CBT News Magazine July 2015 by CBTNews

CAR BIZ TODAY

CHECK OUT OUR DAILY NEWSCAST ON CBTnews.com

The Official News Source of The Retail Automotive Industry

July 2015

Volume 2, Issue 4

TRADE GROUP’S ROLE

LET BUYERS FILL OUT CREDIT

APPLICATIONS ONLINE PETE MACINNIS ... see PAGE 30

CHOOSING BETWEEN

The pricing transparency issue, headlined by TrueCar, is not one where NADA prefers to be front and center.

E-LEARNING AND CLASSROOM TRAINING

CHRIS ROLLINS

... see PAGE 8

... see PAGE 24

HOW TO MAKE 4TH QUARTER A

PRODUCTIVE PERIOD

PRICE YOU’LL PAY FOR THIS CAR

JEFF COWAN ... see PAGE 22

QUICK & EASY

DIGITAL VIDEOS FOR THE SERVICE DRIVE LAURA MADISON

MORE SCRUTINY ON F&I DEPTS. U.S. Bank’s move could signal a trend of financial companies frowning on different policy prices for different car buyers. ... see PAGE 12

PRSRT STD US POSTAGE PAID Permit No. 1459 Pewaukee, WI

... see PAGE 26

SELLING TO SOLDIERS A Texas store offers lessons in how to develop close ties to a local base.

CBT NEWS 5 Concourse Parkway Suite 100 Atlanta, GA 30328

... see PAGE 6

Are your TV and radio ad costs

giving you heartburn? Autobytel leads have a cost per sale of around $275.

Do your TV ads do that?

Autobytel leads sell cars. LOTS of cars. In fact, in our history we’ve delivered over 50 million leads to dealer partners just like you, helping to sell millions and millions of vehicles. And with a cost per sale of around $275, Autobytel consumer connections are a great value. Plus, Autobytel is your true dealer partner. We’re all about your success. That’s why we never get between you and your customer. We never dictate your price. And we never put our brand above yours.

And sell more cars. 1-877-261-4575

Data Sources: Sales number from IHS Automotive/Autobytel Collaborative Study based on consumers that submitted a lead through the Autobytel network. IHS Automotive is part of IHS Inc. IHS acquired R.L. Polk in 2013. “Over 50 million” leads number from Autobytel internal lead totals from 1997 – 2014. “$275 cost per sale” number based on $22 lead price and estimated average 8% conversion rate. © 2015 Autobytel Inc. All rights reserved.

EXPECT TO SELL 60 ADDITIONAL VEHICLES EVERY

YEAR AS A NO PRESSURE SELLING GRADUATE When you pass these 3 virtual new vehicle sales focused courses, expect to sell 5 more vehicles each month, 60 every year.

MAX PROFIT SELLING 80% of new car buyers will spend more money for better benefits. You’ll learn skills to help shoppers transport themselves to the vehicle that provides the most desired benefits they can affod. Instead of competing on price, deliver the four exclusive benefits your customers want and the competition can’t provide. ca

BOOMER SELLING People over 50 buy almost 2/3 of all new vehicles. With average annual discretionary income of $24,000+, Baby Boomers are your most proﬁtable customers. Discover how to build unmatched value and trust. For Boomers, high value and trust are more important than low price.

CONTROL YOUR DESTINY WITH PRE-SOLD REFERRALS Stop waiting in line for the next up by buildling a full calendar of pre-sold referrals. This course gives you everything you need to maximize your lifetime income. The more you implement this common sense follow-up/referral process, the more appointments you set and the more cars you sell.

Sell more cars by selling the way your customers want to buy. Call 800-515-0034 or click WhyNPS.com and take a test drive today!

CAR BIZ TODAY M

Letter from the editor

CAR BIZ TODAY MAGAZINE Email

newsroom@cbtnews.com Phone

678.221.2955 President and Publisher Jim Fitzpatrick Vice President / COO Bridget Everett

Dear readers,

Managing Editor Jon McKenna

Dealers, and our magazine, spend a lot of time strategizing about how to more effectively sell cars. Maybe more time and attention should be devoted to doing a better and smarter job buying vehicles.

Associate Editor Russell Brown

While not every dealership has an acquisitions manager, most of them have the managerial savvy to be more inventive about searching for used vehicles of acceptable quality through other channels than trade-ins and auctions.

Creative Director Simone Tieber

For example, you could consider having one of your people research online for used vehicles for sale that could make effective resales on your lot. You don’t have to be an experienced acquisitions manager to do that.

Designer Betsy Alvarez

Or, why not promote a special car-purchasing weekend on your dealership’s website, through social media and to your contact e-mail list? Your dealership could even establish a special trade-in page on your website to attract more used cars. Again, we’re not talking about hiring additional skilled staff with these efforts.

Production Manager Jason Lowsy

At a time when sales of high-quality used vehicles are being pulled by the rising tide of record car purchases, dealers face the very real prospect that traditional approaches to buying vehicles may leave them in the lurch.

Creative Director - Digital Keith Tuggle Director of Marketing & Events Alex Branam

JON MCKENNA

Marketing Associate Roxanne Luhr

Managing Editor

Subscription Manager Tom Domagalski

Advertising Director of Sales Jane Howard jhoward@cbtnews.com d 678.221.2964 c 404.452.9551

In this Issue 5 Industry News

6 Texas dealership leverages close ties with local Army base By Mary Welch

8 NADA takes backstage role in pricing transparency issue By Jon McKenna

12 Big bank’s stance would limit bargaining on F&I products By Clint Williams

Profile of the typical buyer of luxury models has shifted By Jody DeVere, AskPatty.com Inc.

16 Cox-Dealertrack deal’s impact on pricing, cross-selling By Jon McKenna

Aggressive follow-up needed on both online, phone leads By Grant Cardone, Entrepreneur, Writer and Commentator

20 Ask The Pros 21 Association News 22 Dealers can act to reverse the usual fourth-quarter blues By Jeff Cowan, Jeff Cowan’s PRO TALK Inc.

24 Assessing the pros and cons of remote-training your staff By Chris Rollins, Rollins Performance Group

26 Quality online promo video can be created with a smartphone By Laura Madison, Alan Ram’s Proactive Training Solutions

CBTNews.com

CAR BIZ TODAY JULY 2015

28 How to effectively target millennial women car buyers By Anne Fleming, Women-Drivers.com

30 Customers want to finish F&I paperwork before a trip to the dealership By Pete MacInnis, eLEND Solutions

33 Sales Superstar 34 Service manager’s performance depends on his advisors’ behaviors By Glenn Pasch, PCG Digital Marketing

Dealers should be adept with certain SEO tactics and fundamentals By Amy Farley, Force Marketing

38 On The Set With CBT Automotive Network

Customer Service info@cbtnews.com

Subscriptions To subscribe electronically, log on to cbtnews.com and click the subscribe link on the side bar. Alternately, forward your company name, your name, address, phone number and email address to info@cbtnews. com or CBT News, 5 Concourse Parkway, Atlanta, GA 30328. Please send address changes to the above email or mailing address. Permission to reprint or quote excerpts granted only upon written request. Advertising rates are provided upon request.

News INDUSTRY

Customers Still Want Car Salespeople To Negotiate – To Some Degree

t’s becoming orthodoxy in the dealership industry that more customers today want salespeople mostly to answer questions, and provide information they don’t already have but need to make an informed decision. So, it’s interesting that in a recent survey by J.D. Power and DealerRater, more buyers chose “negotiator” than either “educator” or “facilitator,” when asked about the most important role that salespeople play in the purchasing process. In the May installment of “PowerRater Consumer Pulse,” a monthly analysis performed by the two companies, the preferences were 46% for negotiator, 42% for educator and 12% for facilitator. Surveys were taken between April 22 and May 4 of 8,098 consumers who wrote a post-purchase review on DealerRater.com. “Given that people so often turn to the Internet and smartphone apps to research vehicles, and can even see what others have paid … the results of our analysis were somewhat surprising,” said DealerRater CEO Gary Tucker. “But, it’s clear that consumers still want salespeople to be part of the overall purchase process.” True, but how far dealers can and should react to a finding like this is open to interpretation, especially given the momentum in some quarters for flat pricing. After all, a consumer saying he or she expects a salesperson to negotiate can be tantamount to, “You will cut your price.” And, a customer’s perception of a negotiator may not fit your own image of a salesperson who bargains aggressively for the dealership’s interests.

Georgia Dealership Pioneer Dies

he man believed to be the first African-American Ford dealer in Georgia (in 1975) died recently. William Huff III, of Talbotton, was 69. A few years before he took over his dealership, Huff also became the first elected black official in Talbot County and the youngest African-American county commissioner in Georgia at age 26.

CFPB To Police Non-Bank Lenders

n matters involving the Consumer Financial Protection Bureau, the federal government approved new CFPB rules imposing the first oversight on 34 big non-bank auto lenders that make 10,000 or more loans or leases per year. The group includes captive finance arms of OEMs such as Ford and Honda. The move by the government was triggered by allegations of discriminatory treatment of minority customers seeking car loans. Also, more than 50 congressional representatives signed a letter asking the CVFB to issue new rules eliminating mandatory arbitration provisions in consumer financial services contracts. Critics believe forced arbitration both denies consumers vital appeal rights and protects financial services companies from liability for abusive practices

Midwest Stores Lead List Of Most-Active Used Car Dealerships

ost of the nation’s busiest used car dealerships are in the Midwest, and two of the top four are CarMax stores – including the No. 1 (by a long stretch) seller. Auto Remarketing News recently published its 2015 list of the country’s leading 100 dealers in used vehicles. The top 10 were as follows: 1) CarMax Chrysler Dodge Jeep Ram, Norcross, Ga. (9,088 units sold) 2) Ricart Ford, Groveport, Ohio (7,700) 3) Sam Swope Auto Group, Louisville, Ky. (7,124) 4) CarMax Nissan White Marsh, White Marsh, Md. (5,951) 5) Mossy Nissan, National City, Calif. (5,369) 6) Sundance Chevrolet, Grande Ledge, Mich. (5,041) 7) Oxmoor Automotive, Louisville, Ky. (4,706) 8) Al Serra Inc., Grand Blanc, Mich. (4,561) 9) Dan Cummins Chevrolet, Paris, Ky. (4556) 10) Wilde Toyota, Milwaukee (4,519)

Speaking of used cars, CarMax released its “2015 Used Car Shopping Report,” and the most popular used vehicles at CarMax stores between March 2014 and February 2015 were: Nissan Altima, Chevrolet Malibu, Honda Accord, Toyota Camry and Honda Civic.

Hackers Taking Over New Car Tech Features Worries Congress

t may seem like every buyer coming to your dealership is jazzed about the latest technology being built into cars, but here’s the flip side of that coin. In late May, members of the U.S. House Energy and Commerce Committee wrote to top execs of 17 automakers and to the National Highway Traffic Safety Administration, asking how the OEMs are addressing cybersecurity issues and correcting potential Fred Upton exposures to hackers. This came a few months after two senators called for federal regulations insisting on minimum data privacy and safety protocols for all new cars sold in this country. Built-in wi-fi access is all the rage with newer vehicles. Apps are being developed to let smartphones remotely control some vehicles. OEMs are working on additional technologies to take over certain driving functions, as well as systems to automatically alert drivers to hazards on the road. However, the congressional representatives and their committee staffers worry, what if someone intercepts the data for nefarious purposes, or hacks into a system to seize control of a travelling vehicle? “While threats to vehicle technology currently appear isolated and disparate, as the technology becomes more prevalent, so too will the risks associated with it,” according to the letters from committee Chairman Fred Upton, R-Mich.; ranking member Rep. Frank Pallone Jr., D-N.J.; and others.

Dealership Acquisitions

utter Harley-Davidson in Irvine, Calif., was sold by 30-year owner Joanne Kutter to first-time Harley-Davidson dealers Sara and Eric Pomeroy … Owner Tommy Chiarenza sold the Vero U.S. 1 Nissan in Vero Beach, Fla., to Sutherlin Automotive … The Phil Smart Inc. Mercedes dealership in Seattle was bought by Al Monjazeb … Earl’s Dodge-Jeep in West Plains, Mo., was sold by Blake and Janet Crowe to Bayird Auto Group … Badger Harley-Davidson in Madison, Wis., was bought by Virgil Schulenberg, the owner of other Harley-Davidson dealerships in Wisconsin and Iowa … Canton, Mich.-based Victory Automotive Group bought McConnell Chevrolet and McConnell Chrysler Dodge Jeep Ram in Healdsburg, Calif., from owner Bruce McConnell.

JULY 2015

CAR BIZ TODAY

CBTNews.com

DEALER PROFILE

Dealerships Selling Near Military Bases Can’t Just Sit Back And Wait For Customers

Burge’s dealership is heavily dependent on sales to Fort Hood personnel.

A Texas Mazda store learns what’s necessary with relationshipbuilding, sponsorships, advertising for Army buyers. BY MARY WELCH

ith roughly 40,000 soldiers stationed at Fort Hood in Killeen, Texas, about an hour’s drive north of Austin, it must be like shooting fish in the proverbial barrel for a car dealership – right? Not so fast. As other dealerships near bases can attest, it’s often far from easy to penetrate the local military market. Sometimes it’s hostile territory, in fact. “A lot of military have been taken advantage of by the auto industry,” said John Burge, general manager of the Mazda Killeen dealership. “They’ve done a lot of [negative] things such as overselling or giving a higher interest rate. Many dealers see these young men and women with steady paychecks who haven’t made a major purchase before, and they take advantage of them. That’s why a lot of officers tell their people not to buy a car from a local dealer.” Still, Burge’s dealership has made great headway with the Army base and has object lessons to offer other dealers around the country who covet military business. The dealership owned by Austin-based Roger Beasley Automotive has more than doubled its new car sales since 2011, the last full year under the former ownership, and 70 percent of its new and used units are bought by military. Burge said it took new ownership six to seven months to counteract the former owners’ reputation at Fort Hood. “We had to make people understand that … we’d treat them like they’re our gold star 6

CBTNews.com

CAR BIZ TODAY JULY 2015

Mazda Killeen personnel are careful not to oversell military personnel on car and F&I prices, and here salesman Josh Kasten explains paperwork terms to Army Spc. Anthony Boyette. customers — because they are. The military is our lifeline.”

