Dennis Galbraith

Company: Dealer e Process

Dennis Galbraith Blog
Total Posts: 50    

Dennis Galbraith

Dealer e Process

Feb 2, 2014

Blasting the “Time It Should Take to Sell a Vehicle” Debate

A recent debate is causing quite a stir in automotive retail. Manufacturers and dealers alike are weighing in, and industry trainers are certainly not without their opinions. Just what is the optimal time it should take to sell a vehicle?

A growing camp insists it takes too long to sell a vehicle and customer satisfaction is suffering for it. If this is true, real money is at stake. Many dealers make more money servicing vehicles than selling them. Losing the opportunity to get that future service business is a stiff price to pay for upsetting the customer, not to mention the prospect of future sales and the sales that could come from advocacy and referrals.

Another group argues close rates improve as the time spent with the customer increases. In their view, spending less time with the customer will cost the store in vehicle sales, and they think they have the data to back it up. According to a recent Automotive News article, famed sales trainer, Joe Verde, claims his data shows the following:

Time the Salesperson Spent with the Customer

Close Ratio

< 60 minute

6%

>72 minutes

37%

>100 minutes

57%

 

Those involved in the debate are good people with good reputations, and there is a lot of money riding on the answer. Nonetheless, it brings to mind the famed quote about the three levels of falsehood, “lies, damn lies, and statistics.” Not all customers arrive at the store with equal intent to buy, not all stores have the same policies, and not all salespeople have the same skill or even intentions when handling these opportunities. I’ll explore these differences and show how they twist the numbers.

Correlation is often confused with causation. Looking at those who spend less than 60 minutes with the sales person, did so few of them close because of the amount of time spent with the customer, or was the time spent with the customer cut short because they were not going to close? Maybe the store didn’t have the right vehicle, maybe the chemistry between the salesperson and the customer was not good, or any number of things from affordability to the desire to trade cars in the first place was not in alignment. For lots of people, this gets determined in less than 60 minutes. If the salespeople could have found a way to get this same group of shoppers to stay to 100 minutes would another 51% of them have closed? No chance.

Of those who spent more than 100 minutes with the salesperson and bought a vehicle, how many of those bought a vehicle because of the time spent and how many of them spent the time because they deeply desired the vehicle and spending that time was the only way to get it? There is no doubt some shoppers require more than 100 minutes with the salesperson in order to make up their minds and do the deal. Trying to force everyone to buy in less than an hour would certainly cost some sales. Many of those who advocate a shorter sales process, like leading sales trainer Grant Cardone, acknowledge you must spend the extra time with those who want or need it. There is also no doubt many shoppers who buy in a long sales process would rather have done so in less time.

Cardone says he has data showing the longer the sales process the less money you make. Again, a simple correlation may be misleading. Customers who are intense negotiators may take longer on average. If that’s the case, these shoppers both add to the pool of long sales processes and reduce the average gross from that pool with skinnier deals.

In reading comments from consumers online, there is clearly a segment of shoppers who want a shorter shopping process. There is a segment of shoppers who even think the reason it takes so long is because the salespeople, managers, and F&I department are focused exclusively on grinding the customer to maximize commissions and don’t give a hoot about the satisfaction of a customer they probably won’t sell to again for years.

While this may not be the experience at your store, it remains the reality at some stores, and shoppers know it. This dissatisfaction is not just with the length of the sales process but with the process itself. There is no way to eliminate it without eliminating the cause of it, and that’s hard to do. How do you motivate based on gross profit while keeping the process short if salespeople are successful at using time as a negotiating tool? It will be tough to hold salespeople to any process if they can, or think they can, make more money by going outside the process. In my view, that is the bigger debate and the reason our industry so desperately needs training for sales and training for sales management.

A sales process that provides shorter times for shoppers who want it and lots of attention for shoppers who need it is a worthy objective. Achieving it will not be fast or easy. Clouding the issue with poorly analyzed data is not going to help the problem. I’ve yet to see any data on this subject that controls for the shopper’s pre-arrival intent, the store’s policies, and the salesperson’s process. My hypothesis: each of these variables has more influence on close rates, gross, and customer satisfaction than the variable being studied, length of sales process. Without controlling for these in the research, correlation analysis means little or nothing.

