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SOCIAL MEDIA | By Kathi Kruse
SOCIAL MEDIA A PREFERRED CUSTOMER SERVICE CHANNEL
Recent Study Results
Social media is one of the first channels consumers head to when they have a question or an issue. In fact, 45 percent of consumers have done so. A recent Sprout Social study cited the disconnects between social marketers’ goals and consumer preferences, but there is one area they found marketers and consumers agree cannot be left out of the mix: customer service. On the front lines with customers and prospects every day, an overwhelming majority (88 percent) of social marketers understand the importance of customer service on social. Nearly half (45 percent) of consumer respondents have reached out to a company on social. Social media is a unique customer service channel. Handling customer service through social media is tricky. The same marketing individual or team is often expected to wear the customer service hat, and situations can quickly go awry when specific skills and focus are absent. Given that many dealership customer messages go unanswered on social media, it’s clear dealers haven’t put enough attention on designating someone to oversee their digital reputation, which is fast becoming their only reputation in their customers’ eyes. In many cases, customer care is left to a group of busy people who view it as an afterthought. Great social media customer service has a strong impact on the dealership’s bottom line. Social customer care doesn’t just contribute to brand perception. It impacts your bottom line. Twenty-one percent of consumers are more likely to buy from businesses they can reach on social. The same percentage would rather message a brand or business on social media than call customer service. This tells us that social customer service has a financial impact and is swiftly becoming the consumer’s preferred care channel. Done well, social customer care means customers will spend more. It improves efficiency and generates data you can use to improve services and benchmark against your competitors. Done poorly, you will
be faced with spending precious resources digging your store out of a hole. Research published in Harvard Business Review found customers who received a response to their query on social media were more likely not just to remain a customer, but to spend more money with the brand, and recommend it to others. The research from Sprout Social showed answering a customer’s question on social media prompted 49 percent of consumers to purchase.
A rapid response is now standard. Facebook Messenger, already widely used for customer service, is setting the standard for response times on social media. It’s also a new channel for advertising. Forty-eight percent of those surveyed valued a quick response on social media above any other action a brand could take. Dealers have a lot of work to do to meet these expectations. According to Sprout
Social, the average brand response rate is just 12 percent. On average, a response takes 11 hours. That’s far short of the Facebookrecommended 15 minutes, and a lot of potential sales lost. The top reasons consumers reach out to brands on social: • They had a question (57 percent). • They had an issue with the product or service (45 percent). • They wanted to commend a company on their product or service (34 percent). When a customer reaches out with a question (their number one reason for reaching out on social) use this as an opportunity to form a relationship – not just resolve an issue. There is a wide range for how many customer service requests a business receives via social, though 58 percent of marketers surveyed receive between one and 50 requests in a week. There is also a wide range in response times, though the majority (78 percent) responds to a customer request within 12 hours. Social has matured as a communication channel and consumers have blended it into their lives. They expect dealers to do the same. While many dealerships now use social media regularly, very few take social customer service seriously. Quality customer service – regardless of channel – relies on a meaningful, efficient, solution-focused exchange between dealers and their customers. The consumer preference for social media as a communication channel requires your store to rethink its customer service policies and procedures, and integrate them with your business strategy. The best social customer service keeps your store in the conversation and doesn’t allow malcontents and competitors to speak for you. All this data makes it crystal clear how important social customer care is to your social and overall business strategy. How can dealers and their social marketers actually improve their efficiency and strategy in this area? More than half of social marketers say the answer is a bigger team. Large, small or somewhere in between, a dealership must allocate the right resources into social media. Given the data, it’s clear that customer service cannot be left out of your social media strategy. Every dealership needs to reassess how their customers prefer to communicate and adjust resources to meet ever-changing customer expectations. Kathi Kruse is an automotive social media marketing expert, blogger, consultant, author, speaker and founder of Kruse Control Inc., which coaches, trains and delivers webinars focused on integrating social media and online reputation management into dealership operations. She can be reached at kathi@krusecontrolinc.com.
WWW.TNIADA.COM DECEMBER 2018 TENNESSEE DEALER CONNECTION 3
DECEMBER INSIDE
2018
03............................................Social Media Study 06................................................. 20,000 by 2020 06..................................... Facebook Marketplace 08.........................................................NIADA CPO 10................................NIADA Government Report 14...................... How to Compete with Online Ads
ADVERTISERS INDEX
AutoZone ........................................................... 9 DAA Dealers Auto Auction Group, LLC. ............. 5 Manheim............................................................. 11 NextGear Capital................................................12 TradeRev.......................................................... IFC TrueCar............................................................ IBC vAuto................................................. Back Cover
WHAT’S NEW
NABD SESSIONS ONLINE Check it Out on NIADA.TV All sessions from the NABD Buy Here, Pay Here Subprime Conference powered by NIADA are now available online. The robust offering of education sessions from the BHPH industry’s premier event includes topics such as Facebook Marketplace, underwriting, the effects of the new tax laws, social media, internal controls, industry benchmarks and more from industry leaders. Check it out at NIADA.TV.
