Dealer’s Edge
ILLINOIS INDEPENDENT AUTOMOBILE
D E A L E R S A S S O C I AT I O N
S T A T E
M AY / J U N E
Inside:
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• Overcome Used Car Stereotypes • Acquire More Customers • Sales and the Presidential Race • Compliance Starts with Data Accuracy
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A F F I L I A T E
Inside M A Y / J U N E
P RODUC T S & SER V ICES
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OVERCOME USED CAR STEREOTYPES
Move Forward with Basic Solutions | PAGE 06
NEWEST RULES OF ONLINE MARKETING
Helping You Accomplish Sales Goals | PAGE 10
ACQUIRE MORE CUSTOMERS
DealerSocket Data Reveals Untapped Strategies | PAGE 12
PREDICTIVE ANALYTICS
How it Can Make or Break a Dealership CRM System | PAGE 16
WHAT SALESPEOPLE CAN LEARN FROM THE PRESIDENTIAL RACE Qualities to Emulate | PAGE 18
REGULATORY COMPLIANCE STARTS WITH DATA ACCURACY Don’t Omit This Critical Detail | PAGE 22
What’s New
BHPH DEALER MAGAZINE
NIADA now has a magazine devoted to Buy Here-Pay Here! The BHPH DEALER Magazine is published bi-monthly on the even months of the year and is included as a supplement to NIADA’s Used Car Dealer magazine. Visit www.niada.com/bhph_dealer_magazine.php to check out the inaugural issue.
Advertiser’s Index
AA of New England.....................................................IFC ADESA .....................................................................................7 AutoZone ...........................................................................16 Black Book............................................................................3 Dyer Auto Auction .........................................................8 Lohman Companies ............................................... IBC Manheim................................................................... 10, 11 Manheim Minneapolis................................................5 Manheim Pennsylvania..........................................13 NextGear Capital..........................................................12 PassTime............................................................................17 Protective .............................................................................9 TrueCar ...............................................................................15 VAuto................................................................ Back Cover Veros Credit .....................................................................18 Wolters Kluwer ..............................................................19
Office
For information on how to become a member of IIADA, please contact Bruce Eklund at 800-987-6627 or lilcheeper5@aol.com.
NIADA Headquarters
National Independent Automobile Dealers Association www.niada.com www.niada.tv 2521 Brown Blvd. Arlington, TX 76006-5203 phone (817) 640-3838 For advertising information contact: Troy Graff (800) 682-3837 or troy@niada.com. The Dealer’s Edge is published bi-monthly by the National Independent Automobile Dealers Association Services Corporation, 2521 Brown Blvd., Arlington, TX 760065203; phone (817) 640-3838. 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 individual authors and do not necessarily represent the views of The Dealer’s Edge, the Illinois Independent Automobile Dealers Association, or the National Independent Automobile Dealers Association. Likewise, the appearance of advertisers, or their identification as members of IIADA or NIADA, does not constitute an endorsement of the products or services featured. Copyright ©2016 by NIADA Services, Inc. All rights reserved. Visit the NIADA Website at www.niada.com.
STATE MAGAZINE MGR./SALES Troy Graff • troy@niada.com EDITORS Jacinda Timmerman • jacinda@niada.com Andy Friedlander • andy@niada.com MAGAZINE LAYOUT & GRAPHIC ARTIST Chantae Arrington • chantae@niada.com ART DIRECTOR Christy Haynes • christy@niada.com PRINTING Nieman Printing
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Black Book Launches Bullseye Prospecting HELPS STREAMLINE DEALER MARKETING CAMPAIGNS
Black Book announces its latest innovation called Bullseye Prospecting, a comprehensive solution designed to help dealers and their marketing agency partners automate customer campaigns. During initial tests Bullseye Prospecting was found to deliver a 30 percent reduction in cost per car sold. Powered by data from Black Book, Bullseye Prospecting is designed to reduce and consolidate the many different touch points involved in the development and execution of a customer campaign. Dealers and their marketing partners often work with several different vendors, all who add to the overall cost of production after markups are taken into effect. Bullseye Prospecting seamlessly leverages economies of scale for data
Board of Directors Chairman Gordon Tormohlen Tormohlen’s Good People Automotive 1800 S Ihm Blvd Freeport, IL 61032 815-232-5543 goodpeople@aeronic.net
Executive Director Bruce Eklund IL-IADA Headquarters 129 S Phelps Ave Suite 706 Rockford, IL 61108 (800) 987-6627
President Joe Mok G Motor Cars 2411 E. Oakton St Arlington Heights, IL 60005
Czar Dana Eklund IL-IADA Headquarters P.O. Box 7266 Rockford, IL 61125 (800) 987-6627 iiada302@gmail.com
Vice President Eric Nelson Nelson Automotive Inc 1801 S Busse Mt Prospect, IL 60056 eric@heycars.com Treasurer Lori Chignoli-Cora Chignoli Auto Sales 1850 Essington Rd Joliet, IL 60485 lori@chignoli.com Secretary Alex Tovstanovsky 8959 Hanslik Ct Naperville, IL 60564 (630) 631-2535
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coming from DMS, consumer, incentives and vehicle equity and valuation sources. The program also leverages partnerships with photo and printer vendors for direct marketing collateral. “With Bullseye Prospecting, dealers and their marketing agencies can leverage true economies of scale by pulling from either template campaigns or custom builds if they choose,” said Jared Kalfus, senior vice president of sales for Black Book. “Bullseye Prospecting is designed to level the playing field for dealers of all sizes and geographies, with the power to drastically reduce costs and improve the bottom line.” Dealers and their marketing partners need to re-evaluate the way in which customer campaigns are developed and managed to lower their total costs. Dealer profits are shrinking, mainly due to tightening margins on the sale of new and used vehicles. According to Henderson, Hutcherson and McCullough’s recent auto dealer economic outlook, the gross profit margin for dealers fell from 13.5 percent to 13.3 percent. The report also stated the average new vehicle gross
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Board Members David Suwinski Carzell Corp 222 W Merchandise Mart STE 1212 Chicago, IL 60654 (888) 437-4772 dsuwinski@carzell.com Amy Goodnight Lohman Companies 3901 15th St. Moline, IL 61266 (309) 764-8331 x 220 amy@lohman-companies.com
POWERED BY DATA FROM BLACK BOOK, BULLSEYE PROSPECTING IS DESIGNED TO REDUCE AND CONSOLIDATE THE MANY DIFFERENT TOUCH POINTS INVOLVED IN THE DEVELOPMENT AND EXECUTION OF A CUSTOMER CAMPAIGN. profit fell from $1,204 to $1,193. Gross margins also declined from 3.81 percent to 3.68 percent. Conversely, campaign costs remain high for dealers. According to research firm Statista, the average size dealership (selling between 150-399 cars annually) spends approximately $616 on advertising per each new car sold. This number increases as dealer size shrinks. The firm points out that dealerships selling between 1-149 cars annually are faced with a per-car advertising spend of $862.
