Eric Mercado, Chief Sales Officer of Force Marketing joins Jim Fitzpatrick in our CBT News studio where the pair take a comprehensive look at how dealerships can update and fully utilize their digital marketing strategies to create the best buying experience for their customers.
Jim Fitzpatrick: Welcome, Eric, to CBT.
Eric Mercado: Thanks for having me.
Jim Fitzpatrick: What are the digital biggest contributors to growth for automotive dealerships today?
Eric Mercado: There’s a few different things that we’re seeing that are spearheaded growth in our accounts. Everybody for the last five, six, seven years has really been heavily relied on search. Search is starting to hit that plateau where it’s not necessarily all about demand capture anymore. Excuse me. Now it’s about the main creation.
Eric Mercado: I think, as always, the automotive industry has been the latest to adopt where you’re starting to see all these massive businesses and entities that are building billion dollar businesses through social media.
Eric Mercado: What we’ve seen in the last 18 months is a vast growth in social media. Facebook, your Instagram, your Waze. Then also, online video. We’re seeing tremendous growth in online video. YouTube, Programmatic. We’re also starting to be able to measure correlation between the traffic we get there and actual sales based off of who we’re targeting.
Eric Mercado: I would say the channels that are spearheading growth in the automotive vertical, I would say, Facebook, for sure. Still.
Jim Fitzpatrick: Regardless of brand, regardless of market, definitely be on Facebook.
Eric Mercado: Regardless of brand, regardless of market. Creating demand through Facebook. Targeting audiences that are in markets specifically looking for the vehicles you sell where they’re at 8, 9, 10, 12 times a day.
Jim Fitzpatrick: Yeah, that’s for sure.
Eric Mercado: Showing them the inventory they may be looking for in market is the quickest way to connect the customer to your inventory.
Eric Mercado: Then video for sure, so there’s a cool statistic that we got at this last Google summit where they talked about that 44% of consumers that search online video will end up visiting a dealership within the next two weeks.
Jim Fitzpatrick: 44%?
Eric Mercado: 44%. You have a 44% chance that you can connect the inventories that I’m looking to, to the audience looking for it about customer coming to your dealership. So video is very important. It’s something that again, dealers are still laying adopters of. They’re scared to invest in it.
Eric Mercado: What we’re seeing is that the dealers who have and who have done it now for almost a year are definitely getting the dividends from it.
Jim Fitzpatrick: These are even still a place for pay-per-click?
Eric Mercado: There is, there is. Obviously, so there’s to sides of the fence. There’s demand capture like I mentioned. Consumers start their research process on search. It just is what it is.
Eric Mercado: They go to Google, they go to Bing. They start looking at which vehicles am I interested in? This is consideration phase. Then from there, they’ll go into, “Okay, I’ve identified I want to get an SUV. That fits my lifestyle. Which SUV do I want?” They’ll do all that research, all that research they will do on search.
Eric Mercado: How much can I afford? Where can I buy this vehicle? Is this a good deal? That’s where social and video kick in because when you get on search it’s over saturated in some cases. There’s dealer ad, dealer ad, dealer ad, dealer ad. They all have the same inventory as you and there’s a fraction of a priced difference of a few hundred bucks either way you spin it.
Eric Mercado: Now when that customer leaves because they’ve been oversaturated … Paralysis by analysis. They looked at a lot, but did nothing. They’re re-targeted with Facebook. That Facebook is showing said dealers inventory that they were looking for.
Eric Mercado: Then, “hey, I like this, this static ad.” I go to the VDP page. I look at it. When I leave, I go to YouTube later on and check a video out for my kid and a pre-roll ad pops up with the same video driving me back to the same said dealer. With same said incentive.
Eric Mercado: That is the dynamic. Paid search is a necessary evil. Not saying it’s a bad thing. It’s a qualitative channel, but it is not the only channel. I feel like a lot of dealers are starting to adopt that process of I need to have a well-balanced digital marketing approach versus just having $80,000 grand in paid search hoping I capture every click.
