Despite the challenging economy, Gary Crossley Ford in Kansas City, MO implemented a strategy that dramatically increased their revenue and reduced their operating costs and just had the best month in the dealership’s history, outperforming last year’s July even though Cash for Clunkers created an artificial spike in sales. In a year’s time, the dealership became the #1 dealership in Kansas City and set a record for profitability during the worst of economic times. The 30-year old dealership also has gone from being one of Ford’s top 1,000 to being in the top 60 in the last couple of years.
Crossley managed to grow even while trying to pay off a start of the art dealership it built five years ago. Founder Gary Crossley’s son Todd, who now runs the dealership, talks with Dealer magazine about Crossley’s strategy and secret to its extraordinary success.
Todd, you’re part of the “PhD” club, as you like to call it – the “Papa had a dealership” group.
Yes. My father started the dealership about 30 years ago. So I kind of grew up in the business. I went away to college in Omaha, NE, and then started working for a big Ford Mazda dealership there in 1997. I worked in several roles.
But then my dad fired his general manager, general sales manager and finance manager. I really wasn’t ready to come back, but I figured it was time to do it when the “getting was good.”
Being a dealer’s kid can be a challenge and an uphill battle but it’s worked out for me. I started off here as the general sales manager, then worked as a service manager, then became general manager of the store.
What’s your favorite part of the business?
Being able to work in the fixed operations side. That was probably one of the best things I ever did. Understanding that part of the business helps tie everything together.
While working here, I think I just followed my father’s model of taking care of the customer, and was able to take it to another level. One thing I did was to add a Quick Lane facility next to our main building. It’s become the best customer service tool we have because it ties our customers to our store.
You’ve had some great success recently.
Yeah, we did make some big leaps, but we’re in a good market also.
So five years ago, you build this brand new dealership and then the market collapses in 2008. That must have been an interesting time for you.
Well, it was. I looked around at some of our competition, and they were able to batten down the hatches, but we couldn’t do that. I had this facility to pay for, so we had to go for broke. We got real aggressive with our marketing and advertising.
We still made a little bit of money in 2008, but not like we had in the past. But then, in 2009, it paid off for us and came together nicely. One thing is, we had to become much more efficient and that pushed us into a lot of the processes we have today.
So, how did you pull it off?
After we were moved into our new location, we knew we had to increase revenue to cover the additional costs of the new store and we needed to reduce our operating costs. We created a strategy to attract more traffic for less cost than the traditional advertising we had done in the past.
Second, we converted more of our traffic into profitable sales. And third, we increased our sales and service loyalty and increased our average revenue per transaction. We accomplished this by making sure we had the right people, processes and tools to deliver a world class experience for our customers.
Of those, which had the biggest impact?
We shifted our advertising to market where customers were shopping – the Internet. We also bought technology that helps us target in-market customers and automates many of our processes which allows us to do more with less people.
What type of technology did you buy? How much did you spend?
At first we spent too much money on technology – we spent a total of $20,000 a month with 15 different vendors to execute our strategy and it was too much money and too many different tools that didn’t integrate. We did a vendor audit and decided to replace 12 of our vendors with one company that had an “all-in-one” system that integrates with our DMS and gave us everything we needed for about $5,000.
You make that sound easy. Walk us through how you did it.
We made a list of everything we needed and sent an RFP (request for proposal) out to multiple companies and we picked a vendor (VIN Solutions) that had a system that integrated everything we needed into one platform for a lot less money than what we were paying. Our new system includes our web site, inventory management, Internet lead management, CRM, BDC, campaign management, reporting, service and a desking system that integrates used vehicle market pricing.
You said that you were able to attract more customers while spending less money. Every dealer in the world wants to do that.
Previously our ad budget was too big and the returns on our traditional advertising were too small. We cut the budget and spent a higher percentage on targeted direct mail and Internet advertising because it generated more traffic. We more than doubled our traffic and our cost per sale was cut by approximately a third.
You mentioned targeted marketing and Internet advertising. Explain that in more detail.
