By Geoff Williams

Attracting car buyers has never been more difficult, or more important. This dynamic has placed an increased emphasis on marketing, as dealers try to achieve higher returns on
shrinking budgets.

Regardless of the economic climate, the key to marketing cars remains constant. As Kevin Gallagher, who owns Utah Auto Sales in Lindon, Utah, says, “I call it the BSD factor. You have to give your customers Benefits, you have to have a little bit of Sizzle, and you have to be Different. If you don’t have the BSD factor, you’re not going to attract people.”

Marketing strategies don’t have to be all three things at once, but they better have at least one of these attributes. Some examples:

Look after your current customers

According to OneCommand.com, a marketing firm for auto dealerships, 89 percent of buyers will never return to your parking lot—not even for maintenance. Of those remaining 11 percent, 72 percent will eventually repurchase a car from that same dealership. The message: stay in touch. Whether the economy is up or down, failure to market to your existing customers is a mistake.

Be a resource

To your own customers, absolutely, but even to the general public, if possible. Eight years ago, Gallagher started publishing “The Used Car Buying Guide,” a 30-page magazine with articles and information about beating depreciation. He has printed 10,000 copies over the years, occasionally modifying the text, and he has built relationships with credit unions around the state, offering educational seminars on the premises to the institution’s customers.

Consider newer ways to get out your message

Six months ago, Mike Sage, owner of University City Nissan in Los Angeles, gravitated to Gumiyo, a specialist in automotive mobile marketing. Gumiyo, whose prices ranges from zero to approximately $150 to $200 per month, places a dealership’s inventory, vehicle photos and condition reports on mobile phone screens. Photos on a mobile phone aren’t for every dealership. “If we were another company, aimed at Generation X and Y, I would say that would be a focus that we would need to concentrate on,” says Paul Nogrady, new car sales manager at Porsche of The Main Line in Newtown Square, Penn.

Partner with organizations to attract new customers

Dan Quirk is the owner of eight dealerships in Massachusetts and recently set up a partnership with a nonprofit called Moore Center Services, which helps people with developmental disabilities. Quirk paid for a 1950s-style diner to be built on the premises of his Quirk Chevrolet Buick dealership. Moore Center Services staffs the eatery and keeps the profits.

Remember your community

Gallagher’s dealership has an annual complimentary barbecue that feeds approximately 1,500 people. It’s always a success because he joins forces with a local parade, which has a built-in crowd that is grateful for the food. “People need some benefit when they’re going to do business with you,” says Gallagher. “You’ve got to change with the times and give people something that they want or need.”

As guerrilla marketing guru Orvel Ray Wilson once said, “Customers buy for their reasons, not yours.”

Of course, that’s how it has always been, which should be comforting. The times and technology may be frequently changing, but the actual marketing in many ways doesn’t. “History repeats itself,” says Nogrady of Porsche of the Mainline in Newtown Sq., Pa. “When it comes to marketing a car dealership, you often have to stick to the tried-and-true to bring in customers. It’s how you handle those tried-and-true events, and where you’re spending your money in general — that’s what’s important.”

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by Victoria Fierson

Boy, that Prius looks nice. You are standing in your local Toyota dealership looking over a dark blue model, practically salivating at the thought of going 571 miles between tank refills. “Sorry, sir, that’s the last one we have,” the dealer says. “And it’s already sold.”

What a dealer does next is equal parts art, sales and math. In today’s market, keeping customers when their preferred fuel-efficient model has sold out is as critical as ever. There are only so many car sales to go around.

Consider the methodology of Brady Henderson, financial director for Pederson Toyota located in Fort Collins Colo. “The real question is, do you drive enough to make up the difference in pricing on the more expensive model?” asks Henderson. “Hybrid models are more fuel efficient when driving short distances within cities and towns. On the highway the car switches from electric to fuel emission. Whether or not it is a more cost efficient alternative mainly depends on the type of driver.”

