Direct Marketing White Paper: Buy Rate
By Michael Abrams, Dealerite LLC
Thanks to sources including: AutoCount, an Experian Company, Tom Watson, Skill Development Systems and Todd Heflin, Edifice Group
The purpose here is to identify Buy Rate for your market and your automotive dealership. Once identified, it should be used as a measuring tool to determine if a marketing list (manifest) is a good (over expected Buy Rate) or a poor one (under Buy Rate).
The average Buy Rate on Marketing Lists not created from dealer’s DMS is .02% to .05%. If you have doubts about this statement, go back and match past marketing manifests (lists) against 6 weeks of sales records from the start of the campaign. Or, better yet, have the marketing company do it for you. Provide them with your DMS sales for a 6 to 8 weeks from start of their campaign and have them do the matching to their marketing list (manifest).
As an example; if you mailed or emailed to 50,000 people, 10 to 25 of the addresses on your manifest should result in sales at your dealership during a 6 week period.
Why 6 weeks? Studies over the past 7 years by Edifice Group using thousands of campaigns that were not short-term ‘events’, found that direct marketing produced the most sales during the first 4 weeks, followed by 2 to 4 weeks of substantial residual before it tails off. “A reasonable period of time that accommodates a reasonable buying cycle”, would be a different way of putting it. Looking at the buy rate of a list in too short of a time period does not give you a reasonable view of how good the list was. Let us just say that we should never look at a period of less than 6 weeks when assessing the value of a marketing manifest.
In addition, 6 weeks cycles can be useful in budgeting substantial direct marketing, allowing for 8 per year as opposed to 12 per year.
How to find your dealership’s share of your market’s Buy Rate:
The typical Buy Rate in most markets for the last couple of years has been between .4% and .6%. More active markets may be closer to .6%, slower markets closer to .4%. In other words, .4% to .6% of the adult population will purchase a vehicle in any given month.
To determine your dealership’s share of the buy rate:
- Estimate size of market (1 million, 700,000, etc.) (adult population)
- Factor in how many new and used cars your dealership sold last month
- Compare that against the total sales in the market for that month.
I have created an Excel worksheet for this purpose, which is available upon request.
Factors affecting Buy Rate:
- Your ‘share’ of the market (worksheet available upon request)
- Your dealership’s ability to preserve opportunities that may result in sales (see ‘phone’ below)
- The Quality of the List (Manifest)
An extremely high quality manifest consisting of people who are actually looking to buy, will give you the opportunity to increase your Buy Rate 2, 3 or even 4 times, .09% to .15%. To get even higher Buy Rates, see #’s 1 and 2 above.
People who have done business with you in the past have a tendency to do business with you again unless your company has alienated them in some way. Overworking DMS can also result in diminishing the results of DMS marketing
Short term events have a tendency to condense the Buy Rate into a shorter period of time, giving the dealer the impression that more people bought off the marketing list (manifest), than actually did.
Premiums and Staffed Events
Give aways can increase opportunities, but too many non-buyers casing in on premiums can also deflect actual buyers if there is too much traffic. This is one reason why ‘staffed events’ may still have relevance. The brought in staff usually has perfected methods of sorting out the additional traffic, but it does come with it’s costs.
Mail and Email
Still, to this day, there are a significant number of car buyers who will not respond, or even look at, emails. You don’t have to be a genius to figure out that mail needs to be a part of your direct marketing efforts.
Most people have their first interaction with your dealership via phone. It’s still the number one place where the first impression is made. Yes, the internet and email can be huge, but , in most cases, it’s still the phone.
If you are a Dealer Principle or General Manager and you have not experienced what your customers experience when they phone your dealership, you are shooting in the dark! There is nothing preventing you, the dealer, from disguising your voice and finding out first hand about hold time, questions being answered, getting the right person, etc.
Please Contact Michael Abrams email@example.com in order to receive the Excel Worksheet for Buy Rate.