Cliff Banks
Cliff Banks has been involved with the automotive industry for nearly 20 years and has covered the industry for Ward's for nine years. He is an award-winning...more
On the hunt for used vehicle inventory? Here are some tips from Consultant Tony Albertson, a used-car specialist with NCM and Associates, that he provided for a story in our Ward’s Remarketing 150.
Hire an offsite buyer to beat the bushes for vehicles. It’s OK to pay the buyer anywhere from $200 - $500 for each vehicle but tie the compensation to how fast the vehicle sells.
Provide specific instructions on which vehicles you need. Don’t let the buyer buy off the cuff.
Advertise everywhere you buy used cars.
“It’s what made Carmax famous,” Albertson says. “They will buy the used vehicle, even if the customer doesn’t buy a vehicle from them.”
Maintain close ties with other local dealers who might be wholesaling vehicles you need.
Leverage your customer database. Create a direct mail campaign to customers in your database offering to buy their vehicles.
You also can target your marketing to customers owning vehicles you need. Be sure to personalize the letters or emails for each customer, Albertson says.
Another critical piece — if you’re paying for inventory management software, such as AAX, VAuto or FirstLook, use it. It may take some effort, but it’s worth it.
Don’t give up on the auctions. If you’re not already using the online auctions and services, you likely will find it increasingly more difficult to secure used-vehicle inventory.
Sites such as Manheim’s OVE.com and Manheim Simulcast or AESA’s LiveBlock or DealerBlock allow dealers to conduct all of the pre-auction and pre-sale research, acquire inventory before it even reaches the auction and trade with other dealers.
After Kelley Blue Book’s relationship with AutoTrader.com ended prematurely this June, it immediately devised a strategy to take on the industry behemoths, AutoTrader and Cars.com.
KBB is launching a pay-per-performance model (also called pay-per-lead) directly contrasting with the subscription models of Cars.com and AutoTrader. It’s a gutsy move, perhaps born out of some measure of desperation.
Kelley has the brand and the consumer visits, but it lacks the inventory and, some say, technological prowess to be successful. It is partnering with Vast, however, to provide it with the necessary technology. Vast’s goal is to create a network of lead providers that collectively will be powerful enough to force Cars.com and AutoTrader.com into the pay-per-lead model.
My guess is, dealers will continue doing business with Cars.com and AutoTrader in the subscription model, but certainly will play with Kelley and others pushing the pay-per-lead model.
Recently, I’ve heard several comments alluding to the fact that CRM (customer-relationship management) is dead, or at least is at a point where people are tired of talking about it. There is a notion among many dealers that vendors have over-promised and underdelivered. It might be dealers are expecting too much.
Ask for a definition of CRM and you’ll get 10 different answers. The problem is, automotive retail is a complicated business with a lot of moving parts. Add to that, dealers will have different goals or objectives for their CRM initiatives, and that makes measuring the return on investment difficult.
In the store, it’s easy to get bogged down in the details of the process, and if there isn’t a well-defined goal, dealership personnel get CRM-fatigue. Before long, you’re writing a check for a solution that sits on the shelf that never gets used.
Enough of the problems, what are some solutions? It’s not giving up on CRM — now, more thn ever, you need to find ways to drive both sales and service traffic. There are several simple solutions.
Here are some creative things dealers have told me they have done the last 12 months that have helped business. Nothing earth shattering — nevertheless, there may be some nuggets for you.
First, market to customers in your database. You already have the relationship with them. Offer something of real value on the service side. You can generate a ton of service traffic and repair orders with simple campaigns marketing to folks that haven’t been back to your store within the last year.
To do that you should find a solution that integrates easily with your dealer-management system. Being able to pull data from your DMS and integrate it with information in your CRM tool is invaluable.
Many of you are looking for used-vehicle inventory. CRM can help you do that. Create a list of vehicles you need, and then send targeted offers to people in your database that have those vehicles. Make it a special invitation, not a generic direct mail piece.
I know Cash for Clunkers probably is a dirty word right now in your stores. It was an intense program while it lasted and nobody wants to even mention the term now. But there has to be a way to continue leveraging those sales, and even the people who didn’t qualify who left the store without buying.
Offer a special service incentive for people who bought cars using the the program. Some dealers are planning a Cash for Clunkers after party a few months from now to generate service business. It doesn’t have to be a Clunkers party — it could be a party or picnic celebrating anything.
Tie into the local sports teams — whether it’s college, professional or high school. For example, offer free oil changes or car washes if the football scores 40 points. You can go in so many directions with this.
All of these things can be defined as CRM. The point is, be creative and aggressive now. Business is there, but it needs prodding.
Good luck, and if your store is doing something unique that is working, I’d love to hear about it.
A conversation with a dealer in Texas drives home the importance of paying attention to contracts you have with your vendors.
This dealer says she now is instructing her staff to give her all vendor contracts to review. She recently caught a uniform vendor raising prices 8% when the contract clearly stipulates it can only raise prices 3% each year.
On another contract, she found the dealership was being charged $62 a month when the vendor owed it $1,200.
Doesn’t sound like much, but it adds up month after month. So the message here – Pay attention.
Cash for Clunkers is now over after generating nearly 707,000 direct sales, along with countless other sales for customers not eligible for the program.
Now what? Most analysts are afraid September sales will experience a downturn without the popular government financing.
Many of you have stories of crowded showrooms and of customers racing to the dealership in the hours before Cash for Clunkers ended in order to buy a car. The industry hasn’t seen that sort of excitement in years.
Wouldn’t it be nice to continue that momentum the next several months?
I recently saw the fictional movie The Goods: Live Hard Sell Hard (you know, research for work) which details how a traveling sales team puts on a four day event to save a dealership from closing in Temecula, CA. (If you plan to see it, leave the kids at home). There’s one scene that struck me. The last day of the event, a hyped up concert at the dealership fails miserably and results in a riot.
