We think it’s safe to say that none of us has seen a sales environment like this. But one thing is for sure, those in the market for a new or used vehicle are still in the market. The question is, what is the best way to appeal to them?

Obviously, we are dealing with a smaller overall new-vehicle market. TrueCar’s latest forecast predicts “total SAAR to decrease 16% from a year ago from 16.7 million units to 14 million units. — Used vehicle sales for July 2020 are expected to reach 3,759,781, up 9% from a year ago and down 1% from June 2020. … This is up 31 percent versus July 2019.”

Current buyers in the market or those sitting on the fence need a good reason to make a move. Initially enhanced factory incentives and a glut of new vehicle inventory as reported by the press were enough of a reason to spur new vehicle sales. However, at the same time, used-vehicle prices dropped as uncertainty for rental car inventories and anticipated slow new vehicle sales caused processes to plunge.

Now, it’s August and new vehicle dealerships are running out of inventory, and production isn’t quite up to speed. Used vehicle prices have rebounded, and dealers need used cars to bridge the inventory gap.

Mail presents your greatest opportunity for the current situation. Service Mail drives dependable traffic to your service lane. Equity Mail attracts owners in equity purchase or lease maturity positions. Sales mail attracts customers who may need to downsize or upsize in the current environment. All these strategies allow for personalization of the message, giving prospects a reason to buy or trade now.

Why Not Email?

Each year, the Ponemon Institute releases “The Most Trusted Companies Study,” a list of overall top-performing companies and federal agencies that are perceived to be most trusted. What these organizations have in common is a strong orientation to respecting their customers and providing the best possible customer service.

The research is an objective study that asks consumers to name and rate organizations they believe are most committed to protecting their privacy. Participants are asked to apply the following definitions when determining the companies they trust:

• Personal information – Consider only data about yourself and your family. This information typically includes name, address, telephone numbers, email address, Social Security number, other personal identification number, access codes, age, gender, income and tax information, shopping information, account activity, and many other pieces of data collected about you.
• Privacy trust – Your belief that the company or federal agency is honoring its privacy commitments to you, and keeping your personal information safe and secure. This includes its commitment not to share your personal information unless there is a just cause or you have given your consent.

More than 100,000 adult-aged consumers were asked to name up to five companies they believe to be most trusted for protecting the privacy of their personal information. Every year that’s been surveyed, the United States Postal Service has made the list. The truth is that people trust regular mail more than digital mail communications. Especially when it comes to information such as their vehicle financial status, payoff, and lease terms.

Every dollar counts. You need to squeeze every ounce of profit you can from every department. At this point in time in our industry, mail represents your greatest opportunity. More trust, more value, more traffic.

The FTC and many state-level regulators have made auto finance and dealership advertising practices their priority enforcement areas. The FTC says the rules are straightforward, but some are not very clear.

“In the past six years, the FTC filed about 40 enforcement actions related to auto dealerships,” said Nikhil Singhvi, a staff attorney in the FTC’s Division of Financial Practices, in an article with Automotive News. Singhvi said enforcement areas include deceptive advertising, deceptive and unfair finance practices, title loan fraud, debt collection, privacy and data breaches, and credit reporting violations.

The FTC also increasingly seeks to hold individuals accountable and is including them in its enforcement actions when it can show that they knew of deceptive practices, Singhvi said.

The FTC receives dealership complaints through consumers, other law enforcement or state partners, consumer advocacy groups and even former employees, he said. The FTC in its 2018 report tallied more than 100,000 auto-related complaints.

Singhvi said the FTC’s rules are easy to follow for dealerships. “The baseline that we enforce at the FTC is don’t deceive consumers. That’s a pretty easy one,” he said. “That covers things like advertising for incentives that are not actually available or that have such onerous limitations that they’re effectively not available to anyone.”

The FTC also scrutinizes bait-and-switch advertising for vehicle offers that don’t exist but are used to draw people into the dealership.

“The specific rules for financing advertising have not changed dramatically in a long time, the specific financing terms that must be disclosed,” Singhvi said. “These aren’t very complicated matters, and they are things that compliant dealerships should be able to handle.” The FTC also monitors social media advertising, where it can be difficult in limited space for a dealership to make the required disclosures, Singhvi said. (Automotive News)

NADA has provided guidance for advertising. In 2015, the association created a guide for dealers, manufacturers, finance companies, and dealership ad agencies on ad compliance that covers 41 topics and provides examples of good vs. bad ads. Those guidelines can be found here.

Dealership ads need to disclose triggering terms required by the Truth in Lending Act and the Consumer Leasing Act, said Randy Henrick of Mosaic Compliance Services. Leasing also requires many additional disclosures such as the number of payments and security deposit, and some states require excess mileage or allowed mileage disclosures or the cost to buy at the end of the lease term.

“What gets dealers in trouble is advertising the payment amount, or advertising a low APR for a certain number of months and not saying anything else,” he said. “Or putting it in mass type in color that bleeds into the background that’s not clear and conspicuous.”

