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The Official News Source of The Retail Automotive Industry

December 2015

Entire contents ©2015 Car Biz Today. All Rights Reserved.

Volume 2, Issue 9

ANSWERS TO SOME OF

THE TOUGHEST SALES QUESTIONS DAVID LEWIS

… see PAGE 24

NEW TRENDS

IN DEALERSHIP EXTERIOR LIGHTING CHIP WALKER … see PAGE 26

CHOOSING KEYWORDS

FUELS SOLID MARKETING ROI AMY FARLEY ... see PAGE 28

GET THE MOST PRODUCTIVITY YOU CAN FROM HOURLY

BDC AGENTS

BILL WITTENMYER … see PAGE 30

Aaron Zeigler President, Zeigler Auto Group

TRAINING FUELS MICHIGAN GROUP’S GROWTH Zeigler Auto Group has assembled a staff training, recruitment and development program that most major corporations would envy. ... see PAGE 6

CUSTOMIZED KIOSKS OPEN MANY OPPORTUNITIES

CROSS-TRAINING OPTION TO HYBRID SALES/F&I A single group of managers, working from the same office, could handle any of a buyer’s sales, loan and insurance questions. ... see PAGE 20

Latest advances in kiosk technology let dealers move more information and processes that customers need to touch screens. ... see PAGE 12

AMAZING AMAZING AMAZING MARKET MARKET MARKET INTELLIGENCE INTELLIGENCE INTELLIGENCE

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Learn Learn more Learn more at more at at MyPowerDealer.com MyPowerDealer.com MyPowerDealer.com


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Letter from the editor Dear readers, In our pages and in my letters in recent editions, I’ve tried to keep you updated on all of the material developments with our CBT Automotive Sales, Service and Marketing Conference & Expo – which is not an easy task, trust me. As an attendee, you of course will be primarily concerned with the practical value of the guidance you hear from our speakers. To that end, you’ll want to read our update inside about the addition of several panel discussions. Apart from creating a seamless bridge from our keynote addresses to the conference breakout sessions, these panel discussions will bring you top minds and business leaders in retail automotive to break down some of the most vexing issues for dealers. The early registration deadline (for a $200 discount) for our Feb. 9-11 conference in Atlanta is fast approaching, so go to www.cbtconferenceandexpo.com to sign up today.

JON MCKENNA

Also in this edition, you’ll find our usual menu of drill-down suggestions from consulting Managing Editor and training experts, on topics such as how to create an effective compensation plan for hourly BDC agents, reserving the right keywords to support your dealership’s online marketing program, and setting up a framework to make sure your various departments keep up with their legal and regulatory compliance. Against that backdrop, I wanted to particularly point out an article by Glenn Pasch of PCG Digital Marketing about setting up a defined, tangible culture at your dealership. “Corporate culture” is one of those business bromides that get tossed around so freely that they can lose their meaning, but Glenn has some very practical action steps for dealers. In the “no two people do the same thing the same way” category, you’ll want to make sure to read about an alternative, cross-trained-manager approach to the hybrid sales/F&I representative proposed by Mark Tewart of Tewart Enterprises Inc.; as well as our coverage of the impressive investment in training by Zeigler Auto Group and of emerging capabilities of customizable dealership kiosks. Make it a great selling month.

CAR BIZ TODAY MAGAZINE Email newsroom@cbtnews.com Phone 678.221.2955

President And Publisher Jim Fitzpatrick Vice President/COO Bridget Fitzpatrick Managing Editor Jon McKenna Creative Director Randall Veugeler Art Director Erica Abrams Production Manager Laura Payne Designers Shay Harbaugh Brian Hassinger April Miller Christina Zavlanos Creative Director - Digital Jeff Pearson Director of Marketing & Events Alex Branam Marketing Associate Roxanne Luhr

In this Issue 6

Extensive video and live training contain turnover at Ziegler Auto Group By Jon McKenna

8

How to make your business culture a daily imperative, not some vague concept By Glenn Pasch, PCG Digital Marketing

10 Ask The Pros 11

U.S. House approves a NADA-backed bill to alter CFPB role in auto financing

12

Customizable kiosks give options to streamline your customers’ experience By Jon McKenna

14

Industry News

16

Heavyweights in auto retailing fortify February CBT Conference agenda

18

Dealers, GMs must work on their resistance to leveraging social media

By Laura Madison, Alan Ram’s Proactive Training Solutions

4

CBTNews.com

20

If hybrid sales/ F&I model makes you uneasy, cross-train managers instead

By Mark Tewart, Tewart Enterprises Inc.

32 On The Set With CBT

Automotive Network

34

Take proactive approach to mystery shopping, rather than fearing your score

By David Kain, Kain Automotive

22 Association News 24 Options to resolve tough

issues with sales staff that dealers often face

36 Stop treating women and

millenial buyers as distinct market segments

By David Lewis, David Lewis & Associates

26 Separating promises from

reality with exterior lights, especially new LED models

By Dennis Galbraith, Dealer E-Process

38 Follow this framework for how a dealer can track all compliance duties

By Chip Walker, Custom Facilities Inc.

28 Keywords, including

negative keywords, are vital to your marketing ROI By Amy Farley, Force Marketing

30 Tips for getting the most productivity from BDC reps paid hourly By Bill Wittenmyer, ELEAD1ONE

CAR BIZ TODAY DECEMBER 2015

Subscription Manager Emily Wiggins

By Terry Dortch, Automotive Compliance Consultants

41

Small tweaks in how service dept. handles ROs give big results over time By Rob Gehring, Fixed Performance Inc.

ADVERTISING Director of Sales Erin Cianciolo ecianciolo@cbtnews.com d 678.221.2964 c 770.490.2637

CUSTOMER SERVICE info@cbtnews.com

SUBSCRIPTIONS To subscribe electronically, log on to cbtnews.com and click the subscribe link on the side bar. Alternately, forward your company name, your name, address, phone number and email address to info@cbtnews.com or CBT News, 5 Concourse Parkway, Atlanta, GA 30328. Please send address changes to the above email or mailing address. Permission to reprint or quote excerpts granted only upon written request. Advertising rates are provided upon request.


DEALERSHIP PROFILE

TRAINING EVOLUTION INTO A SUBSTANTIAL

Helps Sustain Zeigler Auto Group’s

CORPORATE PLAYER

Michigan dealership group believes recruiting and developing talented staff are essential to growth. BY JON MCKENNA

B

ack in 2004, Zeigler Auto Group ran four stores, covered staff training with an occasional live meeting and recruited new employees mostly by word-of-mouth. However, President Aaron Zeigler had ambitions of becoming a much bigger company and realized he’d need a more sophisticated training, recruiting and mentoring program to support the necessary work force. Fast-forward to 2015. Zeigler Auto Group has swelled to 21 rooftops in western Michigan, suburban Illinois, Indiana and New York State and employs about 1,200 people. Many employees delve into a library of video training sessions that numbers between 2,000 and 3,000, picking out 15 short videos per week and 20 to 25 minutes of training each work day. The company recruits aggressively on college campuses against Fortune 500 employers and has developed several performance groups to groom talented staff for eventual leadership roles as GMs, F&I managers and office managers. In short, Zeigler Auto Group has created a training, recruitment and development program that rivals that of much bigger dealership organizations, not to mention substantial companies in other industries.

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CAR BIZ TODAY DECEMBER 2015

“The reason why we created Zeigler University [in 2010] was we wanted to grow the organization, and the best people come up through your organization,” Aaron Zeigler said, referring to the internal name for the company’s training program. “It ties into recruiting as well. When we started this program, we were in that 30% [annual turnover] range. We’ve got about 1,200 employees now, and if we were still in the 30% range, we’d never be able to build the company.” The family owned company was launched in 1975 by his father, Harold Zeigler, in nearby Lowell, Mich. Thanks to a decade of rapid expansion through acquisitions, it ranked No. 60 on the 2015 WardsAuto Megadealer list.

Emphasis On Video Training

Mike Van Ryn, the group’s director of talent development, said most of the training videos are aimed at salespeople, service advisors and managers of various departments. Typically, they range in length from 30 seconds to between five and eight minutes. The group has access to noted sales trainer Grant Cardone’s video library, but also has its executives and managers record training videos at one of the numerous stores that has a training room.

Aaron Zeigler

And, many of the guest presenters of live training also are willing to do recordings that are used later as video training. Van Ryn explained the preference for short-duration video training this way: “It reflects the realities of attention spans now and how busy our people are. So, they can do the training on their own schedules throughout the week, and have more concentrated training during in-person sessions.” The company makes a point of updating video training, which is categorized by complexity level, on a set schedule to keep it fresh, Zeigler said. Examples of “100-level” topics are displaying the right attitude when you come to work and how to treat a customer, while overcoming a customer’s objections to buying a car is one of the more advanced topics. Employees are required to pass a short quiz after watching an online video. Zeigler gets a report each Saturday on whether employees have watched the required 15 training videos for the week, and any unexplained failures are referred to managers for a sit-down with those employees. Like Van Ryn, Zeigler believes the high-frequency, short-duration video training approach has proved effective, particularly with salespeople. “We are getting numbers we have never seen before, like people who were selling 25 cars a month who are averaging 30 to 35 after the training.”

Role Of Live Training

As for live training, every one to two months the group brings in a high-profile guest speaker, such as Cardone, former Olympic hockey team goalie Jim Craig and Bill Rancic, the first contestant to be hired after Donald Trump’s TV show “The Apprentice.” Their presentations are videoconferenced live to other stores. Also, monthly general manager meetings are videoconferenced throughout the chain of dealerships,


Zeigler and Mike Van Ryn chat with staffer on the Zeigler Honda showroom floor.

A Zeigler Honda salesman works the showroom floor.

Van Ryn teaches a class in a dealership training center.

and Van Ryn delivers a monthly sales training course at a different store each month. A six-hour new hire orientation course is another important component of live training.

Aggressively Recruiting At Colleges

When it comes to recruiting talented staff for a company of Zeigler Auto Group’s size, Aaron Zeigler said “we have found we can compete very well” against major corporations for new college graduates in the Upper Midwest, notwithstanding any stigma about working for a car dealership. “A lot of the time in these big companies, it takes you a long time to get into middle management, and you get forgotten. We can offer a very concise path going forward. If they come into the organization in sales, we can show them if they are successful, they could be running a $50 million business unit in five years. I’ve been elated with the process.”

more sophisticated aspects of a manager’s job that aren’t addressed in training sessions. Several managerial positions have been filled by members of performance groups, as when a GM position recently came open at a Ford store. “We had five or six people who were ready to go, and one was a perfect fit” to transfer in, Zeigler said. “Instead of putting someone in there and hoping he will grow into the job, we have someone who already fits in the culture and has been exposed to every challenge they will face.”

Keeping Turnover Down

At the end of the day, one of the critical metrics in judging whether Zeigler Auto Group’s investment in recruiting, training and development is turnover (more specifically, avoiding the high turnover that plagues dealerships).

Van Ryn said four fulltime recruiters (who also assist with training and development) and he recruit at 10 to 20 universities and colleges in the region that have business colleges and/or marketing programs. The group also found a niche by promoting careers to college athletes through connections with coaches, he said. Van Ryn attributes that appeal to the competitive natures of both sports and sales.

Zeigler said the companywide turnover rate “has dropped like a rock” since Zeigler University was created in 2010, to an overall 8 percent (5% when seasonally adjusted). In the management ranks, turnover is only 2 percent, he said.

ZEIGLER AUTO GROUP AT A GLANCE New vehicle sales revenue: $446.2 million Units sold: 13,444 Used vehicle sales revenue: $214.0 million Units sold: 11,943 F&I revenue: $54.7 million Service revenue: $30.8 million Parts revenue: $40.9 million Total revenue: $832.3 million Source: WardsAuto Megadealer 100 list for 2015.

Mentoring Groups Play Key Role

However, talent and training only get you so far in corporate America. That’s why the group also created within Zeigler University three performance groups, whose mission is to mentor and groom employees believed to have potential to become GMs, office/manager controllers or F&I managers. Service managers get mentoring in something of an informal 20 group. Membership in a performance group comes only by invitation from Zeigler or Van Ryn, based on a GM’s recommendation. The groups meet six to eight times a year in Kalamazoo to discuss and analyze

Van Ryn talks with salesman Ben Coopes. DECEMBER 2015

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MANAGEMENT

What kind of experience do you most want customers to take away? Your answer will drive your culture.

T

he word “culture” gets thrown around routinely in corporate meetings and events, but it is far from a throwaway concept. Companies such as Zappos.com, Ritz-Carlton, Disney and Apple have amazing company cultures that all should emulate.

However, what exactly is a business “culture”? Does it really matter, and how can you establish a culture that drives your business plan? I think culture is very important and far from jargon. It should be the measuring stick of what your company does for its customers and employees. However, it can be difficult to verify whether your culture is helping or hurting your business, so in this article I’d like to review the fundamentals of corporate culture. I think the first step toward understanding culture is to “begin with the end in mind,” in the words of the late Dr. Steven Covey. What type of experience do you want your customers to have with your company? Also, you must decide what image of your company you want customers to take away. Is it most important that your business is seen as informed? Responsive? Obsessed with its customers? Fastest? Offering the easiest sales process?

Corporate Culture:

MAKING IT MORE THAN AAt YourCLICHÉ Dealership Identify the kind of customer experience you want, and let your procedures, hiring and training drive your culture. BY GLENN PASCH 8

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CAR BIZ TODAY DECEMBER 2015

Some of you will reflexively answer, “I want all of these!” However, I must warn you that trying to change a number of processes is not the same as making them better. Force yourself to identify your company’s top priorities, or at the very least pick the one or two traits or processes you want to work on first.

STEPS TO IMPLEMENT CUSTOMER EXPERIENCE

As far as action items to address those priorities, count on the following: • You will have to review all of your current procedures and processes, and adjust them if they do not encourage behaviors that lead to your customer experience goals. • You need to hire people who can execute your ambitions. • You will need a training structure in place. • You must measure outcomes. • You will have to insist on accountability and retraining.

DON’T ASSUME CULTURE CHANGES STICK

Now, with those fundamentals as a backdrop, let me walk you through what my company did after we decided our culture needed refocusing. We created our culture “focus points” more than a year ago, and initially our customers got the experience we wanted. Our main goal was for customers to feel our company was available and would educate them, so they could understand their results in simple terms. Things went well enough that I began to focus on other business priorities. However, after a few conversations with clients who moved on from our company, I realized something had gone wrong. I had taken our culture for granted. After discussing this problem with my executive coach (every business leader needs one, by the way), I decided to take my own advice and perform a top-down inspection of our culture through the eyes of a consultant.

