Just about everyone in the business has repeatedly heard and read that the average shopper visits only 1.3 dealerships before buying a vehicle. It’s been repeated in countless articles and at nearly every automotive marketing conference. That statistic is false, it was always false, and it remains false. New research released by J.D. Power and Associates again debunks this myth. J.D. Power also put out information in 2011 which contradicted this myth, but few wanted to hear it. Here is the link to the entire story and a complete understanding of what the actual data means, http://www.dealereprocess.com/1-point-3-dealer-myth-destroyed/

Having the facts right does not diminish the importance of the internet. Just getting shoppers to the store is still not enough. Great websites meet the information needs of shoppers, bring them to the store more ready to buy, and provide full content on mobile devices to meet shopper needs within the store. In the modern buying cycle, websites never stop working.

Recently, an article emerged stating that all optional fields should be eliminated from lead forms. This, according to the article, is a primary issue impacting conversion. That kind of information can be dangerous for dealers, so I’d like to provide a more holistic view of optional fields in lead forms.

To start with, you don’t have a problem with your lead forms as long as the completion rate is high. Completion rate is a function of how much the shopper wants the information and what they need to do to get it.

Lead Form Entry Rate X Lead Form Completion Rate = Email Lead Form Conversion

Dealerships need to balance their desire for more information with their need to maximize website conversion. Maximizing the creation of sales opportunities is the objective dealers are most focused on. This is why top-rated website providers allow the dealer total control over their lead forms, both what is optional vs. required and which fields are shown or not shown.

Email Lead Forms X Appointment Rate X Appointment Show Rate = Sales Opportunities

Here are a few reasons you might opt for additional information fields:

• A dealer producing more leads than can be properly handled at the time may want to have the leads scrubbed and/or scored to know which leads should definitely not be overlooked. Of course, the long-term answer is more capacity to handle leads, but it’s hard to do that quickly. The short-term answer is to include the information needed to have these automated processes performed.
• The additional information may be improving lead handling. Before responding to the lead, it can be very helpful to know if the customer lives down the street or 100 miles away. Don’t just A/B test to maximize the immediate dependent variable (form completion rate or conversion rate). Test to be sure the impact on appointment set rates and appointment shown rates are also considered. You may obtain more sales opportunities asking for the additional information.
• Getting the customer to contribute more information may cause them to have a greater investment in the lead submission. An old sales trick was to ask the customer if you can borrow a pen or pencil. (There was a time when carrying one was normal.) It was a little thing that increased the customer’s investment in the relationship. Most people naturally avoid those they owe something to and stay close to those who owe them something in return. In an electronic world, asking for a few more fields of information may be the modern equivalent of asking for a pencil. You don’t need to guess at this. Test, as discussed in the previous bullet point.
• The additional information may later add to your ability to communicate carefully targeted messages based on information in your CRM. If you don’t ask for a mailing address, you can’t mail. That is not at all important to some stores in some communities, but it is very important to others.

Whatever your situation is today, reconsideration may be justified in the future. The most powerful variable is how badly the shopper wants the vehicle, the information, and the relationship. Giving the shopper more information, and better navigation to find that information, helps turbocharge their desire and their corresponding willingness to provide additional information.

Understand what works on your own site for your unique store in your unique community. Secondary research can be directional, but it is generally not proof of how you should run your store. When you do use secondary research, be sure you fully understand it and its implications. The article I mentioned in the beginning was based on secondary information.  They mistakenly thought because Expedia’s A/B test showed a profit by eliminating the optional “company” field from one of their forms meant that auto dealers should eliminate all optional fields.

An article on the Expedia test shows why the “company” field was a problem:

• When visitors see the “Company” field, they were confused.
• Visitors thought Expedia meant they should put in their Bank name.
• Users then put their Bank’s address into the billing fields.
• This led to failed transactions, which led to abandons.

Clearly, we don’t have these problems with lead forms. We don’t ask for confusing things like “company”. This research cannot be applied to asking shoppers for their address or asking them if they’d like to include any comments.

