AutoSuccess November 2012
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The #1 Sales-Improvement Magazine for the Automotive Professional - featuring Dominion Dealer Services
Transcript of AutoSuccess November 2012
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ATTRACT CONNECT CONVERT
For more reputation information, email us at [email protected] or visit us at www.socialdealer.com
GET A FREE REPUTATION ANALYSIS
(877) 326-7624 MONITOR ALL REVIEW SITES AND GET MORE REVIEWS!IMPROVE YOUR AVERAGE RATING,
Dr. Abraham has the cure for your reputation.
• Reputation Monitoring• Reputation Pro (Manage Software)• Reputation Management (We Do It for You)• Enterprise Reputation Reporting• Review Streaming
Sanju Abraham, PhD, MBADirector of Application Development SOCIALDEALER
ARE AFFECTED BY THEIR REPUTATION.HOW MANY ASPECTS OF THEIR BUSINESSDEALERS DO NOT REALIZE
OUR INDUSTRY EXCLUSIVE SOFTWARE MAKESBETTER MANAGEMENT POSSIBLE.
Reputation Performance Per Source
Reviews
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AutoSuccess Magazine is published m
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12
marketing solution
leadership solution
sales & training solution
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AndrewPrice 40 increAse your odds by selling the Appointment
deAlers need A scouting report for success in 2013brianPasch 32the somedAy syndromeJimmyVee & travisMiller 28
A cure for your review heAdAchecharlieBass 30
dennisMcGinn 20 reinvent reconditioning
leverAge your strength As the selling deAler to fill your bodyshop with work
daveDunn 34
toddHudak 38 household prospecting: what is really going on?
most obJections hAve optionsmarshBuice 24
AJLeBlanc 36 using video pre-roll
markTewart 22 getting to the next level pArt 2
the two things thAt mAke everydeAlership run better
scottJoseph 14
dalePollak 18 five benchmArks to guide your used vehicle investment success in 2013
dealerPanel 42 2012 wrAp up
step into the futureJasonHauk 10
tv vs. cAble: which is more effective for your dealership?paulAccinno 26
susanGivens 08 customer service: the secret ingredient of effective sales
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08 autosuccessonline.com
Susan Givens is the publisher of AutoSuccess. She can be contacted at 877.818.6620, or by e-mail at [email protected].
podcast in
terv
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sales & training solutionSusanGivens
customer service:the secret ingredient of effective sales
Customer service can play a critical role in making or breaking the sale. For automotive dealerships, great customer service can create a lifelong relationship, with repeat purchases and word-of-mouth referrals that add up to a significant ongoing revenue stream. Customers are also willing to spend more with companies that provide them with great customer service, which takes the focus off price. However, many businesses overlook the importance of customer service, as recent statistics show:• According to the American Express 2012
Global Customer Service Barometer, in the past year, more than half (55 percent) of consumers have intended to conduct a business transaction or make a purchase, but decided not to based on a poor customer service experience.
• The Small Business Administration found that poor customer service is the No. 1 reason customers leave and never return.
• A case study on the importance of customer service from The Times 100 found that it costs as much to gain one new client as to keep five existing ones.
So, how do you provide the kind of service that generates high CSI scores and keeps customers happy? The key to world-class customer service is to exceed expectations and create a positive, memorable purchase experience. Not surprisingly, many customers have low
expectations when they come to a dealership. You can overcome these negative pre-conceptions by addressing three key areas:1. Product Knowledge — Today’s automotive customers are more knowledgeable than ever
before. They do extensive research before they even walk into the dealership, and in many cases, they know more than the sales consultants do. A sales consultant who can answer questions quickly and accurately builds credibility and creates confidence. Mobile technology can help sales consultants to exceed expectations with instant information at their fingertips.
2. Quality of Interaction — The stereotype of a car salesman is quite negative: fast talking, dishonest and hard-selling. However, to exceed expectations, it is not enough to merely be nice. Sales consultants who build a consultative relationship with their customer right from the meet-and-greet create a credible, comfortable environment that encourages the sale. An insightful needs-analysis can also get to the heart of what the customer is really looking for and help you tailor the presentation accordingly, rather than offering a one-size-fits-all approach.
3. Engagement — Keeping customers engaged throughout the process is critical to success. Although we live in an electronic age, many dealerships are still using old-fashioned sales methods. You can surprise and delight your customers by leveraging the latest technology to make and keep the presentation more engaging. Customers love iPads. Using them during the sale to show videos and look up inventory can ramp up excitement. Incorporate multimedia tools into the selling process to create a “wow” factor.
One dealership that gets the customer service recipe right is Ed Voyles Honda, in Marietta, Georgia, whose motto is “You can’t buy trust. You have to earn it.” The dealership recently launched the IntellaCar iPad selling system as part of their customer service mission. GM Pete Richards said, “I’m thoroughly convinced that this is the future for dealerships. Not only is this good for our customers, but it’s great for us as well. Every person in training said this is the coolest product they’ve ever seen. And IntellaCar has some of the best customer service I’ve ever worked with.”
Jim Hughes, principal of IntellaCar, said, “Our mission is to bring back the excitement of buying a new car. You can’t do that without great customer service.”
DEALERPANEL
TH
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+successful solutions from successful dealers
AutoSuccess & DealerELITE are both designed to keep the view from the sales floor front and center in everything we do, and we've come up with an exciting new way to accomplish this.
Our new Dealer Panel gives voice to dealers, GMs and sales professionals to share their experiences — sales techniques, new technologies and ways to motivate staff — giving our readers the benefit of their experiences.
We're always looking for new voices, as well. If you've got something to share with the rest of the industry, drop us a line at [email protected].
leadership solutionJasonHauk
10 autosuccessonline.com
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When I was just a child, I got a Christmas gift that I really wanted: a Pong game for the TV. I thought that was the coolest present I could have ever hoped for. It was on many kids’ lists, but only a few were lucky enough to get one. I had friends over day and night playing this Pong game. Within six months, the next dream gift was out. After that, I would play Pong occasionally but the glitter was off. The kids stopped knocking on the door. The greatness of “Pong” subsided. There was a new craze in town.
Now I have to tell you, this scenario played itself over and over again in my youth with many different innovations and fads. Finally, I had the realization that things will always change; they will lose their usefulness and, in fact, will eventually even be laughed at as “old technology.” An example would be the “bag phone.” Everyone laughs at the “bag phone” now — they wouldn’t have laughed at the phone, though, if they had it when it was hot. Looking back at old technology makes us all laugh.
Enough said about a changing world. What we all want to know is how it applies to our business. Let’s put our business to the test:• Have you researched what’s new in the automotive industry?• Do you keep up with the periodicals, seminars and the ideas bouncing around the dealers in your
immediate area?• Do you have a tendency to be stuck with the way things are done at your dealership as a tradition,
rather than be willing to scrap traditions for a risky new idea? (Don’t be the “Fiddler on the Roof.”)• Are you afraid to make a change? Self-conscious? Afraid of a little ridicule from your peers?
(“Gee, folks. You’re trying to reinvent the wheel.”)• Do you tell yourself “It’s been working for years — why rock the boat?”
Well, I guess there could be a legitimate argument if the competition is your partner. But let’s face it, you want more market share, and where does market share come from? You have to know the
answer. The moral of the story is “don’t take advice from your competition.” Chances are they have personal motives for keeping your dealership in the “No Change Corral.”
Saddle up; it’s time to jump the fence and ride into the future where the money is. Don’t be a “bag phone” during the time of the “iPhone.”
Enough of the symbolism; it’s time to talk straight to the issue.
The future of our industry is begging for new innovative ideas. The customer is more educated these days with iPhones, iPads and computers. Unfortunately, you aren’t smarter than your customer anymore — be open to the new ideas, concepts and methods being brought your way. Don’t be so quick to say, “We are happy with our present system.” Your competition might listen and take a bigger piece of the pie, making your slice much smaller.
Oops, more symbolism. I really didn’t mean to do that. Actually, I did mean to do that. Sometimes, using symbolism is the only way to get your point across. So don’t be an old “bag phone”— step into the future with new ideas.
Jason Hauk is the owner of Sharp Cars and Dealer Marketing Concepts. He can be
contacted at 866.388.4503, or by e-mail [email protected].
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bird-kultgen ford has been in waco, texas for 76 years, and prides itself on having generations of customers. for a business like this, in a competitive market, reputation means everything. for most of the dealership’s existence, word of mouth has kept customers, and their children, coming back. however, the world — and the consumer — has changed. An internet search that pulls up negative reviews can be the deciding factor to consumers weighing their options. no matter how well established it may be in a community, managing a dealership’s online reputation is crucial.
we recently sat down with claire kultgen, the business development director of bird-kultgen, and spoke with her about the dealership’s history, its goals, and how much emphasis it puts on protecting, developing and marketing its reputation.
Autosuccess: claire, tell us a little about your dealership,and the marketplace that bird-kultgen ford finds itself in.claire kultgen: My great-grandfather started the dealership in Waco 76 years ago. My co-workers are family to me, and many of them have been here since I was a born. We treat each other like family, with respect and care. Furthermore, we treat our customers like they are an extension of our family — we have serviced third- and fourth-generation customers. We know we treat people right. In fact, it is something we pride ourselves on, and it’s a story we want to tell both in person and, these days, online. We find ways to keep them coming back for more — year-over-year and generation-to-generation. In our culture, we do whatever it takes to make them happy.
For our dealership, we compete with other makes in our community. There are four car dealerships within a rock’s throw away from one another, with one more coming soon. It is so critical to stay ahead of the other dealers.
As: why is reputation management crucial?ck: It’s two fold. When we do our jobs right, we want people to know about it. Many people hesitate to trust car dealers. More and more, consumers are starting their car research online. When searching on Google, a consumer will easily be able to compare at a glance a dealership with three stars versus a dealership with five stars, and we link trust directly with our online reputation. Its importance can’t be underestimated.
Secondly, we use reputation as a way of monitoring our employees’ activities and ensuring we are treating every customer with the same superior service.
From time to time, however, we slip up. We use Dominion’s PRIME Response Reputation Management system, which allows us to identify these mishaps and proactively reach out to solve them with the customers — typically weeks before Ford sends the CSI surveys.
As: tell us about your online marketing philosophy, and howreputation management figures into it. ck: Our dealership has put a lot of value in effectively using SEO and SEM. Like many other dealerships, we invest a lot of money to get consumers to click on our ads, but it is a one-two punch. First, we invest money to be a top, Page One search result for our area. Second, we take full advantage of the first impression. It is a split-second decision; no one is going to click on a dealership with only one star. Rather, they will continue to move down the page (or around the corner) to a different store that has four stars.
Google is our No. 1 traffic generator (60 percent of the new visits), even over direct traffic, largely because our dealership’s name is so hard to spell. But with Google’s help — by combining SEO, SEM and reputation — I can at least get my dealership above the fold on the first page.
As: what is your philosophy of consumer reviews?ck: The opportunity to leave a review goes out to each and every customer in service, sales and our collision repair center — no matter what. I want to know the good and the bad. It only helps to make us better.
As: describe your problem resolution process for bad reviews.how has this process helped your dealership?ck: I see each and every bad review. Our process is simple: We quickly identify what happened and develop a plan to reach out to the customer to make it right.
As: how are you redefining the processes ofgathering reviews in your dealership? ck: Distributing the PRIME surveys gives us a chance to hear about a problem. By the time a customer gets a Ford CSI survey, it is too late. Sometime we make mistakes; we want to be notified and correct it faster.
