Orem Mazda
Quick Response vs Quality Response
One of the popular buzzwords (It's actually 2 words) in the industry when it comes to Internet Sales is "Response Time." Oftentimes dealers fall into the trap of thinking that managing their response times on Internet Leads is the Holy Grail of Digital Operations. I was chatting with a dealer recently who was frustrated because they had worked very hard to reduce their response time from an average of 5 hours 35 mins (YIKES!) to 25 minutes. While 25 minutes is certainly respectable, and a massive improvement from where they were before, it is not anywhere near a best practice benchmark. Anyway, the dealer was frustrated that the improved response time had not had a measureable affect on their conversion percentage to appointments. So he and I began to dig a little deeper into what was going on.
Over the next couple of days the dealer and I started to take a look at what was going on in his CRM. FULL DISCLOSURE: I have the dealer's authorization to publish these responses as long as I don't divulge the dealership's name or location. That disclosure gives you a pretty good idea as to the nature of the responses you are about to see. (responses are word for word including typos and grammar)
Question: What is the "out the door" price on this pre-owned 2010 Civic?
- The price isn't important unless you're paying cah which I sure you not. How much down?
Question: Do you offer financing for people with credit problems?
- We can get you bot. All I need is a 5 liner. What are yor prilems? (WHAT?)
Question: Dealership XXX has quoted me a slightly lower price on the same vehicle and I was wondering if you price match.
- Dealership XXX is giving cars away to buy market share. Go buy it there.
At this point I probably don't need to write anything more in this blog post to properly convey my message. While repsonse time is certainly an improtant and vital piece of the puzzle when it comes to having a top notch Internet process, it is only 1 piece of the puzzle. Not the only piece. This dealer was astonished and furious over what we uncovered when we just took a peek into the responses that were going out from his dealership.
The key is Quick Response in conjunction with Quality Response.
Take a look at the responses that are going out from your dealership and always inspect what you expect.
Let's move some metal!
Orem Mazda
Action is the Foundational Key to all Success
I definitely think Picasso was on to something when he was quoted as saying "Action is the Foundational Key to all Success."
That has been the basis of my philosophy when it comes to Professional & Thorough Follow-Up whether referring to my 20 years in the dealership world or my time with DrivingSales.
I have this friend and client in Canada named Wayne C. Wayne is a tough car guy on the outside and a great human being on the inside. I would like to share some of the experiences that Wayne and I went through in forging our business & personal relationship. We went through quite a tumultuous process to arrive at where we are today. A fairly good case study on follow-up on both sides.
Stages of follow-up with Wayne:
- 9/10/2012 ~ Emailed & Phoned Wayne to respond to his request for information
- 9/10/2012 ~ Received email containing pricing objections
- 9/10/2012 ~ Sent email explaining value & benefits
- 9/11/2012 ~ Sent email with a "Successful Client Quote"
- 9/12/2012 ~ Sent email & left voicemail
- 9/12/2012 ~ Received email stating he is "re-thinking'
- 9/13/2012 ~ Sent email with a list of references
- 9/17/2012 ~ Received email stating he is going to hold off
- 9/17/2012 ~ VM & email "I'll be here if you need me"
- 9/24/2102 ~ VM & email
- 10/15/2012 ~ VM & email
- 10/22/2012 ~ Received "Request for more info" from Wayne
- 10/22/2012 ~ VM & email answering questions
- 10/23/2102 ~ VM & email "I'll be here if you need me"
- 10/30/2012 ~ Sent Wayne a link to a great blog post
- 11/12/2012 ~ Received email from Wayne thanking me for the link
- 12/6/2012 ~ VM & email "I'll be here if you need me"
- 12/6/2012 ~ Received email from Wayne asking me to stop contacting him :-(
- 12/6/2012 ~ Sent email confirming his request and asking if I could contact him quarterly to check in
- 12/12/2012 ~ Sent Wayne a Holiday Card
- 1/13/2013 ~ Sent email wishing Wayne a prosperous year in business
- 2/6/2013 ~ Received the following email from Wayne!
Hi Ron,
It’s been a while since I decided to pass. I’m re-engaging now. Seems the slow wintery months up here are getting to me and I’m spending way too much time researching and learning all the trends!
Talk soon,
Wayne
So what are the takeaways from this 6 month exchange other than the fact that I am a pain in Wayne's rear end? I think it goes back to what Picasso said, "Action is the Foundational Key to all Success." I am a firm believer that there comes a time in the follow-up relationship where you stop selling and just continue building rapport and value. However, never stop providing professional and thorough follow up. EVER! What would have happened if I had stopped following up with my future wife when I received the response of "Let me think about it" to my marriage proposal? I know of 3 kids that would have been disappointed. Although, maybe she would have found a better "provider." I know that I never could have.
Now I will fully acknowledge that not every long term follow-up story ends like the one I just illustrated. However, if 1 out of 20 does, isn't it worth it? Also, Wayne has become a valuable source of information for me in understanding Canadians. :-) Just kidding, that was his line. But in all seriousness, he is a valuable resource for me and our company.
I hope he will share his side of how this all went down but I shared this story to illustrate a few important things that I believe in when it comes to providing professional and thorough follow-up:
- Just Do It! (My apologies to Nike)
- Provide value to prospects as well as customers
- No simply means, not right now
- Canadians are pretty cool
Let's move some metal!
6 Comments
DealerTeamwork LLC
Great example of that follow-up management process. Nice to see you "practicing what you're preaching," Ron
Budds Chevrolet
Ron, this is a good post. Real world experiences sometimes teach us the most when viewed in retrospection. All too often we lose sight of the basics in our business, and good, thorough follow up is a key to our success that is often underrated. What stood out for me during our exchange was your professionalism, blended nicely with your sense of humour. Let’s not take life too seriously! What’s important to know is that I never really didn’t want the product, I simply wasn’t totally sold, and for the investment you were asking, I felt I needed more justification. Now, this wasn’t a conscious thought. It’s simply a great example of the way shoppers’ decision making processes work. You could have easily dropped me, because I gave you some pretty stern ‘no’s! But instead you did what a professional closer/salesperson does and you hung in there, unaffected by my ambivalence. Each time I received an email with the various pieces of material or data got me a step closer to not only realizing how much I needed your product, but that, as Eric points out, you were practicing what you preach. That’s credibility in my books. Exactly what I wanted. Great job. And now a plug for you guys. I couldn’t be happier with DSU. Anyone in our Driving sales community that is on the fence about DSU, contact me. I’ll give you an honest evaluation. Believe me ,this Canuck is finding out quickly that even with 26 years in this biz, I’ve never known so little! Wayne
Orem Mazda
Well said, Wayne. Very honest and eloquent as always. You're going to conquer the world!
Orem Mazda
Action is the Foundational Key to all Success
I definitely think Picasso was on to something when he was quoted as saying "Action is the Foundational Key to all Success."
That has been the basis of my philosophy when it comes to Professional & Thorough Follow-Up whether referring to my 20 years in the dealership world or my time with DrivingSales.
I have this friend and client in Canada named Wayne C. Wayne is a tough car guy on the outside and a great human being on the inside. I would like to share some of the experiences that Wayne and I went through in forging our business & personal relationship. We went through quite a tumultuous process to arrive at where we are today. A fairly good case study on follow-up on both sides.
Stages of follow-up with Wayne:
- 9/10/2012 ~ Emailed & Phoned Wayne to respond to his request for information
- 9/10/2012 ~ Received email containing pricing objections
- 9/10/2012 ~ Sent email explaining value & benefits
- 9/11/2012 ~ Sent email with a "Successful Client Quote"
- 9/12/2012 ~ Sent email & left voicemail
- 9/12/2012 ~ Received email stating he is "re-thinking'
- 9/13/2012 ~ Sent email with a list of references
- 9/17/2012 ~ Received email stating he is going to hold off
- 9/17/2012 ~ VM & email "I'll be here if you need me"
- 9/24/2102 ~ VM & email
- 10/15/2012 ~ VM & email
- 10/22/2012 ~ Received "Request for more info" from Wayne
- 10/22/2012 ~ VM & email answering questions
- 10/23/2102 ~ VM & email "I'll be here if you need me"
- 10/30/2012 ~ Sent Wayne a link to a great blog post
- 11/12/2012 ~ Received email from Wayne thanking me for the link
- 12/6/2012 ~ VM & email "I'll be here if you need me"
- 12/6/2012 ~ Received email from Wayne asking me to stop contacting him :-(
- 12/6/2012 ~ Sent email confirming his request and asking if I could contact him quarterly to check in
- 12/12/2012 ~ Sent Wayne a Holiday Card
- 1/13/2013 ~ Sent email wishing Wayne a prosperous year in business
- 2/6/2013 ~ Received the following email from Wayne!
Hi Ron,
It’s been a while since I decided to pass. I’m re-engaging now. Seems the slow wintery months up here are getting to me and I’m spending way too much time researching and learning all the trends!
