Car buyers pay for the CarWoo service. They have skin in the game, so there is no doubt they are serious buyers. The dealer's opportunity to submit offers to these buyers is completely free with no strings attached, no fee when the sale is made, and no upsell products. This business model is completely different from leads or listings.

    The buyers who sign up with CarWoo are largely the same people who avoid ads by recording programs or watching on-demand movies, Showtime, HBO, etc. Chances are they don't see dealer's ads enough to feel they know any of them and are willing to pay for a good shopping process just like they pay for good, commercial-free TV. Among new-car shoppers, there is reason to believe the size of this group is growing. CarWoo won't replace your need for listings services and leads providers, but it will send some buyers your way for free. 

    Getting the most out of CarWoo requires a few minutes of pre-work. The call notifying the store of an opportunity often ping pongs around the store and ends up in a voicemail. Without registering one or more contacts with CarWoo, this could easily happen at your store and may have already. Meanwhile, your competitor is communicating an offer that demonstrates they are the right store to buy from. The promptness of their response adds credibility to their claim, and now you are starting off in the hole, if you ever get started. In my view, this is a fantastic opportunity and should not be left to chance. Sign your store up ahead of time with the name and contact information of someone responsible for these opportunities. Here is the link to do that: http://dealers.carwoo.com/dealers/new.

   The Power Information Network is a division of J.D. Power and Associates. Its automated system collects data from roughly 1/3 of all franchised dealers and provides a free reporting tool, PowerDealer, showing both the individual dealer's data and aggregated results from other dealers. PowerDealer is a nice complement to the free Dataium information I wrote about last week. While Dataium is live shopping information, PowerDealer is sales information in near real time. Between the two, you have insight into what is actually being sought and bought.

   Unlike sales reports based on registration data, this information is no more than 24 hours old from the point of sale. This makes the guidebook particularly useful during times of turbulent pricing and fluctuating demand.

   A feature I find helpful for knowing what vehicles to be on the lookout for is the ROI indicator; it combines gross profit and days to turn. If the average retailer cost of a vehicle is $12,000 and its average sales price is $14,000 with an average 30 days to turn, then the dealer could expect to make $2,000 in one month. If this were repeated each month, it would result in a 200% ROI on the $12,000 investment ($2,000 X 12 months = $24,000). Sorting vehicles by ROI is a quick way to identify attractive inventory.

   Another fantastic feature is PowerDealer's ability to plot sales information on a Google map with a variable radius from the store. Franchise sales reports can be seen at four regional levels. It also includes a booking tool backed by current sales data.

   This free tool is not going to replace your vAutos or any other robust market-data tool. It can help your sales managers know whether their expected gross margins line up with benchmarks based on what is actually selling in the same time period.

   I'm told that some dealers still hold back from participating in order to retain anonymity. The 1/3 penetration rate assures that enough dealers are included in the aggregate benchmarks to dismiss that concern in nearly all cases. A fixed-operations module can be added for a fee, but the core product is free to dealers.

   The PowerDealer demo site can be accessed at: https://pinpowerdealer.com

Login: pindemo

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The one dominant difference between AutoTrader.com and Cars.com is that AutoTrader.com tiers the listings and Cars.com does not. This distinction has grown over the years as AutoTrader.com gains penetration for its premium product and consumers search across a wider radius.

It is not accurate, in the strictest sense, to say that Cars.com is like being a Premium dealer for every brand, because there are no dealers getting left out. In a market where no dealers purchase the premium package, the Featured version of AutoTrader.com functions similarly to Cars.com. In markets where many dealers purchase the premium package, Cars.com is more similar to the Premium version of AutoTrader.com.

Metro markets tend to have a high concentration of premium dealers because of intense competition. In rural areas, most shoppers expand their search radius beyond the default setting, pushing more Premium dealers into these searches.

There are two ways to compare Cars.com and AutoTrader.com:

1.       Cost per Contact

2.       Cost per Vehicle Details Page (VDP)

Cost per Contact is ideal, but it is difficult and involves lots of assumptions. Is a chat worth as much as a phone call? What is an email worth? What are website transfers worth? Are printable ads and map views a reasonable estimator for walk-in traffic? How does one reconcile the completely different reporting methods of the two companies for these metrics? How much duplication is taking place? Whatever your answers are, they will change over time, as your store's operational performance improves faster in some areas than others.

