Many ag equipment dealers have seized on digital marketing opportunities and found them to be very effective tools as part of their overall marketing efforts, according to the findings of a first of its kind marketing survey.
Industry leaders say they expect even more dealers will take advantage of these newer marketing opportunities that have been created by digital technology in the coming years.
The first-ever Confidential Marketing Expenditures Survey was prepared by the editors of Farm Equipment magazine to help U.S. farm equipment dealers benchmark how they are allocating marketing dollars vs. the industry at large — and where they achieved their best results. The findings of the survey were compiled into an executive summary report, and those who attended the 2018 Dealership Minds Summit in July were the first to take a look.
Participation in the inaugural survey was limited to U.S. farm equipment dealer companies only and was compiled based on an 18 question survey that was sent out by fax and email to top farm equipment executives and marketing managers in early June. Responses were collected until early July.
Top 3 Dealer Takeaways from This Survey
• While many respondents said they plan to embrace newer marketing opportunities in the coming years, such as mobile marketing and customer data mining, it’s typically the larger dealers that are doing so.
• Many of dealers’ greatest marketing successes over the past 12 months relate to electronic media, such as website development and social media.
• The 5 highest ranked marketing activities in terms of ROI were a mix of digital and legacy media, though newer technologies claimed the top 3 on that list. Larger portions of dealers’ marketing budgets continue to be spent on legacy media, however, such as print and radio/TV advertising.
The survey asked respondents for a number of things, including the priorities of their marketing programs; their allocations to various marketing activities; and a description of their greatest marketing successes over the last year.
About 160 equipment dealers responded to the survey. Collectively, the survey respondents accounted for about $10.7 billion in 2017 sales revenue and they operate about 950 individual stores. They averaged 6 stores and 2 marketing personnel per dealer, and 17 employees per store.
Among dealers who provided information on their total annual ag marketing expenditure budgets, a little less than $302,500 on average is being spent in 2018. Breaking these budgets down further, dealers are spending nearly $52,000 per store this year.
In addition, respondents were asked to detail the percentage of their 2017 total ag equipment revenue that came from 3 segments: production agriculture; rural lifestyle and large property owners; and commercial lawn, turf and landscape contractors. The average of these responses showed that roughly 64% of revenue came from production ag customers, 25% of revenue came from rural lifestyle customers and 11% came from lawn, turf and landscape customers.
After gathering the survey data, Farm Equipment editors analyzed both the aggregate results as well as by dealer characteristics. Respondents were categorized by the number of stores in their dealership operation, 2017 sales revenues, number of overall employees and number of marketing personnel on their payrolls.
Each category was broken down into 4 groups.
- Number of stores: Single store, 2-4 stores, 5-9 stores and 10-plus stores.
- Total 2017 revenues: Less than $20 million, $20 million to less than $50 million, $50 million to less than $150 million and $150 million or more.
- Employee range: 1-20 employees, 21-40 employees, 41-60 employees and 61 or more employees.
- Marketing staff: 1 or fewer marketing personnel, more than 1 up to 3 personnel, more than 3 up to 5 personnel and more than 5 personnel.
The marketing survey aims to establish an industry-wide benchmark and also points out variations in the results based on the previously mentioned dealer characteristics.
Jeff Bowman, chief experience officer of Titan Machinery, the 89-store Case IH dealer based out of Fargo, N.D., says that prior to this survey, he and his colleagues had to rely on marketing data from other industries.
“This is a step in the right direction,” he says.
Heather Hetterick, marketing director of Redline Equipment, a 12-store Case IH dealer based in Archbold, Ohio, says this type of research, which was very limited prior to the survey, will be useful to equipment dealers when they are planning their overall marketing efforts.
“It does help you check where you’re at compared to others, and it’s a really great resource,” Hetterick says. “There are some things that jump out at you, and some things that surprise you. But it’s a great resource as you go to set up your budget for the year, knowing what other people are doing, because it’s not something that’s easy to find in our industry.”
Even so, the survey’s findings do not answer all questions surrounding dealership marketing, adds Hetterick.