Talk soon,
Wayne
So what are the takeaways from this 6 month exchange other than the fact that I am a pain in Wayne's rear end? I think it goes back to what Picasso said, "Action is the Foundational Key to all Success." I am a firm believer that there comes a time in the follow-up relationship where you stop selling and just continue building rapport and value. However, never stop providing professional and thorough follow up. EVER! What would have happened if I had stopped following up with my future wife when I received the response of "Let me think about it" to my marriage proposal? I know of 3 kids that would have been disappointed. Although, maybe she would have found a better "provider." I know that I never could have.
Now I will fully acknowledge that not every long term follow-up story ends like the one I just illustrated. However, if 1 out of 20 does, isn't it worth it? Also, Wayne has become a valuable source of information for me in understanding Canadians. :-) Just kidding, that was his line. But in all seriousness, he is a valuable resource for me and our company.
I hope he will share his side of how this all went down but I shared this story to illustrate a few important things that I believe in when it comes to providing professional and thorough follow-up:
- Just Do It! (My apologies to Nike)
- Provide value to prospects as well as customers
- No simply means, not right now
- Canadians are pretty cool
Let's move some metal!
6 Comments
DealerTeamwork LLC
Great example of that follow-up management process. Nice to see you "practicing what you're preaching," Ron
Budds Chevrolet
Ron, this is a good post. Real world experiences sometimes teach us the most when viewed in retrospection. All too often we lose sight of the basics in our business, and good, thorough follow up is a key to our success that is often underrated. What stood out for me during our exchange was your professionalism, blended nicely with your sense of humour. Let’s not take life too seriously! What’s important to know is that I never really didn’t want the product, I simply wasn’t totally sold, and for the investment you were asking, I felt I needed more justification. Now, this wasn’t a conscious thought. It’s simply a great example of the way shoppers’ decision making processes work. You could have easily dropped me, because I gave you some pretty stern ‘no’s! But instead you did what a professional closer/salesperson does and you hung in there, unaffected by my ambivalence. Each time I received an email with the various pieces of material or data got me a step closer to not only realizing how much I needed your product, but that, as Eric points out, you were practicing what you preach. That’s credibility in my books. Exactly what I wanted. Great job. And now a plug for you guys. I couldn’t be happier with DSU. Anyone in our Driving sales community that is on the fence about DSU, contact me. I’ll give you an honest evaluation. Believe me ,this Canuck is finding out quickly that even with 26 years in this biz, I’ve never known so little! Wayne
Orem Mazda
Well said, Wayne. Very honest and eloquent as always. You're going to conquer the world!
Orem Mazda
Does not being transparent make you invisible to customers?
BUZZWORD ALERT!
TRANSPARENCY. Love it or hate it, it is relevant and plays a big part in your Digital strategy.
Let's see if we can look at things from a customer's perspective for a moment.
- Google the product you're looking for.
- Read through the results on pages 1-5 to narrow your search. (Yeah, right!) More like, Read through the first 3, maybe 4 results.
- Visit a couple of the sites to gather information including pricing and availability.
- Visit 3rd party sites. (Autotrader & Cars.com)
- ASSUME THAT NO PRICE = HIGHEST PRICE AND MOVE ON TO NEXT DEALERSHIP.
So is #5 happening? You better believe it is! If you aren't pricing your inventory and pricing it "On the Money" you are out of the Internet game. Remember, we're looking at things from a customer's perspective. So here's the rub, some dealers dig their heels in the sand and say, "Listing prices online just costs me gross and those mooches who insist on knowing he price before they come in can go see the guys down the street."
The work I do with dealers affords me the opportunity to review many Internet mystery shops of dealerships all over North America. It blows me away how many times we ask for a price and get an answer like:
- We'll make you a great deal. When can you come in?
- We've never lost a deal over price. Come on down.
- What monthly payment were you hoping to get?
- Do you have a trade?
Let me address #4 specifically. Now remember, customer perspective. "Hey honey, did you know the price we can get on the new Tahoe we want is affected by whether or not we have a trade-in?" "Hmm, I'll never understand the car business so I guess we better go down to the dealership that won't give us the price online because I'm sure they will be much lower than these other 2 dealerships that have been so nice and answered our questions so thoroughly."
NOT!
The moral of the story here is that as the business owner you certainly have the right to make the business decision to resist transparency and not post prices on your website or with 3rd party vendors. Whether or not that is a good decision rests with you and your management team but I would like to offer a suggestion. Look at it from a customer's perspective when making that decision. Think about the last time you shopped online for a high ticket item like a tv or a riding mower or whatever it may have been. Chances are you were looking online for 3 pieces of information:
- Product info
- Pricing info
- Businesses that offered the product
Did you consider going to businesses that didn't offer one or both of the fist two items?
The Dalai Lama said, "The lack of transparency results in distrust and a deep sense of insecurity."
Go move some metal!
46 Comments
Auto Industry
A good deal is a state of mind. It's based on perception. There is no real transparency. Its also perception. And the perception is transparency is much more important that transparency itself. Does anyone really think we are going to divulge our complete cost structure to each consumer, then negotiate the margin? We'll have true transparency about the time Dealers are transparent with their managers and sales people, and not a moment sooner.
National Auto Dealers Association
The word transparency is often over used, but that is because consumers have more influence and data to support their influence than in any time in auto industry history. The problem is not all data is equal, and using it in context can also be a problem. Research indicates the Gen Y buyer who will soon comprise over 40% of your consumers wants this type of validated experience. With-out this type of showroom experience they, Gen Y, purchases from a dealership willing to be "transparent" There usually is a difference between new and pre-owned gross profit, but both experiences have to be validated in a transparent way. The good news for progressive dealerships is you can become transparent in a lot of different ways and use data that works for your dealership and your consumer. I wouls strongly recommend beginning to look to address Gen Y the are different buyers and the data supports that fact.
Orem Mazda
David, I couldn't agree more than transparency has to happen between dealers, managers and sales consultants as well. Truth is, dealerships that aren't are not only losing customers to competitors, but employees as well.
Orem Mazda
Great comments Stuart! I believe that it's not about being the lowest price, but being in the most aggressive sample set and then letting your light shine through a process that builds value and trained & certified sales consultants. Thanks for your thoughts!
TradeInVelocity.com
Carmax proves over and over that price is not the issue. You don't have to be the cheapest to have customers buy from you, but you do have to have a good online shopping experience. Getting instant gratification on a trade appraisal on your dealer website is very important and I would challenge you to do the research on which values are most realistic and relevant. Start a fresh or rare car a little higher price than a car that is aging and you'll make up the difference in gross.
TradeInVelocity
As one of the generation in question, as mentioned above... this could not ring truer to me. Having been burned once (hard) by a very "non-transparent" dealership, I made it a point to never allow it to happen again. My weapon of choice? The internet. Since that first burn, I have made 2 more vehicle purchases. In both instances, I walked into the dealership with a wealth of information on hand, and spoke frequently to the dealerships I shopped with prior to coming in. And while both were adamant about not talking price before I actually walked in the door, I was ready anyways. Thanks in large part to sites like edmunds (which I used both times), I felt I had a decent idea what the cost of the car should be, and thanks to my smartphone, I had no problem forcing the salesmen and dealerships I visited be as transparent as possible with me. At the end of the day? Customers understand that the salesmen and the dealership need to eat too. It's about respect, tact, and honesty. These are the values we of ANY generation hold over slime, smarm, and snark.
CarWoo Inc.
This is a major part of what I am trying to solve with CarWoo!. You're on the money here Ron. Dealers that embrace what you've written are definitely more successful with the online buyer. Thanks for the post.
Orem Mazda
Thanks Tommy! Guys like you and I are trying to change the world one dealer at a time. :-)
automotiveMastermind
Great read Ron... Does not being transparent make you invisible to customers? No, I think it is actually much worse than that! It makes you very visible and therefore very avoidable! Internet research is used by the consumer to make their life easier by elimination, that is why pre-purchase visits have dropped from 6 to 2 in the last 10 yrs, right? Your pricing point is right on: No price = Too High = Strike that one from the shortlist... The internet is the digital extension of the physical dealership, nothing more, nothing less. The same rules for great consumer experiences are in effect, but they must be observed even more diligently as you seldom get a second chance online. It is far too easy for the consumer to move to the next dealer.
Orem Mazda
Hey Ryan, I love your comment, "Internet research is used by the consumer to make their life easier by elimination." Bingo! Right on! Nailed it! I'm fairly confident that dealers do not intentionally want to be eliminated from consideration.
DriveBuyMarketing, Inc.
