*This article previously appeared in the Reynolds and Reynolds FUEL monthly newsletter*

By Jessica Quattro

Most dealers know the service department, with its steady flow of jobs and reliable revenue streams, serves as the financial backbone of the dealership. Vehicle sales can sometimes resemble a rollercoaster month over month, but when the service department is humming along like a well-oiled machine, revenue outlooks typically don’t cause too much heartburn.

Yet, we’d never know this is the case by looking at the marketing the service department does compared to the sales floor.

There are a few reasons for this. One, regardless of financial realities, dealers and manufacturers still think the dealership is the place where they, first and foremost, sell cars.

Selling is romanticized, includes the human element of face-to-face interaction, and is where most dealers’ minds go when it comes to marketing to new and returning customers. The lack of focus in the service marketing area represents a huge – and ongoing – missed opportunity.

This brings us to another possible reason for the current status quo: dealers aren’t quite sure how to market their service departments effectively. This is a more legitimate concern, since beyond throwing out a discount on oil changes or a deal on tires, ideas for drawing people in can get foggy pretty fast.

However, what if dealers are simply focused on the wrong issue? What if the core issue is not the substance of your service marketing, but the inconsistent, impersonal, and unplanned haphazard way it’s traditionally been delivered?

Targeted and Customized Marketing

To clarify, it still benefits dealers to deliver marketing campaigns with more substance than a simple $10 off an oil change. But, it’s also true people need your service department no matter what. The issue isn’t dealers pitching the right product – it’s that service marketing is traditionally ineffective at driving traffic.

We’ve seen time and again customers respond at much higher rates to targeted, personal, and customized marketing. But, how do dealers execute this sort of approach?

It’s worth taking a step back to examine the systems governing your service department as a whole. I consider the ideal solution to be a web-based, comprehensive CRM tool that’s built as part of the DMS and serves as a single point of data entry and retrieval.

You may be wondering: “What does this have to do with marketing?” A single set of data shared across departments means you eliminate data duplication and reduce data entry errors. This provides a cleaner, more accurate database of customer information for your targeted marketing campaigns in both email and direct mail formats.

Targeted campaigns that can be customized to the individual level and delivered with consistency have proven to convert at higher rates than most other advertising forms. Too often, however, dealers look to their database only to find it disorganized, full of half-complete or duplicate entries.

Having a CRM that is the sole entry and access point for such information removes obstacles, providing your service department with a solid foundation on which to base highly effective, targeted campaigns.

With reliable customer information in place, you can equip your service department for the marketing campaigns it has always deserved. Are you ready to breathe new life into your service marketing?

About the Author

Jessica is product planning manager at Reynolds and Reynolds for sales based applications.

*This article previously appeared in the Reynolds and Reynolds FUEL monthly newsletter*

By Brooks Fiesinger

If you pick up a report listing the most successful dealerships nationwide, nearly each one would identify success based on revenue. When I sit down with a general manager and ask how they’re doing, the first thing they say to me is almost always, “we sold X dollars of cars this month!” I look at the whiteboard and see a revenue target, a count of how many cars were sold and maybe – just maybe – a gross profit figure mentioned somewhere.

Revenue as a whole is overrated. At first glance this comment is going to be met with eye rolling and a sigh because, “everyone knows it”. However, it is a core issue that must be addressed. A dealer will only improve what they measure.

Revenues are up at dealerships across the board, but the cause for concern is in diminished vehicle margins. When profitability is purely coming from increased volume it is more important than ever to measure margins.

Without revenue, it is impossible to have profit. But, revenue itself doesn’t pay employees, owners, or provide for expansion. In fact, even gross profit isn’t the ideal target of an automotive dealership. Gross profit is only taking into account the cost of goods sold. Rather, net profit is what matters; taking all the revenue and subtracting all expenses.

Each dealership should ask themselves this: would I rather have $60 million dollars in revenue and be published as a top dealer in the nation, with $120,000 in net profit? Or, would I rather see $30 million dollars in revenue, still be recognized as a dealer leader, and walk home with $260,000 in net profit?

Many of the top volume dealers in the nation see tremendous revenues in extremely low margin products and operations, but neglect high margin profit segments, such as F&I offices and fixed operations. Dealerships consumed with revenues treat them all the same, focusing on quantity over quality.

