Why Used is Better than New 

According to Santander Consumer USA, used cars are expected to outsell new cars nearly 2 to 1 this year, making it more important than ever for dealerships and sales professionals to understand what’s driving this trend and how to work with shoppers as they try to find the best vehicles for their particular needs. Used-car shoppers have unique needs that drive them to your dealership, and in order to win their trust and convince them to buy from you, you’ll need to show them you’re able to offer what they’re looking for in a way that makes them feel positive about their purchasing choices.

The Used-Car Decision

It’s not surprising consumers often wander toward the shiny new cars on your lot first, but the price tag and payments that go along with new vehicles can be daunting—and more than many shoppers can handle. This fact alone has many shoppers turning to quality used vehicles, and if your dealership handles a large selection of used cars, you’ll want to know how to best connect with your customers. Used-car sellers have to combat a predetermined reputation that has been built over years. Shoppers often square off against these professionals and assume they are about to be swindled, tricked, or taken advantage of simply because of the nature of the business, and it’s up to your dealership to tear down these walls. Everything matters—from the very first moment of customer contact to the final signing of paperwork to follow-up and vehicle maintenance. When your reputation is on the line, customer perception of your dealership and the service that’s provided is essential.

Earning Trust Is Key

There are several things your dealership professionals can do from the beginning to earn customer trust and ensure used-car shoppers feel comfortable. Consider some of the following to get you started:

Focus on great communication. Take the time to talk—and truly listen—to shoppers in order to understand their needs. Are they shopping out of necessity? Do they want to upgrade for space, mileage improvements, or safety reasons? Often, shoppers feel like they are not heard, and instead feel like salespeople are simply trying to push product on them. By actively listening and working to meet their needs, you’ll have a better chance at a sale, and you’ll be earning trust in the process.

Focus on your relationship. It’s important to let your customers know you’re there for them. While it’s tempting to jump immediately into selling-mode, take a few minutes to get to know your customers and what they’re all about. When you’re able to find some common ground, you’ll be able to create a rapport with them that places you in a role of trusted advisor, rather than salesperson.

Focus on the value you offer, rather than what you sell. As professionals who are in the business of selling, this can be a difficult task, however, by doing this, you’ll end up with more sales in the long run. By sharing the ways your dealership can help shoppers, it will be easier for them to see themselves aligning with you for a purchase. Be sure to show the beyond-the-sale benefits of buying from you, like quick oil changes, maintenance reminders, certified technicians, and anything else that makes you stand out from the crowd.

Focus on a great experience. Many used-car buyers have gone through a car-buying experience before, and it’s likely they have unpleasant stories to share. This is your chance to change their perception of the industry as a whole by providing the best overall buying experience possible. Think about the things you often hear, especially when it comes to used-car purchases, and consider ways you can change the customer perception:

• If shoppers are stressed about budget or credit scores, be open and honest with them before you go to the finance manager. Remember, a long wait could signal to them they aren’t qualified to buy, so be sure to check back with them frequently and let them know what’s going on.
• Reiterate value in used cars. Most customers are proud to be able to make a value purchase, however, they will be embarrassed if they are made to feel cheap. By choosing words that reinforce their value-conscious decisions, you’ll be more likely to gain their favor throughout the transaction.
• Get to the bottom line as quickly as possible. Everyone wants to get the best deal, and we know you have to make a profit, too. In today’s hurry-up-and-get-things-done world, most shoppers want to settle on a price and move on to the next step as soon as they can. Customers will appreciate it when you are able to land on a number and help them move forward with the process quickly.

Focus on building your credibility. Ditch the bad rep that seems to accompany used car sales for good by doing things like providing great information for your customers, a reliable website with links to outside resources, and updated content that educates rather than pushes consumers to buy. When you lessen the pressure and offer avenues that allow shoppers to explore their options and learn about what’s offered, you’ll be seen as a facilitator and someone they want to turn to when it’s time to purchase. It’s tough to gain trust and credibility in a market that’s both crowded and slightly suspicious of car dealerships, so it’s important to gain your footing early in the customer/salesperson relationship and then maintain it every step of the way. Remember, your customers walk into your dealership with something specific in mind, and if you listen to their needs, work to assuage their fears and insecurities about the buying process, and offer them what they’re looking for, they’ll likely realize you’re on the same team and see you as an ally throughout their purchasing journey.

The image used in this post was provided by freedigitalphotos.net.

Why Used is Better than New 

According to Santander Consumer USA, used cars are expected to outsell new cars nearly 2 to 1 this year, making it more important than ever for dealerships and sales professionals to understand what’s driving this trend and how to work with shoppers as they try to find the best vehicles for their particular needs. Used-car shoppers have unique needs that drive them to your dealership, and in order to win their trust and convince them to buy from you, you’ll need to show them you’re able to offer what they’re looking for in a way that makes them feel positive about their purchasing choices.

The Used-Car Decision

It’s not surprising consumers often wander toward the shiny new cars on your lot first, but the price tag and payments that go along with new vehicles can be daunting—and more than many shoppers can handle. This fact alone has many shoppers turning to quality used vehicles, and if your dealership handles a large selection of used cars, you’ll want to know how to best connect with your customers. Used-car sellers have to combat a predetermined reputation that has been built over years. Shoppers often square off against these professionals and assume they are about to be swindled, tricked, or taken advantage of simply because of the nature of the business, and it’s up to your dealership to tear down these walls. Everything matters—from the very first moment of customer contact to the final signing of paperwork to follow-up and vehicle maintenance. When your reputation is on the line, customer perception of your dealership and the service that’s provided is essential.

