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Dealer magazine july 2010

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Dealer magazine july 2010

  1. 1. HAGEN DURANT Classic Chevrolet page 22 Vol. 17 No. 7 July 2010 Jim Ziegler: Business Sucks... Could It Be You? page 12 Leadership: The True Measure of a Leader page 16 Ownership: What is Your Dealership Real Estate Worth? page 17 Pre-owned Vehicles: With History there is No Mystery page 55
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  6. 6. ABLE OF CONTENTST JULY 2010 PRESIDENT AND CEO MICHAEL ROSCOE VICE PRESIDENT AND EDITORIAL DIRECTOR CLIFF BANKS cbanks@Dealer-communications.com 248-351-2620 PUBLISHER GREG NOONAN 607-264-3359 gnoonan@Dealer-communications.com CONTENT COORDINATOR MARIA BURKEL mburkel@Dealer-communications.com ART DIRECTOR JOE BIRCH PRODUCTION MANAGER ELIZABETH BIRCH PRINT PRODUCTION NICK THOMAS COVER DESIGN JOE BIRCH COVER PHOTOS RANDY ANDERSON CIRCULATION SUBSCRIPTION RICH JARRETT 314-432-7511 rjarrett@Dealer-communications.com www.Dealer-communications.com NATIONAL ADVERTISING SALES adsales@Dealer-communications.com 607-264-3359 Dealer magazine makes every attempt to ensure the accuracy of all published works. However it cannot be held responsible for opinions expressed or facts supplied herein. Nothing may be reproduced in whole or in part without written permission from the publisher. All rights reserved. The publisher encourages you to submit sug- gestions. Submitted materials become the property of Horizon Communications, Inc. and will not be returned. Send material for publication to 330 Franklin Rd., Suite 135A, PMB 386, Brentwood, TN 37027. The editor re- serves the right to edit material; submission of material constitutes permission to edit and publish that mate- rial. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is presented with the understanding that the publisher is not engaged in rendering legal, accounting or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. From a Declaration of Principles jointly adopted by a Commit- tee of the American Bar Association and a Committee of Publishers. A PUBLICATION OF C O M M U N I C A T I O N S Dealer magazine (ISSN 1537-6141) is published monthly by Horizon Communications, Inc., 754 Armstrong Place, Brentwood, TN 37027. Periodicals Postage Paid at Brentwood, TN and additional mailing offices. POSTMASTER: Please send address changes to: Dealer magazine, P.O. Box 16770, St. Louis, MO 63105. Subscriptions are $48.00 per year, 12 Issues per year, monthly. Back Issues, $10.00 each. Make check payable to Dealer magazine. Send to: P.O. Box 16770 St. Louis, MO 63105. Reprint Requests: (412-548-3954). POSTMASTER please send change of address to Dealer magazine, P.O. Box 16770, St. Louis, MO 63105. FEATURES Dealer Advocate by Jim Ziegler 12 Business Sucks...Could It Be You? Cover Story 22 Hagen Durant Classic Chevrolet COLUMNS From the Chairman 10 Dealer-Assisted Financing Still at Risk in House-Senate Conference Ed Tonkin Cliff’s Notes 11 FI Profit, Captives and IRS Wealth Squads Cliff Banks Leadership by Dave Anderson 16 The True Measure of a Leader Ownership 17 What is Your Dealership Real Estate Worth? Erin Kerrigan 18 Cut Through the Multiples – Focus on Real Value Greg Gilmore Employee Management 20 Life in the Fast Lane! Chuck Barker Sales 51 Millennial Madness! (or ‘How I Missed the Big Boom!’) Jim Boldebook Finance 53 Pricing Guidelines for Fun and Profit Gil Van Over Pre-owned Vehicles 55 With History there is No Mystery Tim Deese 56 The New Reality of the Used Car Business Dale Pollak Fixed Operations 58 Wow! A Free Money-Maker Ed Kovalchick DEPARTMENTS 6 Editor’s Note 8 Dealer Mail 54 Dealer FI New Products 60 Dealer New Products Services SPECIAL SECTION INSERT DD16 Joe Ellsasser General Manager Golling Chrysler Jeep Dodge DD8 Take Out the Trash and Keep the CRM from Being a Garbage Dump DD10 How to Set Yourself Apart in a Competitive Market DD14 Eight Steps for Real Reputation Management DD20 Turn Your Site into the Ultimate Closing Tool DD24 Four Steps to a Super DOC – and More Profit Full Digital Dealer table of contents on page DD2. pg. 25 4 Dealer July 2010 Dealer-magazine.com
  7. 7. DITOR’S NOTEE Just spent a wonderful week in Southern California with my daughters Christina and AJ. You see, AJ left for her school soccer team’s summer camp in Georgia the Saturday before Father’s Day, so we couldn’t go to Destin for the weekend to celebrate. I guess that’s why we went when we did...but there’s another reason why we went where we did. AJ thinks she might want to go to college in California. Now, truth be told, I don’t want her to go to college all the way out in California. Christina is attending the University of Texas in Austin, but that’s only half as far. And I went to school there. And TADA’s Bill Wolters told her if she ever needed anything just call him up. California is a four-hour plane ride away! My first thought, instinctively, was to take her out there and make sure she didn’t like it. But that just didn’t seem right. It’s my job as her father to encourage her to explore, to be unafraid to try new things, to reach for the stars...whatever that is to her. So I committed to showing her Southern California in its best light. The three of us had a blast. Probably the best day was when we went out to Catalina Island and took the new Zip-line EcoTour. It takes about two hours...you put on a harness and a helmet and they hook you onto this cable and zip...off you go down the mountain from one platform to the next. Except when we got to the platform, both of my girls had second thoughts. I suppose reading about zipping over 1,000 feet, 300 feet above the canyon floor at 45 miles per hour on a web site is different from actually doing it. AJ has never been one to go on fast rides or big roller coasters and now she’s about to hang from a cable moving at 45 miles per hour. The instructor was very encouraging but the more he spoke, the more they stepped back.Three people had already gone, then out of nowhere, AJ says, “I’ll go next”. And she did. I once told her being brave isn’t not being scared. Being brave is when you’re scared and you do it anyway. She was very brave. Some say a parent’s job is to raise their child so that they are ready and wanting to leave. And I suppose part of that is get- ting them unafraid to take chances. After we got back, AJ still thinks she wants to go to college in California. She took a chance with that zip-line and apparently she is willing to take a chance to live four hours by plane away from her mother and I for four years, where she knows...nobody. Don’t know if she will or not...still three years away, a lot can happen. But that’s a pretty good Father’s Day present when your daughter is even con- sidering making a move that big...on her own...at age 15. Mike Roscoe Michael Roscoe Editor-in-Chief 6 Dealer July 2010 Dealer-magazine.com
  8. 8. Jim Boldebook, Thankyouforyourarticleseverymonthin Dealermagazine.Theyalwaysteachmesome- thing. I would like to take you up on your offerandrequestyousendmethe“Wordsthat Work” abstract. If you ever hold a conference where you share your knowledge on making media more effective, please contact me. Barry Merrill Hello Barry, Thanksforthecompliments. Allofthewriters at Dealer magazine put a lot of time and effort into making the magazine the best it can be. The ‘Words thatWork’ abstract is on its way. I’llkeepyournameinourfileforfuturemarket- ing conferences. Sincerely, Jim Boldebook Dave Anderson, I enjoyed reading your article in the April 2010 issue of Dealer magazine, “What I ShouldHaveLearnedinFirstGrade.”Bravo! Julie Emberton Julie, Thanks for the note! Glad you liked the message! Dave Anderson Dave Anderson, I just wanted to give you a “well done” on your article in the June issue of Dealer magazine, “The Calm Before the Storm”. It furtherhelpstoclarifyapicturethatI’vebeen seeingalso.ButwhatIreallyappreciateisyour encouragement to lay solid foundations so that you’ll be far ahead of your competitors. Our new product we’re developing can be a keyassetindoingthat.Withlaunchplanned for the end of this year, it will be interesting to see how the economy affects us. Jim Hughes President Hughes Hunter Automotive Marketing Thousand Oaks, CA Jim, Thank you for the feedback on the article. It’s great to be prepared and positioned well. Regardless of what the economy does, we’ll win. Dave Anderson EALER MAILD Dealer welcomes your letters and after verification will run them signed or unsigned. Letters may be edited for space and clarity. Send letters to: 2000 Town Center • Suite 1900 • Southfield, MI 48075 FAX: (248) 351-2699 • e-mail: cbanks@dealer-communications.com www.ImpactSummit.com Start your dealership’s team assent at: A Total In-House Training Solution Dealership Success Guide The “The processes and commitment Chuck talks about are even more relevant today than ever before. Chuck’s words of wisdom and the content he teaches will make any store better and more efficient.” Guy Manasse President, DealerUps A PMDS Automotive CRM Solution Chuck Barker Dealership Developer Dealer magazine Author “My goal is to help you build a stronger dealership by helping you build stronger individuals. This program is focused to do just that.” 8 Dealer July 2010 Dealer-magazine.com
  9. 9. WANTEDDEALERS WITH 1,000,000 IN USED CAR INVENTORY “We Come to You” Total Implementation Do you have $1,000,000 or more in used car inventory? Do you have an average day in stock of 32 days or less? Do you have 12% net to gross or higher? “That’s What We Do” We visit the store every month in person after the implementation, we set objectives in gross, volume and net. We don’t get paid if you aren’t happy at the end of each month. We have no contract. I have always done business on a handshake. Call me at 1-800-266-7408 www.probac.com pbasics@aol.com Tim Deese, CEO 2 Day Class Schedule: July 22-23 Jacksonville Beach, FL Oct. 21-22 Jacksonville Beach, FL Nov. 9-10 Los Angeles, CA Limited seating available, call today!
