AutoSuccess Sep09


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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 Sep09

  1. 1. September 2009
  2. 2. Have you ever felt like you were mak- My name is Mark Tewart and I am the • Make an extra $100,000 or more ining little mistakes that are costing you President of Tewart Enterprises Inc. For your service pro ts in 90 days or lesstons of money at your dealership? Do almost two decades I have been helping • Double and even triple your salesyou feel like there are hidden pro ts dealers nd hidden pro ts and correct- and service customer retentionin your dealership that are just waiting ing little mistakes that were costing • Double your appointments andto be uncovered? If you are like most those dealers hundreds of thousands of sales conversion from Internet leads,dealers, the honest answer is, YES, dollars. These almost-magical solutions Web site leads, third party leadsAbsolutely! turn little mistakes • Increase yourIt’s a shame for YOU not to make into instant cash I can’t say how much F&I Product pen-more money, when these dealers do machines of bot- etrations by 25%it so easily… tom-line pro t. money is being left immediately unrealized at your • Discover the one Just one thing that Mark showed Because I have not dealership. However, I secret that willus made us over $200,000 in prof-its in 90 days met you and do not know anything can say FOR CERTAIN make your dealer-ship an additional Franklin Greene, GM that the number of million dollars or about your dealer- Montgomery Ford LM ship, I can’t say dollars is substantial more over the next Our grosses went up 30% on thefront end, and we added almost 50% how much money and would shock you, ve years — We is being left have several clientsin the back end. The best part of that unrealized at your if you knew. who have alreadyis that our sales also increased over dealership. How- experienced this25% and continue to increase. ever, I can say FOR CERTAIN that and it will make the hair stand up on Gary Minneman Jr, GM the number of dollars is substantial your neck when you hear this. Sunshine Toyota and would shock you, if you knew. Working with Tewart Enterprises isdifferent from other consultants and There are a few things that every Call 888 2 Tewart (888 283-9278) ortrainers. We are getting results with dealer should be doing to make e-mail to schedulevery satisfied customers. In addition, money, especially in this economy. a private and con dential interview.Tewart Enterprises Inc is helping us The Great News is that I have identi- ***We will share candid and speci cto make our entire business more ed those little mistakes and have big information that will prove to you withoutsound. With years of successful ex- solutions for them. NO BS, just real a doubt what I am saying is true. You willperience, this team is innovative and measurable results that start happening see real dealer examples that support theseup-to-date presenting fresh ideas immediately and I guarantee those results. Because of time constraints, thereto keep up with our ever-changing results. will only be a limited amount of dealersbusiness. I would recommend Tew- accepted into this Enterprises Inc. to anyone who • Sell more vehicles without spendingwants to improve their business. $1 more on advertising P.S.: Please, only Dealers or – Doug Mathers • Increase your gross pro ts any- General Managers Russwood Auto Center, Lincoln, NE where from $300 to $800 a vehicle may respond.
  3. 3. 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 40220.3834 Taylorsville Rd. Building A, Ste. 1B Louisville Kentucky 40220 | 877.818.6620 / 502.588.3170 | / | Ken Susan Givens, Publisher Thomas Williams, VP & Creative Director Dave Davis, Editor & Creative Strategist Brian Ankney, Sales-Improvement Strategist John Warner, Sales-Improvement Strategist jwarner@autosuccessonline.comfeature solution leadership solution marketing solution sales & training solution HOW TO INCREASE INTERNET LEADS WITHOUT CREDIT CARD PROCESSING TODAY - WHAT IS U.S. AUTOMOTIVE RETAILERS CREATE A NEW KEY STEPS TO MAXIMIZING THE BENEFITS OF WHAT SHOULD MY CONTROLLER BE DOING? CHAT YOUR WAY TO AUTOMOTIVE SUCCESS DATA COLLABORATION IS KEY TO SUCCESS AVOIDING THE TRAPS TO BHPH SUCCESS IMPROVING PVR AND CSI WITH BIWEEKLY BUSTING STAFF EVENT MYTHS, PART 2 THE HANSEL AND GRETEL MANEUVER DEALER GROUP STRATEGIES: SAFETY AUTO STIMULUS PLAN TO REPLACE SPENDING MORE MONEY LEGISLATIVE CHANGES WITH FIVE EASY STEPS CASH FOR CLUNKERS RIGHT FOR YOU? IN NUMBERS PAYMENTS An Interview By SusanGivens PART 2 18 24 20 10 30 28 34 08 16 22 26 32 JeffAnderson SteveBrazill SeanStapleton DavidEngelman DalePollak ChuckPatton ToddSmith AlBabbington ScottNorman MattBaker EricSelby SusanGivens September 2009 pg 2 pg 4 pg 0 pg2 pg2 pg3 sean stapleton eric selby todd smith
