When I first entered the automotive sales industry in 1999, my sales manager at the time gave me a copy of the New York Times Best Seller, “Who Moved My Cheese,” written by Spencer Johnson, M.D. This motivational fable centers around navigating through unexpected twists in your journey to find “cheese” (a metaphor for what you want in life). It was this book that inspired me to think outside of the box.
I entered the automotive industry at an interesting time. The “internet” had just started to become something. We were receiving internet purchase requests from our OEM via fax! Our “CRM” was a paper desk log and a highlighter. Our data mining / equity mining and customer retention was done from a little box filled with index cards.
When I got into the business, the vast majority of dealers and managers didn’t like or understand the internet. Most thought (incorrectly) that the internet was merely a fad. Many in the industry had negative feelings surrounding internet prospects and internet sales.
After I read “Who Moved my Cheese,” I was determined to avoid getting sucked into this negativity, and instead, I embraced the internet and took an active role in overcoming the challenges that came with it. I studied as much as I could on my own, taking classes on everything from website design, to SEO, etc. I earned certifications in this new field so I could evolve with the world in my new career. All of this paid off beyond belief.
I went from averaging 30+ units per month on the showroom floor (I was a sales consultant but “handled” all the internet leads because no one else wanted to), to becoming a manager and getting recruited to a dealer group in Central New Jersey (Pine Belt).
By 2002, I was delivering 110 units per month online at a Nissan Kia Cadillac dealership and holding gross!
Fast forward 16 years later to today, where I am blessed with perspective. I’ve trained more than 25,000 automotive sales professionals, and worked with 1,100 roof tops, everything from single-point “mom-and-pop” dealerships on the brink of bankruptcy to billion-dollar and publicly-traded dealer groups. I’ve learned so much about what works and what doesn’t.
I’m sad to report that despite increased tools to aid sales efforts, a vast majority of dealers today are not even close to delivering 110 units per month online — what I was doing 16 years ago! And NO, it’s not just because of opportunity or location. There are dealers today that have better franchises, better location, better inventory, more inventory, more money, more people, and still do not even come close to what we were doing in New Jersey, 16 years ago. It has to do with infrastructure, philosophy and strategy.
- 92-99% of Americans go online before they step foot into a dealership.
- The average car shopper spends over 11 hours conducting research.
- The average prospect is visiting 10 dealerships or websites (online) before they ever visit a dealer onsite.
- The average in-market buyer ONLY visits 1.2 dealerships.
- The average closing ratio for an internet prospect or phone prospect once they show up to an appointment is 45 – 52%!
What this means is that if you get them to the dealership as an appointment, they will buy from you unless something goes wrong at the dealership. To be specific, I am talking about actual in-market buyers…people that are qualified to buy an automobile from you. The data is clear, it is not an opinion – it is fact. Hardly anyone that buys a car (who is qualified) goes from dealership to dealership (physically) anymore. That is why NADA says it’s “1.2” dealerships they visit. Folks, we know there is no such thing as a .2 dealership! Let me repeat that again. An actual in-market, qualified buyer only visits 1.2 dealerships period. This means if you are successful in getting them to the dealership you will sell them an automobile. Obviously, this excludes if something goes wrong or if they are upside down on their trade, their credit is unqualifiable, the vehicle is not available or they are not realistic. But for the most part, the vast majority will buy from you. You just need to get them to your dealership for that appointment!
NADA also says that out of the 16,500 franchised dealerships in the U.S., the average dealership:
Delivers 96 units
- Has 10 sales consultants
- Has two sales managers
- Has either and/or both a GM or GSM
- Has an F&I manager
- The average sales consultant delivers on 9.6 units per month
- The average cost per sales in advertising is $640 per car sold
- The average closing ratio on a fresh showroom prospect is 18-20%
- The average dealership has approximately 480 showroom opportunities (in dealership prospect visits)
- That is 14-15 professionals for ONLY 480 opportunities!
On the flip side, the average dealership receives approximately 400 FRESH internet and phone opportunities per month (sometimes just internet leads alone are 400). Plus, there is a “residual flow factor” of an additional 250-300 “carry-over” leads. Realistically, the average dealership has 650-700 REAL opportunities (both fresh and carry over) every single month but they have a fraction of the support staff as the showroom does. The average dealership either:
- Has those internet and phone leads distributed to the showroom floor and makes the sales team follow up with all those opportunities in addition to all the other things they are supposed to be doing.
- Has a BDC or some version of a BDC model in their dealership but even with some version of a “BDC,” they only have approximately two full-time BDC reps, or a BDC manager and one to two reps at most.
The result is that the vast number of dealerships don’t even convert a true 10% of the 400 fresh opportunities, never mind 12-15% of the total opportunities of both the fresh and carry-over leads. Remember the total opportunities per month are 650-700. That means the total deliveries should be between 75-105! Yes, that is right, if a dealership receives 400 fresh leads per month but has a residual flow factor of 250-300 and a REAL 650-700 opportunities to do business! With that said, 75-100+ is more than realistic. It is their responsibility. If not, you are leaving money on the table. But yet, the vast number of dealers struggle to deliver 40 out of the 400 fresh leads!
The reason this is happening is because the majority of dealerships are NOT set up correctly. They are still using traditional thinking and strategy for both HR and for marketing. Dealers are still setting up for the “traditional showroom,” 10 sales consultants, 3-4 managers to deliver the average of 96 units.
