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That Pesky Groupon Model Surfaces for Auto Sales . . .

Here we finally have a car dealership using Groupon for CAR DISCOUNTS (Cadillac and Groupon).  People can purchase an amount off the car later for buying a coupon for a lesser amount now.

 

I tried to get four separate dealers to try this last year. I'll get the same push-back here, perhaps, as I did from them, but this guy quoted in the article gets it:  It's not a coupon, it's ADVERTISING.

 

$199 buys you $500 off a car purchased this year.  The customer commits to buying from you by spending money NOW, and you apply this as an advertising expense.  Really, how much do most of you spend now per vehicle to get the phone to ring, leads/emails to come in, and to get walk-in traffic?

 

It's going just like pricing did:  We used to hold all the cards for brochures and price, and some of us played games in the newspaper.  Nowadays, if you're asked a price in a lead, you answer with a price (as well with calls to action and enticements, but you send a price).  THAT began when the first dealer sent a price and got business when others did not.  It will be the same here, if this works out, and I think it will.  It's just the first.

 

by Keith Shetterly, keithshetterly@gmail.com
www.keithshetterly.com
Copyright 2011, All Rights Reserved. 

Views: 99

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Comment by Keith Shetterly on July 19, 2011 at 11:36am

Groupon is advertising, not direct sales (though they could come, too).  Anyone expecting it to be other than advertising is going to continue to miss the point that the folks leading the Groupon IPO certainly get.  As advertising in this case, anyway, so far it didn't hurt a thing.  It only helped.

If a discount is offered on a common domestic brand vehicle, as is so often still placed in newspapers, radio, direct mail, and also now online, what happens to that brand cachet?  If a great truck line is offered at "starting at $21,999" with a one-only "ad car" does that reduce the brand?  If so, the brands are so low after decades of that that Groupon can't hurt.

We need to stop, in this vertical, using the same ad hoc marketing methodology that has occurred since the first dealership:  "Well, I wouldn't like that" or, as was said to me recently on another subject "I never look at reviews, so why can that be important??" . . . Marketing is not personal.  It is research, creativity, excitement, and effort with the hopefully glorious and (sometimes!) still a wrong-headed advertising campaign.  This was not wrong-headed.

 

Hats off, again, to LaFontaine for seeing what so many clearly miss.  Thanks.

Comment by David on July 19, 2011 at 11:16am
If dealerships focus on the quality of how their sales staff engages the customer on the phone they would see a much higher sales rate of conversion. Dealers will say they sold 10%+ of the inquiries that reach the dealership by email or phone. When asked why so low? or why not more? ... they have a blank stare. It's because it's always been this way and they are led to believe the numbers to be good enough. I have even heard the statement to get more sales you simply have to get more leads and visitors. They could not be more wrong.

So I tend to agree with Charles. There is a reason why consumers purchase a Rolex, Benz, Louis Vuitton apparel and other luxury items ... because of brand recognition and not everyone can afford it. If there was a discount on these brand names then those with exclusivity would no longer be interested.

My previous comments prior to the July 18th article on LaFontaine also predicted the same outcome that Groupon is not for the automotive retail sales.

I am willing to make a friendly wager (since I don't gamble) that if Groupon is successful in generating vehicle sales by reaching the expected numbers where actual vouchers are released to the consumer for a given dealership group then I will offer a FREE DMS from AutoXloo.com for ONE YEAR to any dealer nominated by the blog mediator Keith Shetterly.

Similar to professional sales staff that have strong relationships and leveraging their existing contact they are expected to make the sale, online showrooms, classified listings, websites are like your 24/7 virtual sales representative. 750000 visitors and no sales does not pay the rent.

