15 Field-Tested Ideas To Market Your DealershipCED Magazine, January 2007
Article Date: 01-01-2007
Copyright (C) 2007 Associated Equipment Distributors. All Rights Reserved.
WANTED: Marketing strategies and tactics to drive sales.
From coast to coast, construction equipment dealers are implementing new marketing strategies and tactics with the hopes of improving their market positions. Whether representing brand leaders or market underdogs, successful dealers must continually evaluate and assess what’s working and what’s not. Undoubtedly, there is no one right answer, because each dealer’s situation is unique.
“There’s always something you can do,” says Eric Gagnon, author of The Marketing Manager’s Handbook and editor of the Business Marketing Association’s e-newsletter, Tuesday Marketing Notes. “If you aren’t constantly on the lookout for new mailing lists, if you aren’t constantly testing new price combinations and promotions and probing new marketing opportunities for your company, you won’t have any insurance for the day when your bread-and-butter ads, mailings, or other marketing projects go south—and they’ll do just that, given the fact that change is a constant in every market.”
Advertising By The Numbers
According to AED’s 2006 Cost of Doing Business Report, the typical AED dealer spends 0.4 percent of sales – or $156,000 – on advertising and sales promotion, while high-profit AED dealers spend 0.3 percent – or $159,000. High-profit dealers have a pre-tax profit margin of 7.1 percent, compared to 3.4 percent for the median firm in the industry.
Since 2004, high-profit dealers have reduced spending on advertising and sales promotion by 2 percentage points, while typical AED dealers have kept the percentage constant. However, it’s important to note that the AED report does not take into account co-op advertising dollars. In a 2000 survey conducted by the Associated Equipment Manufacturers’ Marketing Communications Council, 57 percent of suppliers reported that fewer than half of their dealers participated in their co-op programs.
Maximizing co-op dollars may be one reason high-profit AED dealers generate more revenue, despite spending a lower percentage of sales on advertising. Co-op dollars are important enough to Norris Sales Co., that president and owner, Don Zajick, provides a financial incentive to his marketing person if the goals are exceeded.
Annual revenues may also be a factor. Large-volume firms benefit from advertising frequency discounts and other economies of scale. And smaller-volume firms, despite devoting a higher percentage of sales to advertising and sales promotion, are still significantly outspent in real dollars.
Although the typical AED dealer spends the same on advertising as they do on travel and entertainment expenses, Medium dealers (majority of equipment sold is less than 100-hp) spend more on advertising than all dealers.
Phillip Ransom, marketing manager at Mathews Machinery, a Volvo dealer with five locations in California , says the way many dealers market heavy equipment is archaic – salespeople driving around in trucks calling on customers. With the cost of personal sales calls rising, Ransom, like many marketing managers, is exploring alternative ways to reach customers and improve the efficiency of the sales force.
From the more traditional use of direct mail, product and company publicity, space advertising, trade shows and events, to the more unexpected use of telemarketing, e-mail, radio and television, dealers continue to perfect their methods for reaching and influencing the customer base.
Where Buyers Get Information
While dealers clearly have their own opinions about what works and what doesn’t, research conducted by James Informational Media, publishers of Better Roads and Aggregates Manager magazines, provides quantitative data about where contractors, government agencies, consulting engineers and aggregates producers are getting most of their information about the products and services they purchase. In separate studies, 74 percent to 80 percent of subscribers cited trade magazines over an array of other information sources – among them sales reps, websites, word of mouth, e-newsletters and webinars.
“The portability of magazines is a great convenience,” says Michael Porcaro, president and publisher of Better Roads and Aggregates Manager. “ Reading magazines is also a habit. Most of our readers have subscribed for many years.”
While there’s no denying the Internet’s growing presence, research confirms that print advertising remains an effective tool to reach buyers.
Marketing Takes On New Role
Marketing has emerged to take on a greater role in dealerships.
“Our roles in marketing have definitely evolved over the past 10 years,” says Sue Miller, vice president and director of marketing for Ring Power Corp., a Caterpillar dealer. “Now we’re involved in most aspects of the business.” Miller manages a 12-person department that produces advertising and marketing for all divisions of Ring Power.
As dealers find success in driving sales through advertising, management appears willing to invest.
“We believe in it,” says Zajick, “but advertising takes time.” He stresses repetition and employs a continuous flow of direct mail promotions, a 24-page flyer mailed three times a year, and radio advertising to communicate with buyers.