This post won't end the debate, and I welcome comments. But I hope this independent candor regarding the data helps get the discussion back onto a fruitful path.

 

Dennis Galbraith

Dealer e Process

Chief Marketing Officer

4542

5 Comments

Matt Lowery

Proactive Dealer Solutions

Feb 2, 2014  

The issue isnt with how long the salesperson takes with the customer to pick out the perfect car for them, its how long the process takes once the customer says yes. If the customer wants to take 5 hours and drive every car on the lot great... The second they say yes, they want to be walking out the door. Taking an hour after they say is where it costs you money. Every minute they are not in F&I I believe is costing you money.

Dennis Galbraith

Dealer e Process

Feb 2, 2014  

Matt, Waiting for F&I for an hour or more is a common occurrence. While that is not the total extent of the problem, there is no argument about it being a large portion of the problem. Great comment!

Feb 2, 2014  

The title sounds like you are measuring the entire time a customer is on the lot trying to buy a car but the article is focusing on the time with a sales person? I would agree that the longer they spend on the car and building value in the dealership the better. On the surface it looks like bad data, maybe they are not all measuring the same start finish places and how are they measuring with the CRM or manually? Like Matt we see the same issue from the time a customer says they want the car, it takes on average 45 minutes to present and sell F&I then another 45 minutes to complete paperwork. This where the biggest opportunities are. But with lenders, F&I products and DMS's all building out their own non integrated nitched solutions, I don't think they get what that does to the customer experience.

Christopher Murray

Contractor

Mar 3, 2014  

Dino makes an excellent point. Our DMS is not integrated with our CRM nor are either one of those two tools integrated with Zurich which is our F&I tool. That is not our choice, each vendor promised us complete integration yet a year later we have nothing to show for our investment at integration and the customer suffers. We are currently searching for a "one stop" or "single entry" system to replace it all with in the interest of saving the customer time. Once a customer indicates they want to buy they should be rolling off of the property within 45 minutes to an hour in my opinion.

Mark Rask

Kelley Buick Gmc

Apr 4, 2014  

The feedback that we are getting is that it is not the time spent with a salesperson....it is the process after that

Dennis Galbraith

Dealer e Process

Feb 2, 2014

Blasting the “Time It Should Take to Sell a Vehicle” Debate

A recent debate is causing quite a stir in automotive retail. Manufacturers and dealers alike are weighing in, and industry trainers are certainly not without their opinions. Just what is the optimal time it should take to sell a vehicle?

A growing camp insists it takes too long to sell a vehicle and customer satisfaction is suffering for it. If this is true, real money is at stake. Many dealers make more money servicing vehicles than selling them. Losing the opportunity to get that future service business is a stiff price to pay for upsetting the customer, not to mention the prospect of future sales and the sales that could come from advocacy and referrals.

Another group argues close rates improve as the time spent with the customer increases. In their view, spending less time with the customer will cost the store in vehicle sales, and they think they have the data to back it up. According to a recent Automotive News article, famed sales trainer, Joe Verde, claims his data shows the following:

Time the Salesperson Spent with the Customer

Close Ratio

< 60 minute

6%

>72 minutes

37%

>100 minutes

57%

 

Those involved in the debate are good people with good reputations, and there is a lot of money riding on the answer. Nonetheless, it brings to mind the famed quote about the three levels of falsehood, “lies, damn lies, and statistics.” Not all customers arrive at the store with equal intent to buy, not all stores have the same policies, and not all salespeople have the same skill or even intentions when handling these opportunities. I’ll explore these differences and show how they twist the numbers.

Correlation is often confused with causation. Looking at those who spend less than 60 minutes with the sales person, did so few of them close because of the amount of time spent with the customer, or was the time spent with the customer cut short because they were not going to close? Maybe the store didn’t have the right vehicle, maybe the chemistry between the salesperson and the customer was not good, or any number of things from affordability to the desire to trade cars in the first place was not in alignment. For lots of people, this gets determined in less than 60 minutes. If the salespeople could have found a way to get this same group of shoppers to stay to 100 minutes would another 51% of them have closed? No chance.

