Newspaper advertising is expensive and ineffective at branding your business. It is absolutely amazing how much money is wasted on newspaper ads, by car dealers who use it religiously, every week. Just open your local newspaper this Sunday and count the number of dealers engaged in price wars. Then, next Wednesday, ask the General Managers how effective the ads were. Better yet, analyze the actual sales results and review the gross profit that was generated, to get a clearer picture of the cost per lead and cost per sale. If you want to earn more profit, stop wasting money on ineffective advertising and build a marketing plan with a purpose.
Running a sound special finance department, or even a profitable buy here pay here operation, is no longer the exception in the industry where the customer has limited choices. Today, customers (even those with credit problems) have more options than ever before, and the competition for their business is only going to intensify. Any successful car dealer must learn the power of effective marketing, and build advertising campaigns that establish a brand within their market and capture share.
In order to advertise effectively, you must first understand the four “Ps” of marketing:
1. Product: the goods or services your business offers. For special finance, the products are reliable transportation, affordable financing and all the ancillary products you sell with the vehicle.
2. Price: the perceived value of the goods or services. Your inventory should be priced using the term “market value”, and ending in odd numbers other than the traditional “995” most dealers use.
3. Place: the location of your goods or services and the ease of access. It is not just the location of the dealership, albeit important, it is also how you display your inventory. Present your inventory so that it captures the attention of customers and represents your dealership well.
4. Positioning: the awareness of your brand in the mind of the public. It is how memorable your dealership is to the customers in the market to buy a vehicle.
Take a moment and think outside of the dealership. Think about other businesses. What brand name do you think of when ordering a pizza? What kind of peanut butter do you buy? Who makes the best laptop computer? What do you take for a headache?
We are all consumers, inundated with a barrage of product messages vying for brand positioning in our minds. As a competing business owner, you don’t have an effective brand unless you have a “top three recall”. This means your product or dealership is one of the top three businesses consumers’ think of in your market. When consumers think of your dealership, what comes to mind? What is their opinion? Who are the top three names within your market niche?
As entrepreneurs, we must look at marketing as a battle zone, where it is essential to cut through the haze of confusing advertising, and reach customers with a message that sticks. Dave Thomas of Wendy’s restaurant immediately gained a significant amount of national market share with a little old lady demanding to know, “Where’s the beef?”
Nike’s phrase, “Just Do It,” sticks in all our minds, telling us to get off our cans and exercise or play sports.
Many of us learned how to spell bologna from that old school Oscar Meyer commercial. And the list goes on and on. The message for thousands of products and business brands are bouncing around in our minds, fighting for the dominant spots called “positions”. We, in the car business, need to take note and learn the power of effective marketing from these Fortune 500 experts.
Too many car dealers are stuck with the age old paradigm, “low prices drive traffic”. Shouldn’t value, service, image, emotional desire and brand recognition mean just as much? If price was the leading factor in our purchasing decisions, we would all shop at the least expensive stores and only buy generic products, but we don’t. We want the best we can get for our dollar. Why else would so many people pay $5 for a cup of Starbucks coffee?
As consumers, we like freedom of choice. We want value and we want exceptional customer service. We want the sizzle that comes with the steak, the benefits of the solutions that a product offers, and we need an emotionally motivated reason to buy now. Effective advertising reaches our inner thoughts, and appeals to each of these factors, to create and increase brand awareness. It engages us in a war with our competitors, for the top position in the minds of the consumer, and it creates an emotional desire for consumers to buy our product now. Effective branding is how we highlight our competitive edge, to capture the attention of the buyer and convince them to choose us over the competition.
What is the one thing that sets your business apart from your competitors? What does your dealership do better than any other? Why should a consumer choose to buy from you? In other words, what are your competitive advantages? Whatever they may be is exactly the message you want to brand in the minds of the consumer. It’s the message that you want to sum up in a hook phrase, like “Just Do It.” This is what you want prospective buyers to remember about you and your dealership whenever they think about buying a vehicle. This is your brand.
Once you determine your brand within your market niche, the next step is simple, but requires patience. You must reinforce your message continually, through consistent advertising, which will not provide the instant financial gratification that dealers expect. Each ad should support the other, in all forms of media, to develop your brand. The deeper the brand, the easier it will be for consumers to recall your message. When people remember and think about you, more people will visit your dealership, expecting to receive the benefits from your offer. Then, it’s the job of the sales team to exceed every one of those expectations. You can then watch your sales increase exponentially.
The most powerful media for advertising your message is television. Radio ads support the same message, and remind prospective buyers about the commercial they saw last night on TV. Your print advertising does basically the same; except in a print ad, you can highlight a more detailed inventory, to prospects who are actually in the market to buy now. This is where the buyer can take their time, and learn more about you and your offerings, at their own pace and by their own choice. Each ad works together to collectively build your brand.
The problem is, television advertising is expensive (especially in large markets); but bad advertising in any media form is even more costly. If your business is located in a major market area, where television is simply too expensive for the budget, there are alternatives. Cable television is much less expensive, and in some cases, better targeted to a specific demographic than the broadcast networks.
There are also companies that purchase last-minute, bulk advertising time from the major networks at significant discounts, then resell those advertising spots to smaller businesses. The point is: Do your homework and investigate what is available in your market. It is also well worth your money to hire an advertising agency to buy the media for you. After all, they are the experts, and you will find their fees are more than covered by the savings made during the media buy.
Advertising on the Internet is a whole new frontier, but the same basic rules of marketing apply. The purpose with all advertising is simply to let people know about your business idea. You should take advantage of every possible opportunity to drive traffic to your Web site. The Internet is the interactive “Yellow Pages” of today; it’s as important as the telephone was 20 years ago.
In sharp contrast to the efforts of numerous car dealers, effective advertising on the Internet is much more complicated than simply “getting a Web site”. Your site has to be appealing and easy to navigate. It must convey the message about your business and impact the customer in a positive manner that keeps their interest. It must engage the consumer in an interactive process of information exchange. It must say what you want about your business in as few words as possible, and turn that visitor into a sales lead. However, even the best Web sites are worthless if nobody can find them.
The number one factor for advertising effectively online is to make it easy for the impatient cyber-surfer to find you. Sure, you could pay a fortune to search engines like Google or Yahoo! to put your site at the head of the class, but those of us without a Fortune 500 ad budget need to be more frugal. We need to learn about search engine optimization. We need to advertise our sites whenever and wherever we can. From park benches to blogs; even to sites like myspace.com, craigslist.com, automart.com, and so on. We need to spread the name of our Web sites.
Regardless of the size of your advertising budget, you should incorporate a marketing plan into your comprehensive business plan, and invest your money into actually building a brand. The rewards in profitability are exponential. Your marketing plan should be developed with the sole purpose of building your brand in the minds of the consumers, and capturing market share. Anything short of this is inefficient and, more often than not, a waste of hard-earned money.
Special Finance Insider Vol. 1, Issue 4