One thing she was left wondering with was how these responses varied based on the type of customers each dealer had. In the case of Redline Equipment, marketing efforts can vary based on the type of customer they are targeting, such as production ag, rural lifestyle and construction.
After gathering basic company information, the survey asked respondents whether their marketing initiatives were largely centralized at the company’s headquarters office, or largely decentralized and managed at the individual store level. A little more than three-quarters of dealers said they have a centralized marketing structure.
Dealers also divided their total marketing objectives into individual objectives. Options included new equipment sales, used equipment sales, parts sales, service & repairs sales, precision ag, dealership branding, rental sales and “other.”
The larger the dealership in terms of revenue, the less likely it is to plan on making changes to its marketing budget. For dealers who brought in less than $20 million in revenue last year, only 36% indicated they will keep their marketing budget the same next year while 39% said they expect to increase their budget by up to 10%. More than half of dealers with 2017 revenue of $20 million or more said they plan to keep their budget as-is, while 29% planned to increase their budget by up to 10% in the coming year. Likewise, a higher percentage of dealers in the less-than $20 million range say they plan to decrease their marketing budgets relative to those who brought in $20 million or more. Nearly one-tenth of dealers making less than $20 million plan to decrease their marketing budgets, while 7% of dealers making $20 million or more said they planned to do the same thing next year.
Source: Farm Equipment 2018 Marketing Expenditures Survey
Marketing Objectives: Equipment Sales Tops List
New equipment sales and used equipment sales were the objectives with the highest percentage, averaging 71.2% of total marketing objectives when added together. Also when paired together, parts sales and service and repairs sales made up 17.4% of marketing objectives on average. Dealership branding, a category that doesn’t necessarily translate directly to sales, averaged out to be 5.6% of respondents’ marketing efforts.
The breakdown by objective among all respondents is as follows:
- New Equipment Sales — 42.8%
- Used Equipment Sales — 28.5%
- Parts Sales — 9.3%
- Service and Repair Sales — 8.1%
- Dealership Branding — 5.6%
- Precision Ag — 1.8%
- Rental Sales — 1.8%
- Other — 2.2%
Larger dealerships (both in number of stores and in annual revenues) tend to place more emphasis on other factors relative to their smaller sized counterparts. For instance, comparing survey respondents based on their number of stores, the single store dealerships put the highest percent of their marketing budgets toward new equipment sales relative to other groups in that category, on average. Dealers with 2-4 stores, meanwhile, claimed the highest average percentage goes toward used equipment sales.
The biggest contributions to the remaining categories — parts sales, service & repairs sales, dealership branding, etc. — came from dealers either in the 5-9 stores group or the 10-plus stores grouping. The same pattern is observed when grouping survey respondents by 2017 total sales
Dealers were also asked to rank their top marketing priorities. Attracting more contacts and leads was the top priority, based on average ranking among all respondents. Following that are: converting contacts and leads to buyers and supporting; retaining and increasing spending with current customers; dealership branding; product brand awareness; tracking and proving return on investment (ROI) for marketing investments; and, lastly, reducing the cost per contacts. Averages are based on a 1-8 scale, where 8 equals “most important.”
Digital Offers Best Return
When it comes to ROI for marketing activities, digital appears to be the king. Legacy media, such as newspaper and radio advertisements, still have an important place in dealers’ marketing strategies, although they come with a larger price tag.
The survey asked dealers to estimate how much they allocate to various marketing activities, and additionally ranked the top 5 of those activities in terms of ROI.
Web advertising ranked the highest, with data services coming in second. However, survey respondents said they allocated significantly fewer resources to data services than web advertising: 1.1% vs. 9.3%, respectively. The third ranked activity was website design, development and maintenance, and the fourth and fifth ranked marketing activities were radio/TV advertising and print advertising. As it happens, these two activities also make up the largest allocations in marketing budgets. Radio and TV ads on average account for 16.8% of budgets, while print advertising commands 18.2%.
Bowman says these results shows that dealers are clearly seeing good things from digital marketing, such as web ads, yet they are not investing enough in those channels.
