Word of mouth referrals have always the best way to sell cars. Friends, family and networks are the go-to source for finding trusted sellers and online sites make it so easy now. As a dealer, if you’re not paying attention to what’s happening on these sites, things can go very wrong, very quickly.
Online ratings are what brought me to social media marketing. It was 2008 and after 25 years of managing dealerships, I foresaw the direct correlation between online ratings, social networking and business operations. I discovered customers were talking to one another instead of listening to advertisements.
Social media now fuels conversations and online ratings are one of the first places people go when they’re looking for solid, trustworthy advice.
Building and managing your online reputation is no easy task. I’ve seen a couple of dealerships that enjoy over 200 reviews but suffer from an overall 2-star rating. This constitutes a 911 call (if there was such a thing).
When you’ve got a large amount of reviews and your overall rating is very negative, that represents a consensus, not just the few opinions of your disgruntled customers.
It’s impossible to know how many sales are lost due to negative online ratings, but taking action now to prevent disaster will certainly keep you out of hot water.
What you CAN do is take these 7 Right-Now Actions that top independent dealers are doing to secure their online reputation.
1. Make sure your company culture is ready for prime time.
There’s a local dealer here in Southern California who reached out to me to help them with their “Yelp problem.” A look behind the curtain showed me it’s not the online part of their reputation that’s gone wrong. It’s their culture that’s causing the negative reviews, and it affects their actual real life reputation as well.
Their processes are “old school” and it reflects in the customer experience. That fact is reflected in their 100-plus 1-star Yelp reviews.
2. Establish and maintain an internal process for capturing happy, loyal customer reviews.
This starts from the top and must be managed effectively with solid leadership and accountability. An effective process would include clear objectives, training, development, pay plan changes, and a marketing plan to build customer reviews. Your salespeople are your biggest advocates. Leverage their networks and past clients.
3. Recruit reviews honestly, openly and with enthusiasm.
The last employee your customer deals with in their transaction can have the most impact. Train front line personnel to ask for referrals! This works: have your employee look your customer square in the eye and say, “Our business is based on referrals. Would you please share your experience with others online here.” and then offer them a printed reminder with your profile’s URL.
4. Recognize that online reviews are a company asset.
You’re already focused on keeping customers happy, right? Then why not maximize the payoff of those efforts by recognizing that happiness is a valuable online asset. A flock of glowing reviews greases the gears of search engines to greatly increase your exposure in regionally-based searches. Combine that with the powerful effect of word-of-mouth, and online reviews deserve a place under “assets” on your company’s balance sheet.
5. Acknowledge that software can help but it’s not a replacement for hard work.
There are providers out there claiming to “manage your online reputation.” No one manages your business’ reputation but YOU and your staff. Software can certainly automate some of the tasks but a solid internal process to capture happy, loyal customer reviews and referrals is what makes or breaks your success.
6. Convey the importance of online reputation to your front line personnel by motivating them. (i.e.: WIIFM – ‘what’s in it for me’).
When employees see their names in online reviews, it can be very powerful. Many people buy cars after Googling the salesperson. More and more, you’re seeing sales personnel show up in search results for a business. When you incorporate online review building with their compensation, you’ve got an avenue into getting employee buy in.
7. Handle negative reviews quickly, sincerely and with social finesse.
There is a very special way to approach replying to negative reviews. This is where an online reputation coach can really help. It takes finesse and years of online social experience to know how to respond.
Here’s how not to do it: (This is from an actual dealership’s profile). The customer wrote seven paragraphs on why not to buy a car from this dealer and ended the review using all caps, “DO NOT BUY A CAR FROM xxxx”. This was the dealership’s response:
“Thank you very much for taking the time and effort to write your review of our dealership. We do appreciate any and all feedback. It certainly sounds like you had a very frustrating experience with our sales department and we are deeply saddened that your experience with us was less than perfect. We would definitely like to hear about your visit in further detail, so if you have a free moment, please give our Sales Department Customer Service Representative xxxx a call directly at (xxx)xxx-xxxx.”
Three things went wrong with this response:
1. It could not sound more corporate. In fact, the same canned response is given for every one of their negative reviews.
2. They refer to her experience as “less than perfect”. Really? I would say it’s a lot worse than that in her opinion. Don’t minimize your customers’ feelings.
3. The general manager doesn’t even take the time to respond. He pawns it off on someone else.
If I’d been that customer, the store’s response would’ve enraged me even more. Here’s a much better response:
“Wow, how sorry I am that your experience with us was this negative, xxx (customer’s first name). We have failed. I’m xxxx, the General Manager of xxxx and I’d like to talk with you personally about how we can do better. Please call my cell at (xxx)xxx-xxxx. I truly want to make every customer’s experience a positive one and I hope you give me the chance to rectify things with you. Thank you so much for your feedback. I look forward to hearing from you.”
