The automotive space is changing rapidly, with some industry insiders dubbing it a technology tsunami.
Most local businesses are being forced to adapt towards digital marketing, and it's no different within the automotive businesses. Yet, this industry is experiencing immense pressure within this "tsunami" to adapt to new technology introduced to their products and services.
This post will cover the automotive vertical from an outsider perspective and provide an overview of the different parts of the ecosystem, what they do, and how agencies can approach these unique business needs.
Table of Contents
- The current automotive landscape
- Opportunities for Agencies in Automotive
- Selling to automotive business niches
- Understanding (and avoiding) automotive campaign pitfalls
The current automotive landscape
The automotive industry is transforming rapidly in this tsunami, with technological advancements presenting new software and tech to auto businesses faster than they can integrate and adopt them. Some of these technology changes bring vehicles closer to the infamous "self-driving car," with these changes being lumped under ADAS (advanced driver-assistance systems). This would include backup cameras, collision detection, etc.
Other technology changes relate to new materials (metal alloys, plastics, etc...) that require specialized equipment to work with. Just like an iphone is a hot mess to fix, sometimes cars can fall into the same category—simply removing a panel can destroy wiring or require re-calibration of sensors.
This landscape of massively shifting technology puts the automotive industry in a unique position of not only having to adopt new technology just to provide their services, but also having to confront new customer acquisition challenges. New costs to an automotive business could range from training staff on new repair techniques, purchasing expensive repair/calibration equipment, and even licensing software to leverage their equipment purchases
Ultimately, the changes to the automotive industry will force these businesses to adapt faster than many others—or to die trying.
What does this mean for agencies? New Opportunities!
Opportunities for Agencies in Automotive
As automotive businesses adapt to the new environment outlined above, the requirements for marketing and advertising solution bundles will shift.
Automotive service / product providers are going to feel a budget crunch. While every business needs to be efficient with their marketing spend, this is doubly important for the automotive vertical. Automotive businesses are going to be looking at trimming the fat from their marketing budgets, and agencies will need to reconsider their approach to these businesses to not get turned away at the door.
Here's how you can find opportunity in that process.
1. Find your place in the automotive marketing budget
According to sba.gov the marketing budget for any business under $5 million in revenue should be 7-8% of gross revenue—for new businesses it could be as high as 20% for their first few years getting established. This should be a rule of thumb for you to follow when proposing a marketing strategy.
The standard business essentials (reputation, reviews, listings, social, website, digital advertising etc...) are critical for every local business. These are going to be key components in your marketing toolkit for all local businesses.
I personally work with an auto body that spends maybe 1-2% of their gross profit on marketing, but they're well established—ranking at the top of Google for their niche with solid reviews. The majority of their remaining marketing budget (5-6%) goes towards charitable donations and supporting the local community. This plays a dual role of building high value local citations (further solidifying their #1 spot on Google) and significantly reducing taxes.
If an auto body shop generates $4,000,000 in revenue on an annual basis based on our formula above you should expect them to have a marketing budget of at least $280,000 yearly. That would be an incredible customer, but even when applying my 1-2% customer, you could expect somewhere between $40,000 - $80,000 yearly if you met all of their marketing need.
2. Show proof of performance that traditional media cannot
Many automotive business are still using costly traditional media (e.g. tv, yellow page, radio ads). For many in the space, these are tried and true methods often based on decades-old relationships with traditional media / yellow page companies. To further complicate things, traditional media companies generally have dedicated sales efforts in that they actually stop in for a coffee to talk with their clients:
in person... outside the of the office... not on a hangout with the camera off... irl... for hours at a time
Normals a.k.a. traditional media people refer to this practice as "relationship building". They have long established relationships and trust that is going to be hard for a digital marketer to compete with.
When approaching any local business that has an established relationship with a traditional media company, it is important to step lightly. Just like a bad breakup between paramours, breaking up with a traditional media company can lead to tears. While the media companies themselves are generally very reputable, the sales representative responsible for your prospect might not take too kindly to you taking their contracts, and might even threaten the local business "If you stop advertising in the yellow pages you're going to go out of business!"
If you happen to work at a traditional media company with all the established relationships, you're in the perfect position to start offering digital marketing services. If not - you've got some relationship building to do but your secret weapon will be showing proof of performance through digital marketing.
