Car Business Ramblings

This is not 1996 anymore. It’s 2009 and we have some exciting trends taking place in our industry; its time to come out of the cave and participate in these exciting opportunities!  

What’s Out: Internet Departments

What’s In: Teaching your entire staff, desk included, how to handle Internet shoppers

The Internet is NOT a niche market anymore.  Since over 80% of your customers are using the web to purchase cars, shouldn’t at least that much of your staff be prepared to handle the demand? 

What’s Out: CRM as a technology

What’s In: CRM as a management tool for your entire dealership

In today’s market follow up is imperative, especially with Internet marketing.  We reach consumers much earlier in the buying cycle, requiring much more robust follow up. 
(Check out CRM vendor ratings right here.)

What’s Out: Traditional marketing to drive customers to your store

What’s In: Traditional marketing to drive customers to customized landing pages/microsites

IF you are still sold on traditional media (this is opening a whole other can) at least send them to a special micro site or landing page to track and capture what is left of your traditional marketing effectiveness. 

What’s Out: Walled gardens of information

What’s In: Leveraging the collective knowledge of peers to think smarter and faster

Individual trial and error wastes time and money; that’s why it said that “two heads are better than one.”  Someone, somewhere has solved the issue you’re facing.  The most progressive professionals in the industry are blogging, commenting, discussing and leaning on their peers nationwide for guidance and ideas to improve upon and implement at their stores. Thousands of successful industry pros have flocked to dealer communities like DrivingSales.com, where they can ask questions, discuss tactics and get creative ideas to be more successful.  Mass collaboration networks have revolutionized the way peers in other industry’s innovate; it’s about time it hit the car business! 

What’s Out: Websites that were made to be beautiful.

What’s in: Websites that were made attract traffic and Convert.

Dealers have figured out that a good looking, whiz bang website is not the objective.  Websites that are open to the Search Engines and index well bring in potential customers.  You site must also take visitors and convert them into leads so that your dealership can sell IS the objective.  Stop judging a website by how cool the functionality is, and judge it by the simple equation of  “leads captured”/Site visitors.  That is how a website should be judged.

What’s out: Unprofessional, ALL CAPS LOCKS, misspelled and misaligned emails.

What’s in: Professionally branded l messaging. 

Emails should be short and to the point.  Include a proper signatures and links to more information including video and custom landing pages. Lastly, DON”T YOU KNOW ALL CAPS IS YELLING IN WEB LANGUAGE?  All caps was acceptable in 1996, lots has changed and it is now (12 years later) offensive so its time you caught up with the times.

Lastly a few other things that are IN:

Dealership Chat:  Chat is proving itself at stores across the country to dramatically increase the number of leads a site provides.  Leads = Car Deals and Car Deals = ROI.

Craigslist, and other free online services to list inventory.  Many established companies (Google) and new startups are getting into the space with innovative business models to publish inventory for free and capitalize on upgraded services.  Dealers are taking advantage of these services for gains in incremental traffic and deals to their store.

Creative: (not the verb, the noun)  Beautiful design can dramatically send a visual statement to your customers about your brand.  First impressions set the stage and tone of the relationship. Poor creative is like wearing plad pants, white leather shooes and a fur coat on the used car lot, it doesnt strike positive emotions in your customers.  Get your creative done right.
 

Technorati Tags: craigslist, Creative, CRM, dealership trends, internet departments, social networking, traditional marketing, Vendor Ratings, Website Chat

Merry Christmas to the thousands of DrivingSales community members who frequent the community and participate. We wish you all the very best this holiday season!  Ill share my 2 most memorable Christmas in the Car Business.  (Feel free to add your own if you so desire.)

Most memorable Christmas #1:

When I was 10 or so years old, on Christmas day, my father told us kids that he had some work to do and needed to go into the dealership for a few hours.  He offered to bring us, and said since it was Christmas he thought we could have some fun playing in the Jeeps.  We all went down to his Jeep dealership, my 2 brothers, my sister and even some cousins, and to our surprise as we got there he said, “it looks like Santa visited the dealership.”  Inside the showroom, decked out with the real Jeep Wranglers was a Power Wheels Wrangler for each of the younger boys (I was the oldest by 4-5 years)  The Power Wheels were in between the real ones on display like they were for sale and each one had a name on the stock tag.  Everyone got excited and started driving their Jeeps around the show room and I noticed (along with my older cousins) that there was no car for us to drive.

