After studying market share retention of hundreds of dealers in several markets (Charlotte, So. CAL, Dallas, Houston, Atlanta, Sacramento and SF Bay Area), I have found that many dealers experience large market share swings from one month to another. This is indicated by comparing them to other dealers selling the same brand of vehicles that they sell in a given market. Upon seeing this, I interviewed several dealers about the negative aspects of these swings. The consensus was that both large swings up and down had a negative effect on maintaining gross profit. On the down months, they find themselves behind the competition and as a result ‘give away’ vehicles as the month winds down to catch up. On the up months, they are usually in some promotional (and expensive) mode that causes a negative hit on gross.
I then tracked two years of data for the Charlotte market where pay for performance marketing has been used consistantly for the last two years and found that these two Honda stores did not suffer the marketshare swings that their competition experienced during this period.
Consistant, intelligent and calculated direct marketing is the key to maintaining and growing your market share. Expensive and sporatic promotions have no positive residual effects and can hurt gross. Dealers want a dependable method to address this issue.