Dealership Innovation Guide - Q1 2012

1st Quarter 2012

Quarterly ranking of dealership vendors & best practice guide

How Market Data Helps Build Sales and Hold Grosses by Dale Pollak

NFC: The Next Greatest Thing In Mobile-Commerce by Eric Miltsch

MARY CATHERINE CURRY discusses what

RICE TOYOTA SCION

did to increase service business that led to winning the BEST IDEA CONTEST at DSES DrivingSales

DEALER SATISFACTION AWARDS

DrivingSales

VENDOR RATINGS

DrivingSales.com is a Vendor Rating and Best Practice community for Dealers and Dealership Managers to connect and collaborate on dealership strategies

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LETTER FROM THE FOUNDER: Dealership Executives, Welcome to 2012 and the first issue of the year for the Dealership Innovation Guide. This year promises to be a surging one for the industry – consumer confidence is up and pacing a steady rise through quarter one, and new car inventory is climbing as well. Now more than ever, making informed decisions about your dealership and dealership strategy is paramount. Two thousand twelve will be the year of data, and having access to accurate information with which to appropriately evaluate your business is key.

Jared Hamilton, Founder/ CEO of DrivingSales.com, welcomes you to the 1st Quarter issue of the Dealership Innovation Guide! Dig in and enjoy, and don’t forget to share your thoughts online at DrivingSales.com!

In this issue of DIG, we’ve set out to share some of that information with you in two ways:

Industry Experts – Some of the top industry professionals have shared here what they believe to be ahead of us in 2012 and how to both take advantage of opportunities, as well as you give you tools to make your own decisions on what’s right for your store.

Vendor Ratings – As always, we’ve included our database of vendors and products that have been rated and reviewed by your dealership peers, offering you honest information on who’s come out on top. This issue includes highlights of the top rated vendors and solutions that have had consistently strong showings throughout the year, qualifying them for a DrivingSales Dealer Satisfaction Award.

You might notice come changes throughout the magazine, particularly in the Vendor Ratings section. We’ve revamped the look, making it easier to read and take in the information that you need to make the best assessments for you and your store. Stay tuned for more changes around the corner, but for now, enjoy the newer look, the informing content, and the New Year – it’s bound for success!

Here’s to 2012,

MEET THE DIG TEAM Jared Hamilton Founder, CEO Paul Hamilton Production Manager paul@drivingsales.com Lindsey Auguste Editorial Director lindsey@drivingsales.com Tommy Bay Director of Marketing tommybay@drivingsales.com Jeff Pease Graphic Designer jeff@drivingsales.com

Jared Hamilton Founder of the DrivingSales.com dealer community

Bart Wilson Business Develepment bart.wilson@drivingsales.com Larry Schlagheck Director of Advertising larry@drivingsales.com

www.DrivingSales.com

DrivingSales DEALERSHIP INNOVATION GUIDE | 1 s t Q u a r t e r 2 0 1 2

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1st Quarter 20 1 2 | DrivingSales DEALERSHIP INNOVATION GUIDE

www.DrivingSales.com

Quarterly ranking of dealership vendors & best practice guide

DrivingSales

VENDOR RATINGS

DrivingSales

DEALER SATISFACTION AWARDS

WINNERS:

The dealers have spoken! Coverage of the 2011 Dealer Satisfaction Awards starts on page 8

7 How Vendor Ratings Work 8 Call Management 8 Chat 8 CRM Fixed Operations 9 CRM Sales Department 9 DMS 10 ILM 10 Inventory Pricing 10 Internet Trainers

11 11 12 12 13 13 14 14

Mobile Sites New Car Leads Owner Marketing Reputation Management Search Engine Optimization (SEO) SEM - PPC Used Car Advertising Websites

EXPERTARTICLES COVER STORY: Read How RICE TOYOTA SCION Went to the Hospital to Obtain MORE Business

www.DrivingSales.com

14 18 21 25 28

30 33 36 39 42

Quality Community Service at Affordable Prices: A Dealer Best Idea Award Winner How Market Data Helps Build Sales and Hold Grosses Five More Minutes Four HUGE Evolutions That Can Have a Profound Effect on Your Dealership.

Fixed Ops and Mobile Commerce: A Look into the Parts & Acc. Online Sales Cycle Looking to 2012 and Beyond Dealership Accessories Sales: Bringing It All Together for the Win! 5 Ways Dealers Can Take Advantage of the Rapid Growth of Pinterest and Instagram NFC: The Next Greatest Thing In Mobile-Commerce TrueCar Facts and Falsehoods

DrivingSales DEALERSHIP INNOVATION GUIDE | 1 s t Q u a r t e r 2 0 1 2

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DrivingSales

VENDOR RATINGS

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

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

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1st Quarter 20 1 2 | DrivingSales DEALERSHIP INNOVATION GUIDE

www.DrivingSales.com

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.

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, 2011 to December 31, 2011.

www.DrivingSales.com

DrivingSales DEALERSHIP INNOVATION GUIDE | 1 s t Q u a r t e r 2 0 1 2

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DrivingSales

VENDOR 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

Callbright

Inbound Lead Tracker

2.01

CallRevu, LLC

CallRevu, LLC

.295

CallSource

Who’sCalling Dealer.com

CallTracking

Who’sCalling

Call Management

8.88

Rating

Rec

97% 94%

.597

66%

.137

88%

100%

Chat 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

Activengage

Activengage Chat

215.71

CarChat24

CarChat24 - 24/7 Fully Staffed

4.38

ContactAtOnce! LLC Dealer eProcess

Client-ConneXion

ContactAtOnce! IM/Chat PRO-ACTIVE Live Chat

Chat-ConneXion

607.91

Rating

Rec 95%

99%

29.80

100%

95%

100%

.430

CRM / Fixed Ops CRM - Fixed Ops: Customer Relationship Management systems for the Fixed Operations.

Company

CIMA Systems

Dealer e Process

Product

Score

Virtual Service Consultant

1.31

CIMA Car Care Service Menus

ADP Dealer Services

ADP CRM

VinSolutions

MotoSnap™ Service CRM

DealerSocket

DealerSocket Service

1.61

Rating

Rec

100%

95%

.150

43%

.084

.098

80% 44%

Add your own vendor ratings at DrivingSales.com/Ratings

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1st Quarter 20 1 2 | DrivingSales DEALERSHIP INNOVATION GUIDE

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DrivingSales

VENDOR RATINGS

CRM / Sales Dept 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

DealerSocket

Product

Score

Autobase CRM

1424.89

DealerSocket CRM

CAR-Research XRM

132.23

Reynolds and Reynolds

Contact Management

5.13

VinSolutions MotoSnap CRM

Rec 95%

92%

383.08

CAR-Research VinSolutions

Rating

98%

30.20

81%

44%

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

ADP Dealer Services

ADP DMS

3.33

Auto/Mate Dealership Sys

AMPS

Reynolds and Reynolds

DealerTrack

ADP Dealer Services

Reynolds ERA DMS

4.22

DealerTrack DMS

1.17

ADP Drive DMS

.174

Rating

Rec 58%

48% 68%

.236

92%

62%

half_page-CAO_Mitchell_Brenner_testimonial_ad.ai 1 12/22/2011 3:31:41 PM

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DrivingSales DEALERSHIP INNOVATION GUIDE | 1 s t Q u a r t e r 2 0 1 2

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DrivingSales

VENDOR RATINGS

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

AVV

VinSolutions

Product

Web Control

VinSolutions MotoSnap ILM

Score 3.19

Rec 80%

86%

.279

78%

DealerSocket ILM

.491

iMagicLab

Internet Lead Management Tool

.050

Control Center

1.21

DealerSocket Dealer.com

Rating

90%

70%

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

eCarList

TrueTarget

18.61

vAuto

VinSolutions

FirstLook

Black Book

vAuto Pricing, Appraising Tools MotoSnap Market Pricing

FirstLook - 360º Market Pricing

Black Book Used Car Guides

49.94

Rating

Rec

99%

100%

94%

.678

80%

.056

.283

100%

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

Phone Ninjas

Phone & Internet Training

2.48

PCG Digital Marketing DealerKnows Consulting Potratz

eDealer Solutions

Brian & Glen Pasch Joe Webb

Digital and Social Media Trainer

Jennifer Suzuki

37.98 2.19 .544

.428

Rating

Rec

100%

100%

100%

100%

88%

Did you know DrivingSales has over 10,500 verified vendor ratings?

Visit DrivingSales.com/Ratings for more information.

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1st Quarter 20 1 2 | DrivingSales DEALERSHIP INNOVATION GUIDE

www.DrivingSales.com

DrivingSales

VENDOR RATINGS

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

Company

Product

Score

Cobalt

Cobalt Mobile Websites

.240

DealerFire

DealerFire Mobile Websites

.049

Dealer.com

VinSolutions AutoMotionTV

MobileSites

MotoSnap™ Mobile Websites AutoMotionTV Dealer App

.384

Rating

.166

.032

Rec 88% 80% 87% 85%

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 Dealix

Cars.com

Product

Score

Dealix New Car Leads

32.61

NewLeadsPlus

64%

.766

Zag Sales Strategy

1.38

Autobytel Inc.

Autobytel New Car Leads

.590

www.DrivingSales.com

New Car Advertising

Rec

86%

1.54

ZAG

AutoTrader.com

Rating

DrivingSales DEALERSHIP INNOVATION GUIDE | 1 s t Q u a r t e r 2 0 1 2

66%

58% 75%

11

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

CIMA Systems

Complete Virtual BDC

135.47

Cobalt

Cobalt Owner Marketing

2.26

J&L Marketing, Inc.