OM GOSH!!!!!! How can we eat this elephant? One bite at a time? I just left a store which is part of a multi -store group and after having met with their Director of eCommerce I left scratching my head. Scenario-at their "high volume store" where the General Manager Tyrannosaurus Rex, holds higher grosses than most in his group, a strict rule was instituted- RULE- DO NOT PROMOTE PRICE ON VEHICLES ON THE LOT! Reason? When a guest arrives and is given a price by the sales person, IF the price they are quoted is HIGHER than the Internet price AND the guest sticks around, the sales person has to create distractions long enough for one of the sales managers to contact the e Commerce manager to pull the Internet price down before the customer can pull it up on their handheld! They actually have a "process" for such instances (which according to the eCommerce guy takes up 1/2 to 2/3 of his day to pull down prices as sales people dance).....I asked a couple stupid questions as I sat there in awe- 1) "How many times does the customer get to the internet price on their handheld before you can have it pulled?" ANSWER: 1/2 the time.....1/2 of that number is deals lost- the guest leaves unsold - the eCommerce director is mostly a fireman!! 2) "Why don't you just price your inventory using your inventory tool fairly and eliminate all the damage control (along with the poor reputation control) along with time spent explaining, distracting, and or dancing?" ANSWER: "The GM holds high gross and at the end of the day that's what matters." Now if they didn't sell 325+ a month I wouldn't have been as astounded as I was- but at 325 units per month with this type of business practice going on- can you imagine what would happen if they came clean, priced fairly, promoted the value of the store the customer service and service value? Imagine the possibilities if they were transparent to the other 1200 minimum "ups" they say they get in order to sell the 325? I failed to mention their ad budget is off the charts. WOW- I am more determined than ever to get dealers on board with the importance of transparency- or should I say value.....and get them to understand that first and foremost the value is to their stores! It aint gonna be easy but someone has to do it.
Orem Mazda
Hey Wendy, I won't mention any names, but I think I may have spoken to the GM of that store a few weeks ago. He was very brazen in declaring that they "kicked butt" without worrying about the Internet and their grosses were very high. And if it wasn't the same store, then this Tyrannosaurus Rex (your words) :-) mentality is still active in our industry which I find disheartening at best. You are right on with your assessment. That process of deception has to lead to reputation nightmares with the 50% that walk. People like you and I will keep on preaching the good word and doing our best plugging along trying to change the industry for the better. Thanks for your comments!
Valley Imports
Nice article Ron.................I wonder, is a dealer transparent when they post their MSRP online with a button below that says: "get e-price"? To me that means that if you are a Gen X buyer and actually come in to kick tires, you are going to pay more. Kind of a murky area.............which isn't transparent in my opinion. Your word of mouth reputation as a dealer is just as important as transparency. Be consistent for EVERYONE and you will be consistently profitable.
Self
It seems that definition of Transparency is not understood well, transparency is not about selling your inventory at the lowest price, this is your choice to sell at your price and there is no problem with that. Keeping up with competition is also seller choice; even your online reputation is your choice. We all make choices and we need to accept the consequences. Transparency mean to practice business ethic throughout the process of making a deal and customer care, I do strongly believe that in the age of information, businesses that don’t practice it will suffer greatly in long run.
Auto Industry
RE: "Transparency mean to practice business ethic throughout the process of making a deal and customer care, I do strongly believe that in the age of information, businesses that don’t practice it will suffer greatly in long run." Actually, transparency in the context of sales has to do with the information both the buyer and seller share. When the bulk of information is known by the dealer, and not the buyer, the dealer has an advantage in the negotiation. Absolute transparency means buyer and seller have the same information, transforming the product into a commodity. This leads to disintermedation. And dealer who thinks that is good for him is a complete fool.
Self
David, there is not such a thing as "Absolute transparency" there is either transparency or not. being transparent doesn't mean that we have to loose money or make little money on a deal, It also doesn't mean that we have to tell the customer how much we are in a vehicle. Transparency simply means that not to give customer falls information. It absolutely does not have anything to do with how much money made on a deal. I have attended few selling and management seminars, and some from well known companies, all they had to offer was how to lie to customer and make them confuse and then sell. We don't need to do that to sell, instead we could work on value selling as well as giving them peace of mind. Selling is about persuading customers with working on value, peace of mind, and future relationship. If there are two dealerships with the same vehicle, different price, I would not necessarily buy from dealer with lower price, I would pay little more and buy from dealership that has good reputation and great customer service.
Auto Industry
Actually, there is, and it leads to "efficient markets." Transparency has to do with information. The advantage dealers, or your jeweler, hold is knowing exactly what their costs are. IF you intend to be transparent, and your customer asks you what your bare cost is, you are obligated to tell them. That's why dealers typically aren't completely transparent with their managers or sales people. Relative transparency is something different. We should call it what it really is. The word "Transparency" means different things to different people. But there is only one definition of "disintermediation." Selling isn't about giving the customer what they want, its about making them like what we gi8ve them. One thing I've told new sales people, for decades now, is do NOT judge your customers by yourself.
PCG Digital Marketing
Ron Well done. I have been preaching this for the past 2 years. customers have been trained to expect to be able to find anything they need in terms of a product so why should car shopping be different. The harder you make it for the consumer to move closer to the sale, they will go to the past of least resistance and find someone who will help them. The days of car dealers being the only ones who hold information are over so providing as much as you can is the best strategy to stay on a consumer's list of potential partners.
Orem Mazda
I agree 100% Glenn. It is foolish to think that customers in this day and age of information are ill informed. If a dealer is playing games or withholding information, the customer will simply move on to a better dealer. The upside in my opinion is that businesses are finally being forced back toward providing outstanding customer service, which is a skill set that has really disappeared in recent years.
PCG Digital
The more information you provide the customer, the more they will trust you. Remember, people buy from people they know, like and trust. Transparency is the key to trust.
NADA
If you have not heard of George Akerlof you are not alone. In 1970 Professor Akerlof used the auto industry and a "lemon car" i.e. defective vehicle to show how transparency, equal information for both buyer and seller will create a more efficient market.Transparency will reduce adverse selection for both buyers and sellers. It is worth Googling and reading the articles. If you think about technology and the tools that contain market data, these are all marketed to create efficiency. Because information today is available with-out much consumer effort, Gen Y and other groups as well, demand this transparent approach, and embracing it with a solid process will not necessarily mean less profit. Research supports that it will help ensure more deliveries at reasonable grosses, and more satisfied customers. Wit hall the social media and rating sites the satisfaction with yuor process is very important. Stu Zalud NADA Used Car Guide Co.
Auto Industry
RE: "The more information you provide the customer, the more they will trust you. Remember, people buy from people they know, like and trust. Transparency is the key to trust." So Adam, why not just disclose your triple net costs and negotiate the margin. Your customer will appreciate your transparency so much they will pay you the 10% margin you need to break even and provide some ROI, right? My argument is NOT for absolute opaqueness in the negotiation process. My point is that our advantage is to have more information than our buyers. If not, our product becomes a commodity. A blind dog with a note in his mouth can deliver transparency. It takes some skill and understanding to provide salesmanship.
Auto Industry
@ Adam - As COO, how "transparent are you with your sales employees, managers and sales people, let alone your customers? Do you disclose all of the dealer trunk money to them? Your store's bottom line?
Auto Industry
@ Stu - I know an "efficient market" sounds good. But as a representative of NADA doesn't "disintermediation" have a meaning to you? That's what an "efficient market" leads to. Is that really what you want? Along with increased information which is depressing dealer margins, OEMs are pushing dealers to spend more and more on their fiacilities while the CFPB is moving to take away rate markup. Do the math.
PCG Digital
@David - cDemo is based on transparency and efficiency. We offer a vehicle merchandising platform that allows dealers to collect more detailed information about their vehicles including damage and tire tread depth in addition to standard features. As far as transparency with our employees, we use a CRM that shows all user activity to all employees. We encourage our entire team to be transparent about what we do on a daily basis. Our customers have complete access to our back end and can see where all of their inventory is coming from and being sent. We have great relationships with our customers and many of them have my personal cell phone number as well as the cell phone numbers to our management and support team.
Orem Mazda
@David ~ From a customer perspective, which dealership will they choose when one is open with information and pricing and the other is protecting information for the "advantage" you spoke of?
Auto Industry
Transparency is the key to trust? How many people buy jewelry without asking for transparency in the markup? Yet, people still buy jewelery. Same with furniture. The objective is not transparency. The objective is a sale with enough gross profit to support ROI. An "efficient market does NOT provide ANY ROI for the middle man. You guys should really be talking about a balance of transparency and salesmanship because absolute transparency leads to your demise. How many of you think consumers would knowingly pay you a 10% margin on new vehicle? How many have added up all of your costs of sale to see how much you need just to break even? What are the chances your customer would pay you that in a truly transparent business model?