  10. 10. T he 60-30 bipartisan Senate vote on the Brownback motion sends a clear message that Main Street auto dealerships should not be in a Wall Street reform bill, yet the future of dealer- assisted financing is still in jeopardy. The success of the Brownback motion comes thanks to the immense grassroots engagement by dealers and dealership employees. Continued engagement is even more critical as Representatives and Senators meet in conference to work out details of the legislation. The final bill is expected to be sent to the President before July 4. The Brownback motion urges Senate conferees to support House language, which protects consumers by keeping auto credit affordable and available. Conferees will have to reconcile the Senate version and its House counter- part, which -- thanks to an amendment offered by Rep. John Campbell (R-Calif.) -- preserves dealer-assisted financing as a competitive option for car buyers. While the majority of Senators and House members clearly understand that dealers are not banks, there is immense pressure on conferees by the White House and others to strip out the Brownback/ Campbell language. The goal is to pre- vent new, unnecessary and burdensome regulations over auto dealerships that would make it harder and more expensive for consumers to purchase a vehicle at a dealership.The existing regulatory struc- ture has permitted millions of families to make a vehicle purchase at competitive interest rates. We must remain engaged or this fight could be lost. Dealers and dealership employees should reach out to the confer- ees to urge them to retain the auto dealer language in the final Wall Street reform bill. More information on the legislation and a list of conferees can be found at: www.NADA.org/KeepCreditAffordable. Ed Tonkin NADA Chairman Dealer-Assisted Financing Still at Risk in House-Senate Conference From the Chairman Ed Tonkin, NADA Chairman Don’t miss the New Ideas, New Revenues, New Efficiencies, Greater Profits CONFERENCE EXPOSITION 9TH9TH October 12-14, 2010 • Las Vegas, NV EARLY BIRDSPECIAL!Register beforeJuly 30, 2010 and save up to $200. Key Points in Favor of the Brownback/ Campbell Language: • Conferees should support the Brownback/Campbell language because dealer-assisted financing provides convenience, competition and choices for consumers who rely on affordable credit to meet their transportation needs. • Both the House and Senate have voted on a bipartisan basis to keep in place the sound regulatory structure that has allowed millions of consumers to buy vehicles at competitive interest rates instead of creating an uncertain regulatory regime under a new agency. • Main Street auto dealerships are not banks and didn’t contribute to the financial meltdown. • If adopted, the Brownback/Campbell language keeps every auto loan and every auto finance source that underwrites, funds and/or services a loan (including buy-here/pay-here operations) regulated by the new agency. • Dealers’ retail financing activity would continue to be effectively regulated by the Federal Reserve Board and the Federal Trade Commission. Dealerships would continue to be subject to all Federal and state consumer protection laws and regulations that currently govern dealer- assisted financing today. 10 Dealer July 2010 Dealer-magazine.com
  11. 11. FI Profit, Captives and IRS Wealth Squads T here was a lot of news over the last monththatwillaffecttheautomotive landscape for the next several years. ThebignewsisthattheU.S.Senate,unlike the House, refused to adopt an amendment that would exclude car dealers from being affectedbythefinanceoverhaulbill.Butthen, a couple of days later, the Senate decided to instruct its negotiators to push for adoption ofsimilarlanguagetowhattheHouseversion has which does exclude dealers. The bill is in conference now as of press time, and negotiators from both the House andSenateareputtingthefinaltouchesonthe legislationwhichwillbesenttothePresident for signing. Dealers still are not out of the woods on thisone.TheWhiteHouse,thePentagonand several consumer organizations are fighting NADA hard to include dealers. NADAofficialssaythisisthetoughestand most important battle in recent memory. If the bill passes with inclusion of car dealers, FI revenue likely will dry up. That’s not being chicken little. A federal agency will determine which financial prod- ucts you can sell, how much you can make and which firms you can do business with. You may have some influence over your con- gressional members, but a federal agency? Not a chance. This battle has to bewonon the legislative side. So keep fighting hard. In other financial news, GM leaked that it is exploring options to either buy or start a captive finance firm. Ever since it sold controlling interest of GMACtoCerberusafewyearsago,GMhas had little to no control of the financing of its vehicles. It became a real problem in 2008 when Cerberus decided that GMAC would onlyfinancedealsforcustomerswithbeacon scoresinthe700sorhigher–inotherwords, theonlypeopleabletobuyaGMcarthrough GMAC were those with near perfect credit. Sales tanked for GM, pushing it into bankruptcy. Cerberus relinquished control of GMAC. It also owned Chrysler Financial, whichithasputonthebackburner.Sincelate last summer, GMAC has become Chrysler’s main lender also. Althoughthecreditscoreshavecomedown some,GMAC(althoughitchangeditsname to Ally, it’s retaining the GMAC name for its automotive business) still is not financing sub-prime buyers. Overall, GMAC finances at least a third of GM’s customers. According to the latest numbers, only 1% of GM’s customers in the first quarter were sub-prime. Experian reports that 16% of all car buyers in the fourth quarter of 2009 fell intothesub-primecategory.That’snotcount- ing deals that weren’t completed because of a customer’s credit score. Tocomparewithotherautomakers,theAP reports that 20% of Honda’s business comes from the sub-prime market – 20% vs. 1% -- no wonder GM – and Chrysler – is at a disadvantage. The problem extends beyond sub-prime, though. GM and Chrysler have little control over the incentives they can offer customers and dealers to push sales. Yes, automakers have said they want to end their reliance on incentivestodrivesales,butGMandChrysler have no flexibility. Bothautomakers,obviously,needafinance arm – preferably separate from each other -- they can control. Until that happens, both automakers will continue to be handcuffed as they try to recover. Chrysler did make a move last month announcing a relationship with the Spanish bank Santander that will enable it to offer its customers cheaper sub-prime loans. Meanwhile, get ready for the IRS wealth squads. You’re sitting in your office at your confer- ence table. Your accountant is there along with – not one – but four or five agents from the Internal Revenue Service who are dig- ging through every nook and cranny of your financial life. This scenario likely will play out at your dealership in the near future, according to a column last week on Forbes.com written by Donald T. Rocen, a member at Miller Chevalier Chartered, a firm that helps large corporationsandotherbusinesseswithfederal tax controversies. Before you think Mr. Rocen simply is tryingtodrumupbusinessusingscaretactics, considerthis:hewasthedeputychiefcounsel ofoperationsfortheIRSfrom2004to2007. His column, IRS ‘Wealth Squads’ On the Way, provides a window into the plans IRS Commissioner Doug Shulman has for a cer- tain level of wealth owners. Rocen says the IRS has not said what type of earnings will generateavisitfromanIRSwealthsquad,but thinks it is in excess of $10 million. These so-called squads will be part of a Global High Wealth Exam Group being implemented by Mr. Shulman and likely will be created from the 16,000 new agents the IRS is in the process of hiring. Rocenbelievestheauditingprocesswillbe a major overhaul of one’s finances and could include a criminal investigation agent. So if you’re one of the few that can be labeled wealthy, consider yourself warned. Cliff’s Notes Cliff Banks Cliff Banks Vice President and Editorial Director    Dealer-magazine.com July 2010 Dealer 11
  12. 12. T he month of May 2010 just might havebeentheturningpoint.Asmany ofyouareaware,Icommunicatewith hundreds of dealers every month. Making phone calls, communicating online, and now...talking to dealers, managers and sales professionals daily on Facebook andTwitter; I like to think I am fairly tuned in to what’s happening at the grassroots levels. Well,speakingwithmostdealersandman- agers, their mood was ecstatic. Coming out of the Memorial Holiday Weekend, most dealers were telling me they’d had the best sales they’d seen in three or four years. With few exceptions every manufacturer saw huge percentagevolumesalesincreases,mostinthe double digits over just one year ago. But, of course, with all of this enthusiasm andinfectiousoptimism,therewerestillthose rare birds whose cup is perpetually three- quarters empty. Ibelievesomepeopleare,bynature,whin- ers, wimps and complainers. Inthecourseoftalkingtoallofthesedeal- ers who were celebrating a great month; here I was listening to complaints and excuses from dealers in towns where their competi- tors had exceptionally good sales in May. Same brand of cars, equally good location, but; one dealer had a recent-memory sales record with highly-motivated employees while another dealer selling the same cars in thesamecommunityhadamiserablemonth. It’snotthemarket--createyourownmarket. It’s not the product -- every manufacturer builds good cars and trucks. It’s not your location -- it’s you. Could it be that if your business sucks, it might just be because you suck at it. FormonthsI’vebeenwritingandspeaking about this moment -- as in right now. How many times have I said or written that busi- ness is coming back like a runaway freight train -- no stopping it -- and you’re prob- ably not ready for it. This is the best we’ve seensinceCashforClunkers.And,youknow what? It’s going to get better. In light of May sales, most statisticians in the industry pro- jected their seasonally adjusted sales to an 11.2 million unit light vehicle sales based on May 2010. Howeverboldtosayit--but,Ibelievewe’ll see another 16 million unit year in the not too distant future. But, if your business still sucks despite the fact others are enjoying near record sales all around you; then, you might strongly con- sider the possibility that something is wrong with the way you’re running your busi- ness. It might be the way you’re marketing. Maybeyou’vegotthewrongpeopleincharge. Your processes might be wrong. It’s got to be something. This is the time to evaluate unemotionallyeveryaspectofyouroperation. It’s time to upgrade to first-class Five years ago I ran an ad in Dealer maga- zine featuring the headline... “If you’ve been doing business with any other automotive training company, isn’t it time you upgraded to first-class?” That headline grabbed a lot of attention at the time. My competition certainly wasn’t thrilled. Recently,Ihavebecomeincreasinglysensi- tivetothenegativeperceptionofpeopleinthe car business. The overwhelming majority of dealers and dealership employees are decent, hardworkingpeoplewhoarehistoricallyand emotionally involved in their communities. Even so, old stereotypes, no matter how untruecontinuetobeperpetuatedandregur- gitated. Companies like CarFax run ads on televisionportrayingcarsalespeople(dealers) asdishonestwithalittlecartoonFoxpopping upbehindthesalespersonrattingusouttothe consumerinsinuatingwe’rehidingsomething about the cars we sell. They certainly make it a point to insinuate that only reputable dealers have CarFax. Edmunds.compublishesanallegedexpose fromasupposed‘undercover’carsalesperson. Wearecontinuallyportrayed,onpurpose, ADVOCATE Business Sucks...Could It Be You? Jim Ziegler 12 Dealer July 2010 Dealer-magazine.com
  13. 13. 13 zurich new
