Learn How You Can Prepare For And Survive The End Of Inventory (VDP) Marketing
This is a critical warning for all dealerships and automotive professionals operating worldwide:
You need to throw out the window almost everything you know about automotive marketing using inventory and VDPs if you want to avoid the storm that has already hit the automotive industry and survive the massive undercurrent that’s about to swallow most car dealerships.
This warning is not a doomsday prophecy or a clickbait hook to get your attention. If you’ve seen any of my previous content, you know I am way more on the optimistic side of the spectrum than prone to share negativity and promote fearmongering.
But this is serious.
The foundation of our industry is built on its ability to grow by attracting customers using inventory and VDPs; unfortunately, that way of marketing is about to become obsolete.
If you don’t adapt urgently to the change and shift your dealership’s marketing strategy from inventory marketing to customer-driven experiences, you will have little to no chance of survival.
Let me provide you with a bit of context to the underlying problem:
From 1888 to 2022 - A Little Bit Of Context
It’s no secret that the automotive industry is a pillar of the global economy. It’s such an intricate part of our daily lives that it’s difficult to imagine a world without it.
If you’re an automotive professional making your living from the car business, it’s not just difficult to imagine a world without motor vehicles; it’s quite literally impossible!
However, cars have only been around for 150 years. Such a short history, and yet, what a bumpy ride!
From the first few Motorwagen sold by Benz in the late 1800s to today’s EV revolution and hypercars, we’ve seen the car business go through many cycles of changes and adjustments like:
the rationing of metals during World War II and the “Car Boom” that followed;
the Monroney sticker price in the 50s, the first government regulation which led to the MSRP;
the increase in the gas price of the 70s and the push for leasing that followed;
the introduction of computers in the 90s and the beginning of online shopping in the 2000s
the 2008 financial crisis - which led to a massive production drop that took the industry a few years to climb out of.
This quick automotive history lesson shows that this is not the first time the industry has been forced to re-invent itself.
Still, as massive as the previous incidents were for the car business, none of them played havoc with the industry, like the current semiconductor shortage and the ongoing vehicle inventory crisis.
I say this because I believe we have yet to see the true impact and ramifications of the shortage.
Now I realize it could be easy to dismiss the whole issue and reduce the crisis as an unexpected short-term bump in the road, thinking everything should go back to normal very soon, right?
But I believe that’s a very dangerous position to adopt for a few reasons:
It looks like this chip shortage is a bit more complex than we initially thought, and the current war between Russia and Ukraine will not help speed up the recovery. To quote one of our dealers: “there seem’s to be no end in sight”;
I also believe OEMs and many dealers are enjoying the current lean manufacturing systems now in place, allowing them to minimize waste while maximizing productivity and profitability;
The climbing gas prices, the low demand for larger-displacement engines and the pursuit of an EV-only lineup will also help support the current trend towards lean manufacturing because nobody wants to make the wrong manufacturing bet.
So what does this mean for you?
Well, bottom line, you need to prepare for an automotive retail world with very lean inventory levels that will allow for healthy retail prices and excellent profits at all supply chain stages.
Sounds all good, right?
Well, kind of.
Except for three massive details that are all very closely intertwined:
Lean inventory levels mean dealerships will have to re-invent how they market themselves to consumers because everything they’ve been doing (using inventory and VDPs) to attract customers is now virtually out the window or eroding extremely fast;
With minimal inventory, dealerships will have to develop a strong focus on selling pre-orders. And the usual “in-market” prospect at the bottom of the funnel, which needs a vehicle right now, is definitely NOT the ideal prospect to attract to grow your pre-order sales;
Attracting upper and mid-funnel prospects that are able and willing to wait for their pre-order to get built and delivered will require a relentless follow-up system for which dealers don’t currently have any of the tools or processes.
Now let me walk you through the three pieces of the puzzle and the potential solutions that could help you navigate these challenges:
The Erosion Of the VDP Marketing Era
For the last two decades, dealers have mastered the art of bringing their inventory online. It was the age of inventory or VDP* marketing.