But as we clearly have identified, the internet and phones are the NEW showroom so why are dealers still setting up their showroom with an antiquated strategy?
We have taken Route 4 Cars in Paramus, N.J. from delivering 75 units per month online to 298 units per month online at $2,300 per copy! And we did it by treating this department like it was a full-blown dealership. They have 10 BDC reps, an internet director and two sales managers / desk managers (one for Chrysler and one for Hyundai). They are a self-contained “dealership” within their dealership. Their internet department delivers triple the number of units than the average dealership. As an example, here’s a typical month for them:
- Start the month approximately 900 carry-over leads on day one of the new month
- They receive approximately 1,600 fresh emails and phone calls.
- Their 10 BDC reps make a total of approximately 29,000 outbound calls
- Their BDC tracks approximately 3,300 conversations / connections
- Their BDC makes over 950 appointments
- They have more than 590 appointments show
- To deliver 298 units at $2,300 per copy…
As you can see, their internet, phone, BDC department is more accurately described as a “follow-up” department. That is exactly what they mostly do. Look at the amount of outbound calls it takes to convert to a connection! I didn’t even get into all of the other forms of communication opportunities like:
- Text messaging
- Video email
- Video text messaging
- Video social media communications
- Apple Facetime / Skype
- Social Media communications (like Facebook or Instagram “DM”)
The question is how in the world can a showroom sales team follow up with ALL of that (and at that level) while doing all of the “traditional” showroom sales activities? The answer is, it is impossible!
Let me explain by sharing an experience I had while speaking at an elite NADA Ford 20 Group. I was speaking with a GM of a single-point Ford dealership located down South. The GM was very proud to profile his dealership for me:
- Single-Point Ford Dealership
- 27 Sales Consultants
- 4 Sales Managers
- Plus, a GM and 2 F&I Managers
- Total of 34 Automotive Professionals and Managers
When I asked him how many units he delivered from phone and internet, without blinking he said, “111.” I said, “Your organization is MASSIVELY underperforming!” He looked at me like I was crazy but I quickly explained that if you do just basic math… 300 – 111 = 189. Divide 189 by the 27 sales consultants. That means if you take phone ups and internet ups out of the equation, then the sales team is only averaging seven units per salesperson per month! And without giving him a second to breath I added, “And, if you are paying them on bonuses for volume, you are paying and incentivizing them to be complacent with mediocrity!” He still seemed confused so I explained, “There are eight ways a showroom sales consultant can sell an automobile:”
- Internet Up
- Phone Up
- Prior Customer / Orphan Owner
- Service Conversion
If you take phone and internet out of the equation and the sales team is only averaging seven units per month per salesperson. But yet there are six entirely different other ways to sell a car. What are they doing? What are they not doing? He almost fell out of the chair. He got it.
Let me go even deeper. His dealership was designed for showroom operations with HR and marketing. But the reality was the vast amount of opportunities flowing in were for Internet Sales and Phone Sales. So, his team was focusing their time on reacting to those opportunities. They were the low-hanging fruit and well in abundance!
Here is the worst part… Because his dealership was not set up the correct way, their internet operation was not yielding as many units as they could have because they did NOT have the infrastructure in place to receive maximum return.
If they had the infrastructure similar to Route 4 in New Jersey, they could have easily NET increased another 60-70 units from the Internet / BDC side of the business. AND if they had the proper amount of people (and the right people, trained with the right processes) on the internet / phone side, that would have freed up all 27 sales consultants to spend the proper amount of time, attention and skill on the other six ways they could sell an automobile like:
- Maximizing fresh walk-in traffic
- Increasing be-backs
- Working the service drive for service conversions
- Maximizing ALL prior customers and orphan owners
- Generate MORE referrals and create more referral agents
- Prospect more, provide more deals that do NOT come from the dealership
**If the dealership was able to modestly increase the average units delivered per salesperson per month from 7 to 9, the dealership would be able to achieve a NET increase of 54 additional units from the showroom side! That is a total NET increase from both the showroom and internet / phone side of 114-124 (at $2,000 per copy). That is an additional $280,000 per month additional revenue and almost 3.5 MILLION additional revenue the first year. All of that by understanding the “cheese” has been moved. There is a NEW way to do business. Dealers need to accept this, make adjustments in their strategy and this will allow them to absolutely begin to generate more revenue immediately!
This is NOT an idea or a hypothetical. This is REALITY. The dealers that want to sell more cars, more often and more profitability are the ones that evolve. The dealers that don’t will have to be complacent with mediocrity or risk getting destroyed by competition.
If you would like to learn more about how to find your “cheese,” email me at firstname.lastname@example.org for a free strategy session. It would be my pleasure to assist you.
Author: Sean V. Bradley, CSP
Sean V. Bradley, CSP is an entrepreneur, published author, speaker, and award-winning international trainer. He is an eight-time NADA/ATD convention speaker and a FranklinCovey Certified Facilitator. He has earned the coveted “CSP” designation in the National Speakers Association. Sean is also a member of the elite “Million Dollar Speakers Group” in the NSA, as well as a State Association Speaker and Trainer. He has spoken at over 217 NCM and NADA 20 Groups. Sean has personally trained over 25,000 automotive sales professionals in 1,100 unique roof tops.