A Texas car dealership has completely cut out direct mail promotions, relying instead on rich media e-mail for customer acquisition and retention.
Grand Prairie Ford in Grand Prairie, a suburb of Dallas, has not been using direct mail for the past year because executives there found the mailings to be costly and ineffective. General manager Jeff Baker said the recent anthrax scares confirmed his decision to eliminate the medium.
“People are becoming increasingly afraid to handle mail from people they don't know personally, especially direct mail, which is probably being thrown away immediately,” Baker said.
In his region, including at his dealership, people are automatically tossing “junk mail,” a practice Baker said is typical of most Americans.
“As things go on, with what's going on in the world, I think it [e-mail] is a better way to communicate with people. And you know that the post office is going to have to raise their rates,” Baker said.
However, the decision to cut the mailings, three annually from the dealership's service department and three from the sales department, was made more than a year ago because of declining response rates.
Grand Prairie switched to video e-mail technology from ExpandMail Inc., Dallas, which delivers a multimedia, fully functioning HTML Web page to consumers' e-mail boxes. Rise Media Group, Dallas, is the marketer and distributor of the patent-pending technology.
“The returns in the Dallas/Fort Worth area were shrinking, and costs were rising. Direct mail was saturated in our area,” Baker said.
The highest response rate Baker garnered with direct mailings, using inhouse and third-party lists, was 3 percent. About a year ago, response rates had fallen to 0.5 percent.
In addition, the dealership's costs ranged from 35 cents to 79 cents per mailer, compared with 20 cents each for the video e-mails.
By comparison, the response to a video e-mail campaign from Grand Prairie in July was 24 percent.
Out of 25,000 video e-mails sent to consumers in the area interested in car buying via a list from eDirect, 24 percent clicked through to enter a drawing to win a 2002 Ford Thunderbird on Grand Prairie's site, Flagshipford.com.
However, because of the viral component, 25,000 entered the contest from that e-mail. Viewers who forwarded the e-mail passed it on to four to seven people.
The e-mail, which included a two-minute video, also had a call-to-action, offering $10 worth of gas after consumers took a test drive at the dealership.
More recently, Grand Prairie and ExpandMail used the 25,000 e-mail database, coupled with lists from DoubleClick and Smart Money magazine of people in the Dallas/ Fort Worth area who have inquired about new vehicles, to send a video e-mail.
The e-mail to 50,000 people, dropped Nov. 15, promoted Ford's national Ford Drives America/zero percent financing campaign, which ends Nov. 20. The e-mail featured a two-minute video of the dealership and Ford vehicles that users could click to play. In addition, it included a link to the Thunderbird drawing, which ends Dec. 1, an offer for an extra $1,000 off the purchase of a vehicle and a link to directions to the dealership on its site.
“The first time, people looked at it [the video e-mail] because of the contest, and people who didn't want to be on the list were purged. Now we're getting down to people who probably have some interest in our product, use our product today or are interested in hearing about specials we have,” Baker said.
At the same time, Peter Martin, president of ExpandMail, does not want to project response rates for the Nov. 15 e-mail.
“This is going to be a very short campaign, and anything over what they had been getting with direct mail is going to be awesome,” Martin said.
Baker said the video e-mails, along with promotions and video brochures on its site, have resulted in 50 Internet-related vehicle sales a month.
“We don't sell them online, but it's a way that people can contact you and overcome the fear of walking in [to a dealership] and not knowing anybody,” Baker said.
A year ago, Internet-related sales were about 10 vehicles a month.
Grand Prairie's salespeople ask for e-mail addresses from everyone who walks into the dealership, with the ultimate goal of building customer relationships.
“One of the hardest things in my business is to get people to know who you are. In Dallas, we have 25 Ford stores real close,” Baker said.
Baker also appreciates the quick turnaround time of e-mail campaigns.
“If tomorrow I decided to send a video e-mail out, it would probably take me three days to turn around. If I decided to mail something out, it would take two weeks,” Baker said.
Baker thinks e-mail will be used by more retailers to market to customers in the future, and he does not plan to return to direct mail anytime soon.
“I think what we've done is on the leading edge of what people are going to start doing. By this time next year, we'll see a big upswing in the use of video e-mail to advertise,” Baker said.