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6 Elements of a Successful Direct-Mail Campaign

September 2008, F&I and Showroom - Feature

by Denny Long

We’re all looking for an advertising campaign that just sells vehicles with little or no work. Unfortunately, it’s unlikely you’ll ever find one. It takes a lot of work to convert special finance and buy-here, pay-here leads into sales. However, you can at least make it seem easy

by focusing on the individual elements of the lead-conversion process. Let’s look at the six key elements and how they affect your return on investment (ROI).

1. Response rate

Many factors come into play here, such as target audience, offer, timing and competition. What you do to achieve a meaningful response also will affect the elements that follow. For example, if you offer gifts or a chance to win a prize, you may increase response, but you also may decrease your closing ratio.

There are many documented cases where dealers have used deception to increase their response rate. This is not a good idea, because it can lead to costly fines and lawsuits. Take a look at Tom Hudson’s articles in the June and August issues for examples. Worst of all, deception will give your dealership a bad reputation. That will have a negative impact on ROI for all your advertising.

I have a nice collection of articles about dealers receiving fines well over $200,000 because they thought they could get away with deceptive advertising. Don’t do it! It’s smarter, safer and more effective to target the right prospects with the right offer. I’ve seen BHPH promotions achieve a 10 percent response rate without gifts or giveaways of any kind.

2. Contact ratio

Measure the total number of leads against the number who were actually contacted by your sales staff or BDC. The initial contact is your best chance to set up an appointment. This is where the real work starts. I can’t tell you how many stories I’ve heard about a dealer getting a great response, but not selling any vehicles. Why? Because the sales team didn’t contact the respondents.

You pay good money to generate leads, so don’t let anyone drop the ball on following up. Call early and often until you reach the prospect. If you really want to increase your contact ratio, have an employee or call center in place to answer phone calls. Set as many appointments as you can on that initial contact, and you’re on your way.

3. Appointment ratio

So, for all the potential buyers who called in, how many said “yes” to an appointment? Again, this is an important number and it should be tracked. Create a script that everyone uses to ask for the appointment, and stick to it. Role play with your team to practice and refine the verbiage. This is where great training and discipline make a big difference. Remember, practice doesn’t make perfect, but perfect practice makes perfect.

4. Show ratio

How many of your appointments actually showed up? If you did a great job setting the appointment, you should do well here. This is an area where it is OK to offer an incentive for keeping their appointment. Offer a $10 gas card just for coming in. It will be well worth the cost. Make a confirmation call before the appointed time. If they don’t show up, make a follow-up call immediately after. See if they’re willing to reschedule. It’s unlikely you’ll sell any cars to people who never make it to the store, so do everything you can to get them to show up.

5. Closing ratio

I’m sure you’re already pretty good at this, because you do it every day. This is an area that requires constant tracking and training, regardless of which advertising source generated the lead. Having the right mix of vehicles and lenders makes increasing your closing ratio possible, but the desire and ability to close sales makes it a certainty.

6. Gross per sales

Like the first five elements, gross per sales contains its own unique set of factors. Did you buy the right cars at the right price? Did you have the systems in place to match each buyer to the right vehicle and the right lender? We’ve seen dealers raise their average gross by more than $1,000 just by implementing software that handled the matching process for them.

Improvement in any aspect of your direct-mail campaigns can improve your ROI. Remember that advertising is an investment, not an expense. In the current economic climate, some of your competitors will continue to cut their marketing budgets for short-term savings. Many of them won’t be in business when things improve. Focusing on the factors you can control is the key to staying profitable. Training and discipline is the key. Here’s the really big bonus: You can apply what you learned improving your direct-mail results to all your lead-generation investments. Good luck and good selling!

Denny Long is senior vice president at Dealer Marketing Services. E-mail him at dlong@special-finance.com.

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