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Dealerships Conquering 21st Century Marketing Challenges | DrivingSales News

Dealerships Conquering 21st Century Marketing Challenges

August 18, 2015 0 Comments

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It used to be “marketing” was done by the dealership’s ad agency or in some large groups by creative types in a room down the hall. They turned out newspaper advertisements and TV commercials and came up with exciting events to draw consumers into the dealership.

That doesn’t describe the marketing function any longer for many of America’s progressive dealerships. It doesn’t because the marketing function and the talents required by those responsible are changing rapidly. It means dealers are bringing marketing’s responsibility in-house to better direct, drive and measure its effectiveness in the new, digitally driven automotive retail environment.

A most timely article on this topic appearing recently in Forbes.com is poignantly on point: “Marketers are looking well beyond their traditional advertising agency base for expertise to drive marketing performance and handle exploding technology, data, digital migration, channel fragmentation, and a more diverse, multi-cultural consumer base.”

Dealers who have cut ties with traditional advertising methodologies say results can be eye opening. When Germain Auto Group dropped newspaper advertising and pulled marketing and its brand messaging in house, its cost of vehicle sold dropped dramatically.

“When we made these changes in 2008, our June year-to-date advertising spend for the group versus June this year shows $599 cost per car sold or 13.46 percent of gross profit versus $227 or 5.5 percent this year,” noted John Malishenko, COO for Germain. He is responsible for marketing and branding vision, investments and execution across the group’s 15 stores.

In general, the marketing function remains responsible for driving sales leads – from traditional media, including TV and radio and billboards – and increasingly from mobile, text, video, email and the telephone. Moreover, dealers who can are giving the function more horsepower, making it a key in-house function for driving brand message consistency across all marketing channels and platforms.

Some dealers say marketing’s success depends on everyone working for the dealership succeeding as brand and engagement ambassador.

“I mean, whose job is marketing? It’s everyone’s in the dealership,” Malishenko said.

Bryan Feely, e-commerce and digital marketing manager for Audi Boulder, agreed. “Marketing starts at the top and involves creating and conveying a very specific image we want to portray to consumers.” The dealership is part of Kuni Automotive, which operates 16 dealerships in four Western states.

“I have been fortunate to work with two general managers here who are acutely aware of the importance of marketing, so I have been able to push harder than I might otherwise. My job is to sort out the ideas,” said Feely, who was graduated with a Bachelor of Science in Business Administration from the University of Oregon. He worked previously as the e-commerce director at Kuni BMW in Beaverton, Oregon, after running an independent, digital marketing firm.

Malishenko and Feely agreed that this second decade of the 21st century requires dealerships to embrace digital in all its variations. This includes not only the well-traveled alphabet soup of SEO, SEM, and PPC, but also mobile, text, and video– including service scheduling, trade appraisal, and finance and lease rate apps on the dealer website –­ to drive business into the showroom and hang onto it.

“Digital content is the new branding,” Malishenko said, who took over Germain’s operations in 2008 after working as a GM for several of its stores for seven years following a 10-year stint with Lexus and Toyota corporate. “The key to marketing is not what you say or do so much as can you deliver your brand promise consistently, across every phone up, text message, video, website content and in-store experience?”

Malishenko earned a bachelor’s degree in Marketing from Ferris State University. At Toyota he was regional merchandising manager and at Lexus national sales manager. In those roles he worked direct with advertising associations and multiple agencies, at both National (Tier 1) and Regional (Tier 2) levels.

Not Your Father’s Marketing

The term marketing is rather nebulous, as it can cover a wide spectrum of business activities designed to support selling efforts. The function is often lumped into sales, advertising, or events, which it certainly includes. Germain and Kuni also realize marketing’s broader (perhaps holistic) necessity: “The activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large,” as The American Marketing Association defines it.

As such, they say outsourcing marketing to an agency and making that agency responsible for multiple dealerships or auto-related clients didn’t seem to work out for them.

“I never really understood the ad agency relationship,” Malishenko said. “Once I took on operations here I was frustrated with our agency’s inability to really ‘get’ our business. In response, we hired our own creative person and took control of branding. We wanted people working here on our marketing who are in this environment daily, who understood our brand and culture and can execute their similarities and unique aspects across all of our stores.”

Marketing, they implied, especially its branding mission, had to be more than the right logo and tagline.

