Digital Dealer
By Jim Roche
Automotive dealership marketing, like every other aspect of the business, is about to undergo substantial change. The capabilities that the Internet can provide, coupled with increasing customer service expectations, is forcing automotive dealers to shift their current mass marketing techniques to a more customized "one-to-one" marketing approach.
Today's marketing techniques can be both expensive and inefficient. Newspaper ads, direct mail television and radio yield less than a one-percent response rate despite their big dollar expenses. While these methods will not be replaced in the near future, they will be augmented by new Internet marketing techniques that are becoming increasingly available.
"One-to-one" is a next-generation, powerful marketing approach that automotive dealerships can incorporate into their overall marketing plans. This approach will be a strategic differentiator for the successful automotive dealer in the new millennium. With one-to-one marketing, dealers can leverage the Internet to develop and maintain "personalized" relationships with consumers.
One-to-one continues to become increasingly competitive because of the advances in database techniques, the Internet and Call Center technology. One-to-one enables an automotive dealership to gather and receive information and feedback about its customers and combine that information with demographic data to create highly specific customer profiles. Couple this powerful customer database with delivery tools that allow unique offerings (letters, e-mails, telephone calls) and you achieve the future of dealer marketing: a repeat visit for service or new or used car sales by extending the right offer, at the right time, to the right customer.
With the advent of the Internet, dealers can more easily perform analysis on a customer database, identify a target group of customers (for example, 1996 and 1997 Taurus owners with more than 40,000 miles who have visited a dealership in the last year), design an e-mail, direct mail or teleservice promotion targeted for that specific group of consumers and subsequently deliver the promotion to target consumer within a matter of hours. By using the Internet to monitor promotion activity, dealers can also measure both the exact response rate and return on investment quickly and effectively.
Many times, it is not practical for individual dealerships to build and maintain the infrastructure that supports one-to-one marketing technologies. By outsourcing one-to-one services, dealers can leverage the combination of expensive database purification techniques and the sophisticated technology infrastructure required to facilitate strategic one-to-one marketing objectives, in a quick and cost effective manner.
Dealers will accrue many benefits by embracing one-to-one marketing. These include: increased owner loyalty resulting in vehicle repurchase, increased customer lifetime revenue through more frequent visits to the dealership and, most dramatically, the reduction of total marketing costs.
An example may provide clarification. The average dealer marketing cost per new vehicle sold in 1999 was $410. The majority of this money was invested in the usual array of television, radio, direct mail, etc. By increasing owner loyalty, we can decrease the dependency, and thereby the cost, of new customer acquisition over time. In addition, by reducing the requirement for mass marketing by transitioning to a more focused and accurate marketing method, overall costs can be reduced substantially.
Many companies have already demonstrated that one-to-one marketing can increase owner loyalty and reduce advertising costs. What could you do with the money if your dealership advertising costs were reduced by 25%? Or 50%? How would you re-invest the savings?
What can be done with the extra funds will be the subject of next month's article. Ideas or inquiries can be sent directly to my attention at jroche@ngresults.com.
Jim Roche is president of carabanga.com, a wholly owned subsidiary of Newgen Results Corporation. jroche@dealeronline.com