Aftermarket accessories are something that frequently gets overlooked in a dealership. Few dealerships recognize the potential for dealership-wide profit accessories can offer. Take a spoiler for example. Traditionally, a $750 spoiler may net only $120. On the other hand, a $550 F&I product offers $149 in gross to the F&I office. This makes the spoiler seem like a second-tier sell. However, at the enterprise level, a $750 spoiler may only net $120 in the F&I office, but the $630 cost isn’t going to an outside company; it’s going to the service department. After $220 installation and paint (at a profit of $170 to the service department), the $410 service department cost goes to parts. Parts has a $196.80 cost on the product, netting $213.20.

From a comprehensive level, which is more appealing: (A) an F&I product which offers $149 to the dealership or (B) a spoiler which offers $503.20 to the dealership?

In a study of aftermarket accessories, the comprehensive profit margin averaged 57% and could be as high as 88.2%. Compare this to F&I products such as extended service contracts which average only 45%.

From this viewpoint, it’s evident dealerships make the most of what’s important when looking at how much of the revenues flow into net profit. When focusing on profit as opposed to revenue, dealerships can preserve much more of what counts at the end of the day: what goes into their pockets.

Want to learn more about creating a new profit center in your dealership with accessories? Download our latest accessories trend report.

About the Author

Brooks Fiesinger is the Senior Product Planning Manager for Reynolds and Reynolds, leading analytics and intelligence products. Brooks has years of expertise in the automotive industry, both in academic research and practice. He is passionate about educating others and helping them succeed.

*This article previously appeared in the Reynolds and Reynolds FUEL monthly newsletter*

By Joe Witt

SEMA recently published its latest market report with a lot of new findings. The most exciting finding is that the accessory industry garnered an extraordinary $42.92 billion in retail sales. They also added a new section with do-it-yourself estimates on installations and information on where accessories were purchased and received – an important stat to pay attention to when conducting accessory customer discoveries. But one thing that didn’t change in this new report is that accessory buyers are a diverse group.

The accessorizers are broken into two categories: enthusiasts and non-enthusiasts. SEMA compares types of vehicles they drive, population distribution, age, and more. But SEMA’s reports don’t cover how you sell differently to each group.

To better understand the roles both these groups play in the accessory market, let’s take a closer look. The enthusiasts are broken into three groups:

The Builder buys parts because they enjoy working on their vehicle. They’ll probably buy parts from you if they’re at a discount, but they’ll be doing the installs themselves. That is, unless the install is less fun and more tedious. Try selling them hitches, exterior body accessories, and driver assist systems.

The Driver buys parts to maximize the fun of driving. They’re an easy accessory sell – most likely associated with the off-road segment.

The In-Crowd buys parts to make their vehicle stand out. They’re looking for the craziest accent lights and the shiniest spinners.

The enthusiasts can be an easy sell if you know how to identify them and what accessories to sell. Try to keep them engaged and make the learning process easy. Don’t shove another sales pitch in their face. Instead, let them take the reins on a shopping experience and make it simple for them to buy.

Enthusiasts are only 44% of the market. So what about the other 56% of the market that are the non-enthusiasts? They’re also broken up into three groups:

The Handyman buys parts to upgrade when performing repairs or maintenance. They’re looking to extend the life of their vehicles and maximize efficiency of operation. They’ll be looking for the safety and reliability products.

The Commuter buys parts to maximize driver comfort and for mild personalization. They’re looking for functional accessories more than anything else.

The DIFM, or “do-it-for-me”, buyers listen to their mechanic’s recommendations for everything the vehicle needs. This segment is proof that an accessory department needs to involve all departments. Imagine getting this entire customer base just because your mechanic says they should!

The non-enthusiasts are actually going to be fairly easy to sell to as well. They are aware of accessories, want accessories, and go to the shop down the road to purchase accessories. As with selling to enthusiasts, you’ll want to make it simple for them to buy. Allow them to browse your selection, and don’t shy away from selling aftermarket products.

