CIADA
INSIDER
State Affiliate
MAGAZINE
C O L O R A D O I N D E P E N D E N T A U T O M O B I L E D E A L E R S A S S O C I AT I O N JULY/AUGUST 2017
CIADA
ACCOMPLISHMENTS PASSED SB 17-240
SUNSET MOTOR VEHICLE DEALER “SUNDAY SALES” PASSED HB 17-1205
MOTOR VEHICLE TOTAL LOSS
PASSED HB 17-1249
PENALTIES FOR UNLICENSED MOTOR VEHICLE SALES
PASSED SB 16-140
CERTIFICATES OF TITLE ISSUED FOR MOTOR VEHICLES DEFEATED HB 15-1089
EXCLUDE KEI VEHICLES FROM DEALER SALES
WHAT CIADA HAS BEEN DOING FOR THE AUTO INDUSTRY PAG E 0 6
DALLAS, TEXAS Permit No. 2079
PAID
PRSRT Standard U.S. Postage
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PASSED HB 14-1100
TITLE DOCUMENT BRANDS PASSED HB 14–1299
REPEAL SIX-YEAR LIMITATION ON SALVAGE BRANDS
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INSIDE 06..................................................................... CIADA Update 10....................... Facebook Organic Reach is Near Extinction 12....................Beat Back Used Vehicle Margin Compression 15......................................................No Compliance Training? 16.................................................................Art of the Referral 17 ................................................Save the Date: Charity Gala
WHAT’S NEW
Convention Education Sessions Online
The NIADA Convention & Expo June 12-15 offered a wealth of information for dealers on a variety of topics. If you missed a session, or would like a refresher, sessions will be available on NIADAconvention.tv mid-July.
ADVERTISERS INDEX
Alliance Inspection Management.........................................17 AmTrust Financial....................................................................9 AutoZone.................................................................................6 Black Book...............................................................................5 Dealers AA of the Rockies...................................................IFC Lobel Financial.........................................................................3 Loveland Auto Auction..........................................................15 Manheim................................................................................11 Manheim Denver....................................................Back Cover Manheim Pennsylvania.........................................................13 NextGear Capital...................................................................12 PassTime................................................................................14 VAuto...................................................................................IBC
OFFICE
For information on how to become a member of CIADA, please contact Todd O’Connell 950 Wadsworth Blvd., Suite 101 • Lakewood, CO 80214 303.239.8000 toddo@ciada.org
NIADA HEADQUARTERS
NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION WWW.NIADA.COM • WWW.NIADA.TV 2521 BROWN BLVD. • ARLINGTON, TX 76006-5203 PHONE (817) 640-3838 CIADA Insider is published bimonthly by the National Independent Automobile Dealers Association Services Corporation, 2521 Brown Blvd., Arlington, TX 76006-5203. Periodicals postage paid at Dallas, TX and at additional offices. POSTMASTER: Send address changes to NIADA State Publications, 2521 Brown Blvd., Arlington, TX 76006-5203. The statements and opinions expressed herein are those of the authors and do not necessarily represent the views of CIADA Insider or NIADA. Likewise, the appearance of advertisers, or their identification as members of NIADA, does not constitute an endorsement of the products or services featured. Copyright © 2017 by NIADA Services, Inc.
FRONT RANGE CLASSES /
COLORADO INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION Pre-Licensing Certification
Colorado state statute requires anyone applying for a used motor vehicle dealer’s license or a used powersports dealer’s license be certified through a pre-licensing course. This seminar is also offered to salespeople to be able to pass the New Mastery Examination Test. Class is held at least once a week. Check our website for dates.
Basic Title Training Class Join us to get updated information to learn the CORRECT way to fill out your paperwork at time of sale and other topics including title compliance, do’s and don’ts for titles and more. This class is held once a month for half a day. Call CIADA for information on these classes, or to get your forms and/or Dealer/Salespersons Bonds.