Dominion Dealer Solutions

OneCommand

Sales Events

@utoRevenue

OneCommand

656.19

Rating

Rec

100% 100% 96%

47.68

.191

84% 85%

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 eXtĂŠresAuto

DealerRater.com

Torque Dealer Solutions

PCG Digital Marketing

Naked Lime Marketing 12

Product

Online Reputation Management

Certified Dealer Program

Score 12.77

Rec

98%

.951

87%

.244

100%

Reputation Management

.244

Digital Reputation Management

.043

Reputation Management Services

Rating

1st Quarter 20 1 2 | DrivingSales DEALERSHIP INNOVATION GUIDE

100% 100% www.DrivingSales.com

DrivingSales

VENDOR RATINGS

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 eXtéresAuto

PCG Digital Marketing Dealer eProcess

Dealer.com

TK Carsites

Product

Score

PCG Strategic Digital Marketing

3.29

eXtéresAUTO - SEO

Power PageRank SEO

ManagedSEO

10.80

Rating

97% 96%

1.26

.477

TK SEO

Rec

98%

.116

89%

91%

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

POTRATZ

Search and Behavioral for Web

.814

Dealer.com

TotalControl DOMINATOR

.180

Dealer eProcess

PCG Digital Marketing

The Local Search Group

Dealer eProcess SEM

PPC Management Service

Eagle Edge PPC

.914

Rating

Rec

100% 100% 100%

.298

85%

100%

.131

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

Cars.com Online Advertising

1.96

Dealer Specialties

.290

AutoTrader

AutoTrader.com

Dealix

UsedCars.com

Cars.com

Dominion Dealer Solutions

Digital Compass Marketing

Automotive Advertising Network

3.56

Rating

Rec 73% 85%

91%

1.65

78%

100%

.219

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

DealerFire

DealerFire Custom Websites

54.57

Dealer.com

SmartSites

5.52

Dealer eProcess

DealerOn

Cobalt

www.DrivingSales.com

Dealer eProcess Dealer Website

Flex Sites

Cobalt Websites

79.30

Rating

94.16 1.84

DrivingSales DEALERSHIP INNOVATION GUIDE | 1 s t Q u a r t e r 2 0 1 2

Rec

99% 99% 100%

84% 68%

13

Mary Catherine Curry Rice Toyota Scion Marketing Manager

Quality Community Service at Affordable Prices: A Dealer Best Idea Award Winner

By Mary Catherine Curry

M

y family has always been in the car business. My grandfather opened the first Toyota store in the southeastern United States in the 1960’s, the store that my dad now owns and operates.

I started working here in high school driving dealer trades. Although I sold real estate for a building company for 6 years after college, I eventually found me way back home to work with my family.

While the dealership lifestyle is a long-standing tradition in communities and in my family, the pace at which the industry is changing is exhilarating. Sales people are emailing videos of cars to customers, automotive websites have improved dramatically in the last 3 years, and the industry is finally stepping into the social sphere online. There is a lot of opportunity out there for the motivated and technology savvy salesperson.

But of course, you don’t have to be tremendously fancy or techie to achieve results. In fact, the biggest difference maker in our operation last year was simply adding actual photographs of new and used car inventory to our website.

ice, Sr. Garson R 0 196 14

At Rice Toyota Scion, we try to be as technologically savvy as our customers. That’s how we standout from the stores around us. We make sure we have a mobile website, mobile service scheduler, email service reminders and coupons, and a strong emphasis on online reviews. We constantly ask ourselves, “If I was a customer, what would I expect and look for when I am going to spend time and money somewhere?” We understand that customers value three primary elements – price, convenience, and quality of experience – and we strive to offer those benefits to every customer regardless if they are in sales, service, at our collision center, or buying parts online.

Price, Convenience and Quality of Experience My favorite part about working as the Marketing Manager for Rice Toyota Scion is putting an idea into place and watching it grow every month. We recently started a new program that we knew had the potential to market our brand and build us a reputation of quality and convenience at affordable prices – an idea that won us the Dealer Best Idea award at the DrivingSales Executive Summit

Rice T oy Drivewota Service ay 197 0

1st Quarter 20 1 2 | DrivingSales DEALERSHIP INNOVATION GUIDE

www.DrivingSales.com

The crux of our program is centered on providing a quality service that is convenient and affordable.

in Las Vegas this past October. The premise of our project is creating a partnership with our local hospitals to provide vehicle maintenance for hospital employees while they are at work. We chose the group for a variety of reasons: 1. They are geographically close to our store, making transportation time and costs low, 2. Hospital employees make excellent customers because they have great job security and a steady, aboveaverage income, and 3. Hospital employees tend to act as a family and refer accordingly, generating a massive potential to leverage a large network of recommendations if we build our program with the customer in mind.

The crux of our program is centered on providing a quality service that is convenient and affordable.

We began by creating a menu of maintenance services and prices offered for all vehicle makes and models, and offered that special pricing to the hospital employees with who we partnered.

Logistically, a porter picks up the vehicle from the hospital and brings it back to the shop. Then, we service the vehicle, wash it inside and out, and return it to the hospital before the customer’s shift is over. The goal is to generate additional business for service by making it more convenient for the employees of our city’s largest employer.

errands such as dry cleaning, grocery shopping, or other tasks for hospital employees while they are at work. If they have an errand solutions company, make contact with that company to get on the approved vendors list. If they do not have an errand solutions company, work with the Employer’s HR department to communicate your services to the employees.

3. Designate Two Service Writers to Manage the Accounts Consistency is key. Ensuring two steady account managers will make the process more efficient and limit confusion for the customer as well as in the Service department.

4. Establish Check-In and Check-Out Sheets Use these sheets to note vehicle mileage and any body damage at time of pick up.

5 Steps to Setting Up a Hospital Affiliation Program 1. Create a Service Menu This menu should offer pricing on services for all makes and models. Don’t get caught up on pricing. Be competitive, but remember that there’s a convenience value that goes a lot farther than a $9.99 oil change. Be sure to include the cost for the porter to drive to the hospital to pick up the car and drive it back.

2. Contact the Hospital’s HR Department Check to see if they have a company that handles

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5. Hold Kick-Off Events This should be done at the employer’s location (we did ours in the hospital cafeteria). Remember to bring the service menus as well as people who can answer any questions. Holding an event like this

DrivingSales DEALERSHIP INNOVATION GUIDE | 1 s t Q u a r t e r 2 0 1 2

15

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1st Quarter 20 1 2 | DrivingSales DEALERSHIP INNOVATION GUIDE

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“Consistency is paramount, as is having a system in place to measure any changes.” creates awareness for your service.

NOTE: Be sure to bring a salesperson, not just service personnel. We had a large number of questions on car inventory as well as lots of potential buyer leads.

Providing More Than Just Service At first, we had a lot of one line RO’s, most of which were oil changes and state inspections. However, after a month or two, we began to build rapport and became trusted for bigger jobs such as tires,

could not have grown without the proper structure in place. Clear instruction and regularly revisiting expectations for the program and of your staff helps keep everyone on the same page and places you in a position to handle any uncertainties as they arise.

Consistency is paramount, as is having a system in place to measure any changes you make on a monthly basis.

Providing service to our community in a way that is useful and reasonable to them is our main priority and that it adds extra to our bottom line at the end of the month makes it even more worthwhile. That’s my favorite part of being in the car business: the thrill of the end of the month. If you don’t feel that way, you’re not doing it right.

To discuss this article and to view comments by others, please visit DrivingSales.com/innovation ___________________________

alignments, and air conditioning work. As the appointments grew, we expanded beyond service by offering special pricing on vehicles and rental cars.

The additional benefits have spilled over into sales, parts, rental cars, F&I, and accessories. This program has helped Rice Toyota build a reputation for quality and convenience at affordable prices with a large portion of our community who also happens to experience higher than average job stability and reliable income. Currently, we are steadily rolling along at about 5-7 extra vehicles per week in our service department and now attribute 4-5 new and used car sales per month.

Mary Catherine Curry was born and raised in Greensboro, NC. Her grandfather, Garson Rice Sr, began selling automobiles in Greensboro in the early 1960’s.

Rice Sr was the first Toyota dealer in the Southeastern United States. Her father, Garson Rice Jr, joined Rice Sr in the family business after graduation from NC State University. Following her father’s footsteps, Curry graduated Cum Laude from NC State University in 2003.

After college, Curry moved to Wrightsville Beach, NC where she sold residential real estate for seven years, consistently earning national recognition at Century 21’s highest sales honor, The Centurion Award. In 2007 Curry opened Carolina Social Media helping companies plan and execute social media and online reputation management strategies. Rice Toyota was one of the accounts Curry managed. In 2009, Curry returned home to Greensboro to work full time as Marketing Manager with the family business, Rice Toyota Scion. November 2010 she graduated from the NADA Dealer Academy.

The success of this program and these results

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17

Dale Pollak

Founder vAuto

How Market Data Helps Build Sales and Hold Grosses

by Dale Pollak

T

here are two key challenges facing many used vehicle dealers—how to ensure competitive retail asking prices to attract buyers and how to hold grosses on these deals when buyers show up.

up becomes a pricing death knell for today’s online buyers. These buyers have ample and easy access to online guides for used vehicle values and pricing. They simply won’t pay any attention to vehicles that appear to be priced $1,000 or more above what they perceive as a fair price.

The solution to these challenges rests with a rethinking of how dealers have traditionally set retail asking prices for used vehicles and re-training sales teams to address your price and pricing strategy up front with customers. The end result:

Ray learned this lesson the hard way. He struggled for months trying to boost used vehicle sales, only to realize he wasn’t moving the needle. That ended when he changed his approach to pricing, using technology and tools to

“The end result: Customers will typically pay what you ask for, with only minimal discounts (typically less than $200) to close a deal.”

Customers will typically pay what you ask for, with only minimal discounts (typically less than $200) to close a deal.

Why Traditional Mark-Ups No Longer Work As we all know, dealers have traditionally applied a standard mark-up of $3,000 to $4,000 to the costs they incur to acquire a used vehicle from an auction or a trade-in. This approach to retail asking prices served the industry well, but it’s now become more of a burden than best practice.

“Just because we overpaid for a vehicle doesn’t mean somebody else will pay me for my mistake,” says dealer Marc Ray of Grogan’s Towne Chrysler Jeep Dodge Ram, Toledo. “I used to be that guy who marked up vehicles $3,000 no matter what.

Now, I ask myself, ‘what was I thinking?’”

