ZIP Code-Level Marketing: How Dealers Can Deliver Precision Ads to Customers

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In 1963, concerned with the overwhelming volume of post-WWII mail it was delivering, the US Postal Service (USPS) created a five-digit identifier as part of its Zone Improvement Plan—now known as the “ZIP code.” The ZIP code succeeded in making mail delivery more accurate and efficient, but it also increased efficiency for goods and services for the entire economy.

For new car franchise dealerships, ZIP codes are used in online marketing to drive more sales and increase margins. And there’s just no polite way to say it—franchise dealers who DON’T use ZIP code marketing are just throwing money away.

Let’s discuss a few examples of how using ZIP code marketing can help every aspect of your business.

But first, we need to dispel a common misconception.

ZIP Codes vs. Geolocation

ZIP Code-level marketing is often confused with geolocation-based marketing. Geolocation essentially means drawing a circle around your dealership and targeting customers in that area with online ads.

You immediately see the problem, right?

Just because two customers both live five miles from your dealership does NOT mean they are the same type of customer. The area around your dealership is likely made up of vastly different communities to the North, South, East, and West. There are big differences in zoning (commercial or residential), income-levels (low, mid, high), and lifestyles (young urban millennials, families, and empty-nesters).

If you’re targeting every customer with the same marketing message, you’re not appealing to anyone.

By contrast, ZIP code-level marketing allows you to send highly-targeted marketing messages to different types of customers. In other words, ZIP codes allow you to pinpoint your ideal customers with messages that resonate.

ZIP codes are just as useful for online and social media marketing as they are for traditional mailings. Both Google and Facebook take ZIP codes into account when displaying ads and search results. Dealers located closer to the user’s ZIP code will get higher placement in search results than dealers who are further away.

The smaller the area, the stronger your voice will be.

ZIP code-level marketing works because people tend to cluster based on income and lifestyle. College students live in one neighborhood, and affluent families in a different neighborhood. These two types of customers have very different needs, so your marketing should change accordingly. Advertise minivans and SUVs to the families, and your used sedans to the college students.

Delivering the same online ad to your entire Primary Market Area (PMA) dilutes your voice and leads to a lower impression share. That means your ideal customers will see fewer ads from you and more ads from your competitors.

When advertising online, your goal is to be seen EVERYWHERE by the customers who matter. High impression share keeps you top-of-mind when a customer is ready to buy. The best way to gain high impression share (while still being cost-efficient) is to target customers by their ZIP.

Expand your presence even further by using ZIP codes to plan your offline marketing. Sponsorships are a great way to build connections in the community, so make sure your opportunities fall within the ZIP code where your ideal customers live.

The end result of ZIP code-level marketing is every dealer’s dream: You OWN your market.

Hyper-Local = Higher Profit

Ok, so you see the value of marketing to specific ZIP codes. But it couldn’t hurt to expand the net a little further, right? WRONG.

The data is clear. Local sales mean higher profits.

If a customer is driving more than 20 miles to make a car purchase, the dealer is going to lose an average of 49% of the profit on that sale.

Customers who drive that far are clearly shopping on price and hunting for the steepest discount. They don’t want to hear about vehicle upgrades or packages. They don’t want the floor mats or warranties. They’re too far away to come back for service visits, and when it’s time for a new car, their only loyalty will be to the lowest price.

You want the customer who lives nearby, the one who values you and your reputation. Because you know what her commute is like, she’ll listen when you recommend an upgrade. Because you’re convenient, she’ll use you for service, and she’ll return when she needs a new car. And because you’re a fixture in the community, she’ll feel comfortable sending her friends to you when they are looking, too.

ZIP Codes Aren’t Just for Mailing Anymore

In this Era of Big Data, precision marketing is required to succeed. If you don’t do it, another dealership will.

All dealers should be asking how a ZIP-code level approach can improve every aspect of their marketing—making sure that their campaigns are as efficient and effective as possible.

Tools like AdCue make ZIP-code level marketing easy and practical. Contact us for a demo today.

Julie Lawton

Julie is the CMO of DealerCue and a automotive industry veteran. She has spent her entire career helping dealerships use data to reach more customers.

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