Here are answers to two of the most common marketing questions we hear:

1. What percentage of sales should be spent on marketing?

There is a simple rule of thumb in dealerships when it comes to how much you should spend on marketing. If your dealership is less than 5 years old, or if you have brought on a new major line in the last five years, in most cases or depending on your margins, you should spend 5% of your gross revenue on marketing. As a quick reminder, your gross revenue is all of the money that your dealership brings in before you pay your taxes and expenses. If your dealership is older than 5 years old, and you haven’t brought on a new major line in the last 5 years, you should spend 3% of your gross revenue on marketing.

Let’s say, for simplicity’s sake, ABC dealership has generated a total of one million dollars over the last year. In this example, this pretend dealership has been in business for four years, so we will assume that 5% of the gross profits are going towards the marketing budget. That is $50,000. That is a lot of money. In most dealerships, you could get an entire additional employee for your marketing budget. In order to justify this, we have to be sure that our marketing money is generating us as much as an employee would.

2. How do you determine who your typical customer is?

Well, it’s easier than you think. Next to your point of sale, simply have a sheet where your employees can write down key information such as the customers gender, age (over 40 or under 40) and their favorite radio station. That’s it. You might want to ask a few different questions to help narrow in on where you might best market such as, “Do you subscribe / read the local paper?” or “How often do you drive down Highway 71?” Find out where they spend their time and what they are interested in. Once you understand who your customer is, you can start doing a better job marketing to them.

If you have any questions you would like answered, send them to Vanessa@BobClements.com. 

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More from Bob Clements

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For more advice on determining your typical customer:
Understanding Personality Types to Increase Sales Part 1 and  Part 2
Marketing Strategies to Grow Your Dealership [Webinar]