On today’s show, we’re pleased to welcome back Andy MacLeay, Director of Digital Marketing for Dealer.com.
Jim Fitzpatrick: Hi everyone. Jim Fitzpatrick with CBT News. Thanks so much for joining me today. Today, I’m happy to have with us Mr. Andy Macleay, Director of Digital Marketing for Dealer.com. I know that you know this gentleman. He’s been on CBT News a number of times. Welcome back to the show, Andy.
Andy Macleay: Hey, Jim. Thanks a lot for having me on here.
Jim Fitzpatrick: Sure. So I’m really happy that you’re on the show because this is an area that’s near and dear to my heart, which is digital marketing for fixed ops. This is something that before we got started recording today, we were talking about the fact that dealers had over the years had not really allocated much to fixed ops marketing. And only recently, in recent years have dealers kind of waken up and said, “Wait a minute, your next sale is coming out of fixed ops.” Fixed ops generates a tremendous amount of gross profit for the bottom line. So it’s great to be talking to you about this, and it’s become such an important part of the revenue for dealerships. And yet they lose a significant portion of that revenue to third party vendors. Why is that?
Andy Macleay: Yeah. So there’s a number of reasons. You sort of mentioned this idea of attrition of that revenue to these third-party vendors, and there are numbers that we have seen here from anywhere from $260 billion to $380 billion of available fixed ops revenue that’s out there, and that includes everything that maybe service-related, parts related. And dealers are only capturing about 30% of that huge nut that’s out there, right? And so for me, what I see is a huge opportunity here.
Andy Macleay: And why the sort of dealers haven’t focused their digital marketing efforts on fixed ops as much as they have the new car side is there’s probably a number of reasons for that. I think that many of us are focused. The fun part of being a car dealer is really moving that metal. I think that there for a number of years were OEM incentives through coop that would really sort of incentivize dealers to push car sales over that service side. But we’ve seen a significant shift here over the past two years where both dealerships that are really savvy about kind of how they brand themselves and OEMs that understand that, “Hey, we sell a lot of cars through these dealerships out of the service lanes of these dealers.” They’re really beginning to fund that and back those strategies.
Jim Fitzpatrick: Sure. So how can dealers apply digital marketing dollars to fixed operations in order to increase dealership profitability?
Andy Macleay: Yeah. So that’s a good question, and I think the first step is just recognizing that a dealership needs to establish a strategy for fixed ops just like they would any other profit center inside of another dealership. New, used, fixed ops, all of those require what we would consider to be an omnichannel advertising approach. So those are things like the basics of paid search, retargeting, display. But you can really amp it up with things like digital video advertising. You can look at areas like digital radio. There’s a number of ways that you can begin to sort of spread out how you message your fixed ops capability inside of that dealership.
Jim Fitzpatrick: And what are some of the main reasons dealers have been reluctant to split their ad dollars between fixed ops and inventory pages?
Andy Macleay: I think for a long time it was kind of twofold. It very frequently was a cultural issue where the people that were in charge of kind of the digital marketing inside of a dealership tended to come from more of the sales side of the house than they would be the fixed operations side of the house. So that’s a comfort zone right there to begin with. That’s beginning to change. I think also there was this idea that many of the OEMs would coop nearly exclusively new car sales. Again, big change has happened over the past couple of years. Most of the progressive OEM programs that we’re working with right now are beginning to coop at least a portion of the fixed ops digital marketing for dealerships, and there’s a really good reason for that. Again, like we had talked about before, there are a ton of car sales that are made from right inside the service lane at a dealership. But it also protects the brand in times of slower car sales.
Jim Fitzpatrick: Yeah, for sure. And it’s good to hear that the OEMs are finally waking up to this and wanting to push more business into fixed ops via digital marketing and such. What can dealers do to allocate digital marketing dollars towards their service experience and capabilities, and what can they expect from that investment?
Andy Macleay: So that’s a great question. Again, I think that this was a portion of the challenge as to why people maybe were reluctant to invest in the fixed ops digital marketing strategies that we’re seeing people begin to invest in today. And that’s really because it’s a lot easier to sort of track the successes of those campaigns. At Cox Automotive, we have service schedulers through our Xtime integrations, which will land you directly to a service landing page that can clean out the digital cobwebs. And that’s kind of the area that received the least amount of love from a digital marketing side when it comes to the website. But there’s so many great things that you can do.
