Dealership Innovation Guide - Q1 2013

Dealership

INNOVATION

GUIDE

A DrivingSales Publication

Quar terly Ranking of Dealership Vendors and Best Practices

Inspire

1st Quarter • 2013

Motivate

5 Tips to Increase your “Wins” at Wholesale Auctions

LEADERSHIP

By Todd Kinzle - Page 14

Report: Inventory Metrics

By Dennis Glabraith - Page 20

Challenge

BACK to BASICS:

Building Your Reputation

By Brent Albrecht - Page 32

Facebook’s New “Nearby”

By Lindsey Auguste - Page 44

Leadership

By ADAM GROSSMAN - Page 16

Featured Dealer Chris Hill

Page 28

Dealer Satisfaction Award results - Page 6 Visit DrivingSales.com to view more than 8,000 verified dealer ratings of over 800 vendors in 28 categories.

I dig deep - analyzing the data of the industry’s latest trends and consumer studies - helping find the formula that fits each client’s needs.

Don Blanchard, Abstract Data Interpreter

MasterCall Solutions Dealer Branded Mobile Apps Science Driven Direct Marketing that gets Results www.DMEautomotive.com Images © Steve Thornton

888-262-7982

Dealership

INNOVATION

GUIDE

A DrivingSales Publication

Quar terly Ranking of Dealership Vendors and Best Prac tices

Dealership Executives, Happy New Year and welcome to what is certain to be a killer 2013!

With the NADA Convention on top of the auto industry’s mind at this time of year, it’s important to take a minute and realize how many automotive professionals out there are dedicated to the success of dealerships. Dealers across the country would certainly have a more difficult time running their store operations without the help, guidance, and support of their vendor partners.

Now, don’t get me wrong, there are plenty of people out there to game the system and make a buck or two, but for the most part, we’re operating in an industry with experts who are willing to take the time to share what they know to make us better.

Many people are probably heading to the NADA Convention with the intention of finding a new solutions provider or replacing a current one. Selecting a vendor to work with is not easy and not cheap. Finding a vendor partner is a substantial investment and one you don’t want to have to do often. If you need help in selecting someone, head over to our DrivingSales Vendor Ratings (www.drivingsales.com/ ratings): •

View ratings and reviews for a variety of companies and products.

•

Learn what real dealers are saying, both good and bad, about vendors in the industry.

•

See how your vendors and potential new ones stack up in the market.

DrivingSales works tirelessly to verify each review that comes in to limit and ultimately eliminate spamming or gaming the system. We have a team of people dedicated to calling and verifying each review so that the dealer community gets accurate, realtime information empowering them to make relevant and informed decisions.

Make informed decisions about your vendors through DrivingSales Vendor Ratings, have a great NADA Convention experience, and let us know what we can do to help your store be more successful in the upcoming year. We’re here to serve you.

Here’s to 2013,

Jared Hamilton, Founder of

DrivingSales is a third-generation car dealer and technology geek. His passion for this industry and for tech has inspired him to help dealers gain access to better information, faster.

Meet the Team Jared Hamilton Founder, DrivingSales Inc. @jaredhamiltondDS Lindsey Auguste Editorial Director lindsey.auguste@drivingsales.com @lindseyauguste Jeff Pease Art Director jeff.pease@drivingsales.com @jeffpease Larry Schlagheck Director of Advertising larry.schlagheck@drivingsales.com @larryschlagheck Bart Wilson Business Development bart.wilson@drivingsales.com @bartrwilson Paul Hamilton Production Manager paul.hamilton@drivingsales.com @pbhamilton

Jared Hamilton Founder, DrivingSales, LLC

Tommy Bay Director of Marketing tommy.bay@drivingsales.com @tommybay Eric Miltsch Director of Product Strategy eric.miltsch@drivingsales.com @emiltsch

Dealership Innovation Guide

DrivingSales, LLC • 1st Quarter - 2013 • 3

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DealerSocket 2011— Efficiency and Profitability at Your Finger Tips.

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oc Guide About This ket , In c. 2 Guide is published quarterly by Dealership Innovation 01 |A DrivingSales LLC. To1subscribe, visit DealershipInnovationGuide. ll R igh com. Printed in the United States ts R of America. Copyright © ser DrivingSales LLC 2012. All rights ereserved.

No part of this ved publication may be reprinted or otherwise reproduced without publisher’s written permission. Dealership Innovation Guide and DrivingSales LLC assume no responsibility for unsolicited manuscripts or photographs.

4 • 1st Quarter - 2013 • DrivingSales, LLC

Letters To The Editor Dealership Innovation Guide and DrivingSales LLC welcome Letters to the Editor. If you have questions about the guide, or would like to make a comment, or voice an opinion about the guide, DrivingSales LLC, or the industry in general, please feel free to write us.

Please send letters to lindsey@drivingsales.com. Include a telephone number and address (preferably email address).

Letters may be edited for clarity or space. Because of the high volume of mail we receive, we cannot respond to all letters.

Dealership Innovation Guide

Table of Contents

1st Quarter

FEATURES 14

2013

5 Tips to Increase your Wins at Wholesale Auctions

By Todd Kinzle

FEATURED DEALER 28

Chris Hill

A shopper will spend over 18

hours online doing research before they even consider contacting

a dealership, let alone step foot

on your lot. Learn how Chris Hill

from Bill Jacobs Auto Group has

16

Back to Basics: Leadership

20

REPORT: Inventory Metrics

24

RECAP: DrivingSales Executive Summit

26

Mobile Trends

32

Building Your Reputation

36

OPINION: Carfax’s Policies

44

Facebook’s New “Nearby”

46

Old School vs New School

leveraged his entire team to meet

the expectations of the customer’s digital experience.

06

By Adam Grossman

By Dennis Galbraith

By Lindsey Auguste

By Aaron Strout

By Brent Albrecht

By Jeremy Alicandri

By Lindsey Auguste

By Wendy Lowen

On DrivingSales.com, dealers can rate their vendors. All reviews are

verified to be legitimate and posted for you to learn who the best vendors are – directly from your peers.

Dealership Innovation Guide

DrivingSales, LLC • 1st Quarter - 2013 • 5

Over 10,500 unbiased vendor ratings submitted by verified dealers.

CATEGORIES 8

Call Management Chat CRM/Sales Department Dealership Management Systems (DMS)

9

Fixed Ops Solutions Internet Lead Management (ILM)

10 Internet Trainers Inventory Pricing Mobile Sites New Car Leads

11 Owner Marketing Reputation Management

12 Search Engine Optimization (SEO) SEM - PPC Used Car Advertising Websites

View detailed vendor reviews written by verified dealers at DrivingSales.com/Ratings

Call Management Solutions that track inbound calls through designated tracking phone numbers so that you can manage your marketing spend and increase ROI.

Company

Product

Score Rating Rec

CallSource

CallTracking

909.82

Who’sCalling

Who’s Calling

7.25

CAR-Research XRM

Century Interactive CallRevu, LLC

Call Tracking / Ad Sourcing Solution

Call Tracking

CallRevu, LLC

996.43

93%

47.45

100%

4.68

100% 67% 100%

Chat Products These solutions allow you to meet, greet and converse with customers who visit your website, as well as set appointments, generate leads and provide better customer service.

Company

Product

Score Rating Rec

Dealer e Process

Dealer e Process Live Chat

45.04

Activengage

Activengage Chat

ContactAtOnce! LLC

CarChat24

ContactAtOnce! Auto Dealer Chat

CarChat24 - 24/7 Fully Staffed Chat

Client~ConneXion Chat~ConneXion

121.96

100%

10.31

100%

0.73

0.70

100% 75%

100%

CRM/Sales Department Variable Ops: these are CRM systems that track all your walk-in, phone and Internet customers through the complete sales funnel and owner life-cycle. They allow for advanced customer segmentation and marketing and track your sales activities by employee to make your team more effective at attracting customers and managing relationships.

Company

Dominion Dealer Solutions

CAR-Research XRM DealerSocket

ProMax Unlimited VinSolutions

Product

Score Rating Rec

CAR-Research XRM

50.25

ProMax Unlimited

0.20

Dominion CRM

DealerSocket CRM

VinSolutions MotoSnap CRM

161.35

96%

2.34

66%

0.06

67%

99% 90%

Dealership Management Systems (DMS) Dealership Management Systems connect all your dealership departments with accounting and maintain your dealership data in one central place. These ratings are for the DMS systems themselves, NOT the solutions that plug into the DMS systems such as a Desking or CRM solution.

Company

Product

Score Rating Rec

DealerTrack

DealerTrack DMS

112.01

50%

36.49

75%

Auto/Mate Dealership System

AMPS

361.95

Reynolds and Reynolds

ERA-IGNITE

87.01

ADP Dealer Services

ADP Drive DMS

36.49

Reynolds and Reynolds

Reynolds ERA DMS

8 • 1st Quarter - 2013 • DrivingSales, LLC

100%

80%

25% Dealership Innovation Guide

Fixed Ops Solutions Customer Relationship Management systems for the Fixed Operations.

Company

Product

Score Rating Rec

Dealer e Process

Virtual Service Consultant

9.92

DMEautomotive

The Customer Journey

0.57

CIMA Systems

CAR-Research XRM

CIMA Car Care Service Menus

Service Drive Control Manager

ELEAD1ONE AutoPilot

379.57

98%

1.03

100%

100%

0.19

100% 100%

Internet Lead Management (ILM) These Internet Lead Management solutions are built exclusively to handle incoming Internet leads and manage your Internet sales process. Many full-service CRM systems include Internet Lead Management features, but the ILM systems listed below are stand alone utilities built exclusively for managing Internet Leads.

Company

Dominion Dealer Solutions

CAR-Research XRM

VinSolutions

HookLogic - AutoHook ELEAD1ONE

Dealership Innovation Guide

Product Dominion ILM

Internet Lead Manager

VinSolutions MotoSnap™ ILM

Lead to Show 1.0 ELEAD ILM

Score Rating Rec 250.18

0.07

67%

0.07

100%

20.42

0.07

99%

100% 100%

DrivingSales, LLC • 1st Quarter - 2013 • 9

Internet Trainers Consultants and trainers who focus on bringing online success to dealerships. General Dealership Consultants, Sales Trainers, and Fixed Operations Consultants belong in their own categories.

Company

Product

PCG Digital Marketing

Brian Pasch

14.76

eXtéresAUTO

eXtéresEDU - Dealer Training

1.73

KPA

Phone Ninjas

DealerKnows Consulting

DealerWebinars.com presented by KPA

Phone & Internet Training Joe Webb

Score Rating Rec

587.86

100%

8.69

100%

97%

92%

100%

1.12

Inventory Pricing With market volatility and transparency increasing online, knowing how to price your inventory is a science critical to increasing your store’s profitability. These “Inventory Pricing” tools collect various forms of market data to help define the optimum pricing for your inventory to maximize both Gross and Turn.

Company

Product

Score Rating Rec

DealerTrack eCarList

TrueTarget & eCarList HD

4.71

vAuto

Black Book FirstLook

VinSolutions

vAuto Pricing, Appraising Tools

Black Book Used Car Guides...

FirstLook - 360º Market Pricing

MotoSnap Market Pricing

196.10

100%

0.76

67%

0.51

100% 0%

0%

0.09

Mobile Sites These websites are built specifically for mobile browsers to cater to customers surfing the web from mobile devices.

Company

Product

Score Rating Rec

DealerOn

DealerOn Mobile Sites

5.54

WorldDealer, Inc.

WD2GO Mobile Websites

2.01

Dealer e Process

DealerFire Cobalt

Dealer e Process Mobile Websites

DealerFire Mobile Websites Cobalt Mobile Websites

391.99

100%

2.01

100%

2.01

100% 100% 100%

New Car Leads These providers collect and aggregate leads from their web properties and from partner sites, then distribute these hot leads to dealers. Currently this category is for both finance and vehicle leads.

Company

Product

Score Rating Rec

AutoTrader

New Car Advertising

1.37

50%

1.13

100%

Dealix

Dealix New Car Leads

677.38

Autofusion, Inc.

Third Party Leads

1.13

Autobytel Inc.

Autobytel New Car Leads

1.13

Dealercentric Solutions

Get Preapproved n Seconds

100% 100% 100%

*Category scores are computed per category and are not comparable across the board.

For questions about Vendor Ratings, please email to bart.wilson@drivingsales.com 10 • 1st Quarter - 2013 • DrivingSales, LLC

Dealership Innovation Guide

“After installing ELEAD1ONE, we had our best net profit month in the history of the store. I have to admit, the continued use of the system and the call center has reaped positive benefits for our store. There is absolutely zero doubt in my mind that our company did their homework and made the right CRM decision.”

Jeff Hicks General Manager, Crown Honda of Greensboro

866. 989.8077 | sales@eleadcrm.com | www.elead-crm.com

© Data Software Services, L.L.C. 2010-12

Owner Marketing These targeted solutions help you mine and segment your customer database, and then market to them successfully. These solutions can market to your customers through email/direct mail/phone and other means.

Company

Product

Score Rating Rec

CIMA Systems

Complete Virtual BDC

93.86

CAR-Research XRM

Owner Marketing

8.07

J&L Marketing, Inc.

OneCommand

Dominion Dealer Solutions

Sales Events

OneCommand

Dominion Marketing Services

189.35

100%

15.31

100%

1.90

100% 100% 100%

Reputation Management These products and services help a dealership manage its online reputation. They may assist with review collection, monitoring, resolution and promotion of online reviews.

