Magic City Ford Lincoln is a fourth-generation family dealership that’s been serving consumers in the Roanoke, Virginia, area since 1938. The franchise won Ford’s prestigious President’s Award for customer satisfaction in sales and service each year, from 2010-2012, and is a 13-time winner of the award. Magic City Ford Lincoln is Southwest and Central Virginia’s #1 Volume Ford and Lincoln Dealer.
At the helm of Magic City Ford Lincoln is dealer principal Cameron Johnson, the great grandson of the company’s founder. Cameron’s rise through the auto industry ranks is not your typical story, however. Entrepreneurial at heart, Cameron started his first business when he was nine. By the time he was in high school, he had made his first million dollars with an internet startup. During this period, he also appeared on the cover of BusinessWeek magazine. Today, he runs two franchise locations and serves on several boards, including the Virginia Automotive Dealers Association. We invite you to read the following interview to find out more about Cameron and Magic City Ford Lincoln.
Magic City Ford is a family dealership and received a 75-year award from Ford. Today, you’re the Dealer Principal of the business. Could you talk a bit about your rise through the dealership?
I am a fourth-generation Ford dealer. The business started in 1938. So, next year will be our 80th year in the business. I started, actually, outside the car business. As a teenager, I started a number of internet companies. When I was twelve, I was selling Beanie Babies over the internet and made $50,000 that year. When I was in high school, one of my internet companies was generating $100,000 a week in sales and I had 200,000 customers in sixty countries. My business background was these different start-ups outside of the car business. I made my first million before I graduated from high school.
After all those internet businesses, I wanted to learn the car business. I wanted to get into the family business in some capacity. When I was 16, I started off changing tires during the summer and changing oil. At the same time, parallel to those odd jobs I did around the dealership, was when the Internet was growing. What I said to my dad at the time to a) hopefully get out of changing tires in 100-degree heat but also b) to have a bigger impact on the dealership was to ask him if I could start our internet department. In the year 2001, I started our internet sales department and I would answer emails and answer leads, then I would hand them off to a sales person because during the day I was in school. However, I was able to give them the most accurate product information and the quickest response. I grew our internet sales to be the number one internet department in the state of Virginia at the time. I did that for a couple of years and then attended Virginia Tech.
After being so entrepreneurial at such an early age, what was college like?
I was on the cover of BusinessWeek when I was fifteen. When I was in an advanced business class at Virginia Tech and I came in one day and sat next to a friend and she asked me if I did last night’s reading assignment. I told her no, I didn’t, and asked her what was it about? She said it was on entrepreneurship. I told her I am obviously interested in that and I’m an entrepreneur myself and will go back and read the assignment. She told me to turn to page 156. She said the whole chapter was about me. I said are you kidding? I’m in my own text book at Virginia Tech. I’m telling you this story because at the time, when the article came out when I was 15, the publisher McGraw-Hill owned BusinessWeek and McGraw-Hill had obviously published text books. What they had done was repurposed the story about me and my companies and enterprises and here it was in my text book. This was like my first semester in college.
But I dropped out of college after my first semester and started a company called “Certificate Swap.” It was going to be an online marketplace for gift cards. The gift card business was a $40-billion a year industry at that time, the number one gift to give or receive at Christmas was a gift card, because you put a little bit more thought into it than cash. Obviously, you could end up with a gift card you didn’t want, so what we did was connect buyers and sellers. This was back in 2003. I told my parents I was going to take one year off from college. It wasn’t going to affect anything. I was going to take one semester off from college and try and raise five million dollars in venture capital. I actually raised ten million dollars. At the last hour, my partner and I decided to walk away from the ten million because we were going to be giving up control, we’re not going to be calling the shots.
At some point, you returned to the car business. How’d that happen?
