AutoSuccess aug10


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AutoSuccess addresses the specific, researched needs of new car and light truck dealerships by providing entrepreneurial, cutting-edge, solution-based editorials to increase dealership profits and reduce expenses

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AutoSuccess aug10

  1. 1. 2010AUGUST
  2. 2. AutoSuccess Magazine is published monthly at 3834 Taylorsville Rd., Building A, Ste. 1B Louisville, KY 40220; 502.588.3155, fax 502.588.3170. Direct all subscription and customer service inquiries to 877.818.6620 or Subscription rate is $69 per year. AutoSuccess welcomes unsolicited editorials and graphics (not responsible for their return). All submitted editorials and graphics are subject to editing for grammar, content and page length. AutoSuccess provides its contributing writers latitude in expressing advice and solutions; views expressed are not necessarily those of AutoSuccess and by no means reflect any guarantees. AutoSuccess accepts no liability in respect of the content of any third party material appearing in this magazine or in respect of the content of any other magazine to which this magazine may be linked from time to time. Always confer with legal counsel before implementing changes in procedures.© All contents copyrighted by AutoSuccess Magazine, a Division of Systems Marketing, Inc. All rights reserved. Reproduction in whole or part is prohibited without express written consent from AutoSuccess. AutoSuccess may occasionally make readers’ names available to other companies whose products and/or services may be of interest; readers may request that names be removed by calling 877.818.6620. Printed in the USA. Postmaster: Send address changes to AutoSuccess Magazine, 3834 Taylorsville Rd., Building A, Ste. 1B Louisville, KY 40220.2300 Hurstbourne Village Dr, Suite 1200 Louisville Kentucky 40299 | 877.818.6620 / 502.588.3170 | / | Susan Givens, Publisher Thomas Williams, VP & Creative Director Dave Davis, Editor & Creative Strategist Brian Ankney, Account Manager Susie Horne, Account Manager John Warner, Sales-Improvement Strategist jwarner@autosuccessonline.comfeature solution leadership solution marketing solution sales & training solution DO SOMETHING DIFFERENT, THE SALES ARE OUT THERE STEPS TO STRENGTHENING YOUR FINANCE DEPARTMENT HOW TO RULE WITH STRATEGIC MARKET LEVERAGING AUTO TRANSPORT BY RAIL SALES UP TO 30 PERCENT THE DEATH OF THE TRADITIONAL DEALERSHIP PART 2 DARCARS Automotive PERCENT OF ALL CONSUMER PURCHASES? WOMEN Group Knows Owner MANAGE YOUR ONLINE MERCHANDISING, PART 2 WHO IS THE ‘MINORITY’ WHO ACCOUNTS FOR 85 Retention...Do You? WHAT IS (AND ISN’T) A ONE-SOLUTION SYSTEM , IDEAS, NOT GENDER, ARE KEY TO SUCCESS CREDIT SCORE IMPROVEMENT PROGRAMS LAUNCHING A POSITIVE REVIEW CAMPAIGN Tammy Darvish, Vice President, speaks out on THERE’S A GUY ON THE LOT...WHO’S UP? THE VALUE OF A MANAGER’S MINUTE A SMART, PRACTICAL, STEP-BY-STEP OPTIMIZE YOUR MARKETING, PART 1 ACTIVITY BREEDS PRODUCTIVITY FOR THE SERVICE DEPARTMENT Learning the Art of the Old Give and Take eLEAD and Automotive Marketing INTEGRATION MYTH BUSTER THE PATH TO PROFITABILITY: An Interview with UPS’ Kristin DeBates GUIDE TO CRM SUCCESS LEGAL COMPLIANCE A Call to Action for All Dealers Who Taught You the Rules? An Interview With TammyDarvish NEGOTIATION 101: 17 14 16 30 32 36 37 08 10 24 25 28 38 20 22 34 40 11 18 26 SteveBrazill FranTaylor JoeAbraham JohnBrentlinger HossDevine JimRadogna DalePollak JodyDeVere BillPhillips TomHopkins PeterBond JeffGrandstaff KirkManzo JockSchowalter RichardWinch SeanStapleton BryanAnderson JoePollaro & ShelleyMcBride KristinDeBates MarkTewart pg 4 pg 7 pg 0 pg3 pg1 pg1 kristin debates dale pollak bryan anderson
  3. 3. DalePollak sales & training solution THE PATH TO PROFITABILITY: A Call to Action for All DealersRecently, I received a note from a successful So who are the winners in these most highly poses challenges at multiple stating in part that they’ve experienced efficient razor-thin margin markets? Theydifficulty with appraisals of late. Part of it is are the companies that possess two essential First and foremost is the industry’s culturethat they are stretching so far to make new characteristics. The first characteristic is of pursuing fat margins in favor of movingcar deals, they’re often putting too much into the company’s ability to perceive the price directly to the equilibrium price. This culturala trade. His desk managers are really finding at which their products will sell at any resistance is presently allowing dealers toa larger disconnect between auction values given moment and their willingness to offer significantly improve their market share.and what other similar cars with respect to the products at that price point without Another significant challenge, however, ismiles and trim are selling for on the Internet. delay. The price at which the product will the restructuring of their