Building, managing and sometimes improving your online reputation will be one of the hardest tasks you’ll ever take on. Take these right-now actions, secure your presence online and become the trusted resource that everyone is looking for.
For more info on the strategies of independent dealers, see Auto Remarketing's Jun 15 issue: "Top 100 Used-Car Dealers: Independents Edition." This issue highlights some of the top independent dealers in the nation in pre-owned performance, plus much more.
One of the most overlooked and underutilized practices on social media is leveraging its power to generate leads and sales.
Many think social media is a platform to only create interest in your dealership. If this is your mindset, then listen up, because you’re leaving money on the table.
To generate leads on social media effectively, you first need to lay the groundwork.
Just like during face-to-face networking events or in social situations, you must take the time to listen and engage with people before you try to sell them something. On social media, this is done with useful, relevant content that attracts buyers.
The opportunity to grow your business using social media has never been more advantageous.
- 77 percent of B2C marketers say they have acquired a customer through Facebook.
- 34 percent of marketers have generated leads using Twitter and 20% have closed deals.
- 46 percent of web users will look to social media when making a purchase.
When you’ve laid the groundwork and the opportunities are plentiful, this is the time to enact your strategies for leads and sales on social media. Be open to the possibilities here. Your level of willingness to adapt to the new ways of reaching customers has a direct affect on your results. If you’re ready, here are 10 ways the top Franchise Dealers get leads on Social Media:
1. Define clear objectives and goals.
I’ll bet that either you or your boss thinks you can’t sell anything using social media. If you do it right, it’s not only possible but probably. Setting objectives and goals is the best first step. When you have serious goals from the start, your results become more meaningful as you tie them back to your goals. That’s how you establish social media ROI.
2. Create a solid content strategy to share valuable, useful content.
A goal without a plan is just a wish. Content strategy is how you’ll get the right messages to the right customers at the right time. A successful content plan examines and identifies 3 segments:
- You. Identify the reasons why you do what you do. What are your core values and beliefs?
- Your dealership. Why do customers choose your business over your competitor? What differentiates your store?
- Your ideal customers. Learn how your customer behaves in order to know what content will engage them. What are their interests? What problems can you solve? How can you provide value?
3. Be social. Always genuinely engage with your audience.
I still see dealers on social media using old advertising tactics. Broadcasting the “benefits” of their products and services to people who will scroll past your content without a thought. The majority of users on social media want to connect and engage with brands they love.
Every sale starts with a conversation. Learn to recognize leads during conversations and work them accordingly.
4. Be helpful.
Social selling is about being helpful to those who you’re connected with. Answer questions. Don’t sell something; solve something.
5. Advertise on Social Media.
Turning fans into customers takes a strong conversion strategy. Engaging prospects in conversation, asking questions, listening, and ultimately helping them buy are all tactics that great Social sellers practice.
Social media ads boost your results. Grow your Facebook page likes, improve post engagement, drive leads using landing pages: these are all ways to advertise on social media.
6. Use landing pages and calls-to-action.
When a prospect is in the final stages of their research, be the guide that takes them further down your sales funnel. Capture their attention and convert them into a customer with actionable, compelling landing pages. Drive them to the landing page with ads and use a clever call to action to collect their contact info.
7. Create visibility on search with your blog.
Blogging is an integral part of social media strategy and it’s essential to driving traffic, leads and sales. Content in blogs is what drives search results today, however, it’s got to be GREAT content. Writing a blog is a skill so seek guidance if you’re not sure how to approach it. Quick tip for subjects: As your employees to give you 3 FAQs customers ask. Answer each one with a blog post.
8. Use Twitter for prospecting.
With a little skill and perseverance you can locate and engage with your ideal customers on Twitter. Create a search on Hootsuite Geo-Search for tweets in your market area. Monitor the search regularly and soon you’ll find ways to be helpful or even awesome. Engage prospects in conversation by offering help or advice. Expect nothing in return except the good feeling you get from helping someone. If/when the conversation turns your way, ask more questions to let them create the lead naturally.
9. Identify communities on Google+ where leads might be and join them.
Don’t wait for leads to come to you, go look for them! Start with a completed profile so people can see who you are. Share content on Google+ using your already-established content strategy. These two actions are like getting ready to go on a sales call. Now you’re ready to seek out leads. Join communities where you can network and collaborate with others. Give to get.
10. Show another side of you on Instagram.
If you’ve done your homework on developing your dealership’s “brand,” take that content strategy to other platforms. Use Instagram to communicate the fun side of your brand. Spend 10-15 minutes each day engaging with other users. I know a dealership who has worked leads using their Instagram content.
These 10 tips give you every reason to capture leads and sales with social media. All that’s required now is to make the choice and go with it!
Ask an auto dealer about their detail department, and they will usually rattle off a litany of problems. Or, if you ask them what the biggest problem in the dealership is, they will usually reply, “the detailing department.”