A few minutes passed and we heard a motor racing outside.  We ran out just in time for us to catch my father in a gas powered go cart with a fiberglass stock car body whizzing down the sidewalk towards us from his other dealership two doors down.  He threw out a big Merry Christmas card as he raced by and did a lap around the lot.  We each had a turn racing around the lot.  It was a very memorable Christmas, and led to years of fun on the go cart! 

Most memorable Christmas in the Car Business #2:

Just a few years ago, on Christmas Eve, I was on the desk so the other mgrs could have the day with their families.  (My oldest son was only 2 and my wife was understanding, so I figured the other Mgrs should spend the time with their kids who were much older.)  I had in-laws in town, and some family, so we scheduled dinner at 6.   At the store we planned on working the morning and shutting the doors around 2-3 so the rest of the team could get home and enjoy the holidays.  Well, anyone with any experience in the car business knows as soon as you make plans to get out early… you’ll be stuck with a late deal.
The morning was an average holiday and we sold a few cars, but this particular “repeat guest” showed up at noon and wanted a surprise for his wife.  He had purchased many cars from us before, but all in his company’s name.  He wanted a blue Expedition Eddie Bauer, we didn’t have one in stock.  We quickly found one at the neighboring lot and make a quick trade, checks by mail, and sent the sales person on her way.  We hadn’t even pulled credit, but knew the guest and had to get the car before the other store shut down if we wanted to make the Christmas surprise.  The lot tech went to get the car while we completed the paperwork.  Turns out the guy was personally way over extended, he had great credit, but too much outstanding.  We called banks, sent him for current pay stubs, and worked every angle.  In the end the car arrived, got detailed but there was no way we were going to get anyone at the bank to approve this… they were home for Christmas.

I decided to roll the car, confident the deal would get done (which it did the day after Christmas) The guest went through finance and we did a spot delivery.  The sales person did a full delivery (you have to protect those surveys!) and we finally closed up around 7.30.  By the time I locked up, pulled the gates, hit the lights I wasn’t home until 8:30 long after the big family dinner.  I was so stoked though, it was one of those trophy deals.  When you work for 6-7 hours on a deal, you wont let ANYTHING stand in the way of placing the happy tag on the car and watching the new taillights hit the road.   As the saying goes “Busting bugs and burning gas”

 My in-laws were great about the whole thing, but in the end it would take someone from inside the business to understand the addiction to making sure the deal went down, even on a holiday

For those of you who do not know what the "job bank" program for the UAW is let me give you a crash course:

After heavy layoffs of union workers in the 1970’s, and the threat of automation cutting more factory jobs, the UAW and the big 3 negotiated an agreement.  It was clear that the big 3 would (and should) continue building automated factories where robots completed much of the labor to increase quality and decrease costs; as a result fewer factory workers were needed.  As automation increased, so would the layoffs.  Rather than reward the Big 3 for the ingenuity, and despite the quality enhancements and the cost savings, the UAW demanded that the factory workers still get paid even if they didn’t have a job.  The result of the union negotiation was the "Job Bank."

The job bank is an account, funded by the Big 3 that pays factory workers up to 95% of their prior wages if they have been laid off due to restructuring or automation.  According to the source I read they can receive payments until they either retire or get a job at another factory!  This program guarantees obsolete factory workers pay and has been a weight on the shoulders of the big 3 since the contract was put in pace in the 80’s!

