Dealing with the Big ‘R’ — Recession doesn’t have to be what it’s feared to be

by : Jim Richter
From: Dealer Fixed Operations Magazine April 2008

A recession is kind of like the common cold; it’s a natural phenomenon, it happens every so often, it’s usually not life threatening, and if you’ve taken reasonable precautions it usually is just an inconvenience. Those who don’t take care of themselves can get pretty sick, but the ones who are in good health to begin with usually ride it out with a minimum of pain and suffering.

Get past the fear!
A recession is a normally occurring correction in our economic cycles. We’d all like to think that our market will continue to climb forever, but that’s not the way things work. When the economy is too good to be true it slows itself down until it levels out and gets ready for the next charge forward again. Dealers who have not prepared for this get hurt; those that have will simply have a downturn for a short time period. If the core profit centers of your fixed operations are sound and fixed absorption is high, then the worst scenario will be fewer profits coming from the variable-based profit centers. Many of my clients have learned this lesson from previous cycles and are better prepared for this one. Others with short memories, who focused their efforts on the quick money from sales are not prepared, and will end up suffering losses again as a result.

Putting basics in place
The first thing to do, if you haven’t already, is to get your parts house in order. Service and collision both feed from your inventory and the more you are counting on them to provide needed revenue, the more important the levels of service from parts become.

Clean up obsolescence: Remember your parts inventory is all net working capital. At a time when cash becomes a critical factor make sure it’s all usable. Factory based opportunities must be utilized effectively. This means sending back everything you can and applying purchase discounts to scrapping rather than gross profit, which saves tax payments. You’re only kidding yourself if you hang onto this stuff; junk today does not turn into gold tomorrow, it’s only Fools Gold at best.
Control the backflow of unsold service special orders and police returns from wholesale accounts and your collision center. Review your special order policies and procedures. I often find that these are not being enforced or have never been communicated to new employees. Don’t assume that they are working, Check it out! Contact me if you need to know how to do this.
Review the DMS settings for stocking levels. Many manufacturers have changed their terms and conditions since the last recession and many managers have not adjusted accordingly. If you’re on multiple weekly orders, or better yet a daily stock order, be sure that you are not stocking more pieces than you need. If they have it and you can replace what you sold today tomorrow, how many do you really need to stock? Frequently it’s only one.
Cut down on sheetmetal, especially if you can replace it quickly and reliably. This kind of “comfort stock” can tie up a lot of cash.
Make sure that you are aggressively developing a broad selection of valid stocking numbers through proper use of the lost sales function. Every job that gets finished today is one less special order, and you get paid today, not days or weeks later. It also reduces unapplied time in the shop and reduces work in process, all of which impacts your retained profits.

Review marketing strategies
Recessionary markets become very competitive. Just like the big box retailers are now experiencing, customers are looking for more cost effective ways to get what they need. Price becomes more of an issue than it had been before.

Review your matrix formulae and price levels. If the revenue levels are dropping and the gross profit percent is still high, you may be pushing business to competitors. Shop yourself on specific parts that are down in sales to see if you are still competitive. When that’s done, adjust your DMS price settings to bring yourselves back in line with the market. Revenue flow is the critical issue now and it’s OK to give up some margin to pick up increased dollars. When the economy comes back you can readjust it then.
Update your maintenance menus. The dollar has been taking a dive recently and most importers have been adjusting their prices accordingly. The market shopping exercise you did should also lead you to where you need to re-price parts used for scheduled maintenance. Once this is done get it to service so they can do their update and get competitive prices in effect in the service drive.
Get more aggressive in communicating with your customers, especially the wholesale ones. Just like your prices, the aftermarket has gone up substantially too. Much of what they stock has offshore origins so their prices have gone up as well.

Get ready for the ride
Once you’ve got your basics in place you have to watch the business flow very closely and adjust accordingly. If you have the basics in place, then you should be able to ride out the storm. It’s very much like the person who takes vitamins and extra precautions during the flu season; hopefully he or she won’t get sick, but if they do it’s usually a lot less serious for them than the ones who are not prepared. Get going now!

http://www.dfo-magazine.com/index.asp?article=1897

The Power Of “Thank You”

As our society speeds along ever faster and communication is channeled through one technology or another – all this powered by the internet and instant access to the totality of man’s accumulated knowledge, of course – common courtesies seem to be falling by the way side. So much so, that even a simple “thank you” is often hard to come by these days.

And that breakdown creates an opportunity for the savvy marketer. And it’s a simple one to deliver on. Whenever a customer or prospect stops in, whether it be for a test drive, to make a purchase, get their oil changed or just to say hello… say thank you. Follow up with a quick note, email or phone call. All are fine and they let your customer or prospect know their time and attention are valued. It’s simple to do and it’s simply good business.