Earning Trust Is Key

There are several things your dealership professionals can do from the beginning to earn customer trust and ensure used-car shoppers feel comfortable. Consider some of the following to get you started:

Focus on great communication. Take the time to talk—and truly listen—to shoppers in order to understand their needs. Are they shopping out of necessity? Do they want to upgrade for space, mileage improvements, or safety reasons? Often, shoppers feel like they are not heard, and instead feel like salespeople are simply trying to push product on them. By actively listening and working to meet their needs, you’ll have a better chance at a sale, and you’ll be earning trust in the process.

Focus on your relationship. It’s important to let your customers know you’re there for them. While it’s tempting to jump immediately into selling-mode, take a few minutes to get to know your customers and what they’re all about. When you’re able to find some common ground, you’ll be able to create a rapport with them that places you in a role of trusted advisor, rather than salesperson.

Focus on the value you offer, rather than what you sell. As professionals who are in the business of selling, this can be a difficult task, however, by doing this, you’ll end up with more sales in the long run. By sharing the ways your dealership can help shoppers, it will be easier for them to see themselves aligning with you for a purchase. Be sure to show the beyond-the-sale benefits of buying from you, like quick oil changes, maintenance reminders, certified technicians, and anything else that makes you stand out from the crowd.

Focus on a great experience. Many used-car buyers have gone through a car-buying experience before, and it’s likely they have unpleasant stories to share. This is your chance to change their perception of the industry as a whole by providing the best overall buying experience possible. Think about the things you often hear, especially when it comes to used-car purchases, and consider ways you can change the customer perception:

• If shoppers are stressed about budget or credit scores, be open and honest with them before you go to the finance manager. Remember, a long wait could signal to them they aren’t qualified to buy, so be sure to check back with them frequently and let them know what’s going on.
• Reiterate value in used cars. Most customers are proud to be able to make a value purchase, however, they will be embarrassed if they are made to feel cheap. By choosing words that reinforce their value-conscious decisions, you’ll be more likely to gain their favor throughout the transaction.
• Get to the bottom line as quickly as possible. Everyone wants to get the best deal, and we know you have to make a profit, too. In today’s hurry-up-and-get-things-done world, most shoppers want to settle on a price and move on to the next step as soon as they can. Customers will appreciate it when you are able to land on a number and help them move forward with the process quickly.

Focus on building your credibility. Ditch the bad rep that seems to accompany used car sales for good by doing things like providing great information for your customers, a reliable website with links to outside resources, and updated content that educates rather than pushes consumers to buy. When you lessen the pressure and offer avenues that allow shoppers to explore their options and learn about what’s offered, you’ll be seen as a facilitator and someone they want to turn to when it’s time to purchase. It’s tough to gain trust and credibility in a market that’s both crowded and slightly suspicious of car dealerships, so it’s important to gain your footing early in the customer/salesperson relationship and then maintain it every step of the way. Remember, your customers walk into your dealership with something specific in mind, and if you listen to their needs, work to assuage their fears and insecurities about the buying process, and offer them what they’re looking for, they’ll likely realize you’re on the same team and see you as an ally throughout their purchasing journey.

The image used in this post was provided by freedigitalphotos.net.

Toyota Marin’s Numbers Tell an Impressive Story:

• Toyota Marin is among the top dealers nationwide in Internet new and used car sales, with 1,710 Internet sales units in 2010 and close to that number for 2011.
• The dealership ranks 10^th in the region for new car sales. That’s up from 41^st in the region when the Price-Simms Group acquired the store in 2004.
• Toyota Marin is 145% sales efficient – selling almost 1.5 Toyotas to every Toyota registered in its primary market area, as defined by Toyota.
• Toyota Marin’s fixed operations are up 21% year over year.
• 2011 was Toyota Marin’s fourth consecutive year winning Toyota’s President’s Award.

An open mind, an aggressive sales strategy, and ongoing critical evaluation of the performance of its digital technology vendors are keeping Toyota Marin among the top dealerships nationwide in Internet sales.

And, the dealership has just completed remodeling to Toyota Image USA II standards a Scion facility that will be its new direct sales building.  That is expected to more than double the dealership’s capacity for new car sales and for the direct sales department in 2012. 

Toyota Marin’s General Manager Mike Christian and General Sales Manager Jay Brownrigg recently shared with Digital Dealer magazine the secrets to the success of this remarkable dealership.

Click here to read Mike and Jay’s full story and the rest of the March 2012 Digital Dealer magazine.

First of all, Mike, how did you get into the car business?

Mike: In 1985, I was 16 years old, my mother was in the business and I was hired to sell cars on weekends and after school at Ricart Ford, in Columbus, OH. I fell in love with the business and worked my way through high school and college and never looked back.

I worked at a few different dealerships. Then, I moved to California and went to work for the current owner of this dealership, Tom Price in 1998. He had a group called First American Automotive. In the early 2000s, he sold out to Sonic and I stayed with Sonic. Then in 2004, Tom Price bought Toyota Marin and in March of 2007, I came back to work for him here.

