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.

Are Internet customers all that different than showroom customers? Josh Vajda analyzes the sales processes used with Internet leads and with showroom customers, and gives recommendations on how to ensure that both groups of customers are being treated the same, for maximum closing rates and profitability.

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.

We recently conducted a survey in which we asked Internet department personnel to share some key metrics. In one question, we asked:

How much total gross does your Internet department generate for every $1,000 spent on Internet leads from all sources (SEM, independent and third-party leads, classified site subscriptions, etc.) ?

Of the 183 responses, the answers broke down:

3X or less: 33%

4X-6X: 18%

7X-10X or greater: 20%

Don’t Know: 29%

 

These answers reveal there is quite a large disparity between auto dealers’ return on investment (ROI) on Internet spending, as well as a surprisingly large percentage that don’t even know their ROI.  So I wanted to know: what should a dealership target for a reasonable Internet marketing ROI?

 One of the experts we consulted for measuring this metric was David Kain, President of Kain Automotive. He suggested that 5X ROI was the absolute minimum that a dealership should strive for, and ideally Internet departments should be seeing 7X ROI on their Internet spend.

But how do you calculate your ROI? Basically, ROI is what you get for what you spend. Here is a simple formula:

(Gross Profit – Marketing Investment) / Marketing Investment = ROI

 This formula represents three steps.

 1)   Marketing investment should be simple to figure out as it is the total cost of a campaign. For instance, if you spend $1,000 per month on a Pay-Per-Click campaign, $1,000 per month on independent leads and $1,000 per month on a subscription site, then your total marketing spend on Internet leads that month is $3,000. For the sake of simplicity, I’m going to suggest here that the cost of overhead, while included in some ROI measurements, should not be included when figuring out ROI for Internet leads, regardless of source. So in this formula, don’t worry about including labor costs (for staff), web site maintenance costs, etc.

 

2)   Gross profit is the next metric you’ll need to figure (my first GM used to say, “Volume is vanity. Gross is sanity.”). If you can pull the actual grosses on all Internet deals, that’s great. If not, take the number of sales and multiply it by your dealership’s average front and back combined gross profits. So if $3,000 in marketing spend delivers 10 sales at an average of $3000 combined gross, then your total Internet-related gross profit will be $30,000.

 

3)   Next, you need to subtract the initial marketing investment ($3,000) from your gross profit ($30,000) for a total of $27,000.

 

4)   Divide that number by your initial marketing investment ($27,000/$3,000) and in this scenario you end up with 9X ROI, an excellent result.

 

Why is it important to know your ROI? Any time you spend money on anything, whether on Internet leads or a marketing campaign, it is an investment. Like any investment, it should be measured, monitored and compared to other investments so you know where you should be spending your money.

 

Also, knowing the ROI for all your lead sources gives you leverage. How many Internet marketing budgets were slashed in 2009 and 2010? Perhaps some cuts were deserved, but do you know which ones? Cutting back on a lead source that returns a high ROI is only going to hurt the bottom line.

 

Of course, our question focused on the overall Internet marketing spend, not on the ROI of various lead sources. But applying this formula to your separate lead sources is highly recommended and gives a better measurement of success than just closing percentage or other metrics. After all, ROI is what goes to the bottom line.

 

I’d love to hear some feedback: how do you calculate your dealership’s ROI on your Internet leads spend? What do you consider a good ROI? In my next blog, I’m going to give some tips on how to drive your team to improve ROI.

 

I remember my first off-site used car super sale and the sales meeting that preceded it. “Guys, forget about the sales process. Don’t worry about demo drives. When customers walk in, sit them down, ask a few questions and qualify them for a payment.” Those weren’t the exact words, but I’m pretty sure I took away the right message. With 1500 cars to choose from and hundreds of customers pouring into the stadium every hour, expediting the process and making it as easy as possible just made sense.

I’m going out to go out on a limb and say that you’ve heard, taught, or currently teach your salespeople that it’s wrong to pre-qualify your customers. And I’m guessing you also know and stress the importance of landing the customer on the right vehicle. It’s difficult to do both things well; when you don’t have a conversation about affordability, you often end up on the wrong vehicle and either lose your customer or start the process all over again. I cannot tell you how many interactions at the desk I’ve heard where the Sales Manager is grinding on the salesperson for putting the customer into a vehicle he or she cannot afford. Well, didn’t you train the salesperson not to pre-qualify customers?

Yes, sometimes “love will find a way.” We all have stories of the customer who wanted to be at $300 a month who left at $550 per month. But we’re kidding ourselves if we think that’s the majority. Good dealerships close about 25% of their total opportunities.  There are plenty of stories we forget to tell about those customers who left without buying – or even sitting down to consider – a vehicle we desperately wanted them to love. And that’s not even considering the phone and Internet customers who never make it in the door.