Auto Industry
As an added bit of information: Only about 28% of customers are fast trackable from credit perspective. Everyone else might need a little help from the dealer to gain financing. Then there are trade in issues. Buying a car isn't like ordering a laptop from Dell. Everyone is NOT an ace negotiator. If you have a problem with some people paying a higher profit than others you are in the wrong business. If a dealer needs to average $3K per transaction, and one customer gets a $2K deal, the next one needs to furnish $4K to maintain the average. Those who want to make sure everyone pays the same margin will probably suffer the same fate as those who tried that previously. Anyone recall the failed Ford Collection experiment, where Ford tried to retail cars based on what consumers told them they wanted in focus groups? Maryann Keller tells the story of a Silicon Valley startup that bought cars at fleet price, then offered them to the public at an even lower price to see if consumer could be satisfied. They couldn't. The fact is, during a negotiation, if neither party gets their feathers ruffles, someone left money on the table.
Orem Mazda
2 Thoughts: #1: In my market your statistics regarding credit worthiness are way off. #2: I don't recall anyone saying in this post that being transparent equaled being One Price.
Auto Industry
My stats on credit worthiness come from Experian. They are national numbers. Before the Great Recession consumers with credit scores over 700 numbered about 32%. Now, one has to be a 720 to have any chance of being fast trackable IF DTI is below 50%. RE: One Price - One Price is/was a way to attempt to communicate to the consumer that the "best price" is freely disclosed. What is YOUR definition of transparent? Better yet, what is the average consumer's definition of transparent? In surveys, consumers say they don't want to pay a higher profit than anyone else. In surveys, they say they just want the "best price" so they can buy. They don't understand that there is no such thing as a "best price." The Ford Collection attempted to sell new vehicles the way consumers said they wanted to buy them. Dealers on the fringe of the Ford Collection markets were the ones who benefited. The Ford Collection experiment cost hundreds of millions of dollars. Dealers are free to be as transparent as they want. Consumers are free to shop until they find a sales process that suits them. Dealers are free to give away gross profit in an attempt to molify consumers and earn their trust. Dealers are free to pay vendors to bring them leads by demonizing dealers as a whole and creating the perception that X dealer is "different." And any dealer who thinks absolute transparency suits his/her purpose is free to disclose their triple net costs and disclose their actual margin. I think it would be nice to give up on this idiotic word. It has so many definitions and perceptions attached to it that it has no common meaning, rendering it worse than useless.
Orem Mazda
I think Franklin D Roosevelt sums it up pretty well. "There are as many opinions as there are experts."
Auto Industry
@ Ron - Some dealerships are more artful than others when it comes to negotiation. If a consumer is not happy with one dealership's process, they are free to move on. If you want to assume all consumers are knowledgeable, start giving away gross profit immediately to earn their trust. Then try to pay your overhead with transparency. This business is still about gross profit. And a good deal is still based on perception. If transparency was the key to auto retailing success, there would still be a Ford Collection.
Orem Mazda
Let's agree to disagree on this one. I ran a One Price store for many years and our #1 position in the marketplace and our bottom line told me that it was successful for us.
Auto Industry
@ Adam - RE: " As far as transparency with our employees, we use a CRM that shows all user activity to all employees. We encourage our entire team to be transparent about what we do on a daily basis. Our customers have complete access to our back end and can see where all of their inventory is coming from and being sent." If you had true transparency with your employees, they would know YOUR salary, the Dealer's salary, and your monthly P&L. What you have is relative transparency designed to provide the perception of complete transparency.
Auto Industry
@ Adam - It isn't clear to me if you are COO of a dealership group, or of a vendor. Either way, absolute transparency still leads to an "efficient market" which is NOT good for "middle men." Once you have commoditized a product there is no need for middle men. Once the product is commoditized there is not gross profit to sustain them. I hope your business model isn't based on providing transparency to dealer customers, and in the doing, trending them in the direction of becoming obsolete. The discussion should be about relative and/or appropriate transparency. This business is still about perception and gross profit.
PCG Digital
@David - I work for cDemo Mobile Solutions, as indicated on my Driving Sales profile page. We allow dealers to merchandise their vehicles in a very efficient and transparent way (by using a mobile app to collect all the details of their inventory including damage, photos, and real video) . I believe the original intent of Ron's article and the point I was trying to get across was that the more information you provide the customer up front, the better. If you try to hide things online (like price) or not answer a customer's questions, you frustrate the customer an increase the chances that they will go elsewhere to do business. Prior to my joining cDemo I was the Internet Director for a 3 store automotive group and did my best to ensure that our inventory was merchandised properly with real video walk-arounds and damage disclosed so that customers who were shopping online knew what they were looking at and didn't have any surprises when they walked into our stores. I did my best to knock down the walls that customers had built after having bad experiences at dealerships who jerked them around in the past. In the end, most people just want to feel like they got a good deal and have a good experience. I think most of the members of this community are committed to providing their customers a good experience and a good value on the vehicles they sell. We all want and need to make a profit. I don't think anyone who is part of this community wants to see dealers become obsolete.
Auto Industry
Actually, there is, and it leads to "efficient markets." Transparency has to do with information. The advantage dealers, or your jeweler, hold is knowing exactly what their costs are. IF you intend to be transparent, and your customer asks you what your bare cost is, you are obligated to tell them. That's why dealers typically aren't completely transparent with their managers or sales people. Relative transparency is something different. We should call it what it really is. The word "Transparency" means different things to different people. But there is only one definition of "disintermediation." Selling isn't about giving the customer what they want, its about making them like what we gi8ve them. One thing I've told new sales people, for decades now, is do NOT judge your customers by yourself.
Orem Mazda
"Selling isn't about giving the customer what they want, it's about making them like what we give them." I couldn't possibly disagree with you more on that comment! I wonder if that would work as an ad slogan. "At ABC Motors we won't give you what you want, but we'll make you like what we give you." Welcome back to 1973. As a consumer, if a business doesn't give me what I want, they don't get what they want........my money.
Auto Industry
Of course it wouldn't work as an ad slogan, but that doesn't change the facts of life. Why would the basic principle of sales even be considered as an "Ad Slogan?" Where id that come from? ANYONE can sell in a negotiating environment if they give consumers everything they want. Consumers don't want to pay middle man profit. They have no understanding of our cost structure, and don't care. The human nature of the car deal hasn't changed in decades. Nor have the basic principles of negotiation.
Orem Mazda
@David I enjoy a respectful and lively debate and you certainly have provided that. Thank you. I suppose we will have to agree to disagree on this one, but I will say this as a summation. I believe that Gen X, Y, and Millennials will not buy a car from a dealership that doesn't give them what they want in a buying experience. They won't go through the old games because they don't have to. There are enough dealerships today that have adapted to today's buyers. When the Boomers begin to diminish, dealers who are still resisting the "new normal" will have to adapt or will see massive decreases in sales and market share.
Auto Industry
Ron, I believe that Gen X etcs. won't pay gross profit if they get everything they want. All of them don't have credit scores that even merit "fast tracking." Many are still paying off school debt, haven't bought their first home, and are a threat to move back in with their parents. They might find $500 open credit on a credit card to order something from Dell or Amazon, but it isn't yet time to turn our business on its head for them. Here are the facts. Increased transparency leads to an efficient market, which leads to disintermediation. That's elimination of the middle man. That's the car salesperson and car dealer. Look up disintermediation. Increased transparency compresses margins. As margins are being compressed by increased transparency, margins are also being compressed by the CFPB putting downward margin pressure on rate markup in F&I. At the same time, the OEMs are coercing dealers into higher overhead costs through facility renovation. Do the math.
Auto Industry
What we need is appropriate transparency, basic salesmanship, and gross profit. Only consumers want absolute transparency. They also want to cut out the middle man. The way they answer survey questions and the way the behave in the real market aren't the same.
Orem Mazda
Does not being transparent make you invisible to customers?
BUZZWORD ALERT!
TRANSPARENCY. Love it or hate it, it is relevant and plays a big part in your Digital strategy.
Let's see if we can look at things from a customer's perspective for a moment.
- Google the product you're looking for.
- Read through the results on pages 1-5 to narrow your search. (Yeah, right!) More like, Read through the first 3, maybe 4 results.
- Visit a couple of the sites to gather information including pricing and availability.
- Visit 3rd party sites. (Autotrader & Cars.com)
- ASSUME THAT NO PRICE = HIGHEST PRICE AND MOVE ON TO NEXT DEALERSHIP.
So is #5 happening? You better believe it is! If you aren't pricing your inventory and pricing it "On the Money" you are out of the Internet game. Remember, we're looking at things from a customer's perspective. So here's the rub, some dealers dig their heels in the sand and say, "Listing prices online just costs me gross and those mooches who insist on knowing he price before they come in can go see the guys down the street."
The work I do with dealers affords me the opportunity to review many Internet mystery shops of dealerships all over North America. It blows me away how many times we ask for a price and get an answer like:
- We'll make you a great deal. When can you come in?
- We've never lost a deal over price. Come on down.