Of those who spent more than 100 minutes with the salesperson and bought a vehicle, how many of those bought a vehicle because of the time spent and how many of them spent the time because they deeply desired the vehicle and spending that time was the only way to get it? There is no doubt some shoppers require more than 100 minutes with the salesperson in order to make up their minds and do the deal. Trying to force everyone to buy in less than an hour would certainly cost some sales. Many of those who advocate a shorter sales process, like leading sales trainer Grant Cardone, acknowledge you must spend the extra time with those who want or need it. There is also no doubt many shoppers who buy in a long sales process would rather have done so in less time.

Cardone says he has data showing the longer the sales process the less money you make. Again, a simple correlation may be misleading. Customers who are intense negotiators may take longer on average. If that’s the case, these shoppers both add to the pool of long sales processes and reduce the average gross from that pool with skinnier deals.

In reading comments from consumers online, there is clearly a segment of shoppers who want a shorter shopping process. There is a segment of shoppers who even think the reason it takes so long is because the salespeople, managers, and F&I department are focused exclusively on grinding the customer to maximize commissions and don’t give a hoot about the satisfaction of a customer they probably won’t sell to again for years.

While this may not be the experience at your store, it remains the reality at some stores, and shoppers know it. This dissatisfaction is not just with the length of the sales process but with the process itself. There is no way to eliminate it without eliminating the cause of it, and that’s hard to do. How do you motivate based on gross profit while keeping the process short if salespeople are successful at using time as a negotiating tool? It will be tough to hold salespeople to any process if they can, or think they can, make more money by going outside the process. In my view, that is the bigger debate and the reason our industry so desperately needs training for sales and training for sales management.

A sales process that provides shorter times for shoppers who want it and lots of attention for shoppers who need it is a worthy objective. Achieving it will not be fast or easy. Clouding the issue with poorly analyzed data is not going to help the problem. I’ve yet to see any data on this subject that controls for the shopper’s pre-arrival intent, the store’s policies, and the salesperson’s process. My hypothesis: each of these variables has more influence on close rates, gross, and customer satisfaction than the variable being studied, length of sales process. Without controlling for these in the research, correlation analysis means little or nothing.

This post won't end the debate, and I welcome comments. But I hope this independent candor regarding the data helps get the discussion back onto a fruitful path.

 

Dennis Galbraith

Dealer e Process

Chief Marketing Officer

4542

5 Comments

Matt Lowery

Proactive Dealer Solutions

Feb 2, 2014  

The issue isnt with how long the salesperson takes with the customer to pick out the perfect car for them, its how long the process takes once the customer says yes. If the customer wants to take 5 hours and drive every car on the lot great... The second they say yes, they want to be walking out the door. Taking an hour after they say is where it costs you money. Every minute they are not in F&I I believe is costing you money.

Dennis Galbraith

Dealer e Process

Feb 2, 2014  

Matt, Waiting for F&I for an hour or more is a common occurrence. While that is not the total extent of the problem, there is no argument about it being a large portion of the problem. Great comment!

Feb 2, 2014  

The title sounds like you are measuring the entire time a customer is on the lot trying to buy a car but the article is focusing on the time with a sales person? I would agree that the longer they spend on the car and building value in the dealership the better. On the surface it looks like bad data, maybe they are not all measuring the same start finish places and how are they measuring with the CRM or manually? Like Matt we see the same issue from the time a customer says they want the car, it takes on average 45 minutes to present and sell F&I then another 45 minutes to complete paperwork. This where the biggest opportunities are. But with lenders, F&I products and DMS's all building out their own non integrated nitched solutions, I don't think they get what that does to the customer experience.

Christopher Murray

Contractor

Mar 3, 2014  

Dino makes an excellent point. Our DMS is not integrated with our CRM nor are either one of those two tools integrated with Zurich which is our F&I tool. That is not our choice, each vendor promised us complete integration yet a year later we have nothing to show for our investment at integration and the customer suffers. We are currently searching for a "one stop" or "single entry" system to replace it all with in the interest of saving the customer time. Once a customer indicates they want to buy they should be rolling off of the property within 45 minutes to an hour in my opinion.