We fix it, or, if the customer does not express what really happened, we try to pull it out of them. We will continue to work on it as long as we can.
As: tell us some of the goals you had when youinstituted a reputation management system.ck: Our biggest goal was to have reviews on many different sites, and not just the big ones (Google, DealerRater, Cars.com, etc.). We’ve been able to achieve this with PRIME Response. In less than a year, we’ve gone from having 20 reviews online to 167. We have an average rating of 4.6 stars, and added new reviews on eight review sites during this time, including reviews from both the sales and service departments.
As: how have you been able to achieve successinternally with your associates? ck: Internally, we let our associates know the importance. Since great service and treating customers right is our culture, we did not have to make any changes to make this happy organically.
Today, customers are conditioned. What is great about our reputation management system is that the surveys just happen. There is no need for us to pre-communicate with them. No one in the dealership is required to do anything. Once the sale or service is complete, they get e-mailed the survey. It is simple, and that is what I like about it.
As: how has incorporating reputation management changed your dealership’s culture? did you have to incentivize your associates? how did you train your associates? ck: We have been printing out the good reviews and posting them in our dealership. Or I e-mailed them to the folks involved in the transaction and their manager. One thing we can never do too much of is praising our team for the great job they are constantly doing. Like most businesses, too often we focus on correcting the small number of problems that occur, rather than the great job our team does 99 percent of the time. Also, we have been posting the good reviews to our dealership’s Facebook wall. Many of our employees monitor the social areas and make comments about the great reviews their peers have gotten — it is wonderful to see them share successes.
As: what advice do you have for dealers?ck: For new dealers, learn how people are getting to your Website. Having advanced analytics (like Google Analytics) and knowing how to use it is a must. Understand what consumers see on their journey to finding your dealership through Google (or whatever tool they are using). You need to make sure what they see looks good, which in our case is simply an accurate reflection of the world-class job our team does on a daily basis. Learn how Google works. If you have four stars and the next person has two stars, you win — it’s that simple.
For the free e-book “Create a Loyal Customer Base,” which offers proven steps on improving your online reputation, contact us at the information below.
For more information about Bird-Kultgen Ford or Claire Kultgen, visit www.bkford.com.
For more information about Dominion’s PRIME Response Reputation Management system, contact them at 866.389.2363, or by e-mail [email protected].
what can an online reputation management system do for your dealership? with a package properly fitted to your dealership, like dominion’s prime response system is with bird-kultgen ford, a system can (and should):• Allow you to maintain a consistent, professional
brand presence• increase your page one search results to rise
above your competition• grow the volume of your ratings across
numerous sites• drive more leads across online sources• Allows you to monitor changes to your online
profiles• offer you the option to manage multiple
accounts with group-level statistics
14 autosuccessonline.com
If you own a dealership or manage one, there are really only two things you need to consistently do for maximum rapid success and multiplied prosperity. First, you have to attract a constant flow of potential buyers to your showroom, service department and Internet site. Then, once they are there, you must get them to continuously take action.
Research has shown that consumers are bombarded with more than 10,000 marketing messages each day, which means many of those promotional messages get lost in the crowd. Even with thousands of communications out there clamoring for attention, I believe dealers have an obligation and responsibility to differentiate their dealership, products and services, or watch profits die. Therein lies the paradox — and a dealer’s opportunity.
ineffectual or worthlessUnfortunately, a large percentage of the marketing, advertising and promotions that dealerships are doing is ineffectual at best and, in many cases, utterly worthless.
If you’ve been using television as a medium, there are now 500 different channels taking viewers somewhere else. Plus, most people skip over your commercials with the touch of a button.
If you have depended on radio to grow your dealership, Sirius and XM satellite radio promise commercial-free programming. Regular stations have started doubling the number of commercials they run per hour — turning listeners off even more.
Telemarketing and texting? They can result in huge government fines.
If your dealership has been relying on direct mail, every postal increase means that what used to work probably doesn’t produce the same return on your investment.
If you’ve been trying to communicate via e-mail, chances are your messages are getting lost in cyberspace due to hyper-aggressive spam filters. Deliverability is down as much as 85 percent. Believability is down even more.
The Internet? It allows potential buyers and
previous customers the ability to shop you all over without ever leaving their phone, iPad or computer. In 2007, the average customer visited 4.3 showrooms before buying a car — now they only visit 1.8. No wonder dealerships complain about the lack of showroom traffic. They’re caught between a marketing “rock” and a promotional “hard place.”
the missing piece of the growth puzzleTo offset this, most dealers and general managers are always on the lookout for the newest business-building strategies, the latest profit-boosting tactics and those ultra-inventive ideas that provide the quickest financial pay back on their advertising investment.
Many of these dealerships jump erratically from one superficial technique to another. Their marketing becomes inconsistent, irregular and intermittent. Certainly it’s not at all strategic. This is why most dealerships cannot rely on a predictable traffic flow, sales flow or multiplied profitability. It’s feast, then famine. It’s a record month, then a dismal month. So, it’s frequently a scramble to know, let alone manage, traffic and sales.
hidden Assets, overlooked opportunities, underperforming Activities — And untapped potentialAlmost every dealership we have partnered with was originally underutilizing their resources to some extent. Some were sitting back and waiting for a big payday to appear, or for the economy to all-of-a-sudden turn. They wanted a flood of new customers to suddenly discover their dealership and show up at their door in a buying frenzy. But they weren’t doing much proactively, strategically or systematically to make that a reality. They were stuck reacting to the marketplace, rather than forging ahead with a successful proven strategy.
old thinking doesn’t work todayThe best chance of making a lot more money today is not to keep taking the same old approach. To compete today, you must increase the overall value of your customer, which really means they:
marketing solutionScottJoseph
the two thingsthAt mAke everydeAlership run better
• buy from you more often• pay you more per transaction • visit your store for sales and service more
frequently• stay an active customer for much longer
With the old way of doing things, you ran the real risk of alienating or accomplishing the polar opposite. Saturating your customers with information that is irrelevant to them will cause them to become callous to everything you communicate to them. A mere five-percent increase in customer retention can result in a 75-percent increase in customer value. The challenge is how to improve your retention by five percent.
A strong owner marketing strategy is much more than just the simple automotive direct mail campaigns we’ve all done in the past. The relevance of your owner marketing communication is a key ingredient to any loyalty or retention-marketing program you have. Trying to be everything to everybody will have a negative impact. Think of it this way:• Increased relevance creates increased
engagement.• Increased engagement creates increased
satisfaction.• Increased satisfaction creates increased
behavior.• Increased behavior creates increased value.• Increased value creates an increased return on
investment.
An effective automotive owner marketing strategy should improve the relationship you have with each and every customer. With good data and a reliable analytic team, you can create profiles specific to each customer and develop predictive models; that way, you only send information that is timely and relevant to their needs. That’s when your direct marketing efforts will truly begin to lead customer behavior.
Once that happens, there is no greater feeling in the world of business than knowing that you don’t just compete in your market; you dominate it.
Scott Joseph is the president of J&L Marketing, Inc. He can be contacted at888.835.1689, or by e-mail at [email protected].
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What’s the biggest frustration dealers have with marketing these days?
It drives you nuts when it doesn’t work! Nobody likes wasting money, and so
many of the marketing “ideas” aren’t much different than gambling. The other frustrating part is when you find something that works once or twice, then it stops working. The start and stop breaks your heart and demotivates your staff. Ultimately, we have worked hard to create a winning strategy that works consistently and improves over time. The secret to that is focusing on something other than low price because it’s always easy for another dealership to out-price you. Instead, with the help of Gravitational Marketing, we talk about the value we provide and the problems we solve.
An Easier Way To Get CustomersA Dealer’s Perspective On Marketing in the Modern World
hy does marketing to get customers seem so difficult and daunting? Why do so many dealers fail in their attempts to drive a consistent flow
of traffic? With all the new tools and tricks available in the Internet age, you’d think it would be easier than ever to get customers to come to your dealership. But that’s not the case. Finding the right customers, and enough of them, seems harder than ever. To get the latest on real-time marketing trends, we caught up with Tom Ring, from Brown Daub Kia, part of a dealership group that’s been around since 1936. Brown Daub Kia is well known for having nearly quadrupled sales in the last few years.
W
So what’s Brown Daub Kia doing differently than other dealerships?
Our growth has largely been driven by improved marketing. But marketing
today is a strange paradox: with all this new
technology we’re able to be more connected with our customers than ever, through email, social media, video, chat, etc.—yet we’re also more disconnected from our customers than ever. The trend is for customers to view dealerships as “all the same” and make decisions solely on price. And why not? With all this new technology, communication is faster, but there’s less of a relationship. You can’t build a genuine relationship with a customer through text or email only. Having been in business for decades, we place a lot of value on customer relationships. We truly believe our dealership is the best choice for our customers, regardless of price. So our focus is on giving our customers unique reasons to visit us, face to face, so we have a chance to build a relationship with them and truly help solve their problems. That’s proven to be the best way to attract and convert customers and maximize our gross and net profit. Jimmy Vee & Travis Miller at Gravitational Marketing have helped us develop the marketing strategy that puts a priority on relationships and solutions over prices.
Why do customers choose Brown Daub Kia when there are so many other options?
People hire specialists like financial advisors and personal trainers to help
them get ahead in life. So we chose to position ourselves as specialists. We specialize in helping people drive the car of their dreams. When a customer needs an “expert” to help them with a new or used car, they choose us. Jim and Travis are always saying “Same is lame,” which helped us realize that if we look and act like other dealerships, then customers won’t have any reason to choose us unless we offer the lowest price. So rather than price ourselves out of business we went in the opposite direction and became the first choice for our customers.
You mentioned Jim and Travis and Gravitational Marketing. What makes them any different than other marketing companies?
In the end, consistency of results is what matters most. Jim and Travis helped us
apply Gravitational Marketing to our store and we got results immediately and have continued to see results, consistently, for four years now. They have a complete plan, not just one or two quick fixes. It takes effort, hard work and commitment, but that’s how we knew it was the real deal. There’s really no “easy button” in life. They call their group of dealers “Rich Dealers” for good reason—when traffic increases, money increases, and the business gets better all around. It’s enriching in more ways than one.
Any advice for dealers who just can’t seem to get any traction in their market?
Move! Or hire Gravitational Marketing! Seriously—stop thinking that you have
to come across like every other car dealer. Start focusing on what makes you unique, on the true value you offer your customers. I think most dealerships don’t place a high enough value on the service they provide. When you shift your perspective from low price to high value you unlock a lot of new opportunities.
Can other dealers duplicate your success?
As long as they’re willing to commit to the process and apply the effort.
I know of about a hundred dealers in the country who use a similar approach and have similar results. It’s not for everybody, but it may be for you.
Get in touch with Gravitational Marketing
at 407-641-0248 or www.RichDealers.com/tomring to see if you can become a “Rich Dealer.” That’s the advice I give most dealers who ask about our success.
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What’s the biggest frustration dealers have with marketing these days?
It drives you nuts when it doesn’t work! Nobody likes wasting money, and so
many of the marketing “ideas” aren’t much different than gambling. The other frustrating part is when you find something that works once or twice, then it stops working. The start and stop breaks your heart and demotivates your staff. Ultimately, we have worked hard to create a winning strategy that works consistently and improves over time. The secret to that is focusing on something other than low price because it’s always easy for another dealership to out-price you. Instead, with the help of Gravitational Marketing, we talk about the value we provide and the problems we solve.
