All Signs Point to Mail

We think it’s safe to say that none of us has seen a sales environment like this. But one thing is for sure, those in the market for a new or used vehicle are still in the market. The question is, what is the best way to appeal to them?

Obviously, we are dealing with a smaller overall new-vehicle market. TrueCar’s latest forecast predicts “total SAAR to decrease 16% from a year ago from 16.7 million units to 14 million units. — Used vehicle sales for July 2020 are expected to reach 3,759,781, up 9% from a year ago and down 1% from June 2020. … This is up 31 percent versus July 2019.”

Current buyers in the market or those sitting on the fence need a good reason to make a move. Initially enhanced factory incentives and a glut of new vehicle inventory as reported by the press were enough of a reason to spur new vehicle sales. However, at the same time, used-vehicle prices dropped as uncertainty for rental car inventories and anticipated slow new vehicle sales caused processes to plunge.

Now, it’s August and new vehicle dealerships are running out of inventory, and production isn’t quite up to speed. Used vehicle prices have rebounded, and dealers need used cars to bridge the inventory gap.

Mail presents your greatest opportunity for the current situation. Service Mail drives dependable traffic to your service lane. Equity Mail attracts owners in equity purchase or lease maturity positions. Sales mail attracts customers who may need to downsize or upsize in the current environment. All these strategies allow for personalization of the message, giving prospects a reason to buy or trade now.

 

Why Not Email?

Each year, the Ponemon Institute releases “The Most Trusted Companies Study,” a list of overall top-performing companies and federal agencies that are perceived to be most trusted. What these organizations have in common is a strong orientation to respecting their customers and providing the best possible customer service.

The research is an objective study that asks consumers to name and rate organizations they believe are most committed to protecting their privacy. Participants are asked to apply the following definitions when determining the companies they trust:

  • Personal information – Consider only data about yourself and your family. This information typically includes name, address, telephone numbers, email address, Social Security number, other personal identification number, access codes, age, gender, income and tax information, shopping information, account activity, and many other pieces of data collected about you.
  • Privacy trust – Your belief that the company or federal agency is honoring its privacy commitments to you, and keeping your personal information safe and secure. This includes its commitment not to share your personal information unless there is a just cause or you have given your consent.

More than 100,000 adult-aged consumers were asked to name up to five companies they believe to be most trusted for protecting the privacy of their personal information. Every year that’s been surveyed, the United States Postal Service has made the list. The truth is that people trust regular mail more than digital mail communications. Especially when it comes to information such as their vehicle financial status, payoff, and lease terms.

Every dollar counts. You need to squeeze every ounce of profit you can from every department. At this point in time in our industry, mail represents your greatest opportunity. More trust, more value, more traffic.

Top Ten Reasons To Use Mail To Advertise Used Cars

Direct Mail still provides one of the highest ROIs in marketing when it comes to reaching customers. Check out this list of the top 10 reasons to use mail specifically for used cars.

1. Dealers have a historically low inventory of used vehicles.

2. The media is now reporting that there is a used vehicle shortage, making mail or advertising more credible when asking to buy their vehicle.

3. Dealers need to be super sharp digitally and in their communications with customers during this shortage. Finding out what their current car is worth (63%), and locating a dealer or getting dealer info (46%) are the top consumer shopping destinations (AutoTrader).

4. Even if every dealer in a market is advertising “we need your car,” your dealership should still advertise it. Customers will always shop more than one offer and you want your dealership to be included.

5. It takes 6 to 8 weeks to receive a new vehicle once ordered from the factory. Current dealership inventory is probably less desirable than inventory your dealership had 4 to 6 weeks ago. Traffic sells cold product.

6. Dealers need the inventory.

7. A “trade-in” is almost always better than a vehicle obtained at auctions. Trade-ins are unique and therefore represent a greater profit opportunity.

8. Used vehicle auction prices are on the increase. On a year-over-year basis, most major market segments saw seasonally adjusted price increases in the first 15 days of July. Luxury cars and pickup trucks outperformed the overall market, while most other major segments underperformed the overall market.

9. The easiest customer to convert is an existing customer. Dealers at a minimum should be mailing and emailing their owners.

10. The CARES ACT. If the CARES ACT is extended, you’ll have consumers possibly looking for a used vehicle based on enhanced unemployment income. If the CARES ACT is not extended, you may have consumers looking for cash or lowering existing payments.