Company

Product

Score Rating Rec

DealerRater.com

DealerRater Certified Dealer Program

129.51

eXtéresAuto

Online Reputation Management

466.23

100%

Dominion Dealer Solutions

Dominion Prime

17.09

Digital Air Strike

Reputation Logix

4.22

Cobalt

Dealership Innovation Guide

Reputation Management

11.93

97%

100% 100% 100% DrivingSales, LLC • 1st Quarter - 2013 • 11

Search Engine Optimization (SEO) These companies will help get your website optimized so that it shows up higher in the search engine rankings. These services generally include both on-page and off-page optimization.

Company

Product

Score Rating Rec

Dealer eProcess

Power PageRank SEO

48.45

KPA

TK Carsites PowerSEO

4.33

eXtéresAuto

PCG Digital Marketing Autofusion, Inc.

eXtéresAUTO - SEO

SEO & Strategic Internet Marketing Search Engine Optimization

124.74

96%

41.20

100%

2.72

100% 100%

100%

SEM - PPC These solutions help you determine how to invest in and execute a Pay-Per-Click campaign on the major search engines for greatest ROI.

Company

Product

Score Rating Rec

Local Search Group

Search Engine Advertising

281.45

PCG Digital Marketing

PPC Management Service

28.59

Dealer eProcess

POTRATZ

Drive Digital Group

Dealer eProcess Digital Marketing

Search and Behavioral for Website SpeedSEM

284.88

100%

59.47

100%

2.20

100% 100% 100%

Used Car Advertising These consumer facing websites allow you to display your inventory to in-market consumers. They make huge media buys to attract customers to your inventory, and to increase your walk-in, phone and web leads.

Company

Product

Score Rating Rec

GetAuto.com

Advertising & Leads Program

31.82

Dealix

Cars.com

AutoTrader.com

Mojo Motors, Inc.

UsedCars.com

Cars.com Online Advertising Used Car Advertising

Mojo Motors, Used Car Marketing

622.04

100%

9.22

100%

5.13

3.59

100%

17%

100%

Websites These full service websites are built to be the main hub of your dealership’s online presence and are central to your dealership’s marketing, branding and customer service. Note: Micro Sites and Mobile Sites are rated in their own categories on DrivingSales.com.

Company

Product

Score Rating Rec

DealerOn

DealerOn - Flex Sites

147.41

DealerFire

DealerFire Custom Websites

12.91

Dealer eProcess

Dominion Dealer Solutions Autofusion, Inc.

Dealer eProcess Dealer Website

Dominion Websites

Custom WebSolutions

185.28

100%

94.05

99%

6.27

98% 100% 100%

*Category scores are computed per category and are not comparable across the board.

For questions about Vendor Ratings, please email to bart.wilson@drivingsales.com 12 • 1st Quarter - 2013 • DrivingSales, LLC

Dealership Innovation Guide

How Vendor Ratings Work The DrivingSales Vendor Ratings site is the first formal mechanism for dealers to rate and review their vendors in a comprehensive, real-time vendor directory. It empowers dealers by allowing them to learn about all the solutions available and to view actual customer feedback, both good and bad, about how each solution actually performs.

Rules • •

•

•

Only dealership employees can post ratings and reviews. Reviewers are verified to ensure they are valid and eligible to leave reviews.

Dealership employees can only rate and review the products they have experience using. The ratings are a chance to hear from actual customers with live experience using the solutions in their stores.

Each reviewer must answer three questions to complete their rating: 1. How many stars does the solution deserve?

2. Would you recommend the solution to a friend?

3. Why would or wouldn’t you recommend the solution?

All three components of the review, along with the job title of the reviewer, are posted live to DrivingSales. com for all to reference when selecting new vendors.

Safeguards •

•

DrivingSales.com protects the anonymity of each dealer employee who leaves a rating and review.

However, DrivingSales requires valid name and contact information for each reviewer so that each reviewer can be validated.

Each review is passed through a variety of technological checkpoints to ensure vendors are not gaming the system. Furthermore, DrivingSales staff calls to verify a large percentage of the reviews.

Vendor Ranking In each product category the vendor solutions are ranked in real-time as each new dealer rating is submitted. The vendor products are ranked based on a weighted Bayesian Algorithm.

This is a standard mathematical calculation that looks at the number of stars the reviewer gave as well as the statistically valid sample size needed, relative to the competitive set, to create a ranking based on the statistical accuracy of the results. Sometimes a company with 3 stars will rate above a company with 4 stars if mathematically the first company has a higher probability of success based on the submitted reviews.

We encourage all dealers to rate and review their vendors by visiting DrivingSales.com/Ratings

Dealer Satisfaction Awards The DrivingSales Dealer Satisfaction Awards recognize those solutions with the highest vendor ratings. For each category within the vendor ratings there are three award winners, the “Highest Rated” vendor and two “Top Rated” vendors. These awards reflect products and providers with a proven record of success and excellence in serving their dealer clients. The Dealer Satisfaction Award trophies are presented annually.

Learn more at DealerSatisfactionAwards.com

Rankings Only dealership employees are allowed to rate their vendors on DrivingSales.com and all submitted ratings are verified.

The vendors are then scored and ranked using a weighted Bayesian Algorithm (shown below). Sometimes a company with 3 stars will rate above a company with 4 stars if mathematically the first company has a higher probability of success based on the submitted reviews.

w = (m*v 2 )*r+(v 2 *m)*c

The Vendor Ratings in this issue are based on the aggregate of all dealer ratings submitted from January 1, 2012 to December 31, 2012. *Category scores are computed per category and are not comparable across the board.

For questions about Vendor Ratings, please contact bart.wilson@drivingsales.com

5 “

Tips to Increase your “Wins” at Wholesale Auctions

If I didn’t need auction cars, I’d never buy them.

I

heard this comment from a Southeast dealer the other day.

I share it because the dealer has captured what I suspect is a commonly held sentiment among auto retailers: Buying cars from auctions is an increasingly risky and difficult business, particularly in today’s era of constrained supplies and increased competition among dealers to acquire used vehicle inventory.

But there are ways dealers are mitigating both the risk and difficulty of acquiring auction vehicles. They are making better, more informed purchase decisions to avoid making car-buying mistakes, and they are becoming more adept and efficient at working both online and physical auctions to increase their chances of acquiring the “right” cars at the “right” prices.

The following are five best practices that will help you make your auction purchasing a more productive and profitable component of your used vehicle operations.

14 • 1st Quarter - 2013 • DrivingSales, LLC

Go beyond “tried and true” local auctions.

Dealers say relying on one or two local auctions isn’t enough in today’s era of tighter used vehicle supplies. These dealers have doubled or tripled the number of wholesale auctions they now use to acquire used vehicles. Their new sourcing footprint often extends across several state lines. This shift can be a difficult change for some dealers/ buyers—it means traveling farther and going beyond the familiar. It also puts greater pressure to acquire the cars for the “right” money because of the additional costs for transportation and related fees.

The good news: Every dealer faces the same challenge, which means those who are able to expand their sourcing efforts in the most time- and costefficient manner have an edge over their competitors.

Set bid limits based on acquisition ‘cost to market’ margins.

”

This is the single-best way to ensure you don’t over-pay for vehicles. The cost to market metric measures the difference between the cost to acquire (and transport) a vehicle and its likely retail asking price. Example: If the cost to acquire and transport a vehicle is $10,000, and its prevailing retail asking price is $13,500, the acquisition cost to market is 74 percent, which leaves a 24 percent “spread” to cover reconditioning costs and front-end gross profit expectations.

Dealers use this metric to set limits for bids on every car they intend to pursue at physical and online auctions. Typically, this metric-enabled approach requires discipline to ensure buyers don’t let a desire to “win” a car overcome the more important necessity of acquiring vehicles with sufficient “spread” to retail them effectively.

Dealership Innovation Guide

cars that have the greatest likelihood to be “right” for their dealerships.

Expand your online auction participation.

Some industry observers predict that half of all auction vehicle purchases will be made online by 2015. The prediction owes to both current and emerging realities. Currently, many dealers recognize they cannot purchase the number of vehicles they need by solely participating in physical auctions. Many of these dealers now acquire 50 percent or more of their auction-purchased vehicles through online sources. At the same time, the auctions themselves see a more efficient and cost-effective upside to shifting their energies to online purchase platforms.

A related pointer for proxy bids: Auction statistics suggest many dealers hedge their proxy bids and offer less money than they would if they were bidding on vehicles in a live online or physical auction setting. As one dealer notes, this approach is “a waste of time. If you’re not bidding to win the car, why are you placing the bid in the first place?”

Minimize time spent on “bad” cars.

The first step here is to establish clear parameters for vehicles that are “right” for your dealership. For many dealers, a vehicle with a bad CARFAX or a marginal condition report means the unit isn’t worth their time to evaluate.

With these parameters, dealers are using technology and tools to efficiently sort auction run lists based on a vehicle’s known condition and history. This way, they don’t spend time researching cars that their experience suggests will be problematic. Dealers report this best practice helps them review a larger number of vehicles in less time, and focus their research efforts on Dealership Innovation Guide

The upshot: Dealers will need to become more proficient using online auctions.

Today, a growing number of dealers are becoming adept at participating in multiple online auctions and lanes at the same time, using technology and tools to help monitor when the cars they want hit the block and use a combination of live/proxy bidding to secure inventory.

Resolve arbitration issues consistently and quickly.

Unfortunately, some of the cars you “win” at auction bring a surprise or two when they arrive at your dealership. This is particularly true for vehicles purchased in online settings, where you haven’t physically examined the vehicle. The good news: Auctions recognize that dealers don’t like such post-auction surprises, and they’re working to improve the consistency and availability of inspection and condition reports. That said, it’s a dealer’s responsibility to arbitrate these issues with auctions when they occur.

information about the vehicle at the time of purchase. Second, we used this time-of-sale information as we inspected vehicles as they arrived at the dealership.

Third, if we found an inconsistency, we had a designated administrative assistant to begin the arbitration process with the auction. Finally, we actively monitored and managed our process to ensure the efficiencies we gained more than made up for the cars that didn’t live up to our expectations.

While our process for inspecting and arbitrating vehicles wasn’t perfect, it went a long way toward helping us ensure the “wins” we achieved at auctions were true winners when they arrived at our dealership.

About The Author:

Todd Kinzle is Director of Operations for vAuto Genius Labs and co-founder of AuctionGenius. He and two friends founded AuctionGenius with a single goal: Apply their technology development to solve an everyday problem for car dealers. Prior to AuctionGenius, Kinzle held sales and business development positions for technology and property development firms. Kinzle also served as an outreach minister for a church in Longmont, Colo., where he currently resides.

When I was a dealer, we expected that at least one out of every 10 cars we purchased at auctions would have an appearance or other problem that we weren’t aware of when we bought the vehicle.

To address this, we created a fourpart process: First, we captured all the DrivingSales, LLC • 1st Quarter - 2013 • 15

INTEGRITY

Back to Basics LEADERSHIP

Authors Note: This message is directed to leaders by which I mean anyone who chooses to apply the lessons. You don’t need to be the Dealer Principal to be a leader. According to the definition below, you simply need followers to be a leader. You may be the leader of a small team or you may just be the leader of yourself. Leadership is a practice requiring you to work consistently toward becoming the best version of yourself. If you do, followers will soon fall in line.

A

s we charge into the New Year, every leader should take a moment for personal introspection and preparation. Leadership, contrary to many opinions, is not an innate gift. Leadership is a learned skill that, like any other skill, takes deliberate practice to refine into a proficient aspect of your personality.

At its most basic level a leader is easily defined: someone who has followers.

High quality leadership is more subtle.

It takes place at the interpersonal level and focuses on goals such as inspiring, motivating, and challenging.

An organization’s culture is a clear reflection of the quality of leadership in place. Your dealership’s culture is akin to its personality and has a huge impact in how you’re perceived by customers, partners, your community, and potential employees. From another angle, the promise you make to the public about your culture, or who you are, is your brand. If this public promise doesn’t match the internal reality, you’ve got an organizational personality disorder and the makings of painful lesson in integrity.

16 • 1st Quarter - 2013 • DrivingSales, LLC

The Integrated Whole Management is doing things right; leadership is doing the right things. – Peter F. Drucker Integrity is often referenced in terms of moral or ethical standards which, while generally valid, isn’t necessary for our purposes. For the sake of this conversation, let’s refer to integrity as the alignment of an organization’s words, thoughts, and actions both internally and publicly. In this way, every element of the organization is an integrated part of the whole, seamlessly transitioning from one facet to the next.

Consider this important test of your organization’s integrity: Is there a difference between how your employees treat customers when you are watching and you are not?

Typically, your employees will treat your customers the same way they are treated by you. That is integrity at work and can either be a blessing or curse depending on…you.

The integrity of your dealership is a clear reflection of the integrity of its leadership.

As the leaders continue to refine themselves into the best versions of themselves the organization will follow. Here is a simple, though not easy, process for enhancing integrity within your dealership.

Dealership Innovation Guide

Step 1: Integrity for Yourself As a leader, your first step is to ensure your thoughts, words, and actions are integrated before you work on your organization’s integrity.. Step 1 is the most important because all of the other steps, which focus on the organization, are mere extensions of the personal lessons that the leader has internalized.

Take careful stock of yourself and ask the questions outlined in this process directing the lens on yourself instead of the organization. If you’ve never done these types of exercises before it will take a deliberate effort but the results can be astounding.

Step 2: Define your Values Your values are the strong foundation upon which you build everything else.

In many ways your values should be easy to put your finger on. It is imperative that the organization buys into whatever values are chosen. If they don’t, then there is little hope in propagating them. This leaves you with a couple choices: change your values or change those within the organization that don’t align with the values.