OFFICE
For information on how to become a member please contact TNIADA: P.O. BOX 366 Bell Buckle, TN 37020 1-866-5TNIADA (586-4232) director@tniada.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 Tennessee Dealer Connection 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 TNIADA 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 © 2018 by NIADA Services, Inc.
STATE MAGAZINE MGR./SALES Troy Graff • troy@niada.com EDITORS Jacinda Timmerman • jacinda@niada.com Andy Friedlander • andy@niada.com MAGAZINE LAYOUT Christy Haynes PRINTING Nieman Printing
ACCELERATE |
By GWC Warranty
EARNING TRUST IN F&I
Showing Customers the Value of F&I Products Perhaps the most difficult obstacle to overcome in the F&I office is getting your customers to trust that the products you’re offering will be worth the added cost. Establishing that trust is the first step in building the foundation for long-term F&I success. But how do you go about gaining the trust of someone whose money you’re looking to spend on additional products like a vehicle service contract? Just like most things in life, honesty is the best policy in the F&I office. Being upfront about monthly costs, coverage limitations and the company backing your products will help customers feel the confidence they need to feel to make a service contract purchase. Payment Transparency For the vast majority of customers, you’re negotiating on monthly payment and getting them on board with how the cost of a service contract impacts what hits their bank accounts each month. At a glance, the added cost can be staggering, especially in a world where 78 percent of people are living check to check. But breaking it down by daily cost could help overcome this hurdle. For example, the daily cost of a $300 payment is roughly $10 a day. If you add $50 per month for a service contract, that daily cost is just over $11 a day. This nominal daily increase compared to the cost of major repairs can help customers see the value in added vehicle protection.
BOARD MEMBERS
CHAIRMAN OF THE BOARD PRESIDENT-ELECT
Mark Noble 615-977-3313
PRESIDENT
Stephanie Baker 615-217-2848
Tracy McMurtry 615-865-7350
SECRETARY
Sonja Hopkins 615-364-6259
TREASURER
Don Isakson 865-310-3505
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Coverage Transparency Not all coverage levels were created equally. It’s important to impart this to your customers. If you’ve mastered your menu selling strategy, working backwards from the highest level of coverage achieves this goal for you. Focusing on what customers miss out on and using this technique in tandem with highlighting small daily cost differences, it’s easy to spell out value that will help your customer see you have their long-term financial interests in mind. Provider Reputation Customers may object to a service contract due to the industry’s reputation. But working with a reputable partner has its benefits – most notably your ability to showcase that reputation to customers. When you can show customers the product you’re selling is backed by a company with decades of experience and billions in claims paid, peace of mind will come easily – and quickly. Showcase Past Results Does your customer still not trust your F&I process? Even the most difficult customers can’t deny real-life results. Keep close a file of past work orders or a claims paid report and show that difficult buyer all the money VSCs have saved your past customers. No customer can refute the value of a VSC after seeing exactly what it’s done for people in their shoes.
TENNESSEE DEALER CONNECTION DECEMBER 2018 WWW.TNIADA.COM
Robert Villucci 512-318-8642 David Stancil 931-707-8899 Brandy Steiner 615-982-9842
COVER STORY
ASSOCIATION NEWS | By Paul John
The NIADA Begins New Membership Initiative The National Independent Automobile Dealers Association has begun a new nationwide membership initiative. Its goal is to reach 20,000 members by 2020. The organization will reach this goal by focusing on the states with the highest growth opportunity. This simple strategy measures current market share – number of members compared to number of licensed dealers. NIADA state-affiliated associations that provide more dealer educational programs and effective advocacy at the state capital – and are able to negotiate exclusive member discounts for their members – generally have a bigger footprint, typically between 30 and 60 percent market share penetration. NIADA has already begun working with the state organizations by working closely with the state directors and their board members to understand their state-specific challenges as
ONLINE MARKETING | By Digital Air Strike
FACEBOOK MARKETPLACE FOR AUTO DEALERSHIPS
Explained in 60 Seconds
Facebook Marketplace is an easy, convenient way to buy and sell just about anything, including cars. More than just a replacement for sites like Craigslist, Facebook is quickly turning Marketplace into the world’s largest online e-commerce site. Your dealership needs to be ready. Facebook recently revealed a series of partnerships with automotive companies like Kelley Blue Book, Cars.com, Edmunds, and others that are quickly turning Facebook Marketplace into the biggest car buying site, used by 550 million people each month – and quickly growing. It’s free to manually upload used vehicles to Marketplace and start selling!
