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Is the bottom line (cost of doing business) an important factor for your automotive marketing tactics focusing on total profitability?

Selling a product with a very high depreciation rate and a dynamic inventory with hundreds of new models every year is not easy. Thus, it is important to have automotive marketing tactics strategically created for your business model, inventory style, type of niche audience, and your expected ROI.


ROI and automotive marketing tactics

ROI – return on investment is calculated as the profit you gain over and above the business’s cost. Say, you are running a car dealers USA company. The cost of running the business includes every single liability you have, including, but not limited to, labor cost, cost of space, material, advertisement cost, utility bill, and more.

To have a higher ROI, there are two options to focus your automotive marketing tactics. You can either increase the selling price or decrease your cost of doing business. Why do experts prefer the second option? According to marketing gurus, the tactic of reducing your bottom line (cost of doing business) is a path towards financial stability. By reducing the cost incurred, you are steadily improving your profitability with certainty.

How to choose automotive marketing tactics focused on financial stability?

If you plan to increase your profit per product sold, your final price of the product increases. Before buying a car, every buyer would search all the best online car buying sites to compare the prices. If your product does not have enough USP (unique selling point) to justify the higher price tag, your automotive marketing tactics fall.

If your business plans to reduce the profit margin per product and increase the number of products sold per day, it might look like a viable option. For instance, for every for sale used car, you reduce your profit margin by 10%. This decrease in price tag will increase the customer flow, leading to an increase in the number of cars sold, thereby increasing ROI.

However, the company will not have an absolute dollar increase in its profits. In simple terms, the company is not creating automotive marketing tactics that would essentially increase the profit. Over the long run, this would reduce the company’s financial stability since the business’s overall profit reduces. The viability of the business falls.

The last option is reducing overheads. By reducing overheads, the business is not altering its profit margin or the end product price. Thus, there is no additional stress on your marketing team to increase the sales volume. On the other hand, you are spending less on each product sold, thereby increasing the net profit.

How to reduce the bottom line?

Product cost

The first method that comes to anyone’s mind to reduce the bottom line is reducing inventory costs. So, an autotrade USA dealer might focus on reducing the inventory cost by, say, $400, which means $400 additional profit per product sold. However, the emphasis should be on how the company reduced $400.

Did it reduce the quality? Did it reduce the process involved in inventory management like mechanic certification, quality check, changing spare parts, etc.? If the end product’s quality fall, the brand reputation falls, and it is costlier and time-consuming to get back the reputation.

There is a healthier way to reduce product cost. How good is your negotiation skill? If you can negotiate suppliers into reducing the cost of the product even by 10%, you are making a stable change. Yes, there is an implicit cost involved in this process- the cost of negotiation.

The time, resources, and labor skills involved in a negotiation process are not cheap. For negotiating with a supplier, you need to conduct market research, find alternative players with the same quality, understand factors involved in the pricing of the product or service, and so on. High-end professional negotiators are not cheap, either.

The most promising way to reduce this expense is AI negotiation tools. These ML-powered bots can strategically alter the negotiation pattern to get the best deal for your business without increasing negotiation costs.

Supporting resource cost

The best car dealerships in USA have a reliable sales platform. Reducing the quality or maintenance of the platform can be counterproductive. The sales showroom and other luxury factors could be reduced to reduce the overall cost of doing business. However, you might be pushing away certain personas, who are status-oriented buyers.

The most common way to reduce resource costs is by reducing labor costs. Blindly firing people would be the worst mistake that your business could make. You can increase the utilization of labor by introducing AI negotiation. The bot will conduct the first line of negotiation, proposes a win-win situation, offers statistics and other reports to justify the price, and reduces the complexity of your sales team’s task. Thus, you can reduce the overall labor cost involved in selling the product in terms of resources required and man-hours spent.

Why car dealerships need AI negotiation tools to reduce the bottom line?

AI negotiation tools like Robonegotiator can reduce the bottom line by,

  • Reducing the cost of negotiation per product
  • Increasing efficiency and closure of deals without the need for increasing labor volume
  • Ability to scale up the business without increasing overhead
  • Reduces the incidence of customer complaints and grievance management
  • According to a study published in Chatbots Magazine, using advanced bots can reduce the overall customer service expenses by 30%
  • The bot implementation on your portal will improve the conversion rate. This reduces the cost of advertisement campaigns and implementing automotive marketing tactics.

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Dhaval Shah