Your Turn To Drive's latest episode takes on several car dealer challenges with the latest episode - what steps can dealers take to improve competitiveness in 2017?  Jim Dykstra of Vinadvisor,  Joe Webb of DealerKnows Consulting, and Scott Larrabee of New To Sales discuss several interest points.

New car dealers are fast approaching a crossroads. Check out Joe Webb’s practical steps on improving salesperson proficiency to lower the 60% turnover dealers suffered last year. Scott Larrabee hones in on the rarely discussed state of dealership web sites, which can increase returns without big investments of time or money. The Fed’s increase today of 25 basis points to the prime rate is a shot across the bow of dealer profitability. My friend Dale Pollak has been warning dealers for the last 10 years about what even a 1% increase in the prime rate can do to dealership profits. 

The biggest step forward a dealer can make this year is recognizing that they don’t just compete with other dealers. Consumers entering the market for the first time in 3 to 5 years expect a more contemporary purchase experience. They expect car buying to less like last time and more like their other complex purchases. They certainly don’t expect 17 hours online, 20 different sites visited and 3 to 4 hours in a dealership per Google’s Auto Study. It’s really this easy. Until buying a Chevy Cruze is transparent, efficient and assures consumers a fair price like they find when they buy $25,000 of GM stock at ETRADE, dealers face more risk than ever before.

Here are some of the highlights:

Jim: While the speed of change in auto retailing continues to accelerate, the core drivers to your profitability are more constant. The primary determinant of profitability for every franchise dealership is new car sales. Not just total new car sales, but more importantly, new car sales effectiveness. Growing local sales in your primary market area (PMA) is the surest way to grow sustainable profits.  
 
The first step I’d recommend any dealer take is to determine what percentage of your new car ad spend geo targets your local market. Don’t get caught in circular discussions about whether to spend more TV or digital, direct mail or radio. Your most important metric is total dollars spent exclusively in your PMA. If your goal is to sell 100 new cars each month and you want 70 of them to come from your PMA, spending 60% of your new car ad dollar’s market wide won’t get the job done. Pump outs will rise and local share decline. The new car business is still a local business. Beware chasing short term gains in sales volume – even when chasing stair step incentives – as the long-term price you pay is lower service retention and repurchase loyalty.
 
Don’t get ad $/car tunnel vision. Take a deeper look and quantify where your spending your money, then consider which mediums to choose and test.  
 
Joe:
So, Jim, you mentioned a few key elements that I want to touch upon. Let me say, though, I am worried too many dealers focus their attention on ad spends and driving traffic when the effectiveness of their sales floor is poor. If dealers haven't trained their teams to be cutting edge at the basics, then no amount of money will fix the profit leak.
With that said, you talk about capturing business from your local market. As tech grows, you're able to find and target in-market shoppers so much easier than you were before. Don't to, not just their location, but their interests and search history. Dealers need to leverage their websites to increase engagement, online/paid search to increase their traffic, and video to increase their brand more in 2017 than ever before.
The ONLY way they should be investing money in multiple digital channels is if they're truly keyed in on the latest attribution insights offered today. If you don't know what part of your ad budget is working for you, there is no use spending more. Instead, you'd be better spending it on making your sales and service teams more effective.
 
Scott:
Joe, I think that's exactly right, personally I believe dealers that want to be more competitive in 2017 should take a hard look at what they're doing to invest in the training and development of their salespeople.
Salespeople need daily training, but they need to have training that does a couple things. It needs to empower the salesperson by giving them the full set of tools necessary to become a professional.
Secondly, training salespeople to brand themselves, market themselves, and in turn promote the dealership. Dealers who encourage the growth of their sales force will rise above the rest.
Highly trained salespeople marketing themselves and their own brand will give dealers an edge in today's selling environment. Yes it costs money to invest in platforms to get salespeople the training. But dealers needs to ask what the cost will be going forward if they don't.
 
Jim: Great points guys, and they really funnel down to the issue of digital engagement. Joe’s right, insights needed to close are in the data. Scott’s point that salespeople build value in the product, themselves and the dealership to win couldn’t be more right.
What’s common to both is the need for salespeople to understand how differently a 27-year consumer is from a 47-year old consumer. Two things to consider when engaging any prospect digitally: (1) how do they see a car? a 27-year old’s coming of age moment was most likely their first phone (device), while the 47-year old’s was his or her first car. Miss this distinction and you’re done. Own it, and digital engagement will quickly improve. (2) What is their purchase experience expectation? Start down the road to a sale with 47-year old and you have a chance. Make the same move with 27-year old and they will “ghost” you. What’s it mean to be ghosted? It’s when you’re texting or emailing back and forth when all of sudden one side just stops. No see ya, thanks or any reply…ever again. Kinda of the digital version of an “Irish goodbye” at your local bar.  
Understand what your audience expects and give it to them. If they question the price you quote it doesn’t mean you need to show them an invoice. It means it’s your job to help them understand how the market is pricing the car they have chosen. Digital natives expect succinct communications, the more you type the less effective it will be. Whenever possible, point them to online resources so a 3rd party can validate what you’ve shared.
It’s imperative salespeople and managers build a relationship in the consumer’s voice, not the dealership's.
 
Joe:
Coming from the dealership training side, the topic you touch on, Scott, of investing in both coaching and technology to make your team more self-reliant to conduct their business and serve the customer is spot on. And when Jim talks about understanding the customer's persona and, in turn, validating their need and research with third party info. That really blends together well for what I believe dealers need to focus their efforts on in 2017.
 
Reaching the customer where their head and heart is. Their mobile device. The information that it contains is priceless to them, and you need to reach them here with your advertising, your branding, your messaging, your videos, your inventory, your pricing, and open up the lines of, not just communication, but research. Connect to them through their phones with valuable information, relevant to their search, and you'll win more shoppers. This needs to happen both digitally, and in-store. Influence the content on their phones, and you influence the user.
 
Scott:
Dealers that want to be a leader in their space need to remember that even though a 27 year old and a 47 year old buy differently, according to the latest 2015 Polk Auto Buyer Influence Study, they found regardless whether it be Millennials, Gen Xers, or Boomers, they all say the internet is the most influential source leading them to the dealership.
Time shopping online has increased, because people have access to more information than ever before.
Customers want to spend less time in the dealership. I mean don't we all want hassle free buying experiences?
Our customers want a friction free process more than ever, and the more a dealer can deliver on that from internet to delivery the more success they will have.   
Dealers need to focus on creating an experience online with a well thought out and well designed website.
Customers should be able to get the information they are looking for during this crucial part of the process not click away to the competitor in frustration.
Once the customer decides on the vehicle they want, dealers know they are going to shop less than 2 stores before a sales is made.
The customer knows they want a vehicle, at this stage they are now searching for the place to do business.
This circles back to the trained sales force ready to make the process seamless. The in dealership experience should exceed the expectations the customers had from visiting your site!
Any dealer in 2017 that focuses on bringing high quality training to their salespeople, along with a strong focus on a quality online presence will do more than compete in their space in 2017, they will DOMINATE IT!! :)