CULTURE FIT CAN SLIP DURING HIRING

I decided the processes and procedures were in good shape, so I moved on to our hiring, training and reporting. Regarding our staff, I focused on the qualities I had previously prioritized as necessary to deliver the customer experience we wanted. We had decided on the following employee qualities or traits that reflect what we want in our company culture: ✓ Self-motivated ✓ Flexible ✓ Collaborative ✓ Accountable ✓ Passionate


While I got involved with performance reviews to make sure we had the right people, I realized that we had made a few poor hiring decisions. We had hired based on needed skills and not on whether this person was a good fit for our culture. Then I moved on to our hiring and training processes. I wanted to learn more about why we had hired incorrectly. As a small company, we ask our staff to wear many hats, but that is no excuse for cutting corners when it comes to customer experience. So, we instituted bi-monthly and monthly training for teams and for individual employees. We created new assessments to measure retention of knowledge, and had our executives interact with department managers during customer communications. We emphasized that no matter what question a customer asked, regardless of whether it fell under the services for which we hired, that question would be answered. I realized I had been skipping opportunities to reinforce these culture points with my team each day. Reading these values written on the wall at meetings and having them printed on cards to hang in employee workstations would not cut it. Culture is a living and breathing thing that takes daily focus and execution, and I needed to focus on the culture traits every time the opportunity arose.

HOW TO IMPLEMENT FUNDAMENTALS Now, how might you use these culture fundamentals and my company’s experience to help establish your dealership’s own culture?

Let’s say you want your customer’s experience to be informative and fun, with courteous service at every step. What procedures could you implement to deliver that level of experience? ➜ You could have a staff member greet every customer as he or she enters, rather than leave the job to a receptionist sitting behind a desk. ➜ You could have upbeat music playing over the PA in the showroom and service area.

➜ Salespeople could be instructed to always come out from behind their desks to greet a customer.

8 Comfort with being in front of a group What about employee training and follow-up?

➜ You could create a kid-friendly waiting room with iPads or computers loaded with games, and a video console.

8 You will need a consistent, well-thoughtout onboarding process. 8 You should require everyone on staff to take certain online classes or training.

➜ You might have photos taken in the vehicle-delivery area.

8 New hires should be handled by common trainers, not by multiple people who have individual visions of what the job is.

➜ You could install a monitor in the service waiting room offering tips on improving the life of a car, and a console letting customers look at different options or packages without a salesperson hovering. Now, let’s talk about staffing. What employee qualities would help produce the customer experience your culture emphasizes? 8 An energetic and outgoing personality 8 Experience in a hospitality business or at a theme park, or in a job that changed every day 8 A prior career as a teacher or coach, meaning he or she has patience to answer questions and explain complicated topics in a clear way

8 The dealership leaders will need to get out on the floor to make sure the culture is being executed, and reinforce the culture by their own actions. Everyone looks to the leader to follow suit. I hope I have made the point that beautiful wall art or posters displaying your culture points do not mean your team is delivering excellence to your customer. Your dealership must find every opportunity to reinforce the chosen traits. Your customers will thank you, and someday your business may be the example routinely tossed out when people discuss great corporate cultures.

“Culture is very important and far from jargon. It should be the measuring stick of what your company does for its customers and employees.” GLENN PASCH

CEO of PCG Digital Marketing Glenn is a trainer at heart. He is a highly sought-after speaker, writer, coach and operations strategist, as well as a customer service fanatic. He has spoken throughout the U.S. and Canada, educating audiences on a variety of topics including business leadership, change management, digital marketing and the impact of this new technology on culture, business and society. Visit the website www.pcgdigitalmarketing.com

This pool of job candidates may come loaded with desirable skills, but will they be a good fit with your dealership culture? TO SEE MORE FROM GLENN PASCH GO TO CBTNEWS.COM

DECEMBER 2015

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ask THE

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t CBT News, we are fortunate to partner with the best trainers in the industry. Whether it’s information on sales, F&I, marketing, management or fixed ops, our contributors are the go-to professionals for reliable, relevant advice for dealership personnel. You have access to the foremost authorities in the retail automotive industry. Need a new closing technique? Wondering what’s the best way to increase sales in the service lane? Send us your questions at AskThePros@ cbtnews.com. We’ll forward your inquiries to our ensemble of experts.

pros

S

hould I make sure the statement I get from an outside advertising agency that indemnifies us against FTC fines for false or misleading advertising, also covers state advertising laws? For that matter, how well do these statements usually hold up in court if the agency wants to contest? -Tonya, Grand Rapids, MI

A: Jim Radogna, senior compliance specialist at KPA and president of Dealer Compliance Consultants Inc.: Yes, it’s very important that you ensure that your ads are compliant both on the state and federal levels. The FTC Act gives a broad overview of advertising compliance, while state regulations tend to be more specific. For instance, state guidelines may proscribe minimum type size for disclosures, allowable exclusions from advertised selling prices or prohibitions on guaranteed trade values, to name a few examples. That said, advertising agency indemnifications are likely of little or no value in court, because the primary responsibility for compliance lies with the dealership, not the vendor. According to state and federal laws, a dealer has the duty to investigate the accuracy of any statements made in advertising. Keep in mind that if your dealership is cited for advertising violations, your advertising agency may indemnify you against monetary penalties, but you will still suffer the ensuing reputation damage. Worse yet, many regulatory actions include injunctions or consent judgments under which your advertising practices will be scrutinized for as long as 20 years. In that scenario, in addition to the inconvenience of having to submit regular reports to the regulatory agency, there’s a very real chance of future substantial penalties. For instance, the FTC entered consent judgments with five dealers for advertising violations in 2012. Since then, two of the dealers were charged with violating the judgments, resulting in settlements of $360,000 and $80,000, respectively. There’s just no upside to having regulators breathing down your neck! A best practice is to have your advertising reviewed by competent professionals before 10

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CAR BIZ TODAY DECEMBER 2015

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publication. You should never assume that advertising agencies or vendors know all the laws and regulations governing advertising compliance. This is particularly true of companies based in other states, such as Internet and direct mail providers.

am familiar with some other dealership groups that dole out their video sales training no more than a few minutes at a time. What is your opinion of the effectiveness of this short-burst approach to sales training vs. longer and more detailed sessions? -Ernie, Dallas, TX

A: Bill Playford, VP and

partner at DealerKnows Consulting: First, let me say that we’ve trained, coached and consulted in over half the states, along with three provinces in Canada. I can safely say that every dealership is different. Some folks have the attention span to get the most out of marathon training sessions, while others can maximize what little free time they have. Of course, there is the matter of videos they are watching, the topic of the segment, along with who is standing in front of the green screen. As they say in the parts department, mileage may vary. With that caveat aside, based on the offerings that we provide, I find that 30-to-45-minute sessions tend to work best, with 20 minutes on a topic and the rest being discussion. With anything less than 30 minutes, attendees tend to not allocate their full attention. Anything more than 60 minutes, people’s minds start to wander to other priorities.   In terms of streaming or recorded videos, research offers mixed results. Many studies have concluded that there is a sweet spot in the six-to-nine-minute range, providing there is a fixed objective (e.g., passing a quiz). Other studies have suggested there is more value that can be added out to the 30-minute mark (the super-genius TED videos are 18 minutes or less). I reached out to a couple of associates of mine in academia, and while they’re excited about the prospects of electronic training, they agreed that is still more to be learned about the methodology before such assertions can be made.   Consider being like those in the video education space, and experiment to see what works best for your team. To measure the impact, have an objective that should be met at the end of each session. It could be a quiz (either provided with the training or your design), a moderated discussion about key takeaways, or asking each person individually how he can directly apply what he just learned. Adjust your timing based on how well your team meets those set objectives.

W

e got trashed on a review site by a service customer who probably was the most difficult customer I’ve ever seen in 25 years in the business. I won’t bore you with a full history of the problems, but if you engage this customer online, she is just going to fire back with more unsubstantiated and untrue griping that just makes us look worse. Isn’t it better to not post anything online in response to the original review than to give this customer more encouragement to post something nasty about us? -Carl, Allentown, PA

A: Ryan Leslie, director at

DealerRater: Always offer a response. As hard as it may be, it is especially important in a situation like this.

The dealership’s response to a negative review serves two distinct and critical functions, as it is one microphone serving two audiences. Let’s address the obvious audience first: The cranky reviewer. Generally speaking, consumers don’t want to write a negative review; they want to have a satisfying experience. A negative review is a lastditch effort to reach someone they feel will hear their complaint. A recent survey by Right Now found that when businesses reached out to contact customers who left negative reviews, 34 percent voluntarily withdrew their original complaints without being asked. Another 33 percent responded to the outreach and re-posted a positive review after reconciliation. Responding 100 percent of the time helps to not miss the 66 percent of consumers who will be positively affected by your efforts. By your description, you may very well have one of the 33 percent who won’t be happy no matter what you do, and that is okay. The best thing that could happen is for you to respond cordially and professionally, and have them continue to act irrationally. The second audience for your response is the unsold prospect who will read this negative review and your response. He or she is perceptive enough to know when a consumer is acting unfairly. You will absolutely lose in the court of public opinion if it appears that you ignored the concerns of customers. But, if you’ve made every effort to hear them and help them in full view of the public, then the unsold prospect will see the situation for what it is. Resist the temptation to defend yourself in your response, and don’t feel obligated to apologize when an acknowledgement is equally appropriate. The best response is always a brief and high-road acknowledgment of the review, with an offer to investigate the claims therein and written by someone with the authority to do so, giving their contact information.


House Backs Measure To REIN IN THE CFPB IN AUTO LENDING Prior guidance keeping F&I offices from negotiating APR would be nullified.

H

ow far the measure goes from here is very much in doubt, but critics of the federal government’s oversight of indirect auto financing won a significant victory recently when the U.S. House passed H.R. 1737.

NADA and its allies protest that such a policy would deny affordable financing alternatives to car buyers without reliable and objective data showing widespread racial discrimination in indirect lending in the U.S.

The bill known as the Reforming CFPB Indirect Auto Financing Guidance Act was introduced in April by representatives Frank Guinta, R-N.H., and Ed Perlmutter, D-Colo. The CFPB refers to the Consumer Financial Protection Board, an office that has become a lightning rod for the National Automobile Dealers Association and other auto retail trade groups.

As enacted by the House, the bill also would direct the CFPB, when proposing and/or issuing guidance that is primarily related to indirect auto financing, to:

H.R. 1737 was approved in November by a 332-to-96 vote in the House. Most notably, the measure would nullify CBPB Bulletin 2013-02, which is guidance issued in 2013 in which the CFPB recommended preventing dealership F&I departments from negotiating on the APR for customers who are ready to finance a vehicle purchase. Instead, the CFPB recommends a policy under which lenders would compensate dealerships with a flat fee that they could not discount.

• Make any information the CFPB staffers rely on in formulating that guidance publicly available. This would address the NADA’s failed attempts to obtain minutes and other staff discussion for Bulletin 2013-02 enforcement.

• Make sure a public notice is issued and public comment gathered, before the guidance is issued in final form.

• Redact any information that is exempt from disclosure under the Freedom of Information Act. • Consult with the Federal Reserve, Federal

Trade Commission and Justice Department in creating any guidance. • Be sure to evaluate costs and impacts of any policy on consumers, small businesses and businesses owned by women and minorities. In prepared statements issued after the House vote, NADA President Peter Welch and Cody Lusk, president of the American International Automobile Dealers Association, cheered the bill’s progress. “The CFPB is clearly trying to eliminate a consumer’s ability to receive a discount on credit in the showroom,” Welch argued. While saying his members strong oppose any discrimination in the marketplace, Lusk added the CFPB “has failed time and again to fully disclose its methodology for measuring the presence of disparate impact or provide transparency in issuing guidance to auto lenders.” The CFPB also has raised eyebrows among dealership interests by its decision this past summer to start supervising more than three dozen non-bank auto finance companies, extending its regulatory reach beyond dealerships’ commercial bank partners. Progress of the bill could be problematic from here. If H.R. 1737 gets through the Senate and any conference committee, President Obama has publicly expressed his support for the CFPB’s efforts in combatting marketplace discrimination.

Protect your dealership, train your employees, and retain your customers with KPA Sales & Finance Compliance Comprehensive online training with over 100 topics, including: Unfair Deceptive Acts and Practices, Adverse

Action, Customer Information Security, and Fair Lending and Desking Practices.

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before you're caught in a lawsuit or government inspection.

Expert advice directly from the pros. KPA clients have direct access to Sales & Finance Compliance experts like Jim Radogna for F&I questions, training, audits and best practice advice. www.kpaonline.com | 800-781-8308


N O I T A R E N E G W THE NE VENDOR PROFILE

S K S O I K F O Emphasizes Time Savings And Transparency For Customers

ges in tracking lead sources, Meantime, dealers hunt for advanta signing offers. identifying customer desires and de BY JON MCKENNA

I

nformational kiosks have been on the dealership scene for years. Who hasn’t encountered one of the OEM-provided machines in a dealership lobby, essentially serving as an electronic brand brochure for customers?

What haven’t been around are customizable kiosks that serve the dealer’s needs, not the manufacturer’s, and zip a customer faster through the research, sales, F&I or service processes faster. Companies offering these machines are betting they are still at the beginning of a dealership technology life cycle that could last at least another seven to 10 years, plenty of time for them to capitalize. That assessment may strike the average person as odd. First of all, kiosks are not new technology. Second, aren’t dealers being told by every marketing consultant that the information and processes being housed on the new kiosks (for example, customer check-in, a full lot inventory or a video walk-around) must be pushed onto their websites to satisfy today’s digital-insistent buyers, particularly the millennials?

Walk-In Appeal Still Matters

Well, customers still walk into dealerships, they need to be greeted, and automotive still lags way behind most other retail sectors in meeting them with engaging, self-service technology, said Todd Marcelle, CEO and co-founder of Dulles, Va.-based GoMoto. His is one of three providers that are probably best-known in the customizable dealership kiosk space (the others are Digital Dealership System Inc. of West Palm Beach, Fla., and Integrated Computer Solutions of Bedford, Mass. And its ViewPoint product line). “At most dealerships, the customer still walks in, a salesperson still greets you and sits you down at

a desk, and still starts the entire transaction assuming the customer has little-to-no information about the product,” Marcelle said. Plus, even if many dealerships had loaded that much information and processes onto their websites for customers to view and use (which they haven’t), there’s a big difference between using a computer, phone or tablet screen and a 24-inch split-screen on a kiosk, noted Todd Katcher, managing partner at Digital Dealership System. “Just like with digital signage, the main role [of a dealership kiosk] is to show something they haven’t seen before, or deliver it in a way they haven’t had before,” he explained. “They way they’re interacting with the machine is much more visual, much more feedback-oriented. A lot of people are getting information online prior to coming to the dealership, but we’re trying to reposition that information in such a way that makes it a unique buying experience.” ➤

What A Dealer Might Pay

What does that experience cost a dealer? The monthly fee (think of it like a lease) for a GoMoto cloud-based HUB unit is about $1,200, covering hardware, software, mobile device-enablement, staff training and back-end analytics. Digital Dealership System’s kiosks, whose applications are housed on the system, start at about $500 per month for a 24inch screen.