- What monthly payment were you hoping to get?
- Do you have a trade?
Let me address #4 specifically. Now remember, customer perspective. "Hey honey, did you know the price we can get on the new Tahoe we want is affected by whether or not we have a trade-in?" "Hmm, I'll never understand the car business so I guess we better go down to the dealership that won't give us the price online because I'm sure they will be much lower than these other 2 dealerships that have been so nice and answered our questions so thoroughly."
NOT!
The moral of the story here is that as the business owner you certainly have the right to make the business decision to resist transparency and not post prices on your website or with 3rd party vendors. Whether or not that is a good decision rests with you and your management team but I would like to offer a suggestion. Look at it from a customer's perspective when making that decision. Think about the last time you shopped online for a high ticket item like a tv or a riding mower or whatever it may have been. Chances are you were looking online for 3 pieces of information:
- Product info
- Pricing info
- Businesses that offered the product
Did you consider going to businesses that didn't offer one or both of the fist two items?
The Dalai Lama said, "The lack of transparency results in distrust and a deep sense of insecurity."
Go move some metal!
46 Comments
Auto Industry
A good deal is a state of mind. It's based on perception. There is no real transparency. Its also perception. And the perception is transparency is much more important that transparency itself. Does anyone really think we are going to divulge our complete cost structure to each consumer, then negotiate the margin? We'll have true transparency about the time Dealers are transparent with their managers and sales people, and not a moment sooner.
National Auto Dealers Association
The word transparency is often over used, but that is because consumers have more influence and data to support their influence than in any time in auto industry history. The problem is not all data is equal, and using it in context can also be a problem. Research indicates the Gen Y buyer who will soon comprise over 40% of your consumers wants this type of validated experience. With-out this type of showroom experience they, Gen Y, purchases from a dealership willing to be "transparent" There usually is a difference between new and pre-owned gross profit, but both experiences have to be validated in a transparent way. The good news for progressive dealerships is you can become transparent in a lot of different ways and use data that works for your dealership and your consumer. I wouls strongly recommend beginning to look to address Gen Y the are different buyers and the data supports that fact.
Orem Mazda
David, I couldn't agree more than transparency has to happen between dealers, managers and sales consultants as well. Truth is, dealerships that aren't are not only losing customers to competitors, but employees as well.
Orem Mazda
Great comments Stuart! I believe that it's not about being the lowest price, but being in the most aggressive sample set and then letting your light shine through a process that builds value and trained & certified sales consultants. Thanks for your thoughts!
TradeInVelocity.com
Carmax proves over and over that price is not the issue. You don't have to be the cheapest to have customers buy from you, but you do have to have a good online shopping experience. Getting instant gratification on a trade appraisal on your dealer website is very important and I would challenge you to do the research on which values are most realistic and relevant. Start a fresh or rare car a little higher price than a car that is aging and you'll make up the difference in gross.
TradeInVelocity
As one of the generation in question, as mentioned above... this could not ring truer to me. Having been burned once (hard) by a very "non-transparent" dealership, I made it a point to never allow it to happen again. My weapon of choice? The internet. Since that first burn, I have made 2 more vehicle purchases. In both instances, I walked into the dealership with a wealth of information on hand, and spoke frequently to the dealerships I shopped with prior to coming in. And while both were adamant about not talking price before I actually walked in the door, I was ready anyways. Thanks in large part to sites like edmunds (which I used both times), I felt I had a decent idea what the cost of the car should be, and thanks to my smartphone, I had no problem forcing the salesmen and dealerships I visited be as transparent as possible with me. At the end of the day? Customers understand that the salesmen and the dealership need to eat too. It's about respect, tact, and honesty. These are the values we of ANY generation hold over slime, smarm, and snark.
CarWoo Inc.
This is a major part of what I am trying to solve with CarWoo!. You're on the money here Ron. Dealers that embrace what you've written are definitely more successful with the online buyer. Thanks for the post.
Orem Mazda
Thanks Tommy! Guys like you and I are trying to change the world one dealer at a time. :-)
automotiveMastermind
Great read Ron... Does not being transparent make you invisible to customers? No, I think it is actually much worse than that! It makes you very visible and therefore very avoidable! Internet research is used by the consumer to make their life easier by elimination, that is why pre-purchase visits have dropped from 6 to 2 in the last 10 yrs, right? Your pricing point is right on: No price = Too High = Strike that one from the shortlist... The internet is the digital extension of the physical dealership, nothing more, nothing less. The same rules for great consumer experiences are in effect, but they must be observed even more diligently as you seldom get a second chance online. It is far too easy for the consumer to move to the next dealer.
Orem Mazda
Hey Ryan, I love your comment, "Internet research is used by the consumer to make their life easier by elimination." Bingo! Right on! Nailed it! I'm fairly confident that dealers do not intentionally want to be eliminated from consideration.
DriveBuyMarketing, Inc.
OM GOSH!!!!!! How can we eat this elephant? One bite at a time? I just left a store which is part of a multi -store group and after having met with their Director of eCommerce I left scratching my head. Scenario-at their "high volume store" where the General Manager Tyrannosaurus Rex, holds higher grosses than most in his group, a strict rule was instituted- RULE- DO NOT PROMOTE PRICE ON VEHICLES ON THE LOT! Reason? When a guest arrives and is given a price by the sales person, IF the price they are quoted is HIGHER than the Internet price AND the guest sticks around, the sales person has to create distractions long enough for one of the sales managers to contact the e Commerce manager to pull the Internet price down before the customer can pull it up on their handheld! They actually have a "process" for such instances (which according to the eCommerce guy takes up 1/2 to 2/3 of his day to pull down prices as sales people dance).....I asked a couple stupid questions as I sat there in awe- 1) "How many times does the customer get to the internet price on their handheld before you can have it pulled?" ANSWER: 1/2 the time.....1/2 of that number is deals lost- the guest leaves unsold - the eCommerce director is mostly a fireman!! 2) "Why don't you just price your inventory using your inventory tool fairly and eliminate all the damage control (along with the poor reputation control) along with time spent explaining, distracting, and or dancing?" ANSWER: "The GM holds high gross and at the end of the day that's what matters." Now if they didn't sell 325+ a month I wouldn't have been as astounded as I was- but at 325 units per month with this type of business practice going on- can you imagine what would happen if they came clean, priced fairly, promoted the value of the store the customer service and service value? Imagine the possibilities if they were transparent to the other 1200 minimum "ups" they say they get in order to sell the 325? I failed to mention their ad budget is off the charts. WOW- I am more determined than ever to get dealers on board with the importance of transparency- or should I say value.....and get them to understand that first and foremost the value is to their stores! It aint gonna be easy but someone has to do it.
Orem Mazda
Hey Wendy, I won't mention any names, but I think I may have spoken to the GM of that store a few weeks ago. He was very brazen in declaring that they "kicked butt" without worrying about the Internet and their grosses were very high. And if it wasn't the same store, then this Tyrannosaurus Rex (your words) :-) mentality is still active in our industry which I find disheartening at best. You are right on with your assessment. That process of deception has to lead to reputation nightmares with the 50% that walk. People like you and I will keep on preaching the good word and doing our best plugging along trying to change the industry for the better. Thanks for your comments!
Valley Imports
Nice article Ron.................I wonder, is a dealer transparent when they post their MSRP online with a button below that says: "get e-price"? To me that means that if you are a Gen X buyer and actually come in to kick tires, you are going to pay more. Kind of a murky area.............which isn't transparent in my opinion. Your word of mouth reputation as a dealer is just as important as transparency. Be consistent for EVERYONE and you will be consistently profitable.
Self
It seems that definition of Transparency is not understood well, transparency is not about selling your inventory at the lowest price, this is your choice to sell at your price and there is no problem with that. Keeping up with competition is also seller choice; even your online reputation is your choice. We all make choices and we need to accept the consequences. Transparency mean to practice business ethic throughout the process of making a deal and customer care, I do strongly believe that in the age of information, businesses that don’t practice it will suffer greatly in long run.
Auto Industry
RE: "Transparency mean to practice business ethic throughout the process of making a deal and customer care, I do strongly believe that in the age of information, businesses that don’t practice it will suffer greatly in long run." Actually, transparency in the context of sales has to do with the information both the buyer and seller share. When the bulk of information is known by the dealer, and not the buyer, the dealer has an advantage in the negotiation. Absolute transparency means buyer and seller have the same information, transforming the product into a commodity. This leads to disintermedation. And dealer who thinks that is good for him is a complete fool.
Self
David, there is not such a thing as "Absolute transparency" there is either transparency or not. being transparent doesn't mean that we have to loose money or make little money on a deal, It also doesn't mean that we have to tell the customer how much we are in a vehicle. Transparency simply means that not to give customer falls information. It absolutely does not have anything to do with how much money made on a deal. I have attended few selling and management seminars, and some from well known companies, all they had to offer was how to lie to customer and make them confuse and then sell. We don't need to do that to sell, instead we could work on value selling as well as giving them peace of mind. Selling is about persuading customers with working on value, peace of mind, and future relationship. If there are two dealerships with the same vehicle, different price, I would not necessarily buy from dealer with lower price, I would pay little more and buy from dealership that has good reputation and great customer service.