Be sure you have control over your website and be sure you use that control based on sound research rather than rash predictions from desperate vendors. As a wise man once said, “Beware of false prophets.

Sonic Automotive is boldly and publicly moving toward a brand-wide strategy delivering 45-minute transactions without negotiation, simplified back-end options, a single-person sales experience, and with virtually no paper work. It’s a bold plan. Will it work? Will it win? Will it dominate? As today’s Automotive News article points out, some financial experts are cautious. Many of the comments to that article are downright mean toward Sonic.

The fact that Sonic Automotive has comfortably been so forthcoming with information about a strategy just getting ready to go into the pilot stage says volumes about how slow they think their competition will be to change. The fact is automotive retail has historically been slow to adjust to changing consumer habits and desires. Yes, our industry is changing faster than it ever has, but not as fast as consumers would like. As an example, CarMax has been a success story for a very long time, yet their position is unique in most of the markets they serve.

Sonic Automotive wants their brand to stand for a type of shopping experience many shoppers will find beneficial and most dealerships will find difficult to emulate, even those who try hard to do so. Frankly, it appears to be a well thought out plan that involves changes to every part of the marketing mix, from product and pricing to promotions and store operations. If well executed, it should work. Unfortunately, it will take several years to know for sure.

Will some shoppers still shop for the right deal on the right car and end up at whatever store that search takes them to? Some will. Will some shoppers give preference and a premium to a consistent retail process? They sure will. Will other shoppers be all about qualifying for finance, even if it’s not the ideal vehicle, deal, or retail process? Yes, some will. The market will remain segmented.

The transformation of Sonic Automotive will not quickly change the entire industry. But it could allow the company to become a dominant and growing player serving an expanding segment of shoppers. Their effort cannot be encapsulated into an argument about one-price stores, sales process, or the advantages and disadvantages associated with a more rapid transaction process. More than anything, it should stimulate an array of discussions about the benefits of delivering a unified marketing mix aimed at a particular segment of shoppers.

Regardless of which segment of shoppers a store or group of stores aims at, those with the greatest degree of success will be those who thought through a holistic plan. Large dealer groups have the advantages of scale. Smaller groups and individual stores have the advantage of speed. Neither of those will be sufficient when stacked up to organizations who execute well on the optimal marketing mix for the segment(s) they most desire to serve. 

It’s pretty clear that the one-price retail model will continue to grow each year for the foreseeable future. Whether or not it ever becomes the dominant retail pricing model, one-price has special marketing needs and requires some special marketing tactics.

The dealer’s website absolutely must demonstrate value. One-price is not a benefit to the shopper unless that price can quickly be recognized as a value. If the shopper sees comparisons like MSRP on new vehicles or original MSRP and book value on used vehicles, then the customer can be confident the offer price is a good value. At that point, the benefit of not having to negotiate can be the store’s competitive advantage.

Many shoppers don’t want to haggle, but they don’t necessarily want to pay through the nose for the privilege of not haggling. That option has always been there for shoppers at any store. It’s up to the one-price store to demonstrate value, and the place to do that is on the dealer’s website. The dealer’s site is used by more shoppers than ever, from the early stages of online shopping all the way through the store experience.

Ads driving traffic to the website can do so with the promise the one-price store not only prices their vehicles to be a great value but demonstrates it for all to see. Stores pricing their vehicles competitively without demonstrating the fact they have done so will never experience the full benefit of their marketing policy. Value demonstrations on the dealer’s website are a core and essential tactic when executing the one-price strategy. 

Mobile phones greatly changed the role of the dealership website. Many of us used to gage a website primarily on its ability to convert shoppers into contacts. That remains important, but today the site is used by customers even while they are in the store. Savvy dealerships are turning to high-content websites and training personnel on the use of that content when working with customers in person as well as on the phone or online.

When the website is loaded with content about the vehicle, within a navigation platform that makes things easy to find, anyone with the site in front of them can be an expert on the vehicle. Employees can remind shoppers what awards a particular vehicle won in the model year it was created. They can assure customers the vehicle includes the options or marketing packages important to the shopper. They can even bring up manufacturer brochures and owner’s manuals on the vehicle, right on dealers website.