REACH OUT TO BUILD CREDIBILITY So, what marketing and pricing tactics get more U.S. military personnel (of whom there are 2.9 million on active duty around the world, not counting 825,618 in the National Guard and Reserves, according to the Department of Defense) into your dealership and buying a car? Especially since every other local dealership has the same ambitions. One of the first things Burge tried was to reach out to the Killeen chapter of the Association of the United

States Army (AUSA), a private non-profit organization that supports Army causes. He asked how his dealership could effectively get involved with the Fort Hood community. “They’ve done a tremendous job of getting our name out … and letting everyone know that we’re here to serve.” “Credibility is everything,” noted Ron Taylor, president of the AUSA Fourth Region (Texas, Oklahoma, Arkansas and Louisiana). “Once you’ve lost it, you won’t ever recover.”

EX-MILITARY MAKE SMART HIRES Mazda Killeen also got to know its customers by

hiring former military. Burge estimated that 60 percent to 70 percent of his 21 employees are ex-military, and others are military spouses or grew up in military households. “I was in the military, but it was 27 years ago. Things are a little different today. My general sales manager is a disabled vet who was wounded in Afghanistan. He truly relates with these soldiers, and them with him.” His military-savvy employees know the Army terminology, ranks and titles. His sales manager shows up at each of Fort Hood’s important, and sometimes quite elaborate, deployment ceremonies.

AVOID TEMPTATION TO OVERSELL The dealership, which posted 2014 vehicle sales revenue of $16.9 million, knows the danger that overselling poses to its long-term success. “These young guys have bigger eyes than their wallets,” Taylor explained. A prudent dealership knows to “keep them in budget and, if necessary, take the time to make sure they understand their LES [leave and earnings statement]. Do not put a solider in a car he can’t afford. It will have lasting repercussions, not only with him but with the base overall.” Burge’s salespeople know to review exactly how much of a hit the soldier’s car payment will inflict on his or her paycheck, so there are no surprises.

MAZDA KILLEEN AT A GLANCE

He also follows military suggestions to encourage soldiers to show the contract to their immediate superior officer, or even invite the superior (usually a first sergeant) into the dealership. “We especially do that with anyone under an E4 [corporal], and in about 75 to 80 percent of the time the sergeant is involved.”

DON’T RUFFLE THIS GUY’S FEATHERS In the Army, a soldier having a problem with an offbase business is supposed to report it to the base’s consumer affairs officer. Get too many complaints, and the officer not only will talk with your business but might put it on the “off limits” list. “Nobody wants that, because you won’t be in business much longer,” Taylor said. Thus, forging a good working relationship with the consumer affairs officer is vital, and Burge is working on that. But, “you just can’t walk in and say, ‘Hi.’ They are real suspicious.” Taylor is trying to help Burge as a liaison. SPONSOR, AND SPONSOR SOME MORE About 80 percent of Mazda Killeen’s marketing budget is spent on advertising or promotions targeting the military. Burge advertises occasionally on the two base newspapers, but word of mouth can be more impactful. He aims to be a business sponsor of “pretty much anything that the military is doing, and about 90 percent of anything that goes on in this town has to do with the military.” He also looks for sponsorship opportunities

involving military retirees, civilian employees and spouses. An example is a 5K race to raise money for breast cancer research at which Mazda Killeen gave out 250 bags with water bottles, T-shirts and other branded merchandise. Recently Burge worked with AUSA on a program to donate a used Mazda every 90 days to a soldier. “We thought about giving it to a Gold Star family member but think it will be more beneficial for active Army. We want to pay it forward.” They also helped form a nonprofit called No DUI of Killeen, and the dealership provides at least one car each weekend so that off-duty soldiers can pick up military personnel who have drank too much alcohol. On an average weekend, at least 100 soldiers are driven safely home in a Mazda, according to Sgt. Mike Nuttall, who heads the effort. Plus, Mazda Killeen donates $50 from each sale to Wounded Warriors or other military-related charities. And, while most manufacturers offer a military discount, Burge said Mazda’s is more inclusive and further helps his dealership’s reputation. That discount is $500 discount for all active military, members of the Reserves or National Guard, and military personnel who have retired within the last two years. “Our store has been more profitable since we became [more] involved with the military,” Burge said. “We cater to them. We want to them understand that they are not only our No. 1 customers, but [also that] we will treat them that way.”

Vehicle sales revenue: $16.9 million Units sold: 453 new, 388 used Service revenue: $512,689 Parts Revenue: $866,286 Vehicles sold online: 181 new, 177 used

“I was in the military, but it was 27 years ago. Things are a little different today. My general sales manager is a disabled vet who was wounded in Afghanistan. He truly relates with these soldiers, and them with him.” — John Burge

Source: Roger Beasley Automotive. All figures are for 2014.

Salesman Gi Cho shows a Mazda to Army Lt. Jeff Bland. JULY 2015

CAR BIZ TODAY

CBTNews.com

DEALER PRICING TRANSPARENCY And TrueCar Are Debated Without NADA

ON THE FRONT LINE Some dealers wonder why their main trade association doesn’t take a more prominent role with this issue, but NADA prefers a backstage role. BY JON MCKENNA

ack in 2013, Acton Toyota of Littleton in Littleton, Mass., got into a dust-up with TrueCar Inc. over the vendor’s new policy demanding payments associated with all vehicles sold to customers who had downloaded TrueCar-sponsored price offers. The dealership felt it could prove that certain car sales invoices hadn’t originated from TrueCar leads. It wasn’t the first time that Acton Toyota had become upset over a TrueCar business model and policies that “erode the new car profitability,” recalled Justin Brun, the dealership’s marketing and e-commerce director. Around that time, it would have been helpful, he said, “for NADA to point out to dealers what they’re giving up to TrueCar.” “I’m not being educated, then or now” about the car pricing transparency issue for which TrueCar is either the epicenter or the chief villain, depending on your point of view. Even though TrueCar is Acton Toyota’s top source of sales leads other than its website, Brun sees the company “as a top industry disruptor.” Pricing transparency is one of the issues for which Brun and many other dealership leaders wish the National Automobile Dealers Association, as the bellwether of the industry, had taken a more out-front and public role as part of its educational mission. The transparency debate continues to burn, as evidenced by more litigation brought this year against TrueCar brought by dealership interests; and NADA has the most credibility and resources to invest in webinars, white papers, round table discussions and other informational resources.

FTC CITED AS LIMITING INFLUENCE However, NADA has declined to hold any public events on pricing transparency and plans to continue that policy going forward. Its stated reason is that it can’t risk violating a Federal Trade Commission prohibition against a trade association influencing pricing by its members. Other, unstated factors could be NADA’s conservative leadership, its historic reluctance to wade into issues that ultimately are decided by state legislatures, a desire to steer clear of the anger that TrueCar inspires in many dealers, or a combination of all of the above. Any information offered by NADA on the pricing transparency issue apparently will be handled only in meetings that aren’t presented to the general dealership public. Educational forums on this controversy have been and will be left principally to the state dealership associations.

CBTNews.com

CAR BIZ TODAY JULY 2015

TRUECAR’S CENTRAL ROLE IN CONTROVERSY Santa-Monica, Calif.-based TrueCar is a third-party website to which car buyers can turn for guaranteed prices on new and used vehicles from participating dealers. While some critics of the company seem convinced that all of TrueCar’s pricing data is pulled directly from participating dealers’ DMSes, in fact the company buys information from a variety of sources such as state departments of motor vehicles and lenders. Car buyer can go to TrueCar.com, click on a particular make and model, and be shown the MSRP, a factory invoice price, the average price that other consumers actually paid at participating dealerships for that make and model, a TrueCar price estimate and anticipated savings from MSRP. They also can view price estimates from local certified dealers and print a certificate to give to a dealer that locks in “guaranteed savings.” Over the last few years, TrueCar has altered its business model several times (converting to a subscription model from pay-for-sale in some states) and come back from the brink of disaster, although it is still losing money. But its financial improvement hardly mollifies dealers who hate its practice of “guaranteeing” vehicle prices without giving context as to, say, why one dealership might have chosen to sell at a low price. Such a simplistic statement of pricing inevitably glosses over a host of

variations and differences in car deals – the kind of value-add that quality dealership salespeople are supposed to add, critics feel. On the one hand, TrueCar has become a near-indispensible source of leads and on the other, it undercuts the profitability of its participating dealers, they feel. The depth of opposition to certain parts of TrueCar’s business model is underscored by the number of lawsuits the company must fight around the nation. Just to cite a couple of examples, the California New Car Dealers Association has sued in state court seeking a declaration of whether TrueCar should be regulated as a dealer or auto broker under California law. And, a federal claim alleges that TrueCar’s “no haggle” promise is untrue and the company’s advertising fails to disclose a $299-per-transaction fee.

HOW MUCH LATITUDE ON NADA EDUCATION? NADA, notes its Form 990 operating report filed with the federal government, includes in its mission “assist[ing] dealers in improving their sales and services” and running “training and service programs to assist dealers in improving their sales, services, and operational efficiencies.” The NADA website shows the various ways the association pursues education and training: Panels at the annual convention and expo, webinars on dealership-management topics such as planned transitions of ownership and using technology, publication of research and trend reports. However, a dealer won’t find any past or future sessions specifically addressing the pricing transparency issue. Car Biz Today made several requests to interview NADA officials about the association’s approach to and policy on education with this issue, and plans going forward. Eventually, spokesman Chuck Cyrill said officials had decided they could not discuss the pricing controversy without potentially running afoul of FTC restrictions on trade associations. story contnues on page 10

TRUECAR CEO PAINTER’S BUSINESS MODEL DRAWS FIRE

Generally, the FTC prevents a trade association from exchanging specific member pricing information or trying to influence its members’ pricing, and from encouraging or discouraging use of a particular vendor. That would seem to leave considerable room to safely discuss in public other aspects of the pricing transparency controversy, such as what individual state dealership franchise laws have to say or how salespeople might explain why a price quoted by TrueCar or similar business appeared low. To some extent, it’s understandable why NADA legitimately might worry about attracting the FTC’s attention, given that a few years ago the agency investigated whether some dealers had colluded, using public blogs and forums, to organize a boycott of TrueCar.

FOCUSING ON DATA PRIVACY What NADA was willing to discuss for this story is a topic that Brad Miller, associate director of legal and regulatory affairs, said is “very relevant to what you’re talking about”: privacy protections for, and authorized uses of, sales and other data residing in dealership DMSes. NADA has undertaken an aggressive educational effort on how federal privacy law governs this topic for the last 10 to 15 years, he said, and Miller personally has been talking with dealers about their obligations for seven years. NADA also has published a number of regulatory guides on dealership information privacy, plans to issue new interpretive guidance later this year, and has posted a sample contract addendum on data protections for dealers to use in contracts with vendors that can access their DMSes. “The reality is that dealers, to do their business, need to share data with a variety of vendors,” Miller noted. “From the aggregators to the banks to the finance companies to the DMVs to the marketing companies, there are a lot of parties that manage customer and dealer information. “Dealers are doing a pretty good job – and frankly, a better job every day – getting control of this. They are not in the business of making money by selling information. They have a very high regulatory burden and take it very seriously. Once you agree to do the sharing, you have to agree to do it under certain controlled conditions, and even then it’s difficult to keep it from leaking out. “The FTC is very interested in these issues. We think the bar is being raised. It is a huge moving target where frankly, the rules are being decided now. The obligations are only going to be increasing over the next few years.” NADA EFFORTS BEHIND SCENES Circling back to the pricing topic, Don Hall, the president and CEO of the Virginia Automobile Dealers Association, has frequently tangled with TrueCar CEO Scott Painter. A more visible NADA role in educating dealers on the myriad 10

CBTNews.com

CAR BIZ TODAY JULY 2015

issues involved in pricing transparency could have helped a few years ago, he said – but that’s not the same as the national association being completely disassociated. At an NADA-organized meeting in Chicago of state automotive trade association (ATA) executives held three or four years ago, Hall said, NADA lawyers gave attendees a considerable volume of information on the pricing transparency issue that they could turn around and share with their local dealer members. “They gave us the tools to understand the issue; it was up to us state ATAs to in turn figure out how to use the information.” In Virginia, his Richmond-based association then created a webinar and seminars, designed by lawyers, addressing what businesses providing referrals to car shoppers can and can’t do in the state and the legal prohibition against their getting compensated for individuals car sold. “We didn’t discuss whether they should or shouldn’t exist,” Hall said.

WHERE IS ASSN.’S EFFECTIVE ROLE? He believes that kind of less-formal informational exchange is a more effective role for NADA than is public educational outreach on issues involving state laws. Since Peter Welch took over as president in 2013, NADA has proved more willing to at least serve as an informational clearinghouse, Hall said. He pointed to the Tesla direct-sales controversy and NADA investing in consultants to study the benefits of the dealership franchise system, results of which were passed along to state ATAs. “I don’t think NADA is effective with multi-state trends,” Hall said. “The NADA tends to be looked at like the federal government, the big bureaucracy. I don’t think there’s any value to them doing a general seminar on a subject” like pricing transparency. “It’s intellectually stimulating to have experts predict what it will look like five years down the road, but it’s more effective to have [state associations] discuss what their laws are. “If you’re looking to impact more people and take the temperature of the affected dealers, the states tend to do a better job connecting with the dealers. Even though the pricing issue is national in scope, the reality is that it will be handled by each state’s legislature as to whether to follow the law or change the law.”

PROGRAMS MIGHT NOT RESONATE NOW The Sacramento-based California New Car Dealers Association is litigating against TrueCar is acting as an auto broker under state law. Several years into the pricing transparency issue now, “it would be hard for NADA to put on a program that offers more than very general information that wouldn’t help us very much,” said Brian Maas, president of the California association. “I think NADA is doing a pretty good job of walking that fine line. You can find a member who will want [NADA] to take a position on almost any issue. They’re going to get pressure to jump in. But this is a very complicated issue because … there are multiple permutations in how it’s impacted by state and federal statutes. It makes it very difficult” to put on a meaningful educational session. In terms of the California association’s own informational outreach, Maas said it sent out two statewide memos to dealers explaining what his leadership felt were the legal issues with TrueCar. Also, the group held roundtable discussions and met with individual dealers to address where sales data is being obtained in the marketplace and for what purposes, and how it is protected. Information from NADA was not used in that outreach, he said. AIADA ALSO LETS ISSUE PASS While NADA is the most prominent voice for U.S. dealers, it is not the only voice. How are other trade associations approaching the pricing transparency controversy? Given that the Washington-based American International Automobile Dealers Association’s sole official mission is to represent international-nameplate dealerships before Congress and federal agencies, there has been no need to weigh in, said Elizabeth Newman, VP of public and industry relations. “This is not really a political issue; it’s a business issue,” she argued. Like NADA, she also mentioned potential trade restrictions. However, she informally discusses the issue with individual dealers frequently. “It matters to them. It is a big deal to them. I get that. But, they understand our mission and that it’s not something I can lobby on. I have never heard any of them ask why AIADA is not on the forefront of the issue.”