businesses to create transact at the given moment is called “the more efficient operations. Only some ofThere is no question that the pain being equilibrium price.” this restructuring can be achieved throughexperienced with respect to appraising conventional cost cutting and expensevehicles for acquisition and the amount that’s The second essential characteristic of control. Fixed expenses such as land andnecessary to be paid at auction isn’t justified efficient-market winners is a highly cost- facility costs are prime examples of thosewhen you consider the retail market. I’ve efficient operation. Since the profit margin that can not be easily or quickly reduced.been speaking incessantly over the past year at the equilibrium price is razor thin, less-about the rapid increase in wholesale values efficient operations cannot survive for Because the greatest cost efficiencies, andwithout a corresponding retail price increase. long at that pricing level. If, and when, too to be sure the hardest ones to achieve, lie inThe effect is a highly compressed margin many sellers meet the equilibrium price, the dealership’s organizational structure andenvironment. There are identifiable reasons the equilibrium price will drop and thereby processes, it is now time to take inventory offor this compression; however, that’s another systematically weed out those sellers with all the necessary tasks and to eliminate all non-discussion, and it will not likely change in marginally less operational efficiency. essential ones. This effort requires hard choicesthe future. In other words, this is the reality Under such circumstances, these sellers will to be made between the “nice-to-have” and theof the current and future retail automotive exit the market in favor of more profitable “must-have.” Moreover, the remaining tasksenvironment. opportunities, which could mean soy beans must be reengineered to achieve effectiveness instead of corn, compacts rather than SUVs, with lower cost. This, too, will require toughAlthough the industry is struggling to or storage facilities instead of dealerships. choices involving employees and relationshipsaccept this margin compression, it’s clear with outside entities.that it is the reality of all efficient markets. The good news is that, as the less-Specifically, this reality begins with the efficient operations exit in favor of better The present moment in the industry isrecognition that profit margins will be much opportunities, the equilibrium price will then one between from where we came andsmaller than they were in the previously begin to rise. The profits of the most highly where we are headed. Although there isinefficient market. This new reality sets up efficient operations will soar as a result of a growing trend of dealers characterizedtwo important questions. First, will there be a their extraordinary efficiency. Once the by this movement who are learning andrace to the bottom, where no one makes any profits for the most efficient operations climb executing the principles, there are manymoney? Second, if not, who are the winners to a high enough level, the other less-efficient others who have simply adopted the practiceand losers in such an environment? competitors will again return to this sector of equilibrium pricing. The consequence for searching for a share of the profits. At this such dealers who are willing to price at orWith respect to the first question, the answer point, the cycle repeats itself over and over. near equilibrium without attaining greateris no, there will not be a race to the bottom operational efficiency has not yet beenwhere no one makes any money; in fact, The bottom line is that the reality of the realized. Without question, over time thissome will make plenty. The support for this ever-more efficient retail automotive market group of dealers will experience results thatposition can be found by examining some of is lower margins. There will, however, will cause them to retreat from the marketthe most efficient markets in the world. Such certainly be winners and losers. The winners by either reverting to non-equilibriummarkets include mercantile and commodity will possess the two essential characteristics pricing or pursuing other more attractiveexchanges — markets where everyone has of being able to move immediately to the investment opportunities.access to relevant information with lightening equilibrium price and hang in there until Dale Pollak is the founder of vAutospeed. In these markets, there are certainly the less efficient are flushed out by the and an author. He can be contacted atwinners and losers; but to be sure, the profit inefficiencies of their operations. This new 866.867.9620, or by e-mail atmargins are razor thin. paradigm for the retail automotive industry
