Dealers will always ask themselves the question: “How to get even more car sales leads?”
The first thing dealers in the U.S. are going to do is buying some leads from a lead provider that is selling the same leads to multiple dealerships.
American automotive market is highly competitive – currently new car models are lasting longer and financing of the purchase requires more time to finish. Car sales in the United States amounted to $5.3 million units in 2018 preceded by $6.08 million in the previous year according to Statista.
How to stand out and outperform other dealerships fighting for the same customer?
In this article I am presenting ideas discussed with Jim Ziegler, a renowned American automotive during the webinar “How to win a raise over a customer in an automotive field?” [see the replay].
In the current situation, dealerships can win a race for a client if they are adhering to effective processes of lead management.
It’s no longer a case of who gets the most deals, but who manages to get the most from each incoming prospect and responds faster than a competitor.
The Internet has not sold one additional automobile that we wouldn't have sold without the Internet. All it did was put vendors between us and the customers and taking part of the profit or most of the profit in some cases. It did profitized the cars. But all of that being said, the Internet has not sold any additional cars, but it redistributes who gets the deal.
Jim Ziegler, automotive expert, Alpha Dawg
The Internet has put buyers and vendors together.
It has created opportunities for third parties to redistribute leads among multiple dealers.
And this, in turn, has resulted in many opportunities for everyone – for a buyer it means finding the best deal faster, for a dealer – getting more deals and eventually revenue, for a third party – putting dealers and clients together.
What’s happened with the automotive industry in the United States?
It has become more competitive and the automotive market has become even more saturated than few years ago.
Car dealers should operate in an extremely competitive environment and get the most from each car sales lead.
On top of that, upselling services after a car sale and client loyalty should result in a huge chunk of income for a dealership.
The success is in the right strategy, setting effective processes and adhering to them.
So how to put it in place and outrun competitors?
1. Optimize lead response time
That is why car dealers should be doing their best to answer leads as fast as possible before their prospects are contacted by another dealership.
Dealerships should start with analyzing lead response time and setting a framework for improvements.
The reality is that most dealers are ignoring their customer inquiries online, according to the report on lead response time among over 500 U.S. dealerships.
So about six weeks ago, I sold her car. I went over Kelly Blue Book online and got the cash offer and Kelly Blue Book said to me that I would receive phone calls from five dealers and they named the five dealers.
So my wife and I drove her car to the dealership couple miles away and the dealer wrote me a check for the car. And Wow. I was sitting in that dealer showroom. A franchise dealer called me 45 minutes later and I was sitting there with a check in my hand from the dealer.
They call me in five minutes. And the funny thing was I could look out the window and see the other dealer that was calling me, you know, just a couple hundred feet away.
Jim Ziegler, automotive expert, Alpha Dawg
2. Market to old leads again
Dealerships have a lot of dead leads in their CRMs. Instead of keeping those leads in CRMs, dealers should start marketing to them again and make an attempt to sell to them again.
Maybe they bought a car somewhere else, but you could use your service. You know, maybe maybe they didn't buy a car. Maybe they have a family member about to buy a car. Maybe they're about to buy a third car. You got them. You got to do what I call it, retro marketing. You've got to market to your past customers and to the deals, you didn't make it.
Jim Ziegler, automotive expert, Alpha Dawg
3. Verify booked meetings
Verifying scheduled appointments should be a part of a manager’s routine. A manager should be checking out if the leads invited to a showroom are real and a meeting with a dealer will take place.
My sales representatives have to set appointments and those appointments have to be verified by a manager. "Hello, Mrs. Jones. I see you talked to my employee Kyle. This is Jim's Ziegler. I'm the general sales manager. I just want to say please say hello to me when you come to the dealership today. You're not coming? You told Kyle you weren't coming? I'll have a word with Kai. Okay." Do you see what I'm saying? The management needs to verify those appointments to be sure they're genuine appointments and not something just the salesperson submitted.
Jim Ziegler, automotive expert, Alpha Dawg
4. Do preliminary paperwork online
Buying a car in the US entails a lot of paperwork and consumers tends to prolong the purchase process, quite often due to the financing aspect and preparing all necessary documents. A solution would be to create processes to finish a considerable chunk of paperwork online before closing a deal with a customer in a showroom in person.