Jay, how did you start in the business?

Jay: I started in the business in 2001 after I got off of active duty in the U.S. Air Force. I responded to an ad in a local newspaper and was hired by County Ford and worked there for five years. Then I was recalled to active duty to serve in Afghanistan and Iraq. When I was done with my tours of duty, my wife and I moved to California and in 2010, I applied to Toyota Marin and I was hired as a sales manager. I’ve since progressed to general sales manager and I manage our Internet sales.

Tell us about the company culture that fosters so much success at Toyota Marin.

Mike: The dealership group we are part of – Price-Simms – is unique. We are very open-minded and generous. We are constantly looking at other dealers and vendors in order to help improve our own operations. We also bring dealers in from outside the organization and share information with them. We all stay actively involved with what’s happening within our industry. For example I am on the dealer advisory board of AutoTrader.com and others sit on boards like ResponseLogix.

We’re embracing a lot of things that many dealers are resistant to — such as the intangible results from a blog or from postings on Facebook. Some dealers may feel: Why waste the time on it? We’re trying to be more forward thinking than that. We’re constantly looking to evolve.

We pride ourselves on our ease of doing business, and whether it’s for our sales people or the consumer, we like transparency. We have transparency at our sales meetings; we will talk about aspects of our financial statement or why and how things may operate. We have transparency with the consumer. We pre-discount all of our cars. We quote prices, terms, rates, and availability questions right up front.

We’re completely negotiation free on pre-owned. We sell 165 pre-owned cars a month and our goal this year is to expand that to 250 and it’s based upon a totally upfront, straightforward and transparent sales process.

From a new car standpoint, a couple of times a month we’ll shop and determine what price cars are transacting at by model. We use Toyota’s reports as well as outside sources like; Edmunds.com, Zag and other third-party providers. Once we feel we have an accurate picture of the transaction price we simply price the cars there right out of the gate.

It just makes good business sense. The least amount of control I have is over my new car margin. So, I want to spend the least amount of time trying to manage that aspect of my business. Our transparency in pricing makes it easier for everyone (consumer and salesperson alike) to do business, after determining what price the car is transacting at, we just put it at that price and go.

When the tsunami hit last year and supply diminished, obviously the cars were transacting at a higher price and we made a little more margin during that time. But, at the same time, we remained committed to our value pricing, and so we kept discounting when other dealers simply saw an opportunity to gouge a consumer.

How about pricing on the pre-owned side?

Mike: It’s really the same thing on the pre-owned side. We just tell ourselves the truth every day. When we take a car in, we price it right at the market price, right out of the gate. That allows us to turn our inventory two times a month. We are selling 165 used cars a month on a lot where we never can carry more than 85 on the front line at any given time.

This past year, 2011, we sold a little over 1800 used cars and sold just about 1700 new cars.

What percentage of those sales were Internet sales?

Jay: Strictly speaking, about 44% of our sales are Internet, based upon our direct sales department numbers. We get about 1,200 to 1,300 Internet sales leads per month and our closing ratio for these Internet leads is about 12%.

Unlike many other dealerships, we don’t count phone leads as Internet leads. They are an entirely separate channel, and we track them a little differently. Most of the phone leads go to the direct sales department, but a retail floor person can take the training for our own certification program and they can handle phone leads as well.

We get between 700 and 800 phone leads a month and we generally close around 10% of our phone leads.

Many dealerships do count phone leads as Internet leads. Often the store’s number that the customer is calling is only available from the dealership’s website.

Mike: In a broad sense, we actually attribute 95% of our sales to the Internet, because all customers are touched by it — even the ones who walk in with no mention of any prior Internet queries.

And that’s why most of our advertising is focused online.

Do you do any traditional advertising?

Mike: We spend about $5,000 per month advertising with Comcast in our local market, for fixed operations and sales. Our total dealership’s ad spend is around $100,000 a month.

The other $95,000 a month is spent in online ads or services such as: SEO, SEM, and third-party lead aggregators – we spend a decent amount with AutoTrader.com – and our email follow-up company.

Our e-mail follow-up leverages analytics to send targeted multi-channel communications to our customers on the fixed operations side. That, along with our superior customer service, and the fact that people are keeping and servicing their cars longer in this economy, is why Toyota Marin’s fixed operations are growing at 21% year over year.

We can also give some credit here to Xtime, which we use to schedule service appointments. Xtime is doing a very good job for us. We upgraded Xtime to become a premium dealer so our customers can do bill pay online. We’re moving towards being more transactional on our web site.

How do you manage your website and drive traffic to it?

Mike: Dealer.com hosts our website and our mobile website and does a great job with both. Our inventory lead management system is VinSolutions, which works very well for us. We do our own specials, and we also have an ad agent, ThinkOut, that specializes in online marketing and sales and helps us manage our ads, SEO and SEM as well as our web content.

ThinkOut is headed by Beth VanStory and she is phenomenal. When we brought her onboard, she tripled the number of leads that came in for sales and also for fixed operations. She does an amazing job for us.

What percentage of your leads does your own website generate?

Mike: Our web site generates 50% of our Internet leads. The other 50% comes from our third-party lead providers – mostly from AutoTrader.com, Cars.com, and Zag.

