Case Study: How to not sell a car!


There's more being written every day by frustrated auto shoppers discussing their disappointing online interactions with dealerships while they were looking for a new or pre-owned vehicle, but it isn't often that auto industry experts share these experiences, when they enter the retail arena.  If you click HERE, you can read a very interesting article written by John McElroy, who is a well-respected auto industry pundit working for a variety of Detroit, and national media outlets.

Dealers and dealership managers should pay heed to the message John shares that buying a car SHOULD be fun.  Unfortunately, this outlook can be changed very quickly when a dealership process seems designed to frustrate a customer's purchase goals, rather than facilitate them.  Dealerships who want to survive need to willingly, and enthusiastically embrace a model of customer interaction that is focused on making things easy for the customer, not on making things easy for the dealership.  Today's buyers shop online.  That's the way it is, and it isn't going to change no matter how much sales managers who miss "the old days" want to go back to their towers and four squares.

Just like John, I had the opportunity to revel in the retail experience recently, although from a slightly different perspective.  I have a daughter who is a student in Texas, who needed to replace her well used car.  At her behest, I did some research and selected a new vehicle that would meet her basic requirements for size, gas mileage, and safety (OK, that was more my requirement than hers), and offered a very aggressive lease program for graduate students that promised a very affordable payment for us.

I went online and located three different dealerships in the general area where she lived, including one of the large national chains where a friend of mine happens to be a VP.  The first dealership I contacted was the large national chain.  I explained to them in my email that I was looking for my daughter, and that I was going to handle this from Michigan, and I warned them that I had been in the retail car business for over 25 years.  I asked them for a 24 month and 36 month lease payment on the model I was interested in under their grad student program, and with $2,500 out of pocket at signing.

The response I received did not provide any answers to my questions, and just thanked me for my inquiry and asked me to come in and test drive the vehicle.  I responded, again explaining that it wasn't too likely I would be coming down to Texas from Michigan, and that I needed to get this worked out via email before I sent my daughter in, at which time she would be taking delivery.  Their response to that email (I'm not making this up), was to ask when my daughter could come in.

Then I contacted a second dealership, a little further away, and sent them the same initial email looking for a 24 and 36 month payment.  I got back a very generic response promising me wonderful service and answers to all my questions.  They also called me, but I declined to answer because I wasn't ready to have a conversation about it, I just wanted a damned starting point to help me figure out how much cash I would need to get her to a payment she could probably handle.

The next day, I contacted the third dealership, again with the same initial email.  Within a few minutes I received a real response from a BDC Rep who acknowledged my request, shared that she was originally from Michigan, and promised to get me my numbers.  About 30 minutes later, she emailed me again with both payments I requested, and she also gave me a payment on a slightly more equipped version of the model I was interested in because it would lease out better, so the payment was slightly less, and it had more equipment.

The next day, I received an email from the GM at the dealership, thanking for my inquiry and offering to help me with anything I needed to get my daughter taken care of.  We exchanged a couple of emails about colors and with more and less due at signing and set up an appointment in two days for her to pick up the car.  She showed up, called me from the dealership and confirmed that everything was as described, and took delivery.  The entire process took place over about four days, from first email to delivery.

I did hear back from the other two dealerships a few times.  The second one never sent me anything other than obvious automatic emails, but the salesperson at the national chain store did send me a couple of personal follow-ups.  I took the time to respond to him and let him know that i had purchased from a different dealership and suggested that in the future they do a better job of working with people online if they wanted to convert them to buyers.  In his response to that, he defended his actions by saying he wanted to make sure he had all the information needed to get me the lowest possible payment, and that's why he wanted me to come in.  Of course, since his competitor had managed to accomplish all that and more online before they made the sale, his defense sounded rather ridiculous.

