How’s Your Vital Signs?
When you visit a doctor’s office, after they get your name and your co-payment, you’re typically ushered into one exam room. A few minutes later (hopefully it’s only a few minutes), a nurse comes in and gets some basic information. She checks your pulse, temperature, blood pressure, and asks if there have been any changes in medications recently.
This assessment of your vital signs tells your doctor if there is any problem that needs immediate attention. Sometimes, even subtle changes can be indicative of something that needs further examination. Hopefully, early detection prevents anything more serious from developing.
Is it time for you to check the vital signs of your dealership? When was the last time you took a good, hard constructive look at what’s happening and make some changes to prevent more serious conditions from developing?
Many times, the most obvious vital sign that shows a problem is declining number of sold units. Lately, this is probably becoming more epidemic in dealerships than we would all like, and unfortunately, there’s no vaccine that can prevent it in a down economy. A side effect of this can be a decline in the average gross profit per sale, as dealerships look to move more units, at any cost, in a n effort to cut inventories. Manufacturers may throw incentives and rebates on slow moving units, like a vitamin shot, to help dealers feel better, for a short period of time. But, as well all know, a vitamin has little effect if only taken once,
Dealer that thrive and survive in down times know how to adapt to a changing market. They’re proactive on their approach to tough times. Many dealers reduce advertising expenditures and look for “cheaper” sources to invest their advertising dollars. Others eliminate advertising all together, figuring the same they sell the same number of units whether they advertise or not.
In tough times, when dollars are short, spending money haphazardly is not something any of us want to do. We look at each purchase we make to insure we get the most for our money. Marketing efforts for dealerships are not different.
Recently, I met with a client who wanted to know how many customers had come into his dealership as a result of the direct mail we were doing for him. His concern was that, for the money he was spending, he didn’t feel he was getting enough “bodies walking through the door”. When I asked him how many of the customers that had responded to our mailing his dealership had sold and how much profit he had made on these sales, he said he didn’t know, but that was not as important to him as knowing how many customers had actually come in.
The response rate in his dealership was one of the highest we had seen, yet the return on investment was something this dealership did not know. Isn’t that the most vital sign of any marketing campaign? Knowing not only how much it cost, but how much profit a marketing campaign produces, how many units and at what average gross profit each produces is the most vital statistic available. It shows the “health” of your marketing efforts, and indicates where limited dollars can be best spent to produce maximum profits. After all, anyone can sell you cheap leads, but as we all heard, “You get what you pay for!”
Look carefully at what you’re spending your marketing dollars on these days. Check the “vital signs” of each marketing sources you use, and determine which ones a providing long term “healthy” benefits to your dealership, and which ones may be “snake oil” promising quick relief, but no real growth for your dealership. To grow business these days, it going to take more than a quick fix; it’s going to take a careful analysis of what can produce the ongoing results we all want, more sales and more profits!
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