  4. 4. marketingsolution DalePollak HOW TO INCREASE INTERNET LEADS WITHOUT SPENDING MORE MONEY I’ve spent the past six vehicle managers in my study group are these stores create incentives for efficient, months studying the able to complete this same process in three thorough work to feed their fast-turn online merchandising and marketing of used days or less — with some using technology timelines. Similarly, freshly acquired vehicle inventories to better understand what and tools to post units the same day they vehicles get top priority in service for drives consumer interest and attention. purchase them, even at auctions. reconditioning work. The premise here is that the faster technicians complete recon To do this, I compiled metrics from a variety The difference in these turnaround times work, the faster they’ll see the next vehicle of dealers and used vehicle managers has profound implications for generating show up to add incremental hours to their with whom I’ve developed personal and interest and leads from online shoppers. paychecks. professional relationships. Their incentive The stores that are able to purchase and post to share comes from sharing my desire to their vehicles on a same-day basis have 14 Using Technology to its Fullest get a firmer grasp on what makes consumers extra days of online exposure. Likewise, the The dealerships that post vehicles online the “click” on some listings more than others. dealers who manage the online presentation same day they acquire them take advantage turnaround in three days or less have a 10- of technology that allows real-time dumps of After pouring over this data and digging day advantage. In comparative terms, these VIN numbers and other documentation into for meaningful trends, I came away with stores have roughly 30 percent more online their DMS to feed the fast-turn process. At two key understandings — one that is exposure for their inventory — added time these stores, accounting office clerks are on already fairly well understood and the other that gives them additional shots at attracting standby to ensure the data feeds smoothly. that offers an opportunity to increase lead online consumers without spending another Automated data feeds also mean less potential without spending additional money dime on additional inventory or premium duplicative data entry — another time-saver. for positioning and other advertising on online placements. third-party inventory sites. Of course, there are a lot of other important I believe all dealers and used vehicle factors that drive the number of leads a store 1. Size Matters managers should strive for this level of generates from its online inventory listings Every dealer and used vehicle manager operational efficiency. It’s not easy to — the quality of photos, the compelling knows that a larger inventory means accomplish and requires some key steps: nature of vehicle descriptions, price, etc. a greater variety of choices to attract But, as we all know, time is money in our potential consumers. This has been true Decoupling “Virtual” Merchandising business and my initial review of data from a with physical lot inventories, and it’s true From “Physical” Merchandising variety of dealers and used vehicle managers for online inventory listings. The more The stores that achieve the same-day posting suggests that many stores lose valuable vehicles a dealership posts online, the of units online made a decision. They time on the front end of a used vehicle’s greater the chances that a consumer will recognized that faster online placements inventory life cycle. land on a vehicle that appeals to their tastes, translate to more selling opportunities and, lifestyle and budget. The potential to attract if it’s the “right” vehicle, a faster rate of turn One of the dealers in my study achieves additional consumers translates into a on their investment in the vehicle. Once they same-day posting of his vehicles online potential for an increase in leads. made this mental shift, they realized that it’s and sells 300-plus units a month. He 2. Timing Matters more important to get the vehicle they own puts the time-sensitive nature of online I’ve learned that it’s not uncommon for in front of customers and then polish up the merchandising this way: “If a vehicle’s not dealerships to see a five to seven day delay photos and presentation after detailing and online, it’s not for sale.” in the time that it takes to get a vehicle other reconditioning work is complete. In to their store after they’ve purchased it some cases, these stores use stock photos as at auction. From there, it often takes an temporary place-holders. Dale Pollak is an author and the founder additional seven to 10 days to recondition of vAuto. He can be contacted at the vehicle, take pictures and post the Creating a Fast-Turn Culture 866.867.9620, or by e-mail at “pixel” presentation of these vehicles online. At some stores, detailers and upholstery crews are waiting for transports to arrive. By contrast, many of the dealers and used The dealers and used vehicle managers at08
  5. 5. leadershipsolution SteveBrazill THE HANSEL AND GRETEL MANEUVER The past year has been moves worked as planned and which didn’t, them disappear, as bread crumbs will. Record fatal for many in the which you would repeat and which you would them now, file them away. Keep them safe. business. If you and your dealership have handle differently, and what information was survived, have you stopped to ask a simple useful and what was missing. Want to make this exercise even more potent? question: What made you different? Ask yourself and your fellow managers Try making a first draft from memory, while another simple question: “What could we Was it a better mix of franchises? High fixed at home or some other place away from the have started doing five years ago that would coverage? An expense structure you could dealership. In your first effort, just capture have made the past year a smoother ride?” control? the big picture. Later, you can add detail to Once you answer that question, you may your notes while walking through the store conclude there is no time better than the Simple responses such as those don’t really (or your department), letting the sights and present to convert those thoughts into action. get to the root causes. Sure, some franchises sounds remind