Why Your Dealership Should Incorporate These Direct Marketing Strategies

direct marketing

On today’s show, we’re pleased to welcome back Eric Mercado, President of WeDrive Automotive. Eric is here with us today to talk about key automotive marketing trends and best-practices for 2020, as well as the upcoming NADA show, where you can catch WeDrive at booth #1421C.


Jim F.: Hi everyone. Jim Fitzpatrick. Thanks so much for joining me on another edition of CBT news. We’re so happy to have with us in the studio today Mr. Eric Mercado. I know that you know this name and this face. He’s been on CBT News a number of times before. He is also the president of WeDrive Automotive, so thank you so much for joining us.

Eric M.: Thanks for having me.

Jim F.: Yes, so I know that you criss-cross the country helping dealers all the time with their marketing, and you guys are doing such great work at WeDrive. Talk to us a little bit about some of the trends, the marketing trends, that you saw in 2019 that will carry over in 2020, and things that dealers should pay attention to.

Eric M.: Yeah, there’s probably three trends that we saw in almost every conversation when we’re talking about a dealer’s holistic marketing approach we found was something that was kind of talked about. Digital retailing, obviously, was a huge, huge shift in 2019. It was spoken about 2017. Dealer dabbled in it in 2018. You’re seeing large enterprise partners of ours now start to jump in and implement it in every single one of their stores nationwide.

Jim F.: Does that change, when a dealer says we’re going to do digital retailing, does that change the way you market a dealership?

Eric M.: I think it should. What we have found is there’s no rhyme or reason or specific way to do it, but I think it needs to be a part of almost every message. It needs to be like a unique selling proposition that that dealer offers. Even if other dealers in the market offer it, if they’re not marketing it, consumers don’t know. Consumers don’t know about the buy direct experience, to buy online. I don’t have to come to the dealership.

Eric M.: And so I think that one of the things that you’re seeing a lot more of is that shift. And I’m not trying to promote digital retailers, but there are a few out there that do a great job. And we’ve found that even when we are marketing offline, online, and driving traffic to those particular pages or applications on dealership websites, we’re generating increased conversion rates, generating increased sell to rates. So digital retailing for us was one of the things that we saw take a huge spike in interest and a lot of conversation around in 2019, more so than we did the previous year.

Eric M.: I also saw a big shift in artificial intelligence. That was again, artificial intelligence almost in every aspect of automotive marketing. You saw it with smart bidding from Google now on search. You’re seeing it with chat bots that manage chat feeds when consumers start to communicate with the dealership to tell [inaudible 00:02:40] internal bandwidth, right? Companies out there that specialize in that. You’re seeing it with messenger bots on Facebook for Facebook applications, artificial intelligence to scan historical transactions for equity mining. So that’s another one that we saw a lot of and we’ve even incorporated artificial intelligence in some of our data mining programs and found success because it helps take the human element of error out of these campaigns. So that’s been something that we saw a huge spike of.

Eric M.: And then video. Video marketing has been massive in 2019.

Jim F.: We hear so much about that.

Eric M.: And it’s crazy. We integrated online video into some of our programs. We’re seeing that when we actually match that back to in store visits, people that have viewed the video and through like a unique ID that we’ve created for them, we track that through to an in store visit. I mean the numbers are crazy. Dealers spending four or five grand now in video where it used to be taboo to spend $1,000 on video online. But they’re seeing 150, 200 in store visits from people that viewed their video before they came to the dealership. And I’m not going to tell any specific provider, but there is YouTube, there’s some programmatic channels. I think just the concept of online video in general has changed the game.

Jim F.: What are some of the trends that you see in direct marketing?

Eric M.: So trends in direct marketing are basically mobilizing direct, right? So incorporation of text messaging, all right, giving consumers different channels of communication, right? Like if I want to contact the dealership, do I have to call the phone number that’s on the mail piece or in the email? Or do I have to visit the website and fill out a form fill? Which to me is a little bit kind of antiquated of a process and kind of like what we used to do five, six, 10 years ago versus can I pick up my cell phone, which is always on my hip, my smart phone, and text the name of the dealer to a short code and immediately get a response back with what my car is valued at, what upgrade options I have.

Jim F.: That’s incredible.

Eric M.: A micro site I can visit. So the integration of text messaging into all different marketing channels has obviously increased the response rates to a lot of these programs. And it’s great because they’re kind of at like their peak point of interest, right? You know they have their mobile phones. You received their cell phone. They’ve now opted in for text messaging, which is a preferred method of communication for most customers. So you’re actually building a database that you can communicate better with down the road as well. Text messaging for us in … it’s changed the game for us with regards to direct response numbers. We’ve seen our average response rate of about 1.2% increase to over 2% right? Still getting people that call, and now we’re giving people that text.

