Parts and Service. Fixed Ops. No matter what you call it, it’s a giant marketing opportunity that many dealerships aren’t focused on to the level they should be. In 2017, consumers spent $114.15 billion on parts and service at new-vehicle dealerships, which breaks down to $6.8 million for an average dealership. This seems like a large number, but in reality, this is only 30% of all parts and service sales. Which means there is a $200 billion opportunity out there for dealerships to take advantage of.
We quote these same gigantic numbers every single year and every year dealerships continue to do less than they should. But we do get it. There are endless priorities and not enough people to do them. But you can’t blame us for trying to guide our clients towards doing just a little more each month. There is only a 6-8% average profit margin for new-car sales, but a 70% average profit margin for vehicle-service labor. The math doesn’t add up for where we prioritize resources and advertising dollars.
When a consumer purchases a car from your dealership, that’s a one-time transaction that doesn’t guarantee loyalty or promise a repeat purchase, but if that customer starts using your parts and services department they, in turn, become a repeat customer that generates sales long after that initial vehicle purchase. According to Google, consumers who have their vehicles serviced at your dealership are 3x more likely to purchase or lease from you again.
DOM360’s Director of Client Services, Mike Brown said “Fixed ops advertising can be done so easily and cost-effectively. Because there is a lack of dealers in this space and the competition level is low, dealers can capitalize on market share and increase not only their ROs but also retention numbers with little impact to the budget.”
So what digital advertising and marketing efforts should a dealer be focusing on for their parts and service department?
SEM and PPC
SEM should be the driving force for your dealership’s digital parts and service marketing strategy. We are in the age of online research before purchase, and the automotive parts and service industry is no different. According to Google, 40% of all automotive searches are for Fixed-Ops and 70% of drivers research online before they purchase parts and service (regardless of where they buy). Search and display ads that are integrated with your whole SEM plan can help maximize the performance of click-through rate, impression share, total leads, and more.
Social media usage is growing at a steady pace and is expected to reach 2.62 billion users worldwide by the end of 2018, making it an easy and useful way to reach consumers. Creating targeted ads for social platforms can get you in front of the right people at the right time with the right message. We are using 1st party dealership data such as retail purchasing behavior, demographic information, and financial data to pinpoint the correct people to target with the right message.
Video content is a crucial part of digital marketing and provides dealerships with a great way to engage and move consumers further down the purchase funnel. In fact, viewers retain 95% of a message when they watch it in a video, compared to 10% when reading it in text and 97% of consumers performed an action after watching a video. By adding video to the mix with your SEO and social campaigns your dealership can get an enticing message in front of the best target market.
Part of the whole marketing process is looking at the results of your efforts and analyzing the data. How else will you know if something is or isn’t working? By going through the results and reports you can pinpoint where your marketing efforts are really making an impact and where they need some work.
You have likely heard a lot of these themes before but now is the time to act. We all know the data is real just like the opportunity is real. As we start a new quarter let’s all decide to do something about it. Let’s give parts and service the attention it deserves. If you don’t, that independent down the street will.