Cross-Segment Study on Marketing Tactics

Transcription

1 ADP DEALER SERVICES Cross-Segment Study on Marketing Tactics A study of heavy equipment, motorcycle, marine, RV, and heavy truck dealers. December 2011

2 Introduction and Explanation In challenging economic times, all dealers are looking for ways to improve their customer retention rates, and although each market segment faces its own unique challenges, what each has in common is a need to identify the most effective ways to speak to its specific customer base. In June 2011 PFW, Lightspeed and ADP Truck each distributed a survey to their clients as an effort to gain insight into how dealerships selling heavy equipment, agriculture, motorcycle, marine, RV, and heavy trucks were focused on marketing activities. In the next section of this document are the survey questions and responses, accompanied by observations for each industry. The results of this study indicate specific efficiencies and variations in marketing strategies from one market segment to another. Looking at what marketing efforts are at work in one particular industry can lead to new ideas and inspire creative new marketing approaches for any dealership, regardless of product line. ADP Dealer Services brings together a large, dedicated team of individuals with deep dealership and system experience to represent dealers of all kinds from a number of different segments. As a direct result, we are able to leverage this strength to conduct surveys such as this one. ADP Dealer Services is dedicated to assisting dealers run their businesses as profitably and efficiently as possible, and although the types of products sold by our customers vary, there are commonalities and valuable knowledge that can be shared between all of them. By offering a complete and integrated DMS, as well as offering complementary business solutions from a single source, ADP offers dealers the opportunity to more rapidly adapt to the ever-changing business environment and lower their operating costs by simplifying their IT infrastructure and reducing their total dealer spend. 2

3 Table of Contents Who In Your Dealership Has Primary Responsibility For Marketing? 4 Does Your Dealership Measure Customer Satisfaction? 5 Do You Currently Use A Referral Program? 6 Does Your Dealership Have A Way To Measure Customer Profitability? 7 Do You Reward Your Top Customers? 8 Does Your Dealership Have A Method To Regularly Contact Customers? 10 What Percentage Of Your Revenue Comes From New Customers Versus Existing Customers? 13 What Tools Do You Find To Be Most Effective In Finding New Customers? 14 How Many Dealership Events Do You Host For Your Customers Within A Year? 16 Does Your Sales Staff Encourage Customers To Use Your Parts And Service? 17 Does Your Staff Capture Customer Information For Post-Sales Follow-Up? 20 Do You Have A Documented Process To Upsell? 21 Observations in Heavy Equipment 22 Observations in Motorcycle, Marine, and RV 23 Observations in Heavy Truck 24 About the Different Segments 25 Contact Information 26 3

4 Question 1 WHO IN YOUR DEALERSHIP HAS PRIMARY RESPONSIBILITY FOR MARKETING? Percent GM Owner Sales Manager Parts Manager Service Manager Office Manager Marketing Manager Other Employee Title Heavy Equipment & Agriculture Motorcycle, Marine & RV Truck In the Heavy Equipment and Agricultural Equipment market segment, the person who is most likely to have primary responsibility for marketing was reported to be the marketing manager (51.0%). To a lesser extent, the sales manager (30.6%), GM/owner (24.5%), and parts manager (16.3%) are responsible. There were a number of titles logged as Other, including Chief Operating Officer, Controller, and everyone. In the Motorcycle, Marine, and RV segments, the person with primary responsibility for marketing is overwhelmingly the GM/owner (61.9%). To a lesser extent, the sales manager (17.1%) and marketing manager (14.3%) are responsible. There were also a small number of titles logged as Other, including IT Manager, Sales Personnel, and Parts Analyst. In the Truck segment, the person most likely to have primary responsibility for marketing is the GM/owner (41%), followed closely by the marketing manager (35.9%), and the sales manager (30.8%). Truck did not have any titles logged as Other. 4