Eric M.: I would also say the incorporation with, for us, it’s been not only the direct marketing side of it, but how are we using the data that we’re marketing to in direct marketing to pair with the other channels beyond direct marketing. So what we found is taking those same audiences that we built these manifests for and creating audiences and Facebook with profile matches and custom match campaigns and YouTube and SEO content around the program on the dealership’s website and connecting the experience has been a big game changer for us.

Eric M.: So again, you could say mobilizing direct mail, digitizing your direct mail. But basically it’s creating an experience that connects the dots between offline and online. Right? I received something that was demand creation. It told me I was in a position to trade or it told me it’s a great time to buy. I had a life-changing experience. I had a kid. I know I need to get an SUV. This is perfect. And now I can text and identify what can I upgrade to an SUV for with my trade.

Eric M.: I can call and immediately be dropped in some kind of a post-call cadence of communication. I can visit a micro site that talks to me about my upgrade options. I do not have to call the dealership and schedule an appointment and come in and sit with an advisor and do all those steps. And then worst case scenario, I don’t do any of those steps and I can go online right now, figure out the car I want to buy and order it and they can deliver it to me. Right? So there’s a lot of different steps beyond just the marketing channel that the dealership has to take control of in the way of communication. But I think, again, digitizing or mobilizing your direct marketing efforts is really the biggest game changer for our industry, our vertical that we’ve seen trending.

Jim F.: Are old dealers still doing direct marketing?

Eric M.: Yeah, they are. I-

Jim F.: Still a part of their budgets.

Eric M.: I have dealers. It’s funny, I wouldn’t go as far as to say all dealers. I mean I have dealers that do it periodically, and I have dealers that have told us, through prospecting efforts, “We don’t believe in traditional media. We’re a hundred percent digital.” Which is fine. What I would tell them is, and I do and my team does, is that digital is a demand capture set of channels. We are, people are already exhibiting intent to buy. So they are mid to low funnel in most scenarios. Your goal, is to cast the net and bring them in down the funnel til convert or they come to your dealership.

Eric M.: What we do with demand creation, we are identifying consumers that may not know they’re in the market. That they may not know that their vehicle is worth a certain amount of money-

Jim F.: They are once they see an offer.

Eric M.: Exactly. And they may have gone through a life changing experience. They may have not known that being discharged from a bankruptcy now opens them up to be an approved for auto loan. They may have not known that they are pre-qualified for a certain loan amount just based off of their auto [inaudible 00:08:06] criteria. They may not know that we’ll buy out their lease three months in advance of terms. So-

Jim F.: Lease termination programs.

Eric M.: Exactly. And digital doesn’t necessarily do that just yet the way that direct marketing and email marketing does.

Jim F.: The other thing too is that, in our household there’s four cars because we have two kids in college right now and of course my wife and I. So there’s four vehicles, at least, at any given time. So I might be in your database and you might be a Toyota salesperson and maybe we own a Toyota in the house. But yet I know that my son’s vehicle is coming to lease term. You know what I mean?

Jim F.: So if you send me an offer, I might look at that offer and say, well, while I’m not in the market for a vehicle, we’re in, we happen to be in the market for a vehicle for my son’s car. Or maybe my son’s in the market for a vehicle. So no longer is it, well, that individual, his lease, he just got into at lease two years ago,.it’s a three-year lease. We all know that a year out is pretty aggressive.

Eric M.: Yeah. Huge liability.

Jim F.: However, who else is in the household for that person, you know what I mean?

Eric M.: Exactly.

Jim F.: So you can market to those people through the one that you’ve got in your database, because you don’t have my son or my wife or my daughter.

Eric M.: Exactly. And the funny thing about that is from a tier two level, a lot of what we’re doing for tier two is actually conquesting. Consumers coming to term on their leases with conquest brands. So no naming OEMs. But an OEM will come to us and say, listen, we have a huge incentive on leases for this particular model. Here are their core competitive models in market. Can you find out who’s leasing these vehicles for us in this PMA set of zips? We’ll go out in the market and let them know, exchange your vehicle and upgrade to this and we’ll terminate your lease payments in the dealership.

Jim F.: Nice. Nice. [inaudible 00:09:45].

Eric M.: Exactly. So what you said was a hundred percent correct in the fact that when we do sales matches, we do them in two different formats. You can do a sales match using phone numbers and emails, right, and names, and identify these are the customers that through channels of communication bought from us. We reached out to them with this email, they came in and bought. Or you can do a sales match by household. And there’s about a 20% variance in sales matches when you do a sales match by household. Because a lot of times the person you’re communicating with is not the actual person that buys the car.

Jim F.: That’s something.

Eric M.: It’s not the actual person that gets approved for credit and it ends up in the DMS for the database, but they live in the same household. And it’s about a 20% variance. It’s just shy of that on average. So you’re right. One out of every five customers that we communicate with don’t let buy for themselves.