Jim Fitzpatrick: Right, right. That’s what most dealers … That’s been their approach for a number of years.
Jim Fitzpatrick: Which profit centers do you feel you’ll see the most impact from digital marketing changes this year?
Eric Mercado: That’s a great question. Service and used car sales.
Jim Fitzpatrick: Really? Service? Okay.
Eric Mercado: Every dealership, I say every. All franchise dealers for the most part, is like running three different businesses. You’ve done it yourself so you know new car sales, used car sales, and service.
Eric Mercado: What we have seen the pendulum swing is towards used car sales and service. New car sales, they’re still going to have a good year. They’re still going to get their piece of the pie.
Jim Fitzpatrick: The manufacturers are doing a lot of the heavy lifting in regard to the marketing and advertising.
Eric Mercado: Exactly. Exactly. Really it’s about which dealers can merchandise their showrooms best with qualitative used cars that have high demand in their market? Then how can they create the best service experience with their customers? Then market that experience.
Eric Mercado: Because it’s funny. We’ll look at qualitative metrics of what does it cost per repair order for this dealer versus this dealer? Said Honda dealership in Trenton, New Jersey, said Honda dealership in Los Angeles, California and they’re so vastly different. When you go to the dealerships you understand why. It’s a completely different experience.
Jim Fitzpatrick: When you talk to dealers, do they … Because I know a lot of dealers are like, “I don’t know if I’m going to be promoting or advertising my service center per se. We do a little direct mail to some of the past customers and things like that,” but are you recommending to your clients that if you got $100,000 budget, allocate 20% or 30% of it to service or is that too high?
Eric Mercado: If I gave you a percentage it could be arbitrated. It depends on your needs. You’re a brand new dealership. You have no service customers. You have to create demand. You have to spend a little bit more up front.
Eric Mercado: Your dealership has been in the market for seven, eight, nine years, you have great reputation, you don’t have to market nearly as much. You have to market smart. You have to go after specific customers that drive those vehicles that you can service.
Eric Mercado: We talked to a lot of dealers that say they’re at capacity, which is a shame because they have more service potential. They’re losing business to the Jiffy Lubes in their market that are providing an oil change for $19 bucks, but then getting a $200 repair where they take it because they go identify the other issues that they found.
Jim Fitzpatrick: That’s right, that’s right. Doing a walk around.
Eric Mercado: Doing a walk around. One of the things that we try to do is specific to the dealership we identify. Listen, is service a strong initiative of yours? Are you trying to increase service? If so, here’s what you’re seeing as an average customer paid repair order. Where are you trying to get to? Let’s create a strategy around that. It’s low cost, high efficiency and we can move that deal.
Jim Fitzpatrick: You can tell your clients exactly what they’re clients and customers prospects in their market how they’re shopping online for simple as oil changes or maintenance for their Toyota or whatever the case may be.
Eric Mercado: There’s so many different tools you can look at now that identify. Even the accounts actual analytics. You can see which pays are being visits, which service specials are being clicked on at the highest rate or redeemed. That’s showing intent. It’s the same thing that the factors will tell you is look at your VDP views. That’s how you need to merchandise your vehicles.
Eric Mercado: If you have a vehicle in your used car department that’s second or third highest visited page, you need to get more used cars like that. Those are cars you can sell quickly.
Eric Mercado: We do the same thing for service. You just monitor what they’re looking at on said site, but also there’s some third party tools you can go to with Google Auction Insights. Then I’ll identify this is what people are shopping for in this market as it relates to service and your franchise. Then bid according to those specials.
Eric Mercado: There’s just some generic specials that we know at volume create activity in the dealership. Oil changes, that engine diagnostics. Things like that.
Eric Mercado: Service is a big one. Used car sales is a big, big, big one. There’s some dynamic functionality that we’ve introduced in the last couple years in the space that has made that easier to manage whether it be on search or display or video where you can promote your vehicle specific to what they’re looking for.
Eric Mercado: Those are two profit centers in, I think, in 2019, I would even say probably 2019, probably 2020, 2021.