This information is particularly important for used vehicles. Some sales people are truly experts regarding the new vehicles they sell, but that’s extremely hard to achieve with used vehicles. This is especially important now that more and more stores are placing an enhanced emphasis on the sale us used vehicles. Thousands of dealerships use pricing tools like vAuto or FirstLook, and virtually every dealer now understands the importance of merchandising their inventory with photos, videos, and text descriptions. Dealers need a differentiator. Additional information, better navigation for that information, and training staff members on how to use this information can all lead to significant competitive advantage.

There is an inverse relationship between information and customer doubt, and a direct relationship between information and perceived value. Providing more information can help improve close rates, hold gross, and shorten the time it takes to sell a vehicle within the store. It’s difficult to know what information will be vital to a particular individual. Providing complete transparency, as well as making it easy to find the information, makes it possible for each shopper to quickly obtain what they need. It can also help each person in the dealership quickly find the information they or the shopper are looking for.

Dealership websites not only play a huge role in driving traffic to the store, they have a significant role within the store. Living up to the opportunity requires more content than most dealership websites provide.

Today’s Automotive News quotes AutoNation CEO, Mike Jackson in a report saying AutoNation will move away from third-party sources and make its own leads. AutoNation is actually going to spend more money than ever on digital marketing, it simply is moving that money toward a better website strategy and more digital marketing, bringing shoppers directly to the site.

The first 18 years or so of automotive internet was dominated by companies like AutoTrader.com, Cars.com, kbb.com, Edmunds.com, and eventually Truecar.com creating consumer audiences. Third-parties either used their audience to create leads or brought subscribing dealer’s inventory to those shoppers. The latter system eventually dominated with the vendors adding value through a kind of matching service.

Today, search engines provide a superior matching service and consumers are responding. More and more shoppers are performing long-tail searches, looking for a vehicle via search rather than a site from which to find a vehicle. As dealers consider moving more resources to where consumers are shifting their search, they need to consider this is a two-vendor play. You have to pay for the search, either directly or through a digital marketing service. (The latter is often more cost effective.) Then you have to land the shopper onto a fantastic Vehicle Details Page (VDP) on a very good website. This combination can be far more cost effective that paying an automotive audience provider for their match-making service.

Thousands of dealers have gone at this half way. They either pay for a digital marketing service that is not effective or transparent, getting them burned, or they choose a good, transparent service only to land the shopper on a poor website with a poor VDP. As more and more of these searches are done on mobile devices, the dealer’s mobile site experience becomes as or more important than their traditional site.

Going where the consumer and AutoNation are going can make fantastic sense, but you must go all the way. When you see a company as big as AutoNation moving hard and fast in this direction, it’s important to stop asking whether it works and begin asking whether you are working it.

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:

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.

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?

The exact formula for finance lead generation is illusive and probably varies a great deal based on market and store reputation. However, the following model offers a good guideline for thinking through the key variables: (value of the information provided to the customer + value of the information obtained about the customer) / the sensitivity and quantity of the information required of the customer. I’ll break this down one element at a time.

Lead generation can be measured in quantitative terms, but leads which include credit score are far more valuable than those that do not. Credit score helps the store get the right vehicle and financing in front of the customer early in the process. An increase in finance lead volume at the expense of obtaining credit scores would not be nearly as valuable as the same quantitative increase along with credit scores.

The more valuable the information provided to the customer, the more likely they are to complete the lead form. As an example, receiving a pre-approval notice is of high value to many credit-challenged shoppers.

The value of the information obtained about the customer represents the qualitative value. The most important elements are credit score and contact information. Elements like Social Security number present no direct value to the store and are a sizable liability to the dealership.

Consumers are turned off by having a great deal of information required, and are even less likely to complete the lead form when sensitive information is required, like date of birth and Social Security number.

Using this model, it was determined that an ideal finance lead form would have the following characteristics:

1. No Social Security number required
2. No date of birth required
3. Dealership receives the credit score of the shopper without impacting the shopper’s credit score (soft pull)
4. Promise of an approval notice to the shopper

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.