NADA IS MORE OF AN INFO CLEARINGHOUSE UNDER WELCH

REVEAL THE PRINCE ON

YOUR USED CAR LOT.

Learn how to certify your Other Makes & Models at: motortrendcertified.com/royal or call 888.965.2924

©2015 Automobile Protection Corporation-APCO. EasyCare is a registered trademark of Automobile Protection Corporation – APCO. MOTOR TREND® is a registered trademark of TEN: The Enthusiast Network Magazines, LLC.

F&I

Next Limitation On F&I Departments:

No Bargaining On Product Prices? U.S. Bank acts before the CFPB can, but dealerships may be more amenable than they are with government intervention on APR. BY CLINT WILLIAMS

CBTNews.com

CAR BIZ TODAY JULY 2015

DUPAQUIER: THIS IS A LOGICAL RESPONSE TO A VAGUE CFPB differences in pricing or excessive add-on product financing on a prohibited basis, then we will notify you,” the U.S. Bank notice read, according to F&I and Showroom. “We will ask you to provide any additional information that you believe we should consider regarding the matter. If you are unable to provide an explanation for the identified differences, or if the unexplained differences persist, we will consider taking further action.” That would mean U.S. Bank would preclude its dealership partners from negotiating with different customers on the underlying pricing of extended service contracts and GAP insurance, among other products. The bank is letting dealers know it won’t allow even the appearance of impropriety or unintentional discrimination.

ALREADY FACING HANDCUFFS ON APR Dealerships already have been trying to digest a 2013 CFPB guidance document that seeks to prohibit F&I departments from negotiating on APR for customers seeking to finance a vehicle purchase, which the Board says leads to riskier loans being underwritten. The CFPB believes it would be more prudent for lenders to compensate dealerships with a flat fee. However, this plan has fueled criticism that the CFPB is overstepping its authority established by the Dodd-Frank reform bill of 2010. NADA and several other automotive trade groups are backing federal legislation that would force the CFPB to rescind its guidance and consider other options.

All F&I customers should get the same price on products from same dealership, some feel

second front may be opening up in the battle against the way dealerships have been pricing F&I products for customers – and this time, the private sector is taking the lead rather than the federal government. Minneapolis-based U.S. Bank, the country’s fifth-biggest commercial bank with $410 billion of assets and branches in 25 states, raised eyebrows in dealership circles in May with a notice to dealerships that distribute its F&I products. That notice, according to an F&I and Showroom magazine story, let dealerships know the bank would now be monitoring the underlying pricing of products – while all the attention until now has focused on the Consumer Financial Protection Bureau’s proposal to stop dealerships from negotiating on APR. U.S. Bank apparently has concerns about CFPB policy interpreting federal fair lending laws to address not only intentional discrimination but also “certain neutral practices that have an adverse discriminatory impact on a prohibited basis (i.e., disparate impact).” And, the bank worries about the implications for more products than just auto loans. “If this monitoring program finds unexplained

OTHER LENDERS COULD FOLLOW On this issue of the base pricing of F&I products and different prices for different customers, other financial services companies are almost certain to make the same choice that U.S. Bank did out of an abundance of caution, the vendor and dealership veterans interviewed for this story believe. “U.S. Bank is taking a very proactive approach,” said Tony Dupaquier, who runs the national training academy for Service Group, an Austin, Texas-based supplier of F&I products to dealerships. That’s a

DORFMAN: THE TIME HAS COME FOR THIS DISCUSSION prudent policy, he said, given the vagueness inherent in the CFPB’s use of guidance memos. “There are no direct recommendations from CFPB. They let everybody figure it out for themselves – and everybody gets in trouble.” While some observers might characterize U.S. Bank’s tactics as an overreaction (after all, it’s by no means completely accepted that the CFPB is

authorized to regulate automotive F&I products), neither can the potential that this is the first domino to fall be dismissed.

SOME THINK IT’S TIME TO CHANGE “While the argument over CFPB’s authority is going on, it’s well worth it that we, as an industry, discuss how we’re going to address it,” said Larry Dorfman, CEO of Norcross, Ga.-based EasyCare, a provider of vehicle extended warranties, key replacement coverage and other F&I contracts. That discussion, Dorfman believes, should include F&I products vendors and dealerships asking themselves whether it’s time to consider changing the way they do business. The current “what the market will bear” approach to pricing warranty products may strike people as capricious, given that it can boil down to how high a price a sales representative thinks he or she can negotiate with a particular customer. “If U.S. Bank is looking at loans for Chevy Malibus, and some people are paying $1,100 for a service contract and some are paying $3,200, the bank is going to say ‘What’s going on, guys?” according to Dupaquier. ADVANTAGES TO FIXED PRICING “The solutions are not that challenging,” Dorfman added. Both Dupaquier and he feel the smartest way to avoid entanglements with the CFPB, and potentially Congress down the line, is to use fixed, suggested retail prices on ancillary products such as service contacts. The price would be set based on vehicle age, mileage, the deductible and what is covered – with sales negotiations not playing a factor. “Find the product that meets the customer’s needs based on their driving habits,” Dorfman summarized. A set, non-negotiable price on such F&I products would bolster the credibility both of the product vendor and of the dealership, Dupaquier argued. It would “eliminate the possibility of discriminatory practices.” Dealers, in fact, might find their total F&I sales increase under fixed prices, with sales of policies increasing thanks to simplicity and improved credibility and more than compensating for reduced margins. DEALERSHIP CAN GET BEHIND THIS IDEA Fixed pricing of F&I products for all customers would offer still other benefits to the dealership, said Stephen James, corporate controller for Park Place, a Dallas-based dealership group selling Mercedes-Benz, Porsche and other luxury brands. “Standardized pricing provides for a much better customer experience,” James said. “You don’t have the haggling. You don’t have the customers worrying if they have been taken advantage of.” Park Place standardized pricing on F&I ancillary products sold at its dealerships several years ago, in order to save customers time and “create an experience that makes clients keep coming back,” he reported. CUSTOMERS WILL FIND OUT, ANYWAY Dorfman believes the U.S. Bank move will further debate at a propitious time, given that buyers now can access a great deal of information about how vehicles are priced but don’t enjoy similar transparency with F&I transactions. “Why have it be questionable?” Both Dorfman and Dupaquier believe financial services companies will continue to make dealerships respond to CFPB action, real or perceived. Even so, when it comes to underlying pricing of F&I products, “take U.S. Bank out of the conversation,” Dupaquier said. “Take CFPB out. And, put Facebook in.” In other words, social media have the ability to immediately let disparity of pricing in financial contracts known worldwide, and the potential backlash from customers in response would be more painful than anything a federal bureaucracy could inflict.

JULY 2015

CAR BIZ TODAY

CBTNews.com

MARKETING

Growth In Luxury Car Sales Comes From

MILLENNIAL WOMEN, NOT WEALTHY EXECS Dealers should be shifting their marketing strategy to appeal to the segment likely to dominate their business for some time. BY JODY DEVERE

uxury car dealers, do you know your audience? If you’re like most dealers whom I’ve spoken to, you may be selling cars with the wool over your eyes, assuming that the affluent male buyer is your crème de la crème, with some wealthy widows, high-ranking female executives and women entrepreneurs rounding out your target market. However, the latest research seem these assumptions just aren’t supported any longer. As CEO of AskPatty.com, a website dedicated to providing automotive resources to women and helping auto dealers like yourself attract and retain more women customers, the findings surprised me as well. The “Shullman Luxury, Affluence and Wealth Pulse, Autumn 2014” report from The Shullman Group, a niche marketing research firm, offers some very intriguing findings on who is actually buying in the luxury vehicle market. First of all, it’s not just 14

CBTNews.com

CAR BIZ TODAY JULY 2015

aﬄuent people. In fact, 61 percent of buyers with a household income of $250,000 or more don’t own a luxury car! And interestingly, it seems that the millennial generation of women is driving more luxury vehicles than is commonly assumed. While dealerships following an orthodox approach have continued to target an older buyer demographic, they may have been taken unaware by decision by many millennials that they are more interested in a luxury lifestyle than are baby boomers or Generation X.

STATS ON MILLENNIAL TAKEOVER According to the study, “The $75,000-$249,999 aﬄuent segment is the primary buyer of all the luxuries consumer spending, including luxury vehicles. The second-largest buying segment for all luxuries was mass-market America [those with less than $75,000 in household income]. The very high-income buyers [those with $250,000+ incomes], although fewer

in number, typically spend the most on average for each luxury bought and tend to buy more luxuries per adult than the other two income segment ... “The number one luxury buying generation today, according to this survey, is the Millennial generation [18-34 years of age in 2014], who constitute 45% of luxury buyers.” So, let’s take a moment to consider the target market for dealerships in the luxury segment – the new target, the millennial woman. If dealers are going to eﬀectively sell luxury cars to millennial women, they need to understand more about how they think and operate. These are not baby boomers or Gen-Xers, so marketing approaches oriented toward those older demographics will ring false with these groups. (It’s also worth noting that, in my experience at least, a high proportion of the millennial segment is actively working in advertising much of the time. This is yet another reason to avoid outdated or trite marketing and advertising. They know all those tricks!)

PROFILING THE NEW LUXURY BUYER Today’s millennial women are a technologically connected, diverse and educated generation. They prefer the speed and convenience of smart phones

“WHILE DEALERSHIPS FOLLOWING AN ORTHODOX APPROACH HAVE CONTINUED TO TARGET AN OLDER BUYER DEMOGRAPHIC, THEY MAY HAVE BEEN TAKEN UNAWARE BY DECISION BY MANY MILLENNIALS THAT THEY ARE MORE INTERESTED IN A LUXURY LIFESTYLE THAN ARE BABY BOOMERS OR GENERATION X.” remember that this is the generation of the “meme.” In other words, iconic, engaging and visual marketing plays an important role in ad messages that resonate with them. Luxury car dealers should not shy away from humor, and should focus on making their messages instantly accessible and simple. Ever looked at Pinterest? It’s literally just a wall of photos, but to many millennial women, it’s a wall of ideas, conversations and opportunities to do something amazing. Consider this: Fifty-eight percent of them look to Pinterest or Instagram for inspiration on everything from meals to make-up to home décor. Most of all, these women are “social shoppers,” meaning inveterate users of social media who value the opinions expressed by their social media peers more than anonymous reviews or snappy slogans.

BE SINCERE WITH CAUSES Cause-related marketing also works with millennial women, as long as you take care to ensure that your cause means something. Millennial women are usually quick to spot specious practices like “pink-washing” (that is, coloring a product pink for breast cancer awareness month but not actually

providing any meaningful support for the cause). So, choose your charities wisely and remember that transparency is key. When your dealership does commit to a cause, it should embrace your entire company. For example, consider TOMS Shoes. The company’s message is clear, simple, cause-driven and instantly accessible: For every pair of TOMS Shoes purchased, the company will donate a pair to a child in need. This clear and concise message, coupled with transparency and accountability, has made the company an absolutely huge hit with millennial women; to date, it has provided shoes to more than 10 million children.

BACK TO THE CORE QUESTION Now, let me ask you again, luxury car dealers: Do you know your audience? Are you shifting your target-marketing practices away from the older executives and widows and toward the generation of Pinterest projects and Tumblr blogs? If you’re not approaching your marketing plans with the goal of making instant accessibility the core of your brand, then you could be missing out on the No. 1 buying segment of luxury vehicles today.

This is the prototypical new buyer of a luxury vehicle. Was your dealership expecting a silver-haired male exec or a well-dressed woman in her late 50s? and e-mail over live phone conversations or walk-in business. In terms of work, they tend to have more job market equality than in previous generations, and are earning four-year degrees at a higher rate than their male counterparts are. This higher individual income translates to higher overall household income for their families, which points to a new kind of American family – one in which the mother is the sole breadwinner.

OPINIONS THESE CUSTOMERS VALUE Millennial women do have some traits in common with boomers and Gen-Xers. They tend to be “brand influencers” who are quick to share their opinions with friends, family and their online communities. A majority of social media outlets have predominantly female users, who use those outlets to speak their minds. Millennial women generally insist on being included in any important conversations, and rebel against being told what to do or what to purchase. They value inspirational messages and important causes, and most significant of all, they tend to support brands they feel support them. When it comes to advertising to millennials,

The right marketing approach that appeals to millennial women may sell more of these vehicles.

JODY DEVERE CEO of AskPatty.com Inc. Her company runs a website and blog, and offers training, education and marketing support on how dealerships and other automotive retailers can more effectively target women consumers. She speaks at conferences held by sponsors ranging from the National Independent Automobile Dealers Association and Mercedes-Benz to the Car Care Council Women’s Board. Visit her website at www.askpatty.com.

JULY 2015

CAR BIZ TODAY

CBTNews.com

VENDOR PROFILE

The Huge Cox Buyout Of Dealertrack:

WHAT IT MEANS TO DEALERS Market participants expect greater simplicity for customers, but also more aggressive marketing and pricing. BY JON MCKENNA

he price tag for Cox Automotive Inc.’s planned purchase of Dealertrack Technologies Inc., approximately $4.6 billion, is certainly eye-popping. However, once you get past the shock and awe over how much money is involved, what might this deal mean for the dealership customers that buy from one or both of these prominent vendors? To explore that subject, you need to know more about the companies involved in the proposed deal, which could close by Sept. 30. Lake Success, N.Y.based Dealertrack has the industry’s largest online credit application network, connecting more than 20,000 dealers with roughly 1,500 participating lenders. That network, which is free to dealers, gives Dealertrack a great springboard from which to market its suite of subscription-based software and online platform products, and specialty and 16

CBTNews.com

CAR BIZ TODAY JULY 2015

transportation services. That suite comprise DMS platforms, car transportation services, an integrated F&I platform for dealers, digital marketing consulting, online and cross-state vehicle registration, and electronic titling. Probably the company’s best-known brand name is the Dealer.com digital marketing platform.

DEALERTRACK ADDING REVENUE QUICKLY Dealertrack’s revenue had been growing nicely for several years even before it took a huge jump (thanks to acquisitions) in 2014, when it leaped 77.5 percent to $854.4 million. However, the company took small operating and net losses that year as it digested the buyout of incadea plc, a provider of DMS software and services, among other costs. Its rosters of active lender-to-dealer relationships, and of U.S. and Canadian dealers with at least

Both Cox and Autotrack have business lines in dealership inventory management.

one active Dealertrack subscription, have been on healthy growth curves for several years, according to the company’s 10-K filing with the SEC. Those numbers stood at 202,086 and 24,336, respectively, in 2014. Atlanta-based, privately held Cox Automotive is, of course, a heavyweight player in several dealership industry sectors: Media (it owns Autotrader and Kelley Blue Book), auctions and auto transport (Manheim is the biggest, but not the only, Cox provider), software (vAuto inventory management and VinSolutions in CRM are well-known brand names), financial services (including NextGear Capital dealer credit lines and GoFinancial subprime lending), and international sales of several of its products and services.