However you ask the question, the answer is always the same: detailing departments in dealerships pose problems for the dealer.
What are the problems?
The most cited problems are generally always the same with most dealers:
- Dirty, disorganized and an eyesore for the dealership
- High labor costs
- Undependable and unreliable employees
- Extremely high chemical and supply costs
- Poor quality work
- Slow turnaround
The Detail Department Reflects the Dealer
Simply stated, a detail department is a reflection of the dealer principal’s or general manager’s attitude about the detailing department. Hard as that statement might be for a dealer to accept — or as much as they might try to justify the “whys” for these problems — the burden and the solution rests squarely on their shoulders.
Be honest. How important is the detail department to you? How much time do you spend to make it better?
If you go into a restaurant and find the service poor and the food marginal, it is due to one thing: bad management.
The same is true of a hotel where desk clerks, bellmen, restaurants and overall service is lacking. It is traced to the hotel manager.
If the dealer principal or general manager is not responsible, then who is? When asked to evaluate a dealership’s detailing department and make recommendations involving major changes and/or a substantial investment to upgrade, it is always the dealer principal who has the final word.
Therefore, if a dealer expresses dissatisfaction with his or her detail department but is unwilling to make any effort or investment to improve the department, it’s telling me they don’t really care that much about changing anything.
To Be More Specific
This is not intended to be a critique of dealer principals or general managers, so let me offer some possible solutions.
Over the years that I have consulted to dealers and others in the detail business, I have found that problems can be categorized into four areas:
- Attitude
- Management
- Personnel
- Technology
All of these play a major role in the successful operation of a dealership detail department.
1. Attitude
Simply, it is the dealer principal’s attitude about the importance of the detail department in the overall operation of the dealership that affects what you will find in the department. This attitude trickles down to GMs, sales managers and the detailers themselves.
2. Management
Any dealership that processes a minimum of 100 to 150 vehicles per month requires management, supervision and accountability.
In a dealership, the sales department (new and used), service department and body shop all have managers or supervisors and are held accountable for certain standards. However, this is not the case with the dealership detail department. Management is given to the used-car manager or the service managers, who really do not want the responsibility and do not even know what to manage or how to manage the department to make it better. So, how can it be better? Those in charge are basically a “babysitter” for the department.
3. Personnel
Detail personnel are the one problem you hear voiced by more dealers than any other. Why? That is simple! It is easier to blame someone than to assume responsibility.
Face it: who hires the personnel? The dealer, GM, or whoever is put in charge of the detail department. If you do not put sufficient time and effort into selective hiring and proper training, you will end up with unsatisfactory employees.
In my opinion, the reason for the personnel problems in most detail operations is that managers hire “typical detailers.” That is employing the unemployable, and trying to train the untrainable. When you hire an experienced detailer, the first thing they want to do is change the chemicals being used to the ones they have used before. If you have detailing procedures, they will want to follow their own. They are not interested in following; they want to do what they know, and few really know anything. Most of them have never had any formal training. When a detailer says he has three years experience, we say, “No, he has had three months experience doing the same thing two years and nine months.”
Bottom line: hire people with good values and potential, not skills. People with good values can be taught skills.
4. Technology
Bottom line: dealership detail departments are inefficient because no one knows what good detail technology is available. The dealer does not; the GM does not; the service manager does not; and neither do the detailers. Most are using the same technology that has been in detailing for the past 60 to 70 years:
- Portable shop vacuums
- 10-pound electric buffers
- Hand scrub brushes
- Plastic squeeze and spray bottles
- Rags and scrap towels
- Buckets
There are new technologies such as central vacuums, soil extractors, vapor steamers, air tools, orbital tools (that will wax a car in five minutes), automatic chemical diluting and dispensing systems, etc.
These new detail technologies can eliminate most, if not all, off the common problems facing dealers with an in-house detail department; but it requires an investment of time, money, and effort. If a dealer is not willing to expend the time, money, or effort, then they must be willing to settle for what they have always had.
If you think about it, the intersection of technology and people should be making our dealerships more efficient places to do business. The rise of demand for transparency, coupled with a myriad of reporting tools tracking every metric and variable of our business, should be resulting in something like an algorithm change: picture the squiggly line in movies when subjects are hooked up to a lie detector test — an urgent procession of sharp spikes and descents. Instead, many dealers are seeing results on their overall statements which are, oddly, flat. In my work with dealers these past few months, I’ve noticed a trend which may explain the disconnect between inputs and outcomes, and why most dealer principals and GMs won’t see positive changes without mending this breakdown.
Being a car dealer in Canada, especially in stressed and fragmented markets like Ontario, has become progressively harder to do successfully over the course of the last ten years.