3. Offering niche specific and relevant automations
With technology changes on multiple fronts, leveraging automation is more critical than ever. Whether it's improving parts of the customer experience, collecting feedback, booking appointments, or otherwise, automation is going to be vital. Not only to free up administrative toil, but also to improve customer satisfaction and push savings of an additional wage directly to the bottom line.
In my experience, the challenge in selling automation to local automotive verticals is having an established degree of trust and speaking their language. This is a relatively new technology and you might as well throw in buzzwords like A.I. blockchain zeitgeist because you may have lost your audience as soon as you said "automation."
However, many components within automation also allow you to create personalized experiences for the end customer. Little things like personalized greetings, thank you notes, and reminders go a long way. It is a major in-market differentiator to personalize the customer journey, in building relationships between your client's brand and their client—those who can pull this off will succeed.
Selling to automotive business niches
If you're completely unfamiliar with the automotive vertical and its ecosystem then it might seem odd, but each niche offers either a product or service. Even more confusingly, businesses may specialize further by offering b2b, b2c, or a mixed model. The way that an agency pitches an automotive company will vary depending on the niche—understanding their terminology and challenges will go a long way in closing them as accounts.
Here are some simple breakdowns of the niches and some basic needs that each might face.
Automotive service providers
In general, service providers can expect a very high intent or sense of urgency from visitors to their website or social sites. Service provider's prospects are generally need and solution aware to some extent (e.g. my car was in an accident, the check engine light is on, or my car doesn't look swag enough).
Examples of automotive service providers
- Auto body / collision repair shop
- Mechanic shop
- Detail / Accessory shop
Solutions to sell to automotive service providers
- Reputation and review management
- Social media management
- Website hosting
- Chat bots
- Appointment scheduling
Bundle foundational solutions like reputation, social, and hosting services with website add-ons to help consumers book appointments and get immediate service. This will ensure their online presence is in-check, and help capitalize on that high purchase intent of the consumers searching for their services. These customers have a problem that needs to be solved - the business with the least complicated funnel with reign supreme.
Automotive product providers
Unlike service providers, automotive product providers will generally have to deal with more tire kickers (pun intended). Leads may have to be qualified and remarketed to, as they might not be needs-aware, or simply building a dream board.
Examples of automotive product providers
- Parts dealer
- aftermarket or original equipment manufacturer (oem)
- Car dealer aka. Dealership
- new or used
Solutions to sell automotive product providers
- Reputation Management
- Review Management
- Social Management
- Website Hosting
- Chat bots
- Appointment scheduling
Business essentials like reputation, social, and hosting services with website add-ons to help consumers book consultations or e-commerce to "buy it now" are all fair game for product providers. The key challenge here will be to build a complete funnel from top (low intent, low awareness) to bottom (high intent, product selection) and tracking your proof of performance. A full sales/marketing CRM and activity tracking is critical for attribution and proof of performance tracking here.
Multi automotive product and/or service provider
Some automotive businesses offer an assortment of products and services. Often, dealerships will provide every service, but restrict their offerings to a single manufacturer. In some cases you may find a business with both an auto body and detail shop combined or mechanical shop and aftermarket parts combined.
Needs for these businesses could be a combination of both a service and product company. This is where you'll want to identify multiple personas for each aspect of the business. It may require additional effort towards qualifying prospects and offering personalization throughout their marketing funnel.
Automotive networks and multi-location brands
All of the above business models can be either stand-alone businesses or part of a multi-location brand. Often, multiple brands within the automotive industry merge into what the industry terms a "network". Being part of a network generally provides central support functions to auto businesses like marketing, human resources and allows for high level bargaining with insurance companies (i.e. direct repair provider deals provided below).
Needs for automotive multi-location brands and networks are going to be very similar to those mentioned above but will require fulfilment at scale. Networks can also contain multiple distinct brands which could drastically change the tone of any marketing content they'll want to publish. The foundational products and services offered to other auto businesses, PLUS bundled with large-scale fulfillment and likely several e-commerce solutions.