Well, buying a car is actually in the US more paperwork than buying a home. It's going to take a period of time and a lot of this you can be blamed on consumer.
Jim Ziegler, automotive expert, Alpha Dawg
5. Get a down payment
Consumers don’t want to provide a dealership with a down payment. And dealers are doing a poor job with asking for it. In fact, by covering down payment consumers could get a better deal by financing a down payment. A solution for a dealer would be to explain the benefits and incentives of financing a down payment as a consumer can get a better interest rate by covering it.
6. Utilize the potential of a service department
A service department in a dealership can make a considerable amount of income for any dealership. Many dealers are selling cars at a loss. The automotive market in the U.S. is highly competitive – a lot of cars are being sold on a yearly basis, financing has become longer and cars are lasting longer.
We're selling right now about 60 million new and used vehicles here. And that's just from dealerships, not counting private sales. You know we're selling 16-17 million new cars annually. So that is another big problem in the US market, there are only 200 million licensed drivers in the United States. 200 million people with a license to drive a vehicle and we've been selling them 60 and 70 million cars a year for the last five or six years.
Jim Ziegler, automotive expert, Alpha Dawg
But a dealership can earn more on services and create processes to ensure a customer wants to use service center during a vehicle's lifetime.
The top of a car's repair curve is about 42 months. So in other words, a car in the first three years of the average cars lifetime, the average cost of repairs under $150, in the second half of a car’s lifetime, the average repair is over $850. So 42 months, that car begins, you become expensive. At 42 months the cost of repairs is going up.
Jim Ziegler, automotive expert, Alpha Dawg
Dealerships in the U.S. can’t rely only on buying new leads from lead providers. Instead, they should create processes that would be efficient enough to contact prospects before competitors even reach out to their phone. Effective processes start from optimizing a lead response rate, ensuring appointments booked by dealers are genuine and most paperwork is done online before a client visits a showroom to finalize the purchase.
[00:04] Margo: Hi everyone. I'm glad to host Jim Ziegler today. Jim is an expert in the automotive field in the United States. He has had a chance to teach over 100,000 people. This audience has been invited to his seminars, webinars, and all the events Jim has had a chance to participate in. Jim, you have started your career in 1986, if I'm not mistaken, right?
[00:43] Jim: You are mistaken. Yes. I started my career in 1976 I started this business in 1986, so I started selling cars in 1976, 42 years ago.
[01:05] Margo: Wow. Fascinating. So how things have changed from the time when you started your career and joined the automotive field in the U.S.? How has the situation changed over time?
The automotive field now and 42 years ago
[01:23] Jim: 42 years ago it was a pen and paper. It was... the newspaper was your main source of advertising. Today, a newspaper is only valuable if you are training your puppy. You know, it's... technology has changed. I've had to reinvent myself many times over the years as technology moved forward and keeping up and staying ahead of the trends have been very important. So, technology is all-encompassing today because the website is the showroom, not the physical bricks-and-mortar building. Google is the weapon. You know, it's all changed and you have to be proficient. The Internet has not sold one additional automobile that we wouldn't have sold without the Internet.
[02:20] Jim: All it did was to put vendors between us and the customers and taking part of the profit or most of the profit in some cases - it did profitized the cars. But all of that being said, the Internet has not sold any additional cars, but it redistributes who gets the deal. It redistributed, which of the most proficient dealers and most, the most savvy dealers, the most efficient dealers are going to get the business. It's very important that you be not only on top of your technology but on top of your processes. Your processes have to be good and your people have to adhere to your, and that's what we're going to talk about today. If you're going to win the race for a client and that client is distributed to five or six different dealers, not only do you have to be the first to that client, you have to be most efficient at achieving the appointment and the show-up of the appointment and the ultimate sale.
[03:21] Margo: Yes, Jim. But how do you define that? The most efficient dealer. What does that mean to be on the top?
[03:31] Jim: Well, you know, Margo, most leads are wasted, the overwhelming majority of leads are mishandled and they drift off into infinity and nobody ever makes a deal or worse yet your competitor made the deal because they outperformed you.
[03:51] Jim: And we're at a highly competitive market. Consumers are not walking into the showroom, they're walking on to the keyboard and they're doing their research and you have to be there. And the biggest problem today is that dealers are not there when they call.
