January 2005
By Patrick Luck

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Our January issue is dedicated to honoring the Top 10 eDealers of 2005. The benchmark for consideration for winning this year’s award is results as measured by volume of Internet sales and by how well the dealers use the Internet and digital marketing to promote all of their profit centers: new, used, F&I, service, parts, etc.

Our goal was to seek out the dealers who are the best at using this marketing medium to generate huge increases in profit for their dealerships. We considered the number of rooftops, the size of the dealership or dealer group, their markets, the brands they carry and their Internet profits as a percentage of their total profits. Here’s the detailed criteria used to select the winners:

• Profit generated as a result of Internet marketing
• New and used vehicle sales volume as a result of Internet marketing
• F&I and sub prime profits as a result of Internet marketing
• Online service and parts business

2005 eDealers of the Year
Congratulations, eDealer of the Year Award Winners!

Paragon Honda & Acura
www.ParagonCars.com

Dick Hannah
www.DickHannah.com

Ralph Schomp Automotive
www.Schomp.com

Tasca Automotive Group
wwwTasca.com

Herb Chambers
www.HerbChambers.com

Red McCombs
www.RedMcCombs.com

Earnhardt Auto Centers
www.Earnhardt.com

Courtesy Chevrolet
www.HouseofCourtesy.com

Dave Smith Motors
www.DaveSmithMotors.com

Sheehy Virginia/DC
www.Sheehy.com

We learned a lot about what determines a dealer’s success with using the Web to generate increased sales and service profits. We found some commonalities among the winners and some truly effective best practices that have propelled the winners to the forefront of digital marketing, enabling them to sell 50 to 800 units every single month. Successful dealers recognize and appreciate the fact that 70 percent to 80 percent of all customers who purchase a new or used vehicle use the Web at some point in the buying process. Some dealers have even scrapped their conventional advertising budget and dropped their cost per sale from $300+ to less than $150 per sale. In recognition of these and other outstanding achievements, we devote this article to recognizing the Top 10 eDealers of 2005 and we will share some of the best practices that have positioned them at the top in their field.

Internet Strategy & Vision:

We found that commitment starts with the dealer principle himself and cascades throughout the rest of the organization in direct proportion to dealer’s level of commitment. For the award winners, the vision doesn’t start with the General Manager or the Internet Director or
another member of the leadership team; for the winners, commitment to an Internet strategy and vision begins with the dealer himself. A common mistake some dealerships make is to dedicate or hire a technology person and leave it to him or her to establish an Internet marketing strategy. This person typically winds up spending a lot of time updating and maintaining a nice-looking, information rich site that is largely ineffective and when taken to the extreme, these are the dealers who abandon the Internet entirely. In contrast, our Top 10 dealers tell us about personal involvement in selecting the right vendors and defining an Internet sales strategy and vision with their entire leadership teams. Some of the areas dealers consider when establishing their strategy and vision are: technology, marketing, process, people, pricing and measurement.

Establishing Your Strategy & Vision by Seeking to Answer 10 Questions:

Technology:

How do we separate the hype from what works? What vendors deliver a clear return on investment and what technology can successfully automate parts of the process?
Marketing: What are some best practices for using the Web and digital marketing to attract more customers to the dealership? What is the best use of my advertising budget and how much should be devoted to digital marketing?

Process:

How can a dealer fine-tune his process to ensure that more of his opportunities are being transformed into profitable sales?

People:

What are the secrets to lowering employee turnover? What are some best practices for recruiting, hiring and training the right team?

Pricing:

When, where and how do the most successful dealers address pricing on the Internet? What will work for my store and what are some best practices for maintaining a fair profit?

Measurement: What are the key metrics for measuring performance success?

