As auto marketers start gearing up for 2015, news from the car industry continues to be good: car sales are expected to hit 16.77 million this year, outstripping both last year’s rate and the consensus forecast. But why stop there? The improved economic environment allows for opportunities on a number of fronts, from add-ons to leasing to a diversified product range, all of which can be bolstered through highly targeted marketing. Today, we’re going to discuss how a diversification of your auto marketing practices will allow you not only to maximize profits but also to make your business more resilient in good times and bad.
1. Add-ons: Adding More Car to Your Car
Improved consumer credit means customers can borrow for less. With lower monthly payments, they’ll have more money available for features that they might previously have eschewed. And as technology increases, the list of cool add-ons gets longer and longer, from monitoring systems that alert drivers to objects in their path to drowsiness-detection cameras that warn them if they begin to doze off on those long cross-country trips. Moreover, add-ons don’t have to only be physical. Finance and insurance (F&I) add-ons, such as extended warranties, more comprehensive insurance policies and the like, can also be a great way to enhance a car purchase. By practicing targeted marketing (see point four below), you’ll have a better idea of which of these add-ons to market to which of your credit-flush customers.
2. Leasing: It’s Not All About Buying… At Least Not Yet
As car sales rise, car leases are on the rise as well, and it’s important to get into the game. Why? First of all, more than a quarter of financed new vehicles are now being acquired through leases, so it’s hardly a market to turn our noses up at. Secondly, leases create buyers over time. When the lease is up, most consumers either purchase the car they’re driving or go on to take out another lease. Either way, the sales or interest profit involved is good for auto dealers. And by focusing your strategy on establishing a lasting relationship with your leasing customers, you are setting the stage for long-term profitability. Nothing comes from pushing a customer into a purchase that they’re not ready for. Leasing allows them to test the waters, become familiar with the car they’re driving, and pay off the residual when the time is right.
3. Diverse Products: It Isn’t All About the Margin
In point number one, we talked above about the diversity of add-ons in the market to the cars we sell. Now it’s time to talk about the cars themselves. Sure, higher-end new cars provide the highest profit margin, but a single-minded pursuit of higher, one-off margins is not the way to build a successful dealership over time. In the right circumstances, sacrificing a little on the margin side in order to seal a sale is the right way to go. There are several reasons for this:
- The value of even a lower-end sale can be supplemented through a long-term service and repair relationship.
- The customer with the lower-end car may blossom in time into the customer who comes back for your luxury model.
- Word of mouth from a customer with a lower-end model might persuade a neighbor or friend with a little more cash in their pocket to come into your showroom. And this goes even for the customer purchasing the lowest-end used car on your lot.
- Perhaps most importantly, catering to a full-spectrum of credit segments opens you up to many more potential sales.
Of course, you don’t want to sacrifice so much that the sale isn’t worth its while. But as long as your priorities are clear with each potential customer you come into contact with, you will be able to discover opportunities that might otherwise have passed you by.
4. Targeted Auto Marketing: Finding the Jewel in the Rough
A diverse range of products, add-ons, and financing options requires a more diverse range of customers to take advantage of them. So how do you find this broad base of customers? Clearly not by churning out a one-size-fits-all marketing strategy. Fortunately, with new technological tools available, you can score leads based on their convertibility potential as they come in. Once you have classified your leads, you can then determine the right marketing strategy for each category. From there, determining the amount of resources to expend on a lead, the type of message to send and through which channel of communication, all becomes much, much easier. The result? A much higher probability of matching your diversified product offerings to the right customer.
For Better or For Worse
Diversification of products and services in auto marketing isn’t only an end unto itself. Sure, the economy is turning up now, but the recovery is still a fragile one, and there’s no way of knowing if another slump might not be right around the corner. By diversifying your income streams now, while you can, you will be set to face the tougher times if they do come back. If one of those streams falters, you will have others to fall back on. And with a broader customer base, you will be able to build the coalitions necessary to see you through.