Most shop operators know they need to market their business for continued growth. But without a marketing background, it isn’t always easy to know how to allocate dollars for the best possible return, says Bob Coleman, CEO of body shop marketing consulting firm RC Marketing.
He says some shop owners still spend hundreds of dollars monthly on outdated advertising, such as Yellow Pages ads. And others blow through huge portions of their budget with one expensive marketing effort, such as TV ads, and don’t have enough left over for other necessary initiatives.
That’s a no-no in the marketing world. Coleman says shops need to have multiple touch points to drill their brand name into the minds of consumers. Shops need to spread marketing dollars across several areas to improve the probability of getting noticed.
Meanwhile, experts suggest only spending up to 5 percent of annual revenue on marketing. That’s $25,000 to work with for a $500,000 shop—and it goes fast.
So before you start spending, first spend time developing a budget by articulating a prioritized and planned approach for where each penny needs to go.
Coleman suggests starting with the small stuff. Before you begin budgeting money for certain efforts, there are basic marketing items that every shop needs.
—Tom Zoebelien, president, Stratosphere Studios
Every shop needs to have things like a presentable facility, updated logo, business cards and business brochures. They also need a strong online presence, with a strong website that’s optimized for search engine marketing, Coleman says.
“Those are all things that shops need, regardless of size or marketing budget,” Coleman says. “They tend to be fairly inexpensive investments. Start by costing out those items and build your budget from there.”
He says that allows shops to understand how much money they have to work with after the bare essentials are taken care of.
From there, build your budget from a goal-oriented perspective, says Tom Zoebelien, president of shop marketing firm Stratosphere Studios. Marketing budgets should be based on the goals and needs of your shop so they match your mission and growth targets.
“Make a revenue goal, identify your average value per sale, and how many sales you need to get there,” Zoebelien says. That helps to identify how much marketing is necessary, and how much money is necessary to reserve.
—Kurt Mueller, owner, Kurt’s CARSTAR Collision Center
From there, it’s up to each individual shop to identify the best way to allocate remaining funds. There is no exact science to do it, but a few basic strategies can help you critically analyze the situation:
• Assess existing efforts Steve Rigsby, owner of Total Marketing Solutions and marketing manager for a group of 11 shops in Colorado, says shop operators should conduct quarterly reviews of their marketing programs and budget allocation. Analyze your returns, and constantly assess whether certain initiatives are worth the investment.
• Know your business generators Rigsby says shops should allocate the highest percentage of marketing dollars toward their largest generator of business. Then trickle down and spend proportionate amounts on efforts that generate smaller returns.
The shops Rigsby works with generate 75 percent of revenue from insurance referrals. So he invests a majority of the marketing budget on various tactics to stay in front of insurance agents monthly.
Rigsby’s second largest generator of business is from customer-pay walk-ins. That caused him to spend the second largest amount of the marketing budget on TV, radio and online pay-per-click campaigns.
“Shops should constantly track their referrals and drill down to see where customers are coming from,” he says. “That’s a good way to quantify where to invest money.”
• Know your target audience Have a clear understanding of whom you’re targeting to better understand where to market, Rigsby says. You don’t want to market in places that target high-end vehicle owners if you mainly repair more common cars.
Rigsby says your town might have several print avenues to market in. Always ask for the demographics to find out who reads them and where they’re being seen.
“That allows you to budget money with the media that most appropriately matches your target audience,” he says. “You don’t want to waste budgeted money with something that doesn’t reach your customers.”
• Leave padding room Rigsby suggests setting aside at least 5 percent of your annual marketing budget for unexpected situations. For example, he says large hailstorms recently hit parts of Colorado. He spent an entire day sending out dent repair promotional items to capitalize on the opportunity.
“Some things have to be done spontaneously based on current events in your market,” he says. “Budgeting some padding room allows you to have enough finances reserved to act on things that can’t be planned for in advance.”
So how exactly does this work in a shop? Kurt Mueller, owner of Kurt’s CARSTAR Collision Center in Maryville, Ill., offers a practical approach to breaking down and prioritizing marketing expenditures.
Here is his budget:
Annual Shop Revenue: $2.3 million
Marketing Budget: $103,500
Percentage of Revenue: 4.5
Mueller starts with two main components to his marketing budget. First, he pays about 55 percent of the budget to a St. Louis business group for large marketing initiatives. The business group, which consists of 10 CARSTAR shops in the St. Louis market, handles expensive TV and radio efforts that span the large metropolitan area.
The remaining 45 percent of Mueller’s budget, roughly $50,000, is allocated for his own grassroots efforts.
He acknowledges that’s not a lot of money, so it’s been critical to have a thought-out approach for where and when it all gets spent.
Mueller begins by identifying how much he actually has to spend on a monthly and weekly basis. The breakdown is about $4,100 per month, and $960 per week.
Then he estimates the costs of handling the marketing program. For example, Mueller hired a part-time marketing director for $20 an hour. He says that amounts to $1,600 a month, and reduces the monthly marketing dollars available to $2,500 per month.
Then Mueller identifies each of the marketing tactics that he definitely wants to continue, and knows will automatically consume a portion of the budget.
He posted three billboards in his community, which cost $500 a month. That expense immediately drops Mueller’s budget to $2,000 a month, or a mere $500 per week.
“That’s not much for the goals we want to accomplish,” Mueller says. “So we’ve got to use it wisely.”
Mueller offers his top tips on how he analyzes the situation:
• Know your reach Mueller says his shop sits in a small town of 15,000 people. But he draws business from three other surrounding towns, which have a total pool of 100,000 potential customers.
With several cities from which he can generate business, Mueller needs to spread marketing dollars around and have a presence in each. He has multiple chambers of commerce, schools and communities to be known in.
• Understand frequency Mueller says frequency is key when it comes to initiatives such as TV or radio. You need regular promotions because one ad per month doesn’t generate much impact.
But with more frequency also comes more expense.
Mueller says local TV and radio spots are out of the question with his budget. He says he simply can’t afford the necessary frequency to make the investment worthwhile.
• Get several touch points Mueller says it requires multiple touch points with consumers to stick in their minds. It’s important to market in as many different ways as possible with the money that is available, he says.
“If you have a small budget, it may not be beneficial to spend a large amount on one tactic because you only get so many touches for what it costs to do,” Mueller says.
• Understand community values Analyze the characteristics of your community to understand customers’ interests and purchasing behaviors. Figure out what is important to community members, and what will make an emotional impact on them, Mueller says. In his community, involvement and sponsorships are the tactics that hit home with consumers.
Those factors caused Mueller to develop a marketing budget based on grassroots community efforts. Not only does that best fit the personality of his business and community, but also his budget.
Mueller holds charitable fundraisers, sponsors baseball and soccer leagues and hosts various community events. The shop is also active in parades, theaters, chamber of commerce gatherings and business networking groups.
“There are several types of grassroots efforts that shops can do that are light on the budget,” he says. “You have to base your budget on what will get the most bite, the most number of times, with the money at hand.”