Now, call me crazy, but lets say you are a sales manager making 100k per year and the market drops so the dealer reduces his staff from 3 sales managers to 2.  You are laid off.  Are you entitled to receive 95% of your pay until another dealership agrees to pay you 100 grand?  How about if some software tool came out that did your job so you were no longer needed at the dealership and thus you were laid off.  Would you get $95k until you retire?  No way!  We know that our task is to do our job as best as possible, and if we are ever replaced its up to us to go find other means of making a living.  If you are rewarded (paid) regardless of the job you have, or if you even have a job, than what would be the motivation to get better or to create opportunities?

Isn’t capitalism about the opportunity to create our own destiny?  The ability for the strong to flourish, while the weak rebuild to come back stronger?  The American dream is based on freedom to do what we want to do.  This freedom blesses us with tremendous opportunities, but it comes at a cost. That cost is that another force in our free market may replace us with something better; thus our main task is to constantly transform ourselves into better to keep us on top.  America isn’t about guarantees; it’s about opportunities, and the constant cycle of everyone trying to out do one another is what keeps innovation and our economy moving.

Its sad to see the big 3 under such weight that they cant stand on their own.  Its sad to see what was once designed to protect workers, now be one of the causes bringing down the companies who employ these workers.  I know the UAW has good intentions, and I believe that workers must be treated fairly, but in trying to defy the constraints of the market the UAW has strangled, or assisted in strangling, the golden goose. 

an old but good article on the job bank from Detroit News:  http://www.steveharryforstaterep.org/JOBSarticle.htm

Split deals can be a headache for Management and a downer for the department.  They affect more than the two or three sales people involved, because the team tends to pick sides with their friends and the “ill-will” spreads like a contagious cancer around the showroom floor.

The saying, ‘the best offence starts off with a solid defense” definitely applies here.  Set ground-rules and insure everyone, including management, plays by them; your team will be much better off.

Your CRM tool is one of, if not THE most important piece of technology since it holds the keys to your success, your customers.  Regarding split deals, your CRM tool can take on added value as the end all answer to many of your stores in house disputes.
I feel strongly that “process” is key to one’s success.  Mediocre sales people perform above average if they execute a process well and good sales people will be unstoppable.  As a manager define and ALWAYS reward your process.  Build your sales process into your CRM system and use it in moderating questions over who a customer belongs to.

For example, if your CRM recodes inbound and outbound calls these can be used to decide split deal disputes.  If your process is follow up with a customer weekly then protect the sales person if the CRM system shows they followed the customer weekly as directed.  If they missed their call, or didn’t record it in the system, they loose protection.  If a sales person claims he worked with a guest a few days prior, and has their name and number on a business card to prove it but they are not logged into the system… sorry no protection.  Customer activities must be properly recorded in the CRM to warrant protection. You must always go back to your stores process, and make sure your CRM system is aligned with what you want to happen and you will kill two birds with one stone.

1.Disputes over split deals will happen less and less, keeping your sales team happy and focused on the task at hand, selling    cars.

2.By using the CRM system as the deciding factor in protecting a sales person from a split deal, you will build a culture that your process matters.  This alone will increase your business by getting all the team on the same page.

Disputes over split deals are a waste of time.  Take a few minutes to outline your process in your CRM and define your rules for split deals.  The benefits will pay off 100 fold over time as you build a team that executes your vision.
 

Technorati Tags: car sales, Sales, sales management, split deals

With so much hupla over potential for a government bailout pundits and politicians are quick to point an ignorant finger at the many wrong reasons that placed us in this mess to begin with. Few if any, are discussing the historic facts at the core of the domestic automakers current crisis.  The industry was set up right, but has been locked in and unable, not just unwilling, to change their now antiquated business model & structure.

The domestic automakers were born in the very early 1900’s, they weren’t started IN the industrial age, the WERE the industrial age.  These companies grew rapidly into becoming the economic engine that fueled America’s great growth.  To serve the population dealerships were needed in every community for sales and service.  This industry revolutionized the economic world as well as the social world.  Cars made travel affordable and efficient, keeping people connected and making the world a smaller place much like social networks of today.

In the 50’s and 60’s the interstate highway system was built out, to the pleasing of the auto industry lobbyists.  With easer means of travel the need for cars increased, but so did competition, which severely eroded dealership margins.