John Weatherhead, publisher and general manager of the Associated Construction Publications, works with national advertisers and dealers to coordinate ad programs. In addition to consistent ad programs, he recommends dealer advertisements place more focus on their capabilities and include a call to action.
“If dealers would include a call to action in their advertisements,” says Weatherhead, “they would improve response.”
The following pages offer 15 field-tested ideas from some of the industry’s most effective marketers. So take a tip here, an idea there, and make it your own.
1. Target, Target, and Target Some More
Having your database tied to sales activity means more targeted mailings and better response rates. Rikki Bardzik, marketing and technology associate for Norris Sales Co. utilizes CounterPro software to pull direct mail lists based on specific product purchases.
“I can also pull a list of inactive accounts to generate activity and update our list,” she says. In addition to hitting the right people, Bardzik stresses promoting with frequency to ensure the message will be there at the right time.
A “rifle” approach is what you might call the method Andy Bull, president of C. H. Bull Co., a distributor of a broad line of tools and equipment, uses. Recently, he purchased a list of potential buyers of Genie products at approximately 250 churches that have schools.
Three mailings that specifically targeted the needs of that audience generated an impressive 10 percent response rate.
“Marketing gets us in the door,” says Bull.
However the company is also relentless about following up on leads immediately. In addition to leads generated by marketing activities, Bull has been pleased with leads purchased from BuyerZone.com.
At BuyerZone.com buyers request quotes on anything from business insurance to computers. Currently, the company offers leads on nine types of earthmoving and lifting equipment.
2. Connect With Country
It was almost by chance that Midwest Ditch Witch, with five locations in Illinois, Wisconsin and Indiana , became a sponsor of Country Thunder, a four-day outdoor concert featuring headliners that include Keith Urban and Brad Paisley.
Just days before the concert in 2005, the dealership accepted a trade-out agreement from the concert promoter. In exchange for installing trenching lines in their camping area, Midwest Ditch Witch received an exhibit, concert tickets and the opportunity to show their commercial 12 to 14 times a day on the Jumbotron, exposing their company to tens of thousands of people.
The company is now making plans to turn Country Thunder into a very special event for 20 to 30 of its best customers in 2007. General manager Mark Harbaugh sees it as an opportunity to build customer relations.
“Everybody can do direct mail and everybody can have someone do an e-mail campaign,” says Harbaugh, “but it’s those out-of-the-box kinds of things that sometimes get you noticed.
“This is something that’s very different from anything we’ve done before.”
3. Extreme PR
When customers asked if Michigan CAT would donate equipment to be used on the hit ABC show “Extreme Makeover–Home Edition,” Matt Zabiega, marketing manager for the dealership, recognized an opportunity to help a community member and to participate in an event that would get a lot of notice in the community.
While ABC embargoed much of the story until after the show aired in September, Michigan CAT was able to promote its participation in a limited format on its website and will feature an article about their experience in an upcoming edition of its newsletter.
“Community involvement is something that we believe is our responsibility,” says Zabiega. The company supports many local groups and charities including youth sport leagues, high school sports and collegiate athletics. Recently the company even auctioned off a tour of their facility for the benefit of a local charity.
Publicity is also a tool used by California-based Mathews Machinery. The company regularly provides job story leads to regional construction publications.
“When you do that, it’s not you saying Volvo is great, it’s the customer,” says Phillip Ransom, marketing manager, “so we try to do as much of that as possible.”
Learn to “think like an editor.” Know the hot market trends and concerns of your customers. If your products can credibly be linked to a trend or can solve a common problem, you have a story magazine editors will want.
4. Consistency Counts
Trish Maher, communications manager for McAllister Equipment in Alsip, Ill. is a firm believer in consistent communications. She built her marketing program from the ground up four years ago by creating a valuable database of customers and prospects from customer, association and trade show lists.
To increase marketing effectiveness among a diverse customer base, she segmented the list by product category, and then reached out to customers and prospects via postcard promotions, newsletters and service coupons.
“We try to touch customers and prospects at least once a month,” says Maher, who takes advantage of every co-op advertising dollar.
All promotions are designed so they don’t need to be opened. One of their most successful direct mail promotions offered a free Volvo jacket for 2,000-hour maintenance service.