To establish your core values, assemble a group that includes someone from every level of the organization. The people included should have the respect of their peers even if they don’t maintain a leadership title. Work together to identify your organization’s most basic values and gain buy-in from this team. These people will now become ambassadors of the message.

Once you get your house in order, maintain buy-in by incorporating a values conversation into your recruiting process. For example you could provide a list of core values to a candidate and ask them to explain Dealership Innovation Guide

which one speaks to them the most.

You’ll find people will self-select themselves out if their values don’t align with the organization’s.

Step 3: Communicate Expectations Once you’ve identified your core values they will become the foundation for all decisions within the organization. Every time there is a question regarding which path to take, the decision should be a straight line back to your core values.

This becomes extraordinarily liberating.

If done properly, you can safely push decision making down to the lowest levels of the organization. When decisions get made at these levels, your organization becomes extremely efficient.

Imagine if your organization had a blueprint for decision making that was clearly understood by everyone and produced consistent results. Not only do decisions get made faster but this integrity is felt by everyone. Employees are thrilled to contribute, partners sense the empowerment and work extra hard to meet the standard, and customers are delighted at every turn.

Step 4: Reward Success Immediately Once the values are understood throughout the organization, look for opportunities to reinforce the actions you are looking for. Try to avoid the classic cliché of the core values hanging on every wall in your establishment with nobody ever referencing them.

Core values should become part of your daily discussions.

Any time someone exemplifies these Did you know? values, they should Within the neocortex (the be recognized. Don’t part of the brain responsible limit this praise to for higher reasoning) feedback yourself, your GM, or other management. connections outnumber signal This feedback should connections by as much as be available from all a factor of ten. At our most angles and should primal level, people are carry weight. Think physically wired to receive about implementing a feedback box, huge amounts of feedback. thanks whiteboard in the break room,

WHAT NOT TO DO Sometimes even more important that the list of things to do is the list of things not to do. Keep these five in mind as you influence your organization this year.

1. Don’t simply define your core values and hang them on the wall. Core values should be incorporated into daily discussions and decision making at all levels.

2. Don’t produce different sets of values for different parts of the organization. Core values should be just that, part of the organizational core. They are the foundation upon which all decisions are built.

3. Don’t allow some people to disregard core values. There are no special exceptions to core values and they should stand paramount to any particular person. If anyone in the organization witnesses behaviors counter to the core values they should be empowered to set things right.

4. Don’t change your core values. Core values should be relatively immutable. Now this doesn’t mean that all change is prohibited, but changes to the core should happen in a very measured manner in response to significant changes in the environment.

Look to our nation as an example. In over 200 years we have amended the constitution, which represents our core values, only a handful of times.

5. Don’t worry about getting it all right in the beginning. Integrity is something that is developed over time, not overnight. Keep at it and reward successes.

Before you know it your organizational words, thoughts, and actions will all align.

DrivingSales, LLC • 1st Quarter - 2013 • 17

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or an electronic bulletin board or email list. Create some way to promote behaviors that align with the core values.

Incorporate this feedback into reviews, which should be happening as often as possible.. Feedback is a critical element in good organizational decision making so you should establish it as a core practice. Timely feedback allows us to shift on the fly and still produce the desired result. If we need to wait until the end of the year to receive feedback, the “wrong” way has already become ingrained and harder to fix, which fosters resentment. For best results provide feedback as close to real-time as possible.

Rinse and Repeat Keep in mind that this is a process, not an event. You don’t start out in January with your freshly minted core values and feedback program just to set them on autopilot. This will become part of your organizational DNA if you give it a chance and put in the work.

Conversations about what’s best for the organization in the long-term will begin to overshadow conversations about what’s best for the decision maker right now.

Here’s wishing your dealership a harmonious and integrated 2013.

Recommended reading For more information about creating an integrated organization see these great works.

Integrity: The Courage to Meet the Demands of Reality

by Dr. Henry Cloud. http://amzn.to/12kbOOJ The 8th Habit: From Effectiveness to Greatness by Stephen R. Covey. http://amzn.to/UXRqLU Achieve Brand Integrity by Gregg Lederman. http://amzn.to/ZDVit8

About The Author:

Adam Grossman is the CIO of Auction Direct USA, three time winner of Auto Dealer Monthly’s Independent Retailer of the Year award. He also acts as a strategic advisor to DealerTeam, the first automotive dealer platform born in the cloud. Adam is a product visionary with broad experience in technology startups including a media partnership with the NFL Players Association called Pro Player Insiders and a technology partnership with the U.S. Postal Service called Epostmarks. A Systems Engineer from Virginia Tech, Adam is passionate about system optimization, crafting amazing experiences, and the intersection between machine learning and the human brain. Adam is married with two young children and lives in Rochester, NY.

Dealership Innovation Guide

DrivingSales, LLC • 1st Quarter - 2013 • 19

Report

INVENTORY

METRICS

Report for Dealers and Their Vendors on Comparing Inventory Metrics

T

here are a variety of reasons for wanting to compare inventory metrics across website providers. Chief among them is the fact that many dealers now manage more than one website. Dealer groups make up an ever-growing proportion of franchised stores, and most have websites from more than one provider.

Many single-store dealerships manage both a manufacturer mandated or suggested site as well as a site from their provider of choice. Whether the metrics from these services are comparable at all has been unknown since the beginning of dealer websites.

Being able to aggregate and compare metrics from various sites is important to dealers. If the metrics are not the same, then it cannot be known whether differing results from the same action items are due to differences in the way those actions come across on the two sites or simply because the measurements are different. It is vital that dealers be able to see measurable differences made by the changes they execute wherever possible.

We limited the scope of our initial investigation to the critical area of consumer interaction with vehicle 20 • 1st Quarter - 2013 • DrivingSales, LLC

inventory. Most shoppers who phone, email, or chat with the dealership before coming in have seen the dealer’s inventory online before doing so.

Inventory is regularly sought out by online shoppers, which account for roughly 80% or more of all new-vehicle buyers and the vast majority of used-vehicle buyers.

It is becoming increasingly important to be able to aggregate inventory views from all the places consumers view the dealer’s inventory. Changes to pricing and merchandising can impact conversion rates on inventory publisher sites, like Cars.com, AutoTrader.com and CarSoup.com, as well as sites the dealer owns. Understanding the full impact of these changes requires a uniform understanding of the impact across all these sites. Today, that just is not possible, but we did seek to drill into the comparability between inventory publisher’s metrics and those on dealer sites. One inventory publisher, Cars.com, is exploring a variety of new metrics they think add to the understanding of how their site impacts consumer traffic. We include comments about the similarities and differences between inventory publishers and dealer sites throughout

the report and add a special summary section to cover these topics holistically.

Search Results Pages (SPRs) One key metric for a dealer’s site is the number of Search Results Pages viewed. This occurs when the shopper performs an inventory search on the dealer’s website. Make/ model searches are common, but some sites allow the shopper to search by vehicle type. This can be particularly helpful for used vehicles when the shopper lacks preference for a particular brand. For example, a Ford dealer may also carry used pickup trucks from competing brands.

For a number of reasons, not all SPRs have the same value to the dealer.

The number of vehicles shown varies depending on the search and the dealer’s inventory. The shopper may be dead set on a particular model or run a multitude of searches comparing the findings among various models.

Nonetheless, each time a search is conducted and a result is shown, it counts as one Search Results Page view, one SRP. This definition appears uniform Dealership Innovation Guide

across site providers. Unfortunately, uniformity of definitions does not guarantee that all metrics are captured the same way by each provider. Even small differences in the way these metrics are captured can change the result.

What is known is that the more exposed the inventory search functionality is on the website, the more searches are likely to occur. What is also understood is that the number of SRPs is highly correlated with the amount of consumer contact occurring directly from the site. Time series analysis with this metric will show the dealer whether or not this metric is trending in the right direction (example below).

The optimal way to trend this data is with four-week periods. The dealer will typically have hundreds or even thousands of searches over this period of time (good sample size) and each period will contain the same number of days (28) and the same makeup of days (four of each day of the week).

When monthly data is all that is available, there will be some variation caused by the number of days in the month and which days of the week are represented five times versus four.

One way to increase the number of searches is to attract more relevant traffic to the website. More traffic can be measured by the number of visits and unique visitors. However the relevance of the traffic may be seen in the number of searches per visit or visitor. If a great deal of traffic has been added for parts and service, this ratio may go down. However, if a great deal of traffic has been drawn to the site for the purpose of vehicle shopping, we would expect this number to increase so that the number of SRPs is increased and the number of SRPs per visit or SRPs per unique visitor is also increased.

to recognize if their data is changing as a function of driving traffic or, instead, more relevant and sticky content. Any dealer can calculate and trend this metric on their own by combining reports or using business intelligence tools like the free version of DrivingSales Data.

Nonetheless, we encourage website providers to expand their reporting to include per-visit and per-visitor metrics.

We’ve seen a number of good and bad examples of Search Results Pages.

One dealer in Canada offered so little information on the SRP that the only difference between 6 new Ford F-250s was the price. Every other spec of information was identical, providing the shopper no guidance as to what equipment each vehicle contained and why the pricing was different. Other dealers do a beautiful job of providing the customer with enough high-level information to quickly click into the one that initially appears best to the consumer.

When information on the Search Results Page is optimal, the result is an increase in the number of times those shoppers exposed to results on an SRP then engage with a Vehicle Details Page (VDP). A change in SRPs per vehicle may be a function of relevant traffic to the site, but improved information on the Search Results Page can lead to more, deeper engagements with inventory.

These engagements are captured with VDP, VIN Views, and Inventory Views.

Vehicle Details Page (VDP), VIN Views, and Inventory Views There has been a great deal of confusion about the various definitions for VDPs, VIN Views, and Inventory Views. The responses we received indicate a lack consistent definition or strict comparability.

Three companies define VIN view the same way they define VDP. However, one vendor defines the VIN View as the click to see the vehicle details and VDP as the page when it loads. These metrics seem the same, but can be different. Some vendors define the VDP as the number of times details are requested and some as the number of times they are shown. This is why inventory metrics from various site providers are not strictly comparable.

The definition of Inventory Views varies a great deal across providers. Some count VDPs in this metric; some count SRPs in this metric, and some count both.

Not only is it important that dealers not try to compare these statistics across site providers, it is essential that they know what the definition is from each provider before using the metric to determine the impact of various action items. Some actions, like an increase in the amount of widely searched for inventory, impact both SRPs and VDPs but may not to the same degree.

Some actions, like improved primary photos and pricing demonstrations of value on the SRP can increase

Of the five website services participating in our survey, three of them show SRPs per visit and two show SRPs per visitor.

It is important to know whether changes in the number of SRPs, VDPs and other inventory metrics are due to a change in the number of shoppers or a change in the rate at which shoppers engage with the inventory once on the site.

Showing these metrics allows dealers Dealership Innovation Guide

DrivingSales, LLC • 1st Quarter - 2013 • 21

new and used vehicles. Take inventory photos, for example. Most new car photos placed on inventory pages are stock images, while the used car photos are typically taken by the dealership when the car reaches the lot. We know through extensive research provided by both Cars.com and AutoTrader. com that real photos, and opposed to stock images, impact the propensity for customers to click through to a VDP or contact the dealership. Looking at the numbers from a perspective of new or used vehicles can help the dealer better understand if the action items imposed by the dealership are effective or vary between new and used inventory.

Inventory Publishers

the number of VDPs per SRP without increasing the number of SRPs at all.

Despite the fact that these metrics are not comparable across site providers, it is essential that dealers track the number of VDPs, VIN Views, and/or Inventory Views. Most shoppers who call, email, chat with the dealer from the website do so from the Vehicle Details Page. This is the level of engagement that directly correlates with increased selling opportunities.

Phone Calls, Emails, and Chats Separating out metrics by contact type is instrumental for dealers to understand how effective their marketing is for driving leads and contacts. There are no real surprises for defining and measuring contacts by phone, email, or chats. Most all providers measure them by a lead form submitted, phone call placed, or chat initiated. However, where the metrics really differ is at arguably their most important differentiator – reporting them on a per vehicle basis by new, used, or total inventory. Unfortunately, only two of the providers surveyed reported their metrics by new, used, and total.

Why is this important? Few dealers have the same merchandising policies across 22 • 1st Quarter - 2013 • DrivingSales, LLC

Services like AutoTrader.com, Cars. com, CarSoup.com and others are known as inventory publishers. Most have long provided information on the number of VDPs, SRPs, and various forms of contact with the store. Our work with these metrics on DrivingSales Data shows conclusive proof that these metrics are not the same across all website providers. The basic definitions are similar, but the methods of data capture cannot possibly be the same. For example, the conversion rate from SRP to VDP on Cars.com is generally higher than that on AutoTrader.com. However, the conversion from VDP to tracked contact (phone, email, or chat) is generally higher on AutoTrader.com than it is on Cars.com. As we would expect, the conversion from SRP to tracked contact is very similar between the two firms, but the significant differences between the conversion points between SRP and contact is a clear sign that the VDP metric is not recorded the same way.

We know that SRPs are not the same, because Cars.com has more vehicles shown on the SRP. However, there appear to be other differences that have not yet been clearly defined. The only conclusion one can reach is that these metrics are not comparable across services. That is unfortunate, because dealers would like to know the impact of their vehicle merchandising across all sites where their inventory is listed, their own sites as well as OEM and thirdparty sites. Action items like improved photos, videos, and text descriptions

can improve the store traffic generated from each of these sources, but may not do so in the same proportion.

Understanding the total benefit from improved merchandising would allow dealers to get a clearer, more complete picture of the financial return from these activities. In theory, this would lead to improved merchandising throughout the industry and thus greater returns from sites carrying dealer inventory, like both dealer sites and inventory publishers.