Ray is among a growing number of dealers who have recognized that applying a traditional mark18

assess retail asking prices before he acquires a car. In this way, Ray can determine the wholesale acquisition price he can pay for a specific unit that provides enough “spread” to account for his reconditioning/other expenses, achieve his gross profit goals and offer a competitive retail asking price.

This foundational change to vehicle pricing—an extension of market data Ray uses to focus on vehicles he knows will be strong sellers in his market—has helped the store nearly double its monthly used vehicle sales volume and meet gross profit expectations. “I’ve come to believe there isn’t a bad car, but only bad prices for cars,” Ray says.

Using Documentation to Hold Gross With Price-Savvy Customers The second challenge for dealers selling used vehicles is holding gross profits on deals. A growing number of vAuto dealers have addressed

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As an early user, Keith experienced the power of vAuto’s Provision™ before any of his competitors. Provision helped him locate the right used vehicles for the right price while other dealers struggled to find inventory.

After just six months, Keith is on track to have his best year ever — with a 39% increase in used vehicle sales and a 72% increase in dealership net profit.

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this using a “documentation is the new negotiation” approach to working used vehicle deals with customers.

This approach results in dealers averaging less than $200 in discounts off their initial asking prices.

Why is this? First, these stores follow a market-based pricing approach similar to what dealer Marc Ray instituted. Second, these stores have retrained their salespeople to address a vehicle’s price up front, using market-based data to validate and affirm the initial asking price with customers.

Web TV covering all things car-dealer related.

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.

This is a significant shift, and one that upends tradition-based sales models that keep the lid on vehicle price as a tensionbuilding negotiation tactic.

However, today’s buyers are increasingly less interested in negotiation and more interested in simply getting a fair price for their next vehicle.

This more transparent sales works for two key reasons: 1. It plays to what most customers already recognize—you have a vehicle they may want at a price that fell within the range they considered “fair and reasonable” based on their own online research and valuation.

2. It helps salespeople build credibility and trust with customers in a less confrontational and more open manner.

This sales process change requires work on the part of managers to teach salespeople how and why a dealership uses market-based data to set asking prices. Tip: In sales meetings,

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incorporate side-by-side vehicle comparisons with a dealership’s unit and competing vehicles in the market to highlight your dealership’s pricing strategy and the inherent fairness and value it offers customers.

With that backdrop, salespeople can become adept at articulating why a vehicle that may not be the lowest price compared to similar, competing vehicles represents a good value based on its condition, history, mileage, equipment, trim, etc.

To be sure, some customers may still want and ask for discounts.

In these cases, it’s important for salespeople and managers to hold firm and let the market data sustain the asking price. These customers, however, are not the majority. When presented with a transparent sales process and market-based pricing, most buyers today respond positively and accept the asking price for what it is—a reflection of what they found in their own online research.

To discuss this article and to view comments by others, please visit DrivingSales.com/innovation ___________________________ Dale is the chairman and founder of vAuto, Inc., a company that provides retail auto dealerships with a better way to appraise, manage and price their pre-owned inventory. Prior to founding vAuto, Dale was the VP of Sales and Business Strategy at Digital Motorworks and has over 25 years dealership experience - including 12 years as a Cadillac GMC dealer in Illinois.

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Five More Minutes

Chris Costner Southern Volkswagen at Greenbrier Business Development Director

By Chris Costner

H

ave you ever heard the following phrase in your showroom: “Five More Minutes?” It is one of the most common phrases said by salespersons in showrooms day after day across the country to customers waiting to enter the F&I office. From a salesperson’s perspective, one of the most frustrating times during the sale is making the transition to the F&I office to finalize the deal. The reason it is so frustrating for the

“The salesperson should have all paperwork completed prior to turning it over to the F&I office.”

salesperson is that they truly believe the longer the customer waits, the better chance they have of losing the sale altogether. I am sure many of you have heard the wonderful complaints from customers firsthand that it took “hours” for them to get their paperwork signed. Now in most cases, the actual time the customer waited was much less than they actually stated but keep in mind that it can also feel like hours to your salespeople before making the transition to the F&I office.

The salesperson is likely to place blame on the F&I managers, but everyone reading this needs to understand they are not the biggest reason these situations arise. The biggest reason hands down is “enforced inactivity.”

packed up, everyone is loaded in, and down the road you go. Once you take the exit to get on the interstate, traffic is completely stopped and it will be a few hours before traffic is moving again.

Not to be delayed because your time is limited, you search for other routes. Unfortunately, there are no other options. As time slowly creeps by, you are becoming more agitated and anxious for something to change with the current situation.

Eventually, the kids become restless and cranky and soon after that your spouse is frustrated.

What happened? Your family eventually mirrored your visible emotions that you were transferring over to them. Can you understand how a customer sitting with the salesperson waiting for the F&I office can begin to do the same once they see the salesperson expressing all of these types of emotions? Of course there are times when delays are unavoidable, but most often we have the ability to prevent it. The two biggest option we have for using this time effectively are to increase both CSI scores and F&I department income.

To start, the salesperson should have all paperwork completed prior to turning it over to the F&I office. We all know the delay that can happen once the F&I manager needs to give the folder back to the salesperson for completion. What makes matters even worse is when the

Here is a good way to put “enforced inactivity” into perspective for everyone: Imagine you are getting ready to take the family on vacation to one of the best amusement parks around. You have your set time off of work and this is going to be an exciting adventure for the entire family. The vehicle is all

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salesperson has to be paged numerous times to the F&I office to bring back missing information. One of my own personal gripes during my F&I days was the inability to load a complete deal due to inaccurate or incomplete paperwork. What started off as a tenminute evolution of loading the information turns into a thirty to forty-five minute ordeal with “negative experience” written all over it. This is inefficiency at it’s finest and is very unprofessional. F&I managers should always do a complete checklist of what is missing upon receipt of the deal folder. Anything needed should be given to the salesperson all at once for them to bring back in one trip.

process to have a positive influence on their CSI scores and substantially impacting the effectiveness of their F&I departments? All manufacturers have a CSI program for their dealers to help create a positive purchase experience and quality delivery for the customer. The bad part is many times the customer will come out of the F&I office after finalizing paperwork only to find their salesperson standing there with the keys and owner’s manuals in hand.

In record time, the customer is in the vehicle and driving down the road. The salesperson gives his high-fives to fellow workers and then is off to find the next customer to sell. Done deal, right? Meanwhile

“The twenty minutes or so the salesperson and customer are alone together waiting for the F&I manager should be filled with activities that are CSI driven”

For now, let’s imagine a complete deal folder is turned over to the F&I office. There is now about twenty minutes that the salesperson will have alone with the customer while the F&I manager is loading the information into the computer. I have never understood this myself, but often I will see the salesperson look for anything else to do besides spend this “down time” with their customer. This leaves the customer alone with their mind wandering, staring at an empty office and listening to everything else happening in the showroom. Without a game plan and fear of losing the deal, the salesperson decides to stop in and tell their customer, “five more minutes,” because to them that phrase will make everything better. By this time the customer could be experiencing some “buyer’s remorse” all because of the inactivity and the tension the salesperson could be transmitting due to their own insecurity.

Many of you reading this have witnessed this exact situation and can agree that it isn’t fun for anyone involved. Ultimately, it will negatively impact the F&I department’s effectiveness on selling products.

In almost 70% of new car buyers surveyed by JD Power & Associates, the F&I process was the worst part of their purchase experience. Now I have to ask, was it really the F&I experience that was so bad or was it the events leading up to it?

Although there are dealers nationwide that have some sort of process in place to occupy this “down time,” my question is are dealers gearing their 22

the customer is driving home and realizes that the gas tank is half filled. Shortly thereafter it starts to drizzle, it’s dark out and the customer has no clue on how to turn the wipers on. It gets better. A few days later, that wonderful survey comes in from the manufacturer with failing scores. All of this could have been prevented. Here are a few ideas to work from to increase CSI scores and also increase the F&I department’s effectiveness.

Take a few steps back and start from when a “complete” deal folder is turned into the F&I department.

The twenty minutes or so the salesperson and customer are alone together waiting for the F&I manager should be filled with activities that are CSI driven such as the service walk, the features and controls presentation, and the one many salespeople seem to hate doing and that is driving with the customer to the gas station to fill up their new vehicle. These three activities are inherently CSI driven, but will also increase the effectiveness of your F&I department. Let’s take a moment and drill down on these three activities a little more in depth to bring it all together.

SERVICE WALK: I am sure every OEM requires this to be completed for CSI purposes and it is a great time for the customer to meet their personal service advisor or service manager. These individuals can also take

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a few moments to explain what type of service is recommended over the life of the vehicle, share any tips on car maintenance, and close with a quality endorsement of the Service Contract. Leave the selling to the F&I manager.

FEATURES AND CONTROLS: This should be a fun presentation highlighting the location and function of all interior controls. Please don’t think that a solid walkaround presentation is adequate. Before a customer agrees to purchase a vehicle, they experience many emotions at one time making it hard for them to retain most of the information given by their salesperson. Now that the customer has agreed to the purchase, it is time for them learn about their new vehicle and take mental ownership. This step helps the customer justify in their mind that this was a good decision making the purchase and will get them more excited about the vehicle itself. Value is certainly reinforced here, which is good because in a few minutes they will be meeting with the F&I manager.

GAS STATION FILL UP: This is not a hard transition since both the customer and salesperson are already in the vehicle. It just requires a little more effort. It’s time to drive the customer to the gas station and fill up the tank. This shows the customer a high level of quality customer service but also will familiarize the customer the next time they need to fill up.

Upon return to the dealership the F&I manager should be ready to finalize the customer’s paperwork. The “enforced inactivity” was absent from the process and look at how much the salesperson accomplished for the entire dealership. Everything had a purpose.

The customer is even more excited about the quality of their new vehicle along with the dealership’s customer service. This is key, as it will have a huge impact once they sit down with the F&I manager.

I like to think of it as a big ball of positive energy and it does nothing but good things to all it engages.

This process will only work if everyone in the dealership understands all the details and the purpose behind them. It will have an immediate impact with increased CSI scores and bigger F&I gross. Have fun with it and good selling, everyone.

