The True Cost of Marketing

Where did NADA get the figure of $611 per vehicle sold for marketing costs? I have had dealers tell me recently that because they have cut back on advertising expenses, that they now have a $280 per vehicle cost. Well, yes and no. If you spend $45,000 per month on advertising and sell 160 new and used cars in a month you can say that your cost per vehicle is $281.25, but let’s be serious.

Over the past 15 years I have asked the question to dealers; “If you stopped all advertising for the next 6 months, what percentage of current sales volume would you have average over that period?” The answer is almost always 60% of what I do now. The dealer still has his sign, his location, his reputation and the advertising that the OEM does. So this is a realistic number.

Ok, so in reality, you are spending $45,000 to sell 40% of your vehicles. 40% of 160 = 64. $45,000 divided by 64 = 703.12 per vehicle. This is the number you should be looking at for advertising costs per car, not $281.25.

So, what do you do about it? Only use the most accountable, reportable, budgetable and predictable advertising methods. From a direct marketing standpoint, you should look over ‘services’ on this site and contact me for further discussion

Advertisements

About dealerite

National affiliations of professionals who are engaged in changing the culture of the automobile retail business. Key focuses currently include Compliance, Behavioral Marketing and Phone Skills.
This entry was posted in Uncategorized and tagged , , , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s