Mindspear Blog Articles

Jeff Gandy
/ Categories: Digital Marketing

Establishing ROI Benchmarks for Motorcycle and Powersports Marketing Budgets (Part 1)

As a dealership owner who is spending money to market his/her business it is critical that you work towards establishing strong ROI benchmarks for your marketing budget.  Most dealerships have very little or even no real ROI reporting and opt for the “just see what sticks” concept which is just a black hole for funding.  You will be fleeced just as fast as you write the checks.  Sure, some of it might work but which works best?  Even if you don’t really have a way of measuring your ROI now, start working towards what makes sense for your dealership and then hold your vendors accountable.

The terms and concepts below are not perfect, but they are starting points to help understand how to improve on budget accountability.  There are always grey areas, but I work all the time to minimize those as best as possible through solid reporting.

Market Spend Per Sale
The most basic and high level number you want to establish is how much to spend per unit sold on marketing.  Typically I look at this on a monthly and yearly basis.  Seasonality will change the monthly numbers, but after a few years of data you should know what to expect and plan accordingly.  It’s a very easy calculation – Marketing Budget/Units Sold.  Marketing Budget for me includes all the ad spends, plus the website infrastructure (hosting, pictures, video etc), plus my salary and the minions.  It’s a great example of the grey area, as I also maintain all the IT, phone systems, CRM system – so this number gets fudged a bit where I am currently.

Cost Per Lead
One of the single most important numbers I look at, and one you absolutely have to establish. It will tie back to everything, and its only by knowing this that you can quickly tell how any marketing campaign is performing in real dollars.  For me time is at a premium every day, but if I don’t monitor my campaigns every few days or weeks things will quickly spiral out of control.  That might seem extreme, but there are lots of forces at play, and a change in anything from your competitors keyword ads to regional inventory demands can alter your lead costs.  We budget daily spends, and if my lead costs shoot up, my budget gets blown early and I can miss out on leads.  This is looked at on a per campaign or source basis.

Conversions
This is one of those terms that means different things to different people.  Internally I look at it in different ways.  There are two primary calculations.

Total Traffic / Leads
Whether its eBay, Cycletrader or your website, the conversion percentage tells you a lot about how effectively you are marketing to the target audience, how your inventory is priced, how your message is working and more.  Tracking this over time allows you to benchmark performance.  Vendors and agencies will brag about how many visits they can get you, or how many “clicks”. None of it matters unless you get real actionable leads.  I will take half as much traffic if my conversion rate doubles – that means my message is stronger and reaching the right people which will boost the results for the next number below

Leads per Sale
This number is so important and effects much more than marketing.  It tells me how effective my marketing is in terms of reaching the right audience.  It tells me how effective the automated processes are in my CRM.  It tells me how effective the sales process is.  How effective my sales person is.  On the marketing side if all my leads are high income, high credit score individuals who want to buy within 48 hours then I am a genius.  Reality is that my lead group is a mix, and that mix varies by source.  The mass leads I get from manufacture events convert at about a .001% rate – they are not good because anyone will fill out a form to get a t-shirt.  Facebook Marketplace leads are better but there is still a lot of chaff.  My Cycle Trader or website leads are much better and they have to be so that as a whole we carry the day.

Leads Per Day
This isn’t really a ROI number, it is a performance number.  It is critical and I look at it every morning, usually before leaving home for work.  I look at the previous days numbers for each store, and the sources for the leads that are coming in.  The reason I list this number is that it’s a very important part of the daily routine and it cannot be ignored.  If there is something wrong with any of the elements of your marketing campaign (which equals dollars on the ground) then this is a quick way to know if your morning needs to include digging deeper into your lead generation mechanism.

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