Dealership Innovation Guide Q4 2014

Dealership

INNOVATION

GUIDE

A DrivingSales Publication • 4th Quarter, 2014

Quar terly Ranking of Dealership Vendors and Best Practices

SOCIAL MEDIA: THE HARD TRUTH Robert Karbaum - Page 28

ON THE CUSP OF TRANSFORMATIONAL CHANGE Cliff Banks - Page 14

MODERN MARKETING IS A MOVING TARGET Grant Gooley - Page 22

PLEASE TELL ME WHAT’S GOING ON WITH GOOGLE SEARCH Eric Miltsch - Page 40

Visit DrivingSales.com to view more than 17,000 verified dealer ratings of over 800 vendors in 28 categories.

DID YOU KNOW 83% OF SHOPPERS ARE LIKELY TO LOOK ONLINE FOR SERVICE AND REPAIR INFORMATION? 1 C+R Research, April 2013

1

Dealership

INNOVATION

GUIDE

A DrivingSales Publication

Quar terly Ranking of Dealership Vendors and Best Practices

Dealership Executives, As we enter the fourth quarter, we’re finishing up 2014 and starting to prepare our 2015 business plans for our dealerships. There are many new strategies out there to consider and in-depth research to do before deciding which path to take and then we will lead the way by executing. To prepare for a successful 2015, we need to be thinking about what kind of car buying experiences we are currently delivering to our customers and understand the customer expectations.

Here at DrivingSales, we are thinking about 2015 in a manner of how we can best serve dealers.

We’ve launched DrivingSalesNews.com this summer, which is dedicated to dealer-focused news featuring exclusive reporting on dealership tech trends and innovations in automotive retailing directly from the DrivingSales editorial team. Dave Martinson, our Broadcast Journalist, will play a big role in delivering daily breaking news affecting your dealership on topics including Dealership Operations, General Marketing, Industry Innovations, Industry News, Mobile, Search Marketing, Social Media, Website Optimization and much more.

Our team has received multiple requests from dealers throughout the years for additional news and information directly from DrivingSales. This is one way we are responding to dealers’ requests.

We will continue to invest in media in the future to deliver top-notch dealer-driven news and look forward to receiving feedback on ways to improve DrivingSales News.

We’re very pleased to provide another stellar DrivingSales Executive Summit lineup for those of you attending DSES this year. We have SEO expert Rand Fishkin coming back by popular demand to keep us ahead of the ever-changing SEO game. We have Brian Eisenberg, online marketing pioneer, to teach us how to create legendary dealership brands. We also have best-selling author, Brian Solis, to forecast innovations in our future and how we can embrace them to ensure we’re delivering a great car shopping experience.

We hope you will find value in the enclosed articles to prepare for next year. Good luck executing on the remainder of 2014 and preparing for a successful 2015.

Thanks for all your support—and best wishes!

Sincerely,

Jared Hamilton Founder, DrivingSales, LLC

Meet the Team Jared Hamilton Founder, DrivingSales Inc. @jaredhamiltonDS Kevin Root President, COO kevin.root@drivingsales.com Jeff Pease Art Director jeff.pease@drivingsales.com Mike Jeffs Media Manager mike.jeffs@drivingsales.com @mikejeffs3 Larry Schlagheck Director of Advertising larry@drivingsales.com @larryschlagheck Josh Phelon Advertising & Sponsorship Sales Manager josh.phelon@drivingsales.com @joshphelon Justin Rhoane Advertising & Sponsorship Sales Manager justin.rhoane@drivingsales.com @JRhoane Tommy Bay Media Designer tommy.bay@drivingsales.com @tommybay

Dealership Innovation Guide

DrivingSales, LLC • 4th Quarter - 2014 • 3

Thanks to our Sponsors!

MAGAZINE CREDITS About This Guide Dealership Innovation Guide is published quarterly by DrivingSales, LLC. To subscribe, visit DealershipInnovationGuide.com. Printed in the United States of America. Copyright © DrivingSales, LLC 2014. All rights reserved. No part of this 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 • 4th Quarter - 2014 • 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 mike.jeffs@drivingsales.com. Include a telephone number and 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 FEATURES 14

On The Cusp of Transformational Change Cliff Banks

18

It’s Time to Toast your Sales Team Megan Barto

22

THE HARD TRUTH

28

Modern Marketing is a Moving Target Grant Gooley

34

Robert Karbaum

Eliminating Dealer Reserve Pete MacInnis

40

Please Tell Me What’s Going on with Google Search!

Eric Miltsch

06 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 • 4th Quarter - 2014 • 5

Over 16,000 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)

1 0 Internet Trainers Inventory Pricing Mobile Sites New Car Leads

1 1 Owner Marketing Reputation Management

1 2 Search Engine Optimization (SEO) SEM - PPC Used Car Advertising Websites

6 • 4th Quarter - 2014 • DrivingSales, LLC

Dealership Innovation Guide

Dealership Innovation Guide

DrivingSales, LLC • 4th Quarter - 2014 • 7

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

Company CAR-Research XRM

Product

Call Tracking / Ad Sourcing Solution

CallSource CallTrack

CallRevu CallRevu Dealer.com

Century Interactive

Dealer.com CallTracking Car Wars

Score Rating Rec. 170.03

94%

2.45

80%

168.58 1.06 0.96

100% 100% 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.

CarChat24

CarChat24 - 24/7 Fully Staffed Chat

178.83

ContactAtOnce! LLC ActivEngage Gubagoo

Dealer e Process

ContactAtOnce! Chat Connect ActivEngage Chat

Gubagoo 24/7 Behavioral Live Chat Dealer e Process Live Chat

868.66

99%

170.91

100%

13.29 10.19

100% 90% 100%

CRM-Sales Department These are Customer Relationship Management (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

Product

Score Rating Rec.

ELEAD1ONE

ELEAD CRM

478.38

DealerSocket

Dominion Dealer Solutions CAR-Research XRM VinSolutions

DealerSocket CRM Dominion CRM

CAR-Research XRM

VinSolutions MotoSnapTM CRM

585.17

97%

383.33

97%

96.29

5.49

99% 98%

87%

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.

Autosoft, Inc.

Autosoft FLEX DMS

224.45

Auto/Mate Dealership Systems Dealertrack Technologies Reynolds and Reynolds CDK Global

8 • 4th Quarter - 2014 • DrivingSales, LLC

AMPS

Dealertrack Dealer Managment System Reynolds ERA DMS CDK Driv

503.38 188.93 71.34 42.82

92% 95%

81%

38% 75%

Dealership Innovation Guide

Fixed Ops Solutions Products and/or services designed specifically for Fixed Operations.

Company

Product

Score Rating Rec.

DealerSocket

DealerSocket Service

80.02

CIMA Systems

CIMA CarView

ELEAD1ONE AutoPilot CIMA Systems

CIMA Car Care Service Menus

Adworkz

Service Scheduler

479.92

98%

19.34

100%

11.89 0.65

100% 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

Product

Score Rating Rec.

Dominion Dealer Solutions

Dominion ILM

108.87

ELEAD1ONE

ELEAD ILM

DealerSocket

DealerSocket ILM

CAR-Research XRM

Internet Lead Manager

VinSolutions

VinSolutions MotoSnapTM ILM

111.25

100%

18.46

98%

11.17

0.26

99% 97%

88%

“We use the entire ELEAD1ONE solution to manage all of our 16 dealerships. The main differentiator and why we chose ELEAD1ONE is their outstanding client support and corporate reporting that helps us better manage our business on a global level. Momentum Auto Group has grown almost three-fold in the last 8 months - ELEAD1ONE is definitely a main factor! With ELEAD1ONE, we have one vendor with first-class software, call center and client service to take our business to the next level.”