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T H E O R G A N I Z AT I O N W I L L R E A C H THIS GOAL BY FOCUSING ON THE S TAT E S W I T H T H E H I G H E S T G R O W T H O P P O R T U N I T Y. T H I S S I M P L E S T R A T E G Y MEASURES CURRENT MARKET SHARE – NUMBER OF MEMBERS COMPARED TO NUMBER OF LICENSED DEALERS. well as develop a clear understanding of their goals. And more importantly, NIADA is working with states’ leadership on specific strategies that will pave the way for state associations to grow and stay relevant. Paul John is NIADA’s vice president of national field operations. He can be reached at paul@niada.com or 770-616-5156.
Dealerships can also partner with companies to help them automatically upload their inventory onto Facebook Marketplace. Once posted, vehicles and dealerships on Marketplace are displayed to shoppers based on their location. By default, Marketplace shows listings and dealerships within 40 miles of a person’s location. Shoppers can sort through car listings using typical filters like price, model, and mileage. A big bonus of Marketplace is that after a shopper views a vehicle, it will be advertised to them again in their newsfeed, as well as newly added similar vehicles. This is a great costeffective way to keep your vehicles and dealership fresh in a customer’s mind during that critical consideration phase. Facebook Marketplace doesn’t stop at listing your used inventory. You can also advertise on the platform, allowing you to reach customers where they’re spending their time. This gives your dealership an advantage over your competitors because you are connecting with
TENNESSEE DEALER CONNECTION DECEMBER 2018 WWW.TNIADA.COM
customers who are actively shopping for vehicles. Interested buyers can quickly and easily contact dealerships directly from the vehicle listing with Facebook Messenger. Facebook Messenger conversations are a little different from your typical chat interaction (in a good way). Unlike some website chat interactions, conversations in Facebook Messenger don’t disappear. This opens the opportunity for future follow-ups to help nurture the sale. Additionally, shoppers are notified of new messages on both Facebook and Messenger apps, which helps increase read and response rates. While it’s great that you can access Facebook messages in the future, problems arise when dealerships do not have a team to tend to incoming messages. Typically, when a shopper contacts your dealership, your sales team must respond. Your entire team may not have access to your Facebook business page, may be focused on other customers, or your dealership may be closed. Still, the longer you take to respond, the more likely your customer is to lose interest or check out other vehicles being sold by other dealers. The solution is to integrate A.I. powered messaging onto your Facebook page. A bot can automatically qualify the interest level of every lead that comes in your system. When a lead is hot, the correct team member is notified by text and email for instant follow up! For more information email sales@ digitalairstrike.com or visit www. digitalairstrike.com.
ASSOCIATION NEWS
NIADA PARTNERS WITH DEALERSHIPS TO OFFER CPO VEHICLES Two New Dealerships Added to the CPO Family
RLB Sales & Leasing and 6th Gear Auto – both of Fort Worth, Texas – are now proud members of the NIADA Certified family. To celebrate, NIADA held kickoff launches at both dealerships. “It’s important to us to be here,” said Warrantech business development manager and program administrator Mike Sims. “Not only to us as a whole, but to these dealerships as clients, as partners of ours with NIADA.” Scott Lilja, NIADA’s senior vice president of member services, was also on hand to offer support and explain the benefits of partnering with NIADA. “We’ve been around for 73 years protecting dealers’ interests, putting together programs to help them get to that next level in terms of differentiation and quality, and trust and transparency with consumers. And that’s what the NIADA CPO program is really about.” The NIADA Certified Pre-Owned Program offers high-quality used vehicles backed by a powerful warranty with nationwide reach, and backed by NIADA – a national association whose more than 15,000 members are dedicated to integrity and subscribe to a strict code of ethics. For a vehicle to be considered “NIADA Certified,” it must undergo a 125-point inspection conducted by a licensed repair facility and be backed by a rigorous vehicle history report. Once all requirements have been met, dealers are then able to offer these vehicles to their customers along with a number of features and benefits, including the following: • A CARFAX vehicle history report. • Special financing for qualified customers. • Flexible, fully customizable warranty options. • Roadside assistance, towing, vehicle rental and lost key/lockout service. Offering these benefits is already paying big dividends for both dealerships. “My turnover is in the 40s now and that’s what I’m really proud of,” said 6th Gear Auto Sales owner Chris Johnson. “We’re selling cars faster, but more importantly, our systems, our procedures and our policies through Warrantech have helped us sell more cars through our training processes.” “It adds value to what we’re doing here,” said RLB Sales & Leasing general manager Shane Collins. “It adds value to every vehicle we sell. We’ve already seen the uptick. We’re pacing 60 cars this month when last month we did 30, so we’re excited. It’s going to be a long, happy journey.” To learn more about how your dealership can become NIADA Certified, visit niadacertified.com/dealers or call 1-877-3100288 to sign up today.
