Twenty years ago, branding and marketing decisions were easy. Think about it: Who bought your radio and television advertising? Who approved and often appeared in your commercials and print ads? Who approved your outdoor signage? If you were a single-point store, then it was likely the dealer principal who made these decisions. If your store was part of a group, then it may have been the general manager or someone at the group level. My point here is that there was never a question about who managed the dealership’s brand in 1991.
Okay, so how about today? Who in 2011 will be making the branding and marketing decisions for your store? If you’re like most dealers, you may have accidentally abdicated the branding decisions that impact 90% of your prospect base to someone without the necessary skill set (or required skin in the game). Because roughly nine out of ten consumers are conducting research online, and because the typical dealer principal doesn’t get deeply involved in their own online marketing, many dealers have relinquished their online branding decisions to someone who is simply “good with computers.”
While I think it’s okay to trust these folks with online customer acquisition activities, your store’s brand is too important to leave to chance. Although all marketing campaigns are expected to ultimately drive increases in a store’s customer base (otherwise, why would you spend the money?), the disciplines of branding and customer acquisition are actually very different. To prove this point, let’s examine what we already know about branding activities versus customer acquisition activities.
Branding v. customer acquisition
Branding, whether it is conducted online or offline, typically produces little measurable ROI. (You know that half of your advertising is working, you just don’t know which half.) Even a branding campaign considered to be successful can require a big effort with an unknown return. Moreover, the results generally show over the long term.
Because branding activities can have a huge impact on current and future customer perceptions, these decisions should be left up to the experts. Whether you have an in-house marketing team or you use an outside ad agency, someone other than the Internet manager should be responsible for this budget-based, strategic spend.
Examples of online branding include traditional banner advertising, social networking and behavioral targeting. Additionally, at least one online classified website claims they want you to consider their invoice as part of your branding (not customer acquisition) budget.
Customer acquisition activities, conversely, always provide a measureable ROI. (Hint: If there is no measureable ROI, then the activity is branding, not customer acquisition.) Further, with effective customer acquisition activities dealers enjoy big returns for relatively little effort; and the results, unlike with branding, are often immediate.
Successful Internet dealers understand that the dollars allocated to true customer acquisition activities should be capacity-based and not budget-based. Additionally, they generally leave the bulk of their online customer acquisition decisions to their Internet team (they are most often the best equipped to manage tactical decisions like these). Some examples of online customer acquisition activities include the dealer’s website (yes, your website is primarily a customer acquisition tool, not a branding tool), website lead-generating add-ons, search engine marketing (SEM) and independent Internet leads.
The branding/customer acquisition tradeoff
Once you understand the difference between branding and customer acquisition, it’s easy to see what the tradeoffs should be. For example, you no longer need to have the budget discussion over whether you should buy third party leads or banner ads. (Third party leads are a customer acquisition activity, while banner advertising is branding.) The tradeoffs should be “third party leads or SEM” and “billboards or banner ads.”
In fact, it’s important to reiterate that the money you spend on branding should be based on your marketing budget, while the money you spend on customer acquisition should be based on your team’s capacity to manage the leads and other byproducts of these activities. (It may also be important to note that anything your dealership does in public – whether offline or online – affects your brand. This means even pure customer acquisition activities should have some oversight by at least the store’s general manager.)
While I am huge fan of strong customer acquisition activities, I also see the need for dealerships to engage in regular branding. It often goes unnoticed, but if you are a typical dealer, then most of your website’s traffic is the result of your past branding endeavors and not the result of your current customer acquisition activities.
If you don’t believe me, check out your Google Analytics. A typical dealer gets about half their website traffic from search engines, about 20% via a referring website (like from a link on your OEM’s website), and about 30% of visitors come to the site directly.
Inarguably, the 30% who come directly to your site found you because they were already familiar with your brand. One could likewise argue that the 20% who were referred to you came to your site as the result of a customer acquisition activity. The tipping point that proves the need for dealers to continue their branding activities comes when you examine the search traffic of a typical dealer. While the numbers can vary widely, most dealers get 60% or more of their search engine traffic via keywords that contain some variation of their own name (we call these branded keywords). When you add the branded search volume to those who come directly to your website, it’s easy to see that more than half of your overall website traffic is the result of your branding.
What’s more important: branding or customer acquisition?
Given the website data presented above, you might argue that branding is more important than customer acquisition (but, you’d be wrong). The answer is that both are equally important – provided they are done right. It really becomes a “chicken and egg” discussion if you try to place too much emphasis on one versus the other. The key to maximizing the effectiveness of both is to follow a few simple truths about branding and customer acquisition:
Truth #1 – Branding and customer acquisition are different activities with different expected outcomes.
Truth #2 – Your branding decisions (whether offline or online) need to be made by someone with both skin in the game and the required expertise. (They will choose the right activities that benefit the dealership today and in the future.)
Truth #3 – The bulk of your customer acquisition decisions (those that do not involve the store’s brand) should be made by those closest to the action. Preferably, by someone who has a commission-based compensation. They will choose the right activities that lead to increased sales.
Truth #4 – How much you should spend on branding should be determined by your marketing budget, while how much you spend on customer acquisition should be determined by your team’s capacity. For example, don’t buy more leads just because you have the budget. Conversely, don’t cancel an effective lead source because you want to use the money for branding.
The reason your team struggles to separate online branding from online customer acquisition activities is because twenty years ago there were very few true customer acquisition products and services available (everything was about branding, even the loss leader in the Saturday paper). Today, technology allows for the necessary tracking and measurement to create great customer acquisition opportunities that simply did not exist in 1991.
The trick for you and your team is to understand the goal of anything you do online and determine: Is it branding or customer acquisition?