you of pieces you skipped It’s been said that the best managers don’t fared better than others, but all mainstream over on the first pass. Have other managers solve problems; they anticipate and avoid brands took a severe beating. And anyone make their own records, then compare. them. This is surely a cyclical business with high fixed coverage knows that and it is appropriate to plan for the upturn condition didn’t happen by merely wishing You now have a trail of bread crumbs. The that lies ahead. But there will always be a it so. The same goes with a manageable next time the business cycle flips from boom next downturn and as important as it is to expense structure. More likely you made to bust, you will have a familiar path to take maximize profit in the good years it is also many key decisions at critical times, then through the woods. Imagine if you’d had important to survive the difficult spells. Now executed repeatedly. a trail to follow this time, left by someone is the time to plan ahead. who’d already been there and done that. So, what were those decisions? Now is the Steve Brazill is the chair of automotive time, while memories are fresh, to make Experience is the best teacher, and the most marketing for Northwood University, a record, in rough chronological order, of relevant experiences are your own. You Texas Campus. He can be contacted at what you did, at what time, and why. Take probably paid a high price for lessons during 866.861.1515, or by e-mail at advantage of hindsight to recognize which the past year. What a shame it would be to let D EAT URETS F ODUC PR Attention. Customers. Sales. Curbie™ Advertising Flags The Frog™ from $ from $ 995 119 from $ 99 Air Dancers Custom Inflatables Banners from $ from $ 449 1999 from $ 39 888.530.8151 or visit us online for signage that increases sales revenue & gets your business noticed.10
  6. 6. marketingsolution ChuckPatton DEALER GROUP STRATEGIES: SAFETY IN NUMBERS Recently I had a advantages? Get all of the stores on the Where Do I Start? “perfect storm” same page and you will grow responses The backend is typically the easiest place to conversation with a general manager of a exponentially as you strengthen the value start because of the uniformity of strategies dealership group. This dealership not only of your own brand. Sometimes individual that the franchises most likely share. Direct had their GM store pulled, but also their marketing initiatives become stale programs marketing typically makes up about 80 Dodge store. The stores were turning a profit, that can be cut. percent of the total advertising expenses had great customer loyalty and were moving of most service departments and falls into cars. Overall, there were about 17,000 Brand — The dealer group benefits from three main categories – reminders, conquest customers in the database who were affected. more prospect loyalty when the overall mailers and e-mail. The dealership was devastated. dealer brand is viewed as having more value than one store. Branding your dealer group is Go to each store and ask a series of simple The silver lining was that this dealership had also a key advantage when you are rewarding questions: “What are you doing and how been investing its marketing efforts into a loyal customers. Consider programs for effective is it?” “How do you measure it?” group strategy. Even though they had gone loaner cars, free car washes, free service “Why do you think it is working?” Ask for from eight dealerships to six and lost two clinics, massive oil change discounts or documentation to back up their numbers. Just of their strongest stores, the dealership had exclusive parties every year. Everyone likes because they say they were swamped or had its own brand value to fall back on. This like to feel they are special. a great month doesn’t mean the marketing value helped retain employees, provide their strategy caused it. Sometimes a service community with long-term solutions and What Hurdles Must You Overcome? department handles large numbers of recalls. avoided putting a family-owned operation The average mindset — You can monitor of 40 years out of business. The lesson that marketing effectiveness month-to-month, but Start interviewing marketing partners. Ask dealer groups like this have learned is that do not plan it that way. Proactive long-term them what makes them different and how there is safety in numbers when marketing planning is a must. You must have a written they can work with your dealerships as a your stores as a group. plan that covers the group and work that plan. group versus individually. How much will This is not a short-term fix to help what is each store save by streamlining advertising Where Are the Opportunities? going on right now. and avoiding duplication of advertising How can we find safety in multi-point dollars toward the same customers? Find numbers? How can I take advantage of the Assess the dealership — It’s a lot of work a vendor who can effectively implement a power of my dealership group to achieve to accumulate the standard practices of strategy for the dealer group for all categories more than I would as a single point? each store and cross-reference them with that focuses on results! Challenge them to manufacturers’ programs. Make a thorough make you more money, not just cut costs. Opportunities Unique to Group audit to see what each franchise is doing to The message will be consistent, will promote Dealers Fall Into Three Categories: market their store, as well as an analysis of your brand value and the total participation Volume — Sheer amount of dollars