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6th Gear Auto – Fort Worth, Texas
RLB Sales & Leasing – Fort Worth, Texas
TENNESSEE DEALER CONNECTION DECEMBER 2018 WWW.TNIADA.COM
REGULATORY MATTERS | By Blair Witter
ONE OF THE BIGGEST THREATS TO YOUR BUSINESS
It Could be You
Yes, really. It might be you. Despite the record sales you’ve brought in. Despite the cost saving measures you’ve put in place. Despite the efficiency of the organizational procedures you’ve implemented. If you’re the person putting GPS tracking devices on the vehicles you’re selling – without disclosing it to the consumer – you might be putting your business at risk. The use of GPS devices to help mitigate the risk for creditors in the subprime auto finance industry has been around for a long time. Yet, even after all this time, there are GPS providers – and dealers or creditors – who still operate without obtaining written disclosure from the consumer when using this type of technology. Let’s not kid ourselves. It is not the technology that’s the problem. It’s your choice not to disclose the use of that technology – or failure to comply with state and federal regulations – that is the problem. This decision could make you a threat to your own business. Why should you be disclosing? Well, depending upon your state, it might
be illegal not to. Several states, including California, New Jersey and Nevada, have recently passed laws requiring disclosure of GPS devices to the consumer. The laws vary by state on exactly what must be disclosed and exactly how it must be disclosed, but disclosure itself is not an option. Even if it is not specifically illegal not to disclose in the states you are doing business, by choosing not to disclose the use of GPS devices to your customers, you are still exposing your business to some serious liability. With Right-to-Cure laws, Consumer Protection Acts, and Consumer Privacy Acts, not disclosing the use of the device could open you up to legal issues such as fines or even civil action. Hudson Cook LLP partner Tom Hudson encourages dealers to disclose the use of devices: “Every state that has legalized devices by statute has also required a dealer or finance company to disclose that a vehicle has been equipped with a device. Further, more than one state has fined dealers for failing to disclose the devices for engaging in an unfair, deceptive or abusive act or practice. You’d have to be braindead not to disclose the presence of the device.” And, of course, the CFPB could take notice of your position not to disclose. If you think you’re too small to get the attention of the CFPB, I wouldn’t count on it. Just look at Y King S Corp., which does
business as Herbies Auto Sales, in Colorado. Last year, the company was ordered to pay $700,000 in redress to consumers for what the CFPB called violations of the Truth in Lending Act and the Dodd-Frank Wall Street Reform and Consumer Financial Protection Act. Would the CFPB consider failing to disclose the use of GPS technology a violation as well? It is fair to say that having a customer sign a written disclosure about the existence of a device, how it operates, and how it will be used by the creditor helps reduce the liability of your company. It could prevent a lawsuit or other type of consumer complaint. So, if your GPS provider is saying you don’t need to disclose, maybe you should ask them if they are also offering to cover your legal fees, a potential fine from the CFPB or a classaction lawsuit for invasion of privacy down the road. Choose a GPS provider that offers technology that is compliant with state and federal regulations. Additionally, use a company that employs certified compliance officers and offers advice, recommendations and training such as webinars to its dealer customers. Does your provider do that? Blair Witter is PassTime’s vice president of sales for the Southeast Region. His vast experience includes 11 years at Credit Acceptance and founding and managing two large-volume dealerships in Biloxi, Mississippi, and Mobile, Alabama, for over a decade. Contact Blair at (239) 240-6913 or bwitter@passtimeusa.com.
WWW.TNIADA.COM DECEMBER 2018 TENNESSEE DEALER CONNECTION 9
Latest Government Issues and Activity
NIADA is your voice in Washington D.C., advocating for independent dealers, the used vehicle industry and small business. Here’s a look at the latest news and NIADA efforts regarding legislative, regulatory, PAC and grass roots activities.
for a visit; Florida IADA past president Lisa Compagno, who hosted Rep. Brian Mast (R-Fla.); and BHPH Commission member Steve Taylor, who brought Rep. Mike Bost (R-Ill.) to visit Auto Credit of Southern Illinois. In addition, Baker and Michigan IADA president Otto Hahne met with Rep. Mike Bishop (R-Mich.) and House Ways and Means Committee chairman Kevin Brady (R-Texas) at an event in Lansing, IADA of California past president Gus Camacho met with his Congressman, Rep. Steve Knight (R-Calif.), and NIADA secretary John Cousins met with Rep. Ted Yoho (R-Fla.).