  14. 14. intheworstpossiblelight,perpetuatingcon- sumer distrust. Are there people in our industry who are notuptothequalityofcharacter,professional and ethical standards we should be holding ourselvesto?Sadlyenough,theansweris,yes. There has never been a better time to upgrade the quality of the people we put in front of the public. If I were a car dealer in this day and age, I would be continually evaluating the performance, measuring sales and management ability, and increase my overallawarenessoftheintegrityofmydealer- ship employees. Iamcontinuallyperplexedthatdealerships have no performance standards or measure- ments of the selling effort. Your top produc- ing salesperson probably posted a net profit ofmorethan$30-$40,000,while,thesame time, another salesperson only put a couple of thousand dollars on the books. Or worse yet, lost money. Sometimes two salespeople sellingthesamenumberofunitshaveadiffer- ence of tens of thousands of dollars in profit for the company.The same standard applies to managers. With unemployment at a near all-time high, don’t you think there are some really greatpotentialsalesandmanagementpeople available? Maybe this is the time to take a hard look at your employees and their per- formance. The answer may be additional training, or it may be time to free up their futures. Regardless, the question is, “Are you emotionally attached to non-achievers who are costing you money and sales?” Death of an American icon A wisp of sadness came over me but for a moment when I heard the news that Ford Motor Company has officially announced that Mercury division will be phased out in the fourth quarter. But, you know, it’s like a long-suffering relative that finally passes away. It was inevi- table and, in the larger scheme of things; it was the right thing to do. Back in 2008, when the last stand-alone Mercury dealer went out of business, I wrote an article titled “The Advantage.” Here is an excerpt of what I wrote then.... Mercury, rest in peace The headlines announced that Community Motor Company of Canonsburg, Pennsylvania resigned its stand-alone Mercury franchise. I’ve written repeatedly that there is no viable reasonforMercurytoexist.ItisadrainonFord Motor Company to keep it alive. Now that the last remaining stand-alone Mercury dealer has exited the building…why not euthanize the nameplate? I once again refer to Chrysler Corporation’s retirement of the Plymouth nameplate. There wasnoearthquakewhenthetransitionoccurred. They just rebadged everything as “Chrysler.” What’s wrong with the idea of renaming all non-redundant Mercury models as Lincolns? The Lincoln Grand Marquis would still sell… probably better with the prestige name. I wrote the preceding nearly three years ago and it rings true today. Of course, Mercury had a rich heritage. Created by Edsel Ford in the 1930s as a ‘step Dealer Advocate, Ziegler (continued from P-12) Your Advantage Visit Manheim.com/YourAdvantage to see the videos and learn why Manheim is Your Advantage. I’m InvIsIble In a crowd. You won’t see me untIl the package Is gone. gatherIng IntellIgence onlIne to work the lanes, I secure what I need quIcklY and easIlY. then I vanIsh wIth mY profIts. I am a buYer, wInnIng In the greatest marketplace there Is. IAMASECRETAGENT ©2010Manheim,Inc.Allrightsreserved. 14 Dealer July 2010 Dealer-magazine.com
  15. 15. up’ from the Ford product. Not quite the luxuryofaLincoln;itwaspositioned against Buick and Oldsmobile as an intermediate carline. That made a lot of sense in that era because there were only domestic manufac- turers with very little product diversity or import choices. Nameplates like Mercury Comet, Meteor, Marauder,andCougarwerelegendaryascross between luxury and performance -- certainly not Granddad’s Lincoln. Asthebrandmatured,sodiditscustomers andtheMercuryGrandMarquisisstilliconic with an older demographic. But,intoday’smarketarena,asIhavewrit- ten in articles and delivered in speeches for more than five years I can document now; other than pure nostalgia, there is no sound reason for Mercury to exist. I would sug- gest they look strongly at keeping the Grand Marquis and rebadging it as a Lincoln Grand Marquis -- and maybe even giving the Mountaineer another shot, renamed and rebadgedasLincoln,not“Aviator,”butastep up from Explorer in that genre. My belief is there is still a strong market in that middle segment. My opinion, they can transition these models for at least another four or five years. The entire market is not going to drift easily into cross-overs. Regardless,inresearchingthispieceIstum- bled across some old Farrah Fawcett videos onYouTube advertising the 1970’s Mercury CougarXR-7.Myeyestearedupatthelossof both Farrah and the Cougar, and the image of “The Cat” in the commercials, but what we are really mourning is not the passing of thebrand--wearemourningthelossofaless complicated and more innocent era. Ford’s offer to buy out Mercury dealers... Once again, in my opinion, Ford is taking the best path to dissolving the 1,700 remain- ingMercurydealerswithcashsettlements.For themostpartthesettlementsFordisoffering go beyond state laws, and are more generous than the franchise agreement requires, and moresignificantly;itappearstobemoregen- erousthanvirtuallyanymanufacturerhasever offeredinasimilarcircumstance.Inyearspast I’vebeenparticularlybrutalwithFordandthe way they’ve handled everything concerning the dealers. Wouldn’t say it if I didn’t believe it.Myperceptionhereisthey’rebendingover backwards to make this equitable. One twist that is absolutely unique to this dealisthatFordwillbuythedealers’Mercury partsinventoryatit’struevalueandwillallow thedealertokeeptheparts.Excuseme,ifmy math is correct that means they are actually paying the dealer 200% of the parts inven- tory value. Anumberofdealershaveexpresseddissat- isfactionwithwhattheywereofferedandI’m surethatwillbesettledonacase-by-casebasis but, most of the Mercury dealers I’ve spoken to were more than happy with the deal. Of course whether or not that dealer was already combined with Ford products has a lot to do with how the news was received. Lincoln...a return to true luxury and Visit Manheim.com/YourAdvantage to see the videos and learn why Manheim is Your Advantage. ©2010Manheim,Inc.Allrightsreserved. I AM AN EMPEROR I AM A COWBOYI am a SELLEr, wInnIng In thE grEatESt markEtpLacE thErE IS. I am magnIfIcEnt whEn I brIng my goodS to markEt. hundrEdS arE at my caLL, pErfEctIng my carS. whEn I’m SatISfIEd, I grant thE maSSES thE InvEntory thEy dESIrE. LEt thE bIddIng bEgIn. Your Advantage continued to P-61    Dealer-magazine.com July 2010 Dealer 15
  16. 16. The True Measure of a Leader P ulitzerPrize-winningauthorAlexander Solzhenitsynspenteightyearsofhislife inprisonformakingafewdisparaging remarks about Joseph Stalin. He went into prison an atheist and come out eight years later a Christian. The first words out of his mouth were: “I bless you prison – I bless you for being in my life – for there lying on rotting prison straw, I learned the object of life is not prospering as I had grown up believing, but the maturing of the soul.” Thesoulismadeupofone’smind,willand emotions:yourthoughts,desiresandfeelings. Aparadoxofsuccessstatesthatifyougetthese factors “right” first, then success will ensue. However, when you chase the material and position “stuff” of life with a bereft or unde- veloped soul you may indeed get more than yourshare,onlytofeelemptythroughoutthe process and marginal in the end. While you can certainly have prosperity and a mature soul, your overall fulfillment and happiness asamanorwomanisgoingtolargelydepend on which you pursue as a priority. Motivational speaker Jim Rohn was dead- on when he declared that, “To get more than you’ve got you must first become more than you are” Throngs of people in our industry strivehardtogetmore,buttheyneverbecome more.They use the same old skills, habits or attitudes,merelystiffeningwithagebutnever truly growing. They’re not lazy. They work hard…on their jobs. But they don’t work hard on themselves.They grow old but they don’t grow up. They become so focused on their destination that the journey becomes a haplessdeathmarch,anecessarymeanstoan end.Theyhavenojoyorpowerinthepresent because they are too fixated on their destina- tion. They willingly sacrifice health, family and relationships in exchange for their goals, accepting their diminishment as a necessary tradeoff for that better job, bigger paycheck, larger house and loftier title. At the end of their days, these misguided “achievers”reflectandreachahorrifyingcon- clusion: while they have made money, they have made no real difference in the lives of co-workers,intheircommunitiesorfamilies. They are haunted by the fact that when they dieitwillbeasthoughtheyneverlived. They becamesuccessfulintheworld’seyesbutthey neverreachedaleveloftruesignificance.They crossedmanyfinishlinespersonally,butfailed tobringotherswiththem.Infact,thebacksof others running the race bear their footprints. Manyleadersenduprichandalone;richand sick; rich and spiritually bankrupt. I agree with Solzhenitsyn, that the objec- tive of life is not about prosperity, but the maturation of the soul. And that the former without the latter assures an emptiness that shakes many shallow leaders to the core with the question, Is this really all that there is? On the other hand, when maturing your soul becomes a priority, you can have it all. You move from success to significance as you improve yourself, export value to others, and edify humanity at large.You accomplish this by taking the focus off your own selfish ambitionsandaspirationsandputtingothers first: God, family, friends, co-workers and customers. It works like the teeter-totters on the playground. By pushing down your own ego you elevate and expand your platform to do well, to have an impact, to leave a legacy. Maturation of the soul begins with devel- opingastrongercharacter,purermotivesand broader outlook on life. In other words, you stoptryingtofixeveryoneelseforawhileand work harder to get yourself right. Here are a few areas to examine. 1.What is your plan for personal growth? How many serious books do you read each year that help you become a better leader? If you’re not committed to growing yourself, can anyone really expect that you have what it takes to develop others? 2. What is the state and strength of your family relationships? Do those who know you best love and respect you the most? If you can’t run your family with excellence, how eager should someone be to allow you to run their business? 3. How moral are your ethics? Do you keep commitments without excuse and regardless of the cost? Do you tell the truth—always—orareyoupronetowhitelies and false impressions? On a day-in, day-out basis do you do what is right or what is easy, cheap, popular and convenient? 4.Howstrongareyourrelationshipswith others? Are you a gossip, a purveyor of dis- cord? Are you loyal to those not present? Do youusepeopleforyourownbenefitordoyou add value to them? Are you selfish or selfless, a taker or a giver, a mentor or a moocher? 5.Whom have you impacted? Howmany people under your leadership have been pro- moted to better positions? Who can point to you and say, “That person made a real difference in my life”? Do you leave people betterthanyoufoundthem,ordoyoumerely maintain them? 6. Do you have the “disease of me”? Are you too protective of your turf? Do you put your own personal comfort zone and agenda ahead of what’s best for the team? Would the other leaders in your organization say that you’ve got their back or stab their back? 7. How do you impact the world outside your business and family? What do you vol- unteer for? How much money do you give to worthy causes? How much time do you give and value do you provide to people who could never possibly repay you? The questions that made you the most uncomfortable have the most to teach you. Leadership Dave Anderson continued to P-62 Maturation of the soul begins with developing a stronger character, purer motives and broader outlook on life. 16 Dealer July 2010 Dealer-magazine.com