5 Question 2 DOES YOUR DEALERSHIP MEASURE CUSTOMER SATISFACTION? Percent Yes No Heavy Equipment & Agriculture Motorcycle, Marine & RV Truck In the Heavy Equipment and Agricultural Equipment market segment, the majority of respondents (72.5%) responded in the affirmative when asked if they measure customer satisfaction, while just over a quarter of respondents (27.5%) said they did not. Similarly, in the Motorcycle, Marine, and RV segments, the majority of respondents (71.4%) also said they do measure customer satisfaction, with 28.6% saying they did not. However, in the Truck segment, customer satisfaction was much less likely to be tracked, with only 42.4% of respondents indicating that they measured it. The majority of respondents (57.6%) said that they did not do so. 5

6 Question 3 DO YOU CURRENTLY USE A REFERRAL PROGRAM TO ENCOURAGE CURRENT CUSTOMERS TO PROMOTE YOUR COMPANY? Percent Yes No Heavy Equipment & Agriculture Motorcycle, Marine & RV Truck In the Heavy Equipment and Agricultural Equipment market segment, a minority of respondents (25%) said that they have a referral program in place, while the other 75% indicated that they did not. In contrast, in the Motorcycle, Marine, and RV segments, the majority of respondents (57.1%) answered that they do currently use a referral program. A smaller group (42.9%) said they did not. In the Truck segment, only a small group of respondents (9.1%) reported that they currently use a referral program, while the vast majority (90.9%) said that they did not. 6

7 Question 4 DOES YOUR DEALERSHIP HAVE A WAY TO MEASURE CUSTOMER PROFITABILITY? Percent Yes No Heavy Equipment & Agriculture Motorcycle, Marine & RV Truck In the Heavy Equipment and Agricultural Equipment market segment, a full 80% of respondents said that they have a way to measure customer profitability, with only 20% answering in the negative. In the Motorcycle, Marine, and RV segments, a significant majority of respondents (70.3%) also said that they have a way to measure customer profitability, with the other 29.7% responding that they did not. In the Truck segment, a smaller majority of respondents (63.6%) said that they have a way to measure customer profitability, while 36.4% said that they did not. 7

8 Question 5 DO YOU REWARD YOUR TOP CUSTOMERS? Percent Yes No Heavy Equipment & Agriculture Motorcycle, Marine & RV Truck In the Heavy Equipment and Agricultural Equipment market segment, the majority of respondents (57.5%) answered in the affirmative when asked if they reward their top customers. A smaller group (42.5%) said that they did not do this. In the Motorcycle, Marine, and RV segments, fewer respondents (41.8%) said that they do reward their top customers as opposed to those that said they did not (58.2%). In the Truck segment, the smallest group of respondents (24.2%) said that they did reward their top customers. The majority (75.8%) indicated that they did not. 8

9 Question 5 DO YOU REWARD YOUR TOP CUSTOMERS? IF YES, HOW DO YOU REWARD THEM? Heavy Equipment In the Heavy Equipment market segment, some of the ways in which respondents indicated that they choose to reward their top customers were: Discounts on equipment, parts or service business; more aggressive pricing on new complete goods; or even special payment terms Invitations to special event functions (where special pricing or training may be offered), or rewards of tickets to sporting events, trips, and holiday gifts Identifying 'key' accounts and offering them a higher level of service, including priority response times, plus better pricing for volume purchases Having a dedicated 'Core Accounts' team and product support specialist to work with top customers Motorcycle, Marine, and RV In the Motorcycle, Marine, and RV market segments, some of the ways in which respondents indicated that they choose to reward their top customers were: Discounts on units, parts and accessories Offering gift cards and loyalty programs Giving customers OEM goodies or private riding/demo events Heavy Truck In the Heavy Truck market segment, some of the ways in which respondents indicated that they choose to reward their top customers were: Discounts and promotions Preferred customer status, which could include special pricing on parts and labor or the ability to place their own orders Other perks, such as free lunches 9

10 Question 6 DOES YOUR DEALERSHIP HAVE A METHOD TO REGULARLY CONTACT CUSTOMERS? Percent Yes No Heavy Equipment & Agriculture Motorcycle, Marine & RV Truck In the Heavy Equipment and Agricultural Equipment market segment, the vast majority of respondents (87.5%) said that they did have a method to regularly contact customers, while only 12.5% said that they did not. In the Motorcycle, Marine, and RV segments, most respondents (75.8%) said that they did have a method to regularly contact customers, with only 24.2%% saying that they did not. In the Truck segment, the majority of respondents (69.7%) said that they did have a method to regularly contact customers, while a smaller group (30.3%) said that they did not. 10

