But many dealerships aren’t exploiting these new opportunities, whether down to lack of knowledge or fear of change, and continue to rely on the more traditional methods such as mailshots. The new media revolution appears to have bypassed the motor trade. Is it actually the future of marketing or is the industry destined to continue with the old-fashioned methods of customer contact?
Interact with the internet
Research shows that more than 50% of retail buyers use websites to research a new car purchase before they even set foot in a showroom. This can be as high as 80% for prestige makes. Even so, the internet accounts for an average of just 3% of a dealer’s marketing budget.
The industry is failing to recognize the new buying patterns of the retail customer and it could be losing them money.
A survey carried out by retail marketing support specialist Portfolio Europe puts the whole issue of lost profits into context. One dealer created 192 leads in one month at the cost of £10,800.
However, 44% of the leads were generated through the internet – and that’s with only 2.9% of the budget spent (just over £300). More needs to be spent on internet marketing – a dealer’s website is its virtual showroom and should be treated as such. An effective used car locator with 75% or more vehicles with images can increase the number of email enquiries by up to eight times.
“Treat your web-based enquiries with the same vigour as you would a customer in your showroom,” says Mike Pilkington, managing director of Portfolio. “The customer has taken the time to research a vehicle, visit your website and make an enquiry. These leads should be taken seriously and followed up promptly.”
Now broadband is extensively available, features can be added to dealer websites that have not been possible before: high resolution images and more interaction. This can help a dealer maximize a vehicle’s sales potential and set its stock apart from the competition.
“The challenge for the industry is to understand how retail buyers’ habits are changing and react appropriately. The trends we have identified show that the rewards for dealer networks far outweigh the relatively small investment required to improve an internet marketing strategy. Technology is advancing at such a rate that the industry not only needs to get up to speed now but also make strong plans for the future,” adds Pilkington.
But according to some, there is still room for effective mail marketing. This can still be a cost-effective way to win new customers and encourage existing ones. “Showrooms, particularly the smaller ones, face intense competition and it can be difficult to stand out from the crowd. By using the mail effectively they can do just that,” says Tim Rivett, Royal Mail’s head of small business.
“But dealers need to look through their records to gain a better understanding of customers’ previous needs. Using this information enables you to offer products or services that you can be sure are relevant, so reassuring the customer that you are acting in their best interest.”
Individuals are more inclined to do business with companies that they have some emotional attachment to and that they can associate with. “If you are a faceless company that they know little about they will have little loyalty. Use the mail to help them understand who you are and what you stand for – newsletters are an effective way of communicating. It’s also worth considering a seasonal campaign offering your existing and prospective customers a special deal that will entice them in,” adds Rivett.
Regular data cleansing is crucial
Whatever your method of marketing, ensuring you are accurately targeting the right people is paramount. According to Experian, the automotive industry wastes more than £40m every year by using inaccurate information to mail customers and potential prospects.
“Customer databases are our dealer clients’ most valuable asset, but without regular data cleansing, they can be rendered useless and are potentially damaging to a dealer’s reputation and its relationships with its customers,” says Rob Whalley, managing director of Experian’s Automotive division.
“Regular data cleansing is crucial, not only to comply with data protection legislation but for profitable business too, helping to cut down on costs and enabling businesses to target their marketing campaigns and communications more effectively,” adds Whalley.
Utilising your existing customer base
Few dealers would argue with the importance and value of utilizing their existing customer base to drive revenues together with increasing profits, and recognize that they have a real challenge with regards to maintaining the quality of their customer data.
But once dealers have an effective data management programme, they should have the opportunity to fully exploit their customer data to the maximum, whatever the method of marketing.