  17. 17. continued to P-62 What is Your Dealership Real Estate Worth? What is your dealership real estate worth today?That is a very good question, and not one that is easily answered. Most dealers and theirlendersorderanMIAappraisaltodeter- mine real estate value. Unfortunately,duringtherecentrealestate bubbleandsubsequentcrash,appraisalshave often proven unreliable in determining what your real estate is worth. By way of example, I know a dealer whose real estate appraised for $6 million in 2002. The same property appraised for nearly $12 million at the peak of the real estate bubble in 2006, doubling in just 4 years. Since then, according to three different apprais- als, the property’s value has plummeted. It was valued at $8 million last year, $6 million in April and $5 million in May, below its 2002 value. How can the same property have so many different values in such a short period? We all know that the frothy credit markets are primarily to blame for the boom and bust in commercial real estate. However, part of the blamecanalsobeplacedonthewayinwhich real estate is appraised. Appraisers typically deploy three methods when valuing real estate. They are as follows: • The cost approach: The cost approach is based on the idea that a buyer would not pay more for a property than the cost to con- structasubstituteproperty.Inthisapproach, appraisers collect data from comparable land sales to determine the cost of land and then calculate the current cost of constructing the improvements. As part of the process, the appraiser also applies discounts to the build- ing costs to take into account depreciation and market dynamics. • The sales comparison approach: The sales comparison approach is similar to the costapproach,inthatitreliesoncomparable sales to determine value. In this method, a property is valued by comparing the subject property to similar properties that have sold in the surrounding areas.The appraiser then applies the comparable pricing metrics to determine value. • The income capitalization approach: The income capitalization approach is based on a multiplier between the prop- erty’s net operating income and its value. Not unlike blue sky multiples, capitaliza- tion rates are derived from expected risk adjusted returns on real estate investments. These return expectations are then applied to a property’s net operating income to determine the property’s value. In today’s market, all of these approaches have flaws, particularly when valuing owner-user real estate. The first chal- lenge is that since the Great Recession, we have had few comparable transactions upon which to calculate substitute pric- ing. Instead, the available comparables are often recent distressed sales of abandoned dealerships. In search of non-distressed sales, appraisers must often look far out- side a subject property’s region, even to another state. Given this situation, the cost and sales comparison approaches vary widely depending on the appraiser. Neither method is dependable as a barom- eter for value today. Alternatively, appraisers could depend more heavily on the income capitaliza- tion approach. However, this approach is rarely considered. Appraisers reason that because most dealership real estate is owner-occupied, the rental income may not be market and is therefore not a good determiner of value. While accurate, this assumption is unfortunate because the income method is the only one that takes into account what a dealership may be able to support in rent. In the end, the biggest challenge with all of these valuation methods is that none actually looks at the dealership’s financial performance. The appraiser never con- siders whether the dealership can/will support the value being placed on the property.This is particularly problematic in a market where over 13% of all dealer- ships have closed in the last two years. To accurately value dealership real estate that is owner-occupied, an appraiser must understand how much the underlying business can support in rent payments. This means (i) reviewing the dealership’s current and projected financials, (ii) Ownership Erin Kerrigan Based on 2009 NADA figures, the average dealership paid about $30,000 per month in rent, before insurance and taxes. At that level, assuming a 7.3% fixed mortgage interest rate (400 bases points over the 10-Year U.S. Treasury on 6/2/10) and a 20-year amortization, the average dealership could support a $4 million mortgage. Assuming banks and captives are lending 80% loan- to-value, the average dealership’s real estate is worth $5 million. Example of alternative real estate valuation methodolgy Property appraisal has become much more of an art than a science. Let’s return to the science.    Dealer-magazine.com July 2010 Dealer 17
  18. 18. Cut Through the Multiples – Focus on Real Value F ormerSpeakeroftheHouseTipO’Neil once remarked, “All politics is local.” I believe the same is true of dealership valuations. Contrary to a common industry belief that multiples of earnings drive deal- ership transaction prices, dealership value is primarily determined on a very local level by reviewing local variables specific to the selling dealership. Rarely a week passes where I don’t field a question regarding franchise multiples from aprospectivedealershipbuyerorseller.While multiples provide a general industry frame of reference, they fall short in determining the final dealership transaction price. A few years ago I took on the task of recording and comparing multiples based upon individual historic dealership earnings. I sourced the informationfromthemanysaleandpurchase agreements that passed through our office over a five-year period. I then compared the information to annual dealership financial statements to determine average franchise multiples.Ifurtherbrokeouttheinformation by geographic region. While the sample size grewtoafairlylargenumber,thefluctuations in individual multiples were significant. Some of the difficulty in determining an overall franchise multiple was determining what the true goodwill number really was in relation to what was reported in the sales and purchase agreement. I would also find variations in real estate, fixed assets and parts allocations in relation to overall dedicated goodwill. What I found were wide swings in theaveragesreportedbymanyoftheindustry publications. In the end, it was apparent that most of the final transaction prices for the dealsIreviewedwereactuallydeterminedbya combinationofsellermotivation,futurefacil- ity expenditures, perceived retail upside and the overall potential return on investment. Finding opportunity On the local level, everything starts with the buyer’s perception on how many new vehicles can be sold in the market compared tohistoricperformance.Asweareconsidering newvehiclefranchises,itonlymakessenseto startwithnewvehicleplanningvolume.Once established, all of the remaining department gross and expense projections should fall in line with a thoughtful forecast. The key is finding a legitimate new vehicle planning volumetoprovideafoundationforthereturn calculations. In my opinion, the best way to determineanaccurateplanningvolumeisfor the potential buyer to independently review the market with a focus on growth demo- graphicsandcompetitivemarketregistrations. A thorough review of historic registra- tions should give the buyer a starting point inassessingplanningvolumepotential.From there, realistic growth projections based on realistic inventory allocations are necessary to develop a projected five-year return on investment.Inquiriesintomanufacturersales efficiency may give the buyer some informa- tion on new vehicle sales volume potential but caution is advised when reviewing sales efficiency or manufacturer provided plan- ning volumes. Sales efficiency is only as accurate as the manufacturer’s market defi- nition. Sales efficiency calculations may also includeformulabiasesbasedonregionalaver- ages or geographic differences. For example, some markets have purchase biases when it comes to domestic or import ownership. Including either the Detroit or Los Angeles metro market averages into a regional sales efficiency calculation with upstate markets could have a significant impact on whether a dealer achieves sales efficiency for a specific franchise. When attempting to determine a realistic planning volume and ultimately an accurate return on investment, it’s best to do your own homework. Once the planning volume and overall department gross profit projections are com- plete, its time to prepare a realistic annual expense structure. While compensation expenses should account for the majority of dealership expense, facility expenses are typi- cally the wildcard when determining return on investment. Today, most manufacturers maintain high expectations when it comes to their signature image programs. Many dealerships on the market today are there as a direct result of the seller’s decision to forego a costly manufacturer mandated remodel. Additionally, those that have completed the required upgrades may have occupancy expenses that have not been supported with additional profit generation. If the buyer does not address the manu- facturer’s image plans at the beginning of the buy-sell process, the new requirements will surely come up later during the approval process.Iftheexistingdealershipisnon-com- pliant with respect to image or facility square footage, most manufacturers will provision the buyer’s new dealer agreement with strict timeframes regarding the required upgrade. Additional issues that I have found which play a key role in determining the final dealership transaction price include seller Ownership Greg Gilmore Most of the final transaction prices for the deals I reviewed were actually determined by a combination of seller motivation, future facility expenditures, perceived retail upside and the overall potential return on investment. 18 Dealer July 2010 Dealer-magazine.com
  19. 19. motivation, the buyer’s overall acquisition strategy,thebuyer’saccesstocreditandfinally the manufacturer’s overall business plan. While seller motivation often contributes to the largest fluctuation in multiples on a local level,thebuyer’soverallpurchasestrategyalso has a significant impact on final price. For example, in our study of goodwill multiples and final transaction prices, I have foundthatlocaldealersoften paya premium over out of town buyers. The strategy fol- lows that purchasing your competition adds inherentvalueupandbeyondthetraditional transaction.Otherbuyerstrategiesincludethe large and public auto group’s franchise shop- ping lists. Of course, once the large groups beginnegotiatingonaspecificsegment,trans- action prices increase. Beyond mega dealer acquisition strategies, tight credit markets have severely limited the dealership buying pool. There was a time when first time buyers commanded a healthy percentage of new dealership acquisitions. Today, those numbers are negligible. If the buyer does not have firmly established floor- plan relationships, the deal will most likely fall apart. Finally, overall manufacturer busi- ness plans do play a role in determining the final transaction price of a dealership. While factory image and facility initiatives have been addressed earlier, some manufacturers are planning additional representation in markets that they feel can support additional sales penetration. Ifabuyerislookingtopurchaseafranchise that falls into this category, it’s important to review the manufacturer’s last market study of record. If there are monitored or open points located in or near the prospective dealer’s primary market area, the return on investment may be severely impacted. In the end,therearemanyfactorsbeyondmultiples that determine the final transaction price of a dealership. An educated buyer will review as many of these variables as possible before making a final offer. Greg Gilmore is president of The Apex Group, Inc., a non-brokerage firm that develops buy- sell and open point packages for its clients. He founded the company in 1997 following his tenure as market representation manager for Toyota Motor Sales, USA. If you wish to discuss this article with other dealers, or with the author, please go to the “Discussion Forums” at www. Dealer-communications.com and enter the“Ownership”forumore-mailhimat ggilmore@Dealer-communications.com. 3 Time Winner Dealers’Choice Awards    Dealer-magazine.com July 2010 Dealer 19
