HOW TO DETERMINE THE BEST SALES CHANNEL FOR YOUR DEALERSHIP?
When it comes to auto sales, it’s difficult to know which sales channel will give you the most bang for your marketing dollars.
Having the right tools to track and measure your sales channels will help you determine where you should allocate your marketing dollars to produce the most qualified leads. Does it not make sense to allocate money away from ineffective sales channels to sales channels that are producing?
The shotgun approach to marketing is no longer as effective in the digital age. Today, the point of digital marketing is to research, profile, and target your audience with specific ads in order to reduce the amount you spend on advertising while increasing the number of leads you can generate with your marketing budget. If you are still coming at your strategy with a fully loaded shotgun, then you might want to consider the following tactics as an alternative when establishing the best sales channels for your dealership:
1) Determine the Sales Channels for your Region
While there are a few national sales channels that all dealerships should consider, every region is going to have sales channels that are more popular in their area. Examples of national channels to consider are Craigslist, Trader and Kijiji while smaller cities will have additional regional or local classified sites. The point is to research and know the sales channels available to you and secondly determine which ones are the most popular in the area you choose to serve.
One of the best ways to determine the right regional sales channels is to find out where your customers heard about you or where they viewed your inventory online. In-store or telephone conversations are a good place to ask where people heard about you, but checking your referral links in your Google Analytics account is another great place to start. From there, it’s important to figure out which new channels you are missing.
2) Be Creative
Be creative with your ad copy, make sure you’re covering all your bases with your vehicle photos, if you have three vehicles that are the same model, switch up the formatting of your descriptions, add suggestions of why this vehicle would be great for your customer, don’t be afraid to throw in some humor.
For more tips on making your vehicle descriptions stand out, check out our recent blog post
3) Testing, Testing . . . is this thing on?
If you have Steps 1 and 2 covered it’s time to get out on the open road and test drive the sales channels. You let your customers test drive your product before they commit and you should do the same with your marketing strategy.
Half of marketing is testing the feasibility of different methods and sales channels to find out which produce the best results. This way you can determine how much of your marketing budget to allocate to each channel.
Start out with an even spread for your budget across the channels you’re using.
4) Calculate Your ROI per Sales Channel
Here is the point you came here to read…the winning formula for calculating your ROI per sales channel.
Results are useless unless they can be measured and quantified allowing you to see your return on investment. Calculating ROI from a marketing campaign or sales push is somewhat of a science and not always the most accurate, as there are always other mitigating factors (trends, staff’s time, etc.), but it can go a long way towards measuring the effectiveness of your sales channels. The best way to measure the ROI for your sales channels as a dealership is to work out the ‘Cost Per Lead’.
Here’s the formula for calculating your cost per lead per sales channel:
Cost of Sales Channel / Number of Leads = Average Cost Per Lead
So if your sales channel costs $1,000 per month and brings in a total of 300 leads it’d work out like this:
$1,000 / 300 leads = $3.33 Cost Per Lead
Now you can calculate which sales channels are giving you the best cost per lead and allocate your budget accordingly. Your sales team will be integral in adding another factor here, which is ‘determining the quality of the lead’. If a sales channel has a low cost per lead but the quality of the leads are terrible then you need to take that into account. A higher cost per lead for a higher quality lead is not a bad thing, especially if it results in sales.
Now you know there was going to be a pitch right?
*If you’re one of the many dealerships that use DealerXchange, you can take advantage of the Lead Generation ROI Reports which will automatically calculate the cost per lead of each of your sales channels for you. We’d be happy to demo this feature for you. Call Steve at 1.888.800.6546 for a demo or fill out one of the forms to book your demo.
5) Refine & Repeat
After you’ve measured your results for 2-3 months you’ll be able to determine which sales channels are working and which are producing no leads or low quality leads. Now you can re-allocate your budget to the channels producing better leads at the best cost to get the most for your marketing dollars. Once you have your set sales channels, try testing new ones in the same way to find out if there are other sales channels that might suit your dealership.
We hope this article has been useful. While some of these steps may be overly simplified, we are more than happy to discuss how you can go about executing each one. Like we said before, fill out the form below to book a demo or even just to chat digital marketing with Steve.