11 Question 6 DOES YOUR DEALERSHIP HAVE A METHOD TO REGULARLY CONTACT CUSTOMERS? (FOR EXAMPLE: S, PHONE CALLS, DIRECT MAIL, ETC.) IF YES, PLEASE TELL US HOW YOU CONTACT THEM. Heavy Equipment In the Heavy Equipment market segment, respondents shared some ways in which they regularly contact customers, including: Monthly s and phone calling programs, as well as quarterly company newsletters Winter and spring sales flyers and spring and fall catalogs, plus inspection flyers when service work is being promoted marketing/ blasts; statement stuffers John Deere publishes a quarterly magazine and mails it to customers on behalf of the dealership Phone call check-ins and in-person, face-to-face meetings with sales staff On-farm visits with or direct mail postcard follow-up 'alerts' Social networking, including Kijiji, Facebook, YouTube, Twitter, and mass mailers Direct mail, postcards, flyers, newsletters Sales flyers distributed by or included with customers monthly statements Motorcycle, Marine, and RV In the Motorcycle, Marine, and RV market segments, respondents shared some ways in which they regularly contact customers, including: All customers are either called after a new sale or ed after a service visit blasts, follow-up phone calls, and thank-you cards after purchases Customers are phoned or ed 30 days after a sales transaction, and 90 days after service Mass , mass text messages, social networking, phone calls, seasonal direct mail campaigns Heavy Truck In the Heavy Truck market segment, respondents shared some ways in which they regularly contact customers, including: Phone calls 11

12 Direct mail In-person visits A combination of all of the above OEM-driven programs, such as mailers A note of interest is that while and direct mail were popular answers, one respondent said that they specifically tried to avoid using mass or direct mail as methods of contacting customers. 12

13 Question 7 WHAT PERCENTAGE OF YOUR REVENUE COMES FROM NEW CUSTOMERS VERSUS EXISTING CUSTOMERS? Percent % new Vs. 20% existing 60% new Vs. 40% existing 50 % new Vs. 50% existing 40% new Vs. 60% existing 20% new Vs. 80% existing Unsure Heavy Equipment & Agriculture Motorcycle, Marine & RV Truck In the Heavy Equipment and Agricultural Equipment market segment, the most common answer, at 47.2%, was from those who felt that their business was 20% new vs. 80% existing customers, with the next-largest group (25%) answering that they were unsure. There were also smaller groups that chose other options. In the Motorcycle, Marine, and RV segments, the largest group (25%) felt that their business was 60% new vs. 40% existing customers. A number of other options were very close behind, but again, a significant number (23.8%) were unsure. In the Truck segment, as with Heavy Equipment, the largest group of respondents (51.6%) felt that their business was 20% new vs. 80% existing customers, with the next-largest group (25.8%) indicating that they were unsure. There were also smaller groups that chose other options. 13

14 Question 8 WHAT TOOLS DO YOU FIND TO BE MOST EFFECTIVE IN FINDING NEW CUSTOMERS? Percent Heavy Equipment & Agriculture Motorcycle, Marine & RV Truck In the Heavy Equipment and Agricultural Equipment market segment, the most effective methods of finding new customers among survey respondents were: Internet marketing/website (58.3%), advertisements (55.6%), and mailers/postcards (52.8%). In the Motorcycle, Marine, and RV segments, the top three most effective methods of finding new customers were: advertisements (54.4%), Internet marketing/website (53.2%), and events (48.1%). In the Truck segment, the most effective methods of finding new customers were reported as: Internet marketing/website (45.2%), advertisements (32.3%), and mailers/postcards (29%). Also worth noting is that Truck respondents selected a variety of other methods. 14

15 Question 8 WHAT TOOLS DO YOU FIND TO BE MOST EFFECTIVE IN FINDING NEW CUSTOMERS? CHOOSE UP TO THREE RESPONSES. IF OTHER, PLEASE SPECIFY. Heavy Equipment In the Heavy Equipment market segment, respondents reported that some of the other tools they found most effective in finding new customers were: Word of mouth from neighbors The sales process (prospecting) Outside salespeople calling on new customers Motorcycle, Marine, and RV In the Motorcycle, Marine and RV market segments, respondents reported that some of the other tools they found most effective in finding new customers were: Word of mouth Personal contact while away from the dealership Heavy Truck In the Heavy Truck market segment, respondents reported that some of the other tools they found most effective in finding new customers were: In-person visits Outside sales calls Location of the dealership 15