PAC In October, NIADA co-hosted an event in Dallas for Rep. Steve Scalise (R-La.), currently the House Majority Whip. While that position will soon change after the Democrats won control of the House, he remains one of the highest ranking Republicans in the House of Representatives. Scalise, who was one of four people wounded when a gunman opened fire on the Republican team’s practice for the annual congressional baseball game in 2017, won re-election easily last month. In the weeks leading up to election day, NIADA member dealers from around the country took the opportunity to meet with their congressional representatives at campaign events, fundraisers or private meetings or at their dealerships. Inviting your elected representatives – at the federal, state and local levels – to visit your dealership is the single best thing you can do as a dealer to educate those representatives about what you do, how your business works and how the laws and regulations they create affect you and your business in the real world. Among the dealers who did so are NIADA BHPH Commission member Jeff Baker, who hosted Rep. Jackie Walorski (R-Ind.) at his location in South Bend, Ind.; Mid-Atlantic Regional IADA president Michael Brill, who had Rep. Brian Fitzpatrick (R-Pa.) in
L E G I S L AT I V E In the runup to the midterm elections, President Trump announced he was working with Republican congressional leaders, including Rep. Brady, on a plan for a 10 percent tax cut for the middle class. According to a White House spokesperson, the cut would be “revenue neutral,” and was to be voted on after the election as an extension of the Tax Reform 2.0 bills that were passed by the House this year. Following the election, the President said he will continue to seek that tax cut, but with Democrats now in control of the House, he is willing to consider raising some tax rates – including corporate rates – to get the break for the middle class. “If the Democrats come up with an idea for tax cuts – and I’m a big believer in tax cuts – I would absolutely pursue something even if it means some adjustment,” he said. “I would certainly be willing to do a little bit.” Tax reform was one of Trump’s top priorities upon taking office, and the Republican Congress acted by passing the Tax Cuts and Jobs Act in 2017, which dropped the corporate tax rate from 35 percent to 21 percent and slashed taxes and increased deductions for individuals. But many of those changes are scheduled to expire after 2025. Any proposals now will need bipartisan support to pass the divided Congress.
WASHINGTON UPDATE |
By Shaun Petersen
NIADA GOVERNMENT REPORT
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TENNESSEE DEALER CONNECTION DECEMBER 2018 WWW.TNIADA.COM
R E G U L ATO RY State AGs protest CFPB: A group of 14 state attorneys general challenged the CFPB’s stance on disparate impact discrimination in the wake of Congress striking down the bureau’s indirect auto lending guidance in May. In a letter to acting CFPB director Mick Mulvaney, the AGs said the bureau is “unlawfully refusing to protect residents of our states against credit discrimination … by suggesting the CFPB is ‘no longer allowed’ to enforce the Equal Credit Opportunity Act’s prohibition against disparate impact discrimination with regard to auto lending.” The CFPB was one of five federal agencies that issued a joint statement in September making it clear supervisory guidance issued by the agencies does not have the same effect as law and they will not take enforcement actions based on that guidance. The guidance document, issued under former CFPB director Richard Cordray, used the concept of disparate impact to claim dealer discretion in auto lending created a risk of racial discrimination. But many experts found the methodology to be flawed, and industry leaders protested the lack of input from stakeholders and the public before the guidance was issued. In 2017, an opinion from the Government Accountability Office defined the guidance document as a CFPB rule – in part because it was used as the basis of enforcement actions – allowing Congress to repeal it through the Congressional Review Act. Small business cybersecurity campaign: The Federal Trade Commission, along with the Department of Homeland Security, the National Institute of Standards and Technology and the Small Business Administration, has launched a national education campaign to help small business owners understand common cyber threats and how they can protect their businesses. The FTC said the campaign grew out of last year’s series of roundtable discussions the agency held with small business owners to discuss cybersecurity issues. The new campaign includes fact sheets, videos and quizzes covering 12 topics: cybersecurity basics, understanding the NIST cybersecurity framework, physical security, ransomware, phishing, business email imposters, tech support scams, vendor security, cyber insurance, email authentication, hiring a web host and secure remote access. For more information, visit www.ftc.gov/ tips-advice/business-center/small-businesses/ cybersecurity. Shaun Petersen is NIADA’s senior vice president of legal and government affairs.