It works — sometimes.

“Our job is to educate and guide the customer,” Henderson says. “There are many instances where a customer is misinformed about the true savings they will receive from hybrids. But if people want a Prius when they walk into a dealership, they are usually willing to wait for it.”

Tony DePaula, president of DePaula Chevrolet in Albany, N.Y., says the dealer should discuss the economics of a proposed purchase with any consumer leaning heavily toward a hybrid.

“When people are asking about alternative-fuel vehicles, give them an opportunity to do the math, DePaula says. “Often people think they are saving a lot more money than they really are. Customers need to assess what the true return is on their investment. This is based on the amount of miles they drive and the length of period they will have the car. Whether or not a hybrid will be more efficient and cost-efficient is based on a case-by-case basis.”

Take the Prius and the Corolla. There is about a $6,000 difference between the two, says Tim Curley, finance manager at Glens Falls Toyota in New York. For a customer who drives more on highways, the Corolla gets 36 miles per gallon, where the Prius gets 45 to 50. “While there is only an eight-miles- per-gallon difference, the amount of money a consumer will save on gas may not make up the $6,000 price difference,” Curley says.

Curley says initially people often decide to switch to a more fuel efficient vehicle out of panic. What the consumers don’t realize is that “it may take longer than the length of the lease to make up for the cost of the vehicle in relation to the amount of money saved on fuel,” he says.

That’s fine for consumers who buy based on price. What about the consumers who seek out the often-sold-out hybrid models for other reasons, what one dealer called “emotional” reasons? This is a tough situation for a dealer.

“It is a dealer’s responsibility to present all of the options to the customer to find the car that best suits them,” says Louise Miconi, financial manager of Hyannis Toyota in Hyannis, Mass. “Vehicles are an emotional purchase. People have their minds set on something, even when they are told other options are better. Especially when it comes to the hybrids, they are more concerned about being kind to the environment.”

For some nameplates, alternatives to hybrids are selling well, even in today’s credit-challenged economic environment. For example, non-hybrid Hondas are still strong sellers, such as regular Civics, Accords and CRVs. “They get really good gas mileage to begin with,” says Greg Conner, financial director of Prime Honda in Newton Corner, Mass. “Anyone who wants the hybrid version is interested in being environmentally conscious and is not as interested in fuel economy.”

It’s hard to talk someone out of that.

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by Mary Wisniewski

Imagine running a car promotion before telling employees about the deal. Sounds silly, but this marketing blunder has actually happened.

Several years ago, marketing consultants Gravitational Marketing worked with a dealer to create a radio promotion. The very first morning it aired, the station contacted the marketers. Their listeners were confused after calling the dealership: Its employees were unaware of such a deal. “This is a classic mistake where the dealer fails to communicate what the program is this month,” Travis Miller, co-creator of Gravitational Marketing and co-author of Gravitational Marketing: The Science of Attracting Customers, says. With the incredible amount of marketing initiatives a dealer deploys, a few are bound to go Amelia Bedelia wrong; however, most are preventable.

The number one mistake dealers make is taking the same marketing approach as everyone else and expecting great results. Same is lame, says Miller. Frank Myers Auto Maxx is one Gravitational Marketing client striving to break out of the “same” marketing tactics. “Everyone does the same things,” Tracy Myers, owner, says. “Everything they are selling is a commodity. When selling a commodity, it is very limiting to what you can offer the customer.” The Winston-Salem, N.C.-based dealership strives to create stronger relationships as a way to step out of the abyss of dealers nationwide. Take its movie nights. People come to the dealership to eat popcorn and watch family films on a widescreen television. For another relationship-building tactic, Myers patrols social networking sites, spending 1.5 to 2 hours on the Web daily. Part of knowing what works well is also knowing what does not work at all. In the past, outside companies have led to poor results for Frank Myers.

