Monday, February 13, 2012

The Three Phases of Digital Marketing (Uncut)

The Three Phases of Digital Marketing (Uncut)  

Written by David Andrew, aka “The Professor” 

 You ask, “If you had to segment the Internet marketing down into four steps (the first being where a dealer would start and the fourth being what a top-notch dealer’s internet marketing consists of), what would be included in each step?” Wow! What a great question! Where would I start? Let's see, if I were a Dealer….


Phase 1: Enlightenment

Start by accepting a few truths about the evolution in consumer behaviors. In “The New Rules of Retail by Lewis and Dart” it’s referred to as a paradigm shift of power from producers to consumers. “Those who make to those who buy” says Harvard Business School’s Rosabeth Moss Kanter. That’s not to say Dealers should succumb to the downward pressures placed on dealerships by the consumers growing ability to harness the power of connectivity and free flow of information, it's only to suggest that Dealers should accept the fact that the new market economy demands a new level of transparency. Dealers must understand that consumers have the ability to research and assimilate volumes of information in a matter of minutes. Mobile devices and smart phones allow consumers to do comparative geographical location based product and service analysis in real time. The Internet provides consumers with infinite choices, and consumers are leveraging that information to make comparison valuations on quality and experience.

Consumer Motivation

We are witnessing The Perfect Storm a convergence of Maslow’s Law of Diminishing Returns as it relates to the human condition (Hierarchy of Needs), and Kurzweil’s Law of Accelerated Returns, which is an expansion upon Moore’s Law regarding the doubling of technology every 12 months, in which Kurzweil describes an exponential growth of technological progress. This technological progress is creating affordable mobile connectivity for the masses, it is no longer one consumer influencing ten, its now one consumers immediate circle of influence being one hundred and fifty.
As consumers are transitioning to self-actualization, the highest level in Maslow’s “Hierarchy of Needs” consumer satisfaction, or “happiness” as Maslow references; It is no longer driven by things, “satisfaction / happiness ” is now driven by “the experience”. How can this be relevant to the Dealer? Let me break it down like this. For the last ten years Dealer profit margins have been getting squeezed from all sides. The manufactures push production and supply-chain model, third party vendor's exploitation of information, consumers desire to receive best deal, internet connectivity, information’s demand to be free, and dealer-manufacturer negotiation based multi-tier pricing strategy, have all placed downward pressure on profit margins. As the automotive industry struggled not to become the next victim of the Internet revolution, it’s the Dealer, who has been offered up as the sacrifice in the supply chain. But there is hope if things no longer motivate consumers, if satisfaction/happiness is driven by “the experience”, then price is no longer the motivating factor in the buying equation. If price is not the centerpiece of the purchase decision, then just as quality of product and experience improves for the consumer, quality of sale (profitability) and consumer loyalty for Dealer Brand also can improve, as does consumer demand for the manufacturer brand. The window of hope is small however, if Dealers cannot shift the organizational mindset to “profitability being a bi-product of the consumer experience in other words from selling cars and service for profit to selling the experience”, they will continue to be squeezed out of the supply chain. Why because the Internet isolates inefficiencies, consumers understand the middleman is an added expense, and manufacturers / marketers understand true Brand Dominance is achieved through consistent representation of “the brand experience”.