Rahim Hassanally

Owner of Momentum Auto Group Top 40 Under 40 - Automotive News, 2013

Top Rated CRM, ILM, Owner Marketing © Data Software Services, L.L.C. 2014

Dealership Innovation Guide

866. 989.8077 | sales@eleadcrm.com | www.elead-crm.com DrivingSales, LLC • 4th Quarter - 2014 • 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

Score Rating Rec.

PCG Digital Marketing

Brian Pasch

73.73

100%

3.75

100%

Phone Ninjas eXtéresAUTO

Car Game On

Dynamic Beacon

Phone Ninjas

eXtéresEDU - Dealer Training

Car Game On Internet Trainers Dynamic Beacon

365.72 10.26 3.75

100% 100% 100%

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.

VinSolutions

MotoSnap™ Market Pricing Analysis

81.52

ACE Tech FirstLook

CDK Global

Dealertrack Technologies

LotPro

FirstLook -- 360 Market Pricing AutoCheck Express TrueTarget™

269.16

94%

26.85

100%

11.65 11.65

80% 50% 50%

Mobile Sites This category is for mobile site providers. Mobile websites are built specifically for mobile device browsers and cater to customers surfing the Web from phones and tablets.

Company Dealer e Process

Product Mobile Websites

Dealer.com MobileSites DealerOn Cobalt

DealerOn Mobiles Sites Cobalt Mobile Websites

Score Rating Rec. 241.33

100%

32.11

67%

0.89

0%

28.83

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.

Autobytel Inc.

Autobytel New Car Leads

48.86

Dealix

TrueCar

Dealix New Car Leads

TrueCar New Car Leads

Cars.com NewLeadsPlus Black Book Online Division

Activator Complete

*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 • 4th Quarter - 2014 • DrivingSales, LLC

361.70

88%

14.95

56%

4.74

100%

6.12

92%

60%

Dealership Innovation Guide

Make your voice heard.

DrivingSales Vendor Ratings is the only place for dealers to rate and review their vendors. The market is listening and your opinion matters.

www.drivingsales.com/ratings

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 J&L Marketing

Product bLinked

ELEAD1ONE GoldDigger CIMA Systems

Complete Virtual BDC

OneCommand OneCommand

VinSolutions VinMarketing

Score Rating Rec. 519.90

100%

6.35

100%

356.02 5.42

1.81

99% 100%

75%

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

Company

Product

eXtéresAuto

Online Reputation Management

DealerRater.com

Slipstream Creative Digital Air Strike Cars.com

Dealership Innovation Guide

Score Rating Rec.

DealerRater Certified Dealer Program

144.23

95%

Reputation Management

25.46

100%

Reputation Logix

Cars.com Dealer Reviews

69.98 2.09 1.83

97% 50%

33%

DrivingSales, LLC • 4th Quarter - 2014 • 11

SEM - PPC Search Engine Marketing (SEM) and Pay-Per-Click (PPC) solutions help you determine how to invest in and execute a display or paid ad campaign on the major search engines for greatest ROI.

Company

Product

Score Rating Rec.

PCG Digital Marketing

PPC Management Service

15.27

Dealer e Process DealerFire

Local Search Group Showroom Logic

Dealer AMMP

DealerFire SEM/PPC

Search Engine Advertising AdLogic

100.83

100%

5.84

100%

5.84 5.24

100% 100% 80%

Search Engine Optimization (SEO) Search Engine Optimization (SEO) solutions work to optimize your websites so that they show up higher in the search engine rankings. These services generally include both on-page and off-page optimization. This category also includes Website Conversion Tools.

Company

Product

Score Rating Rec.

PCG Digital Marketing

SEO & Strategic Internet Marketing

293.78

eXtéresAUTO Dealer.com

Dealer Apex L2T Media

eXtéresAUTO - SEO Dealer.com SEO Organic SEO SEO

301.74

92%

83.39

100%

73.93

73.93

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.

Cars.com

Cars.com Online Advertising

101.79

Edmunds.com

Edmunds Used Car Advertising

11.81

Dealix UsedCars.com 835.90 95% AutoTrader.com Slipstream Auto

Used Car Advertising Slipstream Posts

86%

25.07

40%

11.48

100%

50%

Websites Website solution providers create full-service websites built to be the main hub of your dealership’s online presence. These sites are central to your dealership’s marketing, branding and customer service. Micro Sites and Mobile Sites are rated in their own categories.

Company

Product

Score Rating Rec.

Dominion Dealer Solutions

Dominion Websites

471.52

Dealer Car Search Dealer e Process DealerOn

DealerFire 12 • 4th Quarter - 2014 • DrivingSales, LLC

Responsive Websites Dealer eProcess Websites DealerOn - Flex Sites

DealerFire Custom Websites

923.69

99%

323.26

100%

177.52 68.61

97% 98% 100% Dealership Innovation Guide

How Do 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 September 1, 2013 to August 31, 2014. *CATEGORY SCORES ARE COMPUTED PER CATEGORY AND ARE NOT COMPARABLE ACROSS THE BOARD. FOR QUESTIONS ABOUT VENDOR RATINGS, PLEASE CONTACT BART.WILSON@DRIVINGSALES.COM

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

Dealership Innovation Guide

DrivingSales, LLC • 4th Quarter - 2014 • 13

On the CUSP of

Transformational Change 14 • 4th Quarter - 2014 • DrivingSales, LLC

Dealership Innovation Guide

The industry is starting to get past that now. Technology vendors are pushing solutions into the market that are solving many of the challenges.

Vendors such as ADP, Reynolds and Reynolds, Dominion, AutoTrader and DealerTrack are designing their marketing and products around the concept of seamless transactions.

Likewise, large dealer groups are preparing to roll out initiatives this year in which the customer will be able to move back and forth from online to offline throughout the course of the shopping and transaction process.

AutoNation is investing nearly $100 million in online initiatives such as these. Chairman and CEO Mike Jackson has, for years, envisioned an industry where customers can shop online, determine the exact vehicle – including color and trim – they desire, choose the financing method and source while picking the various finance and insurance products they want, complete an online trade appraisal and then come to the dealership with the vehicle and paperwork waiting for them.

Meanwhile, the Sonic Automotive Group is piloting, in Charlotte, NC, its One Sonic - One Experience program, which seeks to reduce transaction times to less than an hour. Tablets in the hands of each salesperson and a pricing strategy based on complicated algorithms that allow for only a $300 window for negotiation are two initiatives that Sonic executives believe will make the onehour or less transaction time a reality.

T

he automotive retail sector is on the cusp of true transformational change. Since 1995, when Seattle dealer Marty Rood sold the first vehicle online – a gold Volvo 760 – through a service called DealerNet, the Internet and its surrounding technology has pushed customers, dealers, vendors and automakers closer to an era where real digital transactions are possible.

Dealership Innovation Guide

SEAMLESS TRANSACTIONS

DRIVING INNOVATION – THE CUSTOMER

The current buzzwords are “seamless transaction.” We’re not there yet, but we are close. It’s long been promised, but nobody has been able to truly get there yet. Old business practices, legacy technology systems, and data imprisoned in hundreds of separate silos prove to be difficult obstacles.

Besides technology, what’s driving the push toward true digital transactions?

First, it is the customer. In many ways, the industry is following the customer.

