Each April, “Ward’s Dealer Business” publishes the e–Dealer 100, its ranking of the top automotive internet retailers. The dealers recognized by the e–Dealer 100 understand that generating profitable, incremental business from online leads stems from their commitment to consistent sales processes and effective online merchandising.
Cars.com recently teamed up with “Ward’s Dealer Business” editorial director Cliff Banks to bring you tips from three of the top dealers. In this month’s DealerADvantage LIVE webinar, Jonah Jones, Jon Kissinger and Mike Lavezzi discussed how their stores manage internet traffic, respond to leads and maximize the impact of their online advertising.
The following excerpts from that conversation shed light on the secrets of their success, tips from the Ward’s e–Dealer 100 that you can use today to drive incremental sales and improve overall store operations. These dealers tell us that they record higher front- and back-end profits with internet sales than with traditional showroom sales. How? Because they focus on fundamental sales processes and lead follow-up and provide their sales teams with the training and resources they need to succeed.
Responding for the Sale
Banks: How critical is lead response? Is there a difference between the new car side and the used car side of the business?
Kissinger: I think the lead response time is very, very critical. As far as used car versus new, I pretty much stay with them the same, particularly in the amount of information I give. I’ve got an autoresponder that goes out as soon as the lead comes into the dealership�probably within 20 seconds. We like to keep our quality response time to within 10 to 15 minutes. After that, at 24 hours, I send out an automated message letting the customer know a little bit about the dealership, why we do what we do, how we price the cars. Then I have a follow-up system that sends out an automated reminder every other day for the first two weeks and then a weekly email after that. After three months of sending emails once a week from the automated system, I put them in my database, and they kind of go cold from there. I just follow-up with newsletters.
Jones: There’s definitely a correlation. My stores that respond in less than 15 minutes are all my best stores. The ones that respond in 45 minutes to an hour are the ones that are still struggling. It’s so clich�, and it’s still one of the most critical things we do. On used cars, I think the phone call, as far as response time goes, is the most important; whereas with new car, I think the email response is more important.
Banks: How important is the content to your new car email response?
Jones: In the old days, we used to send the price right out the door. Lately we’ve started changing away from that, basically because that’s what everybody does now. I don’t feel we were doing anything special, so we’ve gone back to the old days of asking a couple of questions, trying to get communication going, trying to narrow down more specifically what the customer’s looking for rather than just shooting them a price�maybe even a lowball price�and then just playing games with them. A lot of the dealers around us started copying what we were doing so well�which was sending out an aggressive price and then getting the customer on the phone, getting the customer in the door; you know, doing what it takes to make the profits elsewhere. So what we did was to get faster on response times, get more aggressive on just setting appointments and getting people in the door.
Lavezzi: We used to send the price immediately, and I found it to be more effective to send customers an email immediately to let them know we want to touch base with them on the phone for verification, to make sure we have our facts correct. We use that as a gateway to open up dialogue. Many times, people incorrectly click things on the internet, and we’ve had instances where we make misquotes because we didn’t have our facts straight. Basically, the customers don’t necessarily check the quote, and they’re comparing numbers with another quote they’ve got. We’ve priced ourselves out just by pricing the wrong vehicle. If we can’t get the customer on the phone in the first 24 hours, we’ll send an email out saying, “This is what we’re quoting on. Is this the correct vehicle?” and try to open dialogue that way. We try to hold back on the price as long as possible.
Jones: If you’re going out there trying to deceive a customer, you’re going to get smoked. The point is that we’re not trying to deceive so much as we’ve learned from a couple of big Honda dealers around me in Dallas. Their whole game turned into: “Whatever you get from McDavid, we’ll beat it.” It became more important for us to find out customers’ needs and wants, get them on the phone and make a friend; actually the old sales process we’ve taught for 50 years�taking more of that over the internet: creating rapport, finding out what their needs and qualifying, all that stuff.
Lavezzi: You can’t go wrong with value-added selling.
Jones: Pricing does come up 70 percent of the time. That’s fine, once we’re talking to them, then we’re giving pricing based on what they really need, not just on a lowball number.
Lavezzi: Customers are pretty savvy on the internet. They want information, they want to be treated well, and they want to feel special.
