Do Dealership Sales Events Work?

Sales events are common throughout a variety of retail industries, but are they effective for car dealerships in 2020 and beyond. What separates a good sales event from a gimmick?  Hasn’t e-commerce increased competition and given consumers the ability to find low prices whenever they want?

Part one of this post will compare typical dealership sales events to my personal favorite sales event, the Nordstrom Anniversary Sale.  Part two will analyze results from several years of a dealership group sales event and make data supported recommendations for dealerships planning their own sales events.

The Nordstrom Anniversary Sale not only meets all the criteria of an effective sale, it holds up well in the age of e-commerce because of its unique strategy.  While Nordstrom’s competitors offer clearance sales on aging inventory, Nordstrom features new Fall and Winter inventory at significant savings.  This serves as a unique competitive advantage because it generates visibility and buzz for new products during one of the slowest retail periods of the year.  This sale is so successful its revenue rivals Nordstrom’s holiday season sales.

While profit margins and seasonal sales trends, and ownership cycles are very different in retail automotive, the Nordstrom Anniversary Sale is a great example for dealerships because it meets all of the key criteria for a successful sale.  These include: limited opportunity, genuine savings, loyalty incentives and rewards, and fit with brand and internal culture.

Limited Time Opportunity & Genuine Savings

For a sales event to have be successful year after year, it needs to feature offers or pricing that won’t be available during non-sale periods and sales can’t be too frequent.  In other words, the time between sales must be longer than people are willing to wait.  The Nordstrom Anniversary Sale is once a year and offers additional savings over two semi-annual sales and significant savings over regular prices.

Many car dealerships have sales during every holiday weekend.  Presidents’ Day, Memorial Day, Fourth of July, Labor Day, and these are in addition to factory year-end sales events and seasonal sales events. Considering that the typical customer purchase process spans 90 days from vehicle research through the completion of the transaction, the frequency of sales should be at least 90 days or longer or there will be no true urgency to motivate buyers.

Modern shoppers are smart and can easily compare prices over time and across competitors.  Sales events that don’t offer genuine savings won’t generate big traffic or repeat shoppers.  The Nordstrom Anniversary Sale offers 30-40% savings which for retail clothing is significant.  Equivalent savings at a car dealership would be in the 10-15% off the manufacturer suggested retail price (MSRP) range.  Nationwide factory sales events have been effective with “Employee Pricing” which offers similar savings.  (15% off MSRP for General Motors (GM) and other domestic brands and 10% for import/luxury brands).

Loyalty Driving

The best sales events offer something extra for loyal customers. Whether that is early access to limited inventory or bonus points or gifts, these added bonuses can impact shopper behavior beyond the event by continuing to shop throughout the year to maintain loyalty program status and access to these perks.  The Nordstrom Anniversary Sale excels in this area by allowing rewards program members access based off their tier. Even more effective are the “tented off” VIP areas in the stores for early shopping.  This serves to both build excitement for the sale and it drives credit card and loyalty program signup as cardholders are allowed early access regardless of their tier level.

 Dealerships generally have an obsession for attracting the new, “conquest” customer, but lack focus on retaining and rewarding loyal customers.  Examples of strong loyalty incentives must provide value for the customer and be sustainable for the dealership.  Good promotions that can be offered in sales events are discounted vehicle accessories and lifestyle products, complimentary car washes (limited within reason), discounted cosmetic services or free pick-up and delivery for future services.

Internal Factors and Cultural Fit

Internal factors are often overlooked when analyzing effective sales event tactics.  In a sales environment, the impact of the marketing, promotion, and overall energy on the internal team is just as important as the impact on the consumer.  An excited sales team armed with significant savings and limited opportunity will offer shoppers compelling reasons to buy. Special attire and décor add to the energy and authenticity of a sale which drives sales.

Car dealerships are typically good at motivating dealership teams with special bonuses or team competitions during sales events.  Dealership sales event themes and décor however must evolve to match the experience featured in factory creative.  Tacky inflatables, balloons, and sweepstakes style contests are out-of-place in a market where simple, upfront savings, and a streamlined purchase process are featured in factory and e-commerce advertising of CarMax and Carvana.

Recommendations

In planning a sales event, dealerships should analyze their market and brand and build an event that offers genuine savings and limited opportunity.  Consistent execution of these fundamentals year over year will produce sales growth. Customers that have positive experiences will have less incentive to shop other dealerships and more confidence in the value they’ll receive in future sales.  If executed properly, a sales event simplifies the shopping experience by providing an answer to the question, “when is the right time to buy?”  With this question answered, customers can devote their energy to their top priority, finding the right car.  For new prospects, a sales event gives sales teams tactics to differentiate their dealership and an opportunity to re-engage cold or lost leads.  With consistent annual sales events, dealerships can also capitalize on lease returns and targeted campaigns that encourage customers to upgrade and take advantage of equity they may have in their current vehicle. 

Ongoing yearly sales events give sales teams the opportunity to proactively communicate and build excitement.  I know to expect a phone call about three weeks before the Nordstrom sale to let me know when new brands are available, to ask me what I need and to find out how my pant or jacket size has grown.  I look forward to it every year!