REGULATORY MATTERS |
By Anthony Cacciatore & Adam Steele
FTC USED CAR BUYER’S GUIDE
Three Things Auto Dealers Need to Know
Though its usage rules may seem straightforward, the Federal Trade Commission’s Used Car Buyer’s Guide includes several requirements that seem to catch many auto dealers off guard. First and foremost, the FTC requires it be displayed on all used cars sold by a dealer. The guide must contain details concerning the vehicle’s background along with any warranties available to the buyer. Failure to perform these steps can lead to private class action lawsuits and FTC enforcement penalties reaching $41,484 per incident. Don’t Forget to Display the Entire Guide The FTC requires the guide be affixed to the vehicle in such a way that both sides of the guide are easily readable by potential buyers. This rule, however, presents an initial challenge because the guide is two pages long. Per the FTC, compliance can be accomplished by: • Displaying the guide on one of the vehicle’s windows so that both sides may be read. • Hanging the guide from the vehicle’s rearview mirror. • Placing the guide in a plastic sleeve on the outside of the vehicle so buyers may remove and read it. • Another creative solution that doesn’t prevent the consumer from seeing the full document for the vehicle. What doesn’t work? • Using a double-sided print so that the
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reverse is only available by looking through the other side of the car window. • Placing the guide in the glovebox or under the seat. “As Is” Provisions Don’t Prevent All Consumer Claims Another area that is particularly sticky for the Buyer’s Guide is warranties. Many dealers are under the false impression that checking the “as is – no dealer warranty” box prohibits all consumer claims. Unfortunately, that isn’t the case. The reality is that a dealer selling a car “as is” only prevents claims arising from implied warranties. Implied warranties can be disclaimed. There are two so called “implied warranties” involved whenever a car is sold – implied because they exist whether they are ever spoken aloud or written. They are the implied warranty of merchantability and the implied warranty of fitness for a particular purpose. In laymen’s terms, this means warranties that a car is fit for sale (i.e., merchantability) and will be useable for driving (i.e., fitness for the particular purpose). Express warranties, on the other hand, cannot be disclaimed through the use of an “as is” provision or some other expression the car is offered without warranty. Dealers, and especially sales personnel, have to be particularly careful when selling a used car not to cross the line from sales puffery to an unintended warranty. Express warranties are created when a salesperson makes a verbal or written statement that essentially guarantees product performance or quality. Example of express warranty: “This car will last you 200,000 miles!” Example of sales puffery: “This car is in good condition and a great value!” Express warranties also obligate the dealer to claims concerning those representations. Dealers need to be careful about what representations they make about a car to buyers because an “as is” provision doesn’t nullify those representations. Upcoming Enforcement Arguably, the most important thing dealers need to be aware of concerning the Buyer’s Guide is that regulators will be cracking down. The guide has been on the FTC’s watch list ever since rules governing the guide were revised in 2016. Earlier this year, the FTC performed a random compliance audit of more than 2,300 vehicles nationwide to see if dealers were following the rules. They weren’t. In fact, over 50 percent of those vehicles failed to either include the guide or display it properly. Seeing such a huge red flag, the FTC is surely signaling an increase in regulatory crackdowns. Savvy dealers will take steps to ensure compliance with these regulations and avoid potentially substantial fines by working with experienced automotive counsel that can advise and audit their guide use and related consumer compliance obligations. Anthony Cacciatore and Adam Steele are attorneys with Ohio law firm Mac Murray & Shuster LLP. For more information, call 614.939.9955 or visit www.mslawgroup.com.
SALES MATTERS | By John Chapin
A REASON MANY SALESPEOPLE FAIL
How to Avoid It
In a recent article, John Brubaker of CoachBru.com said, “According to a U.S. Department of Commerce research study, in the first five years of a business the survival rate for independent small businesses is less than 20 percent but the survival rate for franchises is 95 percent.” “It isn’t so much the name recognition,” said Brubaker. “It’s the fact that with a franchise you get to utilize a turn-key set of business operations [a successful system that works] as opposed to having to invent the wheel in your own business. “Starbucks [has] an excellent system, which is why they have a thriving business. From the point of purchase displays, merchandising, upsells, menu options and language to the tiered pricing, customer service, and order production/fulfillment methods, they have a calculated, streamlined process for every single touchpoint.” During a discussion with me, he said his own research found salespeople and entrepreneurs that follow a sales system are 10 times as likely to be successful as those who don’t. The reason this is true may not be what you expect. It’s also not the same exact reason for franchise success, though it’s similar. The primary reason why salespeople following a system are 10 times as successful as those who don’t is that they care enough to have a system to begin with. Let me explain. The first step to success in sales is an iron-clad commitment that you’re going to be successful. Anyone committed to a goal lays out a plan and follows a system to achieve that end.
