Oh, The Dollars you Waste! How You Squander Your Marketing Budget and How to Fix It - AutoSuccessOnline

Oh, The Dollars you Waste! How You Squander Your Marketing Budget and How to Fix It

There’s an awful lot of time, effort and dollars that go into selling the automobiles on your lot to willing purchasers. You have to attract prospects to your dealership to have any opportunity to sell them a vehicle in the first place, so it’s safe to say that your marketing and advertising efforts are critical to your success.

​I want to talk with you about the dollars wasted in your digital marketing and advertising — and help you look at those things in a different way. Doing so will help you obtain the best value for what you’re already willing to spend and ultimately enable you to grow your business, which boils down to getting more people into the dealership

Dr. Seuss
“The more you spend in haste, the less effect can be traced, the less facts that are faced, oh, the dollars we waste!” That’s Dr. Seuss, for the unfamiliar.The good doctor was right — we spend considerably on marketing and advertising in an effort to grow our business, yet we fail to plan and are often unaware of what we’re actually getting for our money. I’m going to get you started by focusing on how to grow your business and while spending less money.

Focus on the Right Metrics
To grow your sales business (not your fixed operations), we need to first determine that you’re measuring the correct things. A pet peeve of mine is the focus within automotive on the “close rate.” Can close rates really grow your business? The answer to that is “No.”

Why? Because the biggest dealerships in the country have the same close rates as many of the smallest. There’s a couple of percent here or there, but you’re not going to double your sales this year by doubling your close rates. Nobody has a close rate of 100 percent, so that’s not really the answer. Besides, close rates are always looking backwards at business and you need to look forward, with a focus on how to grow.

What about simply increasing the number of leads you purchase from third-party providers? Once again, the answer is “No.” In fact, you’re going to have to start holding your third-party lead providers’ feet to the fire. Doing so will require that you determine the lead engagement rate for every third-party provider — it’s the key metric to growing your dealership.

What is Lead Engagement?
Simply stated, engagement is defined as a lead you reply to in some manner — call or email, for example — who in turn responds back with a call or email. The key is that you have to talk with them at least one more time. The real process is getting the lead to respond. Growing an Internet department requires you to get a lead to engage, which will equate to an appointment, eventual showroom traffic and, finally, a sale.

Engaging the Best Leads
Effective Lead Rate and Effective Lead Cost are two important metrics you’ll need to know. The Effective Lead Rate is calculated by multiplying the number of leads purchased by the actual engagement rate, which is the true number of leads you have to work with. The Effective Lead Cost tells us what we paid per lead based on the Effective Lead Rate, versus the total number of leads purchased.

Example: Provider A delivers 200 leads with a 45 percent engagement rate for $2,200. This seemingly equates to a price of $11 per lead. But with a 45 percent engagement rate (Effective Lead Rate), your effective reach is just 90 people out of the 200 leads, leaving you with an actual Effective Lead Cost of $24.44.

The key, though, is not the Cost Per Lead, but whether there is value in the leads purchased, no matter their cost — quality over quantity. In making that determination, it’s important to remember that the leads who don’t respond often require twice as much time as the ones who do, so you end up wasting precious time on the wrong people. This takes your people away from the prospects who want to buy from you, which is an inefficient use of your time. My experience is that you’ll see more sales and efficiency as your engagement climbs.

90-Day Challenge
Bringing this full circle, I want to challenge you to undertake a plan that will increase your engagements while cutting your costs over the next 90 days.

You’re going to start by measuring each of your third-party providers. Then you are going to fire those providers who aren’t delivering a high Engagement Rate. We consider that to be 51 percent and above. Doing so will allow your people to use their time efficiently in attempting to get those prospects that engaged — they represent the real meat on the bone.

Next, you’re going to cut 10 percent off your budget. Trust me; while that seems drastic, you’ve definitely got 10 percent waste in your operation, so it’s easier than you think. Doing so will help you to get rid of those relationships which are bad while providing cushion for you to invest in the higher-engaging lead providers. This helps ensure you’re spending money in the correct way.

Then you’re going to invest in your own site. I’m a big believer in organic traffic, which requires driving people into your Website and chat. Our experience has found that the highest engaging leads you’re ever going to find come right from your Website, chat and finance app. You need to always work on building your organic traffic. Doing so equates to investing in your inventory and owning your area.

Finally, I’m challenging you to grow your engaged leads by 20 percent. Doing so will require figuring out where you’re wasting money and working harder to ensure you’re purchasing the highest-value leads possible. Focus on the growing the lead volume, but only through high-engaged lead providers.

​Bottom line: Your goal is to spend the same amount of money, but getting more engaged leads for those dollars.

You May Also Like

Identifying Gaps in Digital Retailing Solutions & 5 Easy Fixes

Inconsistencies slow the purchase process, erode consumer trust and eliminate the willingness to purchase.

Identifying Gaps in Digital Retailing Solutions & 5 Easy Fixes

I was recently talking with my friend and industry expert Brian Pasch about the automotive industry and its many growing pains. We discussed how the market continues to evolve and push further into a digital retailing-first approach, despite many dealerships simply not being ready for the change.

The adoption of digital tools has certainly brought about numerous benefits — including a more data-driven approach to turning leads into sales — but it has also exposed certain gaps that need to be addressed. Among the most glaring issues are the lack of personalization and consistency across digital retailing solutions. In this article, we’ll explore these gaps and discuss why they are crucial to the success of car dealerships in the digital age.

The SMS Paradigm: Reshaping Customer Engagement in the Automotive Industry

By reaching out through SMS, we have tapped into the potential of a less invasive, yet highly effective, method of communication.

The SMS Paradigm: Reshaping Customer Engagement in the Automotive Industry
Don’t Be ‘Nice’ to Your Team — Be Caring

Here are four steps to take to lead a team that minimizes critical actions and will put our team members on the path to success.

team leadership
The Top 3 Reasons You’re Missing on Used Vehicles

As front-end profits tighten, misses on used vehicles hurt more. To tighten up acquisition and pricing, you need a different way of operating.

The Top 3 Reasons You’re Missing on Used Vehicles - AutoVision
Is a Vehicle Test Drive Still Relevant Today?

An important part of the process, the test drive is the strongest opportunity to build the customer’s positive emotions around the vehicle.

Is a Vehicle Test Drive Still Relevant Today?

Other Posts

Is Marketing Both the Problem and Solution for the EV Market?

Marketing can answer consumers’ questions and demystify the EV buying journey.

Is Marketing Both the Problem and Solution for the EV Market? myAutoIQ article
Closing the Appraisal Gap

A new OBD II enriched with VIN-centric reconditioning cost data, not estimates, is now integrated into workflow software to eliminate intentionally overlooked or ignored yet authentic reconditioning exposure at appraisal.

Closing the Appraisal Gap - Rapid Recon
Everyday Actions, Monumental Outcomes

It is in the quiet moments of consistent work that our skills are sharpened and our goals are realized.

True success is the product of a daily grind, forged from focus, dedication and perseverance.
Bridging the Communication Gap: Dispelling the Opt-in Text Myth in Dealership CRMs

There are common misconceptions harbored by some CRM providers in the automotive industry that are hindering dealers’ communications with their customers.