An Easier Way To Get CustomersA Dealer’s Perspective On Marketing in the Modern World
hy does marketing to get customers seem so difficult and daunting? Why do so many dealers fail in their attempts to drive a consistent flow
of traffic? With all the new tools and tricks available in the Internet age, you’d think it would be easier than ever to get customers to come to your dealership. But that’s not the case. Finding the right customers, and enough of them, seems harder than ever. To get the latest on real-time marketing trends, we caught up with Tom Ring, from Brown Daub Kia, part of a dealership group that’s been around since 1936. Brown Daub Kia is well known for having nearly quadrupled sales in the last few years.
W
So what’s Brown Daub Kia doing differently than other dealerships?
Our growth has largely been driven by improved marketing. But marketing
today is a strange paradox: with all this new
technology we’re able to be more connected with our customers than ever, through email, social media, video, chat, etc.—yet we’re also more disconnected from our customers than ever. The trend is for customers to view dealerships as “all the same” and make decisions solely on price. And why not? With all this new technology, communication is faster, but there’s less of a relationship. You can’t build a genuine relationship with a customer through text or email only. Having been in business for decades, we place a lot of value on customer relationships. We truly believe our dealership is the best choice for our customers, regardless of price. So our focus is on giving our customers unique reasons to visit us, face to face, so we have a chance to build a relationship with them and truly help solve their problems. That’s proven to be the best way to attract and convert customers and maximize our gross and net profit. Jimmy Vee & Travis Miller at Gravitational Marketing have helped us develop the marketing strategy that puts a priority on relationships and solutions over prices.
Why do customers choose Brown Daub Kia when there are so many other options?
People hire specialists like financial advisors and personal trainers to help
them get ahead in life. So we chose to position ourselves as specialists. We specialize in helping people drive the car of their dreams. When a customer needs an “expert” to help them with a new or used car, they choose us. Jim and Travis are always saying “Same is lame,” which helped us realize that if we look and act like other dealerships, then customers won’t have any reason to choose us unless we offer the lowest price. So rather than price ourselves out of business we went in the opposite direction and became the first choice for our customers.
You mentioned Jim and Travis and Gravitational Marketing. What makes them any different than other marketing companies?
In the end, consistency of results is what matters most. Jim and Travis helped us
apply Gravitational Marketing to our store and we got results immediately and have continued to see results, consistently, for four years now. They have a complete plan, not just one or two quick fixes. It takes effort, hard work and commitment, but that’s how we knew it was the real deal. There’s really no “easy button” in life. They call their group of dealers “Rich Dealers” for good reason—when traffic increases, money increases, and the business gets better all around. It’s enriching in more ways than one.
Any advice for dealers who just can’t seem to get any traction in their market?
Move! Or hire Gravitational Marketing! Seriously—stop thinking that you have
to come across like every other car dealer. Start focusing on what makes you unique, on the true value you offer your customers. I think most dealerships don’t place a high enough value on the service they provide. When you shift your perspective from low price to high value you unlock a lot of new opportunities.
Can other dealers duplicate your success?
As long as they’re willing to commit to the process and apply the effort.
I know of about a hundred dealers in the country who use a similar approach and have similar results. It’s not for everybody, but it may be for you.
Get in touch with Gravitational Marketing
at 407-641-0248 or www.RichDealers.com/tomring to see if you can become a “Rich Dealer.” That’s the advice I give most dealers who ask about our success.
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leadership solutionDalePollak
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Dale Pollak is the founder of vAuto and a best selling author. He can be contacted at 866.867.9620, or by
e-mail at [email protected].
five benchmArks to guide your used vehicle investment success in 2013
“Dale, what can I do to take my used vehicle operations to the next level in 2013?”
This question comes my way more frequently, and much earlier in the year, than it did in the past. To me, this is a good thing — more dealers are thinking hard and planning ahead to do a better job in their used vehicle operations.
For the majority of dealers who pose this question, my answer is nearly uniform: Do a better, more consistent job of meeting the metrics that guide an optimal return on investment (ROI) and maximum profitability for your used vehicle operations.
I share this guidance because it’s no easy task to consistently maintain efficiency and harmony among all the people and processes that touch every used vehicle. Inevitably, even the best dealers will stumble. And, when they do, the corrective steps almost always go back to the fundamentals — the benchmarks that provide the baseline conditions for success, and will help to maximize their ROI and profitability in 2013 and beyond:
1. Market Days Supply: This metric measures market supply/demand data on specific cars, and offers a thumbnail read of their desirability among potential buyers. The goal: a 70-day market supply for your entire used vehicle inventory. The benchmark should guide, but not strictly define, a dealer’s acquisition strategy. Broadly, vehicles with a market days supply of 65 days or less are often retail “no brainers”—that is, the balance of supply and demand data suggests these cars will sell quickly. However, used vehicles with a 120-day market days supply can also make good sense as retail units, depending on a dealer’s ability to acquire it “right” and align its pricing to reflect a fair amount of competing cars. The key here is striking an inventory-wide balance between highly desirable and less-desirable cars. In general, the 70-day mark indicates a well-balanced inventory.
2. Cost to Market: For much of 2012, dealers have complained that high wholesale values for used vehicles make buying cars “right” more problematic. They found the cost of reconditioning and packing cars hurt their ROI and profitability. These insights were gleaned from tracking the cost-to-market metric for their used vehicle inventories and individual cars. The metric measures the ratio or “spread” between the dealer’s cost to acquire and make a vehicle retail-ready and its prevailing retail price point.
The benchmark: Dealers should aim for an 84 percent cost-to-market metric for their inventories. This creates a 16 percent “spread” to achieve a dealer’s front-end gross profit goals. This benchmark should guide vehicle acquisitions to ensure appraisers and buyers can readily understand the relationship between the acquisition price, reconditioning/other costs and a unit’s likely gross profit potential. The old saying, “you make your money when you acquire a car,” remains true today.
3. Price to Market: This metric compares the asking price of a vehicle to the prevailing prices of similar vehicles available in a market. It’s ever-more critical for dealers to offer competitive pricing
to capture consumer attention. The most successful velocity dealers manage this metric in relation to a vehicle’s market days supply metric and its time in inventory. Example: A vehicle with a 120-day market supply might be priced five percent less than competing units (a 95 percent price to market) during its first seven days as a retail unit. The five percent discount reflects the unit’s lesser degree of desirability, because the market days supply metric suggests a high degree of retail competition. If the car doesn’t sell in a week, a dealer would adjust the pricing to 93 percent price to market for the next seven days. The cycle typically continues until the unit sells.
4. Inventory Age: Every dealer knows it’s important to sell fresh cars fast to maximize gross profits and inventory turn. That said, I still see a lot of dealers with more than half of their used vehicle inventories older than 30 days. This scenario suggests a problem managing cars that don’t sell right away. The causes of aging inventory are many — the wrong car, the wrong prices, too much time lost to make it retail-ready, etc. Regardless of the issue, however, dealers who maintain at least 50 percent of their inventory under 30 days of age are best positioned to maximize their inventory turn, investment ROI and profitability.
5. Average Discounts on Deals: This benchmark ensures that dealers “hold gross” when they close deals with customers. The goal: Average discounts should run $250 or less at a dealership. Dealers should track this number by individual managers and salespeople. In addition, dealers who adopt sales processes that validate their retail asking prices with customers and the market are best able to minimize discounts.
A final point: It takes discipline to ensure your people and processes are pointed to meet these benchmarks on a daily basis. But, as I tell dealers who seek better results in the months ahead, the pay-off from improved ROI and profitability is well worth the price of admission.
“Our sales increased byalmost 40 cars in one month.
We couldn’t ask for a better partner.”
Ricky LopezGreenway Dodge Chrysler Jeep
Watch the video and learn why Ricky trusts ActivEngage!www.activengage.com/GreenwayTrust
Call for more details: 1-866-458-CHAT (2428)
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leadership solutionDennisMcGinn
Dennis McGinn is the founder and CEO of Rapid Recon. He can be contacted at 866.268.3582, or by e-mail at [email protected].
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reinventreconditioning
The sustained return of the used car market has been accompanied by a dramatic increase of informed and quality-conscious buyers. Proportionally, this has put great demands on reconditioning. More than ever is it necessary to “buy right” and “trade right” to keep a lid on reconditioning costs while, at the same time, maximizing selling days to produce a fair profit. Are you a candidate for reinventing your reconditioning process? If so, do you still operate by using a spreadsheet or whiteboard? Toss them. They are incapable of providing any continuous, interactive data on which to base any reliable business decision. Take control by moving forward to a real time, Web-based system for continuous process improvement. Recon departments across the country are using this new software tool, customized to manage their entire reconditioning process from auction or trade to front-line ready. As a result, on-the-spot trouble-shooting eliminates any delays, and major conflict is avoided when all responsible parties see the same real-time data.
Recon teams count on reliable data to be efficient and productive workers. Inaccurate information costs time and money. For example, you can “buy right” and “price right,” but if your recon costs are too high, your gross profit takes a hit. And, if your average reconditioning “time to market” is too long, it eats into selling days and your profit opportunity drops too soon.
Reinventing your reconditioning processes is not difficult — in fact, it is quite the opposite.
It starts with laying out a workflow map based on your current processes, then adding a daily inventory export from existing DMS sources. Text and e-mail alerts are integrated for notification and transparency. Handling multiple stand-alone franchises, multiple stores or sharing a centralized recon center is not a problem.
One misconception holding some dealerships back is the fear this will require more work on the part of their already over-worked recon staff. In reality, this is one of those rare opportunities where the only ones who will have to do more work are the ones who have been avoiding accountability. The rest of the team will embrace their part in this new real-time process because it will be proof where each of them stands, since they are able to enter their own work into the system. One click indicates their job is complete and ready to move to the next step. Good employees want transparency and accountability — especially when the measurements are fair for all. It is what drives continuous process improvement, eliminating wasted time and resources.
With this system, management is now able incentivize recon teams fairly, based on the true hard data embedded into their system. And some dealerships use brief weekly meetings to review their numbers and make adjustments.
For the dealers and dealer groups who have made the transition to a real time workflow system, the verifiable facts are conclusive. They now know where they stand with every car, at every step, from auction or trade to front-line ready. Real numbers don’t lie. How many days their reconditioning cycle is taking is now based on facts, not on assumptions. True accountability and transparency leads to an efficient and enjoyable work environment. It is a win-win for their recon teams and their dealership.
Should you reinvent your reconditioning? Of course, it is just a matter of time — real time. And the longer you wait, the more it will have cost you. On the other hand, if you wait long enough, it may not matter.
Many exceptional live examples are available as proof points. If you want to view a few, just contact me.
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Last month, we took a look at programming your subconscious to be the best supercomputer you’ll ever need to achieve success. This month, let’s take a look at some other ways to survive and thrive in your situation, and find the joy in your career and life.
First, you must quantify to qualify. You have to get a handle on what you are currently doing, and be honest. I have consulted with thousands of businesses over the years. I have found few, who are currently unsuccessful, willing at first to be honest about the reasons for their lack of success. There are almost always tons of excuses and a shocking lack of self-awareness.
Have you ever watched the reality TV shows about unsuccessful restaurants, bars, hotels, etc? You will notice it’s always the same elements in their lack of success. It also does not take a genius to discover it and fix it, but it does take self-awareness and honesty.
