The broad term “Internet Marketing” encompasses a fast-changing industry. In the past two years, “new” developments such as mobile, social and reputation management have quickly become mainstream, while the effectiveness of “old” methods such as banner ads and e-mail marketing have been debated.

 

While dealers should be aware of the latest technologies, ensuring that perceptions about the Internet and its capabilities is extremely important too. Here are three things every dealer should know about Internet marketing:

 

1) The Internet Creates Buyers, Not Shoppers

 

Given a choice between greeting a showroom customer and working an Internet lead, most salespeople would choose the former; simply because they believe they have a better chance of closing the showroom customer in the short term. Many dealers (and salespeople) still view Internet leads as “Internet shoppers” who are potentially difficult to work with or even reach.

 

The reality is that, whether they’re in your virtual showroom or your physical showroom, they’re a buyer. Maybe not today, but statistically the Internet customer is highly likely to buy within 90 days.

 

94% of car buyers begin the process online, according to recent estimates, yet most dealerships attribute less than 30% of actual sales to Internet leads. Why the discrepancy? Most consumers do research online but instead of submitting a lead, they decide to call or walk into a dealership when they’re ready to buy. Because of all the research they can do on their own, though, customers today visit only 1.4 dealerships before purchasing a car, down from 4.5 in 2005, according to J.D. Power.

 

And, according to a recent study by CAR-Research XRM, only 25% of people leave showrooms because they are “still shopping.” The rest leave because of inventory, financing or some other issue. These customers are ready to buy, the only question is, are they buying from you?

 

2) Internet Marketing is More Than a One-Person Job

 

If I asked you, “Who is in charge of your Internet marketing,” would you answer, “The Internet Sales Director?”

 

To be effective, Internet marketers need to have knowledge of and take advantage of all facets of the Internet. This means managing the dealership’s website and SEO, e-mail marketing campaigns, and being the resident CRM expert.

 

In addition, Internet marketers should know how to properly leverage and manage the dealership’s presence on independent auto shopping, research and review sites, the manufacturer website, social media sites and reputation management sites. Finally, they need to keep up with the latest trends and create strategies for search marketing, payment marketing, mobile marketing, banner advertising, e-mail marketing and video marketing.

 

That’s a lot for one person to keep up with, let alone the time needed to work the leads that come in as a result of all that work. To stay competitive, dealers need to allocate the appropriate budget, training and resources for their Internet departments. According to a recent article in Ward’s Auto profiling the top 100 e-dealers, successful Internet dealers typically spend 40% or more of their overall advertising and marketing budget on digital.

 

3) Evolve Your Communication

 

Most dealers are probably not Internet gurus; nor do they want to be. Several years ago, the perception was that this was okay. Hiring an “Internet nerd” who could run the Internet operations was the norm. But staying competitive today—and maybe even survival tomorrow—depends on how successful your dealership’s Internet marketing program is.

 

Every manager needs to understand that customers can engage with the store and its sales staff anywhere online. They need to stay abreast of trends, direct strategies, manage processes, hold teams accountable and respond to customers’ online concerns and opportunities—wherever they arise. One click, one call, one person doesn’t work any more.

 

What do you think dealers need to know about Internet marketing?

I’d like to think that by now most dealerships have a written Internet sales process to handle Internet leads effectively. As the documented, researched and confirmed driver of “lead quality,” an established process is the key to obtaining a maximum ROI from Internet leads. Though many dealers are allocating a substantial portion of their marketing budget to attract Internet leads, many are still not achieving the recommended minimum of five times their ROI on those dollars spent, even with a “good process”. Why not?

 

Very often, accountability is the missing link between a written process and lack of desired ROI. How easy is it for an Internet salesperson to check off tasks as completed when they are not, or to say “I’ve tried calling that person three times and they haven’t called me back. What’s the point?” A good process that isn’t followed is the same as having no process at all—both salespeople and managers must be held accountable to following that process.

 

Here are a few tips to help weave accountability into your processes:

 

Does Your Team Own It? Accountability is about ownership – do your salespeople own the process? Ownership means more than just knowledge of the process, it’s belief in the process and its consistent execution. As a manager, if you want to hold people accountable you have to reinforce WHY they should be following the process and instill the belief that their personal results will improve. Call out individual successes that reinforce that following the process yields personal returns.

