Summertime is a GREAT time to be a car dealer! The market is flooded with Active Shoppers, and it’s high time for selling cars!
But there’s a catch. Just because the market is bustling, it doesn’t mean that you’re getting all the juice from the fruit. Here’s the hard truth: if you’re doing the same things everyone else is doing, then you’re going to get the same results everyone is getting—no less, but also NO MORE. And that means that you are leaving valuable opportunity on the table.
Status quo thinking and common sense action deliver status quo results. So if you are seeking more than average results and success you need to do something different!
That’s why we’ve put together a simple, three-step solution to help you prepare for selling season. This approach will set you up to reap the BIGGEST rewards from the influx of traffic and interest from consumers. Here’s how to prepare for selling season:
STEP 1: Analyze Your Marketing Budget
We’ve heard some crazy stories about how dealerships should determine their advertising budgets, but we’ve nailed down a more effective way to do it that’s just as easy (maybe even easier) and ensures explosive growth.
Probably the most common way to come up with an advertising budget in the automotive industry is to look at your gross sales from last month, take 12.5% of that number and allocate it to advertising. Lots of dealerships do it this way! And this approach might work for you, if you’re not looking to grow. But if you want to sell more, faster and experience explosive growth, then you need a fast growth model for determining your ad budget that will bring in a ton of additional traffic.
The formula we use for this is so simple it’s crazy. Take your average advertising cost per car and multiply it by the number of cars you WANT to sell. Now this is the key. If you want to grow, you can’t determine your budget by looking BACK at what you did last month. You have to look FORWARD, toward your goals. In terms of that CPC number, it can vary a bit from market to market. So the key is to find your average and multiply that by the number you WANT to sell—that should be your budget.
The hard truth is that you’re never going to sell more cars by spending less money. And yet so many dealers who are looking to grow, shoot themselves in the foot by cutting the one area of budget that will get them the additional traffic they need to sell more cars.
Simultaneously, some dealers think that since the market is having a heyday, now is a good time to rollback their marketing budgets—save a little coin, if you will, to user later when times are tougher. But just because there are typically more Active Shoppers in the market does not make this a good idea. Here’s the deal: if you cut back your advertising budget, your sales numbers are going to fall. A lower ad budget equals fewer leads, which equals fewer sales. Period.
For instance, one of the dealers we work closely with came to us last year to tell us that they were seeing a decrease in sales. And in fact they had, they’re sales had fallen off 11% over the course of 6 months. But we knew that their marketing hadn’t changed, so what could be responsible for this dip?
We’re curious guys, so we started looking into it.
Turns out that over that same 6-month period, remained relatively the same, but they had reduced their advertising budget by 11%.
Ah-ha! Less money spent equals fewer cars sold. And it’s pretty linear as you can see. You see, your advertising budget and marketing is the fuel that powers the whole machine—traffic, leads and sales. So if you’re looking to grow, you should never cut.
If you roll back your ad budget and you don’t see this kind of impact, then you need to start asking how effective that marketing was in the first place. Your ad dollars should directly correlate to your sales numbers if your advertising is working, which brings us to STEP 2.
STEP 2: Investigate how are you spending those ad dollars.
The biggest mistake dealerships make when it comes to advertising is that they spread their ad budget around numerous media options. They think that this means they are covering all the bases, so they do a little here and a little there, then cross their fingers that something works. We call this approach SPRAY and PRAY because you SPRAY your budget all over the place and then PRAY something sticks, and it has actually become the de facto standard for media budget allocation over the years. But it doesn’t work!
The reason it doesn’t work is that each media option gets so little of your ad budget that it doesn’t make an impact. A low-frequency presence is the same thing as no presence at all. It simply can’t break through the static, the clutter of advertising methods that confront consumers each day.
The trick to breaking through this static and driving a tremendous amount of traffic to your doorstep is to dominate a single media first, before moving on to a second or third media.
Why does this work? Because most advertising media require an advertiser to reach a certain threshold or critical mass before they start to be really effective. Most local advertising absolutely fails to ever reach this threshold, so it absolutely fails to be effective. Also present in every media is a sweet spot— where the return on investment is at its highest—and a point of diminishing marginal returns—where the return on investment starts to drop. The goal should be to determine the sweet spot in any media and invest up to, but not beyond, that point in order to maximize the traffic that results from that advertising—before adding any other media.
Step 3: Take a long, hard look at your marketing.
One of the biggest problems facing dealers today is that all dealers, all dealerships, look the same. We aren’t talking about their physical look, although that too, but we’re really talking about the public perception. The public is bombarded with automotive marketing messages that all look and sound the same. The sooner you realize the severity of this problem, the sooner you’ll begin to reap the rewards of finding a solution to it.
Here’s the reality: Same Is Lame. If you look up “lame” in the dictionary, it’s eye opening. It means, “pathetically lacking in force and effectiveness.” Think about that. If your advertising looks the same, and it’s lame, then it’s lacking force and effectiveness. If your marketing is lacking force and effectiveness, then it can’t possibly deliver the kind of results you’re looking for. It’s basically impotent; it’s a frustrating waste of time and money. If you’ve ever wondered why your advertising isn’t pulling, this may a big part of it.
