Industry insider explains why so many consumer marketing campaigns remain highly inefficient.
It seems like everywhere you turn, there is an immense amount of conversation and pressure to drop your current dealer marketing strategy and throw all your eggs into a new basket, such as direct marketing, social, or mobile.
These “wave-of-the-future” strategies have promise, and there is even some decent ROI associated with each. But what about finding a better way to do what you’re currently doing in terms of customer marketing?
Some habits are hard to break in the automotive industry. And to be honest, some don’t have to be broken, especially if you can simply find a better way. This is exactly what’s happening with dealers and the way in which they market to their customers. The marketing works, but the method is failing us.
The problem isn’t necessarily at the tactical level. Direct mail still works. Equity marketing remains highly effective. DMS information is ripe with accuracy. The biggest problem is the way in which all these components come together. The process is disjointed. It’s frustrating and inefficient. Worst of all, it could be costing you millions of wasted dollars.
It’s important for dealers and their marketing partners to reevaluate the way in which customer marketing campaigns are developed and managed, and many of the reasons are financial. Dealer profits are shrinking, mainly due to shrinking margins on the sale of new and used vehicles. According to Henderson, Hutcherson and McCullough (HHM)’s recent auto dealer economic outlook, the gross profit margin for dealers fell from 13.5% down to 13.3%. The report also stated that the average new vehicle gross profit fell from $1,204 to $1,193. Gross margins also declined from 3.81% to 3.68%.
Furthermore, according to research firm Statista, the average-size dealership (selling between 150 and 399 cars annually) spends approximately $616 on advertising per each new car sold. This number goes up as dealer size shrinks. The firm points out that dealerships selling fewer than 150 cars a year are faced with a per-vehicle advertising spend of $862. This figure can be lowered simply by consolidating the different touchpoints involved in the development of campaigns.
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