So remember to say “thank you.” Do it for of the goodness of your heart, for your respect for your fellow man and for your bottom line.

Thank you.

D. Jones
Marketing Strategist/Creative Consultant
SmackDabble, LLC

Your Dealership.com

By David Kain
Ward’s Dealer Business, Apr 1, 2008 12:00 PM

You likely shop or research online with the expectation that the websites you visit will have the information you seek.

When the sites you select don’t have the information, you probably click on another and keep clicking until you find something that meets your needs.

Consider yourself a focus group of one and apply what you learn in your own experience to what you would want if you were visiting your own dealership online.

While you are reading this article, go to your own website and click along with me. Try some simple tasks and put yourself in a “customer mode.”

Look for a new or used car in your inventory.
Look for specials on vehicles, service or accessories.
Look for your phone number and address and see if it is easy to see.

Hopefully, you were able to complete these tasks with no problems. If not, do something about it and contact your website builder the same as you would a tradesperson to fix a leaky roof or a heater in your physical facility.

Now, try some advanced tasks:

Schedule a service appointment.
Order a part or an accessory.
Look for how you submit a credit application.
Look for the dealership team photos or individual contact information.
Look for a personal description on the used vehicle of your choice (more than the basic specs).

If you think like your customers, you likely have limited time to do tasks of this nature. Most people lack the patience to read and learn at a website. So they click and move on.

Compare your site to simple sites like Google.com where you are instantly acclimated to what they want you to do – search.

Compare Google.com to Yahoo.com and see the difference. One is a utility (Google) whereas the other is a destination (Yahoo). Your site is more similar to Yahoo but should have the clear and easy navigation like Google.

When you design or redesign your site, think of it just like you would your physical dealership.

Make it clear where everything is located and provide the signage (navigation links) to assist your customers in finding what they need right away.

I visit so many dealerships and used to think signage was not necessary because, after growing up at a dealership, it seemed pretty simple.

However, I really appreciate it now when I see a sign that says customer parking or service or parts and know the dealership customers appreciate it too.

Put yourself in a customer state of mind and see if you can navigate your website quick and easy. And if not, do something about it. The easier you make it, the more likely your prospects will contact you to complete the next steps.

We are always asked to mystery shop dealerships and provide feedback on how the Internet or business development team responds to our inquiries and then suggest ways for improvement.

You should do this yourself from time to time both online and offline. Online is easy. Create a fake email account and submit a request for sales, service, parts, etc. and see what happens.

Offline may sound silly, but I recommend telling your team you are going to be a customer this week and walk in and try to talk to someone about what you saw online.

Ask your manager and sales people about the vehicle you saw on the website and see how they respond. Hopefully, they will not say, “Let me get our Internet specialist to help you.” You would not want them to say, “Let me get my newspaper specialist” if they said they saw an ad in the paper.

Now that the Internet has become the primary tool of most automotive shoppers, your entire team must become acclimated to the dealership online.

http://wardsdealer.com/interneteletter/auto_dealershipcom/

Reuse. Recycle.

I’ve always thought that as bandwidth expanded and became less of a hindrance to online multimedia (I don’t know anyone that’s still on dial up!), we’d see a lot of crossover and repurposing between traditional media (television, radio, newspaper, direct mail) and new media (internet, email, mobile, etc.). But to a great degree, that crossover has yet to materialize.

The question, of course, is this: What are you waiting for?

Why are your radio spots and television spots not featured on your website? Why are the coupons and offers available in the newspaper not downloadable from your website? How much information about your inventory can I get via my cell phone? Why do your sales people still not have email addresses (honestly, it happens)?

All these things are possible. More importantly, they’re smart business. Not only does it help to integrate your overall marketing mix, but repurposing content from one platform to another costs next to nothing. The TV spot is already created, the offer is already on the table and the art is done, etc. So get it out there already. With so many customers going online, you can’t afford not to put your best in front of them each and every time.

D. Jones
Marketing Strategist/Creative Consultant
SmackDabble, LLC

Maximize PPC campaign returns

Published: April 14, 2008 in iMedia Connection

Has your PPC campaign maxed out in terms of ROI? Not to fear — you can continue to boost returns by following these suggestions.

As I trawled through my daily fix of industry emails yesterday, I was amused to see two articles in the same newsletter that, on face value, told significantly conflicting stories.

The first covered a MarketingSherpa survey under a doom and gloom headline announcing that 60 percent of large companies are cutting marketing budgets this year; the second covered the IAB’s latest UK ad spend survey that proudly reported that continuing growth in online ad spend will result in the internet overtaking TV as the biggest ad channel in Britain by the end of 2009.