Without boring you, I will sum this up in three events having a catastrophic impact on the industry. First, this thing we know as the Internet, with its many evolutions and innovations of network and device. Second, the fallout from the financial recession and the resulting instability in the job market leading to a shrewder consumer who, in some cases, can’t afford to care about anything other than price. Third, “ZMOT” (zero moment of truth), or, the commoditization of the service business: whatever you can sell a person, houses, cars, legal wills, is now researched in a sterile and logical environment, often online, in a consumers home or on their device, far away from where we can sway their quest with our best sales approach and emotion. This brings us to today.
I think if given the option, the majority of dealers would really like the Internet to just go away. The perception I hear is that it’s expensive to maintain an online presence, impossible to measure, and that the jury is still out on whether or not it actually helps us sell more cars. With the exception of a few innovators, the large majority of us dealers haven’t quite figured out who we are supposed to be online, never mind how we are supposed to do it profitably. When sales are down, how many dealers even look at their Internet numbers? In a climate where the latest stats show consumers consulting up to 24 online sources before visiting dealership, it is safe to say that if your store is not competitive in some aspect or other, that fact should show up in a metric somewhere.
Fact: if you Google “car shopping paramount concern”, the resulting SERP (search engine results page) is a list of pages with that stock copy from Dealer.com websites, “Dealer X treats the needs of each individual customer with paramount concern …”
People. Come on. Are you kidding me? This is like opening a store in a facility used by another dealer in the past and leaving their name up on the door. Nothing else screams, we don’t even look at our website, like leaving your home page covered with the stock content stuffed onto 90 percent of the dealer sites across the country. Remember that figure of 24 sites consulted online? Now imagine reading about “individual needs with paramount concern” 24 times! I guess the “long walks on the beach” line worked for a time too, but trust me when I say: that time has passed. The fact is that if your online efforts aren’t working to move people through the new, elongated Web-to-showroom sales funnel; it’s not them; it’s not Auto Trader; it’s not even Google; it’s probably you (or your digital twin).
I firmly believe that despite the three issues mentioned above, every single dealer in Canada can afford to run a successful online dealership. If I didn’t, I wouldn’t risk offending dealers by highlighting so brightly why so few of us are doing it. You see, we spend upwards of 50 hours every week in our stores, we know them, and our lot, like the back of our hand. But how well do you know your digital dealership? Answer these five questions:
- What reason would people have to do business with you after reading your home page?
- Do you own your URL?
- What page on your site gets the most traffic? The longest visits?
- What happens when you Google your dealership name and the word “reviews”?
- How many cars do you have online right now, with pictures and descriptions?
I ask because each of these questions has a corollary to our physical businesses, and they speak to issues of basic dealer identity, stability, having an accessible business that lends itself to the car buying experience, having a good reputation in your community and just plain being open for business.
You would never allow your physical dealership to fall into the condition I suspect your digital dealership has. Until more dealers take control of what consumers find when they go online, we will continue to hear about upwards trends and recovery, and wonder why it is not translating to more profits and more sales in our store. For the select group of dealers who are actively managing their online identity, please accept my congratulations, and my apologies: I do hope that soon (after the release of this article) there will be more competition from your peers.
True or False: The primary function of your website is to generate interest and leads for your dealership.
If you agree that this statement is true, then would it be fair to assume that your website is focused on providing people with a simple and intuitive way to get information on vehicles, and to contact the dealership once they see something they like?
Much has changed in the automotive industry over the last 10 years. Google has built cars that drive themselves, and fully electric vehicles are much more accessible than they once were. With all these great advances in technology, one might expect that the way dealerships are run would have seen a similar degree of advancement.
I am fortunate to have the benefit of meeting and working with new Canadian dealerships every week, and when you speak to as many dealers as I do, you see some common threads start to emerge. Even today, dealership websites are first and foremost viewed by the management as a place for people to view their cars online.
In 2004, that might have been accurate — in 2014, your website is the new front line of your business. It’s where the majority of your customers are coming from and one of your greatest assets. So why aren’t you giving it the level of attention needed to make it truly great?
The majority of your website traffic is landing on one page, that isn’t getting nearly enough love from you …
Introducing the VDP
First things first, what is a VDP? (Hint: It’ not a Vicious Dinosaur Plumber) A VDP is a Vehicle Details Page. This is the page where people will be able to view information on individual new and used vehicles on your website.
The VDP is one of, if the not the most important page on your website. Studies have shown that 90 percent of website visitors will land on a VDP at some point during their visit. This is where the magic happens.
Have You Customized Your VDP?
Most dealers aren’t aware that their VDP is as customizable as any car on their showroom floor. With less than 10 companies providing 90 percent of the website solutions to dealers in Canada, there isn’t a whole lot of variety out there.
All VDP’s are not created equally; some convert much better than others. In one instance, an overhaul of a dealer clients’ VDP led to a 45 percent increase in conversion for that particular page. This increase in conversion resulted in a healthy spike in lead generation, while total monthly website traffic remained relatively unchanged.