After I sold Certificate Swap, I started working back at the dealership. At the time, we had a used car manager who had just left, and our general manager, who had been with the company for 47 years, the only job he had ever had in his life suggested they make me the used car manager. I couldn’t go back to internet sales because that was two years ago and I had obviously hired somebody to replace me when I went away to college. I said, yeah, used cars. One of the most important parts of a dealership, you’re managing basically a portfolio of cars, which to me was no different than managing a stock portfolio. You’re looking at your ROI, how fast can you turn it, what’s a good stock or a good inventory to have, what’s a bad stock? I took over as used car sales manager, that year we grew $10 million in sales. After used car sales manager, I became general sales manager. I was not going to stay in this business if I could not own all of it, so I started writing checks and bought out the other shareholders.
You have a successful business book that was published by a major publisher. Could you talk about your experience as a published author?
Sure. In 2007, my book You Call the Shots was published by Simon and Schuster. The book’s about how you’re in control of your own life, which is why we didn’t take the VC money. Anyway, when the book came out, I was separate from the dealership and was a regular at CNBC, where one of Oprah’s people saw me. They were casting for a show for ABC that was all about charity. It had huge celebrities like Jennifer Aniston. I was traveling with Oprah for three months. It’s obviously a T.V. show but we were competing against each other to see who can raise the most money for charity and we did it in eight different cities around the country. Every Sunday I was on T.V. after “Extreme Home Makeover.”
Parallel to this, it was ’08 or ’09, I was still getting all the emails from the dealership. The car business was doing poorly. I have a younger sister but otherwise I’m the only heir to the dealership. Ultimately, I said to myself, if I don’t go back and work at the store, then it’s going to be sold. I didn’t want to be the one to cut off a fourth-generation business, and I also love the car business. That’s all I could think about and live, eat, and breathe. I returned in January of 2010, as the sales manager. After a year and a half, my dad promoted me to president of the company. It’s been a fun journey, every part of it, whether it was the internet company or the college experience, or the book or Oprah.
What advice do you have for family dealerships who are ready to turn over ownership to the next generation?
I think the timing of the question is super relevant. In the next two to six years or whatever time period, you’re going to see more dealerships change hands than ever before. What’s even more challenging about the question is that unlike my dad’s generation where it’s sort of like, hey, this is what you need to do, young people no longer average one or two careers in their life. They might average seven to twelve careers. Sadly, I get approached by other owners where the dealers are my dad’s age and their kids do not want to be in the business. Obviously, turning it over or selling it or however that process is handled among the family, that process is more crucial than ever. But on the flip side, as someone who is young and already in the business, I see it as the best opportunity for me that I could ever ask for, because more dealerships will be changing hands. Even though, until two years ago when I bought this other store in Lexington, for our first seventy-five years we only had one dealership.
I’m really fortunate because of what my dad went through. He wanted to afford me the opportunity for him to get out and for me to be able to run it, I guess, in the earlier years of my career instead of in the final years of my career. I think you’re going to see if the dealer principals hold on to the reins too long, their kids are going to get turned off and not feel as if they’re getting the responsibility.
How would you define your management style?
It is totally about empowering people. I think I learned that from both my internet companies where I had to empower people. Even when I was a teenager and I had dozens of employees, we never had a physical office, so people were freelancing. I had to empower people. At the dealership level, we had a general manager who had been with us for 47 years. My general manager, now, has been with us for 15 years. My CFO at the dealership has been there 43 years, so he’s been there longer than I’ve been alive. Having that structure already in place at the dealership is obviously amazing. You can’t put a price on it. But I totally empower all of our people, down to the porters. Everybody should feel they’re not going to be reprimanded for taking care of the customer.
What’s it like having the two dealership locations?
When I was a teenager, I was always going with my dad to his 20 Group meetings. I was having adult conversations with other dealers in the business. What I’m leading into is that for a long time I’ve seen dealers grow to have multiple, multiple stores and I’ve seen the efficiencies at each of those stores. You would think their efficiencies would go up but they actually go down. The problem is finding good people. I’ve seen where a guy had one store that made a lot of money so he went out and bought more and so they all operate at only 60% of what they should be doing. I’m trying to avoid that.
Our second store was previously owned by another dealer and it was losing a lot of money. When I first bought the business two years ago, of course, everyone was opposed. But I was the largest shareholder and it was a small dealership. I said, “Look, do you want me to make a small mistake or a big mistake. What’s the worst that could happen?” At that point, we weren’t acquiring the land, just the dealership. I wanted to see if I could turn it around—it was losing tens of thousands of dollars a month.