 Winning Hearts and Minds

Brands like Apple, Coke, and Abercrombie, are creating Dynamic Brand Energy by maintaining control of the entire consumer experience, then fine tuning those consumer experiences by leveraging neurological triggers, as Martin Lindstrom outlines in his book “Buyology”- Why We Buy. To better understand references to neurological triggers and the impact of Sensory Branding consider the elements present in the Tommy Bahamas store’s island like atmospheres, an Abercrombie’s club like atmosphere, or Apple’s use of white and stainless steel in it’s store’s attempt to create a subliminal association with a religious or healing experience. Science is helping us to understand that there is much truth in the saying “car buying is an emotional purchase” as recent studies show the pursuit and discovery process trigger the release of a chemical in our brains called dopamine, the same reaction one might feel during a life altering experience, intensely religious experience, gambling, fond family experience, etc.. Dealers who are able to successfully control their environments delivering dramatically superior consumer experiences will achieve Brand Dominance in their markets. Dealers spend exorbitant amounts of money trying to achieve top of mind dominant presence, Newspaper, Billboards, Radio, TV, the real secret is they don’t have too! Why? Because delivering a true powerful “World Class Consumer Experience” creates the neurological reaction, which as consumers, we are not even conscious of (remember that release of dopamine). The reaction leaves a marker in the consumers subconscious. When the consumer sees an advertisement or needs a related service or product that subliminal marker is recalled and the consumer is motivated to return to the source that created the marker. This is pre-emptive marketing. In the same way that some Dealers used traditional advertising in the past, to saturate print, radio, and TV effectively drowning out advertising messaging of competitors, pre-emptive marketing trumps all other. Dealers delivering true powerful “World Class Consumer Experiences” in affect receive more benefit from a competitor's interruption style traditional marketing practices, because the consumer is subliminally recalling “the positive experience”, while simultaneously associating a negative feeling about the organization running the competitive ad. As tradition advertising, and marketers continue to lose credibility, word of mouth referral is gaining more and more power to influence consumer-buying decisions thus the importance of creating “the ultimate consumer experience”. Local businesses are outpacing larger big box retailers by listening to and understanding the invidual-ized needs of the consumer. Niche local brands are creating individualized emotionally connecting environments and in turn experiences giving them sustainable competitive differentiation against mass marketing mega brands, as consumers pursue individualized exclusivity. These trends are being accelerated by technology (Digital Media). No longer is it effective to use shotgun like “interruption style” marketing messages. Dealers can realize a far greater return in personalized individual “needs based” marketing/messaging delivered through an array of Digital Media Channels centered around individual consumer preferences, and lifestyles (The right message to the right consumer at the right time), best of all its measurable.

The Power of the Consumer Experience

The benefit of providing ‘the ultimate consumer experience” goes well beyond an improved profit margin, “the experience” generates “BUZZ, or Conversation”, from a trusted voice (source), it drives a desire in peers to seek the same experience (happiness). The connectivity (one consumer to another) provided by technology accelerates and amplifies the “BUZZ”. However, be forewarned there is no statement truer than “Your Brand is not what you say it is, it’s what your customers say it is” and under that premise (with or without your participation) “Buzz” can make or break you, and will definitely break the Dealers, who do not embrace the consumer transition to Self Actualization. In other words, the New Marketing Economy magnifies everything exponentially good or bad. Which brings me to the heart of your question. I don’t believe you can build a great Dealership Brand without accepting these truths as reality. Once a dealer embraces these fundamental truths he is ready to begin building an online presence equally as important as his bricks and mortar physical location.


Phase 2 Identifying Target Audience

Use Porters Five Forces Model to look at the landscape of the market. Ask specific questions about what the immediate market looks like. Identify the Blue Ocean opportunities and navigate away from the Red Oceans of the competition. Understand competitor’s strengths and weaknesses and how competitor strategies work for or against connecting with the Dealer Brands desired target audiences.

Phase 3 Develop Marketing Strategy

Setting the Stage

Develop a marketing strategy and marketing plan built upon the research and analysis of phase two. Invest in the best consulting agency or Internet savvy marketing person you can find. This person is critical to the success of your entire organization. In the past dealers have placed this position too far down the org chart in terms of compensation and organizational power structure. The “in Dealership” person filling this position wears many hats and is critical to the success of every department and the organization as a whole. Therefore it can be argued that the position warrants equal status and compensation to the General Manager’s position. Both positions are equally important. Most often if not always the General Manager is a car guy, he understands the intricacies of the car business. His experience may or may not prevent him from understanding the concepts presented here. One thing is for certain. He has a Dealership to run and doesn't have the time to do the required reading, learning, research, or testing necessary to become an expert in the evolving new marketing economy. The position requires a highly motivated, highly educated, Digital media and Marketing savvy individual, not necessarily from the automotive industry. It’s not the non-producing salesperson; we want to find a spot for. The right person is going to drive sales, while simultaneously lowering cost, they are going to develop and implement strategy, champion new initiatives, and be instrumental in building organizational culture. Most often they are most qualified to make technology decisions, directly responsible for implementing technologies, responsible for all marketing decisions (including negotiations), developing processes that build on marketing strategies, developing e-commerce, and monitoring success of each of these initiatives. To further quantify or justify the expense beyond survival, and Brand market domination consider the total savings could be as much as $400 per vehicle sold. Another great measure could be advertising cost savings somewhere in the neighborhood of 30% to 60% depending on how much traditional untargeted marketing is still utilized.