“If I’m looking at ROI and what am I getting back for every dollar I spend, I still want to continue to push my highest ROI channels until I hit those diminishing returns,” he says. “I know we need a mix, and nobody knows the exact formula to understand what that mix is, but I think sometimes we fall short. I think we’re probably under-invested in website, web advertising and social media ads. We feel better because our mix is getting more digital, but it’s probably not going as far and as fast as it should go and as these numbers would tell us to go.”
Breaking out survey respondents by various categories reveals interesting results when looking at how marketing dollars are allocated.
Number of Stores. Smaller dealers leaned toward traditional forms of advertising, while electronic marketing initiatives were more of a mixed bag. Single store dealerships allocated the highest percentage of marketing dollars toward radio/TV and print ads. This single store dealer group also allocated the most to website design, development and maintenance, though not by as large a margin as the first two. Dealers with 2-4 stores allocated the most to pay-per-click or SEO initiatives, the 5-9 store dealers invested most in social media, and dealers with 10 or more stores contributed the most to data services and video production.
Number of Employees. In general, radio/TV advertising as well as print advertising percentages decrease as the number of employees increase in dealerships. For instance, dealers with 1-20 employees allocate 22.6% of marketing initiatives to radio and TV ads, and 18.6% to print advertising. Those percentages drop to 13.9% and 13%, respectively, when looking only at dealerships who have 41-60 employees.
Dealers with 60 or more employees invested the largest percentage among all other employee groupings in the categories of public relations/content creation, direct mail, promotional items and manufacturer programs. Dealers with 41-60 employees place a large emphasis on web advertising relative to the other groups. Their estimated allocations of 20.4% to that category is more than 5 percentage points higher than any other in the employee-size group.
Springtime Focus a Surprise
Survey respondents were asked to rank each month in terms of how important it is to their marketing activities. When analyzing the data, each month was place on a scale of 1-12, where “12” equals the highest ranked month.
On average, March was rated the most important month for marketing among the respondents. Dealers ranked each month from most to least important. From a scale of 1-12, a “12” rating indicates the most important month. March was ranked 8.3 on average. Behind March is May, with an average rating of about 7.6. Following that is April, which averaged 7.3. The least important month for marketing was January, which had an average rating of about 4.1.
The spring months got the most attention from dealers, followed by early summer and late fall/early winter.
The springtime months of March, April and May have a combined average ranking of 23.1, the highest of all four seasons. Following that is the month of fall, with a combined average rank of 19.5. Then comes summer, with a combined rank of 18.3, and in fourth is winter, with a combined score of 17.0.
In fact, dealerships with greater total revenues seem to place even more emphasis during the spring months than others. For instance, dealers with 2017 revenue of $150 million or more ranked March an even 9 on average, the highest of any of the four revenue categories. However, the highest ranked month for the $150 million-plus category was May, at about 9.4. This ranking was more than 1.5 points higher than the second highest ranking.
The fact that dealers ranked the spring months so highly came as a surprise to Hetterick, who says her dealership emphasizes the winter months for marketing.
Hetterick expects those who market more in the spring might primarily be targeting a different customer base than those involved in production ag — such as rural lifestyle customers.
A breakdown of the targeted customer base during these months would answer that hypothesis, she says.
“In some cases, like Redline Equipment, we have all three of those audiences (ag, rural lifestyle and construction). But we market to them at a different time,” she says. “Our biggest audience is ag. So, when I answer those survey questions, I always base them on that, even knowing that I do have a construction audience and rural lifestyle. We do things mainly based on ag.”
Ranking Dealers’ Top 4 Professional Development Interests
(Scores next to name show averages on a scale of 1-4, where 4 is “most important.”)
- Subscriptions and Association Memberships (2.8)
- Dealer Peer Groups Specific to Marketing (2.56)
- Conference Attendance (2.52)
- Ongoing Training with Consultants (2.47)
Bowman says Titan Machinery focuses much of its marketing efforts during the fall.