Online shopping sites such as Amazon have conditioned the customer to expect a seamless process. Sites remembering a customer’s shopping history along with credit card and personal information, DrivingSales, LLC • 4th Quarter - 2014 • 15

VENDOR DEALS IN 2014

all while providing recommendations based on their shopping history are normal and expected business practices.

to use, how much profit is needed for that specific vehicle and whatever else is pertinent to the appraisal.

Although Sonic Automotive is moving toward a one-price system, customer surveys consistently show they aren’t necessarily interested in a non-negotiation process.

Customers want a process they can trust and that respects their time.

Customers feel like they are part of the process. They trust it more because they are the ones doing the appraising and the final price is determined by a trusted third party source such as Kelley Blue Book, Black Book or NADA Used Car Guides.

One of the more interesting developments involves customer collaboration in the areas of trade appraisal and F&I.

Meanwhile, on the F&I side, some dealers are experimenting with letting their customers use a tablet to research and choose which products to purchase – without involving a sales pitch from an F&I sales person.

These early pilots show customers are buying more products and paying more for them using these methods.

Innovative dealers are handing their customers a tablet and allowing them to appraise their own vehicles. The appraisal tool has, on the back end, all of the dealer’s business rules, such as determining which valuation company 16 • 4th Quarter - 2014 • DrivingSales, LLC

•

Ally Financial led the way with a $12.04 billion IPO earlier this year.

•

CDK Global’s IPO & spin off from ADP. It generates almost $2 billion in annual revenue placing its valuation at in the neighborhood of $7.5 billion to $8.5 billion.

•

Brookfield Property Partners purchase of Capital Automotive for $4.283 billion.

•

Gannett Co.’s buyout of Cars.com in a deal valued at $2.5 billion.

•

TPG acquired the Warranty Group for $1.5 billion.

•

KKR acquired Internet Brands (CarsDirect) for $1.1 billion.

•

DealerTrack acquired Dealer.com for $987 million.

•

TrueCar’s IPO was valued at about $880 million (market cap is now $1.5 billion).

CONSOLIDATION Consolidation is another development pushing transformational change. The automotive retail space is becoming significantly less fragmented on both the dealership and the vendor side.

This year the industry is on a record pace for dealership buy-sell activity.

According to data published by The Banks Report, nearly 200 dealerships have changed ownership by the end of September. That is up from 186 U.S. dealerships changing hands in 2013.

The Banks Report estimates that the top 100 dealer groups own more than 3,000 of the 17,895 Dealership Innovation Guide

dealerships in the U.S. overall, and that approximately 12,000 companies/ principals own those 17,895 stores.

Dealership groups with capital are getting bigger and controlling more of the landscape. Additionally, they have the ability to invest in new technologies and solutions.

Meanwhile, from a financial perspective, vendors are consolidating at a record pace. So far in 2014, more than $23 billion in vendor equity has changed hands. When factoring in the IPO spin off of CDK Global (formerly ADP Dealer Services) that number jumps close to $30 billion.

Several smaller vendors have been acquired this year, for a total investment of nearly $600 - $700 million. Mainly, these are purchases to help larger vendors fill product holes they may have. There are more deals that are rumored to be close this year.

innovation, including integration of data, websites, F&I and fixed operations.

FIXED OPERATIONS

DATA INTEGRATION

Fixed operations is an area that is often overlooked. A study this year by Three Birds Marketing of 1,000 dealership websites shows that critical servicerelated content is missing from most sites. One reason is that the service repair space is still fragmented with many small players lacking the juice to move the ball down the field.

The industry is light years ahead of where it used to be with integrating data. Companies such vAuto, TrueCar and others have been able to pull data from various sources and package it in a way that helps dealers and customers price vehicles more intelligently.

But the ability to integrate true incentive data into the process – data based on customer qualifications, lender and automaker programs, market-area and vehicle trim level – is an area that needs much work.

(Edmunds.com is launching, this year, a solution that integrates incentive data into its Price Promise program.)

Being able to take that data and integrate it into website solutions is also a challenge. And that includes mobile technology. A recent white paper by Brian Pasch of PCG Consulting shows that the industry has a wide gap to overcome in the areas of mobile website and multi-screen marketing.

•

OneCommand’s purchase of CRM firm Higher Gear.

•

Private Equity firm HPPG’s purchase of AutoAlert.

•

Vista Equity’s majority stake in DealerSocket.

F&I

•

AutoLoop buys Car Research.

•

Reynolds and Reynolds acquired AddOnAuto, a firm that helps dealers sell accessories online.

•

Dealertrack’s acquisition of ASR Pro.

•

Search Optic’s acquisition of DigiGo.

F&I also is an area where the industry will see great innovation in the next couple of years. Automating the process of tying a customer’s credit score to specific lending and incentive programs based on specific vehicles while also integrating the trade appraisal and a dealer’s specific business rules to come up with the monthly payment is the Holy Grail.

Many of these deals are providing vendors with greater capital investment and/or pieces that will help them in the push toward true digital transactions.

MORE INNOVATION NEEDED Even though the industry is close, there remain areas that require significant Dealership Innovation Guide

The above scenario also includes e-contracting and online payments – two areas that will explode in 2015 and 2016. DealerTrack and RouteOne are making significant inroads into these areas. Meanwhile, DealerTrack quietly has cornered key geographic market areas in the online titling and registration segment – critical pieces that will help move the transaction process into a true digital era.

The industry is going to see more innovation in this area. Solera, a relatively unknown company in the automotive retail space, will be a big player moving forward. It acquired Service Repair Solutions last year and could drive some of the consolidation needed. SRS is the parent company of AutoPoint/MPi and is in position to provide innovation in the service space. It will be interesting to watch companies such as Solera, xTime, ADP and others vie for control of the fixed operations segment.

Meanwhile, Cars.com has intriguing plays on the table with RepairPal that could help bring needed transparency to the dealership service business.

The next five years could be one of the most revolutionary periods in automotive history. It’s going to be wild and it’s going to be fun.

Automakers, dealers and vendors that are willing to take risks, able to listen to customers and be innovative are the ones that will be the industry leaders in the near future.

About The Author: Cliff Banks is an industry veteran of 24 years. A long time editor and analyst, he is the founder and president of The Banks Report, an online service that analyzes news and trends in the automotive retail sector.

DrivingSales, LLC • 4th Quarter - 2014 • 17

IT’S TIME TO

TOAST

YOUR

SALES TEAMS!

18 • 4th Quarter - 2014 • DrivingSales, LLC

Dealership Innovation Guide

How Outside of Industry Training Can Help Develop Strong Leaders.

I

’m sure you’ve heard “the best never stop learning.” With a dozen or so automotive industry specific conferences that run throughout the year, a Dealer Principal, General Manager or Marketing Director have plenty to choose from. There are even more automotive industry trainers who will fly into your store and train your teams on-site. Both conferences and trainers are important (as long as you select the best one for your specific situation), and I will never discourage anyone from attending these conferences or hiring a trainer.

For learning anything from best practices, to emerging trends or new ideas, and even for hands-on learning, attending automotive industry specific conferences or having someone train your teams on-site is imperative when you are looking to grow your business.

However, when you’re planning your training and education budgets for

Dealership Innovation Guide

DrivingSales, LLC • 4th Quarter - 2014 • 19

next year – why not invest in your employee’s personal development with something outside of our industry?

Most industry conferences are geared towards your General Managers, Dealer Principals, Digital Marketing Managers, Internet Managers, and there’s even a number of F&I Conferences. Have you thought about training for your salespeople? I’m talking about the salespeople who have been in the business for six months and don’t have a clear understanding of how it all “works” yet. I don’t mean just having a trainer come in for a one or two day session on selling. While those industry-specific conferences and trainers are critical to your success, there’s so much more to our industry than just how to present numbers or how to do a meet and greet.

