NORCROSS, GA. — October 4, 2021 – APCO Holdings, LLC, a leading provider and administrator of automotive F&I products and home to the EasyCare, GWC Warranty and MemberCare brands, has named Bobbie Davis as Vice President, Enterprise Project Management Office. In this newly created role, Davis will advance the organization’s project planning and change management capabilities to drive continued growth.

“We are excited to have Bobbie join our leadership team to steer the evolution of project management, process development, and resource planning as our company grows,” said Scot Eisenfelder, CEO of APCO Holdings. “She will play a key role in helping us successfully plan and implement the strategic initiatives that we have envisioned for the future.”

Prior to joining APCO, Davis held various positions of increasing leadership focused on project and program management, ERP implementations, service lifecycle management, human resources, and information technology. Bobbie was most recently Director of Enterprise PMO for PowerPlan, Inc.

“I welcome the opportunity to build a lasting discipline which will solidly establish APCO Holdings as a project-based organization that continuously propels the business to greater heights. I am honored to partner with an organization that is committed to excellence and maximizing the customer experience,” said Davis.

Davis has an MBA from The Pennsylvania State University, a Bachelor of Science in Management from Georgia Tech, and is a certified Project Management Professional.

About APCO Holdings

Since 1984, APCO has grown to become a leading provider and administrator of F&I products for the auto industry. Built on a foundation of financial security and a commitment to understanding our customers’ needs, APCO is a trusted partner to some of the most well-respected insurers, highly successful dealerships, and leading auto industry players in the country. The company markets its products using the EasyCare, GWC Warranty, and MemberCare brands, as well as other private label products, through a network of independent agents and an internal salesforce that specialize in consulting with and servicing the automotive dealership markets. EasyCare, GWC Warranty, and MemberCare F&I products are the only “MotorTrend Recommended Best Buy” in the industry. They also carry top ratings from the Better Business Bureau, have protected over 11 million customers and paid over $3.5 billion in claims. For more information about the APCO Holdings family of brands, please visit apcoholdings.com.

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New vehicle sales are slowing and increased pricing transparency is eroding front-end sales margins. I predict that increased F&I pricing transparency due to online retailing solutions will soon put the same downward pressure on F&I margins. 

To stay profitable in this environment, dealers must transition to a razor and razor blade business model, where almost no profit is made on the front end and all the profit is made on the back end. With this business model, profits are made by creating an enduring relationship with customers over the lifetime of vehicle ownership.

How will this affect dealership pay plans?

The traditional dealership business model was designed to optimize profits from every transaction: the sale, F&I, service. We’re one of the few industries left that have 100% variable pay plans, and most dealers still pay salespeople and service advisors based on transactions, instead of on relationships.

The problem with variable pay plans is that they’re out of alignment with the experience that you want to provide customers. Think about it: If I make a killing off you on the first sale, how can I move forward to create a relationship with you that’s built on trust?

Variable pay plans are not good for the consumer, nor are they good for the long-term profitability of a dealership. Besides, it’s becoming increasingly difficult to find young people who are willing to work for this type of compensation.

Changing Pay Plans in Sales

In the old days, the view was that gross margin on a vehicle was determined by the ability of the salesperson and sales manager to negotiate. If you think about the number of deals that are now coming through TrueCar, Costco or credit unions, your salespeople don’t have much opportunity to influence gross margins. Why pay them on that basis?

With traditional pay plans, even the sale of the vehicle is split up into two different transactions, with compensation structures pitting sales against F&I.  But the customer has only one bucket of money, not two buckets of money. Is it any wonder that forcing a customer to sit through two separate sales processes leaves a bad taste in their mouth?

If the future of dealership profitability relies on nurturing customer relationships, the compensation structure should reward salespeople for efforts that promote relationship-building. There are plenty of things you can bonus on that aren’t related to number of units sold or gross generated.

My brother-in-law who has a dealership now bonuses on positive reviews. You could bonus on CRM KPIs, such as number of conversations. Definitely bonus on service introductions, as well as when customers bring their vehicle in for service the first time. This would encourage salespeople to follow up with customers after the sale, which rarely happens now.

Changing Pay Plans in Service

The same transactional mindset exists in service. When a service advisor presents a list of $1,000 in recommended repairs, the customer’s initial reaction is one of resistance.

However, if the service advisor breaks down recommended repairs into urgent items, safety items and nice-to-haves, then the customer is better prepared to address the items over time.