Auto Industry
Actually, there is, and it leads to "efficient markets." Transparency has to do with information. The advantage dealers, or your jeweler, hold is knowing exactly what their costs are. IF you intend to be transparent, and your customer asks you what your bare cost is, you are obligated to tell them. That's why dealers typically aren't completely transparent with their managers or sales people. Relative transparency is something different. We should call it what it really is. The word "Transparency" means different things to different people. But there is only one definition of "disintermediation." Selling isn't about giving the customer what they want, its about making them like what we gi8ve them. One thing I've told new sales people, for decades now, is do NOT judge your customers by yourself.
PCG Digital Marketing
Ron Well done. I have been preaching this for the past 2 years. customers have been trained to expect to be able to find anything they need in terms of a product so why should car shopping be different. The harder you make it for the consumer to move closer to the sale, they will go to the past of least resistance and find someone who will help them. The days of car dealers being the only ones who hold information are over so providing as much as you can is the best strategy to stay on a consumer's list of potential partners.
Orem Mazda
I agree 100% Glenn. It is foolish to think that customers in this day and age of information are ill informed. If a dealer is playing games or withholding information, the customer will simply move on to a better dealer. The upside in my opinion is that businesses are finally being forced back toward providing outstanding customer service, which is a skill set that has really disappeared in recent years.
PCG Digital
The more information you provide the customer, the more they will trust you. Remember, people buy from people they know, like and trust. Transparency is the key to trust.
NADA
If you have not heard of George Akerlof you are not alone. In 1970 Professor Akerlof used the auto industry and a "lemon car" i.e. defective vehicle to show how transparency, equal information for both buyer and seller will create a more efficient market.Transparency will reduce adverse selection for both buyers and sellers. It is worth Googling and reading the articles. If you think about technology and the tools that contain market data, these are all marketed to create efficiency. Because information today is available with-out much consumer effort, Gen Y and other groups as well, demand this transparent approach, and embracing it with a solid process will not necessarily mean less profit. Research supports that it will help ensure more deliveries at reasonable grosses, and more satisfied customers. Wit hall the social media and rating sites the satisfaction with yuor process is very important. Stu Zalud NADA Used Car Guide Co.
Auto Industry
RE: "The more information you provide the customer, the more they will trust you. Remember, people buy from people they know, like and trust. Transparency is the key to trust." So Adam, why not just disclose your triple net costs and negotiate the margin. Your customer will appreciate your transparency so much they will pay you the 10% margin you need to break even and provide some ROI, right? My argument is NOT for absolute opaqueness in the negotiation process. My point is that our advantage is to have more information than our buyers. If not, our product becomes a commodity. A blind dog with a note in his mouth can deliver transparency. It takes some skill and understanding to provide salesmanship.
Auto Industry
@ Adam - As COO, how "transparent are you with your sales employees, managers and sales people, let alone your customers? Do you disclose all of the dealer trunk money to them? Your store's bottom line?
Auto Industry
@ Stu - I know an "efficient market" sounds good. But as a representative of NADA doesn't "disintermediation" have a meaning to you? That's what an "efficient market" leads to. Is that really what you want? Along with increased information which is depressing dealer margins, OEMs are pushing dealers to spend more and more on their fiacilities while the CFPB is moving to take away rate markup. Do the math.
PCG Digital
@David - cDemo is based on transparency and efficiency. We offer a vehicle merchandising platform that allows dealers to collect more detailed information about their vehicles including damage and tire tread depth in addition to standard features. As far as transparency with our employees, we use a CRM that shows all user activity to all employees. We encourage our entire team to be transparent about what we do on a daily basis. Our customers have complete access to our back end and can see where all of their inventory is coming from and being sent. We have great relationships with our customers and many of them have my personal cell phone number as well as the cell phone numbers to our management and support team.
Orem Mazda
@David ~ From a customer perspective, which dealership will they choose when one is open with information and pricing and the other is protecting information for the "advantage" you spoke of?
Auto Industry
Transparency is the key to trust? How many people buy jewelry without asking for transparency in the markup? Yet, people still buy jewelery. Same with furniture. The objective is not transparency. The objective is a sale with enough gross profit to support ROI. An "efficient market does NOT provide ANY ROI for the middle man. You guys should really be talking about a balance of transparency and salesmanship because absolute transparency leads to your demise. How many of you think consumers would knowingly pay you a 10% margin on new vehicle? How many have added up all of your costs of sale to see how much you need just to break even? What are the chances your customer would pay you that in a truly transparent business model?
Auto Industry
As an added bit of information: Only about 28% of customers are fast trackable from credit perspective. Everyone else might need a little help from the dealer to gain financing. Then there are trade in issues. Buying a car isn't like ordering a laptop from Dell. Everyone is NOT an ace negotiator. If you have a problem with some people paying a higher profit than others you are in the wrong business. If a dealer needs to average $3K per transaction, and one customer gets a $2K deal, the next one needs to furnish $4K to maintain the average. Those who want to make sure everyone pays the same margin will probably suffer the same fate as those who tried that previously. Anyone recall the failed Ford Collection experiment, where Ford tried to retail cars based on what consumers told them they wanted in focus groups? Maryann Keller tells the story of a Silicon Valley startup that bought cars at fleet price, then offered them to the public at an even lower price to see if consumer could be satisfied. They couldn't. The fact is, during a negotiation, if neither party gets their feathers ruffles, someone left money on the table.
Orem Mazda
2 Thoughts: #1: In my market your statistics regarding credit worthiness are way off. #2: I don't recall anyone saying in this post that being transparent equaled being One Price.
Auto Industry
My stats on credit worthiness come from Experian. They are national numbers. Before the Great Recession consumers with credit scores over 700 numbered about 32%. Now, one has to be a 720 to have any chance of being fast trackable IF DTI is below 50%. RE: One Price - One Price is/was a way to attempt to communicate to the consumer that the "best price" is freely disclosed. What is YOUR definition of transparent? Better yet, what is the average consumer's definition of transparent? In surveys, consumers say they don't want to pay a higher profit than anyone else. In surveys, they say they just want the "best price" so they can buy. They don't understand that there is no such thing as a "best price." The Ford Collection attempted to sell new vehicles the way consumers said they wanted to buy them. Dealers on the fringe of the Ford Collection markets were the ones who benefited. The Ford Collection experiment cost hundreds of millions of dollars. Dealers are free to be as transparent as they want. Consumers are free to shop until they find a sales process that suits them. Dealers are free to give away gross profit in an attempt to molify consumers and earn their trust. Dealers are free to pay vendors to bring them leads by demonizing dealers as a whole and creating the perception that X dealer is "different." And any dealer who thinks absolute transparency suits his/her purpose is free to disclose their triple net costs and disclose their actual margin. I think it would be nice to give up on this idiotic word. It has so many definitions and perceptions attached to it that it has no common meaning, rendering it worse than useless.
Orem Mazda
I think Franklin D Roosevelt sums it up pretty well. "There are as many opinions as there are experts."
Auto Industry
@ Ron - Some dealerships are more artful than others when it comes to negotiation. If a consumer is not happy with one dealership's process, they are free to move on. If you want to assume all consumers are knowledgeable, start giving away gross profit immediately to earn their trust. Then try to pay your overhead with transparency. This business is still about gross profit. And a good deal is still based on perception. If transparency was the key to auto retailing success, there would still be a Ford Collection.
Orem Mazda
Let's agree to disagree on this one. I ran a One Price store for many years and our #1 position in the marketplace and our bottom line told me that it was successful for us.
Auto Industry
@ Adam - RE: " As far as transparency with our employees, we use a CRM that shows all user activity to all employees. We encourage our entire team to be transparent about what we do on a daily basis. Our customers have complete access to our back end and can see where all of their inventory is coming from and being sent." If you had true transparency with your employees, they would know YOUR salary, the Dealer's salary, and your monthly P&L. What you have is relative transparency designed to provide the perception of complete transparency.
Auto Industry
@ Adam - It isn't clear to me if you are COO of a dealership group, or of a vendor. Either way, absolute transparency still leads to an "efficient market" which is NOT good for "middle men." Once you have commoditized a product there is no need for middle men. Once the product is commoditized there is not gross profit to sustain them. I hope your business model isn't based on providing transparency to dealer customers, and in the doing, trending them in the direction of becoming obsolete. The discussion should be about relative and/or appropriate transparency. This business is still about perception and gross profit.