Honda and Toyota didn’t enter the US market until this time, and really didn’t gain significant traction until the 1980’s.  Because their infrastructure was built out decades later and in a completely different economic era, their businesses structures are very different than the domestic’s.  Most notably they have far fewer dealers, especially when looked at the ratio of dealers to car sales.  Also, they are also not weighed down by the UAW, which was formed in 1936 (however smaller unions date back to the late 1800’s.)  Global competition has caught up to the American factory worker and these corporations can no longer afford to pay the benefits afforded through the past century given global competition.

Letting these plants move over seas should be out of the question, despite the potential short-term benefit.  Out-sourcing the domestic’ manufacturing would be a national security disaster.  During the past Word Wars the auto plants we converted to building tanks, planes and other vehicles for the military. Could you imagine if WWIII ever happened and we had to outsource our military vehicles to china?  YEA RIGHT!

There is no doubt the industry has some pains ahead of it as it goes through a much needed correction but there is a silver lining to this gray cloud.  Restructuring (even with a Chapter 11 reorganization of some sort) could provide some HUGE long-term benefits to the US auto industry.  Even though the industry is changing and that is painful, it must look at it as an opportunity. New business models could sprout creating a wide array of benefits for those inside the industry and those that consume our products and services.  There is lots of uncertainty in the market right now.  However, one thing is certain, as long as American ingenuity and entrepreneurship is alive and well the domestic industry will survive and reinvent itself into the world wide powerhouse that it was and deserves to be.
 

Technorati Tags: bailout, crisis, domestic auto industry, restructrue

I hated spoon deals.

Spoon deals can do some great… and really crappy things inside a sales department.  Sales people rightfully love to be handed a done deal; it basically means free money!  There is a downside to these deals though, they can promote laziness, unnecessarily increase expenses and can start bad feelings inside the department as managers tend to pick favorites because of friendships and then unfairly distribute the free deals.

Here is one way we found to keep the positive and rid ourselves of the negative effects of spoon deals.
Get all your managers to together and determine qualifications that they feel a sales person must have before they turn a family member to them.  This may include things like being knowledgeable with the product, be good with people etc.  Find ways to make these qualifications measurable such as pass off the product tests, have a minimum CSI score of X etc.

With a complete list of measurable qualifiers we went to the sales team and let them know what they had to achieve to “qualify” for spoon deals.  This insured that there was a push for certification and CSI.  Then each month you would rank your sales team on other measurable goals (based on your stores culture.)  The ranking could be determined by sales volume in the prior month, the winner of the walk around contest or the amount of perfect scores received on the prior months CSI surveys.  Once the sales people are ranked place them in order on a white board.  Managers have spoons to pass out; they always choose the top sales person on the list who is present at the store.   This allows the managers to pass family and friends off to be helped by qualified sales people.  By creating a “spoon board” we found we distributed the deals fairly and created some friendly competition for the matrix we were trying to reward.  (in our case we ranked sales people based on highest CSI for the prior month.) 

Whatever matrix the dealership decides to reward, you will find your team engaged and happier because they are no longer focused on why its unfair that Johnny always got the spoons and they never do.  They will be happier and motivated, which always sells more!
 

Technorati Tags: car sales, sales management, split deals, spoon deals, spoons

Life would be very tough without my blackberry.  Of the hundred or so legitimate emails I get a day, being connected and capable of a quick response at all times has dramatically improved my effectiveness.  Its no wonder that smart phones have become a necessity for all walks of executives.

Is it strange then, that the President of the United States, perhaps the most powerful executive of all, cannot use his blackberry to keep up?  Through the campaign trail, I was embarrassed for McCain’s lack of commitment to technology.  He at times seemed proud that he didn’t read emails and often pronounced his lack of tech usage having aids print emails fro him to read.  (Remember the Sales Mangers that continued print leads and only use the paper printouts despite having great CRM/ILM tools available.?  Yikes.) Obama’s campaign, on the other hand, greatly increased his advantage by aggressively pursuing a successful online strategy.

