4 Marketing Strategies for Overcoming Inventory Shortages

Every dealership is dealing with inventory acquisition challenges. It’s an industry-wide issue that has had a profound impact on profitability. And while some dealers are choosing to “wait out” the inventory shortage, others are succeeding now.

Implement these four auto dealer marketing strategies to overcome inventory obstacles and supply chain challenges at your dealership.

  • Strategy 1: Evolve Campaign Types—Focus auto advertising on inventory acquisition. Promote that you’ll pay top dollar for used vehicles.
  • Strategy 2: Widen Your Geo-Target—As inventory shrinks, expand your audience beyond normal boundaries with messaging about buying used vehicles.
  • Strategy 3: Add Web Content—Use your dealership’s website to advertise acquisition efforts with home page banners, service page banners, and trade-in reminders.
  • Strategy 4: Dealership-Wide Plan—Ensure marketing, sales, and service are all in sync, connecting workflows across departments, to accomplish inventory acquisition goals.

The current inventory shortage is a major challenge, and it’s not going away anytime soon. With these four proven marketing strategies, you can outlast current supply chain challenges to keep profits high, even as inventory is low.

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Operations in a Lean Inventory Environment

In the wake of the coronavirus pandemic, the industry faces significant inventory shortages that threaten your dealership’s profitability. With fewer cars to sell, you’ll need to adjust your dealership operations by developing a comprehensive, cross-departmental strategy for thriving in a lean inventory environment. As a centralized force for dealership change, operational staff can help guide and implement that strategy by encouraging departmental collaboration, improving dealership-wide processes, and providing helpful metrics and reporting.

Encouraging Departmental Collaboration

Lean inventory environments present unique challenges that demand increased levels of inter-departmental collaboration. To thrive within such environments, you’ll need to tear down the traditional silos that keep departments operating independently. Important communication and collaboration between the service and sales department will be necessary to source used cars from service customers and to find sales opportunities. Your sales and marketing departments will also need to work closely to segment, target, and close on high-potential opportunities for selling and sourcing vehicles. Operational employees will have the important job of ensuring that everyone within your dealership is connected, communicating, and capturing necessary data.

Improving Dealership-wide Processes

During periods of lean inventory, it won’t be enough to simply improve communication within the dealership. Your dealership’s operational employees will need to develop and refine important internal processes. In many cases, you’ll need to abandon the status quo and adjust processes, adapting them to fit the unique conditions created by inventory shortages. Most importantly, you’ll need to align around an internal process for bolstering inventory by purchasing cars from customers and from vehicle owners in your service lane. Determine the right pay structure for vehicles acquired out of the service lane. Consider paying customer pay rates vs. internal rates for recon of vehicles purchased out of the service lane prior to being serviced. Decide who will approach those customers, what they will say, and how employees will be rewarded for sourcing and selling cars.

Reporting and Analytics

Because your dealership will be shifting many of its strategies, operational employees will also need to carefully track and report performance. You’ll want to keep a close eye on key metrics that indicate whether or not new tactics and processes are actually working. Provide regular reports to each department, allowing them to evaluate their individual performances and adjust their approaches.

Of course, reports aren’t just about looking backwards. Operational employees can also play an important role in achieving the dealership’s forward-thinking goals, including sales and inventory sourcing. For example, a simple sales trend report for used vehicles can help the dealership determine which models are in high demand or are bringing in high gross profits. Using that information, all departments can solicit trade-ins from customers that own those cars. Website analytics reports can provide similar information based on search volume and VDP views for specific vehicle types.

Enduring and overcoming inventory shortages will require strategic adjustments from every department of your dealership. Those charged with managing dealership operations will have an especially important job—one that requires them to bring all departments together through communication and collaboration. By sharing information and improving processes, your dealership’s operational employees can put every department on the path to success while helping the entire dealership to navigate these challenging times.

To learn more strategies for thriving in the current inventory environment, check out our free Lean Inventory Playbook.

Marketing in a Lean Inventory Environment

Given today’s inventory shortage challenges, it can be tempting to cut back on advertising. After all, what’s the point in marketing when you don’t have as much inventory to sell. But experience has shown that cutting advertising can lead to significant, long-term setbacks.

Henry Ford understood this concept way back in the early 1900s when he said that stopping advertising to save money is like stopping a clock to save time. But that doesn’t mean your marketing has to stay at status quo. Here are a few smart ways to evolve your marketing strategy for lean inventory times.

Adjusted New-Inventory Campaigns

Now is a great time to focus your marketing on vehicles with more availability. Promote in-transit inventory and vehicles scheduled to arrive. Remove bargain pages and raising prices to match demand. It may also be wise to add urgency to advertisements that help customers understand the realities of availability limits. Fear of missing out can bring in new customers, even if those customers have to wait just a little longer to get their vehicle.

Used Car Advertising Campaigns

New cars may not be immediately available, but there are a lot of pre-owned cars in the world, many of which are prime for purchase and resell opportunity. Shift your used car advertising dollars toward pre-owned campaigns, targeted at shoppers with trade-ins and who are more likely to buy used. As long as you can continue to source used inventory, you can sustain sales operations until manufacturers catch up to meet new inventory demands.

Pre-Order Purchase Campaigns

A car doesn’t have to be physically on the lot for you to sell it. Advertise the opportunity to pre-order a car and promote the option to hand-select features, giving your customers a customized, personalized vehicle purchase experience. These types of pre-order campaigns can also direct your automobile leads to your dealership’s digital retailing tools, allowing them to complete large portions of the buying process online.

Brand Awareness Campaigns

Inventory may be scarce, but buyers are still out there. Brand awareness campaigns can keep your dealership top of mind with active or soon-to-be active shoppers, while reinforcing all the reasons to buy from your dealership. Just as importantly, these types of campaigns prevent competitors from stealing market share by filling an advertising void.

Service Campaigns

Less inventory also means more miles on your customers’ current cars. Shift some of your advertising spend to promote your service department. In doing so, don’t forget about lesser-known services like your wash bay, auto detailing, and other services that can be attractive for drivers wanting to make small upgrades and make do with what they have for the foreseeable future.

Conclusion

As Henry Ford predicted all those years ago, time and car sales continue to march forward. And while inventory shortages are only temporary, the customers you bring in through your marketing can last a lifetime and help your dealership sustain short- and long-term success. To learn more strategies for thriving in the current inventory environment, check out our free Lean Inventory Playbook.

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