Nonetheless, these metrics are extremely valuable to the dealer in their current form. Cars.com has taken steps in recent months to greatly expand the amount of inventory information delivered to dealers through their internal reporting tools. Dealers no longer need to calculate conversion rates; this data is openly provided to the dealer in aggregate, at the individual vehicle level, and across stores in the dealer’s market area. Time-series analysis is also provided for up to six months.

Cars.com now even calculates the cost per SRP, cost per VDP, and cost per listing for the dealer. This is a level of transparency that, to the best of our knowledge, is unique to the industry.

Virtually any dealer could calculate these things from the data provided, but most lack the time to do so. It is fair to say that increased ease of use is a form of increased transparency, and many vendors are happy to provide that additional transparency.

AutoTrader.com does a good job of separating out the consumer activity with used-vehicle inventory from that with new-vehicle inventory. The level of vehicle merchandising is generally higher for used vehicles, reflecting the fact that every used vehicle is unique to some degree. An action item, like changing from stock photos to actual photos on new vehicles will improve SRP to VDP conversion of new vehicles.

However, if the metrics are only collected for new and used vehicles combined, then the impact is watered down by the amount of unaffected inventory.

As measured by SRPs and VDPs, there has never been as much consumer activity on a per-vehicle basis for new vehicles as there is for used. However, Dealership Innovation Guide

it has been argued that establishing preference for the dealership is more important for new vehicles. Efforts to achieve preference for the dealership are not clearly reflected in SRP and VDP analysis. As a result, Cars.com has begun emphasizing engagement metrics with dealership information related to new-vehicle shopping on the site. These metrics show the exposure and engagement with dealership information relative to competing stores within the same market.

AutoTrader.com is also placing more emphasis on exposure and engagement, rather than direct, measurable customer contact. This is a natural evolution for inventory publishers.

To some degree, the expansion in reporting metrics is a function of dealers’ growing understanding of the space and willingness to look beyond source of sale when gauging the value of online marketing.

Exposure and engagement metrics have long been important metrics for advertising designed to drive traffic

to the dealer’s website. Indeed, inventory publisher sites also drive traffic to dealer sites as one of their many methods of advancing the sales process toward the store.

Understand the Metrics to Understand Your Business The purpose of this survey was to get a clear picture of which metrics vendors in the industry are reporting, how they are defining those metrics, and which behaviors trigger a data point within the metric. What we found was that there are only a few reporting measures that vendors wholly agree on, and within those similarities, there are some profound holes where dealers aren’t getting the data they need. Understanding the measuring differences is imperative to gauging the effectiveness of the action items dealers are putting in place to move the needle in their marketing, as well as increasing conversion across a number of metrics to excel their business.

About The Author:

Dennis Galbraith leads Research and Business Intelligence for Dealers at DrivingSales and is the author of Sales Integration. Dennis ran the automotive internet division of J.D. Power and Associates and was Vice President of Advertising Products and Training for Cars.com. He has owned several successful companies, Dennis Galbraith Marketing Services and Revenue Guru. He earned an MBA from University of Southern California and taught marketing for Embry-Riddle Aeronautical University and NADA Academy.

Waldorf-Astoria New York City April 21-22, 2013

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Seth Godin, will be keynoting the gathering along with other top minds discussing things like economic pressures on your store, leadership effectiveness, and dealership acquisitions.

RSVP at DrivingSalesPresidentsClub.com/registration to reserve your seat today.

Dealership Innovation Guide

DrivingSales, LLC • 1st Quarter - 2013 • 23

RECAP E

ach year, the industry stumbles across “the next big thing,” and 2012 was no different. January 1st ushered in the notion of big data and how it was destined to change the automotive retail industry. But what was considered the newest buzzword for our line of work had already changed organizations all across the words for the better. And by better, I mean more profitable. Dealerships and other automotive professional spent that year trying to tackle this obscure concept and understanding the operational benefits it could provide.

This couldn’t ring more true from dealers. Just as baseball was rooted in a convention of gut-feelings, instinct, and romantic recruiting stories, dealerships have a longstanding association with operating on hunches. The old adage of “50% of my marketing works, I just don’t know which one,” has driven too many milliondollar decisions in automotive retail.

Counting everything from marketing decisions to identifying the walk-ups who are “really ready to buy,” emotion has championed the decision making process, leaving no room for data.

For obvious reasons, “Big Data” was the topic of conversation at the 4th annual DrivingSales Executive Summit (DSES). It was time to take all the ebb and flow out of Big Data and begin to nail down the application to business in general and dealerships in particular.

To this endeavor, DSES brought in the General Manager of the Oakland A’s, Billy Beane. Famed for his “moneyball” methods of baseball management, Billy expressed how he was able to use data to find assets that were previously undervalued to help them succeed in a competitive environment.

Until now.

24 • 1st Quarter - 2013 • DrivingSales, LLC

In baseball, Billy Beane understood that in order to stay competitive in a market that had way more spending dollars than he did, he needed to find assets that were traditionally undervalued that he could capitalize on. Shifting the importance he placed on certain player stats, Billy and his statisticians made objective decisions about who made the team and who batted in which order, leading them to secure a 20 game win streak in the middle of the 2002 season and a

race in the playoffs. No small market team had ever been so successful and it was all because of data.

Florian Zettelmeyer, J. L. and Helen Kellogg Professor of Marketing at the Kellogg School of Management at Northwestern University, described in his keynote on Day 2 of the DrivingSales Executive Summit, a dealership case study example of Big Data in action. In his study, he found that when invoice pricing was disclosed at the beginning of a negotiation, the dealership made more money on the deal – an average of $1500 more. Conversely, when the invoice price was conveyed toward the end of the conversation, the dealership reeled in negative numbers in gross (over $2000 worth). This is only one example of how data can be used to challenge one of many long-standing Dealership Innovation Guide

conceptions (that transparency upfront hurts a dealers gross) and generate awareness of consumer behaviors that dealer can capitalize on.

Thanks to the emphasis on data in our own industry, there are mounds of it to be had. Every product you use, every process in place, all produce transformative data that can help dealers understand their customers better and leverage that for success.

But as Zettelmeyer pointed out in his keynote the tremendous potential in Big Data, he also recognized the inherent frustration with it.

Dennis Galbraith, Director of the Data Division at DrivingSales, stated in his DSES keynote that the industry is on its way to greater profitability with data; however, he continued that the secret isn’t in the data itself, but in the analysis.

Understanding the application of Big Data is necessary not only because of how highly profitable it can prove to be when used effectively, but how overwhelmingly frustrating it can be when sitting there with unseen function.

Take, for example, SEO. Search Engine Optimization provides and endless cavern of data points and consumer insights on how people are searching for your store, learning about your store, and ultimately viewing your virtual store online. Rand Fishkin, SEO guru and CEO of SEOmoz, energized DSES attendees with his actionable takeaways regarding search engine optimization theory and practice, all from data. He relayed the importance for businesses to have and understanding of the basics of SEO, like content and keywords, to make good decisions and understand the data well. His advice to dealers Dealership Innovation Guide

who want to win at search, for example, was to ignore the big keyword topics.

What?! Ignore the most prominent keyword topics? Well, that doesn’t feel right.

But, maybe it is. When looking at the data, Fiskin declared that Google owns all the top keywords. Instead, dealers should go for the middle or the tail end of the keyword popularity scale because that’s where no one can take it from you.

Others aren’t there because they’re all still fighting Google for the top 3 or 4 spots – because that “feels right”.

It’s information like this that can be applied directly to a marketing or sales perspective to garner greater profitability for the dealership. These are the takeaways that dealers need to be able to implement Big Data action items into their operations successfully with limited frustrations. It’s the very reason why dealers attend the DrivingSales Executive Summit – to learn how to apply these real world topics that are impacting businesses of all kinds to their own business in automotive retail.

education to know how to apply it to your business. Perhaps you already have a great relationship with your solution providers that can help support you in this endeavor as well. Either way, for your dealership to capitalize on today’s opportunities, the difference is in the data, and the profit is in understanding and operationalizing it.

About The Author:

Lindsey Auguste is the Editorial Director for DrivingSales, ensuring that the community is getting the content and experience they need to improve their dealerships. Lindsey

comes from a background in psychology and sociology at Chapman University and worked as a research assistant at Stanford University where she executed the research design and collection process. She applies this specialty at DrivingSales by providing research across the industry and by helping to bring relevant content to her DrivingSales peers.

Billy Beane was right when he said that more data leads to better decision making, but with the context surrounding the Big Data discussion, I would amend the statement: More data leads to better decision making, if you know what to do with it. Thankfully, you don’t have to do it all by yourself if you don’t want to. Chances are you have a stellar leadership team that can rally around this profit gold mine and gain the right

DrivingSales, LLC • 1st Quarter - 2013 • 25

Mobile Trends Three Key Trends in Mobile for 2013

Y

ou don’t need to be a rocket scientist to realize that the world is changing at a ridiculously fast pace. Over the last 2-3 years, the social web (Facebook, Twitter and Youtube) has gone from being “cute” to an important focus for many companies.

In the automotive industry, there are still many people wondering “who moved their cheese” as they try and keep up with consumers who are armed with information like never before as they research and purchase, lease and service vehicles. Mobile technology is

no exception and in fact, is rocketing forward at a breakneck pace.

Fueling this mobile evolution is the growth of smart phones that now have the same computing power that the Apollo 11 – the spacecraft that landed on the moon back in the 1969. We’ve now reached 50% smart phone adoption in the U.S. and on top of that, tablets (like the iPad) are quickly providing the content consumption power of a desktop or laptop with the form factor of a device that fits in your purse or briefcase.

One of the biggest technology breakthroughs over the last few years has been the inclusion of GPS thus enabling location-aware technology in most mobile devices. This ability to allow mobile apps an additional layer of intelligence so that they can better assist in searches, directions, locating of businesses and most importantly, two-way conversations is revolutionizing the art of what’s possible. Below are three trends being fueled by location awareness that any business – particularly dealers and auto-part stores – should pay attention to in 2013.

Apple Passbook With the launch of the iPhone 5 came Apple’s new mobile operating system, iOS6. Not limited to just iPhone 5s – iOS6 is backward compatible on iPhone 4s and 4Ss – this new operating system provides the killer app for customers and businesses alike. The biggest benefit is the fact that the Apple Passbook application comes hard coded into the operating system so that it can’t be deleted. Better yet, the application has the ability to house coupons, passes, tickets and loyalty cards. These cards can be delivered to the phone via text message, e-mail or website.

26 • 1st Quarter - 2013 • DrivingSales, LLC

Once there, these objects are hard to delete (an intentional user interface red herring on Apple’s part methinks).

What’s critical about this application is that once a coupon, pass, ticket or loyalty is delivered to the phone into the Passbook, a business has the ability to update these objects remotely so new messages, offers and alerts can be presented to customers.

Because the application is locationaware (assuming location services are turned on on the phone), a business can also message or present offers

Google Mobile Search

Google makes some of the least fun technologies out there. Yet, many of us couldn’t see living another day without our Gmail, Maps, Search, and Analytics.

To that end, what they’ve done in the location-based space has been less sexy than companies like foursquare, Instagram, Path and SCVNGR. Google does happen to have the power of ubiquity (apologies to Bing). And thus their mobile search appears on nearly every smart phone or tablet out there.

Google’s latest version of mobile search now includes five icons below the search bar. These allow users to find local restaurants, coffee, bars, fast food and other businesses. Nothing sexy at all about this approach and definitely no gamification involved.

Not even a reward but it is front and Dealership Innovation Guide

Instagram

center and last I checked, Google has hundreds of millions of users.

The prescription for this is that you must, must, must have your Google Places content up to date (just do a search for your dealership or business on Google and it will be one of the first things that come up). You can claim your business via a very simple process and then ensure your website, Twitter handle, phone number, hours of operation, etc.

Because this impacts search, you don’t want to confuse people or worse, find out that your location is in the wrong spot.

Dealership Innovation Guide

Instagram is hardly a new technology but 2012 was the year that it went from 10 million members to north of 80 million. And while this audience skews younger, it has a very active base and is now owned by Facebook (heard of them?) Increasingly, brands like Red Bull, Playboy, Ford and many others are embracing the platform posting hundreds of millions of photos. Given the visual nature of the automobile industry, this is a natural place to play whether you are capturing and posting favorite pictures of new cars, parts, your showroom floor or even your employees.

One of the keys with Instagram is that you can easily cross-post to several other networks including Twitter, Facebook, Flickr, Tumblr or you can e-mail. There are also possibilities of using hashtags (those funny things that are combo of a “#” sign and words).

Hashtags allow people on Instagram that don’t follow your account but follow certain trends e.g. #musclecars to discover you. Instagram is also a

great place to run photo contests. So don’t forget that old adage, a picture is worth a thousand words.

About The Author:

Aaron Strout is a the head of location-based marketing at WCG, a global agency offering integrated creative, interactive and marketing communications services to clients in healthcare, consumer products and technology. At WCG, Aaron not only focuses on helping customers with social media strategy and mobile/location based marketing but also helps provide a social voice for the company via his blogging, podcasting and speaking activities. Prior to joining WCG, Aaron spent time as the CMO of social media agency, Powered Inc., VP of social media at Mzinga and director of interactive at Fidelity Investments.

DrivingSales, LLC • 1st Quarter - 2013 • 27

INTERVIEW With Chris Hill A shopper will spend over 18 hours online doing research before they even consider contacting a dealership, let alone step foot on your lot. Learn how Chris Hill from Bill Jacobs Auto Group has leveraged his entire team to meet the expectations of the customer’s digital experience.

