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I recently went on a series of job interviews for the position of Internet Manager, and I'd like to address the number-one concern that I’ve heard in these interviews with GSM’s and GM’s. This concern was gross profit - specifically, the impact (perceived and real) the Internet Department has on a dealer’s gross profit margins.
After listening to me speak they would simply lean in, squint an eye at me and ask if I give cars away. The experience might be similar to what to a woman would feel in a job interview in a society where sexism runs rampant. She could be highly educated and skilled, yet her interviewer leans in and asks questions unrelated to the job at hand.
I’m not going to list stats already appearing in nearly every other paper regarding the “internet shopper” or the future of the auto industry. Rather, I’ll outline the concepts I attempted to discuss in these interviews.
Though Internet Departments have been around for many years, they are still very much a niche within the dealership. These departments are both loved and hated. They are hated for “giving away cars” and not working a traditional process - and loved for their ability to move units with great ease. They are accepted not unlike a society seems to accept a slight injustice on a people - discounted and tolerated because the change is in process rather than complete.
I’d like to address this injustice - the number one fear that keeps the internet department tucked away in the corner office or sometimes even in an entirely separate building. The fear that prevents total integration. The fear of losing control of the dealerships ability to earn a profit.
The concepts here will provide clear outline or common point of reference for the GSM or GM who is afraid that somehow the Internet Department impacts store revenue.
My goal is not necessarily to educate, but to intervene and create a wholesale shift in thinking in the GSM and GM. To give them a new perspective on the Internet Department.
Often, in an intervention, a line has to be drawn. I believe such a line already has been drawn - by the competitors savvy to the concepts discussed here, and by the customer themselves.
Below, I will provide immediate steps for increasing floor traffic and revenue. I would suggest no matter how far along you believe you are in any or all of these areas, you create a project on each key area and determine where you and your competitors stand relative to each area. I would then create a plan (in-house, outsourced, etc..) to improve your position in each one.
You will be surprised at the relative simplicity and how generally familiar you are with each area; however, each area’s dependence on the others can not be overlooked. Some areas can even bring down the rest, regardless of how much money you’d planned to invest in them. For this reason, I’ve purposely excluded a few topics you might have expected to see here as I feel immediate implementation of them doesn’t greatly impact revenue or floor traffic though these shouldn’t be ignored as part of long-term component of a successful Internet Department/Strategy.
With that said, simply seeing where you stand today and what you should consider for the future is only the first step. You must make the status of your and your competitors’ progress in these areas a topic of an ongoing meeting. This is perhaps the most important step.
I’ve outlined five key areas of focus that not only create sales for the Internet Department but also increase overall floor traffic and lift revenue for the entire store.
These areas are:
This paper will not spend much time evaluating or discussing secondary initiatives like social media, though these areas should be addressed in an overall strategy.
SEO (getting traffic)
The importance of Search Engine Optimization cannot be underestimated. SEO can effectively drive more traffic to your website. SEO covers not only key word/phrase updates but also link-building and other important updates on locations like Google Places to further improve relevant site visits. The more successful the SEO, the less reliance on third-party leads, the lower the cost of sales, and the higher volume of converting traffic.
When I say conversion ratios, I don’t exclusively mean visitors filling out a form. I’d also include physical visits to the store as gathered from fresh up-counts and hits on your Directions/Contact Us pages.
All traffic can be baselined in your existing reports, and monitored on an ongoing basis to improve upon. Some fixes will be one-time, and others will play out in steps for maximum results.
Site & Content Management (converting your traffic)
Once visitors come to your site, you want them to become customers. The strength of your site’s content will increase this conversion ratio. Simply having the canned dealer site in place is not enough. Your site provider likely offers editing tools, a blogging platform, and video support for good reason.
Someone must create and manage this content, and it must be personalized and compelling. A mediocre site creates mediocre results. Very few dealers customize their sites. I would imagine many larger corporate dealership groups will or already have made significant investments to do so and will soon distribute content and associated processes to all their dealerships. Once implemented, this will create a competitive gap – something to catch up to.