PCG Digital
@David - I work for cDemo Mobile Solutions, as indicated on my Driving Sales profile page. We allow dealers to merchandise their vehicles in a very efficient and transparent way (by using a mobile app to collect all the details of their inventory including damage, photos, and real video) . I believe the original intent of Ron's article and the point I was trying to get across was that the more information you provide the customer up front, the better. If you try to hide things online (like price) or not answer a customer's questions, you frustrate the customer an increase the chances that they will go elsewhere to do business. Prior to my joining cDemo I was the Internet Director for a 3 store automotive group and did my best to ensure that our inventory was merchandised properly with real video walk-arounds and damage disclosed so that customers who were shopping online knew what they were looking at and didn't have any surprises when they walked into our stores. I did my best to knock down the walls that customers had built after having bad experiences at dealerships who jerked them around in the past. In the end, most people just want to feel like they got a good deal and have a good experience. I think most of the members of this community are committed to providing their customers a good experience and a good value on the vehicles they sell. We all want and need to make a profit. I don't think anyone who is part of this community wants to see dealers become obsolete.
Auto Industry
Actually, there is, and it leads to "efficient markets." Transparency has to do with information. The advantage dealers, or your jeweler, hold is knowing exactly what their costs are. IF you intend to be transparent, and your customer asks you what your bare cost is, you are obligated to tell them. That's why dealers typically aren't completely transparent with their managers or sales people. Relative transparency is something different. We should call it what it really is. The word "Transparency" means different things to different people. But there is only one definition of "disintermediation." Selling isn't about giving the customer what they want, its about making them like what we gi8ve them. One thing I've told new sales people, for decades now, is do NOT judge your customers by yourself.
Orem Mazda
"Selling isn't about giving the customer what they want, it's about making them like what we give them." I couldn't possibly disagree with you more on that comment! I wonder if that would work as an ad slogan. "At ABC Motors we won't give you what you want, but we'll make you like what we give you." Welcome back to 1973. As a consumer, if a business doesn't give me what I want, they don't get what they want........my money.
Auto Industry
Of course it wouldn't work as an ad slogan, but that doesn't change the facts of life. Why would the basic principle of sales even be considered as an "Ad Slogan?" Where id that come from? ANYONE can sell in a negotiating environment if they give consumers everything they want. Consumers don't want to pay middle man profit. They have no understanding of our cost structure, and don't care. The human nature of the car deal hasn't changed in decades. Nor have the basic principles of negotiation.
Orem Mazda
@David I enjoy a respectful and lively debate and you certainly have provided that. Thank you. I suppose we will have to agree to disagree on this one, but I will say this as a summation. I believe that Gen X, Y, and Millennials will not buy a car from a dealership that doesn't give them what they want in a buying experience. They won't go through the old games because they don't have to. There are enough dealerships today that have adapted to today's buyers. When the Boomers begin to diminish, dealers who are still resisting the "new normal" will have to adapt or will see massive decreases in sales and market share.
Auto Industry
Ron, I believe that Gen X etcs. won't pay gross profit if they get everything they want. All of them don't have credit scores that even merit "fast tracking." Many are still paying off school debt, haven't bought their first home, and are a threat to move back in with their parents. They might find $500 open credit on a credit card to order something from Dell or Amazon, but it isn't yet time to turn our business on its head for them. Here are the facts. Increased transparency leads to an efficient market, which leads to disintermediation. That's elimination of the middle man. That's the car salesperson and car dealer. Look up disintermediation. Increased transparency compresses margins. As margins are being compressed by increased transparency, margins are also being compressed by the CFPB putting downward margin pressure on rate markup in F&I. At the same time, the OEMs are coercing dealers into higher overhead costs through facility renovation. Do the math.
Auto Industry
What we need is appropriate transparency, basic salesmanship, and gross profit. Only consumers want absolute transparency. They also want to cut out the middle man. The way they answer survey questions and the way the behave in the real market aren't the same.
Orem Mazda
Internet Lead Response, Inspect what you Expect
In my capacity at DrivingSales I get the opportunity to analyze the Internet Lead Response Process of many dealers. The results certainly are varied and surprises pop up almost daily. These surprises are often received less than favorably by the dealer and understandably so. Dealer Principals and General Managers are confident that their process and response times are solid, that is until they see some actual results.
Yesterday I took a random sampling of the last 10 Process Analysis Reports that I prepared for dealers and there are certainly some trends that jump out very quickly. 7 of the 10 were completed while talking to the DP's and GM's at the NADA convention and the remaining 3 were completed just before.
Take a look at some of these statistics:
- Average response time (not including auto responders) ~ 11 hours I think it's important to note that I removed the 4 dealerships that didn't respond at all in order to not completely skew the numbers. Ouch!
- # of responses that contained an answer to a specific question that was asked ~ 1 How are your prospects reacting when they submit a question via your website, a specific question, and the response they get in return is, "Let me know if you have any questions." Hello, Mcfly!?! I don't know about you, but if businesses do not listen to me, they do not get my money.
- # of responses that contained grammatical or spelling errors ~ 6 Now when you look at that number please keep in mind that for the purpose of this post I pulled 10 samples and 4 of them did not respond at all. 10 minus 4 =.....well, you get the point. How important is a first impression? I would be willing to bet that you have sales meetings regarding the importance of the first impression. Did you know that one of the most critical items that a customer judges in order to decide if they are going to eliminate a dealership from consideration is the level of professionalism in that initial email response?
Ok, I'm done discussing the gloom and doom of poor lead handling and the pitfalls that they present to dealerships and the money that it costs them every day. I'm done mentioning that the disconnect that exists between the investment that the dealer makes in new technology tools and digital marketing and the execution that actually takes place in the trenches is bleeding dollars through the back door. I'm also done mentioning that over 95% of car shoppers and buyers today require a professional online experience in order to consider giving a dealership their business.
Good news! The 10 dealers who received these reports (after they stopped fuming) saw a great area of opportunity where they could, kindly and lovingly, coach their teams on the benefit of tightening up these processes. Benefit #1: Job Security!
My advice, take the time to analyze your process and see if there is some opportunity that your dealership may be missing. The ROI on the time you spend doing so will make you smile.
Let's move some metal!
12 Comments
DealerOn
Thanks for sharing Ron. Same results, different day for many dealers.
Valley Imports
What a coincidence! My e-Business Manager and I were just talking about the same thing with our internet team yesterday............the cream rises to the top. Thanks Ron. Jeff Richmond GSM Valley Importrs
DealerKnows Consulting
Good stuff, Ron. I recently presented similar findings at the DMSC in Orlando, after ranking thousands of Internet responses. Suffice it to say, we might have well saved ourselves time and looked at a much smaller sample size to show that dealers need help improving their interaction with customers.
PCG Digital Marketing
Great info Ron. We have found very similar results during our consultations and work with dealers. Many times it is because dealers don't know. When they tell us they have their lead process down, they are shocked when we present information to the contrary. Especially when their departments don't call a lead we submit. Dealers have to allow some of the great trainers out there to hold up the mirror so dealers can sell more cars.
Interactive Financial Marketing Group
Definitely food for thought. One question: was the ~11 hour average just business hours, or within a 24 hour window?
Orem Mazda
Great question Amy. In preparing the findings from the sample I pulled it was business hours only which means the results were actually worse than reported. So glad to see responses to this post from Glenn Pasch, Joe Webb, and Shaun Raines who are all experts that I admire tremendously. And Jeff, good for you for having those discussions! Keep up the good work!
Allen Samuels CDJR
Here is some food for thought... What is your process for monitoring response times and quality of response. While third party (outside eye looking in) advice is great and always welcome we as Managers should be monitoring these issues daily. Though we may never perfect the process of Internet Sales, there is no reason why we should not try! Thank you Ron for your insight!!
DealerSuccess / Virtual Deal
Anyone know of a company that I can hire at a reasonable price to secret shop my digital team weekly/monthly? We have thousands of email addresses to secret shop our competitors every month for the last 10 years but I - and I bet they would appriciate some accountability reporting on my team. Funny, while I was typing this, I contacted my accountability manager and discussed doing this in-house and creating a "Digital Report card" that would grade every lead response in detail and followup including copies of every response and phone call/text attempt for 30 days. Answered my own question :) Love this forum.
Orem Mazda
Hey Joe, Shoot me an email and I'll share the "Quality Lead Response Report Card" that we have. Good to see you on the forum and I hope we'll see you at DSES.