The person who just “kind of” wants to lose weight, thinks it “might be nice” to play the harmonica, or is in sales because it “pays the bills and gets me to the weekend” isn’t putting in extra time to plan out how they’re going to actually make it happen. This is similar to the person who spends more time planning a vacation than their retirement. They simply aren’t serious about the latter. The good news is a sales system doesn’t have to be a painstakingly detailed, stepby-step system like those required to run a franchise such as Subway or Starbucks. All that’s required is that it leads to enough of the right activities resulting in enough contacts with enough qualified prospects to make enough sales to hit weekly, monthly, and annual sales goals. INGREDIENTS FOR A SUCCESSFUL SALES SYSTEM A Plan Your plan is the easy part of this process. It simply consists of your goals, your activity, and your plan to get the activity done. The first thing you need to determine is your annual sales goal. Once you have your annual goal, break that down to monthly and weekly goals. Next, calculate your daily activity. To do that, begin by dividing your annual goal by the size of your average sale. That will give you the number of sales you have to make for the year. Now, based upon your closing ratio, figure out how many proposals you need to present. Calculate the number of prospects you need to get that number of proposals. How many calls does it take to get that number of prospects? Once you have the total number of sales, proposals, prospects, and calls, break those
down to monthly, weekly, and daily numbers for each. Your last step is to plan your days and weeks based upon the number of calls you need to make while getting your other activities done. Whatever your numbers are, with 168 hours in a week, you should have more than enough time. An example of the business portion of a day might look like the following: • 7-8 a.m.: Paperwork and prep for the day. • 8-10 a.m.: Prospecting phone calls. • 10 a.m. - 12 p.m.: In-person prospecting. • 12-1 p.m.: Lunch. • 1-3 p.m.: Appointments. • 3-5 p.m.: Prospecting phone calls. • 5 p.m.: Paperwork. The Tools Your tools will consist of a playbook, a binder with all scripts, a Concept Book, and a way to track and follow up with clients and prospects. Your playbook will include company policies and procedures, how you start your day, how you find, contact, and follow up with prospects, how to build long term relationships, and how you end your day. It’s something you can hand to a brand new person, who can be up and running once they have a general understanding of it. Scripts in your binder include all prospecting calls, presentations, answers to objections, and all other items you need to convey to prospects and clients. Your Concept Book will contain all your “evidence,” such as testimonials, user lists, reference letters, endorsements, articles, guarantees, examples of where your product or service was applied with successful results, and all documentation that supports any claims you make during your calls. Finally you need CRM (client relationship management) and PRM (prospect relationship management) systems in place. These don’t have to be super-complicated or even computerized – they just have to be effective. I have one sales rep who uses a yearly planner, 3x5 index cards, and an Excel spreadsheet. The key is you have a system and it’s effective. Follow the Plan and Make Adjustments Once you have your plan, get into action as soon as possible. Notice what is and isn’t working and make adjustments. Remember, imperfect action is better than no action. The biggest problem I see with putting a system together is that some people become perfectionists and as a result are never ready to take action. Take action every day, even while you are putting your system together. Do not stop everything you’re doing and decide you’re going to wait until you have the perfect plan in place. Do sales activities every day whether a plan is in place or not. If you’re looking for an additional resource to help you put together a system, one of John’s tools is Business Growth Vault at CoachBru.com. 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.
WWW.TNIADA.COM DECEMBER 2018 TENNESSEE DEALER CONNECTION 13
ONLINE MARKETING | By Adam Tobias
HOW TO COMPETE WITH ONLINE ADS
5 Steps for Small Dealers
Car buying has become a primarily online activity. According to Cox Automotive’s Car Buyer Journey Report, customers spend just a third of their time at dealerships. The rest is devoted to online research. Only after careful research do car buyers proceed to a dealership to test drive and purchase. The challenge, therefore, is to be found online. Dealerships might have the right inventory and prices, but if they can’t get traffic to their listings, they won’t get buyers onto their lot. Online advertising is the answer, but most small and mid-size dealerships can’t justify the cost. But there is a right way and a wrong way for small dealerships to advertise online. And it’s expensive if you do it the wrong way. The Benefit of Being Big Large dealerships dominate advertising on third-party websites like Cars.com and Autotrader. They can afford the exorbitant costs of buying ad space there and can blanket the Internet with ads. Sure, they waste a lot of money on visitors who don’t buy from them, but with enough traffic, only a tiny fraction of visitors need to become customers to make the ads worthwhile. That’s the benefit of being big. When small dealerships try the same “spray and pray” approach, they undoubtedly fail. If you can’t compete on budget, you have to use other tactics to get found online. When They Go Big, You Go Small Small dealers can’t afford to blanket the Internet with ads, but anyone can afford to run a few highly targeted ads to the perfect customer. If you have $100, you can effectively advertise any vehicle online. Here are five steps to developing a highvalue advertising campaign. These principles are universal for any dealership, but they’re especially powerful for smaller dealerships trying to compete with large companies.