1. What’s your background, experience and current role & responsibility?

I’ve been in the automotive industry for about 11 years now. I’ve worked almost every roll in the front end of the dealership in one capacity or another. As for my current role, I have the pleasure of working as the E-Commerce Director of the Bill Jacobs Auto Group based out of Joliet, IL. I started primarily as the Internet Sales Manager and was brought in to recover a underperforming and under developed BDC/Internet department. The group is 6 franchises and 7 stores strong and one the most highly respected in the Midwest. My current responsibilities have evolved over my time with the Bill Jacobs Auto Group.

Currently I’m directing almost everything digital for the group ranging from SEO, SEM and PPC management to online advertising campaigns and execution of strategic social media projects.

2. How did you evolve into this roll and how do you see this position in the dealership changing over the next couple of years?

I’ve always been one of those typical car guys. I never fell victim to the “moving metal” mentality when selling them.

After about 3-4 years of selling new and used vehicles I was approached by my father Joe Hill(GM of International Auto).

Knowing I had done freelance website design and was very familiar with SEO, SEM and proper management of PPC campaigns, he felt moving to the digital 28 • 1st Quarter - 2013 • DrivingSales, LLC

Dealership Innovation Guide

side of the dealership could be a great opportunity. He made it clear to me that this was the direction the industry was going in. This was years ago, even then he had a full grasp on what was coming.

Over the next few years I fully believe you will see this role changing from one of the most important positions in the dealership to one of the most important departments. Everyone from single stores to large groups will realize it soon enough. Once they do, it will be a rush to catch up to the dealerships that embraced it sooner. The industry is going to start seeing more and more universal solders emerge. These people will be able to handle more than the typical internet sales process and implementing the systems. Dealerships can’t afford to pay 4-5 different vendors to handle what they can do in house. Internet Managers need to be proficient in handling venues like SEO, SEM and PPC. Not only to better serve their respected dealer but also to protect them from predatory vendors/advertising firms.

3. Share your thoughts on how the dealership has responded to the changes in today’s shopping environment with regards to your digital strategy?

I’m fortunate enough to have a GM(Brad Wise) and a GSM(Jason K.) that completely understand what the digital world means to a dealership. Both these gentlemen have invested significant time and dealership money into ensuring the Bill Jacobs Auto Group is fully covered in the digital realm. Honestly, they’ve given me the platform I need to bring a dealership group ahead of the curve.

Over the last eight to ten months our dealership has completely redesigned our websites through www.Dealerfire. com. This has given us a leg up on our competition. Prior to this redesign our websites looked exactly like our competitors. We didn’t have anything to set up apart on the web. We also made significant improvements in customer communications systems like ContactAtOnce and DealerCRM’s internet lead management system.

This has allowed us to fully service our customers in the format they feel most comfortable in. In this increasing Dealership Innovation Guide

digital atmosphere we need to make ourselves available in any format our customers would like to use.

4. How important has it been for your staff to understand and embrace the internal processes - lead handling, sales, fixed ops, trade-ins, etc?

As far as I’m concerned this couldn’t be more paramount to the success of the dealership in the digital landscape. Over the last few years the fastest response would win the race to the sale. Today everyone’s fast, so quality; reputation, personalization and overall value are the deciding factors. These factors were firmly implanted into our staff during CRM/ILM training. They understand that your customers are no longer restricted to your local market. The internet has opened your store to the entire country.

The everyday consumer has so many resources at their fingertips now. You must excel in every digital field to avoid being eliminated from consideration.

Our sales managers have conformed and trained staff to deal with extremely aggressive internet pricing and customers that shop multiple dealerships from behind their monitors. We’ve built value in more than just the vehicle. We made it a point to our customers that we are a long standing value based company that doesn’t take customers for granted. We have reached out to our community and shown that we truly appreciate the business they bring us. Everything from sales to service to customer service was looked at. This has in turn made us the 2012 Joliet Commerce Business of the year. Our customers see that and it builds trust and value in our dealership group.

5. What type of activity have you changed or implemented to deal with the increased demand for ratings and reviews - for both your dealership and the vehicles (whichever applies, or both) - What seems to make the best impact?

Reputation management and reviews seem to be the hot words for the last couple years. I tend to look at the bigger picture of reviews. We love going above and beyond for our customers so when we receive a review or rating we try to direct them to put it

in a place that will do the most for the customers and the dealership. I had the dealership focus on three avenues; Google, Yelp and Dealer Rater.

Obviously, Google is mogul that isn’t going anywhere. Their implementation of Google+ Businesses from their old platform Google Places has given the opportunity for the customer to tie their recommendation (+1) in with Google’s up and coming social media presence “Google Plus”. I believe that the ongoing rating score system and review system that Google is constantly improving will be by far the most important in the near future.

In addition to Google and the mobile android platform, Apple has placed a large emphasis on Yelp’s reviews. While I’m not a huge fan of this platform, the I-Phone user base is extremely large and thus make a powerful force of reviewers that need to know about us. This is one of the few review sites that make it tougher for businesses of individuals to tamper with their reviews. This is mainly due to the fact Yelp requires you to be an experienced reviewer before they tag a business with your review. This is a good and bad thing in my mind. It certainly validates your reviews but also makes it tough for the typical customer to voice their opinion about you.

Lastly, Dealer Rater was brought in for a few different reasons. My personal favorite is the SEO abilities that Dealer Rater brings to the table. They seem to tie in so well with vehicle based search and the cities a consumer is shopping in. Obviously when looking for a review the previous two outlets I mentioned are great resources but Dealer Rater puts web links and a full presentation in front of the consumer when they search for a vehicle. This adds web presence, reviews, pictures of the sales reps and overall ranking compared to the other dealers in the area. It really gives us more than the others do and for these reasons they are a must have.

6. Tell us about some of the initiative or efforts that didn’t seem to work & what you learned form that?

I try to get a firm grasp on anything I plan on implementing prior to pushing it to the floor. I’ve fallen flat on my DrivingSales, LLC • 1st Quarter - 2013 • 29

face trying to force new technology or systems into dealerships that haven’t had the proper training. I’ve helped launch plenty of ILM’s and CRM’s over my years and forcing the subject over a period of one or two weeks has always failed me. The mindset of an “old era” car salesmen is not an easy objective to overcome. I’ve found giving them time to play with the system, log an up or two and use it on their terms at their pace is a fantastic way to get them comfortable.

Once you’ve done that bring them in as a group with their peers and train them together. You will find that they will ask each other for help in certain areas they don’t fully understand. This way the internet department doesn’t become a bottomless pit of questions and issue. In addition it gives them a sense of ownership and know how when it comes to using the system.

7. How is your store structured to handle lead flow - BDC, traditional round robin, other method?

Bill Jacobs Auto Group has always run a traditional BDC. I had never worked in that type of environment so when I joined the group I was apprehensive to say the least. After spending a few months in the BDC setting I knew a change was needed. Fortunately, so did the upper management of my group. The concept of having people who aren’t sales professionals answering the phones and internet leads for the dealership just doesn’t make sense. Paying additional people to do what the sales people could be doing with their absorbent amount of free time was also frustrating to the upper management. That being said making the changeover to a different format isn’t as easy as just flipping the process. This is truly a philosophy change for a dealership. There are inherent problems that all dealerships will run into when installing a new format.

I do know of some local and regional dealerships that have formatted their stores to run successfully in the BDC environment. I’m not going to deny it can work but at the end of the day your sales professionals know that they can make more money selling cars rather than working in the BDC. That in turn makes it difficult to hire BDC people that are going to be well versed in both 30 • 1st Quarter - 2013 • DrivingSales, LLC

digital and physical sales. Eventually, you’ll find yourself five to ten to even fifteen BDC people deep and spending a tremendous amount of money to do what your sales people could be doing but aren’t because they are busy waiting at their desk for the next up or sales opportunity to fall into their laps.

The old way of selling cars is still embedded deep in dealerships that have been around for 10+ years.

Everyone from your sales professionals to your sales managers may still have the idea that you can live off ups and inbound phone calls. Obviously this way of thinking is no longer valid. The internet has changed everything and in turn the mindset of the employees in the dealership need to as well. Getting these old era sales people to buy in to a new way of doing business is a process in itself. As a dealership principle or manager you find yourself faced with the issue of installing value in a new program and training the 20th century sales person to sell in the 21st century.

The format I am getting to here is classified as the Hybrid Internet department. This is a sales team comprised of sales people that are well versed in everything from vehicle sales, phone and communication skills(SMS) and fully trained in everything internet. These people aren’t just floating out there waiting to be hired. They are built much like a championship sports team. They have to be trained to properly deal with internet leads and follow up. This embodies everything from proper response time, grammar, multimedia emails(videos, reviews, walk-around) and more.

8. Tell us about your sales training methods - lessons learned from how you’ve chosen to train the staff?

When I came into Bill Jacobs we used the BDC to handle all presale and most of the post-sale follow up. This required very little out of the sales reps in terms of diversity. For the last four or five months we’ve had sales people into our internet department working alongside our remaining BDC people. The reasoning behind this was to help train our remaining BDC reps in the art of selling vehicles and overcoming objections. At

the same time the sales rep would see how to properly use a CRM and handle a customer that is well versed in emails and text messaging. We firmly believe that customers want to be stimulated by rich multimedia content. We use lots of videos, pictures and reviews in our emails. This gets the customer excited to come in and experience what they just experienced in our emails.

Over the last couple years I’ve learned that even the most closed minded and old way of thinking sales people can be trained and successful on the internet.

Don’t forget these people are your professionals and all that’s standing in their way of digital success is the proper training and understanding of the system they need to use to contact the digital client. Build yourself a universal soldier. These aren’t cold calls/emails, these are customers coming to you or a third party site, saying “I want to buy a vehicle, help me!” When these sales people realize that and see the mildest of results from their efforts they will see value in the program and it will spread like wild fire throughout your dealership.

9. What type of trends do you see ahead in the retail market for next year?

As I mentioned earlier in the interview, business no longer just walks through the doors. You’re being shopped now and have to make sure you don’t get eliminated. This goes for everyone in the dealership. Sales people are going to have to continue to fully service their customers from cradle to grave during the car buying experience. Management needs to work closely with their digital partners to ensure they are relevant and making sure they are servicing their customers how they want to be serviced.

It’s obvious that the face to face time with a customer is more paramount than ever. That being said, if you never get a swing at that time it’s irrelevant. The usage of mobile devices and emails are growing so fast most media outlets can’t even get you accurate numbers. This along with social media websites like Facebook and Twitter is how we connect now. That means one on one time with someone face to face or over the phone become less and less. Dealership groups need to use social media, text Dealership Innovation Guide

messaging and emails to service their cliental. Test my theory… Next time you receive your district or national rankings, secret shop the top two and the bottom two dealers. Look at everything from response time, professional approach and overall handling of the lead. I assure you the ones that address the needs of the customer in the format the customer wants will win the race. Even if you’re the best price out there the convenience and overall approach will win the customers attention. You could be eliminated before they ever look at your price.

10. How do you see the dealership changing and responding to these new trends?

Bill Jacobs has formed extremely close relationships with our digital vendors.

We no longer give them our money and wait for ROI reports at the end of the month. One instance of this is the relationship we’ve setup with DealerFire. com our website provider. I found that DealerFire is a vendor willing to work with me on a daily basis to address my goals. They are proactive to challenges I present them on behalf of my dealership group. This can range from adjusting my SEM strategies, finding ways of producing more leads out of my website to staying fresh, appealing and relevant in the digital landscape. They are truly the epitome of a 21st century vendor.

11. What are three of main areas for an Internet Director to focus on to ensure ongoing success?

I’d say first off Internet Directors should really focus on the four P’s. Those four P’s being product, price, placement and promotion. Every time I have one of my sales people return an email or post an advertisement we ensure these four items are done properly.

Now that most of the manufacturers have fairly comparable products it’s up to the manufacturer and the dealership to make it as attractive as possible to the consumer. One of these methods is by overall price. Internet and sales managers have to ensure that they are competitive with their surrounding competition. Having a product poorly displayed or not aggressively priced will get a dealership eliminated quickly. Proper placement in emails Dealership Innovation Guide

and in advertisements will ensure your customer base gives you and your vehicles a chance. Promotion has to be a unified, clean and clear message across the board. This means what is in your print ads should reflect what is on your website and what is being relayed to your internet customers.

Another area to focus on is staying relevant in the digital landscape. It’s important that internet managers explore different vendors and programs to stay ahead of the curve of emerging technologies. I addition to that you have to find out what your direct and indirect competitors are doing for their customers.

Don’t be afraid to secret shop, take the best ideas you find and improve upon them, make them your own.

Lastly, I highly suggest that all Internet Managers out there take an active role in everything your dealership is doing digitally. It’s important to become the expert in your realm. Dealerships are stumbling through the unknown when it comes to the digital environment.

Your stock will go up and so will your overall value to the company when making yourself the go to guy for everything digital in the dealership.

About Chris Hill:

Chris Hill has 11 years of automotive experience and is currently the E-Commerce Director of the Bill Jacobs Auto Group in Joliet, IL. He manages six franchises and seven stores. His experience ranges from automotive management to SEO, SEM, PPC and social media.

WATCH NOW!

Exclusive & Entertaining Automotive Coverage DrivingSalesTV combines two powerful media platforms – video and social media – with powerful profit-building information. With DSTV, dealers can easily keep tabs on their industry, see best practices in action, and have a more personal view into peer success stories, in a format that is lively, interesting, interactive – even, at times, provocative – but always with a focus on business innovation and improvement.

