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Key Numbers 101 Series – Key # 5 Marketing Expense
Key Numbers 101 Series – Key # 5 Marketing ExpenseThis series includes 24 Key Numbers. If you work on getting all of them in the ranges mentioned, your shop should be solidly profitable.Key Numbers 101 Series – Key # 5 Marketing Expense
For this key number, we want to know what percent of total sales is spent on marketing – including discounts that are directly related to marketing (advertised specials, etc.)
Last month Acme Auto had total sales of $50,000
Total marketing expense was $2,500
*Remember that this includes marketing discounts.$2,500 ÷ $50,000 = 0.05
So, our key number is 5%
When looking at this number for a typical independent shop which is solidly profitable, this number will normally run between 4.0% and 5.5%
There is a fill in the blank form where you can calculate this number for your shop in our Business Calculators area available to Premium Members.
https://www.automotivemanagementnetwork.com/business-calculators/
Definitions and notes:
Marketing expense: Anything with the primary purpose of promoting the shop in some manner to potential or existing customers.
Total sales: Includes all parts, shop supplies, labor, sublet and tires.
The most notable exception to this key number would the shop that is in an exceptionally good location for customer convenience and exposure because so much marketing can be accomplished through the presentation of a facility. While the marketing expense in a shop like this may be as low as 1.0% or even less, it is usually offset by the higher cost of the excellent location. However, when all is said and done, this is the ideal situation for most shops.
#autoshopmarketing
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