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Sales in Charge of Marketing Loses Money--So Why is it that Way at Your Dealership?

If your dealership still has sales in charge of the marketing department, you’re absolutely losing money via sales—because sales departments do NOT understand the modern marketing function.  In the old days, sales managers worked the newspaper ads a couple of times a week and made commercials—sometimes of themselves!—for TV and radio, and did some direct mail pieces.  Marketing was just a means to an end.  Nowadays, we’ve grown up, and today’s marketing runs the gamut from newspapers, to direct mail, to email blasts, to websites, to SEO/SEM, to social networking—and beyond.  And if your marketing department still works for the sales department, your sales will suffer because that arrangement allows sales management to choke marketing in order to make sales’ financials look better on gross per copy.  And it allows sales to spend money unwisely in random efforts to generate sales.  You know that and more is exactly what happens today!

And you can no longer afford that.  As a friend of mine puts it, “Just because it’s a dealership doesn’t mean it can’t be run like a business.”  Our market has evolved around us, and we’ve grown regionally (and sometimes nationally), but we still treat marketing like we are small local businesses in the 1950’s.  For example, many dealerships have never “budgeted” for the print buys they are still making—they never had budgets, really, the spending just grew as the bill for the perceived results grew.  No other modern businesses of our size and market still operate like that, and we must stop!  We need modern marketing plans with a budget for modern vehicle marketing tools in order to drive sales, and not bovinely react (like always before) to some mid-month sales slump with an ad hoc and often-poorly-defined marketing effort tossed up last minute.

I know that the sales department will resist losing control of marketing, in no small part because that means they can’t steal from marketing to offset gross sales depressions or be able to randomly “try something!” during a slow month.  And I also know that nobody in the car business likes losing control of anything once they have it—we’re just that type of people!  However, if we take the time to hire and organize marketing people separate from sales, people that know how to perform and oversee modern marketing, we will see our sales improve.  Perhaps drastically, but most certainly positively.

And that’s the point of being a real business:  That you both act on, and react properly to, your market.  For example, you need to advertise more in a tightening market, not less.  However, how many of you let (and some want!) the sales staff cut back on marketing costs when sales slump?  Think about what that really means:  Fewer buyers will be hearing about you, but you saved money??  NO.  Your sales numbers will look improved per copy, and you won’t sell as many copies.  What kind of business does that?  Not a winning business.  Not anymore.

Many fantastic marketing tools and methods are out there today, and there are many people and vendors who can help you perform well using them.  However, if you haven’t decoupled marketing from sales to really take real advantage of all that, you’re losing money.   And you will continue to do so until you change.

And then one day, if you don’t change, your strongest competitor will finally show you how it’s done:   They will set up a modern marketing department separate from their sales, out-market you, and steal the sales you need to stay in business.  So, why not beat them to it?

The only regret you’ll ever have is the sales you lost before you made the move.

By Keith Shetterly, keithshetterly@gmail.com
Copyright 2009, 2011, All Rights Reserved.

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Comment by Paul N. Long on February 21, 2011 at 12:34pm

Well put, Keith.  One thing I will point out -- a Loyalty Marketing Initiative is one of the only marketing initiatives that you can actually build a P&L for.  Since Loyalty Marketing initiatives are 100% trackable, we're able to build an ROI for our customers.  Of course, that depends on the dealership making a plan and embracing loyalty as a brand initiative.

Our best dealerships see as high as a $17 return on investment, meaning they get back $17 for every dollar they invest in their loyalty initiatives.  Many of our dealerships realize a 4% increase in customer loyalty.  This can equate to over 25% increase in profitability.


Just as dealerships can no longer afford to put sales in charge of marketing, dealerships can't afford NOT to focus on loyalty marketing.

Comment by Keith Shetterly on February 21, 2011 at 8:21am

Thanks Kathy!  The "Austin Powers" movies are some of my favorites.  :)

 

And I agree with what you said 100%.  Love your "Krusin'" pic, by the way.

Comment by Kathi Kruse on February 21, 2011 at 8:05am
P.S. Love, love, love your homage to Dr. Evil.
Comment by Kathi Kruse on February 21, 2011 at 8:04am
Bravo Keith! It seems the recurring theme for dealers today is 'Embrace Change'. You pegged it right too about the hip-shooting that goes on with dealership advertising. I don't even call it marketing because that would imply that there was a discussion and a plan. Never before has there been a louder call for separate marketing people at dealerships. Social Media campaigns are only successful when the dealership engages their audience and builds relationships. Dealership salespeople, especially the 'Internet Dept', can't do that when they have to make gross and a paycheck.

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