Paul Gluchowski Turner Acceptance 4454 N. Western Ave Chicago, IL 60630 (773) 290-5002 paul@turneracceptance.com Janette Peak PJP Auto Enterprise 3100 S. Douglas Springfield, IL 62704 (217) 792-3552 pjpautosale@comcast.net Russell Hughes III Hughes Auto Group 1080 East Main Street Galesburg, IL 61401 (309) 342-2277 info@hughesautosales.com Paul Schmidt Nationwide Acceptance 3435 N Cicero Chicago, IL 60657 pschmidt@nac-loans.com
www.il-iada.org 800-987-6627
M A N AG E MEN T G A MEP L A N
Overcome Used Car Stereotypes
categories: the silent ones who never come back, the angry ones who tell everyone and never come back, and the ones who will complain to you and let you correct the problem. Most fall into the first two categories, which means revenues and reputation take a hit more often than not. Spotting Shortcomings Old car shark practices are increasingly rerouting would-be buyers toward more progressive competitors. Telltale old car shark signs include: • Know-it-all, condescending attitude. This is the “father knows best” approach where a sales rep tells a prospect what they want and need and talk down to them at every turn, instead of asking what they want. Even when a prospect has done extensive research, old car sharks often tell them they don’t know what they’re talking about. • Adversarial approach. These guys view themselves as advocates of the dealership, not the customer. Accordingly, they will argue anything they feel isn’t in the dealer’s best interest. Their negotiation tactics are often win/lose and not win/win. • Limited product knowledge. Given many buyers already have researched in-depth the make/model(s) they’re considering, sales reps need to become product specialists, at
MOVE FORWARD WITH BASIC SOLUTIONS BY SCOTT BERGERON
I still remember the first time a person asked me what I did for a living. When I said I was a car salesman, you would have thought a siren had gone off. People gathered and started telling their worst experiences, as if I was responsible. I once heard that if a customer is happy with you, that person will tell three people, but if unhappy, 11 will hear about it. Apparently, I was one of those 11, as I had to hear all the horror stories from everyone nearby. Unfortunately, the horror stories so prevalent in the 80s continue today, and with social media and sites like Yelp, customers can tell thousands, not just a handful. Our reputation as an industry is still tarnished, and while many of us are working to change that, it’ll take more than just doing our part. As owners and managers, we have to stop tolerating the one bad apple that can spoil the bunch, at least the apples we manage and hire. Used Car Dealer Stereotypes Didn’t Happen in a Vacuum Pushy, know-it-all, condescending used car salespeople – the stuff of stereotypes – often tie back to routines learned 20-50 years ago. Their tactics still work at many dealerships, especially longstanding operations with longtime sales reps that sell to older buyers. Many dealerships have survived on repeat business from customers accustomed to hard-sell, in-your-face sales techniques. While a few gruff words may be exchanged, there’s familiarity and trust that supersede the unpleasantness. With today’s younger and more educated buyer, who will spend countless hours researching every possible choice through social media, all that is changing. Today, most car shoppers, not just the young ones, are researching, pricing and evaluating the quality and reputation of used cars and used car establishments. As a result, fewer prospective used car buyers will tolerate the old ways. They fall into three
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least to a point. Often, sharks will attempt to skate on this – preferring instead to spend time strong-arming, manipulating and playing ridiculous shell games with pricing. Aggravating the personnel problem can be dealership deficiencies. A dealership where cars are parked haphazardly, aren’t displayed in any kind of order, lack cleanliness, and generally look sloppy are all neon signs to would-be customers that the dealership doesn’t have much respect for itself, or likely its customers. Customers now expect a pleasant buying experience where they can feel acknowledged, in comfortable and clean surroundings. Solutions Start with Basics Rules of successful sales have changed. Used car dealer steps to counteract old-style people and presentations include: • Making the sales force advocate for customers, not the dealership. To do this, one key requirement is to follow the “two ears, one mouth” protocol – a clear directive to listen more than talk. When I first sold, my managers would listen to me close deals. I got roundly criticized for advocating my dealership first, the customer second. Customers need to feel you’re working in their best interest. One of the best examples of customer advocacy is Costco. They continue growing rapidly
in part because members know the retailer has their back, and will collaborate with them to solve problems instead of challenging them. • Being truthful and transparent. When my son was used car shopping recently, the salesperson went out of his way to disclose a repainted spot I wouldn’t have noticed. Going that extra mile to tell the truth generated considerable goodwill, helped lead to a sale, and has resulted in referrals. In the same vein, sometimes salespeople have to share truths buyers don’t want to hear, but it’s important to explain candidly what the real deal is. For example, a bluebook value of $10,000 on a car being sold for $12,000 may be due to regional preferences that make the car more popular and valuable. While the customer may not want to pay the premium, at least he or she should understand why. Then, there’s always the repair history. Let’s face it, if you don’t disclose it, chances are the customer already has a Carfax, and hiding an issue can lead to a customer walking away and telling you they will “be back.” • Knowing their cars. With most customers shopping online and setting appointments, wouldn’t it make sense to do some research about the make and model you’re about to present before they arrive? Googling “walk around Audi A4,” as an example, will give you instant credibility when you know how to pop the hood and the fuel cap. • Taking and showing pride in their operation. Talk to virtually any auto dealer consultant, and the first thing they’ll talk about is first impressions. Credibility soars when a prospect walks into a showroom/facility that has its act together, from its welcoming and clean facilities to a workforce that displays confidence and competence. New stereotypes painting the used car industry in a positive light are just around the corner for those willing to move forward in today’s car buying environment. Former dealer executive Scott Bergeron is the founder and principal of Daily Gameplan (www. dailygameplan.com), a national sales team productivity solutions provider. Bergeron is a major advocate of common-sense approaches to dealership front end challenges. Bergeron can be reached at 303.918.3169 or scott@ dailygameplan.com.
