The Secret Identities of Successful Car Dealers
More elusive than the last unicorn, the secret to success in the car business is hiding in plain sight.
When the “up bus” forgets to stop in front of your store, you may feel an urge to put out an ad (any ad) to get the people in. Call the newspaper! Buy some more radio! Get on TV!
But before you do, put some serious thought into why anyone should buy a car from you.
Let me help you: think of a person, or a group of people, with a certain and specific need, and get a strong picture in your head of you selling them the perfect vehicle in the perfect process at the perfect price for them. Do not tell me why everyone should buy a car from you. Speaking to the masses is less an art than an outdated form of artifice originating in the days before Google became a household name.
Shouting from the rooftop is less effective than whispering to the guy beside you. Moreover, none of these approaches will do anybody any good if you don’t walk your talk and can’t back up your claims. Your dealership has its own unique brand position, different from that of your OEM, and its essential that you know who you are in the landscape of the industry.
Car dealers can be segregated into general groups, or profiles, based on their business practices, volume and goals. If your definition of success is selling 25 like-new used vehicles of the same make as your new-car franchise sign, with a higher than average gross and little fuss about those business office add-ons … be honest with yourself, and be honest with your customers.
There are more than a few valid business models in the industry today, and the only way to really run a bad business is to not understand your own goals, thus failing to communicate your true brand strengths to your customers.
Pick your position, and play it well.
High-priced, full-service, specialty experience. In this scenario, you advertise a price near or at the top of what the market will bear. You recondition the vehicle (which you likely bought in a closed OEM sale or took in as a lease buyout), possibly to a CPO or enhanced set of standards, and roll out the red carpet in every aspect of your customer experience. To really rock this approach, you need to go all the way on your vehicle presentations, merchandise them like diamonds in the sky and rely on brand strengthening messaging that is not price-centric.
To really confuse your customers, couple your premium brand messaging with assertions of low prices and savings.
Middle of the pack pricing, bigger selection and add-ons for a price. You may have bought some of your units at auction, in order to get some off-make stuff, and while you didn’t steal any of them, you checked your pricing tool and you are right where you want to be, at 98 percent to market. This is where you will sit until either a) you agree to do some extra stuff, to the tune of $600 or $800, on the car to get it sold, or b) you drop the price 90 days in and take a skinny margin to move it off your lot. To find the sweet spot here you need supreme attention to detail; since you have no obvious edge or advantage on the car or the pricing, emphasize your relationships with banks, premium suppliers and value adds like balance shortfall protection or limited warranties which will allow you a better opportunity to upsell into creditor insurance and premium extended service contracts in the business office.
The big mistake in this zone is to fail to give any motivator at all; since you pretty much operate in the “partly sunny” realm of vehicles, you have to really go out of your way to show and tell the “sunset on the beach” story.
Lowest price, massive selection, get what you pay for (no more, no less). You (or somebody in your store) probably likes to consider yourself a true wholesale buyer, savvy in sourcing and dispatching units to fit the price shopper’s needs by the hundreds, pricing them out at low prices but faring better than other dealers would think on front end gross.
This is because you hold your gross, and since your cars book out well, you make some good profit in the business office, too. You safety your vehicles, sell them with however many keys they came in with, and refer to the comments section on your bill of sale. This is where it says “customer declined extended warranty” if non-safety related items pop up as come backs after about thirty days.
To maximize your exposure and your volume (this model relies on high volume, fast turn) focus on your online classified listings and your website. Worry less about brand messaging, and send out flares of general price alerts in static media which cater to budget conscious demos, like families, or accountants. Don’t promise premium experiences unless you can actually follow through.
People actually believe those ads on TV where if you call now, you get not one, not two, but eight for the price of one. And they are seriously miffed if there’s any shortfall or extra shipping and handling charges.
All kidding aside, in this digital age where word of mouth is archived online, and going viral can be the best thing that ever happened to your business, it is vital to make sure you have a clear picture of the state of affairs in all aspects of your store and that you share that image straight up, no twists, to the people who will respond to that projection intuitively.
I have engaged with some key dealers in a guided self discovery process of operations analysis, and that’s a great starting point to assist you in finding out your current habits and practices so you can write your road map to get you from there to where you feel your store’s own unique brand really should be.
Look at your sourcing and stocking approach, your volume and turn rate, and reconditioning and business office activities, to compare to the markers of a consistent image that you feel represents the kind of dealer you want to be. Or maybe, once you figure out who you are today, you will make some adjustments to your ideas of who you wanted to be as a dealer, and begin to sing the real praises in marketing and executions that are congruent with the kind of business you are doing day in and day out. Either way, take your vision and your reality, get it together into one solitary line, and look straight ahead in 2014.
Cathie Clark is a dealership operations consultant specializing in used vehicle sales and digital plus full media marketing strategies. Clark is the principle at Automotive Insider Consulting. Have a question? Email Cathie@automotiveinsider.ca .