We’re constantly scrutinizing our third-party lead providers and their territories. We’re constantly redefining our territories and evaluating providers by quality and close ratio.

Throughout the year, we periodically change our third-party lead providers. If they are performing well for a period of time, we stay with them, and if they are not, we cut them off.

There’s been several that we shut off during the past year and now we’re back with them. We’re very aggressive from the standpoint that we’re always looking to get bigger and grow our operation, but we certainly want to work with quality and not waste our sales persons’ time. If we don’t feel the leads are performing – say a conversion rate drops down to 4% – we’ll take a hard look at that lead source.

Rather than just shut it off immediately, we’ll concentrate on the leads we get from that source and work a little harder on them, to see if it’s us or the quality of the lead. If we work that source’s leads for another 30 or 45 days and we can’t improve the conversion ratio, then that provider is gone.

How do you process your Internet sales leads?

Jay: We look at everything as its own individual channel. We treat an Internet lead or a phone lead with the same level of intense follow-up as most stores treat a walk-in consumer.

Most dealerships focus on walk-in traffic and they can count how many ups, demos, write ups, etc., and they handle walk-in follow-ups more aggressively than their Internet leads. We handle all our leads aggressively.

We have 26 salespeople altogether. Twelve of them handle Internet leads and 12 handle phone leads. We don’t have a BDC.

Everything channels into our CRM no matter what type of lead it is and every lead has its own type of work plan – whether its phone follow-up, or email or mail follow-up. It’s all dictated by which channel the lead came from.

What is your normal response time to an Internet lead?

Jay: We use ResponseLogix and it performs very well for us. Our immediate response to an Internet lead is a custom-tailored price quote sent out by ResponseLogix within 10 minutes. That frees our sales person to pick up the phone and call the customer while that customer is still at the computer. Our personal response time is within half an hour.

Our follow-up time for both Internet and phone leads is 75 days. We have one required follow-up call on a phone up and then we traditionally will have one of the sales managers call on that lead as part of customer relations. That call is to see if the first call was handled properly.

Then we use services like Who’s Calling, a call capture service, which allows us to track whether the prospect makes an appointment or not. So our managers can react quickly on the phone leads, if the phone call did not go in the manner that we want.

What do you use for CRM?

Mike: We are actually thinking of changing our CRM this year. We are shopping and keeping an open mind to anything out there. As the technology changes, we’re constantly looking to improve communications with consumers and make things a little easier for our sales people to do business. There are some great new advances in CRM technology that we are looking to take advantage of this year.

What specific advances or features are you looking for?

Mike: Everybody’s CRMs are good at trading, workflow and a sales person’s to-do list. The lead comes into the CRM and it quotes a price, or not, depending on your business model. Then, all the CRMs offer a set of templates for emails that go out to the prospect and, of course, all CRMs offer the sales person’s phone action plan and to-do list to coincide with all that.

We are looking for a CRM that does all that, but will also help us improve our leads to sales ratio. To do that you have to fine tune communications with the consumer.

We’re seeing different consumer behavior in today’s market. The old buying funnel is disappearing. It used to be that a consumer would start by looking at five different cars four months out, and as they got close to transactional time, they would be considering two cars – like a Toyota Camry and a Honda Accord. Today, we’re seeing the consumer typically start with two cars and eventually go to three or four when it comes down to transaction time.

So, our goal this year is to make sure that we are speaking to the consumer about what’s relevant to them when it’s relevant. Companies like Dataium can watch and track what each consumer’s behavior is and help us tailor our message to each customer and deliver it when the consumer is most receptive.

For example, let’s suppose a consumer sees that we have a really cool used car, a Toyota Supra on our home page, and submits a query, which becomes our Internet lead. Meanwhile that same consumer goes on to look at five Toyota Tundras in our inventory. If we are able to track that online behavior, we know we need to be communicating to that consumer about a Tundra, not a Toyota Supra, because based on their behavior, the Tundra is what they are really interested in buying.

It’s about using all the information that’s available about consumers online and being able to educate our sales force and improve communications, so we can talk to our customers about relevant information in a timely fashion and help drive more customers through our door.

How do you keep up on technology?

Mike: We read Dealer magazine. We go to the Digital Dealer Conference & Exposition. We are part of the Price-Simms organization, so we get together as a group twice a year and invite several vendors and listen to their presentations. We are receptive. We try to be very open-minded. We’ll look at things. We are always trying to deal with vendors that are best in class and we’re always trying to figure out what is the latest, greatest development.

How do you handle social media?

Jay: We use Digital Air Strike for social media. We are extremely pleased with the approach they take.

One of the reasons we chose Digital Air Strike is that they offer more of an agency, hands-on approach, rather than provide some automated solution. They handle Facebook and Twitter for us – posting links on those sites to wherever consumers have put reviews about us online.

Mike: Digital Air Strike is much more proactive than we have the time to be. We have a lot of things to do during the day. Sitting down and writing and posting things on Facebook, and Twitter are not top of mind for most dealers. But, I think social media is an important and growing segment.

That’s why we write our own blogs for our website. Each department head is supposed to write one blog per month. Beth VanStory and I just post them. We are constantly reminding the managers to make sure they get their blog in and I can’t say we’re successful every month, but I think we do a better job than most.