Selling to multi-location brands or networks might require you to coordinate through their internal marketing teams and definitely other vendors - with this in mind you'll want to offer solutions that:
- Have flexible integrations for use with other vendors
- Show and allow for export of proof of performance
Understanding (and avoiding) automotive campaign pitfalls
As a marketer, you're well aware that every business is wildly different. Here are a few examples of niche challenges you might run into when providing services to businesses within the automotive vertical.
1. Know whether your prospect is service or urgency based
Service or urgency based organizations often struggle to perform with audience driven paid advertising. No one is interested in car repair until they need it —this makes finding a target audience very difficult or leads to a sort of modern day phrenology trying to cobble together a broad match audience of people most likely to have a car break down. It's bad.
On the other hand, product organizations like parts, accessory or car dealers often do extremely well with audience advertising. In any case - it is important to identify the goals that your client has and tailor any campaigns to meet those needs.
While you might not want to throw advertising spend at urgency or service based businesses, you could drive a wealth of business through post-service marketing. Every satisfied customer is an opportunity to drive word of mouth marketing, reviews and testimonials for social proof.
2. Choose your content carefully
It's very common that automotive businesses will want to talk about what matters to them - especially when they've paid a lot for it. If you find yourself in a position where you want to market an automotive companies' new certification or piece of equipment be very careful how you do it. A campaign like "We are certified to repair Ford F150 series vehicles!" might confuse end clients and actually reduce the number of customer - first off, most end client's don't care about a businesses' certifications and it's very possible that they would think that this business only repairs those vehicles. Your client business might argue "We paid $300,000 to train our staff, buy new welding equipment and pay even more to license software to perform this work - we need those jobs". A better campaign would be "We are a dedicated repair facility and have advanced certification on Ford F150 series vehicles"
3. Understand how they acquire new customers
Many service providers drive their work through what they'll call a DRP or direct repair provider agreement with an insurance company. Essentially, this is where insurance company recommends customers use their "trusted" service providers.
DRP agreements are not typically something that you can help a service provider with. If most of their work comes from a DRP agreement then they might not be as interested in an inbound funnel. That being said, the allure of not being under an insurance companies' thumb might be enough to have them consider building a separate inbound funnel until it can be self-sustained.
4. A wider funnel often leads to a more pressure at the bottom
Unfortunately there are only so many repair jobs that can be managed at a single time. It is important to understand the volume of additional customers that your client could support otherwise you'll put too much pressure on their funnel. If you provide more prospective customers than your client can support they could end up with administrative burdens and might even start to receive negative reviews due to wait times. Like every problem - this presents an opportunity! Automation (chat bots, scheduling, review management) is great for managing administrative burdens.
5. Dealership websites suck
As a general rule, dealerships have terrible websites. This is generally the case because of contracts bundled with their records management systems or other products (buy our website product or you won't qualify to be listed in our directory) - these types of deals tend to be negotiated at the network level or somewhere else equally divorced from the importance of good user experience or conversion rate optimization. With this in mind - while you might have a lot of valuable insights to improve their website or want to sell them on a separate CMS altogether you'll be hard pressed to pull off the deal. Tracking performance of marketing campaigns through dealership websites will rely on heavy expertise with Google Analytics and/or Google Tag Manager.
If somehow you do get a contract to replace a dealership website make sure you're fully aware of their organizational needs. Turning off the website might have unforeseen consequences and you can rest assured that the records management system provider will have sales people trying to reclaim their lost revenue on a regular basis. All that said - dealerships have stupid amounts of money. I've seen them pay $5000 / month just to paint their windows with big bubble letters in pastel. If you can and keep a group of dealership clients you may find you're also suddenly obsessed with helium balloons, a "green means go" sales mentality and who knows - you might find yourself with enough spare cash that pastel bubble letters seems like a next-gen-5d-chess website growth hack.
The automotive space is going to continue to see a technological tsunami, and those able to adapt will survive. Ultimately, as long as consumers want cars, they'll find a way to buy, crash, repair, and modify them—this means that service and product providers will still need marketing agencies to help them get their customers. As always, let me know in the comments if you found this post helpful or if anything was missing. I'm working on a survey to over 150 auto body shops to get insights into their marketing pain points and common objections to agencies looking to sell to them. Let me know if you have any questions you'd like to see included!