Dataium offers useful information you can't get anywhere else and gives it away free to dealers!

                 Dataium offers useful information you can't get anywhere else and gives it away free to dealers!

     In 1995, nearly all dealer marketing dollars were spent with local vendors. Local newspapers, shopper magazines, radio stations, TV broadcasters, and cable companies enjoyed a fair amount of autonomy from parent companies and very little competition from national companies like Autobytel and AutoTrader.com.

      Today, well over 100 companies compete nationally for dealers marketing budgets. Integration is often a nightmare. Even more challenging, many of the new products are participatory models, requiring the dealer to modify operations in order to extract full benefit. These dealership challenges will not stop dozens of new vendors from forming and taking their shot at the multi-billion dollar market.

     The vast majority of national vendors went into business to gain penetration and sell out. Getting bought out by a larger company is the dominant exit strategy for these national companies. Yet they serve local dealers who sell vehicles in a tiny sliver of the national market and hope to do so for generations to come.

     The recent wave of vendor consolidation is but a small spec of what is yet to come if vendors' dreams are to come true. But who will be left, and how will they be received. Any vendor that gains a large share of the budget gets demonized by a portion of the dealer community (e.g. ADP, Reynolds and Reynolds, AutoTrader.com). Many dealers are afraid to place too much of their budget with one or two companies. But it could get worse. The prospect of being limited to a hand full of vendors forced on them by manufacturers is enough to make some dealers leave the business. Yet synergies among all three tiers of advertising must develop.

     Will the large vendors become mega vendors? Will they get there via the OEMs? Will companies like Google, Microsoft, and eBay make a move to become the new heavyweights? If small vendors are here to stay, how will dealers decide among them? How will dealers objectively measure the value of so many vendors while trying to run a business in an increasingly completive market? Can vendors attract top talent without the prospect of a big payoff? Will any of these scenarios result in a faster level of consolidation among dealers into large dealer groups with centralized marketing teams?

     More than marketing hangs in the balance. You can't have a five-year plan unless you have some idea what the environment looks like in five years. The answers may change the structure of stores, dealer groups, and the relationships between dealers and OEMs.

     Thoughts?

     In 1995, nearly all dealer marketing dollars were spent with local vendors. Local newspapers, shopper magazines, radio stations, TV broadcasters, and cable companies enjoyed a fair amount of autonomy from parent companies and very little competition from national companies like Autobytel and AutoTrader.com.

      Today, well over 100 companies compete nationally for dealers marketing budgets. Integration is often a nightmare. Even more challenging, many of the new products are participatory models, requiring the dealer to modify operations in order to extract full benefit. These dealership challenges will not stop dozens of new vendors from forming and taking their shot at the multi-billion dollar market.

     The vast majority of national vendors went into business to gain penetration and sell out. Getting bought out by a larger company is the dominant exit strategy for these national companies. Yet they serve local dealers who sell vehicles in a tiny sliver of the national market and hope to do so for generations to come.

     The recent wave of vendor consolidation is but a small spec of what is yet to come if vendors' dreams are to come true. But who will be left, and how will they be received. Any vendor that gains a large share of the budget gets demonized by a portion of the dealer community (e.g. ADP, Reynolds and Reynolds, AutoTrader.com). Many dealers are afraid to place too much of their budget with one or two companies. But it could get worse. The prospect of being limited to a hand full of vendors forced on them by manufacturers is enough to make some dealers leave the business. Yet synergies among all three tiers of advertising must develop.

     Will the large vendors become mega vendors? Will they get there via the OEMs? Will companies like Google, Microsoft, and eBay make a move to become the new heavyweights? If small vendors are here to stay, how will dealers decide among them? How will dealers objectively measure the value of so many vendors while trying to run a business in an increasingly completive market? Can vendors attract top talent without the prospect of a big payoff? Will any of these scenarios result in a faster level of consolidation among dealers into large dealer groups with centralized marketing teams?

     More than marketing hangs in the balance. You can't have a five-year plan unless you have some idea what the environment looks like in five years. The answers may change the structure of stores, dealer groups, and the relationships between dealers and OEMs.

     Thoughts?

                One of the tough decisions in automotive marketing is whether or not to go premium with AutoTrader.com. However, knowing whether or not it pays off is not a matter of guesswork. By going from featured listings to premium, your inventory will be included on more Search Results Pages (SRPs). Under the reporting tab of Dealers.AutoTrader.com, this is found in the Executive Summary as "Times your vehicles were seen in a search."

                More SRPs leads to more shoppers selecting your inventory, measured as Vehicle Details Pages (VDPs). This can be found in the same report as "Detail pages viewed for your inventory."

The value of going to premium status can best be measured as the margin cost per VDP. Calculate the additional amount you are paying AutoTrader.com to go from featured to premium status, then divide this dollar amount by the change in the number of VDPs. Generally speaking, we are looking for a marginal cost per VDP of less than $1.

                The $1 per VDP benchmark assumes market pricing, good merchandising, and good lead handling. It also assumes a marginal cost per vehicle sold of $400 is tolerable. Adjustments must be made when these assumptions are not valid. For thousands of dealerships, store operations are so poor that even a marginal cost per VDP of less than $1 is still not cost effective. Generally speaking, these stores should get their house in order before expanding their advertising.

