Automotive Solutions: Changing Marketing Budget Strategy in a Down Market
Hi! I’m Dan Bartlemay and I am one of the Account Executives here at PERQ. I’d like to talk about one of the biggest challenges I see for dealers: changing their marketing budget strategy in a plateauing and/or down market.
One of my biggest takeaways from DrivingSales Executive Summit conference this year was learning how marketing strategies have a tendency to be placed on the backburner when sales are down. I want to share some simple, unique steps on how to revamp your strategy.
This past year, despite the market showing overall growth, many dealers felt a sales plateau in the second half of the year, reports which were supported by Automotive News. I also kept hearing things about cutting marketing budget and stopping seemingly unnecessary spending until the slow market was over.
While it’s natural for an owner or general manager to have that knee-jerk reaction to cut costs and lower the bottom line, what I would say is that that could very well be a mistake.
If you have a strategy in place and you’re dropping in sales, it doesn’t make sense to have that same strategy, but then less of it. The marketing budget strategy needs to change. Simply decreasing budget is not a resolution.
So what can we do, moving forward as a dealership? If I were a dealership, I’d want to improve that bottom line and make up those lost sales, and I would do so by looking at basic metrics: cost-per-lead, lead-to-sale, and cost-per-sale.
If I were a dealership, I’d want to improve that bottom line and make up those lost sales, and I would do so by looking at basic metrics: cost-per-lead, lead-to-sale, and cost-per-sale.
I would challenge you to look at third party websites specifically. There are a number of different websites and automotive solutions out there that a dealership’s car can get placed on.
However, what’s starting to happen is that because there are a number of different websites out there where you can put your vehicles, your vehicles are competing with other dealership’s vehicles, and converting a lead is coming down to the fact that vehicles are being defined to just suit one particular person’s interests.
You also have those third party sites where once someone converts as a lead, they’re getting calls from 30 different dealerships to see if they can get them into the showroom and if they can ultimately buy from them. It’s like a shark tank feeding frenzy, and it can be overwhelming.
Simply put, those leads just aren’t going to be very high quality because they’re going to be stretched thin amongst 30 different dealerships. And people are going to do cost research, looking at as many as 15 different websites before they decide to buy a vehicle. How can your dealership stand out from the crowd?
My suggestion would be examining this marketing budget strategy: How do you utilize your own website more effectively to generate leads?
When someone goes directly to a dealership website and converts to a lead, that lead is going to be two to three times more likely to convert into a sale. So what a dealership should be looking at is how to shift some of that budget away from third party sites and focus on driving more traffic to their own website.
At the end of the day, a consumer wants to know: “what’s this dealership going to offer me and why should I buy from them specifically?” It’s a matter of putting them in a position that says “I’m going to buy from ABC Motors’ website.”
That’s why once they’ve hit your website, it’s a matter of just more effectively capturing those leads. One way to do that is to make sure that whatever local initiative you’ve got going on — whether that’s a $500 Trade Bonus, $250 off New Vehicles, or a lifetime suite of benefits for any new or used car shopper, are front and center on your website and are aligned with any other marketing initiatives that your dealership may have.
You would be surprised how many dealerships have different forms of marketing pushing incentives, and not have these offers listed on their site.
The next step would be to make sure you have automotive solutions that are going to be more engaging and more effective at capturing those call-to-actions. We’re talking about CTAs and interactive experiences as an example.
The reason why this is important is if you look at the click-through rates of smart CTAs versus static calls to action, as well as look at a static form completion rate versus an interactive experience completion rate, it’s pretty substantial.
By putting in these new solutions, suddenly, you’re now generating more first-party site leads, more than you’ve ever been able to do on these third party sites.
Now, I’m not saying to totally get rid of using these third party sites. They have their merits and strengths. What I am saying, however, is to look at your budget, cost-per-lead, and at how many sales are coming off of third party sites.
See if you can reallocate that money so you can drive more people to YOUR site and THEN more effectively capture them as a lead. That is an effective change in your marketing budget strategy, and it improves your lead-to-sales conversion rate and increases the bottom line.
As I mentioned at the very beginning, owners and GMs are looking at ways to cut spending if their sales are down, but this could be a great opportunity to reallocate some of that budget for marketing towards a different type of strategy. You’d also be changing the game up by taking on a totally different strategy than what most competitors are doing or are used to.
All in all, I’m really passionate about helping dealers understand how to change the game on their marketing budget strategy in a down market. If these ideas resonated with you, I’d be happy to elaborate further, so be sure to give PERQ a call.
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