5. Promote Your Successes
To celebrate 50 years in business, St. Louis-based Cummings McGowan & West (CMW) worked with AED to create a publication chronicling the company’s history and revealing the philosophies that have contributed to its success.
CMW president, Larry Glynn mailed the publication as a follow-up to customers who attended their 50th anniversary celebration. However, he has since found it to be a useful introduction piece with potential customers in the Kansas City market, where the asphalt, concrete and aggregates dealer recently expanded its operations.
“We have used it with manufacturers, and even new personnel, to explain who we are,” says Glynn.
6. Remember The Operators
Paul Parker, marketing manager for Texas-based Romco Equipment Co., has found success with marketing that focuses, not only on the primary decision-maker, but also on operators and mechanics.
“A lot of times the guys who operate and work on machines have a lot of input,” says Parker. “And if you have a great operator you don’t want to lose – and he loves machine A and hates machine B – when it comes time to buy the next one, he has a lot of sway. If there’s not a lot of price difference, if everything is equal, that operator can have a big influence.”
For years, Romco Equipment was the sole sponsor of the Romco Super Late Model Racing Series held throughout Texas . While the events were open to the public, Romco used it primarily as a customer appreciation event and invitations were extended not only to key decision-makers, but also to mechanics and operators.
Strong brand loyalty can be one of the most difficult obstacles to overcome, especially among operators. Parker says one of the most effective tools to break down competitive brand loyalty is a demo.
“When we get machines on site,” says Parker, “we can put it right next to our competitor’s, and we do pretty well that way. We’ve won over a lot of people by just letting them operate the machines.”
7. Open The House
What began as a pig roast and a thank-you gathering for about 100 customers has expanded into a major selling event for McCann Industries, based in Addison, Ill.
According to Lisa Eatherton, sales and marketing assistant, attendance for the company’s open house has more than tripled over the past three years, and the number of vendors has increased from 20 in 2004 to more than 60 in 2006.
Attractions at the July 13, 2006, open house included product demonstrations, prize drawings, a jobsite safety class and a seminar on decorative concrete. Most importantly, by promoting “show specials” and “one-day-only pricing” the event now drives revenue.
Vendor fees help offset costs for the event. According to Eatherton, the event is marketed in a variety of ways including magazine advertising, a fax blast, invoice stuffers, flyers in the stores, personalized letters to key customers and the sales staff.
In 2007, McCann plans to move the event to May to promote even greater attendance.
8. TV Hits The Spot
Costs for television advertising can be prohibitive in a major metro market. However, in smaller markets, TV can be a viable option.
Romco Equipment elected to try television advertising to build its brand in the Austin, Texas, market.
"Normally we would avoid TV," says Parker. "You pay for a lot of people you can't sell to."
However, because the Austin market is hot and the costs were so much more affordable than Dallas and Houston, Romco decided to give it a try. To ensure the broadest audience, they elected to advertise on a pre-game show for the University of Texas Longhorns.
"If you want to get into Austin, the safest thing to do is to get in with Longhorn football," says Parker. Utilizing generic stock footage from Volvo enabled the dealer to keep production costs low.
9. Think Local
It's a big transition to move from selling used equipment to new, but North Georgia Equipment Sales has found targeting the local market can smooth the way.
Marketing coordinator, Debbie Lentini says print advertising in the sports section of a local newspaper and participation in local Chamber of Commerce events brought in new business.
In addition, the company held an open house in September that attracted more than 500 people. The family-oriented event featured food, fun attractions for the kids and equipment demonstrations.
10. Beware Data Decay
Direct marketing success rests heavily on the accuracy of the list used, whether it's mail, e-mail or telephone. Industry experts estimate that from 50 percent to 70 percent of the response is attributable to the quality of the list.
A study conducted by John M. Coe, president and founder of the Sales and Marketing Institute (www.b2bmarketing.com), found contact information decays 70.8 percent in 12 months. The degree of inaccuracy for in-house files can be even worse, as most companies don't have a process in place for data hygiene. Too often, internal company data is infrequently revisited to update contact and company information.
Coe suggests these proven methods for improving the accuracy of your lists.
11. Use Your Website
- Send a request to customers and prospects each year that contains the information you have on them and request verification.
- If your data is badly decayed, it may be cost-effective to hire an outbound telemarketing firm to verify, correct and add additional information. The higher the dollar value of the product you're selling, the easier it is to cost-justify the expense.