Jim F.: That’s right.

Eric M.: But they’ll buy for somebody in the household.

Jim F.: That’s right. That’s right.

Eric M.: And there’s also a lot of multi vehicle purchases that we see where it’s, I bought four vehicles from one channel of communication that told me I was in the market. I went bought for myself, I bought for my wife, I bought for my kids. Right? So there’s a lot of statistics around … Omnichannel marketing is nothing new, right? We’ve talked about it for a years. Having, scoping, a wide scope of different channels you market through, different audiences, and making sure that wherever they go, you can talk to them.

Eric M.: The difference between what we do, and I think just digital marketing in general, is that we’re creating a much more personalized experience in our communication. We’re talking to the consumer by name. We’re talking to the consumer by any different data asset that we have on that customer within our given manifests. All right. The audience that we built out. Their loan payment, their balance, their wife, their birthday, right? So there is a difference there because we’re creating a better experience and because we’re telling them things like again, they may have not thought they were in a position to do. Right? Trade the current vehicle and terminate their lease.

Jim F.: Especially if you, if it’s no money down, no payments for 90 days. Easy qualifying.

Eric M.: Incentives do help. Especially whenever the, you’ll see seasonal spikes in our industry. And you see it. They’re typically in line with intent and incentives. Right. What I mean by that is if you look at the highest moments of intent online, they come in the form of holidays, major holidays, your President’s Day, your Memorial Day. Your Black Friday is obviously a big one. The year ends, right? Because those are when consumers are ready to buy. So you’ll see these intense spike online of consumer searching around automotive sales and President’s Day, Memorial Day, Labor Day. Major holidays.

Eric M.: And then what you see is the incentives are typically directly in line with those intense spikes. So the factories come down and tell us we’re going to go and ante up and do $8,000 off the Silverado because it’s truck month and also just happens to be the same time as Memorial Day and there’s going to be a huge spike in intent around trucks, right?

Eric M.: So we find that when we do that, and the dealers also double down on those efforts to get their fair share, is when we get the best results. I mean, it’s not rocket science. It’s timing and incentives. And the best incentives, the most intent, and a personalized offer is going to create a better result. So the dealers that we talk to, I do it periodically, we always tell them, listen, you should do something in a personalized manner, whether it be direct marketing or email marketing, at least from a promotional perspective around major holidays and doing it about 10 to 15 days in front of that holiday. So for example, I think February 19th is President’s Day. The window for opportunities is actually the 1st of February to the 25th, is what Google tells us on intent perspective. So we tell our dealers get out in the market before your competitors. Be out there the first week.

Jim F.: That’s a good point.

Eric M.: Talk to consumers that don’t know they’re in the market week one, February 1st to February 7th, let’s call it. Drive them into the shopping process and then let your digital channels capture them and push them down to conversion. Not every mail piece right now is built to create a phone call. What we’re actually seeing is way more, way more leads in the other channels. Text messaging.

Jim F.: Wow. That’s great.

Eric M.: Yeah. Form fills, appointments set on BDCs. Just in store visits. People that never called, never texted-

Jim F.: Just walked in.

Eric M.: But their mobile device crossed the geo fence around your store and let us know they were in your showroom.

Jim F.: Wow. That’s awesome.

Eric M.: To have that kind of insight to how a campaign worked versus before it was I had a good month or I didn’t have a good month is the biggest evolution in our industry that I’ve seen.

Eric M.: So excited about 2020. There’s a lot of cool things coming down the [inaudible 00:14:11].

Jim F.: Speaking of that, I know you’re going to be at NADA this year. Talk to us a little bit about that. You introducing anything or, or?

Eric M.: We are. We are. So one of the things I’ve never been a big proponent of, and I’ve done NADA for 13 years, right? I’ve never been a big proponent of we’re launching something brand new and everybody come see what we have that’s brand new. Because to me brand new means is not proven, right? Like you’d never probably buy the first model of a brand new car. You want to give it a year and then you go buy the next one, right. I feel like for us we have something that works, and it works really, really well. And I feel like what we’re trying to do is just add NoS to the engine, make it move faster.

Eric M.: So we have some new applications to what we’re doing that we’re introducing, that have generated increased response rates, increased attributes and metrics. So we’re going to talk a little bit more about that. But we’re not going to change what we’ve done and had tremendous success with this year. I think we just need to get more consistency around creating a portion of the marketing budget that’s dedicated to these programs every single month, just like you would your paid search or your SEO or your Facebook. You’re not going to change it. It’s in there and you can benefit from the residual effect of it. So a lot of what we’re talking about in NADA is really the strategy behind what makes us successful. Showcasing some results.