Mapping the Course

Once your champion has been chosen, set short term and long-term goals. Establish short-term mile markers designed to allow for short term wins along the path to long-term goals. The short-term wins are going to be important motivators for your team to stay continuously focus on the end game. Gain buy-in from the most influential people within the dealership, those with both informal and formal power. Helping them to understand how the new or improved direction could specifically benefit each of them personally. Likewise, Have organizational meetings for gaining consensus throughout the dealer organization. Consistently measure and publicize results, create incentives, bonuses, rewards and recognition opportunities built around the strategic vision, and milestones. Organizational buy in is the key to success. I have learned over the years that technology is not a replacement for human capital. In the New Marketing Economy, every team member from the Groundskeeper to the Owner is critical to the overall consumer “experience”. You can tear down all the Silos you want but in the end it always has been, and always will be the human connection that is most important to the equation. With that in mind help key personnel to understand that unfortunately not everyone can or will rise to the new elevated standards, therefore a greater emphasis must be placed on best practices in recruiting, training, and development (after all you as only as strong as your weakest link).

Removing Barriers to Progress

Let me be clear on one other point related yet beyond the scope of this discussion. As it relates to downward pressure on price I can’t encourage Dealers enough to seek expert advice from those who discuss investment in terms of delivering quantitative ROI for the products and services. Additionally, I encourage Dealers to stand united in avoidance of third party lead providers who's business models rely heavily on the leveraging of the Dealers brand and franchise brand to gain traffic. I would argue that most third party lead providers simply capture lead traffic destined for the dealership, and that funds diverted from third party lead providers and then concentrated on the Dealerships own branding, SEO, and other key Digital Media efforts would net far superior results. It’s important to note, this pre-emptive strategy can be applied to Online positioning as well. Furthermore, I encourage the Dealer Body to un-leaver itself from the OEM Manufacturers efforts to implement a one size fits all Digital strategy for its Dealers. The long-term relationships that are being established throughout the industry are detrimental to innovation, they serve little purpose beyond consistency of message and presentation, and are often forged with sub par vendors by decision makers not equipped with the complete technical knowledge to make informed decisions, merely adding additional cost to Dealers looking for innovative differentiation and competitive edge. The Dealer Body would be far better served seeking individuals to work on the Dealer's behalf, even if they came at a premium cost. The importance of controlling the brand is obviously critical to the success of the manufacturer so it's understandable that the OEM would like to be involved at all points of consumer distribution. Yet like the inefficiencies of big government and the unintended consequences of not allowing free markets to compete, the same holds true for manufacturers. Manufacturers should establish clear expectations and guidelines for both dealers and vendors. They might even go as far as to endorse “Best in Class Vendors” but not enter into agreements on behalf of the entire Dealer Body.  


Phase 4 Building an Online Presence

Based upon the strategic planning previously outlined, identify which best practices and processes will align the entire organization with its online presence. Match those needs to “Best in Class”technologies, within and out of the industry.


Dealer Websites

Great websites have: • Architectures that are “naturally favorable to search engines” • Sensory Branding Elements • Subliminal consumer hotspots • Strong calls to action/ clear points of contact • Self service and full service features • Strong brand value messaging • Readily available pricing with inclusion of manufacturer applicable rebates and incentives • Active specials in all departments • Inclusion of Real Time Social Media Elements and Engagement Opportunities • Inclusion of Fresh Relative Content • Ratings and Reviews • Live Chat, Hyper Connect lead contact • Inventory and Build your Own Vehicle Features • Real time Inventory Posting, Specials Postings • Intelligent reporting and tracking • Access to helpful widgets, and mobile apps • Strong manufacturer branding  relationship • Multimedia engagement


Beyond the Website

Great Internet departments actively manage online engagement. Using state of the art intelligent reporting analytics they consistently measure SEO, SEM, VSEO, Landing pages, and content marketing initiatives, ensuring it remains relative. Great Internet departments integrate email marketing, mobile text marketing, and mobile smart phone apps into their arsenal of consumer interaction. Great Internet departments effectively mine both internal and external data and use state of the art CRM tools to efficiently deliver engaging multi-media messaging to their target audience. Great Internet departments create visibility for the entire dealership organization assisting individual team members to maximize social capital by leveraging online relationships in social media channels. Great Internet departments serve as Public Relations departments, “Blogging”, implement processes for commenting, monitoring reputation, responding to ratings and reviews, publicizing unique fulfilling consumer experiences, posting relative informative content. Great Internet departments maximize the tools available today by building best practices and implementing effective processes to maximize ROI while researching emerging technologies for the cutting edge differentiators. Great Internet departments engage the entire organization with training and development to improve customer interactions, and gain understanding of marketing strategies. Great Internet departments analyze a wide array of Data Points to determine effectiveness of organization, individuals, marketing channels, and processes. Close ratios, length of time to first response, website and channel conversion ratios, over various time periods are only a fraction of data analysis.