Specifically, how do you handle online reputation management?

Jay: Digital Air Strike helps us with online reputation management and we get a lot of traction with the online reviews. We personally answer all the reviews that require an answer.

We are on DealerRater.com with an average rating of 4.9, with 23 reviews. We’re constantly looking to drive up reviews. Whenever a customer reaches out to us to tell us about their experiences here, we respond with a templated e-mail that has the hyperlinks to the big review sites. When we want to push to get more reviews on DealerRater, we put its link first and foremost on the email. Google Places is probably the next initiative we need to take to get more reviews.

What is your biggest challenge?

Mike: We have several: Margin compression – that’s a problem for everyone in the industry; maintaining quality personnel and being able to grow people; and keeping on top of all the technology we use – between the CRM and the products – and having 22 different model lines.

As for maintaining a quality staff, Price-Simms is an upwardly mobile and growing organization that’s launched several new dealerships all in the San Francisco Bay Area this year: Ford of Fairfield, Mercedes Fairfield, Fisker and McLaren for all of Northern California.

That’s good for us, because it allows us to recruit more and keeps people on a career path. At the same time, it’s a challenge, because there’s constant evolution. It never stops, so we are always training.

What is your vision for the future?

Mike: Right now we have 120 employees at Toyota Marin and we’re selling over 3,600 cars per year. We’ve recently expanded and opened up a used car facility across the street to increase our used car capacity.

Our vision for the future is to constantly grow our organization and improve our CSI. We want to be number one in CSI, sell 250 used cars per month, be in the top five in the region for new car sales rankings, and top five for certified pre-owned sales. We are always looking to get bigger, including our fixed ops side. We’re constantly driving our sales volume up to increase our units in operation and our used car volume to drive our reconditioning which in turn fuels our fixed operations. We are always looking to improve, refine and grow along this trajectory.

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Toyota Marin’s Numbers Tell an Impressive Story:

• Toyota Marin is among the top dealers nationwide in Internet new and used car sales, with 1,710 Internet sales units in 2010 and close to that number for 2011.
• The dealership ranks 10^th in the region for new car sales. That’s up from 41^st in the region when the Price-Simms Group acquired the store in 2004.
• Toyota Marin is 145% sales efficient – selling almost 1.5 Toyotas to every Toyota registered in its primary market area, as defined by Toyota.
• Toyota Marin’s fixed operations are up 21% year over year.
• 2011 was Toyota Marin’s fourth consecutive year winning Toyota’s President’s Award.

An open mind, an aggressive sales strategy, and ongoing critical evaluation of the performance of its digital technology vendors are keeping Toyota Marin among the top dealerships nationwide in Internet sales.

And, the dealership has just completed remodeling to Toyota Image USA II standards a Scion facility that will be its new direct sales building.  That is expected to more than double the dealership’s capacity for new car sales and for the direct sales department in 2012. 

Toyota Marin’s General Manager Mike Christian and General Sales Manager Jay Brownrigg recently shared with Digital Dealer magazine the secrets to the success of this remarkable dealership.

Click here to read Mike and Jay’s full story and the rest of the March 2012 Digital Dealer magazine.

First of all, Mike, how did you get into the car business?

Mike: In 1985, I was 16 years old, my mother was in the business and I was hired to sell cars on weekends and after school at Ricart Ford, in Columbus, OH. I fell in love with the business and worked my way through high school and college and never looked back.

I worked at a few different dealerships. Then, I moved to California and went to work for the current owner of this dealership, Tom Price in 1998. He had a group called First American Automotive. In the early 2000s, he sold out to Sonic and I stayed with Sonic. Then in 2004, Tom Price bought Toyota Marin and in March of 2007, I came back to work for him here.

Jay, how did you start in the business?

Jay: I started in the business in 2001 after I got off of active duty in the U.S. Air Force. I responded to an ad in a local newspaper and was hired by County Ford and worked there for five years. Then I was recalled to active duty to serve in Afghanistan and Iraq. When I was done with my tours of duty, my wife and I moved to California and in 2010, I applied to Toyota Marin and I was hired as a sales manager. I’ve since progressed to general sales manager and I manage our Internet sales.

Tell us about the company culture that fosters so much success at Toyota Marin.

Mike: The dealership group we are part of – Price-Simms – is unique. We are very open-minded and generous. We are constantly looking at other dealers and vendors in order to help improve our own operations. We also bring dealers in from outside the organization and share information with them. We all stay actively involved with what’s happening within our industry. For example I am on the dealer advisory board of AutoTrader.com and others sit on boards like ResponseLogix.

We’re embracing a lot of things that many dealers are resistant to — such as the intangible results from a blog or from postings on Facebook. Some dealers may feel: Why waste the time on it? We’re trying to be more forward thinking than that. We’re constantly looking to evolve.

We pride ourselves on our ease of doing business, and whether it’s for our sales people or the consumer, we like transparency. We have transparency at our sales meetings; we will talk about aspects of our financial statement or why and how things may operate. We have transparency with the consumer. We pre-discount all of our cars. We quote prices, terms, rates, and availability questions right up front.

We’re completely negotiation free on pre-owned. We sell 165 pre-owned cars a month and our goal this year is to expand that to 250 and it’s based upon a totally upfront, straightforward and transparent sales process.