The Legality of Direct Mail Marketing

The FTC and many state-level regulators have made auto finance and dealership advertising practices their priority enforcement areas. The FTC says the rules are straightforward, but some are not very clear.

“In the past six years, the FTC filed about 40 enforcement actions related to auto dealerships,” said Nikhil Singhvi, a staff attorney in the FTC’s Division of Financial Practices, in an article with Automotive News. Singhvi said enforcement areas include deceptive advertising, deceptive and unfair finance practices, title loan fraud, debt collection, privacy and data breaches, and credit reporting violations.

The FTC also increasingly seeks to hold individuals accountable and is including them in its enforcement actions when it can show that they knew of deceptive practices, Singhvi said.

The FTC receives dealership complaints through consumers, other law enforcement or state partners, consumer advocacy groups and even former employees, he said. The FTC in its 2018 report tallied more than 100,000 auto-related complaints.

Singhvi said the FTC’s rules are easy to follow for dealerships. “The baseline that we enforce at the FTC is don’t deceive consumers. That’s a pretty easy one,” he said. “That covers things like advertising for incentives that are not actually available or that have such onerous limitations that they’re effectively not available to anyone.”

The FTC also scrutinizes bait-and-switch advertising for vehicle offers that don’t exist but are used to draw people into the dealership.

“The specific rules for financing advertising have not changed dramatically in a long time, the specific financing terms that must be disclosed,” Singhvi said. “These aren’t very complicated matters, and they are things that compliant dealerships should be able to handle.” The FTC also monitors social media advertising, where it can be difficult in limited space for a dealership to make the required disclosures, Singhvi said. (Automotive News)

NADA has provided guidance for advertising. In 2015, the association created a guide for dealers, manufacturers, finance companies, and dealership ad agencies on ad compliance that covers 41 topics and provides examples of good vs. bad ads. Those guidelines can be found here.

Dealership ads need to disclose triggering terms required by the Truth in Lending Act and the Consumer Leasing Act, said Randy Henrick of Mosaic Compliance Services. Leasing also requires many additional disclosures such as the number of payments and security deposit, and some states require excess mileage or allowed mileage disclosures or the cost to buy at the end of the lease term.

“What gets dealers in trouble is advertising the payment amount, or advertising a low APR for a certain number of months and not saying anything else,” he said. “Or putting it in mass type in color that bleeds into the background that’s not clear and conspicuous.”

Other problem areas are teaser terms, undisclosed balloon payments, false $0 upfront leases, undisclosed lease terms, hidden rates, fake prize promotions and credit and leasing violations. (Automotive News)

In addition to the FTC, dealerships need to know their state regulations covering deceptive and unfair advertising. That’s where Prospect Vision comes in. Prospect Vision’s integrated software ensures accurate pricing and includes all disclaimers. Your mail pieces are then archived for future audits. The team at Prospect Vision is specialized in communication compliance.

Beyond A House: The Biggest Purchase We Make

You’re considering one of the biggest purchases of your life and you get – wait for it – an email.

But it’s just like the hundreds of emails you get for everything from drug stores to dental appointment reminders.

If you’re asking someone to make the second biggest purchase of their life (behind housing), shouldn’t you at least take the time to make it personal?

 

Letters and handwritten cards have greater importance now more than ever. These days, our email boxes can feel flooded with junk mail every day, and missives from companies are sometimes automatically filtered out, if not thrown in the junk mail folder immediately. On the other hand, hard-copy letters are fewer and further between now, and each one gets a little more attention than before.

Everyone gets mail. It’s not just seniors, either, as more and more young people are opting out of the web and focusing on life away from screens, phones, and computers. Using traditional mail is still the best way to contact everyone. Forty-four percent of millennials pick up mail at least six days a week, compared to 60 percent of Gen Xers and 73 percent of Baby Boomers.

Finally, according to the USPS Office of Inspector General, the decline in mail volume may be more nuanced than some realize.

“Take the drop in First-Class Mail (FCM), for instance. FCM decline varies widely by location… For example, in Dallas, the percent of First Class Mail (FCM) volume lost was greater than in Charleston, WV – where it was close to zero. Moreover, the rate of decline is slowing or has even stopped in many of the areas that have lost the most mail volume. Declines in U.S. Postal Service mail volume vary widely across the United States.”