Of course in reality both pieces were ostensibly saying the same thing, and it is nothing new: Online should weather the economic downturn better than traditional advertising channels. The reality will remain to be seen, but what is certain is that for some search engine marketers this perception presents something of a conundrum.

To the uninitiated, PPC presents the Holy Grail of marketing — a totally accountable, scalable and measurable ad channel. Accountable and measurable it certainly is, but 100 percent scalable it certainly is not.

Every PPC campaign will, at some point, reach a saturation point where the optimal keyword mix has been reached and where adding new terms actually starts to negatively impact CPA targets. Exactly where this saturation point is differs from campaign to campaign, and that’s where the science of PPC planning and buying comes in.

For search engine marketers, the question is what you do when you’ve reached that saturation point but are getting pressure to deliver more results from your boss or clients.

The answer is, first and foremost, to work on ad and landing page optimization. Any successful PPC campaign depends on constantly testing and retesting different ad copy and landing pages. This is arguably even more important in times of shaky economic conditions. Remember, as the economy changes, so too will the ways in which people think about making purchases, particularly for luxury or high ticket price items. Plan and optimize accordingly.

Secondly, consider integration. A number of surveys have revealed that integrating display with search can result in at times significant uplifts in clickthrough rates and conversions. Ensure you take a close look at campaign metrics immediately after any offline or online branding campaign has been pulled. Did the change have any impact on your conversions? Cross-media analytics, whilst more complicated to run, can help increase campaign effectiveness in the long run.

It is also important to remember that integration is equally applicable when it comes to traditional media. Running a TV campaign, for example, without a supporting PPC campaign may cause you to miss significant opportunities and not make the most of your media spend. This is particularly important today as Wi-Fi penetration continues to increase — your potential customers are more likely than ever to be searching for your brand or ad slogan online directly after seeing a TV spot.

Another area to consider is exploring other PPC networks to see if you can find more quality traffic to complement your existing campaigns. Adding new networks to your media schedule can offer incremental reach to your PPC campaigns, but be mindful of the trade-off between the time you invest in campaign management and the results you actually achieve.

As a rule of thumb, if you are working with smaller networks, it is worth choosing only those that have the in-house capability to handle much of the legwork for you in terms of campaign set-up and management.

Reaching saturation point in your PPC campaigns can happen regardless of what sector you operate in and regardless of the state of the economy. How you deal with the issue is what will give you the edge over your competition.

http://www.imediaconnection.com/content/19006.asp

Make Those Opt-Ins Count

So you’ve been collecting emails for months or even years now. You’ve got hundreds or maybe even thousands of people who have raised their hands and agreed to listen to what you have to say.

So what are you doing with that list? If you’re just sending them a quarterly newsletter and a Christmas card, you’re probably not making the most of it. Here are a few things you might consider:

1. Ask for referrals. Heck, offer a bonus (free oil changes for a year or something similar) if they bring in a friend or family member who buys a car from you.
2. Don’t always send to the whole group. Segment the list and hit them with timely, targeted offers.
3. Invite them to special events at the dealership or get them tickets to an event (minor league baseball game, comedy club or the like).
4. They’re special, treat them as such by offering to unveil new models to them first. Give them first dibs on that hot new sports car that you can’t keep in stock.

In short, making being on your list worth their time and attention. Otherwise, you risk being deleted along with the other stuff we all wished we hadn’t signed for.

D. Jones
Marketing Strategist/Creative Consultant
SmackDabble, LLC

Text-Only or HTML: Email’s Million-Dollar Question

It’s one of the most commonly debated issues in e-marketing: Should the emails you send out be text-only or should they be HTML? The argument for text-only goes like this… It feels less like advertising, it’s better at getting around spam filters, the most important emails people get are usually text-only. The argument for HTML is this… The message feels more “polished,” I can include graphics, animations and other high-impact items, and I’m able to carry my brand into the message.

So which should you use?

The answer, as you might expect, is both. Anytime you’re sending a person-to-person message, it should be text-only. This applies to sales and service staff following up with customers and other such one-to-one communications. But when that message is coming from the dealership (rather than an individual) HTML is the way to go. It will do a better job of carrying your brand and carries a more put-together, dynamic message.

D. Jones
Marketing Strategist/Creative Consultant
SmackDabble, LLC

Study: Auto Market Among Top Online Sales Categories

From Auto Remarketing
April 08, 2008

SCOTTSDALE, Ariz. – Despite widespread retail declines across the American economy, a recent study projects an upswing in online shopping for 2008. This includes the auto industry, which analysts predict to be among the top three Internet sales categories.

The State of Retailing Online, a Shop.org study conducted by Forrester Research, anticipates that online retail sales will increase by 17 percent this year to $204 billion.