 

Review the Internet Sales Process.  Does it mirror the showroom sales process? In the showroom process, there’s always room for interaction with management. Salespeople have check points throughout process; the test drive, desk log and the write-up. In many stores, managers walk the lot and showroom and inject themselves in the process to ensure everything stays on track. Is management involved throughout your Internet sales process, only at the end, or not at all? Create availability of management to the Internet team and reinforce the need for manager involvement.

 

Openness and Competition. Nothing breeds accountability like visibility. Show the whole team where all of them rank in your key performance areas and include the steps of the sale (i.e. contact rate, appointment rate, show rate), not just sales volume. Regularly review team results in a group, calling out the best at execution, and schedule individual meetings for coaching and personal accountability.

 

What are your tips for improving accountability? What tips do you have for managers and for salespeople? 

Since more than 80% of your customers are likely to finance or lease a vehicle, when is the right time to bring up this potentially touchy subject? Is it better to pre-qualify or not to pre-qualify your Internet leads? Josh Vajda, Director of Inside Sales for AutoUSA, shares some tips. www.autousadealers.com

 

In October, we facilitated a panel called “The Five Things in Common That Successful Internet Departments Share” at the 13^th Digital Dealer Conference & Exposition in Las Vegas. We were thrilled to have over 200 attendees and want to thank our panelists for doing a great job. We decided to share some tips from our panelists for the benefit of all who couldn’t make it to the conference in hopes that you’ll find it as helpful as the attendees did.

 

Our panelists included:

- Greg Coleman, Director of Business Development & E-Commerce Director, Lexus Store of Lexington & Toyota of Nicholasville

- Justin Brun, E-Commerce Manager, Acton Toyota of Littleton

- Richard Tolsma, Internet Manager, Dan Wiebold Ford, Idaho

- Ray Fenster, President & CEO, RayFenster.com, LLC

- Dennis Colome, Vice President Sales & Marketing, eXteres Auto

 

Here’s a summary of some tips from their discussion:

 

1)      Boost your phone call volume without paying additional money: “Make your phone number prominent on every website page. In addition, include your phone number in the website page title and description.” – Ray Fenster

 

2)    Relevance is content, not just keywords. “Don’t ‘keyword stuff’ your website search terms, i.e. don’t go after every city in the state. Google is onto this and no longer allows it.”  – Dennis Colome

 

3)    All leads are created equal. “Our dealership uses a strict 180-day process for follow up. Once a lead reaches 60 days with no contact, then the process becomes automated.” – Richard Tolsma

 

4)    Turn your “dead” leads into service opportunities. “If a customer isn’t ready to buy a car, give the lead to fixed ops to market and see if they can get that customer in for service. Something like 80% of service customers will buy a new car from that dealership. The closing percentage goes way up.” – Ray Fenster

 

5)    Don’t be afraid to share pricing, just be smart about it. “Be up front in your pricing, but be sure to give the customer several pricing options. Give them the price for the vehicle they inquired about, then follow up with second and third pricing options that are lower.” – Dennis Colome

 

6)    Generic responses don’t add value to the conversation. “Respond to specific questions and concerns in the customers’ initial e-mails. Also acknowledge the source from where the lead came; for example, if you get a lead from ZAG American Express, mention something about the program and how exclusive it is and how happy you are to be working with them.” – Justin Brun

 

 

7)    Have a pricing strategy. “When responding to pricing questions, use a “we start as low as” strategy and show the customer the option, i.e. a Toyota-Corolla. Giving them the lowest price on the lowest model will set their expectations and they usually upsell themselves. The vast majority of our customers buy a different vehicle than they originally inquired about.”  – Greg Coleman

 

8)    Be patient. “Third party leads typically research five to six vehicles on the third-party sites because they are looking for unbiased info. When they submit leads they are often three to four months out, so work with them for a while. True ROI has to be measured over time.” – Dennis Colome

 

9)    Know Your Market. “We perform a competitive analysis via e-mails and mystery shopping websites and third-party sites, and build a pricing matrix based upon the information gathered. On new vehicles we found our competitors are just showing the MSRP; so by displaying that number minus any available rebates, we automatically show a lower price than what’s in the market.” – Greg Coleman

 

10)Trends are worth more than ‘snapshots’. “When you report to management, they want to see results. Whatever program or product you are reviewing, show 30-day, 60-day and 90-day snapshots so they can see trends as to what’s working and what isn’t. Don’t be afraid to get rid of what’s not working. Not all products work for all dealerships.”  - Ray Fenster

 

Which is your favorite “top tip?” What are you doing in your department that works? What’s your “top tip” to share with other Internet sales personnel? 