VDPs should always be customized and tested, as there is no one-size-fits-all solution out there — every market and brand is different.
So now that we are aware of this major pitfall, let’s look at the things you can do to smash the mold and make your VDP your own.
The All-Important CTA
Second things second – What is a CTA? (Hint: It’s not the Canadian Triceratops Association). A CTA is a call to action. This a button or image on a webpage that is designed to get people to, you guessed it, take action!
No VDP is complete without a compelling CTA. Today, the average VDP has 8 CTA’s – that’s a whole-lotta-options for car shoppers. Conversion science in the e-commerce business shows that more is not necessarily better. Ecommerce juggernauts like Amazon or Zappos take a very different approach, giving users two prominent CTA’s above the digital fold.
Why is this? The philosophy is simple — don’t give people too many options, and funnel them where you want them to go. While the automotive industry is different from full-on ecommerce industries, it’s interesting to compare how different the average dealership website is to your average e-commerce site.
Your CTA’s should reflect what you want consumers to do while on your website. Is your top priority getting them to share the vehicle on twitter? I hope not, because very few, if any, do this. How about the “Make an Offer” button? If an up walks on the lot, are the first words out of your product adviser’s mouth, “Want to make an offer on this car?” Of course not, you’d never start a conversation like that on the lot, so don’t start a conversation like that online.
Why Should Anyone Buy From You?
When a car shopper visits a VDP they are ultimately looking for two things:
- A car.
Anyone visiting a VDP on your website is looking for a new or used car.
- A dealership to purchase from. Brand loyalty is at an all-time low, and consumers are more open-minded to switching from dealership to dealership, based on their perception of value.
Most VDP’s have plenty of information on the car, but what about the dealership? My 10-dealer spot-check yielded not one dealership who had customized their VDP with a unique value proposition of any sort.
Consider this – Your new inventory is nearly identical to every other same-franchise dealer in your city/province. Your used inventory, while slightly more varied, is quite comparable to the other used inventory pieces that are available in your local market at any given time.
Knowing this, wouldn’t it make sense to use some of the VDP real estate to differentiate yourself from your competitors? Why should they buy from you, as opposed to the dealer down the street?
If you don’t tell them, no one will.
The Other Stuff …
High-quality photos, strategic pricing and custom descriptions are all essential components of an effective VDP. If you aren’t prioritizing the above mentioned items, consider what your shoppers are looking for when they click through to the VDP. They want to see what it looks like and how much it’s going to cost them, and they also need a reason to pick this vehicle over the others they have looked at.
Putting it All Into Perspective
If you’re anything like most dealers in Canada, you likely have invested millions of dollars in both the land and physical structure of your dealership. While one could make a counter argument that this is money well spent, data doesn’t lie.
On average, dealership websites get 10 to 15 times more visitors than their showroom floors do. If your website is falling short, the most incredible facility and remarkable sales team will always underachieve.
If you build it, they will come.
Want to talk websites, VDP’s, conversion, etc.? Kevin Gordon is always up for a chat.
Kevin Gordon is an international speaker and thought leader in the automotive industry, regularly speaking at conferences across North America. Kevin co-founded Convertus, a digital marketing solutions provider for dealers. Learn more at Convertus.com.
It’s sometimes hard to turn the focus from customers to internal practices and employees, but if you find the time, it will pay off.
That’s according to Paul Potratz of Potratz Advertising, who spoke last week on one integral internal strategy that many dealers are forgetting.
In the latest “Think Tank Tuesday” video, Potratz focuses on organizational charts, which he sees as something crucial to business success.
Potratz says if you take the time to come up with an internal organizational chart, you will reduce employee turnover and increase morale.
“It will also increase the confidence of the employees since they know what is expected,” Potratz added.
He then offered a few steps for dealers beginning to look at the internal structure of their store.
“The first step is focus on hierarchical organization,” he says.
But he cautions dealers to not focus their charts on where they are now, but where they want to be in the future.
For example, if you plan your chart with forward growth in mind, you may have position blocks open, but Potratz says this is par for the course.
He also warned to beware of pitfalls, and pick out the “doers” in your team as leaders, not just the thinkers, or those who have been with the company the longest.
He also encouraged dealers to study alternative organizational charts, as well, such as the matrix, and the 21st century organization chart – which is based on a molecule.
“You want to create absolute clarity among your employee. When you build clarity, your sales and confidence will go up,” he said.
To see the latest “Think Tank Tuesday” video, click here.
A colleague shared the single-side of a cell phone conversation he overheard this week as his return flight from the Digital Dealer conference in Atlantic City taxied to the gate at O’Hare airport.
The passenger in the seat behind him took a call from someone seeking a sales job. The passenger, who described himself as a dealership’s Internet manager, laid out the dealership’s pay plan, which prompted my colleague to take some notes:
New Vehicles: The store pays a straight 20 percent commission on sales, with a $175 guarantee on no-gross deals (“Those are the ones we sell at invoice or need to blow out,” the manager explained to the caller.)