[04:10] Margo: I have had a chance to participate in the research done in the automotive field in the United States. So we've examined something like around five hundred contracts or dealerships in the United States. We have found out that for a majority of the dealership their presence online is pretty low, first of all. Secondly, there are websites that look like they were designed in the ’90s. They are not optimized. If I'm gonna look for a car from my mobile phone, from a smartphone, I'm not gonna have the same experience as I could have been searching for this car online from my laptop because the website is not optimized for a smaller device.
[05:09] Jim: The overwhelming majority, and I don't like statistics, it depends on who's telling you this statistics, whether the statistic is valid. Well, I'm going to talk from experiential observation things I have seen and what I have seen is that the overwhelming majority of people contacting the dealership on a handheld mobile device, your mobile website has to be as efficient, more efficient than your previous desktop application of your website.
[05:42] Margo: Right. That's true. And also I do like the points that you have mentioned about the processes. I have been talking with multiple sales leaders from different fields and just going beyond the automotive industry, but all of them focus on processes and they say that you can be creative to the extent you want, but you have to put yourself in specific frameworks and specific processes to succeed in sales. What is in your opinion as a successful process and how should that be organized in a dealership? Because the dealership is definitely such a different market than any other business.
[06:25] Jim: There is no business like the retail automobile business. You're right. I'm a believer in the business development center. As a matter of fact, I'm beyond that, I'm a believer in the business communication center. I believe that every dealership should have a center where there are two people or twenty people that communicate all inbound and outbound communications online and telephone with that dealership. You know, it's amazing that so many customer inquiries go unanswered for hours, days and your competitor has got, if they outperform you, and again, whoever gets to that customer first has an overwhelming percentage, a possibility of making that sale, the first person to reach that consumer, especially if they can reach the consumer while the consumer is still on their device making the inquiry. Does that make sense?
[07:27] Margo: Yeah, yeah, sure. How about that moment when someone submits a request via email or a chat window. Right now we see a lot of dealerships use this solution and they don't respond in the next, I don't know, 30 minutes. So potential customers leave their websites and they're looking for something different. What is the major way for customers to communicate with dealerships in the United States? Because I'm coming from Poland and we probably have a different approach. Uh, in your opinion, what is the main channel for communication with customers in a dealership?
[08:12] Jim: Well, the most, the most communication today is coming in from lead providers, cars.com, Autotrader, CarGurus, Edmunds.com. They submit those same leads to five or six dealers. Sometimes you're not the only dealer that got that lead. So here we have a lead provider. Did you pay a lot for that lead? And if your people aren't the first to respond to that lead, if they're not coming in as quit more quickly than your competitor, you have an infinitely high percentage of a chance of not making that deal that you paid for.
Lead response rate: a critical factor to win deals
[08:58] Jim: So yeah, you've got to answer the phone quickly. You've got if that lead has a phone number in the form they filled out, your people have to respond quickly and if it’s more than five minutes you've lost the deal. And there are so many dealers that, let me give you, can I give you an example? Okay. My wife and I are moving to Atlanta. We're leaving Florida. So about six weeks ago, I sold her car. Now the way I sold our cars, I went over Kelly Blue Book online and got the cash offer and Kelley Blue Book said to me that I would receive phone calls from five dealers and they named the five dealers. Take that back. It was three dealers that they said, these three dealers would call me and one dealer responded to me within five minutes with a cash offer from my wife's car.
[10:09] Jim: And I said, yeah, that's a fair deal. I'm in the industry, I know what cars are worth. I said, yeah, I'll do that. So my wife and I drove her car to the dealership couple miles away and the dealer wrote me a check for the car. And Wow. I was sitting in that dealer showroom, a franchise dealer called me 45 minutes later and I was sitting there with a check in my hand from the dealer. They call me in five minutes. And the funny thing was I could look out the window and see the other dealer that was calling me, you know, just a couple hundred feet away. So the dealer lost my business because they didn't respond as quickly as the dealer that responded in five minutes. And that is what we're dealing with with the Internet today - people are not responding or worse, they’re responding with an auto-response text that is a form template and for using the same computer program that other dealers are using. It's the same words.