When you shop for anything these days, you probably hop online, do some research, review pricing, determine how the purchase will fit in to your budget, and then identify where you’re buying. Your customers are no different. They want to know what fits into their budget, and since more than 90% will end up financing their vehicles, the payment is critical in their consideration process. So how do you bridge the gap, online and offline?

1.     Earn the right to have the conversation. Obviously, the greeting is not the time to say, “What payment are you looking for?” We still need to build rapport and make payment part of, not the focus of, the process.

2.     Make it the customer’s choice. Having a conversation about finances can be complicated. Make it easy, and let the customer choose whether to engage in it or not. Simple questions like, “Is there a payment range we should be considering when we’re looking for the right vehicle for you?” can help guide the selection process.

3.      Give the customers the information they need to select the right vehicle, online or in store. Do you put payments on the vehicles in your showroom or on the front line? How about online? Since most customers don’t equate $20,000 with $380/month, it helps “connect the dots” and lowers the surprise factor during the negotiation, which should reduce time and improve CSI.

 

Most dealers give customers a static payment calculator and an option to fill out a credit application on their website. Historically, these tools have very low engagement and offer limited information of real benefit. There is a tool available now, however, that changes that. AutoUSA’s Payment Pro puts real payments on new and used inventory on the dealer’s site and pre-qualifies customers for those payments without affecting their credit score. Powered by Drive It Now’s patent-pending technology, the customer gets the information they need to help them select the right car, and the dealer gets a lead that includes the customer’s credit eligibility, vehicle of interest, and all of the payments the customer qualified for and selected.

 

If you read my blogs, you know I don’t push our products. Well, this one’s too exciting to keep to myself. Finally, this gives the customer what they want and ask for, and it gives the dealer what we need to facilitate a sale with good gross, front and back. Check it out and let me know what you think! http://www.Paymentprodemo.com

What happens when your dealership gets an Internet lead for a vehicle you don't have in stock? Josh Vajda gives 3 tips for overcoming the selection objection.

Fort Lauderdale, FL – July 9^th, 2012 – AutoUSA Internet Sales Solutions (www.autousadealers.com) today announced a milestone for the company; based on the total number of leads that AutoUSA has delivered from independent auto shopping web sites and the average closing percentage collected from AutoNation, AutoUSA’s Internet leads have contributed to the sale of an estimated 1.3 million vehicle sales since the year 2000.

 

“The demand for our leads has stayed pretty consistent over the years, mirroring the market but demonstrating that independent leads continue to offer proven results and add revenue to the bottom line,” said Phil DuPree, President of AutoUSA.

 

In a survey that AutoUSA recently conducted of more than 180 dealership Internet marketing personnel, 89% of respondents indicated that their dealership purchases Internet leads from at least one independent (third-party) provider; and 31% of respondents reported that more than 30% of their total Internet leads come from independent (third-party) providers.

 

AutoNation’s dealerships have been using leads delivered by AutoUSA since before the auto retailer purchased the company in May 2000. “The value in independent leads lies with the fact that you can capture customers who visit independent sites for research, and who might otherwise not find your dealership,” said Mark Taylor, Director of Business Development at AutoNation. “Our company is very focused on results-oriented marketing with measurable results, and AutoUSA’s leads have always delivered proven ROI.”

 

In addition to an improving economy, DuPree observes that more dealers are investing increased time and budgets into online marketing, staff training and process improvements. “The investment is paying off as Internet sales metrics continue to improve,” said DuPree. “More dealerships are embracing new technologies that help to increase their show and close rates, and drive more traffic to their web and social media sites.”

 

About AutoUSA Internet Sales Solutions

AutoUSA Internet Sales Solutions brings the best-in-class tools to increase Internet sales and lower costs for automotive dealerships. Leading products include Leads&Listings^SM, providing the highest quality, new and used car email and phone leads from 100+ sites; ShowPro^SM incentive program, proven to turn more leads into shows; PowerListings^SM 2.0, helping dealers increase traffic to—and leads from—their social media sites; and AVA Virtual Sales Assistant, helping dealerships manage more leads at a reduced cost. AutoUSA products are currently benefiting thousands of active dealers all across the U.S.

 

For more information, visit AutoUSA’s web site, subscribe to our blog at http://blog.autousadealers.com, follow us on Twitter @AutoUSALeads and “Like” us on Facebook at /AutoUSADealers

I’ve always believed that Internet customers have the same objectives—and objections—as showroom customers: the only difference is the way they choose to contact the dealership. So it’s interesting to me when I hear from salespeople who have different expectations from their Internet leads than they do from their showroom guests.

