In the last quarter of 2012, Nissan of McKinney’s Internet sales, which had accounted for 39% of the dealership’s business, increased dramatically month over month to the point where they now represent 50% of the new and used car sales at the dealership.
In 2011, Nissan of McKinney sold 922 new and used vehicles from 18,783 Internet/phone leads, out of a total of 2,370 units sold.
In 2012, Nissan of McKinney sold 1,417 new and used vehicles from 15,574 higher quality Internet/phone leads, out of a total of 2,500 units sold.
David Kelley recently shared with Dealer magazine his strategy and tactics for dramatically increasing Internet sales and closing rates since October, when he became GM and partner at the dealership.
First, David, how did you get into the business of selling cars?
I started selling cars in 1996 in Scottsdale, AZ, for Van Chevrolet as a summer time job. I was successful at it and an opportunity came up in Dallas at Trophy Nissan and I went there as a manager. I worked there five years and was promoted to the GM and partner of Toyota of Dallas 2003. In 2012, October 4, I took over as the new GM and partner of Nissan of McKinney.
Please give us a brief history of the dealership.
Nissan of McKinney opened up in the spring of 2004. McKinney is a big community and the dealership is doing really well. It’s within the top 300 dealerships in sales volume nationwide. And, the potential for growth here is phenomenal.
McKinney was voted the number two community to live in the U.S., according to Money Magazine, so we are aggressively pursuing a big share of this market, and, in particular, we are aggressively developing and pursuing more Internet leads and sales.
How are you doing that?
When I took over the store, in October, the first thing I did was evaluate our website and our Internet lead handling process.
Then, I brought in Brett Zakarian as our GSM and Rick Nichols as Internet director, who had worked for me at Toyota of Dallas store. We quickly changed a few things.
The first thing we did was change our pricing tool with Dealer.com where we automatically showed the MSRP and an aggressively discounted Internet price on all our vehicles. We have pricing rules to make sure we’re pricing our cars aggressively.
Next, we started monitoring more closely the sources for our Internet leads and seeing which third-party lead providers were giving us the best ROI. We’ve gotten rid of the ones who aren’t performing. The three we’ve identified that we are having the most success with are AutoTrader.com, Cars.com and Edmunds.com. These we spend money with.
Next, we made sure that our website is being updated daily with the most complete and current information. We make sure we have pictures on our website for all of our new vehicles, so consumers see the actual photo of the new vehicle. We also feature pre-owned vehicles. We typically have eight to 10 used car specials on the website all the time. We make sure our specials pages and our staffing pages are up-to-date. And, we make sure when we do targeted remarketing ads, that if the consumer is looking for an Altima, the ad takes them to the Altima specials page on our website.
We work with our own marketing company, Van Tuyl Marketing, and we work with Dealer.com, our website host. They both do a great job, and our website does well.
My General Sales Manager Brett Zakarian, my Internet Director Rick Nichols and I get together every month and we create new banner ads for whatever specials we want to promote that month.
The next thing we changed at the dealership was our follow-up process for Internet leads.
We set up our 3-2-1 follow up, where we make three phone calls to the customer on Day 1 when the Internet lead comes in and send the customer two e-mails on Day 1. Hence 3-2-1.
Our goal is to see that all Internet leads are responded to in the first 15 minutes.
We now have a sales associate scheduled for Sundays to respond to leads even though we are closed on Sundays. The leads that come in after hours get an auto-responder to let customers know we’ll be e-mailing them as soon as the store opens up. Then on Monday mornings these leads round-robin to the first team that opens up.
How many Internet salespeople do you have?
We have 17 Internet sales associates in both new and used and we plan to hire more. We have a total of 33 sales people, with 16 for floor sales.
When we got here the number of leads per associate was about 120 per month. We’re trying to pare it down to 60 leads per month, per associate. That lower number of leads can be handled more efficiently and ultimately results in high sales. Our target is to make sure we are staffed properly, with 60 Internet leads per month per associate.
The quality of our response is more important than the quantity. I encourage our sales associates to read each customer e-mail thoroughly, answer the question that the customer has, and then give the customer as much information as they need to get the customer in the door. Sometimes the consumer won’t want to know if the car’s available; they’ll want to know what the color of the interior is. Or, does it have this exact option? In used cars, the consumer may ask how many previous owners. We periodically spot check the e-mails our sales people are sending out to make sure they are answering the customers’ questions completely.
Often, the sales people, instead of answering the question, will try to go right to scheduling the appointment.
Typically, if a customer inquires about a car and doesn’t give any additional information, we always try to give that customer a best price on the car and an expiration date when that price will no longer be available. We have a payment calculator on our website that is set up for the lowest rate on the longest term we have available.
When I first got in the business you had to make 50 phone calls a day, but now I tell our sales associates that it’s not just about the number of phone calls you make, it’s also about the number of e-mails you send out.
Now with caller ID and cell phones, if a person doesn’t know your phone number, a lot of times they don’t answer the phone. So, my managers are expected to follow up with their customers through e-mail. We get a lot of engagement back through the Internet department based on outgoing e-mails as well.