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ONL INE M A RK E T ING
Dealers Upset About Google Adwords PPC Change CHANGE PUSHING ORGANIC RANKINGS DOWN BY KENNY ATCHESON
Recently Google decreased the amount of Google Pay-Per-Click ads showing after a given search such as “used car dealer.” The ads down the right-hand side of the search results have vanished. There used to be three at the top and seven down the right side. Now there are four at the top and that’s it! What does this mean for you? If you are not utilizing Google Adwords PPC ads and you are reliant on search engine rankings, be prepared for your website visitor traffic to drop. Now that there are four ads instead of three at the top, that pushes organic rankings further down. If you are ranking outside of the top three you may drop below the fold (death to traffic).
This change lessens the impact of search engine optimization because some websites are pushed below the fold. Surprise! Google wants more people to click on their ads so they can make more money. If your ads were appearing outside of the top four previously, then your ads may not appear at all. You could go from thousands of visitors to zero overnight! Let’s not be too hard on Google. Facebook made sweeping changes awhile back forcing you to pay money if you want anyone to see your posts. Back to Google… If your ads generally appeared in the top three you still may have to make some adjustments. Your competition will probably think the only thing that gets them into the top four is by placing higher bids. This drives the price up on you but you can be smart about it, and it may not cost you any more than it does now.
There are two ways to crack the top four ads or maintain your top status: 1. Pay more money per click (bidding). 2. Improve your CTR (click through rate). The second is trickier but here is the short answer: •Better targeting. •Better copywriting on your ads. •Ads specific to the specific target.
Hot Tip: Although I’ve been getting paid to write copy for a long time, I still splittest the ads to make sure our clients get the most out of every dollar spent on Google Adwords PPC. I will continue to do so. Whoever is managing your ads should be splittesting too. Kenny Atcheson is the founder of Dealer Profit Pros and author of Marketing Battleground: How to Deploy Under-theRadar Strategies to Explode Your Profits. His website is www.DealerProfitPros.com.
S A F E T Y WAT CH
Nissan Recalls Rogues for Fuel Pumps
Nissan North America Inc. is recalling 46,671 model year 2014 Nissan Rogue vehicles manufactured July 25, 2013, to Dec. 21, 2013, and Feb. 1, 2014, to June 7, 2014. Improper nickel-plating of components within the fuel pump may result in the fuel pump failing. If the fuel pump fails, the vehicle may stall without warning, increasing the risk of a crash. Nissan will notify owners, and dealers will replace the fuel pump, free of charge. The manufacturer has not yet provided a notification schedule.
Ford Recalls Transits for Seatbelts
Ford Motor Co. is recalling 48,990 model year 201516 Transit vehicles manufactured Feb. 13, 2014, to Jan. 13, 2016, and equipped with rear passenger seats. The rear seatbelt buckles may be damaged if a heavy object is placed on, or impacts, the top of the buckle. The damage may prevent the buckle from latching or from remaining latched. Ford will notify owners, and dealers will modify or replace the seatbelt buckles, depending on their location in the vehicle, free of charge. Remedy parts are currently unavailable. Owners were notified of the recall in March and will receive a second notice when remedy parts become available. Ford’s number for this recall is 16S06.