  20. 20. motivation, the buyer’s overall acquisition strategy,thebuyer’saccesstocreditandfinally the manufacturer’s overall business plan. While seller motivation often contributes to the largest fluctuation in multiples on a local level,thebuyer’soverallpurchasestrategyalso has a significant impact on final price. For example, in our study of goodwill multiples and final transaction prices, I have found that local dealers often pay a premium over out of town buyers. The strategy fol- lows that purchasing your competition adds inherentvalueupandbeyondthetraditional transaction.Otherbuyerstrategiesincludethe large and public auto group’s franchise shop- ping lists. Of course, once the large groups beginnegotiatingonaspecificsegment,trans- action prices increase. Beyond mega dealer acquisition strategies, tight credit markets have severely limited the dealership buying pool. There was a time when first time buyers commanded a healthy percentage of new dealership acquisitions. Today, those numbers are negligible. If the buyer does not have firmly established floor- plan relationships, the deal will most likely fall apart. Finally, overall manufacturer busi- ness plans do play a role in determining the final transaction price of a dealership. While factory image and facility initiatives have been addressed earlier, some manufacturers are planning additional representation in markets that they feel can support additional sales penetration. Ifabuyerislookingtopurchaseafranchise that falls into this category, it’s important to review the manufacturer’s last market study of record. If there are monitored or open points located in or near the prospective dealer’s primary market area, the return on investment may be severely impacted. In the end,therearemanyfactorsbeyondmultiples that determine the final transaction price of a dealership. An educated buyer will review as many of these variables as possible before making a final offer. Greg Gilmore is president of The Apex Group, Inc., a non-brokerage firm that develops buy- sell and open point packages for its clients. He founded the company in 1997 following his tenure as market representation manager for Toyota Motor Sales, USA. If you wish to discuss this article with other dealers, or with the author, please go to the “Discussion Forums” at www. Dealer-communications.com and enter the“Ownership”forumore-mailhimat ggilmore@Dealer-communications.com. 3 Time Winner Dealers’Choice Awards Dealer-magazine.com July 2010 Dealer 19
  21. 21. Life in the Fast Lane! Get your store to its full potential L isteningtomyiPodwhilemowingthe yardthispastweekend,theEaglessong “Life in the Fast Lane” began playing. Hearing it, triggered an experience I had a few years ago and gave way to my thinking about the power of growth potential and the idea for this article. A few years ago I was riding with a friend in his new Porsche 911 Turbo S on the Autobahn in Germany. He couldn’t wait to show me the potential of his new car. As we migrated over into the fast lane he began to accelerate quickly until he found a comfort- able cruising speed of 135 miles an hour. “Can youbelieve thepowerinthis thing?” he asked. Then, glancing in his rear view mirror he said, “Oh, my gosh!” I turned around expecting to see police lights but instead saw a car bearing down on us in our lane a half mile back flashing its lights for us to get out of his way.We pulled over into the next lane to give way to this vehicle and as it flashed past us in a blur I noticed it was the samemodelPorscheweweredrivingbutmost likelydoingsomewhereintheneighborhood of 175 miles an hour. Just when we thought wewereutilizingthepotentialofthisPorsche we were immediately humbled by someone else who was actually fully using the car’s potential much greater than we were. In my travels around the country, I see the same thing occurring in dealerships all the time.Somestoresthinktheyareutilizingtheir fullest potential while there are stores who are blowing right past them by utilizing the new sales development methods. Many are not challenging themselves to become better thantheycurrentlyare.Ihaveseenstoreswho essentially have a similar sales team, manage- ment team, product line and desirable loca- tion,yetaredifferentinsomanyways.Inspite ofthesesimilaritiesbeinginplace,somestores sellmoreunits,doubleand/ortriplethegross profits, as the other stores. They also have created a total team synergy platform from which to build upon and have a low attrition rate.Why is it that some stores drive along at 135 and almost identical profiled stores are doing175?Wheredoesthedifferencereside? Ask 20 people this question, “What are the first thoughts that come to your mind when I say car salesman”? Their responses are a reflection of negative paradigms built up over the years from experiences they, a relative or friend had in dealing with a car salesman. The dealerships that are driving to new levels of achievement recognize this perception and are affecting a change in the waytheydobusinesswiththeircustomersby creating a paradigm shift. This shift can only be created when the dealershipandalltheemployeesarecommit- ted to raising the level of professionalism to new heights. When this occurs you will see dramaticproductivityincreases.Productivity increasesoccurasaresultofleadingedgepara- digmshiftingtrainingandresultinincreased output(units,gross,CSI)beingachievedwith thesamelevelofeffortcurrentlyrequired.No moreworkrequiredjustabetterwayofdoing the same work. Examples of productivity increases include: • Professional sales training priorities are put in place thus reducing the effort and time required to accomplish various tasks required to increase the store’s growth. • Reaching higher levels of skill set devel- opment leading to elevated work quality and growth in professionalism and profit increases. • Significantly reaching higher levels of employee satisfaction and motivation which leads to willing increased effort and increased team work and synergy. When you stop learning new strategies you stop growing. When you stop growing you become a prisoner to high maintenance, problems and irritations. You become stag- nant and complacent. Once you adopt the decision to do things differently, you must consistentlybedisciplinedwithyouraccount- ability in seeing it through. It is OK to make adjustments along the way but in no way should you compromise your new approach to doing business. Fact: Every dealer wants to grow the store. Yetfewformthehabitofdoingthethingssuc- cessfuldealersdoonaregularbasis.Recognize that there are two types of pain. There’s the short-term pain of disciplined accountabil- ity and the long term pain of regretting to become accountable. Gooddecisionplanninghelpsusbeginthe increasedpotentialjourney.Beingaccountable and consistent to new sales techniques and processes encourage and allows us to finish ahead.Thepainofdisciplinedaccountability is momentary but the payoff is monetary. Where does it all begin? At the top. Top down strategy simply means that everyone in management has to be com- mitted to discovering new business strate- gies, planning, implementation, manag- ing and the leadership of a new sales and management approach. Let everyone know how valuable and essential to the store’s success they are because quite frankly it is Employee Management Chuck Barker When you stop learning new strategies you stop growing. When you stop growing you become a prisoner to high maintenance, problems and irritations. You become stagnant and complacent. You must consistently be disciplined with your accountability in seeing it through. 20 Dealer July 2010 Dealer-magazine.com
  22. 22. AUTOMOTIVE ADVERTISING SPECIALISTS SINCE 1983 1-800-222-2682 info@cbcads.com www.cbcads.com All these dealers have two things in common. They’re #1 in their market, and they work with CBC. Want to see your logo here? Call us today! SINCE 1987 AUTOMOTIVE CHEVROLET Your Logo Here ARE YOU READY TO bE #1? all about your people. We all need to acknowledge that the land- scapeoftheautomobileindustryhasandcon- tinues to change and if you want to be a part ofthesuccessstoriesregardingconsistentstore growth then you will just have to do things withenhancedprofessionalismandnewtrain- ing methodologies. What got you here will notkeepyouhere.CorporateAmerica,witha fewexceptions,hasbeendoingitthiswayfor quite some time with remarkable results. Yet the automobile industry, for some unknown reason, feels this professional approach is not for us. If you’re current thinking is taking you towards a “business as usual” shortcut approach then be prepared for a diminish- ment of everything you have built thus far. We need entrepreneurship to be at its best in this industry right now. One tremendously important factor in ‘growing to your potential’ is your invest- ment in your employees. If people really are your greatest assets, isn’t it time to look at giving your people an opportunity to reach their full potential? Look at them as invest- ments in your organization’s human capi- tal and not just as an expense. Anyone can be competitive with their capital (such as advertising) but investing in the skill sets of your people develops a stronger store and is priceless. A very small percentage of your advertisingbudgetredirectedtogrowingand training your employees will deliver to you much greater long term benefits than the newspaper in the trash. Don’t wait until you have a flat tire to do something. Now more than ever are we required to be people of excellence. In an industry where mediocrity has been thenormforsomanydealerships,consumers fed up with this approach are now expecting to develop relationships with professionally acting sales consultants. No half-hearted efforts any more. Full throttle forward in the directionofawelloiledprofessionalmachine. Excellence is doing the right things when no one is watching. Earn respect, sharpen skills, whatever you do – get better at it. Develop a spirit of total team excellence in your deal- ership and watch your potential begin to increase speed. Shed a few paradigms. It has become such a cliché for management to claim that ‘our employees are our greatest asset’. Yet, much to the dismay of most employees, the effort management puts forth into developing this valuable ‘human capital’ continues to be seen as an expense and not as an invest- ment. It’s time for you to turn this around. Start looking at your training programs as if they were capital investments. Develop your very own ‘in-house’ training solution and deliver it consistently twice a month using new enhanced material. Don’t just settle for the ‘same old stuff’, make it purposeful and clear. At a time when there are so many exciting new developments in enhanced skill andpsychologytrainingandwiththemarket increasing,you’regoingtoneedpeopleattheir full potential. Invest in your people and they willinvestinthemselves,inmanagementand thedealership.Youalsohavetothenempower themtomakedecisionsinordertogetthings done. I like to say if it doesn’t burn the store down, break the law, hurt anyone and we would be proud of it on the front page of our newspaper, then just make the decision. Empowerment, what a great word. Chooseyourroadwiselyandnavigatewell. We can no more afford to spend major time onminorthingsthanwecantospendminor time on major things. Keep your eyes on the road especially when you are accelerating in thefastlanestrivingtoreachthefullpotential you are capable of. Need a map for reaching your dealership’s full potential? Send me an e-mail and request ‘The Map’. Keep both hands on the wheel! “Half of knowledge is knowing where to find it.” ~ Ben Franklin Chuck Barker is CEO of his two companies, Impact Marketing Consulting Group, LLC and Impact Summit, LLC, both located in Virginia. His experience ranges from an execu- tive with a Fortune 200 corporation to the automobile business where he has performed all management positions. His firms specialize in growing people and dealerships. He delivers leading edge sales training programs, customer relationship strategies, management leadership workshopprogramsanddealer/principalconsult- ing assistance for the automobile industry. He has recently published the first comprehensive ‘in-house’ sales training solution program for dealers entitled Dealership Success Guide. If you wish to discuss this article with other dealers, or with the author, please go to the “Discussion Forums” at www. Dealer-communications.com and enter the“Ownership”forumore-mailhimat cbarker@Dealer-communications.com.    Dealer-magazine.com July 2010 Dealer 21