Video in a dealership as a powerful personalization tool
[11:17] Jim: One of our biggest successes lately has been a fast efficient response with video. We have, one of my proteges, one of my friends, one of my the most skillful women in the car business is Elise Kephart is a superstar in the U.S. car business. And one thing about her, she can get a video in that customer's hands personalized to them calling them by their name in less than two minutes. And that is so good because she has certain pre-recorded videos. It clips is she puts in the video and she greets them by their name and it looks like it's all prepared specially for them. But actually, it's a combination of her pre-recorded clips and the live greeting and then she calls him and it’s just absolutely phenomenal. The response is, she gets...
[12:18] Margo: It's amazing with video content is on the rise.
[12:23] Jim: Well, video response, responding to a lead with video when everybody else is sending flat text messages is personalized, calling the people by their names. It absolutely accelerates. That's why she is such a superstar with her techniques. And years ago I was pioneering video and in the business when we had the old, the old flip cameras and I was standing on stage educating people how you could use a flip camera and send a customer a customized video, which of course technologies advance way beyond that.
[13:06] Margo: Yeah. So lots of things have changed since the time when you started. If you're gathering all your experience in all your thoughts about how dealers get their leads online. So you mentioned about, those middleman, right? That are selling leads to dealerships, too many different dealerships.
[13:31] Jim: Lead providers. Yes, absolutely. Right.
Car sales leads: where to get them (sources)
[13:34 ] Margo: What are other ways to get leads?
[13:39] Jim: Google AdWords has always been your pay-per-click has always been the major source of leads that are self-generated. But you've got to remember now the lead providers, these vendors are also using a lot of PPC and they're using a lot of sources where they buy leads on an open market. Think about leads – Facebook and social media leads are actually selling a lot of cars today and are selling a lot of cars cheaper than even some of the pay-per-clicks. But there are tools today where a dealer can measure what your competitors are doing, what's your competitors are spending, what words and phrases they are using. Because Google is like an amoeba, it's ever-changing. It shapes you, you're never going to get on top of Google. You're never going to trick Google.
[14:39] Jim: Google is wise whatever people would try. Google wants to deliver a meaningful experience to the searcher or the person that is searching. So getting a meaningful experience to that consumer to generate the lead. But you know, we're missing the point. Most leads and the dealerships that I go to and I have dealt with hundreds of thousands of car people, hundreds of thousands I have been in dealerships and actually worked in dealerships in 49 of our 50 states. So yeah, I'm talking things I have seen, I'm talking experience here. I don't trust statistics, especially when statistics are provided by the vendor trying to sell you something.
[15:37] Jim: I have a saying that figures lie and liars figure. You had to be real careful whose statistics you believe, but things I have observed, things I have seen, you know, I go to dealerships and their CRM, their customer relationship management system has thousands and thousands of dead leads, leads that came into the dealership. They did not make a deal. Maybe the competitor made the deal, maybe the customer got out of the market, but the deal was not made. And those leads are just sitting there and people don't realize you've stopped marketing to those leads. You paid for those leads. So you've got them in your CRM. They're living, breathing human beings in your market. They are people and you're not contacting or you're not marketing to them. Maybe, maybe they bought a car somewhere else, but you could use your service. You know, maybe they didn't buy a car. Maybe they have a family member about to buy a car. Maybe they're about to buy a third car. You got them. You got to do what I call it, retro marketing. You've got to market to your past customers and to the deals, you didn't make it. So does that make sense?
[16:56] Margo: True. True. Jim, I I definitely like to expand on that. So, um, probably salespeople would understand that in the first row. So once you have a cold lead, you've bought it or someone has provided it for you. What are the next steps for dealers in the United States to contact those leads? Because I guess that probably this first concept is it's got to be very cold and the majority of people would not listen.
Building relationships with a customer
[17:36] Jim: Some customers will wish to be contacted and other customers are looking for information only. And you have to differentiate who you're dealing with. That doesn't mean you can't contact them. The Internet department should not be selling the car. We don't want to sell the car in the Internet department. All we want to do is make a relationship with a consumer, gain their trust, convert the email address to a phone number if you don't have a phone number and get a conversation with that consumer. Consumers communicate in different modalities. They might be visual people, they might be auditory people, they want to talk on the phone, they might both be keyboard people. You have to determine who you're dealing with, what type of customer you have and how they wish to be communicated with or not at all. So the first business of a business development center is to generate an appointment.
[18:48] Jim: And then a manager to verify that appointment and then to get the customer to actually show up in the dealership and ultimately to make a sale.