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SO CI A L MEDI A
Newest Rules of Online Marketing
HELPING YOU ACCOMPLISH SALES GOALS BY KATHI KRUSE
It’s hard to believe, but we are almost through the first half of the year. How far along are you in achieving your dealership’s goals for 2016? The digital marketing landscape continues to evolve. SEO, social media, content marketing and online reviews are no longer standalone strategies. All
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these intertwine and support each other, and it’s extremely important to clarify exactly how you’ll leverage these online marketing pillars to grow your business. Where does your store fit in the digital marketing landscape? I continue to be concerned about dealerships’ reluctance or slow adaptation to Google’s requirements and customers’ needs, especially when it comes to digital presence. There’s a lot of conversation (both online and off) postulating how some dealerships or business models won’t survive in the next 5-10 years. I’ve been helping dealers navigate social media, content marketing, SEO and online reviews for years and sometimes it
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seems like the needle has barely moved. Everything else is moving at such a fast pace and, judging by what I hear from a lot of dealers, sitting on the sidelines seems to be the common go-to strategy. A manager in one of my conference sessions said, “Car sales are at an alltime high. What do I need with online marketing?” Warren Buffett said, “In the business world, the rear view mirror is always cleaner than the windshield.” Just a few short years ago, every dealership was struggling to figure out what to do in the Great Recession. Using the above mindset – “Car sales are at all-time highs” – as an example, all-time highs mean the end of growth is near. Also, subprime delinquencies are at 20-year highs (and there’s a bubble happening similar to the mortgage meltdown). Add these indicators to all of the outside pressures on the dealership business model (Uber/Lyft, ride-sharing, self-driving cars, etc.) and you’ll see it would be prudent to forecast for the coming downturn – no matter what it looks like. From my years as a dealership manager, 60 percent of which was as a CFO, I can’t ignore trends. Online is how we all communicate today and becoming savvy in this arena will ensure your store has every chance to reach today’s buyers. THE 7 NEWEST RULES OF ONLINE MARKETING Getting and keeping customers is proving to be more and more difficult. Many dealership marketers seem to be ignoring a basic fact: people like to buy from businesses they know, like and trust. That isn’t just some cliché. Selling to people who actually want to hear from you is more effective than interrupting strangers who don’t. These newest rules of online marketing will help you understand what it takes to win customers and make informed decisions about how to drive more leads and sales to your store. Assume nothing. • Consumers. They’re getting a 5-star experience with online sellers like Amazon. How are you delivering the same experience, or better? • Competitors. What are your competitors doing better than you? Nothing short of fearless assessment and measured improvement will do. • Google. What exactly are you serving up to search engines? Search strategies today compared to even just a year ago are drastically different. Google is wickedly adept at recognizing quality content to serve its users. Do you know the ranking factors Google employs? Invest. Resolve to build stronger relationships with current and new customers. The
amount of time and effort spent is directly proportionate to the results achieved. We live in a world where no one wants to see ads from brands they don’t know. Why? Zero trust. Ad blocking is up 48 percent in the U.S. and growing. However, your ads are welcome in cases where you’ve invested in customer relationships and built a strong following. Profit isn’t a purpose, it’s a result. Empathize. A brand that can put themselves in their customers’ shoes, and deliver the information needed to make the right choice, secures a customer for life. Teach. With so much content on the web and very little trust, it’s overwhelming for consumers to research even the most common products. That’s why we’ve all turned to our social networks and online ratings sites for answers. The days are gone when you could walk into a store and get a trustworthy recommendation. A business today must leverage its assets to be a teacher not a seller. Social selling (using social media to build a network by providing value to give and receive referrals) is a fantastic solution to grow your business. Incorporate social selling within your sales process: • Differentiate yourself from the “sales sharks.” • Don’t be all about making the deal. • Pass on valuable information. • Use social media to teach, not sell. • Be a publisher (all good sales people are content marketers too!). • Develop your network through giving and getting referrals. • Leverage paid social to drive leads. • Don’t be afraid to ask for the sale. Curate. Everyone loves valuable information. People who consistently deliver solid, original, high quality content are considered thought leaders. Spend 30 minutes per day consuming content that’s helpful to your business growth and helpful to your customers. Schedule posts (via Hootsuite, Post Planner, Buffer or others) on social media sites to broaden your thought leadership. Advocate. Create a community online that mirrors your offline community. I’m always delighted to find a brand on social media that listens to their customers. Brand loyalty is born when someone at the store is there monitoring, responding and advocating for customers should they have an issue or want to give feedback. Listening > Advocacy > Loyalty. Care. A step further from advocacy is to
authentically care. Every time I fly JetBlue, they see my check-in at the airport and tweet me a nice message. They make me feel special and I feel like they care. When they announced they would abandon their “first bag free” policy, it wasn’t the best news, but their previous efforts to make me feel special softened the blow. Evidence that you care can only come from authentic action. Being able to document that well in the form of blog posts and social media content is a musthave strategy in 2016. Your goals for the second half of 2016: It all boils down to this: Attracting,
CREATE A COMMUNITY ONLINE THAT MIRRORS YOUR OFFLINE COMMUNITY. engaging and selling to today’s hyperconnected buyers requires focused attention and a solid plan to drive leads and sales. These seven new rules will guide you to accomplishing your sales goals and finishing the year strong. 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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Acquire More Customers
Implementing phone sales training and call management technology can help narrow the competitive gap. 2. The problem: Traditional marketing no longer works. Radio spots, TV ads, DEALERSOCKET DATA REVEALS billboards and tent sales are UNTAPPED STRATEGIES mainstays of most dealerships’ BY DEALERSOCKET marketing plans. But the DealerSocket has unveiled a ROI just isn’t there anymore. five-step customer acquisition Conventional media now bring plan for independent car in an average total profit of dealers, backed by the $1,702 per vehicle, while digital company’s most recent marketing rakes in $2,514 per internal data and a survey of sale. In today’s increasingly dealerships nationwide. The digital world, dealers must plan highlights low-hanging- relinquish preconceived ideas fruit strategies dealers can and embrace the media that implement right away to work. attract and convert more leads. The solution: Digital media “It’s tempting for result in more sales and cost independent dealers working less. in the trenches every day In many cases, a lower to get ‘tunnel vision’ about price translates to lower their marketing efforts. If the performance. But it’s just numbers aren’t where they the opposite with digital need to be, the automatic marketing, which includes response is to just try harder,” websites, social networks, said Matt Redden, chief email, smartphones, tablets marketing & sales officer at and kiosks. According to DealerSocket. “Instincts and DealerSocket data, it costs $150 subjective observations are of digital marketing to sell one helpful, but dealers must also car. Compare that to $1,581 of prioritize reliable, black-and- traditional media. If you stick white data. It can reframe with conventional methods, challenges and uncover you’ll pay 10 times more than solutions they may have never necessary. noticed otherwise.” 3. The problem: ThirdDealerSocket recommends party lead generation can be implementing the following expensive. strategies for the quickest Some dealers believe they results in lead acquisition and must directly pay for more conversion: leads. They don’t think they 1. The problem: Phone can produce new prospects leads are underperforming. organically through resources With lower close rates, already in place. While longer sales cycles and lower third-party lead generators profit margins, phone-sourced can certainly work, the leads provide tremendous question boils down to cost opportunities for growth. effectiveness. Independent dealers take 37 The solution: Optimize percent longer to close phone your website for maximum leads. In addition, phone leads visibility and efficiency. result in a mere 14 percent of About 35 percent of independents’ sales. Perhaps independent dealers’ leads most challenging of all, phone arrive through their website, leads bring in about $307 less making it the No. 1 lead profit per sale than other lead generator. It’s also one of the sources. easiest to optimize for even The solution: Focus on more impressive results. phone training and call Invest in organic search management efficiencies. engine optimization and Independent dealers make marketing so customers can an average of 2.86 outbound find you. Also keep in mind calls to each phone prospect, inventory pages are the most while focusing more time on visited section of any dealer floor leads (4.13 calls) and website. They should be well Internet leads (3.82 calls). As organized and fully searchable, a result, phone leads have while offering multiple calls to only a 5 percent close rate. action.