All classes are subject to change without notice. Please check our website www.ciada.org for any changes.
www.ciada.org • phone 303.239.8000
ENROLL IN THE CIADA LEGAL PROTECTION FUND NOW!
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BOARD OF DIRECTORS OFFICERS
EDITORS
Jacinda Timmerman • jacinda@niada.com Andy Friedlander • andy@niada.com MAGAZINE LAYOUT & GRAPHIC ARTIST
Christopher Hanley • chris@niada.com
DIRECTORS.
President
Tim Gaylord Gaylord Leasing Company Inc. 303-667-6188
Vice-President
Mark Weida Street Smart Auto Brokers 719-434-8443
Secretary
Teshome Tesfaye Norfolk Motors 720-298-1796
Treasurer
Mike Whistance Country Truck and Auto 303-857-1281
Dan Berkenkotter Berkenkotter Motors 303-809-1618
Dean Gunter Mile High Car Company 719-570-7800
John Lindberg Auto Warehouse 970-490-2886
STATE MAGAZINE MGR./SALES
Troy Graff • troy@niada.com
Lakewood, Colorado Education & Training Center 950 Wadsworth Blvd., Suite 101 Lakewood, CO 80214
Jim Bode J. Bode Used Cars 303-366-1535
PRINTING
Nieman Printing
Past President / Directors Jim Bahne Bahne, Inc 720-934-9806
Mike Bonicelli Nevada Auto Sales 719-635-2533 Dave Cardella Mountain States Auto Group 303-887-8977 Peppe DeMarco Highline Motors 970-206-9963
Lucas Jozefkowicz Denver Autos 303-573-1333
Roger Kirlin Roger Kirlin Auto Sales 303-526-7805
Mike Widhalm Reds Auto and Truck 303-726-5520
Joe McCloskey McCloskey Motors 719-594-9400
Chairman
Stan Martin Stan’s Auto Sales 303-650-1011
Dean Strawn AutoTrek 303-934-5600
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CIADA INSIDER / July/August 2017
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ASSOCIATION NEWS
WHAT CIADA HAS BEEN DOING FOR THE AUTO INDUSTRY Your Association Working for You
Rules and regulations play a huge role in today’s auto industry. CIADA stands vigilant to fight harmful legislation while promoting lawmaking favorable to the industry. Below are brief descriptions of the issues CIADA helped with or initiated over the last few years. SB 17-240: MOTOR VEHICLE DEALER BOARD “SUNSET REVIEW” All Colorado boards and commissions undergo a review by the Department of Regulatory Agencies (DORA). This year was the auto industry’s turn to have DORA look at the general operation of the Auto Industry Division (AID) and the Motor Vehicle Dealer Board. This long and extensive process started last year with DORA’s investigation, review and recommendations, concluding with legislation this year. The report DORA turned over to the Senate Business, Labor and Technology Committee consisted of 49 pages with 12
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specific recommended changes. After much discussion and legislative committee hearings, the following items stayed in the bill: • Continues the regulation of motor vehicle and powersports vehicle sales until September 1, 2027. • Codifies the auto industry division in statute under the department of revenue and changes the authority to enforce the regulation of the licensing of vehicle sellers from the executive director of the department of revenue to the director of the division. • Requires a licensing application when a business acquires a new owner. • Subjects the license of a dealer to discipline when the owner is acting as a salesperson and violates the law
governing salespersons. • Requires a fingerprint-based criminal history record check for all licensees. • Requires people who have had licenses revoked to wait one year before applying for a new license. What was arguably the biggest potential concern for dealers was DORA’s recommendation to repeal the prohibition on Sunday sales. CIADA, with the help of other associations and the Senate committee’s great understanding of the auto industry, was able to pull this recommendation from the final legislation! This bill takes effect on July 1, 2017. HB 17-1205: CONCERNING CHANGING THE DEFINITION OF “SALVAGE VEHICLE” This bill basically requires any “total loss” vehicle, except for hail or theft, to be branded
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CIADA Group Meeting with Senator Gardner During the National Leadership Conference
with a “salvage” title. This will prevent the monetary loss to dealers when purchasing “clean” titled vehicles without the knowledge the vehicle had suffered a “total loss,” as well as the possible public relations problem when the buyer finds out his vehicle was a “total loss” and thinks the dealer sold him a “salvage” vehicle. In addition, this will bring Colorado in line with how the majority of other states treat severely damaged vehicles. This bill passed