Buyers could launch educational videos of F&I products they favor, and that info would immediately be uploaded to the CRM.

GoMoto does not disclose how many units it has in U.S. dealerships. Digital Dealership Systems has just over 50 kiosks in dealerships, where its bigger penetration comes from digital signs (more than 500). The functionality of these systems compared with the older-technology “brochure” kiosks is truly impressive. The technology is still evolving, and vendors are constantly developing new features that can be selected.

“A shopper could use a kiosk to compare different makes and models … or digitally ‘build’ the car of his dreams with manufacturer-provided accessories.” 12

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Imagine if your customer could immediately schedule a test drive for this vehicle from the kiosk.

Some Functions You Could Choose

“The functionality of these systems compared with the older-technology “brochure” kiosks is truly impressive.”

For example, on a GoMoto HUB kiosk, a customer can check in to start an appointment, enter contact his or her contact information, have a driver’s license scanned, and answer a few questions about how and why they came to that dealership. That information is packaged as a lead and uploaded to the dealership’s CRM system, regardless of CRM vendor. That customer then can review vehicles on the lot and their specs, get a virtual walk-around of one car by entering its VIN, schedule a test drive and arrange to have a product brochure e-mailed. If the customer is willing to enter the VIN on his or her current vehicle, then service specials will be customized to that car, and the customer can digitally claim promotional offers on a current or future visit. If he or she responds to prompts to value a potential trade-in, that information can be transmitted immediately to the used car manager and CRM. Or, a customer could choose to start a track of educational videos about F&I products. If he or she indicates an interest in a particular product, the F&I manager is electronically alerted to that fact, and earned incentives can be e-mailed back to the customer. Plus, a hard or soft credit pull could be initiated from the kiosk. Digital Dealership System emphasizes its flexibility in customizing a kiosk for a particular dealership’s

needs. For example, a customer getting ready to complete a sale could use the kiosk to schedule the first service appointment from the sales floor, rather than take time later. Some of its customers devote a single kiosk to valuing and initiating trade-ins, Katcher said, while others dedicate one to siphoning away long lines at the cashier to set appointments. In a more whiz-bang sense, a shopper could use one of the company’s units to compare different makes and models (for example, a Honda Accord vs. a Toyota Camry) for engine performance, MSRP and other standard features while shopping. Another Digital Dealership System application lets customers digitally “build” the car of their dreams with manufacturer-provided accessories, just to get an advance look. ➤

Tracking Source Of Sales Leads

The ability to use the kiosk interaction to more accurately pinpoint what message led a customer to visit the dealership, and to refine marketing spend accordingly, is an advantage that all of the

manufacturers tout. “Most stores are only accurately tracking 40 to 70% of the customers who come through their showrooms,” according to Marcelle. His company is noticing the most dealership usage of advanced kiosks in sales (particularly for check-in, starting the purchase and arranging a test drive), remote tracking (by tablet) of interest in F&I products, and sales of service work. Katcher’s company is getting the most traction in the sales and service departments. Despite the promises of enhanced customer engagement and tracking, calculating ROI on kiosks can be something of a murky project for a dealer, as with any prong of a marketing investment. They would need to attribute benefits to data that helps validate the effectiveness of sales and marketing efforts, the ability to identify the source of sales leads, and the expectation that CSI scores will improve if customers are spending less time in the dealership.

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INDUSTRYnews RELIEF MEASURE ON RENTALS OF RECALL CARS GETS VICTORY IN CONGRESS

WORRIES PERSIST ABOUT CFPB, LOOSE AUTO LENDING STANDARDS

The U.S. House passed on voice vote the so-called Williams Amendment, which would limit proposed restrictions on rentals of vehicles that are under a current recall. A proposed comprehensive transportation bill, H.R. 22, would impose a sweeping ban on rentals of recall vehicles, but the amendment would limit its reach to rental car companies, meaning dealer loaners would not be affected.

Dealers these days are not short on regulatory and court actions demanding their attention. For starters, a Washington political action group called the American Action Network launched a $500,000 advertising campaign against the Consumer Financial Protection Bureau, which has drawn some dealers’ wrath for demanding fee-based sales of lenders F&I products. U.S. Comptroller of the Currency Thomas Curry warned during a speech to a business group in Washington that he finds the current state of auto lending – with loans to buyers with low credit scores and maturities routinely exceeding six years – akin to the prelude of the 2009 mortgage-backed securities crisis.

Mike Jackson

The National Automobile Dealers Association and other automotive trade groups have been lobbying hard on behalf of the Williams Amendment. Fort Lauderdale, Fla.-based AutoNation, which in September pledged not to sell or lease any new or used vehicle that is under an open safety recall, announced that 16 percent of its used car inventory at the end of the third quarter could not be sold as a result. Chairman and CEO Mike Jackson added his company will have to beef up its inventory during the fourth quarter to have enough vehicles for sale. Despite the pinch, the company is standing firm behind its no-recall policy.

VW EXTENDS FINANCIAL OLIVE BRANCH TO DEALERS, AS POLITICIANS CIRCLE As the Volkswagen diesel engine emissions scandal widens, parent company Volkswagen AG is trying to build bridges with its U.S. dealers as their lots clog with unsellable inventory. The OEM is offering cash and no-interest loans to roughly 650 dealerships and encouraging them to offer prices on trade-ins equivalent to those prevailing before the emissions-rigging news broke; Volkswagen AG promises to cover the difference in value. Also, the parent company sweetened its goodwill offer to owners of affected cards with $1,000 in prepaid credit cards and dealership credits, on top of the $2,000 already offered on trade-ins. Politicians are not sitting out the Volkswagen controversy silent on the sidelines. U.S. Sen. Richard Blumenthal, D-Conn., called for $18 billion of federal fines against the automaker, said the company should give owners the choice of selling cars back or getting rebates of up to $20,000, and promised to protect dealerships’ interest. Blumenthal sits on the Senate Judiciary and Commerce, Science and Transportation committees.

DEALERSHIP ACQUISITIONS ✓ AutoNation Inc. made its biggest single dealership acquisition since 1999 by purchasing 12 Texas rooftops from the Allen Samuels Auto Group. Fort Lauderdale, Fla.-based AutoNation didn’t release deal terms, but its new stores represent about $800 million in annual revenue and 19,500 new and used vehicle sales per year. ✓ Billionaire financier George Soros and his Soros Fund Management made their much-awaited jump into U.S. retail automotive by providing financing to Little Rock, Ark.-based McLarty Automotive Group. The group was formed last year by industry veteran Mark McLarty and is focused on dealership acquisitions in the central U.S. ✓ Meanwhile, McLarty Automotive bought eight of the 10 stores owned and operated by Joe Machens Dealerships in the Columbia, Mo., area. McLarty Automotive intends to continue operating the dealerships under the Joe Machens brand name. 14

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Also, the South Carolina Supreme Court upheld a $3.6 million ruling that a dealer’s closing document fee violated state consumer protection law, even though that fee had been certified by a state agency. The court noted that the dealer failed to show what went into the calculation of that fee. A New York State dealer, B&Z Auto Enterprises, filed a federal lawsuit against Autotrader Inc., whose software it claims mistakenly inflated the number of web page views provided to dealerships buying the company’s digital advertising services. Atlanta-based Autotrader denies the allegations. And, the California Department of Motor Vehicles warned it will enforce state laws preventing electrical vehicle manufacturers like Tesla Motors Inc. from advertising a net price after a federal tax credit and state rebate, rather than the MSRP.

RAYCOM MEDIA BUYS PURECARS ADVERTISING PLATFORM PureCars, which runs an automotive digital advertising platform, was bought by Raycom Media, a privately held chain of 51 local TV affiliates based in Montgomery, Ala., Raycom will run PureCars as a separate entity, and it will keep its Atlanta development campus and offices in Charleston, S.C., and in Milwaukee. In another technology vendor development, Netsertive, a Morrisville, N.C., digital marketing intelligence company, was selected as one of six KIA certified website and digital advertising provider. The company also was named the fourth approved provider in Mazda’s digital advertiser program.

EXECUTIVE ANNOUNCEMENTS • The board of CarMax Inc. elected Alan B. Colberg, the president and CEO of Assurant Inc., as a director. Longtime director Tom Stemberg died in October, Richmond, Va.based CarMax said. • JM Family Enterprises of Deerfield Beach, Fla., promoted Ron Coombs to CFO and SVP. For the past seven years, he had served as the company’s COO, and before that was VP and then CFO of the World Omni Corp. business unit.

Alan Colberg

• Jennifer Briggs, a 13-year retail veteran, was named director of dealer strategy for the ZMOT Auto digital marketing strategy unit of the Cardinale Group of dealerships, which is headquartered in Monterey, Calif. Holly Balogh was named COO of Recovery Database Network, a Mesa, Ariz.-based vehicle recovery software subsidiary of ADESA. She has more than 20 years of technology experience and previously served as senior product manager, senior operations director and VP of operations at RDN. ADESA is a Carmel, Ind.-based vehicle auction services company. Separately, ADESA tapped Amy Bouck as executive sales director.


CONFERENCES

Nick Saban

Patrick Lencioni

Retail Automotive Movers And Shakers Jared Rowe

Jason Dorsey

Dale Pollak

Join Panels That Enha Of CBT Automotive C Industry execs like Jared Rowe, Rachel Richards, Dale Pollak and Stuart Bailey will explore vital dealer issues in detail during panel sessions.

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s the agenda continues to expand for the CBT Automotive 2016 Sales, Service and Marketing Conference & Expo, dealership professionals are getting the opportunity to hear a range of highly topical guidance that is unprecedented for a conference in their industry. Interestedattendeescangowww.cbtconferenceandexpo. com now to utilize an easy registration process and get full information about the most comprehensive conference for the industry.

NEW PANEL DISCUSSIONS BRIDGE AGENDA

In recent weeks, CBT Automotive Network, which will 16

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hold the event Feb. 9-11 in Atlanta, has created extremely focused panel discussions to be held immediately after each day’s keynote address, and which will be conducted by some of the best leaders and minds in retail automotive. “Dealers and their managers will discover these panel discussions not only offer fresh new viewpoints on some of their biggest business challenges, but also create a wonderful bridge between our keynote speeches and the 65 breakout sessions,” said Jim Fitzpatrick, founder and CEO of CBT Automotive Network.

PANEL TOPICS ON MARKETING, USED CARS, CULTURE

“Our panelists will challenge the attendees to run their dealerships and their industry in entirely new ways, to respond to a complex and increasingly digitally driven marketplace.”

The next day’s keynote speaker is business leadership author and speaker Patrick Lencioni, who will discuss strategies for dealers to keep their most valuable and productive employees. After he concludes, a high-profile

On Feb. 9, after keynoter and millennials expert Jason Dorsey finishes his address on secrets of selling to Gen Y, Brian Pasch, founder of PCG Digital Marketing, will lead a panel discussing important trends in auto marketing. Other panelists now include Jared Rowe, the president of Cox Automotive’s media division; Rachel Richards, VP and chief marketing officer at Sonic Automotive; and John Fitzpatrick, president and CEO of Force Marketing.


WHEN: Feb. 9-11, 2016 WHERE: Omni Hotel at CNN Center in downtown Atlanta HOW TO SIGN UP: Early bird registration is still going on (a $200 savings), but the deadline is approaching. Complete information is available and being constantly updated at www.cbtconferenceandexpo.com.

Marcus Lemonis

Rachel Richards

Stuart Bailey

Larry Dorfman

Jeremy Anspach

ance The Appeal Conference & Expo panel will explore the future of used vehicle sales. It will be led by Dale Pollak, the president and founder of vAuto. His fellow panelists currently include Stuart Bailey, VP of marketing and pre-owned vehicles at Asbury Automotive; Larry Dorfman, chairman and CEO of EasyCare, which powers the Motor Trend Certified program; Jeremy Anspach, CEO and co-founder of PureCars; and Jim Fitzpatrick. On Feb. 11, University of Alabama head football coach Nick Saban is the first keynote speaker, explaining how he assembles and motivates a successful team in both football and the dealerships he owns. As Saban leaves off, a panel on building a winning culture in the dealership environment takes over. It now includes Joseph Michelli, the New York Times best selling author of the Mercedes-Benz and Starbucks obsessions with customer experience, as well as CBT’s Jim Fitzpatrick.

TO SEE MORE ABOUT THE CONFERENCE GO TO CBTCONFERENCEANDEXPO.COM

The conference’s final keynote speech concludes the event after that panel is completed. It will be delivered by Marcus Lemonis, host of the CNBC business-oriented reality show “The Profit,” and offer his philosophy and discipline for winning in business every day. Between the keynote addresses, panel discussions and 65 breakout sessions, critical insights will be delivered to virtually every manager in a dealership, from dealers and GMs to GSMs and new/used car sales managers, F&I managers to marketing directors, service and parts managers to comptrollers and BDC managers.

VENDOR INTEREST IS BRISK

Another important and appealing aspect of the Sales, Service and Marketing Conference & Expo concerns the leading vendors of goods and services to dealerships, which will be exhibiting at the event.

Platinum sponsors for the conference are EasyCare and AutoTrader. After exhibit space sold out for the event, CBT added another 10,000 square feet for booths – only to see that quickly sell out as well. “The response from exhibitors was intense and rewarding, reflecting the retail automotive industry’s need for a conference that focuses on every aspect of running a successful dealership, and in turn the ability of vendors to present to a large and diversified audience of dealership professionals,” Fitzpatrick said.

REASONS TO REGISTER NOW

Dealers and their managers, vendor representatives and others with an interest in retail automotive can register now to attend the conference by logging on at www. cbtconferenceandexpo.com. The early bird registration period will expire soon, but in the meantime attendees can save $200 by signing up now.

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MARKETING

Why Are Dealers, GMs The Last At Their Stores To

Join The Social Media Party? Lack of support from the top is holding dealerships back on social selling and marketing. BY LAURA MADISON

This all may seem like a blur to dealers, which explains why they’re not stampeding to social media.

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social media movement is rocking the retail automotive sector, but the people at the top – dealership owners and general managers – seem to be struggling to accept and execute a strong social presence. Beyond sparsely updated Facebook pages, many owners and GMs are failing to take sufficient action to sell as many cars as they could. There seems to be a very serious disconnect between dealers and the amazing opportunity to use social media to sell cars. At a time when 87 percent of car shoppers are online doing research, any dealer unwilling to try and connect with customers in this online space using is completely missing the bus. Their salespeople, however, are a group that does understand the power of online visibility. Salespeople seem to be in tune with the reality that the majority of the car shopping process has moved online; they understand it’s crucial you be there when prospective buyers are looking. Salespeople also acknowledge that people buy from people they know, like and trust, and that social media can be an incredible tool to capitalize on this principle.

TREND NUMBERS DON’T LIE

The statistics behind the power of automotive social media activity are powerful:

43 percent of car buyers say they would use Facebook to search for a local dealership.

