From street level, it may look like being an auto dealer is a cushy seat on the gravy train, which it may eventually be for some, but it is harder to make money that way than you might think.
First, it takes very deep pockets to set up a showroom, hire employees, pay the overhead and purchase an inventory. Then you have to layout a fortune on advertising in TV, radio, print, mail or online promotion. A new dealer will try to use a good mix, cover the bases until discovering what works best for the firm. That’s not always easy to determine.
Then there’s the fact dealers seldom make a profit selling a car – by they time they’ve paid for it, stored and kept it shiny for a couple of months, the retail price is a net loss. They make their money from financing and service.
Talking with Beau Smith about a year ago, he said the main thing today is transparency. “They come in better informed than you,” he said. “They’ve done their homework and know what they should pay for the car and what features and options should be included.”
Smith made the brilliant move of buying a luxury showroom in Broomfield, CO, just as the recession began. It is still known as Sill-Terhar Motors and he is still at the helm.
They have web-connected phones and netbooks and they are probably chatting with another dealer while they are talking to you. According to Smith, people would prefer to deal with someone close by – it makes it handy when they need to return for service. He even said you don’t have to have the best price around, as long as the customer doesn’t think you’re trying to take advantage of them.
So getting a customer into the showroom is the first task – connecting with them on a personal level is the next.
Future Flow Media comes into the mix with a group of filtered prospects fitting the dealer’s optimal customer qualifications that are likely to be in the market for a new vehicle. The kind of data many online sites collect and sell to third parties like Free Flow Media.
What the company refers to as a “high-integrity database” is filtered by numerous levels of demographic, psychographic, and vehicle ownership data points for over 30 million permission-based subscribers, probably gathered by auto shopping sites.
This allows a dealer to choose recipients on cues reflecting their likelihood to be interested in their brands, plus aspects such as gender, age, income range, net worth, credit rating, marital status, number of children, car-related interests or hobbies, car shopping history online along with other products and many other characteristics.
Dealers can take inventory of past sales and produce a profile of their most likely buyers and then use that information to zero in on specific audiences with targeted offers, bringing viable visitors to their website.
Future Flow Media provides the name and postal address of the people getting each email ad campaign. Comparing the list to their sales records, they can tell how well their offers and targeting are working – how much bang they get out of every buck.
There is an old advertising saying that goes, “I know that half of our advertising budget is wasted, but I don’t know which half.” That is doubly true for auto dealers.
“This new sales record match-back service provides the hard data that dealerships need to make advertising decisions that yield the greatest impact on their sales results,” said Chris O’Neill, Principal Consultant at Future Flow Media.
At least as far as this firms services are concerned it does, but it doesn’t help them evaluate their other marketing efforts.
This is not meant to belittle what they have done. Having worked with periodicals for many years, proving advertising works is one of the hardest things in the known universe. It is much easier to prove not advertising doesn’t work.