Self-awareness and personal responsibility
are cornerstones in creating success or moving to another level. Programming your autopilot with successful habits is essential to success. Be ruthless with your time, because you cannot get it back.
Another cornerstone of success and goal attainment is to utilize what I call the “Polarization Effect.” This has taken me decades to truly understand and something I must be mindful of every day to experience ultimate success. Ultimate success is not only measured by the goal attainment, but in also truly enjoying and breathing in all that you have while you go for what you want.
Let me be more specific. Pain can be a tremendous motivator. Pain in your current position can move you towards getting what you want. You may have great pain about your income, financial position, weight, relationships, etc. This pain leads you to a defining moment. To quote the line from the movie Network, “I am mad as hell and I am not going to take it anymore.”
Some people may use this pain to motivate them for the rest of their lives. However, true joy and success comes from not only using this motivation to drive you, but also taking a deep breath every day as you drive yourself and realizing the joy you are receiving from the doing.
Attainment of goals without the enjoyment of doing is hollow. In this case, nothing can be good enough and no goal, no matter how big, can fulfill you. Begin to truly enjoy the moments of what you do. Strive to find absolute amazement and wonder in excellence.
Recently, I went to a concert featuring The Dirty Dozen Brass Band, Little Feat and Delbert McClinton. I have been listening to their music and watching these performers for decades. I watched in awe at the magnitude of their skill. These performers are better now than ever. Their passion was
evident. I have also sat and watched a man shine shoes for 20 minutes and found myself amazed at his skill, communication and passion.
To be an expert and to be truly amazing at anything takes passion and dedication. Every day, look for examples of that passion and dedication in others and in you. Although it takes honesty about what you are doing right, it takes grace to give you and others credit for what you are doing right. Recognize and enjoy the performances.
There is a scene in the movie The Hustler with Paul Newman where Newman’s character, Fast Eddie Felson, is grousing about being a loser in life, but also talking about how he feels when he has a pool cue in his hands and his feeling of something truly amazing. His girlfriend in the movie, Piper Laurie, passionately tells him that most people go through life and never feel that kind of passion or excellence, and that he is anything but a loser.
Just remember, on the days that are not easy and the days you feel down on yourself, you are excellent and that you experience passion like few ever experience.
Go to work on seeing, doing and feeling that excellence as much as you possibly can. When you utilize the pain to motivate and the passion and feelings of excellence to saturate, then you are using my “Polarization Effect” to the fullest. You are using polar opposites in a way to maximize your skills, time, energies and enjoyment. The good news is that it does not take more effort to get to the next level. It is just a different type of effort and awareness.
sales & training solutionMarkTewart
podcast in
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and the author of the best seller, How To Be A Sales Superstar. He can be contacted at 866.429.6844, or by
e-mail at [email protected].
getting to the next level p
art 2
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sales & training solutionMarshBuice
Marsh Buice is the sales manager of Mark Dodge,Chrysler,
Jeep. He can be contacted at 866.535.5006, or by e-mail at
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most obJectionshAve options
It’s been said that nothing in life is guaranteed, yet one thing is certain in sales: There will always be objections. When it comes to sales, objections are a necessary evil. After all, if there were no objections, there wouldn’t be a need for salespeople; thankfully, vehicles don’t sell themselves and need advocates like you and me to favorably demonstrate the advantages we have over our competitors.
Look at objections not as roadblocks, but rather as detours. If you and your family were traveling to Disney World and halfway into the trip you ran into a “Road Closed” sign, would you turn around
and go home? Of course not; there’s no way you’d risk breaking your children’s hearts and turn around to go home. Instead of heading back to the Ponderosa, you’d search for an alternative route and continue on to the Magic Kingdom. Be assured, your travels on the “Highway To Sell” will be full of “Road Closed” signs, but it is up to you, “Sales Professional,” to find unconventional routes in order to complete your sales journey. Yes, there will be objections and obstacles in your pathway to success; yet, with the right perspective, you’ll always options.
Some customers give objections as a means of stalling; they will give an objection trying to freeze the obligation of having to make a buy/not buy decision, while other customers give objections by saying “No” when in fact they may be saying “Know.” They cannot make a decision because they don’t know enough about you, your dealership, or the product you represent; they don’t know if this vehicle will fit
into their budget; they don’t know if you can overcome their trade’s negative equity and
get them into a new vehicle. You’ll never know [a great month] until you’re willing to dig and uncover your customer’s “knows.”
When a customer gives you an objection, ask yourself is it a wall or a hall? Is the objection one where you reach an impasse and can go no further, or does the objection have an alternative route? If the customer’s objection has options, the sale still has a heartbeat. When faced with an objection, it is up to you to do exploratory surgery, asking investigative Who, What, Why, When, and Where questions (a.k.a. open-ended questions), in an effort to bring about a solution to your customer’s transportation problem. Instead of giving your customers a take-it-or-leave it ultimatum, try to explore your customers’ objections and recommend alternative options — such as adjusting the money down, finance terms or vehicle model — in an effort to close your deal.
When faced with a major health crisis, doctors give their patients options; when confronted with a problem in the cockpit, pilots weigh their options. Your career is no different; it literally is life or death — to your paycheck. Every month, you are likely to contract a dis-ease; with each Up resulting in no sale, your comfort zone is robbed. Without focused intensity and effort, there is a chance your month can crash and burn. In spite of your worst walk-around ever, your customers elected you as their salesperson. Unbeknownst to those outside of the sales profession, you are waging an all-out war of rejection and adversity day in and day out. Your best defenses to objections are options.
I’ll see you next time on the blacktop.
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marketing solutionPaulAccinno
tv vs. cAble:which is more effective for your dealership?
Currently, Borrell & Associates estimates dealers spend about 44 percent of their budget on digital advertising and the rest on traditional advertising. Of the traditional expenditures, about 12 percent is broadcast TV while four percent is cable TV. Determining whether broadcast TV or cable TV is the right choice for your dealership depends on several factors, such as the size of the market, the brand you sell and your marketing strategy. Attributes of broadcast tvProbably broadcast television’s (BTV) single strongest attribute is its ability to reach the entire market. Usually on a cost per thousand basis (CPM), BTV is the least expensive method to reach viewers because of the large audience size. Typically, one spot on the morning news will reach more viewers in your market than several spots in your favorite baseball team’s broadcasts. So, depending on your marketing strategy, it could be your most cost-effective option. However, in general, BTV spots cost more per spot than cable spots.
Attributes of cable tvCable television (CATV) has several notable strengths, including its relative lower cost, higher frequency and targetability from both a geographic and demographic standpoint. Because of the “hard wired” delivery, it is easier to target areas you are trying to reach without experiencing the “spill” that you get with BTV.
developing your strategyTo analyze this even further, let’s take into consideration the size of the market, the particular brand you sell and your marketing strategy by looking at few scenarios.
• Large Market, Large Dealer and Large Brand — In this case, we have a high-volume dealer who is in a large market with lots of sales potential, selling a major volume brand. If this dealer wants to dominate the market, carries an expansive inventory and can develop compelling reasons for shoppers to drive past other dealers to shop his store, then BTV would most likely be a good choice. These dealers tend to be high-volume/lower-gross dealers who advertise lower prices and large selection. In addition to local news, prime time and sports are good places for these dealers to be, since there is far less clutter and higher viewer engagement in the programming. This dealer could also add CATV to “heavy up” in the highest potential sales zones in his market, or to target smaller brands if the dealer is a multi-franchise dealer. Also, you can buy CATV the same way you buy BTV by purchasing the interconnect. This is like
buying all the cable zones in a market at once (but at lower cost), and is good for high-profile shows like Monday Night Football or other major prime/sports events.
• Small to Mid-Market, Large Dealer and Large Brand — The scenario above would work even better in a smaller market, since the media costs would be far less, but the result would be the same; a large dealer with lots of inventory advertising to the entire market and drawing traffic from the entire market.
• Large Market, Small Dealer and Large Brand — A smaller dealer is far less likely to drag customers across the market, past other dealers, to their location. It is best if they try and own their backyard, and CATV is perfectly designed to do that. You can buy just your zone, or if there is additional potential, you can buy an adjacent zone or zones. Be careful not to buy too many zones; you defeat the purpose of geo-targeting and you may as well buy BTV.
• Small Market, Small Dealer and Large Brand — This gets a bit more difficult, since small markets at times do not have their own TV stations, leaving CATV the only choice. If there is a local TV station, their programming tends to be mostly local news/traffic/weather/sports, which are strong programs and their rates are probably very reasonable, so a combination of BTV and CATV is the best strategy.
• Other Scenarios — We have been discussing dealers with large brands, but when we look at smaller brands like Mitsubishi or Fiat, most dealers have these paired up or near other franchises. It is easy to target these particular buyers with geo-targeted and demographically targeted CATV. The obvious exception to this rule is the large dealer selling a smaller brand who can draw customers from the entire market with BTV. So if you are the largest Mitsubishi dealer in the area and are selling at the rate of Honda and Toyota dealers, then BTV makes sense.
Fringe market dealers are either in-between two markets or on the edge of a major market. For example, if you had a dealership in Seneca Falls, New York, your customers would receive TV signals from Rochester as well as Syracuse. It would be difficult to buy TV stations in both markets. So one possible scenario, for a large dealer, would be to buy news programming on the strongest two stations and fill with CATV. The smaller dealer should just stick with local CATV in his zone.
For the dealer on the edge of a major market,
CATV would be the most logical choice. For example, a dealer in Wilmington, Delaware is part of the Philadelphia TV market. To buy Philadelphia BTV to reach the entire Philadelphia market and bring them to Wilmington would be cost prohibitive — unless, of course, you have a crazy deal that is so compelling people will travel an hour to get there.
To summarize, BTV is the most efficient media to reach the largest audience. In small and mid-sized markets, the costs are lower and tend to be very affordable. In larger markets, it is still the most efficient, but may not be affordable from an ROI standpoint. In any size market, CATV is affordable, geo and demo targetable and can be used as the main campaign medium or to tactically supplement BTV.
• Reach, Frequency and Target Demo — These three factors will also help you determine whether BTV or CATV works best for you. Reach is how many viewers or what percentage of the market you are reaching with your buy. Frequency is how many times, on average, the individuals in your target audience are exposed to your advertising message. It takes an average of three or more exposures to an advertising message before consumers take action. And finally, for your target demo, determine who are you trying to reach. If you’re selling pickups, it’s probably Men 25-64. If you’re selling a model that appeals to young women, maybe Women 25-49. The point is, you want to reach at least 50 percent of your target demo a minimum of three times. Many stations quote household (HH) demos, which is everyone in the house aged 2+. You really need your buys quoted with your target demo. So, for example, if your rep is telling you that you have a 80-percent reach with a 2.3 frequency in the HH demo, ask them to reduce the reach, increase the frequency (which means they need to change programming and/or networks to reach fewer people but more times) and tell them you want your buy quoted in your demo of A25-64 (Adults). If you can accomplish a 50 percent reach with a 3+ frequency in your demo and within your budget, then BTV will probably work for you. If you can’t, then try doing the same with CATV. Here’s another hint: Try using bookend 15s to increase your frequency. Run a branding 15 second ad mixed with a compelling offer 15. It’s a great combination.