[19:03] Jim: And, and uh, so many dealers are not using the Google Analytics just to see the performance of their Adwords in your pay-per-clicks. And they need to do that to take an accurate measurement of what's going on. You know, how efficient your, basically, how your competitors are penetrating into your online market. You've got competitors that are taking business away from you that coming in under the radar and stealing your leads. So you've got, you've got to be aware. Facebook advertising is extremely strong, but once, once again, it's a very inexpensive pay-per-click. You've got to be there.
[19:51] Margo: Yeah. So we have to harness these digital channels. The main channels are Google ads and Facebook ads. Yeah. I've heard multiple times from multiple dealers that they are actually doing that and they are successful. But they are also saying that this cycle is pretty long. Once a person sees and starts considering buying a car, the process from him considering buying a car and actually buying a car is quite long. What do you think about this process and what are the ways to shorten it and bring a customer closer to a deal?
Paperwork with buying a car: how to reduce it?
[20:30] Jim: Well, buying a car is actually in the US more paperwork than buying a home. It's going to take a period of time and a lot of this you can be blamed on a consumer. I'm not defending the dealer's totally, but mostly the consumers cause a lot of the log jams in the process, they, you know,= they don't let it go smoothly. They indecision. Um, there's a lot of things that happen with the consumer that slows up the process in a bit and you know, statistics don't show that. But if I can get a car sale under two hours, not 45 minutes, 45 minutes will be a dissatisfied consumer. They'll make the wrong selection. There's a lot that goes into it. More second largest purchase you'll ever make in your life. But I've seen dealers at the process takes four hours, far too long.
[21:35] Jim: If I can get the entire process from selection of the vehicle and down to the delivery and the tail lights and waving goodbye to them and the thing technology can do to alleviate this is to do a lot of the preliminary paperwork online before the consumer gets to the dealership. If we can get the consumer to initiate a lot of the preliminaries, a lot of the questions that the government and you know, whatever if we can get that done, it'll definitely speed up the process. A lot of people are saying they want the process under 45 minutes. That's never going to realistically happen. But getting any process under two hours from the time they show up to the time they leave provided they're not indecisive. That is very, very, very doable.
[22:30] Margo: Uh, you mentioned this a situation when a customer is already in a showroom and is considering different options, but I guess some dealerships, might have problems with acquiring lead sources, right? So they need more customers. Like an ideal customer who comes and finishes the deal in a maximum of two hours. They want more? How to get more?
[22:59] Jim: We are the customer. The customers always want more and that's the problem. Yet, there's very little profit in an automobile today. You know, as a matter of fact, if you, if you really looked at it, new cars are sold at a loss. You know, if, if you look at the stats across the country, you know, the manufacturers have squeezed the dealers so tightly that the car is a loss leader to obtain service business. So consumers are unrealistic about the how much profit the dealer has to work with because years ago they had a lot of profit. So there's a lot of people say they don't want to haggle, they don't want to negotiate. But negotiation is driven by the consumer. You know, I don't want you to go, I don't want you to negotiating, but I want to negotiate. So you, where do you go? So the dealers for the ones I know, and I work with thousands, they want to be more customer-friendly, they want to be more time-efficient.
[24:11] Jim: But a lot of the bottlenecks are coming from credit. Credit is a major, major problem today. The consumers, we've gone to 84-month financing. I saw some credit unions recently go to 120-month financing. You know, will you finance an automobile for 120 months? You're not able to trade that vehicle for years beyond five, beyond six. You know, 72-month financing today is the norm and that's, that's too long. So to get the payments down where a consumer can afford the payments, that most negotiation today is the consumer wanting a lower payment. Most consumers don't even care about the price. It's the payment that drives the sale. So leasing is a better alternative. But the manufacturers lease programs are not as good as they once were. And it's a major dilemma that the manufacturers realize this. They're trying subscription cars that did not work. They're trying a creative leasing that that is working and consumers still want that mindset where they own the car. They're not totally buying into leasing in mass.
