5 Ways to Recession-Proof Your Dealership
If someone tells you they can see the future, they’re probably looking to put one over on you. It doesn’t matter who you are, all you can do is hope for the best while preparing for the worst. On that latter point, more than one indicator is hinting that we’re heading for a recession in 2020, so it behooves you to prepare. And if there isn’t a recession, the worst thing that happens is you saved yourself a ton of money when you didn’t have to. Here are five things you can do right now that will give your dealership a solid footing, even when the ground isn’t so stable.
1. When It Comes to ROI, Demand Accountability
Every dealer retains a number of advertising vendors that drive business to their dealerships. You have SEO, digital advertising, paper advertising, TV, radio, website, chat, CRM, service scheduling, and why not, even billboards. That’s a ton of things to keep track of and it’s easy for one or more of them to fall through the cracks. Maybe you keep them because you’ve always had them. Maybe you keep them because they’re what dealerships do. In a recession, you don’t have the luxury to spend money unless you know it’s making you money.
Car sales are already falling, down 15% from this time last year. Certainly not panic-inducing, but enough to make a savvy dealer sit up and pay attention. If nothing else, it’s a good excuse to look into what you’re shelling out for each of these services and what you’re getting back. In other words, you need to look at your Return On Investment (ROI) for each and every vendor.
The first step is getting the hard data from each one, which will enable you to make the hard decisions. Before determining what stays and what goes, you need to know not only exactly how much everything is contributing to your bottom line, but also how much it is costing your dealership. You need dollar amounts, precise ones, and from there, you can concentrate your spending on what works and get rid of what doesn’t. Not every vendor will have this information readily available, however you should be wary of anyone not willing to make it available.
At DealerOn, we’ve gone to great lengths to ensure that our dealers are armed with everything they need to make these exact decisions by utilizing our new Beacon reporting suite. Beacon not only allows dealers to see their latest website reporting trends, but also determines the exact ROI of their investments by retrieving sold vehicle data from their DMS.
2. Consolidate Your Websites to OEM Programs
Any modern dealership understands that one of the single most important assets their business has is their website. It’s their online showroom that anyone can access from anywhere and the place that’s getting you the lifeblood of your business: leads. Leads come in all shapes and sizes, from phone calls, to web forms, service appointments, credit applications, even someone walking onto your show floor. Prior to the growth of manufacturer programs this was a big problem. Vendor choice was scarce and finding a provider that was going to be able to get you those leads was rare. This forced dealers to pay thousands of dollars extra to have a secondary site that was going to perform for them.
Those days are fortunately over, with almost every major manufacturer moving to a choice model. With choice, and the quality of OEM integrations providing more and more value, there is no longer a need for secondary sites.
DealerOn is in 26 OEM programs, and that number is growing all the time. If you need any aspect of your business addressed, you only have to pay one person, assuming you’re with DealerOn. Lose the redundant sites and go with an OEM provider and let DealerOn give you the site you want for a single price you can afford.
3. Put Service on the Front Page with Sales
When the average person thinks about a dealership, they think of a slickly-dressed salesperson showing them around the features of a brand-new car. But that’s not where the lion’s share of a dealership’s profits come from. The sales floor might be the marquee attraction, but it’s the service department that truly pays the rent.
Rather than hide from that fact, embrace it. Feature the service department on your front page. Advertise it. Offer coupons and other incentives. During a recession, you don’t have the luxury of clinging to this idea that somehow the sales floor is good and the service department is as shameful as a Victorian lady’s bare ankles. Celebrate your moneymaker and watch your profits soar.
This is a good practice anyway. Your service team is a valuable part of any organization and deserves to be recognized as such. It raises morale and profits. That’s the definition of a no-brainer.
4. Shift Your Advertising to Digital
Imagine it’s 80 years ago, and you’re spending all your advertising dollars on classifieds. You’re pretty certain this radio thing is a passing fad, and you’d rather stick with an advertising method that worked well for selling Model Ts and oxcarts. That sounds crazy, doesn’t it?
If you’re not focusing your advertising dollar online, you’re living in the past. Dealers still spend 45% of their advertising dollar on traditional sources. That’s about 25% too much. More and more of modern life is spent online. A person walks around with a powerful computer in their pockets at all times and looks at it on average once every 12 minutes. It’s the kind of engagement that every other method can only dream of.
Not only that, but digital advertising has the ability to respond to and track a customer’s preference. To get your money’s worth, your dealership’s goal should be at least 80% of your advertising budget to digital sources. Spend where you make money, and that means online. DealerOn approaches digital sales with the rigor of scientists. Our devotion to data is second to none, focusing on optimizing to cost per vehicle sold, as opposed to the antiquated cost-per-click method most of our competitors are still stuck using.
5. When It Comes to Digital Advertising, Spend Smart and Track Every Dollar
Think of this step as a combination of steps 1 and 4. If you’re doing those, you should be okay. But okay isn’t really good enough, especially in the rough weather we may be up against.
When DealerOn runs your online ad campaigns with our award-winning platform our commitment to data and transparency shines through. We’ll determine what is most effective for your dealership and then execute on that plan, sharing those results with you along the way. Our dedication to constant improvement in the form of testing means we are continually striving to improve our dealer’s results. And you will always know exactly what your ROI is for every last penny of your spend, ensuring you are spending smart.
Recessions come and go like the tides. They’re impossible to avoid, so it’s on us to prepare for them the best we can. With DealerOn on your side, you have a great partner and the tools needed to keep your head well above water.