Main

When I ask companies what their marketing objective is , they often say, “to increase sales.” Obviously, that is a vague. What are the most cost effective ways to increase sales? More sales from existing customers? Acquisition of competitor’s customers? Turning non-users into users? We need to be more specific about who we are targeting to obtain incremental sales. Once we know that, we can explore various options for achieving the objective and estimate the cost effectiveness of each.

Naturally, we will want to measure the success of the effort once we execute it. However, comparing total sales in the test period with total sales in the previous period can be extremely crude. It invites dozens of additional variables to influence the measured outcome. How can we be sure the new marketing communications were the cause of the change in sales? The other extreme is strict sales attribution, “Our sourcing attributed 10 sales to the new communication effort.” This assumes that there is no integration between your various marketing communications efforts. I certainly hope that is not the case, and it today’s environment of hyper-connected consumers it would be nearly impossible to achieve even if you wanted to.

The trick is to find the variable of mix of variables that best relate to the new communication effort as a cause for the desired activity leading toward a sale. Notice I said leading toward a sale. It will probably not be the sale itself. The mix of variables should include not just the medium used by your organization’s use of that medium. If it’s a listing a product, then your merchandising has a big impact on the contacts coming out of that listings service. If you are buying leads, then your organization’s lead handling has a big impact on the number of appointments set through those leads.

Strict attribution from one marketing activity to a precise number of sales is an illusion most businesses cannot afford. Measure the things you know contribute to sales and can be attributed to the marketing activity you are trying to measure. Your decision-making will improve, and your frustration level will go down.

Classification is important to understanding, and I'm concerned our industry is off on the wrong foot. I'm hearing a lot about new mobile applications, but apps fall into a number of tool classifications. Some simply do what you tell them to do; some help you remember how to do it, and others extend your management programs to guide or control the work of others. Here are the four categories as I see it:

1) Wrenches and typewriters have no memory. There is nothing about them that can help the user understand the process of tightening bolts or writing letters. These non-memory tools are great for users who know or can figure out the process of completing the task without assistance. The user works the tool.

2) Many software products come with a help button. The process for completing a task is recorded in the help menu and can be called up when needed. The user accesses additional process memory within the tool.

3) Everything in Microsoft office has a multitude of features, but does not memorize processes unless a macro is created to do that. Macros do tasks according to a recorded process. The user starts the process as recorded within the tool.

4) A GPS determines the process for getting somewhere, then tells the user what to do. This is what some of the new apps coming out offer, and it is a boon to areas like sales and marketing involving complex processes. The tool directs the user.

I'm going to call this fourth group management tools, because they manage the actions of others. This is often essential for process control.

Configurator tools guide shoppers through the path of designing their dream car. More recently, apps are being sold that guide the salesperson through the sales process or guide the F&I manager through the menu process. The if-then nature of computer programming allows for branching, making it possible for the system to design a nearly infinite number of process combinations. Each solution is produced to optimize the process based on the situation as input. The user is guided through a process of information inputs, and those inputs optimize the remainder of the process.

A Canadian company, cDemo, caught my eye in Dallas several months ago with their Mobile Inspector Application. It guides the user through a process that simultaneously develops vehicle photos, live video, and a vehicle condition report. That process varies from vehicle to vehicle. The photos for a pickup truck are not the same as for an SUV or a sedan. If something is found to be wrong in the vehicle condition report, additional detail is captured on that item. There must be millions of combinations, but the user doesn't have to remember any of them. Just about anyone can complete the process. In fact, cDemo asserts it's so easy a monkey could do it, and it all happens on an iPhone or Droid based smart phone.

This is a radical departure in the purpose of tools, yet it is not entirely new. Twenty years ago, I had a sales interview that involved me giving a sales presentation on the product of my choice. I sold them on buying my Hewlett Packard 19B programmable calculator for each sales person. Buy programming in the formulas for quoting rates, no salesperson would ever again need to remember the variables, the formulas, or how to execute. The program tells them what variables to entry and takes care of everything else. No more missed information, no more miscalculations. Sales people could function faster and more perfectly by letting the tool direct them. I provided break-even analysis to demonstrate the how quickly this simple management tool could pay for itself. The interviewing team quickly understood the importance of management tools in sales and marketing. Needless to say, I was offered the job.

If you can hire highly skilled professionals, it may make sense to give them tools they control, and maybe even tools with additional memory support. However, if the process and discipline is more than your people can live up to, then put a tool in place that runs the employee the way you want them to be run. Most of these tools can be modified by the manager. For example, the cDemo tool allows steps to be added or deleted from the process by the manager or through company support.

In many ways, these new tools are an extension of management, and it is badly needed. The cars we sell and merchandise are more complex than ever. The buyers are more knowledgeable than ever. But the people selling and merchandising vehicles are generally not any more talented than those we worked with ten years ago. These management tools are not coming out a moment too soon. If you want to insist that vehicles be sold or merchandised the way you want it done, then consider duplicating yourself through one of these new tools that manage your people in your absence.

Yes, I do practice what I preach. I've developed internal tools to guide myself, preventing mistakes when I'm working tired. I've talked to several companies about helping them develop and/or market management tools and will remain involved in this growing field as it relates to the marketing and sales of durable goods. I recently lured my brother, Gary Galbraith, into the auto industry to help cDemo introduce their new tool in the United States. As I look at the collision course of product complexity, product proliferation, transparency to the consumer, and an undereducated workforce, these tools appear essential to the future profitability of retailers. Management tools cannot be looked at as just another kind of application.