59 percent would trust a review from a Facebook friend more than reviews found at other sites.

87 percent of car buyers report that their friends’ comments on social media either extremely or somewhat influence their opinions on car makers and brands.

80 percent of consumers say they are more likely to turn to their social network for car buying advice than to the salesperson.

WHY DEALERS HOLD BACK

So, with all of this trend information available and being discussed, why do owners and GMs continue to be the last people to see the value in using social media more aggressively to sell cars? In my experience working with and speaking to dealerships, there are three key reasons:

THEY DON’T UNDERSTAND THE OPPORTUNITY.

This social movement has erupted so quickly that some owners and GMs have barely noticed it. They continue to dump advertising money into newspaper, television, and radio without having ventured into this unfamiliar (for them) social zone. Today, many car shoppers are active on social media, taking steps such as watching videos on YouTube to help inform their decision. Again, the statistics are powerful; 69 percent of people who watched YouTube videos while buying a vehicle were influenced by these videos. That’s more than with TV, newspapers or magazines. Automotive review videos have been watched more than 3 million hours during the first nine months of 2015. When owners understand that the overwhelming majority of their prospective 18

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“There seems to be a very serious disconnect between dealers and the amazing opportunity to use social media to sell cars.” customers are looking to social media to help make their car-buying decisions, they will begin to focus more of their energy on this realm.

THEY ARE CONCERNED A SALESPERSON WILL “GO ROGUE.”

Some dealers are concerned that salespeople will move on and take customers, and prospective customers, with them. The reality here is that there are numerous ways for salespeople to participate in social media underneath the umbrella of the dealership – in a controlled and effective manner. Also, many dealerships are enacting a social media policy that can combat any inappropriate online behavior.

THEY FOCUS TOO MUCH ON THE SHOWROOM.

Many dealership owners and managers are missing the social media bus because they remain extremely focused on showroom activity. While what happens in the showroom remains extremely important to a dealership’s bottom line, salespeople standing around with their faces pressed against the glass waiting for the next customer are not generating visibility or motivating people to walk through the front door. When you take into consideration that the average car shopper today makes fewer than two dealership visits before purchasing a vehicle, visibility in the online space becomes even more paramount to sales success.

HOW SOCIAL MEDIA CAN DRIVE SALES

What’s perhaps more important than the why behind dealers’ and GMs’ late arrival to the social media realm is how they can move forward to use social media to increase sales. First, the auto industry must understand that social media is about real connection. Most car dealerships have been using Facebook, if at all, as an advertising platform. They share photos of inventory, rates and specials on cars, an announcement of an upcoming sale and awkward, uncomfortable photos of customers with their new cars. These dealers are not really engaging with an online community. They are not listening on these platforms, and they are certainly not connecting. Rather than bombard prospective customers with sales messages, dealers would find social media effective if they actually became SOCIAL. For example, they could start a conversation about topics related to the industry that are important to customers: Safety, cost of ownership, tips, advice about buying a car. Or, they acknowledge that YouTube videos influence prospective customers and start creating more videos. Next, dealers could share their engagement in community events, post compelling pictures of

TO SEE MORE FROM LAURA MADISON GO TO CBTNEWS.COM

Remember, taking video of people at work helps humanize them to their companies’ customers.

“Rather than bombard prospective customers with sales messages, dealers would

find social media effective if they actually became SOCIAL.”

vehicles at favorite local spots, and share behind the scenes dealer happenings to make people more comfortable with the dealership. Finally, dealers could use social media as a portal where customers connect with salespeople. Creating visibility for salespeople with prospective buyers generates opportunities for the conditions we know lead to a sale – customers knowing, liking and trusting the dealership staff. It was networking guru Bob Burg who said, “All things being equal, people will do business with, and refer business to, those people they know, like and trust.” Social media is the tool that will accomplish this.

HOW TO GET STARTED

To get the ball rolling at your store, a dealer or GM first needs to encourage this activity within his staff. Highlight the benefits of social media in a morning meeting, and create an environment

where business social media use is encouraged. This is a powerful message that needs to come from the top. Once the interest is there, provide guidance to your staff by implementing a social media policy, and give resources and training to those who are interested. The effort required here is minimal, but the results could be incredible. Instead of the current situation with many local dealers struggling to understand how social media can help sell cars, we could as an industry decide to be active in the social community in a way that makes sense and boosts sales. If you try some of the simple tips I’ve discussed here, you could begin building a community of raving fans on social media and ultimately be rewarded with many more car deals.

LAURA MADISON

National Director of Sales for Alan Ram’s Proactive Training Solutions Laura is a former auto salesperson and now specializes in use of social media and personal branding by dealership clients. She has developed a “social selling” training course on how salespeople can effectively use social media and a personal brand to win more business. She has been featured in Automotive News and Advertising Age and on Edmunds.com.

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F&I

If You Don’t Want Hybrid Sales Reps, Consider

CROSS-TRAINING YOUR SALES & F&I MANAGERS

Doesn’t it make more sense to let them handle any issue your customer has with buying a car, loan or insurance? BY MARK TEWART

There is no good reason for different people to have to answer customers’ questions about a vehicle or insurance purchase.

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here are two things we know for sure in the dealership business. First, customers have complained about our F&I processes for many years. Second, they think the entire process (which of course covers F&I) of buying a car takes too long. Don’t dealers know enough to conclude it’s time to rethink their F&I process? Some dealership groups and even some manufacturers would like to eliminate stand-alone F&I departments. These dealerships typically cross-train their salespeople to handle both vehicles and F&I products. However, for purposes of this article, let’s assume that you are a dealer who has decided against a hybrid sales rep but that you would like to explore another solution to customer dissatisfaction with F&I. Now, as a dealer, you probably know that the turnover rate for automotive salespeople nationwide last year was 66 percent. You almost certainly have experienced the challenges of recruiting, hiring and training capable sales reps. You also may have struggled to get your

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salespeople to adequately perform their current sales duties and cannot fathom assigning them still other responsibilities (especially job functions that are critical to your dealership’s profitability and involve highly technical aspects of a sale that could expose your business to legal liability). Given that you already have decided that a turnkey salesperson is not a road you want to travel, what’s next? What are your viable options?

MANAGERS BECOME GENERALISTS Consider the following possibility: You no longer have separate sales and F&I managers. Instead, you cross-train each front-end manager to be a “customer concierge,” with duties of both sales and F&I management. These managers are trained to perform as a team and to handle whatever is necessary for a buyer of a car, a loan or an insurance product. The managers will be housed in one large office, while the rest of the current F&I staff works from their current area to present the menu and execute

paperwork. The managers will be expected to work together on deals and to communicate with the salespeople and customers faster and more effectively. Imagine if the wait times for a customer to speak with an F&I manager at either the point of sale or delivery, or with the sales manager about some aspect of the deal, were virtually eliminated. In the traditional “silo department/silo manager” structure, huge inefficiencies result in ineffective down time for managers when they could be working for and with salespeople and customers.

“If nothing else, isn’t the concierge manager approach at least worth a test at your dealership?”


HEADING OFF A BAD CUSTOMER EXPERIENCE Those inefficiencies would go away if your managers were effectively cross-trained and shared job duties based upon the TLC (“think like a customer”) concept. Typically today, a customer is experiencing a peak level of excitement when he or she has bought a car. Then, the dealership has that customer wait to meet with an F&I manager, the simple idea of which often scares him or her to death. Depending on the day and deal activity, the wait could be prolonged – even for hours at many dealerships!

“For many F&I managers, the days of

structuring deals and lender relationships based upon rehashing deals

and communicating with the lender are gone.”

At this point, that previously elated customer is experiencing anxiety, which can devolve into more fear and even anger before long. This dealership is creating its own sales prevention department. Making things worse, the customers can look around and see some of your staff without customers while they wait for some mystery F&I person. They cannot figure out why wrapping up the business takes so damned long and why they have to meet with F&I anyway. They can’t understand why the employees who aren’t waiting on customers can’t help get them out the door. At this point, you have perpetuated negative car buying imagery in the customer’s mind and this often results in getting bad CSI scores and potentially bad reviews that affect future buyers, their impression of your dealership, and their decisions shopping/buying decisions about you. With a few changes mentioned, most if not all of this can be avoided!

WHY YOU SHOULD ACT NOW Good companies always share good leadership, excellent communication, strong and wellexecuted processes, and willingness by their leaders to display a teachable spirit. Good leaders are always looking to learn and grow and are not reticent about change. They don’t get behind the tired axiom of “If it ain’t broke, don’t fix it” and avoid attitudes of “We have always done it this way.” In today’s marketplace, dealerships must be willing to adapt and change quickly. Being static is like a deadly cancer. Competitors that are changing will dominate you before long. The days of insisting, “Let’s wait to see how Dealership X does with its changes before we do anything” are over. Consider the potential positives and negatives of eliminating siloed departments and managers. The positives: Better communication, better cross-training, fewer inefficiencies, improved handling of customers, reduced or eliminated customer wait times and happier salespeople. The negatives: Well, what are they? I have a hard time coming up with a list.

Sales and F&I managers could work effectively from the same “concierge” office.

If nothing else, isn’t the concierge manager approach at least worth a test at your dealership?

MARK TEWART

The road to the sale has changed. It is not realistic to pretend that the roles of your managers and the nature of their involvement with customers must also change. The harsh reality of today’s marketplace is that either you can change, or the market will do it for you.

Mark is a sales expert and professional speaker, trainer, consultant, entrepreneur and author of the best seller “How to Be a Sales Superstar – Break All the Rules and Succeed While Doing It.” He has a 27-year career ranging from sales to becoming an executive manager at age 27, to founder and president of four successful companies. He is a professional member of the National Speakers Association and the Author’s Guild. Visit his website at www.MarkTewart.com.

TO SEE MORE FROM MARK TEWART GO TO CBTNEWS.COM

President of Tewart Enterprises Inc.

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ASSOCIATIONnews JEFF CARLSON TO CHAIR NADA BOARD IN 2016 Colorado dealer Jeff Carlson was elected 2016 chairman for the National Automobile Dealers Association during NADA’s latest board meeting in Palm Beach, Fla. Carlson’s term as chairman begins in January at McLean, Va.-based NADA’s Convention and Expo in Las Vegas, when he takes over for upstate New York dealer William Fox. Carlson currently is serving as NADA vice chairman. He is president of Glenwood Springs Ford and Glenwood Springs Subaru in Glenwood Springs, Colo.; and co-owner of Summit Ford in Silverthorne, Colo.

The 2016 ALI board also includes Lentz as past chairman; President Bob O’Gorman; Jeff Kritzer of BendPak in Santa Paula, Calif.; Stan Poweska of PKS Lifts in Ancaster, Ontario, Canada; Matt Webster of Vehicle Service Group in Madison, Ind.; Harold Yeo of TLS Lifts in Oakville, Ontario, Canada; and Gary Wainwright of Weco Automotive Lifts & Equipment in Bradford, Ark.

Jeff Carlson

The 2016 NADA secretary is Bill Willis, president of Smyrna, Del.-based Willis Automotive Group, which has Chevrolet, Buick and Ford dealerships. Neale Kuperman, president of Rockland Toyota in Blauvelt, N.Y., was elected treasurer.

NADA’S WELCH TOUTS DEALERSHIPS’ ROLE IN SOLVING RECALL PROBLEM Back-ordered repair parts and owner disregard of recall notices are the main reasons why the nation’s recall repair completion rate lags at about 75 percent, NADA President Peter Welch told a congressional subcommittee. At the moment, Washington-based NADA is strongly resisting a call to disallow rentals of vehicles, and sales of used cars, that are under open recall. Relatively minor problems would keep a vehicle grounded under such proposals, NADA says. Testifying recently before the House and Energy and Commerce Subcommittee on Commerce, Manufacturing and Trade, Welch pointed out that franchised new-car dealers are essential to performing recall repairs and improving the nationwide completion rate. However, dealers often must wait 60 days or more for a back-ordered recall repair part, and sometimes the delay can last more than a year, he said. He urged the subcommittee to improve the recall database run by the National Highway Traffic Safety Administration. It is designed for a consumer’s researching a single vehicle, and Welch said it needs to accommodate dealPeter Welch erships that want to automatically check each day which used vehicles in their inventory are under open recalls. “A tool that is searchable, automated and can batch multiple requests is critical to identifying open recall vehicles and getting them fixed,” he said.

NEW LEADERSHIP TAKES OVER LIFT INSTITUTE’S BOARD The new board of the Cortland, N.Y.-based Automotive Lift Institute will be led by Stet Schanze as chairman. Schanze represents Gray Manufacturing Co. in St.

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Bob O’Gorman (left) and Jerome Lentz

Separately, ALI and the National Occupational Competency Testing Institute signed a joint marketing agreement to promote to one another’s memberships NOCTI’s credentialing program and ALI’s online lift safety training program. NOCTI is run from Big Rapids, Mich.

Meanwhile, metro Chicago dealer Mark Scarpelli was elected vice chairman for 2016 to succeed Carlson. He is president of Raymond Chevrolet and Kia in Antioch, Ill., and co-owner of Ray Chevrolet in Fox Lake, Ill.

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Joseph, Mo., and he succeeds three-termer Jerome Lentz of Challenger Lifts in Louisville, Ky., as chairman.

AUTO FINANCE GROUP RECOGNIZED FOR ITS COMPLIANCE PROGRAMS The National Automotive Finance Association received the Auto Finance Excellence Award at the Auto Finance Summit in Las Vegas in late October. The award recognizes the Hanover, Md.-based association’s extensive consumer credit compliance educational programs. Over the last two years, the association has developed a consumer credit compliance certification program and introduced a compliance certificate program for finance company front-line staff. Recipients typically serve as collectors, underwriters, funders, salespeople or customer service representatives. More than 700 people have completed the online programs.

AUCTION TRADE GROUP TAPS BROWNING AS PRESIDENT FOR NEXT YEAR After a year as president-elect, Mike Browning was inducted as president of the National Auto Auction Association. Browning is general manager of Manheim San Antonio. He got into the auto industry in 1989 in car sales, and after more than a decade in retail jumped over to wholesale in 2003 as general sales manager of Manheim’s New Orleans auction. The Louisiana native became GM in New Orleans two years later.

Mike Browning

He succeeds Ellie Johnson, GM of Manheim North Carolina, as president of the Frederick, Md.-based association. Jerry Hinton, GM of Brasher’s Portland (Ore.) Auto Auction, is president-elect for the 2015-16 term; the vice president is Warren Clauss, general manager of ADESA Buffalo.

NIADA DOES LEADERSHIP TRANSITION WITH NEW CEO, CHIEF LAWYER Steve Jordan took over as CEO of the Washington-based National Independent Automobile Dealers Association, while Shaun Petersen will join the association staff on a fulltime basis as SVP of legal and government affairs effective Jan. 1. Jordan was elevated to the CEO’s post by unanimous vote of the NIADA board at a recent meeting. He joined the association in 2011 as COO and took charge of operations as EVP in 2013 after Michael Linn retired as CEO. Petersen has served as NIADA’s outside regulatory counsel since 2012, as a partner of the Ohio law firm of Mac Murray, Petersen & Shuster. He is a former Ohio deputy attorney general with extensive experience working with the automotive industry.