Mail providers and the U.S. Post Office ensure that your letter gets to the mailbox of the person written on the envelope. On the other hand, digital documents can easily bounce back for a number of reasons, from misspelled addresses to full inboxes or out-of-office situations to spam folders.

When you come right down to it, paper mail just means more. The key is feelings. Seventy-five percent of the inspector general’s survey respondents said receiving personal mail “made them feel special.”

Doesn’t it make sense that if you’re asking a person to make the first or second biggest purchase decision of their lives, you should at least take the time to put it in writing?

Timing is Everything When Getting Customers to Upgrade a Vehicle

In July of 2018, CARMAX published a loyalty report from customers who traded in cars. Using their data, CARMAX explored which cars people own at trade-in and what they purchase as their next car. Did they stay with the same brand or not? Are people loyal to the same type of car they used to drive (i.e., do SUV owners keep buying SUVs or do they switch to sedans)? This was a great test case because, given choices of dozens of brands in close proximity, what percentage would stay with the brand they were driving. New car retention hovers around 52 percent, but given freedom of choice, what would consumers pick?

The highest ranked vehicles traded in for the same vehicle was only 30 percent. That means three out of 10 repurchased the same brand, at best. The average was closer to 20 percent. In this new era of digital-based competition and customer control, people are increasingly buying because of a brand’s relevance to their needs in the moment.

The truth of the matter is that loyalty is waning. And you don’t want to take the chance of your customer picking something else. Acquiring a new customer can cost five times more than retaining an existing customer. Increasing customer retention by 5 percent can increase profits 25–95 percent. The success rate of selling to a customer you already have is 60–70 percent, while the success rate of selling to a new customer is 5–20 percent.

Timing is Everything

A new vehicle purchase is still an impulse buy. A friend of mine in the car business always used to say, “Rarely does anybody really have to have a new vehicle. Somewhere in their brains, they have justified a new vehicle.” The service lane is the optimum location for capitalizing on relevance and timing. The customer is thinking about their vehicle, they may be questioning if it is time for a new vehicle, or a new model may have caught their eye on the way to the service lane. This is the perfect time to insert yourself into a conversation.

Having a dedicated person or team is a great way to help ensure that you’re in the conversation. This way, their main focus is on transitioning service customers to new or used vehicle sales. Having a person that becomes used to dealing with these transitioning prospects is an important asset. Having someone that has learned the nuances of nudging a prospect along increases the chance of the sale.

Relevance

You have to find the right customer who is in the perfect equity position to upgrade to a new vehicle. Once the service appointment is set, look at the customer’s history and their equity and see if the time is right to draw them toward a new car. Providing them with a loaner while their car is getting serviced is a great way to help transition them from the service drive into sales. Prepare some offers for the customer, and once the car is returned and they say they love it, provide them with the offers to purchase the vehicle with no money out of pocket. Thanks to your data, you already knew the customer’s situation before they arrived and were able to draft offers that fit their particular situation.

Don’t Fall Prey to the Status Quo

To succeed in the non-loyalty era, dealers must be continuously willing to abandon old practices. As new technologies shift customer journeys and expectations, they can (and should) also enhance companies’ abilities to engage with customers in more relevant ways. Often, the greatest roadblock is a dealer’s lack of willingness to transform their processes, organizations, and mindset into something new.

Mastering Service Lane Marketing

“Customers don’t know what they want until you show it to them.” – Steve Jobs

When customers shop, they either browse vehicles that might catch their fancy, or they gravitate toward a vehicle that fits their needs in the best possible way. How you approach these people and the environment you place them in is critical to your success.

If your customers don’t really need a new vehicle but are in an equity position, then you need to give them a promotional experience – an excuse to buy. But, if they need a new vehicle due to costly repairs or obsolescence, then you give them information – logic.

One size does not fit all

You’re more likely to convince customers to buy or trade for a vehicle if your strategy aligns with their mindset. You need to have your service lane ready for both promotional and logical purchase mindsets.

Q: What makes car shoppers consider a vehicle they don’t really need?