 

Justin Brun, E-Commerce Manager with Acton Toyota of Littleton, shares three tips for effective Internet lead response.

This is the third in a series of blogs I’ve been writing on metrics: in my last blog we discussed the average percentage of sales in dealerships that can be attributed to Internet leads. This week, I’d like to talk about average front-end gross per vehicle.

 

In a recent survey we conducted, we asked dealerships representing all types of makes and models:

 

These were the two questions related to front-end gross in the survey:

1) What is the average front-end gross per vehicle sold in the showroom (floor sales) in your store?

 

2) What is the average front-end gross per vehicle sold in the Internet department in your store?

 

We wanted to first quantify the difference between gross from showroom sales and Internet sales, and we wanted to compare the averages of stores in different “performance brands.”

 

Here are the survey results:

 

• 29% of respondents said the average front-end gross per vehicle in the showroom is > $1,300

• 15% of respondents said the average front-end gross per vehicle in the Internet department is > $1,300

 

At the same time:

• 9% of respondents said the average front-end gross per vehicle in the showroom is < $800

• 21% of respondents said the average front-end gross per vehicle in the Internet department is < $800

 

It’s clear there’s quite a disparity between averages in the showroom and the Internet department. We consulted David Kain of Kain Automotive on this question, because he believes (and the survey results reflect this), that most Internet salespeople tend to discount too soon. This tendency leads to lower front-end gross averages in the Internet department.

 

Regardless of what your dealership’s average gross per vehicle (PVR) is, the goal is for the showroom and Internet department averages to be the same. Why is this important? The higher the gross per vehicle, the higher your ROI and profits are.

 

We compared answers from dealerships making seven times or more ROI on their Internet spend, to those making three times or less ROI on their Internet spend, regardless of make or model. The results were compelling:

 

Internet Department ROI	Showroom PVR > $1300	Internet PVR > $1300
< 4x	21%	7%
> 6x	58%	44%

 

So how can you increase your average front-end gross per vehicle, as well as get the Internet department gross in line with the showroom gross? Here are a few tips:

 

1)   1)  Always provide the customer with choices and carefully review leads for model selection and trim levels. If you’re quoting your customer the loss leader or base model and they want the luxury model, then you’re setting them up for a price expectation way lower than is reasonable.

2)   2)  Just like when you’re face-to-face with a customer, focus on building value in the vehicles. Customers want to know what they’re buying is worth the money, and you have the opportunity to explain why the price is what the price is

3)    3) Don’t be tempted to immediately give a discount, and be wary of programs that send inventory selections to customers with quotes designed to beat your competition or that are loss leaders. Big discount quotes make the customer believe all vehicles can be significantly discounted.

4)    4) Mystery shop your competition from time to time on key vehicles to ensure you’re pricing your vehicles to market.

5)    5) Consider location. If a customer is close to you, then price in the convenience of shopping with you. If the customer lives 20 miles away and has to drive past multiple competitors in order to get to your store, you may be more aggressive in your pricing.

6)    6) Set the rules in the Internet department based on what vehicles are selling for in the showroom. If they know the ‘floor’ price, you’re less likely to have a significant discrepancy between the showroom and the Internet gross.

 

What other tips do you have to raise the average front-end gross per vehicle, and more importantly, to increase the averages in the Internet departments to be more in line with showroom averages?

Is your dealership's 'contact made' rate for Internet leads in the 65-75% range? If not, here are three things to focus on that will help. Josh Vajda, Director of Inside Sales at AutoUSA Internet Sales Solutions, gives a tutorial on how to improve auto dealers' 'contact made' rates.

AutoUSA is pleased to announce that Phil DuPree and Josh Vajda have been selected to speak at Digital Dealer 13 in Las Vegas, October 23rd - 25th. In this video snippet, Phil gives a brief overview of the workshop about the "five things in common that successful Internet departments share". Focused on processes within the dealership that are necessary as a precursor to success.

So far 2012 has been a good year for vehicle sales, with a SAAR surpassing 14 million. Good news for auto dealers but with increased sales comes increased Internet lead volume. In this video Josh Vajda shares a few best practices to help Internet departments deal with every lead so none fall through the cracks.

Josh Vajda compares salespeoples' lack of response to Internet leads with ignoring showroom customers, and gives three tips to ensure your Internet customers don't get ignored.