[25:32] Jim: So this is what we're dealing with and dealers have been trying to solve this. And financing online was the hardest thing because consumers are unrealistic because manufacturers and lenders, all lenders, all banks charge different interest rates to different people depending on their past credit history and amount of their down payment. And consumers don't, don't fathom this. If they have poor credit, they're going to get a high interest rate, not because the dealer wants that, that the bank demands that rate [adjusted] to the risk. And if somewhere the credit scores today run anywhere from 300 hundreds all the way to 900 is excellent credit score three, 350, they can't even get financed. 600 is the number that separates good credit - bad credit. So the consumer's credit is below 600, they'd go into a high interest rate category. We can't change that. That's what the bank's demand to even finance the deal. So the bottlenecks today are greatly involved in financing, because a high percentage of consumers have poor credit.
How to encourage clients to cover a down payment
[27:00] Jim: And an even higher percentage of consumers owe more on their trading than it's worth. So the banks are signing a higher interest rate to people that they have to finance this additional equity when customers would call in the business upside down. This causes a big problem because consumers are so much more on their cars than they're worth. Because of the long-term financing and the fact that they did not put a down payment on the previous vehicle. Down payment is the key to solving all of our problems and consumers are not coming up with cash down payments and the dealers are doing a poor job of getting down payments. The dealers I work with are averaging high down payments because we ask for it. We work with the customer to explain why they need the down payment and believe it or not, most consumers have a down payment. The dealers are very, very poor job of getting a down payment from the consumer. Nobody wants to give you a down payment, but once you explain it to them and you show them that they're going to get a better rate, they're gonna more likely to be financed, then they'll give you a down payment.
[28:20] Margo: Yeah, most definitely depends on the level of education of the target audience. So I guess there are some people who may not know the specifics of the U.S. automotive industry. Could you just give us an overview on how the environment looks like? Because for me, for a person coming from Europe, the automotive fields in the U.S. looks like there is one dealership, and there is no other dealerships in the range of 20 kilometers or 30 kilometers. For instance, if I just go outside of the building, I will definitely find at least two dealerships in the range of less than a kilometer around me. What is the situation in the U.S.?
[29:11] Jim: Well, U.S. Franchise laws in most states require at least seven mile separation, same type of vehicles, same make. And the franchise laws were created basically to protect the dealers and the consumers, you know.
Automotive market in the US: statistics
[29:34] Jim: I've been to Europe, I had been in Great Britain, England. I've been there quite a few times. I know a lot of those dealers and it's a much different market in Europe, a much different market. Um, you know, we're, we're selling right now about 60 million new and used vehicles here. And that's just from dealerships, not counting private sales. You know we're selling 16-17 million new cars annually. So that is another big problem in the US market, there are only 200 million licensed drivers in the United States. 200 million people with a license to drive a vehicle and we've been selling them 60 and 70 million cars a year for the last five or six years.
[30:33] Jim: Everybody that's got wall, once one has one, you cannot keep cramming those numbers. There's not enough millennials coming of age to buy a car. There's not enough seniors dying off to make up for that deficit. You know, cars are lasting so much longer. Financing is so much longer, so where are we going to get additional customers is another big problem. If a dealer's going to thrive and survive in the next couple of years, now that we have reached a close to saturation market where everybody that wants one has one, they last longer. You're going to have to take that business. Here's your thing. We're going to have to take that business away from a competitor that wants the business too, you've got to, you've got to absolutely be able to defeat your same brand competition. You've got to take that business away from them. And to do that, the efficiency of your process, your customer first contact, first impression, you know, what content do you give that customer that makes the appointment. So many variable factors coming into all of this.
[31:54] Margo: Right, right. I know you mentioned about getting additional business apart from selling vehicle. What do you think about selling services to existing customers? Which chunk of income for a typical dealership should it make?
Service department in a dealership: how to make more sales?
[32:16] Jim: Well, the service department makes a lot of money for a dealership because cars are lasting longer. People were keeping them longer. And the top of a car's repair curve is about 42 months. So in other words, a car in the first three years of the average car’s lifetime, the average cost of repairs is under $150, in the second half of a car’s lifetime, the average repair is over $850. So 42 months, that car begins, you become expensive. At 42 months the cost of repairs is going up. There are items like breaks, Macpherson strut suspension, there are all sorts of items that are starting to wear out. Then it started and need to be replaced. Tires can come into that. You know, there's all kinds of things you're going to have to do to a car after 42 months. So the cost of ownership goes way up after three and a half years.