COMPLEMENTARY PRODUCT LINES Despite its bulk, Cox actually has less overlap with Dealertrack than do two companies that might be seen as acquirers, CDK Global and Reynolds and Reynolds, according to the Dealertrack 10-K. Cox and Dealertrack directly compete for CRM, digital marketing and inventory management customers. However, Dealertrack hasn’t needed to worry

about Cox going after its credit application, DMS and F&I customers. Certainly the debt-rating services believe the lack of product overlap, and the resulting flexibility to market broader menus of products and services to customers of both companies, is a key driver in the deal. They are examining the transaction because of the large amount of debt Cox will need to incur. “The partnership will allow the combined entities to provide broader and more efficient solutions to dealers, lenders, manufacturers and consumers,” wrote Moody’s Investors Service in a credit rating announcement. Fitch Ratings analysts wrote that they expect “the growth prospects within Cox Automotive” with this deal to help offset the added debt’s stress on the company’s credit profile by the end of 2016.

GREATER EASE OF USE One of the nation’s largest dealership groups, the Sandy, Utah-based Larry H. Miller Group of Companies, extensively buys products and services from both Cox and Dealertrack. Senior Marketing Vice President Paul Nygaard said he thinks the deal more appropriately should be evaluated based on its impact on ease of customer use, rather than on future pricing or marketing strategies. The more products and services in the automotive sector that are housed under one corporate roof, the easier for related business units to share data, frame-in one another’s web frames, etc., he pointed out. “To me, it’s a real positive, a really refreshing deal from the landscape of where the industry needs to go,” Nygaard said. “Right now, you have all of these individual systems, and none of them are talking to one another. But we’re going to get a deal between two of the big providers where it actually makes sense.”

“DESPITE ITS BULK, COX ACTUALLY HAS LESS OVERLAP WITH DEALERTRACK THAN DO TWO COMPANIES THAT MIGHT BE SEEN AS ACQUIRERS, CDK GLOBAL AND REYNOLDS AND REYNOLDS.” DEBT’S PRESSURE ON PRICES One DMS consultant, who didn’t want to be named, believes Cox inevitably must increase DMS fees and also lock dealers into long-term contracts that have built-in price hikes. After all, that was the case several years ago after Dealertrack purchased the Arkona Inc. DMS system, she said, and that was a price tag far below what Cox is paying in this transaction. The marketplace generally considers the Dealertrack DMS product to be a “Tier 2” system that is very price-competitive but doesn’t have the same technological bells that higher-priced systems do. “It would take a huge [additional] investment for Cox to upgrade the Dealertrack DMS to be a Tier 1 system, and since they already spent $4 billion,” that consultant doesn’t look for such an investment to be made anytime soon. CROSS-SELLING INEVITABLE Certainly, it is logical for dealerships to expect Dealertrack to aggressively market Cox products such as the VinSolutions CRM to its existing customer base, either individually or in a package, she said. However, many of Cox’s products and services appeal more to large-volume dealership groups

than to the smaller customers that Dealertrack has pursued, those cross-sold products will need to be chosen carefully, she added. Dealerships should anticipate pitches to buy a suite of products, agreed Frank J. Lopes, vice president at Forest & Blake Marketing – Advertising in Clark, N.J., which performs digital marketing for dealer clients. “Let’s say a dealer advertises with Autotrader. The company now will be telling that dealer, ‘You need vAuto, and why isn’t your website with Dealer.com?’” He also anticipates pricing going up over time for digital marketing and advertising services for customers of both Cox and Dealertrack. When a dealership also is buying several other of a large vendor’s product lines, Lopes argued, it’s harder for that customer to push back on price for a single service like digital marketing. “Kudos to Cox for being able to grow and dominate in our space through acquisition,” he added. However, he admits to feeling somewhat nervous about the level of access that an even bigger Cox will have to dealership, customer and OEM data, with so many technology based business units that can share information.

PLANS TO ACQUIRE

Revenue $4.9 billion

Revenue $854.4 million

24,000 employees

Net income -$17.3 million 202,086 active lender-to-dealer relationships

40,000 wholesale and retail dealer, and OEM, customers 121 locations worldwide

24,336 subscribing dealers in U.S. and Canada 40 locations worldwide

Source: Cox Enterprises website, Dealertrack Form 10-K. Note: All numbers are for 2014.

JULY 2015

CAR BIZ TODAY

CBTNews.com

SALES

Customer: “I am ready to buy a car TODAY.”

DRAGGING HEELS ON SALES LEAD FOLLOW-UP CAN KILL DEALERSHIPS Your people must take a disciplined, structured approach to following up on leads that come in by phone or online. BY GRANT CARDONE

CBTNews.com

CAR BIZ TODAY JULY 2015

he landscape of the automotive industry has changed dramatically since I started out selling cars 32 years ago. You used to get most of your leads from people walking onto your showroom floor who were responding either to the big sign outside or to some print or TV advertisement. Digital marketing has come to dominate dealership advertising and is expected to exceed total TV advertising spend by 2018. This digital shift is driving an unprecedented number of customers to websites and landing pages. In turn, this creates both new problems and bigger opportunities for automotive salespeople who

can figure out how to effectively respond to these prospects. Regardless of whether the customer’s first appearance comes on foot or through the Internet, you must be prepared to follow up with him or her. How big is the risk from failing to follow up in a timely fashion? Well, have you ever reached out to a business’ website, diligently filled out a form and ended up completely ignored anyway? Of course, you have.

HUGE ISSUES WITH FOLLOW-UP I recently created a “mystery shop” campaign to demonstrate to companies the size of the risk involved. Three companies selling completely

“THE FIRST COMPANY THAT FOLLOWS UP TYPICALLY LANDS 50 PERCENT OF THE BUSINESS.” from the skilled professionals. And, the reality is there is no commitment from most businesses to follow up. Their cultures have made that failure okay. If your salespeople don’t know how to effectively follow up – what to say, how to text, when to e-mail, when to call – then how can they even make a useful second call, much less the five to 12 calls typically necessary to convert a lead to a purchase? Below and to the right are some rules to follow to take your follow-up game to professional status:

WHEN USING THE PHONE TO FOLLOW UP ON ANY LEAD  Always leave a message

3. Give your staff a very precise schedule and actions for each follow-up attempt, using a variety of means. An example may look like this: • Automated response within 5 minutes: “Thank you. Someone will be right with you.” • Text message or e-mail (text preferred) response, with information overload and terms guarantee • A same-day call from quality service • A same-day e-mail message: “Please call me immediately regarding your interest. I have a way for

 Be consistent with the phone (daily use)

you to take advantage of great savings.”

 Try to call when floor traffic is lightest  Always be enthusiastic, upbeat and positive  Always offer alternatives that benefit the buyer  Give the buyer reasons to return  Have a designated time for your outbound calls  Ask for referrals on the outbound call SPEED COUNTS WITH LEADS The faster your dealership can respond, the better your chances of converting and qualifying a sales lead. The first company that follows up typically lands 50 percent of the business. And, the key to increasing your speed in following up with leads is to utilize every communication tool you have available. Don’t just rely on phone calls and leaving voicemails. E-mail. Text. Send smoke signals and carrier pigeons, if you have to. If you have the data to text a client within the first five minutes of contact, your chances of conversion go up almost 300 times.

WHEN FOLLOWING UP ON ONLINE LEADS 1. Share the facts about lead response, and follow up with your team

TO SEE MORE FROM GRANT CARDONE GO TO CBTNEWS.COM

is about your culture and is bigger than any decision by executive management.

 Call sooner rather than later  Call everyone back – no exceptions

different products hired me to evaluate their website response and sales teams. One was a luxury jewelry store, another a large group of automotive dealerships, and the third a services company. The automobile dealership sent an automated response to the leads, and the other two companies still had not responded after three days. Having studied this follow-up phenomenon, I can tell you the problem is massive. Sixty-five percent of all companies admit they have no processes to nurture leads. When a lead walks into your showroom, you aren’t going to close with him or her unless you know how to follow up. Whether the lead arrives is in person or online, the follow-up separates the ordinary salespeople

2. Make a commitment to follow up at your company. This

• Average response time for an Internet lead is 44 hours • 65 percent of all companies don’t nurture leads • Only 25 percent of all salespeople make at least two contact attempts • 80 percent of all transactions require five to 12 follow-ups

• Third-party touch, management call: “What can we do to earn your business?” CREATE A LONG-TERM FOLLOW-UP PLAN If you still fail to convert the lead, then you must create an exact follow-up process for day two through the next 12 months. Don’t just write it off, don’t quit – dominate and stay on your schedule. I give the more than 15 hours of these and other training and tips in my “Automotive Sales Training for New Hires MP3” course. It also covers how to put the buyer at ease, building up buyer profiles, handling objections and more. The purpose of the follow-up is to demonstrate interest in this prospective customer and in the things that are important to him or her. If your salespeople have an issue showing genuine interest, then your dealership needs to immediately work out this shortcoming. Only when you are genuinely interested will you be able to effectively understand or implement the three points. Your future in the dealership business will be determined by your ability and willingness to be creative, consistent and persistent in staying interested in your customers through follow-up. Every contact is helps lubricate the relationship, separate your dealership from its competitors and demonstrate that you are there for your customer all the time, not just when its time to close the deal. I assure you that by being creative, consistent and persistent in staying interested and following up with customers you don’t sell as well as those you do, you will improve your sales volume, closing ratios and profit margins – as well as your salespeople’s self-esteem. Stop struggling. Take advantage of this opportunity and differentiate yourself in today’s market. Create a solid follow-up system and make it a part of your culture, not just your work culture. Follow up or die out.

GRANT CARDONE Entrepreneur and New York Times best-selling author Grant, a national speaker and motivator, is a respected, highly regarded master salesperson whose passion is to teach people how to sell themselves, their products and services regardless of economic climate. His books, audio packages and seminars provide people of all professional backgrounds with the practical tools necessary to achieve high levels of success. Follow him on Twitter @grantcardone.

JULY 2015

CAR BIZ TODAY

CBTNews.com

ASK THE ?

PROS

t CBT News, we are fortunate to partner with the best trainers in the industry. Whether it’s information on sales,

F&I, marketing, management or fixed ops, our contributors are the go-to professionals for reliable, relevant advice for dealership personnel. You have access to the foremost authorities in the retail automotive industry. Need a new closing technique? Wondering what’s the best way to increase sales in the service lane? Send us your questions at AskThePros@cbtnews.com. We’ll forward your inquiries to our ensemble of experts.

I READ THE OTHER DAY ABOUT A NIELSEN STUDY THAT FOUND BUYERS ARE GETTING OVERWHELMED BY THE AMOUNT OF TECHNOLOGY GETTING CRAMMED INTO CARS, AND THAT IS SO TRUE. MY SALES TEAM CAN’T COME CLOSE TO KEEPING UP WITH IT ALL, LET ALONE PICK OUT WHICH FEATURES BUYERS WILL CARE ABOUT AND ADEQUATELY EXPLAIN IT TO THEM. WHERE DO YOU COME DOWN ON HOW MANY OF THE NEW TECH FEATURES SHOULD BE COVERED IN THE WALK-AROUND? WHICH ONES? - Al D., Las Vegas

$3,000-profit sales each month, while dealers up their budgets to try to drive more traffic onto the lot each month. The solution: Teach them to sell, and they’ll find those hot button features and they’ll know how to use those to sell more units.

OUR DEALERSHIP SEEMS TO BE GETTING PRETTY GOOD RESULTS FROM PROMOTING SOME FACEBOOK POSTS AS ADS, BUT TWITTER IS DOING NOTHING FOR US. ARE YOU SEEING ANY DEALERSHIPS GET MILEAGE OUT OF TWITTER, AND IF SO WITH WHAT KIND OF CONTENT? - Carl C., San Angelo, Texas

David Kain, President of Kain Automotive: Carl, it’s refreshing to hear that you are getting socially engaged at your dealership. Facebook works great and Twitter can work just as well and perhaps even better, because of the instancy of the platform. Twitter for Business allows dealers to monitor tweets and actually lets you create timely ads to be “on topic” with the tweets as they happen. For example, if you are a Bay Area dealer, as the Golden State Warriors win the championship you can have tweets pre-scheduled to engage as hashtag #Championship or #Warriors come up, and offer a championship discount to Warriors fans. You can also scan for logical tweets for your business like #BuyingACar or #CarBuying, etc. and engage on a local basis with those that are in your market. Additionally, on an individual-salesperson basis, we encourage salespeople to create Twitter accounts that they use exclusively for business engagement with clients. They can follow their customers, “favorite” their customer posts, re-tweet customer posts and even comment when they like the post. This casual engagement earns the ability for them to then have customers read their posts. I would also ask your salespeople and even your dealership to follow your brand and re-tweet the OEM posts, so they are aligned. I personally love Twitter for the immediacy and think it’s a perfect fit.

WHAT IS THE HIGHEST NUMBER OF PRODUCTS YOU THINK SHOULD BE ON THE SALES MENU USED BY THE F&I DEPARTMENT? WHERE IS THE DIVIDING LINE BETWEEN OFFERING A GOOD ARRAY OF CHOICES AND JUST CONFUSING THE BUYER? - Anne T., Rochester, N.Y.

Scott Penn, VP of Business Development at EasyCare: Most dealers are offering more products these days specifically designed to cover items pertaining to a finance type (purchase vs. lease) or mileage band (high-mile sales). The key is for a dealer to have a defined menu presentation strategy, with multiple menu defaults for different purchase types. They should have different benefits on these menus and try to limit them to no more than six benefits in the full package, and at least two in the base package. The benefits should be organized by the kind of exposure they fill. They will mostly be designed to cover an exclusion of factory coverage, a financial exposure attached to the financing, or a safety or appearance concern. They should be bundled or grouped in these categories, to streamline the description of the service and to establish the benefit of the offer in order to avoid confusion for the customer. By adopting this kind of strategy, the dealer can carry a portfolio of nine to 12 product offerings overall to cover all possible exposures or services on the different purchase scenarios. All menu defaults should then be set up with a maximum of six benefits from that portfolio that make the most sense, based on the length of anticipated loan or ownership period and the mileage band of the vehicle being purchased. This will lessen confusion in the presentation and clearly define the highest exposure or need for the customer.