“No one knows your business like you do. Outside companies can have the greatest and latest things, but maybe it won’t fit into your culture and won’t work,” Myers says. When Myers has hired outside companies for direct mailing needs, the outsiders have failed 95 percent of the time, even when it was a good piece, he says. “We don’t have a franchise. We are an independent dealership. The family name is our brand. If we use a generic direct mail piece and don’t personalize it with our culture and our consumer, it won’t work,” says Myers. Outsiders are not the only marketing obstacle dealers face. Industry insiders say the biggest marketing blunder dealers make is holding onto the past.

What worked best for the past three years does not mean it will work for the next three years, says Brion Stapp, dealer principal at Stapp Interstate Toyota – Scion. To keep on top of the changing marketing climate, the Coloradobased dealership, for one, hosts quarterly reviews to ascertain where to spend marketing dollars. Television and Internet are the top two best marketing mediums for Stapp Interstate. Most dealers, however, have not developed or concentrated time on Internet strategies.

“Most dealers are behind the times,” says Jason Mattia, chief financial officer and founding partner at automotive Internet consulting company AutoEngage, Inc. The ex-auto dealer says most dealers realize an auto online presence is critical but still view it as a secondary part of their business.

Gilbert Chavez, president of Carzeus Consulting, LLC, shares Mattia’s sentiments.

“[Dealers] don’t know what to do,” Chavez says. “They aren’t embracing technology or Internet strategies. They aren’t embracing [them] because they are panicking. They are going to something that worked for them in the past.” Chavez cites a dealer who recently tried to “dominate” cable as one such misguided marketing endeavor. “You wouldn’t be in the car business without a healthy ego,” Chavez says. “It’s great that you are aggressive in marketing in a down economy; however, if he dominates cable, he thinks he can dominate the market.”

Chavez encourages Internet marketing strategies, instead. This is because a dealer would know if he or she hits its target, for one. “With online marketing, it’s a laser. It’s a bullet,” says
Chavez.

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by Marcie Belles

For years, dealerships sought “outgoing and friendly individuals, with excellent communication skills and thorough knowledge of various cars and car options” to sell vehicles. These days, with vehicle sales on the skids, dealership sales and finance managers need the know-how of a credit counselor, and the creativity of a consultant, combined with a dash of realism.

Hourlong decisions about moonroofs or premium wheels are largely gone; now car buyers focus on new versus used — or whether to buy a car at all. So F&I managers are spending more time explaining down-payment requirements and the inner workings of credit scores. They have to find alternatives to leases and extended-terms. Some have even stopped selling certain insurance products.

“Most people are used to buying cars with no money down,” said DJ Dancer, finance manager at Jack Diamond Lincoln Mercury, in Longview, Texas. “Those days are over. Without $1,500 to $2,000, a deal is hard to get done.” Some lenders might require down payments as high as $4,000 or $5,000, he added. Credit scores and interest rates are another sticking point for finance managers. That’s where the credit counseling comes into play. “We have to explain the banking system more than before, especially credit scores,” said Jimmy Guerra, finance manager at Fiesta Auto Center. “We tell [customers], ‘If it’s low, you’re going to have a higher interest rate until you refinance. After six [on-time] payments, you can get a better interest rate.’”

In some cases, a new car at a 0 percent interest rate costs less than a one- or two-year-old used car. But, still, finance managers are tasked with convincing customers to take that step — one that some find too daunting. “With the standard rate on used, the monthly payment could be $40 less on new,” said Jon Lind, vice president and general manager at Burlington Ford Lincoln Mercury Inc. “But we have lots of guys who don’t want to step into a new one, so they continue driving their [current] car.” That’s a dynamic that has been addressed somewhat by the federal government’s Cash for Clunkers program.

Another obstacle for dealership F&I managers are lenders’ more restrictive financing options. For Tim Dunlap, finance manager at Hare Chevrolet, in one of the most difficult changes to the sales pitch has been the near-elimination of leasing as a financing option. “We’ve lost our captive for leasing,” he said. “You used to be able to get a new Tahoe for $350 or $400 a month. Half our new cars were leased.” Now the Noblesville, Ind., dealership relies solely on US Bank for leasing.