Other problem areas are teaser terms, undisclosed balloon payments, false $0 upfront leases, undisclosed lease terms, hidden rates, fake prize promotions and credit and leasing violations. (Automotive News)

In addition to the FTC, dealerships need to know their state regulations covering deceptive and unfair advertising. That’s where Prospect Vision comes in. Prospect Vision’s integrated software ensures accurate pricing and includes all disclaimers. Your mail pieces are then archived for future audits. The team at Prospect Vision is specialized in communication compliance.

In July of 2018, CARMAX published a loyalty report from customers who traded in cars. Using their data, CARMAX explored which cars people own at trade-in and what they purchase as their next car. Did they stay with the same brand or not? Are people loyal to the same type of car they used to drive (i.e., do SUV owners keep buying SUVs or do they switch to sedans)? This was a great test case because, given choices of dozens of brands in close proximity, what percentage would stay with the brand they were driving. New car retention hovers around 52 percent, but given freedom of choice, what would consumers pick?

The highest ranked vehicles traded in for the same vehicle was only 30 percent. That means three out of 10 repurchased the same brand, at best. The average was closer to 20 percent. In this new era of digital-based competition and customer control, people are increasingly buying because of a brand’s relevance to their needs in the moment.

The truth of the matter is that loyalty is waning. And you don’t want to take the chance of your customer picking something else. Acquiring a new customer can cost five times more than retaining an existing customer. Increasing customer retention by 5 percent can increase profits 25–95 percent. The success rate of selling to a customer you already have is 60–70 percent, while the success rate of selling to a new customer is 5–20 percent.

Timing is Everything

A new vehicle purchase is still an impulse buy. A friend of mine in the car business always used to say, “Rarely does anybody really have to have a new vehicle. Somewhere in their brains, they have justified a new vehicle.” The service lane is the optimum location for capitalizing on relevance and timing. The customer is thinking about their vehicle, they may be questioning if it is time for a new vehicle, or a new model may have caught their eye on the way to the service lane. This is the perfect time to insert yourself into a conversation.

Having a dedicated person or team is a great way to help ensure that you’re in the conversation. This way, their main focus is on transitioning service customers to new or used vehicle sales. Having a person that becomes used to dealing with these transitioning prospects is an important asset. Having someone that has learned the nuances of nudging a prospect along increases the chance of the sale.

Relevance

You have to find the right customer who is in the perfect equity position to upgrade to a new vehicle. Once the service appointment is set, look at the customer’s history and their equity and see if the time is right to draw them toward a new car. Providing them with a loaner while their car is getting serviced is a great way to help transition them from the service drive into sales. Prepare some offers for the customer, and once the car is returned and they say they love it, provide them with the offers to purchase the vehicle with no money out of pocket. Thanks to your data, you already knew the customer’s situation before they arrived and were able to draft offers that fit their particular situation.

Don’t Fall Prey to the Status Quo

To succeed in the non-loyalty era, dealers must be continuously willing to abandon old practices. As new technologies shift customer journeys and expectations, they can (and should) also enhance companies’ abilities to engage with customers in more relevant ways. Often, the greatest roadblock is a dealer’s lack of willingness to transform their processes, organizations, and mindset into something new.

According to the National Mail Order Association, women have exclusive responsibility for sorting mail and choosing which items to keep for further consideration in two-thirds of U.S. households. By many other accounts, more than 80 percent of those who pick up the mail across the country every day are women, most of whom also serve as the primary shoppers both on and offline for their households.

Women also tend to read each and every direct mail piece addressed to them.

A report from the marketing website she-conomy.com found that 65 percent of new cars are purchased by the woman of the household.  American women spend about $5 trillion annually. This represents over a quarter of U.S. Gross Domestic Product. For retailers, women shoppers are their largest target audience.

As digital advertising continues to grow, the effectiveness of direct mail cannot be overlooked. As online shopping increases each year, it is important to note that studies show that 67 percent of online action is driven by offline messages. A study by the Direct Marketing Association shows that 78 percent of consumers react to direct mail immediately when they receive mail from a brand that they’re interested in. Forty-four percent visit the brand’s website and 34 percent search online for more information about the product.

Before you drop your next mail piece be sure to keep your female recipients top-of-mind:

• Sell customer service — Women want to know how the transaction is going to be handled. They prefer nice and easy. Make a customer care representative available by phone to strengthen the relationship and pave the way for a smooth transaction.
• Impart useful information — Women do their research before buying and like to know why making this purchase is a good decision. In addition to expressing why it’s a great deal, include why it’s a smart deal.
• Be personal — Use first names in the copy and make each recipient feel special with messaging that is polite, factual and smart.

Women drive 70–80 percent of all consumers purchasing through their buying power and influence. I can’t tell you how many times I’ve seen a salesperson mishandle a female customer. Remember, they not only buy for themselves but also direct purchases for their partners, children, parents, in-laws, nieces and nephews. Placing direct mail in women decision-maker hands provides you with a tremendous opportunity. Female shoppers easily constitute a vast majority of vehicle purchase decision-makers.

From cars to healthcare to vacations, women are calling the shots at home. They pick up and read mail, place orders, and use coupons at retail locations. Dealers need to acknowledge the dominance of decision-making women and personally address them directly through the mailbox.