with CIADA as the primary force and will take effect on August 9, 2017. HB 17-1249: PENALTIES FOR UNLICENSED MOTOR VEHICLE SALES This powerful addition to the law dramatically increases the fine for acting like a dealer without a license. After August
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9, anyone prosecuted for knowingly selling vehicles without the proper license will face a mandatory fine of not less than $1,000 and 25 hours of useful public service for the first offense. A second conviction will be punished by a fine of not less than $5,000 nor more than $25,000, which the court may not suspend. CIADA has been working on obtaining higher fines for unlicensed sales for several years and this year it passed! Enforcement will be the key to the success of this bill but already it is off to a fantastic start. Last month the Auto Industry Division indicated investigating “curbstoning” will be one of their priorities. SB 16-140: CERTIFICATES OF TITLE ISSUED FOR MOTOR VEHICLES CIADA was instrumental in getting this bill passed last year. With this newer law, a dealer no longer is in jeopardy of possible severe penalties if unable to provide title within 30 days. The dealer now has an affirmative defense, provided all the steps necessary to obtain the title were completed. A huge side note to this bill was the clarification from the state that a lien can
be perfected, if necessary, without the title, using just the title application, financing document and paying the fees. HB 15-1089: EXCLUDE KEI (SMALL JAPANESE VEHICLES) VEHICLES FROM DEALER SALES CIADA helped defeat this bill that would have allowed non-dealers to sell KEI vehicles that would have been registered for normal street use. HB 14-1100: TITLE DOCUMENT BRANDS Creating a new “flood” brand was the focus of this bill. CIADA was in full support of this pending legislation to protect Colorado dealers from buying undisclosed flood damaged vehicles with “clean” titles. That is until language was put in to exclude “repaired” flood damaged vehicles from the brand requirement. CIADA resisted this change and helped get this provision removed. The bill passed with a flood damaged vehicle now branded “flood” even if repaired and also included putting any out-of-state title brands on the new COLORADO TITLE. CONTINUED ON PAGE 8
July/August 2017 / CIADA INSIDER
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CONTINUED FROM PAGE 7
HB 14-1299: REPEAL SIX-YEAR LIMITATION ON SALVAGE BRANDS CIADA was again the main driver of fixing the problem of six-year and older severely damaged vehicles getting back into the marketplace causing financial harm. This bill passed and was signed by the governor on April 25, 2014. Because of this bill and HB 14-1100, Colorado is no longer a prime state to bring in wrecked or flooded vehicles camouflaged with “clean” titles. The spectacular legislative success of the last couple of years is directly attributed to the leadership and vision of CIADA’s board as well as the representation of Aponte & Busam, one of the most highly respected lobbyist firms at the Capitol. Edie Busam and her wonderful associates tirelessly keep track of all auto industry related bills, protecting CIADA’s members from unfavorable laws. Another key factor in the recent triumphs is your contributions to the CIADA Political Committee fund. This money is strictly regulated and exclusively used to support business friendly legislators and candidates. The ability to participate in the political arena is producing very positive results, such as: • Defeating “Sunday Sales.” • Passing higher fines for “curbstoning.” • Preventing financial harm with “total loss”title brands. • Passing “affirmative defense” for late titles. The CIADA Political Committee Fund plays a crucial role in protecting the industry. Your support is vital to keeping your business productive. Giving funds to elected officials certainly does not guarantee their support but does provide an opportunity for discussion and education on our issues. In addition, please support the NIADA Political Action Committee. The NIADA PAC was instituted to further enhance efforts to protect the interests of the used car industry and NIADA’s dealer members around the country. Your contribution to the NIADA PAC allows NIADA to work more closely with Congressional members who seek to protect this vital industry and keep the economic engine of our small businesses running strong. For more information, go to www.niada.com/pac.php. Two of the current “hot” national topics are reining in the Consumer Financial Protection Bureau and addressing vehicle recalls.