Used Vehicles: The manager broke down a stair-step commission structure: 12 percent on the first three deals sold in a month (e.g, 1-3 cars); 15 percent on the next four deals (4-7 cars); 20 percent on the next five deals (8-12 cars); and a retroactive 35 percent if a sales associate sells more than 12 vehicles.
The manager then explained, “If you sell a $3,000 deal at the beginning of the month, you’ll only make 12 percent, but it’ll be 35 percent if you sell more than 12 cars.”
My colleague shared this experience with me because he thought that I might write about the pay plan. He was correct. The pay plan is troubling to me on at least three levels:
1. It’s based on false assumptions and false hope. The first false assumption is that the sales associate controls the front-end gross profit on a used vehicle deal. As my father used to say, “you make your money when you buy the car” and, in today’s market, when you proactively manage the margin through your reconditioning, pricing and promotion. The second false assumption mixes a dash of false hope—that $3,000-gross deals are plentiful in today’s market.
2. It limits efficiency and productivity. The pay-plan’s gross profit-based foundation means that sales associates will inevitably go back-and-forth with managers to negotiate and close every deal. In this deal-by-deal environment, even the most efficient sales associate would seem to be hard-pressed to put more than two deals on the board in a single day. Over time, I suspect the best sales associates will leave, recognizing that the store’s pay plan and process makes it difficult to reach the magical 13-car threshold.
3. It de-emphasizes dealership profitability. The retroactive 35 percent commission in used vehicles strikes me as dangerous from a variable cost perspective—unless, as suggested above, no one ever hits the 13-car target. I don’t know of too many dealers or markets where a 35 percent commission on their used vehicle sales would leave sufficient after-expense profit to make the original investment in the vehicle worthwhile.
In addition to these issues, the pay plan also suggests a lack of pricing transparency and an in-store sales experience that isn’t likely to satisfy customers who’d rather know they’re getting a good deal in a short amount of time than to spend hours negotiating the price of a vehicle.
Dale Pollak is the founder of vAuto. This entry and Pollak’s entire blog can be found at www.dalepollak.com
To increase production in a dealership detail department most auto dealers might think of two ways:
A. Push the employees to work faster (which normally doesn’t work).
B. Increase labor (which simply increases costs).
However, there are three other alternatives you could consider:
A. Hiring better personnel
B. Better utilizing your present facility by organizing and becoming more efficient — the “work smarter not harder school of thought.”
C. Purchase equipment that will allow you to produce more work with the same labor, and/or in the same amount of time.
These are the first steps to increasing production. If you look at most detail shops, they are typically very disorganized and inefficient. Equipment, chemicals, supplies and employees are very helter-skelter — an unsightly mess.
All these elements need to be organized to ensure a workflow that gets the maximum amount of work done relative to the number of employees. In fact, if a franchised dealer does not buy into the concept of workshop organization before purchasing equipment, the results will be less than satisfactory. New equipment will not help a disorganized manager and disorganized people
Rather than purchasing new equipment and dropping it into an existing disorganized detail department, it will be much more efficient to make an effort to look at and determine the causes of disorganization and then eliminate the problems before doing anything else.
The Forest and the Trees Story
A major obstacle for most dealers to this approach is their familiarity and comfort with what has always been done. In other words, it is hard to see the forest with all those big trees in the way.
To say it another familiar way, “It is hard to remember the plan was to drain the swamp when you are up to your posterior in alligators.”
In most cases, the dealer principal does not even go in the forest or swamp.
While many franchised dealers have good intentions, they generally are distant from the operation of the detail shop. The pressure of “getting the cars out” is put on someone else, like the service manager, used-car manager or detail shop supervisor, with little or no involvement on their part.
As Steven Covey states so well in his Seven Habits of Highly Effective People, business people, typically, spend most of their time in “Quadrant I Activities”, what he calls the important and urgent. While these are activities that must be accomplished, it should never be at the expense of “Quadrant II Activities”, which he calls important but not urgent.
These activities deal with goal setting, planning, shop renovation, equipment purchases, etc.
The Application
For me it would be easy to simply say, read Covey’s book to understand its application to you (I would highly recommend the book for every business person). In lieu of your reading the book, a simple summation of his recommendation is for you to take some time to set down your goals and expected results for your detail department and how you might achieve them.
Rethink, Reorganize, Regroup
There is no question that rethinking the present management and operational methods in your detail department will cost you money. But keep in mind that these costs should more than pay for themselves.
To get started, you should work on solving the biggest problems first, and then work on all the others. The key is to get started. Take a sheet of paper and write down at least two or three things that are problems in the operation of your detailing department, or have the person in charge of the department do this, as well.
Even if there are more, pick out those two or three that seem to crop up each and every day.