Mark Rask

Kelley Buick Gmc

Apr 4, 2014  

The feedback that we are getting is that it is not the time spent with a salesperson....it is the process after that

Dennis Galbraith

Dealer e Process

Nov 11, 2011

Provision, and What It Means To Dealers

Happy Veterans Day to all who serve and have served! My friends at vAuto hope this day will also be remembered for the launch of their new product, Provision. As the press release (also posted on DrivingSales.com) noted, the tool  helps dealers know what vehicles to stock, what to pay for them, and where to find them. None of these tasks are new to dealers. My grandfather was buying used vehicles for resale prior to World War II, but here are the differences:

1.       The market for selling those vehicles retail is less forgiving. Transparency in the hands of consumers means dealers need to be operating at the highest possible level when it comes to procurement.

2.       The shopping radius for consumers and dealers has increased. Even if there are fewer dealerships in your region than there was years ago, the competition for clean, used vehicles has never been higher.

3.       If the cost of this tool is less than the value of the labor saved plus the value of improved procurement (efficiency plus effectiveness), then those who have it will enjoy a competitive advantage over those who do not. My grandfather bought cars pretty much the same way in the 80s as he did in the 30s. Your career won't be like that.

Improved profitability doesn't always come from doing things you didn't do before. Often it comes from doing what you've always done in a better way.

Using Provision might very well result in a competitive advantage for your store, but just buying Provision won't do a thing for your dealership. Don't buy it to try it. Buy it to change your business or wait until you are ready to. I've heard too many dealers say tools don't work when the truth was that their people were not working the tools. I look forward to the vAutos webinar at noon (EST) and reading reactions from dealers on DrivingSales.com.

Dennis Galbraith

Dealer e Process

Chief Marketing Officer

2474

No Comments

Dennis Galbraith

Dealer e Process

Nov 11, 2011

Provision, and What It Means To Dealers

Happy Veterans Day to all who serve and have served! My friends at vAuto hope this day will also be remembered for the launch of their new product, Provision. As the press release (also posted on DrivingSales.com) noted, the tool  helps dealers know what vehicles to stock, what to pay for them, and where to find them. None of these tasks are new to dealers. My grandfather was buying used vehicles for resale prior to World War II, but here are the differences:

1.       The market for selling those vehicles retail is less forgiving. Transparency in the hands of consumers means dealers need to be operating at the highest possible level when it comes to procurement.

2.       The shopping radius for consumers and dealers has increased. Even if there are fewer dealerships in your region than there was years ago, the competition for clean, used vehicles has never been higher.

3.       If the cost of this tool is less than the value of the labor saved plus the value of improved procurement (efficiency plus effectiveness), then those who have it will enjoy a competitive advantage over those who do not. My grandfather bought cars pretty much the same way in the 80s as he did in the 30s. Your career won't be like that.

Improved profitability doesn't always come from doing things you didn't do before. Often it comes from doing what you've always done in a better way.

Using Provision might very well result in a competitive advantage for your store, but just buying Provision won't do a thing for your dealership. Don't buy it to try it. Buy it to change your business or wait until you are ready to. I've heard too many dealers say tools don't work when the truth was that their people were not working the tools. I look forward to the vAutos webinar at noon (EST) and reading reactions from dealers on DrivingSales.com.

Dennis Galbraith

Dealer e Process

Chief Marketing Officer

2474

No Comments

Dennis Galbraith

Dealer e Process

Nov 11, 2011

It's Not a Commodity (Exclusively on DS)

I've heard a number of industry professionals say that cars are now a commodity, usually in the process of explaining why it is so important to price relative to the market. I'm concerned about the use of this exaggeration. In fact, It is because I am a proponent of pricing tools and adjusting prices relative to market forces that I am concerned about any exaggeration used to support the argument.

Let's start with new vehicles. A new Buick Verano with the leather group is not a commodity. Some have sunroofs, spoilers, navigation, all-weather floor mats, and cargo nets. Some come with the $125 pedal covers and some do not. Even if two of these vehicles were exactly configured and of the same color, the deal does not stop there. There is the entire back-end portion of the deal to consider. I know some dealers I'd happily pay $50 more to just to avoid having to deal with other dealers at the F&I stage. Even if the customer is paying cash and not buying anything else in F&I, that does not preclude some dealers from charging an additional processing fee.