Cost per VDP is accurate and easy to calculate. A VDP occurs when the shopper selects one of your vehicles to explore further. Few shoppers contact the store without looking at the details of the vehicle, so this is an excellent head-to-head measurement. How many VDPs convert into store contacts depends heavily on the merchandising of the vehicles, which should be from the same feed to either service. On Cars.com's Online Ad Reports, a VDP is titled "People Requesting Details On Your Vehicles." The same metric on AutoTrader.com's reporting tool is titled, "Detail pages viewed for your inventory."

Divide the Cost of the service by the number of VDPs delivered to get the Cost per VDP. This provides a very good comparison of Cars.com to the Featured version of AutoTrader.com. A Premium user on AutoTrader.com could run the same metric the same way to get the average cost per VDP from the service. But buying AutoTrader.com involves two questions: Should I buy the Featured version?, Should I upgrade to Premium? It is best to separate these out, as I pointed out last week.

Every upsell product on Cars.com or AutoTrader.com either creates more VDPs or improves the conversion of VDPs into contacts. If your rep can't show you how the product improves one of these two metrics and help you measure the Cost per VDP or Cost per Contact, then don't buy it until they can. For most dealers, these services provide excellent value, but results vary based on geography, inventory, pricing policy, and store operations. Don't guess at something as important as cost-effective store traffic.

                 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?

                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.

A great deal of SEO discussion goes on about the dealer's name. No doubt, when a shopper is looking for your website, they should be able to find it on page one. However, if a shopper is looking for your website, how much more value is there in have ten links to your site, your Facebook, your Twitter, etc. vs. only nine? Obviously, the benefit is not linear, it has diminishing returns. Yet there seems to be a growing fanaticism about a dealer's level of page-one domination for search terms including the name of the store.

The deeper SEO challenge is to get shoppers to your website who were not searching for it specifically.  Using the advanced filtering capabilities of Google Analytics, a dealership can know how many shoppers came to the site looking for a brand they sell but not looking for the store specifically. For example:

                Containing "Dodge"

                Excluding "Bob's Dodge"

These are shoppers that were under-impacted by the branding of Bob's Dodge and did not seek the store out specifically. There will always be some of those. How many of them are getting to your site?

If Bob's Dodge is the only Dodge dealer in City A, then we care about doing well on page one of a search for "Dodge City A." However, if Bob's Dodge is making an effort to draw traffic from City B, that will be a far tougher SEO challenge. The following advanced reports tell how the store is doing with this effort:

                Containing "City B"

                Excluding "City A"

                Containing "City B"

                Excluding "City A"

                Excluding "Bob's Dodge"

Aggressive SEO should do more than retain the shoppers looking for your store; it should help acquire shoppers who you wish were looking for your store but were not. Dealers need to measure the potential gain from going the last mile on the former with getting aggressive on the latter.

Regardless of how you price your new vehicles, the sales team must be able to demonstrate the value of them. This is one of the many ways the internet has changed floor sales.

If the customer wants a BMW 328i Sedan, you have lots of them with varying packages and options. Some of these features may be must-haves and some may be things the shopper definitely does not want. However, some of the vehicles in the shopper's consideration set will undoubtedly come with features that add to the price yet the shopper is not certain they need. The benefits need to be explained in order to help the shopper determine which vehicle is the best value for them.

This seems so obvious, yet I can't find a single BMW dealer whose website facilitates this decision making. Additionally, I'm sure I can walk into any store and find a salesperson that functions as little more than a query tool, "Do you want this or do you want that?" Of course this inevitably leads to the customer finding that the color they want comes with an option or package they already said they don't want, leading to the desire to keep looking for the perfect vehicle at other stores.

If your website and your salespeople cannot demonstrate the value of each package and option, you simply are not selling as many vehicles as you could be. Maybe the sport steering wheel with paddles is not worth $100 to the customer. However, if you can demonstrate at least some value in the fancier steering wheel, it may not be worth additional shopping to find the perfectly configured vehicle.

It's important to know how each feature can enhance quality of life and contribute to resale value. When resale value is considered, most shoppers are not paying full price for the options they receive full benefit from. If the customer is considering a lease, it is important to be able to discuss options, packages, and accessories in terms of what they add to the lease rate and how they benefit the shopper.

In the age of transparency, sales people cannot go around making this stuff up on the fly. When I began selling cars, the store was the information source. The shopper had very few alternatives from which to gather information. That is far from the case today. If you want to sell cars, you've got to be able to demonstrate the value of them, every little piece of them.

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.