Whether you are in sales or service, your store’s ability to compete with independent service shops and chains has a huge impact on your future. Now that the Massachusetts version of Right to Repair is going to be adopted nationally, manufacturers will no longer be able to provide dealers with a competitive advantage. Independents will have equal access to online information. By 2018, manufacturers will no longer be able to develop systems requiring proprietary equipment for diagnostic testing.

Leading dealers are already fighting back with aggressive pricing on key items, rapid parts delivery systems, fantastic service, and a new focus on marketing service. The result is far more service business, more customer relationships, and record vehicle sales. Franchised dealers can compete with independent service providers, but it requires great marketing, great systems, and execution to match. The deal is finalized yet, but it's close. How will your store fair in months and years ahead?

Whether you are in sales or service, your store’s ability to compete with independent service shops and chains has a huge impact on your future. Now that the Massachusetts version of Right to Repair is going to be adopted nationally, manufacturers will no longer be able to provide dealers with a competitive advantage. Independents will have equal access to online information. By 2018, manufacturers will no longer be able to develop systems requiring proprietary equipment for diagnostic testing.

Leading dealers are already fighting back with aggressive pricing on key items, rapid parts delivery systems, fantastic service, and a new focus on marketing service. The result is far more service business, more customer relationships, and record vehicle sales. Franchised dealers can compete with independent service providers, but it requires great marketing, great systems, and execution to match. The deal is finalized yet, but it's close. How will your store fair in months and years ahead?

There is more to an inexpensive oil change than getting a chance to put the vehicle on the rack. It’s an opportunity to gain new relationships. Advanced dealers are growing their service business to grow their future vehicle sales business. Pulling customers back into the store with oil changes, tires, and the like makes you the one dealership the shopper has a relationship with.

On the service side, the biggest source of competition comes from chain repair stores, not dealerships. But the dealer who can wrestle that service relationship away from the chain repair store is the one with a leg up over all other dealerships when it comes time to shop for a new vehicle. Operating with transparency in the service lanes increases the likelihood the customer will trust the dealership’s sales department. Competitively pricing commonly shopped items like oil changes and tires sets the perception for reasonable prices on larger repair orders and vehicle sales.

Hundreds of millions of dollars are spent trying to get people on their sofas to come in and look at the new vehicles. Luring them into your service lane and waiting area can be far more cost effective. The cars are right there with no way to TiVo them out of the picture.

Marketing for service business has never been more cost effective. A small Search Engine Marketing budget combined with a great website can bring a huge increase in service business. Before long, that increase in service traffic can result in increased vehicle sales. There are no gimmicks. You have to earn the business with digital marketing, competitive pricing on key items, and great service throughout the process. Steal the customer away from the chain repair shops, and you might be stealing her away from another dealer’s future sales board as well.

There is more to an inexpensive oil change than getting a chance to put the vehicle on the rack. It’s an opportunity to gain new relationships. Advanced dealers are growing their service business to grow their future vehicle sales business. Pulling customers back into the store with oil changes, tires, and the like makes you the one dealership the shopper has a relationship with.

On the service side, the biggest source of competition comes from chain repair stores, not dealerships. But the dealer who can wrestle that service relationship away from the chain repair store is the one with a leg up over all other dealerships when it comes time to shop for a new vehicle. Operating with transparency in the service lanes increases the likelihood the customer will trust the dealership’s sales department. Competitively pricing commonly shopped items like oil changes and tires sets the perception for reasonable prices on larger repair orders and vehicle sales.

Hundreds of millions of dollars are spent trying to get people on their sofas to come in and look at the new vehicles. Luring them into your service lane and waiting area can be far more cost effective. The cars are right there with no way to TiVo them out of the picture.

Marketing for service business has never been more cost effective. A small Search Engine Marketing budget combined with a great website can bring a huge increase in service business. Before long, that increase in service traffic can result in increased vehicle sales. There are no gimmicks. You have to earn the business with digital marketing, competitive pricing on key items, and great service throughout the process. Steal the customer away from the chain repair shops, and you might be stealing her away from another dealer’s future sales board as well.

What is the best way for Honda dealers to capitalize on the new December incentive money offered by Honda?

