Do-It-Yourself Direct Mail Yields Big Payoff
By Mark Martincic
Programs for producing successful campaigns reside in your dealer management system
Right now, your customers are being told about the best place to have service work done, but who is doing the promoting, you or your competitors?
If it is not you, then other retailers, mass merchandisers, tire stores, exhaust specialists and independent shops are taking away your business. And once you lose service customers you may never get them back.
Retailers who actively promote their business with a regular, consistent direct mail effort can yield profitable results-often remarkably profitable results. To realize these kinds of results for your dealership, all you need do is exploit the direct mail applications residing in your dealer management system.
For evidence, ask Doug Breuker, general manager of Highland Chrysler, Grand Rapids, Mich., who uses the in-house direct mail features in his dealer management system (DMS) to generate an 11 percent response rate.
Or ask Mark Vandersteeg, Administrative Service Manager for Kool Chevrolet, Grand Rapids, Mich. He has grown his dealership's oil change business to 12,000 changes a year by leveraging the customer targeting and mailer template features that are part of his dealership's DMS.
Direct mail can be simple or elaborate. Programs range from simple postcard service reminders and customized mail-merge letters to glossy flyers. Many professional firms can provide direct mail creative and fulfillment services, for a fee - or you can leverage the customer data and mailing package templates that already exist in most vendors' dealer management systems.
Many of these systems can generate follow-up lists based on dealer-determined criteria and customize mailers announcing advertised specials, manufacturer campaigns or thank-you letters-then create these campaigns on convenient letter or card formats using templates available within the DMS.
Whichever approach you choose, the secret to success is to have a targeted list of prospects to send the mailing to-and a commitment on your end to follow through with all opportunities the mailing program may generate.
Promote more as vehicle quality goes up
Few dispute the need for and benefits of promoting service. However, when you ask retailers and service managers about their efforts to pull customers and prospects into the business, too often techniques most cited are "word of mouth" or "reputation" or "we sell additional service with warranty work."
Certainly word of mouth is important, but by itself, reputation is rarely good enough to withstand the promotional barrage from competitors. And warranty work won't be able to support service much longer. After all, vehicles come off the assembly line with the best overall quality in the industry's history-and the manufacturers' push for even higher quality continues. As a result, warranty claims are down as much as 40 percent, depending on nameplate, over the past few years.
If the manufacturer's goal is to reduce warranty volume, the service department's goal must be to increase customer-paid work. Direct mail is especially effective for building service work but too many retailers shy away from it. They either don't know how to do it-or cringe at the fees they hear quoted from direct mail specialty houses.
New Customers-at Your Fingertips
Yet these same retailers are stunned to discover that all the tools they need to create and produce an effective direct mail promotion are literally at their fingertips.
Highland Chrysler's Breuker started using direct mail in 1986. "The learning curve for direct mail is very short," he said. "We were doing one mailing each month and getting a 3 to 5 percent response, which is very good. Then we added a second mailing for customers who didn't respond to the first one. Our response jumped to 11 percent, which is excellent."
At Kool Chevrolet, Vandersteeg began using in-house direct mail five years ago to build the department's oil change business, which averaged about 500 changes a year as part of normal customer vehicle maintenance service.
"Then we started using direct mail to promote oil changes and the first year we saw our oil change business jump to more than four thousand changes," said Vandersteeg, who noted that the growth increased steadily, until the service department is now servicing 12,000 oil changes a year.
"We now do twice the number of changes in a month that we used to do in a year before we started direct mail promotions and reminders. We've profited not only from the increase in oil service, but from finding more service opportunities once the car is in the shop," Vandersteeg said.
In-house mailing ABCs
Vandersteeg said he saves money by doing his mailings in-house. "There is another dealer across town who uses an outside agency for direct mail. Our costs are about one-fourth to one-third of his costs-and we get better results," he said. Using an in-house system allows dealers to target mailings to customers who would be most receptive to the specific promotion. After determining what service work will be promoted, the shop management program scans the entire dealer customer base to determine which vehicle owners fit the criteria. Promotional letters offering the special service pricing are then prepared only for the customers who fit the particular promotion profile.
The flexibility of targeting is virtually unlimited. Using the customer vehicle history information in the DMS, a retailer can target customers due for an oil change, those with vehicles due for a major service, anyone the dealership hasn't seen in six months, and other factors. Such precision targeting helps position direct mail as information, not promotion, in the minds of recipients. When they receive such targeted mailings, vehicle owners feel you're talking specifically to them and their particular vehicle needs, not just everyone in a "Dear Customer" salutation from a large generic mailing list.
The effect of precise message targeting is impressive. One service manager reports that his direct mail work cuts down on his need to sell service. "With direct mail targeted to my customers' specific situation, they're pre-sold when they come into my service department, waving the card and asking for the work to be done." Although most dealerships use monthly mailings, Mike Coker, service manager for Coleman Family Dealerships, a multi-line General Motors and DaimlerChrysler in Canton, Ill., uses daily mailings to make the process more manageable for his staff. "Four zip codes cover my market area," said Coker. "I've broken my mailings down so that the first day, all the Buick Park Avenue owners in one zip code get a mailing, the next day all the LaSabre owners in the same zip code get a mailing. After Buick, I go to Pontiac owners in the same zip code, and I just keep working through the list by model and zip code. "We mail 80 to 115 pieces each day, which is easier on the administrative staff than trying sending out 2000 pieces once a month. Now, the mailings are just part of their daily routine. And it balances out work in the service department ... you don't get a big surge of work after one big mailing," Coker said. With Coker's program, every customer gets a mailing four times a year.
In-house direct mail programs can be an effective, affordable means to increase service sales. All you need is a workable direct mail plan, the mail piece templates and customer and vehicle data that reside in your DMS-and your commitment to succeed. Where internal staff resources to fulfill mailings are an issue, affordable outside secretarial or mailing services that fold, stuff and take promotions to the post office can help you get projects done, out the door and into your market where your in-house mailers will start returning profits for you.
Mark Martincic is General Manager for ASC Retail Consulting, an ADP company. ASC helps automobile retailers improve profitability and owner loyalty through service merchandising consulting, training and support, as well as other programs that concentrate on helping dealerships improve performance throughout their organizations. mmartincic@dealeronline.com