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4. The problem: Digital efforts do not account for user demographics. Many businesses build websites for themselves rather than their end user. Do you know who is visiting your site, what they prefer in a user experience, and how your content displays on each person’s device? The solution: Pay special attention to mobile and tablet users. Independent dealer websites receive about half of their traffic from mobile devices, and another 10 percent from tablet users. So dealers must prioritize responsive web design that optimizes the user experience, regardless of how the user accesses the Internet. Also, get to know your online shopper base, which typically consists of 65 percent males and 35 percent females. While age ranges are distributed fairly evenly, the majority of online shoppers are between the ages of 25 and 44. 5. The problem: Many leads aren’t yet ready to buy. Try as you might to bring in new customers, you may find the majority of your leads are earlier in the purchase process – making it seem even your strongest closing efforts fall on deaf ears. The solution: Leverage a data mining solution to boost trade-ins and intercept customers when they’re most likely to purchase. Data mining tools have long been a staple of the franchise auto industry. The results are clear – 75 percent of deals generated from a data mining solution result in a trade-in. On the contrary, only one out of every 10 independent dealers take advantage of data mining, and the small number of trade-ins follow suit (about 19 percent of deals). Today’s market includes affordable solutions geared specifically toward independents. By leveraging data mining to identify and target customers for vehicle buy-back programs, dealers accomplish two desirable goals: 1) Aid inventory acquisition efforts by purchasing quality vehicles from past customers and 2) Increase sales as customers replace their old vehicle.
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Did You Miss It?
the vendors and sponsors that participated at www.il-iada.org. We at IIADA are here to serve you and help you be more successful. Happy selling!
DIRECTOR’S REPORT BY BRUCE EKLUND
We recently had a one-day seminar at the Quad Cities Auction. The seminar covered current legislation that affects Illinois auto dealers. The bills included House Bill 4377, Senate Bill 2860 and Senate Bill 2426. In the report below I will give a brief synopsis of each bill. You need to be informed, and call your state representative as well as your state senator to give your opinion on each bill. At the conference, we also talked about the proper ways to floor plan and how to save money on insurance for your business. The yearly conference was held again at Lake Lawn Resort. Vendors of all types were in attendance, and gave very important information on how to save money for you, the dealer. Speakers and vendors gave detailed information on a number of topics. You can request a copy of the agenda and a list of
BILL DETAILS HB 4377: Consumer Fraud Used Vehicles House Sponsors: Rep. Rita Mayfield Synopsis as introduced: Bill amends the Consumer Fraud and Deceptive Business Practices Act. It removes provisions requiring all new and used motor vehicle dealers to pay a percentage of certain repairs for power train components. It adds provisions regarding used motor vehicle dealers and auction companies. It also provides that used motor vehicle dealers and certain auction companies may not exclude, modify or disclaim an implied warranty of merchantability before the expiration of the 15th calendar day after delivery of the used motor vehicle or before the used motor vehicle is driven 500 miles after delivery, whichever occurs first. The bill exempts the sale
of antique and collector vehicles from the new provisions. The bill provides that an implied warranty of merchantability does not extend to damage that occurs after the sale of the used motor vehicle that results from certain conduct, including off-road use, racing, neglect and failure to perform regular maintenance. It sets forth remedies and defenses. SB 2860: VEH CD - Dealer Car Sales Senate Sponsors: Senators Jim Oberweis, Heather A. Steans, and Daniel Biss Synopsis as introduced: The bill amends the Illinois Vehicle Code. It allows for the sale of motor vehicles by licensed dealers on any six days of the week to be chosen by the licensed dealers. Makes conforming changes. It is effective immediately. SB 2426: Cons Fraud - Starter Interrupt Senate Sponsors: Sen. Steve Stadelman Synopsis as introduced: This bill amends the Consumer Fraud and Deceptive Business Practices Act. It provides for the regulation of the use of starter interrupt technology by vehicle dealers
and creditors in the sale of motor vehicles. The bill provides the consent of the consumer must be obtained before starter interrupt technology may be used in connection with the sale and financing of motor vehicles. It sets forth notice requirements, limits circumstances under which starter interrupt technology may be used and defines terms.
INDUS T R Y NE W S
Cox Names Tech Execs
MARK O’NEIL NOW COO Cox Automotive Inc. has appointed Mark O’Neil to the newly created position of chief operating officer. O’Neil will be responsible for the company’s day-to-day operations of Cox Automotive’s software, media, inventory and financial services groups, reporting to Sandy Schwartz, president of Cox Automotive. O’Neil was previously president of Dealertrack, which was acquired by Cox Automotive last fall, and subsequently president of the Cox Automotive Software Group. He began his career in the automotive industry in the late 1980s. O’Neil began serving Dealertrack in 2001 as a member of the board of directors, and in 2005 became chief executive officer. He holds a bachelor of science in industrial engineering from Worcester Polytechnic Institute and an MBA from Harvard Business School. Keith Jezek will succeed O’Neil as president of the Cox Automotive Software Group. Jezek, currently serving as president of software solutions for Cox Automotive, has been responsible for the strategic direction and overall success of the company’s software division, which includes vAuto, HomeNet Automotive, Haystak, VinSolutions and XTime. Rick Gibbs was named Cox Automotive chief product officer, a new position, with the responsibility for creating product strategy and the technology development road map that will enable Cox Automotive to go to market as a unified product company. Both Jezek and Gibbs will report to O’Neil.