We try to stress to our consumers in our e-mail responses the reasons why they should buy from our store. Anybody can send out a low price, but it’s what you get with that low price that can make a difference.
We stress in our e-mails all the fabulous services of the dealership; it’s a brand new Nissan facility, with great amenities. We have one of the top rated service departments as far as customer satisfaction goes. The waiting area has flat panel televisions, computer stations, and a kids area with their own television. We offer free loaners, plus have Starbucks coffee and bagels in the morning.
We stress our rating with the Better Business Bureau and the tenure of our salespeople. Our service manager has been here since the inception of the store.
And, every one of our new vehicles comes with two years free maintenance.
So when a customer is reading an e-mail from Nissan of McKinney and an e-mail from one of our competitors, I think the customers will see we have a whole lot more to offer here. So, if it becomes a tie on the price, the other advantages we offer will be the tie breaker.
What kind of results are you getting from these changes?
We’ve quickly increased our close ratio for Internet leads. In 2011, our Internet closing ratio was only 5% and earlier in 2012, it had been, on average, 8%. This past October, we raised it to 10%. In November, we raised the closing ratio again to 15% and at the time of this interview, in mid-December, we are tracking at a 15% closing ratio for Internet leads.
What CRM do you use?
We use DealerSocket for our CRM. It’s a great tool. It does a lot of great things, not only for follow-up and for e-mail campaigns, but DealerSocket also tracks all our outbound and inbound phone calls. So, it’s a very resourceful and very user-friendly tool.
How long do you follow up on an Internet lead?
We keep leads in the system for six months. We taper down our efforts after a few months and once a lead is flagged dead by a sales associate, that lead goes to our automated Internet follow-up. We do four or five follow-up e-mail blasts a month. Most of our campaigns are e-mail, not direct mail, because it’s a whole lot cheaper.
Without telling all my secrets, the biggest thing we get the best results from is our e-mail blasts. We send out many them. We don’t want to overwhelm our customers, but we certainly want to relay the important messages. Then when they buy a vehicle from us, we take them out of the system for a few months.
When we look at our ROI reports, e-mail blasts are our number one marketing tool. We may not sell a customer for three months, and then all of a sudden, we send them an e-mail blast and they will respond and they are back in the market for a car. You’ll see the customer re-engaging with the sell process.
We use DealerSocket to send out the e-mails, which our Van Tuyl ad agency creates. We have 75,000 e-mail addresses in our system.
What is your split between traditional and digital advertising?
Forty percent digital and 60 percent traditional.
Have you changed that since you got here?
When I got here, the dealership was heavily into radio and TV. In October, as a test, we killed all traditional media. We were just doing Internet marketing and we increased Internet sales 40% in October, over September.
In December, we were buying a little bit of cable and broadcast for the full market, with December being Nissan’s Season-to-Save national sales thrust. Now, all of our TV commercials also direct people to our website.
Our TV commercials are also hosted on our website, so you can see the latest commercials there. When you go to our new vehicle inventory page, one of the commercials plays while you are looking at the vehicle online.
As for newspaper ads, we don’t do any now, and I couldn’t tell you when the last time this store did a newspaper ad, but it’s been years for me since I’ve run a newspaper ad.
Have you changed anything in your digital advertising, since you came to the dealership?
We upped our search engine marketing (SEM) budget to drive more traffic to our website. The Van Tuyl Marketing group places most of our digital spend in SEO and SEM. They spend it on Google and Yahoo, for banner ads. We do retargeting ads and we buy Google keywords. We doubled the spend in those accounts since I got here.
What kind of results are you seeing from these digital advertising changes?
In November, 55% of our sales came from Internet, which is up pretty big historically for the store.
Does the dealership have a BDC?
No, we’re looking to have one, but right now we don’t. So our phone calls and follow-up e-mails are done by the sales managers and sales associates.
How do you keep current with technology?
Our vendors help us stay current. DealerSocket has stayed on the cutting edge by integrating the latest tools with their CRM. When new tools come out, a good CRM vendor like DealerSocket always integrates new tools into their system. DealerSocket has grown a lot since they first started up. We believe in them, and we believe in our website and the lead side of it.
What percentage of leads comes from your own website, from third-party lead providers and from the Nissan website?
Fifty percent of our leads come from our website, and the other 50% from our third-party lead providers and Nissan. Nissan also buys third-party leads and sell them to the dealers, so you can set up with Nissan how many leads you want to buy from them each month. They do a lot of networking on their own to help generate leads for the dealers. We set a budget for that and they can help us like any other lead provider.
Do you have a mobile website?
Dealer.com provides our mobile website, and they do a great job. We are looking to improve content on that always. A lot of our traffic comes from our mobile website. Close to 40% of visits to our websites are from mobile devices. They say that people on mobile are the ones that are pretty far along in their shopping process, because now they are in their car and looking for the dealership.
You see consumers now in your store, or on your lot, looking at a car and telling you what your Internet price is on that car by looking on their mobile devices. Especially on pre-owned, you see that a lot.