Great Web sites: What makes them great? Appearance is subjective, and when it comes to design what appeals to one person can repel another, which is why we selected our Top 10 eDealers based on results. This is why we define the 10 Greatest Web sites as those that generate measurable results. You can refer to the screen shots of these Web sites to go online and experience them for yourself where you’ll find one commonality; they are simple and easy to use. The dealers told us that common feedback from their customers (and this can be true for any online transaction) is that navigation has to be simple and obvious. There’s not a lot of extraneous information on these sites where 90 percent of the space is devoted to what the customer is looking for, which is to research product information, to find a particular vehicle in inventory or to access service information.

Dealers also tell us that a Web site will get results if it is simple, easy to use, quick to load and highly engaging with multi-media technology that can work fast even on a low-speed connection. Great Web sites offer cool features like online coupons, specials, virtual test drives, online credit applications, online trade appraisals and a full range of pricing information. Since the majority of new and used car buyers purchase a model other than what they originally select, a great site will offer an alternative if you don’t have the exact vehicle a customer has inquired about, never telling the customer you don’t have what they want. Great Web sites do much more than post information online, they compel the customers to pick up the phone, submit a lead or drive straight to your showroom.

5 Keys to a Great Automotive Web site:

Key #1:
Simple and easy to use, fast to load

Key #2:
Provide what the customer wants

Key #3:
Incorporate high-tech, engaging, multi-media technology that works fast on a low-speed connection

Key #4:
Automatic updating (inventory, specials, pricing, etc.)

Key #5:
Devote 90 percent of the space to what customers look for 90 percent of the time

Marketing: How can you get the greatest return on your advertising dollar?

Traffic is the secret to success in the car business, whether you’re talking parts sales, service absorption, F&I profit, new car sales, used car sales or the Internet. In today’s super competitive market, it’s not as simple as building a great Web site and selling a ton of cars; you need to let your customers know how to find you. Many dealers start by making sure that all their employees are familiar with their site and by tagging all conventional advertising with their Web address.

The award-winning dealers make it their business to capitalize on the opportunities afforded by digital marketing. They buy the right URLs and they use organic search engine optimization and even pay-per-click optimization to ensure the customer arrives at their site instead of at the competition. Successful eDealers create alliances with regional and local sites that direct customers to their website via banners and links because they know that compared to the cost of conventional advertising, online marketing delivers more customers for less money. Visit the local newspapers for many of our Top 10 eDealers, go to the car section and you’re likely to find a banner ad whenever you research a make that dealer sells. This can generate lots of incremental traffic for the dealership.

Another frequently used and highly effective online marketing strategy employed by our Top 10 eDealers is direct e-mail marketing, because dealers can reach hundreds or thousands of customers with just a few clicks and a couple of minutes for less than the cost of a stamp. Dealers tell us this works best if you have established a database of e-mails and if you have access to multi-media e-mails that use the latest in compressed animation. Bob Tasca III from Tasca Automotive tells us that, “Our customers are always telling us about how much they love our buzzmails because it’s like watching a mini-movie about the product. It’s unlike anything else out there so it gets their attention. What I love is that everything is measurable, including the view rate, so we can measure how effective we are at reaching our target market.

If FMCC comes out with an Explorer incentive, I can send a buzzmail to everyone who has been in on an Explorer, I can select just our lease renewal customers who are currently in an Explorer or even folks who were in for service. There’s no limit to how I can target my campaigns.” Tasca is one among many of our Top 10 eDealers who spoke highly about “virtual test drive” technology that sends customers a mini-movie of a walk around presentation straight to the customer’s inbox without requiring the customer to open an attachment. Regardless of their chosen vendor, the size of their organization and the franchises they carry, the Top 10 eDealers all spoke about the importance of a clearly defined marketing strategy for driving more customers to their Web sites.

Process: The key is implementation and automation.

