Demand for vehicles remains high, yet, as you continue to have fewer vehicles to sell, you may be thinking it’s time to hit the brake pedal on marketing spend.
If this thought has crossed your mind recently, you’re not alone, but remember what Henry Ford once said:
“A man who stops advertising to save money is like a man who stops a clock to save time.”
While the inventory shortage is poised to last into 2022, if not longer, it won’t last forever, and the dealers who continue to effectively market throughout the pandemic will be ahead of the curve when the industry settles back down.
We recently completed a study with RXA, and after analyzing 26+ OEMs, 841 dealerships, and 14.7 million consumers, it concluded that your top-value customers generate 80% of your total gross profit. Don’t let your top-value customers defect and become top-value customers for your competitor. Likewise, top-value customers don’t just become low-value customers either; they defect and become a top-value customer for your competitor. As an industry, we need to think differently about how we are retaining our top-value customers. Would you know a top-value customer inside of your dealership if you saw one?
Think of this like a farmer who plants seeds for harvest. The lifecycle of farming begins with crop selection, then land preparation, followed by seed selection and seed sowing, which requires irrigation, resulting in crop growth, fertilization, and finally harvesting. If a farmer misses any of these steps in the agricultural lifecycle, the harvest will not be the same. Car dealers also have a lifecycle that starts with discovery, then shopping, then early, mid, and late ownership phases. Each phase requires and deserves the same amount of attention. Most car dealers invest all their time and money in marketing to consumers in the shopping phase. During a time like now, when there isn’t much inventory to sell, it can be tempting to turn off the marketing faucet. When in reality, you should be nurturing every consumer who has done business with you – through all of their individual lifecycle phases.
Many dealers forget about marketing their service lane to their customer base, when in fact, the service lane drives the bulk of a dealership’s gross profit. In fact, our study concluded that regular service customers have a 35% higher 3-year value and are 6x more likely to repurchase than low-value service customers. You may not have much inventory to sell to those who are shopping now, but your Mid- and Late-Ownership Phase consumers will be entering the Shopping Phase in a few years – and you could be marketing the inventory you do have to those lined up ready for their next vehicle purchase.
Effective marketing means artificial intelligence-driven individualized content through omnichannel communications.
The expectation for an individualized experience comes from its prevalence with major companies like Amazon, Google, and Netflix. They are masters of customer experience to the point where they know what we want before we do. They consistently deliver such content through data, and accurate AI can make sense of that data to identify content that will best engage each consumer proactively.
Now is the time to invest in your dealership’s marketing. It’s time to go “back to the basics” and reevaluate your vendor list. Which vendors are most meaningful and driving results? Heading into 2022, you need individualized content for your marketing efforts through an omnichannel approach. Today’s consumers expect more, so dealers need to deliver more than just CRM email blasts. How are your current vendors helping you achieve this 1:1 approach?
This also means staying in front of unsold leads and defectors.
To increase engagement levels with unsold leads, you can change your messaging to focus more on brand awareness, lifestyle, and additional service content instead of focusing on urgent selling messages for models that are in low supply.
Don’t discount defectors either. They bought from the dealership once and may easily buy from there again—if their connection to the dealership is strengthened through relevant service, trade-in, and sales content that will most likely resonate with them.
Relevant content and recommendations reduce decision fatigue and streamline the shopping process. When done respectfully and well, it improves the relationship with consumers and builds trust. And trust begets loyalty and retention—the holy grail of lifetime customer value. Our study found that customers who continually engage with a dealership’s content have two times the higher 3-year value.
It is essential to focus on service, finding more trade-ins, and keeping your customers engaged reminding them you are here for more than new car sales—you are a partner who can and should be there when your customers need you most.
With the right tools, dealers have the power to meet customer expectations in a marketplace where very few do. Putting on the breaks now would mean letting the defectors defect, forgetting unsold leads, and ignoring the needs of your otherwise loyal customers when there is so much more to a partnership with a dealer than sales.
Don’t be forgotten when the inventory shortage stops. What are you doing to play the long game and stay in front of your customers?