FF Marketing clients

Car Dealer Ad Budgets that MAKE THE MOST MONEY.

Struggling to maximize your budget? When I say maximize, I mean make more money hit your WALLET. Unsure how to measure success? I can help!

Who I am and why you should care?

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I’ve worked with over 50 auto dealers, moving over $3.5 Billion in sales over seven years. One dealer last year went from $300k profit to $1.8 Million. 

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I’ve created and managed budgets for over 50 auto dealerships across the country, moving over $3.5 Billion in units over a seven year period. From this experience, I have documented what’s worked – and what hasn’t. The result: guidelines for dealerships struggling to maximize their budget. One of our dealers went from $300k profit (2018) to $1.8 Million (2019) in 12 months. 

Screen Shot: Spend smarter, get better leads that close at nearly 20%

A Typical Budgeting Process 

For most dealerships, there are three or four categories for accounting purposes: new, used, service, and parts/body. Within those categories, marketing spends can be allocated. But the question really is: are dealerships spending marketing dollars, based on a feeling that it’s a good decision, or is their real analysis behind that decision? 

I talk to a lot of dealerships who potentially need our agency’s help. During these conversations, we go over the budget line by line. Why are you spending your money on this, why is it that amount, and how is that doing for you? How did you measure that? 

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80% of our dealers have 40% of their budget based on “a feeling” that it’s a good decision.

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More than 80% of these dealers have at least 40% of their budget attributed to the fact that they have, “a feeling” it’s a good decision! It’s not because they can’t do better, it’s because they have done it this way for so long and are reluctant to change. It’s a ton of work to change into a new model, but it’s happening all around the country.

I hear: “But our dealership is different, our market is different, our customer is different”. The truth is, the process is the same in every market. And the consumer is not significantly different market to market. 

There IS A Better Way – Strategic and Tactical Working Together

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When Tactical KPIs match up with Strategic KPIs – PROFITS!

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When I first come in contact with a dealer and get into their budget, I rarely find the dealer creating their budget based on “purchase intent”. Instead, I see them creating it based on tactical needs instead of setting up Strategic KPIs (Key Performance Indicators) enforced by Tactical KPIs. When you have tactical KPI’s matching up to your strategic KPIs you will have success, and it’s not a maybe, it’s a guarantee. If you map these out clearly you either hit your KPI’s or you don’t. Did you hit your tactical KPI’s but your strategic KPIs were not achieved? You have the wrong tactical KPI’s. Change the tactical KPI’s and test again. You can absolutely do this and it will work! It is more work but it is the best way. 

Budget Creation and Management The Right Way

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Look to outcomes, know your audience, don’t do it because someone else is

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Want to get insanely high value out of your budget? Here’s how: 

  1. Write down the ideal outcome with the money you want to spend, breaking that down into “buckets” of money for each category
  2. Qualify what those small audiences care about. Know your audience and their pain points + their objections. Market to them. 

Believe it or not, most dealerships don’t do this. Different marketing channels push you  to spend money with them, on different mediums. 

You know the drill – maybe you’ve even said this yourself: “My competition is beating me. If they’re doing it, I should be too.” “I saw it at Digital Dealer or NADA.” 

Analyze the Data to Improve Your Process

There are a certain number of car buyers in your market, they are interested in a certain type of vehicle, and they want to shop a certain way. This third party data is available and you also have your own data in which, if you organize it, yields some amazing direction for you. 

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

When I say valuable, I don’t mean the cars with the highest grosses, but instead the ones that move fastest and for what profit. A car selling for $3000 gross after 60 days is worth a lot less than a car moving in 14 days at $2000 gross. Your data + market data will tell you what cars to sell, you just have to look. 

Example: You’d think the F-150 is the money maker, but it’s not. It makes $55.41 of gross per day on the lot. Focus makes $85.46 and F-250 makes a whopping $110.92. 

Okay, back to the methodology. What vehicles do they sell, why did they sell them, how much money did they make, and what vehicles do they need to avoid. Again, it’s not that a dealership can’t do this themselves, but referencing what I mentioned above, it’s actually sticking to the plan/process that shows up as the largest obstacle. 

Embrace your customers “buying moments” 

There are five different stages in which people shop, also called “buying moments”. 

  1. Which Car is Best?
  2. Is it Right for Me?
  3. Can I Afford It?
  4. Am I getting a Deal?
  5. Where Should I Buy?

As a tier three franchise or used/pre-owned dealer, you DO NOT need your messaging at all these stages, and quite frankly, it’s a waste for you to try and do all of these stages well. The factories and major corporations will take care of stages 1 and 2 even if you’re a stand-alone used-car lot. Don’t spend any time on 1 and 2. 

** Digital conversions for Tier 3 Dealerships in stages 1 and 2 average under 5% of all dealership conversions. 

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Only 15% of dealerships are targeting in-market buyers. This should be the focus for your budget and your messaging

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Alright now we know the bottom three are most important, and these are people that are truly IN MARKET especially in stages 4 and 5. How crazy would it be if you heard that only 15% of dealerships are targeting in-market buyers. This is where you need to focus your budget and MORE IMPORTANTLY your messaging.

Messaging tip: Show them why they can afford it and how. Show them what a great deal looks like and people getting those great deals. Give them that reason to BUY FROM YOU. 

Notice how I didn’t mention different vendors and how “This vendor” or “That vendor” was common amongst the most successful dealers? It’s because there was not a common thread. There was no correlation between certain vendors and our most successful dealers. Using the money correctly and with the right message was what worked… Oh, and a great sales team. 

Sales Team

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A great sales team will ALWAYS beat great advertising! But…

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I’ve seen incredibly effective spending and poor sales numbers more times than I’d like to mention, but that’s always the biggest factor when it comes to dominating a market. A great sales team will ALWAYS beat great advertising. Put them both together and you get the ultimate high powered machine. I’ll be writing a comprehensive sales and lead nurturing article in the coming weeks so be on the lookout for that!

In Closing… Keep these things in mind, and you’ll find success

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  1. Create messaging that appeals to your target audience and distributing that message for the least amount of money possible. Please understand that messaging has it’s own framework that needs to be followed for you to get maximum success.
  2. Set up the right KPIs and keep up with them. (No easy task, especially in an industry that normally hires employees based on how much they can produce.)
  3. The majority of marketing staff whether internal or hired help are often considered an expense. But, if you set up the system correctly, they’re a revenue-generating machine!
I hope this article was of value to you. If you have questions or you’d like to continue the conversation, please hit me up on Social Media @stephenjurgella or email me. You can also send a passenger pigeon because that would just be incredible. Out!

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