“The key is for a dealer to have a defined menu presentation strategy, with multiple menu defaults for different purchase types.”

Joe Verde, President of Joe Verde Sales & Management Training Inc.: I understand customers’ frustrations because I just bought a new car and don’t know how to use half the features. Unfortunately, product knowledge and a canned six-point walk-around aren’t the answer, because those presentations don’t address the issue. To give customers a feature presentation that matters to them, a salesperson has to know what’s most important to them. To do that, they have to know who will be driving, why they want this vehicle, and how each driver will use it. That information becomes their “targeted presentation and demonstration,” and their foundation for closing the sale. Knowing which technical features to focus on is a skill 80 percent of the salespeople don’t have, because they’re as poorly trained as we were 30 years ago when the average salesperson only sold 10 units. Now, 30 years later, the average salesperson is still only selling 10 and still missing three out of four sales, because he or she isn’t taught how to find – and then use – those hot buttons to sell more. Dealers train techs so they can complete a $400 job to make $240 in gross, but don’t train salespeople so they can complete a sale for $3,000 in gross. They say it’s too expensive or they don’t have time, so the average salesperson misses 10 to 15 of those 20

CBTNews.com

CAR BIZ TODAY JULY 2015

Kain: Facebook is a social media channel that is working well for dealers.

News ASSOCIATION

J.D. POWER TO TAKE OVER NADA USED CAR GUIDE

The National Automobile Dealers Association’s 82-year-old “Used Car Guide” and its familiar orange and blue colors are soon to have a new publisher. Orange, Calif.-based J.D. Power agreed to buy the venerable “Used Car Guide” books (there actually are several editions), with the purchase expected to close sometime before Sept. 30. Financial terms were withheld. The roots of “Used Car Guide” date back to 1922, just five years after NADA was created. The federal government asked NADA to begin gathering more objective data, and over time the books covered retail, loan, trade-in Douglas Peterson and auction values. In a prepared statement, J.D. Power said it would continue to use the “Used Car Guide” title and brand during a transitional period, after which the J.D. Power brand will be used. However, operations for the publications will remain in McLean, Va. Douglas L. Peterson, president and CEO of McGraw Hill Financial, which owns J.D. Power, said his company can boost revenue and cut costs for the new acquisition as part of its Power Information Network platform. The guides’ “unique set of valuations” will fit in well with J.D. Power’s portfolio of benchmark data, he said. The acquisition is subject to federal regulatory review.

SUBPRIME VEHICLE LENDING PACE IS NOT SLOWING DOWN Non-prime auto lending activity continues to chug along at a nice pace, according to the “2015 Non-Prime Survey,” a benchmarking study cosponsored by the National Automotive Finance Association and the American Financial Services Association. This year’s report includes data provided by 45 financial companies, with additional data and analysis from

Experian Automotive and FactorTrust. The survey participants said non-prime portfolio value increased by an average 17% in their 2013-14 fiscal years, and Experian’s non-prime portfolio jumped 12%. It was the fourth straight year of non-prime portfolio growth reported in the survey. That said, delinquency, repossession and net charge-off rates also all rose last year. Separately, NAFA is offering a consumer credit compliance certification program to strengthen compliance professionals’ awareness of applicable federal and state laws. More information is available at www.nafassociation.com/ news/CCCO.html.

TRADE GROUPS KEEP UP PRESSURE AGAINST APR-DISCOUNTING LIMITS

A coalition of nine auto industry trade organizations is circling the wagons against a proposed restriction on dealerships’ ability to discount APRs on financial products, and asking Congress to rescind the associated federal guidance.

On June 11, those associations signed a letter urging Congress to pass H.R. 1737, a bill that would make the Consumer Financial Protection Bureau rescind its 2013 guidance. The CFPB thinks it would be good policy to limit dealers’ ability to discount APR to land a customer’s financing business, and to instead have lenders compensate dealerships with a flat fee that could not be discounted. The nine groups are NADA, the Alliance of Automobile Manufacturers, the American Financial Services Association, the National Independent Automobile Dealers Association, the American International Automobile Dealers Association, the Recreational Vehicle Dealers Association, the Recreational Vehicles Industry Association, the National Auto Auction Association and the Motorcycle Industry Council.

JULY 2015

CAR BIZ TODAY

CBTNews.com

LEADERSHIP

Stop Regarding The Fourth Quarter As

HIBERNATION TIME FOR DEALERSHIP CUSTOMERS Dealers who start planning now for aggressive promotions actually can grab big business late in the year. BY JEFF COWAN

t seems as though you only just hauled out the lawn chairs and fired up the grill. Your pool no longer needs the header on. You grab a cold beer. Then, just as you start to relax and enjoy the summer, it hits you: In just three months, your dealership’s fourth quarter will arrive. Inevitably, your business will slowly dwindle as the temperatures fall and the holidays quickly approach. Year after year, I see the same scenario unfold for dealers. A very few dealers I know show the foresight to plan ahead for the winter and manage to experience

Offer a free winter inspection for this vehicle

a great fourth quarter. A few others scramble at the last minute to make something out of nothing. The vast majority of dealers just lie down and use the “The holidays are approaching” excuse to explain why their fourth quarter business drops off by as much as 50 percent by the time December rolls around. I could write a book on how to become one of the successful dealership professionals in the first group, the select few who plan ahead and end up reap big business and even bigger profits during the last three months of the year. The key is to NOT buy into the old school thinking that holds, “It’s always been slow in the fourth quarter and that’s just the way it is.” Below I have listed some highly effective strategies I have seen work well to make the fourth quarter a productive period. Start putting these strategies into practice at your dealership, and you will start down the path to having something truly worth celebrating on New Year’s Eve.

FREE WINTER INSPECTION CAMPAIGN

Starting the week after Labor Day, start passing out a flyer to every visiting customer that offers, “Get your vehicle ready for winter with a free 32-point inspection!” Also, mount a massive full-database e-mail campaign and, budget permitting, advertise everywhere possible that you are offering the aforementioned deal. Make sure that your event applies to every vehicle that your customer owns, regardless of manufacturer. Notice that I am using the term “event.” That word conveys exactly the look and feel you want this promotion to exude. Schedule this promotion as a one-day event. The first Saturday of October is a great day to use. The entire day should be set up for nothing other than inspections. You may also choose to offer the free winter check-up over a two-week period or even throughout the month of October. Offer it for the one day and then extend it for the following few weeks, citing its “big success.” It’s just like when a Saturday vehicle sales event is held over for 22

CBTNews.com

CAR BIZ TODAY JULY 2015

repackaging can go a long way.

PUT SERVICE DEPTS. TO WORK

Get your service advisors involved. Starting in October, have each of them make five more phone calls, send five more texts, compose five more e-mails and write five more thank you notes each day. These messages should be sent to past customers whom they have not seen in more than a year, customers who are about to be due for scheduled service, those who have declined your dealership’s service offers, and anyone else who the service advisors believe could benefit from one of the promotions I mentioned Reward each sales advisor with a bonus for each

“THE KEY IS TO NOT BUY INTO THE OLD SCHOOL THINKING THAT HOLDS, ‘IT’S ALWAYS BEEN SLOW IN THE FOURTH QUARTER AND THAT’S JUST THE WAY IT IS.’”

person they get to participate. They are likely to be surprised by the favorable response. You will be, too. I have often seen service advisors continue with this customer outreach after the holidays, due to its great success.

REJECT ASSUMPTIONS ABOUT 4Q

There are a variety of additional steps your dealership can and should take to help build up a greater fourthquarter book of business. The recommendations I have discussed here are only a few that can have an immediate and very measurable impact. You are entering the time of the year in which people in the automotive business historically have assumed (wrongly) that customers are reluctant to spend money on their vehicles. This is simply not true. Your customers still drive their vehicles in the late fall and early winter. They still need services and repairs. Dealers need to cast aside orthodoxy here and think about their customers’ true, everyday needs. After all, the fourth quarter is the one time of year when people actually plan to shop. They typically have more to spend – or at least are willing to spend more and more often – and they will spend with your dealership, provided that you give them a little direction and motivation. Customers really do understand the harsh wear that a cold winter can inflict upon their vehicles. The fourth quarter is unique. It is actually a season of opportunity. While you are enjoying your brats, baseball and beer this summer, be sure to plan to seize that opportunity.

one more week because of “excessive demand.” This promotion works well if set up and executed properly. I have worked dozens of these, and the mindset of most customers is that they either already know their vehicle needs a winter inspection or they are not completely sure that it doesn’t.

HOLIDAY SPECIALS

Create these holiday specials and announce them by no later than the first of November. Think outside the box here. For example, I know many people who have asked for or have given sets of tires as gifts. Maintenance services, chrome wheels, details and gift certificates are other popular dealership items I have seen given as gifts. Layaways are great benefits to offer customers as well. How successful your dealership is with holiday specials will be determined by how aggressively you promote them.

SHUTTLE SERVICES

During the months of November and December, offer your customers “Christmas shopping shuttle rides” to the local mall and various other shopping centers. Two of the greatest challenges we all face during the holiday shopping crush are finding a parking space and negotiating traffic. Offering courtesy shuttle service to anyone who is willing to have his or her vehicle serviced can prove very attractive, especially on the weekends. Make it easy on your shuttle drivers by contacting the mall and shopping centers ahead of time, to let them know you will be bringing customers to their front doors but that you need a special drop-off/pickup area. Contact various retailers and see if they wish to be part of a special holiday coupon package for your customers who will be taking advantage of your shuttle. You will need to get the ball rolling on this by mid-August. I know many dealerships already offer Christmastime shuttle rides to the malls, but a little TOTOSEE SEEMORE MOREFROM FROMCHRIS JEFF COWAN ROLLINSGOGOTOTOCBTNEWS.COM CBTNEWS.COM

“YOU ARE ENTERING THE TIME OF THE YEAR IN WHICH PEOPLE IN THE AUTOMOTIVE BUSINESS HISTORICALLY HAVE ASSUMED (WRONGLY) THAT CUSTOMERS ARE RELUCTANT TO SPEND MONEY ON THEIR VEHICLES. THIS IS SIMPLY NOT TRUE.” JEFF COWAN President of Jeff Cowan’s PRO TALK Inc. In his 28th year of training, Jeff is recognized as the creator of the modern-day walk-around and selling processes for service departments. Currently partnered with NADA, EasyCare, NCM, MPi and other vendors and manufacturers, he is the nation’s authority when it comes to training service advisors and service support staff. Visit his website at AutomotiveServiceTraining.com and sign up for free, weekly training.

JULY 2015

CAR BIZ TODAY

CBTNews.com

LEADERSHIP

Evaluate

THE PROS AND CONS Of Training Your Dealership Employees REMOTELY It’s not as simple as comparing the lower cost of online learning, and webinars with the chance that employees might not retain material as well. BY CHRIS ROLLINS

s training of employees at dealerships effective (in terms of both delivery/retention and costs) when conducted remotely, or is it best conducted on-site and in person? This has been an intensely debated topic in training circles for years. My objective in writing this article is not to sway dealers for or against remote training, but rather to simply present some of the benefits and challenges that come with this methodology. Whether it fits your dealership’s business model likely will depend on the learning culture you have established, the processes you have in place, and your desired outcome. Before we jump into the pros and cons of remote training, though, let’s quickly review the rapid increase in training options. Remote training is not new. It used to comprise only conference calls and webinars, but now companies can turn to online virtual platforms with on-demand training 24/7. 2008 and 2009 marked the end to double-digit decreases in corporate training budgets throughout the U.S. economy, including the dealership industry. Training budgets were under the same squeeze as was just about every other line item in corporate America.

It can be easier to maintain employee engagement during onsite training sessions.

With technological improvements and improved Internet speeds hitting the market, the time was ripe for alternative options to deliver training in a manner that was more cost effective.

•

TIME MANAGEMENT. In your dealership, time is money! If you wanted to provide eight hours worth of training, you potentially could break it into eight weekly, one-hour remote sessions. You could take no more time than the typical lunch break from busy key people in the dealership, letting them quickly get back to productive activities.

•

ADJUSTABILITY. If a training date is on the team calendar, but something comes up at the last minute that makes your dealership shift its plans, it is a lot harder to adjust on your team’s schedules as well as with the trainer who blocked out that time and scheduled travel. With remote training, making adjustments on the fly is much easier.

•

TRACKING COMPLETED TRAINING. Remote training may be done by live teaching calls or webinars (recorded, so that your employees can access the session on demand) or through a learning management system (LMS) that tests at defined intervals, to improve the chances that trainees comprehend all of the material.

SAVING MONEY AND TIME

Fast forward to 2015. Remote training is definitely here to stay. Let’s take a look at some of its pros: •

COST EFFECTIVENESS. Let’s start with the most obvious benefit of remote training. When your dealership trains its people remotely, you save on the travel expense of bringing a trainer to you.

Some virtual training can be provided for as little as $25 to $30 per employee per month. At that cost, your dealership could train an employee at between $75 and $100 in a typical quarter. Also, you are eliminating the direct and indirect costs of bringing employees from several offices into one location. In comparison, a trainer may cost you at least $4,000 for a day, although if you can put about 40 employees in the class, the peremployee/per-day cost actually is about the same as with remote training.

All of these options provide a method to track which employee completed which portions of the training, so your dealership quickly realizes if someone has gotten off track with the planned training for the year.

RISK OF TRAINEE DISCONNECT

Now let’s take a look at some potential cons to remote training: •

CBTNews.com

CAR BIZ TODAY JULY 2015

DISENGAGEMENT. While the tendency might be to focus entirely on cost savings, remember that the concern most often expressed with all types of remote training is whether the trainee remains actively engaged throughout the session and retains the most important material. If your dealership cut training costs by 30 percent but suffered a 50 percent reduction in effectiveness, did you really save any money? The reason why engagement in remote training is so difficult to measure is not that your associates are not trying to learn. Rather, it’s their ability to multi-task during the training course. Let’s face it, who among us has not tried to do other work during a webinar or conference call and found out at the end that he or she missed some crucial material? If a dealer had his druthers, would he rather look into the faces of his sales reps during a sales meeting or would he be okay with talking over the phone? That answer is pretty obvious.

•

DOWNSIDE TO BREAKING A SESSION INTO CHUNKS. Sure, it can be easier on you from a scheduling perspective to break a large amount of training material into smaller bits and cover it in short sessions over time. But, if your goal is to improve performance in a particular area as soon as possible, is this the approach you want to take? Eight hours worth of actionable information that your employees learn today can be applied tomorrow. That’s not the case if they are waiting for weeks for the rest of the training material. SCHEDULING FREEDOM CAN BACKFIRE. Many managers have experienced the frustration of giving a well-planned timeline to complete a specific learning objective, only to find that 90 percent of it got completed at the 11th hour. The simple question ism “How effective was the cram session?” The harder question is, “How did it actually get completed?”