 

Take the classic on-the-lot objection, “I’m not looking,” or “I’m just looking but not buying today.” When a customer visits a showroom and a salesperson hears that phrase, what is the proper response? Get angry? Refuse to help that customer? Pass them off to a co-worker? Of course not. It’s pretty well accepted that “I’m not looking” is code for “don’t pressure me,” and it’s the first objection we train our salespeople to deal with when they start their career.

 

In such a situation, it’s generally accepted that the salesperson should immediately set the customer at ease. Acknowledge that it’s OK for the customer to just look, and offer to be a resource for them. It doesn’t mean that the customer won’t buy on that visit or that you won’t ask for the sale when the time is right—but they’ve told you the time isn’t right yet. So you work the process, build value in yourself, the dealership and the vehicle of interest, and take them as far as you can during their visit. And if they leave after your best efforts?  Be friendly, offer to help with whatever they need going forward, then follow up, follow up, follow up.

 

Now, let’s say that a salesperson is sitting at their computer looking at a response from an email sent to an Internet lead. They read “I’m not in the market,” or “I’m just doing research right now, I’m not planning to buy for a while.” The salesperson rolls their eyes, complains that they shouldn’t have gotten the lead, and immediately closes the lead out. That’s the equivalent of a lot drop after the greeting.

 

Why would they treat that Internet lead any differently than a showroom customer? Here are a few reasons why the response should be the same:

 

1) Both showroom and Internet customers have to be brought down funnel. A salesperson has to earn the right to ask a customer for the sale.

 

2) Both showroom and Internet customers ARE in the market for a vehicle, despite their objections. Why would anyone take the time to visit a dealership or submit an online lead (which does take some time) if they’re not?

 

3) Both showroom and Internet customers have the same first-contact conversion rates. NADA estimates that the conversion rate for first-time, walk-in showroom customers is 12-15%. The average dealership’s close rate for Internet leads from all sources combined is 10-15%.

 

Wait a second, you’re thinking. Any decent salesperson can close 30-40% of showroom ups. Maybe even 50%. But that figure includes prospects from a variety of sources; appointments, referrals, repeat visits and first-time walk-ins, all combined. If a floor salesperson was assigned to first-time walk-ins only, they’d close 12-15%. We know that “the point” is the least-productive place to spend your day, and your planner’s where you make your money.

 

4) Appointments set with “be-backs” and Internet customers alike show about the half the time. Of those, most stores close upwards of 50%. Customers who set and show up for appointments are more likely to buy, regardless of whether they first contacted the dealer through the Internet or by walking onto their lot.

 

When faced with objections from Internet leads, some salespeople tend to give up more quickly than they would with a walk-in. But if they invest the same time and effort as they do with showroom customers, focusing on working the sales process and earning the right, they’ll get results. Make the customer comfortable, offer to be a resource, bring them down funnel, and Internet lead conversion rates will improve.

 

What tips do you have for the “I’m just looking” or “I’m not in the market” objection? Do you think the same tactics that work in the showroom are successful with Internet leads?

With prices of late model used vehicles at a near all-time high, according to this latest article by Automotive News, one of the greatest challenges for used car managers is acquiring enough inventory to meet the current demand.

 

I’ve talked to used car managers who are traveling further distances, attending more auctions and paying more than they ever have before. Unfortunately, used car managers don’t have a lot of control in terms of what comes available at auctions and what the market demands they pay for good inventory.

 

What they do have control over, however, are the processes within the dealership that determine how leads for used cars are handled. Implementing the following best practices in the Internet Sales department may help alleviate some of the pain felt due to current lack of inventory:

 1)    Encourage Flexibility. As the Automotive News article states, when the price of a used car reaches 60% of a new car, often times the consumer will opt for a new car instead. So when an Internet leads comes in for a used vehicle and you don’t have the inventory to match it, highlight new vehicles in the same style and price—or even more important, payment—range, as the used vehicle requested. Expanding the selection of vehicles and providing side-by-side price comparisons may change the customer’s mind.

 

2)    Actively Solicit Trade-ins. Tag every email correspondence to customers with an offer to buy their trade-in vehicle—whether they buy from you or not—to drive traffic into your showroom and help boost your inventory. If you use a trade-in tool on your website, such as Kelley Blue Book’s Lead Driver, aggressively pursue the vehicles that match your inventory needs, offering hope that what you will pay often exceeds the online estimates.

3)    Don’t Give Up. Instead of closing out leads that you couldn’t help due to lack of inventory, start a “want list” of vehicles requested and provide it to the used car manager weekly.

 

4)    Hold Firm on Prices. Used vehicles are turning quickly and hard to replace right now, which reduces the amount of potential substitute vehicles in the market and makes the ones you have even more valuable.

 

What other best practices do you recommend to address the used vehicle inventory shortage?