Unfortunately, I work with a lot of dealership managers who still cling to the old school mentality that if they give numbers to an online shopper, they will use them to whipsaw five different dealerships against each other and not buy from them.  Although I'm sure that does still happen occasionally, every study of customers who purchased cars after shopping online that I've ever read, as well as every buyer we've ever talked to at our focus groups, stressed the importance of convenience and transparency in the customer’s dealership selection, as opposed to price, which is fairly easy for shoppers to find out on their own anyway.

You don’t have to look very hard to find examples of businesses that failed to adapt to meet the needs of today’s Internet influenced shoppers.  Some very venerable retailers have gone away as a result of the modern consumer’s desire to leverage the convenience of the Internet into their shopping experience.  Dealers and dealership managers need to embrace this reality and understand and accept that today’s consumer does most of their research without involving a dealership until the very end of the process, and if they aren’t willing to meet their needs by answering their questions quickly, accurately, and enthusiastically, they are going to lose business.

Don't Spend $5 to Solve a $1 Problem!


When I was still a dealership Internet manager, we had an expression that we used a lot when we were talking about problems. “Don’t put a five-dollar solution on a one-dollar problem,” meant that we didn’t want the cost of our solution to be more than what we would gain by solving the problem. I’ve been thinking about this a lot lately when I’ve been looking at BDC and SEO expenses for some of our new clients.

In one analysis I did recently, a very aggressive small dealership group was spending $16,000 a month in SEO, website media promotion, website pop-ups, and third-party lead providers. The good news was that they were getting a lot of website traffic, and for the past six months their Internet/BDC team was averaging almost 80 appointments a month, with an average of 42 of them showing up and 23 making a purchase. The Dealer and GM were generally happy, but they were wondering if they should put some more money into additional lead sources, or add some expanded SEO programs that their OEM was promoting.

Once we took a careful look at all the numbers and did some analysis, we strongly encouraged them to take a hard look at their BDC/Internet training and sales process before they put any more money into their digital advertising budget. They agreed, and we put together a solid program that included additional training for their BDC reps, rewriting their Internet response email templates, freshening up their phone scripts, incorporating more text and chat in their follow-up process, and revising their follow-up schedule – along with revising the BDC rep pay plans to be more results focused.

The improvement in results was dramatic after only a few months. We had suggested that they drop a couple of their third-party lead providers that weren’t generating enough quality leads, so they brought their monthly expense down from $16,000 to $14,300. With the help of better trained reps using higher quality templates, scripts, and follow-up, they were now setting an average of around one hundred appointments per month, over 70 of them were showing up, and they were selling over sixty percent of them for 42 sales a month. So instead of spending $695 per delivery on 23 sales, they were now spending only $340, and their Internet generated sales were up 19 cars per month - over eighty percent.

What changed here? Well, several things: better trained reps with better email, text, and phone tools like templates and scripts will do a better job of influencing the better-quality Internet prospects. The best Internet prospects can be demanding in their communications and requests, but if your team knows how to work with them the right way, not only will more of them show up, but a much higher percentage of them buy when they visit the dealership.

It’s easy to get out the checkbook and buy more leads or spend more on digital promotion. Every day, dealerships are getting inundated with “the new best thing ever,” that are supposed to bring them more sales. The reality is that spending more on promotion and lead sources will only bring you more opportunities. And while it’s important that you not get left behind in the digital road race, it’s even more important that you have the best possible people and process in place to manage the opportunities that you’re getting. If you don’t, you’re going to end up with a lot of your budget going to waste, and that's never any fun.  Making an investment in having a team and a process that can convert your opportunities into visits and sales will always put money in the bank.

Dealership solution providers take note: make sure it works in the real world!


In the last few months, I've had a lot of client dealerships ask me to meet with companies that propose to deliver a variety of solutions to them.  Some of the people I met were very passionate about what they were selling.  They spoke at length about how they were going to show dealerships the right way to do things, and the products and services that were presented to me had very impressive marketing presentations to extoll their wonders.