                It is important to evaluate the change to premium status using marginal cost per VDP, rather than average cost per VDP. Chances are your average cost for featured listings is lower than $1. The fact is AutoTrader.com and Cars.com make sense for most dealers. However, the marginal cost for going to premium status is almost always more expensive on a cost per VDP basis.

                In later posts, I'll explain why aggressive market pricing, outstanding merchandising, and the best possible lead handling can make it possible for dealers to gain substantial profits at a marginal cost of more than $1 per VDP. I'll write about other ways to measure the value of listing services. And yes, I'll also write about Cars.com.

                One of the tough decisions in automotive marketing is whether or not to go premium with AutoTrader.com. However, knowing whether or not it pays off is not a matter of guesswork. By going from featured listings to premium, your inventory will be included on more Search Results Pages (SRPs). Under the reporting tab of Dealers.AutoTrader.com, this is found in the Executive Summary as "Times your vehicles were seen in a search."

                More SRPs leads to more shoppers selecting your inventory, measured as Vehicle Details Pages (VDPs). This can be found in the same report as "Detail pages viewed for your inventory."

The value of going to premium status can best be measured as the margin cost per VDP. Calculate the additional amount you are paying AutoTrader.com to go from featured to premium status, then divide this dollar amount by the change in the number of VDPs. Generally speaking, we are looking for a marginal cost per VDP of less than $1.

                The $1 per VDP benchmark assumes market pricing, good merchandising, and good lead handling. It also assumes a marginal cost per vehicle sold of $400 is tolerable. Adjustments must be made when these assumptions are not valid. For thousands of dealerships, store operations are so poor that even a marginal cost per VDP of less than $1 is still not cost effective. Generally speaking, these stores should get their house in order before expanding their advertising.

                It is important to evaluate the change to premium status using marginal cost per VDP, rather than average cost per VDP. Chances are your average cost for featured listings is lower than $1. The fact is AutoTrader.com and Cars.com make sense for most dealers. However, the marginal cost for going to premium status is almost always more expensive on a cost per VDP basis.

                In later posts, I'll explain why aggressive market pricing, outstanding merchandising, and the best possible lead handling can make it possible for dealers to gain substantial profits at a marginal cost of more than $1 per VDP. I'll write about other ways to measure the value of listing services. And yes, I'll also write about Cars.com.

This is the first in my series of Friday Freebies, highlighting products available for dealers or salespeople at no cost. Others are welcome to add comments – positive or negative – regarding how they make money with the same opportunity or found it not worth their time and effort.

CarFolks is designed to be a dealer-friendly rating service. Individual sales people can sign up on CarFolks at no cost, whether their dealership has elected to buy into the system or not. In other words, every salesperson in the store can use the product for free, even if the store itself does not pay to participate.

Progressive salespeople are sending their customers to CarFolks and asking them for a positive rating, even comments. They then link to this information in their social media and email lead responses.

Increasingly, shoppers consider two or more vehicles of roughly the same value. They may be considering a new car and several used vehicles, but to them the value appears to be about the same. Often, the sale goes to the salesperson who can best demonstrate they are the right salesperson, and their store is the right organization to buy from. In these instances of value parity, ratings and testimonials from an independent third-party can prove to be powerful documentation.

With millions of vehicles listed on any number of automotive websites, instances of value parity are far more common than they once were. With the widespread adoption of tools like vAuto and FirstLook encouraging market pricing, it will become increasingly common in the future.

My recommendation is to print out your CarFolks profile and keep it in a folder with other documentation about you and your store. Consumer comments found on an independent site like CarFolks carry more weight than the same comments on your website or in your store. Have your profile in the favorites of your computer or know how to get to it quickly. Every deal has a deal jacket demonstrating the full value of the vehicle. That's not always enough. Every salesperson should have a folder full of credible evidence showing they are the right person and the right store to buy from. If you are worth enough to tip the scales on a buyer's decision, back it up with documentation.

If you know of a freebie to dealers or salespeople you'd like me to write about, just send me a note through DrivingSales.com or directly at DennisGalbraith@msn.com. Your link to this week's freebie is http://carfolks.com/join.

This is the first in my series of Friday Freebies, highlighting products available for dealers or salespeople at no cost. Others are welcome to add comments – positive or negative – regarding how they make money with the same opportunity or found it not worth their time and effort.

CarFolks is designed to be a dealer-friendly rating service. Individual sales people can sign up on CarFolks at no cost, whether their dealership has elected to buy into the system or not. In other words, every salesperson in the store can use the product for free, even if the store itself does not pay to participate.

Progressive salespeople are sending their customers to CarFolks and asking them for a positive rating, even comments. They then link to this information in their social media and email lead responses.

Increasingly, shoppers consider two or more vehicles of roughly the same value. They may be considering a new car and several used vehicles, but to them the value appears to be about the same. Often, the sale goes to the salesperson who can best demonstrate they are the right salesperson, and their store is the right organization to buy from. In these instances of value parity, ratings and testimonials from an independent third-party can prove to be powerful documentation.