The marching orders were simple: upload your inventory to the Web so potential prospects can find your vehicles and drive the clicks to the VDPs so you can turn Website visitors into leads and opportunities to sell your in-stock vehicles.
The process was straightforward: Inventory was first uploaded to the dealer’s primary Website, then syndicated to multiple car portals and listing Websites so that every vehicle on the lot could be turned into numerous digital footprints for the dealerships.
The more units in inventory, the larger the dealership’s digital footprint would be on the Web.
For example, 250 units in stock could have easily resulted in 1,000 dynamic inventory pages on the Internet if the dealer had pushed these 250 vehicles to their Website, Trader, CarGurus, Craiglist or Kijiji.
You could additionally turn every vehicle into a few ads on Google, Facebook, Instagram and MarketPlace and boom, you had another 1,000 digital footprints!
1,000 VDPs + 1,000 digital ads = 2,000 digital footprints.
It was expensive but easy.
The more inventory you had, the more chances of getting prospects to stumble on your product.
It also worked like a charm for SEO since the dealership’s Website had hundreds of VDPs and tons of backlinks from the automotive Websites where the vehicles were also listed.
And the inventory-generated digital footprint and SEO also blew the sales of all the other dealership’s departments by driving generous Website traffic to the service, parts, finance and body shop sections.
It was a perfectly balanced ecosystem that worked beautifully.
Was it delivering the best marketing possible to consumers? No, but it worked!
OK, now that I have lifted the curtain on the inventory marketing model, let me ask you a question:
How do you do this VDP marketing without vehicles or in a lean inventory environment?
The answer: You can’t because VDP marketing works best if it’s played as a numbers game.
Understand me; you can still do VDP marketing without many vehicles, but it has lost its primary advantage: scale!
Now be careful in your analysis of the turning tides, and please don’t get fooled by the current seller’s market and the favourable conditions it still provides to car dealers.
Remember: the industry is still enjoying the momentum of its previous VDP marketing era and the flywheel it created over the last 20 years.
More inventory => A larger digital footprint => Reaching more potential prospects => Selling more vehicles + the short sales cycle that came with reaching in-market vehicle shoppers required minimal follow-up capabilities from dealers.
See the diagram below:
But the flywheel effect is eroding fast, and soon, outside of the dealership’s sign on the side of the road and its basic Website and ads, dealers, will be almost invisible online to most of the population.
Heck, an online shoe store with a few hundred pairs of shoes in inventory will have a bigger digital footprint than most car dealers.
I’m sure you can now see the undercurrent I was warning you about earlier and how many dealerships risk getting wiped out.
You know the saying: If it’s not broken, don’t fix it.
Unfortunately for the car business, VDP marketing is collapsing.
Time to pivot before it’s too late.
Replacing Your Dealership’s Previous Digital Footprint With A Permanent Content Strategy
Now you might be reading this, scratching your head, wondering how you will replace the digital footprint your inventory used to create for your dealership.
Don’t worry; it’s easier than you think.
All you need to do is replace what your inventory used to do online with permanent content pieces, which is content that will get indexed by Google and remain online and drive traffic to your dealership’s Website for years to come.
I call the strategy Educational Scaling because you are scaling your digital footprint with content that will educate prospects about the wonderful reasons why they should buy from your dealership.
Instead of using the vehicles you used to have in stock to populate your digital footprint, you launch a system to automatically create a massive amount of educational content about your brand(s), the models, their features, your team, your culture, your financing solutions, aftermarket capabilities, maintenance services, parts and tires options, and body shop expertise.
Here’s a visual representation of an example of the Educational Scaling Strategy:
IMPORTANT: You need to make sure the educational content is written and packaged in a way that aligns with what prospects are already searching online and placed on platforms where they will remain permanently visible so prospects can stumble on them as they research their next purchase.
