Quick Tips to Navigate the Uncertainty in Automotive Retail

Quick Tips to Navigate the Uncertainty in Automotive Retail

The good news is that there is never a dull moment in automotive retail, and the great news is that the craziness and uncertainty we’re facing today will surely create some good habits for many dealers and their salespeople.

How Can Dealers Forecast Future Vehicle Sales in Uncertain Times?

In the past, dealer forecasting was relatively easy. How many did we sell last June? How are our sales trending so far this year? Some quick math and a couple of assumptions later, and we’d have a relatively accurate forecast.

Today, we have no idea what next week will bring, let alone next month or next year. This makes forecasting difficult; and makes it more important than ever to never miss the opportunity to reach those buyers who are lowest in the sales funnel, because they may not be there next week or next month.

How Should We Spend Marketing Dollars in Uncertain Times?

While mid- and high-funnel marketing successfully delivered future buyers into a dealership’s pipeline in the past, the inventory shortages from 2020 through 2023 and everything the internet has done to shrink the average consumer’s final consideration set make these approaches less effective today.

I’m not saying don’t market to mid- and high-funnel buyers. I’m just saying I wouldn’t spend a dime on these parts of the sales funnel until I exhausted the effectiveness of my low-funnel marketing.

Today, the most effective digital marketing dealers can leverage are Google’s Vehicle Listing Ads (VLAs). Of course, digital marketing effectiveness can change overnight; and what worked yesterday may not work tomorrow. However, until they’re not, VLAs – also known as Performance Max Shopping Ads – are the most efficient and effective marketing dollars you can spend – provided the campaigns are set up properly and actively managed.

Should We Try to Increase Street Buys in Uncertain Times?

Every dealer knows how profitable buying off the street can be versus finding that same vehicle at auction, though not enough dealers employ the two necessary ingredients to increase their direct-from-consumer purchases. These are:

1. Having a defined marketing strategy to find and attract these sellers. Some paid, but a ton of organic.
2. Employing strictly followed processes to acquire these vehicles.

Many dealers just buy the KBB ICO leads and check a box – yep, we’ve got a buying center. But successful dealers know it takes much more than that. The quickest way to measure your success at vehicle acquisition is to look at your used vehicle inventory:

• Is it healthy? That is, are we stocking the right vehicles and are they turning at the desired rate?
• What percentage of our inventory was purchased at auction? Is this lower than last month or last year?
• What percentage of our inventory came from street buys? Is this higher than last month or last year?

Assuming your inventory levels are relatively close to last month or last year, then your percentage of auction vehicles should be lower, and your percentage of street buys should be higher if your vehicle acquisition efforts are successful.

Should We Back Off SEO in Uncertain Times?

One of the silliest things I see some dealers do is cut their Search Engine Optimization budgets in hard or uncertain times. Of course, they do this because they don’t understand (or can’t measure) the value that great SEO can deliver.

Search Engine Optimization should be your primary mid- and high-funnel marketing strategy regardless of the market. Too many dealers make the mistake of decreasing or eliminating their SEO efforts in times of uncertainty when they begin to focus solely on low-funnel buyers. Unfortunately, this leaves them at a competitive disadvantage when the market settles down – forcing them to spend even more on digital marketing to attract buyers in the future.

Can Processes Help Us Sell More in Uncertain Times?

To be clear, process also outsells talent any day ending in a Y. Strict adherence to customer-friendly sales processes sells more vehicles at higher grosses in any market – and processes are the only way to grow market share without sacrificing gross.

What’s great about processes is that if they’re strictly enforced in good times, dealers only need to make minor adjustments when the market changes – and often, they don’t need to make any adjustments.

Take the road-to-the-sale. The same old-school road-to-the-sale used in the 1980’s and 90’s is still the best way to sell more of your Fresh Ups today at higher grosses. The only difference is that it’s been abbreviated. We still do Needs Analysis and Qualification, we just do these things while walking with the customer instead of sitting behind a desk.

Of course, none of this will work unless your sales managers hold everyone accountable to your road-to-the-sale. This is where discipline comes in; and without it, everyone on the team just freelances and reverts to order-taker mode.

If you’re not sure whether your team is following strict processes or simply in order-taker mode, take this quick test:

1. Are we brooming Ups?
2. Are we answering Write-Up questions before the Write-Up?

If you answered Yes to either of these questions, your team is in order-taker mode (and you’re missing deals while losing gross on the deals you do make).

Good Selling!