To discuss this article and to view comments by others, please visit DrivingSales.com/innovation ___________________________ Chris Costner is the Business Development Director for one of the largest Volkswagen dealerships in the United States. He began selling cars over 11 years ago and has excelled in each position he has held. Chris has always obsessed with automobiles and is truly an automotive enthusiast.

He is passionate about the automotive industry, in particular how it pertains to American culture, the economy and self-expression. www.DrivingSales.com

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Pain Points ed! v l o s Re

What “pain” are you feeling — how to grow the business, reduce expenses, keep up with the social media scene, or ensure compliance on the many legal and regulatory requirements?

NADA University offers a

These and many more critical topics are addressed in

broad selection of resources

the new Dealer Pain Points series from NADA

to support you. visit: NADAuniversityblog.com for the Dealer Pain Points and 30-Minute Meeting Guide.

NADAuniversity.com to train, track, measure, and monitor with ease.

University—all at no charge. Short 2- to 3-minute video vignettes and a meeting guide provide the foundation for a productive 30-minute meeting with your dealership staff.

Straight-to-the-point videos instruct you on what to do to address the issues and opportunities facing your dealership. For more training resources, click on the PDF unique to each pain point for a listing of what is available and where to find it.

Skills + Accountability = Results

NADA U: We build champions!

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Jared Hamilton CEO, Founder DrivingSales.com

Four HUGE Evolutions in the Market That Can Have a Profound Effect on Your Dealership

by Jared Hamilton

I

t’s here – 2012 has dropped in on us and landed right in our lap. Hopefully, you have a strategy with which to tackle the New Year, to expand your profitability, clientele, and overall success of the store. As we look forward into 2012, keep your eye on these 4 trends that they will shape the way the industry, including your customers, manufacturers and dealership, evolves.

person doing the search? Should Google move that dealership from the 9th position to the top position? Google thinks so; thus, we are seeing dramatic personalization of search engines and reorganization of search results.

Social Search

the most popular on the social web. The search game is changing, and dealers need to watch this since it is the number one source of your online traffic.

A properly optimized website gets 80% of its traffic from search engines, but if the engines change their formula, the traffic will be rerouted to a different set of dealerships, those that are

“A mobile application would be a constant tether connecting the customer to your service department that could dramatically increase loyalty.”

While it’s undeniable that social media has dramatically altered the way people share and obtain information all over the world, one of the most tangible effects social media will have on business has yet to fully manifest. That is social media’s impact on search engines.

Search engines gather data by crawling the web to discover how websites link to each other and share information between them to determine what is relevant for given keywords. By analyzing the social web, you can learn more than what is relevant for any given keyword -- you learn what is relevant to any given person for any given keyword. Social media knows you; it knows who your friends are and what content is important to them. By adding this data to the search engines, search results will become more personal.

Today, when someone searches for “Ford F150 specials” they get a list of the most relevant “F150 specials” websites in their market. But what if the 9th dealership on the search results page was recommended by 5 friends of the

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Mobile Applications If you think getting your arms around the “Internet” was tough when we had to get the gist of computers, hang on, because the mobile web is set to create a huge tidal wave of change and opportunity for businesses to connect with customers through their mobile devices.

The biggest debate in the mobile phone arena tends to be about creating a mobile site or a mobile app. A mobile site is a website that is built for a user to surf the web on a mobile’s small screen.

Conversely, a mobile app is a program that is downloaded to the user’s phone and connects and interacts through the web to create dynamic functions such as data sharing and manipulation.

I see lots of dealers starting to get mobile sites, but data shows consumers prefer to interact through mobile applications. I suggest that applications

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will go in two directions. You will have vehicleshopping applications, where consumers can research, store, and compare vehicles side by side while actually on the lot. Additionally, there might be a “garage for the car” on your phone. This app would offer access to your vehicles service history and maintenance needs, allow you to ask and find service-related questions, and perhaps even be notified when your car is ready for service and book the appointment right from the app. It would be a constant tether connecting the customer to your service department that could dramatically increase loyalty. Anything is possible, and you will see these apps coming once you see the market switch from mobile sites to mobile applications… a trend that is certainly on its way.

Flash “Groupon Style” Sales Flash sales, like Groupon, work because they require a minimum volume of customers to transact before the deal goes into effect. For example, a merchant who usually sells 5 TVs per day might say, “I will give my customers 60% off this TV if 100 people agree to buy one in the next 24 hours.” People place their credit card to buy the TV under the terms that if 100 people or more buy, then they all get 60% off. If less than 100 people buy, nobody is charged anything and the deal goes away. The customers are motivated to get more people to buy, so they email and share the deal through social media. This extra “sharing” of the deal by the customers sends a ton of buyers to the merchant’s site, 100 TVs are purchased and the customers get a great deal while the merchant just sold 20 times the amount of TVs as is normally sold in a day. Done properly, it’s a win-win.

Think about flash sales in the auto industry… How powerful would it be to offer some crazy discount to customers if you could increase your sales over 100 vehicles next week alone?

The manufacturer would have to be involved to ensure the proper inventory and special rebates to make the crazy deal happen, but to sell an extra 100 vehicle models and pull deals from other manufacturers would greatly entice your manufacturer to get involved and help you pull it off.

Group sales are wildly powerful, and could cause major disruption in the automotive industry just like they have in other industries. I have yet to see flash sales for vehicles, but it’s coming. It’s a complex problem to figure out but I guarantee you that this is possible, it just requires the reworking of a few programs and for OEMs and dealers to be on the

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same page. Also, think of how this could conquest business for the service drive where you could up sell and have a chance to capture new loyal customers.

There are HUGE opportunities in fixed ops!

Reorganization of Your Dealership Structure Lastly, but perhaps most importantly, dealerships need to reinvent their organizational structure.

What I mean here is that dealerships are not built to succeed with the online business model. To really excel we need to evolve the job responsibilities, pay plans and org charts to succeed in this digital world.

Most stores are building Internet departments with a few web specialists, but the fact is about 90% of car buyers shop online, while dealerships are training only 10% of their staff to handle the web business.

This is a huge mistake.

The best structures separate out the sales and marketing roles within the dealerships so you have a small team of web marketers, but everyone in your store understands how to sell and service customers who have been online. As the industry evolves, you will see Internet departments disappear. The Internet is not a niche market anymore, it’s about time we trained our staff to handle the opportunity.

The web, in addition to creating a highly dynamic medium, has lowered the barriers of entry to change.

The world is now changing at 100 miles per hour, but most dealerships are getting information at 20 miles per hour. Regardless of how the future looks, the most important factor in determining your success going forward is making sure your dealership has access to the information it needs to keep up with the market changes and to ensure that your team is constantly being trained on changes taking place.

Gone are the days where you could train someone the steps of the sales when you hire them and expect them to perform at strong levels during their tenure. Training and education is the most important investment you will make of your time and money to keep your staff ahead of the competition. Good luck in 2012!

___________________________ Jared Hamilton, founder and CEO of DrivingSales.com, is often described as one part dealer operator and one part tech geek. He has over 10 years of dealership management experience in addition to his award winning entrepreneurial record. Jared is a highly acclaimed international speaker educating audiences across the globe about capitalizing on the Internet’s opportunities and how to invest and implement technology solutions inside businesses.

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Clayton Stanfield eBay Motors Senior Manager Dealer Training

Fixed Ops and Mobile Commerce: A Look into the Parts & Accessories Online Sales Cycle

by Clayton Stanfield

A

s of October 2011, an average of 127,000 parts and accessories sell on eBay’s mobile applications each week. I don’t start out this way as a plug for eBay mobile. I’m simply using this fact so that our fixed operations people can quickly see the opportunities in selling parts and accessories online. Consumers are not only ready and willing to purchase vehicle parts and accessories online, but also at a surprising rate every week on their phone, without going to their computer.

What does this tell us? For starters, it’s a great indicator of how the industry is changing as our customers become even more comfortable researching and purchasing online.

As a trainer, I look at this information and quickly realize that auto dealers, who are new to the online parts and accessories market, are falling behind. They need to learn how to sell to a customer who is not just looking to purchase online, but also with the convenience of mobile.

Why is this important?

Mobile commerce is still in the beginning stages but it’s growing at a faster pace than e-commerce.

With the sales pace of tablets and smartphones, it’s only a matter of time before mobile commerce becomes a dominant form of purchasing.

Because of the similarities to e-commerce, consumers a r e quickly adopting m-commerce and expecting

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businesses to adopt this channel quickly.

What can we do? There are a number of pieces to put in place in order to start selling online compared to the traditional and mobile Web. This article will provide the foundational, basic steps needed to begin this process, e.g. how to take a rim sitting in the back of the shop and turn it into a transactional listing online.

Parts & Accessories Online Sales Cycle: Each of these steps could require a complete training session, but are nonetheless a good start as you plan your business for 2012 and beyond.

Step 1: Inventory Selection Create an inventory plan. What will you sell online? I usually recommend starting with special order parts, obsolescent parts, specialty parts, etc.

This allows you to start with parts that are in low supply while helping clean out all that dusty inventory. Once you get rolling on those types of parts and accessories, you can then start including more and eventually your entire inventory.

Step 2: Merchandising This includes creating the actual online listing, and figuring out who will take the pictures, write the description, and ultimately price the piece you sell online.

I recommend getting a listing tool for this, since most of our dealer websites are not set up to hold inventory or handle transactions. There are some great solutions out there that make this process much quicker and simpler. For a list of recommended companies

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“Because of the similarities to e-commerce, consumers are quickly adopting m-commerce and expecting businesses to adopt this channel quickly.”

visit: Seller Tools and Resources on eBay motors.

Step 3: Drive Traffic The first step is to build an online storefront. For example, with eBay you can set up a store for as little as $15.95 a month and start selling immediately.

Then you can use the parts and accessories pages on your website to drive traffic to this storefront.

Most websites either have no parts and accessories page or they have an online parts order form, which is so cumbersome it rarely, if ever, gets used. So, let’s get those pages to generate some revenue for you and have them either displaying inventory or directing traffic to an online storefront.

