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Allen Levenson

Allen Levenson VP Sales & Marketing

Exclusive Blog Posts

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Do Your Salespeople Spend Too Much Time Managing Software...Instead of Selling?

187e9f5c61a28b24824370d7d44b2cda.jpg?t=1The fact is, lead generation is an expensive business and having the right tools to manage this investment and deliver the most qualified leads to your dealership is paramount to your success.

When it comes to mining your database and working your in-market customers, you have two choices: use your internal team to run and manage all aspects of it (self-service) or outsource many of the functions to a service provider who does most of the heavy lifting (full service).  Self-service options demand the installation of comprehensive software that requires training and hands-on daily interaction to be effective, while a full service provider will take over the day-to-day tasks (i.e., database management, developing marketing materials, mailings, e-mails, etc.) and, instead, deliver qualified leads to your sales force.

Both approaches have their pros and cons. Full disclosure, I currently work for a full service provider, but I also spent eight years as VP of Sales and Marketing for a large, publicly-traded dealer group. This experience taught me that there are merits to both solutions, but also that there are a few simple questions you should ask yourself to help determine which road you should travel.

So, regardless of the type of product or service you’re considering, when is it right for a dealership to choose a self-service over a full-service option and vice versa?

Here are some basics questions to consider:

  • Cost and ROI – are there any unforeseen/hidden costs?
  • Vendor Reputation – do they have a solid track record? Do they offer good training/support?
  • Staff Stability and Size – does your staff turnover mean you’ll be training and retraining often? Do you have enough manpower to handle another in-house solution?
  • Staff Expertise and Knowledge – could a 3rd party handle the task at hand perhaps even better than in-house staff?

 

Cost and ROI

Of course, cost and ROI are key considerations when investing in any new solution. And when evaluating managed versus self-service, it’s important to also consider any hidden costs that might be there.

For example, self-service solutions will typically have a well-developed software platform that cost a considerable amount to build – but this is a cost that is usually passed on to the dealer as a relatively high monthly fee. And, then there is the staff required to run the software – in addition to needing front line sales people or BDC reps, dealerships have been known to hire dedicated personnel to administrate different software solutions. Given the high turnover rates in our industry, one of the biggest hidden costs is in training and retraining new staff to run the software and the often “lost” time/opportunities during this process.

This chart uses the example of equity marketing providers to compare the costs of a managed service versus self-service – taking into consideration hidden staffing costs. It appears at the outset that the self-service option is relatively comparable in terms of cost to the managed option; however, if it needs dedicated staff, it can be twice the cost. I suggest doing a similar analysis when considering any managed versus self-service program.

 

 

Managed Solution

 

Self-Service Software

Monthly Fee

$600

 

$2,000

Mail/Postage/E-mail

$1,500

 

$750

Dedicated Staff

$0

 

$3,000

Training/Retraining

$0

 

+++

TOTAL

$2,100

 

$5,750+++

 

Vendor Reputation

It’s important to consider the vendor – not just the solution they are touting. Have they been in industry long or is it a newbie promising to deliver in almost impossible ways? Do they or their management team have a solid track record of results? If it’s a self-service option, do they offer good, solid tech support? Do they have automotive experience and what is their training like? If they are full service, do they have people on board who have worked at dealerships and understand instantly the challenges and needs of your business? Look at the ratings of the solution on platforms like drivingsales.com to get a handle on what other dealers are saying about the vendor. Also consider whether other dealers with similar needs/requirements turn to this solution – ask around!

 

Staff Stability and Size

This is a big one. With a self-service model, usually it’s the dealership’s sales people who do most of the legwork – this can be an advantage because every dealership wants their sales people to be actively working their leads. However, this can also be a huge negative because of high staff turnover in our industry. The facts speak for themselves: according to a 2013 NADA report[1], general staff turnover in a dealership is 35% while a CNW report[2] out earlier this year said that salespeople turnover rates at new-car dealerships is often higher than 100%!

You have to ask yourself: do you have time to be constantly training your sales team on how to use the product? One of the biggest advantages of a managed solution is that you don’t have to rely on front line employees to take action, and therefore never need to worry about the software sitting idle. There is also a great argument for dealerships with minimal manpower to adopt a managed solution for very similar reasons.

 

Staff Expertise and Knowledge

Even a dedicated workforce might lack the bandwidth/knowledge required to run an in-depth CRM software program along with, say an equity-mining tool. This is a real consideration – many stores with multiple products have a problem getting their sales force to use just one of them consistently.

 

Real World Example –Pros and Cons

Using the example of database mining and equity marketing (tools that rely on complex segmenting of databases to help dealers identify in-equity customers), we can evaluate some of the pros and cons of managed vs self-service products.

Self-service software can be stand-alone or directly baked into a CRM solution, giving the task of database mining (which can be complicated) to salespeople or an in-store marketing/BDC manager. A full-service solution, on the other hand, takes the onus off the dealership by handling the data mining and marketing for them, relying on sales staff only to close the deal. A knowledgeable account executive will mine the data on behalf of the dealership, doing all the legwork.

Dealers who choose a full-service program generally do so to take advantage of the expertise and knowledge provided by account executives who run numerous equity marketing campaigns, as well as the comfort in knowing that no matter how stretched the sales force is at any given time, all in-market prospects are being touched, including both cash and service-only customers.

Put simply, a self-service solution can make sense for dealerships that have a stable, low-cost work force and low turnover; while a full service solution can work for just about any dealership and can be a safer bet because you know that, regardless of whatever fire drills might be happening inside the dealership, business is going on as usual.

 

Allen Levenson has over 25 years of automotive and marketing experience. He is currently Vice President of Sales and Marketing for equity marketing pioneer, Prospect Vision. He also spent eight years as Vice President Sales & Marketing of Asbury Automotive Group and was responsible for all sales, marketing, Internet, CRM, strategic planning, and public relations activities for the company.

 

[1] 2013 NADA Dealership Workforce Study Industry Report

[2] 2014 CNW Retail Automotive Summary

Chris K Leslie
Allen, what you are proposing here is crazy. Training is not an expense it's an operational cost. Yes it never goes away and it shouldn't. You really shouldn't compare what you are doing against the value of training internal staff. You should compare the value of your product against the competition and propose a growth strategy that may not exist.
Allen Levenson
Chris, my apologies for the delayed response. I appreciate your feedback, but I believe you misinterpreted my point. Of course, training is always a good thing to do in any dealership, and it is required on an ongoing basis. However, with lead management tools there are options and continuously buying more software isn't always the answer, no matter how good the software is. I was the VP Sales & Marketing at Asbury for 8 years, and I have to tell you we bought a lot of great software that was never utilized properly or vastly underutilized. With the incredibly high turnover inherent in our industry, it can require the stores to constantly be training and retraining on the sophisticated and often confusing software. If there are low cost outsourcing solutions available, it can be a better economic decision for the dealersihp, particularly if they are in an area with high turnover. Better to spend their time training their sales people on the 10 step road to the sale, and not multiple different softwares. Thanks.

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