It doesn't matter who you buy a bar of gold from, because it is a commodity. But it does matter who you buy a vehicle from, because when we look at the entire bundle of features and benefits delivered by the dealer, it is not a commodity. Not only do some stores have better reputations than others, there are probably many shoppers in your community you have no reputation with. This is why actual photos of the new vehicles produce more contacts than stock photos, many customers don't even trust that you actually have the vehicles you say you do. Preference for the retailer impacts the price paid. In the strictest sense, you can't say that about a commodity.

Two used cars of the same year/make/model/trim and accessories with the same mileage and in the same condition will likely sell in the same market for a similar price. Just how similar can depend as much on how well they are merchandised as it does the slight variations demonstrated by that merchandising. If the basic information is the same, the vehicle with more detailed information may appear to be a better value even if some of that information discloses imperfections. Some imperfections are to be expected, disclosing those that are known can reduce the worry about imperfections that cannot be observed. Vehicle condition reports can build preference for the vehicle and the store.

Commodity means there is no preference, and the word is often misused. Oil is said to be a commodity, but it is not. Only oil that is properly categorized can be called a commodity. Crude oil that is certified to be both light and sweet can be confidently purchased at the same price as other light/sweet crude. If the condition report is the same, then it is a commodity.

Price is an essential element to marketing. Now that consumers have access to market information online, there are many of them you will never even meet unless you have the right car at the right price. But that is not enough. Shoppers buy value. Without detailed information about what that price represents, it cannot be processed into a comparable value. When all dealers merchandise their vehicles the same and have the same disclosed back-end practices, then we can talk about cars being a commodity. Until then, competitive attractive pricing will bring more contacts from online shoppers, but the advantage among comparable cars at the same price goes to the vehicle with the most transparent merchandising from the dealership with clearly disclosed policies.

Dennis Galbraith

Dealer e Process

Chief Marketing Officer

10237

No Comments

Dennis Galbraith

Dealer e Process

Nov 11, 2011

It's Not a Commodity (Exclusively on DS)

I've heard a number of industry professionals say that cars are now a commodity, usually in the process of explaining why it is so important to price relative to the market. I'm concerned about the use of this exaggeration. In fact, It is because I am a proponent of pricing tools and adjusting prices relative to market forces that I am concerned about any exaggeration used to support the argument.

Let's start with new vehicles. A new Buick Verano with the leather group is not a commodity. Some have sunroofs, spoilers, navigation, all-weather floor mats, and cargo nets. Some come with the $125 pedal covers and some do not. Even if two of these vehicles were exactly configured and of the same color, the deal does not stop there. There is the entire back-end portion of the deal to consider. I know some dealers I'd happily pay $50 more to just to avoid having to deal with other dealers at the F&I stage. Even if the customer is paying cash and not buying anything else in F&I, that does not preclude some dealers from charging an additional processing fee.

It doesn't matter who you buy a bar of gold from, because it is a commodity. But it does matter who you buy a vehicle from, because when we look at the entire bundle of features and benefits delivered by the dealer, it is not a commodity. Not only do some stores have better reputations than others, there are probably many shoppers in your community you have no reputation with. This is why actual photos of the new vehicles produce more contacts than stock photos, many customers don't even trust that you actually have the vehicles you say you do. Preference for the retailer impacts the price paid. In the strictest sense, you can't say that about a commodity.

Two used cars of the same year/make/model/trim and accessories with the same mileage and in the same condition will likely sell in the same market for a similar price. Just how similar can depend as much on how well they are merchandised as it does the slight variations demonstrated by that merchandising. If the basic information is the same, the vehicle with more detailed information may appear to be a better value even if some of that information discloses imperfections. Some imperfections are to be expected, disclosing those that are known can reduce the worry about imperfections that cannot be observed. Vehicle condition reports can build preference for the vehicle and the store.

