marketing budgets What The Marketing Budget Should Be For Every Auto Repair Shop Owner

[Ron Ipach]

Somebody recently sent an email to me asking the same question that I get dozens of times every single month. Basically, it says, "Ron, how much should I budget for my marketing?"

I have a very simple answer to that. One that actually a lot of people are gonna totally disagree with me...

My answer is, throw out the marketing budget. You do not need a marketing budget, and here's the reason why: A lot of times, I've heard five, six, or even three percent of your growth sales should be used towards advertising.

Now, that might be a good number for some months, but it's a horrible number for other months. But if you're budgeting and you're only gonna have a certain amount of money for marketing every single month, your business is gonna be going to be heading on a downward slope.

For a lot of our clients, the summer months tend to be their busiest month. They don't need to be spending a lot of money on marketing at all during those months because they're just naturally busy. But then when the kids go back to school in August and September, everything screeches to a halt.

So I'm gonna say throw out the marketing budget and spend it where and if you need it. You don't need to spend a lot of money on marketing if you're naturally busy. You do need to spend a lot of money on marketing if you're gonna be slow.

Now, this goes to ... I guess I should mention, it's not a matter of just throwing a bunch of money out there on marketing. You have to do good quality marketing. You have to have the right message sent to the right market at the right time using the right media. In other words, a way that they're actually gonna see your marketing. You have to get all of those things straight.

So I'm going to probably guess that if you follow me and participate in my Car Count Daily campaign by watching my videos, you're getting a good idea, a good sense of what good quality marketing is. I'll assume that you're doing good quality marketing.

Now, if you're spending money on good quality marketing, you're gonna get good results. If you don't need it during the summer months, slow it down. If you're gonna need it in the fall, you need to raise it up. I don't like marketing budgets for that reason, because everybody gets used to spending the same amount of money every single month, whether they need to or not.

Pay attention to your numbers. Pay attention to what your shop is telling you. Pay attention to what your car count's telling you and spend the money when needed.

Also, if you're running short of your numbers, you may need to spend a lot more money and put in a lot more effort on your marketing for those specific months. Don't look at marketing as an expense. Look at it as an investment. A marketing budget is something to be spent. Marketing investment, your marketing dollars if it's done right, is actually an investment. It's not taking money, it's actually attracting more money to your shop.

[mmotley]

Ron,

I'd like to hear your thoughts on actually advertising more when you're busy and less when your slow. On the surface that sounds like a terrible idea, but I once heard someone explain it as follows. If you're always slow every November, why would you spend all your advertising dollars in November if people just simply aren't spending money on their cars (instead, they are probably spending money on holiday items/events). However, if you are busy in July and people are spending money, that's the time to run your specials and advertise.

Up until this year, I agreed with your point of view, but since I had it explained to me this way, it really got me rethinking my advertising. It also makes sense with how you explained forgoing an advertising budget. However, if you take 7% as your advertising budget and base it off monthly sales figures, you should be fine in the slower months since your 7% is based on a smaller (monthly) budget, and not your annual figure.

I've also noticed the same theory in big box stores. BBQ pits, lawn mowers, and lawn furniture all go on sale in the spring and summer months. Holiday decorations for halloween and christmas go on sale in the fall and winter, along with coats, jackets, and hand warmers.  

[TheTrustedMechanic]

I think there is a problem with the "no marketing budget" idea and mmotley just brushed it.  mmotley mentioned annual sales vs monthly sales. Here's my thought, if you have a marketing budget based on ANNUAL sales then you have money planned to work with.  Instead of saying your monthly sales are $25,000 so you should spend $1750 and the in the slow month your monthly sales are only $15,000 your marketing should be $1050, if you base your ANNUAL marketing budget on your ANNUAL sales then you bank the money in the $25000 month and spend it in the $15,000 month.  By basing your marketing budget on your annual sales you have the budget and get to spend it when you need to.  You also should remember, just because you have the budget doesn't mean that you have to spend it all (spend it just to spend it) or can't spend more if needed.

[AndersonAuto]

What has worked for me is absolute consistency. My mailers go out monthly like clockwork, and haven't skipped a beat in over 5 years. There are some months that are busier than others, but overall we're much more even keeled than we were before I did this. Being slow in February doesn't mean you should spend money on marketing in February. It's too late by then. The money needed to be spent in December so your marketing can be in their hands right when the slowdown begins.

I also went with a percentage of my sales as a budget, sort of. I budgeted the percentage of the sales that I wished I had, not what I was currently doing. It hurt, but it was effective.

[alfredauto]

Like AndersonAuto we run the same ads every week, regardless of what's happening in the bays. Consistency is key in marketing. Adding in a few Blitz advertising campaigns for holidays, vacation travel, season changes will help push some more cars into your shop, maybe. One shot ad wonders at random are a waste of money IMO.  The trouble with percentages is a new shop with $500k sales needs to spend 10% to reach out effectively. A $5m shop can spend 1% to get the same exact coverage, and it is highly dependent on location. Most shops can't possibly buy ads for what I can in my rural area. A radio spot for $5 here costs $500 in some markets. But then again I'm advertising to 5,000 listeners vs 500,000. 

[TheTrustedMechanic]

12 hours ago, alfredauto said:

"...we run the same ads every week, regardless of what's happening in the bays. Consistency is key in marketing."
 

Where do you do your marketing to? New customers or existing customers"

If to new customers, do you do newspaper, billboards, bus wraps, coupon mailers, or ???

How old is your shop?

What is your market demographic? - size, age, income

How many other shops are there?

I do nothing that I don't expect to run at least 3 times.  Different offers perhaps but the same action at least 3 times before I consider any judgment of whether it worked or not.  I agree that a large shop can run a smaller % and get the same reach which really makes it hard on the little shop to grow, but that is the way it is. 

 

You mention radio, do you advertise on radio?  If it was $5 a spot, even a 15 second spot I would be all over that.  But in my area it hasn't worked, not in my experience.  Granted the radio I tried didn't have a good administration staff so the consistency wasn't really there, but I never got a single person mention my radio ads.  Not even existing customers.  So I refuse when radio stations call now. 

 

My experience aside, one bit of advice I was told years ago was to record what stations your customers' radios were tuned to.  Maybe check a few presets but pay attention to which station they were listening too.  That way you knew what station to advertise with to get the kind of customers you wanted.  I mean, if you have a customer and you want more of them, if you have 5 and 3 listen to the same radio station, then that appears to be the station that kind of customer is most likely to listen to.  Of course I don't do that because radio in my area hasn't worked for my shop, but if it works for you, great and here's a little something to consider.