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SALES

Possible Answers For Tough

CHALLENGES IN KEEPING SALESPEOPLE HAPPY AND

CLOSING DEALS Insights about issues with promoting salespeople, getting test drives, BDC’s role, split sales forces BY DAVID LEWIS

Q

My top salesperson is interested in an opening at our dealership for a sales manager. He’s an amazing salesman but is not a good manager. I worry I will lose him if I don’t promote him. What do I do?

David Lewis: “I handle this in two parts.

The first thing is … a salesperson wanting to be a manager is a very logical progression. It tells us the salesperson likes what they do, they enjoy working at the dealership, and they want to move up to the next step. “I would sit down with the salesperson and I would truly tell him the pros and cons of making the switch. I would go over the pros of being a salesperson: His income level, all the benefits he gets, the fact that he is a team of one and he is responsible for himself. I would go over the pros of being a manager – there are pros to being a manager. And then I would go over the cons of being a salesperson and the cons of being a manager. “Obviously, I am trying to persuade him toward staying as a salesperson. I might need to incentivize him or her a little bit differently to be a salesperson. I might need to give them more time off, maybe some increased commission rates – something to make them feel they are special to us. “If the decision is made that they want to become a sales manager … I would give them every ounce of training I could provide them before putting them into that management role. I would literally spend two months on a training process. I would send them to sales manager classes, I would send them to leadership classes, coaching classes, motivation classes. And, this training has to be divided between in the dealership with the other managers, and outside the dealership. The problem we run into with training managers internally is, all we’re getting is an additional byproduct of our exiting managers. Meaning, if we want to make a change in management, why would I have the management I want to change train the new person?

This month, we asked leading sales trainer David Lewis for his thoughts on handling several prickly sales force issues that frequently confront dealers.

Q

“I’m going to give this person every benefit of the doubt before I put them in that role. A great salesperson is going to know how to pencil a deal and desk a deal, but does he know how to be a leader? That’s what defines a successful manager.”

What can I do to get these savvy customers who know so much about the vehicle before they get to the lot to still take a test drive, before we deliver price and trade-in value?

David Lewis: “The first thing we need to do is

train the salesperson on why the customer doesn’t want to take the test drive. They have two fears, and our studies are very, very clear with these two fears: 1) They’ll drive the car and fall in love with it, and their impulses will take over and they’ll buy the car without the logical thought they should give it. 2) They’ll drive the car and the salesperson sees their excitement level and become more aggressive to close the deal and put more pressure on them. “Now that we know why they feel this way, we have to teach the salesperson how to slow the process down. They don’t mind being sold, but

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they don’t want to be controlled. If they feel the salesperson truly cares about helping them, is truly not in a mode of ‘Sell, sell, sell,’ they become less defensive. “The way we recommend slowing this process down is, during the inventory walk, when most salespeople ask the customer, ‘Do you want to drive the car?’ we don’t do that. We ask first do they just want to sit in the car so they can see what the interior is like. It’s a less defensive posture. Once I get them in the car, I then spend about 5 or 8 minutes literally going over all of the features and benefits of the car – how to turn the radio on and off and set it, how the sun roof works, how to turn on the climate control, all the gadgets. Now that they’re comfortable with the car and it’s running, now is when I ask them if they want to drive the car. “When we teach this process, we find that our demo penetrations go from 50 to 60% to 90%.”

Q

We’re thinking about going to a BDC arrangement under which the BDC agents handle all incoming phone calls plus Internet leads. We’re concerned that the showroom sale department will rebel. Any thoughts about how to handle the situation?

David Lewis: “First of all, having the BDC take all the incoming Internet leads and phone calls is absolutely the right thing to do. When people call or e-mail the dealership, they’re doing it because they want to hide behind some kind of anonymity, especially when they e-mail … if we let our salespeople handle this, their approach is, ‘Close the deal, close the deal, close the deal.’ They’re way too aggressive trying to get people in the dealership, and it makes the customer more defensive.


If BDC agents bargain the car price down over the phone, that is an acceptable price paid to get the customer to the dealership.

“Whereas, [with] an Internet or BDC process, we teach these people – who are really not salespeople, they’re just people with great phone voices or great computer skills – to slow it down, to ask questions, to be more kind and courteous with the customer. We have to educate and train the salespeople to understand them. If we don’t, they’re going to buck, and once they start to buck, they’re going to start spreading cancer throughout the dealership. “Most salespeople would tell you they don’t like the approach because the BDC people give the car away over the phone or over the Internet. They bring the price down so low that [the salespeople]

can’t make any money when the customer comes in the dealership. But, that’s the way you’ve got to do it most of the time to get the customer in the dealership. When a customer calls four dealerships, if we don’t have the best price, we don’t earn the business to begin with. “The second thing we have to educate the salesperson on is, now how to create gross on that Internet customer. If the customer comes in with an Internet price on a specific car, all we have to do as a salesperson is … get them to look at something different that has a different price structure.”

Q

My new car sales team rarely sells used cars, and vice versa. However, I know they’re letting customers just leave the showroom without giving our dealership a legitimate shot at making the sale. How do I get the separate sales teams to focus on giving customers what they want?

David Lewis: “This is a very difficult situation. I do not agree with a split sales force. It does create animosity. It does create tension. Most people would rather sell used cars because they can make more money. “One thing you do not want to do is create a position where it’s a split or shared commission. For example: I’m a salesperson. I spend an hour with a customer in the new car department, but

they don’t want it. I bring them over to the used car department, but their salespeople aren’t keen because now they have to split the commission. The second thing that happens is, you’re going to have a lot of new car salespeople who are going to get a used car opp, spend 10 minutes with that person and then try to hand them over to a used car salesperson and get a split commission. “If you’re going to keep the departments separate, what you have to do is let the salespeople in each department make a full commission. Then, you as a dealership have to suck it up and pay a small bonus to the other person. Maybe the new car salesperson who spent an hour with a customer who wasn’t going to buy and then brought them over to the used car department gets a $50 or $100 commission for the introduction, while the used car salesperson gets a full commission. The only criterion I would have is, you would have to have management intervention before it got turned over. “My feeling is this: We should have a sales floor where everyone can sell everything. If you have designated new car and used car salespeople, I have no problem with that, but if I’m a new car salesperson and I spend two hours trying to sell my customer a Honda Accord, and they can’t afford it but I know I can put them in a pre-owned Accord for $100 less per month, I as the salesperson should have the opportunity to go earn that commission. I truly believe you can have a split floor, a specialist in each area, but they should be able to fully crosssell if they have a customer who wants to switch over to another product.”

DAVID LEWIS If the salesperson takes a methodical approach, this customer will end up taking a test drive.

TO SEE MORE FROM DAVID LEWIS GO TO CBTNEWS.COM

President of David Lewis & Associates David’s firm is a national training and consulting business that specializes in the retail automotive industry. He also is the author of four industry-related books, “The Secrets of Inspirational Selling,” “The Leadership Factor,” “Understanding Your Customer” and “The Common Mistakes Automotive Salespeople Make.” Visit his website at www.DavidLewis.com.

DECEMBER 2015

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DEALERSHIP CONSTRUCTION

THE TREND

Toward All-LED And Controllable Exterior Lighting At Dealerships Dealers should be aware of the implications and options of these trends. BY CHIP WALKER

I

t was a dark and stormy night. No, really. How does your dealership’s lot look? Can you tell a silver vehicle from a gray one? Does your front row “pop” with that Highline trade you just took? Do you have dark areas surrounded by hot spots, or places with no light coverage at all?

Maintenance required with these types of heads is extensive, expensive and frequent. Additionally, this older-style system cannot be integrated with other systems at the dealership.

OLDER-STYLE HEADS AND FIXTURES:

Output of these units diminishes over time in both quantity and quality.

LIGHT COLOR:

This is measured in temperature; it’s the “whiteness” of the light produced, not the intensity, that matters. One might assume that since light emitted gets closer to “white” the higher the temperature of the bulb is, a higher temperature output is desirable That’s not always the case.

HOW TO MEASURE LED FIXTURES

Automotive exterior lighting is a bit trickier to correctly assemble. LED products are measured in two ways:

COLOR RENDERING INDEX (CRI):

This is a scale from 0 to 100 percent that indicates how accurate a “given” light source is at rendering color, when compared with a “reference” light source. The higher the CRI, the better the colorrendering ability. This is a good thing, right? Again, be careful in making that assumption. Here’s why: If your showroom or exterior lighting include LED fixtures in a high ceiling or tall poles with a very high CRI index, a car painted pearl gray will look different than it will in sunlight, which is naturally lower in temperature and CRI rating. In short, sunlight has a lot of yellow in it.

Dealerships need to take the lighting of their inventory more seriously. Recently, there has been a huge focus on exterior lighting for new store construction and remodelings, mostly thanks to continued advancements with LED fixtures and heads. It probably seems like everybody and his brother has come by your dealerships promising, “We can save you tons of money if you update your lighting!” and “The payback is quick, and the lighting performance is superior!” These promises are often true, to a point, but the devil always lurks in the details. Let’s review some basic facts about exterior lighting at dealerships.

EXTERIOR LIGHTING ESSENTIALS

UTILITY EXPENSES:

This one of the single-largest cost items in operational overhead, often behind only payroll. Any impact on cost reduction a dealer can make in this area can be significant and long-term, and also can greatly enhance the customer experience. Most of the dealership exterior lighting systems I see not only are outdated but also are extremely inefficient.

FIXTURE TYPES:

The most common fixtures on dealership lots combine metal halide bulbs and ballasts (usually in 400- to 1,000-watt bulbs and ballasts) with dual, triple or even quad-head poles. These types of fixtures are either on or off; there is no capacity to dim, reduce or control the amount of light emitted.

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Choosing the right kind of bulb for each exterior application is not easy.


If your customer picked out a pearl white unit in the showroom at night, it may seem like an entirely different car (and maybe a less desirable one) sitting outside in the sun the next day.

FOOT-CANDLES OR LUX:

How high on a light pole your LED fixtures are mounted will affect whether the colors of cars below appear accurate.

This is a measurement of the quantity of light that actually lands on a surface, whether that surface is a car hood or a parking lot. The variables here are really simple. The farther the light source is from the illuminated surface, the weaker the intensity and the wider the beam spread is. This is why exterior lighting fixtures should be positioned high on poles in a dealership lot, in order to produce an even, consistent light footprint. The result is balanced and welldistributed lighting around the lot. This is the same reason a dealership might use shorter poles in the front row, so that cars and trucks parked there look brighter then in the rows behind. Or, you can just use the taller poles with brighter (more powerful) bulbs.

“Make sure before you pull the trigger that your new lighting plan meets all the local guidelines.” ANALYZE THE LIGHTING PLAN BEFORE YOU START

Ready to keep your current lighting and just forget about an upgrade? Take heart. By choosing a reliable lighting manufacturer and a competent electrician, you can get the performance, result and customer experience you desire.

If you are operating one LED 400-watt fixture at 100 percent, it delivers the same light as a 1,000-watt metal halide fixture at half the cost! Note that I said the LED fixture is operating at 100 percent. One of the really powerful advantages of LED is tht the user has total control. Fixtures can be dimmed.

The first step in a well-thought-out lighting project is having your engineer produce a photometric plan. This is simply a blueprint of your facility that shows your pole locations and heights, number of heads, and how powerful the bulbs and ballasts are. The software then will perform all the calculations for how the system will perform on every square inch of your lot.

So, if we go back to the math and LED fixtures operating at 100 percent cost half as much to run as non-LED fixtures, you can dim the lot without affecting how inventory looks. Savings are compounded when a dealership can operate the lighting system at levels adjusted to the surrounding light, while lots always look bright and cheerful.

Within that software, one also can switch the type of lighting systems, bulb sizes and head configurations to customize the lighting plan to meet your budget. In some cases, you can retrofit new heads onto existing poles and update the entire lot at a much lower price. As a bonus, since LED fixtures use much less power, you could reuse the wiring that is already in place (as long as it is functional).

Lastly, security systems can be tied into lighting

Keep in mind that almost all county, city and town governments have some form of lighting restrictions and covenants. Make sure before you pull the trigger that your new lighting plan meets all the local guidelines. Your engineer and electrician can help here as well.

ADJUSTABILITY OPENS LED POSSIBILITIES

Now, let me add one more factor to consider. The new LED lighting systems have a tremendous advantage in operational expense. If you allow me a bit of wiggle room, because there are so many variables, the math is not that complex.

TO SEE MORE FROM CHIP WALKER GO TO CBTNEWS.COM

with cameras and sensors that detect movement. If it is after-hours and exterior lights are at lowsecurity levels, and a camera or a motion sensor detects movement, the entire site can be raised to 100 percent lighting. Plus, some systems send an e-mail to the dealer detailing what just happened, and the dealer can call up the video from anywhere in the world via smart phone or iPad. In conclusion, just make sure to do lots of homework before picking a lighting manufacturer. Ask questions. Find out whether the system is manufactured or assembled, and by what company; whether it is backed by a warranty; and how and where you would get service. Investing in your dealership’s appearance is always money well spent.

“Most of the dealership exterior lighting systems I see not only are outdated but also are extremely inefficient.” CHIP WALKER

President of Custom Facilities Inc. Chip has 25 years of construction and design experience and also spent 10 years as COO of one of the largest dealership groups in the Midwest. He also serves as his company’s in-house expert on manufacturer’s imaging programs and on compliance requirements. See the website at www. buildmydealership.com.

DECEMBER 2015

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S D R OR AVOIDING KEYWO MARKETING

SELECTING

Carefully Will Pay Off In An Improved Marketing ROI

Dealers need a strategy to bid on well-focused keywords and make sure others don’t call up their ads for the wrong searches. BY AMY FARLEY

A

strong keyword strategy is one of the most important aspects of your dealership marketing team’s online paid search efforts. By selecting your keywords properly and implementing the right “negative” keywords, you should see more qualified clicks on your ads and an overall improved marketing ROI. Selection of keywords for paid search campaigns should be strategic and carefully planned. If your aim is to improve the quality of your ad clickthroughs, then your keyword strategy should be tied to the sales funnel. People who are searching for high-sales-funnel keywords are much less likely to click on your ad with the intent to schedule an appointment or make a purchase. This makes those clicks less valuable to you – and remember, you’re paying for each click you receive. High-sales-funnel keywords include broad terms like “Nissan Maxima.” People who search for that term are likely in the research or consideration phases of car shopping (if they’re even in the market for a vehicle at all). They may want to gather information about that particular vehicle, but they are not necessarily interested in your dealership or even committed to the brands or model lines you sell. To make the most of your digital ad dollars, you may want to avoid bidding on these types of broad keywords.

