Are you trying to CUT your way to growth?

[Steve Stauning]

When auto sales slowed during the last recession, we witnessed dealers and groups indiscriminately chopping their marketing budgets in an effort to save money. As many dealers learned, their unmeasured cuts cost them not only sales, but market share.

NADA predicts 16.7 million new units in 2018 - a robust market, for sure, but about 2.4% lower than 2017.

This begs the question: When margins are squeezed and your sales miss your forecasts in 2018, will your team have the discipline to not try to cut your way to growth?

 

[Brendan Dolan]

Reactionary dealers will cut and burn their budgets, but smart ones already know the ROI of their efforts, and will simply trim the fat off under performing sources.

My last dealer group used the recession as the catalyst to move off traditional and go digital only, and we rocked it through 2010 onwards with ad budgets that were 5% of gross.

I'm no longer with that group, but I imagine that when things flatten out they'll just cut the "eh we should have this one for a few extra units" off the mix.

 

[Adam Schaefer]

I think the first cuts will be to the various lead-generation tools on the VDP, SRP, etc. I am excited to see which tools prevail once they all come under scrutiny.

 

[Tallcool1]

I was the CFO of a dealer group during the period of time that @Stauning is referencing. While I understand the point that is being made, I would like to point out that for some dealers these choices were made out of necessity and survival. These decisions to cut marketing budgets were the only thing that got these dealers through that rough patch.

Sure it cost them market share...but it didn't cost them their dealerships.

 

[Steve Stauning]

I think you're missing my point.

Cutting marketing budgets was absolutely necessary for survival (I know, I was at Asbury during that time); but making indiscriminate cuts using no data was and is silly. The dealers who properly tacked and measured made smart cuts and gained share during the recession. The others did not.

The point of the post was to encourage those dealers who still don't properly track and measure to do so before cuts become necessary for survival.

 

[Tallcool1]

I think you're missing my point.

Cutting marketing budgets was absolutely necessary for survival (I know, I was at Asbury during that time); but making indiscriminate cuts using no data was and is silly. The dealers who properly tacked and measured made smart cuts and gained share during the recession. The others did not.

The point of the post was to encourage those dealers who still don't properly track and measure to do so before cuts become necessary for survival.

No, I didn't miss your point. I wrote a poorly constructed reply to your post. I couldn't agree more with the point you are making, and we are actually putting a very heavy emphasis on lead attribution in my store.

You are right Steve, we need to make educated decisions regarding our budgets.