From a new car standpoint, a couple of times a month we’ll shop and determine what price cars are transacting at by model. We use Toyota’s reports as well as outside sources like; Edmunds.com, Zag and other third-party providers. Once we feel we have an accurate picture of the transaction price we simply price the cars there right out of the gate.

It just makes good business sense. The least amount of control I have is over my new car margin. So, I want to spend the least amount of time trying to manage that aspect of my business. Our transparency in pricing makes it easier for everyone (consumer and salesperson alike) to do business, after determining what price the car is transacting at, we just put it at that price and go.

When the tsunami hit last year and supply diminished, obviously the cars were transacting at a higher price and we made a little more margin during that time. But, at the same time, we remained committed to our value pricing, and so we kept discounting when other dealers simply saw an opportunity to gouge a consumer.

How about pricing on the pre-owned side?

Mike: It’s really the same thing on the pre-owned side. We just tell ourselves the truth every day. When we take a car in, we price it right at the market price, right out of the gate. That allows us to turn our inventory two times a month. We are selling 165 used cars a month on a lot where we never can carry more than 85 on the front line at any given time.

This past year, 2011, we sold a little over 1800 used cars and sold just about 1700 new cars.

What percentage of those sales were Internet sales?

Jay: Strictly speaking, about 44% of our sales are Internet, based upon our direct sales department numbers. We get about 1,200 to 1,300 Internet sales leads per month and our closing ratio for these Internet leads is about 12%.

Unlike many other dealerships, we don’t count phone leads as Internet leads. They are an entirely separate channel, and we track them a little differently. Most of the phone leads go to the direct sales department, but a retail floor person can take the training for our own certification program and they can handle phone leads as well.

We get between 700 and 800 phone leads a month and we generally close around 10% of our phone leads.

Many dealerships do count phone leads as Internet leads. Often the store’s number that the customer is calling is only available from the dealership’s website.

Mike: In a broad sense, we actually attribute 95% of our sales to the Internet, because all customers are touched by it — even the ones who walk in with no mention of any prior Internet queries.

And that’s why most of our advertising is focused online.

Do you do any traditional advertising?

Mike: We spend about $5,000 per month advertising with Comcast in our local market, for fixed operations and sales. Our total dealership’s ad spend is around $100,000 a month.

The other $95,000 a month is spent in online ads or services such as: SEO, SEM, and third-party lead aggregators – we spend a decent amount with AutoTrader.com – and our email follow-up company.

Our e-mail follow-up leverages analytics to send targeted multi-channel communications to our customers on the fixed operations side. That, along with our superior customer service, and the fact that people are keeping and servicing their cars longer in this economy, is why Toyota Marin’s fixed operations are growing at 21% year over year.

We can also give some credit here to Xtime, which we use to schedule service appointments. Xtime is doing a very good job for us. We upgraded Xtime to become a premium dealer so our customers can do bill pay online. We’re moving towards being more transactional on our web site.

How do you manage your website and drive traffic to it?

Mike: Dealer.com hosts our website and our mobile website and does a great job with both. Our inventory lead management system is VinSolutions, which works very well for us. We do our own specials, and we also have an ad agent, ThinkOut, that specializes in online marketing and sales and helps us manage our ads, SEO and SEM as well as our web content.

ThinkOut is headed by Beth VanStory and she is phenomenal. When we brought her onboard, she tripled the number of leads that came in for sales and also for fixed operations. She does an amazing job for us.

What percentage of your leads does your own website generate?

Mike: Our web site generates 50% of our Internet leads. The other 50% comes from our third-party lead providers – mostly from AutoTrader.com, Cars.com, and Zag.

We’re constantly scrutinizing our third-party lead providers and their territories. We’re constantly redefining our territories and evaluating providers by quality and close ratio.

Throughout the year, we periodically change our third-party lead providers. If they are performing well for a period of time, we stay with them, and if they are not, we cut them off.

There’s been several that we shut off during the past year and now we’re back with them. We’re very aggressive from the standpoint that we’re always looking to get bigger and grow our operation, but we certainly want to work with quality and not waste our sales persons’ time. If we don’t feel the leads are performing – say a conversion rate drops down to 4% – we’ll take a hard look at that lead source.

Rather than just shut it off immediately, we’ll concentrate on the leads we get from that source and work a little harder on them, to see if it’s us or the quality of the lead. If we work that source’s leads for another 30 or 45 days and we can’t improve the conversion ratio, then that provider is gone.

How do you process your Internet sales leads?

Jay: We look at everything as its own individual channel. We treat an Internet lead or a phone lead with the same level of intense follow-up as most stores treat a walk-in consumer.

Most dealerships focus on walk-in traffic and they can count how many ups, demos, write ups, etc., and they handle walk-in follow-ups more aggressively than their Internet leads. We handle all our leads aggressively.

We have 26 salespeople altogether. Twelve of them handle Internet leads and 12 handle phone leads. We don’t have a BDC.

Everything channels into our CRM no matter what type of lead it is and every lead has its own type of work plan – whether its phone follow-up, or email or mail follow-up. It’s all dictated by which channel the lead came from.

What is your normal response time to an Internet lead?