DrivingSales, LLC • 1st Quarter - 2013 • 31

Building your

Reputation is about More than Just your Character

T

here is a quote from John Wooden that says, “Be more concerned with your character than your reputation, because your character is what you really are, while your reputation is merely what others think you are.” While that is true, I don’t believe that Wooden predicted the many ways that reputation would impact businesses, and its affect on sales. With the growth of reputation sites and consumers searching for online reviews, best practices are more important than ever for auto dealers.

According to a Yahoo/Cobalt study, 73% of consumers consulted online dealership reviews before purchasing, but the idea that consumers use reviews is getting to be an accepted fact. How else though does reputation affect a dealer’s business? Search Engine Optimization (SEO) is a staple in the majority of automotive dealers’ marketing budgets 32 • 1st Quarter - 2013 • DrivingSales, LLC

and online reviews have changed that landscape, specifically how sites like Google display search results. Today, search results have a new look, namely, your rating tied to customer reviews. In a Volkswagen of America study in 2012, Dealerships that attained an average score of four stars or better (out of five) on consumer reviews received 32 percent more traffic to their Web sites from Google searches than those with one or two stars. Dealers may overlook this issue. A dealer may be spending thousands of dollars on SEO, but have a 10 out of 30 score displayed below their name, while below are other dealers with scores in the high 20s. A number one or two position on the first page of Google does you no good when it displays a rating that is significantly worse than your competition. Your reputation can affect whether your SEO investment is being wasted, or generating value for the dealership. The same holds true for Dealership Innovation Guide

Search Engine Marketing (SEM). The higher number of reviews you have, the higher your click thru rate and conversion rate. Multiple studies show increases of 10% - 20% depending on the total number of reviews and average score.

As Social Media continues to grow, it will infiltrate all aspects of Internet marketing, and that includes how reputation affects your dealership . . . in ways often overlooked by automotive dealers.

1. Recruiting -- You know it’s important to attract and retain the best sales and service people.

The best employees want to work at companies with the best reputation, and today’s potential staffers will be researching your reputation before the interview.

2. Vendors & Partners -- How do other companies decide with which companies they want to work? Will your reputation affect whether they want to be in business with you?

3. Your Community -- Community organizations look to local businesses for sponsorships. While some look for any businesses willing to pay sponsorship fees, others that are careful about who they share their brand with and might not want to involve a one and two star businesses with their events.

Yelp, Cars.com and Edmunds. Google and Yelp are important because of the searching for businesses being conducted on these sites, while Cars. com and Edmunds are critical because of their place in the sales funnel.

Consumers are already on these sites searching for vehicles, and once a vehicle is found, finding a reputable place to purchase the vehicle is the next logical step. Online reviews are growing in popularity, so there is a lot of competition in this space. There is no single winner yet, which means while consumers are going to a variety of sites to check reviews, dealers need to be everywhere the consumer is going.

Providing Service So how do you manage your presence on multiple sites? One at a time.

Using software or a service to monitor reviews will help in being alerted to new reviews as soon as possible, which is an important first step in reputation management. Subaru of Keene, which has a combined average of 4.3 across all review sites, recognizes the importance of speed: “At Subaru of Keene, service is more than just the name of a department,” states Mike Perry, General Manager. “It’s engrained in everything we do. The key to maintaining a good reputation is by addressing concerns quickly. We contact every sales and

service customer to ensure they were totally satisfied with their experience.”

The best way to get more positive reviews is to provide exceptional service.

When you go above and beyond a customer’s expectations, they are much more likely to want to tell the world about it. Providing a good product at a fair price is important in business, but it doesn’t inspire customers to go out of their way for you, this is simply what they expect. When you WOW a customer with your service, they can’t help but talk about it, and this exceptional level of service will translate into more reviews.

Asking Customers In addition to providing great service, dealers can increase their positive online reviews by asking their customers.

There are a variety of methods to accomplish this. A common trend is to email customers after a sale. This is a low cost solution that is easy to implement; however, some sites work to filter reviews solicited in this manner.

The preference from sites such as Yelp is that reviews are generated organic, without being solicited.

Traditional methods to encourage customers to leave reviews are showing better results in response and will keep dealers from running afoul of review filters. Dealers are seeing success

4. Family and Friends – Your family and friends may not be going online to search for your ratings, but Google and Yelp put your ratings right in front of them during online searches. How do they feel if they see you work at a dealership with a bad rating?

Other common questions regarding reputation management revolve around, “ Which review website do I need to be on?” or “Do I need to respond to all of my reviews?” and even “What is the best way to respond?”

At a minimum, Dealers should be managing their presence on the top ten or so sites, starting with Google, Dealership Innovation Guide

DrivingSales, LLC • 1st Quarter - 2013 • 33

in handing out a flyer or card with a customer purchase, asking a customer to review the dealership. Dealers can also mail them a postcard, add a sticky note to their receipt, add it to the back of their business cards, or train their salespeople to ask customers personally. A combination of these efforts will yield the best results.

Responding to Reviews However, even with strict standards and detail service programs in place, bad reviews can happen. So what is the best way to manage these? First and most importantly, you need to respond to bad reviews as soon as possible.

During business hours you could receive a review notification and have a response posted within the hour – that would be great. However, you can’t be available 24/7, so we recommend a standard of 24 hours, with a reminder that the sooner is always better. Bad reviews can grow with time. What starts as a single comment from one angry

customer can become a community tearing you down as people add “Me too” or “the same thing happened to me.” The sooner you respond, the sooner you can defuse this ticking bomb.

Responding to reviews takes practice too, and begins with putting yourself in the customer’s shoes. Ask yourself, what were their expectations, and where did you fall short? Understanding where you fell short gives you insight into how to respond to this review. EVERY bad review should be responded too, even if the customer was completely unreasonable or in the wrong.

Your goal in responding is to rectify the situation, which may not always be possible, but even in times when it is not, the rest of the online world will see that you are putting forth the effort.

Consumers do not expect you to have a perfect business, but they expect you to stand by your customers to make it right if something does fall short.

There are several ideas we like to see in a response to a bad review: 1. Apologize.

Again, the problem may not be your fault, but you can still apologize that they had what they feel was a bad experience.

2. Empathize with the customer.

3. How will you rectify the situation?

Be specific. Don’t make vague promises and definitely don’t promise anything you cannot deliver.

not receive a corporate response from a nameless title. Talk to them as you would a friend who is upset, and give them your name.

5. Never attack the person or respond defensively, this will do more damage. However, if they are misstating the facts, it is OK to point out the correct information.

6. Restate your commitment to offering good service and to making things right. Promise you will try to do better in the future.

7. Handle the situation yourself whenever possible. Customers, especially angry customers, do not like to be passed around.

Following these steps will minimize the damage that bad reviews can do. These conversations also make it public that customer service is important to you, and you care about the people you are interacting with.

This is not only what consumers look for in review sites, but it is great positive advertising for your business.

About The Author:

Brent Albrecht has over 20 years experience in Internet Marketing and Advertising, and has his MBA in Marketing Management. He developed the first Internet department and website for Copley Chicago Newspapers & the Chicago Sun Times, and launched their Direct Marketing division.

Brent developed key strategic online partnerships with Automotive partners (WWWheels and DriveChicago.com), Recruiting (ChicagoJobs.com) and retail verticals. Brent has launched and marketed web-based software solutions on both global and local levels. He also teaches Integrated Marketing Communications at Aurora University.

4. Be conversational and be personal.

People want to talk with a person, 34 • 1st Quarter - 2013 • DrivingSales, LLC

Dealership Innovation Guide

OPINION

REQUIRED DISCLAIMER: This article is based on the opinions of the author and nothing contained herein should be construed as a matter of fact.

CARFAX’s Policies Bad for the Dealer, OEM, Consumer, and Competition: 8 Recommendations to Fix It

Consumers and OEMs have made VHRs mandatory….

significant marketing disadvantages if we choose another VHR provider.

In today’s transparent shopping environment, the “best practice” of providing a car shopper with a vehicle history report has become a mandatory requirement in most dealerships. While Vehicle History Reports (aka “VHRs”) are subject to material omissions and cannot replace the assurance of a thorough physical inspection, the reports serve as a relevant selling tool in the retail dealership environment - and as a buying tool in the wholesale market.

Nearly every used car shopper will ask a dealer for a VHR prior to purchase, or simply choose to purchase the report online themselves. In addition, many auto manufacturers (aka “OEMs”) force dealers to purchase these reports as a requirement of the OEM’s used car certification programs.

(http://www.drivingsales.com/blogs/

CARFAX, a wholly owned subsidiary of R.L. Polk & Co, is recognized as the VHR “market power leader” with the highest count of participating dealers – nearly 32,000. However, not every dealer chooses to purchase from CARFAX by choice; many dealers (like myself) purchase VHRs from CARFAX because exclusivity agreements mandate we either purchase from CARFAX, or face

36 • 1st Quarter - 2013 • DrivingSales, LLC

On October 4, I published a post titled “CARFAX is extorting my dealership.” jeremy/2012/12/05/opinion-carfax-is-extortingmy-dealership) In my post, I explained

that BMW’s Certification Program recently allowed my dealership to purchase AutoCheck VHRs to meet our BMW certification requirement (since BMW was no longer exclusive to CARFAX). By switching to AutoCheck, I would potentially save over $15,000+ on my annual VHR costs. However, since CARFAX paid a stipend to Cars. com/AutoTrader.com to be the sole VHR provider on their sites, I could not leave CARFAX without harming my ability to advertise my pre-owned inventory on AutoTrader.com/Cars.com. Therefore, I was forced to pay CARFAX an additional $15,000+ year for the ability to compete on the two major online sources for my used car business.

My post, which received over 2,000 unique views and several comments, also drew the attention of a blogger named Philips Moore (who I believe to be a CARFAX executive since it’s the same name of their ‘Director, Strategic Insights’). The comment stated: Jeremy understands the power of branding for his own purposes. He pays BMW a huge premium over an

alternative auto maker so that he can leverage the investment BMW has made over the years in their brand.

He pays Autotrader.com and Cars. com a huge premium over a lesser trafficked inventory site to leverage the investment they have made in their brands. I’m confused why he doesn’t wish to apply the same logic to Carfax?

Does CARFAX’s branding justify charging dealers a premium?

CARFAX has poured millions into advertising campaigns that feature a distinguishable “CARFOX” icon. The role of the “CARFOX” is to protect the retail car shopper from the “evil car dealer” that sells flooded, lemonbranded, or damaged vehicles without proper disclosure to the consumer. And while Philip felt that CARFAX’s “brand value” justified charging my dealership an additional $15,000+/year for VHRs, I disagreed. I’ve already issued a rebuttal to Philip’s comment months ago, but I’ll explain in further detail why I do not feel CARFAX’s branding is superior to Experian, nor favorable for the franchised dealer or OEM. There are seven reasons why I feel CARFAX’s branding is NOT favorable for a dealer or an OEM: 1. The Strategic Dangers of Co-Branding, The Commoditization of the OEM’s Certification Dealership Innovation Guide

Program, and the Erosion of the Brand’s Customer Experience The OEMs have made significant investments to create programs to differentiate the “superiority” of their brand’s certified vehicles. An OEM’s certified vehicle, by intent, is meant to substantiate to the potential buyer that the vehicle has been thoroughly inspected and scrutinized in order to meet the individual OEM’s certification standards. The notion that a consumer should trust a certified vehicle’s condition because of a CARFAX report is contradictory given the reassurance intent of an OEM’s certification program – and it also removes some of the competitive differentiation attempted by the OEMs to prove the superiority of their individual certification programs. Why? By not emphasizing the trust between the consumer and the OEM’s certification program, and instead attempting to prove trustworthiness via a third party that is also promoted by competing OEMs, I feel the OEMs are distracting their branding efforts from the reliability of their own certification programs and instead attempting to substantiate the reliability of their vehicles by promoting their association with CARFAX. This is a dangerous practice for OEMs since associations with CARFAX will also associate the OEM’s brand with issues that plague CARFAX. I believe that OEMs commoditize their certification standards when they “amplify CARFAX” to a similar standard as their own certification programs. Here are my opinions: a. If a consumer perceives that a single VHR provider is promoted by several competing OEM’s certified programs, then each certified program loses a level of distinctiveness by commoditizing their “unique” certification standards. b. When promoted excessively by the OEM or dealer, the promotion of the VHR provider diminishes the trust level between the consumer and the OEM’s certification standards because the consumer is led to believe that the OEM’s certification program is unable to represent the vehicle’s true condition – hence the necessity of a Dealership Innovation Guide

third party report. (Note: It’s important that OEMs build trust within their brand’s entire customer experience in order to avoid future commoditization.) c. In the event the VHR is proven inaccurate after the vehicle is delivered, a common occurrence, then brand abandonment can result as the consumer will feel misled by the OEM’s VHR affiliation even though the vehicle met the OEM’s certification requirements. d. If the customer suffered from a previous negative experience with a VHR (with a trade-in value or as a seller/buyer), then the customer will likely doubt the manufacturer’s own certification standards as the customer will know the true limitations of VHRs and therefore naturally challenge the legitimacy of the manufacturer’s program.

Examples of what I believe is risky branding: •

http://www.nissanusa.com/apps/ cpo/?next=header.vehicles.cpo.button

•

http://www.lexus.com/cpo/ overview/index.html

•

http://www.hyundaicertified.com

The better way to do it (by being VHR Neutral): http://www.bmwusa.com/standard/ content/cpo/certification.aspx

Essentially, in this example, BMW offers to provide a VHR as a convenience and additional reference for the customer. BMW does not promote any specific VHR provider – and also allows their dealers the right to choose either AutoCheck or CARFAX. Note: BMW has regularly been voted the world’s most valuable car brand.