of the results. or gross dollars will be effective enough for product/services purchased. Each dealership you to get a better price or added services. is a different manufacturer’s point, but they Provider capabilities — After the purchase relatively the same advertising assessment you need to find people who can In summary, marketing as a group allows you services. This volume is attractive to business market the dealership group effectively. This more control to influence results and impact partners, but the true value is communication is defined as a company that knows what and to monitor and reduce expenses. It gives opportunities for a unified message across works at the dealership that can recommend you more control to secure a better future that invested volume. and automate a plan so you are not spending by elevating your dealership brand to a level all of your time managing the marketing. that is distinguishable from the competition Money — Each store is spending money to and not hostage to the ups and downs of the drive in traffic, but is there any duplication Smart results management — Look at manufacturer. in strategy amongst the dollars they spend? the results of each store and the group, then Audit your group twice a year and throw measure deeper than just the sales numbers. out any wasteful marketing. If you have You need the plan to be measured against Chuck Patton is the founder and CEO of 10 stores, and they each spend $50,000 an ROI so you can get an idea of what to do Traffic Builders Inc. He can be contacted at 866.859.8520, or by e-mail at in advertising a month, what percent of next. Don’t go old school and only look at those budgets are targeted and conveying the sales numbers. Today’s technology allows a message about your dealer group you to manage much more cause and effect.16
  7. 7. leadershipsolution JeffAnderson AVOIDING THE TRAPS TO BHPH SUCCESS The buy-here, pay- into the woods. A small error can leave you to consultants when you can do it cheaper here (BHPH) business very far from the intended target. That is by yourself? Well, are you going to be is notorious for its high-risk, high-reward why even the pros have swing coaches. They able to stay on top of the numerous and nature. Every dealer seems to know someone recognize they need help keeping it all in ever changing legal compliance issues by who has been successful at it, and also balance. BHPH is no different. yourself? When you combine lending and someone who failed. Today, market forces auto sales and service there is a lot to think and unprecedented change in the industry These are Easy Sales about. Can you maximize your performance are causing almost every dealer to wonder Most dealers never met a sale they didn’t and stay informed of best practices without if BHPH should be in their future. Many are like, and they owe much of their success attending 20 group meetings? Are you going already confidently moving in that direction. to their ability to drive sales. In the BHPH to be able to make the right calls as market I’ve learned approach is everything, and that business, there is not a surer way to get conditions change without the benefit of there are a few subtle red flags that can help your organization out of balance. It is the trusted peers and advisors? You are faced to predict success. Not to stereotype, but this equivalent of swinging too hard in golf. Too with questions every day such as, do you is especially true for new car dealers. See if much volume can stress the limits of your want SUVs in your portfolio if gas prices any of these attitudes sound familiar: people and your facility. People make poor get back to $4 per gallon, or do you need to choices, corners are cut in underwriting, make changes in your underwriting due to I Got the Guy service bays get backed up, customer the prevalence of mortgage foreclosures? “I know this guy who used to work for me service suffers and it all combines to hurt the Experience can be much more expensive in F&I. He would be perfect to run this.” performance of your portfolio. Pretty soon, than you anticipate. Do yourself a favor and He may just be the right guy, but don’t put what looked like a booming business turns learn from others mistakes. too much weight on that. For numerous into a time bomb exploding with charge- reasons, he could be gone tomorrow. More offs. Never forget that you are entering a My topic here has been failure, but I do want importantly, this business needs to be bigger long-term relationship with that customer, everyone to know that there is hope. Some than one person. When it is done right, it is and how you live up to the promises you of the best performing franchisees are also about the systems, procedures and processes made at the time of sale is more important to new car dealers. The ones that do it best you put in place, and how well you adhere your success than the number of sales. are humble enough to realize what they do to them. How do you monitor changes in not know, and respectful enough to become the business if it is driven by one person’s What is a Balance Sheet? students of the business. They also benefit opinion? Do you have the reporting you New car dealers are just not used to looking from a thorough and integrated computer need to provide proper oversight? Do you at their balance sheet. They manage their system, proven operations manuals, 20 know what to monitor, or are you going to income statement and that is how they group meetings with some of the best let this person tell you what they think is keep score. The problem is that it