The Future

What elements will Brand Dominant Internet Department of the near future possess? Internet sales departments will merge with traditional sales departments; there will be no differentiation. All personnel will be required to develop necessary skills to communicate effectively and professionally through online channels. The words will be real-time, and mobile will replace social media as the buzzwords of the moment. Tech toys like the iPad with integrated payment and RFID functionalities will take mobile computing and marketing to the next level. Mobile apps, text messaging, virtual, real time mobile marketing will become a primary focus, mediums like email marketing will fade much like traditional postal as “marketers” inundate mailboxes with irrelevant marketing messages, real-time 24-7-365 connectivity will become increasingly important. Dealers will shift the heavy lifting of communications to professional call center teams and virtual BDC’s with professionally trained and incentivized teams to cultivate ultimate consumer experiences on behalf of the dealer, including appointment setting, confirmation, lost sale follow-up, service reminders, customer service follow-up, targeted marketing initiatives allowing in store personnel to manage relationships and create environments and ultimate consumer experiences.



Social Media

The illustration below is what I like to call the Wheel of Fortune. It’s a great map for outlining engagement strategies across various social media platforms. The goal is to understand your target audiences touch points throughout the life cycle of the ownership, buying cycle (“consumer experience”) and to craft individual laser targeted personalized consumer experiences and messaging that reach the consumer in their preferred method of communication, in their preferred media or social channel, at points and times that are most relevant to their individualized needs. So many dealers and marketers today are placing the wrong message at the wrong time, in the wrong place. Social Media can be a powerful force for any business, including Dealerships, but it has to be engaging, and conversational. They call it social for a reason, its sharing, its community. The approach will be the measure of success. For instance, someone thought it was a great idea for dealers to place inventory, on Facebook and Youtube, but it's really not, at least not in the way that most dealers and marketers are inclined. People are there to share with one another, or to be entertained, not to shop, or be distracted from their original intent. A conversation about a Dealer who created an awesome “experience” or a vehicle that is simply “amazing” is genuine and trusted. A dealer saying the consumer will be treated well or get your best deal today, is not trusted or respected. There is a time and place for everything, and dealers continuing to do so will eventually suffer for it. I hear the arguments for it and the cars sold by doing it, but for every car sold you lose hundreds of advocates.


Becoming a Market Force

A few years ago the best way to get competitive as a Dealer and improve bottom line profitability was to cut non-effective traditional media expenditures then funnel a portion of those savings into lower cost, highly track able, more effective Digital Media Channels. Today that’s not enough. As Digital Media Marketing Channels continue to create added value, demand increases, and Dealers flood the space; price of those products and services will increase, until we are again at unsustainable pricing levels. Additionally market trends, and technological innovation will continue to challenge and stretch the conceptual understanding of how to best capitalize on opportunities by Marketers and Dealers, as is currently seen in the social media space. Just as MySpace fell lost favor, there will be other Facebooks, Twitters, and YouTube trends. Search providers like Google in an effort to deter individuals bent on gaming the system is constantly changing the rules of the game with complex ever evolving SEO and SEM algorithms, and other structural modifications. Therefore, there truly is only one path to Market domination and it’s through Dynamic Brand Energy, and sustainable profitability. It’s a path that requires leveraging of innovative technologies, solid processes and best practices, transparency, and sense of community, to cultivate relationships, and establish the “ultimate individualized needs based “consumer experiences”. By doing so Dealers will no longer be at the mercy of today's latest trend because the consumer will be the driving marketing force. In my mind that’s an investment worth making with an ROI like no other!

  • Martin Lindstrom-Buy-o-logy
  • Chris Anderson-Free The Radical Future of Price
  • Lewis and Dart- The New Rules of Retail
  • Rapaille- The Culture Code
  • Mitch Joel- Six Pixels of Separation
  • Chris Brogan-Trust Agents
  • Stephen Hall- Wisdom From Philosophy to Neuroscience
  • Erik Qualman- Socialnomics
 Appeared in Auto Dealer Monthly Magazine, June 2011, pages 22-24. 
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