Service Advertising: Whatever You Do - Don’t Stop Now!

OK, I understand that some car dealers are in panic mode. Car sales are off and the competition is tough, expenses keep growing and you have to look hard at your financial statement. You have to cut things out that you don’t really want to cut. You have to make hard decisions and you have to be willing to stick to your guns. It’s tough and I don’t blame you. But what I don’t get, or understand, is why some dealers cut back on service marketing and advertising that are obviously creating traffic and making them money. Why would anyone cut the budget on something that works?

Here’s my thought- expenses that don’t return an investment should be scrutinized and cut. Get’em out of there as fast as you can. Investments (not expenses) like service advertising should not be cut- they should be increased. Makes sense doesn’t it? If they are working and increasing service sales and traffic, they should be increased, right? That is what dealers do when showroom traffic is off – they don’t cut, they spend more. The same is true with service.

Some dealers panic and shift their advertising money away from service and up to the sales department because they need more traffic upfront so they can sell more cars. But what about the service business and traffic back there? Think about it…the average dealer grosses 70 percent on every labor dollar sold and about 45 percent on parts sold in the service department. You make more gross on service than car sales or any other department or product. 

Do the math. The average technician generates about $10,000 in labor gross profit per month and the average service advisor (service sales person) generates between $55,000 and $75,000 in gross profit (not sales – gross profit!)

I think some dealers and service managers get complacent. They think they’re busy so they don’t need to advertise…when in fact they are just afraid of growing. Add some techs. Add some advisors. Open up late, all day Saturdays and start working shifts to accommodate all of that new business. Don’t get lazy and used to getting what you always had – step it up and push the envelope. If you have 10 techs now, grow to 12 and 14 and so on. If you have 2 advisors, grow to 3, then 4 and more. You can do it if you just make it your mission to grow.

The financial gurus will tell you that service advertising should be 2-3% of gross profit. Think how crazy that sounds when the same gurus tell you that the average advertising spent in vehicle sales is between $300-500 per car sold! Take a dealer that grosses $100,000 in service – their ad budget is about $3000 – that’s it!

Here is what I am saying- You know that advertising works. That’s why you keep doing it for the vehicle sales department. Why not do the same for service? Why not increase rather than cut service advertising? Make sure you do the right kind of advertising, make sure it builds brand equity, make sure it is trackable, and make sure you are getting as much bang for the buck as possible and – stop cutting – start spending!