  4. 4. JodyDeVere sales & training solution WHO IS THE ‘MINORITY’ WHO ACCOUNTS FOR 85 PERCENT OF ALL CONSUMER PURCHASES? WOMENWomen buy 60 percent of all new cars and 53 percent of used cars, and spend $300 billion annually The advent of the Internet has enabled womenkeeping their cars repaired; and yet, a recent study of 200 Chicago car dealerships by economists to find the resources and information theyIan Ayres and Peter Siegelman shows that women usually get higher price quotes than men. need to take charge of their own finances and buying decisions, and give voice to theirOverall, most women liken buying a car to having a tooth pulled. It is not like most of her other retail needs and experiences at all, and many women do love to shop. With all that buying power, womenresent not being taken seriously at the dealership. One of the top complaints is that women hate high- In today’s competitive auto industry,pressure sales tactics and the feeling that they are being manipulated or lied to by the salesperson. dealership owners and employees can no longer afford to ignore the need to create a safe comfortable experience for the female car buyer. If anything, they should cater to women and win their trust, or risk losing market share to competitors who do recognize the huge opportunity to grow their business with these loyal customers. Here are Some Facts on the Purchasing Power of Women: According to Fast Facts, women account for 85 percent of all consumer purchases, including everything from autos to health care: • 91 percent of new homes • 66 percent of PCs • 92 percent of vacations • 80 percent of healthcare • 65 percent of new cars • 89 percent of bank accounts • 93 percent of food American women spend about $5 trillion annually, which is more than half the U.S. GDP. Reaching the Underserved Female Majority With the rising tide of the economic power of women, car dealerships and automotive retailers need to devote time, resources and budget to gain a larger share of this huge market. If 60 percent of new car buyers are women and 85 percent of new vehicle purchases are influenced by women, what percent of your marketing and advertising budget are you willing to devote to attract, sell, retain and increase loyalty with this majority of the American auto buying market? Properly armed with the right tools and training dealerships can increase their share of the largest and fastest growing demographic of new vehicle buyers — women. Jody DeVere is the CEO and president of She can be contacted at 866.849.9973, or by e-mail at
  5. 5. SteveBrazill leadership solution THE VALUE OF A MANAGER’S MINUTETime waste differs from material waste in that from sales. If you expect to produce $10,000 equipment and people (including yourself).there can be no salvage. The easiest of all in profit and your expenses are $90,000, youwastes and the hardest to correct is the waste must generate $100,000 in gross profit. If you You might begin by estimating how muchof time, because wasted time does not litter work 12 hours per day and 25 days per month time you spend on the various activities thatthe floor like wasted material. in the process of producing that $100,000 gross make up your day. Find areas in which you – Henry Ford profit, you will have worked 18,000 minutes can reallocate time for greater effect. Here’s (60 x 12 x 25=18,000). Dividing the $100,000 a thought starter: If 20 percent of your peopleIf you are a manager in a typical dealership, gross profit you are expected to produce in a are producing 80 percent of your results, areyou (and your family) know you spend most month by the 18,000 minutes you will spend you spending more of your time with themof your waking life there. The value of that working on that task reveals that you must or with the 80 percent who produce only 20time to you is determined by a variety of produce $5.56 per minute you spend at work. percent of your results?personal choices that only you can assess, butthe value of that time to the dealership is easy Now, $5.56 per minute may not look like Everyone’s situation is unique, and you willto calculate. a lot of money, but remember: It’s equal to have to discover the solutions that work $100,000 per month and $1.2 million per year. for you today, then adjust them as you goWe’ll assume the dealership purchases your forward. The only universal thing is that timetime with the expectation that you will use it I’m not suggesting that you take this analysis is wasted one minute at a time and, onceto produce a profit in your department. And, literally. You should not spend four minutes, gone, it can never be reclaimed. Tick, tock.because the standard accounting period in 18 seconds helping a customer resolve adealerships is one month, we’ll consider the problem, then walk away thinking, “Wow!profit you produce and the minutes you work That guy just cost us $23.91.” You can, Steve Brazill is the chair of automotive however, be constantly aware of the fact that marketing for Northwood University,in a single month. Using round numbers, we Texas Campus. He can be contacted atcan build a simple example. your time is a finite resource that is not free. 866.861.1515, or by e-mail at You can identify and change those things that profit is what’s left over after repeatedly consume more time than necessaryyou cover your expenses with gross profit — streamline or eliminate processes, cranky the #1 sales-improvement magazine for the automotive professional 11