Keywords With Greater Value Conversely, choosing to bid on low-sales-funnel keywords can improve your ROI, because consumers who are searching for these types of keyword terms are more likely to be qualified car shoppers, making their clicks worth more. Examples of low-sales-funnel keywords are more specific terms such as “buy a Nissan Maxima,” “Nissan Maxima dealership Austin” and “new Nissan Maxima for sale.” Consumers who are searching for these types of terms are likely primed to buy, or ready to come into your dealership. Searching for such terms indicates more strongly that someone is ready to purchase that model, or at least to take one for a test drive, and needs to find your dealership to do it. 28

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As a consequence, these types of keywords are much more valuable to dealers. They represent shoppers who may actually be in-market to make a purchase at your dealership.

Within the “Keywords” tab of Google AdWords, marketers have the ability to develop a list of negative keywords. When a user searches for a phrase that contains one of them, your dealership’s ad will not show up.

Let Dealers Handle Broad Keywords

For instance, if yours is a Ford dealership, you may want to run paid search ads related to the Ford Explorer. However, the word “Explorer” has other associations that have nothing to do with your dealership, like the children’s

There’s another good reason that dealers at the Tier III level should avoid bidding on and purchasing high-sales-funnel keywords. A dealer’s Tier I and Tier II parent organizations likely already take care of these keywords. If the parent companies have already bid on broad keywords like “Nissan” or “Nissan dealer,” then there is less need for individual dealers or dealer groups to purchase them as well. It would simply waste your paid search budget. Traffic to the OEM or Tier II websites that results from these types of keyword searches will, in theory, funnel down to your dealership website if a consumer is in-market to purchase, lease or service a vehicle. These methods of selecting (or conversely, not selecting) your keywords can work to keep your overall SEM strategy competitive and cost-effective.

What ‘Negative’ Keywords Are Once you’ve put together your strategy for keyword selection, it’s time to examine your negative keywords, i.e. terms for which you do not want your ads to show up in a search. In many cases, these terms share a word with keywords you have selected, but have a completely different context.

You don’t want this ad popping up unless the searcher really is in the market for a car.

“Choosing to bid on low-sales-funnel keywords can improve your ROI, because consumers who are searching for these types of keyword terms are more likely to be qualified car shoppers.”


" s e r u t ic p d r o c c A a d n "Ho “Honda Accord scam” cartoon show “Dora the Explorer.” It would do you no good to serve up your ads when someone searches for that term, so you might add “Dora” as a negative keyword for your campaign. This way, while a search containing “Explorer” might normally trigger your ad, adding “Dora” to your negative keyword list won’t produce it. While it’s true that someone searching for “Dora the Explorer” probably would not click on a car dealership ad anyway, a misdirection from ad impressions can harm your overall account optimization. Negative keywords help you optimize your account so that you aren’t fooled into thinking that a keyword with high impressions is a strong one, when in reality, consumers searching for that term aren’t at all interested in your dealership.

Putting Negative Keywords To Use Negative keywords help eliminate unrelated clicks on and impressions of your ads, but you also can use them to help qualify the clicks that you do get. To do this, you may want to drill down even further. For example, you might still choose to purchase the keyword “Ford Explorer” but also use negative keywords to ensure that your ads do not show up on searches for keywords that are clearly high in the sales funnel. Someone searching for “Ford Explorer pictures” is likely unready to make a purchase, so you might set “pictures” as a negative keyword.

Dealerships should let OEMs grab up broader keywords and make smart use of so-called negative keywords themselves.

“Negative keywords help eliminate

unrelated clicks on and impressions of your ads, but you also can use them to help qualify the clicks that you do get.” negative keyword list. “Ripoff” and “scam,” for instance, are search terms that you never want to call up your dealership’s ads. You might also decide to exclude certain service terms from your sales campaigns, certain sales terms from your service campaigns, or specific years from your new inventory campaigns.

Compiling A Negative Keyword List It can be challenging to create a comprehensive list of negative keyword possibilities, however. AdWords can help a dealership with that. Once you’re logged into your AdWords account, on the Keywords tab, you can click on a button called “Search Terms” to see for which specific terms users are actually searching to trigger your ads.

In some cases, these terms will make perfect sense to you. An example: Someone searched for “VW Passat TDI,” it triggered the keyword “VW Passat,” and an ad for that vehicle was shown. Other times, the connections won’t seem to make any sense at all (as in the Dora the Explorer example I discussed, when a search for “Dora the Explorer” triggered an ad for the Ford Explorer). The “Search Terms” tool is a great way to generate ideas for negative keywords by examining what people are actually searching for, and it’s easy to add these ideas to your negative keyword list (which can also be found in the Keywords tab). Putting careful thought and strategic planning into your keyword selection – in terms of both actual and negative keywords – can pay off in better, more qualified clicks and improved marketing ROI.

AMY FARLEY

Media and Communications Manager at Force Marketing Amy is a skilled writer and editor with a keen interest in digital trends and topics in the automotive industry. She utilizes her knowledge of what is new in retail automotive marketing to help Force – an automotive digital, direct mail and email marketing firm based in Atlanta – with its evolution of the dealer-to-customer shopping experience. Visit the website at Forcemktg.com.

Certain keywords always have a place on your

TO SEE MORE FROM AMY FARLEY GO TO CBTNEWS.COM

DECEMBER 2015

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29


SALES APPROACH

Consider These Factors To

GET THE MOST

FROM BDC AGENTS PAID BY THE HOUR Keep your hourly rate competitive and implement fresh incentives daily and monthly.

BY BILL WITTENMYER

A

friend of mine says all the time that “Our pay raise becomes effective when we are.” It is his way of saying that we earn more when we do more, when we become more productive. Sounds simple and logical enough, but devising a productive pay plan actually is one of the more challenging undertakings at a dealership, especially where business development centers are concerned. Many different thought processes and operational considerations are involved when it comes to paying BDC representatives. It is not easy – in fact, it can be monumentally difficult – for a dealer to balance optimal efficiency and BDC production vs. cost and ROI.

Concede That This Is A Tough Job

In discussing the broad options for compensating BDC reps in this article, let’s first face the obvious: Running a BDC as a manager, or working as a phone agent, is difficult. Very few people aspire to make calls all day, every day. It’s a tough job that most of us would regard as repetitive and mundane. Also, dealers should recognize that the skill set a good BDC agent must possess is not commonplace. Just think about the number of different phone scenarios he or she must executive properly, especially from the service department’s point of view. With those calls, the BDC rep becomes the voice of fixed operations and must understand and maintain numerous operation codes and technical information; juggle scheduling constraints, tech levels and hour optimizations; and meet customer service and experience expectations. Finding people with those talents isn’t easy; retaining them is even harder. However, high labor turnover is detrimental to the BDC’s expense structure and negatively affects customer experience. To run a successful BDC, a dealer must

implement a pay plan that is attractive enough to recruit and retain talent, but that also maximizes operational efficiency and productivity. With those challenges as a backdrop, let me add that every dealership’s culture is unique. So, a “one size fits all” pay plan for BDC agents is ill advised. Dealerships in heavily populated metro markets have different challenges than those in rural areas, including BDC compensation. The keys to success for any BDC lie in performance and monitoring of production, which includes tying monthly activities and goals to the pay plan.

Pros And Cons For Hourly Plan

When developing a pay plan for BDC agents, a dealer must consider both structures: salary or hourly rate. If each approach didn’t have many advantages and challenges, the choice certainly would be easier. While salaried BDC staff means no overtime and (presumably) improved retention, job stagnation, lack of performance and disproportionate costs-torevenue-generation ratios can become problems. Hourly wages enable dealerships to employ more agents, reduce per-person base compensation and control benefit costs. Dealers also get more flexibility in hours of BDC operation. However, overtime expenses can climb, and reps sometimes become less productive during their regular hours in order to ensure they work overtime.

Don’t Cut Corners On Base Wage

Dealers must weigh several important provisions in considering an hourly pay plan for their BDC, but the most significant is to pay agents an hourly wage above the average for all industries in their region and for comparable local markets. I believe if they pay more, they will attract a higher-quality talent base.

Choices diminish if a BDC agent will make no more per hour than at the fast food restaurant down the street. That person will be inclined to take the fast food job, which is easier and carries less responsibility. Thus, the talent from which you can choose just dropped a grade level – maybe more. It also is crucial to aggressively manage the BDC rep work schedule and hours, with the goal of avoiding overtime. Of course, you will always have employees who “call out” and need their shifts covered, but the dealership can prepare for that event with a deeper agent bench. If overtime is unavoidable, dealers need to make sure it is tied to call-outs and not to reps not completing their original tasks during regular hours.

The Kinds Of Bonuses That Work A BDC that utilizes an hourly pay structure cannot thrive without incentives. Some of the best I see come in the form of contingency bonuses. First, the dealership should implement a unique goal for a single daily bonus opportunity. For example, you could add in a one-day bonus (for a set dollar figure) for every vehicle detail upsold when scheduling a service appointment. That incentive should be implemented as a “daily difference bonus,” and incorporated into agents’ word tracks. For every upsell executed, give the rep a bonus on top of the hourly pay. Change the goal and bonus amount each month; variety will keep the targeted goal fresh and provide an incentive for increased performance in targeted areas of production. Also, a dealer could institute a monthly bonus based on less-defined concept, such as the “call of the month.” The criteria should be set each month, based either on a scoring system or on the general

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Monthly bonuses should be awarded at a BDC staff meeting, which also can serve as a mentoring session.

“Every dealership’s culture is unique. So, a ‘one size fits all’ pay plan for BDC agents is ill advised.” goals for that call. Criteria should stem from the goals set for your BDC, and all phone calls that fit that month’s criteria would need to be analyzed or reviewed. At the same time the bonus is awarded, you should take advantage of the opportunity to review the call and to mentor the entire team. The bonus needs to be substantial in a BDC agent’s eyes – say, $200. You could include other monthly call quality bonuses for second and third place. I have seen such bonuses promote a happier and more satisfied workplace and let BDC agents showcase their skills. They don’t always have to be monetary; restaurant certificates or event tickets accomplish the same purpose.

must be established and clearly understood – number of attempted dials, successful contact ratio, survey completions, average call length, number of script variations throughout the day, etc. Then, the pay plan needs to incent those goals judged as most crucial to the dealership. ➤ Keep directions simple and concise. Employees who don’t understand the incentive or how to achieve it will lose belief and focus, and fail to accomplish the goal. Don’t overcomplicate the qualifiers or the scoring methodology for the incentives and call reviews. ➤ Change things up. Keep monthly goals and bonuses fresh. Reward different skill sets by

changing the goals every month. This gives BDC agents more opportunities to succeed and works on their areas of deficiency. ➤ Measure performance and provide feedback. It’s critical to measure every day the important BDC activities that your dealership manages. Provide reps with feedback on success, and coach them on items that need improvement. Regardless of what BDC pay structure your dealership implements, the mission always is to define clear goals and manage activities and expectations throughout the day, every day. A pay plan is merely a guide to achieve the goals that your dealership has set for the BDC.

Getting Started To summarize, these are the key considerations to maximize the effectiveness of a BDC agent hourly pay plan: ➤ Offer above-average pay. If you pay average hourly wages, expect average talent and performance.

BILL WITTENMYER

Partner at the ELEAD1ONE division of Data Software Services LLC Bill has over more than 20 years of experience in the automotive space and currently manages multiple divisions within his organization including sales, marketing, OEM relationships and large-client accounts. He speaks at several prominent automotive forums each year. Before joining ELEAD1ONE, he spent several years in dealership operations management.

➤ Set performance goals, and align incentives. The goals your dealership has for its BDC

TO SEE MORE FROM BILL WITTENMYER GO TO CBTNEWS.COM

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31


ON THE SET WITH April Rain, CEO of Digital Rain Inc.

Becky Chernek, owner of Chernek Consulting LLC, with Kirk Manzo, host of “F&I Today”

Bruce O’Brien, VP of sales at SpinCar, with Corinne Lillis of CBT News

Jennifer Briggs (right), director of dealer strategy at ZMOT Auto, with Corinne Lillis of CBT News

Tim Kintz, president of The Kintz Group

Ricky Lopez (left), VP of Ross Advisors, with David Kain, host of “Kain & Co.”

Greg Brink, senior director at AutoWeb, with Corinne Lillis of CBT News

Adam Robinson, CEO of Hireology, with Corinne Lillis of CBT News

Joe Chura, CEO of DealerInspire & Launch Digital Marketing, with Corinne Lillis of CBT News

Jeff Wardwell, CEO of Stealth Shopper, with Corinne Lillis of CBT News

Michael Sos, product manager for interactive media at Dominion Dealers, with Corinne Lillis of CBT News

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Jason Dorsey, an expert on marketing to millennials, with Corinne Lillis of CBT News


JOE VERDE

The #1 Training Company In The Car Business

“Looking For Profit In All The Wrong Places” Joe Verde

D

ealers and managers work longer and harder than their counterparts in almost any other industry, and most do it without having any real training in any of the positions they’ve held along the way. The biggest reason we’re conditioned to work so long and hard, is because of that lack of training. Most dealers and managers spend their time and money looking for more sales and profits in all of the wrong places. So in the end, they miss 3 deliveries for each sale they put on the board. If your goal is to grow, answer these easy questions... 1. Which is the easier type of customer to sell to – a repeat customer or an ad-driven, price shopping prospect? 2. How about your gross profit, who pays you more – a customer from service or the drive by shopper? 3. Which of these is your hottest prospect for a delivery right now – the be-back who just pulled back on the lot or the brand new prospect who just parked next to them? Of course you know the correct answers... So what are 90% of the dealerships focusing on right now: • Selling to those low cost, easy to close, high gross customers or • Driving more expensive, hard to close, price shoppers? Read the comment in the box below – this is the kind of result our dealership partners get when they implement our processes in sales and management, and then teach everyone the skills they need to sell more vehicles, at higher profits, to happier customers. Yes, compared to doing nothing, training seems expensive... But not training costs an average 100 unit dealership over $1,000,000 in net profit every year they could have had. In fact, you probably can’t even spend as much on our training in a year as you waste every month right now on marketing and ads that don’t work. And I can prove that to you in my new book, ‘Top 7 Revenue & Profit Sources’.

What Everyone Forgot To Teach Us... “How To Turn 60% Of Your Gross Into Net Profit” There are two types of gross profit; the good kind and the bad kind. We were taught to focus on the toughest sales, that have the highest expenses, and the lowest gross profit. That’s why you often sell more and make less. Top 7 Revenue & Profit Sources In Your Dealership You have 7 revenue sources in your dealership that always generate good gross and send 60% to your net profit. Focusing on these 7 sources is critical, because where and how you make your next sale has so much impact, that you could deliver 4 or 5 more of the leads you buy now, and still not earn as much net profit as selling just one more unit from any of the 7 areas I cover in my new book. • Strategic Growth...If your goal is to earn more profit and grow every year, my new book is definitely for you. You can use any of these 7 revenue sources to strategically control your unit sales, your gross profit per vehicle, your net profit, and your growth every single year. We teach you how to improve in these 7 areas for today’s competitive market in our new management workshop, “Managing Your Salespeople For Continuous Growth”. It’s the class every manager needs now to increase profits. Get my new book and bring your managers to our workshop to make 2015 & 2016 your most profitable years ever.

