It’s complicated to be an Internet-savvy dealer. Pricing, dealer web site SEO, social media, Internet structure and staffing, lead management, there are many critical success factors, and just as many potential points of failure. If you’re a dealer whose doors are still open after the past three years of challenges, you are good at what you do. But there is a yawning chasm between “good” and “great”.
To become a truly outstanding Internet sales dealership, one with 10X performance vs. the average, a dealership must become expert at nine key competencies, roughly in order:
- Used car pricing
- New car pricing
- Used car prep and merchandising
- Dealer website SEO
- Internet organization structure
- Lead management processes
- Third party lead buying
- Social media
When mastered, these “core competencies” operate in a virtuous cycle of continuous growth. Market-based pricing drives sales velocity, an optimized dealer website drives lead volume. Used car merchandising drives lead volume.
A sound Internet organization structure ensures the first phone call and 14-day follow-up practices are staffed for, which helps conversion and customer satisfaction. If an effective first call and 14-day follow-up practices are actually executed consistently, your dealership can experience an additional increase in conversion rates and customer satisfaction. With a well thought through promotional calendar, lead volume can be driven higher. And an effective social media strategy can further augment lead flow and customer satisfaction. And of course, the longer you have remained in a consistent virtuous cycle pattern, the more likely past customers will come back to you—further increasing your success.
So let’s go through each of these core competencies.
Used car and new car pricing
Maximizing gross margin per vehicle is not the goal. The goal is to maximize profit. Profit comes from sales velocity: if a dealer sells 2X the units for 20% less gross margin, he will experience a higher profit. Sales velocity comes from competitive pricing. Competitive pricing comes from understanding the market and this comes from leveraging tools.
On the used car side, vAuto, First Look and Aax are tools dealers can use to benchmark whether their pricing is consistent with the market. For new car pricing, check out Truecar.com. By using these tools, a dealer can determine the going price for every vehicle in his inventory, and set pricing that is market consistent. By doing so, a dealer will attract more consumer interest, sell cars faster, increase sales velocity and they increase profit.
Used car prep and merchandising
To maximize profit, a dealer must source the most popular vehicles and get them at the most favorable price. Again, tools such as vAuto can be very helpful in this process. Once a vehicle arrives, it’s key to recondition and put it into inventory quickly. A process that takes longer than five days from moment of purchase to sellable on lot is too long. Once the vehicle is reconditioned, multiple photos should be taken of its interior and exterior. Used-vehicle page views go up 175% and contacts go up 122% when at least 11 photos per vehicle appear online. With photos taken, some dealers use companies such as Unity Works to stitch the photos into a “video.”
Next step is to price the vehicle, using a tool like vAuto to ensure market pricing. Then you should write your “sell copy,” making sure to effectively merchandise the vehicle. With all this done, the price, photos, videos and copy should be uploaded and the inventory feed sent to all third party sites you work with, along with your own website (and possibly your Facebook page). Then manage your pricing carefully, ensuring you maintain an average days in inventory of no more than 30 days. This entire process should be one you are continuously focused on for daily improvement. It’s key to your business.
Dealer web site SEO
To maximize visits and lead flow from your web site, you need to ensure it is search engine optimized. That requires a plan. A good dealer web site plan involves (roughly in order):
- Find the right dealer web site platform (Dealer.com is a good one).
- Leveraging the capabilities of the platform, create a site map that includes SEO-maximizing content, such as references to key geographies, etc.
- Create a home page design that features a highly usable UI and has powerful calls to action (“Specials under $10K”, “Get a quote in 10 minutes”, etc.).
- Create SEO-friendly URL tags, and name your content in an SEO-friendly way.
- Create new content to drive SEO and to expand your geography.
- Optimize the UI on every page.
- Ensure all your content feeds are fully operational.
- Track page rank / traffic / leads.
- Use this data to optimize your site over time, testing content additions, design changes, etc.. to maximize leads.
- Test search engine marketing (SEM) programs and optimize these.
- Implement microsites and optimize.
Internet organization structure
The optimal structure ensures every lead is managed to its full effect. Assuming you have a tool in place that can deliver the consumer a multi-vehicle price quote in 10 minutes or less, the next step is the first phone call. This vital step must be accomplished within 30 minutes (10 minutes is best practice). That can only happen via a structure that supports the goal. For a dealer with 300-plus leads, the right decision is to put in place an “assistant” to the sales staff that makes this first call, asking qualifying questions and seeking to gain an appointment. She is focused just on the first call—the sales rep is responsible for ongoing phone and email follow-up. But by ensuring the first call is done well every time (and done quickly), leading to an appointment, close rates rise significantly. Structure your dealership to ensure the first phone call occurs very quickly on every lead every time. It’s a critical success factor.
Lead management processes
Tools exist today to support the execution of a multi-vehicle price quote in 10 minutes. Use one. It makes no sense for a salesperson to do something that a tool can do faster and better. Assuming you have executed a multi-vehicle price quote in 10 minutes and have followed with a first phone call in 30 minutes, you are off to a great start. Now the key is to have an effective 14-day follow-up process. Here is a best-practice process:
- One call, one e-mail the day lead arrives
- One call (different time than first day); send e-mail on second day
- E-mail on day three; send post card through the mail
- Manager phone call; e-mail on day five
- Day eight GSM call; e-mail
- Day 11, 14 e-mails
- Then leave to automated follow-up
Ensuring this process actually happens is a significant challenge. It requires highly focused leadership (and equally focused followership). Make it a priority.
Third party lead buying
Once you have solid Internet sales processes, you will begin to see your close rate rise. Having achieved this goal, it’s now time to increase profit by reducing your close rate. Here’s what I mean: with a solid process, you can expand your lead horizon, either by adding more lead providers, or expanding your geography or both. Since there is often much overlap in leads as you add providers, you need to select carefully and manage your duplicates well so you don’t get over-charged. By doing so, you will probably see your close rate go down somewhat. But that’s OK. Remember, the goal is not close rate, it’s profit. If you can sell more vehicles even as close rate goes down, that’s the right decision until the cost of growing your lead count begins to exceed the benefit of an additional car sale.
Once all of the competencies noted above have been mastered (and not before), you can begin to “gild the lily.” A promotional calendar should includes a well-conceived and designed customer newsletter, holiday specials (President’s Day, Labor Day and Fourth of July), service and parts messages. Send these to your database of past and recent customers will enable you to build more profit momentum.
The risk with social media is that it becomes a black hole for time. It’s important that you not focus on social media until all the competencies noted above have been mastered. Once they are strong, then you can: 1. Work to build your Facebook “friends” network, 2. Work to develop procedures for encouraging happy customers to post reviews and 3. Work to ensure when a negative review is posted you do everything you can to “make it right” with that customer, and so forth. These are all good things. They should only be tackled once the other eight core competencies have been fully developed.
It might make sense to engage a social media agency, such as Digital Air Strike, to help you.
If you execute well in the nine core competencies, you will turn your dealership into a profit engine, becoming a 10X dealership. But take it one step at a time: it’s better to absolutely nail each core competency, one by one, than to “dabble” in nine of them.