TV news cameras captured the chaos. Unmitigated disaster, right?
Far from it. The scene’s star, Jeremy Piven (playing Don Ready, the movie’s hero) grabs a microphone, jumps in front of the news cameras and invites all of Temecula’s police department and anybody wearing anything resembling police gear to the dealership and promises a hefty incentive (I’m little shaky on the details – left my reporters’ notebook at the office) if they made it to the store by closing time.
Sure enough, it’s a Hollywood ending. The dealership is saved and Piven gets the girl.
In the midst of a wildy ridiculous story, I think there is a lesson to see. I couldn’t help but think Piven was capturing what being a dealer was all about with that stunt.
Instead of complaining how bad things were, he improvised and turned a bad situation into a winner.
Many of you did just that with Cash for clunkers. All sorts of problems and issues, yet you sold 707,000 vehicles.
Some of you want to keep that going. There is a group of 73 dealers who created their own stimulus plan (you can see the details at www.automotivestimulusplan.com) to compensate for some of the drawbacks of the government’s plan. Dealers participating in the program have raved about its success.
How about other areas?
A recent email from dealer marketing firm OneCommand, detailed the story of a California dealer who last year held a Labor Day picnic, bringing in more that 13,000 people. It was a weeklong celebration that generated more than $400,000 in service department work and more than 1,600 repair orders, and who knows how many customer contacts?
The point is, be creative, improvise and take control. If traffic slows, figure out a way to get them back.
Kelley Blue Book released a statement last week that got a lot of play in the media — including Ward’s. KBB is cautioning dealers to watch their used-vehicle inventory closely because the Cash for clunkers incentive program could create a bubble of inventory prices that could deflate suddenly once the program ends.
I’m not sure I agree with KBB’s analysis. There might be a deflation but how severe is the question. Used-car values have been climbing all year, and according to Manheim’s Chief Economist Tom Webb, prices should continue their upward trend the next few months.
Still, it’s probably wise to not get carried away with adding inventory.
A recent story in one of the consumer magazines asked whether the industry still needs dealers. It argued auto makers could sell cars just fine using the Internet. Haven’t we been down this path before?
Prevalent throughout the article was the premise that dealers are why cars aren’t selling. Specifically, the reason for the decline in sales is because customers are frustrated with the car-buying process.
It’s been a common theme recently. Sales are down so it must mean dealers are bad. Auto makers also have fed that line of thinking by eliminating “poor performing” dealers while implying they need to fix their retail networks.
Even vendors and consultants who sell to dealers are getting caught up in the hype of “blame the dealer.” Just visit one of the automotive conferences and you’ll hear how dealers need to fix their businesses.
The dealer is why we’re only going to hit 10 million sales this year? Nothing could be further from the truth. The banks are at fault, not the dealer. The reason cars aren’t selling is because of the continuing unavailability of credit. The industry was fine until the credit markets collapsed last year.
Dealers have to work harder to get deals financed. Banks say they have loosened the tough credit guidelines. That may be true, but they still are financing far fewer non-and subprime deals. Add to that, the average credit score on new-vehicle purchases continues to climb, according to Experian Automotive.
Dealers are keeping the industry afloat but it’s going to take the banks to bring to the industry back to levels much less painful then they are today. I’m not saying the banks are evil. The fact is, they are between the proverbial rock and a hard place. They got hammered for making bad loans when lending money to people who were high credit risks. And now, we’re hammering them for not continuing that practice.
However, the banks need to loosen up a bit, dealers tell me. Credit unions are trying to fill the gap, but there is only so much they can do because their portfolios and resources are far more limited than what large banks have.
Are there areas in which dealers can improve? Absolutely. The future represents a great opportunity for the 18,000 dealers that will still be in business next year.
Now is the time to “seize the moment,” to get the right staff and the right processes in place for when traffic returns. I have conversations daily with dealers who are doing just that.
In the next couple of weeks, the Cash-for-Clunkers program will be in full force. It’s going to drive a lot of traffic to dealerships who already are marketing themselves as Cash for Clunkers businesses.
If you’re not already getting your dealership ready — marketing, sales people, service advisors — get started today, otherwise you risk being marginalized in your market.
Dealers already are ramping up designing marketing and incentive programs to capitalize on the program the next few months. Dealers are going to be the ones who make the program work.
So hang on. The rest of the year could be exciting.
Three somewhat important news items that might have slipped under your radar last week…
First, the deadline for implementing the Red Flag Rules was again pushed back. This time from May 1 to August 1.
Second, as Ward’s predicted, Sonic Automotive Group did renegotiate its $105 million debt last week with bondholders (it was due May 7), agreeing to a higher interest rate in exchange for more time.
Finally, the top selling Porsche dealership, Champion Motors (FL) filed for Chapter 11 bankrptcy last week. I had lunch with the owners in Las Vegas a few years ago. Bright guys, but seemed a little young and a little too polished. Hopefully, they’ll be able to emerge with a little more seasoning and much wiser.
Bill McClure from the Fitzgerald Mall and Scott Pettitt from Toyota Sunnyvale provided great insight last week during our Ward’s e-Dealer 100 Webinar. These guys are real pros and are instrumental in helping lead a couple of the most forward thinking dealerships in the country.
Topics include Facebook and Twitter; search-engine marketing; follow up process and whether walk in traffic created by AutoTrader.com and Cars.com constitute true Internet leads.
If you missed it, you can access it here and listen when you have time.
You’ll pick up some great tips just by investing an hour of your time.
Ward’s Dealer Business Editorial Director Cliff Banks shares his views on emerging trends and technologies that promise to help dealers sell more vehicles.
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