Step 4: Deliver Value Like the traditional sales business, we need to deliver value in everything we do. From the first point of contact through securing a positive review and repeat business, your online team needs to treat these customers with the same courtesy they provide the customers in your store. In the online parts and accessories market, we look at four main categories. Delivery as promised, Communication, Shipping Time, Shipping Cost

Step 5: Reputation Management Whether you are selling on eBay or through your website, online customers are going to read and leave feedback about your dealership online. Make sure you reach out to every customer to solicit feedback and for the chance to make things right if for some reason the transaction didn’t live up to their expectations. This also provides the opportunity to make improvements to your sales process, while also starting relationships with potential repeat customers, just by reaching out. Your online reputation is your brand in the online parts and accessories market, where your customers come from all over the world – so protect it as such!

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Step 6: Reporting and Analytics It is important to know what is working for your store and have knowledge on where the demand is in the market. Your parts and accessories manager should be researching online as well as going through your monthly results to know how to improve each month. Sometimes online sales will emulate your store sales, and other times you may find certain markets where you can dominate.

For example, I have seen other online teams have great success by focusing strictly on selling slow moving inventory in the warehouse. The important thing is to monitor how you are doing and adjust accordingly. Terapeak is a tool we recommend for our parts and accessories sellers who sell on eBay. Terapeak is a market research tool that allows your team to see what is selling, who is selling it and for how much it is selling for. For more information on Terapeak, visit www.terapeak.com Each of these steps takes planning and execution – in fact, I’d write much more about each if I only had the space. Happy selling!

To discuss this article and to view comments by others, please visit DrivingSales.com/innovation ___________________________ Clayton Stanfield is a Senior Manager at eBay Motors, the Internet’s largest marketplace for buying and selling all things automotive. Stanfield is responsible for the eBay Motors eDealer training program, the Internet sales manager training program, onsite dealer training and involvement in franchise and independent dealer events.

Specifically, Stanfield has contributed to the development and expansion of the eDealer program. Under his supervision, eDealer has added more events across the country and now provides weekly dealer training sessions.

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Jim Bell Don Ayres Honda Internet Performance & Marketing Director

Looking to 2012 and Beyond

by Jim Bell

O

ver the last several months, I have heard from several dealerships from around the country that their internet leads seem to be down. Sales seem to be trending up, but not the actual internet leads. I have heard some dealers being somewhere around 10, 20, and upwards of 30% down from where they “normally” are with their leads. Yes, leads may be down, but the big question becomes is your floor traffic down?

As you are looking at your 2012 advertising budgets, this is something to consider. I was doing a little research within our back end tools that we have available to us from Cars.com and AutoTrader. I came across a report that was intriguing to say the least. It is the “Sold Inventory Report.”

Some of this may connect the dots with your sales and floor traffic. Here is what I found within our report: Of the last 64 sales from the report, only 7 had done a “used car e-mail quote,” 16 “viewed a map” to the dealership, 20 “clicked through” to the dealership website, and 5 “printed details” on our vehicles and all of them were removed from Cars.com within a few days. Can we credit all of these sales to Cars.com? Probably not, but it definitely connects some of the dots and may be a result of the ‘walk-in traffic’ that you may be seeing in your dealership.

This brings me to the Zero Moment of Truth (ZMOT). In the book, ZMOT, it says that an automotive consumer will be influenced by 18 different sources. Also, the Autotrader and Polk study released earlier this year demonstrates that the used car consumer will shop for an average of 18 hours, 11 of which are online. They are not

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only looking at what vehicles to look at, but also at which dealerships to shop.

I will say that without having full descriptions, multiple photos (minimum of 18 on every vehicle), and reviews on multiple websites, you may not be seeing these types of results. If you are doing all of the right things on all of the above, hopefully you are seeing similar results. When you put some of the third party sources – specifically classified listings – under the microscope, something that

you may want to consider is the cost per VDP and not so much the cost per lead and sale. Try and get that cost as low as possible. I know that we are always shooting for less than a dollar per VDP. These third parties are generating floor traffic whether you know it or not. We all hear time and time again that Autotrader and Cars.com are your new newspaper ads from the 1980s and 90s and I really do think that they are.

My philosophy is that leads are on the decline as dealers are having to be more transparent and get on the internet with their photos, descriptions,

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carfaxes/autochecks, and pricing policies just to stay visible on customers’ searches. If you aren’t watching what the market is doing on a particular vehicle and instead shooting from the hip, you just may see that vehicle start to age on you. If you aren’t using a tool like vAuto’s or similar product, you may want to ensure that you are doing your research. This will only help you in keeping your VDPs at the maximum viewing capability and getting the most out of your online marketing with those third party sources.

“The used car consumer will shop for an average of 18 hours, 11 of which are online.”

Consumers are getting more and more scared of putting all of their information in on a website for more information on a vehicle. A report by Dataium shows that over 50% of the consumers who started to fill out a form, stopped. I would think it is because we have not really ‘earned the right’ to ask for that information. It would be like a customer coming in the showroom and we ask the question “Are you ready to buy this one?”

We have noticed at our dealership level that customers are just showing up. They aren’t just showing up locally, but an hour or two away. The Sales Manager will take a TO and ask how they came upon the vehicle of choice and the customer will respond “I saw it on (fill in the blank).” The more transparent we are as dealers, the more success we will see in the coming year. Of all the car buyers surveyed, 69% of them just walked in, 20% called in, and only 11% submitted a lead according to the Autotrader and Polk study.

Dealers will have to watch for several things for 2012 and beyond.

They will have to make sure that their Google Places listing is optimized. Have photos of your dealership and even some video in there, and give the consumer a reason to click on your places page.

Also, make sure that you have Google reviews. If there is a bad one, respond to it accordingly and then find some customers with a Gmail account and bury that bad one.

Make sure that your website is user-friendly. I have looked at hundreds of websites over the last few years in the business and some are user-friendly, and some are a mess trying to find what I would be looking for as a consumer. If it isn’t user-friendly and links are not working properly, the customer may just leave and go on to the next website. Make sure that the most important parts of your site are visible on your homepage so the consumer can get to what they are looking for. New car buyers are using the internet to compare models, research pricing, and find information on special offers and incentives. It is very important to make sure that your specials page is up to date and mirrors the national incentives. When you

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mirror the national incentives, you won’t confuse the consumer with what they may have seen on another website like Edmunds. I have been to too many websites where it will say “Contact dealer for specials.” If you don’t have specials on your website, they just may move on.

We spend so much money on getting the customer to our main website; you don’t want to scare the customer off because it isn’t user-friendly or they can’t find what they are looking for. Get the customer there and keep them there.

Reputation management is going to continue to be a key in the years to come, but not just on Google.

Cars.com did a study demonstrating that 73% of used car shoppers did consult and read online reviews of dealerships. That potential customer is four times more likely to submit a lead or call the dealership based on those reviews. New car buyers are completely different. 91% of the shoppers will look at the reviews and see how the customers rated the service department. They want to know how they will be treated after the sale, not just during it.

Don’t put all of your eggs in one basket when it comes down to the reviews. Make sure that you have them on Google, Yelp, and then go down from there to the other sites. You want to make sure that you are visible on all of the review sites so that when the consumer is going to one of the 18 websites in their research, they will see the same type of positive comments on how you treat your customers.

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The Internet is getting to be more of an influencer than a lead generator. Keep that in mind while you are evaluating different advertising sources on the Internet. Have a plan in place, put the right people in the right positions, and execute those plans. If you have all of your online marketing in place, it should take you to the next level in 2012.

To discuss this article and to view comments by others, please visit DrivingSales.com/innovation ___________________________ Jim has been in the Automotive business for 15 years.

Jim has worked in sales, Finance, Sales Manager, and currently is the Internet Performance and Marketing Director at Don Ayres Honda in Fort Wayne, IN. He has experience with not only Honda, but also has worked at GM and Volkswagen dealerships in the past. He is also a Community Editor for drivingsales.com. His specialties include online marketing presence, social media, and phone training.

Jim Graduated from Indiana Wesleyan with a B.S. in Business Management. He also attended Purdue University and studied Sales Management. In his spare time, he spends it with his family camping and at swim meets as all 3 of his girls are very involved with 11 months of the year.

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Josh Coutts Michael’s Toyota Accessory Manager

Dealership Accessories Sales

Bringing It All Together for the Win!

by Josh Coutts

D

id you know that even though the majority of consumers prefer to buy accessories at the dealership, fewer than 5% are actually sold by dealers? This is counter-intuitive; after all, what better time for a dealer to sell accessories - and a consumer to buy them - than at the point of purchase, at that magic moment when the new buyer is excited and in love with that shiny car. But, the fact is that most dealers shy away from selling accessories, mainly because they view the obstacles to success such as having to carry cumbersome, expensive, and limited physical inventory, the challenges of cross-department integration, lack of appropriate catalogue pricing updates and/or the staff’s lack of knowledge about accessories in general - as too overwhelming.

at first we lacked a coordinated process across the dealership. Most trying for our staff was the heat from the customers because the team simply did not have the information they needed to make the sale; for example, if a salesperson didn’t know that by adding in navigation, you were voiding out the Bluetooth and/or the satellite radio from the factory, naturally, customers would get frustrated.

If the wrong parts were ordered and installed, this too, would create major issues. So, our

“We finally had a mechanism for correct information, correct sourcing, and correct pricing.”

But, I am here to tell you, with the right process and new digital tools, these obstacles fade away to be replaced by major revenue and profit increases!

A few years ago, our new car sales started to fall slightly, and I was in search of another way to increase gross profit on sales. The opportunity presented by the $29 billion accessories market seemed a natural choice. With encouragement and some guidance - from Toyota/Scion, plus the support of my VP/GM, we took on the challenge of increasing accessories sales (and profits!).

There was some friction at first, much of it because we lacked standardized information and pricing across departments. For example, we found that customers would ask about the price of an accessory and then get one quote from the sales staff, a different quote from Parts, and yet another quote from Service. Additionally, Parts would want their markup on the part and Service would want their markup on the labor, creating additional resistance. Turnover in the dealership also created an obstacle as we had to retrain new sales staff not only on the workings of our store, but on accessories sales – a challenge because

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salespeople started to shy away from accessories sales, to take the path of least resistance - which, given the information gap across the dealership was understandable.