From experience in following up with managers, I can tell you that nothing frustrates them more than learning the vast majority of trainees completed the session at the last minute or while they were on vacation. Let’s just say it typically makes that dealership feel like it just wasted training dollars. •

INFORMATION “UNDERLOAD.” You probably haven’t heard that term before. At any dealership, its most seasoned employees will come to a point

in a training session when they feel like they have heard all this before. If that information is being doled out slowly in a remote session, this unintended effect can lead to some employees coasting through the training. Sometimes, overwhelming a trainee with material actually is beneficial. The “shock and awe” of hitting the class with a massive amount of material in a short timespan can really open the eyes of the veteran reps, who realize they still have more to learn. It is much harder to administer a big flow of learning material in a remote training session.

AT THE END OF THE DAY …

Should your dealership utilize remote training sessions? The answer to this question largely will be answered by your business culture and the leadership’s commitment to the process. Just remember that it does not need to be an either/or solution. Remote training as a supplement to on-site classes can prove to be one of the most effective tools to achieving the highest ROI on your training dollars. When approached strategically, a blend of remote and in-person training can help you achieve amazing results.

“SHOULD YOUR DEALERSHIP UTILIZE REMOTE TRAINING SESSIONS? THE ANSWER TO THIS QUESTION LARGELY WILL BE ANSWERED BY YOUR BUSINESS CULTURE AND THE LEADERSHIP’S COMMITMENT TO THE PROCESS. JUST REMEMBER THAT IT DOES NOT NEED TO BE AN EITHER/ OR SOLUTION.”

Dealers must seek confidence that employees are not multi-tasking during remote training sessions.

CHRIS ROLLINS President of Rollins Performance Group Chris has more than 17 years of sales and operational leadership experience and has been personally trained and mentored by such leaders as John Maxwell, Jeffrey Gitomer and Les Brown. He is focused on developing leaders and sales teams to achieve exceptional top- and bottom-line growth by building sustained momentum. Visit his website at LeadershipIsInfluence.com.

TO SEE MORE FROM CHRIS ROLLINS GO TO CBTNEWS.COM

JULY 2015

CAR BIZ TODAY

CBTNews.com

MARKETING

EFFECTIVE VIDEO For A Dealership Is As Close As Your

SMARTPHONE Employees can both conceive and shoot very targeted marketing video, without a big investment in camera equipment. BY LAURA MADISON

n 2015, car buyers are more connected and knowledgeable than ever before. A consumer today can arrange online to have a car built, chat instantly with a dealership on its website and complete nearly all the research necessary to make a sound buying decision. The industry has responded with a technology binge of its own, some of which sends instant, formulaic Internet responses or outsources human phone callbacks. Tragically, some of these “solutions” have almost entirely removed human connection from early communication with a prospective buyer. The consumer’s ease

of shopping has advanced, but dealerships’ ability to truly connect has regressed. The reality of commerce is that people still like buying from people. Customers stay loyal to and recommend businesses – be they a local coffee shop, a hairdresser or an auto dealership – that create some level of emotional connection. To really experience success in digital marketing, the auto industry needs to reconnect with its buyers. I think the best way to accomplish this connection digitally is with video. Now, of course, video is not a person-to-

“TO REALLY EXPERIENCE SUCCESS IN DIGITAL MARKETING, THE AUTO INDUSTRY NEEDS TO RECONNECT WITH ITS BUYERS. I THINK THE BEST WAY TO ACCOMPLISH THIS CONNECTION DIGITALLY IS WITH VIDEO.” 26

CBTNews.com

CAR BIZ TODAY JULY 2015

person connection, but at least it presents real people – which is an advancement over a lot of the marketing communication going on right now. Video is a truly exciting medium; most people love watching and sharing videos. The nature of video that gets the most attention online is one that provides direct and reasonably immediate value to the watcher, as opposed to many pure advertising messages. Such a “value video” gives insight, context, guidance; it may how a salesperson enthusing over his five favorite features of a hot-selling car model, or a finance manager explaining the benefits of leasing. A human being has been introduced (albeit one not in the same room) who represents your dealership, and that can help begin to gain the viewer’s trust.

PRICEY VIDEOGRAPHER NOT NEEDED

Apart from being the most important medium for creating an emotional connection, video is one of the easiest types of marketing content to execute. Too often, dealers delay a video effort because they think they need expensive camera equipment or to hire a videographer. However, high-quality video that effectively connects with prospective customers can be filmed with a smart phone. One YouTube channel I created for a dealership in attempt to increase visibility has garnered nearly a half-million views. All the videos on that channel were shot using my iPhone, with no additional equipment. Prospective clients are not looking to dealerships to create Spielberg-quality productions, and they do not demand spectacular hi-res quality. They are looking for genuine connections and answers to their questions. The video’s content, therefore, is immensely more powerful than differences in production quality.

Interesting and valuable videos can showcase competitive vehicle comparisons, highlights of a newly redesigned model, or trim-level breakdowns for a best-selling car. These can be simple, two- to five-minute videos that will increase a dealership’s visibility and push online researchers to come to the dealership in person.

FREE APPS HELP YOU ALONG

There are even free tools available for smartphones that make creating video that much easier. For example, YouTube offers an incredible free app called Capture that works on most smartphones. Capture lets you quickly shoot, edit and upload your video directly to YouTube. At that point, you can choose a title for the video, include a description and tag some keywords. Anyone who has the skills to send a basic e-mail will be able to use this simple app. Be sure to consider what keywords are relevant to your video; title the video something like “2015 Toyota Camry Features” and tag your location as well as 2015, Toyota and Camry. Doing so will help greatly with visibility when a prospective client uses a search engine for “2015 Toyota Camry” in your area. This video you are creating also presents an incredibly effective type of content to post to Facebook and your dealership website. With the hurdles to high-quality video this low, there is no good excuse for your dealership to delay in getting started. Remember, these should not be “come down to our store” videos; they should offer value, content worth a customer’s time. Just as your prospective customers are fast-forwarding through commercials on their DVRs, they are ignoring overly commercial messages on social media.

EVERYONE ON THE VIDEO TRAIN

Executing on a consistent flow of engaging video, and a fierce online presence, require buy-in at all levels of a dealership. Dealers: Strive to create an environment where generating video, or at least ideas about video, are accepted and encouraged. Make it clear that your culture asks salespeople to step away from the showroom front door and get involved in generating business. You might even consider special bonuses for salespeople who sell leads garnered from their video. Managers: Begin tomorrow by mentioning this video movement in your morning sales meeting. Explain to your colleagues that video can be filmed with a free smartphone app. Start brainstorming on compelling video topics. Salespeople: Get started immediately. Fumble through your first video and then look at what other dealerships have done, for inspiration. Put your own face out there; you’ll be surprised what a fiercely loyal customer base you can build.

Three categories of video that can create engagement with, and connection to, a dealership 1) RESPONDING TO FAQ The questions that are asked most often at the dealership offer good insights into where most customers get lost in the car-buying process. Try posing and answering a few of these frequent questions in video form, to target people searching for the answers online.

2) ASKING QUESTIONS OF THE VIEWER Here, one of your dealership’s employees can ask the audience what new features in a vehicle, or which models, most excite them. Connections can comment with their answers and opinions, providing insights into their interests and ideas for future content. This video demonstrates that yours is a dealership that listens to its customers.

3) COMPARING VEHICLES If you compare a strong-selling model with its direct competition, highlighting the differences/advantage and perhaps even including some driver feedback, you provide real value.

LAURA MADISON National Director of Sales for Alan Ram’s Proactive Training Solutions Laura is a former auto salesperson and now specializes in use of social media and personal branding by dealership clients. She has developed a “social selling” training course on how salespeople can effectively use social media and a personal brand to win more business. She has been featured in Automotive News and Advertising Age and on Edmunds.com.

TO SEE MORE FROM LAURA MADISON GO TO CBTNEWS.COM

JULY 2015

CAR BIZ TODAY

CBTNews.com

MARKETING

The Challenge Isn’t Just To Sell Cars To Gen Y, But To Gen Y Women Understand the particular triggers in a buying decision involving millennial women, and adjust your sales tactics accordingly BY ANNE FLEMING

ere are a couple of statistics that ought to command your attention as dealers. The estimated population of millennials, or “Gen Y,” in the U.S. is about 78 million. According to J.D. Power and Associates, millennials accounted for 27 percent of new car sales in 2014, up from 18 percent in 2010. And, 53 percent of millennial buyers are female. Thus, your dealership and its salespeople need to understand the nuances of selling and marketing to millennial women, if you want to grab generational market share. Our recently completed study at Women-Drivers. com tracked 620 reviews from women car buyers completed November 2014 through May 2015. The results shed light on similarities and differences 28

CBTNews.com

CAR BIZ TODAY JULY 2015

between millennial and non-millennial women buyers that will help your dealership craft agespecific sales techniques. While both millennial and non-millennial women ranked their satisfaction level with dealerships as very high, there were subtle differences between the age groups that you can leverage to improve your dealership’s bottom line.

INCREASING CONFIDENCE WITH THE CAR DECISION While “excited/excitement” was the leading emotion women buyers reported feeling while shopping for a car, No. 2 was “relaxed” for millennials vs. “apprehensive” for non-millennials (for whom “relaxed” was only the fourth-mostfrequent emotion).

Why this matters, and how to take advantage: First, consider why millennial women feel increasingly relaxed and confident choosing a car. Various studies have showed they feel more in control of their finances and making high-dollar decisions, learned more about finances from their parents than did the previous generation, and are more comfortable using technology to get the information needed to make an informed purchase. Astute sales advisors who respect this confidence will quickly win over millennial women who visit their lots. A good sales approach is to ask them lots of questions, respond to their questions truthfully, and only try to guide them through the information they haven’t yet gathered about the vehicle and terms. Above all, assume from the get-go that these

are smart women who have invested a lot of time learning about what they want. While they may come to you with less experience than older female generations, they have a lot more information at their fingertips – and are prepared to access it while in your dealership.

TRUST BECOMES MORE IMPORTANT “Trustworthiness” and “respect” ranked first and second with millennial women among reasons to buy from a particular sales advisor, followed by “understanding.” We also learned that millennials tend to visit slightly more dealerships than older women buyers. Why this matters, and how to take advantage: Many millennials are first-time buyers, so while they feel relaxed and informed, they also want a comfort level with their salesperson to cement their comfort with the choice. Trust and respect comes from realizing and outwardly demonstrating that these millennial women will have done their homework. Once again, a sales advisor should listen carefully to what the shopper is saying, answer questions honestly and avoid trying to help with ever decision. Learning to perceive where the real grey areas with this buyer can help accelerate a sales decision. Be there to help, not coerce; listen, don’t lead. GOING THE EXTRA MILE, LITERALLY The millennial women we surveyed travel 21.5 miles on average to buy a car, vs. 15.4 miles for non-millennials, and were less likely to shop at the dealership nearest their home. Why this matters, and how to take advantage: It is more important than ever to capture information about women shoppers during your screening process, and understand quickly what she needs. If you learn a millennial woman has other dealership choices closer to her home, it is crucial for you to demonstrate why the extra distance and time are worth it. Make a point of showing her your service center and its capabilities, for example. And, make sure your advertising strategy targets millennials, so they will be more inclined to stop at the dealership rather than drive past. Obviously, your dealership needs to advertise online, where 80 percent of millennials research car purchases. Also, make sure the subjects of the photos on your website and social media reflect the 53 percent of millennial buyers who are women, and the types of cars that tend to appeal to that age group.

“ALL THREE OF THESE TOOLS ARE EFFECTIVE AND FREE FOR DEALERS AND DIGITAL MARKETING PROVIDERS TO USE, YET ALL THREE ARE UNDERUTILIZED WITHIN THE AUTOMOTIVE INDUSTRY RIGHT NOW.” are more likely to shop around based on added comfort and convenience. So, during your sales process, be sure to showcase the service lounge and its comforts, concierge services and hours.

CHECKING YOU OUT ONLINE One in four millennials (vs. one in five nonmillennials) said they read customer reviews of car dealers online before visiting the dealership. And, 44 percent (vs. 34.5% for non-millennial women) visited the dealer’s Facebook page, with 67.5 percent (vs. 57.5%) “liking” it. Why this matters, and how to take advantage: It should come as no surprise that this buyer group is tech-savvy and –reliant. Dealers need to ensure their websites and Facebook pages have engaging and educational content. Plus, this millennial generation is very connected socially and have a multi-faceted engagement style with media, watching TV and the same time they post on social media and have chat sessions with their friends. Engaging this generation will require dealership leaders to step into their world and learn what resonates in this new style of communication. In addition to our Women-drivers.com survey,

I think other general trends shown in an early 2015 survey from Edmunds can help you fine-tune marketing and sales strategies aimed at millennial women. These findings include: Seventy-three percent of millennials believe they are savvier than their parents when it comes to buying cars. More than 50 percent of millennial respondents (compared with 37 percent of older Americans) said they are active in advising friends and family on car choices. Eighty percent of millennials use digital strategies to shop for cars, compared with 46 percent of people over age 35. One in three millennials used their phone to find contact information for a dealership, compared with one of four people in the 35-and-up group. While many buying habits are the same for millennial and non-millennial women, the differences I have discussed are significant enough that they need specific sales and marketing strategies. Punching the right buttons with younger buyers early in their car-buying experience can help forge a long-lasting relationship with your dealership.

APPEARANCE REALLY MATTERS “Style and design” and “color” ranked interestingly high in the millennials’ top factors for purchasing. While price was No. 1, “style and design” was second, then “brand and model’s reputation,” followed by “color.” Why this matters, and how to take advantage: A car’s appearance is more important to millennials than to previous generations. A savvy sales advisor will grasp that form is really important to a millennial woman buyer, and it is a mistake to focus only on function (safety, technology, convenience and warranty features). This may mean making an extra effort to locate a car in her preferred color. YOU CAN’T OFFER TOO MANY PERKS When it came to the service department, availability of a courtesy/overnight vehicle was the No. 1 factor for both millennial and non-millennial women. However, a wireless connection and café ranked second and third. Why this matters, and how to take advantage: Millennials have a higher expectation for “service,” and I don’t mean the kind with repair bays. They TO SEE MORE FROM ANNE FLEMING GO TO CBTNEWS.COM

ANNE FLEMING President of Women-Drivers.com Prior to her involvement in the retail automotive industry, Anne spent 20 years in brand and strategic product development for several international consumer product companies. Her leadership training led to the founding of Women-Drivers.com, which has been featured in the Wall Street Journal, ABC News, USA Today, Working Mother, Smart Money and other national media. Visit her website at Women-drivers.com and follow her on Twitter @Womendrivers.