A: Positives

Unengaged customers are more likely to consider buying a new product if they anticipate a “win,” or if that product promises a feeling or an experience that is new or exciting. An example would be building off-road displays for crossovers, SUVs and pickup trucks Or, an example of increased cargo capacity (bikes, kayaks, golf clubs, luggage, etc.) can be effective in giving the customer a visual for a new experience.

Unengaged customers are put off by taxing, factual details. One possible reason is that when shoppers imagine the feeling or experience a product promises, they’re using the brain’s daydreaming mode. You can only daydream if your mind is allowed to wander, and it can’t wander if your attention is absorbed in numbers.

Look at your service lane. Is it just nuts and bolts? (Pun intended) Is the service lane included in the dealerships sales activities? In addition to providing service information, does it communicate that NOW is a good time to trade up?

Q: How do you convert a “need” buyer?

A: Information

If you have a need buyer and it would be advantageous for them to switch to another vehicle, then you need to give them information. Give clear, detailed specifications and offer accurate comparisons to maintaining their current vehicle vs. buying or leasing a new one. Here is a checklist for the information buyer:

Fuel economy – Gas prices may be low now, but chances are they’ll rise again. The fuel economy of new U.S. cars and trucks hit a record 24.7 miles per gallon.

Repair costs – How much it costs to repair your current car. If your annual repair bills exceed a year’s worth of car payments, then it’s time to start shopping.

How much value your car continues to lose – Cars depreciate significantly over the first few years of ownership, often more rapidly than your monthly payments are paying down the loan, putting you upside-down financially.

Safety – Every car should have:

  • Backup camera
  • Curtain airbags
  • Electronic stability control (ESC)
  • Forward-collision warning
  • Blind-spot monitoring
  • Lane-departure warning
  • A “Good” score in the IIHS small-overlap test

Only the latest designs do well in the difficult small-overlap front crash test from the Insurance Institute for Highway Safety. Many of today’s high-tech cars work to avoid crashes altogether, warning the driver about hazards and sometimes responding to threats quickly. Advanced systems can automatically slow or completely stop a car. Visibility aids such as rear cameras and blind-spot monitoring show what’s around you, helping situational awareness.

Connected features – Almost every recent car has these as standard.

  • Hands-free phone usage
  • USB port for plugging in a phone
  • Bluetooth phone connectivity

Specialty items

  • Voice commands recognition
  • Built-in navigation
  • Ability to use integrated apps like Pandora or Spotify

At the very end, signing the contract to buy a vehicle is an emotional decision. It’s a significant commitment. But, knowing a customer’s mindset along the way can help you determine the best path to take on the way to a sale.

Reaching Women Shoppers Through Direct Mail

According to the National Mail Order Association, women have exclusive responsibility for sorting mail and choosing which items to keep for further consideration in two-thirds of U.S. households. By many other accounts, more than 80 percent of those who pick up the mail across the country every day are women, most of whom also serve as the primary shoppers both on and offline for their households.

Women also tend to read each and every direct mail piece addressed to them.

A report from the marketing website she-conomy.com found that 65 percent of new cars are purchased by the woman of the household.  American women spend about $5 trillion annually. This represents over a quarter of U.S. Gross Domestic Product. For retailers, women shoppers are their largest target audience.

As digital advertising continues to grow, the effectiveness of direct mail cannot be overlooked. As online shopping increases each year, it is important to note that studies show that 67 percent of online action is driven by offline messages. A study by the Direct Marketing Association shows that 78 percent of consumers react to direct mail immediately when they receive mail from a brand that they’re interested in. Forty-four percent visit the brand’s website and 34 percent search online for more information about the product.

Before you drop your next mail piece be sure to keep your female recipients top-of-mind:

  • Sell customer service — Women want to know how the transaction is going to be handled. They prefer nice and easy. Make a customer care representative available by phone to strengthen the relationship and pave the way for a smooth transaction.
  • Impart useful information — Women do their research before buying and like to know why making this purchase is a good decision. In addition to expressing why it’s a great deal, include why it’s a smart deal.
  • Be personal — Use first names in the copy and make each recipient feel special with messaging that is polite, factual and smart.

Women drive 70–80 percent of all consumers purchasing through their buying power and influence. I can’t tell you how many times I’ve seen a salesperson mishandle a female customer. Remember, they not only buy for themselves but also direct purchases for their partners, children, parents, in-laws, nieces and nephews. Placing direct mail in women decision-maker hands provides you with a tremendous opportunity. Female shoppers easily constitute a vast majority of vehicle purchase decision-makers.