1. Cut price and make additional profit through volume
2. Continue on with business as usual
3. Increase television and radio advertising to promote a sale
4. Focus communications on your customer base, particularly where the money can be used to help shoppers get financed
5. Increase digital marketing

Some shoppers are more price sensitive than others, and this translates into some vehicle categories being more price sensitive than others. If the inventory you need to move most is price sensitive, then this may be an option. However, cutting price does no good unless you tell people you did it. Now you have three costs to the campaign: 1) a lower gross on the new business received, 2) a lower gross on the business you would have received anyway 3) the cost of additional advertising to support the promotion. Keep in mind that there is a cap on the program of 20% over last December sales. If you go over 120% of last year’s unit sales, you may be giving a discount you don’t have incentive dollars to support. It is all too easy to sell at or above the targeted number of units without moving the profit needle, or even losing money.

A store that expects to be at or near this level without any change in pricing and promotions might wish to simply pocket the additional incentive. This is the position we strive to keep our Honda dealers in all year. In this position, one needs to keep a close eye on unit sales and competitor behavior. If other Honda dealers are trying to make their number by taking sales from you, then you need to be positioned to strike fast, even in the last week of the month.

This is the hardest time of the year to acquire sufficient TV and radio to achieve frequency, and it is the toughest time of the year to make a message stand out. Special offers seem to be the best attention grabbers, and that puts you right back into the problem of spending more on advertising and decreasing front-end gross per unit at the same time.

A store that really works its CRM will be able to identify deals that could have been made earlier if this money were available to assist customers who are upside down on their trade. However, one needs to be realistic about the ability to get those customers financed now. Some will already be thousands of dollars deeper in credit-card debt. This can be a good strategy for bringing a few additional deals into the incentive, but it probably won’t get a store into the money that was otherwise going to have a December 90% as big as last year. It’s a competitive month.

A digital campaign can instantly target a wide range of shoppers with incentives at a variety of levels. It can be dialed up or dialed down. This is ideal for targeting a small window, like 100% to 120% of last December’s sales. However, the devil is in the details. Getting more aggressive on digital marketing by only raising bid prices can be deadly, especially when others selling the brand are in the same boat. Those buying digital marketing via a custom approach, as opposed to the common automated approaches, have a huge leg up in their ability to add additional opportunities, rather than simply bid more for the same old thing.

The dealers who will gain the most from this incentive are the ones who have grown all year and would have made 120% of last December’s sales even without the additional funds. These programs don’t show up for every brand every year, but the dealers with good, steady, growth tend to be in the best position regardless of what the manufacturer does. I hope every dealer has a great December and enters 2014 ready to position themselves even better. Call if you need help, (518) 703-6109.

What is the best way for Honda dealers to capitalize on the new December incentive money offered by Honda?

1. Cut price and make additional profit through volume
2. Continue on with business as usual
3. Increase television and radio advertising to promote a sale
4. Focus communications on your customer base, particularly where the money can be used to help shoppers get financed
5. Increase digital marketing

Some shoppers are more price sensitive than others, and this translates into some vehicle categories being more price sensitive than others. If the inventory you need to move most is price sensitive, then this may be an option. However, cutting price does no good unless you tell people you did it. Now you have three costs to the campaign: 1) a lower gross on the new business received, 2) a lower gross on the business you would have received anyway 3) the cost of additional advertising to support the promotion. Keep in mind that there is a cap on the program of 20% over last December sales. If you go over 120% of last year’s unit sales, you may be giving a discount you don’t have incentive dollars to support. It is all too easy to sell at or above the targeted number of units without moving the profit needle, or even losing money.

A store that expects to be at or near this level without any change in pricing and promotions might wish to simply pocket the additional incentive. This is the position we strive to keep our Honda dealers in all year. In this position, one needs to keep a close eye on unit sales and competitor behavior. If other Honda dealers are trying to make their number by taking sales from you, then you need to be positioned to strike fast, even in the last week of the month.

This is the hardest time of the year to acquire sufficient TV and radio to achieve frequency, and it is the toughest time of the year to make a message stand out. Special offers seem to be the best attention grabbers, and that puts you right back into the problem of spending more on advertising and decreasing front-end gross per unit at the same time.