DealerKnows Consulting
Joe - If you have an accountability manager, you're way ahead of the curve. I LOVE it. We offer a couple of services for our clients and others called TaskTeacher and PriceMatrix. PriceMatrix does the detailed mystery shopping of your same brand competitors on a monthly-bi-monthly basis so you know their pricing, response time, online pricing, strategies, rebates using, etc. This way dealers can stay competitive. However, with TaskTeacher, we do much of what you'll be doing with your accountability manager. I PREFER that dealers do this in-house, but it must be done. We monitor how thoroughly their lead handlers/ISMs follow-up long-term with their Internet opportunities. We measure timing, effort, content, responses, and more. Every bit of criteria we hold them accountable for is weighted statistically to arrive at a "grade". Our team and software then writes detailed notes describing any discrepancies, as well as words of encouragement. It then automatically shoots those "grades" and coaching comments back to the ISM, Internet Director, Sales Managers and more. As you embark down this path, a tip that we ended up including into our software...make sure that you keep a historic database so you can notate trends to how they are improving and what specific short-comings each individual has. It takes managing and training to another level. (We call ours "progress reports"). Great job incorporating that into your daily routine. We've learned that it is only when someone realizes they're being constantly monitored (and receiving corresponding grades) that they start following the process well.
Better Car People
Better Car People is great at helping with this over 1500 dealerships to date
Orem Mazda
Internet Lead Response, Inspect what you Expect
In my capacity at DrivingSales I get the opportunity to analyze the Internet Lead Response Process of many dealers. The results certainly are varied and surprises pop up almost daily. These surprises are often received less than favorably by the dealer and understandably so. Dealer Principals and General Managers are confident that their process and response times are solid, that is until they see some actual results.
Yesterday I took a random sampling of the last 10 Process Analysis Reports that I prepared for dealers and there are certainly some trends that jump out very quickly. 7 of the 10 were completed while talking to the DP's and GM's at the NADA convention and the remaining 3 were completed just before.
Take a look at some of these statistics:
- Average response time (not including auto responders) ~ 11 hours I think it's important to note that I removed the 4 dealerships that didn't respond at all in order to not completely skew the numbers. Ouch!
- # of responses that contained an answer to a specific question that was asked ~ 1 How are your prospects reacting when they submit a question via your website, a specific question, and the response they get in return is, "Let me know if you have any questions." Hello, Mcfly!?! I don't know about you, but if businesses do not listen to me, they do not get my money.
- # of responses that contained grammatical or spelling errors ~ 6 Now when you look at that number please keep in mind that for the purpose of this post I pulled 10 samples and 4 of them did not respond at all. 10 minus 4 =.....well, you get the point. How important is a first impression? I would be willing to bet that you have sales meetings regarding the importance of the first impression. Did you know that one of the most critical items that a customer judges in order to decide if they are going to eliminate a dealership from consideration is the level of professionalism in that initial email response?
Ok, I'm done discussing the gloom and doom of poor lead handling and the pitfalls that they present to dealerships and the money that it costs them every day. I'm done mentioning that the disconnect that exists between the investment that the dealer makes in new technology tools and digital marketing and the execution that actually takes place in the trenches is bleeding dollars through the back door. I'm also done mentioning that over 95% of car shoppers and buyers today require a professional online experience in order to consider giving a dealership their business.
Good news! The 10 dealers who received these reports (after they stopped fuming) saw a great area of opportunity where they could, kindly and lovingly, coach their teams on the benefit of tightening up these processes. Benefit #1: Job Security!
My advice, take the time to analyze your process and see if there is some opportunity that your dealership may be missing. The ROI on the time you spend doing so will make you smile.
Let's move some metal!
12 Comments
DealerOn
Thanks for sharing Ron. Same results, different day for many dealers.
Valley Imports
What a coincidence! My e-Business Manager and I were just talking about the same thing with our internet team yesterday............the cream rises to the top. Thanks Ron. Jeff Richmond GSM Valley Importrs
DealerKnows Consulting
Good stuff, Ron. I recently presented similar findings at the DMSC in Orlando, after ranking thousands of Internet responses. Suffice it to say, we might have well saved ourselves time and looked at a much smaller sample size to show that dealers need help improving their interaction with customers.
PCG Digital Marketing
Great info Ron. We have found very similar results during our consultations and work with dealers. Many times it is because dealers don't know. When they tell us they have their lead process down, they are shocked when we present information to the contrary. Especially when their departments don't call a lead we submit. Dealers have to allow some of the great trainers out there to hold up the mirror so dealers can sell more cars.
Interactive Financial Marketing Group
Definitely food for thought. One question: was the ~11 hour average just business hours, or within a 24 hour window?
Orem Mazda
Great question Amy. In preparing the findings from the sample I pulled it was business hours only which means the results were actually worse than reported. So glad to see responses to this post from Glenn Pasch, Joe Webb, and Shaun Raines who are all experts that I admire tremendously. And Jeff, good for you for having those discussions! Keep up the good work!
Allen Samuels CDJR
Here is some food for thought... What is your process for monitoring response times and quality of response. While third party (outside eye looking in) advice is great and always welcome we as Managers should be monitoring these issues daily. Though we may never perfect the process of Internet Sales, there is no reason why we should not try! Thank you Ron for your insight!!
DealerSuccess / Virtual Deal
Anyone know of a company that I can hire at a reasonable price to secret shop my digital team weekly/monthly? We have thousands of email addresses to secret shop our competitors every month for the last 10 years but I - and I bet they would appriciate some accountability reporting on my team. Funny, while I was typing this, I contacted my accountability manager and discussed doing this in-house and creating a "Digital Report card" that would grade every lead response in detail and followup including copies of every response and phone call/text attempt for 30 days. Answered my own question :) Love this forum.
Orem Mazda
Hey Joe, Shoot me an email and I'll share the "Quality Lead Response Report Card" that we have. Good to see you on the forum and I hope we'll see you at DSES.
DealerKnows Consulting
Joe - If you have an accountability manager, you're way ahead of the curve. I LOVE it. We offer a couple of services for our clients and others called TaskTeacher and PriceMatrix. PriceMatrix does the detailed mystery shopping of your same brand competitors on a monthly-bi-monthly basis so you know their pricing, response time, online pricing, strategies, rebates using, etc. This way dealers can stay competitive. However, with TaskTeacher, we do much of what you'll be doing with your accountability manager. I PREFER that dealers do this in-house, but it must be done. We monitor how thoroughly their lead handlers/ISMs follow-up long-term with their Internet opportunities. We measure timing, effort, content, responses, and more. Every bit of criteria we hold them accountable for is weighted statistically to arrive at a "grade". Our team and software then writes detailed notes describing any discrepancies, as well as words of encouragement. It then automatically shoots those "grades" and coaching comments back to the ISM, Internet Director, Sales Managers and more. As you embark down this path, a tip that we ended up including into our software...make sure that you keep a historic database so you can notate trends to how they are improving and what specific short-comings each individual has. It takes managing and training to another level. (We call ours "progress reports"). Great job incorporating that into your daily routine. We've learned that it is only when someone realizes they're being constantly monitored (and receiving corresponding grades) that they start following the process well.
Better Car People
Better Car People is great at helping with this over 1500 dealerships to date
4 Comments
Brandon McNett
Sommer's Automotive
Performing the basics at a high level often goes by the wayside...sometimes we overthink things!
C L
Automotive Group
I needed a good laugh this morning..
Here's the problem Ron and it's a problem in this industry that I see all the time. Your buddy here got excited about something decided to make moves without even knowing what he was doing and then got what he wanted only to find out it's not really what he wanted at all.
Most businesses create brand elements for their companies. This could be in how they respond to email or the colors that use on their logo. The voice of this business.
They sure as hell wouldn't give 100% of the business response ability to the A$$holes in their sales department. I never understood why this happens in this industry. You have a bunch of people who don't know what they are doing bark orders at other people who don't know what they are doing and then you end up in the situation your buddy is in here.
I have to admit it. I blame a lot of this on Vendors and Consultants in addition to the dealers. Numbers get thrown around like they are gold but nobody every wants to really dig in on how that sausage was really made. Dealers need to spend more time fully understanding and build their outlines before throwing randoms into this arena.
Lastly...
Customers are good with knowing that you got their question or comment. So having say an auto response letting them know that you got it and will have their answer within an hour is totally acceptable.
This allows you time to compile the best response to send back to someone with out the pressure of the clock. Sometimes we may need a little more time to put something really nice together.
If something is good, people are ok with waiting for it. So make sure that response is good.
I dont know what to say to the poor dealer you are talking about here but he needs to start from scratch. He needs to create a standard of what he expects more than anything.
Jason Unrau
Automotive Copywriter
Chris, you're dead on about almost everything. It's just the last point about auto-responders that I question.
Maybe it's just me, but If I get an automatic response whether by email or text, I'm not going to stop searching and wait for the answer I've requested. I'll still fire off a few more requests to other vendors, especially if I'm promised a fast turnaround time or live person online.
It could be that I'm more impatient than most, but I don't think so...
Bill Kurzeja
Professional Success Inc.
So, quality and speed are both important. Auto responses are not the answer. What I have seen across the country is the lack of qualified people. We need to do a better job when it comes to hiring the right people and then making sure they are properly trained and managed. We work in an industry that is reactive to buzz words and trends when what we need is a more qualified staff.