A recent meeting with a general manager at a dealership was interrupted by news of a sale to a customer from across the state. The sales team was celebrating. A buyer thought so highly of their dealership that they were willing to drive hours to buy a new truck. They saw it as proof of their success that they could pull sales from a distant metro area.
The GM saw it as proof their dealership marketing strategy was working. Not only were they doing well in their home market, they were reaching well beyond. Best of all, their cost per click was a bargain.
Unfortunately, reality was not as rosy. Comparing their Google Analytics to vehicle, registration data revealed the true cost of luring buyers from so far. The dealership was spending 40% of their automotive search budget on distant geographies that produced only 5% of their sales. The contract for the customer who drove across state showed the dealership actually took a loss on the truck. They spent a small fortune to lose money on the sale they were celebrating.
Don’t Celebrate Losing Money
Similar scenarios play out all over the country. To drive down the cost of clicks, vendors draw wider and wider circles around dealerships. They have to go farther out to find enough people to meet their traffic targets, people willing to click whatever creative they put up. But this is not usually the most desirable audience for a dealership marketing campaign.
Customers who go out of their way to buy from a dealership typically have a lower lifetime value. They may seek out a dealership with the specific model, trim and color combination they desire—but are more likely motivated by price. Unless you continue to offer deep discounts to entice them, they won’t return to buy again. And they are unlikely to ever bring their vehicle in for service.
The value of market share in the area surrounding a dealership is immediately obvious. Customers who shop a local dealer provide a greater lifetime value. They put more importance on convenience and are generally less price-sensitive. If they have a good experience they are more likely to come back the next time they need a vehicle.
Better Data Equals Smarter Marketing
Allocating a good portion of your dealership marketing budget to specifically target this audience is a smart move but one that’s sometimes overlooked. The first dollar a dealer spends on advertising should always be directed at their backyard, those zip codes closest to them for which they are responsible to the manufacturer. This is true no matter how strong or weak the brand is in the area. Of course, a strong backyard provides a target-rich environment for good potential customers. In this way a more targeted approach to a dealership marketing strategy can be both efficient and effective.
Defend your territory by reminding local auto shoppers what makes your dealership a uniquely attractive place to shop. Similarly, you can reach beyond your backyard to drive sales in areas with promising buying patterns using a dealership marketing campaign and message designed to make them want to visit your showroom when they are ready to buy.
The key is to be purposeful and targeted in your approach to audience targeting in your dealership advertising campaigns. Know your market and your backyard, what sells and where. Be specific in which zip codes you go after and the marketing message you use. Having the right data is critical in assessing sales trends and competition, so you can understand the story behind the data. Your ability to harness data insights for a smarter dealership marketing campaign will give you a significant advantage.
So how effective and efficient is your dealership marketing strategy at reaching your backyard? LOCALiQ AUTOMOTIVE provides the analytical tools and expertise to help you find out. We’ll also help you avoid marketing to the wrong audience.
Contact us for your free Dealer Scorecard analysis today.