A store that really works its CRM will be able to identify deals that could have been made earlier if this money were available to assist customers who are upside down on their trade. However, one needs to be realistic about the ability to get those customers financed now. Some will already be thousands of dollars deeper in credit-card debt. This can be a good strategy for bringing a few additional deals into the incentive, but it probably won’t get a store into the money that was otherwise going to have a December 90% as big as last year. It’s a competitive month.

A digital campaign can instantly target a wide range of shoppers with incentives at a variety of levels. It can be dialed up or dialed down. This is ideal for targeting a small window, like 100% to 120% of last December’s sales. However, the devil is in the details. Getting more aggressive on digital marketing by only raising bid prices can be deadly, especially when others selling the brand are in the same boat. Those buying digital marketing via a custom approach, as opposed to the common automated approaches, have a huge leg up in their ability to add additional opportunities, rather than simply bid more for the same old thing.

The dealers who will gain the most from this incentive are the ones who have grown all year and would have made 120% of last December’s sales even without the additional funds. These programs don’t show up for every brand every year, but the dealers with good, steady, growth tend to be in the best position regardless of what the manufacturer does. I hope every dealer has a great December and enters 2014 ready to position themselves even better. Call if you need help, (518) 703-6109.

Vendors have a wide range of methods for demonstrating the value of their products, some of which vary from one rep to another. Some vendors bundle products up in a way that makes it virtually impossible to measure the value of their offerings in any comparable way. Many dealers are responding with their own methods for determining the value delivered by vendors. It would be useful to hear from vendors and dealers alike on what they see as the best methods for demonstrating the value of various products. 

Many methods have their flaws. Cost of Sale does not take into account that some sales are worth much more than others. Cost per lead is difficult for products driving walk-in traffic. Last-click attribution models are certainly not ideal. In an integrated campaign, some products benefit from the presence of others, making the isolation of benefits difficult. The focus for some dealers is not to find a perfect method, but to find a basket of objective measures that collectively help the dealer make a decision.

Clearly, it's hard to compare products that drive traffic to a dealer's site with leads or listings products, but in the end they all compete for the same share of wallet. So what are the best ways for dealers to decide whether or not to keep buying a product? 

Vendors have a wide range of methods for demonstrating the value of their products, some of which vary from one rep to another. Some vendors bundle products up in a way that makes it virtually impossible to measure the value of their offerings in any comparable way. Many dealers are responding with their own methods for determining the value delivered by vendors. It would be useful to hear from vendors and dealers alike on what they see as the best methods for demonstrating the value of various products. 

Many methods have their flaws. Cost of Sale does not take into account that some sales are worth much more than others. Cost per lead is difficult for products driving walk-in traffic. Last-click attribution models are certainly not ideal. In an integrated campaign, some products benefit from the presence of others, making the isolation of benefits difficult. The focus for some dealers is not to find a perfect method, but to find a basket of objective measures that collectively help the dealer make a decision.

Clearly, it's hard to compare products that drive traffic to a dealer's site with leads or listings products, but in the end they all compete for the same share of wallet. So what are the best ways for dealers to decide whether or not to keep buying a product? 

The larger an organization is, the more important it is too see what the market will look like in the future. Size can cause an organization to lose its ability to change quickly, so it must see farther and more clearly. While some organizations do serious work on 50 year plans, it seems to me 5, 10, and 20 year plans make the most sense for auto retailers. These plans require a little knowledge in forecasting.

The most important thing I ever learned about long-term forecasting came from Jeff Bezos, CEO of Amazon. He said it was more important to start with the things that will stay the same then to focus on what might change. Here are some of the things I think auto retailers can rely on for the next 20 years.