Jim Fitzpatrick: When you mention video as part of the marketing mix, is that something that you guys do at Force is handle the video as well?
Eric Mercado: Yeah.
Jim Fitzpatrick: Because I know dealers are thinking, “Well, what does he mean by video? Like walk around videos or commercials or am I going to take my iPhone and just do my own?” What does that look like?
Eric Mercado: As much as you possibly can. All of that would be great.
Jim Fitzpatrick: All of the above.
Eric Mercado: What you just mentioned, every dealership should be doing. There is the organic video, which you’re talking about which is in the dealership, having your service people do the DIY videos and the walk arounds of the new models in the sales department. Those DIY videos, you post those on your Facebook pages for organic social content.
Eric Mercado: That’s great organic social content. You don’t need Force for that. What you need us for is to customize brand videos and integrate your inventory.
Eric Mercado: Some of the things that I’ll be showing you if I was sitting with you as a dealer, I would say, “Listen, we know video works well. We know dynamic inventory marketing works well. How do we connect the two, put them in front of people looking for them?” We’ve created a product that does that.
Eric Mercado: We can actually customize the script, produce the video for you, make it very brand centric, completely evergreen to where it shows you, here’s the good things you’re doing in the dealership that resonate with the market, let’s promote those. Do you have a 30-day exchange policy or five day test drive on used cars? Let’s promote that.
Eric Mercado: Do you have an extended lifetime warranty or something that you offer on used or new? Let’s promote that then let’s connect the inventory to it. So that’s the kind of video that we specialize in and taking that video a step further is jumping into a number of programmatic as well as in market audiences in some of our data networks.
Jim Fitzpatrick: What should a dealer look for? How do they go about finding a new digital company, or a new digital marketing company to work with?
Eric Mercado: It’s tough. I was in your waiting room. I was talking to a dealer, and he was like, “Man. I have 45 of you guys calling me every single day pitching me why you’re the latest and you’re the greatest and I don’t know who’s the best. You all sound good.” That’s good. That’s good that they’ve got much opportunity-
Jim Fitzpatrick: Not much help for the dealer around there.
Eric Mercado: It’s not much help for the dealer. They don’t know whom to believe. There’s a couple different ways that I have found we’ve grown our business and that I feel like we’ve created our best partnerships.
Eric Mercado: One is referrals. These dealers, most of them anyways, participate in 20 group meetings, they’re sitting in factory meetings. You’re talking to a dealership who’s had a lot of success comparable to you. Let’s not say you’re the number 400 dealer, your franchise, they’re the number one. You’re not going to be able to do what they’re doing-
Jim Fitzpatrick: No, not really.
Eric Mercado: … with a change of vendor. But comparable to you, a dealer that’s moved the needle where at one point you guys were peers and seeing eye to eye and recently they’d made a change and that change made an impact, who are they working with? What are they doing? That’s what those forms are for.
Eric Mercado: I would also say demonstrations. That’s definitely something my counterparts at the office would probably hate me for saying, but see four or five demonstrations. See four, five different companies, see what they have to offer.
Eric Mercado: There’s three to four things I would say for any vendor you decide to choose within our vertical you should be looking for. This is not a plug. This is not me saying, “Use us because we have these.” This is just a standard doing business.
Eric Mercado: I would say, number one, when we talk about transparency, that word is thrown around a lot in our vertical.
Jim Fitzpatrick: That’s all you hear about.
Eric Mercado: Yeah. A gentleman on this show comes on once a week and talks about transparency. Brian Pesh. I feel like there’s levels of transparency. I can show you a lot of your vanity KPIs. I can show you where everything’s working. Or I can actually show you what your return on investment is.
Eric Mercado: I feel like to work with a vendor in this space in this day and age, they’re truly advanced, they should be able to show you what your return on investment is. If I give you said $10,000 for an ad involvement, what is my return in actual profit margin for customers that engage through your channels and bought or serviced vehicles.
Jim Fitzpatrick: Wow. That’s pretty cool.