Large Dealers Like New Marketing Options
With newer technology comes newer marketing opportunities for dealers. A majority of respondents said that within the next 2 years they planned to use mobile marketing, geotargeting and geofencing programs, and explainer videos. Mobile marketing was the most popular option, with nearly 61% of dealers expecting to adopt it as part of their marketing practices by 2020. The least popular was native content programs, with about 21% of dealers expecting to use it within 2 years’ time.
Perhaps unsurprisingly, a greater number of large dealerships vs. small ones plan on adding new marketing opportunities to the mix by the year 2020. As stated previously, a majority of survey respondents indicated they will incorporate mobile marketing, geotargeting and geofencing programs, and explainer videos into their marketing strategies in the coming years.
That story changes when looking at dealers who generated less than $50 million in revenues last year. In that grouping, none of the 6 choices of newer marketing opportunities were to be adopted by at least 50% of dealers. At 46.3%, mobile marketing garnered the highest percentage among that group.
Dealers who generated $50 million or more in revenue are expected to more widely adopt these practices. A majority of respondents in that grouping were recorded in all but one category, native content programs. Even so, 47.1% of dealers said they planned to use the programs by 2020. The category that had the highest outcome was explainer videos, at 92.3%.
Some similar patterns can be observed when considering the number of marketing personnel working at a dealership. For respondents who had one or fewer full time marketing personnel on their payrolls, 57% said they would be adding geotargeting and geofencing programs, 53% said they would be adding mobile marketing and 52% said they would be adding explainer videos by 2020.
Greatest Marketing Successes Most Frequent Commentary
- “Social media has had great results in the last 12 months due to low cost. We are able to directly reach customers and show results much easier.”
- “We launched a new website, which has had significant positive impacts and has allowed us to expand into more web and digital marketing.”
- “Web advertising has been and continues to be far and above most successful.”
- “Direct mail to existing customers has been by far the most successful.”
Those same categories jump when looking at respondents who had more than one up to 5 marketing personnel: 60% said they would add geotargeting and geofencing, 69% said they would add mobile marketing and 54% said they would add explainer videos.
Meanwhile, only 7% of respondents with one or fewer marketing personnel said they planned to add native content programs within the next 2 years; that number jumps to 33% for dealers with more marketing staff on their payrolls.
With these new marketing opportunities available, almost half of dealers expect to not change their marketing budgets much within the next year. Out of all survey respondents, 45% said they will keep their budgets the same 12 months from now. Even so, one-third of dealers said they expect to increase their budgets by up to 10%, and another 11% said they will increase their budgets even more than that. Only 11% said they will shrink their marketing budgets in 12 months.
Dealers that had higher revenue expected to contribute more to each of the six emerging categories. Nearly 100% of dealers that made $50 million or more last year indicated they would be using explainer videos by 2020.
Source: Farm Equipment 2018 Marketing Expenditures Survey
Another survey question asks respondents to reflect on issues that might be standing in the way of obtaining a larger budget and staff for their marketing departments. The most frequent answer was “nothing,” indicating that their marketing funding had no real obstacle.
This is followed by troubles with finding the right people and understanding/vetting the myriad of technologies out there. The least frequent response was technical limitations in software.
Hetterick acknowledged that dealers face challenges in recruiting top-level marketing talent.
“It’s a highly competitive market in any part of the dealership, right now, to find people. A lot of the people graduating who have the skillset that you’re looking for, they may be going to larger companies. And often, let’s be honest, we’re in rural locations. If you didn’t grow up there, that’s maybe not where you want to move. So, I do think it’s difficult.”
The final question of the survey asked dealers to rank their top marketing-specific professional development interests. Options included: subscriptions and association memberships; attending conferences; webinars; vendor-supplier training; training with consultants; professional education courses; and dealer peer groups that are specific to marketing.
The most popular response was subscriptions and association memberships, followed by dealer peer groups. The least popular responses were vendor-supplier training and webinars.
A plurality of survey respondents felt funding was adequate for their marketing budgets and staff sizes.
Source: Farm Equipment 2018 Marketing Expenditures Survey