Banks: How do you ensure the 15-minute response time in your stores?
Jones: Staffing. I see too many managers still allowing their people to hangle 100, 120, 150 leads. I have 16 internet salespeople at my Honda store, and they get 80 leads, sometimes fewer, apiece, and a few phone calls. Because they are accountable for process and response time, they’re able to get 18 percent to 20 percent close rates out of those leads.
Lavezzi: I’m structured a little different because I have a call center. In my BDC, my people average approximately 200 leads, but they’re never on the floor. They’re on the phone eight hours a day, so they can actually handle more leads. I pretty much cap them at 175 to 200. Between that and all the follow-up they do, that pretty much keeps them going. We keep our center open 12 hours a day, seven days a week.
Banks: What tactics do you use to merchandise your vehicles online?
Kissinger: The basic tactic is just getting all of the information in front of the customer, taking quality photographs�that way there aren’t any secrets, and they know everything up front.
Banks: You do a lot with used cars.
Kissinger: That’s the majority of our business, and that’s where the pictures, I think, really come in handy. The minimum we have is eight, and sometimes we go up from there�especially on a highline vehicle. The accuracy of the information also is important; just getting all of the equipment on the vehicle listed accurately.
Banks: Do you see any role that video might play in the future for you?
Kissinger: Absolutely. I’m ready for it.
Lavezzi: We keep it pretty simple. We run a grid of about nine pictures, and we keep all of the basic information on there. I tried the videos, and I tried expanding the amount of information online, and I didn’t notice much of a difference. In fact, I actually found video to have an adverse effect at times. Customers would notice something that tuned them off about the vehicle. We stopped doing videos, and things started turning back around. Our philosophy’s a little different. We’re in an extremely competitive market, and our whole philosophy’s geared around selling the dealership, so we use the phone more than anything else.
Jones: We are planning on trying video in the next month or two.
Banks: How many pictures do you take, and is there a sweet spot for pictures with used cars?
Jones: I’m pretty much middle line imports, so nine is fine. For highline, we move up to 15 or 20 because it’s a little more important to load the value in the vehicle.
Banks: Do you do anything for your new car inventory?
Jones: We pretty much use stock photos across the board.
Banks: What are you doing with email marketing? How do you collect email addresses?
Lavezzi: We have a very strong email capture campaign. We offer incentives to the salespeople, the finance department and the service department to get email addresses, so we have an expanding email database. We do a newsletter; we do it quarterly, instead of monthly. It’s a fine line, I’ve found, that if you start blasting people too many, at times, they get fed up and send you an unsubscribe. With the laws the way they are, you have to honor that change. We walk a fine line. If I notice that the unsubscribe emails start to rise, I scale back.
Banks: What sorts of campaigns work the best?
Lavezzi: It’s one of those things that is very subjective. I’ve tried trying doing different model-type campaigns, maybe there might be a lease special going on. I haven’t had great success with that. I’ve found that what works best is if we notify people about an event going on at the dealership. If we have an event going on at the dealership on a particular weekend, that tends to work well, and it helps to generate increased floor traffic.
Setting Up the Store for Online Sales Success
Banks: What is your setup for handling internet-generated business?
Lavezzi: We run a business development center (BDC) that serves this dealership as well as several others in the Sunroad Group. We basically do everything in advance for the customer and set everything up for them to come in and meet with an internet sales consultant.
Banks: What is your reasoning for that setup?
Lavezzi: The problem we had was timely response. People want their calls returned, and they want their emails returned as fast as possible. The BDC is open all the hours the dealership is open, and we can provide quick turnaround times for both phone calls and emails.
The Role of the Internet in Today’s Dealership
Banks: Regarding the role of the internet in the dealership today, are you seeing it increasing? Are you seeing more attention being paid to it by senior management, or is it still something that’s evolving?
Kissinger: A little of both. Definitely the management staff is always paying attention to it, but this is definitely an evolving side of the business. We see more and more customers going to the internet everyday to get their information and purchase their cars online.
Driving Incremental Business
Banks: Can you tell us how you measure whether your internet sales are incremental?
