Shop owners and managers have to make decisions every day on parts, personnel, supplies, budgets, free time, family, balance, etc. The list goes on and on, right? From a budget standpoint, you, as an owner or manager, look at sales and expenses. You want to make sure your sales at least meet your expenditures and hopefully exceed your expenditures by a great deal. Profit is a good word, and the more the better. But when things get tight, owners and managers have to make tough decisions about what to do with their budgets, and often the cuts they make are exactly the opposite of what they should be doing. Let me explain.

Cars to/through the Door

Any cuts that are made are going to have an impact on one of two categories: cars to the door, or cars through the door.

Here’s an example of a “cars through the door” cut.  Over 10 years ago, I was running the Mentors At Work apprenticeship organization, which is now part of VeriFacts.  I founded Mentors At Work in 2000 to address one of the greatest challenges the industry faced at the time: finding skilled workers.

When the recession hit, the workforce issue wasn’t as hot an issue, so few shops were investing in the workforce of the future. When the economy started bouncing back, the need for skilled workers was back in the forefront, and the challenge was, and is, worse than it was in the 90s and early 2000s. The cuts that were made in the budgets put shops in a bind since the problem wasn’t addressed in advance.  If you don’t have the workers you need, it makes it pretty darn difficult to get cars through the door.

Now let’s look at a budget item impacting cars to the door: marketing. When the recession hit, a lot of people cut marketing dollars. Marketing is often hard to quantify. It’s difficult to draw a solid line between dollars spent on marketing and sales, and that’s why many owners and managers make cuts in this area. But research would suggest that this is exactly the opposite of what businesses should do.

Over the past 13 years, we’ve monitored surveys on marketing (from the AdCouncil and Columbia University, to name a couple), and they show over and over again that companies that allocate 10 percent of their revenues for marketing are found to be leaders in their respective industries. Spending 5 percent of your revenues on marketing provides a relatively successful return on investment. But those that spend 3 percent or less see their market share stall
or shrink.

These studies also show that each dollar spent, on the right things, provides a return of $10. But if you aren’t a marketing specialist, how do you have any idea of where and how to spend your money?  You don’t.  You might do OK, or you might miss the mark entirely. You can’t look at your competitors and think, “If I just outdo them and how they’re marketing themselves, we’ll win.” You must do something unique to make your brand stand out.

Budgeting

When budgeting, please understand that the time spent on learning and training in the marketing arena should be factored into the equation. You pay your people during this training, so that means money. If you don’t have people to spare for marketing, or don’t have people with the aptitude for it (which is very important), then you’ll be paying a third party you truly trust to do the marketing for you. Such is the case with web presence management companies such as Optima Automotive, a company that does website development, social media management, directory listing management and/or reputation management for you. Traditional methods of marketing aren’t effective anymore and haven’t been for some time. The American Marketing Association defines marketing as processes for creating, communicating, delivering and exchanging offerings that have value for society at large. This is done with branding at the core. Identifying a brand and remembering it over time requires repetition. And that’s what social media management for business is all about: multiple impressions of your business brand. And that requires quality, value-added posting that isn’t advertising.

Summary

We know it’s only a matter of when, not if, things slow down again. It’s part of the normal cycle of business in our industry. Don’t be tempted to cut your marketing budget – especially your online marketing – when it does. BSB

BSB Contributing Editor Mark Claypool has more than 30 years of experience in the fields of workforce development, apprenticeships, marketing and web presence management with SkillsUSA, the I-CAR Education Foundation, Mentors at Work, VeriFacts Automotive and the NABC. He is the CEO of Optima Automotive (optimaautomotive.com), which provides website design, SEO services and social media management services.