From cars to healthcare to vacations, women are calling the shots at home. They pick up and read mail, place orders, and use coupons at retail locations. Dealers need to acknowledge the dominance of decision-making women and personally address them directly through the mailbox.

With January Comes Opportunity

It may seem counterintuitive to ramp up your marketing in January, but there are several valid reasons why not cutting back or going dark makes more sense.

  1. Tax Refund: Very few people wake up in the morning and decide to buy a vehicle that afternoon. Usually, there is a catalyst. Expensive car repair or one on the horizon, year-end bonus in hand and ready to spend, anticipation of a tax return earmarked for a new vehicle. Customers are in the shopping mode and you need to be visible.
  2. Year-end Trade-ins: Having quality trades from year-end sales and not telling anybody is like winking at someone in the dark.  If you don’t put strong marketing in place to let the public know, then you know what you’re doing, but nobody else does.
  3. Momentum: Dealerships run on momentum. Sales beget sales, service begets service and you can feel positive attitudes throughout the dealership. Keeping momentum after the yearend is the hardest mental challenge you’ll face all year. Continued advertising shows your team and the public you’re the place to do business.
  4. Competition: The car business never stops. Consumers don’t take off days. If they’re even thinking about buying a vehicle they are online and paying attention to advertising. What they are looking for is an excuse to pull the trigger. A reason to buy now. If you’re not providing a reason, the competition will.
  5. Hiring: Your dealership needs quality staff that can offer a top-notch customer experience on both the sales and service side of the business. For each day your dealership has an open sales role, you can lose up to $800 in gross profitability, and this number jumps to $1,200 for open service roles. December and January are also high-volume months for job applicants. Businesses across industries see an increase in job applicants throughout December and January, as employees start setting personal and professional goals for the coming year. You compete with other dealers. The dealer seen as aggressive and supportive of their people will get more consideration.
  6. Profits: Rarely does anyone ever save their way into a profit. You have to sell something, and for that you’ll need traffic. The only sure way to generate traffic is to be out there. You won’t get a hit if you don’t swing the bat.

The smart money?

We admit that January is a buyer’s market. As such, we have specific opinions on where is the best place to spend your money.

Digital
  • Consumers spend an average of nine hours researching online before walking into a dealership, visiting an average of seven automotive sites, including manufacturer, dealer, and third-party websites.
  • The most influential factors in consumers’ selection of a dealership are, by far, a low price and having the right inventory. In fact, consumers are almost twice as likely to pick a dealer that identifies as having the “lowest price” over reputation.
  • Consumers prefer to do the majority of fact-finding online, and face-to-face communication becomes increasingly important to them at the end of the process, analysts report. More than three-quarters (76 percent) of consumers think they will get a better price by negotiating in person as opposed to online.
Service Lane Marketing
  • Your customers are your #1 source of new business.
  • Sales tools are available to identify customers in a position to trade.
  • 80 percent of sales emerge from appointments made online. Only in the service lane can a dealership talk to a customer ahead of time.
  • January is the perfect month to work the service lane due to it being in the heart of winter with two or three more months to go.

We’re not saying to go wild and bust the budget in January. What we are saying is there are still plenty of customers, and with a little effort and a little budget, you can keep your dealership motivated, maintain year-end momentum, and increase your profits.

The Future Is Your Service Lane

Note: This blog is a combination of information from industry experts, publicly held companies and Automotive News futurists.

“For hundreds of years, the horse was the prime mover of humans, and for the past 120 years, it has been the automobile. Now, we are approaching the end of the line for the automobile because travel will be in standardized modules.” – Bob Lutz

Dealership Structure Will Change

Experts are predicting that dealerships of the future will split into thirds over the next 10 to 20 years. One third will be for mobility services, i.e, autonomous vehicles, fleet and subscription-plan management services. According to an Automotive News article, “In the new world, some consumers want group leases on one self-driving car to share or to buy monthly subscriptions that allow them to switch from one kind of vehicle to another as their needs change day to day. In addition, large fleets have emerged offering ride-hailing services to either their members or the general public. “

Another third will come from those consumers who own a personal vehicle and either use it or monetize it by renting it out when they aren’t using it.