[33:24] Jim: So service absorbs that time. Since cars are lasting longer, people financed them for so long, they can't trade them in yet. So service is getting to be a big business and there needs to be a service, BDC (Business Development Center), you know so many dealers are focused on sales but they're not focused on service and service is a better profit center themselves. So being sure you have a service business development center that you are contacting customers about their service. You're upselling the consumer. Like when I go to a dealership and I see the people on the service lane where they come in, where they check in. I don't see the service writers, the people writing the ticket, trying to sell windshield wiper blades or any of the simple things that they could add, additional small-dollar profit to the sale.
[34:28] Margo: How should service specialists, maybe not service specialists per se, but what should be the general strategy of a dealership in terms of service? How to tie a customer to a particular dealership? Because we are living in an extremely competitive market right now, so a customer is able to choose among multiple different service plans.
[34:54] Jim: You're talking about what is your unique selling position? Is that what you're saying? What is unique about your dealership? What is your unique sales service offer? I have dealerships right now that give customers free tires for life.
[35:13] Jim: Yeah. As part of the initial sale, I have dealers that give customers free oil changes for life. You're not as an upsell, I mean, not a maintenance-up shelf. They're actually giving that to the consumer. And uh, there are people that have a valet service where not only if your car's broken down, they will come to get it and they’ll deliver you a loaner car. Wow. While your car's in the service department, you know, there are so many additional things and a lot of the Highline luxury cars do this as a matter of manufacturer demand, the additional what I call concierge services that other dealers don't offer. I have dealers that do back for the community now. This is a local, a local dealer as opposed to a corporation. A lot of the dealer's shifts in the US are owned by big corporations.
Engaging in a local community as a way to create customer loyalty
[36:13] Jim: Now a local dealer, a mom-and-pop family owned dealership can defeat the corporations by community involvement. And what I mean by that is getting at and, and being members of the community organizations and contributing to the consumer charities in the organizations. You know, being part of the community and you'd say you are historically and emotionally invested in your community. So that is what we're doing today. I had a dealer named Mark Heights who was in Oklahoma City, Oklahoma. He sold that dealership to a corporate dealer because he wouldn't conform to the factory. He built an amphitheater on his property for the community used for the local events. I'm talking about a really upscale amphitheater he built, he built conference rooms in his dealership that local organizations could hold their meetings, you know, and when the dealership becomes part of the community and becomes a contributor to the community, people will reciprocate and do business with your dealership.
[37:29] Jim: I can tell you, I had a dealership that in Brunswick, Georgia, a Toyota dealership. I talked them into installing a car wash on the street. And then we started booking that car wash for the local cheerleaders, the local clubs for their fundraisers. So every weekend somebody was having a fundraiser at the dealership with all their people out there flagging cars into the dealership, creating a lot of excitement and creating community bonds. The dealer liked it so much. We built a barbecue pit on the other end of his dealership with picnic tables. And a barbecue pit and other organizations were having fundraisers, selling their barbecue and it was booked up for months in advance. All the organizations in the town were fighting to be part of those fundraisers. So does that, does that help?
[38:43] Margo: It's pretty interesting. I can bring some analogy to the organization of events. I believe that organizing an event for 50 people might seem nothing in terms of marketing, but if you take into account, we've gone digital, I mean also young people that they start making some transmission of this event and it goes online and they tag that location. So it's gonna be much more than just for 50 people. But it might even become thousands of people.
[39:23] Jim: Yes, absolutely. You know, I've been in the business 42 years and I've got 100,000 friends and followers now online. And for somebody like me to be teaching young people how to use the Internet is phenomenal, because I'm not supposed to know this.
[39:56] Margo: You've got deep knowledge. Okay, Jim. So could you just summarize what particular steps in your opinion, should every dealership make in order to increase sales and also increase the number of upsells?
[40:15] Jim: Okay. Step number one. Okay. Marry your CRM, become married to your customer relationship management system. Pay attention to your statistics. Have regular meetings. Be sure that your processes are followed by your employees. You see in the car business we don't have a knowledge problem, not in the US nor in Europe. Everybody knows what they're supposed to do. We have a doing problem. They know what they're supposed to do, but they're not doing it. Everybody tells me we need more training. No, you don't. You need more doing. You've already trained them. They're not doing it and you're not doing it because you are not managing them.