Well, the new Chief Executive of the United States, Barack Obama may be forced to turn in his blackberry.  Obama is apparently a heavy blackberry user, and leans on the device to keep him efficient.  No suprise since smart phones have proven to make millions of executives more efficient.  However, due to the Presidential Records act the fears of his correspondence becoming public and potential security issues, there has not been a US President who has personally used email.  Some may call it a perk, others a curse, but they have staffers to handle that for them.   Even George W. Bush sent an email as he entered The White House, using his personal AOL account, to friends and family saying that while he appreciated their communication, he was needed to power down until he was out of office.

Obama seems to know no bounds and is accomplishing many firsts.  It will be interesting to see if he is the first “Ultimate Executive” holding office of President of the United States to use the “Ultimate Executive” tool, a smart phone.  I couldn’t do with out mine; I can only imagine the withdrawals the President will go through.
 

Technorati Tags: barack obama, blackberry, email, president, smartphone

Recently General Motors announced it’s running dangerously low on cash and could run out in the next couple months with out the governments help.  They need 11-14 billion in cash reserves to run the daily operations of their giant company and are expected to end this year with 12.5 billion available.  This is a thin margin to be running a company on of this size; especially this is a difficult market to be forecasting in.  

What is the 11-14 billion for?  It’s the cash needed to run the company on a daily basis, akin to the working capital a dealer needs to made debt payments, pay off trades as they come in, discount for rebates and wait 30-60 days for the OEMs to reimburse them and to make payroll while waiting for car deals to be funded.  If this money runs out, there will not be enough to make their payments to their creditors, including potentially employees.  They will be forced to seek bankruptcy protection so they can try and renegotiate their obligations with others.  
In a good market General Motors would borrow funds, but in today’s climate, and with their declining capacity to pay against their current obligations its has made that reality a near impossibility.  In other words General Motors is just like the customer who comes to your dealership to trade in their car to lower their payment.  Unfortunately they are so far upside down, it would be extremely difficult to lower the payment to begin with, and if you could find a car cheap enough, the value of the collateral isn’t enough for a bank to cover the negative equity of the trade.  In other words their DTI is too high and they can’t get the advance.

So what are they left to do?  Like the buried customer who goes to mom and dad to borrow money for the down payment, General Motors (and the others) are petitioning the federal government for some help.  This is where politics get involved, (this isn’t meant to be a political post so ill just generalize here.)  The right (republican side) favors little government, and little intervention.  The company reaps what it sows, good or bad and the market remains more “pure.”  The left (or democratic side) generally pushes for the government to get involved and support the workers.  Both sides have good and bad implications, especially in this scenario (generally picking a side is based on what “goods” you feel are stronger and what “bads” you feel are worse.)

What do I think will happen?  Well right about now I’m not so sure the politicians can come to an agreement in time as to what is best for our nation.  One side says bail them out, the others counter that will raise taxes.  One side says if you don’t bail them out the pain will be greater on the public than the raise in taxes would… and the politics go round and round.  At this stage I think most on each side are in agreement the industry needs help, it’s the details they are fighting over. If the fighting isn’t resolved, the support may come but too late for bankruptcy. GM will file, and begin to restructure, similar to united airlines over the last few years.  GM will stay around, and go through some very radical changes, but they will survive.   To me the biggest variable will be how the public reacts.  If the media blows this thing way out of proportion it may taint the buyers opinion of buying with concerns about “will my warranty be valid?” “Will there be parts when its time for a service?”  The answer is yes they will be here, (bet GM reemerges, but as a very different company) the biggest challenge the dealership will be up against is customer perception.  The perception will be based on the media, and your sales people.

Perception is reality, I don’t write this article to be doomsy or circulate the negative info.  In fact I hesitate to publish this at all, but I think its important that the people on the front lines who are focused where they should be, “on making deals” understand what is happening so they can respond to customers in a non political, understanding way.  Your customers have some wild ideas running around in their heads right now and the sales people must be trained to handle the questions and over-come the objections they are facing.