  23. 23. COVER STORY ClassicChevrolethasagood-naturedbattle with Paddock Chevrolet in Buffalo for the titleofthetopsellingChevystore.Andyou won in 2009. How many years in a row has Classic been number one? Fouryearsinarow.Itlookslikeitcouldbe five in a row if we stay strong. We are more than 300 hundred units ahead of Paddock right now. That’s been a fun rivalry. The loser was supposed to take the win- ner’s management team to lunch. Have you collected yet? DuanePaddocktookusouttodinnerafter our fourth victory, which was this year. He’s a good guy. How long has Classic been around? Since 1990. Was it your dad who started it? My father, Tom Durant, started it. It was actuallyabusinessthathepurchasedindown- townFortWorthsometimein1988or1989. He moved it here about 20 miles away to Grapevine in 1990. There was nothing here at the time. The area looks much different now because of the growth. Classic recently acquired some of the old Bill Heard stores. Yes, one in Florida and one in Sugarland, Texas. How are those stores doing? The Florida one is doing relatively okay. It is not thriving right now, but the economy in Florida has some catching up to do. Our Sugarland store right out of the gate is just doing awesome. We get to share the same front page on the top 250 list. Are you looking to acquire more? Ithinkwearetakingalittlebitofabreather on that one, but we always keep our eyes and ears open. If a good opportunity came up we will look at it. Do you get to Florida at all? Or are you tied to Texas? I went to Florida for NADA. I got to drop by Stingray Chevrolet, but that is the only time I have ever been there. Every store that we buy, we put in a key person who has gone through our flagship store in a management form, we like to call it the Classic Academy. They have proven themselves over here and have absorbed our cultureandthenwesendthemoffaspartners to go run another store. It typically works pretty well. We don’t do it with a corporate mentality, though. We actuallydoitasapartnership,meaningweare notgoingtooutlineprocedures.Wedon’tdo contractswithvendorsthroughoutthewhole group either. It is just about as independent as it gets. You grew up in the business? Ihave.Ofcourse,IhadmytimewhileIwas at college thinking nothing of the business. But I have most certainly grown up with it. Since the age of 10 I started doing the basics. I washed cars, swept the service department. Everything you can think of, I’ve done it. But I didn’t work in the back end. I grew up a little more front end oriented, which a lot of dealerships are strong in, but I want to balance it out now. What are some of the things you are doing now to do that? I spend time visiting with and learning from my service manager. Having a daily visits with him and then wrapping my mind HAGEN DURANT Classic Chevrolet 22 Dealer July 2010 Dealer-magazine.com
  24. 24. In existence for only 20 years, Classic Chevrolet in Grapvine, TX, has been the number one selling Chevy store four consecutive years and is about to make it five. Much of that is due to the culture Owner Tom Durant created that his son Hagen, Classic’s general manager is carrying forward. Hagen sits down with Dealer magazine and shares his thoughts on GM’s new management, being a “dealer kid,” and how technology is helping Classic continue as an automotive retail leader. around the back end – including the body shop – is giving me a good perspective. Texas seems like it has a vibrant body shop business. Yes, but it depends on the area you are in and the relationships you can develop with the insurance companies. Where did you go to college? I went to Texas Tech. I went in 1998 and came back here in 2002. A Red Raider? Yes sir. Good football team. Interesting football team. What did you study? I studied business. I didn’t have any real generaldirection,Ijustwantedaneducation. You came back from school and started working at the dealership again, and now you’re the general manager. What is the timeline of that? I sold cars starting in 2002, mainly Hummers. I looked at vehicles that I was enthusiastic about. I felt it wouldn’t be hard to sell that vehicle. I never wanted to have to talk a vehicle up. I was 22 and wanted something outrageous to sell so I chose that department. Selling those was the most fun I had in the car business. Now you’re the general manager running the dealership. As a GM, what are some of the challenges that you have running such a big store? Ithinkoneofthechallenges—considering theemployeecountismorethan260–isjust being able to stay on top of communications and procedures. We have six trusted manag- ers running our stores and often procedures can be created and I am not aware of them. So staying on top of the operational flow is very important. This is a business that has been around for 20 years and it is huge. It is hardtowrapyourmindaroundhowitworks. That is an ongoing challenge. How is it being the son of a dealer princi- pal and having to gain the respect of the staff and not just being seen as another dealer kid? I have thought that since I was young. I have always tried to approach everyone humbly. I try not to look down on anyone. I look straight at eye level. We are all here to work together. In many cases my elders are people that I manage and they have a lot to teach me. That is both a good and a tough position to be in. Yes sir. What are some things that help make Classic such a success? I think it’s the culture that’s been created. People around here catch on to the fact that they are compensated well and treated well. Theyaren’tgettingbombardedwithpolicies. It is a very relaxed place to do business and it is evident to the people who come here to do business. You can’t just spring up a dealership. It has to happen over time. What got us to where we are today is all of the referral traffic that we’ve built over the last 20 years. Whataresomethingsasyoulookbackyou would say “Wow, I’m glad we did that, it was a homerun for us.” Thatisagoodquestion.I’mgladwestarted doinganInternetdepartmentin1998.There wassurealottotakeinforthatasthetechnol- ogystartedtoevolve.Atthetime,theInternet was barely in existence. Classic has a strong Internet business and has some good people working there. Good people who really do understand communication online.That is a whole new skill – being able to communicate online in nonverbal communication where you can’t always show your expressions or body lan- guage. A lot of our folks have done it so long that they have fine tuned that into an art. I’m on your web site right now. Do you get a lot of traffic with your chat application? Actually it is our number one converter. Client ConneXion does that for us. Logically,howelseareyougoingtoengage withsomeoneonyourwebsite,besideswhat you put out there? Ask yourself, how many dealers are putting stuff up on their web site that is engaging? Chat is another way for us to communicate and engage. You went with a company called Dealer Trends to build your web site. We did that as an auxiliary option. Our OEM-providedwebsitehaditsobviouslimi- tations,sowelookedforadifferentcompany to do that. This month we are switching to VinSolutions. Dealer Trends is a good company – espe- cially for web sites. But VinSolutions offers such an encompassing platform that is going to save us a lot of money.We’re going to gain so much in efficiency and awarenenss. For example, we never used a CRM. I wantedtostayawayfromcomputerproducts even though, I am a computer geek. I love computersandIlovewhattheycandoforus. ButIdon’twanttoturnintotheCheesecake Factorywhereyouhave75opentables,butit still takes five minutes to get seated because the computer has to do it all. ButIdidfindthattherearemanyelements of the CRM tool that improve efficiency of transactions. One is not having to fill out three separate buyer orders and take them to the sales manager for a signature. We can typetheinformationinonceandhaveallthe informationthathasbeencollectedpopulate and be pushed to the different parts of the    Dealer-magazine.com July 2010 Dealer 23
  25. 25. dealership,soweneverhavetodoanydouble or triple entry. It eliminates the redundant tasks we’re doing now. What is the value with the social network- ing as you see it? I think the value for social media is being in front of people and having a message that resonates with people. I originally started playing with it in 2009. There wasn’t a lot to do and not much business is rolling in because of the downturn. People are talking about social media being the next best thing, so I thought I would give it a shot. I’ll be honest with you, the first time I saw it I was wondering what the heck I was sup- posed to do with 140 characters onTwitter. I ended up watching people engage — acting like a mole watching people and how they interact. It has gone really good. I know a lot of people have argued how do you measure your ROI? I don’t think that’s where it is. I think it has other ways to really help your web presence; help the SEO of your web site if you do it right, and again it is relaying your brand and getting in front of people. It is also being human. Have you brought in any consultants or trainers to help with that or are you doing it on your own? I did it on my own for the first eight months. I had my Blackberry and iPhone out throughout the day and I don’t wish to go back to that. But I do like to speak on there on a daily basis. And I had a consult- ing company put together a blog for me. It provides valuable information and tips for the ownership experience of a new vehicle. You mentioned the downturn in 2008- 2009, what are some of the things you did as a general manager that helped keep Classic a premier store? The first thing that happened was being made general manager. In November 2008, I graduated from the NADA’s Academy and after that I just started to dive into things I hadn’tbeenintobefore.Iwaslookingatgen- eral ledger accounts and looking at expenses and creating templates for monthly proce- dures to help with workflow. Dadcaughtwindofthatandputmeinthe chair even though I didn’t think I was ready for it. You never think you are ready to take onabusinessof260-plusemployeesattheage of 29,butyoucouldeatanelephantonebite at a time, so I figured I would just roll with it. It has been a blessed learning experience. As a store you made cuts. We didn’t have to make too many, but we did make some. Your sales really didn’t drop a whole lot, right? Theydidn’tdroptoobad,wewereat4,101 in 2009. In a typical year we usually push 5,000, so we were about 900 to 1,000 cars short by the end of the year. Was there any point where you were nervous? There were points every day where I felt nervous. But you always have to go back to being clear and level-headed about it. You always have to think about how people will react. The whole mass can react if there is a hugetragedy,wheninfactthereislightatthe end of the tunnel. Recently, General Motors sent an internal memo about Chevrolet. What was your guys take on that? Which memo? ItwasleakedtothenewslastweekthatGM executives wanted employees to ditch the Chevy nickname and start using Chevrolet only. I think it is ridiculous really to be honest with you. I don’t mind it, and I’ll roll with it. I think I am referred to as Chevy. I think they’re backing away from it now. I see on your web site you use Chevy. Thenamesaresynonymous;thenamewill have negative effect on web traffic because people are going to type in Chevy not Chevrolet. They want to call it Chevy. What are some other things you are going to be doing over the next year? I have been very meticulous about my ecommerce with a huge primary focus on the front end when I am not thinking about fixed operations. I’ve got a lot of plans for that, but unfortunately these plans take time to deploy. It is kind of like watching a bean sprout grow. It’s tough being patient. Yes. You want to do it all at once, but you just have to tackle one thing at a time. Youwanttotakethebigpictureperspective ofwhatIwanttodo.Ithinkweshouldbeable to offer all of our services in an e-commerce fashion. I’m not talking advertising, I’m talk- inge-commerce.Ithinkjusthowyoucando itatPayWay;youshouldbeabletopickwhat you want to have and put your credit card informationinthereandgotothedealership andsayyournameandbeabletopickitup.I thinkyoushouldbeabletodothesamething with a maintenance plan and have a promise to get the vehicle back at a certain time. Why do you have to do a parts request by e-mail to the parts representative at the counter, who is going to e-mail you back? Why can’t we do that real time online? On your service side, are you looking at bringing in a company that is going to let your customers set a real time service appointment? This would be a software. I would love to do that and I would love for no overlapping between the computing and the viewing. That dynamic has to be perfect. No more Cheesecake Factory. I have a feeling that if I talk to you in a couple of years, you are going to be so far ahead in your fixed operations services then where you are now. Well, you know there is so much fun in fixed operations, if you good at turning switches and being patient after you have done that, then remembering to check your results down the road, it can be a lot of fun. I see there is a lot of efficiency that you can drive in that department if you know what you have; using technology can save you so much money. Money that goes right to your bottom line. Think about this, you’ve got your sink drain closed and the sink is making one drop persecondandyougoonvacationandcome back and your sink is overflowing.Those are little drops. They don’t seem like much, but in e-commerce we are missing little drops. Andifwedevelopnetbucketstocollectthose dropsthenwecangathermoreopportunities. You have been diving into the fixed opera- tions side. What are some things you’re continued to P-57 24 Dealer July 2010 Dealer-magazine.com