- Change the phone-mail contact sequence. In direct mail campaigns, the usual contact sequence is mail followed by a phone follow-up. Reversing the order allows you to clean up the list and identify the proper contacts. The list cleanup costs are typically offset by reduced mailing waste. However, the real benefit is the increased revenue obtained by ensuring the right individual receives the mailing.
- Send the mailroom supervisor brownies. For large companies with mailrooms and multiple contacts, the mailroom supervisor can be helpful. After you call and determine the name of the supervisor, pull a list of your contacts at the site. Buy a box of brownies and send your list inside the box, along with a request to update it. With Coe's clients, the response rate of returned and updated information was more than 50 percent.
Geography creates some unique challenges for Alaska-based Craig Taylor Equipment. However, the company effectively uses the news section of its website to promote how the company meets those challenges.
Transportation costs, as well as timing, are critical in this market. Freight costs for a Bobcat skid-steer loader featured on their website exceeded the cost of the equipment by two times.
"A lot of this stuff goes in remote areas," says Hotzknecht, vice president and general manager. "So you can't just put it on a truck and take it there. It has to be flown in, taken up a river on a boat or around a coast to get to some of these remote areas."
Hotzknecht finds that the stories and photos about these complex deliveries are well received by customers and boost employee morale.
12. Grow Your Online Sales
In just seven months, Florida-based Discount Rental and Sales grew total revenues by 10 percent. The sales driver was a new e-commerce-capable website. In development for two years, the company launched the site in April 2006. Rich Walker, president of Discount Rental and Sales, says the site is like having a salesperson in front of the customer when the customer wants to see him.
Walker has stepped up direct mail and telemarketing efforts as a result of the positive initial response. On the downside, a site with these capabilities comes with a hefty price tag.
"Most people don't buy online unless they call you," says Walker. "They want to find out who you are and if you are legitimate before they put in a credit card for $5,000. It's not like buying a book or CD online."
13. Open Doors With Training
Andy Bull, president of California-based C.H. Bull Co., spends six to eight hours a month conducting safety training classes for current and prospective clients.
"What I have is a captive sales audience," says Bull. "Clients say, ‘You were out there teaching us and training us, while the other guys were just taking orders.' "
By taking on a consultative role, Bull is able to uncover safety problems and suggest solutions. He has found informing buyers about potential safety problems to be an effective opening for a sale.
14. Consider International Markets
Intrigued by the idea of growing your business worldwide?
Since the mid-70s, Hoffman Interna-tional has aggressively pursued offshore business and today it accounts for about 30 percent of sales. An eight-person sales team focuses exclusively on pursuing the sales and rental of large equipment packages in conjunction with agents working overseas. The company currently does business in Kazakhstan, Uzbekistan, Central and South America, Egypt and Africa.
"I think the reason for our success," says Joseph Watters, former CEO and now International sales consultant, "has been the focus we put on it." The export business is a separate business unit.
According to Watters, advances in communications and transportation have made it much easier to do business internationally. Consequently, more dealers are getting involved.
"When we started, no one was doing it," says Watters.
Timothy Watters, the current CEO, cites custom financing packages as an important strength for the company. Language skills are also critical. Although English is widely spoken globally, the company enhances the comfort level of potential customers and prospects with multilingual sales representatives and a website viewable in English, Spanish, Polish and French.
Joseph Watters recommends getting in contact with organizations, such as the International Trade Association (www.export.gov) and the Small Business Exporters Association (www.sbea.org) for help in navigating foreign markets.
15. Measure Results
John Wanamaker once said, "I know half of the money I spend on advertising is wasted, but I can never find out which half."
While measuring results can be a challenge, it's important to continually evaluate what's working and what isn't.
Matt Zabiega, marketing manager for Michigan CAT makes every effort to track initial response, as well as return on investment.
With radio commercials he uses a give-away such as a hat or t-shirt to monitor response and the company is expanding usage of promotion codes on direct mail promotions.
Debbie Lentini, marketing coordinator for North Georgia Equipment Sales surveys new customers to find out how they heard of the dealership.
While not every advertising or promotion activity can be easily tracked to a sale, marketers can set up web pages to track inquiries from specific publications and include promotion codes on direct mail efforts.
Measuring effectiveness can be as simple as training your staff to ask what stimulated a potential buyer to call. Utilizing all possible measures will make it easy to identify the programs that are wasting marketing dollars.
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