I often train that objections are the keys to the car deal.  Build value, a relationship and seek out and solve your customer’s objection; that is how you sell.  I hope this summary helps someone out there in “reader land” better explain what is happening to the market the next time a customer asks.  If you cant answer your customers questions, or respond with, “I don’t follow that stuff much” you will not be breeding confidence with your customer.  

Sales people need to understand the industry is going through some painful corrections and may morph and evolved, but its not going anywhere.  The auto industry is changing and in this environment knowledge is power.  Keep your team current on the facts, and motivated to win. It’s a tall order, but we didn’t become the backbone to our nations economy for nothing.

Technorati Tags: bankrupcy, economy, General Motors, overcoming objections

A description of the typical gen Y buyer today.  (no this isnt really me, im older than 26… just wrote this to illustrate a point.)

I am an “Internet Buyer.” I am not a super mooch of a customer just looking for the lowest price.  I am not an anal-retentive computer science nerd using mosaic to buy my car because that’s what the elite of the web do.  No, those days and shoppers are long gone.

I’m no longer a 14-year-old boy playing around on his dad’s laptop, who decided to send a lead to see what happens. That was me 12 years ago when the web was just starting to take traction in the auto industry.  Today I am a normal 26-year-old college grad buying my second car. I don’t look at the Internet as a fad or me as part of a specialty market.  No, the Internet isn’t even a “way of life,” it’s just part of me and there is very little separation between my life and the web.

I was writing emails, surfing the web and created my first website before most sales people started complaining about invoices being published online. I went to school online, I work online, shop online and communicate online.  My friends and I keep in touch on facebook and through text messaging. I’ve got friends in other countries and we don’t talk long distance thanks to skype; even email seems a bit archaic these days.

I’m not alone, if fact my whole generation is like me.  Not to mention my parents now bank online, have their own blogs and even my grandmother visits our family photo albums on Picasa.  The astonishing thing is not my grandmother, but my 4-year-old niece.  She plays Disney online, is learning to read online and uses the digital camera to film her princess dolls and asks for my help to post them on youtube.

Yea, its not 1999 anymore and the Internet isn’t a novelty. It’s life.
 

Technorati Tags: Facebook, Internet, Internet Buyer, ISM, Sales, Youtube

Does this sound familiar? As an ISM have you work a lead, set an appointment and then it appears the guest didn’t show as promised… then hours later you see their name on the deal board next to another sales persons name?  You approach the sales person and get the response, “They didn’t ask for you, how am I suppose to know they were an Internet customer?  I’m not giving you half a deal now since I’ve done all the work, all you did was send them an email.”

Lets face it, this happens. A lot.

The tensions between Internet departments and retail floors are real.  ISMs feel skated by their retail counterparts and the retail sales person doesn’t believe that an ISM deserves part of the deal “for just sending an email.”

With over 80% of the population using the web to help their purchase experience, these disagreements are not going away.  What ends up happening is you dampen employee moral with the bickering.  Managers get involved and an employee is left feeling like their manager doesn’t support them.  It’s a downward spiral.  The consensus I get in talking with ISMs around the country is that the number one complaint is their managers don’t support what they are doing.  If arguments over split deals are prevalent in your store you run a high risk of losing your ISM, especially if they are good.

My question is, why are the Internet and retail floor separated?  Generally a dealership has 10 retail sales people to 1 ISM. Doesn’t it seem backwards to have 90% of your store is focused on retail deals yet 80% of your customers are focused on Internet transactions?   Better yet, if over 80% of your customers are focused on the Internet, why not just do away with the separation of the floors all together and train everyone to work with the “Internet Buyer?”

The excuse I hear the most is that dealers are afraid of losing gross.  However, the facts are you are more likely to lose the customer by not treating them right, especially if they are armed with information (as 80% plus of them are.)   When more than 80% of your customers are on the web and using it to direct their purchase experience, it does not make sense to dedicate any less than 100% of your staff to serving the this once “niche market.”  Its not 1998 anymore when people were questioning if the internet was a fad… its for real and ALL your staff better be involved.
 

Technorati Tags: internet department, retail floor, split deals