Harbor Chrysler Jeep Dodge, meanwhile, has stopped selling credit life and disability insurance. “It takes care of the confrontation,” said Finance Manager Dave Dutcher. “We tell customers, ‘Go to your insurance company.’” The Michigan City dealership limits its insurance offerings to GAP and warranty coverage. Harbor Chrysler, too, has instructed dealership personnel to quote loan terms only as high as 72 months, because some lenders have shied away from longer terms like 84 months. “We don’t let our salesman go there,” Dutcher said. “We try to work them into a shorter term. In some cases, though, the customer says, ‘I’ll buy this car for $300 a month — I don’t care how many lifetimes it takes.’ In that case, the sales manager has to get involved and say, ‘You’re looking at the wrong car.’”

In recent months, Mike Anderson Auto Group General Sales Manager Terry Osborn has also had to bring offer customers doses of reality. “We try to give the customer what they want” in terms of vehicle selection, he said. “On occasion, we have to show them other options. Sometimes it involves dragging them to a vehicle and saying, ‘Here’s what you can have.’”

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by Victoria Fierson

Fluctuating market conditions have made it difficult for dealers to determine the best marketing strategies. Some are aggressively marketing their brands in an effort to boost sales, while others are taking a more conservative approach and scaling back.

For the upcoming year however, more creative marketing strategies may be a way for dealers to offset their losses. Kurt O’Donnell, general manager, Herb Chambers Saab located in Boston, Mass., says difficult economic times are a great opportunity to promote customer-driven products. His dealership is currently offering customers who purchase 2008 or 2009 Saab models a pair of skis that retail for more than $1,000.

“Promotional products are a great idea, but it’s important that dealers use products that are easily traceable.” — Will Brown, Fidelis Marketing Inc.

“In tough times it is always beneficial to use a vehicle-tovehicle strategy,” says O’Donnell. “That means anything that gives customers added incentive, like buying a car and getting free skis, is usually very successful.”

O’Donnell says effective marketing strategies are tailored to a specific region. “In the Northeast, skiing is very popular,” he says. “This was something I thought customers would really respond to. Just for agreeing to go on a test drive we give customers two free lift tickets.”

Solomon Ski Company approached Saab dealerships around the New England area with the promotional idea. Most of the dealers opted to participate and fund the ski promotion. “Dealers have “co-op” dollars, which are funds allocated for brand marketing,” says O’Donnell. “The manufacturer matches how much of our co-op money we give and we felt this would be a great promotion to offer.”

O’Donnell says in his opinion, promotional products are the most effective way to boost sales. He also started doing a radio spot in December. “During the holiday season people spend a lot of time in their cars so it’s a great time to market, but you need good bait,” he says. For 2009 he anticipates his marketing efforts will be geared towards gas assistance or lower interest rates.

“It really depends on the market conditions, but I think our focus will be on finding a leasing program,” says O’Donnell. “GMAC doesn’t offer leasing programs, so we’ll be looking for a bank that does.”

Dealers are likely to only fund marketing strategies that they feel produce the best results, according to Clarke Hammond, HR Director and Trainer, The Bass Group, an automotive marketing group based in Waco, Texas.

“We’ve been seeing dealers both scaling back and doing everything possible to sell cars,” says Hammond. “It’s really a question of are you going to live out of faith or fear?” Some dealers haven’t changed their marketing at all. For Rick McGill, general manager, Foss Toyota located in Casper, Wy., his dealership’s marketing strategies are winding down because of the season, not the economy.