The Lexington store was profitable from our second month. It works for us because they’re both Ford but they are an hour apart, so we’re not really competing with each other. We’re not too close where you’re cannibalizing yourself. It also works because it’s in the same T.V.-radio market, which means it has no additional advertising expense because we simply tag our commercials with both locations. For the website we combine our inventory, which gives us an even larger number of vehicles to showcase. What’s great about having a second store is that it’s much smaller and we can compare percentages and share situations.
What does Magic City Ford look for when hiring?
I think you hire smiling faces, because you can teach everything else. You can’t teach somebody to be happy if they go through life complaining about everything. I have some sales people who are a lot younger than me and I have sales people who are twice my age, as well. Some of the people who have been there the longest know me like family. One thing we try to do is make everyone feel part of the team. For example, I took our top sales people and their managers and spouses to Las Vegas and we generally do this twice a year. The camaraderie when competing for the contest is a real fun one, because it’s not just who sells the most or who makes the most money. It’s based on a point structure, so certain vehicles get more points than others. It makes it fair, so that everybody has a chance. We do a similar thing for advisers and technicians but obviously on a smaller scale, because of the margins.
Sales people can totally be taught how to take care of a customer and the nine steps of a sale. Service is probably the hardest job in the business, because everybody coming in for service already has a problem. It can be like working at an airline counter and you only have delayed flights. Everybody that’s coming in to that high-traffic area is probably not happy about something. It’s up to us to help make them happy again.
Could you describe the steps or processes your stores take to ensure customer satisfaction?
Every service customer and sales customer gets a phone call from a customer service manager after their visit. We especially like to know who is over-performing, because sometimes we call and we are just blown away by a particular situation that was positive. That could be because their last service was at another dealership where they didn’t have a good experience.
We follow up with everybody in that way and we also tie it to their pay. As much as you don’t want to do that, you do want to do that as an incentive. We’re not taking anything away from you, but if you take great care of a customer, you’re going to earn this much more. In Sales, that might be an additional 5%. Again, we don’t want to punish, but we want to reward those people with the best CSI and do the same for service. The factories obviously judge us. They’re surveying us. Everybody gets surveyed. You go to a Taco Bell and they give you a survey card. I think as a culture, we are totally over-surveyed. You check out of your hotel and you get a survey. Nobody has enough time to fill out all these surveys. Unfortunately, what does happen is the people who do answer are the ones who are sort of upset and they do want to voice all their concerns.
What is your digital marketing strategy?
Dealership dollars have shifted more and more to digital. I think probably next year we will be 100% on digital. It’s trackable. You can create small campaigns, inexpensive campaigns. We do that with Facebook. We do it with Google. We don’t do campaigns on Twitter, but we’ll see what other people are saying on Twitter. We can see what people are saying about our competitors just as much as they say about us. One thing you can do is you can target your ads on Facebook based on where somebody works. We’ve had success in hiring people by this kind of targeting. If you’re trying to hire a technician, you can basically advertise your employment ads to other technicians, people who have it listed as their job on Facebook. It doesn’t have to be in our market. It can be a market that’s forty-five minutes away and maybe they have family here. It costs so little to do highly, highly targeted campaigns that we keep at least a couple dozen running at any given time.
In the summers, during the last weekend of the month, we do a “Summer Midnight Madness Sale,” where we’re open to midnight on Friday and Saturday. So, there might be a 3-day campaign to get in front of somebody for not even hundreds of dollars but literally tens of dollars.
Reaching the entire city was much easier back in the day when you could just buy a newspaper ad or you could buy the six o’clock news and that was your advertising strategy. Now, it is totally different in that you are targeting specific people and you’ve got retargeting ads. We have a pixel on our website that will follow you around throughout the internet and also ties back into Facebook so if you’re logged into Facebook and you come into our website we know who you are. We can target you with a branded or specific message or if you’re on a vehicle page, we can pitch back to you about the vehicle. I could spend 80 hours a week just doing that. Clearly, I am not able to do that. But I feel that’s the direction we’re going in: really targeted stuff. We’ve had some success on Instagram, too, maybe with a picture of a vehicle we just got in and people will comment and share and Like.