Commodity means there is no preference, and the word is often misused. Oil is said to be a commodity, but it is not. Only oil that is properly categorized can be called a commodity. Crude oil that is certified to be both light and sweet can be confidently purchased at the same price as other light/sweet crude. If the condition report is the same, then it is a commodity.

Price is an essential element to marketing. Now that consumers have access to market information online, there are many of them you will never even meet unless you have the right car at the right price. But that is not enough. Shoppers buy value. Without detailed information about what that price represents, it cannot be processed into a comparable value. When all dealers merchandise their vehicles the same and have the same disclosed back-end practices, then we can talk about cars being a commodity. Until then, competitive attractive pricing will bring more contacts from online shoppers, but the advantage among comparable cars at the same price goes to the vehicle with the most transparent merchandising from the dealership with clearly disclosed policies.

Dennis Galbraith

Dealer e Process

Chief Marketing Officer

10237

No Comments

Dennis Galbraith

Dealer e Process

Oct 10, 2011

The Standard: Fewer Than 2% of Inventory with No Photos

On any given day, 17-18% of used-vehicle inventory posted online by dealers has no photos. Virtually every dealer realizes the critical nature of photos. If there is no photo showing on the Search Results Page, that listing has very little chance of being selected for the viewing of a Vehicle Details Page. Nonetheless, more than one in six vehicles are standing naked in the face of tough competition.

Even some of the largest, best known dealers have a poor record when it comes to merchandising their vehicles quickly. Last night, Sun Chevrolet had 33% with no photos, Paragon Honda 27%, Galpin Ford 12%, and Longo Toyota 10%. Mighty CarMax did little better than the national average. From a random sample of 10 CarMax stores, the percentage with no photos averaged 16% and ranged from 9% in Burbank, CA to 26% in Charlotte, NC. The point here is not to pick on any store but to point out that the problem is going unnoticed at even some of the finest stores.

The two best stores I've found so far are Texas Direct Auto (6%) and Finish Line Ford (3%). I track Finish Line Ford regularly, because I know they understand the importance of getting vehicles merchandised quickly. On most days fewer than 2% of their vehicles are without photos. I'm convinced that 2% is a reasonable standard for any store. If the vehicles are not merchandised online, then it is not much of an exaggeration to say they are not really for sale, even though the flooring costs and depreciation are in full swing.

Time is the problem. As the numbers below indicate, most vehicles get merchandised eventually. The problem is that it takes too long to get around to it.

Age of Listing                     Percent with No Photos

1 Day                                     87%

2-3 Days                               60%

4-7 Days                               41%

8-14 Days                             29%

15 Days to 1 Mo.                 15%

More Than 1 Mo.              

    5%

Vehicles often wait days or even weeks for merchandising. Commonly, one person is in charge of taking the photos, whether they are an employee or outsourced. When they are not there or unavailable, the vehicles stand naked online and wait. Another problem is detailing and reconditioning. The best stores process nearly every vehicle in just one or two days. Better yet, photos are taken at the time of purchase and later replaced after detailing or reconditioning.  

The solution to both of these problems is simplicity. When the process is so simple anyone can do it quickly and easily, then the vehicles get merchandised the day they come in. When involving human labor, the path to speed is simplicity. Engineers have understood this for over 100 years. Assembly lines break tasks down to their simplest form. Similarly, batch work can be segmented and distributed to specialized teams. But both these systems require volume. Tasks like used-vehicle merchandising, where one person tackles a series of differentiated vehicles, requires automation of the process instructions. Merchandising a pickup truck is different than merchandising an SUV or a sedan. Simplicity is achieved by automating the process instructions to fit the job and allowing the device to guide the person rather than the other way around. This method is similar to a GPS providing specific instructions based on the travel objective. Any number of drivers can follow the directions with little trouble and no need for thinking through the changes when the next objective is different.

The research for this article was done on October 30,2011 using the over 1.3 million cars listing on Cars.com by dealers only. Since the inventory feeds going to Cars.com are generally the same as the majority of feeds going to AutoTrader.com, and website providers, it is a good representation of the industry as a whole. This research can be duplicated at any time using data and filters that are publicly available on Cars.com. Results vary only a few percentage points from day to day. My hope is that this article can stimulate action that will move these metrics over the month ahead. This is not a zero-sum game. When inventory is merchandised faster inventory turns improve for everyone participating in the change.