Paul Accinno is the president and CEO of WorldDealer Advertising. He can be
contacted at 866.319.6284, or by e-mail at [email protected].
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Lots of people dream of “being rich” or “becoming famous” or “writing a book” or “seeing the world” — someday.
But very few people actually accomplish their dreams. It’s actually pretty sad to think about. We encourage our youngsters to be “dreamers,” but does anybody really expect to see those dreams materialize?
Most people work at a job. Nothing wrong with that. Good, honest work. Making a living. Very few people go beyond “working” and create their own “thing” that replaces a J.O.B.
Sure, a lot of people are talking about one day starting their own deal. But you and I know most of them never will. And there are plenty of excuses. Really good excuses, all related to timing. Mortgage, economy, kids, college, parents…. All through life there will always be plenty of excuses to keep most people away from the opportunity.
That’s what makes the path entrepreneurs follow so lonely and treacherous. Most people can’t fully appreciate the worry and anxiety you deal with. The paranoia. The fear that comes with true responsibility — like meeting payroll and paying rent and covering that line of credit. The damn frustration that comes along with failing 10, 20 or 100 times for every one time you succeed.
No doubt. It’s tough.
Setting all that aside, how many people can truly relate to what it feels like for your heart to
leadership solutionJimmyVee & TravisMiller
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the somedAysyndrome
Jimmy Vee and Travis Miller are founders of The Rich Dealers Institute and the authors of Gravitational Marketing: The Science of Attracting Customers and
Invasion of the Profit Snatchers. They can be contacted at 866.867.9618, or by e-mail at [email protected].
nearly leap out of your chest, drumming with tension, afraid of whether or not you’re truly “ready” to take that first step.
Or secretly knowing that you’re no smarter or more talented than the others. You’re just crazy enough to take that step. And because of that, now you’re in charge. One day, you wake up and you’ve accidentally become a leader, with what feels like the weight of the world resting on your shoulders.
You’re Atlas, standing alone.
And then you’re made out to be the enemy. The greedy capitalist. The nasty car dealer. Go figure.
But who can you complain to? Will anybody really sympathize with your $166,000 quarterly tax bill? Of course not. Nobody will understand your frustration with the red tape, the forced “benefits,” the rules, the regulations.
And nobody would ever bother “thanking” you. That’s that part that really drives you nuts. All this crap, all this effort, and nary a “thank you.”
Welcome to the real world — the world where you create your own destiny. The world where you have to look in the mirror each morning and accept the face you see, along with all its failure and doubt and worry, tagging along with a handful of occasional successes.
You have to tuck away your fear and broadcast your optimism and walk out another day on a mission to convince the world that you’re OK; that you know what you’re doing, and that everything is under control.
We’re living the so-called dream. Shouldn’t we make sure we enjoy the ride and be as successful as possible? Yes, today is the day to buck up and make the most of the rare opportunity we’ve created for ourselves.
For a free copy of our controversial book Invasion Of The Profit Snatchers, go towww.ProfitSnatchersBook.com and use the coupon code ASM1210.
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Not too many years ago, the Web was the place where you went to find things out — a sort of one-way street of information. But, with the introduction of social sites, blogs and review sites, customers not only became consumers, but publishers, as well. It’s especially true with online reviews. We can no longer discount or ignore the importance of our customers’ online feedback. Online reviews are now the second most influential source of information, after word of mouth. How you are viewed in the virtual world either reinforces or discounts all the money you spend on traditional marketing.
These reviews come into play as soon as customers start shopping. When someone searches for your dealership, do they see one or two stars and reviews that have not been responded to? If so, they may never click any further.
Simply put, on the customer’s journey, we need to make sure there are no detours.
The three challenges online reviews present are:1. Visibility — You can’t fix what you can’t see2. Number of reviews — How do we get more?3. Response strategy — Now that we know,
what do we do?
When it comes to visibility, how do you get your arms around all the major review sites? Do you and your team have to go to each site and print out all the reviews? How often do you do that? Daily? Weekly? Monthly? The solution is to use a technology that puts all your reviews in one place, so you can see things in real time, with “live alerts.”
Dealers often say to us, “if I could just get more of my happy customers to respond, my scores would be better.” Does this sound familiar? Unhappy customers are motivated by circumstances and can be eager to respond. Your happy customers will respond as well, but you must present the value and benefits of getting them involved.
Customers who post reviews are not trying to send you a message; they are trying to send everyone a message. They want to help others
on their journey. Knowing this key fact lets you tap into their needs. One way is to have an evidence manual of reviews available for potential clients. This important step also lets them know early how important you consider these reviews to be. This will encourage them to participate.
Next, when it makes sense, sell the value, give them the why and then ask for their review. This is critical for sales consultants, as these good reviews are a first-person endorsement of both the sales consultant and your dealership, and can give them a leg up on future referrals and sales. Reviews that mention specifics like your dealership services, your staff or something unique about you make you more relevant for the next customer shopping online. It’s always good to put a face with a name.
So, you think, that’s a great strategy, but you still don’t get enough reviews. Now what? Easy — fish where the fish are. Most stores have five to 10 times as many customers every day in service than they do in sales. Google doesn’t discriminate; why should you? Your service customers are loyal fans who like you and will visit multiple times. If you could get just 10 percent of these customers, you could tip the online scale. Don’t overthink it; your best opportunities are passing through your service drive every day.
Your service customers are your best source of reviews and your ASMs have the relationships to make it work. Once they are in the habit, it just becomes a routine part of what they do every time. Your reviews will grow to the point where a poor review won’t tip the scale. With all the review sites to consider, just keep it simple. Drive customers to the site they are most comfortable with. If they are not a “Yelper,” driving them to Yelp may get their review filtered. Ask what site they used when shopping or which site they are most comfortable with. For example, a gmail or Android mobile user should be directed to Google. If they searched
using Kelley or Edmunds, ask them to post there. Your strategy for reviews is to go wide and deep, with a focus on Google.
When it comes to a response strategy for reviews, it’s simple: Respond to them all. Everyone knows to respond to negative reviews, but even positive reviews should get a response. For negative reviews, consumers want to see that you took their concerns seriously and took action. Stay away from blame and being defensive online; simple, concise answers work best in this medium. Present the facts, what you’ve done, what you can do and let everyone know you care. For positive reviews, responding gives you a great chance to say “thanks,” and lets them know you care that they took the time to help.
Last but not least, many of you are concerned about losing some reviews. This is where understanding each review site’s filtering process is so important. First-time Yelpers will likely be filtered due to Yelp’s automated review monitor. Yelp is about growing their community and rewarding those who frequently participate. This can be the same with Google and other review sites that are trying to make sure no one “games the system.” As a note, some sites may allow you to create a review on a mobile device, but you may have to login to a desktop to post it online. For reviews to work as a trusted source, they have to be honest and fair for everyone.
So how do you win this online battle? Design a process that your sales and service people can follow every day with every customer. Next, assign someone to be the point person to make sure that what you expect to happen actually happens. These simple steps can mean the difference between thousands more in profits or hundreds more headaches.
Finally? Get the technology that makes it easy for you to follow up and respond. This is a situation where it truly pays to work smarter, not harder.
marketing solutionCharlieBass
A cure for your review heAdAche
Charlie Bass is the vice president of String Automotive, Inc. He can be contacted at 866.383.7481, or by e-mail at [email protected].
Follow On
32 autosuccessonline.com
Brian Pasch, is CEO of PCG Digital Marketing and the founder of the Automotive Internship Program. He can be contacted at 866.849.1560, or by e-mail at
leadership solutionBrianPasch
deAlers need A scouting report for success in 2013
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With 2012 quickly coming to a close, have you revised your game plan to increase your sales and profits for 2013? Professional baseball teams are already preparing for the 2013 MLB season with shifts contemplated in coaches, staff and strategy. Regardless if you are leading your market or fell short of your goals this year, it is time to ask yourself: How will I get to the automotive world series next year?
This past year, through my consulting practice, I have been blessed with many opportunities to work with the most passionate and creative dealership teams in the U.S. and Canada. After looking at the “playbooks” for hundreds of dealers, I have found fielding errors that, when corrected, have turned around the dealership team and increased their winning percentages.
Before I talk about these common errors that impact performance on the playing field, let me dispel some common myths. For most dealers, they do not need to scout for new talent. Yes, every team has a balance of strong players and weaker players, but bringing in rookies who may not fit into the dealership culture is not always the immediate answer.
Most dealers don’t need to build a new stadium. Dealers have the right software, technology and infrastructure in place, but all the pieces are not working together as part of a winning strategy.
you only know what you knowThe first step in creating a winning team in 2013 is to request a scouting report from someone outside your organization. The scouting report would include information on the dealership employees, managers, vendors and customers (fans), and the processes that connect all parties. It also helps to have a brief assessment of your local competitors, which may identify weaknesses that you were not aware of.
Dealers only know what they know. Without fail, a scouting report opens the eyes of management to the opportunities and dysfunction in the organization. It takes a confident coach (dealer) to be willing to underwrite a scouting report. However, those who undertake the process are on their way to creating a unified team and winning season.
Why is a dealership assessment needed? A scouting report creates a reasonable roadmap to tie all vendors, staff and processes together for success. Most dealer principals who have gone through this process realize that they can achieve better returns on their investments by making a few shifts within their team.
better team communications A good scouting report often forces management to take a second step: better communication of their game plan. How many times have dealership employees been told to do something without a manager explaining why it is important? How can we expect to execute the dealership’s playbook without activating the creative energy and passion of all team members?
The flip side is even more common. How many initiatives — that impact the entire dealership — are communicated to only a handful of employees? Have you been on the “left out” side of the team? How did that feel?
Recently, I asked a group of 35 sales professionals this question: “What percentage of unsold showroom Ups do you collect e-mail addresses from before they leave?” The first person said: Zero. So did the second, third and fourth, which is when I decided that I did not have to go any further.
Why was compliance for this very important aspect of dealership operations ignored? To me, e-mail capture is Dealership Sales Training 101 in the year 2012. The staff did not understand how the e-mail would benefit them, and how the CRM system could leverage this data to help them sell more cars. They also did not understand how important an e-mail address was for other team members, whose success depended on e-mail communications.
simplified reporting and measurement The third step that a scouting report often triggers is simplified reporting on key “team” metrics and accountability to review the numbers with the team members often.
Baseball players and fans are obsessed with numbers, and so are dealers. However, when the automotive retail industry went digital, dealer principals and managers got flooded with reports provided by their Websites, CRM systems, DMS systems and third-party vendor reports.
It is time to stop the insanity and create a recognized new standard for dealership reporting and Internet metrics. Winning teams have to review the numbers with their players to improve performance. However, dealers first have to decide what those numbers will be. I’m not talking about the unit sales numbers; those reports are well established.
Winning dealership teams need to master the data coming from their primary online merchandising platform: their Website. How will dealers hold their Website vendor accountable without deciding on which metrics are important? Once dealers have those metrics, what is planned to change their Website layout, design or messaging to see if the numbers can be improved?
Coaches need to control the “fire hose” of data that comes from their primary client retention and sales tool: their CRM system. How will dealers change the behavior of their sales and service professionals if there is no process in place to review their customer interaction “scores”? How will they leverage the value of their customer base if they fail to communicate with their customers?
Roles in the dealership must be created to monitor the true ROI of digital marketing investments. Tens of thousands of dollars each month are invested in advertising and marketing, yet are all these investments scored, tracked and evaluated as often as they should be?
