As 2015 has come and gone, the New Year gives you the opportunity to set new goals and grow your dealership’s market share with your marketing efforts. Nobody really talks about it except the automobile manufacturer which is gaining ground, but it’s an extremely important number which is commonly overlooked by an individual auto dealer in the planning stages of dealership marketing and budgeting.

First let’s face the facts, in trying to identify what makes a dealership successful, some will argue process, some will argue people and some may even argue inventory. And, it’s all true that you need good processes, good people and healthy inventory to be successful. However, none of that will mean a damn thing without a good steady flow of customers to move through your process, talk with your good people and buy your inventory or service vehicles with your store. That’s largely the role of marketing.

Starting with Local – Regional Sales. Within a viable selling radius of your dealership of approximately 40 miles how many new units of your dealership product line(s) are serviced and sold, five hundred, thousand, two thousand, five thousand? It doesn’t really matter you just need the number; the reason this number is important, is because it provides you with an approximation as to the maximum unit sales that can be achieved for your dealership by marketing correctly. While dealer marketing efforts aimed at Increasing Sales of new and used vehicles are important, car sales constitute but one component of a dealership’s revenue stream. Auto dealerships not only sell cars, they fix them. According to the National Automobile Dealers Association (NADA), auto dealership service and parts generate 46 percent of the average dealership’s annual gross profits and sales in the U.S. grew to more than $91 billion in 2014, and service revenue averaged nearly $6 million per dealership.New-Vehicle and Service Profits_2 Making a dealership’s service and parts department a very important component of the dealership’s complex business model. Yet, another truth is that dealers lose much service business after customers’ vehicle warranties expire. That’s because independent shops and national car-care centers are out-marketing dealerships, says Jack Simmons, a trainer for Cars.com, an online automotive marketplace.

Well, the problem is that the Internet as it relates to automotive is currently focused on delivering leads, not sales – resulting in a model that fails to facilitate the sales process for dealers, which is why in 2015, marketing budgets in the automotive industry started to shift the conversation to Lead-Focused Marketing. Making the economics of dealership marketing and lead generation, not about the “Cost-Per-Hour” that counts, or even your “Cost-Per-Click,” “Cost-Per-Impression” or “Cost-Per-Exposure” that matters. But making what matters most is your Cost-Per-Appointment/Lead for the initial Sales appointment with the prospect. Because dealers understandably like to spend their marketing dollars on leads that are addressable – that is, leads that come with the prospective customer’s name, address, phone and email – you know that the more leads you buy, the more cars you’ll sell (and the more chance you’ll have of keeping those buyers from your competition). In most cases, however, you’re paying good money for low-quality leads – leads that someone at the dealership will spend valuable time tracking down.

A Qualified Sales Lead is a Confirmed Appointment with a decision maker (or strong decision influencer), who needs your company’s products or services, and who wants to talk with you about how you can help.

In the past, no single factor had a greater impact on a dealership’s budget than previous years’ success with marketing. It was acceptable to assume that if a dealership can lower marketing cost from the previous year, they would also increase lead generation, improve ROI and drive revenue. This makes sense when calculated on a spreadsheet, but when rolled out in an evolved marketplace with an empowered buyer, it’s going to take understanding which marketing campaign(s) deliver the most customers at a Cost-Per-Appointment/Lead to achieve the goals of increasing dealerships market share.

Let’s take a look at the different marketing mediums and the Cost-Per-Appointment/Lead for each.

average-cost-per-lead3Conclusion

As you can see, how the lead was generated can have a huge impact on the amount of work needed to qualify and convert it to an appointment, as well as on the conversion rates. Therefore, it can have a huge impact on both the cost of the program and on the ROI. Comparing the cost-per-lead as a means of deciding which marketing program to implement is vitally important because of the different definitions that different programs use for what is produced. A lead from a website is not the same as a lead from an email campaign. They will tend to have different close rates, and therefore they will have different ROIs. (The same holds for a lead from a dealer promotion, a networking contact, or a hit to a Web site.) And so you need a common definition of a sales lead in order to compare the advantages of one strategy over another. The best common denominator is the initial appointment with a decision maker who has a need for your company’s product, and who wants to talk with you about how you can help. You only need to calculate the cost of booking that appointment in order to normalize the different options, and flow the costs and revenues through to a pro forma P&L.

Piston Data’s Average Cost-Per-Lead is $36.50 and delivers a Confirmed Appointment with a decision maker, they are addressable – they come with the prospective customer’s name, address, make, model, and more.

NewCar sales and market shareNow let’s review your Dealerships Percentage of that Market Share. Knowing your dealerships total monthly sales number calculate your dealerships market share (Dealership Sales Number divided by Local-Regional Sales = Dealership Market Share, not rocket science) and for calculation purposes it is assumed your dealership is currently at 10% of the Local Market Share (Selling 200 units monthly). The next consideration would be estimating a realist number as to how many additional unit sales your dealership could generate with an effective dealership marketing campaign. Let’s assume you’re a dreamer and hope that an effective marketing campaign will help your dealership achieve a 20% market share or an increase of 200 additional unit sales.

Mathematical Conclusion: You must now actually sell to 18.2 % of all customers, considering your automotive product line within a 40-mile radius. (200 Additional Unit Sales divided by 1100 Viable – Sell-able Buyers)

In the end, there are a lot of things the dealer principal or GM has to do to increase its dealership market share, marketing is just one that the owner, GM, Fixed Operations, and Service Manager should all be involved in to maximize every opportunity.

“It’s not what a GM knows that kills him… it’s what he doesn’t know.”


PISTON DATA – “FUEL FOR YOUR MARKETING ENGINE”