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National Leadership Conference CIADA has participated in NIADA’s National Leadership Conference every year since it returned to DC in 2013, devoting a day to visit with all nine of Colorado’s elected officials or their staffs. The CIADA group pictured with Senator Gardner was part of more than 175 dealers and industry leaders from across the country who gathered at the nation’s Capitol in 2016. During the conference, participants met with federal legislators and regulators to make the voice of the independent dealer and small business heard. CIADA Ambassador Group CIADA formed the “Ambassador Group” to help get word out to members and non-members alike about legislative, legal and compliance issues facing the industry. In addition, they are well versed in explaining the benefits of being a member of CIADA, the largest statewide association representing the automotive industry. CIADA membership is a good business decision. This group has proven to be very beneficial to the association by growing general membership and adding dealerships to the Legal Protection Fund. They are also helping the industry stay viable by generously contributing their talent, time and expertise. Working together, the ambassadors are a potent force strengthening the association for everyone’s benefit. A strong trade association is essential to being more proactive when addressing the many factors influencing today’s business climate, which become more evident every day. Strength and quick response time is also necessary when fighting matters that could negatively affect your dealership. With the ambassadors’ involvement, these issues are addressed more effectively. This action group is helping CIADA spread the word when needed. Thanks to all the ambassadors who are working on behalf of all in the used car business. CIADA’s Legal Protection Fund CLDF was conceived during a directors meeting addressing how to combat the many lawsuits that were thriving in some of the neighboring states and beginning to be an issue here in Colorado. It started with a few attorneys actively soliciting consumer lawsuits against the automobile
industry. Some of these lawsuits are legitimate but some are merely intended to obtain an attractive settlement from the dealer. This is where CLDF steps in to help defend members against Truth in Lending Act and Colorado Consumer Protection Act lawsuits. The purpose is to fight selected lawsuits brought against CLDF members by forcing the consumer to go to trial – settling the suit is not the intent. By providing an aggressive defense, the hope is to discourage future lawsuits against CIADA members. A committee of dealers controls the fund, with CIADA administering it simply as a member benefit. CIADA is working on a new presentation for the VIP card. Soon this card will be available on a mobile app for better ease of use with enhanced benefits. CIADA is committed to the prosperity of the auto industry, providing training such as the following that will make your dealership better: • Compliance Classes • Salesperson Training • F&I Seminars • Title Training • CPO Seminars • Statute, Regulations and Rules Classes CIADA is the independent dealer’s voice at the Auto Industry Division, Motor Vehicle Dealer Board and attorney general’s office, attending many meetings a year. Established in 1941, CIADA is one of the oldest organizations of its type and is the largest statewide association representing the automotive industry. • CIADA is the only non-profit trade association in Colorado advocating for the independent used car dealer. • CIADA proudly embraces in its membership dealers of all sizes, from the largest to the smallest. • CIADA has the highest percentage of eligible dealers as members in the nation at 74.8 percent • CIADA members united under a single banner have a voice that is commanding and powerful. Special thanks to all CIADA members for your terrific support! Non-members, please become involved and help make CIADA and the auto industry even stronger with your participation. Join now to be part of the wonderful dealers and other industry leaders that form CIADA. Make sure your business interests are heard!
