Managing Automotive Co-op

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4 min read

Top Tips for Managing Co-op 

As an Account Manager, one of responsibilities I have is to submit and monitor co-op for our clients. It’s a hands-on process that I’ve fine tuned over my years at Digital to Dealer Direct. I’ve compiled my top 8 tips for managing automotive co-op for you.

1. Have a dedicated person at your dealership work with your agency to handle co-op.

2. Have monthly meetings about your advertising budget and how you plan to spend the funds.

3. Have a basic understanding of the factory’s guidelines and what vendors you may be required to use.

4. Know not only how to spend the funds but learn about the accrual process too. (How much you get per car sold, etc.)

5. Know the percentage of what you will get reimbursed for new car/CPO/service.

6. Check fund status weekly and after previous month’s claims are submitted.

7. Stay on top of the claim submissions (should always be up to date with having the prior month submitted at most 2-3 weeks into the next month).

8. If claim is declined for any reason, find a way to make up for those missed funds in the next month.

If you’re new to co-op, you might have some questions related to exactly how it works, and why it’s important. Below, I’ve included some background information on co-op and the very important benefits it has for your dealership. 

What is co-op?

Co-op has many different meanings depending on how it is being used. In one sense, it means two counterparts working together and both parties benefiting off this mutual partnership (think of the word cooperative). But as a member of the auto dealership world, you probably know this word most commonly as a factory program almost every brand utilizes. Still playing off the definition of “cooperative,” in a dealership co-op is defined by the factory (Ford, for example) and a Tier 3 dealership (ABC Motors) both benefiting off each other by working together to promote the brand and drive traffic to the dealership. Plain and simple, the factory allocated dollars to the dealerships under its umbrella to drive traffic to the dealership, making both the dealership and factory more money.

Every manufacturer’s reimbursement percentages are different. Some will reimburse only up to 50% (which is still a nice “discount” on your advertising costs), and others will give you the full 100% of the money you spent back. If that’s the case, think of this as a no out-of-pocket program you are enrolled in which allows you to brand your dealership at the manufacturer’s expense. So, what’s the catch? All manufacturers require you to follow their guidelines, so your brand complies with theirs. Some brands are stricter with their brand requirements than others. They may require you to use certain logos, fonts, colors or have “off-limit” words and phrases. To make sure you’re following these guidelines, they created a pre-approval process which can be a tedious extra step, but, a nice safety net.

Manufacturers essentially created co-op programs so Tier 3 dealerships maintained the consistent look and message that they built their brand around. From a consumer stand-point, if you saw a local dealership in your town using the same sales campaign that you saw in a Tier 1 commercial, you would be more inclined to shop at that dealership. Cohesiveness between Tier 1 and 3 ads creates trust. However, according to CBT Automotive Network, 20% of dealerships don’t use their co-op at all!

Why is Co-op Management Crucial for Your Dealership?

Once your dealership is enrolled in the co-op program, you want to make sure you’re not losing any of that free money. Each year, billions of advertising co-op dollars are given to dealerships by the manufacturer and nearly half of that money is claimed. If these millions of co-op dollars continue to go unused, the manufacturer could decide to cut them down. While it is beneficial to have someone at the dealership aware of your co-op funds, not every dealer has time to worry about co-op.

Here is where we, (the automotive advertising agency) come in. All dealerships should utilize their advertising agency to help with the ins and outs of the co-op process so you can do what you do best – sell cars. Your agency should know the factory’s guidelines, what can be reimbursed, and if you are on track each month to maintain your co-op funds for a seamless process.

Co-op funds are vital to a dealer’s ability to advertise – which is one of the most important keys to a successful business. More advertising equals more leads which means more sales!

That is why your dealership should take advantage of your funds – it will ultimately help bring considerable foot traffic through your showroom. The program is a win-win situation for both your dealership and the manufacturer where both parties can make more money. You do this buy remaining consistent in your advertising which is more appealing to the consumer. Manufacturers made an investment in dealerships and it has paid off tremendously for them. If you make an investment in your dealership by advertising more often, it will be paid off literally and figuratively.

At D2D, we know how vital good co-op management is. That’s why we take such a hands-on approach to partnering with our dealerships to make sure their co-op is covered. To learn more about the ways that D2D is different from other agencies, visit the Why D2D page.

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