There’s also the people aspect and, more importantly, the “how to interact with people” aspect of the industry.

Just like DrivingSales Executive Summit brings in speakers from outside the industry, we, as automotive professionals, should look for our own training outside the industry. Why not focus on educating your teams with events outside the industry? There is a lot we can learn from customer service events, and even speaking events.

We have to admit the professionals in the automotive space don’t know everything and we can learn from the best and brightest in other industries.

Have you ever thought about Toastmasters? Toastmasters is an organization which oversees local clubs that focus on helping their members improve their communication, public speaking, and leadership skills; 3 skills every automotive professional needs.

Aside from improving your team’s communication, public speaking, and leadership skills, Toastmasters is also a way to network in your community.

With over 14,600 member clubs and 313,000 members worldwide (in over 20 • 4th Quarter - 2014 • DrivingSales, LLC

Dealership Innovation Guide

126 countries), there is one in your hometown. Even if there isn’t – the nice thing about Toastmasters is you can start one in your own community!

The Toastmaster’s website has a club locator that – after you’re done reading this publication- you can use to look for one in your neck of the woods.

Networking with professionals outside of the automotive industry while improving your team’s communication, public speaking and leadership skills? Sounds like a win-win!

Quite often, the club’s meetings occur twice a month, and sometimes three times a month. They’re not strict about attendance, but the more meetings you attend, the faster you progress through the program. There are competitions and different levels you can achieve with Toastmaster’s. It’s an interactive meeting with a lot of audience participation. There’s even an “ah’s counter” each meeting – which counts the number of times a speakers says crutch words such as “ah”, “um,” and “er.” Many people aren’t aware of just how often they say these words while speaking. It’s eye-opening to have someone actually count them!

In addition to improving your team’s communication, public speaking and leadership skills, Toastmasters will also improve their self-confidence.

Your team might be skittish at the thought of speaking in front of people, but Toastmasters are small, intimate groups. Facing their fears of public speaking will improve their confidence in themselves and their words.

With minimal investment on your part (as the dealer), Toastmasters will cost the member $36 every 6 months and a $20 new member fee (individual club dues may vary, but this is the amount set forth by Toastmasters International).

To do the math for you, that’s $92 for the first year and $72 every year after that. Find me a marketing campaign (digital or traditional) that costs that Dealership Innovation Guide

amount. I don’t know a General Manager who would say “no” to one of his employees joining this club. Do you?

By taking the time to let your sales teams know you’re invested in their personal growth and development, it will create a positive culture of learning. The team members who choose to attend the meetings can even discuss what they’ve learned at your weekly sales training meetings (you do have those, right?), which is a way to improve their self-confidence and public speaking skills once again. A positive dealership culture is imperative to sustained profitability. And a cornerstone of a positive dealership culture is showing your employees that you care about their wellbeing outside of work.

Aside from the expected benefits, Toastmasters can also allow its members to mentor others. Once its members become seasoned an experienced, new members will look to them for guidance. Even though it’s hard to admit, many people will feel a solid sense of self-worth when another individual looks to them for guidance.

Allowing your teams the freedom to join a club or other leadership group (Kiwanis, Lion’s Club, etc) will not only help them with their self-confidence and personal development, but it will also help your dealership’s name in the community. While I’ve mentioned that casting your dealership’s name in a positive light in the community is something that will come naturally with joining one of these networking groups, it’s just that – something that will come naturally. It shouldn’t be the sole purpose of joining one of these groups.

There are many ways you can provide your teams with training – it’s just imperative that you do! Your teams won’t grow, flourish and improve themselves if they do not have training and a focus on personal development.

You can teach your team process,

process, process until everyone is blue in the face (including you). Of course, that’s important, but process doesn’t sell cars – people sell cars; and don’t you want to make your people the best they can be?

People will stay with an employer who treats them fairly and shows a vested interest in them. Just like customers don’t want to be treated like a number, neither do your employees. Employee satisfaction has a direct correlation to customer satisfaction – and customer satisfaction is paramount to our business. Find something that works for your teams, something that inspires and motivates them, and watch a world of difference occur. Watch not only their professional habits evolve, but also their personal well-being transform. http://www.toastmasters.org/ http://reports.toastmasters.org/findaclub/ http://www.toastmasters.org/ http://bobyewchuk.wordpress.com/2010/11/17/ tm-unexpected-benefits/

About The Author: Megan Barto started at Ciocca Honda, which is a part of the FaulknerCiocca Group headquartered in Quakertown, PA, in April 2007. Megan is now Marketing Director both of Ciocca Honda, the Ciocca Collision Center & Ciocca Hyundai of Lebanon. Megan has spoken at numerous industry conferences including the 2013 DrivingSales Executive Summit & the 2014 Spring Digital Dealer Conference. Megan is also an active contributor to various industry blogs and magazines. In her spare time she enjoys coaching her 13-year-old daughter’s soccer team & rocking out on the guitar.

DrivingSales, LLC • 4th Quarter - 2014 • 21

Modern Marketing is a Moving TARGET. Hit the

BULL’S EYE in

A

2015 utomotive Retail Marketing in the last three years has become outrageously overwhelming.

If you still have buttons on your phone, think leads from the Internet are typically lower grossing deals, don’t know what “showrooming” is, and can’t figure out why customers know more about your brand than you do, you might be one of those people who are 22 • 4th Quarter - 2014 • DrivingSales, LLC

getting very frustrated and overwhelmed with your marketing strategy.

Let’s look on the bright side; it’s never to late to develop a marketing plan.

Especially with 2015 right around the corner, now is the time to get prepared for an upcoming record year.

A structured plan will dismiss the anxiety of today’s ever-changing technology.

Here is the catch; while marketing tools and consumer behavior changes so quickly what do you concentrate on? It’s not easy, trying to hit a moving target.

The most recent years of my marketing career I have been focusing on building a relevant Ecosystem to target my goals and key performance indicators.

The elements I will outline below, if executed properly will spawn a healthy Dealership Innovation Guide

increase. Just be aware that the elements take resources, time, focus and care. If your team will jump in the boat with you and paddle in the same direction, a shift will occur and so will the success of your marketing plan.

Ecosystem Element #1 is the website, and it’s an important one. Your website needs to be at the forefront of your plan.

Dealership Innovation Guide

In any ecosystem, if a link is missing the chain breaks. The website is the most important link for the simple fact that the bottom line is directly affected by the success of lead conversion, and by that I mean visits that turn to leads or phone calls.

Focus on developing content that builds trust and provides transparency. If online shoppers feel as though they learned

something from your website or were enlightened in a way that actually made their shopping experience easier, you can expect they will be back, shopping on your site. Notice that content is the one element that is constantly brought up, but nobody seems to act on it?

What are you doing to develop engaging content to drive traffic to your website?

DrivingSales, LLC • 4th Quarter - 2014 • 23

from our newsroom to your showroom

Introducing

Dave Martinson DrivingSales News Broadcast Journalist

Have a Tip? Please send your breaking news to:

newstips@DrivingSalesNews.com

DrivingSales News features exclusive reporting on dealership tech trends and innovations in automotive retailing directly from the DrivingSales editorial team.

Covering Breaking News on:

Dealership Operations / General Marketing / Industry Innovations / Industry News / Mobile / Search Marketing / Social Media / Website Optimization / and more...