                

Dennis Galbraith

Dealer e Process

Chief Marketing Officer

2833

No Comments

Dennis Galbraith

Dealer e Process

Oct 10, 2011

The Standard: Fewer Than 2% of Inventory with No Photos

On any given day, 17-18% of used-vehicle inventory posted online by dealers has no photos. Virtually every dealer realizes the critical nature of photos. If there is no photo showing on the Search Results Page, that listing has very little chance of being selected for the viewing of a Vehicle Details Page. Nonetheless, more than one in six vehicles are standing naked in the face of tough competition.

Even some of the largest, best known dealers have a poor record when it comes to merchandising their vehicles quickly. Last night, Sun Chevrolet had 33% with no photos, Paragon Honda 27%, Galpin Ford 12%, and Longo Toyota 10%. Mighty CarMax did little better than the national average. From a random sample of 10 CarMax stores, the percentage with no photos averaged 16% and ranged from 9% in Burbank, CA to 26% in Charlotte, NC. The point here is not to pick on any store but to point out that the problem is going unnoticed at even some of the finest stores.

The two best stores I've found so far are Texas Direct Auto (6%) and Finish Line Ford (3%). I track Finish Line Ford regularly, because I know they understand the importance of getting vehicles merchandised quickly. On most days fewer than 2% of their vehicles are without photos. I'm convinced that 2% is a reasonable standard for any store. If the vehicles are not merchandised online, then it is not much of an exaggeration to say they are not really for sale, even though the flooring costs and depreciation are in full swing.

Time is the problem. As the numbers below indicate, most vehicles get merchandised eventually. The problem is that it takes too long to get around to it.

Age of Listing                     Percent with No Photos

1 Day                                     87%

2-3 Days                               60%

4-7 Days                               41%

8-14 Days                             29%

15 Days to 1 Mo.                 15%

More Than 1 Mo.              

    5%

Vehicles often wait days or even weeks for merchandising. Commonly, one person is in charge of taking the photos, whether they are an employee or outsourced. When they are not there or unavailable, the vehicles stand naked online and wait. Another problem is detailing and reconditioning. The best stores process nearly every vehicle in just one or two days. Better yet, photos are taken at the time of purchase and later replaced after detailing or reconditioning.  

The solution to both of these problems is simplicity. When the process is so simple anyone can do it quickly and easily, then the vehicles get merchandised the day they come in. When involving human labor, the path to speed is simplicity. Engineers have understood this for over 100 years. Assembly lines break tasks down to their simplest form. Similarly, batch work can be segmented and distributed to specialized teams. But both these systems require volume. Tasks like used-vehicle merchandising, where one person tackles a series of differentiated vehicles, requires automation of the process instructions. Merchandising a pickup truck is different than merchandising an SUV or a sedan. Simplicity is achieved by automating the process instructions to fit the job and allowing the device to guide the person rather than the other way around. This method is similar to a GPS providing specific instructions based on the travel objective. Any number of drivers can follow the directions with little trouble and no need for thinking through the changes when the next objective is different.

The research for this article was done on October 30,2011 using the over 1.3 million cars listing on Cars.com by dealers only. Since the inventory feeds going to Cars.com are generally the same as the majority of feeds going to AutoTrader.com, and website providers, it is a good representation of the industry as a whole. This research can be duplicated at any time using data and filters that are publicly available on Cars.com. Results vary only a few percentage points from day to day. My hope is that this article can stimulate action that will move these metrics over the month ahead. This is not a zero-sum game. When inventory is merchandised faster inventory turns improve for everyone participating in the change.

                

Dennis Galbraith

Dealer e Process

Chief Marketing Officer

2833

No Comments

Dennis Galbraith

Dealer e Process

Oct 10, 2011

Mr. GM, Tear Down This Wall

The wall between fixed operations and sales needs to come down.