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Predictive Analytics HOW IT CAN MAKE OR BREAK A DEALERSHIP CRM SYSTEM BY LANG SMITH
For an automotive sales organization, it isn’t the size of your data that matters but what you do with it. No longer a discretionary luxury, predictive analytics are now the name of the game for dealerships that seek to utilize customer metrics in a meaningful way to establish a tremendous competitive advantage, gain notable market share and significantly boost bottom lines. Just what exactly is predictive analysis? Simply put, it’s the ability to more precisely predict a customer’s future spending based on their past behaviors. Of course, there’s no way to actually predict the future but predictive analysis can give companies invaluable insight that can make or break a CRM system. If your dealership isn’t using predictive analytics, your current CRM system is likely falling short
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in several areas. Forecasting Likely Customer Behaviors There’s an old saying in sales: “buyers are liars.” Unfortunately, salespeople are forced to enter notes based on what the customer tells them. Besides these basic notes, which are often unreliable, it’s almost impossible for a CRM system to determine a consumer’s actual behavior. However, predictive analytics software comes with a certain level of assumptions. In this case, the assumption is the future will continue to be like the past. Often, however, behaviors change. That’s why it’s critical to have a system that can not only change with your customers but also learn and adapt to their new actions to make predictive calculations based on the past, present and future behaviors. Enhancing Customer Relationships It’s very difficult to build a true customer relationship if you have no way of accessing and analyzing their prior behavior with your company. Unfortunately, a CRM system cannot automatically track customer actions. It relies
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heavily on manual human interaction and cultivation relying heavily on the accuracy of a salesperson’s notes, which are often less than desirable. The most common use of predictive analytics is to increase and improve customer relationships. The better you know your customer, the more sales you can ultimately make. Using sophisticated algorithms to reveal how your customer behaves also allows you to better communicate with your customer. For instance, isn’t it nice to hear your name when you walk in to your local coffee shop? Isn’t it nice they already know what you’re drinking without you saying anything? On a larger scale, this is how predictive analytics enhance a company’s sales efforts. Many direct marketers have it figured it out – mailing you offers you are likely to actually want as opposed to the ones you consider junk. This is all done with predictive analytics. Another great thing about predictive analytics data is that it doesn’t have to be “big” at all. In fact, sometimes the data can be just a
small concentrated section of just a few hundred actions. Maximizing Marketing Budget ROI If you’re like most companies and have an actual marketing budget, however big or small, it’s best to first make sure the audience you’re targeting actually wants what you’re selling. On its best day, a CRM system can only give you an educated guess. If you want to maximize your marketing dollars, solely using a CRM platform to determine the best suited marketing audience is not the best direction. With predictive analytics, you can maximize your return on investment no matter the budget. For example, if you seek to spend $10,000 on a campaign for delivery to 10,000 customers or prospects, predictive analytics will curate that audience to deliver your message to 10,000 consumers who specifically want what you’re offering at the time. Conversely, CRM solutions alone have very limited filters that prevent a business owner from drill-down targeting the correct audience and, as a result, are undermining their ROI with
opportunity loss. Allowing Data-Driven Decisions The core success benchmark of any company is its numbers. A CRM system cannot show you exact sales numbers broken down by each individual customer over time with any ease. A significant amount of training is usually involved in trying to properly access and formulate these tasks. This often requires a lot of time, which means less time spent making actual sales. Fortunately, good predictive analytics software will allow you to specifically identify where all your money is being made and where the areas of your business are lacking. It should also be able to provide you with a specific customer spending list based on what you’re asking for. Adept systems can actually categorize all your customer’s spending and break it down for you in an easy to read format that allows you to properly make future predictions. Formulating Offer Intelligence Unlike a predictive analytics platform, CRM systems cannot recommend specific offers
unique to customer spending habits. This is a huge downside. It is very difficult to maintain and engage repeat customers without knowing what they want. CRM solutions are mainly a lead management system but, let’s be honest, who wants leads when you can have buyers? Predictive analytics not only analyzes customer actions and habits but also “learns” as it goes. For instance, when an online offer is sent out to customers, or even different offers sent to varying customer segments, a predictive analytics platform can tell you who opened a particular offer, who clicked through on that offer, who redeemed that offer and, when they did, how much that customer spent. The data can also be finely filtered down further to key metrics like which date and day of the week a customer redeemed a particular offer. With the rich data predictive analytics provides, customers can be sent highly meaningful offers tailored specifically to their needs and, as a result, companies can more readily build stronger customer relationships
PREDICTIVE ANALYTICS NOT ONLY ANALYZES CUSTOMER ACTIONS AND HABITS BUT ALSO “LEARNS” AS IT GOES. that bolster the bottom line. Lack of quality data is usually the greatest barrier a salesdriven organization can face when deciding to implement predictive analytics. Getting the most out of a predictive analytics platform requires there is actually available data on customer spending habits, the attributes of the products or services they’re buying (other than the “people who buy this also buy this” type of model), date ranges of their spending, and how much they spend on average. Some demographic information wouldn’t hurt either. If it’s really good, the
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predictive analytics platform will automatically track all your customer actions from start to finish. And, although it can be very difficult to find in current predictive analytics software, a really good system will also automatically capture this data for you to create unique profiles of your individual customers. With this weapon in your proverbial sales arsenal, prepare to grow your sales revenue and overall company profitability in kind. Lang Smith is the founder of Cloud Signalytics, a first-of-its-kind predictive intelligence software platform helping major franchise auto dealerships create highly precise, individualized customer profiles to maximize sales. He may be reached online at www.cloudsignalytics.com.