is easy to BHPH dealers in the country (some new car important? You need structure more than show profit at the expense of the balance dealers, some not), consultants with years of you need personality. sheet in BHPH. You can easily be tempted experience and the ability to learn from the to set aside too little reserve against future mistakes and successes of other franchisees. How Hard Can it Be? losses and show a larger profit. But that will The ones that rely on those resources the You are right in that every little piece is not catch up with you. It is also very easy to least tend to not do as well. But in the words difficult. You may already know how to buy underestimate your initial capital needs and of Vince Lombardi, “There is only one way cars, sell cars and service cars. You may even find yourself over-leveraged a few years to succeed at anything, and that is to give know a little something about financing cars down the road when your portfolio plateaus it everything.” The stakes are too high for because you work with lenders every day. and a wave of charge-offs hits you, or if you anything less than a full commitment, and as But don’t be fooled into thinking that this is expand too fast. This is especially true if you long as you understand that, your future in just a simple extension of what you are doing have been taking money out of the business BHPH is bright. now. Each simple step impacts the next, and through things like inflated rent payments the entire process gets complex. Compare it and management fees. Measure progress to a golf swing. Each step is simple: grip, by your balance sheet and take the time to Jeff Anderson is the vice president, stance, backswing, follow through, etc. understand your true leverage position. franchise finance for J.D. Byrider But if you have played the game, you Franchising. He can be contacted at know that if any one of these things I Can Do This by Myself 866.631.3037, or by e-mail at is wrong, it is very easy to slice it Why pay royalties to a franchisor or fees
  8. 8. marketingsolution SusanGivens U.S. AUTOMOTIVE RETAILERS CREATE A NEW AUTO STIMULUS PLAN TO REPLACE CASH FOR CLUNKERS The Car Allowance and now the industry has jump-started the improvement to qualify. Benstock told the get into trouble if they don’t pay attention to government program creates a layer of Rebate Program economy,” said Brian Benstock, GM and New York Times that the new stimulus plan the details,” Bonanni said. “It took almost waste since it requires the old clunkers be (C.A.R.S), also known as “Cash for vice president of Paragon Automotive in “fills the gaps left by C.A.R.S.,” referring to a month to get it right, but with input from destroyed. Many said the old cars still run Clunkers,” is over, and sales have decreased New York. “They did their job getting the the program guidelines to allow the purchase some of the top attorneys in the industry, we and that we don’t need to cut down more a lot. The government program ended industry going, and we need to do our job of used cars and short-term leasing. finally figured it out.” rain forests in order to harvest steel — or before anyone expected, and there’s still a keeping it going.” Paragon joined other top whatever. Well, someone was listening: The lot of demand from consumers who want to U.S. automotive retailers and is participating “The new stimulus plan helped our new car “We needed to do something to help out private sector plan doesn’t call for the old take advantage of an automotive stimulus in the new Automotive Stimulus Plan, business, but it had an enormous impact on all our customers already driving older cars to be destroyed.” programs to purchase a newer vehicle. As which helps consumers who didn’t qualify used vehicle sales,” said Benstock. After imports, who were upset that they could a result, some of the top U.S. automotive for the government’s plan. More than 90 Paragon implemented the new stimulus not participate in the government program “The other upshot of the dealer-funded Auto retailers launched a new auto stimulus plan percent of consumers were not eligible for plan, they had their best used vehicle sales because their vehicles already got more than Stimulus Plan is that it costs tax payers to build on the positive results of C.A.R.S. the government’s program, and this left a month in the history of their dealership, and 18 MPG ” said Rick Case, owner of Rick nothing,” said Rindsberg. “There is no $3 The results have been better than the lot of consumers unsatisfied. Now many became the No. 1 certified pre-owned Honda Case Automotive Group in Florida, Georgia billion bill and no expensive, rapid bloating government’s program for many dealers. of the largest retailers in the country are and Acura dealer in the world, which in turn and Ohio. “This stimulus plan is also helping of a government department trying to keep The new Automotive Stimulus Plan gives participating in the new stimulus plan to help helped them become the No. 1 Honda dealer our used vehicle sales significantly.” up with paperwork.” The Automobile consumers up to $4,500 of additional trade-in consumers left behind, and to sustain their in the world, with more new and used vehicle Stimulus Plan is a private sector program sales than any other dealer. The new stimulus plan helps retailers increase promoted by many of the top U.S. retailers value towards the purchase or lease of a new increased sales volume. “The public sector their new and used vehicle sales. Used vehicle or used vehicle with improved fuel economy. did a great job getting us back on the