16 Question 9 HOW MANY DEALERSHIP EVENTS DO YOU HOST FOR YOUR CUSTOMERS WITHIN A YEAR? Percent None 1 to 3 4 to 7 7 to or more Heavy Equipment & Agriculture Motorcycle, Marine & RV Truck In the Heavy Equipment and Agricultural Equipment market segment, the majority of respondents (58.3%) said that they hosted between one and three events per year, with a smaller group (22.2%) answering that they hosted four to seven events per year. A few respondents indicated that they held more events than this. The smallest number of respondents (2.8%) said they did not hold any events at all. In the Motorcycle, Marine, and RV segments, a majority of respondents (51.3%) answered that they hosted between one and three events per year. A smaller group (20%) said that they hosted four to seven events per year, followed by those who indicated that they hosted seven to ten events (8.8%), and then those who reported hosting ten or more (11.3%). Finally, some respondents in this segment (8.8%) said that they did not hold any events at all. In the Truck segment, the majority of respondents (61.3%) said that they hosted between one and three events per year, with a smaller group (12.9%) answering that they hosted four to seven events per year. No respondents said they hosted more events than this, with just over a quarter (25.8%) saying that they did not hold events at all. 16

17 Question 10 DOES YOUR SALES STAFF ENCOURAGE CUSTOMERS TO USE YOUR PARTS AND SERVICE? Percent Yes No Heavy Equipment & Agriculture Motorcycle, Marine & RV Truck In the Heavy Equipment and Agricultural Equipment market segment, respondents overwhelmingly (90.9%) said that their sales staff does encourage customers to use their parts and service departments. Only a small number of respondents (9.1%) said that they did not. In the Motorcycle, Marine, and RV segments, an even larger majority (93.6%) said that their sales staff encourages customers to use their parts and service departments, with only a small amount of respondents (6.4%) saying that they did not. In the Truck segment, respondents also overwhelmingly (87.1%) indicated that their sales staff does encourage customers to use their parts and service departments. A small amount of respondents (12.9%) said that they did not. 17

18 Question 10 DOES YOUR SALES STAFF ENCOURAGE CUSTOMERS TO USE YOUR PARTS AND SERVICE DEPARTMENTS? IF YES, HOW DO THEY DO THIS? Heavy Equipment In the Heavy Equipment market segment, some of the ways in which respondents encourage the use of their parts and service departments were: Account management and actively working to break down silos As part of explaining the manufacturer's standard warranty requirements By mentioning winter service promotions as well as home service kits sold by the parts department Customer information clinics, held 6-8 times per year in each branch Customers are visited by dedicated parts and service sales reps Direct conversation, promoting service agreements Face-to-face meetings with customers to encourage customers to use all aspects of the dealership for the best service Advising customers that for equipment under warranty, it is required Gift cards for purchases of whole goods Informing customers of parts/service availability and promotions Introductions to staff members in parts, service, and rentals. Depending on the customer s needs this could happen before, during, or after the sale Parts packages/discounts; maintenance plans Provide a credit application for customers to establish a line of credit to purchase parts and service Selling maintenance packages; explaining how to use online tools/ordering site Specific promotions for parts and service; offering gift cards Introducing customers to the parts and service managers for future reference Motorcycle, Marine, and RV In the Motorcycle, Marine, and RV market segments, some of the ways in which respondents encourage the use of their parts and service departments were: Every spare inch of wall space in the showroom has parts and accessories on display Everyone who buys a machine is offered a 15% discount on all of their parts Introducing customers to the service and parts managers Discounts and priority scheduling in service Sending customers to a chrome consultant to purchase new parts and labor they want done 18

19 When a customer purchases a new unit, the salesperson and parts manager meet with them to introduce them to their unit Heavy Truck In the Heavy Truck market segment, some of the ways in which respondents encourage the use of their parts and service department were: Specific sales calls to customers to promote the dealership s parts and service A walk-through tour of the dealership that includes in-person introductions to the key staff in parts and service Parts and service specials 19