  6. 6. Today’s auto dealers have technical advantages that no other generation of vehicle sales professionals could have dreamed of. Withthese new tools, though, there are challenges, one of the biggest being the decision on which tools will work best with for a dealership’s unique situation. AutoSuccess Publisher Susan Givens recently sat down with Tammy Darvish, vice president of the high-volume DARCARS Automotive Group in Maryland, to discuss the steps she’s taken to make sure her people have the right tools for the job.AutoSuccess: Everyone wants to know goal was to vet and select just a few partners in many of our stores just to keep up with thehow your stores continue to improve, that could integrate with each other to provide appointments that are made by the call center.Tammy. What are some key factors? the most return on our investment. Eliminating We are comfortable knowing that while ourTammy Darvish: Well, for one thing, we many technology sources was a risk, but one CRM provider is doing what they do best, ourhave not and will not operate under the belief that has paid off well, in our case. teams can focus on the better managing ourthat we are executing as well as possible. We business. How many appointments we havereally believe that if we are not improving After several CRM changes, it has been very at each dealership every day is no longer aand looking for ways to better serve our productive to find a long-term approach and mystery. eLEAD helps keep us focused on thecustomers and our communities, then we’re partner that works for our entire group. We many other tasks in our showrooms that wenot going to grow or sustain. At the same time, have experienced that there is no magical can have direct control over, while remainingwe think that internal accountability at every software system that’s not going to have issues as productive as possible.level is vital. We place a lot of emphasis on at times, but front-to-back we believe thattargeted strategies, not only on attracting more we have found the most complete option out AS: What types of targeted marketingcustomers but, more importantly, retaining there. More importantly, eLEAD has resources strategies consistently work well for you?them. By offering our customers the right available to move forward and keep up with TD: With a well-established customer baseincentives and providing them with the level the advancements of technology and our in each of our dealerships, we work withof service that they expect and deserve, we’ve other partners. I think it’s a great advantage our CRM provider to coordinate all of ourbeen fortunate enough to see meaningful to partner with a company that is focused electronic efforts related to all sales andincreases in our sales and service retention on retail, owner retention and continual service campaigns. They often provide us withpercentages. While it’s tough to get out of the improvement. We have grown together in the credible recommendations based on our trafficcomfort zone of traditional advertising, we industry for the past few years. and timing. Whether its e-mail, telephonehave placed greater focus on our customers’ calls, recalls or direct mail, we believe indigital experience. AS: Do you employ an internal professional communication with a clear call BDC or call center? to action for all of our customers to maximizeAS: What’s the biggest technology TD: A lot of my peers are customers of every sales and service opportunity. Usingpoint you rely on? eLEAD and successfully combine both, but external marketing to attract new customersTD: One of the biggest operational decisions our stores do not staff BDCs. We do use their is not only much more expensive, but is oftenwe made a couple of years ago was to partner call center as a safety net to measure how more unreliable than marketing to our ownwith eLEAD as our CRM tool and to create effectively our managers and sales consultants databases. Creating and maintaining long-terma sense of credible accountability across the are following up. Our CRM makes sure our positive relationships with our customers hasboard. Until we defined how our CRM was leads and unsold opportunities don’t slip always been our goal, and eLEAD is a tool thatgoing to measure accountability, we never through the cracks. It’s not realistic to expect certainly advances our efforts towards that goalreally utilized it fully. Although we don’t let our front-line players to complete all the calls, while providing real value for our customers.CRM serve as an excuse or focus every day, all the time, as well as managing everything Vehicle sales and repair orders generatedeLEAD is one of the very few digital strategic else. We’re realistic about the number of calls from true prospecting calls are tracked withpartners that we have. Like many dealers, we that really get made out of a retail point each accountability, just like other key metrics.felt technologically challenged and had to day versus the optimum number that shouldlearn that partners like this were about much be made. There is no way any store could AS: What types of marketing callsmore than technology; they were more about execute the number of calls and appointments do you find most effective?delivering an experience to our customers. Our that the call center averages. It’s a challenge TD: We use eLEAD’s GoldDigger Agents