[41:10] Jim: We're not. Management is as weak as I have ever seen it in 42 years at managing car dealerships, managing the employees. And we're dealing with millennial employees and that's like herding cats, very difficult. But, you still have to do that. You can't have a whole bunch of different people doing their own thing. It's got to be in within the process. They have room for creativity. They got a room for personality. We don't stifle or lock 'em up, but within the bounds of the process, nobody is outside the process. Everybody must do the processes that we define. That's the other thing dealers don't do. They have not quantified. Step number one, step number two, step number three, they don't have the process quantified. Whose responsibility is this? Whose responsibility is this and who do they report to? So processes and management is the first key. Respect for the process. Then the business development center, Business Communication Center, those employees have to make at least a hundred outbound phone calls a day.
[42:38] Jim: We're getting the leads. We've got more leads than we have people making the calls a hundred outbounds a day. The key is setting appointments. My sales representatives have to set appointments and those appointments have to be verified by a manager. "Hello, Mrs. Jones. I see you talked to my employee Kyle. This is Jim's Ziegler. I'm the general sales manager. I just want to say please say hello to me when you come to the dealership today. You're not coming? You told Kyle you weren't coming? I'll have a word with Kai. Okay." Do you see what I'm saying? The management needs to verify those appointments to be sure they're genuine appointments and not something just the salesperson submitted. So appointments are gold, setting appointments is the key, because the people are not walking onto the lot as they once did. They're not walking into the dealership, they're coming in through Internet channels, telephone channels, texting channels, and we didn't even talk about that. Texting is a huge communications channel with your employees today and there are laws that you have to opt-in correctly to text them and your people need to be educated on when you can text, what you can do. But texting, Oh, let me ask you a question. Margo, you have email?
[44:07] Margo: Yes!
Utilizing text messaging in a dealership
[44:08] Jim: Are there any emails in your email box right now that you haven't addressed?
[44:17] Jim: A bunch of them, right? Are there any texts on your phone you haven't addressed? You've responded to every text in your phone, but emails, you don't respond. In this case, if you can get a customer in a text conversation legally, it is a much better way to communicate with, with opt-in permission-based texting, because your text is where that consumer is going to talk to you every time and get your every message and you've got to have templates loaded into your phone, you know, things, responses that you can with one button send to that consumer. What about this? Let me send you a message. Boom! Just that quickly. So texts, text marketing, and chat marketing are two very important things and you've got to have 24-hour chat. You know, you gotta be able to chat with a consumer. How many consumers are shopping at midnight late in the evening and your employees are all going home. Nobody's at the dealership. You've got to have a chat service of some kind that communicates with them when you're not at the dealership. So, I don't know if there are services like that offered in Europe. There are many services offered like that in the US 24-hour chats. So when your employees go home, they can transfer it over to the 24-hour people who will continue to chat with the consumer.
[46:05] Jim: And the BDC is all important, you know, I want them, I want that business communication center and have the authority to be able to basically answer consumer's questions without having to check with the sales manager back and forth. You know, consumers don't like back and forth, although they create a lot of it. You know, the consumers send the salesperson back. I'll say the consumer, you don't pay that back and forth stuff. Nope. Well then are you gonna pay all the money? No. Then you just created some back and forth stuff. You're the ones that sent my sales person back. We didn't want to do that. You wanted to do that. You know, we gave you a fair, no haggle pricing. You would still want a better price. You know, it's hard to win. You can remember you've got to capture the contact info while they're still on their device. That is the key to winning the client. The race for a client in the automobile, automotive industry. You've got to be in contact with that customer while they were still on their device. When they make the inquiry.
[47:26] Jim: Five minutes is too long. Your people have to be totally aware of incoming leads, especially leads that have a phone number.
[47:39] Jim: If that lead has a phone number, you've got to be on it in five minutes or you'll be like the deal or they called me 45 minutes later when I was sitting in the other dealer's showroom that had contacted me in five minutes, same difference. And um, a lot of wasted leads. When you, when you call a customer, you stopped them from shopping. You know, if you call that customer in five minutes, they're not there. They get, they discontinue shopping onward. You become their dealer of choice. So response time and meaningful response time, appointment setting, capturing the customer's phone number so you can communicate with them or at least get them to the appointment. Extremely important.
[51:33] Margo: Thank you, Jim.
[51:57] Jim: Thank you.
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