20 Question 11 DOES YOUR STAFF CAPTURE CUSTOMER INFORMATION FOR POST-SALES FOLLOW-UP? Percent Yes No Unsure Heavy Equipment & Agriculture Motorcycle, Marine & RV Truck In the Heavy Equipment and Agricultural Equipment market segment, the majority of respondents (81.8%) said that their staff does capture customer information for post-sales follow-up, with a smaller group of respondents (9.1%) indicating that their staff does not, and 9.1% were unsure. In the Motorcycle, Marine, and RV segments, the majority of respondents (76.9%) answered that their staff does capture customer information for post-sales follow-up. A small number of respondents (14.1%) indicated that their staff does not, with an even smaller number (9%) answering that they were unsure. In the Truck segment, a slight majority of respondents (54.8%) answered that their staff does capture customer information for post-sales follow-up, with just over a quarter (25.8%) saying that they do not do this. A significant minority (19.4%) was unsure. 20

21 Question 12 DO YOU HAVE A DOCUMENTED PROCESS TO UPSELL? Percent Yes No Unsure Heavy Equipment & Agriculture Motorcycle, Marine & RV Truck In the Heavy Equipment and Agricultural Equipment market segment, just 18.2% of respondents said that they did have a documented process to upsell, while the majority of respondents (54.5%) said that they did not. A sizable group (27.3%) was unsure. In the Motorcycle, Marine, and RV segments, 37.2% of respondents said that they did have a documented process to upsell; however, the largest group of respondents (48.7%) said that they did not. A smaller group of respondents (14.1%) were unsure. In the Truck segment, less than a quarter of respondents (22.6%) answered that they currently have a documented process to upsell. A majority of respondents (54.8%) said that they did not, with 22.6% responding that they were unsure. 21

22 Observations in Heavy Equipment Marketing Responsibility Of the three major dealership market sectors surveyed, Heavy Equipment and Agricultural dealers were the most likely (51%) to have a dedicated marketing manager on staff, compared to Truck (32%) and recreational dealerships (14%). For those dealerships without a marketing manager in-house, the sales manager or GM/owner was the second- and third-most likely person to be filling the marketing role. Even though slightly more than half of all Heavy Equipment and Agricultural dealerships reported that they had a marketing manager within their organization, this figure conversely shows that almost half of all dealerships in this segment rely on their sales manager, GM/owner, or even parts manager to plan and execute marketing activities in addition to the demands of their primary role. This indicates that there are likely still dealerships that could consider bolstering their marketing efficiency by the hiring of a staff member dedicated to marketing efforts, or outsourcing some of those efforts to a third party. Methods used to find new customers Heavy Equipment and Agricultural dealers answered that their most effective methods of finding new customers were Internet/web site marketing, advertisements, and mailers or postcards sent out by traditional mail. Interestingly, their reported use of mailers/postcards (53%) was much higher than that reported by Truck (29%) or recreational dealers (less than 10%), suggesting that this more traditional marketing strategy can still work as a way to bring in new business. New vs. existing customer mix Although 47.2% of Heavy Equipment and Agricultural dealers responded that their revenue mix fell into the category of 20% new vs. 80% existing customers, reflecting an ability on the part of these dealers to retain customers through repeat purchases or parts and service sales, a full quarter of dealers surveyed (25%) responded that they were unsure of how much of their revenue was generated by repeat business compared to new business. Notably, this significant unsure response was also relatively consistent across the recreational and Truck segments, which may point to an opportunity for all types of dealers to better track this metric and plan their marketing activities accordingly. 22