In discussing how they would be used, it became obvious that most of these offerings fell short in terms of how they would work in the real world of an automobile dealership.  For example, in one instance I was speaking with a company that had developed a service lane marketing solution that a manufacturer had embraced and was basically forcing its dealers to utilize (and pay for, of course).  One of the VPs for the company was talking about a checklist that would be completed on every vehicle in for service, with the objective of identifying additional service opportunities that could be presented to the customer in hopes of increasing the RO hours.  The checklist, he explained to me, would be completed by the technician doing the work, and then the advisors would contact the vehicle owner and explain the necessity for additional service.

I asked him if they were comfortable with the expectation of having the process initiated by the original assigned tech, and he confidently assured me that the tech would be happy to do so because it was not only good for the dealership, but it also gave the technician a chance to increase their earnings.  Right then I knew this product was going to be a failure.  They were suffering from a complete and total lack of understanding about how car dealerships work in the real world.

I spent 15 years managing dealerships, and I loved every minute of it.  The smartest thing I ever did in my career was to take the time to get at least a passable knowledge of every job in the dealership.  I worked the parts counter, I did AP in the business office, I took a turn in the write-up lane at least once a month, and yes – I washed and prepped deliveries.  In doing this, I earned some respect from the people who worked with me because I showed them I wasn’t above learning from them, and learn I did.

I’m a pretty smart guy, and I can usually think through any kind of problem and come up with a solution, but those solutions will only work if they are based on an accurate understanding of what’s really happening in the dealership.  Third party vendors who build products and processes based strictly on factory guidance, or theories of “best practices” that have never been tested in a dealership aren’t going to solve problems for dealers, they’re only going to create new ones.

I wouldn’t spend ten dollars on a vendor solution that expected my trans tech to take the time to complete an elaborate vehicle inspection.  I have much better things for him to do, like get on the next transmission job and turn us both some more hours.  Plus, I’m pretty sure he isn’t going to be all that motivated to find additional flat rate hours that will end up on the drivability guy’s time ticket.  Don’t get me wrong, I like the idea of the checklist, and I love the idea of more hours on a car that’s already in my shop, but there’s a better way to implement this concept than what this vendor was proposing.  The objective was fine, the concept was good, but they didn't understand how to make it work in a typical dealership.

I see this happening more and more often as dealership solution vendors connect with manufacturers and convince them to push their products into their dealerships.  The dealership is only involved at the end of this process, and that’s why so many of these solutions fail, leaving both dealers and the factory kissing their investments of time and money good-bye.  What’s equally as distressing is that the problems that were supposed to be solved remain, and opportunities for dealerships to improve their service and earnings continue to go unrealized.

There are so many things that we can do better at car dealerships.  I’ve fantasized for years about a service process where customers are engaged from the moment they take delivery of a vehicle.  One where they are easily catered to in an effort to minimize their inconvenience when their vehicle requires service or maintenance, and are proactively updated on their vehicle’s status.  The technology we have today could easily deliver the kind of vehicle service interaction that would blow a customer away, if it was planned and designed to be used in a typical dealership easily, efficiently, affordably, and expeditiously.  In my own company, we remain zealously committed to working hand in hand with our dealership clients and their management team to put BDC and Internet processes in place that will work for them within the structure that’s already in use by them – and we’re successful almost every time.

I’m confident that someday soon, a manufacturer somewhere is going to figure this out, and they'll seek out a partner vendor that really understands the need to “learn all the jobs” before they push out their product.  That manufacturer is going to resurrect the concept of owner loyalty in their buyers, and you’re going to see massive market share increases for them - the result of their genuine commitment to an “ownership experience” that they will deliver to customers in partnership with a dealer body that has their respect, and their support.

Almost every car dealer I know is open to discussing how they could do things better.  They want to do the right things for their business, their customers, and their factory partners.  The reason they hesitate to embrace every new idea or program that’s forced upon them is because they’re still smarting from the experiences they’ve had before with misguided initiatives that didn’t solve anything, and that they were required to fund.  A great product that is supposed to help dealers first and foremost needs to actually work in a dealership, and without forcing the dealer operators to antagonize their managers and staff, or spend exorbitant amounts of money to reinvent the wheel of making customers happy.  If they really want to help their dealerships do a better job, the manufacturers first need to accept them and their people as invaluable sources of information about what they need, and how they need it.