What’s holding you back from selling accessories? According to SEMA’s report, it may be your customer’s wallet. They found the number one reason preventing people from purchasing more accessories is the cost. Think of the cost of paint protection for example. Most people don’t have $800+ sitting in their bank account for free spending. But they do have a few extra dollars a month. If you build the cost of that sunroof into their new-car deal, you’ve made that purchase a lot more realistic.

There are a lot of different types of accessories out there – performance, functional, entertainment, safety, etc. It’s hard to break all these down in a way where you’re not losing the customer to boredom. A catalog is too big (it will take forever to get through that dusty book), and a showroom is too small (all they see are some floormats, step bars, and sample fabrics).

That’s why the best way to introduce accessories to any customer type is through an interactive digital platform that seamlessly animates the accessory onto their vehicle. An engaging platform keeps the customer excited and involved in the process so they’re not just staring at the back of a computer or flipping through pamphlets. By being able to see all the accessory products in one place, you can identify accessory enthusiasts or non-enthusiasts a lot easier based on what they’re interested in purchasing, and tailor your presentation accordingly. That could go a long way in follow-up efforts!

About the Author

Joe Witt is the Vendor Relations Business Manager for AddOnAuto at Reynolds and Reynolds. He started working in dealership sales in 2005. He became an accessory specialist, and then moved into various management roles. Joe started as an implementation consultant with the AddOnAuto team in 2011. He spends much of his time building relationships with suppliers, restylers, and manufacturers to better the processes and products offered to dealerships with AddOnAuto.

*This article previously appeared in the Reynolds and Reynolds FUEL monthly newsletter*

By Hayley Holmes

What is predictive analytics? Simply put, it’s the use of data to identify the likelihood of future outcomes based on historical data.

I like to think of it as being proactive rather than reactive – being able to plan for something before it actually happens.

Predictive analytics leverages a customer’s profile, considering their transactional, behavioral, and demographic characteristics, to predict the likelihood of various scenarios. It analyzes age, gender, marital status, income, housing type, occupation, and so much more to qualify an ideal prospect and their likelihood of buying.

Why should you care? If you want to be one step ahead, predictive analytics is your number one ally when selling more vehicles. Predictive analytics allows you to identify a customer’s needs before the customer even recognizes that need.

Automotive retailing isn’t the only industry taking note of predictive analytics. Big-name companies across the board are using it to their benefit every day:

Target

Target assigns each customer a guest ID number so they can track information such as name, used credit cards, email address, purchase history, email advertisement activity, and online shopping habits. Based on buying patterns, Target can determine what is most relevant for a specific customer.

Case Example: Target analyzes buying patterns associated with baby registries. They are able to identify 25 products to help predict the likelihood of pregnancy and an associated due date. For example, vitamins such as calcium, magnesium, or zinc are associated with the first trimester and unscented lotion is associated with the second trimester. When cocoa butter lotion and a blue rug are purchased, she is likely having a boy.[1]

With this predictive data, Target sends coupons to mothers-to-be for products before she even knows she needs them, allowing Target to capture more value from customers by creating brand loyalty.

Spotify

Spotify, the largest on-demand music service in the world with more than 100 million users, is a data-driven company. As they continue to grow, Spotify acquires data points that help train their algorithms and machines to listen to music and conclude on insights that impact its business and listeners’ experiences.

Case Example: In its first year, the Discover Weekly playlist feature reached 40 million people. But it’s not your average playlist. Each user gets a personalized playlist every week from Spotify of music they have not heard before on the service, but is considered something the listener will enjoy. Spotify analyzes listening history and combines it with what’s hot and new to deliver a modern-day version of a personalized mix tape.[2]

It doesn’t stop there. Based on listening history, favorites, and location, Spotify sends concert ticket information to users’ email addresses. If it’s a beloved artist and in close proximity, this hand-delivered ticket information is tempting for users. And for Spotify… their brand loyalty just keeps growing.

Amazon

Amazon is a leader in data collection, storing, processing, and analyzing. With predictive analytics, they can determine how customers are spending their money to help increase customer satisfaction and loyalty.

Case Example: Amazon analyzes items you’ve purchased recently, items in your online shopping cart or wish list, items you’ve reviewed or rated, and items you search for the most. Based on this information, Amazon can recommend additional or similar products that other customers purchased when buying those same products.