  26. 26. JOE ELLSASSER General Manager Golling Chrysler Jeep Dodge page 16 July 2010 Internet Sales: How to Set Yourself Apart in a Competitive Market page 10 Digital Process: Eight Steps for Real Reputation Management page 14 Web Sites: Turn Your Site into the Ultimate Closing Tool page 20 Technology Trends: Four Steps to a Super DOC – and More Profit page 24
  27. 27. DD 2 July 2010 DigitalDealer-magazine.com ABLE OF CONTENTST JULY 2010 PRESIDENT AND CEO MICHAEL ROSCOE VICE PRESIDENT AND EDITORIAL DIRECTOR CLIFF BANKS cbanks@Dealer-communications.com 248-351-2620 PUBLISHER GREG NOONAN 607-264-3359 gnoonan@Dealer-magazine.com CONTENT COORDINATOR MARIA BURKEL mburkel@Dealer-communications.com ART DIRECTOR JOE BIRCH PRODUCTION MANAGER ELIZABETH BIRCH PRINT PRODUCTION NICK THOMAS COVER DESIGN JOE BIRCH COVER PHOTOS WUJCIAK HESS CIRCULATION SUBSCRIPTION RICH JARRETT 314-432-7511 rjarrett@Dealer-magazine.com www.Dealer-magazine.com NATIONAL ADVERTISING SALES adsales@Dealer-magazine.com 607-264-3359 Dealer magazine makes every attempt to ensure the accuracy of all published works. However it cannot be held responsible for opinions expressed or facts supplied herein. Nothing may be reproduced in whole or in part without written permission from the publisher. All rights reserved. The publisher encourages you to submit sug- gestions. Submitted materials become the property of Horizon Communications, Inc. and will not be returned. Send material for publication to 330 Franklin Rd., Suite 135A, PMB 386, Brentwood, TN 37027. The editor re- serves the right to edit material; submission of material constitutes permission to edit and publish that mate- rial. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is presented with the understanding that the publisher is not engaged in rendering legal, accounting or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. From a Declaration of Principles jointly adopted by a Commit- tee of the American Bar Association and a Committee of Publishers. A PUBLICATION OF C O M M U N I C A T I O N S FEATURES Digital Dealer Cover Story 16 Joe Ellsasser General Manager Golling Chrysler Jeep Dodge COLUMNS AAISP Notes 6 Get Rid of the Internet Department? It’s Your Call Cliff Banks Internet Sales 8 Take Out the Trash and Keep the CRM from Being a Garbage Dump Joe Webb 10 How to Set Yourself Apart in a Competitive Market Angela Martin 12 Moving from Stiff-arm to Hug Tom Mohr Digital Process 14 Eight Steps for Real Reputation Management Steve Stauning Web Sites 20 Turn Your Site into the Ultimate Closing Tool Joe High Technology Trends 24 Four Steps to a Super DOC – and More Profit Sandi Jerome DEPARTMENTS 4 News
  28. 28. DD 4 July 2010 DigitalDealer-magazine.com IGITAL DEALER TECH NEWSD Dealix releases major update to award-winning hassle free lead return program Dealix,adivisionofCobalt,hasannounced additional features for its award-winning Hassle Free Lead Return program. Features included in the upgrade, Hassle Free Lead Return 2.0, include enhancements that respond to dealer requests for longer periods in which to submit leads and easier ways to return leads. Dealix launched the Quality Pledge in September 2009. The Quality Pledge speci- fiesthatdealersshouldonlyreceiveleadsthat can result in a car sale, and is backed by a feature set – Hassle Free Lead Return – that allowsdealerstoreturnleadsthatdonotmeet acriterionoftheQualityPledge.Collectively, the products allow dealers to make sure their lead baskets are optimized during the course of the month, and provide Dealix real-time data with which to manage its lead supply. The popular program was honored with a Market Innovation award by TargusINFO and has seen widespread adoption. Nearly 2,000 dealers are now returning leads each month. Keyenhancementsinversion2.0ofHassle Free Lead Return, which were the result of dealer feedback, include: - Increased the time frame for returning leadsfromsevento14days.Thisgivesdealers more time to work and close the leads. - Reduced the amount of documentation required to prove a duplicate return. Dealers nolongerneedtoprovideacopyoftheorigi- nal lead when they submit a lead for return. They just need to provide original lead date, time and source. - Added ability to enter comments with lead returns, allowing dealers to provide more information about their experience with the lead which enables Dealix to process the lead faster. “With the Quality Pledge, we sought to place the bar for a qualified lead very high. We knew the program was unprecedented andthatwewouldlearnhowtoenhanceitas our customers used it and told us about their experience,”saidEgonSmola,vicepresident, New Used Car Leads Business. “It’s really important to us that the program works for our dealers – fits in with their workflow and, in the end, saves them time and allows them to make more money.” The program is having a positive impact on sales for Dealix customers. In a recent survey of dealers using the Hassle Free Lead Return program 86% reported that they are able to realize a higher ROI with the Hassle Free Lead Return program because they’re able to replace returned leads with new ones without increasing their spend. “The Quality Pledge represents the best offeringintheindustryandiswhyIwentwith Dealix,” said Michael T. Halloran, e-com- merce director, The Napleton Dealership Group. “I have dropped all other lead pro- vidersbecauseoftheDealixQualityPledge.” www.cobalt.com/dealix Reynolds adds real-time vehicle inventory updates for dealership web sites The Reynolds and Reynolds Company has announced the availability of real-time inventory updates for customers using the Reynolds ERA dealership management system (DMS) and web sites from Reynolds Web Solutions. Now,withthisadvancement,whendealers addavehicletoanERAvehiclemanagement screen or make changes to existing inven- tory records, the updates will be reflected immediately – and automatically – on their WebMakerX 2.0 web site. As a result of this innovation,consumerswhoareshoppingfor a car on the dealer’s web site will be able to view the most accurate information about the dealership’s current offerings, including status, price, and option packages. “Real-timeinventoryisonemorecompeti- tiveadvantagewecanofferdealershipsasthey work to stay top of mind with customers,” said Trey Hiers, vice president, Corporate Marketing, for Reynolds. “When a dealer’s online inventory is updated in seconds, instead of overnight, consumers see what’s in inventory in that moment, not what cars might have been sold yesterday or even a few minutes ago. That can help give consumers more confidence in the dealership’s products and give dealers one more edge in building a relationship with consumers.” For dealers using web sites from Reynolds Web Solutions, real-time inventory updates occur automatically with no additional key- strokesorchangestotheirERADMSorweb updating processes. www.reyrey.com vAuto releases mobile iPhone App vAuto, Inc. has announced its used car inventory management system is now avail- able as an application for the Apple iPhone and iPod Touch. “We recognize that our dealers need the ability to access our real-time market infor- mation wherever they are,” says Keith Jezek, presidentandCEO.“Wedecidedtodevelop ourmobileapplicationinitiallyfortheApple devices because they are the preferred mobile devices for web searching activities.” Live market appraising is the first vAuto moduledevelopedasamobileapplicationfor no additional monthly subscription charge for vAuto users. It is available for download from the App Store on iTunes. All vAuto customers now have the oppor- tunity to utilize the fully integrated market based appraising functionality from their Appletouchdevice.Inadditiontotraditional third-party guidebooks and auction values, the application features vAuto’s exclusive rBook, which allows customers to appraise with the mindset of “how to get out of a car before you get in.” The mobile application functionality also includes the proprietary barcodeVINcapturemethodthatautomati- cally decodes and uploads to vAuto. www.vAuto.com
  29. 29. DD 6 July 2010 DigitalDealer-magazine.com Get Rid of the Internet Department? It’s Your Call Let me state right at the beginning that I’m going to waffle in this column. And I’m not going to apologize for that. More and more, I’m editing columns and talking to people that advocate doing away with the Internet department and becoming andInternetdealership.Partofthethinkingis that most – if not all -- of your customers are using the Internet to shop for vehicles today, therefore,everyoneinyourdealershipshould be able to handle the “Internet customer.” Instead of having a separate department handlethosecustomers,allofyoursalespeople should be able to converse using e-mail and handle customers that are using the web to findtheirvehicleandthedealershiptheywant to buy from. That’s not wrong. There are dealerships that have moved in that direction and have been very successful with it. But there are still dealerships that are incredibly successful with an Internet department and would be crazy to change their process or the way they manage their customers. This where I’m going to waffle – should you get rid of your Internet department? Honestly, I don’t have a clue and I don’t care. I’ve been writing about this topic for years – andprobablywasthefirstonetostartwriting abouttheInternetdepartmentgoingtheway of the Dodo bird (that’s a Chip Perry quote from years ago). If you think about it, it really is somewhat ironic – the Internet manager is a dinosaur now? I don’t think so – at least not yet. WhatIdoknowisthatyoushoulddowhat works best for your dealership. Do you have theright management teaminplacethatcan successfully move your dealership to become an Internet dealership, instead of relying on one department to handle it? If you want to move in that direction, you also have to make sure you have a business casefordoingso,notjustbecauseaconsultant tells you it’s the way to go. If your Internet department is selling a lot of cars, why mess with that? If it ain’t broke, don’t fix it, right? My favorite part of my job is getting to talk to so many dealers, Internet directors and general managers. And one thing I’ve learned is that there is more than one right way to get the job done. Lastmonth,IinterviewedRoyReutterwho is the e-Commerce director for the Sheehy Group. They have no intention or reason to getridoftheInternetdepartment.It’sincred- ibly successful. This month, Hagen Durant, the general manager for Classic Chevrolet inTexas, and the top selling Chevrolet dealership in the country, tells me he would like to make the transition to becoming an Internet dealer- ship where everybody is able to handle the Internet customer. Durant is young, tech- nologically savvy and probably represents the new breed of general managers that are going to lead our industry for years to come. Twodifferentperspectives,buteachwildly successful. In the Digital Dealer cover story this month, we interviewed Joe Ellsasser, the general manager for Golling Chrysler Jeep Dodge in Michigan. It’s the top selling ChryslerstoreinthecountryandIlovewhat they have done. Golling separated the Internet marketing from the sales functions. Think about it -- it’s two different skill sets. In way too many stores, I think we’ve dumped both sales and Internet marketing jobs onto the shoulders of the Internet manager. I suspect it’s a lot for one person to manage. You really want a salesperson handlingyouronline marketing? And you want a marketing person trying to close a deal? I’ll refrain from being too dogmatic here, butifyourInternetmanagerishandlingboth selling cars and marketing them online, you mightwanttoevaluatewhetheryou’regetting the most return on your investment. Being good at building web sites, under- standing search and social networking and knowing how to buy leads properly are com- pletely different skill sets than being able to sell a car – whether you’re doing it online or in the showroom. Youmightreadthingsinthismagazinethat you disagree with. Some things might even make you angry – such as reading that your position should become extinct. That’s a mark of a good magazine. We try hard to provide you with as many ideas, IGITAL Dealer AAISP NOTESD Cliff Banks continued to P-DD24