road, to help consumers, the economy and the John Malishenko, director of operations for inventories shrank because the clunkers environment at the same time. The program has fewer rules and no but the private sector needs to drive America Germain Automotive, another participating had to be destroyed. “We have to buy more minimum MPG requirements for trade-ins. forward,” Benstock told Automotive News, dealer in the Automotive Stimulus Plan, used cars at auctions for higher prices,” said The program has received a lot of publicity Automotive News reported that a group of 73 adding that his stores “are doing three deals reported that sales have dramatically John Malishenko, director of operations for from The New York Times, Washington dealerships are participating so far, and the under the new Automotive Stimulus Plan increased as a result of the new program. the Germain Automotive Group, who owns Post, ABC, CBS, NBC, Yahoo!, AOL, majority of them are larger stores and dealer for every one traditional Clunker deal.” “We had our best weekend of the year. We’ve dealerships in Ohio, Arizona, Florida and MSN, FOX, CNN, FORBES, MSNBC groups. While sales have decreased for most He expects to sell about 1,200 additional seen a dramatic increase in unit sales versus Arkansas. “I would prefer to give customers and CNBC, amongst others. So far, the dealers the retailers who are participating in vehicles under the last month, and we are currently pacing well additional value for their trade-in in order to new stimulus plan has helped participating the new Stimulus Plan have sustained and program. “We sold more cars than ever over $45,000,000 of sales for the month. earn their business rather than paying more to dealers sustain the positive growth that Cash built on the momentum that the government before in our history because the new While other dealers’ business has been falling Manheim Auction.” for Clunkers created over the last month program created. stimulus plan helped us sell more new and off, our business has been setting records while most dealers sales have dramatically used vehicles while most stores have been because we are helping customers who want “Letting consumers buy a used vehicle or decreased. The “Clunker chaos” brought “The government jump-started our industry, focusing on new vehicles only.” lease a new vehicle makes it affordable for to benefit from the new stimulus plan.” the car business back to life, and customers a lot of people who could not participate and dealers don’t want it to end. Since the The new stimulus plan has fixed The program was difficult to create because otherwise,” said Scott Gruwell from clunker program ended, there has been a big many of the problems with the of the complicated web of national and Courtesy Auto Group in California and vacuum in the market that the dealer stimulus government program, and is more state laws designed to regulate automotive Arizona, one of GM’s largest dealers and a has filled. “Our numbers have gone up after inclusive because all trade-ins older advertising. Actually, the government’s participating dealer. “The used car provision the government program ended because than 2007 are eligible, regardless of program violated a lot of these laws that is important since used car dealers, die- we are now speaking to the majority of the their current MPG. Consumers can prohibit any reference to a non-manufacturer hard environmentalists and The Atlantic buyers who didn’t qualify for it, but who choose to either purchase or lease rebate or any inference that a customer magazine had legitimate complaints about want to take advantage of the new stimulus any new or used vehicle with an could receive a guaranteed trade-in value or the government program’s exclusion of plan,” said Benstock. improved fuel economy of 2 MPG. incentive. To navigate the many minefields used cars and the requirement that clunkers The government program appealed of federal and state law, the top dealers be scrapped and not resold,” said Ashley If we think back six or eight months, many of to less than 10 percent of the market hired one of the most respected automotive Rindsberg from The Huffington Post. us recall claims that America was shattered, because it excluded trade-ins with attorneys, Marc Bonanni, former senior legal “Environmentalists complained that the tattered and in a million little pieces. Now, more than 18 MPG, prohibited the counsel for AutoByTel, to help them build before the year’s end, it seems the sale of used cars and most vehicles the program regulations. “Due to the way the country is being put back together needed to get at least 4 MPG law is written, it is very easy for a dealer to again. With the auto industry showing national gains from a single government program (even one that had flaws) — and further gains from a creatively conceived, privately funded plan — the country, with the help of the auto industry, might have finally found a good way to drive forward. For more information about the Automotive Stimulus Program, visit2 20 1 the #1 sales-improvement magazine for the automotive professional