Remember everything cannot be changed at once; you will be lucky to change two.
Once these have been identified, you can then begin the process to change them.
Doing What You’ve Always Done, Getting What You Have Always Got
How do you identify the two biggest problems? Ask the people who work for you. No one knows the problems better than those doing the work.
One of the ways I have learned about how to make a detail shop more efficient is to work in the shop. Without having my own shops, I could not be in a position to offer you any advice.
You Need Procedures
Do not limit your thinking only in terms of purchasing equipment. You must also think in terms of developing procedures, or changing some of those you now have. Often you can increase productivity by making simple procedural changes. For example, do you have a job service order with each car?
If not, how do the detailers know what to do to the car? It does not cost much, but it could save a great deal of time.
Do you have a procedure for final inspection of the vehicle before it leaves the wash bay? Before it leaves the work bays?
To take a few minutes to check the vehicle before it moves is to save even more time.
Changes like these are very important to implement before purchasing any equipment.
Remember: production improvements from equipment purchases are only as effective as the personnel operating the equipment.
But you have to be realistic; not every change made is going to be helpful. Moreover, there will be many of your employees who will point to that one failure as a good reason not to change anything else.
Everyone resists change in all walks of life. You know the old saying: “lf it ain’t broke, don’t fix it.”
But your answer to this is: “We need to get more and better quality work done with the same amount of labor in the same amount of time.”
Employees have to know that greater production means more money for them and their future.
The best way to get employees to buy into planned changes is to include them in the plans. That is, if you really value their input.
If you do not, maybe they should not be working for you. If you ask the employees what they need to do their jobs better or faster, you can insure their participation in your plans for change.
Of course, you have to have the right people, and most dealerships do not have the right people working in their detail departments. I can say with complete confidence that most “experienced” detailers are not those you would want anywhere else in the dealership.
With these people, their experience is only good if you let them do what they want. And then who is in charge? They are. That is why most changes never work because experienced detailers do not want to change and will do everything they can to fight any new procedures, equipment, etc.
Must-Have Equipment
Before identifying what equipment a detail department should have, first look at how your shop is equipped now. Then you can understand the reason for disorganization and mess:
- Portable shop vacuum with long extension cord
- Electric buffer with long extension cords
- Buckets
- Hoses
- Miscellaneous brushes
- Plastic squeeze and spray bottles
- Miscellaneous buffing pads
- Towels and rags
Part of the problem in “organizing for better efficiency” is that your detail department has little to work with in the first place. Organizing the equipment mentioned above takes so much time that you are probably already paying for any high-tech equipment in wasted time and lower production.
It has always been my contention that a detail department should be set up like a surgical operating room or a dentist’s office. A good example of this is the automotive service department in your auto dealerships or the setups in quick lubrication and oil change facilities. Why shouldn’t your detail operation have this same type of organization?
A quick lube facility, for example, uses many types of oils, grease, transmission fluids, differential fluid, brake fluid, etc. These are not dispensed in small containers, but stored in bulk and delivered to the work bays in hoses. This is obviously a very efficient system.
Doesn’t it make sense that a detail operation should have some type of chemical dispensing system? Especially considering the number of chemicals used and the fact that many have to be diluted?
Substantial production increases are possible in most dealership detail operations by re-examining the way the work is presently being done and utilizing everything and everyone to your best advantage. You can purchase the best equipment, but if you are not getting the most out of what you already have, you will not get the most out of what you just bought.
Make Your Supplier Your Partner
A key factor in reducing and maintaining supply and chemical costs is to partner with them.
Ask many dealers about the companies that supply their recon/detail department, and you get comments about lack of honesty and commitment and overselling; or simply, “I don’t deal with them.”
The interesting thing is that if you ask a supplier about their dealer customers, they might say the same things.
So who is right?
Suppliers state that dealers say they want quality, service and delivery. However, most buy based on price.
Dealers indicate that suppliers only want to sell as much chemical as possible, and give you a real “snake-oil” pitch on most of them.
Long-Term Process
Like marriage, learning to “partner” with your supplier is a long-term process. They take the time to develop and require positive input from both sides. Just because the dealer is the buyer does not mean it is a one-sided relationship.
Detail suppliers who have not yet learned to partner with their customers are beginning to find it tough going, and it will get worse.
Smart dealers are learning to limit their suppliers, and work closely with those who can supply most of their needs. You must look for suppliers who want to partner with you. When you find one, put more energy into these relationships, and you will get what you want, when you want it, with the service and attention that goes with a purchase. In the long run, if you commit to one or a few suppliers, it will turn out to save you money.
Suppliers who cannot meet these demands should not be given your business.
Earning Trust
All relationships begin with trust — earned, not purchased, taken or given freely.
Dealers must cooperate with their suppliers. A supplier can only assist you if you share information with them. For example, if you or your recon manager is unhappy with a product or the salesperson who calls on your shop, tell them or their supervisor the problem.