JULY 2015

CAR BIZ TODAY

CBTNews.com

F&I

F&I And Sales On The Same Online Platform:

An Idea Whose Time Has Definitely Come If customers can complete credit applications and finance paperwork before coming to the dealership, the benefits are tremendous. BY PETE MACINNIS

oday’s digital shoppers expect a satisfying shopping experience. They want to be in control and demand information transparency and immediate gratification. These expectations for purchasing from auto dealerships have been shaped largely by other retail experiences – and by technology. Sadly, transparency, instant gratification and satisfying experiences are not words universally associated with the traditionally time-consuming car-buying experience (which averages around four hours, according to most studies). But, is this entirely the fault of the dealership? The onerous F&I process, which dealers tell us is the least-liked part of the process by customers, is a major culprit: Why? Because, in my view, it has remained siloed 30

CBTNews.com

CAR BIZ TODAY JULY 2015

and unconnected by technology with the rest of the shopping process – in fact, it is at the back end. To make transparency possible and build credibility and trust, I believe connecting the sales and F&I processes at the very front of the buyer’s journey is a crucial – and increasingly available – approach to respond to consumer expectations. It makes sense if more of the transaction can be completed online prior to the visit to the dealership. The showroom visit will be shortened, leading to an easier, more satisfying experience for the customer.

CUSTOMERS WANT FASTER APPLICATIONS In fact, according to a recent AutoTrader study, 72 percent of car buyers want to complete the credit application and financing paperwork online, thus minimizing the time they spend at the dealership.

By bridging the gap between sales and finance, the next generation of automotive F&I can reduce in-store bottlenecks and profit leaks caused by the traditional sales and finance department silos. How? Enabling consumers to do more of the car researching and buying online shifts the information pendulum advantage back toward the dealer. The even exchange of information and two-way transparency builds trust, accelerates the sales transaction and jump-starts the finance process. The way consumers shop for cars has changed dramatically over the last 20 years. However, the way cars are sold has remained relatively unchanged for 50 years. The time has come for this inertia to change. My company recently conducted Story continues on pg. 32

NEED TO INCREASE WEB TRAFFIC? “I have partnered with Force Marketing for the last 10 years because of their honesty, transparency and passion to help my business.” - Jeff D’Ambrosio, Owner Jeff D’Ambrosio Automotive Group

Jeff D’Ambrosio, Owner Jeff D’Ambrosio Automotive Group

VISIT THE LINK BELOW TO SEE HOW JEFF D’AMBROSIO AUTOMOTIVE GROUP

IMPROVED WEB TRAFFIC BY 150% IN 12 MONTHS. www.ForceMarketing.com/WebTraffic

Force Marketing | Atlanta • New York | 800-610-8905

F&I

a nationwide survey of dealers in which 86 percent responded that negotiation and the F&I process are steps in the purchase process that customers dislike the most. Over 70 percent of dealers surveyed agreed with the statement that “creating one easy, streamlined buying experience – by starting sales and finance together online – is a worthwhile goal for our industry to strive for.”

WALLS BETWEEN SALES AND F&I Most dealership sales and finance departments currently operate as disjointed silos, plagued with information disconnects, redundancies and other inefficiencies. As an example, during a negotiation sales managers typically eyeball the customer’s credit profile and use educated guesswork to land on finance terms without the involvement of their finance department or any real understanding of the intense complexities of their lenders’ loan underwriting, advance guidelines and pricing policies. When that deal structure does land in the finance department, finance managers frequently shotgun the credit application to multiple lenders through loan aggregators such as DealerTrack and RouteOne, hoping that lenders’ “black boxes” will return decisions that match the “educated guesswork” done at the sales desk. Given the natural human error baked into this process, the results of this dis-integrated sales and finance process are loan re-writes and unwinds, the possibility of perceived discriminatory lending practices and profit leaks for both dealers and lenders. For the customer, this means a painfully long transition from sales to F&I and more time spent on financial decisions. The time buyers spend in the finance office now averages 61 minutes, more than two-thirds the total maximum time consumers typically want to spend at the dealership (90 minutes). CUT THE GUESSWORK With sales and finance processes that start together online (with the buyers’ credit profile and vehicle of choice are matched against multiple lender programs), the odds of putting the customer in the right car and right deal structure improve significantly. Guesswork with finance terms and loan “shotgunning” are eliminated, so loan re-writes and unwinds are minimized. Dealership F&I departments are freed up to handle more deliveries, sell profitable F&I products and enjoy more effective and efficient dealer-lender relationships. This next generation of automotive finance department would be a win-win for both dealers and consumers, because it would bring finance to the front of the sales process. It would create a connected buying experience in which more cars are old, more profitably, in less time to happier customers – reducing risks in both profit and customer satisfaction by slashing the deal process from hours to minutes. HERE’S HOW IT WOULD LOOK Now, how would this next generation work, in terms of the interface a typical car shopper would experience? Here’s how:

The car shopper finds a vehicle in which he or she is interested, on the dealer’s website, either before visiting the dealership or just prior to the test drive. That customer clicks on a “Get Pre-Approved” or “Get Pre-Qualified in Seconds” button on the vehicle detail page, or VDP.

CBTNews.com

CAR BIZ TODAY JULY 2015

“CONNECTING THE SALES AND F&I PROCESSES AT THE VERY FRONT OF THE BUYER’S JOURNEY IS A CRUCIAL – AND INCREASINGLY AVAILABLE – APPROACH TO RESPOND TO CONSUMER EXPECTATIONS.” 2.

The customer next is then prompted to fill out a very short credit application that includes housing and income information.

The platform instantly pre-approves the qualified shopper based on the dealer’s defined credit criteria, matching customers’ credit, stability and ability factors against the vehicle of choice, with a menu of qualifying lender programs and terms. It’s important to note that the dealer remains in complete control of all finance filters. All payment terms could be configured to include dealer mark-up, doc fees, service contracts, etc.

The customer picks his or her payment terms and prints the “Pre-Approval/Pre-Qualification” certificate, which includes information about the vehicle of choice and the exact, near-final finance terms.

With no credit application to complete in-store and no lender decision to wait on, the buyer is transitioned from test drive to F&I much quicker.

The F&I manager is able to spend more time effectively selling additional F&I products. The customer’s perception of time spent at the dealership improves. CSI soars. Costly loan re-writes decline.

PETE MACINNIS Founder and CEO of eLEND Solutions Pete’s company focuses on providing a more efficient sales and finance process for the entire automotive industry. eLEND’s patented platform streamlines car selling by bringing more functionality online. Its suite of products includes CreditPlus, ID Drive and MOBILOT.

SALES SUPERSTAR

prospecting, staying on the phone, keeping your eyes and ears open at all times. WHAT’S THE GREATEST CHALLENGE IN YOUR POSITION, AND HOW DO YOU OVERCOME IT? I’d say

that Internet sales can be challenging, because the customer isn’t seated right in front of you. That can be tough, because in sales, you’re trying to develop that relationship and earn trust, which is easier when you can make eye contact. I try to compensate with prompt responses to e-mails, chats and phone messages. People want answers quick in this day and time.

NAME: BARRY CARVER DEALERSHIP: RONNIE THOMPSON FORD LOCATION: ELLIJAY, GA.

FAMILY: Wife, Shannon; son, Stephen, 25; and stepdaughter Zoe, 18.

know how to explain why. There’s an excitement to the close that I enjoy.

HOW MANY UNITS DO YOU AVERAGE A MONTH?

WHERE DO YOU FIND INSPIRATION? God is my inspiration. With him, all things are possible. I do talk with God about my job during prayer.

Last year, I averaged a little over 20 new and used cars a month, about 250 units for the year. That actually wasn’t my best year ever, but it was one of my best. This year, I’ll be real close to that number. HOW MANY YEARS DO YOU HAVE IN THE AUTO BUSINESS? This is year 12. I was at one dealership

for four months when I first started out in the industry, and I hardly even count that. I’ve been with Ronnie over 11 years, always in sales.

HOW DO YOU FIND NEW CUSTOMERS? Referrals would be No. 1. I find my previous customers are very willing to give me referrals. Also, repeat customers are very important. Other than that, it’s just basic

WHAT MADE YOU WANT TO BE A SALESPERSON IN THE AUTO INDUSTRY? I didn’t actually pick the

career; it kind of chose me. I was with a tractor and commercial equipment dealer before as a service manager. My boss wasn’t pleased with me, so he moved me to sales and it just took off from there, wide open. I just love it.

WHAT DO YOU LIKE MOST ABOUT YOUR JOB?

It’s more than money. I just like selling. I don’t quite

WHAT ADVICE WOULD YOU GIVE TO SOMEONE NEW TO AUTOMOTIVE SALES? Every day is a learning

experience for me. I’m not the best in the business. But, one of the things I see people do wrong ... Every day should be a continuation of the previous day. Don’t start from scratch. People come in here all the time acting like it’s their first day on the job, throwing away leads. The only break in your day should be when you go home. When you come back, you have to work every lead that was in front of you the prior day. I don’t see people doing that. They’re not continuing with what they started, they’re looking for new faces and new ‘ups’ every day.

NOMINATED BY HEATH THOMPSON I am the general manager at Ronnie Thompson Ford. Barry is the hardest-working salesman I have ever had the pleasure of working with. He is consistently our top salesman. His customers love him, and he shows up to work to work. He goes above and beyond to get deals to happen, and to make sure he is taking care of the dealership and his customers. Who’s Your Superstar? Do you have a salesperson who pushes the envelope each month and consistently lands at the top of the leader board? Does one of your professionals make considerable contributions to your community while maintaining a lead position in your dealership? We want to know! Send your nominations to the editor at newsroom@cbtnews.com and let us know why he or she is your store’s Superstar!

Brian Pasch is on CBT Automotive Network!

Brian Pasch, CEO of PCG Consulting, author of “Mastering Automotive Digital Marketing,” and one of the foremost authorities in automotive marketing, examines the latest topics and best practices that are changing the way auto retailers do business today. Brian interviews some of the industry’s brightest minds in the retail automotive business. View the latest show at cbtnews.com

TUNE IN EVERY WEDNESDAY

FIXED OPS

Service advisors should be great listeners and clear communicators.

How A Dealer Should Evaluate A Service Manager’s True Performance Everyone talks about metrics, but why not focus instead on behaviors that the manager’s service advisors show every day? BY GLENN PASCH

CBTNews.com

CAR BIZ TODAY JULY 2015

remember the first dealership for which I consulted. I had been asked to help with their service advisor processes. I walked into the dealership, and lots of faces poked out from cubicles, looking at me with great interest. Then, they quickly disappeared. During a training session later, as we broke off so I could work with the service advisors individually, one of the advisors walked over to me and spoke in a hushed tone. “Can I speak with you?” “Sure,” I replied, and off we went to find some privacy. This advisor said he had liked my session, but that I should not be put off if his colleagues didn’t listen. “We do pretty much what we want here as long as we hit our numbers.” He went on to tell a story with a laugh, about how he persuaded a customer to order service work that wasn’t really needed for another four months. “Because, I needed that money to hit my bonus and get my boss off my back.”

COUNTERACTING NEGATIVE PERCEPTIONS Now, this was six years ago. Many things have changed in the industry since then. However, I am sure the negative perception of the service department typified by my experience with this advisor still exists in the minds of many consumers when contemplate bringing in their cars for service. Many dealerships I have visited in the last year or so have worked very hard to change this perception. If a car owner calls in for service, their dealerships make sure he or she quickly gets an appointment, that appointment is confirmed, the necessary work is handled correctly, and follow-up is conducted in a very professional manner. What these dealers have realized is that more than 50 percent of an average dealership’s revenue is generated by the service department. Now, I believe that when it comes time for the dealer/GM to evaluate the service manager’s performance, it can be less strategic and beneficial to emphasize

“If the service manager is not holding his team accountable for the processes and habits used when dealing with every customer, then the service operation loses revenue.” certain key metrics – recognizing that the industry is all about management by critical performance indicators – than to emphasize whether the service advisors who report to that manager embody certain key habits and behaviors. If the service manager is not holding his team accountable for the processes and habits used when dealing with every customer, then the service operation loses revenue. However, the problem is that in dealerships around the world that I have visited, service advisors are judged only on metrics and are often overlooked on training that can develop those key habits and behaviors. Why are advisors shortchanged with training? My opinion is that because manufacturer’s incentives are focused on new vehicle sales, salespeople are where dealers choose to focus their training dollars.

HABITS TO ENGRAIN IN ADVISORS For those dealerships that wish to improve the performance of your service team, here are a few important habits that your managers or internal trainers can emphasize to improve performance.

HABIT #4: FOLLOW UP

Many service advisors fail to follow up with their customers once the service is done. Many service departments outsource this task to a third party or they even have another person in the dealership handle it. I believe long-term customer retention improves if the service advisor calls his own customers. If advisors are rewarded on retention (more on this below), then I would expect the service manager would mandate they reach out to their customer base to schedule the next service appointment as needed.

WHEN METRICS ENTER THE EQUATION Now, insofar as what quantifiable metrics service advisors should be evaluated by, a dealership needs to first decide whether its goals are principally

GLENN PASCH CEO of PCG Digital Marketing Glenn is a trainer at heart. He is a highly sought-after speaker, writer, coach and operations strategist, as well as a customer service fanatic. He has spoken throughout the U.S. and Canada, educating audiences on a variety of topics including business leadership, change management, digital marketing and the impact of this new technology on culture, business and society. Visit the website www.pcgdigitalmarketing.com

HABIT #1: BEING PREPARED

Top service pros devote a significant amount of time to knowing their services. How do you train a new advisor on your services? Is there a written training process that your service manager delivers? Are there ongoing training sessions to make sure the advisors’ skills remain sharp? Just handing the advisors specifications or price sheets and thinking they will become experts is not the answer. Set aside time each month to work with each advisor on a specific area of product knowledge so they can speak with confidence to your customers.

HABIT #2: LISTENING SKILLS

The late, great Dr. Stephen Covey said, “Seek first to understand, then be understood.” This is a great lesson for us all. The best service advisors I know are excellent listeners. They listen carefully to what their customers say and seek clarification when necessary. They use prompters such as “Tell me more” or “Go on,” which encourage the customer to speak freely about his or her automobile. This is not some verbal trick to get more revenue, but rather a way to focus the advisor on solving a problem for the customer (sometimes a problem that customer does not know how to articulate).

