September 1st, 2009 | Written By: Chuck Patton
The days of simple and minimal service marketing have come and gone, and it’s time to adopt a newer, well thought-out plan of attack. What must a dealer do to think outside the box in this economy? As a first step on the path to securing your dealership as a market gainer in a sea of dealerships posting continual losses, you should stop the simple coupon mailer mindset.
Success was a numbers game. Previously, a service department could depend on new vehicle sales to continually feed the customer pool. And if they weren’t capturing enough of those new potential customers, they could look to steady flow of warranty work and internal work to keep service bays full. If they experienced a slight dip in RO traffic, a quick fix was to send out a coupon mailer with an inexpensive oil change.
Success is a service game. Dealers now need to fight their way to the top by examining their processes and innovating new methods and a new mindset to position themselves in the black. These dealers will recognize their service department as the place where their future sales stability lies. These dealers will think past the immediate, and ignore the inflated promises of getting 50 new customers this weekend with a one-hit promotion.
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Posted in: Direct Mail, Marketing Plan
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August 15th, 2009 | Written By: Chuck Patton
Operating an automotive service department effectively can allow it to serve as both a profit center and an advertising investment. It should be, by far, the most cost-effective advertising you make to generate sales leads. Why? A typical dealership generates 77 percent of operating profits from the service department, and it averages just below 25 percent of the total dealership gross sales. Most customers frequenting your service department will give you an opportunity to sell them their next car. You cannot generate that kind of revenue opportunity through investing in traditional advertising media. Keep the service customers loyal and you will profit from the service work, as well as build a new purchase relationship with the customer. This can be a simple formula as long as the customer has a positive perception of your dealership and is satisfied. However, this is easier said than done since you cannot always control every human interaction that occurs in the store. The impression that the consumer has of your dealership can make the greatest difference. So, how are you building that image or brand to keep that good impression?
Typically, a dealership spends a little more than one percent of their gross sales advertising — but how they spend it is changing dramatically. Consumers want more information and they want the information directed to them, for them and about them. This is why traditional marketing is changing so dramatically.
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Posted in: Branding, Marketing Plan
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August 2nd, 2009 | Written By: Chuck Patton
The weather gets hotter and the air fills with the sounds of Little Leagues across the nation. Coaches try to give their players advice that will last them the rest of their lives. “Keep your eye on the ball” is one such pointer. In the automotive market today, we are in the ninth inning with two outs and the count is three balls and two strikes. It is time to keep your eye on the ball, or in this case, on your units in operation (UIO).
The diminishing UIO is a particularly interesting indicator because it tends to first affect the service department. If your service department is hurting, then it’s like using a cracked bat when you come up to the plate. We all know the secret is out—the backend is profitable. But service departments are panicking now because their core base of customers (those who have vehicles within warranty that are younger than three years) has been dwindling for about 18 months or so, depending on which market they are located.
Do the math with these national trend numbers:
- Number of vehicles in your database – 10,000
- Number that leave per year – 2,000 or about 20%
- New units sold every year – 1,300
- New service customers every year – 700
- 30% decrease in sales over 12 months – 390 units
- Lost service sales potential sustained over 18 months – OUCH
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Posted in: Branding, Customer Acquisition, Marketing Plan
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