Targeted Direct Mail Still Effective, Prospect Vision Reports
January 14, 2015
HICKORY, N.C. — Old-fashioned postal mail, when used strategically, still packs a punch, according to a recent study by Prospect Vision, a provider of direct mail solutions. In fact, mail is delivering much stronger results than other marketing channels.
The study showed that each targeted direct mail marketing campaign delivered, on average, 13 incremental sales at a cost of just $112 per vehicle sold. This is almost 80% less than NADA’s current $616 estimate of the amount dealers typically spend advertising each car they sell.
“Most of a dealership’s marketing spend goes to attracting new customers, while the potential incremental profits sitting in their databases are often overlooked,” said Allen Levenson, vice president of sales and marketing for Prospect Vision. “This study shows that one of the oldest, tried-and-true marketing methods in the book — the humble direct mail piece — leads the way when it comes to ROI and retaining current customers.”
In addition to the incremental sales, dealers also saw an increased gross profit per car sold to these customers; on average the gross profit was $422 more than that of a first-time customer sale.
And because equity marketing nearly always results in a customer trading their one-owner vehicle back to the dealership, trade-ins generated from targeted direct mail campaigns are highly profitable and sell through faster than typical pre-owned vehicles: 64% of trades sell within 30 days of being on the lot vs. 37% for non-repeat sale trades.
“Because the direct mail pieces accurately tell customers the value of their car and impress upon them that there’s a high need for their current vehicle and, when applicable, a great incentive to ‘buy now,’ customers are very receptive to the offer,” said New York-based Honda dealership Friendly Honda’s General Sales Manager Michael Glynn. Glynn reports, on average, that Friendly sells 23 cars per targeted direct mail campaign at a $54 cost per vehicle sold.
Today’s “big data” opportunities deliver a wealth of data on each customer that can be turned into actionable marketing information to drive them back to the dealership. The biggest opportunity here is the low-hanging fruit of customers who are currently ‘in equity’ in their vehicle. Using complex data mining processes to create targeted direct mail with personalized messages about the customer’s current vehicle and equity position, reaped significant, measurable results for all 200 dealerships, regardless of make, model or territory, officials said.