Do you get many Internet customers who will come into the store from a long distance?
We get customers from a 150-mile radius. We are on the north side of Dallas and we draw quite a few customers from Oklahoma. The next major city to the north of us is Tulsa, and there’s not much to the west or east.
Are you one of the top selling Nissan stores in Texas?
Our goal is to be the top selling Nissan store in Texas. In September we were 11th in the market, and in November, we were 5th. So we moved up six spots in two months.
I believe we should be a top 10 Nissan store in the country. Through September, Nissan of McKinney was ranked 95th in the country for Nissan sales and in November, we finished 56th in the country.
What do you see as your biggest challenge for this dealership?
My biggest challenge will be in establishing for this dealership a reputation of wanting to do volume business. This store has always been a smaller store, even though it’s in a big market. So it’s a matter of changing the mindset and culture – of not only our customers, but also our employees – that this can be a big store. And, that bigger volume has got to come from the Internet. The Internet is our biggest opportunity for growth for new and used cars.
How are you going to accomplish this change in culture?
I’ll do this by hiring and training additional sales associates, and bringing in the right management team that understands volume and how to create volume and how to price our cars effectively over the Internet to get traffic and set appointments.
And, we’ll have ongoing good management of our website. If you’re promoting doing business online, you need to make sure that it’s easy for your customer to do that by constantly updating your website. It must have the most up-to-date specials. Your cars must be priced competitively. You’ve got to have nice pictures, and lots of good content for consumers to look at and click through. If you do all that really well, you’ll have conversion.
You talked about DealerSocket contributing to your success by integrating the latest Internet sales and marketing tools. Are there any other Internet vendors who are contributing to your success?
We use ADP for our DMS and it serves us well. It’s the DMS I’ve worked on my whole career. We also use ADP Web Desking. It’s easy to use and provides easy-to-understand payment options for consumers. We really like that.
We use Dealer Chat and we think that helps us quite a bit! We are using them for a third-party lead provider. We get quite a few chat conversations that turn into deals as well.
I believe Facebook will be contributing to our success very soon. We have started our Facebook campaign here and where I’ve come from, we had one of the largest Facebook accounts in the country for a dealership. We had close to 10,000 fans and we started seeing a lot of sales from that.
Since I got here, we started marketing our Facebook page and we’re getting a lot of positive feedback from it. We try to get our customers to interact with us on Facebook; we see it as a way to build the dealership brand.
We do keep the Facebook page up-to-date on what kind of specials we have, and we post fill-in-the-blank puzzles that customers seem to like. We do a good job of marketing the page, and we do advertising to get more fans on Facebook and we encourage our customers to post pictures of their new cars and interact with us. You have to see it!
We’re not doing much with Twitter, yet, but we plan to.
How about reputation management?
We try to respond to the Google reviews and customer concerns. But, the best thing to do about reputation management is do the right thing with your customers so they don’t say bad things about you in the first place.
In our responses to any negative reviews, we try to show customers that we care about our reputation; we care about what our customers think; and we want to try to help them solve the problems they have and not sweep them underneath the rug.
Right now, we try to encourage our customers to post any positive comments they have on the different review sites. We are DealerRater certified and we have a lot of positive reviews there, and on Google.
Do you have any kind of loyalty program?
Nissan has the “One to One” Reward program, and so customers can register for a loyalty card. This program keeps track of all registered customers’ data. So we can do target marketing when people might be looking for a certain age or model car, or when people have an equity position on a car. Data capture is very important to us
Our 1 Micro KeyMachine is another big part of our data capture process. It scans customers’ driver’s licenses for test drives and it pushes all the data from there into our CRM tool, so we can analyze this data and create targeted marketing campaigns.
What is your typical day like, working with your Internet director and GSM?
Every day when we come in, we look at the previous day’s report: what we sold, how many ups came in, how many Internet leads we had, how many appointments we set, and how many appointments we had show.
Then we break it down by the number of appointment set from the Internet to see what kind of a job we’re doing on the leads. My Internet director’s job isn’t necessarily to sell the car. His job is to get people to come in the door. After that, it’s the GSM’s job to get the customer sold on a vehicle.
What’s unique about the dealership?
I believe it is our people. We do a lot of training on our process, so that customers not only receive great service but also consistent treatment. Our goal is to have everyone on the same page working together. Plus, we’re a brand new Image Nissan facility. We have a glass box by the highway that always has our latest hot car in it with the spotlights focused on it. It looks like a boxed Christmas present with a big red bow on the car. That draws a lot of attention.
What is your take on where the industry will be five years from now?
I think the Internet will be an even bigger part of the business. I’ve seen it grow 30-40% and I expect at least 75% of our retail business will be traced back to the Internet. I’d say you’ll get to a point where the retail customer and the Internet customer will be one and the same.
We ask ourselves what is the right mix of salespeople and Internet salespeople, but I think eventually every salesperson is going to have to be able to sell cars on the Internet. People are going to come in and say follow up with me on e-mail and, if they aren’t already an Internet shopper, at that point they become one.