To be clear, as an industry best practice car dealers and OEMs should provide consumers with VHRs as additional selling tools – but OEMs should NOT co-brand with, or excessively promote, a specific VHR provider.

AutoTrader.com/Cars.com commoditize the manufacturer’s

certification standards by “amplifying CARFAX” (opinion): 1. Example (AutoTrader): A Hyundai search on AutoTrader.com will show that the CARFAX icon receives equally prominent display as the OEM’s own certification icon. When the consumer views competing brands to Hyundai, which also feature the CARFAX logo, then the Hyundai certification program loses a level of differentiation by the consumer (opinion): http://www.autotrader.com/cars-for-sale/ searchresults.xhtml?zip=11746&endYea r=2013&startYear=2008&makeCode1=H YUND&listingType=certified&listingType s=certified&sellerTypes=b&numRecords =25&searchRadius=10&showcaseListin gId=330415185&showcaseOwnerId=10 0014414&captureSearch=true&Log=0

2. Example (Cars.com): When performing a search for Certified Mercedes-Benz on Cars.com, Cars. com provides a “CARFAX” report as an official selection criteria (with even more prominence than vehicle’s color or dealership reviews). Again, as explained earlier, the promotion of the CARFAX VHR to such a high standard can prove strategically detrimental to an OEM’s brand differentiation and equity. http://www.cars.com/for-sale/used/mercedesbenz/_/N-ma9ZfgcZqpsZly4Zm5d?sf1Dir= DESC&mkId=20028&rd=30&zc=11746&P Mmt=1-0-0&stkTypId=28881&sf2Dir=ASC& sf1Nm=price&cpoId=28444&sf2Nm=miles &rpp=50&feedSegId=28705&searchSourc e=GN_REFINEMENT&crSrtFlds=stkTypIdfeedSegId-cpoId-mkId-freeHistRptId& pgId=2102&freeHistRptId=34624

2. Lawsuits & Bad Consumer Sentiment related to Inaccurate Reports As Jim Ziegler explained, (http://www. automotivedigitalmarketing.com/profiles/ blogs/it-s-time-for-the-retail-automotive-

community-to-rise-up-and-give) there are numerous lawsuits (including class action suits) that can be found by a web search of the terms “CARFAX” and “lawsuit.” In addition, there are many more online testimonials and articles that explain how a consumer (http:// DrivingSales, LLC • 1st Quarter - 2013 • 37

www.consumerreports.org/cro/2012/05/ don-t-rely-on-used-car-history-reports/index. htm) or dealer (http://forum.dealerrefresh. com/f46/opinion-carfax-extorting-my-

dealership-2902-3.html) suffered from a CARFAX report with errors or omissions –including consumers that lost value for their trade from innocuous repairs that shows as “accidents.”

Thus, an OEM or dealer attempting to merchandise a used a car as being “CARFAX guaranteed” may result in the consumer distrusting the dealer/OEM because of a previous CARFAX direct/indirect experience.

Example from Jim: http://carfax.pissedconsumer.com

3. Commercials that Spread the “Contagion of Mistrust” for Car Dealers I feel, along with many others, that CARFAX’s TV ads promote the contagion of mistrust for car dealers.

These ads often feature the proverbial “used car salesman” and exploit the misnomer that a car dealer cannot be trusted – a stereotype that we do not need when trying to sell used cars.

Example: http://www.drivingsales.com/ blogs/jdrucker/2012/11/28/how-carfaxmissed-a-big-opportunity-in-advertising

4. Strong B2C Segment It is important to understand that CARFAX has a strong business-toconsumer sales channel for customers that purchase cars from private parties.

While some may argue that their TV ads are supportive of CARFAX partner dealers, we can’t ignore that CARFAX is also promoting their own B2C interests in these TV ads. Therefore, in my opinion, the TV ads offer no “premium brand value” for participating dealers. (Note: As a direct result of the uproar over TrueCar’s TV commercials from 2011, TrueCar’s latest round of commercials are now “pro-dealer.”)

5. Comparing against AutoCheck’s Branding While many car shoppers may know CARFAX, I feel many more shoppers recognize that Experian is the company that supplies their personal credit 38 • 1st Quarter - 2013 • DrivingSales, LLC

report - the same company that is supplying the “credit score” necessary to finance the car they’re researching – never mind the same score for other important life decisions (e.g. mortgage, college loans, etc...) It’s my opinion that CARFAX, in terms of overall brand trust or recognition, is not stronger than AutoCheck/Experian.

6. CARFAX In-dealership marketing materials and the “CARFOX” icon…

The OEM’s forced dealers to invest in brand compliant facilities, brand training, and other brand related investments. The OEMs demand dealers provide consistency in the various customer touch points in the dealership, and therefore create a consistent customer experience within the entire brand in order to prevent the “commoditization” of their brands.

Thus, I feel that CARFAX’s in-dealership branding materials also conflict with, and do not complement, the OEM’s certified merchandising materials.

While I can understand an independent dealer’s use of CARFAX merchandising materials to assure would-be customers of the independent lot’s attempt to provide “full transparency” for noncertified cars, I do not feel that a franchised dealer with a certified program should allow CARFAX marketing materials to take away any presence from the OEM’s merchandising materials and related brand criteria.

Moreover, I feel obliged to highlight the “CARFOX.” I find the icon to be a noncharismatic and obnoxious character that is irrelevant to building brand equity for ANY company. From a high-line standpoint, I view the CARFOX icon especially damaging to my premium brand - I certainly will not promote it.

Finally, I feel that the 20+ foot high blowup CARFOX displayed at the exterior of many dealerships is a tangible example of the “CARFOX” literally distracting the consumer from the OEM’s or dealership’s brand differentiation.

7. Dealers just need VHR Reports… they don’t need a star-crossed CARFAX-consumer love triangle Many CARFAX advocates feel that CARFAX does a better job of branding their reports to consumers via TV and

other media. However, it’s important to note that the branding described is largely geared towards the consumer’s fear of used cars and also CARFAX’s B2C sales channel. CARFAX’s advertising aims to convince consumers that a CARFAX VHR is needed to protect the consumer. The advertising, which I believe is anti-dealer and anti-OEM, does not clearly assist dealers in using a VHR as a reliable selling tool – but instead it promotes the image that used car dealers attempt to hide information from the consumer. Moreover, for the most part, dealers are the party being forced to pay a premium to CARFAX for VHRs –not the consumers. Thus, dealers are not realizing an advantage from CARFAX’s advertising that they couldn’t also receive from another VHR provider.

Franchised dealers want a VHR report that can be used to complement their brand’s merchandising materials and certification programs – they do not need a third party product that attempts to convince the consumer that it is more trustworthy than the dealer.

CARFAX’s Business Practices: Illegal? AntiCompetitive? Wrong?

While I do not feel that CARFAX’s branding is superior to any other VHR provider, my opinion may be entirely irrelevant. Why? Anti-trust law. The Sherman Act does not allow a firm with superior market power to use their brand dominance or financial means, as an excuse to deploy anticompetitive behavior or restrict trade.

REMINDER: The content in this entire post represents my opinion. It may be inaccurate, wrong, and unqualified.

CARFAX has implemented “exclusive” business agreements with OEMs, online portals, and dealer groups in what I believe is an attempt to restrict competition in the industry and force dealers to pay CARFAX higher prices for VHRs(opinion) (See “How Carfax locks up car history” http://www.autonews. com/apps/pbcs.dll/article?AID=/20121210/ RETAIL07/312109934/how-carfax-locks-

up-car-history). Exclusivity agreements, in most cases, are perfectly legal.

However, if the agreements do not Dealership Innovation Guide

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create a market efficiency, and instead: restrict trade, create anti-competitive behavior, or lead to higher prices for consumers, then they are considered illegal under the Sherman Act. Here are some examples of CARFAX’s questionable business tactics: 1. Using Exclusivity Agreements on Cars.com/AutoTrader.com ACTION: CARFAX currently pays AutoTrader.com/Cars.com a stipend to be the sole provider of VHRs on these two sites. Currently, neither site will allow me to display AutoCheck VHRs for my pre-owned vehicle listings. Therefore, I’m forced to pay CARFAX an additional $15,000+/year in order to compete effectively on the two major used car marketplaces.

EFFECT(OPINION): The exclusionary agreement between CARFAX/ AutoTrader.com/Cars.com leads to higher prices for the dealer by excluding other VHR competition. In addition, other VHR providers suffer from the market power of CARFAX by potentially losing the ability to earn the business of dealers that heavily rely on Cars.com/ AutoTrader.com to market used cars.

2. Refusal to Allow AutoCheck to Appear on an OEM’s Certified Page ACTION: I’m personally aware of at least one OEM(more may exist), that recently allowed it’s dealer body to use AutoCheck (in addition to CARFAX) to support this OEM’s VHR requirement.

However, this OEM was forced to remove VHRs from its website because CARFAX would not allow CARFAX VHRs to be displayed on the OEM’s website if AutoCheck reports could also be displayed. In my opinion, there is no purpose for CARFAX to require this restriction except to engage in anti-competitive tactics.

EFFECT(OPINION): This harms the ability of the dealer and OEM to provide consumers with VHRs to assist with the consumer’s purchasing decision.

Therefore, this is detrimental to the dealer, OEM, and consumer. It’s also anti-competitive towards AutoCheck.

40 • 1st Quarter - 2013 • DrivingSales, LLC

3. Promotion of a “Free CARFAX Report” ACTION: CARFAX prominently advertises that CARFAX reports are free for the consumer. This is largely untrue. Dealers pay CARFAX for the reports, and in turn, dealers provide these reports to consumers.

I believe that CARFAX’s promotion of free reports is negative towards dealers that don’t use CARFAX for VHRs because the consumer is led to believe that the dealer is “hiding something” since the reports “are free.”

Thus, it’s my opinion, that CARFAX uses its market power in an attempt to force dealers to use their service.

EFFECT(OPINION): Dealers feel “blackmailed” into paying CARFAX a premium for VHRs in order to prevent the appearance to consumers of having “something to hide.”

4. Blocking a Manufacturer’s CPO Listings from Appearing on Edmunds. com (and potentially other sites) ACTION: “It came to my attention that some OEMs are ALSO compelled into EXCLUSIVE arrangements with CARFAX that restrict any other VHR a dealer may be able to provide for CPO. Unfortunately, CPO units blocked

by CARFAX either through mandatory exclusive relationships with other sites, or OEM agreements, will remain absent from Edmunds.com. That is a tragedy for both the consumers looking for those units and the dealers trying to sell them.” – John Giamalvo, Edmunds.com From what I read about the Microsoft Internet Explorer case, the court found that Microsoft’s requirement that “all systems” sold by a hardware manufacturer requiring IE was clear evidence of Microsoft’s attempt to force their IE product into the marketplace with a tie-in agreement.

In comparison, I’m of the opinion that CARFAX is engaging in similar behavior by restricting “all” CPO units from being offered on Edmunds.com.

I feel that a VHR agreement with an OEM, should not restrain trade by forbidding the placement of vehicles on a major online marketplace because an online marketplace chose to be impartial to any specific VHR provider.

EFFECT(OPINION): Consumers loyal to Edmunds are not able to view all available used car inventory. Dealers lose potential sales and value from advertising with Edmunds. Edmunds is heavily influenced to switch to CARFAX in order to compete against rival online marketplaces. Thus, this is also anticompetitive behavior against AutoCheck.

5. Requirement that All Dealers within a Group Sign Up ACTION: Allegedly, CARFAX uses its market power to require all dealers, within a group, to sign-up for CARFAX. Apparently, CARFAX will not allow a specific franchise within a group to choose a preferred VHR provider.

While CARFAX supplied the excuse of “password sharing” for this requirement, it’s important to note that their concern can be addressed by other tactics(e.g.

IP filtering). Moreover, in my experience, most VHRs are viewed by consumers via online marketplaces/dealer websites(these are called “ICRs”). Since nearly every OEM requires their dealers use a website unique to each brand, I believe CARFAX can quite easily restrict a multi-point group from sharing a single CARFAX account by simply not displaying ICRs for any franchise that did not sign up with CARFAX. Thus, it’s my opinion, that CARFAX’s requirement is just another example of CARFAX’s exclusionary tactics. (Reference: http:// forum.dealerrefresh.com/f46/opinion-carfaxextorting-my-dealership-2902-3.html)

EFFECT(OPINION): Dealer groups cannot compare AutoCheck or CARFAX to potentially conclude that they perform similarly. Since certain OEMs require CARFAX, dealer groups are forced to purchase CARFAX for the entire group because of the CARFAX requirement for a single franchise.

Thus, dealers are forced to pay a premium to CARFAX, and CARFAX engages in more behavior that is anticompetitive against AutoCheck.

6. Price Discrimination ACTION: While I do not believe CARFAX is violating the Robinson-Patman Act, I do believe their pricing policies should be reviewed. I personally know many dealers – ranging from independent Dealership Innovation Guide

dealers to new car dealers – that are all paying different monthly fees for CARFAX’s “unlimited VHR program.” A more careful examination of CARFAX’s pricing policies should be investigated to encourage more transparency. In my case, after I publically questioned CARFAX’s policies in my October blog post, my CARFAX rep promised me a $300/month price decrease – this was just after my rep told me that no further discounts were possible. In comparison, AutoCheck charges a uniform price for their unlimited VHR program.

that dealers should not be forced to pay a premium for their product.

