#71 - MM - Cost Per Sale

All right, guys, Happy Monday. Our Monday minute this week. I know we've been absent. We missed out on you guys last week. Luke and I are still recovering from the New Year's holiday and getting back up to speed. But we are excited for a great week. Right, Luke?

We are so excited. I tell you, there's been so much chatter on the Facebook page and so many different questions and you know, one thing I wanted to go over, Jeff, and I think it's been a hot topic and actually it's a good time to talk about it, is average cost per car sold.

Right? Okay. Advertising or cost per car.

I'm sorry? Advertising cost per car.

Advertising cost per car sold. Cause that's what we gotta gauge it by, right? It's not like how much ad spend did you do? Because that's just an arbitrary number. Doesn't really mean anything. I could send $10 million and someone's gonna be blown away, but it doesn't matter if I only sold 10 cars, right?

So. Yeah, so, and I wanna go over what should be involved in that cost.

Okay?

Number one, your website, you. That's a cost. Advertising, right? Okay, okay. Your sales promotion expense. So if you sponsor a baseball team, if you, if you give away hats, give away T shirts, that's advertising cost. Your actual advertising costs, Joe, if it's traditional newspaper, radio, tv, Internet advertising costs, all your third party sites, if you're running Facebook campaigns, if you're doing this, you're doing that, that goes in. So these are. Am I missing something, Jeff? Or you think that's it?

You know, I am a little different. I like to also throw in any promotions. You know what I'm saying? My customer appreciation parties, my T shirts.

I'm talking about all that. All that, okay.

My pencils, the balloons that I put out front.

That sales promotion expense.

Okay, okay, okay. Yeah, I put it all in there.

All in there. And your referrals, you know, if you're giving away referrals, all that should go in there. So what you do is you take all those numbers and you add them up at end of year, right? Or monthly or however you want to do it. And then I want you to divide it by the amount of cars you sold.

Just retail units sold. Not my wholesale unit. Not. Not that stuff, my retail units.

If you're a wholesale wholesale dealer and you're doing promotions with. With dealers, and you can do it that way as well.

Yeah, right, right.

But for retail. So I did that this past year, and we're at $123 the 60 cents per car sold.

123.

123.

Wow.

So we had a good year. We reduced that. I think we were sitting at 143 in 18. So we cut it by $20 a car. And I think a lot of that was because we went digital compared to traditional and we sold more cars. So that's a low number. And I don't think we've been around for 34 years. So I think our branding is so old that we don't have to spend as much as a lot of people do.

And your market has something to do with it. Right. The noise in your market.

Noise in my market, we've been around forever. We get a lot of referrals. So that number is on the low end. So don't. I'm not telling you to go out and only try to spend $123 per car.

So repeat.

Repeat is huge.

Those are free.

Those are free.

Essentially.

Essentially. If we're giving a referral or something. But these are things you've got to add in together to get that number. And you should do it. You should take last year's number and do it so you know where you are. And if you've got a goal to sell 50 cars per month, if I had that goal, I would know that the first place I would start is I would have to spend at least $6,200 a month to try to get there. Yeah. So just remember that.

Right. Figure out what your per car sold is. And we've talked about this. I think the benchmark is like 177 or something like that.

Something like that.

And so whatever your number is, if you want growth times that by the number it's costing you. You know what I'm saying?

That's right. And if it. And if the benchmark is 177 or 200, whatever. 200 is a good number to use because some people may not be as seasoned a dealer as others. And you may make some mistakes in advertising. Multiply the number you want to sell by that if you can afford it.

Some people make it. Yeah. And take it to the next level if you want to. And look at each source. You should have a CRM that's tracking the sources. We know that all leads and all sales are not created equal. What does it cost me to acquire another lead through Facebook, as opposed to radio, as opposed to referral, as opposed to tv? I'm sure that if we did the math, our repeat customers and our referral business is the cheapest customer we get. At least I know that is for me. So to double down in that avenue is going to be my best bang for buck. But when you see where that is, then you know how to add spend and you say, hey, my car gurus is bringing me an X amount. That is X amount per sale. It doesn't make any sense for me to stay with them or double down with them when it's not a cost effective sales source. The leads might be there. And that's a whole other topic. I might be getting a ton of leads from this source, but am I getting sales?

That's right. Cool.

Awesome. Monday, you guys. Stay tuned for the episode this week. Good information. I don't know who it's going to be, but it's going to be good.

All right. See you soon, buddy.