Nevertheless, in spite of these challenges, the added focus on accessories sales eventually yielded an average of $40K - $50K in accessories sales per month, and a gross profit of 22%. The numbers told the story: accessories sales were clearly a revenue and profit growth area for our store, so I dedicated myself to work out the kinks, and get the process to run like a well oiled machine. Little did I know that with the help of accessories sales software and a special digital tool, our numbers would increase even more!

Tools of the Trade Our adventure in accessories sales was very much trial by error, so I was open and willing to try anything new to find what would work. I came

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across specialized software and online tool from izmocars called AddOnAuto, which was specifically designed for accessories sales in the dealership.

they were able to see it in their monthly payment – and of course, that was easily incorporated into the final paperwork.

This sales tool enabled our dealership customers to pull up their exact vehicle model (down to trim level) and interactively configure it with thousands of interior as well as exterior accessories on the fly. Customers could now richly visualize and build a custom, ‘dream’ version of their car and see it on screen with tinted windows, custom wheels, spoilers, body-side moldings, various upholstery options, dash kits or whatever their hearts desired.

This capability was immediately successful with customers but, equally importantly, the tool solved almost all of our ‘information gap’ issues. It provided a 100% virtual inventory system, with

The new tool and standardization also meant that Fixed Ops could become a significant contributor to our accessories sales. We put a dedicated team in place to handle accessories sales calls, including a Service writer, an Accessories Manager, Assistant, and a dedicated parts person. About 15-25% of our accessories sales now take place in Fixed Ops.

“After the first month our gross profit was 35%!” tens of thousands of accessories from OEM and aftermarket vendor databases, meaning we could present vastly more options to our customers – and those options were relevant and updated. And, because it had a virtual database function, pricing information was also logged, so no matter what department in the dealership needed pricing, it was available – and everyone was on the same page, meaning no pricing confusion. We finally had a mechanism for correct information, correct sourcing, and correct pricing – for installed and non-installed parts – which solved multiple issues for us.

A Standardized Process The digital tool also served to bring the dealership team together on accessories sales and out of their departmental silos. It provided the impetus for a standardized process, which was really quite simple: after the sale of a vehicle, when the paperwork was being drawn up, we found that the 10-15 minutes of down time for the customer presented the perfect opportunity to showcase accessories. At that point, we invited the customer to use the digital tool via the computers in our store to configure their new car with various accessories (the great thing about the tool is that it only presents accessories that are available for that vehicle, so no errors). And, best of all, the tool instantly rolled their accessories purchase into the overall sale so with each accessories addition, 34

Providing a compensation structure that works for everyone has also been important. We standardize the pricing by billing parts out at cost, the labor out at cost, and then determine the selling price. The salesperson gets 10% of MSRP (capped at $100 per accessory), and the remaining profit is split three ways between each department -- Sales, Parts, and Service. In addition, we incentivize accessories sales with competitions for various prizes, which have included a one week all expenses paid trip to Hawaii!

With this software and digital tool, all accessories information is at our fingertips – we work as a team with correct information and correct sourcing!

As a bonus, the tool made it easier to work with our installers and suppliers, by giving us a mechanism for scheduling installations, and enabling real-time supplier pricing and specs updates on their products.

Results Our dealership started using the AOA digital tool and our new cross-dealership process in April of 2010, and after the first month our gross profit was 35%!

Our average monthly accessories sales grew to $70-80K, reaching $90,000 in October, November and December 2010.

Our accessories penetration rate is now 45% - 55%, meaning that we sell an accessory to 1 out of every 2 customers. We average approximately $100,000 per month in accessories sales, and that’s just on the front end. We sell an additional $15K to $25K per month through Fixed Ops. Best of all, we are hearing great things from our customers, and they are extremely happy. We have a very high service retention rate, and because our customers keep coming back, it gives us the opportunity to educate them on more accessories options.

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Best Practices and Advice for other dealers We have done very well with accessories sales, and it has caught the attention of Toyota, who recently sent a VP in to interview us about our success. Other stores in the region have also inquired about how we are doing so well. So, I offer these best practice tips and advice for dealerships looking to focus on accessories sales: 1. Have patience...it’s not easy, even with a great tool like AOA. It takes time. It truly is a win-win situation in the end, so it’s worth the time to work out any kinks.

2. Have a dedicated team to work on accessories sales, and get buyin from the entire dealership. Your accessories sales efforts will crash and burn quickly if any member of the value chain has a bad experience. Plus, you’ll get through any obstacles faster as a team.

3. Rely on your vendors – your vendors are the ones to keep you up to date with pricing, and keep installations and orders moving. You can’t install everything right away, and even if you have to pay your vendors a little extra, it will pay off in customer satisfaction, which may lead to repeat business. By the way, AOA is just launching a digital network for suppliers which we are looking forward to because it means our suppliers will be able to instantly generate digital updates integrated into the consumer facing tool!

4. Get the support of VP/GM. When they understand the value and importance of accessories sales, they will support your every move when it comes to accessories sales, and won’t stand in your way.

5. Invest in an online tool that can configure the exact vehicle (down to year, make, model, interior and exterior color) with accessories on the fly, so customers can immediately and richly visualize the enhancements.

Our accessories sales tool has brought it all together for our dealership.

It has helped immensely to increase profitability, and has allowed us to make all accessories available at one source with no need for negotiations due to standardized pricing between all departments.

To discuss this article and to view comments by others, please visit DrivingSales.com/innovation ___________________________ Josh Coutts is the Accessory Manager for Michael’s Toyota in Bellevue, Washington, where he has worked for 6 ½ years, first as a lot porter then quickly advanced to a Toyota Sales and leasing associate. Josh then became the Scion Manager, and in that position, started the dealership’s Accessory program. He attended Seattle University and Hawaii Pacific University.

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VENDOR RATINGS

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Mike Merrill ReachLocal Director of Marketing

5 Ways Dealers Can Take Advantage of the Rapid Growth of Pinterest and Instagram

by Mike Merrill

T

here is no doubt the growth of social media applications have fundamentally changed how consumers spend time online. More importantly, photos are taking center stage with many of these sites such as Facebook, Instagram, and Pinterest. In fact, research from eMarketer shows that the use of photos on branded Facebook pages drive more engagement than any other content.

What is Pinterest?

Pinterest is the leading online pin board site representing a visual list of items a user likes or wants. With the growth of information on the web, this easy to scan interface makes an ideal platform for those of us just looking to browse. Similar to social bookmarking sites such as StumbleUpon and Delicious, these sites also include a link back to the originating site of the image offering a unique backlinking opportunity for inbound traffic.

The rise of photo sharing sites represents a digital marketing and branding medium ideal Engagement Rate* with Facebook Posts Worldwide, for car dealerships.

by Type, March-May 2011 After all, if marketing is all about telling stories, Photo 0.37% why not use pictures to tell the story for Video 0.31% us? And with the use of smartphones with Text only 0.27% hi-resolution cameras continuing to increase, Link 0.15% this is an ideal time to leverage the growth Note: *(likes+comments)/impressions of Instagram and Source: Web Liquid, “Facebook Reach Analysis: Does Post Engagement Pinterest.

Hard to Create Reach?” Oct 27, 2011 believe that Pinterest has grown to nearly 133951 www.eMarketer.com a whopping 5 million unique visits in November of 2011 10 Steps To Get Started

What is Instagram?

Instagram is a mobile phone app that allows users to not only share and modify photos to the Instagram community, but they can also cross post to a variety of social media sites such as Facebook, Twitter, Flickr, and more. Instagram currently has over 14 million users and counting and is very popular with professional photographers. Shockingly, over 150 million photos have been uploaded to date.

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1 - Claim your usernames and build your profiles Whether you think you’ll use these applications or not, it’s always important to claim your username so it’s consistent with Facebook, Twitter, and YouTube and other existing sites when at all possible. For Pinterest, you’ll need to get an invite to join, but odds are someone in the dealership is already obsessed with the site so ask around. Fill

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out your profiles completely by branding with your logo and link to your website. More importantly, provide a compelling bio that will entice someone to click through by telling them something interesting about your dealership. Make sure to add the “Pin it” bookmarklet to your browser.

2 - Upload pictures of your cars This may seem straightforward, but remember detail is what counts. Not only are potential car buyers interested in the overall look of the car, but they also want to see up close and personal shots of the interior, specific trim details, and even the controls on the console. Imagine having 30 photos of one specific model to showcase.

3 - Share pictures of your people At the end of the day, people buy from people so why not give them a glimpse into the folks they would be dealing with in service if they purchased a car from your dealership? Get close-ups of the service drive, service bays, customer lounges and of course the showroom floor. As for the front of the house, these applications offer a great way to introduce them to your salesperson of the month.

Even more incentive to get those walk-in referrals.

4 - Capture pictures of buyers during delivery Years ago, I purchased a Saturn and remember to this day the Kodak photo the sales person took of me as I was taking ownership of my car. Tim Hayden of 44Doors Mobile Marketing explains this moment of taking ownership as one of the most visceral feelings we experience as adults. Why not capture that moment and create a process to upload that photo to Pinterest or Instagram. More importantly, provide the user with the photo by texting it to them. Often times, they will post to their own social media sites as well. Of course, it’s even better if you can have your logo in the background of the photo.

5 - Comment on other’s photos to drive engagement Similar to all other social media sites, don’t just be a publisher of content but engage and talk about other fans’ or followers’ content. Comment or like photos of followers on Pinterest and Instagram. Create an opportunity to develop a stronger relationship with your community as well and seek out users you

!

W NE

Sign up Early!

Internet Manager 20 Groups

NADA offers a broad selection of resources to support you, visit: NADA20group.org If you would like to join one of these elite groups of dealers; or call 1.800.557.6232, Option #4 NADAuniversityblog.com for the Dealer Pain Points and 30-Minute Meeting Guide.

NADAunversity.com to train, track, measure, and monitor with ease.

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NADA 20 Group programs offer a variety of meeting formats to fit your needs, and the new online composite is make-specific, matching up precisely to your manufacturer's financial statement.

