From a management perspective, Bill Phillips sees something of a silver lining in the automotive downturn. Dealers who in the past may have taken their internet departments for granted are now giving them the attention they deserve.
“When the floor traffic dries up, you’ve got to get (business) from somewhere,” says Phillips, president of Automotive Internet Management. “This economy has pushed dealers to be more receptive, faster, to solving this problem.”
The problem, as he defines it, stems from an imbalance in how the value of ecommerce initiatives are perceived relative to showroom activities and the time owners and their senior managers devote to it. Although successful stores attribute 50 percent – or more – of their new- and used-car sales to the internet, Phillips questions owners who overlook its current and future potential.
“The only way in this market to maintain the number of cars you’re selling – or to get more market share – is to go to your competitors and get their share of the pie,” he says. “You have to use marketing avenues more effectively than your competitor – right now, that’s pretty easily determined to be ecommerce.”
Phillips attributes the detachment to how internet departments were initially formed. While owners and their management teams wanted to work with online shoppers, the rules of the road had yet to be written. Absent formalized processes, they improvised as best they could and left the incremental deals for junior team members to handle.
“The average dealer that started an ecommerce operation started it in the fleet department or with the least capable salespeople who were probably more technology savvy,” Phillips says. “Ten years ago, that was the norm.”
How did that approach work?
“I don’t think it did,” Phillips says, noting dealers increasingly recognize those shortcomings and the need to shore up their programs. “What it resulted in was low-gross deals and loss of sales techniques. The standard sales processes that are normally followed with consumers weren’t followed from the very beginning, and I think it developed bad habits.”
Phillips’ message of direct leadership team involvement is one Gary Premeaux, owner of South Bay Ford Lincoln Mercury in Southern California embraces.
“I’m not an owner executive, I’m an owner operator. I’m here Monday through Sunday,” Premeaux says. “We have meetings every Monday with every department, including the internet. We focus on closing ratios, car sales, penetration and lost sales to other stores.”
While Phillips says owners like Premeaux are more common, he’s also surprised by the hold-outs. “The funny thing is to find the people who sometimes shun this will be sitting by their computer on eBay getting something or will go home and order something online but then go to their business that’s moving toward ecommerce and not put focus on it. I’m constantly amazed at the owners carrying PDAs in their hands that don’t see the importance of ecommerce being half their business model.”
For owners who want to step up their participation, Phillips offers three high-level tips:
- Build your capabilities in-house. Rather than methodically developing sales processes that complement their store’s culture and customer base, Phillips says, dealers look to external shortcuts. “I call it the ‘savior complex – I’m going to bring in the guy that’s going to fix the problem.'” While that approach can produce short-term boosts, Phillips describes it as short-sighted. Results fluctuate with the individual running the department and cannot be maintained over time. “That person comes in with a process and leaves with that process,” Phillips says. “We encourage dealers to learn to own the process. The upper management staff should know and understand the process.”
- Focus on the right things. When Phillips advises dealers to be more hands-on with ecommerce, he’s quick to focus their attention on the appropriate priorities. He doesn’t intend for them to meddle with the internet sales manager’s job of writing phone scripts, developing email templates, merchandising listings and responding to leads. “The owner needs to be aware of end results and process activity — exactly like a good owner will know about showroom activity. How many ups did we have, how many demonstration drives did we do, how many times was a manager involved?” Phillips says. “Ecommerce has a similar set of statistics. How many outbound emails did we make? How many calls did we make? How many times did the manager come to the other end of the phone?”
- Provide the foundation. Just as the cars they sell have become more advanced, Phillips says, dealers need to equip their internet department with the resources required to merchandise listings and work with shoppers – whether that means a computer for each employee, CRM or lead management system or dedicated training room. “The tools of the salespeople have changed, and I think the industry has failed to adjust to that change. The owner also has to realize that supplying those tools is akin to their success.”
Ecommerce Directors: Don’t Fear the Owner
In stores with a hands-off dealer principal and management team, Phillips recommends that internet directors invite their participation. Rather than encouraging them to meddle or second-guess decisions, he says the move raises the department’s profile in the dealership. That visibility should translate into easier access to needed resources, wider recognition of sales performance and greater opportunities for career advancement.
“I would lay out for them the potential that exists for incremental internet business,” Phillips adds. “As an ecommerce director, I always tried to point out to the owner that we needed to allocate similar resources and assets to the development of this side of the business that we had to the other side of the business.”
Phillips describes the people he knows who take this route as “team players. They have the success of the store at heart. Ecommerce managers that get the owners involved get more credibility – they view correctly where the industry is going and are not worried about protecting the work they have as if it’s a hidden art.”
What happens when owners and the management team play an active role?
“Across the board sales increases,” Phillips says. “Every single ecommerce department that I’ve been involved in that has the owner interested, knowledgeable and regularly involved, I’ve never found one that doesn’t excel. If the owner’s involved, I tend to find that the rest of the organization follows.”