To get Joe’s new book just scan now or go to JoeVerde.com/CBT (It’s FREE!)

Joe Verde Workshops Salespeople & Managers n How To Sell A Car, Stay Off

Price & Close The Sale

Want a 20%-50% boost in sales and gross overnight? Sign up now or take the course on JVTN®. n How To Close, Overcome

Objections & Negotiate

Tired of missing deals that should have become deliveries? Live & Online...Call today. n Phone & Internet Leads Dealerships miss 8 out of 9 deliveries from these lead sources. We fix that, live in this workshop and online at JVTN®.

Dealers & Managers n Managing For Growth & Profit Our ‘Team Leadership’ workshop is the critical class managers never got on “Managing Salespeople & Profits”. Attend this workshop first. n Working Deals (Negotiation) Improve your sales and gross with this easy ‘customer friendly’ 3-Step Process on every deal you work. n Learn To Hold Effective Training You train M-W-F for 2 reasons, to improve & grow. Problem: If you don’t train, you don’t improve and you don’t grow! Sign up today.

Change your life • Call 1-888-712-6647

$2,905,988 i n PoTenTial That’s the potential every year in a 100 unit dealership, just from the Floor TraFFic they get now. If you’re like most dealerships, you’re probably doing everything but what I cover in my new book to increase your sales and net profit. Most dealers focus on social media, more ads, more events, more leads, value pricing every vehicle (Really! Lower your gross to improve profits?), adding a BDC / Internet Department, and more. But that hasn’t doubled your net profit, has it? Why? Because being ‘liked’ online, having the cheapest prices in town, or buying more leads and ad space for more floor traffic isn’t, and never was the problem. What is there not to understand? • Every customer comes to buy and... • 8 out of 10 people do buy but... • dealers miss 6 of 8 sales because... • their salespeople can’t sell. Not only is there a realistic potential to turn the typical $500,000 pretax net in a 100 unit dealership into $2,905,988, you can do it without spending any more on Ads, Leads or adding a BDC, Social Media Guru, or separate Internet Department. What about you? Are you open-minded and willing to look at some easy examples, and double your net profit by refocusing from being market dependent, to becoming management driven? If you are, get my new book now and get to our class – and turn your management meetings into strategy sessions.

JVTN® – ONLINE TRAINING North America’s #1 Tool For In-Dealership Sales Training

Call now for a free JVTN® tour • 1-888-712-6647 “We’re up 134 units a month!” “About a year ago while on vacation, I brought Joe’s book ‘A Dealer’s Guide to Recovery and Growth’, and I couldn’t wait to get back to work and learn more about Joe’s training. We have since attended Joe’s 2-Day Manager Workshop and implemented JVTN®. Our dealership has completely turned around. We now have a sales process everyone follows, we track everything we do, we set goals religiously, and we have weekly training meetings with our salespeople. We were selling around 50 units a month, and this year we had an all-time record month and sold 184! Joe, thank you for getting us on track and pointing out that there is no secret to success, it’s working smarter, not harder like we were doing.” – Marvin Potter, GM, Matthews Auto Group, Vestal, NY


SALES APPROACH

DON’T FEAR BEING ‘MYSTERY SHOPPED’Shape The Process To Work For Your Dealership

Worry more about what motivates online shoppers than about your grade, and sales performance will improve. BY DAVID KAIN

V

ery few phrases elicit the level of concern in the hearts of dealership team members that “mystery shopping” does. I know how this feels from both sides of the coin – first as a salesman being “shopped” while working at our family dealership, and now as a trainer performing “shops” of hundreds of salespeople. I don’t know about you, but I always hated waiting on the results even when I felt confident I had done a good job. A central cause of the frustration for sales team members arises from the reality that many OEMs use outdated criteria when grading outcomes of dealership mystery shops. Whether the OEM conducts the shops itself or uses an outside agency, I find the grading to be archaic and not reflective of what it takes to motivate automotive customers to engage with dealership personnel.

With all the changes in how customers shop, it is past time for OEMs to update their grading criteria. Our global recommendation to clients has been to not worry so much about OEMs’ grading systems and instead to focus intently on what factors get positive responses from customers. In other words, if a dealership gets too hung up on its mystery shop grade, it likely will sell fewer vehicles to online shoppers. Focus on what works to sell cars at your dealership, and any heat from your OEM rep will fade of its own accord.

KEEP SHOP RESULTS IN PERSPECTIVE

Nowadays, with my company’s own mystery shop services, I always refuse to reveal results to dealership managers during meetings unless they agree not to make any disciplinary decisions based

on them. Too often, I have seen frustrated dealers and their managers call out team members during a 20 group meeting over what they regard as poor effort and results. However, this type of reaction rarely has a positive effect. My recommendation always is to look at a mystery shop as one moment in time, which typically identifies opportunities for improvements in sales processes and tactics. When used properly, it can inspire team members and drive professional development. Beyond the opportunity for professional development, mystery shops also provide an exceptional mechanism to study the sales tactics used by your competitors, as long as you set up the shops properly.

Review messages exchanged during your dealership’s online sales communications at a monthly meeting, as a training tool. 34

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TACTICS FOR YOUR OWN SHOP PROCESS Rather than wait for your manufacturer to mystery shop your dealership, I recommend you launch our own, ongoing shop strategy. You want to be proactive, not reactive. Following are some granular steps I’d suggest in that regard.

1

Create a mystery shop binder for your dealership, with tabs for each month of the year. An alternate approach is to utilize Dropbox or Google Docs to accumulate your shop results. I actually prefer the physical binder, because it is so easy to review the results and share them with your sales team.

2

Create a mystery shop e-mail account, using one or more of the contemporary e-mail providers (gmail from Google, ymail from Yahoo, AOL mail etc.).

3

We use Vonage.com phone numbers, because they are so inexpensive. Also, once you have a primary number, you can create area codespecific virtual numbers to receive voice mails from the sales team.

4

Enlist help from your sales team to conduct the shops. The goal is for them to learn what a customer experiences when he or she shops online. I have found salespeople become more empathetic and understanding of why customers are often put off by the car buying experience.

5

6

7

8

Try different name variations from month to month to witness how your dealership responds differently to men, women, perceived nationality, ethnicity, etc. There are some interesting studies on name discrimination, and you may be surprised to discover how this can be an issue at your own dealership. Check out this older study whose results I believe are still relevant: http://bit. ly/NameDescrimination. Mystery shop in a variety of ways, to learn how your sales team and your competitors respond to different type of leads. For example: Shop for in-stock new or used vehicles with and without a trade-in, shop via live chat, shop by using the trade-in form, shop with and without comments. Shop at a variety of sites such as Kelley Blue Book, Edmunds, AutoTrader, Cars.com, Autobytel, Cargurus, LemonFree, TrueCar and OEM web sites to determine whether your team and your competitors vary responses based on the source, as they should. The education from simply shopping various sites can be amazing. Be sure to capture and print screen shots of the vehicle detail pages and post-submission messages, and place them in your binders. This allows you to review and discuss them with your team. Collecting this information helps you understand what motivated the customer to submit his or her information. Similarly, gather and print your dealership’s responses, and place them in your binder. Then, host a monthly training meeting to review the results. If you set up the Vonage account (a Google Voice account works too, but not as well), organize the voice mails you’ve received and play them back for your team in a training session. TO SEE MORE FROM DAVID KAIN GO TO CBTNEWS.COM

Your salespeople need to get attuned to what this customer experiences when she shops with your dealership online.

“Whether the OEM conducts the shops itself or uses an outside agency, I find the grading to be

archaic and not reflective of what it takes to motivate automotive customers.” 9

Create a scoring methodology (I can provide one, if you’d like; message me at david@ kainautomotive.com) to objectively assess how your sales staff and your competitors performed. You want to:

A

Measure and compare response times.

B

Compare subject lines and decide whether you would have opened the e-mail if you were the customer.

C

Review the message and determine whether it mirrors your request.

D

Review whether answers were provided to your questions.

E

Review whether the message provided a price.

F

Decide whether the response deserves a response from you.

G

Listen to voice mails and decide whether you would call back.

H

Compare the response quality and decide from whom who you’d prefer to buy and why.

10

Repeat monthly!

AN ALTERNATIVE, IF YOU’RE SKEPTICAL

The effort you put into this activity will pay off in so many ways. Rather than work with theories, your dealership is working with reality. This affords a solid platform for performance improvement. Many dealers will insist what I recommend is too much effort. If you fall into that category, I recommend you try the services offered by www. stealthshopper.net. StealthShopper offers a platform that organizes shops and their responses in an easily accessed online environment. My company uses it for our own clients and we even have created our own grading criteria within StealthShopper’s system. Bottom line: Mystery shopping actually should be regarded as “mastery shopping.” That’s the moniker we use in my company, because if a dealer handles the process properly, you in fact will become a master in properly responding to Internet requests from car shoppers. Be proactive; create your own learning environment. Your sales team will quickly appreciate knowing what they need to do to ensure exceptional results.

DAVID KAIN

President of Kain Automotive David has a unique background that includes automotive retail, OEM executive leadership and digital sales training and consulting. His 20 years in retail included various positions in sales and service at Jack Kain Ford, where he remains a partner today. He also was the COO and co-founder of FordDirect.com, the Internet lead provider to Ford and Lincoln dealers. In 2003, he developed Kain Automotive. Visit his website at www.KainAutomotive.com.

DECEMBER 2015

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MARKETING

STOP MAKING THE

MISTAKE

Don’t assume this customer has identical interests either with all women or all millennials.

Of Strategizing Your Marketing For All “Millennial” Or “Women” Buyers Dealers must not equate these broad customer groups with common market segments that they can effectively target. BY DENNIS GALBRAITH

I

hear or read many dealers, their marketers and consultants as they discuss millennials and women as though these are unified market segments to whom the same marketing strategy will produce similar results. This is a gross overgeneralization. Segmentation can be a valuable marketing tool for auto dealerships, but broadly defined groups of people are not actionable market segments. Dealers need to stop thinking of millennials and women as polyglot buyer groups. For example, Volkswagen traditionally has done a good job selling to women buyers. However, the manufacturer’s women customers aren’t all looking for the same things in a car and are not in the market for the same reasons. Plus, Volkswagen would go out of business if it marketed only to women. Abundant research has shown that a very high proportion of millennials find negotiating a car price or spending hours in a dealership to be distasteful. Does this mean that all millennials desire the same shopping experience? No. Market segments must be more narrowly defined than “millennials” and “women” to be actionable for an auto dealership. In practical reality, the only trait all millennials share is being born during the same broad time period, which ranges from 1982 all the way to 2004 depending on which expert you ask. As far as I can tell, the only common trait among all

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women car buyers is their gender.

WHAT SEGMENTATION IS ALL ABOUT Modern digital marketing lets dealers send separate messages to distinct groups of shoppers, thus utilizing their marketing dollars wisely. For example, say there was a nationwide 40-day supply of Jeep Wrangler but a 94-day supply of Jeep Renegades. A Jeep dealer could spend more than usual on cost-per-click to attract shoppers interested in Renegades to its website, while cutting back or postponing spending on marketing Wranglers. Regardless of their age or gender, Wrangler intenders and Renegade intenders are low-funnel shopper segments that are meaningful and actionable to dealers. Moving up the proverbial purchase funnel, dealers might opt to target prospects who purchased or leased a similar vehicle during the timeframe most associated with replacement. Or, they might choose to go after existing customers who are going through one of the life experiences frequently associated with change in the family vehicle fleet (e.g., marriage, purchase of a first home, a first child, a vehicle accident). Most dealerships don’t need to market to everyone in town or even to large segments of the community. At any given time, only 4 percent of people in a local market are interested in buying a vehicle. Even for manufacturers that compete over a wide array of price categories (e.g., Toyota,

“Market segments must be more narrowly defined than ‘millennials and ‘women’ to be actionable for an auto dealership.” Ford and Chevrolet), fewer than half of that 4 percent will be considering a late-model vehicle of the types the dealer represents. Dealership marketers are capable of identifying finely tuned segments and advertising to them directly. A Chevrolet store’s message may be very differently positioned to Cruze shoppers than to Camaro shoppers, but neither prospect likely will ever see the message designed for the other.

AVOID THE WORST MISCHARACTERIZATIONS Advocates of extremely broad segmentation often are vendors offering a training program on how to


treat “millennial buyers,” “woman buyers” or some other broad group. Undoubtedly, some stores and dealers would benefit from sensitivity training when it comes to their female and younger buyers. However, that challenge amounts to simply correcting a training deficiency; it should not be confused with market segmentation. Also, some of the statistics tossed around regarding broadly defined groups are misleading. Take, for example, the claim: “Millennials have the greatest life-cycle value of any market segment.” A dealer may react by worrying he is doomed unless he unlocks the magic strategy to meet the needs of these shoppers. In truth, the youngest group of buyers always has had, and probably always will have, the highest life-cycle value for car dealerships. On average, these buyers simply are going to live and buy longer. Millennials are credited with blazing the trail for mobile and social media. Again, making shopping trends advance generally has been characteristic of young shoppers across all generations. For example, in the mid-1990s younger buyers led the move toward online car shopping, well before any millennial was old enough to buy a vehicle and before many were even born. Dealers always have needed to keep their eye on trends with younger buyers; this priority did not begin with, and will not end with, millennials.

REFINE YOUR TARGET PROFILES The purpose of advertising is to sell products faster and/or at a higher price than would otherwise have been the case. Dealerships need to target their ad dollars on the people most likely to advance or begin consideration of the vehicles the dealers most need to sell. That leads to selling more cars at a higher total profit. That’s what market segmentation is about. A proper market segment for a dealership and its marketers to consider might be women who have children and who work fulltime in a job for which the vehicle is very visible as she visits or entertains clients. These women share the common need to obtain a vehicle that is as appropriate for work as for family needs. This target market segmentation can be narrowed further based on the vehicle’s affordability or the number of seats required.

BROAD SEGMENTATION IS OUTDATED Broad market segments are a relic of mass media. In the 1990s, there was little need for fine-tuning market segments. Various radio stations and TV programs were designed to attract a particular market segment, but the targeting by those media rarely had anything to do with vehicle needs and even less to do with shopping preferences. That is not the marketing reality today. Dealers now can advertise directly to specific vehicle intenders, owners of specific vehicles or shoppers with specific credit scores. Segmentation is narrowly defined because the media opportunities available are so specific. Digital advertising can be extremely targeted. Dealers can segment shoppers looking for the exact inventory their store most needs to sell.