We work with you to identify a group that supports your business goals to ensure a non-competitive grouping by volume, geography, travel preferences, and budget.

"In all the years I've attended NADA 20 Groups, I've yet to come home without an idea that was worth the cost of attendance."

— Jeff Brindley, Roush Honda — Westerville, OH

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work with on a regular basis.

6 - Repin other folks Pinterest content to your board If you like the photo you discovered on Pinterest and it’s relevant to your audience, consider categorizing and repining to one of your own boards sharing with your connections as well.

Pinterest. Instagram offers extensive sites to cross publish and if you optimize your posts when posting, this could offer additional Local SEO benefits.

Consider a Tumblr, Posterous or Wordpress account just for your Instagram photos and put the OEM brand, model and trim, city, and state at the end of each post and see what happens to inbound traffic.

“At the end of the day, people buy from people so why not give them a glimpse into the folks they would be dealing with?”

7 - Use hashtags on Instagram

Bonus Tip:

One of the powerful ways to get your photos seen by more people is to take advantage of hashtags on Instagram. Hashtags create categories of photos so users can see all related and recent photos in that category. For example, categories could include popular cars such #mustang, #volt, #CTS, #RangeRover and more. Who knows – if your photos are popular enough, you could end up on the Popular page of Instagram.

Now the most powerful of all these tips is to encourage and educate your staff to share photos across their own social media accounts. With a little education and coaching, this could be a valuable way to drive awareness for your dealership and even custom cars on your lot. Besides, whom do consumers trust more, a dealership or someone they know who works there?

8 - Post consistently As with any social media site, make sure to post consistently to stay top of mind with your followers and continue to get more exposure. Find someone on your staff that enjoys using these applications and has a knack for taking good photos and put them in charge of doing it regularly. Ideally, you would post daily.

9 - Use Instagram filters and effects One of the powerful features of Instagram is the ability to apply filters, borders and other effects to photos. Experiment with these features to get a uniquely looking image likely to draw attention from followers.

To discuss this article and to view comments by others, please visit DrivingSales.com/innovation ___________________________ Mike Merrill helps business recognize the power of online marketing and social media to acquire and retain customers online. As Director of Marketing for ReachLocal he drives all content marketing and social media for the company including sales . Mike also speaks and blogs regularly about social media and the power of personal branding. Mike is President of the Social Media Club of Dallas, a group dedicated to showcasing social media marketing best practices. Prior to ReachLocal, Mike held several outside sales roles in IT with NetApp and Dell.

10 - Share across your social media sites Lastly, make sure to publish to the various social media sites available through Instagram and 38

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Eric Miltsch Internet Director Auction Direct USA

NFC: The Next Greatest Thing In Mobile-Commerce

By Eric Miltsch

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hat’s going to be the next big thing that changes mobile consumer behavior and the way retailers respond? My bet is on Near Filed Communication (NFC) as a top change agent regarding the way we interact with retailers, share information, and ultimately purchase goods.

I see NFC as Bluetooth’s smarter, younger brother. It’s merely a newer technology that will let our smartphones communicate with each other. Smartphones will be able to talk to each

other by touching the devices together, or simply being within an inch of each other. Devices will be able to connect with and transmit data to an NFC chip within another unit. Adding these new NFC chips, or tags, will then pass the data on to additional sources; thus, opening up unlimited opportunities for retailers to create even more unique shopping environments.

Nokia, Phillips and Sony created the NFC Forum back in 2004 to build the unified standards needed for a new communications platform. The platform takes a few pages from the RFID playbook. NFC enhances the communication abilities of RFID

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by making it a two-way channel rather than a one-way channel. Opening up this new platform is the basis for new consumer solutions. Our smartphones are always with us; this is the rest of the foundation needed to help make these devices truly smart and efficient.

So, when do we get to play with this cool technology? The first NFC phones are hitting the US market now, the most popular being the Galaxy Nexus. Even though Verizon has blocked Google Wallet from their network at the time of this writing, there is an APK available to enable

this application without having to root the phone.

Additional phones will continue to hit the US market throughout 2012; mainstream acceptance and use will most likely take some time as new solutions become available. European countries and China have had access to NFC enabled devices and tags for a couple of years. While application use has been limited, it has been successful at creating efficiencies for users within their public bus and rail systems.

Why Is NFC Important?

We’ve

known

smartphone

penetration

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Goodbye Wallets!

How Mobile Phones Are Becoming The New Credit Cards Money has evolved several times in human history: barter, coins, paper, plastic, and now, phones?

It‛s true - Commerce is the next major advancement in mobile technoloty. Through the use of ‘near field communications‛ (NFC) chips, several companies are about to revolutionize the wasy we shop, replacing our wallets with our smartphones.

THE GROWING MOBILE PAYMENTS MARKET Mobile payment transactions already total $240 billion annually, but that‛s just the tip of the iceberg.

Juniper Research reports that the market will grow 2x to 3x in the next 5 years.

By 2013:

By 2014:

By 2015:

Sales of NFC equipped phones will exceed

NFC transactions alone will approach

The value of all mobile money

$75 billion.

$50 billion.

transactions is expected to reach

Google predicts

Digital goods will make up nearly 40% of this market. Asia,

50%

$

1 in 5 cell phones worldwide

that of cell phones will use NFC technology.

$670 billion.

Western Europe and North America will be responsible for 75% of all mobile payment transactions.

will use NFC technology.

THE GROWING MOBILE PAYMENTS MARKET PAID NFC allows for a simple data exchange between two devices by way of a physical touch.

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NFC requires an initiator and a target:

The initiator generates a radio frequency (RF) field with a range of about 4 centimeters.

SOURCES: GW-PRESS.APPSPOT.COM l GOOGLE.COM/WALLET l VENTUREBEAT.COM l FASTCOMPANY.COM FASTCOMPANY.COM l TECHCRUNCH.COM l NFCRUMORS.COM l GIGAOM l JUNIPER RESEARCH

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The target picks up the RF field and receives the data it contains.

G

gplus.com

www.twiter.com/gplus www.facebook.com/gplus

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increase for the past couple of years; feature phone users are upgrading to new devices.

As the early-adoption curve continues its ascent, users will begin experimenting with new applications. Keep in mind, our networks are more connected than ever and these new

solution - technology has the ability to become a design solution.

Imagine a progressive dealership solution such as micro-terminals within the service and parts department or even at your sales desk. These

delivered directly to them faster and easier.

We’ve all moved beyond trying to understand why we need to be connected socially at this stage of digital marketing game.

We know customers are social, we know they’re mobile. I see a

“Our networks are more connected than ever and these new smartphone users have easier access to their friends’ activities. The rate at which early-adopters influence their networks will rapidly increase.”

smartphone users have easier access to their friends’ activities.

The rate at which early-adopters influence their networks will also rapidly increase.

Smartphone usage will become more efficient and improve consumer-shopping experiences while also improving consumer security (or at least the perception of improved security because of new features available). NFC has the ability to help create fun, cooler features for social media applications due to its ability to share content between devices at a close range.

What Can NFC Change?

Imagine snapping a photo of your friends and sharing the image by simply touching two devices together. We’ve progressed from handing a physical image to a friend, to emailing an image, to touching devices. This is simplicity that can’t be achieved with a design

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terminals, outfitted with the NFC tags, will let the customer pass their phone across the face of it and pay for their service appointment, buy aftermarket parts or even better, make their down payment directly from their phone. Additionally, this activity can be linked to a user’s social profile and shared - creating new lifestyle activity moments.

Another usage opportunity that I’m particularly interested in seeing is the adoption of NFC technology within location based marketing platforms and services. Our check-in activity can become passive, as a simple hand gesture in front of an NFC tagged terminal, rather than an active check-in. (One hand gesture vs. opening up an app and clicking through multiple steps - pretty simple.)

Even better, imagine these NFC tags pushing coupons, recommendations and userspecific content on-demand.

The content consumers are most interested in seeing can be

need for us to take another peek at the emerging tools and apply our talents to taking advantage of the opportunities they will create for our guests.

To discuss this article and to view comments by others, please visit DrivingSales.com/innovation ___________________________ Eric Miltsch is the IT/Internet Director for Auction Direct USA Used Vehicle Superstores; recently awarded as the 2010 #1 Independent Retailer of the Year. Disclosure: Eric advises DrivingSales.com on various online strategies and is also a co-creator of CarZar, along with Jared Hamilton .

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TrueCar Facts and Falsehoods

by Lindsey Auguste and Dennis Galbraith

T

he TrueCar discussions have kicked up a storm of controversy in our industry. It’s easy to get sucked into the feeding frenzy that the fight engenders – bad mouthing, name calling, posing speculation as facts.

In response, DrivingSales aimed to find out the real arguments and the face-value answers. We scoured the discussions online, watched hours of

Lindsey Auguste Editorial Director DrivingSales.com

Dennis Galbraith Research and Business Intelligence DrivingSales.com

dealers want to provide an all-star car buying experience so customers will return. The fact that TrueCar considers cars a commodity is the very reasoning by which they support posting car pricing that show below dealer cost. They’re saying that there is no additional benefit to the purchase price other than the car. But price isn’t about cost and profit, it’s about value. People pay extra for added value, and do so happily. Brand value is the reason Honda disallowed their

“Train your sales staff to be able to adequately explain to their customers what the TrueCar data isn’t.

Empower them to be the trusted advisor they are.”

video, policed the print, and even spoke with one of the leaders of the battle to find out what really are the arguments against TrueCar. Then, we did the same thing on the other side, including a question and answer session with Scott Painter, CEO of TrueCar. What follows is an unbiased view of the debate, aiming to confirm or bust the statements that fuel the TrueCar controversy.

The Car is a Commodity: FALSE It’s frustrating that TrueCar is trying to frame dealers’ products as a commodity, completely stripping from it the experience and value you provide in the transaction. If you sell your cars as if they are commodities, then you deserve these dealer cost prices because you’re not bringing any value to the customer experience.

But that’s not the case with most dealers. Most

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pricing on the TrueCar site, and brand value is the very reason TrueCar won’t share their financial statements with the many dealers who have repeatedly asked for it on open forums – because it’s worth more than the dollars and cents that it costs to generate.