Jay: We use ResponseLogix and it performs very well for us. Our immediate response to an Internet lead is a custom-tailored price quote sent out by ResponseLogix within 10 minutes. That frees our sales person to pick up the phone and call the customer while that customer is still at the computer. Our personal response time is within half an hour.

Our follow-up time for both Internet and phone leads is 75 days. We have one required follow-up call on a phone up and then we traditionally will have one of the sales managers call on that lead as part of customer relations. That call is to see if the first call was handled properly.

Then we use services like Who’s Calling, a call capture service, which allows us to track whether the prospect makes an appointment or not. So our managers can react quickly on the phone leads, if the phone call did not go in the manner that we want.

What do you use for CRM?

Mike: We are actually thinking of changing our CRM this year. We are shopping and keeping an open mind to anything out there. As the technology changes, we’re constantly looking to improve communications with consumers and make things a little easier for our sales people to do business. There are some great new advances in CRM technology that we are looking to take advantage of this year.

What specific advances or features are you looking for?

Mike: Everybody’s CRMs are good at trading, workflow and a sales person’s to-do list. The lead comes into the CRM and it quotes a price, or not, depending on your business model. Then, all the CRMs offer a set of templates for emails that go out to the prospect and, of course, all CRMs offer the sales person’s phone action plan and to-do list to coincide with all that.

We are looking for a CRM that does all that, but will also help us improve our leads to sales ratio. To do that you have to fine tune communications with the consumer.

We’re seeing different consumer behavior in today’s market. The old buying funnel is disappearing. It used to be that a consumer would start by looking at five different cars four months out, and as they got close to transactional time, they would be considering two cars – like a Toyota Camry and a Honda Accord. Today, we’re seeing the consumer typically start with two cars and eventually go to three or four when it comes down to transaction time.

So, our goal this year is to make sure that we are speaking to the consumer about what’s relevant to them when it’s relevant. Companies like Dataium can watch and track what each consumer’s behavior is and help us tailor our message to each customer and deliver it when the consumer is most receptive.

For example, let’s suppose a consumer sees that we have a really cool used car, a Toyota Supra on our home page, and submits a query, which becomes our Internet lead. Meanwhile that same consumer goes on to look at five Toyota Tundras in our inventory. If we are able to track that online behavior, we know we need to be communicating to that consumer about a Tundra, not a Toyota Supra, because based on their behavior, the Tundra is what they are really interested in buying.

It’s about using all the information that’s available about consumers online and being able to educate our sales force and improve communications, so we can talk to our customers about relevant information in a timely fashion and help drive more customers through our door.

How do you keep up on technology?

Mike: We read Dealer magazine. We go to the Digital Dealer Conference & Exposition. We are part of the Price-Simms organization, so we get together as a group twice a year and invite several vendors and listen to their presentations. We are receptive. We try to be very open-minded. We’ll look at things. We are always trying to deal with vendors that are best in class and we’re always trying to figure out what is the latest, greatest development.

How do you handle social media?

Jay: We use Digital Air Strike for social media. We are extremely pleased with the approach they take.

One of the reasons we chose Digital Air Strike is that they offer more of an agency, hands-on approach, rather than provide some automated solution. They handle Facebook and Twitter for us – posting links on those sites to wherever consumers have put reviews about us online.

Mike: Digital Air Strike is much more proactive than we have the time to be. We have a lot of things to do during the day. Sitting down and writing and posting things on Facebook, and Twitter are not top of mind for most dealers. But, I think social media is an important and growing segment.

That’s why we write our own blogs for our website. Each department head is supposed to write one blog per month. Beth VanStory and I just post them. We are constantly reminding the managers to make sure they get their blog in and I can’t say we’re successful every month, but I think we do a better job than most.

Specifically, how do you handle online reputation management?

Jay: Digital Air Strike helps us with online reputation management and we get a lot of traction with the online reviews. We personally answer all the reviews that require an answer.

We are on DealerRater.com with an average rating of 4.9, with 23 reviews. We’re constantly looking to drive up reviews. Whenever a customer reaches out to us to tell us about their experiences here, we respond with a templated e-mail that has the hyperlinks to the big review sites. When we want to push to get more reviews on DealerRater, we put its link first and foremost on the email. Google Places is probably the next initiative we need to take to get more reviews.

What is your biggest challenge?

Mike: We have several: Margin compression – that’s a problem for everyone in the industry; maintaining quality personnel and being able to grow people; and keeping on top of all the technology we use – between the CRM and the products – and having 22 different model lines.

As for maintaining a quality staff, Price-Simms is an upwardly mobile and growing organization that’s launched several new dealerships all in the San Francisco Bay Area this year: Ford of Fairfield, Mercedes Fairfield, Fisker and McLaren for all of Northern California.

That’s good for us, because it allows us to recruit more and keeps people on a career path. At the same time, it’s a challenge, because there’s constant evolution. It never stops, so we are always training.

What is your vision for the future?

Mike: Right now we have 120 employees at Toyota Marin and we’re selling over 3,600 cars per year. We’ve recently expanded and opened up a used car facility across the street to increase our used car capacity.