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What Salespeople Can Learn from the Presidential Race QUALITIES TO EMULATE BY JOHN CHAPIN
While the presidential race is showing us many qualities of politicians we don’t want to emulate, such as bad-mouthing the competition, vacillating on issues and bending truths, there are several other qualities we can emulate to make ourselves super-successful as salespeople. Put yourself out there. The successful politicians who get their names out and are heard through the noise are great at putting themselves out there and letting everyone know they are there. They seem to have mastered the primary fear that stops most salespeople: the fear of rejection. The successful politicians don’t take things personally – they have thick skin. Insults and other slings and arrows seem to bounce off them or roll off their back. They aren’t afraid to speak their minds and they have confidence, conviction, and a healthy impression of themselves. They know that regardless what others say and think, if they are going to be successful they
have to get out into the world and be seen and heard by as many people as possible. If you are going to be successful in sales you must demonstrate these same qualities. You must force yourself out into the marketplace each and every day, and you must be heard. You must let go of the fear of rejection, embarrassment or whatever other fears you have by acting in spite of them. You must develop a thick skin and realize that if success in sales and the resulting rewards were easy, everyone would be doing it. Ultimately, if you are going to be successful, you’ve got to put yourself out there and let as many people as possible know about you and what you have to offer. Meet lots of people. When a politician is out on the campaign trail he or she is laser focused on meeting and talking to as many people as possible. They are not focused on the people they already know and whose vote they have. They are looking to meet strangers and win them over. While they don’t snub the people they already know and have in their camp, they spend as little time as possible talking to these people. Their number one objective is to meet new people and sell those people on why they should get their vote. The biggest reason salespeople fail is due to a lack of activity. More specifically, they don’t talk to enough people. Yes, sales is a numbers game. While relationships are
extremely important, to have the number of relationships you need you have to be talking to tons of people. You need a daily goal for the number of new contacts you’re going to make and then, like the politician, you need to be laser focused on hitting that number. A friend often reminds me of an extremely successful insurance agent who once told him, “What’s made me so successful is that every day, Monday through Sunday, I make sure at least three new people know what I do.” Differentiate yourself. Politicians know if they are going to lay claim to the most powerful office on the planet, they must differentiate themselves from the rest of the crowd. They work on their value statements. They study their competition. They are scripted and they are usually pretty good at knowing how they differ from everyone else in the field. They prepare for the debates by reviewing what questions they are likely to get asked, studying who they are up against, and role playing comments, answers and responses. Similarly, as a salesperson you have to know why you, your product and your company are the better choice. How are you unique? You are the one thing the competition does not have and you have to be able to articulate why it’s extremely important the prospect ends up with you versus the competition. You have to know all the differences between you, your product and your company versus what the competition has to offer. Once you have all the above, you must then script everything and practice it so it comes out of your mouth clearly and confidently. Commit. I doubt many people would question the commitment of a politician out on the campaign trail. Their rigorous schedule has them visiting many cities, and usually several states, each and every day. They are sleep deprived and endure all the displeasures that come with constant travel. Their pursuit also requires they place the rest of their lives on hold, including family and friends. To stay sane and keep up the necessary pace, politicians must be passionate about what they’re doing. They must be completely committed, and they must be willing to sacrifice other areas of life in the short-term. Especially if you are new to sales, an industry, or a company, your life is going to be out of balance in the beginning. There may also be times when the economy, market or industry takes a hit and you have to work extra hours. Sales has never been a 9 to 5 job, and it isn’t for the faint of heart. You’re going to have to commit by making some sacrifices. You also need to know why you’re doing what you’re doing and why you’re passionate about the struggle and eventual reward ahead. Also, if you have a family, you need to make sure everyone is on board. By the way, it’s a good idea to get this cleared before you accept the job. John Chapin is a sales and motivational speaker and trainer. He has over 27 years of sales experience as a number one sales rep and is the author of the 2010 sales book of the year: Sales Encyclopedia. For more information, visit www.completeselling.com or email johnchapin@completeselling.com
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What Will $5,000 Buy?
MANHEIM DISSECTS WHAT $5,000 BUYS AT AUCTION THESE DAYS BY NICK ZULOVICH, AUTO REMARKETING SENIOR EDITOR A segment of Manheim’s 2016 Used Car Market Report asked a question most Buy Here-Pay Here operators consider when they scour the lanes or online platforms to find inventory that will not only turn but will last for the duration of the installment contract. To answer the question of what $5,000 will buy, Cox Automotive chief economist Tom Webb acknowledged in the report that rising wholesale prices often trigger headaches for BHPH dealers since they need to find vehicles their customers can afford, but can run the term of the note with minimal repairs. To give a sense of just how much wholesale prices have gone up over time in the lower price tiers, Manheim looked at the average mileage on auction vehicles that sold between $4,000 and $6,000 during the past 16
years. Back in 2000, if operators spent an average of $5,000 for a vehicle at auction they acquired a vehicle with 84,541 miles. “Average mileage slipped over the following three years as wholesale supplies grew and the overall pricing environment weakened,” Webb explained. But between 2003 and 2014, Webb pointed out the average mileage for the typical $5,000 wholesale vehicle purchase rose every year, except for the recession of 2008 and 2009. A year ago, Webb mentioned BHPH dealers got a slight reprieve as the average mileage on a $5,000 auction purchase dipped but remained above 120,000 miles. During a conversation with BHPH Report, Webb elaborated about the kinds of vehicles that fit that price parameter nowadays. “It’s certainly a mixed bag,” Webb said. “Certainly a vehicle with six digits on the odometer is really not an issue in terms of running the terms of the note if you have some feeling about its condition level. Some makes and models have better reliability over time than others. “The Buy Here-Pay Here
dealers, as you know, are extremely knowledgeable of those units,” he added. “Typically they’ll have some makes and models which are on their black list which they will not buy at all for those reasons. But with any model, the condition can vary quite substantially depending on how it was used or abused.” BHPH operators and other independent dealerships should benefit from the overall lift in wholesale volume, according to Manheim’s report. As wholesale supplies grew a year ago, Webb explained independent dealers were better able to secure inventory that met the needs of their individual customer bases. “As a result, unit sales grew considerably faster than in the prior two years, and at a pace that was higher than that of franchised dealers,” Webb wrote in the report. “Earlier in this cycle, many independents suffered as a result of a lower flow of wholesale units from franchised dealers, fewer desirable trade-ins, and reduced auction supplies. “With all of those sources
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returning to normal volumes, independent dealers should have another good year in 2016, especially if all-important credit conditions remain favorable.”
