RLD’s 2-part Marketing Matters series with industry marketing veteran Cleo Franklin continues with a doable approach for developing a marketing plan, for dealerships of any size. Franklin also looks at how to set a budget so that your plan actually brings results.
Rural Lifestyle Dealer’s Marketing Matters series with Cleo Franklin, president and CEO of Franklin Strategic Solutions, gets to the “nuts and bolts” of marketing. In the first installment, “3 Simple Questions to Improve Your Marketing’s ROI,” Franklin looked at how easily you can gather customer data to help you make more informed business decisions.
Next up in this 2-part series, Franklin outlines a doable approach for dealerships of any size to develop a marketing plan, along with setting a budget to deliver results.
Rural Lifestyle Dealer: Cleo, can you comment on the idea that dealers need to make a strategic commitment to a marketing program?
Franklin: Lynn, many small businesses struggle with committing the time, focus — and budget — to a marketing program. However, to succeed in today’s competitive environment, your business plan must include a strong marketing component, along with the necessary resources and budget to ensure its execution and implementation.
Cleo Franklin is president and CEO of Franklin Strategic Solutions.
All business plans provide an overview of objectives, goals and strategies for the entire business. However, it is the marketing plan that details the actions needed to achieve the company’s mission, objectives and goals.
RLD: How can a dealer set up a basic marketing plan. What are the critical components to help make up a plan?
Franklin: For me, the best marketing plans are fluid, quarterly focused and spread across many tactics. Avoid the “one-size-fits-all” approach as each plan is individual & specific to your business needs, goals and objectives. You want to build in the ability to test approaches and be able to shift if something is not working or new opportunities arise. Most importantly, the plan has to fit your particular market. What works in in Mexico, Mo., for instance, may not work in Mexico, Ind., as these towns may be similar in name, but very different in market dynamics.
Here are the 5 steps to developing a marketing plan:
- Determine your business objectives based on month, quarter and year.
- Identity the categories that will best help support those objectives, such as new sales product brochures, email marketing, social media/digital marketing and events.
- Study the latest trends and best practices in marketing — and see what your competition is doing.
- Intersperse your plan with traditional marketing promotions that you know work well in your market (radio ads, for instance) with digital and social media tactics. As a comparison, one study shows that businesses spent an average of 40% of their marketing budget on online tactics and that percentage is expected to grow to 45% in 2020.
- Invest in a CRM (Customer Relationship Management) system. In today’s hyper competitive, fast moving and increasing technological environment, a CRM system will give you a leg up. In fact, it is a requirement and doing business without one is like going to war with half a cannon, because half won battles are not a measure of success. For instance, a CRM system can show how many leads you are generating each month and how many are converting into sales. You can also track how customers found out about the dealership and the average value of the sale. Harvesting this data can help you fine tune your marketing plan.
RLD: What steps should dealers take to define their marketing budget?
Franklin: The first step I would recommend is to make sure the marketing plan is aligned with your business plan. Here’s what that means in real world terms. Let’s say your business plan includes a goal of growing sales by 5% over last year. The marketing plan should outline specific actions to support that particular goal. Those actions should be measurable and have a budget assigned so they can be implemented. The marketing budget, then, is sized based on what it will take to achieve the increased market share.
With this approach, you can see a return on investment for marketing as opposed to just seeing it as a cost. In addition, it’s important that everyone on the team be briefed so they can understand how marketing will help each of them and the business meet its goals.
RLD: What guidelines can you share regarding assigning a budget to the marketing plan?
Franklin: I would recommend establishing your budget based on industry guidelines within the range of 5-15% of revenue. Your business growth objectives will help determine how much your spend commitment will be. The marketing budgets will also be driven by the competitiveness of your market, the nature of the business, and the cost of the initiatives you intend to deploy.
A strong marketing plan backed with a budget will help turn a business plan into reality. Here’s why:
“A strong marketing plan backed with a budget will help turn a business plan into reality…” Cleo Franklin of Franklin Strategic Solutions
- It forces your business (just like your personal finances) to plan carefully on how you spend your dollars. This alone will help business owners think through upfront their financial options versus the opportunity benefits, both short & long term.
- Remember this quote, “What doesn’t get measured, does not get done.” A well-defined marketing budget allows you to place goals on your investment and also measure the cost versus performance of each marketing tactic. Ultimately, you can see how each tactic is driving revenue.
- Establishing a budget and tracking allows you to drill into the drivers of the performance (or lack of performance), be more informed, make better decisions to stop, shift, increase or test your marketing tactics.
- Lastly, your competition is more than likely budgeting for their marketing, tracking its success and along with measuring the return on their spend. So should you.
RLD: Can you comment on co-ops as a funding source? How can dealerships make the best use of those dollars every year?
Franklin: Let’s start with the perspective that many dealers, rightfully so, may feel using co-op marketing dollars can be tedious, overwhelming and difficult to figure out. A recent study showed that OEMs budget about $6-7.5 billion for franchise dealership marketing. However, about 80% of those funds are used by just 20% of dealerships.
And from my own experience and research, dealers who use their co-op funds experience better sales growth than those who do not. Co-op funds from the manufacturer is a tool all dealers must fully integrate into their marketing plans and promotions.
It’s really all about perspective and scaling your business. You want to find ways to get more out of less, keep your costs stable and grow. This additional funding source, for example, could be used for marketing tactics outside of your dealership’s budget, such as testing a promotion or changing something that is not working.
My advice to dealers is to please take time to learn, understand and use all the marketing support and co-op plans from the manufacturer you are partnering with. Don’t leave money on the table, as it is mutually beneficial for you and the manufacturer to find a way to utilize their advertising support funds.