“We’re offering the Toyota-thon now, which is the same thing we have been doing for the last 10 years,” says McGill. “Toyota is cut and dry; they come up with a marketing strategy and stick to it, but dealers can do individual marketing if they want to.” McGill says during December his marketing efforts usually slow down because people are spending money on gifts, not cars. “We’re doing the same thing we have always done,” he says. “There is no need to scale back any further; business hasn’t dropped off that much.”

For aggressive dealers now is a great opportunity to capture market share according to Will Brown, development director, Fidelis Marketing Inc., an automotive marketing company based in Folsom, Calif.

Brown says scale-backs and aggressive marketing even each other out. “Promotional products are a great idea, but it’s important that dealers use products that are easily traceable,” he says. “You want to know what exactly is working and what’s not.”

Brown says marketing strategies for 2009 should focus on avenues that will allow dealers to trace their marketing successes. “Direct marketing strategies that focus on dealer-specific brands and vehicles lines will be important in the upcoming year,” he says.

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By Elizabeth Kephart Reisinger

While people may have listened in the old days when E.F. Hutton spoke, in today’s marketing environment, customers are more likely to take their advice from friends and neighbors instead of strangers.

The proliferation of information and marketing mediums has made the old standby advertising of radio spots and the occasional television commercial as likely to attract customers as going door-to-door. Dealers and marketing experts agree: to be noticed in a crowded market, the same old marketing tactics just won’t do.

KNOW YOUR CUSTOMERS
Getting people in the door is clearly an important component of the marketing challenge. Dealers then must find out who’s coming in the door and why.

While most dealers ask the customer detailed questions about car-buying history, they rarely ask how many other drivers are in the household and what those people are driving,says Scott Toland, president and an instructor at The Marketing Academy, a company that has been working with auto dealerships on marketing strategies since 1983. Toland cites the 80/20 rule, noting that 80% of a dealership’s business will come from referrals and repeat clients; only 20% of potential customers are responding to advertisements. Therefore, a dealership’s customers are important spokespeople.

LOOK OUTSIDE THE BOX
Stephen Burks takes a similar approach reaching out to his customers, buyers of luxury and exotic vehicles. Burks, marketing director of Springfield, Mo.-based Motorcars International, has found that experiential events – such as hosted events with yacht dealers and investment bankers – work well for his high-end clientele. Most dealers would do better by partnering with institutions such as financial advisory firms.

To get innovative ideas, he often looks beyond the car market.

“I may go out and grab a high-end magazine, such as Modern Luxury, and see what they’ve done for events,” says Burks. “By studying the other parallel markets and their methods, I can develop some opportunity off of that.”

Ray Davis, chief executive of Umpqua Bank in the Pacific Northwest, has said on numerous occasions that he looks at  top players in other industries — not to other banks — for ideas on improving his company: Umpqua has won wide acclaim for its approach to customer service and marketing. Some Umpqua Bank branches, for example, are considered community centers in their neighborhoods, hosting knitting classes and book clubs as a means of improving the bank’s position in its footprint.

SPEND MONEY TO MAKE MONEY
Walser Auto Group’s advertising message is tied to its sales philosophy: The sales staff is not paid on commission and the sales floor is a negotiation-free, hassle-free environment. The 52-year-old company with 10 dealerships in the Minneapolis metropolitan area centers its marketing on one slogan: “The Walser Way.”

“We’re more interested in telling people what it’s like to buy from us,” says Paul Walser, the company’s owner and chief
executive. His media strategy, which excludes television ads, focuses on 60-second radio spots, targeted print ads, and
occasional billboards. “We don’t have a big visual story; it’s an audio story.”

The strategy has worked, although Walser admits that the dealership group plans to step up its advertising in the coming months. “We did a survey several months ago and we were disappointed with what consumers knew about our way of doing business,” Walser says. “We plan to get back into a more aggressive posture.”

Getting through to consumers is harder than ever. The dealerships attracting the most business today understand this
new paradigm and are constantly seeking to move beyond the traditional radio and TV advertisements. Being more aggressive, regardless of the marketing method, is most important.

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