Andy Macleay: I’m here in Vermont right now, and we’re having what we like to call mixed precipitation. This is the time to put on your snow tires, right? The great part about fixed ops is there’s always something to talk about, always some way to connect with your customer. And if I’m a digital marketer, I love having stories to tell to my customers to draw them in, give them incentives to come in, like a tire change special. When you do that, you will increase the value of each RO that comes in. So obviously we want to get people in there to get their service done by qualified technicians who know how to work on these cars, but at the same time, you really have a great sales opportunity when people bring in their vehicles. From what we’ve heard from our partners is on the low end, about 10% of all service customers are well-qualified leads who walk in the door. So you could do the math very quickly on whatever your closing rate is, but if you knew that about 10% of the people that walk through that service door were well-qualified leads on a new car, you’d be posting somebody up in that service lane.
Jim Fitzpatrick: There’s no question about it, and I think dealers that are listening, they know in their heart of hearts that customers currently, new car customers, used car customers are driving through a lane called the service lane behind their dealership or next to their dealership, whatever the case might be. And it just needs to have, to your point, show a little love, throw a little money that way, try it on for size. You spend $100,000 in the variable ops side to drive traffic in, and you spend very little money typically in the fixed ops side. And to me, it just doesn’t make any sense in 2019. And then, of course, as dealers, we complain that we only have 30% of the people coming back to our service drive that purchase cars from us. And you’ll complain about the fact, as a dealer, that you want to write more service. Well, if you want to write more service, put your money where your mouth is and try this, right? It’s crazy.
Andy Macleay: Yeah. It’s a fantastic point, and we know from our Cox Automotive fixed operations study that we did in 2018 and 2019 that 74% of people that return to a dealership within 12 months after the purchase of their car are very likely to return to that same dealership to purchase a vehicle. So when you’re thinking about marketing to a customer, it doesn’t just stop once they get the keys and they drive off the lot, right? You need to continue to communicate with them because what that does is that allows you to open up that line of communication and draw them back in. And that’s where you really build customers for life as a dealership.
Jim Fitzpatrick: Yeah, I agree. So once a dealer sets aside the digital marketing spend for fixed ops, what is the ideal service website landing page look like? What should be on there?
Andy Macleay: Yeah. I shouldn’t even have to say this but everything today should be mobile-friendly, specifically when it comes to service. I think that people who are looking for service from a mobile experience needs something now, maybe need to schedule an appointment directly from their phone because it very frequently could be a sense of urgency that they need to get into the shop. You should make it easy for them to call. But at the same time, you should have all of the things that you love about your service shop expressed inside of that page. I will guarantee you that there are many, many dealers out there who have spent six, seven figures creating a service experience for their customers at their physical location. We really need to put in kind of the same amount of work on the digital side that we do on the brick and mortar side because that is where 80% of our service customers are beginning their journey.
Andy Macleay: So for me, it just makes sense to offer all of the great things, let people know that you have a coffee shop. Maybe you have a shuttle. Maybe all of these things. I’ve got specials on things like oil changes. And you need to update that monthly because what that does is that allows you to rank better inside of Google, Microsoft, all of the places where we really want to build that organic presence. And then you drive traffic with digital marketing.
Jim Fitzpatrick: For sure. Well, Andy Macleay, Director of Digital Marketing for Dealer.com, I want to thank you for coming on the show and talking about this very much needed topic for dealers to listen to because, and I’m painting it with a broad brush, there’s a lot of dealer groups do a great job in this area. And I commend them for it. But there’s a lot of dealer groups out there that really need to pay attention to marketing their fixed ops department. And they start by their website, start on digital marketing first and foremost. You want to be there when somebody starts out here, right? I mean, that’s really the name of the game. More than anything else, direct mail is great, but at the end of the day, when somebody types in ‘Toyota Camry’ or ‘Highlander tuneup’ or whatever, your dealership needs to come up, right?
Andy Macleay: Yeah. You don’t want Jiffy Lube or Joe’s independent service shop coming up. You want the folks that have build that brand equity and have the training and can service those customers. And I think that with a tiny bit of effort, many, many franchise and independent dealers can really take that top spot and give the service experience that they give in their brick and mortar stores.
Jim Fitzpatrick: Yeah, I agree. Andy, thank you so much for joining us on CBT News. It’s always a pleasure. And this information’s much needed. So thanks so much.
Andy Macleay: Jim, thanks a lot. I’ll see you soon.