  9. 9. marketingsolution ToddSmith CHAT YOUR WAY TO AUTOMOTIVE SUCCESS WITH FIVE EASY STEPS As the automotive Here are five steps to leverage chat on Building rapport might sound easy, but industry continues your existing Web site for more sales in the age of the online skeptic, it can to move through dramatic changes, one opportunities. be hard. Try to set the tone and flow of thing is certain. Shoppers are continuing the conversation early by using quality to move from the showroom to the Use a proactive invitation to ask shoppers to questions that will keep your shoppers Internet. Today’s dealership sales success chat during key points in their visit on your engaged. Similar to a typical phone up, if increasingly depends on the ability to Web site. Using chat when shoppers reach you give out all the vehicle information right convert more Internet shoppers to in-store your Web site is a great start, but you can off the bat, you have a high probability of sales opportunities. Every Web site visitor is also use chat to try to capture people before losing them without getting much customer a potential sale. The question is: How do you they abandon your Web site by placing information. The opposite is also a potential reach through your Web site and connect chat on the pages where shoppers most issue. Give up too little or offer very limited with them? often leave your site. Just ask your Web site help or value, and you can drive shoppers provider to give you the top five exit pages. away as well. This takes some trial and Live chat is not a new technology; it has This is a great start to ensure you reach out error to perfect for each store, but always be been around for nearly a decade. What has to engage your shoppers at the right time. conscious of it. changed are technological advancements that now allow you to use chat as an Incorporate chat in all your online marketing Speed of engagement is critical. A response interactive sales tool, rather than just an and social media. By placing chat on in five seconds or less should be your instant messaging system. Delivering an outgoing e-mails, eNewsletters and online benchmark. The longer you wait to engage interactive and informative experience for social media platforms like Facebook, you shoppers, the less likely they will still be shoppers on your Web site sets the stage can enable shoppers to connect with you there. Even waiting 10 seconds can yield for a great first impression. Statistically, we anywhere for instant dialogue. Giving your a drop rate of 15 percent for people who also know that shoppers are less likely to shoppers the power of instant access to attempted to chat. We live in a world of the continue to visit multiple Web sites once information, instead of having to wait for an “instant” and the “now,” and 10 seconds they have engaged in a live conversation e-mail reply or change media to pick up the online can feel like an eternity. online. Offering the dynamic, real-time phone to call, gives you a competitive edge. interaction keeps them at your site longer. Placement of the chat icon on your Web site is extremely important. Through testing, we have found that placement in the top-right header works best. Having the chat button consistently available in the same location, on every page helps shoppers expect and embrace the option. When chat is available on only a page or two, chat conversations drop enormously. There is power in repetition and having your shoppers consistently see the same image throughout your Web site increases engagement. Leveraging live chat on your dealership Web site can have a profound impact on lead generation and sales. Here is a basic formula that you can plug your Web site numbers into to get an estimate of increased leads. __________Number of Unique Visitors X 3% = __________Number of Additional Leads If you took even a basic Web site that had 2,000 visitors per month, you could easily expect to generate an average of 60 more leads per month. With the average Internet closing ratio hovering around 10 percent, six additional sales per month adds up fast. Todd Smith is the co-founder of ActivEngage. He can be contacted at 866.387.9061, or by e-mail at
  10. 10. sales&trainingsolution EricSelby CREDIT CARD PROCESSING TODAY - WHAT IS RIGHT FOR YOU? Today’s marketplace percent to 3 percent and the non-qualified as follows: is extremely difficult rate is the highest rate in this structure and Qualified rate is $15,000 to compete in when you consider the typically ranges from 3 percent to 3.80 Mid-qualified rate is $45,000 uncertain market conditions faced by all percent. Each transaction is processed Non-qualified rate is $40,000 business owners. To maintain the viability at one of these tiers based on a variety and profitability of one’s business, owners of factors, including card type, business Conversely, Merchant B processes the same must thoroughly review all aspects of their type (retail, ecommerce, etc.), acceptance monthly volume of $100,000, but is on company. More specifically, business owners method (swiped, Internet) and timeliness an interchange pricing model based at an must review all vendor partnerships and of settlement or batch. This price structure overall cost 2.10 percent (which includes financial aspects of their company, at levels also is subject to surcharges, which are in the Visa and MasterCard pass-through not required in the past. addition to the processing costs and fees. interchange fees and assessments, along with the processors mark up.) The small businesses and auto dealerships The interchange-plus pricing model is the that will continue to grow in today’s most transparent and typically the least As you can see, although Merchant A has business environment are ones that costly structure for the merchant. The a qualified rate of 1.7 percent, the total will continually review their operations interchange pricing model is based on the effective rate for the processing month is for potential expense control, better wholesale rate established by MasterCard 2.87 percent, based on