EFFECT(OPINION): Dealers are not assured that they are receiving the best value from CARFAX and certain dealers may be paying an unnecessary premium vs. other dealers.

jury verdict and $1 billion damage award

7. “Too Much Control” can disrupt trade

in retail stores to restrict point-of-sale

ACTION: After Hurricane Sandy hit the metro New York area, CARFAX placed a prominent disclaimer on every vehicle registered in “flood affected areas” with a message that warned customers to inspect the vehicle for potential flood damage. Immediately, as I was told, chaos ensued at wholesale auctions as dealers began avoiding units that were branded with the CARFAX disclaimer as it was a deterrent to retailing the car in the future. As a result, the Greater New York Auto Dealers Association and its New Jersey counterpart sent CARFAX a letter requesting the company change the disclaimer.

Within a few days of posting the initial hurricane disclaimer, CARFAX issued a “milder” version of the disclaimer that was more subtle – and similar to a hurricane disclaimer that AutoCheck issued prior. To be clear, I can accept the need for a disclaimer, however it should be provided in a milder fashion so as not to negatively brand what is most likely an unaffected flood vehicle (which was my entire inventory).

EFFECT(OPINION): While more examples exist, CARFAX clearly proved that it contains significant market power. Power, that when used haphazardly, can also interrupt trade. CARFAX also proved that their brand can damage a dealer’s ability to sell, and therefore, it also proved Dealership Innovation Guide

Above, I’ve listed 7 CARFAX business tactics that I found to be worthy of further review; and while my understanding of Sherman Act is amateurish and unqualified, it’s relevant to compare the business tactics I described above with actual legal cases. For example: Conwood v. U.S. Tobacco Corp., 290 F.3d 768 (6th Cir. 2002) cert. denied, 537 U.S. 1148 (2003). The Sixth Circuit affirmed a in favor of Conwood, holding that United States Tobacco Company (USTC) harmed competition when it used its position as category manager over moist snuff racks advertising and shelf space of competitive products. The Court concluded that USTC had sufficient market power to foreclose rivals from achieving a competitive shelf presence on scarce retail space, thus allowing USTC to increase prices and restrict the growth of rivals. Notably, the Court ignored the fact that USTC entered into exclusive supply agreements with 10% of moist-snuff retailers. Instead, the Court focused on the exclusionary effects of USTC’s category managers, who were found to have engaged in a systemic pattern of tortuous conduct, including the destruction point-of-sale racks, repositioning products, and providing retailers with false information regarding consumer demand and sales.

Source: http://apps.americanbar.org/ antitrust/at-committees/at-s2/pdf/articles/ resources-exclusive-agreements.pdf

And Coca-Cola Co. v. Harmar Bottling Co., 111 S.W.3d 287 (Tex. App.- Texarkana, 2003, pet. granted). A Texas appellate court affirmed a jury verdict awarding soft drink bottlers $14 million plus injunctive relief in their suit against Coca-Cola under the Texas Free Enterprise and Antitrust Act. The court found the evidence sufficient to uphold the jury’s finding that the CocaCola Co., which admittedly had a 75-80% share of the branded carbonated soft drink market in Texas, Oklahoma, Arkansas, and DrivingSales, LLC • 1st Quarter - 2013 • 41

Louisiana, had restrained trade, monopolized or attempted to monopolize, and conspired to monopolize through a number of marketing tactics used as a package, including commitments to contracts of one year or more , the exclusion of rivals’ in-store and point-of-purchase advertising, exclusive flavor requirements, display requirements, and pricing requirements. Petition for review has been granted by the Texas Supreme Court, No. 030737 (Tex. Sept. 3, 2004).

Source: http://apps.americanbar.org/ antitrust/at-committees/at-s2/pdf/articles/ resources-exclusive-agreements.pdf

In the Conwood v. U.S. Tobacco Corp case, in my opinion, there are tactics

by U.S. Tobacco that are eerily similar to CARFAX’s business practices.

Specifically, using “market power” to stifle competition, or spreading false information in an effort to diminish AutoCheck’s ability to compete. (See “AutoCheck Gets Green Light to Sue Carfax: http://www.courthousenews. com/2012/07/12/48334.htm) In CocaCola Co. v. Harmar Bottling Co, in my opinion, I believe the trait of restricting a competitor’s advertising and the “packaging and forcing” of marketing tactics is similar to CARFAX’s tactics.

Based on the feedback I received from other industry folks, there are likely more examples of CARFAX’s business tactics that warrant a further look.

However, legal cases take time, and I prefer a quicker and simpler remedy.

Eight Industry Recommendations: In September 2011, I wrote a 4,000+ word analysis that explained why I felt TrueCar’s business model was detrimental to the franchised dealer and OEM. By December 2011, I met with TrueCar’s CEO and top management, and I was able to provide constructive feedback that was combined with other recommendations to improve TrueCar’s business model. By April 2012, I was appointed to TrueCar’s Dealer Council.

From my TrueCar experience, I’ve learned that when companies are willing to listen to suggestions, the end result can be a better product for the dealer.

42 • 1st Quarter - 2013 • DrivingSales, LLC

Thus, I’ll take a “leap of faith,” and share some recommendations for the industry: 1. AutoTrader.com/Cars.com, as well as any other used car marketplace, should immediately cease/desist on any action that prevents participating dealers from choosing a preferred VHR provider to represent their vehicles.

2. CARFAX should immediately end any agreement that restricts the ability of an OEM to promote their certified preowned inventory, on any website or in general, because of the choice of a VHR provider for their certified program.

3. CARFAX should cease/desist any televised commercials that portray car dealers as untrustworthy. Moreover, CARFAX should cease/desist any advertising that states that their reports are free. (Unless accompanied by a statement indicating the reports are free from a participating dealer - this applies online as well).

4. OEMs should cease/desist any branding efforts that strongly align their certification programs with a single VHR provider. Additionally, manufacturers should eliminate any advertising that may confuse consumers into believing the OEM’s certification programs provide a similar level of assurance as a VHR provider (e.g. the AutoTrader Hyundai /CARFAX co-branding discussed earlier). It’s important that OEMs build trust within their brand’s entire customer experience in order to minimize the potential for the commoditization of their products.

5. Experian should improve the look/feel of their reports. The reports can use a “facelift.”

6. CARFAX should provide full disclosure to dealers explaining what they are doing with dealer DMS data. (TrueCar’s disclosure methods could be a valid model).

7. CARFAX should re-examine their used car pricing tools to verify they are not detrimental to dealers and actually complementary.

8. CARFAX should adopt a uniform and transparent pricing policy for participating dealers.

Conclusion Competition is American; it’s moves entire economies forward, it improves industries, and it protects the consumer. We need competition.

Dealers need VHRs in order to buy/ sell used cars. However, the concept of a single VHR provider that uses exclusionary agreements to stifle competition is unconscionable.

Dealers should not be forced to hire a company that charges more than its competitors, spends millions on advertising that damages the reputation of the dealer body, and sells data that is subject to serious errors/omissions.

Moreover, OEMs should be weary of the strategic consequences of aligning their valuable brands with potentially ill-fated third parties. In conclusion, the opportunity for more VHR competition will ensure that consumers and dealers receive a more accurate and valuable vehicle history report in the future.

REQUIRED DISCLAIMER: I’m not a lawyer. Anyone reading this analysis should not consider my above opinion, comments, text, or use of sources as either reliable or accurate. The above information is not factual, and is merely my amateurishly researched and unqualified opinion. You should not rely on the above opinion, or the above text, or anything I post online as it could be completely wrong. Your decision to read this this analysis is based on your own risk.

About The Author:

Jeremy Alicandri is

Vice President of Habberstad Auto Group (New York), where he devotes his time to corporate and strategic development activities. Jeremy is a member of TrueCar’s Dealer Council as well as an Editor for DrivingSales. Prior to his career in automotive, Jeremy was a management consultant for clients including BMW of North America and Motorola.

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Facebook’s

New “Nearby” F

acebook has recently announced a new feature that could have tremendous impact on dealers. It’s called “Nearby” and it’s on the iOS and Android Apps.

The feature is a discovery engine, allowing people to discover businesses around them that resonate with their social graph. Imagine users looking for an oil change and viewing service stations nearby. Will you be listed? Will you be at the top of the list? Will you have good reviews? It marks a big step into a new market for Facebook that could have profound impact on dealers.

What’s new with “Nearby”?

People have long been able to check in to places with their Facebook app, amounting to an average of 250 million users per month checking in to places.

Now, not only will people be able to check in with their Facebook account, but they can rate businesses or choose to like a business’s Facebook page as well.

This will power a list of recommendations from your friends when you’re out looking for places to eat, a favorite retail spot, or even a local gas station.

We know this is sending Foursquare and Yelp for a loop, but it has the potential to really help or hurt your dealership, too. What can dealers so?

Get a page!

Now, more than ever, it’s time for your dealership to get and manage a Facebook page. Yes, it’s true – there are still dealerships that don’t have one. If you do have one, is it optimized 44 • 1st Quarter - 2013 • DrivingSales, LLC

Dealership Innovation Guide

for mobile users to find you? The fact is, Facebook is no longer just a social place to interact with potential customers – it’s a phonebook. If you’re not on it, you’re not being found.

And for those of you keeping up and already have a business page, it’s even more important to optimize it.

Fill out all your company information (for starters), update your images, and interact with your customers.

Categorize yourself.

Think of all the reasons people might come to your dealership. For a new car, of course, but what about after getting into an accident and they need to find a collision center? Or, perhaps they just need an oil change. Be certain you’re listed in the right categories, making sure your being found in all the right places.

Ask for a review!

This is where it really counts. Just like you ask for reviews on Google, be sure

Dealership Innovation Guide

to encourage your customers to check in and leave a review via their Facebook account with the new Nearby. This is where the magic really happens, as the Facebook algorithm takes people’s recommendations into consideration when friends are looking for a spot. You want to be sure you show up on top.

Of course, how this application gains traction will certainly affect the extent to which it will impact your business.

Foursquare has already responded to this move by focusing in on increased personalization. The kicker? They’re using Facebook’s social graph to do it, further emphasizing the fact that Facebook has the power and the resources to define and dominate the social experience for users.

About The Author:

Lindsey Auguste is the Editorial Director for DrivingSales, ensuring that the community is getting the content and experience they need to improve their dealerships. Lindsey

comes from a background in psychology and sociology at Chapman University and worked as a research assistant at Stanford University where she executed the research design and collection process. She applies this specialty at DrivingSales by providing research across the industry and by helping to bring relevant content to her DrivingSales peers.

If and when it does catch fire, you don’t want to be at the back of the pack.

Optimize your Facebook page and ask your customers for reviews now.

This brings a whole new meaning to SoLoMo (Social Local Mobile).

DrivingSales, LLC • 1st Quarter - 2013 • 45

Old School vs

New School I

n my time working in the Automotive Sales Industry, I’ve heard this cliché used far more times than I could ever count: Old School versus New School. Probably because, as the Internet Sales Manager, my area of responsibility falls under the New School heading by necessity and it seems the people who long for the old school days would very much like to see the New School processes fail. People want to go back to doing things the way we used to because “it used to work.”

But customers don’t care about what school we went to. I remember hearing people talk a decade ago about how they could never buy a product on the Internet because they need to see and touch it before they buy it, not to mention that they didn’t want to share their credit card information with anyone that wasn’t in person. That was also back when the store clerk would put your credit card on the plate, place the carbon

paper over the top, and slide the bar back and forth to imprint your receipt.

So when one afternoon at our dealership we were musing about what the future of car sales was going to look like, we immediately envisioned a world where the customers would be the ones driving the sale. Because, whether we like it or not or whether we even realize it or not, they are anyway. And they aren’t going to change the way they want to shop to fit our desires or even our ROI report.

We truly believe that if a customer could buy a car online the way that they shop on Amazon.com, they would. So our challenge isn’t trying to find ways to entice customers to change what they want in order to accommodate our sales process, our challenge is to find ways to adopt our sales process to accommodate the way our customers want to shop for cars. People live online and in our increasingly busy lives, we find the time to do the things we need to do for our personal lives multitasked during our online presence.

And for most of us, buying our next vehicle is a personal purchase.

While the old school approach tells us to withhold price until you have the customer and their trade sitting at the desk in front of you, the customer tells us that they are willing to do the research online and more and more of them are willing to complete their transactions even for these major purchases online. How do we adapt?

We show them that we can do it. We embrace being transparent about our pricing. The days of pricing a car up a few thousand dollars in order to give us room at the negotiation table

46 • 1st Quarter - 2013 • DrivingSales, LLC

make us uncompetitive. The travel industry has paved the way for supply and demand pricing and although customers check us out to see if we’re still playing the haggle game, they are quick to recognize and appreciate the value of market-based pricing.

And we offer to help them avoid spending a couple of hours at our store if that’s what they’d like. We offer to send an appraiser to look at their trade, and we can have the appraiser bring their top choice to test drive so that they can check out our car in the comfort of their own neighborhood while we check the condition of their car. Even for customers who aren’t narrowed down to one particular vehicle are so appreciative of our offer that it sets the tone for the positive experience they’re going to find doing business with us in the New School way.

About The Author:

Wendy Lowen started as the Internet Manager in May of 2010 and has grown the department from 1 to 7 members since then. Her prior experience includes customer service, call center management and analysis, spa and salon management, revenue management and strategies. She enjoys Park Chrysler Jeep because not only is it a family dealership, but it walks the talk when it comes to caring for its customers and staff.

When she’s not working she enjoys spending time with her daughter and family, reading, cooking, traveling and studying French. She has two favorite quotes, “Experience comes from something I’ve done, and wisdom comes from something I’ve done wrong.” And “I reserve the right to get smarter.”

Dealership Innovation Guide

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