You ever notice that when somebody in your neighborhood gets a new car, others start to follow? Marketing is kind of the same thing. I even catch myself saying, “Well the store across the street is doing it, so you should too.” That is definitely the wrong mentality to have. Actually, if the store across the street is doing it, you should either want to go bigger than they are or not do anything at all. To copy them is a losing proposition.
Years back when I was in retail automotive I remember all the automotive news outlets going crazy about one of the largest auto groups in the country cancelling all third party marketing. Most of us followed just like sheep and cancelled our third party marketing. There was only one problem. That huge dealer group never actually cancelled anything. Wanna take a guess at how fast they took all of our market share?
Automotive dealers are struggling more this year than they have since 2008. And again, it’s going to get worse. There is a plethora of off-lease vehicles coming to the pre-owned market over the next 6-12 months. Here’s a great article that is more in-depth about the abundance of off-lease cars. Wards Auto. New car incentives from the manufacturer keep getting better and better every day, which just keeps driving the pre-owned vehicle prices down. Believe me, the bubble is about to burst.
Dealers have been warned for the last 2 years that this was going to happen. Data just doesn’t lie. Some of the General Managers and Pre-Owned Managers have seen it coming, but don’t know how to adapt to it. Some of the Dealer Principals have accepted what is happening, others just keep firing their General Managers, because it must be something they are doing wrong. Well, that’s not exactly working either. Now, not all dealers are hurting. Some dealers have seen it coming and have adapted. Remember the General Manager at the Mazda dealer from my last article? He’s doing just fine. He also is sure as heck not chasing his competition. He’s just flat out beating them.
Now here’s where it gets fun. A friend of mine put it so succinctly when I was talking to him. When the dealers start hurting, the vendors follow within 6 months. And that’s exactly what is happening. However, let’s try to see if there is any logic to what is happening. Sales and grosses are down at most stores. A new manager comes in and is told the only reason he/she got the job was to get the bottom line back in order. So what is the easiest and fastest thing you can do to improve the bottom line? Cut marketing expenses of course. Remember, I said this is where it gets fun. You’ve cut your marketing expenses and the bottom line has instantly improved. Ever heard the saying short term gain, long term pain? Well this is the recipe. So, logical or not?
The whole point of this website is to prevent us from practicing insanity. Here’s another typical scenario. Billy Bob cut his marketing across the street and said he can’t see a difference. And then Betty Sue down the road told me the same thing. Well, since they’re cutting their marketing and not seeing any difference, let’s just cut our marketing at our store too. I think you’re getting the point of where I’m going with this. When I was a General Manager and got a call from one of my competitors asking me how everything was going, do you think I told them, “Well, I cut this and that and my margins are down as well as my sales.” Heck no I didn’t. The conversation went more like this, “I cut this and that and my margins are way up, as well as my sales. I think I’m going to cut everything, even the power.” Ok, maybe I didn’t tell them I was cutting the power, but I sure wasn’t going to tell my competitors I had a made a mistake.
What I did have to learn the hard way, was to stop chasing my competition. When I chased them, even if I finished second place in my region I was still just the first place loser. Once I listened to some great advice and got better direction I started pulling away from the pack.
To my friends that have dealers and can say they truly haven’t noticed a difference when cutting their marketing, please feel free to reach out to me. I promise you once you’ve lost your market share (that comes about 60 – 90 days after you cut your marketing), I will show you where you are getting hurt.
I don’t believe in any way, shape, or form that I am the best at this. However, I have learned a lot of valuable lessons from real-world experiences and from some of the best mentors possible. I hope that the lesson you have learned from this is that when you see all of your competitors going one direction, that is your opportunity to go completely the opposite. What are your thoughts readers? Do you have similar experiences, or a very different experience you’d like to share? As always, thanks for reading and don’t forget that people buy people, not products.