It’s also the reason you’re constantly searching for new and different marketing gimmicks. Deep down you know that your marketing needs to be unique and different in order to help you stand out and attract customers. You just don’t know how to do it. And we suspect you’ve also discovered that neither do any of the so-called advertising and marketing companies out there. They have no freakin’ clue either. It’s a classic case of the blind leading the blind, often ending with the “creative” people coming to you and asking, “What do you want to run this month?” Pathetic!
So now you know Same Is Lame and that it is a complete waste of time, energy and cash to market and advertise the same way as every other dealer. That begs the question…how do you break the mold? How do you break away and look and sound completely different, be something totally unique?
In order to begin this process, you must answer two questions that are on the minds of all your prospects, whether they are Active Shoppers or Sleeping Buyers. And by the way, the great news here is that most dealerships are not addressing these questions in their marketing (or whatsoever), so when you enter the conversation and answer these questions, you can stand out and attract customers.
The First Question You Must Answer Is:
“WHY SHOULD SOMEBODY CHOOSE YOU OVER ALL THE OTHER DEALERSHIPS IN YOUR TOWN?”
It’s almost an impossible question to answer for most dealerships. Usually dealers want to race to say, “Well, we’ve got a great selection. We’ve got excellent service. We have a wonderful location. We’ve been in business 75 years. We’ve got the lowest prices.” The problem is that ALL dealers say that stuff. Have you ever seen a dealership offer poor selection, bad service, awful location and high prices? The reality is most customers don’t care when you talk about that in your advertising.
They EXPECT good service. They EXPECT quality vehicles. They EXPECT a good selection. Then they’re let down when their expectations aren’t met.
Dealers do a pretty pathetic job of differentiating one dealership from another, and the manufacturers add to the problem, because they want all dealerships to look the same. Think about advertising co-op or the building allowances they give you. What’s it all designed to do? It’s designed to homogenize—to cause you to look like every other dealership of the same make and for you to promote the big brand, not yourself.
Culturally, the car business has failed to differentiate itself dealership by dealership, so there remains no reason to choose one over the other, except price. So then, price becomes the chief motivator, the chief driving force, the only reason to choose. Plus, quite frankly, people are generally ignorant about most industries and product categories and if they aren’t ignorant they are not confident about what they do know, so they default to the easiest and most natural reason to choose and compare…price.
But it is possible to differentiate yourself and cause people to choose you for reasons other than price (such as solutions, expertise, notoriety, special offers, security, celebrity, trust) and end up making a higher profit on every transaction.
That’s right, you will end up with more customers and a much higher profit than if you follow the traditional Same Is Lame automotive marketing model.
The Second Question You Must Answer Is:
“WHY SHOULD SOMEBODY CHOOSE YOU RIGHT NOW?”
This is what we were talking about when we said you need to create action—NOW! The truth of the matter is that you need to sell cars now (and later), not just later, which means you have to give people a reason to get up off their butts and come to the dealership to buy a car.
The secret is to leverage the “Something For Nothing” Aspiration.
You see, everybody would like to get something for nothing. That’s why people play the lottery, participate in extreme couponing, hunt for BOGOs and play on game shows.
And it is possible, even advisable, to leverage the “Something For Nothing” aspiration in your effort to attract customers and cause people to choose you right now. There’s nothing dirty about it. It’s the driving force behind all sales. But it’s important that you understand the science behind it so you can maximize the effects of the application. What it boils down to is this: all special offers tickle customers’ greed glands. If you want to capitalize on the “Something For Nothing” psychological trigger, you need to properly make special offers.
The key to tapping into peoples’ “Something For Nothing” Aspiration is incorporating three elements into your marketing. Those three elements are scarcity, urgency and believability.
And when you use these three elements correctly, you’ll get dramatic, rapid response.
Scarcity is when there’s a limit to the number of people who can take advantage of the offer you’re making.
Urgency is when there is a limited amount of time to take advantage of the offer.
Believability is when the customer believes it’s true. Important to note, just because it is true doesn’t mean they’ll believe it. There’s a huge difference between believability and truth. They work best when combined, but don’t confuse them and try to substitute one for the other. Your offers should be true and believable.
So why does this work?
Experience shows that when you create a deadline (urgency), when you give people a time frame in which they have to respond, response dramatically increases! Most car dealers don’t understand this fact and miss putting deadlines and reasons to act now into their marketing. People are terrified of missing the opportunity. Fear of loss is always a stronger motivator than the potential for gain.
“Cash For Clunkers” is a perfect example.
“Cash For Clunkers” worked because it had urgency—there was an end date.
Same concept is at work with scarcity. People are worried you’ll run out before they get there, so they rush to get their fair share. “Cash For Clunkers” had scarcity because there were limited funds.
But it’s all worthless without believability. “Cash For Clunkers” had believability because it was backed by the federal government. However, there’s a much easier way to create believability, a way you can control: presenting a reason why.