Another advantage to superior content is less reliance on price as a driving factor. This being said, the more gains your competitors make with content, the more you’ll rely on price alone and/or profit-maximizing sales practices that cause significant long-term damage to the business on an individual basis and on that individual’s social networks.
Content Management should ideally and eventually be its own department within dealerships in the near future.
Reputation Management (makes or breaks all your efforts)
Almost all gains made in advertising and/or the Internet Department can be destroyed without effective Reputation Management. All major review sites should be tracked and managed. Management includes petitioning for removal of reviews that violate guidelines, responding to customer concerns where appropriate, and procuring reviews from satisfied customers. This work is easy but important, and in a large and highly competitive markets, it cannot be overlooked.
Reputation management cannot be fixed overnight, but the rewards are substantial. Let’s imagine, like many shoppers, you are buying your first, second, or even your fifth car. You are educated, you are online, but you may have had a bad previous experience. Maybe a fear stemming from this drove you online for your initial quotes. Sooner or later, you’ll likely expand your research to online reviews on Yelp.com or dealerrater.com. Or, let’s say you aren’t concerned about reviews, but you pull up google maps for directions to a dealership because you need a tune-up. All the reviews appear on Google (when you click business details). What these reviews say about the dealership and the individual within it can make or break an opportunity for sales and/or service.
You’re competing to have as many positive reviews of your dealership online, but you’re also competing against other dealers who have more positive (or in an ideal situation more negative) reviews. In an ideal world, you want the differences between you and your competitors to be extreme.
The dealer that reigns supreme in this area:
To see how powerful reviews can be, visit Starbucks with a laptop and ask a few friendly patrons to visit yelp.com for reviews of the highest and lowest ranked dealers of any brand (perhaps your own). Ask where they would buy a car. Ask whether their answer would still hold if the better ranked dealer were a few hundred higher in their car quote. Would they still be more inclined to buy there? Contrary to old-school thinking, when a dealership is designed correctly, the Internet Department does not have to fight an all-out price war. People go online, not necessarily to get the best quote, but also to avoid a negative car-shopping experience.
Lead Provider and Evaluation (eventual elimination is the goal)
Your OEM and self-generated leads should have substantially higher closing ratios than third-party leads at a fraction of the cost. You’ll want to reduce reliance on third-party leads sources by using SEO, Content Management, and Reputation Management. However, you may need third-party leads to quickly achieve desired unit objectives.
Having an up-to-date understanding of lead sources, which lead sources competitors are using, and ROI of third-party lead sources (if they are to be used for a period of time) simplifies decision-making.
Sales Performance/Process (improving conversion and gross)
Having all the leads, inventory, and systems in place is meaningless if you have no proven sales process in place to effectively respond to and capture business. Prospective customers should receive a unique and compelling auto-response template that sets the stage for all subsequent actions, versus a general [dear insert name] template.
Many Internet Departments have gone astray by thinking response time was most important. Response time is the most easily measured factor, and for that reason managers like it; however, quality of response is difficult to measure. In many Internet Departments’ efforts to remain superior in response time, they have resorted to sending out quotes without attempting to engage the customer or even considering the customer’s notes. An effective sales process today should seek quality over quantity. I don’t discount response times. I don’t discount the importance of sending a quote. But a dealer that reaches out on a much more detailed level will receive the customer’s notice. And that dealer will receive more responses and higher levels of customer engagement than his competitors. To my knowledge, no dealer or canned CRM report today measures “percentage of engagement.” We should measure this with the same ferocity we measure “response time.”
I purposely have excluded any “how-to” suggestions on these topics. I feel that the GSM and GM need to explore each one and evolve their own understanding on each area. To become as expert as possible in each area. To be highly interested in the ongoing status of each. Not because a checklist isn't easy to create, but because what ultimately makes or breaks the dealership isn't a completed checklist, but rather how connected to and interested its leaders are in their total operational status.