Autoxloo.com
Comment by Keith Shetterly on July 18, 2011 at 4:32pm
It was a successful effort.  We are really right on the cusp of something similar to some folks understanding the power of "talking pictures" and those who believe in "silent cinema".  New media finds resistance and, as you rightly point out, some incorrect usage.  In this case, 100%, LaFontaine appears to have been spot on to their market.  Whatever Groupon is, it's not like they bought time that associated them with a lot of negativity for the consumers.  The negativity here, and in the article I linked to, is all so far from Car Folks.  Peer judgement is a powerful thing, but we'll all be working with talking pictures soon enough, as results in whatever direction always trump parochialism and opinion.
Comment by Charles Kim on July 18, 2011 at 3:31pm

If that exposure doesn't fit within the overall brand or marketing strategy, the answer should almost always be "no."  For example, do I really want my Cadillac franchise to be associated with what essentially is an online coupon?  Would a Mercedes dealer (or MBUSA) want to be associated with Groupon if I could somehow guarantee them 500 million views?  Of course not...it doesn't fit the brand image, and in fact that exposure would actually devalue those brands.  The question is does LaFontaine want their dealership brand or their new vehicles associated with a discount brand like Groupon?  If that is part of their brand strategy and marketing plan, go for it.  But exposure for the sake of exposure is NEVER part of any smart brand strategy.

Comment by Keith Shetterly on July 18, 2011 at 2:36pm

Here's a simple question:  If I offered to put your business' name positively in front of 750,000 people in your marketplace for $0--or even a quarter of that, or even 15%--plus include press coverage, would you turn me down?   I hope not.  Regardless, thankfully, the LaFontaine folks gave the right answer to that well before I ever posted this topic.  Here's to them! 

 

Thanks

Comment by Keith Shetterly on July 18, 2011 at 2:20pm
This is so simple, it reminds me of radio, except it cost $0.  Nobody said it was "in market" people, any more than they would say that about radio.  It's hardly a failing proposition in that way, and thankfully others get it, including the LaFontaine folks--as I've personally spoken to them.  THEY see value in it for their brand, and it was zero cost for that exposure and the load of PR.  So, hats off to LaFontaine, and also to anyone else who gets what this really was:  FREE impressions at $0/CPM.  I'll take that deal every day all day, rather than talk myself out of it.  Advertising is a bridge to customers that is worth every penny.  In this case, the ROI on zero pennies was phenomenal.  And the LaFontaine people were happy to get it, as they should be.
Comment by Todd Vowell on July 18, 2011 at 2:19pm
Mr Kim, I'm going to have to respectfully disagree with you on this one. Its not a "shiny object". Its more of a rustic "Dull" object. Besides that, your dead on...
Comment by Charles Kim on July 18, 2011 at 1:44pm
I would add that Groupon is inherently a failing proposition for a traditionally negotiable commodity (like car sales).  That said, Groupon definitely has legs for service, parts, and accessories if planned and executed properly!
Comment by Charles Kim on July 18, 2011 at 1:42pm
Does anyone believe that 750,000 people looking at this offer were honestly in the market (now or ever?) for a vehicle from La Fontaine?  If anyone does, I have a bridge over the East River of NYC I'd like to sell you.  I've lived in Detroit twice spanning almost 2 total decades, and if you didn't hear of La Fontaine, you had no pulse; so getting exposure through this Groupon campaign (which was not the primary reason for the campaign in the first place) was insignificant from a brand exposure standpoint.  In addition, any exposure they got from a national standpoint is meaningless...they aren't a national brand nor will they ever be.  That would be like Winn-Dixie marketing in California...irrelevant to both parties.  Third, Detroit is not a transient market like L.A., NYC, etc., so this exposure has minimal incremental exposure value to the dealership in that regional marketplace.  4th, these three brands are not exactly high on the Groupon demographic list to begin with.  5th, no serious marketing strategist would ever say that "any exposure is good exposure."  I can get 3,000 people to physically show up at a dealership in a single weekend for very little money...but if you don't get any significant ROI in terms of brand equity, exposure, or sales, what is the point?  Again, dealers need to focus on the fundamentals of a sound comprehensive marketing strategy across multiple mediums and execute that strategy/plan flawlessly FIRST, and then dabble in these "shiny objects" as desired.
Comment by Keith Shetterly on July 18, 2011 at 12:44pm

Not a shiny object at all, unless CPM efforts are shiny objects.  Anything that targets a 750,000 opt-in audience is great advertising.  And it was easy to do, relatively, and was great PR.  And it ended up costing the dealership ZILCH because they didn't get the 10 sales.  Any time you can possibly reach 750,000 people for 0$ . . . well, I'll never, ever button up my thinking to ignore that possibility.

 

Anyway, these advertising basics are always valuable, and I'd run this Groupon today for how easy the dealership got that audience.  It's likely Groupon will change the program IF they ever do it again.

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