Heavy title, I know.
As those of you who attended last month’s 10th Digital Dealer Conference and Exposition might remember, David Kain and I recently completed a nearly year-long study on what truly separates successful Internet dealers from the rest of the herd. The study, which began as a deep-dive into the Independent Internet Leads (IIL) business (previously called third-party leads), ultimately came full circle by helping expose why some dealers could be successful with any lead source and others struggled to close anything that didn’t originate from their own web sites.
During the study, we were able to single out those activities that (when done right) could all but guarantee Internet sales success. While some of what we discovered as top factors were expected, a couple were somewhat surprising. What was most surprising, however, is that factors such as Lead Quality (i.e., completeness of the information contained in a lead) and Lead Mix (i.e., buying from various lead sources) mattered very little relative to other factors. For example, successful dealers did a great job of closing leads that had no phone number, so long as they contained a valid email address. Additionally, it almost didn’t matter where a successful dealer acquired leads (third parties, web site, OEM, etc.); they were successful regardless of their lead mix.
Of course, this article was written to discuss the most important, not least important factors to guarantee Internet sales success, so for those dealers truly interested in moving the needle, here are the seven most important factors our study uncovered:
1. Senior management buy-in. As the seventh most important factor to guarantee Internet sales success, senior management buy-in seems like a no-brainer, right? Surely those at the top of every dealership understand the need for a strong Internet sales effort, correct? Surprisingly, there are still many stores I encounter where the general manager (and sometimes even the dealer principal) struggles to see the value of providing their full support and attention to the Internet sales team.
Buy-in is much more than admitting that the Internet is important or even that ninety percent of your customers are online. No, buy-in as we defined it in our study, includes elevating the Internet sales team to a status equal to your new car or used car teams, and including this team’s leader in your managers’ meetings. It also means providing an adequate budget for marketing and, more than anything else, it includes communicating the importance of the store’s online efforts to all other managers – and holding those managers accountable when they do not fully support these efforts.
2. Leads per person. While it was not surprising to me that Leads Per Person (LPP) was a top factor in determining whether a store was successful with their Internet sales, it was a bit surprising that it did not rank as the most important factor. Coming in at sixth, LPP is still critical to your team’s success, but having been a numbers guy most of my adult life I may have been too fixated in the past on how much of a correlation one could always make between LPP and sales per person.
Of course, our study showed there is still a strong correlation: both too few LPP and too many LPP were indicators that an Internet sales effort might be unsuccessful. However, successful stores that had all of the other important factors in place had much greater leeway in what were their optimum levels of LPP. Ultimately, this meant that my long held belief of holding to a strict 70-80 LPP for end-to-end departments and 120-150 LPP for appointment setters was somewhat less important when a store was operating on all cylinders.
3. Staff training. Though no term in automotive is probably as amorphous as staff training, the reality is that virtually any training is good training. The issue for many seasoned managers is twofold: 1) You probably feel that because “no one trained me” that no one else needs training to succeed in automotive sales; and 2) Even if you agree to training, you probably do very little to reinforce the lessons learned.
Unfortunately for seasoned managers, there was little real training happening in dealerships twenty years ago. The cream rose to the top and everyone who couldn’t hack it left to sell shoes, real estate or insurance. This bias against the need for training is understandable, but completely counterproductive to automotive sales in 2011. Not only are there new concepts and technologies to master, but the pool of available and qualified sales talent is not growing.
For the dealerships in our study, regular and mandatory staff training is not only a reality; it is actually greatly anticipated by the instructors and the attendees. Employees thrive on knowledge, and in a commission-only atmosphere they know that great training means more money in their pockets. That’s why well-planned, regular staff training that demonstrates to the trainees just what’s in it for them ranks as the fifth most important factor to guarantee Internet sales success.
4. Level of accountability. I was not surprised that accountability came in as the fourth most important factor to guarantee Internet sales success, but I am surprised at how even today middling dealers fail to hold people accountable to the very processes that they agreed would move them from worst to first in their markets.
Case in point: I spoke with a dealer recently that just reverted back to using appointment setters to manage Internet leads. They had made an attempt at running a true Internet dealership by allowing the floor sales team to manage a mix of floor ups, phones ups and email ups. This attempt failed, and by moving back to using appointment setters, this dealership now enjoys higher labor costs than their competitors.
More troubling than the increased costs is the reason that they moved away from becoming an Internet dealership: It wasn’t because their floor sales team was too busy to manage Internet ups along with traditional ups; no, the reason they stopped using the floor team to respond to Internet ups is that the floor salespeople weren’t making the required phone calls to prospects. (I’ll let that sink in for a minute.)