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July/August 2017 / CIADA INSIDER
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SOCIAL MEDIA BY KATHI KRUSE
Facebook organic reach refers to how many people you can reach for free on Facebook by posting to your page. Organic reach has been declining for years, and it’s a common misperception that Facebook is doing this to make more money. While it’s true they need to make money (like all businesses), the decline in organic reach can be attributed to more complex issues faced when exponential growth occurs. Why is Facebook organic reach declining? There are two main reasons. The first reason involves a simple fact: More and more content is being created and shared every day.
more than 50 percent last year. With each new page like, competition in the newsfeed increases even further. The second reason for declining organic reach involves how the newsfeed works. Rather than showing people all possible content, the newsfeed is designed to show each user the content most relevant to them. Of the 1,500-plus stories a person might see whenever they visit, their newsfeed displays approximately 300. To choose which stories to show, the newsfeed ranks each possible story by looking at thousands of factors relative to each person. This is what’s known as the Facebook newsfeed algorithm. The Facebook algorithm roller coaster. I was recently asked by a potential client to help create an “organic strategy” to market their business on Facebook. I thought it was an important topic to discuss since there really is no such thing as organic reach anymore. Each social media channel has its own algorithms, and since the introduction of Facebook ads, organic reach has all but evaporated. Social media is a pay-to-play
You’ve probably felt this change yourself. There’s now far more content being created and shared than time to absorb it, something Mark Schaefer talked about in his book The Content Code. On average, there are 1,500 “stories” (posts) that could appear in a person’s newsfeed each time they visit Facebook. For people with lots of friends and liked pages, as many as 15,000 potential stories could appear any time they log on. As a result, competition in the newsfeed is increasing, and it’s becoming harder for any “story” to gain exposure in the newsfeed. In addition to the growth in content, people are also liking more pages. The number of pages liked by the typical Facebook user grew
environment now. As you may know, 10 percent of Kruse Control profits go to animal welfare. The conduit for my cause is Hanaeleh Horse Rescue, for which I volunteer my time on the board, do marketing and personally help with the horses every weekend. We have a lively Facebook page with over 65,000 fans. As a volunteer-run non-profit, we have very little budget to spend on Facebook ads so I’ve become quite creative over the last few years to grow our community of like-minded horse lovers and advocates. It’s amazing to see what you can do with entertaining, informative content when you have zero budget to work with. The page is my bellwether that signals me when
FACEBOOK ORGANIC REACH IS NEAR EXTINCTION Now What?
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Facebook shifts their algorithms. Regarding content, we are a horse rescue so we have that going for us, which many independent dealers don’t. Who doesn’t love horses, right? Our organic reach is always above average because people like horses and we provide awesome content to keep them engaged. For an independent dealer, it’s tougher to come up with awesome content, which is why I recommend starting with a written content strategy. Up until a few months ago, the Hanaeleh page was still getting about 20-30 percent organic reach. But in the last few months I’ve seen it drop to 10 percent, and in some cases even lower. Can dealers succeed on Facebook with decreased organic reach? Currently, according to optimistic data, an average Facebook post reaches around 5 percent of page fans. However, there are other stats available claiming the average organic reach of a Facebook post can be as low as 2 percent. So if your Facebook page has 1,000 fans, your new post will be seen by 20-50 people on average. Facebook ads solve the problem of declining organic reach. Here are four fantastic ways to leverage Facebook ads to reach more people and engage more customers. 1. Create brand awareness. Reach people more likely to pay attention to your ads and increase awareness for your brand. 2. Increase engagement and/or page likes. Get more people to see and engage with your post or page. Engagement can include comments, shares, likes, event responses and offer claims. 3. Lead generation. Collect lead information from people interested in your business. 4. Increase conversions. Get people to take valuable actions on your website or app, such as adding payment information or making a purchase. Use the Facebook pixel or app events to track and measure conversions. Important note: If you don’t have a Facebook ads strategy as part of your social media strategy, you will not get the traction for which you’re looking. Without a solid strategy and Facebook ads to promote your content, many of your entertaining and intriguing content will never see the light of day. Now that you know Facebook ads solve the problem of declining organic reach, commit to taking the next step of putting them into action. Kathi Kruse is an automotive social media marketing expert, blogger, consultant, author, speaker and founder of Kruse Control Inc. Kruse Control coaches, trains & delivers webinars focused on integrating social media and online reputation management into dealership operations.
