“Do you have a marketing plan for the year?” That’s the question I recently asked dealers during a Dealer Success Group meeting. Sure, it seems simple, but if you have ever dipped your toe into the world of marketing, you know that there is a lot more complexity to the question than meets the eye.
I got my start with marketing when I was in college and did an internship at Starlight Children’s Foundation, a not-for-profit that was focused on helping children who were seriously ill to just be kids. While I was there I learned about a number of different pieces of marketing, from maintaining a good CRM to the power of direct mail. After college, I joined the BCI team and started with this crazy idea that we should send out mass emails every single week with helpful information in every single one. I didn’t want to send out mass emails with only ads, but put an emphasis on providing our customers with a helpful tip and a tool that could help them achieve. We would truly be achieving our mission, which is to “Help Dealers Achieve Success.” It’s been over 5 years since we have started sending out mass emails and blogs and there have been changes, but the goal is still the same. We want to provide you with useful information and help you achieve success.
So, what does my background have to do with coming up with a marketing plan? When I started at BCI, our marketing plan was like many dealers. The plan was simply, “Boy, I hope this works.” We had no real plan, no real money set aside, and no real strategy to make sure our marketing was working. I’m happy to say that over the last five years, we have come leaps and bounds in marketing and we have been able to come along side many dealerships across the country to create a plan that works with their goals.
A marketing plan is deeply personal. Depending on your dealership’s vision, your marketing plan should serve as a catalyst for your goals. Over the next few weeks, I will dive into some marketing questions that we answer on a consistent basis. So, our first question is:
“How much should I spend on marketing?”
There is a simple rule of thumb in dealerships when it comes to how much you should spend on marketing. If your dealership is less than 5 years old, or if you have brought on a new major line in the last five years, in most cases or depending on your margins, you should spend 5% of your gross revenue on marketing. As a quick reminder, your gross revenue is all of the money that your dealership brings in before you pay your taxes and expenses. If your dealership is older than 5 years old, and you haven’t brought on a new major line in the last 5 years, you should spend 3% of your gross revenue on marketing.
Let’s say, for simplicity’s sake, ABC dealership has generated a total of one million dollars over the last year. In this example, this pretend dealership has been in business for four years, so we will assume that 5% of the gross profits are going towards the marketing budget. That is $50,000. That is a lot of money. In most dealerships, you could get an entire additional employee for your marketing budget. In order to justify this, we have to be sure that our marketing money is generating us as much as an employee would.
As we look at the $50,000 figure, I am expecting you to put up half of that money. The other half of the $50,000 should be co-oped from your manufacturers. Most manufacturers that you work with have co-op money available to you for marketing. Work with them to find a way to use it! Knowing the amount of money you have available for marketing is the first step in setting up a marketing budget that is actually producing sales.
Next week, I will be answering the question, “How do I know when to spend my marketing money?”