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Regulatory Compliance Starts with Data Accuracy DON’T OMIT THIS CRITICAL DETAIL BY CHET HEUGHAN
How many times have you heard the phrase “The devil is in the details”? That statement has never been more applicable to automotive dealers than it is today. When considering financial risks to their businesses, most dealership owners and managers tend to spend more time focused on issues such as hidden damage on vehicles purchased at auction, aging inventory, contracts in transit and the possibility of another downturn in the economy while often omitting an issue of critical importance to their business. One of the largest risks to a dealer’s financial future is accuracy – or better stated, the lack of accuracy – in loan documentation. Inaccurate sales documentation in financed transactions can create a lingering risk to your business. Your risk starts from the time you submit a credit application to the lender. Something as simple as an incorrect bookout submitted along with the credit application to a lender can create an ongoing financial liability. For example, if you submit a credit application that incorrectly states a Nissan Altima has an SL trim package when really it was an S trim package, your dealership could be responsible for the difference between the stated value and the actual collateral value. Many lenders will audit the loan documentation when a loan results in a repossession and subsequent chargeoff. If the lender finds
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the dealer overstated equipment, which inflated the stated value of the collateral, the dealer will likely be requested to compensate the lender for the difference. In the past this could cost dealers several hundred dollars to a few thousand dollars, in addition to creating tension between the dealer and its retail lender. Today, however, with advancements in technology the stakes are higher for dealers as lenders now see this behavior as a red flag. Lenders can easily audit a dealer’s entire portfolio by using technologies that use vehicles’ VIN numbers to access the actual manufacturer’s build sheet for a vehicle in question, leaving no doubt as to exactly which loans contained “power booking.” This could result in the lender terminating their relationship with the dealer and requesting a larger demand letter. Compliance and accuracy go hand in hand. Repeatedly making simple mistakes when completing forms, or using the wrong forms to document a transaction, can appear to be predatory or deceptive. Inadvertent noncompliance with state and federal guidelines when preparing loan documents can be another area where risk can accumulate over time. A typical retail installment contract can contain more than 150 fillable fields. Making sure the correct information goes into each field may seem like a no-brainer, but what if you’re selling four aftermarket products and your retail installment contract only provides three lines to disclose the information? Some dealers simply combine two of the products or include the product in the selling price. These aren’t good ideas! This approach may pass a lender’s due diligence process, so it must be compliant, but don’t rely on the lender to be your
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Hyundai Recalls High-End Cars for Wipers
CORROSION COULD CAUSE LOSS OF WIPER FUNCTION BY USED CAR NEWS
failsafe. Lenders are not perfect and they don’t catch everything. This issue could be caught months or years later during an audit of the lender’s indirect loan files or it could be questioned by your customers. What was a simple solution to a problem caused by not having enough lines on the contract could easily be viewed as nondisclosure or as deceptive and predatory practices, which can carry large financial penalties or be the basis of a consumer lawsuit. Choosing the right loan documents that are up to date with current legislation along with the enhanced market features needed to support the sale of the many insurance and aftermarket products available in the market today is a sure way to reduce noncompliance and ultimately financial risk. Using the same old loan documents you’ve always used or the free documents made available from your lender may not be the best practice. Choosing a loan documentation supplier that warrants their product, has a comprehensive program for monitoring pending and enacted regulations, and completes timely revisions of their products can go a long way to reducing your compliance risks. Of course, there are many more risks to your business – market conditions, competition and availability of inventory, just to name a few. Many of these risks are outside your control, but you can control a large portion of your risk by demanding data accuracy from your staff and the vendors who provide you with products and services. Chet Heughan is director of AppOne® Risk Mitigation Services and Indirect Lending for Wolters Kluwer. For more information, please visit www.wolterskluwerfs.com.
Hyundai Motor America is recalling 18,700 model year 2012 Genesis vehicles manufactured Aug. 1, 2011, to April 30, 2012, and 2011-13 Equus vehicles manufactured July 10, 2011, to June 12, 2012. The windshield wiper motor cover seal on the affected vehicles may degrade, allowing corrosion on the wiper motor’s circuit board. The corrosion can cause intermittent or total loss of wiper function. Inoperative wipers during inclement weather can decrease driver visibility, increasing the risk of a crash. Hyundai will notify owners, and dealers will replace the wiper motor cover and seal, free of charge. Hyundai’s number for this recall is 140.
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Subaru Hoods Might Open Unexpectedly POSSIBLE MALFUNCTION ADDRESSED IN TWO PHASES
Subaru of America Inc. is recalling 77,000 model year 2006-14 Tribeca vehicles manufactured Nov. 16, 2004, to Jan. 27, 2014. Due to a possible malfunction of the hood safety system and hood lock system, the hood may open unexpectedly while driving. If the hood unexpectedly opens while driving, it may interfere with the driver’s visibility, increasing the risk of a crash. Subaru will notify owners, and dealers will complete this recall in two phases. Phase one will involve inspection, cleaning and lubricating the hood safety and hood lock systems. If after this is performed the hood latch does not operate properly, it will be replaced with a new current style part. Phase two will involve installing an improved hood safety system and hood lock system. The manufacturer has not yet provided a notification schedule. Subaru’s number for this recall is WQX-59 (phase one) and WQY-60 (phase two).