Get your daily dealer-focused news at

DrivingSalesNews.com

Ecosystem Element #2 is

Reputation Management. A hot topic this year, as Google has shifted their focus to reviews and other forms of trust evaluation. Google Reviews are underrated and need to be part of the front line culture. Shoppers are making their sole decision on buying a new car through the little stars on your Google Places page. Do not neglect the importance of your reputation. It takes years to build a solid reputation, one neglected Google review could ruin it.

Ecosystem Element #3 are leads that come from your website (iLeads, Eleads, Form Fills). If a process is not built around how you handle these inquiries it can lead to lost sales and upset customers, not only in the short term, but over the long haul as well.

Your competition is working hard on converting these new types of shoppers so it’s essential you be as well. Watch for specific KPIs like a 10-minute response time, 120-day follow up process, and professional engaging conversation that provides value to the shopper. Do you have a “lead response” process at your dealership?

Ecosystem Element #4

is your marketing budget. It can get out of hand quickly. Having a budget system that follows your campaign calendar can really help you stay in line with spending the hard earned gross dollars. I make sure we understand how much each dealer feels comfortable spending per vehicle sold. Example; $200 per New sold and $250 per Used sold. Multiply that number by your forecasted monthly target and you get a max amount to spend over the month. (Target 100 New X $200 = $20,000) During the month if you are forecasting to be under target on week two, you can adjust ad spend on the media calendar accordingly. There is nothing more satisfying then to know your budget is always in line with profit.

Ecosystem Element #5

is Search Engine Marketing (Google AdWords, Facebook Advertising, Retargeting and Exchange Network). This is the lowest hanging fruit any dealer can go after.

Driving traffic to your website through paid ads will significantly increase your

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leads. All you need is the right partner.

Search engine marketing needs a whole lot of attention, and in my experience it only works well if you are synced up with a dynamic ad creator. This means using a technology that pulls vehicle data from your Dealer Management System to create the Google ads. If the car is in stock, an ad is created. When the car is sold the ad is removed. It’s next to impossible to do this manually.

You would be creating and removing ads all day! Low funnel buyers are using Google to search for exact makes and models (Example; “Honda Civic LX “) the ads should represent the exact vehicles in your inventory to capitalize on the searches for specific inventory pieces. Talk with your SEM partner about dynamic ads; don’t use a vendor that does not provide “dynamic ads technology”.

Ecosystem Element #6 is Merchandising and Data Capture — taking pictures of your Used & New vehicles (I saved the best for last!).

This process has to be the single most underrated element of dealership marketing. Why is it that a large percentage of dealers DO NOT take pictures of their new vehicle inventory?

The response that I hear is “We can’t afford to hire someone to take pictures all day.” But wait! Why is it that we can hire someone to take care of the physical lot and showroom, (known as the “Lot Boy”, “Lot Jockey” or “Detailer”) but we won’t hire someone to take care of our digital showroom? More people come to the website than to the physical dealership on a daily basis!

Something isn’t making sense here.

Dealers have seen as much as a 300% increase in lead penetration when pictures, video walk‐arounds, creative vehicle stories, and transparent pricing are all added to the “Vehicle Details Page” on new inventory. It’s only a matter of time before this becomes regular practice, so why not get ahead of the competition and start capturing your own vehicle data! Used and New!

without knowing why, you will never understand what or how. Here at the Zanchin Auto Group we now have an internal marketing agency that is a Division of Zanchin, called PowerMedia.

Our “Why” is “To innovate, create, and design a trusted car buying experience.”

Trust is an ongoing issue across the North American automotive retail segment. So anyone that works for PowerMedia knows before they make a decision, we ask ourselves does it fit into the PowerMedia “Why?” If not, don’t do it. It’s that easy!

I challenge you, if you have not already, to find your why, then develop a successful “ecosystem.” Have confidence behind your decisions and use the “Why” to guide you along the way.

Don’t let the shiny technology get in the way – the plan will stabilize your target and you will hit the mark in 2015!

About The Author: Grant Gooley is an early adopter in the digital space and is a passionate, driven, full circle marketing professional. With 5 years marketing director & management rolls across 3 auto groups, Grant is quickly making an impact in the automotive retail segment. Adopting the mantra “Leadership and innovation is my reason. Marketing is my platform”, Grant has developed a proven track record, generating a 40% sales increase year over year, across 6 dealerships with the Boyer Auto Group and repeating the same success most recently on a short track with Canada’s Largest Auto Group, AutoCanada. Grant has now found a home with the Zanchin Auto Group in a Director Position, working very closely with the VP to develop an in house marketing agency style, resource center for 33 Dealerships in the GTA.

Conclusion: Do you ever take a

step back and ask, “Why?” As a Director of Marketing for 30 dealerships and growing, I have to stand back before I create anything… and ask “Why” Dealership Innovation Guide

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THE HARD TRUTH g in is t r e v d A is ia Social Med . e e r F t o N ’s it d n a , y s a E t o N ’s It

28 • 4th Quarter - 2014 • DrivingSales, LLC

Dealership Innovation Guide

I

n 2011, I watched Gary Vaynerchuk’s keynote at the DrivingSales Executive Summit.

Like many in the room, I had no idea who he was at first. Within minutes it was clear that if Gary had wanted to start a cult that day, we would have all walked away card-carrying members.

Gary’s brash brand of social marketing had our back pockets tingling with excitement. The concept of making truckloads of money just by talking to people on social media had us hooked. “Don’t just sell cars. If you are a St. Louis dealership, how are you not talking about the Cardinals’ stunning playoff victory over the Phillies?”1 It made sense. We talk to customers all the time; it’s our job. If we do the same thing on Facebook they will break down the door to buy cars! Right?

Sort of. Gary V. prides himself on knowing how to communicate with and market to people in the year we live in, but we didn’t realize how difficult that is. We weren’t ready for his brand of hyper-segmented relationship marketing in 2011. We still aren’t ready. Today, social media is not about conversations.

It’s about advertising, and it’s not easy.

Dealership Innovation Guide

DrivingSales, LLC • 4th Quarter - 2014 • 29

accounts, book deals, and international keynotes. There is a massive disconnect between who they are speaking to and us. Their principals are sound, but focusing on making social media work in a dealership selling 50 cars a month is of no value to them. This isn’t a knock, it’s just a reality we need to understand.

It’s no wonder social media hasn’t worked for dealers: you can’t fit 32-inch rims inside a 16-inch tire. We attempted to take advice designed for corporations and install it into our dealerships. We need to re-learn everything, modified for the scale of our dealerships.

FORGET PINTEREST Lately, I have seen an increasing number of articles on how dealers can leverage Pinterest to sell more cars. It’s a perfect example of where we need to scale things down and think like a dealership before investing our resources.

Print consumption is down 54% since 2010. Newspapers account for just 1.6 percent of American daily media consumption. TV consumption is down 11% since 2010, and radio is down 27%.2 Email open rates have been on the decline since 20083 and even Google AdWords conversion numbers are starting to slip.4 Today, Social media is the most critical and challenging advertising channel to budget for.

PHASE 1, COLLECT UNDERPANTS. PHASE 3, PROFIT. An episode of the show South Park focuses on the problems businesses face with blind expectations. The story follows a group of gnomes whose business plan is to steal underpants from children to make a profit. The problem is, the gnomes are missing the crucial phase in-between stealing underpants and profit, and so are 30 • 4th Quarter - 2014 • DrivingSales, LLC

we. We are all “doing” social media: posting delivery pictures, reviews and news about upcoming models.

Everything we remembered the social experts told us to do. Yet, it’s not profitable and we don’t know why.

