Does your dealership have a digital marketing strategy? When asked that question, I would assume that most dealerships would be quick to respond with a resounding “Of course we do!”. That’s a good thing.
With all of the changes taking place in the automotive industry, dealers are and should be interested in strategy. After all, running a business without a plan is like swinging at a baseball blindfolded: you might get a lucky hit a few times, but you won’t become a consistent hitter.
At times, however, we mix up plan and strategy. A strategy is a lot more than a plan. When we speak of strategy, we’re referring to a way, or ways, of acting and behaving that will provide a dealership with a long-term advantage over its competitors and other forces in the market. When a dealer creates a comprehensive and effective strategy, it does a few things: identifies its long-term competitive advantages that will give it a multi-X position of superiority, plans how it will defend that competitive advantage in the face of competitors and market shifts, and considers how its various actions will work together to strengthen its position.
As a first step, ask yourself this question: What defines your long-term competitive advantage in your market, and can that weather changes that you see on the horizon?
There has been a lot written about crafting a winning strategy. Michael Porter, in an article published in a 1979 issue of Harvard Business Review, famously put forth his “Five Forces Framework” for analyzing competition. He speaks of the need to identify competitive forces in order to determine the attractiveness of an industry. Once a business understands these factors, it can establish its strategy to grapple with any threat that might appear. Other theorists on strategy look at key advantages or competencies that result in long-term advantages– these can include brand, technology, regulatory advantage, and more. What is broadly agreed upon is that without a clear picture of what your strategy is, you’re unlikely to find long-term success.
Leading dealers are thinking about what types of digital marketing tactics they will use in light of their broader strategy. Moreover, they’re considering the environment in which they currently, and will, operate. If trends continue to progress as seen today, it seems that the auto industry is in the midst of the first of two distinct phases.
In the current phase, the case can be made that the fundamentals of the market (demand for private transportation, the franchise model, regulatory advantages, brick and mortar stores, etc.) will remain in place. While slight shifts may be taking place, these changes and forces are largely taken into account by the current business model. This phase may last five years, or twenty. In the current environment, a successful marketing strategy will likely be built around tried-and-true tactics like brand dominance, strong advertising, extreme service, economies of scale, flexible technology, or some other traditional advantage that is difficult to replicate.
In the next phase of the market, a successful strategy will be based on a flexibility to adapt to whatever that new transportation economy looks like. Will dealers become hubs for transportation networks? Will they become private fleet management platforms? Will dealerships simply sell to whoever is buying an autonomous vehicle – assuming that’s where we are headed? The future is really too foggy to know what actions taken today will lead to success in the changing market of tomorrow. A dealer should focus on a few core strategic competencies, and attempt to identify their role in the coming phase. This foresight, coupled with a flexibility to evolve, will help dealerships remain successful even without knowing what the future holds.
This brings us to the most important takeaway– no matter what the future holds, there is one thing that everyone can agree upon: strategies take time to assess.
To achieve larger, long-term goals, a dealer needs to assess their strategy through periods of ups-and-downs. It is difficult to achieve real results in just a few weeks or even months. That being the case, there are bound to be some bumps along the way. It’s unrealistic to assume that from the moment a strategy is deployed, you will consistently move closer to achieving goals.
This is the challenge for dealers. Marketing decisions should be made in accordance with long-term goals, to keep with the strategy that was previously developed. Unfortunately, many of these decisions end up being made with only short-term results in mind. For example, a piece of technology is measured in terms of how quickly it will produce results, instead of how it will play into that dealer’s overall strategy. A few months of lower sales– or some basic staff turnover– might cause a massive shift in focus, which can distract from the ultimate goals of that dealership. Setbacks and short-term decisions have the overwhelming power to distract dealers from opportunities for advancement and innovation. Short-term goals and metrics can also make the dealer more risk-averse, which in turn causes them not to pursue things that would be beneficial to their overall strategy.
What’s most important to achieving a strategy is to infuse your business and its employees with confidence to make decisions based on long-term goals and strategic imperatives. Try to associate metrics with those goals rather than succumb to short-term pressures that can undermine sustained winning. In this sense, the tried and true question of DISC (Does it Sell Cars) should really become “Does it Sell Cars Over a Sustained Period of Time”. That way, your dealership will be in a position to succeed no matter what the market becomes.
If you’re attending Digital Dealer 24, I’ll be presenting a panel presentation titled, “Short-Term Goals vs. Long-Term Strategy: How to Actually Be a Strategic Marketer.” This panel will feature two strategic-minded dealership marketing directors who will discuss how to avoid short-term pitfalls while implementing a long-term strategy.