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  31. 31. DD 8 July 2010 DigitalDealer-magazine.com Take Out the Trash and Keep the CRM from Being a Garbage Dump P lease open up your wallet, pull out a $50 bill, walk over to the nearest trash receptacle, and throw away your money. What do you mean ‘no?’ Of course, it sounds foolish, but that is what your sales team is doing with your money right now. There is a financial cost associ- atedwithbringingeverycustomerintoyour showroom. Every day (maybe every hour), a member of your sales team works with an in-store customer and doesn’t source them properly, essentially wasting the advertis- ing money you spent to lure them to the dealership in the first place. Next to a strong web site and DMS, a fully-functional CRM (customer relation- ship management) tool is the most impor- tant piece of technology you can utilize in your dealership. Some Internet experts that use them well might place their CRM’s importance even higher. Most quality CRMs have the ability to keep track of the ROI (return on investment) you are receiving from your advertising budget. However, this only works if each and every prospect/customer/lead/sale is prop- erly sourced when being logged into the system. There is no quick fix. The only answers are training, dedication, and discipline. I see it almost every day I visit a dealer- ship. A customer is greeted by a salesper- son and when that salesperson logs them into their respective CRM, they don’t even ask what brought the customer in. They assume.They choose on behalf of their cus- tomers. The most common CRM crimes I witness when logging customers come to source. That is why 80% of all of your logged customers are wrongly sourced as “Lives in Area,” “Drive-by’” “Walk-in’” “Phone-up’” or “Manual Add.” Let me help explain why these should not be allowed as sources. “LivesinArea”–Wow.Congratulations, customer.Didyoujustwakeup,realizethat we are members of the same town, and decidetopopinandpurchaseavehiclewith no research? If that is the case, Mr. Dealer, I want your location. More than likely, they studied up ahead of time, sent in a lead prior to in an effort to keep you honest, or has even used your service department in the past. If the latter is the case, then mark them as a “previous customer.” Sure, it isn’t as a previous sales customer, but there is at least some validity to that source. “Drive-by” – Mr. Customer, did you spot this exact vehicle you are purchasing as itwasnestledinamongst100othervehicles while driving past our store at 35 mph? If so, your eyesight is that of a fighter pilot. Certainly some outside influence made you drive into the dealership rather than a glimpse out of the corner of your eye or a rare muscle-spasm and jerk of the wheel. “Walk-in” – Did your dealership have a multi-million dollar mechanical moving sidewalk installed from different corners of the neighborhood to drag unsuspect- ing customers into your store? No? Was someone involved in an accident in front of your dealership and immediately hoofed it over to pick out a replacement vehicle? If you answer ‘no’ to these two questions, then there is no such thing as a walk-in. “Phone up” – Where did the customer get the phone number?That is the source. It’snotlikeyoureceivecallssaying,“Yes,I’m in the bathroom stall at the local KFC and your number is here. Thought I’d call…. Oh, a new car? Yes, that sounds great.” Even if that did happen, the source would be “KFC bathroom stall.” “Manual Add” – I can only assume you chose this source because you manu- ally entered the customer as opposed to its alternativewhichis…..what?Telepathically input the customer’s info? These sources must be removed from your CRMs. Having these fairy-tale sources as options makes your employees lazyandthrowsyourhard-spentadvertising dollars in the trash.The saying is “garbage in/garbage out.” If you allow this to con- tinue, then you are paying your CRM to put out junk and that is unacceptable. Here are two ways to help source: At the meet and greet: Theorderofquestionsyouandyoursales staff are asking the customers must change. After the customer states their vehicle of interest, have your team respond with “Great. Have you had the opportunity to research this vehicle online?” If they say no, be thankful and tell them you can answer all of their questions, thereby making you the “Internet.” If they say ‘yes,’ say “Great. Which sites? Did you have the opportunity to contact our Internet department?” The purpose for this is two-fold. First, whatever sites they researched/found the vehicle on, that is your source and you can use that site to your advantage (if it is a resourcesite)duringthenegotiationprocess with the customer. Second, you will learn if they’ve contacted your Internet team ahead of time and get the customer in front of IGITAL Dealer INTERNET SALESD Joe Webb There is a financial cost associated with bringing every customer into your showroom.
  32. 32.    DigitalDealer-magazine.com July 2010 DD 9  the correct person who has already built rapport with them (and prevent skating). Now, we have heard the phrase “buyers are liars,”butinmyexperience,ifyouaskthem rightawaywithouthesitationifthey’vecon- tacted the store already, they will tell the truth. If you don’t ask, they simply won’t tell. Why should they show their hand if you don’t even do your job and ask the right questions? In the finance office: Have a basic sheet of paper with the printed logos from all of your true advertis- ingsources–(knowingthatKBB/Edmunds can go to different lead providers – research by shopping those sites ahead of time). The finance manager then simply asks the customers to circle the place(s) that they conducted the majority of their research on or which site led them to contacting you. Once the customer acknowledges, just ensure that the correct information is being filtered back into the CRM. Now when you run your reports, you will see how much the Internet truly influences your customers and you will learn your actual ROI from your advertis- ing expenditures. It takes training, time, and discipline. Don’t let your salespeople turn your CRM into a garbage dump. You spend too much money on the tech- nology and the advertising to let that happen. Put the right processes in place. You’ll spend your money better find new ways to market to past (properly-sourced) customers. Your mother was right. It’s time to take out the trash. Joe Webb is the president of DealerKnows Consulting, an automotive Internet sales training firm specializing in assisting deal- ers with the advancement of their online efforts through hands-on/on-site and virtual consulting.Webb has been called “the funni- est guy in the car business” and has consulted nationwide, showing dealerships success by instilling proven Internet marketing prac- tices. He has been writing for Digital Dealer magazine almost since its inception and is a regulartop-ratedspeakerattheDigitalDealer conferences. In the past,Webb found success in the trenches when he created and managed an award-winning business development center for a Chicago dealer group. His primary goal, as he always states, is “to better the culture of car sales”. If you wish to discuss this article with other dealers, or with the author, please go to the “Discussion Forums” at www.Dealer-communications.com and enter the “Internet Sales” forum or e-mail him at jwebb@Dealer- communications.com.
  33. 33. DD 10 July 2010 DigitalDealer-magazine.com How to Set Yourself Apart in a Competitive Market T his is my first article for Digital Dealer magazine and I am so excited to share my daily life in the dealer- ship with all of you. I feel your pain and your happiness along with the ups and downs of the car business. We are unique. We deal with high pressure on a daily basis; there are not many other businesses that run full force day in and day out. Sometimes it is exhausting, sometimes it’s thrilling. We all get up every day and do it all over again. That is what makes us unique. With all the competitive shoppers out there, we as dealers have to find a way to set ourselves apart from the rest. How can you set yourself apart? You have to respond faster than the next guy, right? We have all been taught that since our first month in the Internet department. I am here to tell you that being the fastest might not get you the responses it once did. Customers’ expectations have grown over the years. You could have possibly gotten away with a two-sentence response in two minutes years ago and still made an appointment and sold a car. Not anymore. Customers expect a pro- fessional look and feel to every e-mail you send out – that’s right, every single one. It is incredibly important to show them your dealership’s professionalism. They might even pay you more money for the same car that the guys down the street because of it. Can you dedicate yourself to making your e-mail and phone messages professional and effective? If so, I can guarantee you great results. I have watched it happen – yes, it takes an enormous amount of dedication to do this every time but I believe that every one of you has the ability to do this. The problem is that most of you do not have the self-discipline to continue to do this every day. Writing and designing an effective and professional e-mail or template takes is the very first step you need to become an expert in order to be successful with your clients. This is a must; it is not an option. It seems so basic, doesn’t it? I challenge you to take a look at the last 20 e-mails you sent out and see how many looked and sounded professional. Did they have your company logo? Did they have your full signature – and by full, I mean name, title, dealership, web address, e-mail address, phone numbers, physical store address and lastly, your picture. Your picture will create a relationship and help break down the barrier from the beginning. One of the hardest things that I encountered when I began in this business was the perception that my clients had of me. I began hearing, “You don’t seem like a car salesperson,” and I always thought, what does that mean? I am sure many of you have heard this as well. The addition of a picture in your signature line will help your clients see you as a living and breathing individual. And place you a step ahead of your competition. Next, place a header on every e-mail. A header should include your dealership logo, a manufacturer logo, store phone number, service and parts phone number and web address. I would include images of your store – this will help the customer recognize your dealership. Include an award that the particular vehi- cle has received, such as a five-star rating. For our visual customers, include different vehicle images to help build emotion with them. Lastly, provide the customer options. Include at least one other new vehicle with less equipment and at least one similar used car. The more options you give them, the more likely they are to come in and see those options. In my experience, customers have trouble saying “I can’t afford that,” so show them less expensive vehicles to eliminate the uncomfortable situation of them not being able to afford the fully loaded up version. To sum it up for you, make your pres- ence professional and your customers will be blown away by this – as little as it seems, it will have a huge impact on your personal success as well as your dealership’s success. If you are reading this, you are more than likely ahead of your current competition, so keep thinking outside the box and keep setting yourself apart. Angela Martin has been selling cars out of the Internet department for 10 years. She now is the Internet sales director for Feldman Imports in Minneapolis, which averages 80-85 web- based sales. She graduated from the University of North Dakota in 2000 with a communi- cations degree with a focus on graphic design and photography. If you wish to discuss this article with other dealers, or with the author, please go to the “Discussion Forums” at www. Dealer-communications.com and enter the “Internet Sales” forum or e-mail her atamartin@Dealer-communications.com. IGITAL Dealer INTERNET SALESD Angela Martin I am here to tell you that being the fastest might not get you the responses it once did.
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