Why Your Marketing Goals are All Wrong

Most people think about marketing as a way to generate immediate ROI. For every email campaign sent out, we measure its success with metrics like open rates, click-through rates (CTRs), number of sales or ROs, or even dollars generated.


While it's important to expect accountability from your marketing partner, sometimes it's easy to get lost in the weeds of campaign results data. I recommend taking a step back from scrutinizing campaign results and taking a more holistic approach to your marketing strategy.


What are your ultimate marketing goals? Do you want to get a lot of click-throughs, or do you want to acquire new customers? Do you want to generate a dozen ROs, or do you want to increase customer retention? More ROs does not necessarily translate to increased customer retention, and customer loyalty cannot be measured by the number of coupons redeemed.


The true purpose of marketing is to stay in touch with your customers and keep them engaged so that when something is wrong with their vehicle, your dealership's service department is the first place they think of. Or, when it's time to trade their vehicle in for a new car, your dealership is the one they trust the most.


In order for this to happen, your marketing strategy needs to include campaigns designed to build brand recognition and customer trust, without the expectation of immediate results.


Too often I see dealership marketing strategies designed with a "What in it for me?" focus. Meaning, every single campaign the dealership is trying to sell the customer something; whether it's a car or service. What are you giving your customers other than a sales pitch?


While some of your marketing communications can and should include targeted offers, it's important to also deliver communications that aren't sales-oriented; such as educational information, 'feel good' campaigns that highlight your dealership's commitment to the community and/or newsletters.


With educational and "feel good" types of campaigns, you will probably get high open rates and CTRs, but very few dollars generated. Does this mean they are a failure? Absolutely not! Sending a holiday card is one example of a campaign that asks for nothing but generates a tremendous amount of goodwill. 


How to Measure Marketing Success

Campaign results data such as CTRs and number of ROs generated are important and can definitely be used to review the effectiveness of individual campaigns. This data can tell you what's working or not working so you can make improvements and adjustments to campaigns.


However, this type of data should not be used to measure the overall effectiveness of your marketing strategy. If the goal of your marketing strategy is to improve customer retention, then it makes sense to use customer retention metrics to gauge success.


Here are several customer retention metrics you can use, or you can come up your own method.


1) Assign a loyalty score to each customer in your database, and track the cumulative average of that score over time. Net Promoter Score (NPS) surveys are a relatively easy and low-cost method for generating a loyalty score.


2) Assign a status to every customer, such as active, inactive or lost, based on how long it's been since the customer has visited your dealership. The more active customers you have, the more effective your marketing strategy is.


3) Assign a customer lifetime value (CLV) to every customer in your database. CLV is the estimated net profit that a customer will provide over their lifetime, calculated using metrics such as average purchase value and frequency. Measure the average increase in the CLV of your database over time.


4) Measure and track revenue per units-in-operation ($/UIO). This metric is far more effective for measuring service potential than the outdated service absorption metric. To calculate your $/UIO, take the total number of vehicles your dealership has sold in the last six years. If you average 100 cars per month, that's about 72,000 vehicles. Now, calculate all the service revenue you have generated from these sold VINs (excluding new conquest customers). Divide that figure by 72,000 to arrive at your current $/UIO. Use this number as a benchmark to measure future growth by.


Service revenue from VINs sold in last 6 years/ # of cars sold in last 6 years = $/UIO


Your marketing strategy should be designed to build relationships, not one-and-done transactions. Taking a holistic approach to your marketing goals allows you more freedom to create campaigns designed to engage your customers, build trust and keep your dealership top of mind until their next visit.

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