Our CRM system notifies me 15 days before the month starts with recommended campaigns that target consumers who have the highest probability of buying or servicing their vehicle with our dealership that month. The system automatically sends e-mail and mail and it schedules calls for our staff to make to the target customers. The system integrates with Team Velocity’s mail house (theVdrive.com), and they fulfill our direct mail because the production value is a lot better and the cost is similar to what we were printing on our letterhead. The best part about these targeted campaigns is that we are speaking to people who are in the market now rather than wasting money on advertising to people who are not ready to buy or service from us.
When you shifted your budget to more online ad spend, what areas did you shift it to?
We do online display ads. We also send targeted e-mail campaigns to in-market consumers. Our new web site appears on top of the search engines for the most popular search phrases in our market. We also use video search engine optimization to get more placements on top of Google page one because Google gives video search results 55 times more priority than text results. Car-Mercial helps us produce and optimize hundreds of videos that promote our dealership on the most popular search engines customers use to find a vehicle in our market.
Sounds like you have a lot going on – and in a short amount of time. How do you handle all of these activities while running the business?
Most of what I mentioned is automated; the vehicle info, incentives and specials are automatically updated on our web site in real time.
For example, our system automatically reduces prices for vehicles older than 30 days to be more competitive than our competitors’ market prices and updates manufacturer incentives on our web site and third-party sites as they change.
If a car is reduced in price or a new incentive comes out the system automatically sends an email to all customers who were interested in those vehicles during the previous 45 days. The system also automates customer communications throughout the sales process to confirm appointments, follow up when they don’t show up or buy or to re-activate dead leads that in the past were not followed up on. The automation does the work of a 20-person BDC but I don’t have the payroll cost, or health care costs (ha, ha).
The system also manages our inventory and includes a camera that scans the vehicles bar code and prints window stickers, detailed vehicle brochures, videos and an “Auto-Biography” for every pre-owned vehicle in stock. The “Auto-Biography” is a book with a used car brochure, Carfax, all maintenance records and a list of other vehicles in the market that are selling for more than our asking price.
The system then sends all the vehicle info, pictures and video to our web site and third-party sites with the Kelley Blue Book retail price next to our sale price so consumers can see that our price is less compared to a credible third-party like KBB. If the customer does not find a vehicle on our site they can use our car finder and we automatically email them when the vehicle they want comes into stock.
You mentioned that you increased your closing ratio and gross profit. A lot of dealers are concerned now about the potential of declining gross profit. Can you tell us how you increased both of them at the same time?
Sure. We improved the customer experience and follow up which increased our closing ratio. When an Internet lead comes in we automatically send a custom e-mail that gives the customer a custom brochure with pictures, video and five alternative vehicles that are less expensive. The e-mail directs them to complete our online credit application with a video tutorial and our online appraisal tool so they go deeper into the buying process with our dealership.
When the customer schedules an appointment we send a confirmation within five minutes with point-to-point directions and a second confirmation is sent at 7 a.m. on the morning of the appointment via e-mail and text. When the customer arrives at the dealership the sales consultant can use their phone to view the client’s info and to gather information about their desired and current vehicle. All of the most important fact findings are in the mobile CRM tool and everything that is gathered is saved in the customer’s record. The sales rep can also print custom vehicle brochures and comparisons that highlight the advantages of our vehicle vs. the competition. This helps increase our closing ratio for first time visitors and our new follow up system helps bring back customers who don’t buy.
How do you follow up with the customers who do not buy?
The first step is getting 100% of our prospects’ contact information.
That’s a challenge for every dealership.
Yes. But again, it’s mostly automated for us. Our CRM system captures the customer information if they call or e-mail the dealership and it attaches the recording of the call to their record. We can also see the customer’s lifetime value to the dealership based on their historic spend so we can give our best customers special treatment.
For customers who walk in the sales rep puts the customer’s phone number in our CRM and it automatically fills in all the other contact information, even e-mail. Our sales reps scan the customer’s license before the demo ride and it attaches a copy of their driver’s license and picture to their record. The system then pulls additional information from the customer’s social networks like Facebook, Linked in, My Space and other sites that have public information available. The system tells them what calls they need to make and provides the phone guides for each type of contact. Since the tool is connected to our phone system it records all the inbound and outbound calls, tracks their daily follow up tasks and notifies management if their appointment, follow up and/or closing ratio is below our stores benchmarks.