23 Observations in Motorcycle, Marine, and RV Marketing Responsibility The survey results reveal an important difference for recreation sport dealers versus the other dealer segments in the area of who within the business is responsible for marketing activities. Whereas 51% of Heavy Equipment and Agricultural dealers and 32% of Truck dealers have a dedicated internal resource for marketing, only 14% of recreation sport dealers indicated that they had a marketing manager inside their dealership. Instead of having a dedicated marketing staff member, the survey indicated that 62% of GM/owners take on marketing responsibilities in the recreation dealer markets. This places additional responsibility on an already demanding role. Balancing other GM/owner responsibilities with marketing activities may become difficult and require outsourcing or marketing automation. New vs. existing customer mix Another unique area for recreation sports was revealed by the responses to the question: What percentage of your revenue comes from new customers versus existing customers? Respondents from the Heavy Equipment, Agricultural and Truck markets indicated that the majority (20% new vs. 80% existing) of their business comes from existing customers. The recreation market, in contrast, was relatively evenly split over all categories, with a slight increase in the 60% new and 40% existing category, at 25%. The wide range of responses indicates a difference in sales approaches. Many recreation sport dealers focus marketing attention on acquiring customers purchasing new units and have less of a focus on repeat customers in parts and service. Meanwhile, other types of dealers are focusing efforts on repeat business through parts and service calls. It appears that the other market segments are more efficient in contriving revenue from repeat customers. Although the markets are quite different, this may indicate an area in which the recreation sport dealers could improve. The fact that the answers to this question were evenly spread across the different revenue mixes may indicate that some dealers have already began to shift focus to a total customer lifetime value strategy instead of a new business only strategy. 23

24 Observations in Heavy Truck Marketing Responsibility The majority of respondents (71.8%) in the heavy truck market said that the GM/owner or sales manager are responsible for marketing at their dealership. Although the heavy equipment segment reported a higher number of in-house marketing managers, this trend was visible across all market segments studied. It may be a reality that not all dealerships have the resources to have dedicated marketing staff. If these activities are handled by other dealership personnel, outsourcing and automating marketing activities may be required. Promotion of parts and service Heavy truck is an industry that is very focused on parts and service, so it seems peculiar that it had the highest number of responses (12.9%) from those saying that their dealership does not actively encourage customers to use their parts and service departments. If dealers are assuming that customers will come back for repeat parts and service without additional encouragement, there may be an opportunity here for some dealers to improve their customer retention rate. Rewarding top customers Dealers in the heavy truck industry have a business model that is focused on long-term customer relationships. The majority of respondents agreed with this statement, saying that they have a customer breakdown of 80% existing customers and 20% new customers. With this fact established, it seems contradictory that so many respondents (75.8%) answered that they did not reward top customers, or did not measure customer satisfaction (57.6%). This represents an opportunity for dealers to be more focused on building stronger relationships with their customers, especially those top customers that drive the most revenue to the business. 24

25 About PFW Systems Corporation PFW Systems Corporation is a leading provider of Dealership Management Systems for equipment distribution dealers throughout North America. PFW develops, markets, sells, installs and supports its Dealership Management System from its head offices located in London, Ontario and Hoffman Estates, Illinois. For more information about PFW systems, visit About ADP Lightspeed ADP Lightspeed, based in Salt Lake City Utah, is a part of ADP Dealer Services, which provides integrated computing solutions to over 3,000 motorcycle, Powersports, Marine and recreational vehicle dealers throughout the United States, Canada. For more information about ADP Lightspeed, visit About ADP Truck ADP is the leading provider of Dealership Management Systems (DMS) to heavy truck dealers throughout the United States. As your business partner, ADP delivers best-in-class solutions, and has a wealth of experience developing software for truck dealers of all types, whether single or multi-store locations. For more information about ADP Truck, visit truck.adpdealerservices.com. About ADP Automatic Data Processing, Inc. (NASDAQ: ADP) with nearly $9 billion in revenues and approximately 550,000 clients, is one of the world s largest providers of business outsourcing solutions. ADP is a leading provider of integrated computing solutions to auto, truck, motorcycles, marine, heavy equipment and recreational vehicle dealers throughout the world. Additionally, leveraging more than 60 years of experience, ADP offers the widest range of HR, payroll, tax and benefits administration solutions from a single source. ADP s easy-to-use solutions for employers provide superior value for companies of all types and sizes. For more information about ADP, visit 25

26 Contact Information: Heavy Equipment Jenna Morton PFW Systems Corporation Phone: Motorcycle, Marine and RV Adam Shiflett ADP Lightspeed Phone: Heavy Truck Cam Stelpstra ADP Truck Phone: