I've been a fan of Jeffrey Gitomer for years; ever since I read Customer Satisfaction is Worthless, Customer Loyalty is Priceless. In this video Mr. Gitomer discusses how many businesses go crazy with cost cutting measures that end up costing them business. "It never ceases to amaze me, what business people do to save a nickel that ends up costing them thousands", says Gitomer.

My contention is, that in the car business, it's not the nickels we save, but the extra nickels we try to make, that cost us thousands. Overpricing cars costs traffic. Overselling in any department costs us our reputations and any customer loyalty we might be able to develop.

Don't get me wrong, I'm all for profit - but don’t step over dollars to pick up nickels. And THIS is what our reputation is with the public:

I've been a fan of Jeffrey Gitomer for years; ever since I read Customer Satisfaction is Worthless, Customer Loyalty is Priceless. In this video Mr. Gitomer discusses how many businesses go crazy with cost cutting measures that end up costing them business. "It never ceases to amaze me, what business people do to save a nickel that ends up costing them thousands", says Gitomer.

My contention is, that in the car business, it's not the nickels we save, but the extra nickels we try to make, that cost us thousands. Overpricing cars costs traffic. Overselling in any department costs us our reputations and any customer loyalty we might be able to develop.

Don't get me wrong, I'm all for profit - but don’t step over dollars to pick up nickels. And THIS is what our reputation is with the public:

I remember the first dealership I worked in. It was back in the Stone Age; well at least it was well before the Internet. A couple of days a week, the managers would be hunched over a desk, working, arguing, fighting, and working some more. If you weren’t working a deal, you did NOT disturb them.

After a few hours, the Dealer Principal would stop by the desk, step into the hole they made for him and nod his head in agreement. All the managers patted each other on the back. Or, on some days, the DP would shake his head from side to side and point at the object on the desk with slashing motions. The managers would go back to work, now at a fevered pace.

What in the world were they working on? The GM, the GSM, the New Car Manager, the Used Car Manager, all with final approval from the Dealer Principal? What could cause this much emotion, this much diligence, what could bring this team together so completely. What was so damn important?

Simple. It was deadline day for our print Ad.

These folks knew our weekend, our week, and our month would be made or broken by the decisions they made. They understood that a car dealership was really a marketing machine with customers coming into the market (and leaving the market) on a continual basis. This management team was completely and totally involved in the dealership’s marketing.

I’m not suggesting we go back to spending tens of thousands of dollars a month (or a week, in some markets) on print. I am suggesting that management, in many dealerships, needs to up their level of engagement in their dealership’s marketing program.

Print is dead. Digital is the reigning king. The problem is that many managers don’t have even a passing knowledge of the digital marketing world. Used Car Managers aren’t involved in writing the Ad copy on their digital listings. New Car Managers aren’t updating their specials. Dealer Principals aren’t overseeing the entire process. Now to be fair, this isn’t true of every dealership, but is it true at too many.

The dealerships that have a high level of involvement seem to be the ones winning. Being involved in your dealership’s marketing may be ‘Old School’, but it is also very ‘Digitally Savvy’.

I remember the first dealership I worked in. It was back in the Stone Age; well at least it was well before the Internet. A couple of days a week, the managers would be hunched over a desk, working, arguing, fighting, and working some more. If you weren’t working a deal, you did NOT disturb them.

After a few hours, the Dealer Principal would stop by the desk, step into the hole they made for him and nod his head in agreement. All the managers patted each other on the back. Or, on some days, the DP would shake his head from side to side and point at the object on the desk with slashing motions. The managers would go back to work, now at a fevered pace.

What in the world were they working on? The GM, the GSM, the New Car Manager, the Used Car Manager, all with final approval from the Dealer Principal? What could cause this much emotion, this much diligence, what could bring this team together so completely. What was so damn important?

Simple. It was deadline day for our print Ad.

These folks knew our weekend, our week, and our month would be made or broken by the decisions they made. They understood that a car dealership was really a marketing machine with customers coming into the market (and leaving the market) on a continual basis. This management team was completely and totally involved in the dealership’s marketing.

I’m not suggesting we go back to spending tens of thousands of dollars a month (or a week, in some markets) on print. I am suggesting that management, in many dealerships, needs to up their level of engagement in their dealership’s marketing program.

Print is dead. Digital is the reigning king. The problem is that many managers don’t have even a passing knowledge of the digital marketing world. Used Car Managers aren’t involved in writing the Ad copy on their digital listings. New Car Managers aren’t updating their specials. Dealer Principals aren’t overseeing the entire process. Now to be fair, this isn’t true of every dealership, but is it true at too many.

The dealerships that have a high level of involvement seem to be the ones winning. Being involved in your dealership’s marketing may be ‘Old School’, but it is also very ‘Digitally Savvy’.

Why don't more folks purchase cars online? I don't mean shop, I mean purchase.

I read about this Nielsen Study on MarketingPilgrim.com tonight; Why Shoppers Love Online Most of the Time

The First Moment of Truth - the FMOT - is more likely to occur in a store when a consumer needs reliabilty and safety. I think this describes large purchases, made rarely - like cars. Purchases that might need service - like cars. Purchases where you want to make sure the store is there in a year, if you have a problem - like cars.

Why don't more folks purchase cars online? I don't mean shop, I mean purchase.

I read about this Nielsen Study on MarketingPilgrim.com tonight; Why Shoppers Love Online Most of the Time

The First Moment of Truth - the FMOT - is more likely to occur in a store when a consumer needs reliabilty and safety. I think this describes large purchases, made rarely - like cars. Purchases that might need service - like cars. Purchases where you want to make sure the store is there in a year, if you have a problem - like cars.

The Four Hidden, Magical SECRETS to Automotive Marketing

1. Product
2. Price
3. Place
4. Promotion

Product: Pretty simple, what cars you choose to sell

Price: How you price those cars

Place: Where you locate your dealership

Promotion: How you talk about your cars, how you promote them and how you sell them.

If all this looks familiar, it should; The Four P’s of Marketing have been around for 50 years in print (and was discussed in some college classrooms for about a decade before that). Some have argued recently that 3 more P’s should be added; People, Process, and Physical Evidence. It’s hard to argue that the added 3 P’s aren’t vital to car sales, but I do like the simplicity of the original Four.

Let’s start with some obvious limitations.

 If you are a franchise dealer, you have little control of what new cars you stock. The Product decision was made years ago in most cases. But you have a choice when it comes to used cars. Your franchise will certainly influence your used car stocking decisions, but it no longer has to control them. The Internet has become the consumers’ tool of choice for locating a car they want, and if you have that car, they will find you. Make no mistake; the cars you choose to stock are a basic marketing decision.

When it comes to Price, most successful dealers today find that the old Cost-Plus model no longer works. The Internet is the reason, pure and simple. Informed people won’t overpay – and today’s customer has an abundance of information at their fingertips. The days of making a mistake by overpaying for a car and then passing that mistake on to the consumer are behind us. I would add that buying a car with only wholesale information is also a mistake; today you need to know how you will retail your way out of a car. You need to know the retail side of the equation at acquisition, not just the wholesale side.

Place is another decision that was made years ago. The good news is the Internet has made your physical location much less relevant today.

For many automotive marketers, Promotion is their total focus. I’ll submit to you this is a mistake. If you don’t have a car the customer wants, at a price they are willing to pay, no amount of advertising or promotion will help you much. You can have multiple Inflatable Gorillas on the roof and an army of Wavy Arm Guys at every entrance and you will still struggle to get traffic. Today’s customer shops online and buys in person. The fundamental rule of promoting cars today – especially pre-owned cars – is getting the right car, at the right price with great pictures and compelling comments in front of as many prospects as possible.

If all this 50 year old Four P talk sounds Old School it is and it isn’t. The Four P’s haven’t changed, but the market has. The most progressive dealers in the country are applying these fundamentals to new reality and changing the way they are selling cars. Go back to the blackboard (OK, the whiteboard, or maybe your iPad) and take a hard look at how the Four P’s apply to today’s market. And keep in mind, the Internet isn’t your enemy, it’s your friend - don't fight it!

The Four Hidden, Magical SECRETS to Automotive Marketing

1. Product
2. Price
3. Place
4. Promotion

Product: Pretty simple, what cars you choose to sell

Price: How you price those cars

Place: Where you locate your dealership

Promotion: How you talk about your cars, how you promote them and how you sell them.

If all this looks familiar, it should; The Four P’s of Marketing have been around for 50 years in print (and was discussed in some college classrooms for about a decade before that). Some have argued recently that 3 more P’s should be added; People, Process, and Physical Evidence. It’s hard to argue that the added 3 P’s aren’t vital to car sales, but I do like the simplicity of the original Four.

Let’s start with some obvious limitations.

 If you are a franchise dealer, you have little control of what new cars you stock. The Product decision was made years ago in most cases. But you have a choice when it comes to used cars. Your franchise will certainly influence your used car stocking decisions, but it no longer has to control them. The Internet has become the consumers’ tool of choice for locating a car they want, and if you have that car, they will find you. Make no mistake; the cars you choose to stock are a basic marketing decision.

When it comes to Price, most successful dealers today find that the old Cost-Plus model no longer works. The Internet is the reason, pure and simple. Informed people won’t overpay – and today’s customer has an abundance of information at their fingertips. The days of making a mistake by overpaying for a car and then passing that mistake on to the consumer are behind us. I would add that buying a car with only wholesale information is also a mistake; today you need to know how you will retail your way out of a car. You need to know the retail side of the equation at acquisition, not just the wholesale side.

Place is another decision that was made years ago. The good news is the Internet has made your physical location much less relevant today.

For many automotive marketers, Promotion is their total focus. I’ll submit to you this is a mistake. If you don’t have a car the customer wants, at a price they are willing to pay, no amount of advertising or promotion will help you much. You can have multiple Inflatable Gorillas on the roof and an army of Wavy Arm Guys at every entrance and you will still struggle to get traffic. Today’s customer shops online and buys in person. The fundamental rule of promoting cars today – especially pre-owned cars – is getting the right car, at the right price with great pictures and compelling comments in front of as many prospects as possible.

If all this 50 year old Four P talk sounds Old School it is and it isn’t. The Four P’s haven’t changed, but the market has. The most progressive dealers in the country are applying these fundamentals to new reality and changing the way they are selling cars. Go back to the blackboard (OK, the whiteboard, or maybe your iPad) and take a hard look at how the Four P’s apply to today’s market. And keep in mind, the Internet isn’t your enemy, it’s your friend - don't fight it!

While looking over an upcoming conference agenda, I noticed a bullet point on a speaker’s agenda: Winning pricing strategies -avoiding the death spiral of pricing to market average.

This is a real concern, and one I address every day. The concern is that if everyone rushes to be a little more competitive, there will be no gross left in your used cars. One dealer after another will participate in a race to the bottom.

The truth is the used car market is much more dynamic, with lots more moving parts, than this simplistic view represents.

1. If you pay no attention to the market, your customer base will be only the 10% to 15% of the market that doesn’t shop online.
2. If you can stay ahead of the trends by using real data in real time, rather than historical data and outdated registration figures, you’ll be stocking less price sensitive cars – the ones in short-supply and higher-demand, right now, than your competition that is “living in the past”.
3. Price isn’t everything (but it does matter)! On many cars, being in the ‘Competitive Range’ is enough to get your share of online traffic. Add in great merchandising and a good dealership reputation and you have a winning combination. But if you stock High Market Days Supply units that are dying on the vine at every dealer in town – and price those cars higher than the guy down the street – be prepared to see very little traffic, have aged inventory, and higher wholesale losses.
4. Trend-followers will have trouble identifying the right inventory from the troubled inventory and make poorer decisions than the dealers that are staying ahead of the trends. Those watching the market will be moving to cars with more potential for a higher gross and identifying the trends much earlier.

The Real Used Car Death Spiral comes from reduced traffic due to over-pricing. The higher you price the less traffic you generate. Then you feel that you must have a higher mark-up per car and make more gross per deal to make up for the short-fall… and you get even less traffic. Or you hide costs to the consumer in your advertising and eventually destroy your reputation… and you get even less traffic.

Make no mistake, living in the past is no way to succeed in the future.

While looking over an upcoming conference agenda, I noticed a bullet point on a speaker’s agenda: Winning pricing strategies -avoiding the death spiral of pricing to market average.

This is a real concern, and one I address every day. The concern is that if everyone rushes to be a little more competitive, there will be no gross left in your used cars. One dealer after another will participate in a race to the bottom.

The truth is the used car market is much more dynamic, with lots more moving parts, than this simplistic view represents.

1. If you pay no attention to the market, your customer base will be only the 10% to 15% of the market that doesn’t shop online.
2. If you can stay ahead of the trends by using real data in real time, rather than historical data and outdated registration figures, you’ll be stocking less price sensitive cars – the ones in short-supply and higher-demand, right now, than your competition that is “living in the past”.
3. Price isn’t everything (but it does matter)! On many cars, being in the ‘Competitive Range’ is enough to get your share of online traffic. Add in great merchandising and a good dealership reputation and you have a winning combination. But if you stock High Market Days Supply units that are dying on the vine at every dealer in town – and price those cars higher than the guy down the street – be prepared to see very little traffic, have aged inventory, and higher wholesale losses.
4. Trend-followers will have trouble identifying the right inventory from the troubled inventory and make poorer decisions than the dealers that are staying ahead of the trends. Those watching the market will be moving to cars with more potential for a higher gross and identifying the trends much earlier.

The Real Used Car Death Spiral comes from reduced traffic due to over-pricing. The higher you price the less traffic you generate. Then you feel that you must have a higher mark-up per car and make more gross per deal to make up for the short-fall… and you get even less traffic. Or you hide costs to the consumer in your advertising and eventually destroy your reputation… and you get even less traffic.

Make no mistake, living in the past is no way to succeed in the future.