You mentioned that your average gross profit has increased. Can you tell us specific numbers and how you were able to accomplish that?
Our sales and desking process has improved our gross a lot – how’s that for numbers? We use our new desking system to give consumers multiple finance/lease scenarios that fit their payment requirements and that are the most profitable for our dealership.
We then print out a professional work sheet that includes all their options while highlighting the unique advantages of buying a Ford from our dealership. Our salespeople can also use the tutorials in the system to overcome objections and to educate our customers. For example, the tutorials include multi-media presentations on finance vs. lease, the appraisal process, certified pre-owned process, extended service agreements, welcome to service amongst others.
These tutorials help build value in our dealership and to increase our gross per vehicle. Our desking tool also has an appraisal tool that gives us all the market pricing information so we can value trade-ins based on what cars are wholesaling and retailing for in our market. In addition to telling us the auction and book values it tells us how much we made on similar trades in the past and how many prospects inquired in the last 30 days about that vehicle.
What desking system do you use?
Our desking is part of the VIN Solutions system but it is integrated with Reynolds so our managers don’t have double input – they just press a button and the deal goes into Reynolds.
You also mentioned that the dealership improved its loyalty. Can you tell us more about that?
Of course. We dramatically increased our retention by sending targeted e-mail and direct mail campaigns to customers who are in equity and need service work done. We give them a custom offer to upgrade their vehicle at the same or lower payment that they are currently making and we give them service offers that relate to their current mileage, including the option to buy an extended warranty if our records show they don’t have one.
Our system notifies the original salesperson when their customer that is in-equity comes in to service their vehicle. The service advisor is also notified so they can put a hang tag in the customer’s vehicle to inform them of our “Vehicle Buy Back Program.” If the customer is inactive or lost we send more aggressive incentives to bring them back. After we sell a car our system also creates a personal automotive website for each customer with their vehicle info, owner information, pictures, video, and it updates them with service reminders, recalls and other information related to their vehicle. When a customer spends money in any department we send them an automated survey and if they rate us four out of five stars or higher we automatically post their review on our web site and their personal web site.
We then send them an e-mail to invite them to share their opinions on the most popular review sites on Google, Yahoo, DealerRater etc. If the customer gives us lower than four stars we direct their survey to a manager for follow up as a part of our concern resolution process. We also target customers who bought from another dealership but live in our market. When we lose a sale to another dealership our salespeople have to tell our system that they “bought elsewhere” and our CRM tool automatically sends an e-mail from me, congratulating the customer on their purchase from the other dealership and inviting them to use our service department to maintain their vehicle. Then system also automatically sends out communications to our customers via e-mail, text, voicemail and mail throughout the ownership cycle to retain them for service and re-sell them when they are in equity or at the end of their lease.
Have you dropped all your traditional advertising?
No. Our advertising strategy has improved dramatically because we consolidated our marketing vendors and hired one company to develop and implement a more targeted marketing strategy that speaks to people that are in the market.
In the past we worked with an ad agency and eight other companies to execute every part of our strategy and the vendors didn’t work together so the campaigns were not integrated. It was confusing for my customers because my TV and radio commercials had one message, direct mail had another, my Internet manager was sending emails with other offers and none of it was on my web site or point of purchase materials.
We hired a marketing company called Tier10Marketing.com, who specializes in digital and traditional advertising, and now we have one strategy that is completely connected and consistent. To make sure our customers are treated right, we monitor we use a company called CallRevu.com to monitor all our calls 24/7 and they send real-time alerts to our managers when a customer is mishandled on the phone. Our managers save a lot of deals because they contact customers immediately before it is too late. We also review daily and weekly reports that tell us what marketing the customers responded to, the appointment rates, show rates and closing ratios by ad source. With this information we adjust our marketing to spend more where we get the results and less where we don’t.
It sounds like you are doing a lot at a young age, how do you manage and monitor it all?
My brother Ryan and I have a great team and we learned a lot from our father, who built the business from the ground up. He taught us the importance of having cost controls and efficient time management. That is why we are always looking for ways to do things better and cheaper.
So what is next?
We just had the best month in the dealership’s history but we don’t want to take our success for granted. We will continue to work hard to constantly grow and improve how we serve our customers and our employees.