Kissinger: We have a lead management tool that provides 30 to 40 standard-generated reports. It also allows me to build reports so I can customize what I’m looking for as far as trends go with the internet side of the business.
Banks: How many of the sales are incremental?
Kissinger: Generally speaking, on a month-to-month basis, I’m doing 35 percent to 45 percent of the business here at the store. I’m generally seeing 1 percent to 2 percent growth each month. There’s always going to be a setback here and there, but it’s continuing to grow.
Online Sales Trends
Banks: What kind of trends are you seeing regarding the sales end of the internet?
Lavezzi: I’d say the trend that seems to change every month is the amount of education that the customer has. With the availability of information, they become smarter and smarter every month, and they know more and more.
Banks: Is that good or bad for you?
Lavezzi: It’s a double-edged sword. The problem with it is that, if we don’t handle the customer right, we lose a lot of credibility if we treat them like they don’t know anything. It can also help facilitate the transaction.
Banks: What are some of the challenges you’re seeing today? Are they any different than they were two or three years ago?
Kissinger: Things are definitely different. The information that’s available on the internet is so accessible that our customers sometimes come into the store knowing more about our cars than the average salesperson. That’s why we’ve moved to a dedicated staff. That way we know who our customers are dealing with and know what information they have in front of them.
Banks: What about lead traffic? What type of percentages of your lead traffic comes from the OEMs, your website versus third-parties?
Lavezzi: We get quite a bit. I would say it’s probably 20 percent from the OEM. Of the remaining 80 percent, it’s probably 50-50 between our site and third-party providers.
Banks: Which one has the highest closing ratio?
Lavezzi: It fluctuates. I would say the OEM site.
Banks: That’s interesting. I don’t hear that often from others. Jon, what about you?
Kissinger: As far as the manufacturer sites, we probably get 15 percent of our leads from there. Our dealership website is the main source, and that’s about 50 percent of our lead base. And that’s definitely where our highest closing percentage is. We market a lot to it. All of our print advertising, television, radio�everything that we run points to the website.
Joining the Search Party
Banks: Do you do any search engine optimization or search engine marketing?
Jones: Search engine optimization is a no-brainer. That’s a good deal. It doesn’t cost a lot, but you’ve got to have a good company doing that. Search engine marketing definitely is a little more expensive. You need to be careful. There are many companies out there making a lot of money who aren’t doing a good job, I think.
Banks: So it’s something to experiment with �
Jones: It’s more than experimenting. A lot of my stores are here in Dallas, and, in Dallas, there’s a lot more than experimenting going on. There are people spending a lot of money.
Banks: So you’re almost dictated by your marketplace?
Jones: To some extent. I’ve got a store in Los Angeles, too, and I think, in your bigger cities like that, you’re seeing people a lot more advanced in search engine marketing. The advantage though to someone in a smaller city is that, if you can get good at it, you’re going to take a big step up on your competition.
Banks: Are the costs of the keywords going up?
Kissinger: Big time.
Banks: Are we going to start seeing a world in which keywords cost as much as leads?
Jones: Probably to $4 or $5 for the bigger clicks is where I think it’ll even out. It’ll even out. The dealers are going to jump it too hard. The ones that know what they’re doing will stick around. The ones that don’t know what they’re doing will bail out because they can’t make the ROI make sense.
Advice for New Internet Sales Professionals
Kissinger: I’d start off by creating a solid relationship with your management team, getting everyone to buy in on the process, exactly what you’re doing with the internet. Keep them informed. Your management staff has to know exactly which direction you’re going with the internet department at all times. Getting everyone to buy into the process just makes everything go a whole lot smoother. Getting the right people in place, the right sales professionals to deal with your customers is probably the next biggest thing. Obviously, you spent a lot of money to get them in the door, so you want them being treated right and catered to once they get to the dealership.
Jones: Work hard, follow the process, ask questions and learn. We have a lot of good people out there. You don’t have to reinvent the wheel.
Lavezzi: I’m definitely an advocate of the phone. I think it’s one of the most powerful tools out there. It helps us connect with the customer faster and more personally than the internet can.
More information about the Ward’s e–Dealer 100 is available online at Ward’s Dealer Business, where you can find complete coverage of the annual ranking and read stories about other dealers featured on the list.
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