Reports that are too complicated or that have numbers that are not helpful to use as a management tool will simply never be used. How many reports do you receive on a weekly basis that you are really not using? Or maybe the better question is, what is the ideal report that you would like to see created to help manage your business in 2013?
is there room for improvement in 2013?Success is a poor teacher. Profitable dealerships are often the most in need of a scouting report, but they are the last to think they need help. My challenge to all dealers reading this article is simple: Get To Know What You Don’t Know.
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There has never been a better time for the quality dealer bodyshop. As cars become more and more complex, the dealer is in a great position to capitalize on the buying public’s predisposition that the dealer knows more about fixing their crashed car than does the independent repair shop. Because the dealer has rarely taken the bodyshop seriously, however, they have also unwittingly sabotaged their own market advantage.
getting your slice of the repair pieWe know that 65 to 95 percent of the buying public is predisposed to believe that the dealer should repair their car. We also know in most markets, dealers only repair a small percentage of the collision business. I remember a gentleman who was the national manager for a manufacturer’s bodyshop support program sitting in one of my classes years ago saying he felt as if his dealer shops had a “sales prevention program” rather than a sales program. He realized, of course, that most of the collision work was going to independent repairers rather than his branded dealer shops — in spite of the fact that the car owners were predisposed toward the dealer shop.
the reason for lack of shareThe one strong, unique selling proposition the dealer has with the car owner is the very fact that they are the selling dealer. Being the selling dealer can be overwhelmingly powerful as a sales position – if the bodyshop manager knows how to properly leverage it.
The bodyshop manager is rarely a trained and
skilled marketer. Typically, they are former technicians or service writers who now run bodyshops. They observe how the big independent repair shops operate and copy that model. In some ways, this can be good, but not in the marketing approach. Most bodyshop managers fail to appreciate the difference between the relational and transactional customer. The relational customer is 50 percent of the population who is simply looking for an expert they can trust. They want to be a good customer. Price is one factor, but expert guidance, quality and professionalism is more important. The transactional customer is different. They are shopping price as a major factor in purchasing. Their biggest fear is paying too much; this customer treats what you are selling as a commodity (insurance companies, by the way, are virtually 100 percent transactional). Because the loudest feedback the bodyshop manager hears is from these transactional customers, they tend to build an operating and marketing model which appeases the transactional customer. The relational customer, if treated like a transactional customer, will often convert to transactional buying behavior. One of the things I teach is, “If mediocrity is the perception of what you do, then price is the only differentiator.” In other words, if our bodyshop employees treat our customers in a mediocre (transactional) fashion, then price will become the primary differentiator.
retain and exploit your relational AdvantageSince the majority of your customers want you to repair their car, stop treating everyone like a transactional buyer. The way to grow your bodyshop business is not by chasing every direct repair program (DRP) and discount deal out there. There is this faulty notion perpetuated at dealer 20 groups and others who tell you that you must sign up insurance DRP programs. The unintended consequence is that when you sign up for direct repair status with insurance companies, you now repair the cars that you were likely to repair, only now at a discount. This strategy makes no sense. The bodyshop manager often fills his shop full of referred transactional business, ignoring the most important relational customer who is right under his nose.
prioritizeI am not telling you to never sign up for a DRP with an insurance company. Some companies do not require discounting and so for those, I say “fine.” But I do say never contaminate your relational business model with a transactional mindset. The first priority should be the car owner to whom you have sold a car. They have already shown a willingness to do business with you. Reward them with relational behavior. Treat them like a transactional customer, and price will continue to be the only differentiator.
leadership solutionDaveDunn
leverAge your strength As the selling deAler to fill your bodyshop with work
Dave Dunn is the founder of Masters School of Autobody Management. He can be contacted at 866.386.0042, or by e-mail at [email protected].
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For this month’s article, I spoke with Richard Bustillo, GM of Rick Case Honda of Davie, located in Florida, and part of the Rick Case Group. Richard has seen his Honda store go to No. 1 in the nation for new car sales for June 2012 and is ranked No. 1 in the nation for gross profit. It’s also currently ranked No. 1 in the Southeast, No. 3 nationally and has won the Honda President’s Award from 2008 to 2012. I wanted to get his insights into Video Pre-Roll marketing and how it works for his dealership.
AJ leblanc: what does video pre-roll accomplish for your dealership?richard bustillo: It gives me the opportunity to reach the exact demographic of customers with the exact message I want them to see by using video, which is the best way to connect buyers with our current specials and promotions.
Al: what makes your video pre-roll strategy effective? rb: We chose a Video Pre-roll platform that allows us to target our desired demographics for the current campaign we are running. The videos play on national Websites in the local market area where buyers are getting their news, sports highlights, entertainment and other various information every day, just like they do on their favorite TV channels. It’s basically online, targeted TV, but we are having our video advertisement play while the prospective car buyer is on their laptop, tablet, mobile device or home computer.
Al: how do you measure the effectiveness of your video pre-roll campaigns? rb: The videos are direct response, and are clickable right to our Website, so we can track exactly where the visitors came from. Not only is it driving more traffic to our Website, but it’s selling more cars, as video is proven to increase conversion rates. Al: what is the cost comparison of video pre-roll to other digital marketing? rb: Its equivalent to Pay Per Click, but depends on how much traffic you want to drive to your Website. I recommend a dealer do Pre-Roll in addition to PPC, so they can compare and measure the results.
The screenshot example here shows Rick Case Honda’s Video Pre-Roll that played on popular national Websites like MLB.TV, but only targeting to consumers in the local Miami area. The behavioral targeting demographics applied toward this campaign were: Miami market area, 30-day campaign run, video played 325,000 times, consumers 18 years and older, men and women, and auto-intenders (in-market buyers). The campaign delivered a 1.4 percent click rate, which delivered 4,550 visitors to the Rick Case Honda Website during the 30-day period, and at a cost that worked out to about $1.43 per click and $.02 per view. Pre-Roll Video is a fast and easy way to get your video messaging in front of local buyers quickly, similar to TV, but with the ability to convert a potential buyer who has possible purchase intent at the moment the video is played, and get them right to your Website, hopefully generate a lead and, ultimately, sell a vehicle. Use to video today to gain a competitive advantage over other local dealers in your market.
marketing solutionAJLeBlanc
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AJ LeBlanc is the co-founder of Car-Mercial.com. He can be contacted at 866.795.9094, or by e-mail at [email protected].
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Do you want to buy a refrigerator or a car? Well, what would it take for you to make such a purchase today, or even this month? I have confidence that many readers will make the case that their refrigerator or car works just fine. Most salespeople think they are trying to sell a car when they make a household prospecting call to their sold database. You couldn’t be more wrong.
Their life was going just fine before your call. Household prospecting is about talking to a customer without a current need; however, through effective thought-provoking questions, you can create a possible need and then be the solution for that need. In other words, the intrinsic motivation to buy is what truly creates an in-market customer — and where so many salespeople go wrong is in their approach. You must make at least three attempts per day for three days, only leaving one message a day. Otherwise, don’t even make the call. Household prospecting is a marathon, not a 100-yard dash.
A staggering 90 percent of salespeople and dealerships have no effective plan of action. With limited success, these salespeople lose interest quickly. It’s short-term sight verses long-term vision. It is the intent of many salespeople — and the mistake of all of them — to contact these customers and ask, “Would you like to buy a vehicle? What would it take…?” Can salespeople solve a need for the customer when there is no need present? In one syllable: No. This is a contradiction to the principles of consumer buying behavior.
The top 10 percent of salespeople in the automotive industry understand the true mission of household prospecting, which starts with a consistent (and persistent) plan of action that underlines the principles of consumer buying behavior. With these two critical components, salespeople become sales professionals. “Chance favors the prepared mind.” These professionals will communicate at least once every 90 days with their entire sold customer database by phone (and monthly with e-mail, newsletters, etc.). There is very little left to
chance with frequent and persistent follow-up, but far less if the proper household prospecting content is applied.
“the mission” is made more efficient with seven steps to successful scripting: 1. A clear introduction with an enthusiastic voice tone is vital to set the stage of this call.
Pronounce your name clearly, your title and your dealership, as well as the department you represent. Smile so wide you could eat a banana sideways.
2. Get the green light to continue with your call. Too often, salespeople burn the bridge and assume it’s a great time to speak when, in reality, your call is nothing but an interruption in their day. Ask, “Did I get you at a good time?” Get a “yes” before you go on, or simply call them back at a more appropriate time.
3. This is probably the most important step: Thank your customers. It’s not hard to say, but it means a lot with the proper tone. Every salesperson knows that we earn our living from customers; so, by saying “thank you” as often as we can, this is just one more way to demonstrate our appreciation of their continued trust.
4. It’s time to update and investigate. Confirm the customer’s information. Ask them for their best e-mail address, and if the phone number you used is the one most convenient for them. Is it a mobile number? Is it OK to text them? Get more information to increase your probability of contact the next time you make an attempt. Investigate by asking, “Is this the only vehicle?” If not, what else do they own? The more information you can collect about their vehicles, the better. Now is when you ask, “Of all the vehicles, which one is next to be replaced? Really? Why do you say that?” Let the customer say out loud: high mileage, increased repair costs, terrible gas mileage, etc.
5. Sell the sizzle! Ask, “What if we/I could find a way to take you out of that vehicle?”
6. Depending on the answer, if customer says “yes,” then always go for the appointment. If “no,” then when in the future? Schedule a follow-up call no more than 90 days from now.
7. If not you, then who? Go for the referral every time. Timid salespeople have skinny children.
This is not a 50 First Dates type of call. What I mean by this is when you follow-up again in 90 days, do not reuse this script. Always start your conversation with the first three steps of the mission, and then say, “based on our last conversation….” You will always pick up the conversation from where you last left off with the customer. It is a dialogue, not a sales pitch every time you make contact. Remember, the same two essentials apply for repeat automotive sales as home appliance consumers: the customer’s demand (a need) for your product must be present, and a salesperson (you) is required to broker the sale (again, a need).
In short, these are relationships you build on over time to establish better trust through rapport. Follow-up this way and see yourself rise to the top.
Todd Hudak is the owner of Hudak Consulting. He can be contacted at866.386.4452, or by e-mail at [email protected].
sales & training solutionToddHudak
household prospecting:what is really
going on?
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marketing solutionAndrewPrice
increAse your odds by selling the Appointment
There are many ways a dealership goes about selling cars, but the simple truth remains: Dealers can’t sell cars when their lots are empty. Figuring out how to get prospects who are ready to buy onto your showroom floor can be complicated — but it doesn’t have to be.
If you’ve played your marketing and advertising cards correctly, there should be a steady stream of phone calls and Internet leads pouring in. But are those translating directly into appointments?
setting Appointments o the phone is criticalPhone leads account for 75 percent of all auto purchases — with a ratio of phone leads to Internet leads at 10 to two, according to a recent ADP study. Once the call is initiated, a vehicle is purchased within two to seven days. If you knew that the majority of phone calls lead to a purchase, wouldn’t you do everything in your power to get them into the dealership?
It’s important to get the phone call right and book an appointment, because more than 50 percent of all inbound phone leads defect to a competitor or switch brands. And your phone lines are only going to get busier according to Cars.com, who predicts a 25 percent increase in total call volume by 2014.