For example, if you add a DVD to your online shopping cart, similar movies purchased by other customers are recommended to you. Amazon encourages you to buy on impulse to help further satisfy your shopping experience and spend more money. This method alone generates 35% of the company’s sales annually. [3]

Kroger

For a long time, Kroger, a large supermarket chain, lagged behind other retailers in the digital space. In recent years, they’ve made rapid strides. Using predictive analytics, Kroger segments shoppers and creates individualized experiences – including personalized promotions and tailored pricing – for its Plus Card members.

Case Example: The mobile application is where Kroger truly excels in data. This is where they personalize promotions and deliver value and relevancy to shoppers on an individual basis. In the first quarter of 2018, they delivered more than 6 million unique offers![4]

They track buying history, pattern, and frequency to serve up the best promotions and products most relevant to each customer. Coupled with Best Customer Bonuses, these personalized promotions resonate with shoppers, helping Kroger not only retain its best shoppers, but keep them loyal and spending more in its stores.

Your Dealership

How can your dealership be proactive with customers and increase vehicle sales, customer retention, and brand loyalty? The answer lies in leveraging predictive analytics. These big name companies are proof it works.

[1] Digital Initiative

[2] Tech Crunch

[3] Investopedia

[4] Grocery Dive

About the Author

Hayley Holmes is the product planning manager at Reynolds and Reynolds for XtreamService. She formerly served as a marketing specialist and team lead, providing XtreamService to dealerships, and assisting to build and develop the marketing services team.

*This article previously appeared in the Reynolds and Reynolds FUEL monthly newsletter*

By Scott Worthington

While it’s always important to implement processes that protect your dealership from fraud and theft, it’s just as critical to know the reasons why an employee might decide to steal from you. Let's dig deeper into employee theft and embezzlement to give you more insight to protect your dealership.

Key to understanding this is the Fraud Triangle, which breaks down the factors behind why employees steal thus:

Motivation: Does an employee have incentive to commit fraud? Is there pressure motivating them to embezzle? Often we hear stories about dealership employees who are struggling with something outside of work. It could be anything: pressure to pay off credit card debt, illness, a craving for a different lifestyle. In one case, a dealership employee stole millions of dollars so she could buy her family extravagant luxury items and take them on international trips. The reason? She wanted them to feel loved and she wanted to feel like a good mother.

Justification: Does the employee feel stealing is warranted? Maybe she was passed up for a promotion. Maybe she notices coworkers taking long vacations she can’t afford. Maybe you’ve been asking her to work a lot of overtime. To someone without the justification, it might seem far-fetched that these are reasons an employee would steal. But for the employee? These feel like valid reasons to commit fraud or embezzlement.

System Opportunity: Once an employee has the motivation and justification to steal, there is only one more step their brain must make before they start. Can they get away with it? Of the three sections in the Fraud Triangle, this is where you have the most control. Does your dealership have processes in place to deter theft? Processes not only make the dealership run more efficiently, they also show employees you’re keeping tabs on the dealership, even if you aren’t there. What about a system that monitors transactions across your dealership for suspicious activity? Even with processes in a place, an employee who has the motivation and justification might find a loophole. A dealership-wide monitoring system that informs employees its tracking transactions will take your security one step further.

Keep yourself informed of the ways employee theft happens in the dealership. The more informed you are, the better your chances are of preventing it.

*This article previously appeared in the Reynolds and Reynolds FUEL monthly newsletter*

By Kasi Edwards

If you’re a parent who’s sent a child to college, you know how intimidating the life change can be. You also know the new experiences and lessons they will receive are important for their future.

Now, think about yourself and what you do to better prepare your dealership for its future. Do you take advantage of opportunities to learn from other dealerships, retailers, technology providers, and industry influencers? Here are three ways to improve your business by leaving your dealership to experience lessons outside your comfort zone.

1. Spend the day at your vendor’s headquarters.

The best way to learn about vendors and products is to visit their headquarters. Not only will you grow your relationship with them and their support team, but you’ll understand their company culture and work environment. When you visit Reynolds’ Dayton or Tampa offices, your team will learn how solutions work in your dealership by experiencing them first hand from the people who built them.

2. Travel to conferences and road shows.

Attend conferences and road shows to interact with vendors in person while experiencing live product demonstrations. You’ll view presentations and participate in discussions from industry leaders to learn about problems, insights, and trends affecting the industry.

