As the founder and president of DealerLink, a Charlotte, N.C.-based marketing services provider, Tim Parker has helped his auto dealer clients launch all manner of direct-mail campaigns. The economic downturn and onset of the Internet age, however, put mailers on the back burner for many dealers, but Parker believes the medium is poised for a comeback — so sure that his company is offering a money-back guarantee. The magazine caught up with Parker to find out why he thinks dealers will turn to direct mail in a big way in 2011.
F&I: Just how badly did direct mail suffer as a result of the credit crisis?
Parker: Certainly, a number of dealers cut back. But direct mail suffered for other reasons as well. First, for years, dealers had been doing direct mail almost blindly, without any consideration for whether the customer could qualify. It’s known in the industry as saturation mail. Why, in today’s economy, would a dealer want to advertise to someone who simply can’t qualify to buy?
Second, in talking to dealers over the last two-plus years, it was evident they felt opportunities were missed when they were fielding the inquiries from customers on their direct mail. See, during the downturn, many dealers disbanded their BDCs, so their salespeople had to answer phones.
F&I: In the third quarter 2009, subprime auto loan originations grew for the first time since the onset of the credit crisis. Did you see more orders from dealers looking for special finance customers at that time?
Parker: Across the board, we started to see an increase in activity. Lenders still are asking more questions. Scoring is in place for prime, but they’re double-checking everybody else.
F&I: Do you think dealers will react to that news by sending more-targeted mailers and restaffing their BDCs?
Parker: Yes and no. I do expect dealers to choose their campaigns more carefully, and they’re going to want to know exactly where they’re spending their money. As for the BDCs, we have eliminated that concern because we insist that our call center, which is based in the United States, field all the calls and set appointments based on a schedule the dealer provides. We also follow up with any no-shows.
F&I: What types of campaign are you recommending for 2011?
Parker: We don’t offer saturation mail, only bankruptcy and credit score-based direct mail. Frankly, we see anywhere from three to six times better results from the credit score-based mail than the bankruptcy mail.
F&I: Why is that?
Parker: Just because a consumer has a discharged bankruptcy doesn’t mean they can qualify for an auto loan. There are any number of factors that may disqualify them, such as recent derogatory credit items after the filing, or multiple bankruptcies. Or they may simply not meet the banks’ minimum credit criteria.
F&I: If you’re going by credit score, what’s your target range?
Parker: We let each dealer determine the credit score range for his or her campaign, but our history shows the greatest success with scores between 525 and 675. There’s not much response from consumers above 675. However, if you have in-house financing — or perhaps Credit Acceptance — and can do anything below 525, you can have a lot of fun with this program. And, to my knowledge, DealerLink’s credit score mail is the only one in the industry that is willing to guarantee the dealer’s investment.
F&I: What do you say to dealers who believe direct mail’s role is better filled by Internet and social media marketing?
Parker: Social media marketing is certainly a medium in which every dealer should have a presence, but the consumers you reach through social media marketing already know who you are, and they may not qualify for the financing you’re advertising. The consumers you get from our direct mail programs are new to you, and they absolutely will have the credit required for you to sell them a car.