Simply put, a reason why is exactly what it sounds like. It’s a reason why you’re making an offer.
There’s a tremendous opportunity for car dealers to forget about nonsense offers that have no basis in reality, and start finding real reasons to make real special offers. A truthful and believable offer with a truthful and believable reason why is one of the most powerful marketing elements in existence.
If you decide to do this on your own, you have to get creative and come up with new ways to explain WHY you’re having a sale or making a special offer and you have to do it every single month in a fresh, fun and relevant way. For instance, if you’re offering to pay more than a trade is worth (like the “Cash For Clunkers” offer) you must explain why you would do such a thing. Is it because there aren’t enough used cars to go around or because used car prices are rising at the auction? If you’re going to cut the price on a specific vehicle, why? Is it because you received more than you ordered? Or is there a space constraint?
Given a reasonable explanation why you would offer “something for nothing” most people would be more than happy to rush to receive your offer.
Finally, And Potentially Most Importantly, If You Want To Take Full Advantage Of The Selling Season, You Need To Quit The Car Business!
That’s right, if you really want to stand out and sell more, you need to stop selling cars and start selling solutions.
Take a moment and let that sink in.
Stop selling cars and start selling solutions. Solutions are what people seek every day. Our lives are hectic. We have no time. We are stressed. We are frustrated. We’ve got problems. Can you identify with all of that?
What people are looking for are solutions to those problems, to those stresses and frustrations, to the things that are wasting their time. They’re looking for a solution to make them feel better, to make their pain go away, and sometimes a purchase of something that they’re emotionally tied to, something that they see as a representation of themselves, does a lot toward solving a problem or making a desire come true. When you start selling that, when your marketing is about that, not prices and vehicles, then you can tap into that 98 percent, the Sleeping Buyers, and start talking to them, which drives a ton more traffic!
This is the key to success whether the market is buzzing or plunging.
We aren’t going to say that price isn’t important to customers because clearly it is. We’ve all felt that there is price sensitivity, but we would suggest that low price is far less valuable than solutions. When you think about it, there is a lot of talk about value and most people assume that means lowering prices. The interesting thing about value is that value is as valuable as it is; this means the less valuable something is, the lower the price is and the more valuable it is, the higher the price is. Solutions rank much higher in people’s minds in value than price alone does.
Customers only turn to price when there are no other factors to consider and when there’s really nothing else to choose by. So if someone can solve your problem or some product or service can solve your problem, that has much greater value and you’re willing to pay more.
You may be asking yourself, “How do I actually apply this? How do I take these foundations, these ideas, these principles, and actually use them in my business to make a difference?”
First of all, a very practical solution is to become a trusted advisor, instead of simply being a product-pusher. When you place your ads with prices and payments, when you upload your cars to inventory listing sites, you’re a product-pusher. The Sears ad with the washer and dryer is product-pushing. We are encouraging you to provide solutions, help and advice, instead of simply being a product-pusher who’s just worried about merchandising the next vehicle and thinking about what price to put on the windshield or the web site.
It’s rare to find a trusted advisor who is willing to solve your problems. People gladly pay top dollar to trusted advisors, but they haggle over nickels with merchants.
Being a trusted advisor means being there for your customers, whether they are ready to buy or not. Be there with answers, solutions and help. One of the ways you can do that, a very practical way, is to create helpful information that addresses fears, concerns, and problems that people have when buying a car.
We give our members multiple ways to become instant authors, experts, thought-leaders and celebrities. We show them simple and immediate methods of leveraging information, technology and the written word to differentiate themselves and stand out. With our systems and strategies anyone can harness the persuasive power of experts and authors even if they’ve never written a single word or done anything like it before.
Don’t think that just because you’re in the car business you’re limited to being a car dealer. Better to be an expert who also runs a car dealership than a merchant who runs a car dealership.
By now you are loaded for bear. The ideas, methods and strategies we’ve shared with you are so powerful and potent, perhaps beyond comprehension.
We want to advise you: do not try any of these strategies unless you are committed to the results that can be generated when you do something like this. This stuff works. But it’s a double-edged sword. You need to be prepared to handle the traffic and be committed to providing value, not just selling the lowest price. It’s harder work, but it’s more fun and more rewarding. Preparation is the key.
It’s best to be guided by someone who understands how to use these principles and by someone who has used them effectively in the past. Get connected with a group of like-minded dealers who will share ideas and compare notes. You’ll learn and grow faster when you learn and grow with others.
Imagine knowing you’re taking full advantage of the market; you’re making hay while the sun is shining, and you KNOW that when the market goes the other way, you’ll still be safe.
Bottom line, we’ve got a formula for doing all this, and we can do it for you and make it very easy. Or you can do it yourself using the methods we’ve laid out here.
If you feel like you’re the kind of person who would benefit from being connected with us and with other like-minded dealers, this is the time to get involved.
Every member starts with a complimentary Traffic Scale Report, which compares the quality and quantity of your traffic with your competitors and shows you just how big the opportunity for growth is in your market. To get started, request your FREE Traffic Scale Report here.