Part 1 – Sales Promotions
Properly designed promotions are more fun than advertising. Promotions should involve your employees, your customers, friends, family, neighbors, etc. All promotions should be done in a festive atmosphere. Plan the promotions so that as many customers as possible are included. Try to avoid promotions that have just one winner. It is very difficult to get people excited about one grand prize. People are more likely to participate if they think their chance of winning is better. If a promotion has one winner, there will be less participation than if there were twenty. The prizes do not have to be large, but they should be plentiful. Make sure you take plenty of pictures and post them at your dealership, on your Facebook page and on your website to show customers who chose not to participate all the fun they missed.
Promotions may be designed to serve several different purposes. All promotions should be designed to set your dealership apart from your competition. Some promotions will be designed to assist you in attracting new business by offering prizes or contests for prospects. Some promotions will be designed to attract new business by rewarding current customers for referring new prospects to you. Some promotions will be designed to reward customers for paying their accounts in a timely manner. And some promotions are designed to address certain collection issues you know your dealership will face, such as collecting payments during the holiday season.
Let me start out by saying that some types of all promotions are regulated by state law. Some promotions are considered raffles if a customer must purchase something (like a car) in order to participate and, in some states, that means they are forbidden, in others require a license and in some are absolutely OK. You need to consult your legal counsel on any promotion to make sure you are not violating any state law or local ordinance. In this first part, we’ll take a look at promotions designed for generating sales.
Attracting New Business
These promotions are designed to draw additional traffic to your dealership and providing an incentive for those prospective customers to purchase a vehicle from you during that promotion. I have see dozens of different promotions in this category used successfully.
These include getting a large set of dice that each prospect gets the opportunity to roll. Each pip on the dice is worth a particular amount off of the cars price or down payment. Other dealers have hidden slips of paper with dollar amounts written on them in balloons before they are blown up. Each prospective customer gets to pop a balloon and gets the amount hidden in that balloon off the price or down payment on the vehicle they choose. Another variation of this promotion is to hide a discount certificate in the glove box of each vehicle that would then apply to the pricing on that vehicle. These are just a few of the types of promotions that can be used to attract new business.
Attracting Referral Sales
These promotions are designed to reward your current customers for referring their friends, relatives and neighbors to you to buy vehicles. I know some dealers who get as much as 50% of their sales from referrals and repeat business.
Almost every BHPH dealership I have visited offers some kind of referral program (except in states where ‘bird dog’ payments are illegal). These are typically a standard $50 or $75 for any referral that ends up purchasing a vehicle. This is a great place to start but this promotion tend to get stale and not mean as much to your customers after awhile if you don’t vary it up occasionally. I usually see this take the form of some sort of progressive payment – for example, $50 for the first referral, $100 for the 2nd, $150 for the third and so on for a specific period of time. Other dealers actually have a drawing for all those who have provided referrals and pay off the balance of the winner’s loan. One of the best BHPH dealers I know combines both and takes it to another level entirely. They start with $100 for the first referral and the amounts get progressively larger until the 5th referral. After 5 referrals that buy, they pay off the referrer’s loan. And this is their regular program, not a special promotion for a limited time.
A strong referral program can also boost your repeat business. Why would your customers want to do business with another dealership that doesn’t offer them the benefits yours does?
These are just a few of the successful promotions I have seen used in these areas. The secret is to be creative. Think outside the box. The more you make the experience at your dealership unique, the more customers will want to do business with you and make their payments on time. Promotions are a great tool for making that happen.