the tiers at which the transactions were processed. operating procedures and improved vendor partnerships. An area that is often and Visa. This pricing structure is the closest attempt to provide a single “all-in-one” I’ve always known how overlooked and not fully understood is that rate to each transaction, thus removing the Conversely, Merchant B will have a total of credit cards and payment processing. tiered-rate scenario. You will find that the effective rate of approximately 2.10 percent, to turn my inventory fast, based on the interchange pricing model. As With the increased use of credit and debit cards as a primary source of payment, it is imperative that all merchants have a majority of processors will only offer the tiered rate-pricing model because it is the most profitable for them — not you, the you can see, the interchange pricing model is clearly the best model for this scenario, with but with vAuto my turn is strong partnership with their processor, both in terms of cost and ancillary services. Credit card processing today is far more than “the lowest rate,” as there are many options available for the merchant to help maximize the processing function. It is merchant. Except in rare instances, potential merchants will find the interchange-plus pricing model works best for them. Along with being the most transparent pricing model, interchange-plus pricing also stops the typically bi-annual rate padding the savings of approximately $700 per month. Typically, the only time that a tiered-pricing model is beneficial for the merchant is when all or nearly all transactions are processed at a qualified rate, which is not the norm, not to mention the tiered rates will increase even faster than I ever imagined possible. difficult enough to sell our product or service processors charge every April and October. with a bi-annual padding effect. in the marketplace at a profitable level; As Visa and MasterCard adjust interchange don’t compound it by not having the best every April and October, many processors Other Areas to Consider processing partnership in place that you can. that use tiered pricing will increase the rates There are other options to consider when in these months. choosing your processing partner such as: The difference between just having a • What is the quality of your customer processor and maximizing your processing What Pricing Model Is Best For Me? service support? partnership is simply understanding your This decision should not be based on just • Does your processor provide supplies options. Far too many times, merchants one factor. The majority of prospective free of charge? — Adam Simms, General Manager are “sold” solely on rate alone, and not processors will offer the tiered-rate model • Do you need other equipment, such Toyota Sunnyvale what is best for their individual scenario. and will focus primarily on the qualified as check imagers, PIN pads, Internet Sunnyvale, California The following list attempts to provide rate, which is the cheapest rate to process software, etc? information on the types of processing a transaction in an attempt to sell their • Is online access provided free of charge? structures available — and the related items services. But ask yourself this question: • Has your processor explained the to take into account — when considering What if the majority of your transactions financial benefits of converting credit who will be your processing partner. are processed at a mid-qualified or non- transactions to PIN-based debit qualified rate? One of the greatest examples transactions? Processing Options Available of this would be reward cards, which Toyota Sunnyvale Don’t improve your approach. Get a new one. There are two basic types of pricing represent nearly a third of all transactions, To be a successful and profitable dealership used vehicles sold Dealerships that use vAuto don’t measure their success one car at a time. They successfully structures available: tiered pricing and and typically are processed at a mid or non- in this difficult business environment is interchange-plus pricing. to be one that is open to alternatives that 22% increase turn their entire used inventory in record speed. And they don’t do it the way it was done in the qualified rate. allow your dealership to grow and increase #% past. They do it the way that works. High-velocity turn is the new standard for success in today’s The tiered pricing model is based on a three Let us use an example in which Merchant A profitability. There are constant changes to five tiered structure that typically includes is processing on a tiered-rate model and the in your industry and accordingly you must used car marketplace. And vAuto — the software, the people and the vision — empowers you qualified, mid-qualified and non-qualified rate tiers are as follows: constantly make changes to improve your #% tiers. The qualified tier is typically the lowest Tier 1: Qualified - 1.7 percent dealership and vendor partnerships. to achieve new standards. before with transaction rate available in this structure, Tier 2: Mid-qualified - 2.7 percent vAuto vAuto and typically can range from 1.5 percent to 2 Tier 3: Non-qualified - 3.5 percent Eric Selby is with the Northeast Merchant percent. This rate is the rate many processors Group. He can be contacted at reference when quoting and comparing rates. Let’s assume that the total monthly volume 866.407.3104, or by e-mail at See for yourself. Sign up for a demo of the vAuto suite at2 The mid-qualified rate may range from 2.25 of Merchant A is $100,000, broken down or call 888-536-4086.