Professional Community for Car Dealers, Marketing, Advertising and Sales Leaders
|by Jason Jewert, CDK Global Performance Improvement Consultant|
Who can forget The Contest? One of the most memorable episodes in Seinfeld history featured a contest between Jerry, George, Elaine & Kramer to see who could resist the urge (you know…the urge) the longest. Curbing their enthusiasm (see what I did there?) and becoming ‘master of their domain’ proved more difficult than they thought.
Many of the dealers I work with suffer from a similar urge when it comes to managing their dealership marketing budget. Their impulse is to move money around, cut spending or even change vendors--- sometimes on little more than an urge. I admit, sometimes it can be a tough itch to ignore. How many of you are using a bot or a spreadsheet and looking at analytics from multiple vendors who all want credit for every sale you make? It can get frustrating. But before you resort to any drastic measures, there’s a way you can become master of your dealership domain and lord of your marketing manor.
There’s a limit to what we can spend. And we need a tangible way to justify that spend. So I recommend an incremental sales tracker (IST). It will take a while to optimize your budget, traffic, and sales. But ultimately, an IST may allow you to reach goals you’ve never reached before because you didn’t know the opportunities were out there.
Is a vendor truly impacting sales negatively or positively? Or are they just serving customers who are already going to buy from you? You can’t know for sure until you run a check and balance to incremental sales. And an IST is the way to do it.
An incremental sales tracker will take into account current market trends vs previous year (or previous 90 days, depending on the set up at your dealership). If your dealership makes one adjustment to your spend at a time and allows 90 days for that change to take effect and mature, an IST will allow you to figure out if there was truly any sales lift or decline as a result of the adjustment.
Example: Dealership Z sold 200 new and used vehicles in January. They spent $20,000 on digital marketing with multiple vendors. They then added $4,000 to their budget to add Vendor Y. At the end of May, after discussing the market conditions with their OEM rep and others, Dealership Z knows that there was a 10% lift in the market from January to May. So they should have sold 220 new and used vehicles in May. They sold 225. Those are five incremental sales. Now Dealership Z has to decide if those 5 incremental sales were worth $4,000.
It works the other way as well. If you cut Vendor J and eliminate $4,000 of budget and sell 219 when you should have sold 220, is the one extra car deal worth $4,000?
This is very simple math. You have to get more precise than this if you want to truly optimize your spend. Maybe your dealership is usually 10% over the average in your market. That should be factored in. But an IST will help you start to make more concrete comparisons between Vendor X, who charges 20% to run in certain channels with some customization and no demand-based decisions and Vendor J, who charges 30% for the same channels but generates a higher number of sales vs. the market on the same total spend.
You might also have different vendors who serve ads in different channels and sites in different ways. If the same total spend generates more sales, it’s an easy decision to make.
Multiple vendors probably deserve credit for every sale that happens on your lot— no matter the source. The trick is figuring out how to optimize and maximize your budget to close the most sales. I have personally cut $10,000 out of a dealer’s budget for 120 days with no impact to actual sales vs. the market. We reinvested that $10,000 to hit an audience we weren’t already saturating and generated a 20% incremental lift above the market. And we would never have done it without our incremental sales tracker. Implement your IST today to become a true master of your dealership and its spend!
So the question is, ‘Are you master of your domain?’ Are you using an IST? Please share your experience or let me know if you have any questions in the comments below.
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About the Author
|Jason Jewert is approaching 20 years of technical, customer service, retail automotive, and consulting experience. Prior to joining CDK Global four years ago Jason started his career writing CRM software for real estate agents and leading the technical team of a website hosting, dial up, and point to multi-point wireless business services company. Jason eventually found himself in the retail automotive space where he held sales, F&I, training, and sales management positions. With a passion to help the masses Jason now consults with dealers nationally to help them grow their variable and fixed operations. You can reach Jason directly at email@example.com.|