Refocus on Service

The final third is in service. No one can predict what the future vehicle will look like, but whether it’s autonomous, electric, ride sharing or subscription vehicles they’ll have to be serviced somewhere. If the future of the dealership is mobility centers, then upping your game in service now makes perfect sense. Service has long been the most profitable part of a dealership. In the Automotive News article “Forecasting the Future of Auto Retailing” the authors predict that “for the most part, the dealership of 2030 is fleet management and distributions centers. They have the capital to invest in new tools and training for service technicians to adapt to electric, autonomous vehicles service and maintenance requirements, as well as those of rapidly proliferating drones.”

This is a good thing. Chances are that these vehicles, because of the technology, will have strict service cadences. They’re not going to let just anyone maintain, upgrade and service these vehicles. If dealers can get past selling tangible assets such as cars and trucks and look at themselves as mobility and technology centers, the possibilities are endless.

What can you do now?

Focus on your service department now!

Offer same day/next day appointments

The aftermarket competition will tell your customers that they can bring their vehicle in “today” or “tomorrow.” So your answer has to be one day.

Optimize shop productivity 

If you are at 100 percent or higher, you need to hire technicians because you can’t reduce the wait time for your customers to come in unless you have the capacity to complete the repairs in a timely manner.

Refine your appointment process 

If you are like most dealers, 80 percent of your customer pay sales start with a telephone call to your dealership. Most of these calls go to a Service Advisor. In other cases, they go to a BDC, CDC or to an appointment coordinator.

Call “no-shows” 

Everyone has customers who do not show up for their appointments. Oftentimes, they just forgot.

Call customers on special order parts

If you walk back to your parts department you most likely will find a section of bins that your Parts Manager has designated for “Special Order Parts.”

Schedule your customer’s next appointment

Before your customers leave your dealership, you should automatically schedule their next service appointments based on time and/or mileage. Give them a card with the date and time of their next appointment.

2030

If the prognosticators are correct and the future will be here by 2030, then there is no time to waste. The sooner you get your customers trained and accustomed to coming to you for service, the better off you’ll be. Automotive News reports through a COX Automotive study that franchised dealers are snagging fewer than one-third of repair orders. The average vehicle makes 2.7 service visits a year. Quick-lube shops, tire stores and independent repair outlets account for about half of these visits; dealers take 30 percent, and the rest go elsewhere — body shops, retail stores and specialist businesses.

Direct Mail vs. Email: You Get What You Pay For

Direct mail vs. email? In a constantly evolving marketing environment, which one really delivers the best bang for your buck? On one hand, dealers tend to feel that “nobody reads mail… they just throw it in the trash.” On the other hand, dealers just can’t get past “how cheap email is… it’s practically free.”  The evidence suggests we need to reevaluate the way we use email. Rather than thinking of it as a cheap form of marketing, how we can utilize its strengths? If we continue to bombard customers, we may risk alienating them. Really, the questions you should be asking are, “How do my customers want to be contacted?” and “How often?”

  • Today, 70 percent of consumers reportedly feel like they receive too many emails.
  • The average lifespan of an email is now just 2 seconds and brand recall directly after seeing a digital ad is just 44 percent, compared to direct mail which has a brand recall of 75.

Credit: Pro Active Marketing

As the effectiveness of email marketing declines, the response to direct mail is on the rise, and printed media becomes a more trusted form of consumer communication.

Credit: Pro Active Marketing

You might be thinking that direct mail doesn’t work with millennials. The truth is, according to the United States Postal Service, 47 percent of millennials actually check their mailbox each day. Not only do young people read their direct mail offers, they actually respond well to direct mail offers. The Data and Marketing Association marks 18–21 years olds’ response rate as 12.4 percent.

Credit: Pro Active Marketing

How often should I mail? It depends.

In all other forms of advertising – newspaper, magazine, television, radio and online – there isn’t a second thought given to spending thousands and even millions of dollars marketing to the same subscribers, viewers, and listeners day after day, and even year after year. Yet, dealers question sending a direct mail campaign twice to the same list. Advertising is primarily about repetition, and direct mail is no exception.

We’re not saying to quit email and put all of your money into mail, but since you’re selling the second biggest ticket item most people will ever purchase, take the time to send a letter, postcard, or custom-printed piece to ask for their business. It just means more.