2010 Marketing Plan - Part I

To start off the year, I want to talk about the importance of establishing a marketing plan for the calendar year. A marketing plan among other things will force you to think long and hard about the entire year as well as give you a benchmark to measure success. All too often, rather than calmly executing against a predetermined plan, dealers are respond to a situation (unseasonably hot, cool or mild weather; a sudden lack of new business; a prolonged rainy season, etc) by panicking and usually end up making bad decisions. According to Hudson Ink, only 23% of dealers create an annual marketing plan, so it is easy to see why our industry struggles in this department.

We must look back, before we look forward
Before we start with our plan, we need to first analyze 2009. Was your overall marketing and advertising successful? How did you measure success? What were the goals? Did you keep track? What specific forms of marketing were successful and unsuccessful?

I think Einstein would say we are all insane
Albert Einstein defined insanity as "doing the same thing over and over again and expecting different results." Before we spend our good, hard earned money in 2010 on marketing, we first need to determine if any of the stuff we did in 2009 actually worked.

Advertising must have direct results
I am a firm believer of direct-result advertising. Meaning, advertising dollars are not spent to build a brand, but rather achieve a specific result ? a new customer or a new sale. Success is measured simply by determining if the marketing dollars spent resulted in a profit. If they did, then the campaign was a success and should be continued. If you not, then the campaign was a failure and should be stopped or modified.

For example, let?s say we spent $10,000 on "phone book" advertising and our net profit margin was 10% (industry average is 3% net, not EBITDA). This means our break-even point is $100,000 in revenue.

$100,000 x 10% = $10,000.

Therefore, if the revenue directly tied to the phone book was greater than $100,000, then the campaign was profitable. All too often in this example, I see dealers looking at a revenue target of $10,000 as the break-even point, which means they think they are success when in fact they are losing money. This is probably one of the reason we have a 3% industry wide average net margin.

Marketing vs. Advertising
Now there is a difference between marketing and advertising. I personally view marketing as an investment the company is making into their brand and the process of selling. Therefore, I do not look for a direct return on marketing related expenditures ? uniforms, pens, business cards, wrapped trucks, brochures, website, etc. Therefore when evaluating 2009, make sure you first separate expenditures into either marketing or advertising.

Ways to Track Revenue
Tracking revenue back to a particular advertising campaign is difficult. No matter how much training is given to the personnel answering the phone, simply asking "How did you hear about us" is anything but foolproof. In fact, one study indicated that 20% of responders actually stated the wrong source when asked this type of question (the study found that 20% of responders selected a means of advertising that the company did not perform). Therefore, it is important to put in place processes, and especially automated processes, that capture this information without having to ask for it.

What are some examples?

1. Place a code on every direct mail piece. In order for the recipient to redeem the discount or offer they must provide the code.
2. Use a separate telephone number for an advertising campaign. By tracking the phone bill you will automatically know that people calling this separate number are responding to the ad.
3. Use landing pages on your website. This is great for PPC advertising or traditional advertising. Rather than sending prospects to your website's home page, send them to a specific page that discusses the specific offer. Ideally, the landing page should be unique and only accessible from having received the advertisement.

Next week's newsletter will continue with a discussion on how what type of goals to set and some ideas for the seasonal nature of our business.

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