  7. 7. to strategically mine our databases on customers to come back to the showroom when AS: Many people wonder how youschedule with professional sales and service they are ready to buy, but also to learn more manage it all? Any words of advice?prospecting calls to point our managers in the about their experience in our showrooms on TD: Being a part of every “team” in ourright directions. Most of our sales campaigns their initial visits. We want to follow-up until dealerships is important so that, as decisiontarget customers who are in positive equity, the appointment is set or they have bought makers, we have first-hand experience andwarranty expiration or can lower their monthly elsewhere without aggravating or offending our knowledge of the challenges that are facedpayment. The service campaigns assist us customers. If nothing else, we want to create each day. Having thorough knowledge ofin securing the first service visit from our a friendship with every customer so that even all of the tools available to us through ourcustomers after the sale and help retain them if we missed an opportunity today, they would partnerships is key to the success of ourthroughout their lifecycle. There are many consider us again in the future. Regardless of relationship with our partners. And personally,tools and “menu” items that are offered by the type of prospect, we insist on CRM usage although its difficult at times, I’ve found thateLEAD, all of which work in tandem with our to capture the customer’s information, track the more listening I do, the easier it is for meother operational business partners. daily follow-up tasks and give our management to manage more effectively. team quick access to missed appointments andAS: What can you tell us about your uncompleted tasks. While the workday of afollow-up process with prospects sales consultant is typically very unstructured,who do not buy immediately? we now have professional daily work plans For more information about Tammy Darvish,TD: We tend to believe there is really no such that provide them with a clear road map to or the DARCARS Automotive Group, visit as too much follow-up in the car business. managing all of their opportunities on a dailyThe cost of generating new opportunities is basis. Most beneficial are the follow-up calls For more information about eLeadCRM,high, and customers don’t have time to waste that eLEAD makes to our unsold customers contact the owner, Hugh Hathcock, atat dealerships. It is important to have consistent that, more often than not, would have ended up 866.347.6160, or e-mail him atfollow up not only to try to encourage falling by the wayside.
  8. 8. MarkTewart leadership solution THE DEATH OF THE PART 2 TRADITIONAL DEALERSHIPDo you feel like you are missing out on expectations, value perceptions and lessening relationship building strategies, and sales tosomething? Are you confused as to what of brand loyalty are all things that have service continuity programs and retention.the next step is in making your dealership changed dramatically. Dealers will learn that many advertisingsuccessful? It’s a different ballgame than it agencies do not understand any of these thingswas even just a few years ago. The traditional Every dealership needs to review their process and simply create lousy to mediocre productiondealership is dead and you must bury it to based upon TLC – Think Like a Customer. and buy the media. Without a well-thoughtprosper in the future. What are you currently doing in your strategy, using intentional congruence with all dealership process that lessens customer trust of the above-mentioned factors, you cannot beFor years, the car business could be a or ease of shopping/buying? Most dealerships successful in this and future marketplace.forgiving business. There was room for a lot are living in the stone-age when it comesof error in a dealership, and yet a dealership to something as simple as the meeting and In the last year, I have asked hundreds ofcould still be profitable. Those days are gone. greeting of the customer. Nothing in your dealers the following questions:Dealerships cannot be run in only a “seat of current process is sacred, and the mantra for • What are your overall sales to servicethe