“It is the experience consumers have with us that determines where they’ll buy, which is what branding is about – delivering an online reputation that converts to in-store retention,” Malishenko said. “That means we have to hire people who understand that consumers want speed and convenience and to read about others who bought here and report a similar shopping experience.”

Feely agreed. “We realize the need to deliver a brand experience that retailers like Nordstrom do, a brand that screams great service and really works to create an awesome customer experience.”

When Germain dropped its newspaper budget, $200,000 a month dropped to its bottom line. Feely described a lead strategy that doesn’t focus on buying traffic, but instead on taking control of the message and brand image. “As such, we convert at a much higher rate from many competitors because we are very specific about what our image is and what our experience is going to be like,” he said.

If the industry’s adaption of the Internet has been slow relative to the rest of the world, Malishenko agreed, and the move to mobile is grueling. “It has taken longer for the Internet to bring about the change we thought it might. The move to mobile is hard. Fortunately, I work for an organization open to everything and attached to nothing. There are no sacred cows here we won’t shoot.

“After we eliminated newspaper advertising our budget went down to 5 percent of gross from 10 percent, lowered our selling expense by half, and yet our net profit is up 24 percent this year to 4 percent in a business having had 2.2 percent net margins over the last three years,” Malishenko reported. “We get there by focusing on efficiency, retention and the customer experience.”

Marketing Fixed Ops

Long a stepchild in the car business, fixed ops is beginning to get the respect many say is overdue. Digital marketers like Malishenko and Feely want to bring digital evolution there as they have to the front ends of their business, but recognize unique challenges.

“For us,” said Audi Boulder’s Feely, “The challenge is to marry the level of experience I keep talking about and the nuisance of the experience of finding a vendor or vendors who can handle that, and we have not found a solution to that.

“We know there’s tremendous opportunity to bring digital advantages to customers using our fixed operations, but at the end of the day the solution is difficult. The front end solution is much simpler when you consider that for fixed ops a seamless engagement technology needs to consider shop capacity, availability, parts, and more,” Feely said. “Getting a vehicle serviced isn’t as yet like ordering a book from Amazon where everything needed to get that done is accomplished from one click.”

He explained today dealership websites treat customers as service customers or parts customers, each function often identified by a separate webpage tab and content page. This requires customers to work too hard, Feely said.

“The shift I see gets away from that and instead begins to understand the customer is simply our customer, so we try to deliver all a customer might want from service in one place, including apps for sourcing their service records or reserving a loaner. There are enough vendors doing pieces of all the service function as bolt-ons. I’m not sure of the answer; perhaps we need to listen to the customers or look over their shoulders to see how they’d like to engage with our services online,” Feely said. Germain has approached the need head on.

“We developed an app for our service customers enabling them to book an appointment with us in two clicks from their phone, and we can push service reminders, recall notices, discounts and other engagement content to them. They value this app; it’s something they use again and again, and its use is making our backend a more seamless service for them,” Malishenko said.

Audi Boulder is making service more seamless for its customers too, though perhaps in a less upfront technical way: It is focusing on delivering improved phone call and text message handling to eliminate if possible missed or dropped service appointment contacts. “The goal is for the first person the caller reaches to have the right answers to any questions,” Feely said. The dealership offers online service scheduling, but Feely says too few appointments come through that channel now.

As Always, Training the Right People

These marketers – as well as other dealer operators I’ve spoken with in the last few months – tell a compelling story for hiring a different sort of individual for 21st marketing challenges.

“The new model here is for our managers to create sustainable change and growth. We have to hire people who fit the new digital model, attracting them from nonautomotive businesses and then put in place for them clearly defined processes and definitions. Only that way will everyone know what is expected of them. Then we train and train until they can deliver those processes consistently with quality,” Malishenko said.

“Key to marketing is not what you say or do, but can you deliver it consistently,” he added. “A customer is going to pick up and phone us and we hope our branding meets their expectations. In other words, when they engage with us they’re thinking either, ‘Oh, that’s what I expected’ – or it is not. Every call, every lead, and every text matters. Because so many people are involved in delivering this expectation it is a challenge to get everyone trained properly. One part of this job is to help our managers and people figure out how to do that.

About the Author:

The DrivingSales News team is dedicated to breaking the relevant and the tough stories affecting car dealers. Have questions for DrivingSales News? Reach the team at news@drivingsales.com.

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