By Bob Clements
If you are like most outdoor power equipment dealers, marketing is like playing darts blindfolded. You close your eyes and let the dart fly, hoping you hit that all-important bull’s eye that will bring customers flooding into your store. Every year, tens of millions of dollars are wasted by OPE dealers who fail to ask three basic questions: 1) How much should I spend? 2) Where should I spend it? 3) What should I expect from my investment?
How much money you should spend on marketing your business depends on three factors: 1) age of the business, 2) location, and 3) competition. If you are well established, the only player in town and in a visible location, then you don’t have to spend as much as a new dealer who is a little off the main road with a competitor who has an aggressive pricing strategy.
As a rule, you should allocate 2.5 to 4.5 percent (of non-co-op dollars) of your projected gross sales to market your dealership. Of that money, 25 percent should be allocated for dealership enhancements, and the remaining 75 percent should be divided up among wholegoods, parts and service department marketing based upon their contribution to total sales.
As an example, if you did $1 million in total sales for 2007, with $600,000 coming from the sale of wholegoods, $220,000 from parts and $180,000 from service, by deciding to invest 3 percent of your total gross sales into marketing, you would have $30,000 to work with. You are going to take 25 percent of that amount, or $7,500, to reinvest into improving your dealership. That money would be used for updates and improvements to signage, the outside, inside, fixtures, lights, or anything that will make your building and property more attractive to customers. You now have $22,500 to invest in other forms of marketing. That could be newspaper; radio; billboards; store events; lawn and garden shows; county fairs; direct mail; e-mail blasts; Internet; handouts (caps, pens, and T-shirts); and possibly the Yellow Pages.
Of that $22,500 budget, you allocate those funds based upon the percentage of contribution to sales of each department. Using the aforementioned example, $600,000 of the $1 million came from wholegoods sales, so 60 percent, or $13,500, would be assigned to wholegoods marketing. That amount, in most cases, can be co-oped, so you would have $27,000 for marketing wholegoods. Your parts department will be marketed with 22 percent, or $4,950, and the remaining 18 percent, or $4,050, will be used to market your service department.
Top photo: Everything about BA Lawn & Garden, Broken Arrow, Okla., used to scream “lawn mower shop.” Bottom photo: After being rebuilt, it is definitely sporting the look of a professional OPE dealership, and owner Mike Beason is reaping the rewards by enjoying his highest margins.Dealership enhancements
Now take a closer look at each of these areas, beginning with the 25 percent we have allocated for the store. Take a quick walk outside of your store and tell me that if you were a potential customer driving down the road looking to invest a few thousand dollars in a mower, would you pull into your store? Is the outside neat and clean? Is the paint fresh? Are the signs current? Is the parking lot well maintained? If you answered “no” to any of these questions, you now have a starting point for the $7,500 you allocated for the store. Don’t kid yourself into believing that your customers don’t care about how your store looks.
The outside impression that your store gives off lets customers know how they can deal with you once they walk through your doors. Consider a lighted moving sign as a part of your marketing plan. If your city or county will allow it, the investment you make over a 10-year period will pay you back in gold. Mike Beason, owner of BA Lawn & Garden, Broken Arrow, Okla., will tell you that once you make the decision to improve the outside of your store, the customers who walk in have a different attitude. Before Beason rebuilt his store, people walked in expecting a cheap price. Everything about his old store cried “lawn mower shop.” Today, when you walk into his store, there is no doubt you are in a professional OPE dealership. And, as Beason will tell you, his margins have never been higher.
Once your outside looks good, then move to the inside and invest in professional displays, signage and lots of lights. Most dealers forget that one of the most important aspects of merchandising their store is having the lighting up around the 800-lumen range. Put a plan in place, and each year, invest 25 percent of your marketing money toward revitalizing your store. There is no better use of your marketing dollars.
The next area of focus is your wholegoods. Using our example and taking into account your ability to utilize co-op dollars, you will have around $27,000 to market your wholegoods. The goal here is to focus your attention on your primary lines. Don’t go crazy, spending a little bit here and there; have a plan, and work it.
You all know in business the three keys to success are location, location, location. The better your location, the less you have to spend on marketing your business. You see, that’s the trade-off. If you chose to locate your business in a place that was affordable, meaning it was a little off the beaten path, then you have to spend more money on marketing than someone who was able to put their business on a road that has 20,000 cars drive by it each and every day. If you are not on the “main road,” then directional billboards need to be a part of your marketing strategy. I’m not interested in billboards that are randomly scattered across the town you live in; those do little to impact buying decisions for most potential customers. What I want you to consider are billboards that are on the main road within a mile of your location that you can use to direct people to your store. By utilizing a billboard on the main road, it’s almost like having a location on that specific spot. In most cases, you can work with the billboard company and get special pricing for a long-term lease. Keep in mind that billboards should have a picture that explains what you do, a message that gives simple directions, and a low price or low interest rate that will catch people’s attention.