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MANAGEMENT MATTERS BY DALE POLLAK
BEAT BACK USED VEHICLE MARGIN COMPRESSION 3 Best Practices
It’s like a leaky faucet. Drip by drip, the retail profit you make on used vehicles goes down the drain. But unlike a leaky faucet, the fix for margin compression in used vehicles isn’t as easy as calling a plumber. That’s because, more and more, ongoing margin compression in used vehicles is the nature of the business. According to the National Automobile Dealers Association, used vehicle gross profits as a percentage of transaction prices has been shrinking, bit by bit, for nearly the past decade. NADA data shows that in 2009 used vehicle gross profits ran 14.3 percent of average vehicle transaction prices, compared to 12.1 percent in 2016. This diminished return may not seem like much, but it’s a significant difference when you consider the average used vehicle transaction price has grown by nearly $4,700 – from $15,210 in 2009 to $19,886 in 2016, a 31 percent increase. The challenge, and opportunity, for dealers rests in how you contend with margin compression. The fix isn’t as simple as selling more used vehicles. In a margin-compressed environment, you have to sell more used vehicles more efficiently to maximize an ever-smaller return on an ever-larger investment. To achieve a higher level of operational efficiency and sales, I recommend the following best practices for dealers. A Consistent Sourcing Pipeline You can’t retail vehicles you don’t have in stock. More and more, dealers are employing full time, technology-enabled sourcing specialists to maintain a steady supply of incoming auction inventory. The specialists free up managers who previously found themselves lacking sufficient attention and time to selectively acquire the right auction vehicles, with specific cost to market and market days supply metrics, to fill inventory needs. It’s not uncommon for these time-addled managers to just buy cars because their inefficient sourcing methods lead to frustration and less-than-optimal decisions. Similarly, the specialists give managers more time to oversee appraisals and maximize every tradein opportunity. Faster Retail-Ready Turnaround It’s still fairly common for used vehicles to spend five, seven or even 10 days in service before they are reconditioned, detailed, photographed and posted online. A Midwest Chevrolet dealer found that by trimming three
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days off his dealership’s eight-day retailready average, he realized an additional $300,000 in front-end gross profits. The dealer is now working to consistently meet a 36-hour turnaround, and anticipates the improvement will generate an additional $200,000 in front-end gross. The example highlights the “time is money” axiom of retailing vehicles in today’s margin-compressed market. Top-performing dealers set aggressive benchmarks of 24 hours or less to complete detail and reconditioning work – a goal that typically requires automotive RO approvals when repair estimates fall within expected ranges, and dedicated recon teams in service. Reduced Inventory Age I recommend dealers strive to retail at least 55 percent of their used vehicle inventory in less than 30 days. Dealers who achieve this objective, which requires a Velocity-oriented pricing strategy, are doing all they can to minimize margin compression and take advantage of retailing vehicles when they are fresh and stand to deliver maximum gross profit. To understand why reducing the days to sale of used vehicles is so important, I encourage dealers to do a quick study of the gross profits they achieve on vehicles retailed in less than 30 days compared to vehicles retailed after 30 days. In most cases, the results show the average front-end gross profit declines by at least 50 percent once vehicles cross the 30-day line. If you segment vehicles retailed after 45 days, it’s not uncommon to see a roughly 50/50 split between vehicles that make a little money and those that lose a lot more. This analysis often leads dealers to agree with my assessment that any vehicle you don’t retail within 45 days represents a failure of management. For some reason, right or wrong, someone turned their back on these units when they should have been working harder to sell them. None of these best practices represents an easy fix. Each requires dealers, managers and team members to think and do things differently, sometimes in a manner that’s contrary to what they’ve been taught. But dealers who get past these hurdles find their reward. It comes in the form of improved used vehicle performance and profitability in an era where neither can be taken for granted. Dale Pollak is founder of vAuto and has published several books on his Velocity Method of Management.