With millions of vehicles listed on any number of automotive websites, instances of value parity are far more common than they once were. With the widespread adoption of tools like vAuto and FirstLook encouraging market pricing, it will become increasingly common in the future.

My recommendation is to print out your CarFolks profile and keep it in a folder with other documentation about you and your store. Consumer comments found on an independent site like CarFolks carry more weight than the same comments on your website or in your store. Have your profile in the favorites of your computer or know how to get to it quickly. Every deal has a deal jacket demonstrating the full value of the vehicle. That's not always enough. Every salesperson should have a folder full of credible evidence showing they are the right person and the right store to buy from. If you are worth enough to tip the scales on a buyer's decision, back it up with documentation.

If you know of a freebie to dealers or salespeople you'd like me to write about, just send me a note through DrivingSales.com or directly at DennisGalbraith@msn.com. Your link to this week's freebie is http://carfolks.com/join.

All economic downturns cause manufacturers to dial back the variable elements of production, primarily labor and materials. These can be brought back when times become good again. This time, plant capacity was cut. That cannot be easily replaced. This will impact sales of used vehicles and accessories for years to come.

Internationally, there is still plenty of excess capacity for auto production. However, what matters to dealers is the production capacity for the brands they sell. Increasingly, dealers may be disappointed in their inability to obtain inventory for hot, new vehicles.

At the same time, the supply of late-model used vehicles is going to remain low for years to come. So where are dealers going to get the product consumers demand? Some of the answer will come from huge bubble of used vehicles originally sold from 1999 to 2007, often combined with accessory sales. Many of these will be reliable for years to come. On average, they will stay in the national fleet longer than their lower-quality predecessors.

Quality is not enough. In order for older vehicles to be worth investing in with parts, service, and accessories, they must be of a desirable style. The vehicles built and sold prior to the spike in gasoline prices that occurred in the summer of 2008 are generally larger than those being sold today. The nation will never again purchase a fleet of new vehicles as large as those sold from 1999 to 2007. Yet the pool of auto buyers is aging and becoming more obese, both contributors to demand for larger vehicles.

Taking advantage of these converging shifts in supply and demand requires four key changes in dealer activity.

1.       Develop a competency for obtaining older used vehicles

2.       Develop a competency for reconditioning older used vehicles for maximum profitability

3.       Develop a pricing, sales, and marketing system that maximizes total gross margins and minimizes inventory days-to-turn

4.       Develop a system for increasing accessory sales related to new and used vehicles

Dealers of domestic franchises have the most to gain from making these shifts. The number of 1999 to 2007 model year Ford, Chrysler, GM vehicles resold each year will dwarf the number of new vehicle sales from these brands for years to come.

Many of these dealerships have the necessary store capacity, including service. The question at the individual store level is whether the organization has the ability to manage this much change at one time. For many stores, slight modifications to the existing way of doing business will result in disaster. Accept that adding older vehicles to your product mix requires large-scale change before making the decision to do so.

All economic downturns cause manufacturers to dial back the variable elements of production, primarily labor and materials. These can be brought back when times become good again. This time, plant capacity was cut. That cannot be easily replaced. This will impact sales of used vehicles and accessories for years to come.

Internationally, there is still plenty of excess capacity for auto production. However, what matters to dealers is the production capacity for the brands they sell. Increasingly, dealers may be disappointed in their inability to obtain inventory for hot, new vehicles.

At the same time, the supply of late-model used vehicles is going to remain low for years to come. So where are dealers going to get the product consumers demand? Some of the answer will come from huge bubble of used vehicles originally sold from 1999 to 2007, often combined with accessory sales. Many of these will be reliable for years to come. On average, they will stay in the national fleet longer than their lower-quality predecessors.

Quality is not enough. In order for older vehicles to be worth investing in with parts, service, and accessories, they must be of a desirable style. The vehicles built and sold prior to the spike in gasoline prices that occurred in the summer of 2008 are generally larger than those being sold today. The nation will never again purchase a fleet of new vehicles as large as those sold from 1999 to 2007. Yet the pool of auto buyers is aging and becoming more obese, both contributors to demand for larger vehicles.

Taking advantage of these converging shifts in supply and demand requires four key changes in dealer activity.

1.       Develop a competency for obtaining older used vehicles

2.       Develop a competency for reconditioning older used vehicles for maximum profitability

3.       Develop a pricing, sales, and marketing system that maximizes total gross margins and minimizes inventory days-to-turn

4.       Develop a system for increasing accessory sales related to new and used vehicles

Dealers of domestic franchises have the most to gain from making these shifts. The number of 1999 to 2007 model year Ford, Chrysler, GM vehicles resold each year will dwarf the number of new vehicle sales from these brands for years to come.

Many of these dealerships have the necessary store capacity, including service. The question at the individual store level is whether the organization has the ability to manage this much change at one time. For many stores, slight modifications to the existing way of doing business will result in disaster. Accept that adding older vehicles to your product mix requires large-scale change before making the decision to do so.