How Marketers Can Boost Margins in Used Car Sales: Strategies for Success

Over the past few years, major players in the auto business have begun to pay more attention to the sale of used cars, and competition in this business has increased sharply. However, many dealers do not use the full potential of the marketing department and do not pay enough attention to work in this direction. This article explores how a potential transformation of the marketing department could increase vehicle sales margins.

 

It is especially important to consider that marketing in the automotive industry can vary significantly depending on the level of country in which the sale takes place. For example, in tier 1 countries (such as the US, Canada, UK), marketing and sales of used cars often require more complex and high-tech approaches due to high income levels and a competitive environment. Here, increased marketing budgets, quality analytics and content optimization can significantly increase sales margins.

What problems might the marketing department face?

Increasing competition in the used car business can force change for any company. Often there is no systematic work in the marketing department – that is, specialists can, for example, increase traffic when it is urgently needed, promote single cars for which there is no demand, and “tighten up” budgets to meet key indicators. All of this can reduce motivation, efficiency, and productivity. The lack of consistency also affects sales figures.

 

What changes can be made in the marketing department to improve efficiency?

The first and logical step is to increase the budget. This is necessary in order to:

 

• get more leads;
• effectively redistribute traffic within the warehouse, since some cars received a lot of traffic but were not sold for a long time, and vice versa;
• experiment with new channels to attract traffic in an increasingly competitive environment.

 

To justify the need to increase the budget, the head of the department needs to take responsibility for the result and tell top management how investing in marketing will help you earn more. It is important to understand that you need to speak to all managers in the language of profitability and numbers. Then the marketer needs to guarantee the achievement of a specific result. To do this, you need clear, transparent metrics – KPIs.

 

KPIs can be measured in terms of traffic volume. The disadvantage of this indicator is its strong dependence on the warehouse size, structure, quality of cars, and pricing: the higher the price, the fewer leads, the lower the price, the more leads, but they will not necessarily be “useful”. You can measure operational efficiency in sales volume, but high volume does not always correspond to good profitability, since dealers usually have a heterogeneous supply structure: in one month you can sell 50 cheap cars and in another – 10 expensive ones. As a result, the KPI of a marketer in a company can be measured by the GM1 indicator – marginality.

 

“New” responsibilities of a marketer

One of the main responsibilities of a marketer is constant interaction with the sales and repurchase department. Moreover, a lot of attention is paid to working with buyers, because the promotion strategy depends on what cars will be delivered to the warehouses and what goals the sales department will set.

 

Analytics is another important component of the department’s work. Analytics tools allow you to collect data on the warehouse (for example, the cost of stock, vehicle movement, sales period, warehouse structure according to various parameters), sales, demand, percentage of user attention, etc. At the same time, the employee monitors the market and competitors’ offers and manages the promotion of cars and the department’s budget.

 

Working with content in a highly competitive market can be crucial – its quality is completely under the control of the marketer. The specialist pays special attention to photographs. Photos of cars that are uploaded to classification sites must correspond to the prepared checklist. It can be different for each company, but the general one looks like this:

 

• It is important to select and equip a photo zone so that the pictures are in the same style.
• Buy several good cameras and tripods.
• Train employees to take photographs.
• Photograph the car from all sides, even the smallest details.
• It would be useful to add a short video review.

 

What will the company get as a result?

Changes in the work of the marketing department and the interaction of all related departments with each other will help the company significantly increase efficiency in sales of used cars. Hypothetically, the following improvements can be identified during the transformation of the marketing department:

 

• The company will earn more because margins have increased.
• The volume of cars that have been sold for longer than 3 months will decrease.
• Both the overall gross margin and the margin per 1 car will increase.

 

In the new realities, it is important to optimize business processes in all directions and make maximum use of available resources, including human resources. The rule that marketing department employees of top car sales companies try to adhere to is to treat the business in which they work as if it were their own. This helps keep productivity high, which has a positive impact on profits.