Forget about newsfeed content; that’s like chasing the wind.
Posting this content on Facebook, Instagram, Twitter and TikTok is excellent for keeping your dealership top of mind. Still, you cannot produce content fast enough to be omnipresent on the prospect’s newsfeed.
I’m not saying you shouldn’t have a social media strategy, but these are not channels you want to use to grow your Educational Scaling strategy and scale your dealership’s digital footprint to replace your inventory.
If you want to know how to build your automated system to create on-demand educational content and scale your dealership’s digital footprint, request a mapping session using the link underneath this video.
My team will share with you the tools and platforms you should use to launch your Educational Scaling strategy and be omnipresent online, even if you have little or no inventory.
Now just in case you are not yet convinced of the VDP marketing apocalypse or if you are still confused by the ramification of the inventory depletion on your existence as an automotive professional, let me dive into the two additional critical problems dealers will have to face to adapt to lean inventory:
How to target upper and mid-funnel prospects who are able and willing to wait for their pre-orders;
And how to implement a lead nurturing system that can automatically follow up for months until prospects are ready to pull the trigger on their pre-order.
“In-Market” Vehicle Shoppers And Selling Pre-Orders – A Guaranteed Fiasco
One of the biggest complaints I get these days from dealers everywhere is regarding the misalignment they are experiencing between the prospect their marketing is generating and their available inventory.
The most significant issue:
Prospects come in wanting a model that won’t be available for months and can’t afford to wait the required time for the pre-order to be built and delivered.
It sucks for dealers because we live in a time when brand loyalty has never been this low, but vehicle-type fidelity has never been this high.
This means that if your marketing generates a prospect looking for a small-size crossover and you don’t have the model they want, they will probably buy the competing small-size crossover of any other competitor’s brand.
You paid to attract the prospect, but another dealer gets the deal.
You are still attracting “in-market” vehicle shoppers who need a vehicle now in a world where you should instead attract prospects who are in a position to wait to get the model they really want.
Think about it.
Not only is your VDP marketing dying on you because of your lack of inventory, but whatever part of it is still working is attracting the wrong type of customer.
Time to switch things up!
Your automotive marketing efforts should focus on prospects at the top, mid-funnel, or even better, prospects who are not yet in the market for a vehicle.
These prospects can wait for a vehicle to be built to their exact specifications and won’t “need” to jump ship and buy from your competitors because of their urgent transportation replacement needs.
To do this and attract the right prospects to sell pre-orders, you will need to turn your targeting upside down and start communicating to prospects at the top of the funnel instead of those at the bottom who need to buy now.
I call this strategy Reverse Funnel Targeting.
Abundant Inventory Targeting for Car Sales Reverse Funnel Targeting For Pre-Orders
It’s a little tricky because all the usual hooks and call-to-action you might have been successfully using with “in-market” vehicle shoppers won’t work, but if you launch the Educational Scaling strategy I previously mentioned, you will be able to use all the content to attract the perfect prospects for pre-orders quickly.
The upside of the Reverse Funnel Targeting method is significant as non-intenders represent a market 900% larger than “in-market” vehicle shoppers, which will set your dealership in a blue ocean where competition is irrelevant, and competitors are few.
If you want to learn how to switch your dealership’s targeting from “in-market” vehicle shoppers to non-intenders using my Reverse Funnel Targeting method to attract the ideal prospect to blow up your pre-order sales, click the link underneath this video and request a mapping session.
My team will show you how to combine the content of the Educational Scaling strategy with our Reverse Funnel Targeting method to tap into the biggest opportunity to sell pre-orders to prospects able and willing to wait for the perfect vehicle.
That said, a final piece of the puzzle we need to solve to effectively replace your eroding VDP marketing efforts with a solid customer-driven experience is implementing a robust long-term follow-up and lead nurturing strategy.
The Critical Need For Long-Term Follow-up And Nurturing Processes
Let’s be honest.