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1. What is your niche? Who is your audience? Most dealerships already focus on specific vehicles. That’s called a niche. Maybe your niche is broader, like trucks, European cars or used vehicles. Maybe it’s narrower: a specific brand, price point or customer segment. Having a niche is important. It allows you to define your target audience, the people who are most likely to purchase a vehicle from you. Instead of advertising to any car buyer, focus on advertising to this niche. But how do we find these people on the Internet? And how do we show them our ads? 2. Ad targeting. Ad targeting means creating rules or criteria about who should see your ad, when they should see it and on what platform. Using the tools available on ad platforms, you can target your specific niche. Targeting saves you money by showing your ads only to those people who are most likely to purchase from you. Your conversion rates will be higher, which means more people are clicking on your ads. This, in turn, gives you a better chance to make a sale. For small and mid-size dealers, the secret to online advertising is quality not quantity. You want each ad to make a big impact, and that starts with ad targeting. 3. Choose the right platform. Advertising platforms vary widely on cost, features and targeting ability. Choosing the right one is often the most difficult step. • Third-Party Car Websites Third-party websites – like Cars.com, Autotrader and CarGurus – are the most popular platform for dealer ads. They get the lion’s share of car search traffic and are often the first place buyers look. But because of this, they are also the most expensive platforms. Only large dealerships can afford to advertise effectively on these sites. Every ad is in competition with thousands of other car ads, putting a premium on top ad space. • Google Ads Google Ads (formerly AdWords) lets you run ads on Google searches. Advertisers target the keywords relevant to their product and their ads are shown on the results pages. Google Ads can be affordable or extremely expensive. Broad terms like “used cars” get hundreds of thousands of searches every month, but the cost is prohibitive for most small dealers. Plus, this keyword attracts a wide audience, most of whom won’t be interested in your vehicle anyway. Specific terms like “Honda HR-V 2016 Atlanta” are less expensive and more effective for a small dealer. This type of Google search shows buyer intent – they have done their research and are looking to purchase. This is the perfect time to show them your ad and get them to your website. • Social Media Like Google Ads, advertising on social media can either be cost-effective or
TENNESSEE DEALER CONNECTION DECEMBER 2018 WWW.TNIADA.COM
expensive. Instead of keywords, though, sites like Facebook group audiences based on their interests. You can choose a broad or niche audience, which will determine the cost and impact of your ads. • Display Network Display networks partner with websites and online publishers to deliver banner ads to visitors based on their search history and interests. When you target a specific audience, the display network will show them ads when they visit a website that is part of the network. For example, your audience could see your ad on USA Today, DrivingSales.com and Lifehacker.com. Display network ads are among the most affordable and effective. The ad space itself is inexpensive, and your ads don’t have to compete with hundreds of others. Since they are based on search history and interests, you know you’re targeting a highquality audience. 4. Ad content. The content of your ad has a monumental impact on its success. The right targeting is only half the battle. We’ve grown so used to seeing ads everywhere our minds have become very effective at ignoring them. To win visitors, your ads need to be creative and provoke people to action. If you’re not using the right language, or your ad is not visually appealing, chances are visitors will not click on your ad. Creating compelling ads is tough work. If you don’t have experience, you are probably better off seeking the help of a marketing professional. But even pros aren’t perfect, which leads us to our final step. 5. A/B testing. A/B testing is a method to gauge the performance of an ad before you spend too much money on it. Create two different versions of the same ad and run a limited campaign for each while measuring their effectiveness. Then choose the topperforming ad to run a larger campaign. Repeat this process over time to refine your ads. A/B testing helps advertisers ensure they are running effective ads that generate high-quality leads and, eventually, sales. It’s truly an invaluable tool. It’s hard and scary, but you’re not alone. Online advertising can be a full-time job on its own. It’s only natural to feel overwhelmed by the amount of work and choices involved. Large dealerships make it hard to get the premium ad space on a small budget. And if you’re not in the premium ad spot, it’s easy to get lost in all the noise. However, by targeting your niche audience with engaging ads on the right platform, even small dealers can compete with the big players. Take your time, get it right and watch your sales soar. Adam Tobias is the co-founder and COO of Dealercue, which provides dealerships with real-time, intelligent, market-driven vehicle appraisal, pricing, inventory management, and sourcing solutions. He can be reached at adam@dealercue.com.