Let’s be honest, how many cars have you sold because of Facebook? Not on an anecdotal level, but using real, traceable statistics. How many customers would list Facebook as the number one reason for purchasing a vehicle from you? What percentage of your total sales is that?

My guess is that number is quite low, if existent at all. You are not alone. We are all in the same boat, and it’s sinking.

SMALL DOG SYNDROME We must remember that we are dealers.

Experts like Gary V., Scott Stratten and Seth Godin focus their business on the big fish: mega-billion corporate

The concept is we can Pin our inventory, specials, delivery photos, and sales events and customers will interact with our content and move our sales needle.

Unfortunately, this doesn’t happen and will likely never happen. Pinterest is successful because it allows people to embrace what they are passionate about. No one is passionate about buying a car. Yes, there are a few who are passionate about luxury and classic cars, but is anyone hot n’ heavy about a fuel efficient sub-compact?

What people are passionate about on Pinterest is food, DIY & crafts, home décor, and travel. In fact, if you search “auto” in Pinterest, “Automotive” comes in seventh place, behind “Auto Correct Fails.”

Even the manufacturers are not making headway on Pinterest. Buick has 850 followers5, Toyota has 4806, Ford has 4077, and General Motors has 169.8 If the OEMs can’t make a dent on Pinterest, with media teams and unlimited marketing budgets, what chance does a dealer have?

Dealership Innovation Guide

FORGET INSTAGRAM TOO Instagram has 70 million users in America10 and your customers are likely using it. Does that mean that you should be on it too? Absolutely not.

At its core, Instagram content falls into 4 themes: selfies, food, scenic photographs and inspirational quotes.

These themes are then shared with friends using #hastags, and receive comments and likes in return. Or, to put it another way, imagine Care Bears playfully throwing hearts at each other in the clouds. The auto industry doesn’t belong at this party, no matter how hard we try to fake it.

The OEM’s have gained some traction, but it’s misleading. Ford has attracted 200,000+ followers by mimicking the native style of Instagram. One example from July 22 shows a man sitting on his Ford Edge looking into the sunset. Below the text reads, “The #Edge has everything you need for the #road ahead…”

It’s a great example of Ford representing their brand in the style of the medium.

However, when you look deeper, you see how the audience responds.

The first comments I see are: joey_stanco42: Ford you have to fix the flaws in the fiesta, focus, and fusion.

Also the myfordtouch has some issues too once you work those bugs out then that’s when you should focus on making things even better, although you’re already ahead of the game. rob98donnell: Bring back the bronco. zuni15s: Bring back the old look of the Explorer...

Not the response they were looking for.

In fact, has anyone at Ford dug deep into the general conversations happening on their Instagram posts? The majority of comments are damaging to the brand, spam, or general Internet stupidity.

Dealership Innovation Guide

It’s not just Ford – look into any OEM’s Instagram accounts and you’ll see similar results. Someone told them to be on Instagram, focus on followers, likes, and comments as KPIs and… profit. Let’s be honest again, how many cars have you sold because of your manufacturer’s Instagram account? Do they even know?

WHICH BASKET DO I PUT MY EGGS IN? By next year, the average American will consume 15.5 hours of media per day.9 The bulk of that consumption will be online in the social realm. With Pinterest and Instagram out of the picture, the logical place to allocate your attention is Facebook, but not in the “organic” way we have been failing at up to this point.* I recently visited the Facebook offices in Toronto, and the head of their automotive division gave insight into what was on the horizon. He focused on two important things: mobile user experience, and the fact that posting anything organically without paying is a waste of time.

Today Facebook’s average organic reach is 3-6 percent.

If your Facebook page has 100 fans, your content is likely shared with 3-6 people.

Facebook calculates reach using their News Feed Ranking Algorithm, which governs

who sees your content based on the engagement levels. The amount of “likes” that you have is irrelevant.

When you post, it samples the content to a few people. If it gets engagement such as comments and shares, Facebook will share the content a little further. The more engagement, the further it reaches. Like gunpowder inside a cannon: the more powder, the more boom! However, it works both ways. If your customer delivery photos or community involvement news get zero interaction, it reduces the reach of the current content and future content. This means posting for the sake of posting without engagement hurts you in the long run.

The same tier system works with Facebook’s Paid Reach. The less interaction your content receives, the more you will pay to share it. It’s no different from Google AdWords and Quality Score. If your content is bad, you pay a premium to share it.

It’s the next generation of CRM, built by car people for car people. Call us at 888-983-2919 to arrange a no-obligation demonstration—and start enjoying the benefits of XRM today.

www.CarXRM.com www.AutoLoop.net DrivingSales, LLC • 4th Quarter - 2014 • 31

THE MEAT There are countless ways to advertise on Facebook, but where you should focus your attention is Unpublished Posts, or “Dark Posts”.

With Unpublished Posts, instead of posting to your own timeline you advertise directly to anyone you wish.

You can target a custom audience of people in your competitor’s backyard, or those who just graduated, or even people who are fans of Caddy Shack. You can experiment without affecting your fan base, and target exactly the people you want to buy your product or service. Would you rather spend your ad budget on a newspaper advertisement, or a tactical advertisement directed only to the people you choose with traceable ROI? Facebook may be the best advertising tool you have ever used, but it also handles the all-important social elements. Reputation management, responding to customers, and focusing 32 • 4th Quarter - 2014 • DrivingSales, LLC

on customer and employee satisfaction are all crucial elements in social media. You can’t lose sight of their importance, but they are just the gravy.

The real meat is in the advertising.

ADVERTISING ON FACEBOOK IS PHASE 2.

Phase 1: Be on social media. Focus on reputation management, talking with customers, and customer satisfaction.

Phase 2: Advertise on social media. Advanced segmentation gets the attention of consumers with targeted advertising native to the social environment.

the content falls into the branding or tactical category. The common belief was tactical content didn’t belong on social media; posting specials or inventory would cause customers to flee in droves. Well, how did that turn out? If you want social media to work for your dealership, you have to have the guts to actually sell something.

It’s a delicate balance; turning your entire social feed into an advertisement isn’t the right direction either. You must balance branding and tactical together with engagement in order to succeed. Each dealership will need a different formula for success based on their market demographics, location, and the brands they sell.

Phase 3: Profit.

CRAWL, WALK, RUN, FLY

Engagement, branding and tactical advertising should be your three goals for your content. Design everything for engagement first and then decide if

To start, look within your own walls and use staff as your engagement boosters. If you have 100 people at your dealership, everything you post should start with Dealership Innovation Guide

100 likes, comments and shares. This is the only form of advertising where you can adjust its success by getting engagement from your own staff.

Whatever method you choose, whether by spiff or by iron fist, your entire staff MUST be 100 percent engaged in order for your social media to succeed.

Look at what other industries are doing online, and find ways to leverage their success. Finally, test everything you do and look for incremental increases along the way. If you find out the best engagement comes from photos of kittens in cars, then start adopting more kittens. The moment you become complacent with testing, so will your social engagement. Don’t be afraid to try new things, and don’t be afraid to ask for a sale. Without profit, social media is of no value to you.

com/Article/Mobile-Continues-Steal-Share-of-USAdults-Daily-Time-Spent-with-Media/1010782 3 Email Marketing Metrics Report - https:// www.mailermailer.com/resources/ metrics/2013/open-rates.rwp 4 NERVE 2014 Full Q&A - http:// youtu.be/DOyE0LWKguU 5 http://www.pinterest.com/buick/ July 2014 6 http://www.pinterest.com/toyotausa/ July 2014 7 http://www.pinterest.com/gtcindy/ ford-motor-company/ July 2014 8 http://www.pinterest.com/77cordobaguy/ general-motors-corporation/ July 2014 9 U.S. Media Consumption to Rise to 15.5 Hours a Day – Per Person – by 2015 - http://ucsdnews. ucsd.edu/pressrelease/u.s._media_consumption_

1 Gary Vaynerchuk Interview Social Media

to_rise_to_15.5_hours_a_day_per_person_by_2015

Humanizing the Internet - https://www. youtube.com/watch?v=Y7Gsrp8qG38 2 Mobile Continues to Steal Share of US Adults’ Daily Time Spent with Media - http://www.emarketer.

