Revving up the Dealer’s Profit Engine (Part I)

Revving up the Dealer’s Profit Engine (Part I)

By: Steve Lausch, Director of Product Marketing

For all the prominence it receives, a dealer’s showroom is not his greatest profit engine. Certainly more attention and ad dollars are paid to variable operations (vehicle sales), but a dealer’s fixed operations (service and parts) hold far more potential in yielding a higher overall profit.

Consider the frequency with which consumers are “in market” for servicing vs. purchasing. The average driver invests in vehicle services multiple times each year, but makes a vehicle purchase only once or twice every several  years. As car owners hold onto their vehicles longer, the service-appointment-to-showroom-appointment ratio only grows. This drives revenue for a highly profitable part of the business.

… while over $300 billion are spent on parts and service every year in the US, only a quarter of those dollars are won back by the dealership. Any dealership.

Sadly, many dealers miss the full opportunity afforded by their fixed operations. Online research for parts and service advances at lightning speed, but few dealers match the search ad footprint carved by independent and chain shops. While over $300 billion is spent on parts and service every year in the US, only a quarter of those dollars are won back by the dealership (NADA). Any dealership.

So, what can automotive dealers do to rev up this profit engine?

1. Recognize the opportunity.

Dealers are currently enjoying less than 10% of the potential service dollars per car sold out of their showrooms (DMEautomotive). This suggests that even a modest investment of attention and ad dollars would yield significant results for any dealer willing to rev up this profit engine. For the dealer who needs to see benefit at the front-end, a service customer is twice as likely to purchase from the dealership when compared to those who service their vehicles elsewhere.

The opportunity is real. It’s just a matter of acting on it.

2. Commit to action…now.

With the predictions of flat or falling sales numbers in 2017, dealers need to act today on stronger and more defined fixed ops marketing strategies. Acting now enables dealers to move into 2017 with an advantage that leaves the competition behind.

3. Employ a comprehensive marketing strategy.

Some dealers take a certain comfort in the fact that they have “checked the box” when it comes to marketing their Service Drives. They make good use of OEM advertising programs and are seeing results from it. However, the opportunity lost by stopping at this level of fixed ops advertising is three-fold:

Limiting the available marketing channels.

The manufacturer may, in fact, offer a fairly strong option for direct mail … or email marketing … or search advertising … or social advertising … or reputation marketing, but rarely does a dealer have all of these critical channels covered through the OEM. When a dealer treats his fixed ops marketing like the marketing that supports his variable operations, he optimizes his dealership’s reach across all available channels.

Limiting the available audience.

Similar to the issue uncovered above, this is another problem with the dealer’s reach. The OEM pursues coverage without cannibalism, and rightly so. It uses marketing areas as logical boundaries by which it can generate 100% coverage of a defined geo-location, while keeping the peace between its stores.

But, in using fixed ops marketing via the OEM, dealers are limited in who they can target with their marketing campaigns. It’s like approaching a Par 5 with a significantly discounted pitching wedge. Again, “the box is checked,” but the dealer willing to invest a little more on a driver is going to own the course.

It’s like approaching a Par 5 with a significantly discounted pitching wedge … but the dealer willing to invest a little more on a proven driver is going to own the course.

Limiting the dealer’s unique brand.

Over the decades of selling cars, dealers have worked tirelessly to create a unique voice for their businesses. This need is no less critical today, yet perhaps no more ignored than when dealers use only their manufacturer’s programs to build a digital presence. The same ad. The same website. Only the name at the top is different.

Meanwhile, a dealer’s brand is often most differentiated by the kind of service department offered. Why not talk about it? Why not show it off? Why not stand out from the crowd?

In this four part blog series, we’ll consider five necessary channels to accomplish this. We’ll examine the five places dealers must meet all potential service prospects (current, conquest, and lost soul) with advertising that is as unique to your brand as it is comprehensive in its approach.
These are:

·        your prospect’s inbox
·        your prospect’s mailbox
·        your prospect’s search browser
·        your prospect’s social media account(s), and
·        your prospect’s assessment of dealer ratings & reviews

Subscribe to our blog and stay tuned for Part II, where we’ll cover your prospect’s inbox and mailbox.


digital marketing, Dominion Digital Marketing, Fixed Ops, Multichannel marketing,

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