Our vision for the future is to constantly grow our organization and improve our CSI. We want to be number one in CSI, sell 250 used cars per month, be in the top five in the region for new car sales rankings, and top five for certified pre-owned sales. We are always looking to get bigger, including our fixed ops side. We’re constantly driving our sales volume up to increase our units in operation and our used car volume to drive our reconditioning which in turn fuels our fixed operations. We are always looking to improve, refine and grow along this trajectory.

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Want to gain instant credibility with your customer?  Email them your car’s window sticker.

Why does this grant credibility?  If the window sticker comes in an email rather than as a conversation on the lot, the customer is going to feel like it is legit.  If it is in their email box then the numbers can’t be changed.  For example, say that you have a customer named Jim on the phone.  Jim isn’t ready to come down to the lot yet.  So to entice Jim, you offer to email him pictures of the car he is interested in, incentives, the window sticker and even desk spread payments or an example of what his payments are going to be.  This gains instant credibility with Jim and he is more likely to trust you as a salesperson.

In order to be able to do this, your window stickers should be integrated with the rest of your system, meaning that you should be able to generate them out of your inventory.  If you are set up to do this, then you are on track and can begin gaining your customers’ trust.  If not, then you need a system that can easily generate window stickers from your inventory.

Window stickers are a huge part of branding.  They are most often the first introduction to a car.  So it is all the more important that this information can be easily accessed and generated from inventory into email form.  Once you are set up to do this, then you have an extra option to peak your customers’ interest.

Want to gain instant credibility with your customer?  Email them your car’s window sticker.

Why does this grant credibility?  If the window sticker comes in an email rather than as a conversation on the lot, the customer is going to feel like it is legit.  If it is in their email box then the numbers can’t be changed.  For example, say that you have a customer named Jim on the phone.  Jim isn’t ready to come down to the lot yet.  So to entice Jim, you offer to email him pictures of the car he is interested in, incentives, the window sticker and even desk spread payments or an example of what his payments are going to be.  This gains instant credibility with Jim and he is more likely to trust you as a salesperson.

In order to be able to do this, your window stickers should be integrated with the rest of your system, meaning that you should be able to generate them out of your inventory.  If you are set up to do this, then you are on track and can begin gaining your customers’ trust.  If not, then you need a system that can easily generate window stickers from your inventory.

Window stickers are a huge part of branding.  They are most often the first introduction to a car.  So it is all the more important that this information can be easily accessed and generated from inventory into email form.  Once you are set up to do this, then you have an extra option to peak your customers’ interest.

If you are still using server-based software at your automotive dealership, then you are way behind.  Right now the growing trend in software is web-based software.  There are many advantages to web-based software.  It is easier, safer and more accessible than traditional server-based software.

To begin with, you don’t have to install any CDs, download any software or worry about upgrades.  There is no need for an IT person because you don’t have to worry about technical difficulties.  All of that is handled by the software provider.  All you need to focus on is your work!

Also, web-based software is more secure than traditional software for several reasons.  First of all, with traditional software employees often have to save things to their laptops, USB drives or portable hard drives.  These items may get stolen.  With web-based software everything can be saved on the secured website, preventing any hacking of information.  Another reason that web-based software is safer is that many personal computers are not updated with the latest security packages.  The web-based software is always updated.  Finally, with server-based software, information has to be backed up.  When it’s on the web, it stays there - without the need to be backed up.

Finally, web-based software is more accessible.  Since it is on the web, it can be accessed from any computer.  That means if you are out of town, you can still access it from your personal computer.  That way you can always tap into your dealership’s inventory, sales or individual salesperson’s daily tasks from any location, anytime.

Another feature your web-based software should have is the ability to pull up the software on your mobile phone.  Most web-based software today has a mobile URL so that users can open it on their Smartphones.  This comes in handy when you are working on the sales floor and a customer asks you if you have something in stock.  Instead of going back to the computer, you can just pick up your mobile phone and check.

Remember, the easier the software, the more you can focus on your job of selling.  

If you are still using server-based software at your automotive dealership, then you are way behind.  Right now the growing trend in software is web-based software.  There are many advantages to web-based software.  It is easier, safer and more accessible than traditional server-based software.

To begin with, you don’t have to install any CDs, download any software or worry about upgrades.  There is no need for an IT person because you don’t have to worry about technical difficulties.  All of that is handled by the software provider.  All you need to focus on is your work!

Also, web-based software is more secure than traditional software for several reasons.  First of all, with traditional software employees often have to save things to their laptops, USB drives or portable hard drives.  These items may get stolen.  With web-based software everything can be saved on the secured website, preventing any hacking of information.  Another reason that web-based software is safer is that many personal computers are not updated with the latest security packages.  The web-based software is always updated.  Finally, with server-based software, information has to be backed up.  When it’s on the web, it stays there - without the need to be backed up.

Finally, web-based software is more accessible.  Since it is on the web, it can be accessed from any computer.  That means if you are out of town, you can still access it from your personal computer.  That way you can always tap into your dealership’s inventory, sales or individual salesperson’s daily tasks from any location, anytime.

Another feature your web-based software should have is the ability to pull up the software on your mobile phone.  Most web-based software today has a mobile URL so that users can open it on their Smartphones.  This comes in handy when you are working on the sales floor and a customer asks you if you have something in stock.  Instead of going back to the computer, you can just pick up your mobile phone and check.

Remember, the easier the software, the more you can focus on your job of selling.