Dealership Innovation Guide

10 http://instagram.com/press/ July 2014

About The Author: Robert Karbaum arguably has the best name in the automotive industry. His combined experience over the past decade in E-Commerce and the automotive industry has allowed him to master the art of “AutoSpeak”; the ancient language that bridges the gap between internet geeks, the showroom floor and everything in-between.

Robert manages the E-Commerce operations at Weins Canada Inc. (formerly Don Valley North Automotive Group); a prestigious automotive group in Canada since 1973 which includes the #1 volume Toyota and Lexus dealerships in the country. In 2013 he won the Best Idea competition at the DrivingSales Executive Summit, and is nominated again in 2014. Catch him on Twitter: @Karbaum where he commonly tweets the latest automotive news and pictures of his dog.

DrivingSales, LLC • 4th Quarter - 2014 • 33

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Dealership Innovation Guide

ELIMINATING DEALER RESERVE What Would the Sales & Financing Process Look Like?

New custom analysis from IHS Automotive shows signs that moving financing process up front is already reaping significant benefits and ROI for dealers

P

roposed regulations by the Consumer Financial Protection Bureau (CFPB) have caused panic in the industry as dealers focus primarily on the potential negative impact to their bottom lines. The biggest concern being that the regulations will force a move to a flat-fee payment structure, essentially eliminating dealer participation in the finance contract process. This sounds like a profound loss of revenue when you can no longer collect the gap between the lender’s approved interest rate and the APR the finance manager wrote the purchase contract at.

But a new custom analysis from IHS Automotive, which incorporated Polk into its business last year, indicates that some of the changes that will take place post-CFPB – namely, moving the financing up front - could actually improve a dealership’s profitability.

How does a $20 cost-per-sale and an up to 50% closing ratio sound to you? But more on that later. Let’s start by standing back and looking at the current sales process and consider the changes that need to take place if CFPB regulations come into play -- you might be surprised at the positive picture it paints. And it’s more than likely you’ll want to get your dealership starting to think about

Dealership Innovation Guide

how you can implement some of these changes sooner rather than later.

So we all know that the car buying process is as painful as ever: although some practices have helped consumers over the last decade (most notably more transparency on the Internet), the fact remains that buying a car is still a lengthy and dreaded experience for the majority of consumers. And that is not good news for dealers.

A recent study1 of 200 dealerships revealed that the current purchase transaction, on average, takes up to an exhausting four hours. Consumers bear the brunt of this pain, but no one is really winning. Because, not surprisingly, knowing what they face the next time they walk into a dealership to test-drive and negotiate the price and terms of a new car, means many consumers are trying to skip the showroom visit altogether. A study2 from McKinsey found that car buyers visit 1.6 dealerships before buying – plummeting from 5 just a decade ago; and a recent survey from DMEautomotive found that, before purchasing, 16% took no test drive and a whopping 40% visited only one dealership.

DrivingSales, LLC • 4th Quarter - 2014 • 35

NOT THE MOST POSITIVE SCENARIO FOR DEALERS. The CFPB regulations, as challenging as they are, could, in fact, help turn this trend around by significantly improving the customer experience in the dealership. A key reason for this is that the negotiation of finance terms, monthly payments and interest rates would have to come to the front of the process. Dealers could not finance a vehicle without lender involvement and so the lender interest “buy rate” would necessarily become one and the same with the consumer contract interest rate/APR. Yes, this means that dealer participation, as we know it, goes away, but it shouldn’t mean dealer profits go away (more on this later).

So, how can dealers manage this change? Because likely CFPB regulations will necessitate that dealers determine the lender and final loan approval terms before contracting with the consumer, the financing “piece” must move forward in the sales process. The old system of interest rate guesswork and shot gunning loan applications would not be sustainable: managers can’t be writing contracts at 7.5% with the best-priced lender coming back with a 6.5% rate. In a post dealer reserve world, lender approval terms must be known, done, locked up and transparent at the point of sale – whether that’s online or in-dealership.

Whether or not the CFPB regulations come into play, this could rationalize the whole process. It would certainly offer a scenario that would make consumers more likely to finance with dealers. And, the good news? Profits not only remain intact because F&I managers are able to handle more deliveries, but lender rehashing and costly loan resigns are eliminated and penetration of profitable F&I products and services increase.

By implementing financing preapproval online, forward-thinking dealers are already exploring the 36 • 4th Quarter - 2014 • DrivingSales, LLC

benefits of eliminating some of the consumer pain points in the vehicle purchase process. And consumers are very welcoming of this change.

In fact, Dealer.com recently took a look at consumer engagement in online credit apps and found that dealer websites using interactive, short form pre-approval credit applications, versus a standard long form credit application, see a huge uplift in submitted credit applications. A full 50% of those who start the process actually go all the way through to submit applications versus the 4% that complete a standard, long-form app. And there’s also a whooping 2,000% uplift in the number of applications submitted per month, from an average of two applications per month for dealers still using static long form credit applications, to 40 for dealers using the shorter, interactive instant pre-approval applications.

Even more interesting, according to a recent custom analysis of vehicle registrations and more than 1,400 dealers conducted by IHS Automotive, of those consumers that submitted an online short-form credit application, 54% purchased a vehicle, and those purchasing from the intended dealer saw average buy rates of 28%. In addition, e-LEND analysis of the IHS Automotive detail also showed that, for the Top 100 performing dealers, the average cost-per-car sold from these leads was less than $20.

Top-performing dealers had closing ratios greater than 50%, much higher than the 6-8% closing ratio Cobalt cites as standard for 3rd party leads.3 This is a clear indication that online preapproval is a great way to start facing the changes CFPB regulations promise to bring because in our post-CFPB world, real loan terms will need to move to the beginning of the sales process – whether online or in-dealership. If you put it online, it means the vast majority of your customers will walk into the store with financing through your dealership already in place. And, if you choose the right online platform, the process will meet the CFPB regulations Dealership Innovation Guide

Dealership Innovation Guide

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because the next generation of online credit application programs promise to have real lender loan terms baked in.

How will this work? Technology will marry the online credit app with an industry-neutral loan decision engine that matches the consumer’s credit profile and selected vehicle/ vehicle price to lender programs in real time. It can then generate real, final terms of approval and display it to the dealer or consumer instantly.

This delivers on the transparency in funding that the CFPB is requesting.

An added benefit is that a digital platform with lender integration at its core could take the whole sales/ financing process to under an hour, eliminating costly loan rewrites and unwinds. This means consumers win, lenders win and the dealer wins.

Consumers win because they are provided the choices, transparency and 38 • 4th Quarter - 2014 • DrivingSales, LLC

immediate gratification they expect, all within a streamlined, integrated sales process. And dealers win because they are able to convert shoppers to buyers faster while delivering a more seamless workflow that reduces bottlenecks and risks to time, money and customer satisfaction. What could be better?

