Far too frequently those in charge of dealership marketing decisions rely on one of two things: peer conversations/feedback, or data from a vendor showing results from a comparable dealership.

While both can be valuable in the right situation, the problem is that not all marketing solutions are effective when used in different markets. What works great on the East Coast may not work well on the West. For example, population density can affect what form of marketing works. The biggest issue, however, is that by “following the pack,” you never get ahead of anyone. You simply maintain the status quo.

The automotive industry is incredibly dynamic. Look at all the technologies available to your dealership. Those dealerships which take risks with new technologies and marketing solutions tend to benefit greatly and pull ahead in the race against competitors. However, there is an inherent risk with anything new and, the opposite can happen; that marketing investment could fail. Instead of pulling ahead, you could lose money.

So, is there a way to safeguard your investments while testing and adopting new high risk/high reward technologies?

I recommend that you place ninety percent of your marketing budget in safe marketing strategies. Choose those which have proven effective with a good return on investment in the way that matters most -- selling vehicles.

The other ten percent should be used to experiment and try new things, adopt new technologies and take risk. When those high-risk solutions take off, prove effective and are adopted by the masses, they typically tend to get less effective or more expensive. As an early adopter, you can get that lead and then keep it.

If the new thing reaps high rewards, it’s relatively easy to take that solution and transfer it into your ninety percent bucket, freeing up money in the ten percent bucket to try even more new things.

Okay, so once you get to this point, how do you know what is working and what is not?

Well, that is probably the most important point in all this. And the most important thing here is which KPIs you choose.

The thing NOT to do is to take the mountain of reports provided by your marketing vendors. The KPIs they choose may not perfectly align with your dealership’s marketing goals. Most vendors choose the KPIs THEY feel prove their solution is successful in your dealership. But who defines what is, or is not successful? Typically, the vendors!

A better way to judge performance is to look at outcomes and work your way backward. If you judge your vendors by cars sold, or profit per lead, you can create a common thread that is shared by both your business and your vendors. These KPIs hold both your vendors and your dealership accountable -- a win-win. The most important goal for any car dealership is sales and profit across all departments – not if your vendor said the marketing was a success. Then use A/B testing to measure what performs the best. This allows you to identify solutions that benefit each other while maximizing your investment in those solutions.

In summary, identify KPIs that complement your dealership’s goals. Define what measurements within those KPIs equal success or failure and then test strategies within any given solution across the marketing spectrum of all your marketing channels. This will maximize your marketing spend, optimize its effectiveness and hold your vendors accountable for performance metrics that matter to your business. This way the vendors win too!

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