TrueCar is stealing Dealers’ DMS data: FALSE It’s not stealing if you give it to them. Dealers who are signed up on TrueCar have agreed and willfully allow TrueCar to scour their customer information to track the sale of a car through the TrueCar introductions. They purchase transactional information from over 30 sources including banks, lending profiles, registration information, etc. The idea that dealers could shut down TrueCar by keeping them out of their DMS

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system is simply inaccurate. According to Painter, through all the sources that they buy data, they are seeing 90% of all car transactions across the United States. So even if all 18% of dealers in the market that they have access to (as reported by Painter) suddenly and permanently stopped providing their transactional data, TrueCar still would hold the lion’s share of the information and have the most accurate reporting of car sales transactions.

Of course, True Car isn’t the only vendor that dealers allow into their DMS. There are a multitude of vendors we let in for a variety of reasons, so the fact that dealers are letting TrueCar in should not in itself rile up the amount of controversy that this company has stirred up. And if it weren’t TrueCar exposing the transactional data in this depth, it would inevitably be somebody else.

But TrueCar is using our data against us!

TRUE and FALSE To say that TrueCar is using the dealer DMS data to power the TrueCar curve is incorrect. In fact, it is against TrueCar’s privacy policy to do so and if it is being done, then there’s altogether a more legal issue at hand, which we are neither privy to nor qualified to make statements about. But the data that TrueCar is providing to consumers does go against you.

It’s not that transparency is bad, though that’s another argument in itself. The data that TrueCar is presenting is real. It’s a numbers game and their giving it to the customers straight. The problem is that the data being shared is not rooted in any context. If a car is sold below invoice, even below dealer cost, it could be for a number of reasons – it’s too old, bonus income, more inventory, etc. But TrueCar doesn’t share that information with their consumers; all they show are the numbers. So this transparent data sharing is in fact just as misleading as not sharing it because they haven’t given the consumers the practical information that goes with all data points, including the outliers on both ends. So an actionable solution to this problem doesn’t lie in trash talking on the internet. Train your sales staff to be able to adequately explain to their customers what the TrueCar data isn’t. That’s the low price doesn’t explain trade-ins, odd colors, inventory issues. Arm them with the tools they need to enlighten the customer with market knowledge.

Empower them to be the trusted advisor they are.

Painter declared to us as well as in his letter to the

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automotive industry that about 20% of cars sold in 2011 are at a loss, as if that makes it better – it doesn’t. But it’s 20% for a reason: because anything more than that is not sustainable. Companies don’t stay in business by selling their goods at cost. It doesn’t pencil. Yet, they portray to their consumers that such a price is not only possible, it’s fair. Painter directly revealed to us he doesn’t subscribe to the notion that people will see cheaper prices and feel entitled to them. He instead thinks people will see what the costs are to the dealer and voluntarily pay a higher price. It’s possible, but all of the comments from real customers that have generated over a number of neutral, non-automotive sales sites have not expressed that sentiment. They want a lower price. Who wouldn’t?

TrueCar encourages a ‘Race to the Bottom’: FALSE - Not in practice.

The slippery slope is a fallacy. In a perfectly competitive commodities market, you can argue a race to the bottom, assuming the “bottom” indicates where supply meets demand. The automotive retail market is not in perfect competition, it’s not a commodities market, and where price meets demand doesn’t necessarily mean lack of profit.

Unquestionably, Painter paints the picture to consumers that dealers and salespeople are dishonest and untrustworthy to consumers. But in addition to price, location and selection are huge factors in a customer choosing a car dealership.

It’s always been like that. When we started seeing fixed pricing on the Internet, the same fear arose: “Only the dealers with the lowest price will get the customer!” This same sentiment came about when people started valuing their trade-ins online. And when Edmunds, KBB, RealCarTips.com and all the other sites that are motivated by fixed or inventory pricing popped on the scene, the lowest priced dealer was prematurely deemed the only would-be survivor, duking it out at the bottom with whoever is left. Yet here we are, over a decade later, selling cars. (Note: This is does not mean these site do the same thing or act in the same direct way as TrueCar. It simply recognizes the fear that many dealers experience when the market becomes more transparent to consumers, as all of these sites have encouraged.) The information is out there to be had – this isn’t new. But either people aren’t finding it, aren’t looking for it, or at times, don’t have any interest in it. The lowest price doesn’t always win, particularly in the automotive retail market.

Customer service, experience, location, selection, and trust are dominant and are all things that a

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dealer has control over. These are some of the many things that distinguish automotive retail from a commodities market.

TrueCar wants to eliminate the salesperson from the business: TRUE Although Painter said in his interview with us that he encourages the customer to go to the dealer and try to find the right car for them, and that TrueCar supports that one-on-one dealer relationship, his public statements, time and again, evidence

has done the same thing: frightened the dealer on the possibility of extinction. But that’s the nature of any business. New ideas, products, or models arrive that change the space and force businesses to adapt if they want to survive and thrive. TrueCar may or may not be good for our industry, but it is not taking over the lion’s share of the media market, at least not with a cost per action model tied to the sale. In fact, this cost per action model is stirring up a lot of dust for the company in the legal world.

Board meetings have been called, rulebooks have been pulled out, and investigations are under way

“Customer service, experience, location, selection, and trust are dominant and are all things that a dealer has control over, distinguishing automotive retail from a commodities market.” the opposite. Even as far back as 2008, when TrueCar more or less launched at a TechCrunch conference, Painter stated that there are too many dealers and it’s “completely unnecessary” to have so many, directly indicating that there’s no need for a large number of dealers as it stands now. What’s interesting is that TrueCar wants to provide not only customers with information, but also dealers with information that they can use to target their audience. He relayed some data to DrivingSales in our interview about car buying behaviors; for example, in some zip codes, people will travel 100 miles to save $100 on a car sale, but in other zip codes, namely the Los Angeles area, people won’t travel 5 miles to save $5000 – a direct indicator that multiple dealers are needed to serve the customer as they want to be served. People still have their loyalties – to brands and to dealerships. People want someone to hold their hand, to confirm their information, and to hand them the keys. Those things don’t change just because some people are interested in a better deal. Most cars won’t sell without you.

TrueCar and the Law TrueCar is a company that saw a need in the industry from a consumer perspective and is capitalizing on the opportunity. Everything new that has come across a dealer’s table in the past

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regarding the legality of TrueCar affiliations with dealers. In fact, a handful of state associations are already prohibiting their dealers from doing business with TrueCar in the current capacity, as they are potentially violating a number of sectional codes across various state associations.

Brokering TrueCar operates on a relatively new billing model, known as Cost Per Action (CPA). In this model, TrueCar is only compensated if the introduction they make between dealer and customer results in a sale. Although this model can be incredibly appealing to dealers, it potentially violates brokering laws across a number of states. Kansas Automobile Dealer Association (KADA) released an announcement just yesterday reminding its dealers of the state’s brokering prohibition, implemented since 1990. It defines a broker as “any person who, for a fee, commission, money, other thing of value, valuable consideration or benefit, either directly or indirectly, arranges or offers to arrange a transaction involving the sale of a vehicle, or is engaged in the business of (1) selling or buying vehicles for other persons as an agent, middleman or negotiator; or (2) bringing buyers and sellers of vehicles together, unless excepted” (See K.S.A. 2010 Supp. 8-2401(x).).

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In a recent post on DrivingSales.com by community member Craig Waikem, it is referenced that his state association, Greater Cleveland Automobile Dealer Association (GCADA), has advised their dealers on similar terms. The Virginia Automobile Dealer Association (VADA) even sent a letter to Scott Painter, CEO of TrueCar, advising the company of these violations and inviting him to attend on upcoming board meeting where the issue will be discussed. DrivingSales spoke with Painter last week about the issue and his simple response declaring that TrueCar does not serve as a broker in the transaction seems to be called into question by these claims and legal interpretations.

Privacy The cost per action billing model TrueCar is based on requires access to any DMS of a dealer they do business with, in order to track those introductions all the way to the sale. This has been a point of strong debate throughout the course of the controversy, but it comes into the legal circle on issues of customer privacy. Dealers could be in trouble if the action of TrueCar accessing their customers’ information violates their privacy policy with their customers. Furthermore, the dealership loses the ability to control the flow of information once that information leaves their DMS, and ultimately, the ability to control if their privacy policy and security process are being adhered to.

Advertising Just days ago, the Colorado Automobile Dealer Association issued a statement based on the December 8 2011 meetings with the Colorado Motor Vehicle Dealer Board and the Auto Industry Division, listing all the ways in which TrueCar violated advertising protocol in the state of Colorado, including font sizing of disclaimers and disclosures, failure to include adequate and comprehensive information on pricing, and even using specific verbiage within the advertisements that violate state law. Although these advertising issues are more than likely issues that TrueCar can easily remedy, these claims add to the unseemly complexion of the situation.

Who is Really at Fault?

Legislation changes, as do legal interpretations, so the outcome cannot be foretold. Yet certainty lies in the fact that this issue bounced out of the court of public opinion and into the thorny and 46

expensive legal arena. Whether CPA models are good or bad for dealers is no longer the issue. The question is whether they are legal. In a letter to TrueCar’s Dealers, Stewart Easterby, Executive Vice President of Dealer Development, declared that they are committed to regulatory compliance and data privacy and that, as of early January, no lawsuits have been filed against the company.

However, the issue will be dealt with one state at a time and with varying results, a nightmare for a national vendor with a national advertising campaign.

Should these allegations and violations turn out to be true and pass through the court system, dealers are the ones who are left with the responsibility.

CADA stated that if they “receive any consumer complaints regarding the activities of TrueCar, the Board will look to the licensed, selling dealer and will hold the dealer accountable.” KADA and VADA echoed similar attribution of responsibility, citing civil penalties as well as suspended or even revoked licenses for dealers compensating unlicensed entities in the above-mentioned scenarios. The threat is real and the states are standing up against TrueCar and forewarning their dealers accordingly.

At the end of the day, the dealer could pay much more than just a transaction fee.

To discuss this article and to view comments by others, please visit DrivingSales.com/innovation ___________________________ 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.

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.

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