7 Mistakes Car Dealers Make That Cost Them MILLIONS In Profits!

Introduction: 

This blog came from a question asked during our LIVE YouTube show in which sparked a great discussion. Watch the video, read the article or both! 

Two key objectives: Make more money and (when applicable) make the factory happy.

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You want to save money, and often look to advertising and marketing because that goes straight to your bottom line. But often, after signing up for this marketing program or that, it can take 12 months to remember that it’s not working – after paying $1200 a month for it. 

I have budgets for over 50 dealerships and the “before and afters” are incredible. In one instance, I cut $40,000 a month off of a Toyota dealer’s budget  (most of it was spent on used car listings and ads) and that year they were the #1 Certified (CPO) Toyota Dealership in Texas. All because they cut the “fat” and concentrated on what was working. 

What if you don’t know WHAT to cut? What if you don’t know what’s working? Everything you add just feels like ANOTHER thing. Or it’s something your friend at another dealership claims worked for them. Plus, your needs change, and they change often, or at least that’s what you think. The way vendors market themselves to the dealership makes you think you need that new marketing or advertising program, and you need to move quickly or lose out. In reality, the consumer doesn’t actually change that fast. You are being reactive, not proactive. 

So, the stage is set. Here are the Top Seven Mistakes that cost dealerships MILLIONS. I really mean that too. It may not be MILLIONS this year, but it will cost you MILLIONS over time. 

1. Trying to be like your competitor – it worked for them – or did it? 

    • Good artists create, great artists, steal right? Well, unfortunately for you, every moment you spend concentrating on a competitor and not on your customer costs you way more than the time spent. 
    • Before you copy someone, make sure you actually have the full picture. Make an educated decision. Is it working for them? Or is it just a lot of “noise.” More often than not, every moment you’re wasting on them is actually taking you backward. Just obsess about your customer. 

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Obsess about the people right in front of your nose – your customer. 

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At the end of the day, the only way to win is to focus on the person right in front of you – your customer.. Ask them how you can be of service. What do THEY need? Not what vehicle YOU want to sell to them. You’ll crush it!

**Bonus Tip: Ask this question to one customer a day for 90 days and then compare the 75 or so responses that you get to improve the experience at your dealership. “On a scale from 1-10, 1 being worst and 10 being perfect (and of course no one is perfect), how would you rate your experience purchasing your vehicle at our dealership? (Let’s say they answer a 9 because of course, no one is perfect) Wonderful, glad you had a great experience! What do we need to do to get that to a 9.5 the next time you come in?” 

2. Customer Trust Issues

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You are dealing with a preconceived notion of what a car dealer stands for. You can tell yourself that “we’re different” as much as you want but the stigma exists at SCALE. 

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  • From bait and switch. Are you showing them one deal and trying to sell them something else?
  • Not being truthful – while a short term tactic, it will be discovered and you will lose that potential customer. 
  • Salesperson giving a little information because of so many leads. A customer doesn’t care how many people you’re talking to, they want you to pay attention to THEM. 
  • Everyone already has issues with car dealers. You are dealing with a preconceived notion of what a car dealer stands for – mostly negative.

3. Complacent Sales and Lead Nurturing Process

    • The feeling of abundance can take the attention off of individual leads.
    • Imagine having 80 people walk up to your front door and ask to buy your car in the driveway over a month. How would you treat them each as they came up?
    • Giving the customer value instead of selling them something.
    • Treat your leads as people, not another sale. Think about how you want to be treated, and do the same for your potential customers. 

Below is a screenshot of a client’s lead nurturing correlation study.

**Bonus Tip: Check out minute 8:01 in the video above. Follow that sequence with your sales team and watch them go from selling 10 units per month to 15. I challenge you! 

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Treat your leads as people, not another sale. They are in need and you’re an expert that can provide tremendous value. Don’t sell them anything! 

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4. Selling the Wrong Units

    • The data you gather is a tool in your marketing tool kit. Use it!  
    • Know your audience and people in the area that actually want to buy, and what they want to buy. Meet their needs. 
    • Go over the cars that you sell the most in the past year. Double down on these units, while being sure to offer what the market wants. 

Here’s an example of a study we did for one of our clients to analyze what vehicles are most valuable to them.

 

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Know your audience. Meet their needs, not yours. 

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5. Casting a Wide Net with Marketing

    • The wider the net is cast, the more you dilute your brand, and the more likely you are to make mistakes. You have to become intimately familiar with, to know all the issues, to find buying sources, and to figure out how to market each brand you add to your dealership. When you add a wide variety of different makes and models in inventory, it’s harder to be a resource to customers. 
    • Make sure if you do it, do it well. Build your reputation as an expert in the brands and models you sell. 

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The wider the net you cast, the more you dilute your brand. Resist the urge. 

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6. Leaving out the community (Not genuinely caring)

    • Because community marketing doesn’t have an instant ROI it doesn’t normally get the attention. 
    • Community involvement lowers the barrier to entry. People in the community get to know you, like you, and ultimately trust you.  
    • Choose one single organization and kill it. Then add another like building blocks on a foundation. 
    • Engaging with a community organization that you are genuinely interested in and care about reflects on you and your dealership. It shows you really care about the community and your customers that live there. 
    • Do not just “throw the money” at an organization. Get out in the community and participate with organizations. Be present and be seen. Ask them what they need help with and why that need exists.

Here are examples from a great client doing community social posts.

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People in the community get to know you, like you, and ultimately trust you, lowering the barrier to entry when they inevitably move into the car buying process.

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7. Lack of team buy-in

    • Your salespeople say:How is this going to make ME more money? You want me to do more work? No way!” You need to show your salespeople this will help them and make them more successful. 
    • Having a marketing person in every major sales meeting. I promise you this will transform your sales process like magic! 

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Show your salespeople why marketing will help them and make them more successful. Show them how it works. Get them bought in! 

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I’m able to share these 7 mistakes with you because of the experience I’ve had with dealers throughout the country. Every one of these mistakes is based on real-life examples from our clients. Yes, the bottom line is incredibly important, but how you get to that bottom line can often determine how healthy it will be in the long term. 

Do these mistakes sound familiar? Are you throwing money at programs that aren’t effective? Now is the time to review what you’re doing and either improve on good programs or find better ways to market to the people who will help you succeed. 

Have comments or concerns? Hit me up. I love a good debate!

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