Marketing a Buy-Here, Pay-Here
By Steele Gudal
The new car business has become very sophisticated in its advertising. Detroit has figured out how to play off the consumer's desires to sell them cars, and they do it well. Many Buy-Here, Pay-Here dealers assume that since they are also in the car business, they can imitate what they see coming out of Detroit, or the television spots of their local new car dealers. However, this approach generally is not very effective. I want to use this article to explain why the marketing of the Buy-Here, Pay-Here business needs to be very different.
First, let's take a look at our customer. Our customer is not the upper-middle class suburban homeowner who wants to impress his neighbors or indulge in the biggest sport utility vehicle on the market. We have found our customers to be service or blue-collar workers with blemished or limited credit histories. They generally come from a household earning less than $35,000 per year, and they are primarily renters. They are hard working people who simply do not have a lot of discretionary income. They are not motivated by ego; they are simply looking for solutions to their problems.
Now that we know who our customer is, we need to find a message that is effective.
New car advertising is all about what the customer wants. Buy-Here, Pay-Here advertising should be all about what the customer needs. He may want a sleek, red convertible, but he needs a dependable car to get to work. He also needs it to fit within his budget. Therefore, spend less time talking about your inventory and more time talking about how you are going to help him solve his problem. When you do discuss your cars, emphasize the features that mean the most to your customer, like dependability and affordability. Don't waste your time talking about horsepower and leather seats. Buy-Here, Pay-Here advertising should also be about treating the customer with respect. Our customers know they have problems, and they don't feel that somebody screaming about low prices has the answer.
One other thing I have noticed about our customers is that they are very brand conscious. If you do not believe me, go to a NASCAR race. The drivers' racing suits and cars are covered with corporate logos, and our customers are in the stands. You can also simply go to the local mall and see who is wearing the Tommy Hilfiger gear. That is why we have spent considerable time and effort developing our own brand image, a symbol that our customers will identify with dependable cars and affordable payments delivered with respect.
Finally, you need to figure out how to reach these customers. The research we have done tells us that our customers watch twice as much television as the average American. It makes sense. Television is a cheap form of entertainment. It also is common sense that advertising on PBS might not work as well as a wrestling broadcast. Many Buy-Here, Pay-Here dealers feel that television is too expensive for this business. My response is that we have found it to be a much more effective means of reaching our customers, and in the end, a very good value. Direct mail advertising also works well since it can be targeted to geographic areas with the demographic criteria you prefer.
As a final thought, never forget that you will get what you promote. If you emphasize easy credit, you will get people that have no other credit choices; and it will likely show in the performance of your loan portfolio. And if your advertisements don't treat customers with respect, they will not show you any respect.
Steele Gudal is the President and COO of J.D. Byrider Franchising, a chain of more than 110 Buy-Here, Pay-Here dealerships operating throughout the United States and Canada. Byrider and its franchises own and service approximately $400 million in BHPH receivables. Gudal personally owns three locations in the upper Midwest with $20 million in receivables. sgudal@dealeronline.com