So if eliminating the dealer reserve ultimately brings more consumers back to the dealership and increases the efficiencies we so desperately need in the finance and sales process, these probably inevitable CFPB regulations could help, not hurt the industry.

1 Field study of 200 dealerships by consultant Mark Rikess, reported in Automotive News, February 2014.

2 McKinsey report, 2/2014 3 Cobalt, http://www.cobalt.com/blog/automotive-

About The Author: Pete MacInnis is founder and CEO of eLEND Solutions. Pete’s mission with eLEND Solutions is to provide a more efficient sales and finance process for the entire automotive industry. Pete began his career with WFS Financial where he spent 14 years in various management positions that helped grow the company from $100 Million in assets to over $4 billion serviced. Pete left WFS and co-founded auto finance company Onyx Acceptance in 1993 which went public in 1996 and was acquired by Capital One in 2005 for $191 million.

digital-marketing-best-practices/the-anti-overviewspecific-tips-for-customer-first-selling/

Dealership Innovation Guide

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40 • 4th Quarter - 2014 • DrivingSales, LLC

Dealership Innovation Guide

T

his is the most commonly asked question I hear. Every.

Single. Week. “What is going on with Google search?”

Here’s an in-depth overview of the search engine changes happening and how to prepare for them as well. Without this awareness and understanding, you’ll wind up being as out of touch as the two guys in the picture. Don’t be those guys.

Search engine optimization is rapidly becoming more of a significant strategic element of the marketing and communication efforts of today’s business. SEO is no longer the lone responsibility of an overly aggressive web marketer who is simply looking to rank a website for basic keyword terms. Integrated search efforts now involve multiple disciplines and departments; product marketing, copywriting, and even web development are contributing to successful search marketing initiatives. We’re experiencing another massive shift within Google as it moves from being a web of links towards a web of linking people.

The newest type of content on the Internet is user generated content, such as social media, and this helps create new opportunities for trusted, helpful content. Google is working tirelessly to add the information contained in this

Dealership Innovation Guide

DrivingSales, LLC • 4th Quarter - 2014 • 41

type of content to the search engine results by linking and ranking our social connections as well. This will help usher in a new age of implicit trust between strangers as they search for what’s most important to them online.

Another item contributing to this change in behavior is the mobile device segment; 58% of the US owns a smart phone now. Mobile devices have expanded the buying spectrum by introducing new scenarios, such as subconscious shopping behaviors further out in the buying cycle, while also introducing new heights of instant gratification closer to the final decision making stage. Google also knows it must provide the most accurate and helpful local search results as well.

Local directory optimization is among the most neglected elements of a marketing plan and it’s quickly becoming one of the most effective ways to connect users and convert them into customers. Content that addresses both technical and social needs among local citations will have an immediate positive impact. Consistent business names, addresses, and local phone numbers are vital. Other key elements such as business categories, new images of the business, and positive reviews not only help create customer actions, but they are also specific items Google looks for to create local search authority.

understand the context of a page within a website. Google’s ability to understand the meaning of words is helping build the Semantic Web. This will create an Internet that provides even more specific results when a user is seeking answers and information.

It’s this change that will create a new wave of marketing integration as dealerships see the opportunities to develop internal media departments that exist for the sole purpose of developing incredibly rich content.

us plain vanilla marketing content.

The content provided will be truly beneficial, as the personalization will speak to us clearer than ever and eliminate ineffective and irrelevant content. Add layers of social content being injected into the Internet every day, and you have another

Google’s largest search engine update, Hummingbird, is just the tip of the iceberg for their ability to help understand the context of pages and match those results to our specific intent. This will shape conversational search and create even better user experiences, instead of Google serving

The final piece of this shift is the manner in which Google can understand the connection between words and actually

42 • 4th Quarter - 2014 • DrivingSales, LLC

Dealership Innovation Guide

Dealership Innovation Guide

DrivingSales, LLC • 4th Quarter - 2014 • 43

major contribution of content that is conversational, influential and trusted.

So, what does this all mean for the future of search engine optimization?

As long as there are search engines there will be a need to categorize, rank and serve up content within the search results to users. The methods in which this is done need to change to provide a better, trusted user experience for Google’s user base, while taking into consideration our changing device behaviors, and including more personal connections within the search results. (i.e.: Reviews from local directories)

CHANGES CONTRIBUTING TO THE NEW SEARCH ECOSYSTEM: 1. Natural language search behaviors will continue to increase and 44 • 4th Quarter - 2014 • DrivingSales, LLC

improve, creating the need for more expert, authoritative and trustworthy content that will answer specific questions users have.

Google’s ability to understand the content via machine-readable data and Semantic Web technologies will shape this movement.

2. Personalized search results will also continue to grow as Google connects social content to provide greater results using by understanding context better. This will also help marketing messages speak directly to user intent even faster. Specific needs and desires will be spoken to directly, speeding up the decision making process while also reducing the number of final sources needed to make a buying decision.

3. Topic Modeling will replace the focus on keyword phrases and individual rankings as Google aims to provide more specific answers to our search queries.

4. The best SEO efforts going forward will also include more proactive web development and technical abilities referring specifically to mobile speed performance and more efficient site structure. Improving the user experience will include more than just content improvements, providing technology enhancements per Google’s recommendations will also reward your search efforts.

5. Expert, authoritative and trustworthy authors will reign supreme when it comes to specific topics.

MY FAVORITE RECOMMENDED STRATEGIES: 1. Proper on-page optimization is still a primary ranking factor – every page must be organized properly. Google needs to know Dealership Innovation Guide

PRESENTS ...

FOUR Easy-to-Implement Principles for: GETTING MORE APPOINTMENTS THIS WEEKEND

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of setting an appointment from every lead and every customer contact.

DOWNLOAD THE FREE GUIDE This quick guide will cover four tips that will help you reap a weekend packed full of appointments. We'll look at getting organized and prepared, making the calls, asking for appointments, and then confirming every one of them.

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what the page is all about, if it is a valuable resource and if it links to other relevant content.

2. Secondary content is a must!

Helpful, entertaining & informative content speaks to a user’s intent; your site isn’t one-size fits all. (i.e.: Q&A, Step by step instructions, recall information, vehicle comparisons, reviews, ratings, etc.)

3. Reviews and testimonials should be a mandatory element of your delivery and post sale follow up process. Reviews are a local ranking factor – give Google what they want. This content should also be part of your website content.

4. Local directory optimization efforts are a high priority – Google’s recent Pigeon update changed the local ranking criteria to include more elements we can control and improve.

46 • 4th Quarter - 2014 • DrivingSales, LLC

5. Backlinks are still the most powerful off-page ranking element; We’ll keep building backlinks until this changes as it’s the largest contributing factor to the increase in rankings you’re seeing.

6. Site structure is key – look for more solutions for us to eliminate duplicate content, improve URL structure, organize content better and adding more local elements.

7. Site usability improvements – Does secondary content link properly? Are CTA’s being used properly, is page speed a factor on all site versions?

8. Even more great content. The next wave of successful dealership will adopt a media company/content publishing mentality. Creative topics, unique videos, helpful & unique website content, etc.

One thing is certain: Google will continue to evolve as search technology changes. All you can do is be prepared – and I believe this will help position you nicely by understanding the search ecosystem as best as possible for the changes coming.

About The Author: Eric Miltsch is a successful automotive digital marketing consultant specializing in search, social & mobile strategies. His love of all things digital & automotive is the perfect recipe for helping progressive dealers stay on the edge and continuously improving.

Dealership Innovation Guide

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