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ASSOCIATION NEWS
USED CAR DEALERS OF COLORADO CHARITY IN ACTION
Making A Positive Impact
Used Car Dealers of Colorado Charity Fund continues to make a positive impact in Colorado communities. This (c)(3) charity was formed in May 2014 to represent the tremendous giving spirit and goodwill of Colorado used car dealers. The charity is affiliated with CIADA but is a separate entity that works exclusively with funds raised by the charity for its operation. The CIADA Charity Fund is controlled by a nine-person board of directors made up of current CIADA directors and auto industry related individuals. This volunteer group oversees all charity functions and approves donation requests. In three short years what the charity has accomplished is phenomenal! All this good work is credited to the tremendous support from the truly generous independent
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dealers, remarkable sponsors and other auto industry companies. More than $182,600 has been given out under the Used Car Dealers of Colorado banner as summarized below: • $42,500 in scholarships to Colorado students. • Six replacement vans are now helping with transportation needs. • Thousands of dollars in toys distributed to neglected abused children all across Colorado. • Donated two wheelchairs. • Helped more than 10 families statewide with various pieces of medical equipment and financial aid. • Over $140,000 returned to Colorado organizations that aid in areas such as healthcare, housing, child abuse, domestic violence victims, autistic children, adoption services, young adult programs, veteran programs and service animal training as well as providing more than 4,000 meals across the state.
What a tribute this is to the generous contributors and the many volunteers thatat enable the CIADA Charity Fund to return 94.8 percent of money raised back to Colorado communities.
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ACCELERATE
BY GWC WARRANTY
NO COMPLIANCE TRAINING? It’s All Risk, No Reward
Few things in the automotive industry can be more fluid than federal regulations and their corresponding compliance requirements. It’s so complicated and confusing that – according to Total Dealer Compliance – just 37 percent of dealers offer comprehensive compliance training to their employees. Furthermore, the same survey found just 23 percent of dealerships employ a dedicated compliance officer. This means nearly two thirds of dealers are putting their entire businesses at risk by not implementing a formal employee compliance training program. How, you might ask? The same research we mentioned earlier found that lack of compliance costs dealerships an average of $792,000 in lost profit. Could your dealership withstand such a blow? Rather than talking about the potential cost of penalties, let’s talk about the profit you’re putting at risk by not enlisting compliance experts in your dealership. There are plenty of dealers out there who do it on their own. They research regulations, build out processes to
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remain compliant and stay on top of changes to laws. But this takes up countless hours of your time – hours you could be spending on your lot, selling cars and attracting new business. If you’ re one of these dealers, the time you’re losing acquiring and moving inventory could easily outweigh any money spent on compliance training. Let’s not forget about customer perception. Total Dealer Compliance also found 77 percent of customers would refer a friend or family member
to a dealership that makes compliance a priority. That is a lot of potential repeat and referral business. So let’s recap. If you’re not utilizing compliance training, you’re not only putting your business at serious financial risk, you’re also taking away from profitable time spent elsewhere in the dealership and losing out on a serious amount of referral business. If you haven’t already, it’s time to make compliance a priority – a top one.