Jim F.: Can dealers come by and sit with you or some of your representatives and kind of lay out what they’re currently doing and for you to give them from your perspective. Because dealers, and I know when I was one, you live with these blinders on. You know what’s going on in your dealership, in your market, you know? And if you go to a 20 group, you might lie to the other 19 about stuff. But at the end of the day, you pretty much know what’s going on and you’re not exposed to a lot of other things. So I think that’s one of the great things about NADA. But if a dealer comes by and says, “Eric, here’s what I’m currently doing. Let me pull the curtain back here. If it was Eric Mercado Motors, what would you do? Am I spending enough in direct mail? Am I spending enough in digital? Am I doing enough in social?” Will you give them kind of the once-over and say, “Hey, let me suggest to you some things.”

Eric M.: Yeah, I do it every day. I get calls every day. I’ve had loyal clients of mine for seven, 10 years. I get calls all the time going, Hey man, I just want you to take a look at this. Does this make sense to you? Should I be getting more conversions? Should I be getting less conversions? Is my closing percentage in line with what it should be.

Jim F.: And even if it’s, I’m sure there’s those times that you look at stuff and say, actually, I wouldn’t change anything.

Eric M.: I’ve said that many times.

Jim F.: So it’s just that validation that a dealer is looking for, if in the event the marketing plan is a solid one. But sometimes you might look at it and go, Hmm, I don’t know why you’re spending money on network TV or affiliate TV if in the event that you’re not, it shouldn’t be.

Eric M.: So there’s a lot of, this is the best way to do this. And that’s never the case when it comes to our vertical. Different franchises, different markets, different personnel, right. Different incentives. That all, those are all variables that contribute to sales. Retention, reactivation of lost customers, right. Market share.

Eric M.: Product. Let’s not forget about is your product in line with these other products? In some cases right now there still isn’t, right? Is technology up to par with all the products, which the leveling out. What I try to tell dealers is like there’s not one size fits all with marketing and it’s really kind of a constant analyze, right, and then tweak. Analyze and tweak, analyze and tweak. And it’s not to say like you should spend a tremendous amount of time heavy lifting, looking at all the granular analytics. But you should at least look at it a couple times in a given month and figure out what the trends look like. How is it against your pace?

Eric M.: Because a lot of times when we do deep dives into dealer’s current marketing plans and we have, I think we have like a dozen going on right now, where dealers are asking us, Hey, jump into my analytics, jump into, tell me what I’m doing right or wrong, but tell me where you can be impactful. What do we, what can we replace or supplement? A lot of times we jump in and I’m very, very honestly, I’m like, you’re not hurting here, here, here, here, or here. You’re not effective here. There’s times where there’s the driving hundreds, in some cases, thousands of leads and the closing percentages are a fraction of a percent. Well, what have you done because you’re seeing this opportunity, but what have you done around this opportunity to say I’m going to silo out personnel and dedicated to just closing these leads, train them on that.

Eric M.: A lot of it does come back down to dealer personnel and what they can do internally to manage each individual lane. I say you should have somebody that manages a lead channel, a lead by channel. Excuse me. So like this is my Facebook lead specialist, because that communication is different than the person who fills out a form fill on your website. It’s totally different. And if that person is a specialist and can repeatedly do the same exact conversation with every single Facebook lead they get versus the person that fills out a credit application, has that same exact conversation. And you have specialists in all those lead management. Not one, two. Depending on how many leads you’re getting a month, which is very scalable, you will see closing percentages increase.

Eric M.: What we have seen is that they treat all leads the same, equally. And somebody who fills out a Facebook lead-

Jim F.: A one size fits all doesn’t count.

Eric M.: Or makes a phone call off of a service is not the same. Right. So how do we change that, right? Even apply weights to your leads and say, this is, I need my best closers on these leads because they have the highest weight and the highest closer. They’re the Glengarry Glen Ross leads, right? Highest weight in our business, and the highest closing percentages. I think that those mindset shifts are happening slower than we all like them to happen. But a lot of times when you deep dive on a dealer’s marketing, it’s not the marketing that’s the problem. A lot of times it’s like, man, what are you doing to benefit from this?

Jim F.: That’s right. That’s right.

Eric M.: And if you can’t have that conversation candidly, then you’re really not a marketing partner with your account. You’re a marketing vendor. And vendors get replaced every month. Right.

Jim F.: Eric Mercado, president of WeDrive Automotive. For those of you that are listening to this discussion and want to learn more, stop by their booth at NADA. Meet Eric. He’s an easy guy to talk to. He’s got a very, very talented team as well. And they’ll help you with your marketing in 2020, as a lot of dealers need that right now.

Eric M.: Exactly.

Jim F.: So thanks very much for joining us on the show.

Eric M.: Thank you for having me.

Jim F.: Appreciate it, man.

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