3. Visit another dealership, even a competitor.

Visit a dealership using a product you’re considering to learn how it works. You’ll experience how it works with customers, how employees like it, and positive or negative impacts it’s had on the business.

Moving Forward

When students leave the comfort of home to attend college, their current knowledge is tested and expanded to prepare them for life after graduation. It’s important you and your employees experience the same growth so you can prepare your business for the future. By utilizing the training and guidance available from Reynolds, you and your employees will gain insights that help continuously grow your business.

About the Author

Kasi Edwards is Vice President of Marketing at Reynolds and Reynolds. She leads the company’s marketing, advertising, communications, and Retail Management System messages to the market. During her over 21-year career with Reynolds, she’s built an accomplished background in sales, marketing, and product management.

*This article previously appeared in the Reynolds and Reynolds FUEL monthly newsletter*

By Jay Harper

Does your dealership’s website suffer from TARCAC (Tumbleweeds Are Rolling and Crickets Are Chirping) syndrome? Have you tried every method out there, but no matter what you do, can’t get those website traffic numbers to budge?

Here are five easy ways to drive website traffic:

1. Email Marketing 

Do you even know anyone who doesn’t have an email address? There are 2.5 billion email users worldwide, and it’s predicted to increase to 2.8 billion in the next two years. It continues to rank #1 as the most effective way to reach people interested in your business because it’s the only method of communication you own.

With a clean database, effective messaging, good timing, and the ability to deliver emails to inboxes consistently, you’re able to take control of your dealership marketing with a 1:1 strategy that costs less, retains more customers, recaptures lost business, and drives traffic to your website.

2. Social Media

If you want to be successful in today’s technology-driven world, your social media presence is critical. The average person spends 2 hours and 15 minutes on social media each day. If you want people to see your dealership and your promotions, advertise where people spend their time! Reach beyond your own audience and grow new business by using social insights to target people with similar interests and behaviors. Drive action with lead generation ads. Use the power of influence to spread your brand recognition by letting users see when their friends interact with your dealership.

Want to dip your foot (or straight up cannonball) into Social Media advertising? Invest in yourself by investing in a marketing provider that knows how important your social media presence is.

3. SEO (Search Engine Optimization)

SEO is the foundation for digital marketing and must be a fundamental piece of your marketing strategy. There are two types of SEO – technical SEO and content SEO – and executing on both can mean the difference between driving visitors to your website and getting buried alive in Google search results.

If you lack the time and skill needed to produce the content or the knowledge needed to make it visible to search engines, hiring a skilled marketing company could be exactly what you need to rank above your competition.

4. Create a Dealership Blog

Blogs are a rich source of content that increase organic traffic opportunities by directing people searching for unique keywords to your website. Regularly updated blogs can dramatically improve your SEO ranking.

While car dealer websites perform well in a narrower keyword group (with keywords focused around inventory, service, and specials), for blogs the possibilities are endless. Upcoming events, service promotions, informational pieces, etc. can all be communicated through blog posts. It’s also a great way to engage with your customers, which leads us into:

5. Post. Engage. Respond.

Drive return traffic and increase customer retention by posting relevant, tailored content to your social media platforms and website. If a customer leaves a review about your dealership, try responding to their comment with more than just “thanks for the review.” We recommend using the 3 C’s method:

• Congratulate – customers want to know you care. Congratulate them on the purchase of their new vehicle!
• Connect – successful customer service, and what keeps them coming back, is creating an experience where excellent service is associated with your dealership. Connect with them!
• Communicate – tell your customers about future events, promotions, and offers. Invite them to come back in (and bring a friend or two).

You can’t afford to let your digital reputation fall to the wayside. If you don’t have the time to invest in your online reputation yourself, hire someone who does.

It’s time to dust off your website and get rid of those tumbleweeds. Doing these five simple things is an effective way to boost traffic, customer retention, and keep the crickets at bay for good.

About the Author

Jay’s successful career in the automotive industry led him to Reynolds and Reynolds in 2013 as the Manager of XtreamService. He is currently the Director of Product Planning for Naked Lime, the dealership marketing division of the company, building digital marketing services that deliver results for dealers.