July/August 2017 / CIADA INSIDER
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MARKETING MATTERS BY KENNY ATCHESON
Imagine waking up tomorrow morning with the knowledge there is an army of marketing soldiers battling to send business to your door. I view referrals as marketing soldiers. Wouldn’t it be great to have the ability to generate an endless, steady flow of customers at a reliable, predictable pace? That’s what a referral plan and system can do for your business.
media can be delivered. People record shows so they don’t have to sit through commercials. Newspapers struggle. Yellow Pages are going from print to digital. An overnight algorithm change in Google can hurt your company’s search engine rankings. Your business could go from ranking number one to disappearing off the first page in the blink of an eye. It happens all the time. In 2016, Google AdWords Pay-Per-Click went from ranking 10 ads to four ads on the right side of the first page. If your business previously succeeded by ranking number five of 10 listed, your ad likely disappeared overnight.
The number one principle with referrals is to treat them like other media. Put forth effort, devote time, and invest money with the expectation of earning a positive return on your investment. You could probably find yourself earning a lot more referrals doing so. Stability Let’s look at some things that aren’t so stable. A company reliant upon cold calls likely struggled when the Do Not Call list and regulations were enacted. The same thing happened with broadcast fax, then later texting. New laws and regulations were implemented and had to be obeyed. Then there were changes in the marketplace such as DVRs and the way
Then the world shifted towards mobile. If your advertisements were geared for people who used desktop computers or laptops, and your website wasn’t mobile-friendly, you faced another challenge. These are just a few laws, rules, and changes. The pricing of media is also unstable. You could be totally reliant upon a specific type of media and have a sudden dramatic change occur that hurts your business. These things are not stable. However, a constant flow of referrals is much more stable. If your company has a great referral system in place that is implemented regularly, referrals and repeat purchases
THE ART OF THE REFERRAL Marketing Soldiers
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CIADA INSIDER / July/August 2017
will come at a steady and somewhat predictable pace. Hot tip: Think of repeat purchases as previous customers who refer themselves. Implement the same behaviors and systems to generate referral customers you use to generate repeat customers. Under-the-Radar “I don’t know why that dealership is so successful while we struggle. We have similar inventory and I don’t think they advertise.” This is what the head of your competition will likely say when you have a powerful force of referral soldiers doing battle to send business your way. I am a fan of under-the-radar strategies. A constant flow of referrals is hard for a competitor to copy. One Way to Earn More Referrals Your customers don’t spend nearly as much time thinking about your dealership as you would hope, no matter how great their experience was. If one was asked during a casual conversation if they knew of a great dealership, your customer would probably recommend you. If your customer was at a barbeque and overheard someone else’s conversation, your customer may not be willing to walk over, interrupt and say, “Excuse me but I overheard you’re looking for a great dealership. I know just the one.” Each situation requires the escalation of your customer’s motivation to be willing to refer you. To occupy space in your customers’ brains at all times, including situations they are motivated to refer your dealership, you must communicate with them regularly. Occasional big customer events are good. Continuous communication via print and email newsletters that offer fun, value, and prizes is a less expensive way to occupy brain space. Referrals provide stability and consistency. Many behaviors and systems that are used to increase referrals also increase repeat purchases. Keep that in mind when considering the effort or investment associated with communicating consistently with customers. Kenny Atcheson is the founder of Dealer Profit Pros and author of Marketing Battleground: How to Deploy Under-the-Radar Strategies to Explode Your Profits. To learn more, visit www.DealerProfitPros.com.
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THE TRUSTWORTHY BRIDGE BETWEEN BUYERS & SELLERS
PERSONALIZED BUSINESS INTELLIGENCE
PRIVATE TRADING MADE EASY
Real-time vehicle remarketing trend insights for successful selling strategies
Reduce transaction costs and time to wholesale vehicles by accessing AiM’s private marketplace for direct sales
MULTI-PLATFORM LISTING SOLUTION
Leverage leading online wholesale marketplaces to improve success rates, drive out inefficiencies and sell faster
Find out more
562.432.5050 WWW.AIMINSPECTIONS.COM
www.ciada.org
July/August 2017 / CIADA INSIDER
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