Developing a Marketing Plan
When Dan Dumbauld opened his shop, The Auto Shop Inc. in Phoenix, in 1979, marketing was reserved almost solely for word-of-mouth referrals.
“We were very competitive and stood beside our core values and we just continued to grow,” Dumbauld says.
In more recent years, however, marketing has become a necessity for auto repair shops to help bring in business and offset spikes and slides in sales. That’s why a written marketing plan is so important, and why Dumbauld spends days at the end of every year analyzing the past year’s trends and putting together an annual calendar detailing all of his marketing campaigns.
Dumbauld swears by the planning process, and for good reason: 62 percent of his shop’s monthly sales dollars are attributed to marketing efforts. Dumbauld talked with Ratchet+Wrench to discuss the value of a thorough marketing plan—and how your shop can create one.
Why is creating a marketing plan important?
Just like with any goal you set, you have to create a goal and find the pathway to reach that goal. If it’s not written down or followed and the plan is just put it on autopilot, you will not gain the new customers you need. By creating a marketing plan and calendar, you are able to plan what you have to spend, what you’re going to spend and where you’re going to spend it for the whole year. Otherwise, it just doesn’t get done.
Your plan should have a goal, whether it’s to reach new customers, target existing ones, or grow sales. Most of our goals are in sales growth, so when we look at our reports every month, we know if we’re on track.
What should a marketing plan consist of?
The plan is based on graphing and charting the results of the previous year’s plan. We source every customer we write or who comes in the door to find out how they heard about us. We measure that and we see what marketing strategies are growing, shrinking or trending. We watch that and calculate a percentage of our overall budget to put towards marketing, which is 6 percent.
What’s important to remember is that internal marketing, any form of marketing that happens in the shop, is also part of this plan. Internal marketing is just as important to the dollars you spend trying to get a customer in the door. So whether it’s remodeling or training employees, that internal marketing component is included on the yearly plan, too.
After we identify our goals and the marketing campaigns we’re going to use this year, we plan everything out on a calendar. We include all of our marketing campaigns or efforts on that calendar. For example, we like to touch our database six times a year. For new customers, we send out monthly calendars that describe our specials, tips or facts. That goes on the marketing calendar every month.
If you have a campaign around Thanksgiving or a seasonal special, you would mark that on the calendar and designate however many dollars that campaign costs each week and month.
You also want to include any clubs or websites that you participate in on that calendar, like AAA or Better Business Bureau. Those programs might bill you quarterly or monthly, so by including it on the marketing calendar, we know exactly how much a program costs per day, per week or per year and we can measure the return on that investment.
How important is knowing your customer base to creating an effective marketing plan?
Nowadays, we can’t rely on the blind loyalty of customers as much anymore, which is why it’s so important to understand and know who your customer is. Not just financially or what kind of car they drive, but their interests, families, livelihood, where they like to go.
If you discover that a certain percentage of your database is involved in running, you want to market to that customer base. Maybe you could participate in a marathon—donate, or give a prize. You could create a campaign around that particular hobby. The more you can find out about your customers and how they live, the better your marketing plan will be.
That being said, it’s very uncomfortable for the typical service advisor because they already have a long list of questions to ask the customer. The marketing aspect is not at the top of what they feel their job description is. It’s a constant reminder to audit the invoices and make sure the service advisors are doing a good job of getting the information. It’s about consistency in the verbal communication.
How many different areas of marketing should you focus on?
It doesn’t matter as much how many strategies you have, but rather how well they work. For example, you could put all your money in television if the return is there, or you could have 50 small campaigns that bring you small amounts of business but pay for themselves. We have 25 different items on our calendar.
Roughly 45 percent of our budget is connected to Internet, website and social media efforts, another 15 percent is direct mail campaigns to new customers, and 5 percent is allocated to radio programs. The remaining budget is to our current database, which is our calendars, gift bags, follow-ups, and oil change reminders.
How do you decide where and how to allocate your funds?
We base our budget off the previous year’s trend. Unless you have statistics and information about where your customers are coming from, you’re kind of flying blind. Our budget is dependent on return on investment. We put all of last year’s ROI information onto a spreadsheet and create a trend line to see what did and didn’t work.
If you spend $10,000 on a campaign and you only get $5,000 worth of service, you know that program didn’t work. But if you spend $500 and you get $5,000 worth of business, even though that might only be a day’s work, the campaign returned 10 times the investment.
For my shop, we look for a 6–10 percent return on what we spend. Following that figure, we’ve found that multiple smaller campaigns, rather than one expensive campaign that has a lot of risk, works better for us. There’s not an exact science for how much of the budget we want to put on a given campaign, but last year’s trends provide a lot of insight.
For our location, we’ve found that direct mail isn’t providing the ROI we look for anymore. As far as attracting a new database, most of our efforts are going into Internet searches or referral associations. Our relationships with Google and NARPRO (Neighborhood Auto Repair Professionals) are both especially good.
How long should you stick with a marketing strategy you’ve planned if it’s not working?
The plan is always subject to change. If a campaign is budgeted out through the end of the year but it’s not working, we will drop it within a month or two and devote that money to something that is working or try something new. If the ROI still hovers around 6 percent we’ll let the campaign continue but keep an eye on it. That being said, if it’s clearly a loss and it doesn’t pay in two months, I believe it should be dropped.
How often do you assess your marketing strategy?
Tracking is more important than the marketing piece itself. We look at our reports every month, so we have an ROI that we look for every month, which is a 10 percent return. We measure that ROI on everything that we do and enter the information into a spreadsheet that I constantly review.
That’s how we discovered that direct mail wasn’t working anymore for us. We were regularly sending out huge campaigns that were very expensive, but we started to notice that they were taking more than a year to break even. Now we’ve decreased the amount of direct mail campaigns significantly. You can’t manage what you don’t know.
Which staff members do you share the marketing plan with?
I would recommend going over the plan with your leadership team, who should know all the different parts of the marketing plan. I also share bits and pieces with the service advisors, technicians, and the staff inside the office. They should all know the sales goals, but I don’t share all the details of the marketing budget and strategy.
How can you make sure you stay on track with the plan?
If it’s written down and thoughtfully planned, every month you should be able to measure your return and what you spent. It becomes so much easier to implement the plan and stick to it if it’s written down. You can decide to pull the plug on a campaign or allocate funds differently. I know a lot of other shop owners fail to measure what they’re doing or follow through on their plans. The problem with that is then you never know the reason behind your successes or mistakes. If you measure what you’re managing, it all comes together easily.