With traditional pay plans, service advisors fear that the customer either won’t get the service done, or they’ll go somewhere else, or even if they do come back in they’ll go to a different service advisor, who would then make the bonus on the sale. This mindset encourages an all or nothing attitude.

What if, instead of transactions or longevity bonuses, you paid service advisors on how many of their customers return for service? It doesn’t matter which service advisor the customer comes back to. The primary relationship the customer should have is with your brand and store. The relationship they have with their service advisor should be secondary to that.

Making the Transition

Variable pay plans aren’t good for the customer or for the long-term profitability of dealerships. Changing pay plans doesn’t have to be a huge, sudden transformation. Start by tweaking bonuses and incentives. Think about how to create a less mercenary pay plan that allows someone to put food on the table without having to gouge customers every chance they get.

Eventually, your compensation plans should have a higher base pay and award bonuses based on metrics that reward relationships, rather than transactions.

Marketing is becoming increasingly complex, with the proliferation of ‘Big Data,” predictive analytics and new mobile and digital channels. To leverage the power of these new technologies, a new marketing approach is needed.

Many dealers use multi-channel marketing to reach their customers, but fragmentation of channels presents a challenge. Reach is only one part of the marketing equation. When you factor in frequency and the fact it can take several customer touches to drive action, the cost of marketing across all channels can be prohibitively expensive.

Yet limiting channels is not the best solution. When it comes to communications, we are all omnivores. We consume different messages through different channels at different times.

Although the terms omnichannel and multi-channel are sometimes used interchangeably, omnichannel marketing allows you to increase reach x frequency in a much more cost-effective manner than multichannel marketing. Here are the major benefits of an omnichannel marketing strategy.

Leverages Data

Most dealers don’t have great contact information for many of their customers, and even worse for prospects. The average dealer’s DMS contains complete, actionable email addresses for only 65% of customers, before appending efforts.

If your database is better than average with 70% actionable emails, and an email campaign nets a 20% open rate, that means you’ve reached 14% of your customers. What about the other 86%?

How can you reach 100% of consumers with enough frequency to trigger an action?

First, look at your campaign objective. Are you trying to stimulate action among a loyal customer group, or among a group of prospects? For loyal customers, it may only take one to two touches. For prospects, the standard is the “Rule of 7,” meaning it takes an average of 7 touches to stimulate action.

Second, analyze the contact information you have. Physical mailing addresses are among the most complete and easiest to find in appending efforts, which is why we still use print and many dealers have great success with postcard mailings.

Social media advertising is also very effective because Facebook matches an average 80% of your DMS database to its users. If you add in Google properties you’re close to 100% reach. The more channels you use, the better your reach.

Based on Consumer Behavior

Omnichannel marketing analyzes actual behavior, instead of guessing what your customers might like and respond to. Guessing fails to deliver results because consumer consumption habits are ever-changing and not well described by demographics or personal preferences.

The idea that we need to market based on consumer preferences, or that Millennials are more socially engaged while Boomers still read newspapers is inaccurate.

Omnichannel marketing accounts for actual consumer behavior such as websites visited, Google search information, what the owner’s current vehicle is and driving habits. If you have enough of the right third-party data, your omnichannel partner can even factor in the restaurants that consumers frequent, income, group affiliations and more. Thanks to predictive analytics, you can then literally serve up the right message to the right customer at the right time on the right channel. This helps to keep marketing costs low, so the frequency part of the equation doesn’t get out of control.

Leverages Media Effectiveness

Every channel has a different role in the communication journey. Paper is great to inform but not so great for driving immediate action. Vice versa for text and phone calls, which is why you have your salespeople follow up emails with phone calls when they respond to new leads.

Digital ads are great for brand awareness while videos are ideal for building customer relationships and trust. PPC is a great way to reach consumers during their zero moment of truth (ZMOT), particularly for service and parts.

Omnichannel marketing leverages the right channel for a particular message, increasing overall cost efficiency.

Easily Tailored for Different Objectives

Too many dealerships are single-minded in their marketing objectives. Their goal is to either get customers in the door to buy vehicles, or bring customers into the service lane for repairs.

This approach is transaction-based, rather than relationship-based. Today’s consumers purchase from brands they know, trust and like. Marketing objectives should fall in two categories, and your dealership needs both:

1. Conversion: build brand awareness, win customers, encourage action

2. Retention: establish long term trust & loyalty, be top-of-mind when service or a new vehicle is needed, be a trusted resource.