1. The dealer’s online domain will remain a critical marketing tool. Today, this is limited to the dealer’s website(s). This may seem obvious, but it is worth noting since the same cannot be said of interruption advertising, tools like newspaper, television, and radio. Nor can one be as certain about any particular 3^rd-party site (e.g. Edmunds, AutoTrader.com, Cars.com, or kbb.com). The dealer’s website is the one place the dealer can post all the information they think will aid in the auto shopping process. Much of this data may be sent to other places, willingly by the dealer or unwillingly through scraping it, but consumers will continue to view the dealer’s online domain as the original source direct from the dealer.
2. Many shoppers will still choose to transition from an online conversation with technological touchpoints to a human touchpoint. An increasing number of shoppers may purchase their vehicle with no human interaction, but it will not be all shoppers and may not be most shoppers. Today, these forms of human-to-human contact are email, chat, text, video chat, phone, and walking in (face-to-face). Email may decline in importance and video chat may become a leading form of human-to-human conversation. What will not change is the dealership’s need to be expert at communicating in all the ways shoppers wish to communicate or contract out that function to someone who can.
3. Demonstration of the vehicle’s interior will continue or grow in importance. This may happen online, in the store, and probably both, but the portion of consumer benefits being derived from the interior will not diminish. The less important driving the vehicle becomes, the more important it will be to be productive, relaxed, and/or entertained inside the vehicle. Even where the driver maintains the full driving process and rejects all outside stimulus other than the road and its surroundings, the ability to switch over to a fully connected platform will be a standard feature. The importance of the exterior appearance and/or performance may diminish for many shoppers. This seems likely, but the importance of the interior with all its comfort, convenience, and communication features will not be diminished. Many stores have had a difficult time keeping up with the growing functionality within the interior and will need to step it up.
4. Consumers will demand credible information about the vehicle and the deal. I doubt anyone thinks consumers are going to become less demanding in the amount of information they require. Every shopper is different, but most shoppers today would not spend $20,000 or more on a vehicle with the kind of information they were given 18 years ago. Information demands will not slide back even to the point they are today.

This is not an exhaustive list. What things do you see staying the same over the next 20 years?

 Note: I will be giving a provocative, detailed presentation at DrivingSales Executive Summit on the way automotive retail will be conducted in 2018. 

The larger an organization is, the more important it is too see what the market will look like in the future. Size can cause an organization to lose its ability to change quickly, so it must see farther and more clearly. While some organizations do serious work on 50 year plans, it seems to me 5, 10, and 20 year plans make the most sense for auto retailers. These plans require a little knowledge in forecasting.

The most important thing I ever learned about long-term forecasting came from Jeff Bezos, CEO of Amazon. He said it was more important to start with the things that will stay the same then to focus on what might change. Here are some of the things I think auto retailers can rely on for the next 20 years.

1. The dealer’s online domain will remain a critical marketing tool. Today, this is limited to the dealer’s website(s). This may seem obvious, but it is worth noting since the same cannot be said of interruption advertising, tools like newspaper, television, and radio. Nor can one be as certain about any particular 3^rd-party site (e.g. Edmunds, AutoTrader.com, Cars.com, or kbb.com). The dealer’s website is the one place the dealer can post all the information they think will aid in the auto shopping process. Much of this data may be sent to other places, willingly by the dealer or unwillingly through scraping it, but consumers will continue to view the dealer’s online domain as the original source direct from the dealer.
2. Many shoppers will still choose to transition from an online conversation with technological touchpoints to a human touchpoint. An increasing number of shoppers may purchase their vehicle with no human interaction, but it will not be all shoppers and may not be most shoppers. Today, these forms of human-to-human contact are email, chat, text, video chat, phone, and walking in (face-to-face). Email may decline in importance and video chat may become a leading form of human-to-human conversation. What will not change is the dealership’s need to be expert at communicating in all the ways shoppers wish to communicate or contract out that function to someone who can.
3. Demonstration of the vehicle’s interior will continue or grow in importance. This may happen online, in the store, and probably both, but the portion of consumer benefits being derived from the interior will not diminish. The less important driving the vehicle becomes, the more important it will be to be productive, relaxed, and/or entertained inside the vehicle. Even where the driver maintains the full driving process and rejects all outside stimulus other than the road and its surroundings, the ability to switch over to a fully connected platform will be a standard feature. The importance of the exterior appearance and/or performance may diminish for many shoppers. This seems likely, but the importance of the interior with all its comfort, convenience, and communication features will not be diminished. Many stores have had a difficult time keeping up with the growing functionality within the interior and will need to step it up.
4. Consumers will demand credible information about the vehicle and the deal. I doubt anyone thinks consumers are going to become less demanding in the amount of information they require. Every shopper is different, but most shoppers today would not spend $20,000 or more on a vehicle with the kind of information they were given 18 years ago. Information demands will not slide back even to the point they are today.

This is not an exhaustive list. What things do you see staying the same over the next 20 years?

 Note: I will be giving a provocative, detailed presentation at DrivingSales Executive Summit on the way automotive retail will be conducted in 2018.