Having trouble finding good BDC people? Start with a good BDC process!


In the last few weeks, I’ve had several conversations with dealers from various markets all across the U.S. about the problems they’re having finding good people for their BDC teams. Certainly this is a common problem in a lot of BDCs, and I remember well thinking the same thing when I was a dealership Internet BDC manager. We keep hoping that we’ll find a staff of people who will be as motivated and committed as we are, but unfortunately it doesn’t usually work out that way. After all, you selected your management team because they had exceptional qualities, and that’s what made them stand out. Not all of your team is going to be that extraordinary.

I’m not trying to say that you should lower your expectations for your BDC reps, but I am going to suggest you make sure that your BDC has processes in place that let you bring new people into a department where they can easily be successful. We do a lot to help our dealer clients hire good BDC people. We have a BDC skills assessment, AVA testing based on successful BDC rep traits, team focused pay plans that help keep reps focused and motivated, and much more. Even with all this, it can be a challenge to find people to staff a BDC. There is somewhat of a stigma attached to these kinds of positions, and that sometimes discourages people from applying for them even though they can be a great career opportunity for the right person.

The most successful BDCs all have well established processes in place. Our client BDCs have a structured approach in place, that is created to work with the entire dealership process, and include an enforced schedule for contacting prospects, specific email templates with the right message, up to date phone scripts and messages, regular reports that are completed by the BDC reps themselves and not just managers, and more. We know that the better your BDC process is, the less you’ll be affected by having newer personnel who may not always have the determination and commitment of your best people. When your BDC is process driven, the reps know what they need to do every day with every kind of prospect, and the results are easy to obtain.

As your BDC team gains experience, they should become more confident and convincing in their interactions with customers, but you need to make sure that they are sticking with the plans and structure you have in place. Sometimes after they spend a few months on the job, BDC reps will start to “wing it,” and their results will begin to drop off so it’s important to keep them on target, using the messages and tools that you are proven to bring in customers. The BDC needs to be about reassuring prospects that the dealership can meet whatever their needs are, and encouraging them to visit the dealership. A good process will make sure that’s happening, and you’ll be surprised at how much less personnel problems you’ll have to deal with.

Having a great BDC isn’t rocket science, but it can be challenging for dealers and managers who don’t have a lot of good BDC experience to draw from. If you’re thinking of starting a BDC, or you’re not happy with the results you’re getting from your existing BDC, you need to be sure that they are getting the right kind of advice about process and messages. If you’re ready and willing to take an “eyes wide open” look at your own level of BDC expertise, you might see that your problem isn’t the people you’re finding, but the process you’re plugging them into.

OEM digital programs - What's in it for you?


We recently participated in the GM Compass meetings being held throughout the United States.  During these meetings, it became obvious that the factory is expecting dealerships to spend more and more on Internet and BDC related items, and yet very little credible information was offered to help dealerships learn what they can do at the store level to make sure these investments pay off for them.

Our philosophy at AIT has always been simple: When dealers are required to spend on opportunities, they also need to make sure they're investing in results. Having a well-trained BDC/Internet team using the right techniques and processes can insure that the money you're being asked to spend on digital and website marketing isn't just going into the black hole of unrealized results.  You need to make sure your team has everything they need, including scripts, schedules, templates, process, training, competitor messages, and more, to make these expenses worthwhile.  So many times the OEM message to dealers seems to be more about throwing more money into the digital marketing pot, and dealers are overwhelmed by the sheer volume of programs that they are being asked to fund.  This can shift their priorities away from the things they need to do internally to make these investments payoff.

We are in total agreement with all the OEMs when it comes to just how important digital marketing is.  But one thing that seems to be missing in most of the factory promoted programs is the ability for an individual dealership to promote its message, or present its self as the consumer’s best choice in the marketplace.  Perhaps the most troubling thing we see is the inconsistencies of the OEM message as far as how to maximize the opportunities that can be created by these digital campaigns.