As with success in marketing, success with your process begins by clearly defining what needs to happen, how it needs to happen, who will be responsible and how they will be held accountable. We learned from the Top 10 eDealers that it’s important for the dealer and the leadership team to create a detailed action plan for Internet lead management and sales. Thinking through the tactical details can remove some of the barriers to process implementation while automation can reduce the margin of error and free up your people to spend more time doing what they do best; set appointments and sell cars. Here are the best practices we gleaned from our interviews:

Top 10 Process Best Practices:

1. Fast, professional response increases appointment ratio and ultimately sales.

2. Customizable e-mail templates for every scenario (price, trade, payments, availability, etc.) increase the speed and professionalism of your response.

3. First e-mail should set the stage for a phone call.

4. PHONE SKILLS, PHONE SKILLS, PHONE SKILLS!

5. First goal is to sell the appointment, not the car.

6. Use a script for all inbound and outbound calls.

7. Confirmation calls made by the manager will double the show ratio.

8. Use an appointment board that is highly visible to create excitement and top-of-mind awareness.

9. Use automation wisely to stay in touch with prospects who don’t set appointments, don’t show or don’t close.

10. Management needs to stay involved and create a sense of passion for the process.

People: —”Find the right team and create an environment that they‘ll never want to leave.”

Robert Revere of Courtesy Chevrolet made this comment at the Best Practices Summit in Las Vegas, demonstrating how passionate he is about hiring, training and retaining the right people. Our top eDealers tell us that if you have the right people who are passionate about what they do you can make up for a multitude of shortcomings in other areas. That’s great, but what can a dealer do to find the right people and combat the auto industry’s biggest challenge – turnover?

Whether you’ve built your Internet sales model around an Internet Department or a centralized Customer Relationship Center/Business Development Center, the top dealers tell us that you need to seek out people who are passionate about customer service and can shine on the phone. They also tell us you don’t need a team of technology experts, because with the right Web site and CRM tool you will not spend much time resolving technology issues or maintaining your Web site. Nor do you need people who have proven to be super successful on the sales floor as those team members will often attempt to sell the car (rather than the appointment) over the phone and usually suffer from “Attention to Detail Deficiency.” Since the main goal for team members within the most successful Internet departments and CRCs is to sell the appointment and make sure the customer shows up, it helps to seek out people who love working on the phone in the field of customer service.

Pricing: How to stay competitive while protecting your fair profit.

Pricing was the one area in which we noticed incredible tactical variance among the top eDealers. We found best practices that ranged from 1. invoice, MSRP and dealer price offered online 2. contact the dealer for a quote and 3. no price quoted online, in an e-mail or even on the phone.

When it comes to price it would appear that there is no magic bullet or proven formula for success as each dealer’s pricing strategy was different. However one common practice for every one of our dealers is that the leadership team at the successful dealerships got together to consider each pricing model, evaluate the potential pros and cons and created a pricing strategy that was uniquely their own. By analyzing each model to establish their own pricing strategy, the Top eDealers told us that every member of the team believed in and felt confident about the strategy as a result. Once again, we discovered that nothing sells cars like belief in the value of what you have to offer.

Measurement: Tracking your performance results.

The best part about Internet marketing is that everything is measurable. Some technology providers will even automate the reports you need to take a few minutes a week to get a great snapshot of how things are going, who is excelling and where your process needs fine-tuning. The most important numbers to track are the following:

• Number of visitors to your Web site

• Conversion ratio

• Closing Ratio

• Average gross profit

• Cost per sale by lead source including your Web site and third party lead providers

Again, Congratulations!

Congratulations to the Top 10 eDealers and thank you for sharing your insight on what it takes to use the Internet to sell more cars. If you have any questions regarding any of the best practices described in this article, please feel free to visit the dealers’ Web sites or send an e-mail to pluck01@autosuccess.biz and be sure to read next month’s cover story where we’ll publish our interviews with the Top eDealers of 2005.

Patrick Luck is the editor and publisher of AutoSuccess Magazine. He can be
contacted at 866.432.8276, or by e-mail at pluck01@autosuccess.biz.