If you are already on a main road, then events are going to be an important part of your plan. Go by a car dealership, and look at how they market their cars on their lots. Chances are they have a lot of flags, portable signs and activities that let people know something important is happening there. Car dealerships do pretty well for themselves. Let’s take what they have learned, and use it to create the kind of activity you need to boost your sales. Keep in mind that the purpose of marketing is to expose potential customers to your business. One thing we have to remember is that people are creatures of habit. We tend to do the same things over and over again. We eat at the same restaurants, shop at the same stores, buy gas at the same station, bank at the same location, and travel down the same roads — over and over again.
Sunrise Tractor & Equipment, Fort Pearce, Fla., cross-promotes one of its tractors outside of a local business with a professional-looking, poster-size advertisement inside the unit’s rollover protective structure.Another marketing concept to consider is cross promotions. If you are not familiar with cross promotions, they are simply working a complementary business. A bank is a great example. Meet with your banker, and arrange to have your equipment displayed in the lobby so that the customers at the bank are exposed to your business. It works well for both parties involved. Your business is exposed to the bank’s customers, who may or may not be aware of you, and the bank has the ability to loan customers money to buy your equipment. Not a bad deal for either party involved. Tom Kindred of Sunrise Tractor & Equipment, Inc., Fort Pearce, Fla., is a master at doing cross promotions. His bank has five branches, and he has equipment in the lobby of each one. The bank is happy because it creates excitement and interest for its customers, and Kindred is happy because bank customers are exposed to his business at no cost to him. He is consistently having bank customers stop by his store to talk about buying the equipment they have seen at their bank.
Of course, you have newspaper, radio, direct mail and Yellow Pages. When it comes to print advertising, use it like a billboard with a picture that communicates your message, low pricing or monthly payment, and a call to action — “Stop by this week for special savings!” Today, radio may be questionable as to its marketing value for dealers. In smaller markets, it still has a place. But as you move to larger markets, it can be a bit more difficult to easily identify what and when your customers listen. Direct mail is still one of the most effective forms of advertising if you are willing to do the mailings at least six times every six weeks. If you are not willing to do the repetition that direct mail requires to have impact, save your money. Finally, there is the Yellow Pages. Less and less of your customers use the Yellow Pages each year. For the monthly investment that is required, I find it seldom has the impact that some of the other forms of advertising have.
David H. Lightkep, Inc., Maple Glen, Pa., keeps its service department busy all yearlong by using the department’s marketing money to aggressively promote its services, which include free pickup and delivery.Parts and service marketing
We still have marketing money left for both the parts and service departments, so let’s take a look at some ideas on how to maximize the impact of those remaining dollars. Your parts department will have a natural growth of somewhere around 13 percent each year based upon the facts that you have more equipment in the market than the year before, and the equipment that was already in the field is one year older and needs more parts. With that in mind, you should try to drive your sales an additional 10 percent over last year’s numbers, plus the 13 percent of natural growth.
Marketing your parts happens in your store by your parts people. It starts with weekly specials specific to your commercial cutters. You might highlight specials on items like five-pound spools of trimmer string, 2-cycle oil, blades and filters. It’s your parts staff’s responsibility to set up displays on a weekly basis that highlight products the customers must have with pricing that will entice them to buy while they are in the store getting other parts. A portion of your marketing dollars will be allocated to professional displays and signs. Another portion should be used for incentives for your parts people to up-sell the customers. You will be amazed how many more sales will take place when your people get a little incentive to just ask. In the spring and fall, the parts department should put together a mailer that advertises special pricing on items appropriate to the season.
The service department is going to invest its marketing money during the fall and winter by advertising service specials and discounts on pickup and delivery. If you are not currently doing so, you are missing a great opportunity to keep your service techs busy and your shop profitable all yearlong. David Lightkep Jr., owner of David H. Lightkep, Inc., Maple Glen, Pa., has a service department that is busy 12 months out of the year. He does this by aggressively marketing his service. He uses his service department’s marketing money to send out mailings, make phone calls, and offer free pickup and delivery.
For many OPE dealers, marketing can be frustrating and confusing. The keys are to determine how much you are willing to invest in getting people into your business and then be willing to take the time to measure the results. If you do, 2008 will be a profitable and fun year.
Bob Clements is the president of Bob Clements International, a consulting firm that specializes in the development of high-performance dealerships. His organization works hands on with dealerships throughout North America, helping them attain the personal freedom and financial wealth all entrepreneurs strive to achieve. For more information, contact Bob Clements at (800) 480-0737 or email@example.com or visit his Web site at www.bobclements.com.