The auto industry is expected to account for $19.3 billion of those sales, which would make it the third-largest online segment behind apparel ($26.6 billion) and computers ($23.9 billion), the report highlighted.

“From higher shipping costs to changes in consumer shopping habits, online retailers are not immune to the current economic climate,” said Scott Silverman, executive director of Shop.org.

“But the fact that online sales will increase substantially this year demonstrates the resilience of the channel and is a testament to the value and convenience most customers find when shopping online,” Silverman continued.

The study pointed out that as people become more comfortable with the Internet, online retailers must choose between two sales focuses: retaining current customers or attracting new ones.

According to officials, 53 percent of online retailers’ marketing budgets is devoted to finding new online customers, while 21 percent is for customer retention.

But, many retailers have used search-engine or affiliate marketing as effective retention tools that not only market to existing customers, but bring in new shoppers, as well.

“What’s spearheading online retail sales growth is a tale of two shoppers that visit the Web for very different reasons,” explained Sucharita Mulpuru, Forrester Research principal analyst and lead author of the report. “The casual shopper goes online to look for the best price, leveraging the transparency of the Internet to save money.”

“However, more affluent customers appreciate the convenience of shopping online and are not necessarily looking for the best deal,” Mulpuru continued. “Retailers would be wise to recognize there are significant opportunities within both audiences and should market to them accordingly.”

In order to find new customers, retailers have used search-engine marketing more than anything else. According to the study, 35 percent of sales have originated from that source.

Moreover, 90 percent of respondents stated they use pay-per-performance search placement. Seventy-nine percent plan to make it a greater priority in the coming year, officials stated.

Still, such offline strategies as catalogs and direct-mail have helped retailers convert shoppers to the Internet. What’s more, the study indicated that retailers tend to use those tactics more than TV or newspaper advertising.

According to the study, 65 percent of respondents said they would focus more on social networking resources, while 55 percent indicated they would devote more focus to widgets.

These type of campaigns, however, are thought to be more useful in brand-building versus driving revenue or sales conversion, officials indicated.

Instead, officials stated, the report recommended that e-mail marketing and free shipping promotions be used to boost sales.

http://www.autoremarketing.com/ar/news/story.html?id=7681#

Best Practice: Tracking E-Marketing

One of the great promises of e-marketing is that it’s trackable. You’ve been told for years that e-marketing would lift the fog of accountability from your marketing mix and show you what worked, when it worked and even why. Well all of that is true (mostly), but most folks aren’t taking the simple steps needed to make that dream a reality.

So here’s what you do: Incorporate a series of simple landing pages in to each marketing touch you send out. Require people go to a web page to register or collect their prize or whatever. Then don’t just set up one landing page, but a different one for each marketing message (the pages may look and function the same, but you’ll need unique pages). By tracking hits, downloads and forms submitted from these pages, you’ll have a near-perfect understanding of which messages are driving customer action and which aren’t. And that, my friend, is measurable marketing done in a simple, straightforward way.

D. Jones
Marketing Strategist/Creative Consultant
SmackDabble, LLC

Now’s Not The Time To Slow Down

According to a recent J.D. Power and Associates forecast, new-vehicle sales in 2008 are expected to reach their lowest levels since 1994, dropping to 14.95 million cars and light trucks. This obviously isn’t good news for our industry, and your first instinct may be to cut back on spending (including marketing and advertising), ride out the rough times and wait for sunnier weather. But if you do that, you’d be missing a huge opportunity.

First things first… if you’re experiencing a slow-down in sales, the last thing you’ll want to do is to cut back on the only thing that can drive sales – namely advertising and marketing.

Second, slowdowns like this are an opportunity for the marketing savvy among us to capture market and mind share so that when things rebound, as they most certainly will, you’re in the driver’s seat.

One way to accomplish this is to ramp up your traditional media spending during this lull. Chances are you’ll even probably see some favorable media rates. But an even more effective way to capture the market and mind share you desire is to employ a number of digital marketing techniques. Such tactics as video emails, email marketing allow you to expand your reach at a cost per contact far lower than traditional media efforts. Here are a few things you might consider:

1. Expand your base of opt-in customers – those loyal customers who agree to receive emails and other electronic communications from you.
2. Use multimedia and email tools to expand the reach of your television and radio campaigns to your online audience.
3. Expand the functionality of your web site to better capture leads and drive them toward closed sales.
4. Use online coupons and other offers to create an incentive to act now.

These and other digital tactics, combined with a traditional media schedule, will position you well when the market turns around. Everyone else will cut back… and you’ll use this slow down to steal their customers and their market share.

D. Jones
Marketing Strategist/Creative Consultant
SmackDabble, LLC