This might sound elementary, but you would be surprised at how lax dealerships can be when it comes to maximizing their phone-lead potential. Did you know that the average dealer converts less than 10 percent of calls to appointments, has a less than 50 percent show rate, and closes
less than 50 percent of the appointments who do show? There are many variables that are out of your control, but there’s no reason why you should be average and post average numbers.
training and technologyGetting customers into your dealership for a test drive and setting the appointment relies on two things: training and technology. Are you and your team doing everything possible to set an appointment? Are you handling the phones properly? Do you even know how many calls you’re converting into appointments? Knowing what you’re doing wrong and correcting it can only take you so far. Even if you are doing everything right over the phone, you are still missing opportunities — and you don’t know it.
The ace up your appointment sleeve is a combination of deal-saving mobile alerts and incentives. Dealers can use technology to get missed phone leads sent directly to their iPhone, giving them a chance to get that customer into the dealership and save the deal. But what if they aren’t being persuasive enough? In most cases, leveraging incentives will tilt the odds of setting an appointment in your favor. By receiving a mobile alert of a lead gone wrong and offering the buyer an incentive, the dealer is getting a showroom visit, where there is a one-in-four chance of making the sale.
By identifying your weaknesses, you and your team can make the adjustments to maximize the number of appointments set over the phone. However, you can also take advantage of mobile alerts and incentives to catch leads that fell through the cracks, and convince them to visit your lot.
fish in a barrel is better than in the oceanIt’s much easier to make a sale in person than over the phone. That’s not anything new. It’s how you react to a particular call that will decide whether or not that fish ends up in the boat, or if it slips free. The more fish you catch, the more money you make. You wouldn’t cast a line without bait or a shiny lure into the water and expect top results. Setting more appointments isn’t rocket science; however, you must be equipped with the tools that help you succeed.
These are tools that help inform you what you’re doing right and wrong over the phone so you can alter the way you and your team handle each call. These are tools that offer the customer an incentive to come into the dealership. It’s like knowing which bait the fish love, and then attaching it to a can’t-miss lure that dazzles them onto your hook and into your boat.
Put the odds in your favor and cast a wide net of information, mobile alerts and incentives to secure appointments and drive profits.
Andrew Price is the president of automotive at CallSource. He can be contacted at 888.821.3770, or by e-mail at [email protected].
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42 autosuccessonline.com
DEALERPANEL
Jim EvansChris Saraceno Tony Provost
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2012wrAp upTo better gauge what’s going on the sales floors of dealerships in the U.S., AutoSuccess and DealerELITE.net have started a new dealer’s panel, where we’ll speak with dealerships from various areas and see how they’re doing, what’s working for them and what they expect for the future.
For the first installment of our panel, we spoke with Jim Evans, owner and president of Evans Motorworks in Dayton, Ohio; Chris Saraceno, Vice President and Partner of Kelly Automotive Group in Pennsylvania and Florida; and Tony Provost, president and dealer principal for Nissan of Bourne in Massachusetts. For our November and December installments, we’ll focus on a look back at 2012, and a look forward to 2013.
Autosuccess: overall, how was 2012 for your dealership? did it meet your 2012 expectations?
Jim evans: 2012 has been very strong for us. Our combined new and used sales are up 38 percent over 2011, and, more importantly, our bottom line is up 68 percent, so it’s been very strong. The surprise is that it clearly beat our forecast. We were forecasting an increase of between 15 and 20 percent, depending on the department, so we are definitely pleased how 2012 is going so far.
chris saraceno: Every one of our five stores is up between 10 and 35 percent. We didn’t meet our forecast, but that’s because we have always made a very aggressive forecast. In the past, we’ve probably been overly aggressive, so very rarely has anyone ever reached a forecast in the 17 years I’ve been vice president here. All the general managers and service coordinators meet quarterly for one full day and review our forecast compared to the actual numbers, and then review our actual numbers compared to where we were a year ago. We ask, “These are your forecasts — you predicted them. Why are we not there, and what are you going to do differently? What can we do to support you?”
tony provost: Overall, it was pretty good. It wasn’t very good, but it was pretty good. We didn’t quite meet our expectations, but our expectations were pretty high. We wanted to increase our bottom line by about three times what we did last year, and we did it by about two and a half times, so we’re just a little short of that. As far as volume goes, we were off because we had a surprisingly tough June, July and August this year.
Autosuccess: were there any surprises in 2012?
Jim evans: We did not expect the growth in used cars we saw. We had a strong used car year in 2011, and had actually only expected that to be up about 15 percent; we’ve been very pleasantly surprised how strong the used car market has remained for us in 2012.
tony provost: The biggest surprise was I don’t think the manufacturer
was as busy as it should have been in the summer months. I think they thought they were going to do better than they did, and at least in our general area, in the Boston zone, and I don’t think it was anywhere near as strong as we expected it to be. And because of that, and this is my own fault, we weren’t as aggressive as we needed to be, and our sales were off. We’re definitely looking at that, and we’re not going to get caught like that again.
Autosuccess: what strategy or tool worked best for your dealership in 2012?
Jim evans: The biggest thing we did was that we went on the offensive, instead of playing defense. We felt now was the time to go after some market share. One of the things we did was dramatically increase our marketing spend; during the prior years we had been cutting back and trying to conserve resources and looking more at the bottom line. We made the decision in 2012 to actually attack the market.
chris saraceno: Other than our old faithful tools like vAuto and our CRM DealerPeak, we implemented two tools. One of the things we felt we needed to improve on was our recruiting, hiring and employee retention. We partnered with a company called Hire The Winners, which constantly recruits and sends us candidates for every single position. We never stop recruiting — we look at it with a mindset of a professional sports team. Dealerships often hire when they’re desperate to get people. We decided to never stop looking, and our turnover is actually down substantially from what it was in 2011.
We also added a product called Service Turn to work with customers coming into service. Service Turn helps turn service customers with equity into new or used vehicle sales. Before people come into our service department, we know how much equity they have in the vehicle they’re bringing in. We share with them, using the Service Turn process, how they could lower their payment or update without increasing their payment. You can target people exactly and, in many cases, actually save them money. Between all our stores, by working the service department we sold an additional 40 to 50 vehicles from our service department in September.
tony provost: We started walking our inventory five times a week — new and used cars — got a complete book value (Kelly Blue Book or NADA) on them and put them in the glove box of each of our pre-owned cars. Then we’d pull them out and go over it with our customers during the walk-around; that worked like a charm all year long. Our used car volume is up, our inventory cost is down, we didn’t have as many cars in inventory and we turned them faster than we’ve ever turned them. It was the highest gross-profit year we’ve ever had with used cars, so it worked out well all the way around.
Next month, we’ll look at the marketing plans of these dealerships and what these dealers are projecting for 2013.
If you have questions or are a dealer who would like to be considered for the panel, please contact us at [email protected].
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Dealer W.C. Smith at Monument Chevrolet, Pasadena, Texas, is only 33 years old, and he’s struck by how fast the car business is changing.
“I’ve been in this business my whole life,” Smith says. “More has changed in the last five years than in the past 50 years since my grandfather ran the family store.”
His observation underscores a new reality for dealers today: Our business is undergoing an evolution driven by the rise of the Internet and new technologies. Taken together, these market forces are reshaping customer expectations and forcing dealers to reinvent traditional dealership management beliefs and practices.
In today’s new world order, it’s essential for dealers to make transparency and efficiency the guiding mantras for their dealerships. They must ask, “How can we do a better job satisfying customer expectations for a positive, affirming experience and do so in an efficient and cost-effective manner that ensures our profitability and long-term prosperity?”
My third book, Velocity Overdrive: The Road to Reinvention*, seeks to answer this critical question. It examines the ways a growing number of dealers are reinventing people and processes to increase sales and profitability amid the technology-driven evolution of our business and customer expectations.
I’ve adapted excerpts from Velocity Overdrive below to highlight what I believe will be critical challenges confronting dealers in 2013 and beyond, as well as the operational changes dealers are undertaking to meet them.
Increased Margin Compression - - - - - -I see three challenges here—the first two of which relate to the partnerships between dealers and factories.
Challenge 1:Factory-driven facility upgrades. This has been growing as an industry hot-button, particularly as new vehicle sales have increased from their recession-era levels. Factories now want dealers to make good on facility programs they’ve resisted.
But “every dealer knows another dealer who got in trouble in the recession,” says dealer-broker Mark Johnson of MD Johnson, Inc., Enumclaw, Wash. “Ninety-nine percent of the time the trouble had to do with over-building on the facility. There’s a lot of sensitivity to real estate costs out there. We’re dealing with buyers who, for the first time, won’t buy the real estate. They feel like it’s a dead-weight asset. They don’t expect to get any capital growth from it.”
While I don’t have a dog in the facility upgrade fight, my emotions and instincts side with the dealers. I understand a factory’s need to standardize the dealership experience with their brands, but I have an even greater respect for a dealer’s latitude to truly operate as an entrepreneur. Put simply, the factory facility requirements, writ large, crimp the entrepreneurial nature of the business.
There are lawsuits currently underway that may ease pressure on dealers who have to satisfy factory facility requirements. But this won’t change the underlying fundamentals of the situation: Dealers currently own large, inefficient buildings on some of the most expensive ground in their local markets. And, there are few, if any, signs that these investments will appreciate in the next two to three years.
If I had my way, I would offer a better, more efficiency-minded blueprint for the next generation of dealerships. The concept: Locate the facilities on less-expensive real estate; build up instead of out, using less expensive materials; direct sales customer traffic into the showroom before they can walk your inventory (thank you, CarMax, for a great idea).
This model would address the fact that a) dealership location matters less than it used to now that a store’s front line is really online for most buyers; and b) dealers need less expansive inventories as they ramp up velocity principles in used vehicles and factories maintain more market-realistic new vehicle production levels.
“Dealers need to recognize that a store’s website is far, far more important than its physical structure,” says Joe Herman, COO of Kuni Automotive in Vancouver, Wash. “Dealers need to thoroughly understand how to utilize the web to improve their business. Locational focus limits a store’s ultimate potential”.
Challenge 2:Below-the-line monies: For much of the past decade, factories have been narrowing the margin between the manufacturer’s suggested retail price (MSRP) and the invoice price on new vehicles. This has been done largely in the name of pricing transparency for consumers.
For dealers, this trend has narrowed the MSRP-to-invoice “spread” they’ve historically used to negotiate deals with customers. Now, in more highly competitive markets, discount-oriented
dealers routinely use the formerly sacred (and mostly secret) factory “hold-back” money to negotiate transaction prices with customers.
This has not been a positive trend for dealers. Most will say the resulting compression on vehicle transaction prices and front-end gross profit in today’s market is highly painful and unprecedented. This is why the new car department effectively functions as a “loss leader” at many dealerships.
Factories haven’t been blind to these profitability pressures on dealers. Most now offer some type of performance-based incentive program that provides money for dealers who meet factory-set customer satisfaction, sales and, in some cases, facilities requirements.
I’m not sharing any industry secrets when I say dealers love, love, love the “below-the-line” money. For many dealers, it’s a little bit like crack cocaine—once they’re on it, they come back for more again and again.
At some dealerships, this “below-the-line” money has now become the difference between keeping the showroom doors open for business and boarding them up for good.
As I look ahead, I believe the “below-the-line” money will become even more problematic. First, dealers will lose a little bit more of their autonomy as entrepreneurs. Dealers who have resisted factory facility upgrade requirements while accepting facility-related incentives have a problem. They would not appear to have much latitude to say “no” to factory expectations (an issue at play in the aforementioned lawsuits).
