As with nearly every New Year, I am looking forward to the challenges, successes and even failures that will come my way in 2011. These collective experiences are what define us both personally and professionally, and I welcome each of these with open arms.
Since 2010 (for most of you) was such an improvement over 2009, you are likely as optimistic as I am about the outlook for dealers in 2011. We’ve weathered the OEM consolidations and economic storms, and we see great things on the horizon. For many of you, the conscious cost-cutting you made during the downturn has resulted in record margins. The trick now – as I see it – is to ensure you continue to enjoy these margins as you grow your business in 2011 and beyond.
With sales growth comes optimism about the future. Unfortunately, optimism about the future often leads to spending like a drunken sailor for many dealers. How can dealers enjoy the growth they are expected to enjoy for the next three to five years without adding unnecessary redundancies, waste and bloated staffs to their organizations?
To help you take full advantage of the expected industry growth without breaking the bank, I’ve put together five simple rules that will – at the very least – guarantee you digital marketing success in 2011:
Rule #1 – You can no longer hold a creative competitive advantage. While 20 years ago it was possible for dealers to market in ways that were difficult or expensive for their competitors to emulate, this is simply not the case today. Technology, the Internet and the lack of barriers to entry in the digital marketing world means that anything that is even remotely successful for one dealer can be quickly copied (and even improved upon) by another dealer. One of the first things Charles Oglesby shared with me when I joined the Asbury Automotive Group was that “Asbury and our competitors cannot expect to hold a creative competitive advantage for very long… technology simply won’t allow it.” He was, of course, correct then and he is correct today.
More than anything, this advice means you do not have to always be first to be successful with the next “Next.” In fact, as I’ve written in the past, there is often a competitive advantage to waiting and allowing others to needlessly waste their time and money as they make the expected early adopter mistakes. With the changes to the Internet sales landscape happening on an almost daily basis, the spoils often go to the patient dealer. The dealer who notices, but does not overreact to the changes is often declared the ultimate winner. A “steady as she goes” approach has so far proved correct for Facebook, Twitter, search engine marketing, search engine optimization and local search. That is, those dealers who allowed others to make mistakes and prove ROI before investing tens of thousands of dollars in unproven efforts have come out on top (or, at least, equal to the early adopters).
If you’re wondering how you can emulate a successful early adopter, the answer is so simple it feels a little silly to even write about it here. Is there a competitive dealer who is truly driving revenue with e-mail, Facebook, YouTube or Twitter? Simply create a covert online persona and mystery shop this competitor (to see their great prospect emails), “like” them on Facebook (to get their social media updates), subscribe to their YouTube channel (to see their videos the moment they post them) and follow them on Twitter (to get their Tweets the second their customers do). It doesn’t take much knowledge of technology or even the car business to determine which of these efforts are resonating with consumers and which ones are just wasted efforts.
Rule #2 – Just because you can do something, doesn’t mean you should. Are you one of those dealers who shows an automatically calculated monthly payment on your web site’s vehicle details pages, or who has added one of those neat little toolbars across the bottom of every web page? Did you consider how these cool technologies would fit with your overall digital marketing strategy, or did you just add these features because you could?
What impresses you most about the payments you’re showing to your web site visitors? Is it the automatic nature of the amount displayed with no regard for the consumer’s credit situation or the incredibly high monthly payment that initially displays when a consumer visits one of these pages?
If it is your goal to show a $1,000/month payment on your web site for a $40,000 truck or SUV, then why don’t you also put a big sign on this same vehicle on the lot proclaiming these same great terms? That, you say, would be silly. (Actually, it would be more than silly – it would be disastrous, as it would clearly keep customers from visiting your lot.)
While I am an advocate of having a finance calculator on your website, I think showing a default payment to every visitor (especially one displaying an interest rate of 8.9% with no money down for 48 months) is not only unnecessary, it is simply bad business. Just as a $1,000/month payment posted in large digits across a windshield would keep away lot visitors, so too does an unrealistic payment plastered across a vehicle details page. Just because you can automatically post a payment on every vehicle doesn’t mean you should.
Okay, but why is my cool toolbar such a bad thing?
I was demonstrating one such free toolbar the other day on a fairly successful BMW dealer’s web site, and during the demo the toolbar quickly directed me to leave the dealer’s website for Google, a competitor’s website, Facebook, Twitter and YouTube. While I’m certain this dealer was not hoping to drive visitors from his site, that is exactly what he was accomplishing with the addition of this free toolbar that included a site search function (that also displayed Google results), a Facebook link, a Twitter link and a YouTube link.
What is your goal when you use one of these new toolbars? Moreover, what is your goal for Google, Facebook, Twitter and YouTube? My hope is that your goal is to drive visitors to your site. If this is the case, then why are you so keen to drive them away?
Whether through a toolbar or a big “F” logo, sending your prospects to Facebook just seems crazy to me. Doesn’t Facebook already have enough traffic? If you are trying to build a Facebook following, wouldn’t it make more sense to approach your existing customers about becoming your fans than it does to ask total strangers to “Like” your Facebook page? If you answered yes to this question, then ask yourself why you are featuring a link to Facebook on your website? (Just because you can do something, doesn’t mean that you should.)
Rule #3 – Follow the money. Many industry discussion sites and blogs are becoming simply dirty with advertorial advice from companies whose sole goal is to separate dealers from their money. The practice has become so prevalent that I’ve reduced my regular reading list to just a couple of e-newsletters, a handful of columnists and only two industry blogs and discussion boards.
The problem for dealers who may not fully understand everything about digital marketing is simple: How can I cut through the clutter and focus only on the sound advice that is truly intended to help me move my business? The answer: Follow the money.
The next time you read something on an industry blog or even in many magazines in the automotive digital marketing space, ask yourself if the author (or the author’s company) has a financial interest in the product, process or service the author is touting. If they do, then take everything they say with a grain of salt. Moreover, don’t act on their advice until you can verify it with an unbiased resource.
Rule #4 – Spend like it’s September 2008. In case you already forgot September 2008, this was the month that auto sales dipped below one million units for the first time in 15 years. “Successful” dealers that month were still spending; they were just smart about it. They didn’t waste, but they also didn’t try to save their way into sales growth. Instead, they spent wisely and measured the results every week. If they found something that worked, then they spent more. If something did not, they jettisoned it quickly.
Just because times are better right now, you shouldn’t sign long-term agreements. Instead you should ask for free trials and you must have any new vendor define the expected results of their product or service before you spend a dime. Then, and this is critical, track and measure the ROI. On the labor front, be stingy about adding headcount that is not in a commissionable position. Create 30, 60 and 90-day expectations for any new role and hold the managers accountable if the new hire does not meet or beat those expectations.
While this should be an easy rule to follow, my gut tells me this is where many dealers will fail going forward. There is just something about having great profit margins that makes many business owners think it will last forever – making it easy to overspend on unproven products and unnecessary headcount.
Rule #5 – You cannot save your way into sales growth. Heeding Rules 1-4 doesn’t mean you should put your wallet away. We’ve all heard that you cannot save your way into sales growth, and it’s true. According to nearly every industry expert, car dealers are headed for steady and possibly steep growth for the foreseeable future. The only way to ensure you get your share and more is to spend wisely on new forms of marketing, tools, products, services and personnel. Understanding how to properly apply Rules 1 through 4, and then spending accordingly should deliver great results for dealers. The trick, as it were, is how to achieve the proper balance of spending and growth so that you can continue to earn great margins.