Follow-up has rarely been any dealership’s strength or specialty. Some might have a few tools, such as a CRM, email rapid response or text message (SMS) automation but nothing that could stand the road if they wanted (scratch that) needed to nurture leads and follow up with interested prospects over many months.
I get it.
The VDP marketing era didn’t require a massive follow-up arsenal because the sales cycle of in-market vehicle shoppers at the bottom of the funnel lasts only a few weeks.
A quick phone call when the lead popped into the CRM, a few automated emails, and SMS at month-end were good enough to get the job done.
Every dealer knew their follow-up capabilities and tools were deficient but who cared? It did the work and moved in-market shoppers through the finish line.
The problem is that with the end of VDP marketing and the need to attract pre-order customers higher in the funnel who don’t immediately need a vehicle, the sales cycle has probably doubled, tripled or maybe even 5X its duration.
The follow-up tools that were adequate before are now utterly useless if you want to keep prospects engaged over weeks and months as they gradually move through the sales cycle until the time when they are ready to pull the trigger and pre-order their next vehicle.
Your dealership absolutely needs to change your follow-up mindset from “good enough” to “relentless” if you want to have a chance to be the dealer who gets the pre-order in the new lean manufacturing ecosystem, or again, you will be paying to attract customers that your competitors are going to close.
To do this, I recommend you adopt the Relentless Nurturing process and develop a system that can:
Replace most failing response times with a speed-to-lead strategy;
Allow you to make multi-modality touch points that you will be able to calibrate for the critical first 24 hours, week one, and the initial 30 days;
Trigger a lead nurturing program that will enable you to follow up by email, SMS, ringless voicemail, call and direct mail over six months while you have the permission to contact the prospect
Launch a retargeting campaign providing a return path for the prospect to continue the pre-order process where they dropped off.
You can get an overview of the Relentless Nurturing framework here:
This system will allow your store to reach potential prospects 500 times over the six months following any lead or contact with your content from the Educational Scaling strategy.
You read this correctly: 500 times!
Who will win the follow-up game and get the deal when the prospect is ready to place their pre-order?
I hope the answer is obvious.
The money IS in the follow-up!
Now, if this sounds a bit overwhelming and you would like to access the framework of our Relentless Nurturing system, don’t hesitate to reach out to our team by clicking on the link underneath the video and request your mapping session.
We’ll show you how to integrate our Relentless Nurturing system with the Educational Scaling content strategy and our Reverse Funnel Targeting method to replace your crippled VDP marketing and shift to a full-fledged customer-driven experience that is more well suited to the current market conditions.
Making The Switch From VDP Marketing To CDX Marketing
I hope this content was able to open your eyes to the shift that’s already happening in the automotive industry and that you will take action to protect your future as an automotive professional and the fate of your dealership.
If you feel a bit overwhelmed, it’s a good sign.
It means your survival instincts are awake, you see the danger ahead, and your mind is actively looking for a solution.
Remember the fundamental principles:
We’re moving towards a permanent lean inventory ecosystem;
VDP marketing is dying because it’s a numbers game;
You need to replace your digital footprint or risk becoming invisible in the marketplace;
Use Educational Scaling and permanent content to create traffic soldiers that will drive quality traffic to your dealership’s Website for years to come;
Attract better prospects to grow your pre-order sales by leveraging Reverse Funnel Targeting and find customers willing and able to wait for their pre-order;
Implement a Relentless Nurturing system to follow up with prospects obsessively during the longer sales cycle inherent to customers with less urgency.
Gradually shift your marketing efforts from VDP to a full-fledged Customer-Driven Experience CDX
Dominate your market while other dealers cross their fingers, hoping things will return to normal.
Following these simple steps will allow you to activate a powerful new flywheel that will give your dealership an unfair advantage over the competition and keep bringing the perfect prospect for your available inventory through your doors.
See the diagram of the Customer-Driven Experience Marketing Flywheel below:
Customer-Driven Experience Marketing Flywheel