Second, “below-the-line” money will likely need to move “above the line” in today’s environment. Some dealerships already use this money as they negotiate deals with customers. Others recognize the necessity of spreading it through the store—most often to ensure their people share in the rewards of selling cars and turning inventory. “You don’t have that top bucket to pay your people off in the traditional fashion,” Herman says.
Third, factories have the option to take the money away or change the “below-the-line” incentive program at any time. If I’m a dealer who’s counting on $700/car in “below-the-line” money, and the factory reduces it to $450/car, I now have more than just a profitability problem.
Challenge 3:Business costs are going up, not down. I haven’t heard of any dealership suppliers or vendors cutting prices. Factories aren’t talking about increasing dealer margins. It’s a far better bet that capital gains, property, income and other taxes will go up rather than down in the near future.
To me, the pressures of these rising costs further signal the need for the efficiency-and profitability-focused reinvention. It’s simply not possible to rely on cost controls to ensure a viable and profitable future as a dealer.
The Rise of E-Commerce - - - - - -This fall, Automotive News ran an article detailing public dealer group AutoNation’s planned $50 million investment in new technologies designed to let customers control a greater share of the car-buying process.
This investment, which translates to roughly $232,000 per dealership for new websites, tablets for service advisors and sales and other technology upgrades, follows a realization that customers today (and tomorrow) want a different dealership experience.
“People come into the e-com world looking for an experience they can get at other retailers, and it just doesn’t exist in auto retail,” AutoNation COO Michael Maroone says in the article.
The AutoNation effort follows multiple industry studies that suggest 60 percent of Gen Y buyers are reluctant to visit dealerships, and as many as 80 percent would prefer to avoid the F&I office altogether. In addition, they want an efficient and transparent sales process.
It’s this backdrop that is pushing more vendors to offer dealers online technology and tools that aid the purchasing and financing of new and used vehicles. Already, some dealers report that they’re selling more new vehicles sight-unseen to customers—and delivering them to customers who haven’t visited the dealership.
“We’re hearing more and more customers saying, ‘I don’t need to test drive the car. It’s got four wheels. It looks cool. It synchs with my iPhone. I don’t want to buy the car if it’s broken but I don’t care how it drives,’” says dealer Andrew DiFeo of Hyundai of St. Augustine (Fla.). “I think this will still be a minority of customers but it’s an indicator of where the business is going.”
In Minneapolis, the Walser Auto Group has begun embracing this emerging breed of customer. In late summer of 2012, the 10-store group launched an “I’ll Take It” online-buying program. It allows buyers to place a $500 deposit on a vehicle and complete the paperwork for a deal via e-mail and/or an online application.
“The program’s built to be customer-centric,” says Doug Sprinthall, director of vehicle operations at Walser. “The joke around here is that we’re trying to do what really smart online retailers started doing in 1998.”
Sprinthall says Walser sold 100 vehicles within the first six weeks of the “I’ll Take It” program going live. Like DiFeo, he doesn’t believe these customers will represent a majority of buyers in the near future, but the initial market response suggests the program will see greater traction. I like the way Sprinthall and the Walser team is thinking. The “I’ll Take It” program is a perfect example of a dealership on the road to reinvention, seeking new ways to better serve customers.
Perhaps most important, Walser’s program is also a big step toward a more e-commerce driven business model that I believe will become increasingly important for dealers to embrace in the not-too-distant future.
My prediction: As each year passes, a greater number of dealers will adopt online-focused sales program like Walsers, allowing a greater portion of vehicle deals to occur online and be completed without the kind of in-store experience that has traditionally defined the car-buying process.
Growing Expectations for Transparency - - - - - -Salesperson: “Thank you for coming in today, Mr. Smith. We’ve got the 2010 Nissan Altima you wanted to see outside and ready for a test drive. Before we head out, I’d like to share a little information about our prices. We don’t mark up our cars like other dealers, and offer big discounts. We price our cars to be competitive, which I’m sure you noticed in your research online.
“After we test drive the car, I’ll share a market survey report that shows how we priced the car.
We’ll also review the CARFAX report and the work we did in our service department to get the Altima in tip-top shape for you. I’m confident you’ll agree this car is a great value and a great ride. Here are the keys, let’s go take this baby for spin.”
This type of dialogue with customers is becoming more common as dealers across the country reinvent their sales processes to deliver a greater degree of transparency and maximize their return on investment (ROI) and profitability in used vehicles. It’s an effective set-up for the following exchange that often occurs after a test drive:
Customer: “I love this car. What can you do for me on the price?”
Salesperson: “Well, let’s take a look at the market survey I promised before the test drive. As you can see, the RealDeal market survey shows your 2010 Altima is priced $1,200 below the two other Nissan Altimas available in the market, and this car has fewer miles than either of those. Now, I’m not telling you anything you don’t already know. You did your homework and know that our Altima offers a great price and value.
Customer: “Well, OK. But you know what they say, ‘it never hurts to ask.’”
Salesperson: “I hear you, Mr. Smith. I know it’s probably a little weird to find a dealership that actually means it when they say they want to give you a great deal and an easy, no-hassle buying experience. But that’s what makes us different from other dealers and, quite frankly, it’s the reason I’m working here. Now, let’s knock out the paperwork and get you home in your new car.”
I call this transparency-oriented reinvention of used vehicle sales processes “documentation as the new negotiation” for selling used cars. Velocity dealers say the “document, don’t discount” mantra is a clear-cut winner that helps them address two new realities today’s more efficient, Internet-driven marketplace has created:
1. It’s affirming for customers. Beyond meeting customer expectations for transparency, the “documentation as the new negotiation” approach has a positive psychological effect for buyers. In the example above, Mr. Smith landed on the 2010 Nissan Altima because his own research showed it was the best deal. The salesperson’s process and talk-track actively acknowledges and rewards Mr. Smith for his due diligence—and positions it as a principal reason the dealership cannot extend a discount.
“If we have a good price and there’s a good presentation, the chances are small we’d discount the car anyway,” says dealer Keith Kocourek of Kocourek
Chevrolet, Wausau, Wis. He notes some customers will still ask, and maybe press, to get a discount. But they typically back off once they see the market survey and recognize Kocourek studies the market just like they do.
“They’ll lay over and that’s the end of it,” he says.
2. It protects dealer profit margins. Many dealers recognize today’s more efficient, Internet-driven marketplace requires competitive pricing on used vehicles to attract customers. They also understand this price-efficient environment puts a greater degree of pressure on their front-end gross profit margins.
But many of these dealers miss how traditional, negotiation-based sales practices actually hurt their ROI and profit margin potential.
In January 2012, dealer Adam Claiborne at Fernandez Honda, San Antonio, wanted to figure out why, in spite of strong sales volumes, the store’s front-end gross profit was suffering.
“I ran some numbers and found we were discounting close to $500 on every car,” Claiborne says. “That just doesn’t work. We were eroding our own gross when there’s already a lot of pressure on it in the marketplace.”
His solution: Adoption of the “documentation as the new negotiation” sales process. “I had a meeting with my used car manager and general sales manager. We started making sure that when we’re doing our first pencil, we’re presenting the evidence for our Internet Value Price.
“We went from discounting 70 percent of our cars to 50 percent in 10 days,” Claiborne says.
In a month’s time, the store saw a $45,000 lift in its gross profit on 90 deals—essentially a “put back” of the $500/car the store had been losing through price discounts. “That’s real money,” Claiborne says.
The store hasn’t eliminated every discount, but price reductions are far less frequent and, when they do occur, there’s generally a good reason. “You can’t convince some customers and sometimes it just makes sense to do the deal that day—maybe we’re getting a good trade or we have a finance opportunity,” he says.
3. It creates a stronger, more stable sales team. Velocity dealers say the adoption of “documentation as the new negotiation” is helping them change the culture and composition of their sales teams. They no longer need the hard-to-find blend of the tough negotiator with the gentle touch. Instead, they’re able to tap into a pool of talent many traditional dealers wouldn’t consider for their sales teams.
“It attracts salespeople that you’d never be able to attract before,” Kocourek says. “As much as you and I don’t like negotiating, salespeople don’t like it either. I can hire a kid out of a pizza place and put them through our training process and have them out there selling cars and doing really well.”
4. It matches a dealer’s interest in doing business in a different way. Marc Ray, vice president and partner at Grogan’s Towne Chrysler, Toledo, believes “documentation as the new negotiation” gives him an edge with today’s transparency-minded customers.
“They say consumers used to go to 3.5 dealerships, now it’s 1.5,” he says. “They’re looking online for the cars they want. They’re ending up at one store to look at them. The guy who is the most transparent, treats them the best and has the best process is going to get the business.”
Increasing Dealership Consolidation - - - - -The dealers who are most successful in the current marketplace have traveled the road to reinvention and achieved a greater degree of efficiency than their competitors. They found faster, less-costly ways to sell more new and used vehicles. These are the dealers who are out buying stores from other dealers who, for whatever reason, have opted to throw in the towel.
This dynamic only exacerbates the profitability problems for dealers who have not yet embarked on the road to reinvention in their dealerships. They now face bigger, leaner and more profitable competitors. In some cases, these consolidators can leverage their size and scale to directly affect market demand, supply, pricing and profitability.
The “Great Internet Give-Back” - - - - - -There is a growing degree of convergence occurring online and it’s a good, albeit challenging, development for dealers. Perhaps the most telltale signs of this convergence are occurring on dealership websites every day.
“In 2005, dealership sites were sixth on the list of sites automotive shoppers go to the most. In 2011, dealership sites were second,” says Jason Ezell, CEO of Dataium, LLC., a Nashville-based company that tracks online traffic and trends. “Dealership sites have skyrocketed up the ranks.”
I call this the “Great Internet Give-Back”: Whereas in years past, dealers felt like the Internet was stealing away the business, it’s now bringing customers back.
The key, of course, is recognizing and leveraging the role a dealer’s website plays as a catcher’s mitt for customers—no matter if they use a desktop computer, laptop or mobile device.
Industry analysts predict 2013 will be much like 2012—a challenging, margin-compressed business where buying, reconditioning and retailing used vehicles and making money is no easy task. My new book, Velocity Overdrive: The Road to Reinvention, is intended to help dealers adapt their businesses to this rapidly evolving marketplace and thrive.
The book picks up where my previous books, Velocity: From the Front Line to the Bottom Line and Velocity 2.0: Paint, Pixels & Profitability, left off. It details how many dealers came to a crossroads as they emerged from the darkest days of the economic downturn.
These dealers were not content to just “get by” anymore. They wanted to be more competitive, profitable and successful. They understood the car business had fully become an Internet-driven business. They recognized they had to do a better job of aligning their businesses to the market. They understood that increased sales volumes and profitability would follow the adoption of more disciplined and efficiency-focused processes.
The book is a real-life look at the road to reinvention these dealers undertook—potholes and all—to achieve a greater degree of success in used vehicles and use it to transform other dealership departments. As noted in the book, these dealers have turned on the “wheel of fortune” in their stores.
It is my hope that Velocity Overdrive will guide and inspire dealers to embark on this important journey and set the stage for the long-term prosperity and profitability they deserve.
* To order your copy of Velocity Overdrive: The Road to Reinvention visit Amazon.com.
Dale Pollak is the founder of vAuto and a best selling author. He can becontacted at 866.867.9620, or by e-mail at [email protected].