Eric Mercado: That level of transparency, it’s available. There are a number of vendors that can do it including us. That level of transparency, it leaves the second guessing behind. Is this working? Is this not working? I see my calls per click went down, but my sales also went down.
Eric Mercado: Did that work? Well, cool. If my customer click went up, should I fire this vendor? Oh, wait. Never mind. I got a 12 to 1 ROI on this ad involvement, so no, I’m not. That kind of transparency is important.
Eric Mercado: I would say number two is work with a vendor who is not so focused on telling you internally at the dealership what you’re doing wrong, but gives you strategic recommendations on how you two together can work better. What I mean by that is-
Jim Fitzpatrick: Building a strategy.
Eric Mercado: Building an actual strategy. In any vendor in the space in any marketing space comes to you with the exception of a production company that is not automotive centric and says, “What do you want to do this month?” Just get rid of them immediately because they’re not strategic minded. They don’t have your best interest in mind. That’d be number two.
Eric Mercado: Number three for me, which I think is probably the most important thing, is when you’re looking at a vendor use your gut.
Eric Mercado: A lot of dealers will say, “Well, the factory told me I should use this guy because they’re the least expensive. I went to the presentation. I saw some of the stuff they were talking about. It doesn’t really gel with me, but I went with them because the factory told me.”
Eric Mercado: We’re on a number of certified vendor’s list. This is me again. My peers are going to be like, “What are you talking about?”
Eric Mercado: Go with your gut. If a vendor tells you a lot of things that don’t seem realistic for your business at its current stage, anything they’re telling you is arbitrary. Excuse me. So anything they’re telling you right now is arbitrary until they’ve gotten under the hood.
Eric Mercado: I would say you’re trying to make a long-term decision. Nothing you’re doing right now is for a month. If you’re doing that still, then you’re not going to be successful, unfortunately. You got figure out what am I doing for the next year and create a strategy that’s going to help me get there in a year.
Eric Mercado: If they’re not willing to give you that time up front, or give you that time and information up front or invest time themselves to do the research without getting arbitrary expectations, probably not a good fit.
Eric Mercado: Number one thing is, did you set a goal? Was it a smart goal? Was it measurable? Was it attainable?
Jim Fitzpatrick: Exactly.
Eric Mercado: Realistic and timely? As long as it was attainable and realistic and you’re hitting that number … Because I’ve had some consultations where we say to the dealer, “Hey, I’m selling 50 cars. I need to sell 300.”
Eric Mercado: Okay, cool. What kind of changes are you guys making operationally. You got six sales people out there right now. Hire 40?
Jim Fitzpatrick: And you have 80 cars in stock.
Eric Mercado: And 80 cars in stock. If it’s a realistic goal, which we’ll be able to help you identify in the consultation, but we’re going to help you hit it like it’s a market bear. That’s our approach. It’s a little bit different. We don’t want to be weighed down in conversations where for an hour we’re talking about why it costs per click move from a $1.41 to a $1.43.
Jim Fitzpatrick: That’s crazy. Like I said, it becomes mind-numbing.
Eric Mercado: Yeah, yeah, it’s the difference between Jim Fitzpatrick searching this way or this way. That cost per click goes up or down?
Eric Mercado: But did Jim Fitzpatrick come in and buy a car? We can tell you that.
Eric Mercado: That’s the goal. That’s the goal of the conversation with I think with any marketing partner in this day and age which is why you’re starting to see traditional vendors lose traction. They just are because they can’t show their return on involvement.
Jim Fitzpatrick: That’s right. That’s right.
Jim Fitzpatrick: Well, Eric Mercado, thank you so much for joining us on-
Eric Mercado: Thanks for having me.
Jim Fitzpatrick: … CBT News. We really appreciate it. It’s always great having you in here because we got full of all kinds of news and information for dealers to help them in their marketing. So hopefully we can have you back in a few months, give us an update on what’s going on in automobile marketing. It’d be great.
Eric Mercado: For sure, for sure. I appreciate your time.
Jim Fitzpatrick: Thank you so much.
Eric Mercado: Thank you.
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