HABIT #3: CLARITY/TRANSPARENCY

The better that your service advisor can do in setting clear expectations for the customer in regard to time or cost, the more likely the customer will return in the future. Advisors need to be instructed and coached to explain all service work that will be required and the time expected to complete each task. The advisor should ask the best number to connect with the customer if something changes, and use it. Most customers will accept their service taking longer than expected, if the dealership has given them a heads-up so they can reschedule their day. Telling them about a delay when they have just arrived to pick up their car is never a good experience for either side.

short- or long-term, revenue-only or revenue plus retention. If you are fixated on increasing revenue per service ticket, then create a bonus plan that incentivizes up-sells of services. If your goal is to increase the menu of services sold, then again match the bonus plan to the service. CRM compliance or follow-up could be a metric that is inspected, if the dealership is focused on long-term retention of service customers. One metric I think is often overlooked is repeat customers or service retention. What if you rewarded the service department or advisor team on the number of repeat customers who came in each month? This would incentivize the team to make sure they work their database to bring more service work into your dealership. This strategy also offers the used car department access to a bigger pool of pre-owned vehicles. By aligning your training with the proper metrics and incentives, you will not only have a more efficient team of advisors, but also a larger pool of happy service customers.

PROTECTIVE’S VEHICLE PROTECTION PLAN IS A NO-BRAINER. Introducing the NEW Vehicle Protection Plan from Protective Asset Protection.

Coverage that better meets the needs of an evolving marketplace

Simplified contract and materials

Backed by over 50 years of reliably serving dealers

Updated F&I technology, including e-rating

For more information: visit

protectivevpp.com email

newprograms@protective.com

Protect Tomorrow. Embrace Today.

or call

888 326 2545

Limited Warranty Products, Vehicle Protection Plans (VPPs) and GAP are backed by Lyndon Property Insurance Company in all states except NY. In NY, VPPs are backed by Old Republic Insurance Company, Limited Warranty Products are backed by Western General Insurance Company and GAP is not available. Credit Insurance by Protective Life Insurance Company in all states except NY, where it is backed by Protective Life and Annuity Insurance Company.

TO SEE MORE FROM GLENN PASCH GO TO CBTNEWS.COM

JULY 2015

CAR BIZ TODAY

CBTNews.com

MARKETING

SEO Tactics That A Dealer Not Only Can Grasp,

BUT USE ADEPTLY A marketing-oriented dealership exec can police the calls to action, content alignment and other web elements to help his business. BY AMY FARLEY

very dealer by now knows the importance of a strong search engine optimization strategy. SEO is key to a dealership website’s organic rankings, and in turn those rankings drive customers to a dealer’s online showroom. But SEO isn’t just about keywords and site content, and that’s something many dealers don’t realize. Good automotive SEO is not “set it and forget it.” If you approach SEO that way, you’ll likely see diminishing returns. Instead, it’s something that your digital marketing team or you should be monitoring and working at regularly. With that in mind, this article gives some SEO fundamentals and oft-overlooked tactics that can help keep your organic rankings – and your business – on the rise.

CALLS TO ACTION Other than creating compelling web content, on what should a dealer or marketer focus when it comes to SEO? For starters, a well-strategized call to action (CTA) can guide a website visitor farther along the path to purchase, leading him or her one step closer to making a conversion. So, how can you create the most effective CTA? Determine what action you’d like a customer to take upon viewing a given website page. What question do you think that customer will have next? If the page being viewed compares two vehicle models, will he or she next want to learn more about pricing? Maybe vehicle features instead? The CTA must be relevant to what you believe the customer intends to find out, or else you won’t get any clicks. If you’re choosing a CTA for a button on a model page, for instance, “Check Inventory” might not perform very well, since that’s fairly generic language. “See Pricing” would be a better option, because it provides an answer to a question a site visitor logically would pose – namely, “How much does this vehicle cost?” It’s not just about selecting the best CTAs, though. When a page offers too many CTAs, a visitor can 36

CBTNews.com

CAR BIZ TODAY JULY 2015

become distracted. Several studies have shown that conversion rates tend to be lower on pages with too many competing CTAs. Proper placement of the CTAs also is crucial. Many dealer websites simply feature a long list of links on one side of the screen, even though most savvy Internet users have been trained over time to dismiss that kind of CTA layout as spammy. One or two quality CTAs situated in a part of the page where they can’t be ignored may prove to be the difference between a visitor making a conversion or leaving your site entirely.

WELL-ORGANIZED CONTENT People often forget that user experience is a large part of SEO. That’s why having content that’s well-organized and smartly laid out is so important. When customers visit your website, they are likely looking for specific information or content. If they can’t quickly and easily find what they’re searching for, then they may leave, resulting in high bounce rates. However, this can be avoided if that information is easy for them to find. Do you have pages on your website that simply have too much to say? You may choose to condense the content on those pages in order to make it more easily digestible to the average site visitor. Utilizing headers to section off paragraphs into clearly delineated topics is a great way to organize information, and non-text alternatives such as images, videos and infographics can help get your point across in a way that reduces wordiness and makes a page more visually appealing to a visitor. Streamlining your site navigation also is critical. Links to other pages on your site should be laid out in a natural and concise way. If you have many pages on similar topics (for instance, individual model landing pages), you may instead opt for a unified “Models In Our Inventory” page with a simple and attractive hub layout that shows links to these individual model pages.

Factual

Google Analytics

Infogroup

SEEKING SEO RESOURCES Neustar/ Localez

Acxiom

“Good automotive SEO is not ‘set it and forget it.’ If you approach SEO that way, you’ll likely see diminishing returns. Instead, it’s something that your digital marketing team or you should be monitoring and working at regularly.” CITATION ALIGNMENT Your SEO efforts that take place off your website are just as critical for a successful search strategy as the content you create. Dealers can’t neglect citation alignment, which means ensuring that their dealership’s name, address and phone number (NAPs), as well as any other relevant information, are consistent all across the web. Google’s Pigeon update, which was originally released in 2014, focused on increasing local search relevance, and so consistent NAPs have become even more important. These citations tend to increase a dealership’s local authority and presence in web searches. Essentially, they tell a search engine, “This is a Ford dealership located in Boulder, Colorado.” If there are accurate and plentiful citations, the search engine can trust that fact, and your dealership will be more likely to rank highly when a customer searches for a Boulder-area Ford dealer. Your marketing team or agency can submit correct NAPs information to the four major data providers (Neustar/Localeze, Acxiom, Factual and Infogroup), which will then disperse that information across 300 listing sites around the web. Since Infogroup reports that 85 percent of customers are unlikely to return to a business that displays the incorrect address or hours of operation, citation

alignment is valuable not only to your SEO plan but also to your business plan as a whole.

A/B TESTING WITH SEO Any true SEO expert will tell you that testing is an important part of an overall strategy. There are many options when it comes to calls to action, web page design, content focus and more. It’s a good idea to test each of those options in order to determine what is working and where there’s room for growth. Month to month, try new things or make small tweaks to a given page. For example, you may want to try changing the page layout, or just slightly altering a keyword phrase. Using a tool like Google Analytics, you can see the results and how they change over time. Perhaps a button rarely got clicks

when it was situated on the right-hand side of the page, but it performs much better on the left side. Perhaps the opposite is true. Either way, you can find this out through regular testing. Over time, continually optimizing and testing your content and the pages on your site will lead to greater organic success.

SUMMING UP The fundamental tactics I’ve reviewed here – coupled with the quality, optimized content that your digital marketing team already is creating for your website – can help your dealership’s organic SEO rankings rise. You should see tremendous improvement in key metrics such as time spent on your site and bounce rate.

AMY FARLEY Media and Communications Manager at Force Marketing Amy is a skilled writer and editor with a keen interest in digital trends and topics in the automotive industry. She utilizes her knowledge of what is new in retail automotive marketing to help Force – an automotive digital, direct mail and email marketing firm based in Atlanta – with its evolution of the dealer-to-customer shopping experience. Visit the website at Forcemktg.com

JULY 2015

CAR BIZ TODAY

CBTNews.com

“We have trained in your classes and on JVTN® since 2011. This year, we switched to the controlled rollout on JVTN®, and now we control what courses our team trains on, and wow, what a difference it has made! Along with doing group training on M-W-F, all of our managers do one-on-ones daily with our sales team and use your Monthly Planning Guides. Now we practice exactly what we need to take our store to the next level. We focus on the selling process, we don’t skip steps in the presentation and we use your 3-pass negotiation method to create urgency. It’s been incredible! We realized a 29% increase in our units in 2014 from 565 to 725 and more importantly, we took our gross up $711,347 for a 71% increase! Joe, it’s not magic … but it works like magic. Having a clear plan for the day, week, month and year – and the proper tools to execute that plan is what dreams are made of.” – Brian Nesbitt, GM, Fred Beans CDJ, PA

10 Million Reasons Why You Should Train On JVTN®

hat is JVTN®? It’s simply the most powerful online automotive sales training in the world! Over 10 million chapters of our courses have been taken by salespeople and managers who get immediate results by developing the critical skills we cover that most would never learn otherwise. What would Joe Verde teach our salespeople? The complete sales process... How to sell a car today. No salesperson will be left behind, not knowing what to say or do when they get a customer. Word for word – we’ll show them what to say from the greeting to the delivery! How to close the sale, overcome objections and bypass price on the lot. We teach your salespeople the words and processes to handle every objection, including price, that comes up during the sale, closing and the negotiation. How to build your business by phone / internet. Phones ring and leads come in daily, so we teach salespeople the complete process of taking calls and leads and making outgoing contacts, to turn more lost sales into be-backs, and more contacts into appointments that show. How to follow up, prospect and retain your customers forever. Again, word for word on everything they need to say and do to build your future business. JVTN® even includes a powerful, easy to use mini-CRM built just for salespeople.

JVTN® – The Easy Way To Grow Sales How would JVTN® benefit your dealership? That’s easy ... you’ll make more sales & more money!

n More floor traffic at no extra expense n Put more internet & phone leads on the lot n Sell more units every month n Definitely improve your gross per unit n Lower your turnover in sales

RDE SAL VE ES E

EXCELLENCE

“Units are up 29% gross 71% “I went from 14and to 25 units!” from your classes and JVTN®”

YEARS OF 1985–2015

198 5 – 2015

JVTN – #1 ONLINE TRAINING ®

3 30

AINING,I TR N

The #1 Training Company In The Car Business

AG MAN EMEN T

JOE VERDE

Expect more results “What a person needs to succeed is someone who expects him to!” – Frank Clark I asked a General Manager what the sales goal was for the month. His reply, “We don’t have goals, we know they will sell something.” It’s amazing what salespeople can do when they’re trained, managed and expected to do a good job, and how little they do when nothing is expected. There are 2 kinds of dealers and managers who train with us in our workshops and online with JVTN® ... those who are 100% committed and train online and attend every class with every manager and salesperson, and those who will send a token few and wait to see what happens. By default, when dealers and managers are involved expectations are higher, sales and profits are through the roof, and the dealer congratulates everyone. When dealers and managers aren’t involved expectations are lower, along with their results, and the dealer and managers blame everyone else. We have a sign in class... Send us a person – we’ll change and improve the person. Send every salesperson and manager and we’ll change and improve the entire dealership. Expect more and get involved with our training 100%. You’ll be amazed at what your group can accomplish.

JVTN® is the only Automotive Online Sales Training with...

n Role Play Games and Timed Practice Sessions n Dedicated staff of Certified JV Training Coaches to help your team develop their skills n Training & Performance based Certification to turn your training videos into skills

Get Joe’s New Book FREE!

n Mini-CRM built just for JVTN® Subscribers – Joe's Virtual Sales Assistant® (VSA® )

Call Now • 888-712-6647

Go To: JoeVerde.com/CBT

JOE VERDE TRAINING WORKSHOPS Sales Workshops

Management Workshops

n How To Sell A Car & Close The Sale Aren’t you tired of explaining why you don’t sell more? Sign up now.

n Team Leadership This is the critical class managers never got on “Sales Management.” Attend this workshop first.

n How To Close The Sale, Overcome Objections

n Negotiating & Desking Improve your sales and gross with this easy ‘customer friendly’ 3-Pass Desking Process and increase Satisfaction Scores at the same time.

And Negotiate Get solid buying commitments, more deliveries and higher gross. n Internet / Phone Business Development You’re only missing 8 out of 9 deliveries from your lead sources. We fix that.

Don’t Miss Out – Seats Are Limited!

Call Now • 888-712-6647

n Train The Trainer You train to improve & grow. If you don’t train, you don’t & you won’t! Sign up today.

COMING FEBRUARY 2016

Patrick Lencioni

New York Times best-selling author, speaker, consultant and founder and president of The Table Group

Jason Dorsey

New York Times best-selling author, speaker, Millennials researcher, and award-winning entrepreneur

THE AUTOMOTIVE INDUSTRY’S TOP THOUGHT LEADERS, TRAINERS, AUTHORS AND CONSULTANTS WILL BE CONDUCTING OVER 70 BREAKOUT SESSIONS

Attention Dealers, GMs, GSMs, Sales Managers, F&I Managers, Marketing Directors, Service Managers, Internet Managers, BDC Managers and Pre-Owned Managers The CBT Automotive Sales, Service and Marketing Conference & Expo addresses the needs of every area of your dealership. The automotive industry’s top thought leaders and nationally recognized keynote speakers will come together to present powerful general sessions, more than 70 breakout sessions and thought-provoking panel discussions in what promises to be the most comprehensive and information-packed event in retail automotive.

Visit CBT Conference and Expo.com for more information

There are many reasons to join an NCM® 20 Group. But one thing consistently tops the list. It’s tough to compete with the value of peer accountability and access to NCM’s unparalleled Benchmark® data. But the main reason our members value our 20 Groups is simply the experience and quality of ideas they are able to take back to the dealership.

20 Groups Accepting Members:

Sometimes, all it takes is an outside perspective to illuminate your operation’s areas of improvement. And the ideas coming out of our meetings are brighter than ever.

Kia Service 20 Group

Aug 2015

Denver

BHPH Service 20 Group

Sept 2015

Atlanta

Nissan 20 Group

Oct 2015

New Orleans

Buick GMC 20 Group

Oct 2015

Atlanta

Pre-Owned 20 Group

Fall 2015

Various

Ford 20 Group

Fall 2015

Various

We have several of our 20 Groups currently accepting members, so come enlighten and be enlightened.

877.803.3631

20 GROUPS | CONSULTING | EDUCATION | BUSINESS INTELLIGENCE | TRAVEL SOLUTIONS