Do you use a third-party vendor to assist in your online campaigns?
We do some of this kind of marketing in-house. I do a lot of the individual campaigns myself. But then we also use a company out of Florida. They help with our Facebook strategy quite a bit. They’ll do more of our broad campaigns, like on specific models and that sort of thing, and I’ll do the really targeted stuff, such as a quick message out to people for the day. They do the more sophisticated campaigns and do a great job.
I’d like to go back to your comment about your time with Oprah and charity. In what ways does Magic City Ford give back to the local community?
When people know your name and they know how charitable you have been or can be, you get asked by everybody. A lot of our stuff that we sponsor we consider advertising. It’s something we promote and sponsor as a charity, like an ad in a program or whatever. That’s one thing, but our charitable giving we usually do it silently. For instance, last Christmas we sponsored a “breakfast with Santa” and they had over 200 kids. These are kids that otherwise would have not been able to have breakfast with Santa. We sponsored that event at a local hotel. We didn’t promote it ourselves, though. We privately gave the donation that enabled them to do that. There’s a big telethon here that raises about $150,000-plus for cancer charities in this area. We sponsor the telethon lines. Obviously, we do a lot of youth donations to local baseball and softball teams. I do a lot with the school systems.
Ironically, even though I didn’t graduate from college, I’ve been on the board of our school system for five years, specializing in career and technical education. It’s near and dear to my heart, because I saw friends graduate from college and a) not be able to get a job, and b) have $50,000 in student loan debt. From a society standpoint, we’ve shamed all these people into going to college and they feel like they’re nobodies if they don’t graduate. We also need mechanics and all of those type positions, your plumbers, your electricians. I was on the board of another non-profit and one of the other members was CEO of a huge power company, and he told me he has 10,000 linemen—you know the guys who fix it when your power goes off—that will be retiring in the next five years and he didn’t know where he was going to find replacements. So, you’ve got crazy problems with society. Our top car mechanics can make almost $100,000 a year. There are mechanics now that don’t even get dirty, because everything is software and updates.
What changes or challenges do you see for the industry as a whole, over, say, the next five to ten years?
You know, that question would have been a lot easier five or ten years ago. We’re heading into, I wouldn’t say challenging, but certainly interesting times. Obviously, Tesla is the hot thing. They talk about the direct-selling model Tesla follows. As a board member of the Virginia Auto Dealers Association, we’re still in a lawsuit battling Tesla on the franchise model versus selling direct. And it’s not because of Tesla. Ford does not compete for the same customer with Tesla and probably never will. But if the laws are changed, then you’re talking about the tens of millions, or collectively billions, of dollars that dealer families have invested over decades based on the franchise law system.
I think the real challenge is going to be the consolidation of dealerships. Profit margins are already small for dealers and they are getting smaller by the day. On the other hand, new mandates by the factory almost go up by the day. And you’re going to see dealer principals whose property might be worth more than the business, so they’re going to sell the property and retire. I think you’ll see more situations like that than you will see electric cars everywhere or self-driving cars everywhere. Certainly, in big city markets, Uber and Lyft are going to give us a run for our money on the benefits of car ownership.
Let’s talk closer to home. What’s ahead for Magic City Ford?
Well, hopefully, another 80 years. That’s obviously Ford-dependent as well. We want to continue growing. If that means we enter into a business agreement, let’s say, we’re leasing out our used cars to Uber drivers, on a nightly basis. Suddenly, my used-car inventory is making me money, instead of just sitting there until it is sold. That sort of business model, when you’ve got inventory levels that are crazy high, I think that might be something that changes. I think we’ll still be called Magic City but we might be in a lot of different businesses. Just like our advertising has become so fragmented, I could see a couple of businesses being spun off, taking advantage of the capital that sits on a dealer’s lot. We definitely want to still be in the transportation business and do what we do best, which is taking care of our customers.
Author: Digital Dealer
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