One of the things that makes what we do for our client dealerships unique is our commitment to developing solutions based on the individual qualities of the dealerships and groups that we work with.  We take the time to learn about what they are, what they want, what they don't want, what their strengths are that we can build from, and what their opportunities are so we can address them.  Because everyone in our company has real world dealership experience, we’re able to deliver a process that works without having to change the fundamental structure of the dealership, and this helps us get better results; faster, and without the disruptions in personnel and manager angst that usually comes with making these kinds of changes.  But best of all, it puts dealerships in a position to really reap the benefits of the digital programs they''re being charged for.

Not sure about your BDC/Internet results? Look at your numbers!


We meet with a lot of dealers and GMs who are worried about the results they’re seeing from their BDCs and Internet sales efforts.  They’re seeing reports from their CRM and BDC that show they’re doing a good job, but they aren’t seeing measurable gains in their market share and ranking within their peer groups – which is the best way to measure real results.  It’s understandably frustrating to spend money on a BDC, and not see a positive gain in market share to justify the increased expense.

We’ve installed many BDCs that have helped dealerships increase their sales and market share.  When they’re done right, a BDC can even help lower expenses by allowing the dealership to spend less on “scatter shot” marketing, and do a better job with more a more focused advertising effort and budget.  When we see a BDC that looks good on paper, but the overall dealership numbers aren’t getting any better, the first thing we do is to look at the numbers.

Unfortunately, a lot of CRMs are notoriously bad at providing the kind of reports that a dealer or GM needs to look at to know what’s really happening in their BDC.  When we evaluate a BDC’s performance, we don’t rely on the stock reports that are included in the standard menus, and we don’t accept the reports being turned in by the BDC strictly as submitted.  We look deep into the CRM records to see exactly what is being counted as a BDC/Internet “opportunity” and what isn’t.  Then we apply the same scrutiny to what’s being reported as a BDC generated appointment or sale.

We recently visited a Toyota dealership in a good sized metro market.  The dealer was concerned because he had a fairly large (five person) BDC that was reporting over 150 appointment shows per month, but the dealership sales ranking had actually fallen two spots since the prior year, when they didn’t have a BDC.

After we analyzed the last few months of BDC activities, we were able to see a number of reasons why the dealership really wasn’t doing as well as they thought they were.  One thing we found was that a lot of Internet leads were being inaccurately marked as “bad.”  In this case, 146 leads weren’t being counted even though there was nothing wrong with them other than the fact that they hadn’t responded yet.  Also, the number of Internet appointments made and shown included 67 from customers who were really walk-ins who had submitted a credit app online, or been entered into CRM incorrectly as an Internet lead result.  There were several other areas where the reported information didn’t match what was really happening.

When the real numbers were recalculated, it became obvious that the dealership wasn’t doing nearly as well as they thought they were.  The reports had been showing an Internet close rate of 19%, which isn’t bad, but the real numbers brought them down to 8%.  The same was true with phone calls, although not to the same extent.  Once the numbers were verified the close rate dropped from 36% to 18%.

We changed the process that the BDC was using; including the email templates, phone scripts, contact schedule and other things.  Then we spent a lot of time retraining and roleplaying with the BDC team.  Of course, we also changed the reporting process so that future reports would accurately reflect the results.

The second full month after fixing most of the problems that had been holding them back generated a REAL close rate of 17% for Internet leads, and 38% for phone leads.  We also put an aggressive outbound phone call process in place to work marketing leads and unsold showroom prospects that brought in 25 appointments, and 14 of those ended up buying.  The best result?  The dealership increased their market share by 6 percent, and moved up 4 places in the zone rankings.

If you’re concerned that you’re not getting the growth you want in spite of seeing numbers that show you should be, take the time to do the math.  It may show you that things aren’t exactly as it appears, and then you can fix the problems and flourish!