pants,” entrepreneurial fashion anymore. many things should be “just let it go.” retention numbers and percentages beyondTo be successful, dealerships have to be a free first oil change?measured intensely in four areas: people, Product • What are your number of inactiveprocess, product and positioning. The days of “Stack’em deep and sell them customers, and what percentage is that to cheap” are over. Your new and used inventory your overall customer base?People must be monitored daily using analytic • What is your planned and executed strategyYou must choose a path that works for your systems and technology that measures not for a continuity program to keep yourdealership philosophy. You must recruit only your inventory but others and market customers for sales and service?people on a full-time basis based upon want, conditions. Many dealers have fought usingnot need. The leadership of a dealership must any type of turn system, even though simple Here is the sad result: Out of hundreds ofhave a written and executed game plan for mathematics proved you would be better dealers, only one knew the answer to theserecruiting that utilizes online services, job off doing so. Well, the tide has turned again. questions. I continually find that dealers andfairs, colleges, tech schools, high schools, Web Turn systems themselves are now outdated managers do not really know what is goingsites, micro-sites, social media, newspaper, and can even lower your dealerships ROI on in their own dealerships and are not doingmass media and more. without other factors involved. Each vehicle anything to educate themselves to change that. is an investment — just like a stock or mutualA dealership needs a detailed plan that includes fund — and must be analyzed, bought, priced, The reality is that the future belongs to dealersinterview questions, a number of interviews, marketed, sold and eliminated using several who educate themselves more, execute betterpersonnel trained to interview, testing methods conditions. Just saying that you have a 45-day and understand the value of speed in today’sfor potential job skills match, screening turn system is not good enough anymore. marketplace. The marketplace of today and themethods, follow-up methods, and initial and future will continue to be very unforgiving,ongoing training methods for new hires. Positioning with little room for margin of error, inattention Gone are the days of running display or being slothful. The traditional dealershipProcess newspaper ads and waiting for traffic to is dead, but the exciting news is your newEach dealership should have a written arrive. Your dealership must have a dealership dealership is waiting to be born.and executed process for every part of the strategy that combines market positioning.dealership: sales process, Internet lead Selling vehicles based upon price only will not For a free special report titled “10 Thingsprocess, marketing process, service process, create long-term success. Successful dealers You Must Do At Your Dealership To Beparts process, manager process, used car will no longer be able to delegate all of their Successful” e-mail me at the address belowinventory process, etc. As an example, the marketing to an advertising strategy without with “10 Things” in the subject line.selling process must be reviewed to make educating themselves on the marketing andsure it is up to date and matches today’s positioning aspects of their dealership.marketplace. Most sales processes being Mark Tewart is the president of Tewartused today were created in the 1950s and 60s Dealers will have to massively educate Enterprises, and the author of the best seller, How To Be A Sales Superstar. He canand have changed only slightly. Meanwhile, themselves on things such as direct response be contacted at 866.429.6844, or by e-mailfor the customer, everything has changed. marketing methods, copyrighting, multi-step at gathering, overall knowledge, campaigns, integration of online and offlineshopping process, volume of choices, methods, social media, continual customer 3.2.1 SERVICE CHECKBOOK PROGRAM 1 $ 59 Mercury San Francisco Ford Lincoln 211 Industrial Street San Francisco, CA 94124 Free drop-off and pick-up INCLUDES FREE CAR WASH at our Van Ness location. 866-467-4104 415-553-4400 YOU PAY YOU Plus Tax & oln Mercury $14.88 Disposal Fee REDEEM TO THE ORDER OF San Francisco Ford Linc Oil, & Filter Change Lube, One transaction only. Valid only at San Francisco Ford Lincoln Mercury. Expires 1/31/12. Per book cash. e for IN THE MAIL BOX This is not a check. Not redeemabl present at time of write-up).5W-30). One coupon per service (must synthetic oil (5W-20 or Includes up to 5 quarts of blendedcost. Full Synthetic oil at additional higher (ask your service advisor for details). be Diesel vehicle service may or $3.41 hazardous waste fee. Does not include shop charges Customer Signature Not valid with any other offer. - (704) 231-4809 ©2010 - www.321consultants.com14