January 2009
Notes from the Editor
Yes, there is a recession! Yes, there is chaos in the automotive industry! But now is not the time to panic. However, it is easier said than done. Now is the time to take a deep breath and start looking at history as well as the future. It is also time to look at some very interesting stats. Never in my wildest dreams would I have ever thought I would be focusing so much on stats. In fact, I think I dropped my Stats 201 class in college because I was so intimidated by it! Now almost 25 years later, these stats are helping me get through a huge economic challenge. I have included two sections below called By the Numbers and Adverstising 101. Hopefully these articles will help you too!
We all need to remember that nothing stays the same forever. We will come out of this economic crisis stronger and more agile. The businesses that keep their heads up and are smart with their marketing will not only survive but will also thrive!
We at Dealer Concepts, LLC. have decided that we are not going to participate in this recession. In fact, our business has been great for the past 90 days. Based on our next six months of planning, things are looking bright. Why? There has never been a better time in our history to start a loyalty program and take care of your existing customers. They are PRICELESS!
Keep the faith & Happy Servicing!
Andrew Wolfe and the rest of the Dealer Concepts, LLC. Family!
866.GET.IDEAS (438-4332) x117 or Email Me
Retaining Your Customers for Life.
By the Numbers
According to the last year that NADA ran their numbers (2007), the average new car department generated -3.3% of the stores overall profit. Yes, that is a NEGATIVE! The Service and Parts operation generated 77% of the overall dealership profit. Preliminary numbers for the First Quarter of 2008 is that the Service and Parts operation are now generating 82% of the overall profit! If that number is not shocking enough, read on . . .
In 2007 the average dealership spent $365,000 on Advertising and Marketing. 90% of this or $328,500 was spent in the new and used car departments to GET customers. This left 10% or $36,500 to KEEP current customers. I call this the 90-10 Rule! Translation: your store is spending 90% of its budget chasing after the -3.3% of the profit and 10% of your budget going after 82% of the profit. I think that statement speaks for itself!
Advertisting 101
I will never forget my freshman year at Michigan State University when my Advertisting 101 Professor, Professor Adler, showed us a study by the Wall Street Journal that compared businesses that cut back on advertising with those that continued marketing. I decided to do a Google search for this particular article. I actually found the article as the first result of my search. I have created a link to this Advertising 101 article.
If you redirect some of your advertising away from the new and used car departments and shift it to the service and parts department, you just might find your store coming out way ahead of your competition when things turn around.
Welcome Aboard
What is a Loyalty Program?
Sending out direct mail to a customer does not create Loyalty. If you are lucky to catch a customer at the exact moment they are in the market for a car or service on their vehicle, then your direct mail piece brings the customer back one time. Last I heard the average ROI (Return on Investment) on direct mail is 1-5%. TV advertising does not create loyalty. Radio advertising does not create loyalty. Finally, newspaper does not create loyalty!
The only thing that creates loyalty is REWARDING your customer for the business they give you! All of us belong to some type of Loyalty Reward club such as Northwest Airline miles, Discover Card Cashback, or Cabelas VISA Points Program.
So I ask you, "What are you doing TODAY to create loyalty and reward your customers?" I challenge you to break away from the crowd and spend 5% less on your "traditional" advertising for the next six months and redirect that 5% to a Loyalty Program of some kind for your store. Watch your Loyalty numbers soar!
Tip of the Month
Start selling packages or service contracts, prepaid service, and gift cards right from your desktop with our Loyalty Rewards Program. Think about how much extra revenue your store could bring in!
If you would like more information about Loyalty Marketing and to see a live demonstration of our industry leading Rewards Program, simply click here to register for a FREE demonstration.
Deloitte Report
In October of 2008, Deloitte published a report entitled, Ladies and Gentleman, Start Your Service Engine: Competing on Service Excellence in the Automotive Industry. Here are two of my favorite quotes:
"Profit from Service and Parts Operations is more than 53% higher than overall business profitability"
"By neglecting service and parts, automotive companies jeopardize their business models. Inviting competitors to exploit captive markets is a dangerous game. Service is a crucial link to customer loyalty and retention."
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