In 1982, Time Magazine proclaimed the computer to be Machine of the Year. It was the first time anything other than a person or group of people received person of the year distinction from the famed publication.  That year, Apple Computer became the first PC manufacturer to reach $1 billion in annual sales. It took another two years to launch the Macintosh computer, and first year sales were 275,000 units. Today, it takes Apple less than three days to sell that many iPads. The company is quiet about total sales, but 9.25 million per quarter is thought to be a safe estimate by many experts. Nothing in the history of personal computing has ever captivated consumers the way the iPad is right now. A few months ago, PC sales declined for the first time ever, due largely to the strong preference for iPads.

The success of the iPad is not due entirely to the device. Over 90,000 apps are available for the iPad. These apps are generally far easier to navigate and use than websites. This is the case for automobile shopping as well. Even in its current, early form, the CarZen application is a fresh departure from any automotive shopping site online. More advancements will be made, and consumers will likely shift as quickly to advanced iPad shopping apps as they are to the device itself.

Once the novelty of games and socialization wears off, iPad owners begin to recognize the business and shopping benefits of these mobile machines. When talking about purchase options, couples can share the screen in a way not possible with smartphones, and they can exchange facial expressions in a way not possible from separate desktops. With complete mobility, they are taking their devices onto dealer lots with pride and confidence. The prime time for iPad use is evenings and weekends for things like shopping. Millions of consumers put down their smartphones and laptops because the iPad is the best way to consume content.

In my mystery shopping, I have been amazed to find many salespeople caught off guard by shoppers comparing window stickers to iPad results and carrying their mobile devices with them to the bargaining table. Make no mistake, 2011 will be remembered as the year of the iPad. Stores that are not ready to change where they place their inventory and how their great their shoppers will suffer a huge competitive disadvantage to those that are.

CarZen President, Nick Gidwani, and I are developing presentations to help GMs and dealer principles get their stores ready for the iPad revolution that is already underway. One or both of us will be easy to find at most major automotive marketing events, including PCG Pit Stops, Digital Dealer, DrivingSales Executive Summit, and more to be announced. As a reader of RevenueGuru.com, you are free to call me directly at 910-339-9700 or email me at DennisGalbraith@gmail.com. I'm happy to answer your immediate questions and add you to our distribution list for upcoming whitepapers and webinars. I'm going to do all I can over the remainder of this year to help dealers adapt to these consumer changes and profit at the expense of those who do not.

The success of a dealer's reputation management strategy impacts virtually every other marketing activity. Dealers must go beyond the surface items, like reviews, to the core issue, relationship. Asking for reviews is essential, but having the kind of relationships that earn more reviews and more glowing reviews is the ultimate challenge.

I've been blessed over the past few weeks to listen to some real experts on reputation management and social media via the PCG Pit Stops: Brian Pasch, Paul Portratz, Kathi Kruse, JD Rucker, Gary May, Ralph Paglia, and others. These encounters were eye opening for me. Many dealers have done a fantastic job of soliciting reviews after the sale; however, this is but one touchpoint. A relationship spanning multiple touchpoints yields the following benefits:

1. Greater likelihood of generating one or more reviews
2. More top-box reviews
3. More online and offline advocacy of the dealership
4. More service revenue
5. Greater likelihood of repeat sales (loyalty)

After talking to Continental Warranty's Vice President, Tony Volpe, I began to realize the real power of warranty products that incentivize the customer to return for service. Continental offers products that wave the deductable if the shopper returns to the dealer for covered services and repairs. It doesn't take much imagination to visualize this program producing not only more revenue and more touch points with the consumer but more and better reviews, more repeat sales, and more advocacy of the dealership.

Both medical and social science have demonstrated the imperfections associated with human memory. Our brains change over time, and so do our memories. The way we recall events, feelings, and conversations is not consistent over time. Therefore, it is risky to expect even the best sales experience today to generate a lasting, untended relationship. This may have little impact on packaged goods companies with purchase cycles measured in weeks or months, but it can have a huge impact on providers of durable goods like automobiles and motorcycles. Locking in the customer's service business locks in a stream of future touchpoints that can strengthen the relationship and ultimately have a positive impact on the dealership's reputation.

Much has been said about the simple fact that service lanes produce far more customer touchpoints than the showroom. It is also clear that dealers need to do more with their service business to feed their reputation management effort. Taking this all the way back to offering a complete complement of service contract products may not be obvious, but can be impactful.

When we look at the kind of touchpoints strengthening relationships, we find that many of them add additional profit at the same time. This is the nature of commerce, we enhance quality of life by making more of the right kind of sales. Step back and take a deeper look at your reputation management strategy. You may find some fantastic opportunities to add touchpoints that strengthen the relationship while growing profits. 

Advertising budgets are formulated in any number of ways. Most professionals and academics find Objective Based Budgeting yields a superior result to the "I just feel" method, yet the latter dominates among dealers. I bring this up not as a criticism but as a demonstration of opportunity.

Competition will continue to intensify among car dealers. The shopping radius of consumers continues to grow, and the transparency of market information to consumers continues to increase. Under these conditions, every competitive advantage matters. A store spending $40,000 per month with 90% efficiency will bring 50% more traffic to the store with the same budget compared to a store advertising with 60% efficiency. Sadly, we are finding stores that are performing at considerably less than 50%.

Advertising is the devil's playground. There are many temptations - attractive sales people, the ability to be seen on television, a bias for what worked years ago or what one thinks they know how to utilize. Many advertising products have no variable cost to the seller, making wild discounts possible. This naturally appeals to people used to selling products with very high variable costs, but it does not change the fact that 60% off the rate card may still be a very poor option. The best way to discipline yourself and avoid these temptations is to base all advertising and marketing decisions on sound performance metrics and Objective Based Budgeting.