This store (like many others) put processes and rules in place, but failed to hold people accountable when they don’t follow the established and agreed upon direction. They have a solid written process in place – complete with six required phone calls to non-responsive prospects over the first ten days – yet they allowed floor salespeople to dictate whether or not the process was followed. (If you think this couldn’t happen in your store, take a gander at the past due activities in your CRM tool – it may be happening to you too.)
Holding people accountable is tough work, but it pays off for everyone in the end. Your salespeople make more money, you sell more cars and your customers are better served. Plus, when you hold everyone accountable to the rules you set, you increase the satisfaction of your best employees (you see, they notice it when you let others slack and they don’t like being the only ones who follow the rules).
5. Middle management oversight/buy-in. Clearly the most surprising factor to me that ended up near the top was middle management oversight and buy-in. While I knew that friction between the desk and the Internet team, or the Internet team and the new or used car managers occurred in most stores, I personally didn’t realize that these issues had such a negative impact on a store’s success. In fact, if you’d asked me before the study if buy-in was most critical at the middle or senior management level, I would have insisted that buy-in from senior management was at least twice as important as getting the desk or sales managers to support the Internet sales efforts.
And I would have been wrong.
Our case studies clearly showed that successful Internet stores not only had support at the middle manager level, but that this buy-in was truly a game-changer for these stores. From little things like eliminating skating and helping ensure a good customer experience during a T.O., to providing quality and efficient assistance during desking, F&I and delivery. Unlike below average stores where the desk often takes pleasure in torturing the Internet salespeople, middle managers at successful Internet stores know that Internet sales are the future for their business and that their paycheck improves as these sales improve.
For dealer principals and GMs who think their Internet team has a great working relationship with their desk and sales managers; ask yourself who you support when there are issues between the two? Ask yourself who’s been with you longer and who gets the bulk of your respect? You may be providing terrific support to the Internet team, but if the desk, F&I and sales managers are not following your lead, then your success will be limited (at best).
6. Adherence to a written process. Yawn, right? It is precisely because following a written process (or even having a written process) is so boring that so many dealers still struggle with substandard closing rates and the inability to work with all lead sources.
It would be great if you and your team could sell hundreds of cars every month without having to deal with pesky processes (especially written processes), but there is a reason that this was the second most important factor to guarantee Internet sales success.
The difference between stores who have and adhere to a written process and those who just wing it is staggering. The latter have consistently strong (often record) sales results, while the sales trends of the former are littered with short spikes and deep valleys. Beyond the obvious higher closing percentages that come with consistently strong performance, stores with written processes tended to have less turnover and greater employee satisfaction. Additionally, these stores had no problem being successful with independent Internet leads, while the stores without written processes often cited “bad lead sources” as the main reason they were not consistently successful.
7. Quality of lead response. Using templated e-mails, proven phone scripts, and having a commitment to making every interaction memorable for the prospect creates a first-class response; and quality of lead response was the most important factor in guaranteeing a store’s Internet sales success for the dealers in our case study.
Successful stores do not “freelance” or stray from the quality responses that have worked in the past. This is not to say that they are so rigid as to not allow any deviations. On the contrary; these stores also have a commitment to continuous process improvement. (Of course, for successful stores, any process improvement is carefully measured and managed. Once proven, these improvements are quickly incorporated into the existing process.)
You may believe you provide a high quality response to all leads, but do you? It’s critical for dealers to understand that when you respond to a lead you are not alone. Your response is competing with as many as nine other dealers. How can you stand out? How can you be the selected dealer? Your response has to be first-class and has to show the prospect that you are different from the others. Asking “What’s it going to take to earn your business?” is not going to earn anyone’s business.
Not sure if you respond properly to all leads? Mystery shop your own store. Or, better yet, have your spouse or a good friend mystery shop your store and three of your competitors. The results will likely tell you more about what is happening with your Internet sales efforts than all the sales meetings in the world.
It was interesting to both David Kain and me that what started as a case study on third-party leads could morph into something that exposed so much more. If you haven’t had a chance to read the study, I encourage you to check it out on the KainAutomotive Idea Exchange (www.kainautomotiveideaexchange.ning.com). In the meantime, I’m hopeful these seven factors lived up to the promises of this article’s heavy title. Of course, you have to admit that you probably wouldn’t have read an article titled Foremost Conclusions of a Year-Long Independent Internet Leads Study Revealed, right?