For every campaign, define your business objective. Do you need a last-minute push to reach your monthly new vehicle sales goal, or do you want to promote a pre-owned incentive? Do you need more ROs, or more lines per RO? These are all different strategies for different audiences that require different messages.

When it comes to marketing, more isn’t always better. Relevant messaging at the right time on the right channel is what drives action. If your dealership doesn’t have an omnichannel marketing strategy, you’re missing out on the power of big data and predictive analytics to increase reach x frequency in the most cost-effective manner.

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Dealerships aren't always the first place that vehicle owners think of when it's time for service. According to the Cox 2017 Car Buying Journey study, 23% of new vehicle owners and 53% of used vehicle owners did not return for service to the dealership where they purchased the vehicle.

To retain more of their sold customers, dealers are becoming more aggressive with their service marketing strategies. And similar to what we saw on the sales side in 2005 and 2006, they're adding digital channels into their marketing mix.

This is a sound strategy, as omnichannel marketing is proven to increase reach, frequency and results.  In marketing, there's something called the Rule of 7, which states that a customer needs to hear and see your message at least seven times before he or she takes action.

Digital omnichannel marketing campaigns are a cost-effective method for delivering multiple, personalized messages to a single customer. In many cases, dealers can get results while spending the same as they currently spend on their owner's retention program (ORP). This is possible because digital campaigns are much more targeted than mass mailers and email blasts.

To maximize service campaign response rates and ROI, make sure you’re using the following channels, in addition to direct mail and email.

1) PPC/Search Marketing

Pay-Per-Click (PPC) is highly effective because it targets prospects who are actively looking for service and repairs. An active consumer has an immediate need; for example, it's time for an oil change or the brakes start squeaking. The consumer turns to a search engine and enters a phrase such as "BMW oil change," or "Silverado brake pads."

If your dealership doesn't have an effective PPC strategy for your service department, you won't show up in the results and you'll never even be in consideration.

2) Social Media

Currently Facebook has 207 million users in the U.S. and the average session is 20 minutes. Instagram has 96 million users and 80% of users follow at least one business. The reason your dealership needs to have a presence on these platforms is because that's where your customers and prospects are spending their time.

Advances in marketing automation make it possible to match the customers in your DMS with their social media profiles. It's now possible to deliver service reminders, overdue maintenance reminders, appointment reminders and relevant coupons right into your customers' news feeds.

When you cross-reference Facebook and Instagram users with your own customer data, these two platforms become highly influential channels that deliver incredible results.

3) Display Ads/Retargeting

Google properties offer a variety of display advertising options that allow you to deliver specific messages to your customers based on their online behavior or physical location.

For example, if someone visits the service pages on your website, you can retarget that person with a display ad and relevant offer. Another effective strategy is to identify customers who are in an equity position with their vehicles and target them with a discounted oil change. Once they're in your service department, a salesperson can approach them and offer a free trade-in appraisal.

Geotargeting and IP targeting allows you to deliver offers to customers based on their physical location, such as customers within 10 miles of your dealership, or at a competitor's dealership. Or you can deliver an offer to people attending a sporting event or concert in a nearby stadium or arena.

4) Video ads

Video is the new television. For video ads, YouTube offers an array of targeting capabilities based on demographics, interests, life events, shopping behavior and the video content that your intended audience is currently watching.

YouTube's greatest advantage is that you only have to pay for video views and interactions. This means there's a huge opportunity to raise brand awareness without having to pay for video views.

You're probably familiar with skippable pre-roll ads on YouTube videos. Whenever you watch a video, you have to sit through five seconds of a pre-roll commercial before you're allowed to click on "Skip Ad."

If you create a video that displays your dealership name and can grab the viewers' attention in the first five seconds, even if the consumer clicks on "Skip Ad" you are raising your brand awareness and increasing the reach and frequency of your message—for free!

Ideally, your message is compelling enough to appeal to service intenders, and they won't skip your ad. Either way, it's a win-win situation.

5) BDC Campaigns

While not digital, BDC campaigns are important to mention because they're highly effective. They can also be expensive, so reserve use for opportunities with significant revenue potential. Examples include declined service follow up, telematics notifications or recall completion events.

As more dealers rely on their fixed ops revenue to increase profitability, the effectiveness of their service marketing is coming under scrutiny. In sales, digital omnichannel marketing campaigns have become an accepted best practice, and soon it will be the same in service.

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