How Auto Dealers Can Become the Disruptors in a Digital World
The story of Blockbuster's failure is often oversimplified as a cautionary tale of arrogance and stupidity. But as Justin Cook, the Executive Vice President at C-4 Analytics, explains, their demise was much more complex. It offers crucial lessons for today's auto dealers. When facing digital disruption, it's not enough to just react. You have to anticipate and, even better, become the disruptor yourself.
You can do this by focusing on five timeless marketing fundamentals that go beyond technology and market trends. Here is how to apply them at your dealership.
1. Know Your Business
Success starts with clear, measurable goals. You can't reach a destination if you don't know where you're going. It's surprising how many businesses fail to set clear goals or share them with the teams responsible for marketing. Without a clear objective—like selling more cars, increasing service revenue, or gaining market share in a specific region—your marketing efforts have no direction.
- Set Realistic Goals: Align your marketing budget with your goals. A small budget won't give you a massive increase in sales. Use industry data, like NADA statistics, to understand the realistic cost of acquiring a customer.
- Analyze Your Competition: Use OEM reports to understand your market share. If a new competitor enters the market or an existing one hires a new marketing team, your old strategy and budget may no longer be enough. Knowing your competitors' business better than they know their own is a powerful tool for disruption.
- Understand Your Inventory: Having a "good" inventory isn't just about the number of cars on your lot. It's about having the right cars for your market. If your customers want SUVs and your lot is full of sedans, your inventory isn't helping you.
2. Know Your Customers
Understanding your customers is about more than just their demographics. It's about knowing their online behavior, their needs, and what motivates their decisions. The modern car buyer does most of their research online, but dealers often misallocate marketing spending to traditional channels.
- Target with Precision: Use data to pinpoint your audience by location, demographics, and consumer behavior. Create custom-tailored messaging in your campaigns to speak directly to these groups. For example, if you know a certain zip code is a "battle area," make specific ads that offer a deal just for that location.
- Optimize for Mobile: Most web traffic today comes from mobile devices. Make sure your mobile site provides a great user experience. If it does, think about putting a bigger portion of your budget toward mobile campaigns to get a competitive edge.
- Leverage Beta Programs: Talk to your marketing partners about taking part in beta tests with platforms like Google. These early access programs can give you a big advantage over competitors who aren't in the loop.
3. Focus on Authentic Value and Customer Experience
Blockbuster's business model was fundamentally dependent on late fees. It actually penalized its customers. When Netflix offered free shipping and no late fees, it became a highly disruptive force that Blockbuster had to spend millions to fight.
- Move Beyond "Why Buy" Pages: Instead of generic "why buy" lists that sound just like your competitors, focus on an authentic customer appreciation strategy. Small things like handwritten thank-you notes, birthday greetings, or surprise upgrades can build real loyalty.
- Create Emotional Connections: Use compelling video content or humor to engage customers. The goal is to make a real connection that goes beyond price. This is what helps one-price dealers, for instance, beat their competition and make more money.
4. Fight the HIPPO (Highest Paid Person's Opinion)
The most dangerous animal on the planet is the HIPPO—the Highest Paid Person's Opinion. Fear-based decisions from the top can undo the best-laid plans. This is what happened at Blockbuster when an investor prioritized short-term profit over the long-term strategy of doing away with late fees and investing in a new model.
- Demand Data-Driven Decisions: Use data to challenge opinions and validate strategies. Your dealer portals and OEM reports provide a wealth of information.
- Look for Causation, Not Just Correlation: Be careful with marketing solutions that promise attribution but only show correlation. Just because two things happen at the same time (like ice cream sales and shark attacks) doesn't mean one causes the other. Invest your budget in marketing that truly drives results.
5. Embrace Change
The biggest threat to a dealership may not be a large company like Amazon or Tesla, but the partners they're paying for marketing. In some cases, third-party sites compete with dealers for search traffic, use the dealer's own inventory to drive traffic to their sites, and even offer competing services like financing.
- Be Your Own Third Party: Don't pay for the privilege of a competitor using your inventory to drive their own business. You have the data and technology to become your own third party.
- Leverage Behavioral Data: Use data feeds to target potential customers who have shown interest in specific vehicles, even if they've never visited your website. Show them dynamic ads for the exact vehicles you have in stock on platforms like Facebook. This type of highly effective, low-cost targeting can give you a huge competitive advantage.
By understanding these five fundamentals, you can transform your dealership from a potential victim of disruption into a powerful force that leads the change in the market.
Watch the Full Presentation
Ready to dive deeper? Watch the full presentation with Justin Cook to get a firsthand look at these five fundamentals and how they can empower your dealership.