TO SEE MORE FROM DENNIS GALBRAITH GO TO CBTNEWS.COM

“Dealers always have needed to keep their eye on trends with younger buyers; this priority did not begin with, and will not end with, millennials.”

HOW MARKET SEGMENTATION CHANGED IN RESPONSE TO SHOPPER MEDIA ENGAGEMENT AND NEW MARKETING OPPORTUNITIES

OLD SCHOOL INPUTS

MODERN APPROACH INPUTS

· BROADLY DEFINED SEGMENTS (E.G., 25-54 YEAR OLDS)

· NARROW SEGMENTS (E.G., ACTIVELY SHOPPING FOR A KIA SOUL IN CERTAIN ZIP CODES

· SAME MESSAGE WAS SENT TO EVERYONE THROUGH MASS MEDIA

· ADS AND LANDING PAGES ARE CUSTOMIZED FOR EACH SEGMENT THROUGH HIGHLY TARGETED DIGITAL ADVERTISING

OUTPUTS · MESSAGE WAS SPREAD ACROSS THOUSANDS OF SHOPPERS, WITH ACTIVITY OFTEN COMING FROM FEWER THAN 1% · RETURN ON INVESTMENT WAS VIRTUALLY IMPOSSIBLE TO CALCULATE. KEY METRICS WERE REACH AND FREQUENCY

OUTPUTS · HIGHLY TARGETED MESSAGES ARE GENERATED BY AUTOMATED SYSTEMS UNDER EXPERT CONTROL. A DEALER ONLY PAYS WHEN SHOPPER ACTIVITY RESULTS. · COST PER CLICK, COST PER LEAD AND COST PER SALE ARE CALCULATED AUTOMATICALLY AND CONTINUOUSLY. Source: Dealer E-Process

DENNIS GALBRAITH

Chief Marketing Officer at Dealer E-Process Dennis produces a weekly video series for dealers called “Automotive Marketing Facts” and is the author of two marketing books, “Sales Integration” and “Online Automotive Merchandising.” Previously in his career, he ran the automotive Internet division of J.D. Power and Associates, was VP of advertising products and training for Cars.com, and owned two companies that served dealers and vendors. He also has taught marketing for the NADA Academy.

DECEMBER 2015

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GOVERNMENT REGULATION

As A Dealer, Are You On Top Of

All Legal And Regulatory Compliance? Follow this framework to make sure your oversight of your dealership departments’ compliance efforts is thorough. BY TERRY DORTCH

Human resources, pertaining to Equal Employment Opportunity Commission employment, hiring, harassment and discrimination practices and policies.

COMPLIANCE IS A TOP-DOWN ACTIVITY

While every employee has a role to play in a dealership’s legal and regulatory compliance, commitment to operating a compliant business must come from the top. If your business is audited and found in violation of these laws, the owner pays! In dealerships whose owner takes an active role in compliance, generally I find that:

✪ Department

heads know of their compliance obligations, and who may take actions necessary on compliance issues.

✪ All employees know their responsibilities. ✪ Errors are discovered and corrected before they become costly.

Managing compliance internally (i.e., not turning to an outside consulting firm) starts with training. Include senior managers in that training to equip them with big-picture concerns, and include department managers and their staffs to ensure they know their hands-on responsibilities. On compliance processes, a dealership benefits from a compliance risk assessment, which can be performed internally or by a third party. It helps identify and isolate compliance risks, weaknesses and strengths. A risk assessment involves “boots on the ground,” with eyeballs on the nitty-gritty of current processes and procedures. Information from the risk assessment will provide your business with a good map toward an efficient compliance program. Whichever route you take, following is a by-department breakdown of compliance responsibilities (with this disclaimer: No one article can comprehensively cover all regulations governing the modern auto dealership. For that detail, you need to consult a compliance professional.)

FOR THE DEALER AND GM

Regulators recognize the necessity for owners and senior managers to be involved in compliance. Remember, at the start of any examination into your practices, government officials will review:

Your F&I staff need to make sure customers have reviewed all sales and marketing materials for a product before finalizing a purchase.

C

ompliance with federal and state laws and regulations affects several departments in an auto dealership. However, oversight of overall compliance must be driven by the dealer or GM, or a dealership’s risk of a costly and/or dangerous violation increases. In this article, I want to present a framework for administering an auto retailer’s total compliance from the head office level, recognizing that specific compliance duties will be policed and handled by individual departments. Broadly speaking, today’s federal (and often state) laws and regulations govern a dealership’s: 38

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Sales and financing, pertaining to advertising, sales, consumer financing and aftermarket sales practices. Privacy and data security, pertaining to both the customer’s and employees’ information. Service and body shop operations, including OSHA regulations that pertain to worker safety and health; and OSHA/ EPA regulations that pertain the storage, handling and disposal of materials classified as hazardous, including air bags.

✖ Board meeting minutes and supporting

materials during the period under review, looking for coverage of compliance matters.

✖ The role of the chief compliance officer and his/her authority.

✖ Training

ownership.

of

board

members

and

✖ The compliance budget. ✖ Compliance reports to management. Given that, a dealer or GM must ask themselves:

➤ When was compliance last discussed at a board meeting?


➤ Does the dealership compliance officer

have meaningful authority in the dealership and ownership of compliancerelated issues?

➤ Does the compliance officer have access to upper management?

➤ Has the dealership budgeted funds for compliance?

Lift safety is one of the priorities for compliance in your service department.

➤ Are

compliance reports reviewed by ownership and upper management regularly?

FOR THE F&I MANAGER

The F&I department must be sure to:

1

Have available for consumers, copies of sales and marketing materials for each product offered by the dealership. Your F&I staff should make sure customers review these materials prior to a purchase decision.

2

Review and verify that the content of sales and marketing materials for each product sold is current and accurate, contains proper disclosures and accurately states what is and what is not covered.

3 4

Have customers sign off when they decline to buy a product.

Clarify in writing the benefits the produce will deliver to the customer and why the cost is therefore reasonable.

5 6

Have established and published prices for each of the F&I products offered.

Make sure dealership policy and practice require that each customer be treated equally regarding the sale of ancillary products and their cost.

7

Monitor product sales to ensure that commission-based employees are not taking advantage of certain individuals and classes with the prices of ancillary products.

8

Use a menu, and be sure it clearly describes the products being sold, their cash prices and their financed costs.

Three additional advisories for the F&I staff are:

UTILIZE ADVERSE ACTION LETTERS WHEN NECESSARY:

These must be delivered either in person, at the time of the transaction, by mail within 30 days of the denial, or electronically within 30 days of the denial to anyone who applies for credit and is denied. An adverse action letter also is required when terms differ from those requested, and the customer therefore does not accept them. Usually, the bank with which the dealership has pursued financing for the customer will produce and distribute this notice. However, when the dealer makes the credit decision or denies credit without shopping the application to a bank or finance company, the dealer must take that action.

TO SEE MORE FROM TERRY DORTCH GO TO CBTNEWS.COM

PROVIDE RISK-BASED PRICING NOTICE WHEN NECESSARY:

Dealers must provide a risk-based pricing notice to customers who receive credit on material terms that are less favorable than those extended to a substantial proportion of the customer base. An alternative to a RBPN is an exception notice, which should be delivered to all customers on whom the dealership runs credit prior to entering into an agreement.

SAFEGUARD CUSTOMER INFORMATION:

The dealership must protect private customer information from identity theft to comply with the Gramm-Leach-Bliley safeguards rule and financial privacy regulations. Do not leave deal jackets or other sensitive customer information (worksheets, contracts, notes scribbled on notepads and up cards) anywhere where it might be read and/or stolen. This need also extends to the service department, where customer information appears on write-up sheets, repair orders, etc.

FOR THE SERVICE MANAGER

In the service department, common compliance problems include: Failure to maintain a current safety manual, train all shop employees on abiding by it, and conducting continual reviews of the manual, shop conditions and employee adherence. One common oversight is for the service department to forget about required signage like “Exit” or “Not An Exit” signs on doors. Missing egress or exit route maps as required by law. Be sure these maps are current and visible in public areas. Parts, parts shelving and crates that block access to electrical panels.

Failure to keep personal safety equipment near grinders, welders and similar tools and machinery. Missing fire extinguishers or extinguishers, or units that are not properly marked or situated where they are easily visible. Failure to set up hazardous materials and emergency response programs that cover safety data sheets, employee evacuation, disposal of used oil and refrigerants, etc. Service personnel also should maintain and inspect quick lube, service and body shop lifts annually to comply with OSHA’s local emphasis program (LEP). Insist that technicians who work on EV and hybrid vehicles comply with OSHA regulations pertaining to safety gloves.

FOR THE HR MANAGER

Employment laws continually require auto dealerships to review harassment laws with employees. Discrimination suits based on gender, race and other factors that get the EEOC can cost an offending dealership $1 million or more in compensatory and punitive damages, if the business is found liable. So, dealerships and their HR staffs should pursue these hiring best practices: clear written anti-discrimination ✪ Have and harassment policies in place.

✪ Train management on how to handle and follow through on employee claims.

Train all employees on anti-discrimination and harassment policies and proper conduct. Every employee needs to know to whom to report inappropriate conduct. Enforce the rules and procedures established in the dealership, regardless of the position an offender may hold.

TERRY DORTCH

President of Automotive Compliance Consultants Terry is a former auto dealer and operator and also has worked as a GM, general sales manager, F&I director and F&I manager in a dealership environment. His company specializes in retail automotive compliance with federal and state laws and regulations. See the website at www.compliantnow.com.

DECEMBER 2015

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You’ve heard about NCM® 20 Groups. Now see one in action: ncmassociates.com/together


FIXED OPS

Small Reforms In How Your Service Department Approaches Repair Orders

PRODUCE BIG RESULTS OVER TIME Quickly undertake these changes in pricing, recommending and scheduling.

E

very service department wants to maximize its results on repair orders – just ask them. The tone of the conversation will change, however, when you ask how they expect to maximize RO productivity.

Personally, I find it fascinating how incremental changes in ROs can have a huge financial impact on the dealership over time. Take, for example, a dealership that performs 1,000 repairs per month. If that service department improved its average technician hours sold per RO by 0.2 and increased its effective rate by $4.00 per hour, then its parts and labor sales would jump by $500,000 after 12 months. If the RO count increased to 1,100 a month (assuming the same gains in hours sold and effective rate), then revenue would climb by $846,000 after a year. I hope I have made the point that achieving relatively small changes in RO results and achieving them consistently can have a major payoff. In this article, I am going to discuss several such incremental improvements that will help you maximize results.

STOP THE DISCOUNTING I believe most people take the path of least resistance in life. In that regard, I see service across the country discounting labor and parts pricing on ROs as soon as they learn the price is higher than the estimate they provided to the customer. They also habitually give discounts to family members, friends, people from their church; the list goes on. These advisors are taking the path of least resistance, as it is easier to give a discount than phone the customer and increase the bill over the estimate. Most service managers fail to monitor discounts in a consistent manner, so the advisor is never challenged about the reason he or she discounted the customer. While discounts can be examined in most DMS exception reports, the formats are not the easiest to read or understand. The most innovative way I’ve seen to control advisor discounts is a product called ROAMS (repair order analysis & management system) from KEEPS Corp. These easy-to-read reports show a percentage of advisor compliance on every RO that has been written on customer pay. They then give a detailed breakdown of non-compliant ROs, which are highlighted so the user can click to review them. It then becomes easy to review non-compliant discounts with the advisor to get the reasons for his or her actions. At that point, the path of least resistance for the advisor no longer includes discounting customer labor or parts sales on the RO. The goal here should be for every advisor individually and the dealership as a whole to be more than 90 percent compliant on a consistent basis. TO SEE MORE FROM ROB GEHRING GO TO CBTNEWS.COM

BY ROB GEHRING

RESULTS AT A HYPOTHETICAL SERVICE DEPARTMENT Before

After

Net Change

Hours Per Customer Pay Repair Order

1.64

1.84

0.2

Repair Orders Per Month

1000

1100

100

Total Labor Hours Sold

1640

2024

384

Effective Labor Rate

$81.00

$85.00

$4.00

Total Labor Revenue Per Month

$132,840

$172,040

$39,200

Total Parts Revenue Per Month

$106,272

$137,632

$31,360

Monthly Parts & Service Revenue

$239,112

$309,672

$70,560

Key Performance Indicators:

CHARGE MORE FOR HIGH-SKILL REPAIRS Today’s dealerships have many competitors providing easy maintenance services such as oil changes and tire rotations. Due to the complexity of the latest automobile systems, the level of competition drops off dramatically it comes to electrical, diesel engine or transmission repairs. The independent shops typically offer little or no factory training of staff and no special tools. However, the dealership has invested hundreds of thousands of dollars in brand-specific technician training and special tools needed to repair the vehicle correctly the first time. Who is your competition for complicated repairs? To maximize service results, dealerships must be unafraid to charge the customer higher prices to offset these investments. Your dealership will never make large profits from oil changes and tire rotations. I have talked with many service managers who believe they cannot bill over a certain figure even for high-skill repairs. Remember, most of your customers do not come to a dealership service department expecting the lowest price. What they do expect is a properly trained tech who can perform a quality repair and make their vehicle safe.

RECOMMEND MORE SERVICES As we all know, every year billions of dollars of needed maintenance and repairs never even gets recommended to customers. I must share some of the most destructive reasons I’ve seen for this failure. Let’s say a tech thoroughly inspects a car and

Annualized Improved:

$846,720

notifies the advisor about several issues. The advisor quickly responds: “That’s Mary. She never buys anything. Just button it up and go to the next car.” I am not a mind reader but I bet I know what that tech is thinking now: “I just wasted 15 minutes of time for which I won’t get paid, caring about problems that the customer won’t even know about. See if I do that again.” Going forward, the tech is likely to recommend less service because he assumes the advisor won’t sell it. It’s critical that you understand nobody wins in this situation, including the customer. Whether a customer buys a repair or service isn’t the biggest concern. The dealership has an obligation to inform that customer about his or her vehicle’s needs. Advisors need to encourage techs to make a complete list of recommendations, and service managers should tour their shops looking for repairs and service procedures that weren’t recommended. During these shop walks, I always discover work that was not suggested to the customer. Be sure that every multi-point inspection is presented in the first 15 minutes of the customer’s visit, with recommended services listed. We know that 80 percent of all approvals are given in the first 25 percent of the visit, so emphasize that your people are presenting inspection reports quickly in a disciplined fashion. Then, track and record each declined service, so that your advisors can review it in detail with the customer during a future visit.

ROB GEHRING

President and Founder of Fixed Performance Inc. Rob’s company specializes in training engagements for dealership fixed-ops clients throughout the U.S. and Canada. It aims for dramatic and profitable improvements in a dealership’s fixed operations in both processes and people. He also writes a free weekly newsletter and holds a free weekly conference call on fixed operations topics.

DECEMBER 2015

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