We are all familiar with the state of the auto industry at the moment: from chip shortages to the ongoing COVID-19 pandemic and increased demand from consumers, it’s been a weird time. However, this is the perfect time to decide how you’re going to increase profits in 2022 for your auto dealership. If you’re ready to make too much money in 2022, let’s talk about some real ways to increase your car dealer profits.
How To Increase Car Dealer Profits in 2022
The key to increasing car dealer profits this year is to improve your recruitment and retention strategies. How are you getting your clients? Are you using old-school tactics like billboards along the highway and cold-calling? It’s time to update those tactics to modern automotive marketing solutions that really work.
And how long is your typical follow-up window right now? Keep reading to find out how long, on average, it took most leads to buy a car. We have found that most dealerships simply don’t have the bandwidth to keep contacting leads for as long as it takes for most to buy a vehicle.
Car Dealer Profit Margin
The car dealer profit margin is expected to increase even more in 2022 due to high demand. Customers already know that paying over sticker is the new normal1 (at least for now). Many dealerships already broke records with their profits last year. According to data from the 2021 Kerrigan Dealer Survey, 94% of car dealers expect their profits to continue in 2022 and 79% expect them to rise even more.
So, if you’re looking to increase profits this year, it’s not about finding ways to make more money per car. It’s about obtaining more of those customers who are looking to purchase a car and making sure you are the one to sell it to them. The bottom line: if you want to get more profits this year, you need to both find and retain more customers.
How To Recruit New Car Leads
When it comes to recruiting new car leads, you need to play offense, not defense. Cast a wide net to recruit new leads for your dealership on social media with innovative and effective Facebook and Instagram ads. We have an arsenal of data that showcases that this strategy works.
Here’s a secret: it works because the ads allow us to capture leads’ contact information if they auto-fill a simple form. This tells us that the lead is at least somewhat interested in buying a new car at some point in the future. From there, it’s imperative that you follow up consistently, no matter what part of the sales funnel they are in.
How To Retain New Car Leads
First off, make it personal. Send personal text messages from someone on the sales team or your BDC. Nobody wants to have conversations with a robot. Cut out the SPAM and don’t send links.
Organize and prioritize these leads in the follow-up process so that you can focus on buyers who are ready to purchase and nurture the leads who need more time.
Speaking of needing more time: Our data shows that leads average 42 days between initial contact and vehicle purchase. That’s right: out of 150,000 vehicles sold, 73% were sold after 42 days. We have found that many dealerships abandon leads after about a month, simply due to lack of manpower.
If you want to retain your leads, you can’t give up.
For many, profits have come easy the past year or two. You can’t expect or plan for that to last forever. Be proactive and strategize around recruiting and retaining new car leads. Your future self will thank you for it.