How much of your marketing budget are you allocating to generating more referrals in 2018?

Kristen Tepper

Do you think these NADA stats are still accurate? - The average dealership spends about $30,000 per month on various advertising, usually spending about $625-$650 per vehicle. Here's the advertising breakdown:

  1. Digital - 25%
  2. Newspaper - 20%
  3. TV - 20%
  4. Radio - 16%
  5. Direct Mail - 10%
  6. Other - 10%

Do you think that your referral marketing efforts are budgeted into your "other 10%" or are you unsure if you're allocating any budget to a true referral marketing strategy?

If you are unsure of your referral marketing strategy and budget, you should definitely make it a priority in 2018! The average gross profit per non-referral vehicle is $1,509 compared to $2,267 per Incentivefox referral vehicle. Added value per referral is $758!

Furthermore, referral marketing is an easy way to get ahead of your competition and create a new channel for customer engagement and retention.

  1. Only 30% of companies have a formalized referral program, despite the fact that those that did experienced 86% more revenue growth over a two-year period.
  2. 64% of marketers believe word-of-mouth marketing is the most effective marketing tool and only 6% of them have mastered it.
  3. Only 39% of marketers use referral marketing regularly. But 43% of those who do use it acquire MORE than 35% of their new customers with it.
  4. 65% of consumers say that receiving rewards impacts their frequency of purchase.
  5. 69% of consumers say that they’re more likely to try a brand if it gives rewards. 
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Derrick Woolfson

@Kristen - I think you brought up a *valuable* point! This year we are focusing on creating a referral program, and investing money in it. Knowing that the customers will most likely refer people that will spend more money and continue to refer people. We have not set a firm budget yet, but have started offering $100 gift cards for referrals, which are digital so we are able to keep track of them. 

Amanda Gordon

Our numbers in used are a bit lower than that and I find it interesting that the referral always seems to be the least mined resource yet the most inexpensive. Hmmmm

Tori Zinger

I'd be surprised if any business really still spends 20% on newspaper advertising. Dealers -- am I way off in this regard?

Amanda Gordon

@Tori What's a newspaper? 

 

(Kidding)

Kristen Tepper

@Tori, I agree. I can't imagine anyone spending 20% but it'd be interesting to see how it's changed in just 3 short years (these are NADA 2015 I believe)

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