  • Franchised dealers must regain some of the accessory sales lost to online and offline competitors. That is not going to happen unless Parts, Service, and Sales all work to make it happen.
  • Regardless of what is done with social media, it is impossible to maximize customer relationships for loyalty and advocacy if the store is not uniformly committed to growing those customer relationships.  
  • Service revenue is lost every month when customers call in for service on the same tracking number they used when initially shopping for the car itself. Sales people don't get paid to answer service calls, and the way some of them handle those calls surely reflects it.
  • Most service managers don't get paid to teach people how to operate their vehicles. And it shows when customers call up complaining about their car not operating when the customer simply doesn't know how it is supposed to operate. Vehicle delivery is insufficient at thousands of stores. Of course, most sales people don't care about that. Their only worry is about the next sale, not the last one.
  • Occasionally, nasty comments are tossed back and forth over the variable-ops/fixed-ops wall, but most of the time these departments uttered their disdain for each other to the consumer.

When Ronald Reagan gave his famous speech at the Berlin Wall, telling Mikhail Gorbachev to "tear down this wall," it was not a new policy position. The five previous presidents had all wanted the same thing. In fact the wall did not come down for another 29 months, nearly one year after Reagan left office. Persuasion takes multiple efforts, even when it is clearly the right thing to do.

Many stores are changing their commission plans on accessories, splitting the gross profit equally between parts, service, and sales. Although there are plenty of success stories coming from the use of this approach, some stores baulk at the idea of taking such a big step right away. At a minimum, GMs can start by adding non-human touchpoints that introduce service to sales customers and sales to service customers. Here are a few product examples:

  1. AdVantage Tec, an Innovation Cup finalist at DSES, uses 15% of the TV screen in the waiting area for promotional messages, often promoting sales to waiting service companies.
  2. Dealer e-Process won the 2011 AWA Fixed Ops Technology Award for their service solutions on dealership websites. Many websites are virtually controlled by Sales and neglect service opportunities.

I'd love to hear what your store or product is doing to help tear down this wall. 

Dennis Galbraith

Dealer e Process

Chief Marketing Officer

4475

No Comments

Dennis Galbraith

Dealer e Process

Oct 10, 2011

Mr. GM, Tear Down This Wall

The wall between fixed operations and sales needs to come down.

  • Franchised dealers must regain some of the accessory sales lost to online and offline competitors. That is not going to happen unless Parts, Service, and Sales all work to make it happen.
  • Regardless of what is done with social media, it is impossible to maximize customer relationships for loyalty and advocacy if the store is not uniformly committed to growing those customer relationships.  
  • Service revenue is lost every month when customers call in for service on the same tracking number they used when initially shopping for the car itself. Sales people don't get paid to answer service calls, and the way some of them handle those calls surely reflects it.
  • Most service managers don't get paid to teach people how to operate their vehicles. And it shows when customers call up complaining about their car not operating when the customer simply doesn't know how it is supposed to operate. Vehicle delivery is insufficient at thousands of stores. Of course, most sales people don't care about that. Their only worry is about the next sale, not the last one.
  • Occasionally, nasty comments are tossed back and forth over the variable-ops/fixed-ops wall, but most of the time these departments uttered their disdain for each other to the consumer.

When Ronald Reagan gave his famous speech at the Berlin Wall, telling Mikhail Gorbachev to "tear down this wall," it was not a new policy position. The five previous presidents had all wanted the same thing. In fact the wall did not come down for another 29 months, nearly one year after Reagan left office. Persuasion takes multiple efforts, even when it is clearly the right thing to do.

Many stores are changing their commission plans on accessories, splitting the gross profit equally between parts, service, and sales. Although there are plenty of success stories coming from the use of this approach, some stores baulk at the idea of taking such a big step right away. At a minimum, GMs can start by adding non-human touchpoints that introduce service to sales customers and sales to service customers. Here are a few product examples:

  1. AdVantage Tec, an Innovation Cup finalist at DSES, uses 15% of the TV screen in the waiting area for promotional messages, often promoting sales to waiting service companies.
  2. Dealer e-Process won the 2011 AWA Fixed Ops Technology Award for their service solutions on dealership websites. Many websites are virtually controlled by Sales and neglect service opportunities.

I'd love to hear what your store or product is doing to help tear down this wall. 

Dennis Galbraith

Dealer e Process

Chief Marketing Officer

4475

No Comments

  Per Page: