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As many of you know, several automakers have rolled out incentive programs that pay dealers escalating bonuses as you sell more of a specific model. This has been a selling tactic that has been used for many years. Instead of advertising rebates to the consumer, the manufacturers incent the dealers with these stair-step programs with the hopes of lifting sales.
If you read the Automotive News article that was published on May 21st, you know that dealers are split on the topic of stair-step programs. Some dealers know how to work the system, having a plan to execute once these programs are released. But many dealers say stair-step programs wreak havoc on their markets. Dealers pushing for their sales bogeys in the final days of a program often slash prices well below their cost in hopes of a large volume-based bonus at the end.
If you work for a dealership that just sits back and waits for customers to walk in the door throughout the month, you probably don't like these programs. Personally, I love stair-step programs because I always felt like I had a plan to execute on them. Our group would utilize many of our existing marketing tools like Cars.com new car specials, Autotrader.com spotlight ads, our email marketing ability, social networking, paid search, and retargeting ads to drive specific car buyers into our lead engines.
In fact, while I was on the dealership operations side of the fence, we built a solution that would proactively segment customers based on specific models (i.e. Honda Accord) and drive them into our showrooms. This solution ultimately morphed into HookLogic’s Lead to Show tool. Hundreds of dealers use Lead to Show every day to segment customers that submit leads on those cars that are a part of the stair-step program and incent those customers to visit your showroom floor. We would turn this on as soon as we would receive the announcement so that we would get a head start on our competition. Driving more customers into the showroom would give our salespeople more “at-bats” on the cars that we needed to move, hence allowing us to sell more and hitting the bonus levels earlier in the month so we weren’t battling with our competition while they were in panic mode during the last week of month.
When you see these types of Manufacturer Programs, don’t take the same path as many of your competitors. Heck, don’t follow the same ritual that your dealership has in past. Come up with a multi-faceted plan and execute on it. Use tools that will help you differentiate yourself from your competition and you will come out on top, with higher market share and a lower cost per sale...oh yeah, and more profit from the stair-step bonuses.