GM’s Excellent Adventure: Profit Over Volume

In 2005 GM launched a promotion that had people buzzing. They offered the same “insider” price on their vehicles to the public that they offer to employees. This marketing tactic did so well at removing languishing vehicles from showrooms across the country that GM extended the offer a few more months.

The promotion even got the attention of competitors. Ford adopted the strategy, but confident Toyota raised prices on certain cars just to show that they didn’t need any deals to get people to buy their automobiles.

Whatever your position in the local marketplace, you want to compete on value, not price. In other words, it’s better to follow Toyota instead of GM in this scenario.

As GM’s promotion demonstrated, lower price equals more sales. Follow this to an extreme and you will join the businesses that adopted the mentality of, “We lost $1 on each sale, but we made it up in volume.”

Your goal should be profit, not volume. If you can earn a profit of $10 on one arrangement, why make $5 on each and do twice the work? Using discounts to increase business is the marketing tactic that takes the least amount of knowledge and effort. After all, how astute do you need to be to mark down a price?

Adding value to your product is the smarter way to go; free gift with purchase, two-for-one on selected items, and promotional discounts are all healthy ways to discount. You pick the products, buy flowers at a discount, and pass along the savings – while maintaining your normal (or higher) profit margins.

Most GM dealers missed the boat by not capitalizing on the promotion devising incentives to keep customers coming back to them for sales and services. Promotions bring customers in for one day, but then the question becomes “What have you done for me lately?” If you don’t follow up with e-mail campaigns, direct mail promotions, and website specials, then you aren’t showing your customers the value of their relationship with you.

Looking back, Toyota’s future was, and is rosy. GM was left in the weeds. Which path would you want to follow?