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With automakers expecting a slow-down in sales we should soon see how each manufacturer chooses to respond.

BY November 03

 

With automakers expecting a slow-down in sales we should soon see how each manufacturer chooses to respond.

Typically, when looking to boost sales, OEMS add incentives or special lease deals. However, that may not be the right strategy. These types of campaigns tend to end up starting a domino effect that creates a catalyst for competing manufacturers to offer similar incentives in order to maintain market share.

Just as reported in a recent article in Automotive News, in down times, typically manufacturer’s gloves come off as they battle for consumer buying attention through marketing and incentives.

This has an effect on dealers of all brands who must then react to what’s happening in their personal markets to stay competitive and keep the lights on at their dealerships. For many, simply throwing more money into marketing will be the go-to solution – very similar to what manufacturers are expected to do – but is that the right answer?

The majority of dealer marketing is price-centric — designed to lure customers to the dealership through big discounts. When manufacturers as a group start throwing incentive money right and left, dealers react by reducing their prices causing competitors to follow suit. This infinite circle of react-and-respond behavior typically includes an increased marketing spend. Dealers order more leads and, in general, invest more money in traditional and digital advertising. Oftentimes, this increase in budget is welcomed by their vendors. Why not? Of course the vendors like more business. But is increasing marketing spend actually going to matter if the competition is simply following suit?

I get it. Our industry tends to be numbers based. Get more people in the showroom and we’ll sell more cars. How do we get more people in the showroom? Spend more money. While that formula may seem logical, with just basic data to work with, many dealers find that they’re spending money in all the wrong places and not spending money where it should be spent. They see poor marketing results and end up pulling their hair out trying to figure out what works and what does not.

In no way am I saying sit back, relax and let your competition eat your lunch — and steal your customers. What I am saying is that sadly, some dealers simply don’t know what marketing actually works to drive customers into their dealerships outside of a vendor rep taking credit, or looking at a source in the CRM to determine which advertising methods produce sales.

Without a larger picture, it’s almost impossible to truly judge what marketing strategies pay off and which ones don’t. You may not have to spend more money at all to “keep up with the Joneses.” But rather spend the same amount of money you’ve been spending – only spend it smarter.

Consider taking a holistic approach to your marketing spend and touchpoint influences. This will help to identify where you can improve, which channels are influencers and which ones aren’t. Armed with that knowledge, decisions can be made that could result in an increase in sales without an increase in marketing spend.

And, if we do find ourselves in a downward sales period, the ability to spend money more intelligently could be exactly what your dealership needs to remain competitive without emptying your bank accounts.

Follow Steve on Twitter at @SteveWhite


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