You must give in order to get. In exchange for good pricing and extraordinary service you need to make a commitment to purchase most of your chemicals and supplies from them.
If you want a supplier to provide you the most advanced technology and information you must help them. They have needs as you do, and you must be sensitive to their needs as you expect them to be to yours.
As a small dealership you might be saying, “Hey, I’m too small for all this fancy ‘partnering.’ I have to keep my costs down, and if I can buy for a cheaper price, I have a right to do it!”
But are you really too small? Maybe you are small because you think small about your detail department, and then get small results.
Consider those suppliers who could put you on the cutting edge of all the latest technology in the detail business that cannot only save you money, but make you money.
You will never know how these suppliers can help if you do not give them a chance.
Better yet, ask those suppliers that sell price what else they can offer besides price. If you think saving a buck or two on a gallon of chemical is going to help your detail operation you are destined for disappointment.
Suppliers, You Have a Role, Too.
This is not just for dealers! The supplier must partner too. Not only with their customers, but with the company who supplies chemicals, pads, brushes, etc.
To be the greatest value to the dealer, the manufacturer you represent, and to yourself, you must be a source of knowledge for both. Share as much as you can with your customers and your manufacturer. Do not be discouraged if your ideas are often met with a lack of response. In partnering, you must always look at situations from the other point of view.
As one of Steven Covey’s Habit’s state: “Seek first to understand, then be understood.”
Have you gone too far? That is, have you tried to fit too much into too short of a YouTube video, or is your landing page full of text but falling to engage customers?
Quality versus quantity, says Paul Potratz, of Potratz Partners advertising, in his latest "Think Tank Tuesday" video report.
But there may be a time and place for each.
In this week’s video, Potratz speaks on how long dealers should be making their content on several different marketing channels.
Potratz says sometimes dealership need "quality," and sometimes they need "quantity."
Potratz gives the following examples: in an inventory video, a longer, more in-depth form might be warranted, rather than one minute blips for every car on the lot.
In fact, Potratz shares the long format videos prove to spur some of the best conversions.
"The more informed a customer is about a product, the more likely they are to convert," he says.
On the other hand, landing pages present a different scenario.
If your landing page message is something that doesn’t take a lot of explanation, such as a deal on a particular vehicle, you can use a short landing page.
But a lease description landing page might be a bit longer.
Potratz says the most important thing is to remember to make sure to have multiple calls to action staggered throughout your landing page.
Lastly, he covered email marketing.
Potratz proposes that dealers test the waters by sending out one short-form email, as well as a longer, more in-depth note.
Vary your subject line or content, and send each variation to a split database to find out what works best for your store, Potratz said.
The latest Think Tank Tuesday video can be seen here.
It feels pretty good to be a car dealer right now, particularly in used vehicles.
Dealers are reporting strong used vehicle results in April, with some setting records for both volume and profitability at their dealerships. So goes what we call the “spring selling season,” which buoys dealer confidence and their bottom lines.
But amid all the positivity, I feel compelled to offer a word of caution: A strong spring season for dealers invariably spurs some to make bad decisions. Their confidence can quickly turn to folly as they build up their used vehicle inventories based on the belief, as one dealer put, that “we think we can sell everything.”
Recent news about the seasonal adjustment in used vehicle wholesale prices—they’re declining (sharply in some segments) as the market digests large numbers of off-lease vehicles and trade-ins—only adds to the spring-time temptation for dealers to stock up and keep selling. The cars are plentiful, so what’s the harm in ramping up the inventory?
But here’s the problem: While in past years the spring-fed slide in wholesale used vehicle prices might have offered dealers the opportunity to acquire inventory at a lower cost and achieve additional front-end margin, today’s market doesn’t work that way. There’s too much competition and retail pricing transparency for dealers to expect that as wholesale prices decline, retail asking prices will stay the same.
If anything, retail price pressure will effectively erase the additional margin dealers might have enjoyed as a result of purchasing vehicles at a lower cost. Here’s how one Velocity dealer put it the other day: “I’m buying cars cheaper, but I still have to be aggressive with my prices to be competitive and maintain my inventory turns and profit objectives.”
The comment underscores the difficulty dealers face in today’s margin-compressed market. Acquiring used vehicles at the “right” price is only a first step; from there, you must make merchandising, pricing and promotion decisions that help you retail vehicles fast, to limit the market’s appetite to eat away your margin.
Unfortunately, there will be a lot of dealers who simply can’t resist the temptations of spring, and they’ll lack the velocity-focused management mindset that’s necessary to properly expand their used vehicle inventories and retail the additional vehicles quickly to maximize profitability.
For them, the decision to buy more cars today will lead to over-age vehicles tomorrow, and a very difficult summer.
Dale Pollak is the founder of vAuto. This entry and Pollak’s entire blog can be found at www.dalepollak.com
