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THE FOUR-PART SERIES: Lies the Digital Age Told You About Selling Cars

| by David Metter, President of AutoHook powered by Urban Science

As part of Urban Science, it’s in our blood to question everything. Not only do we look outside the box to solve complex problems, but we then question each element that makes up the box, down to each individual line, 90-degree angle and the composition of positive and negative space that define the constraints of the box. Better yet, approaching a problem from a true scientific perspective means questioning why the box even exists in the first place. While the process can be painstaking, making observations through the unbiased lens of science can also lead to accidental discoveries.

Granted, for someone who started in the business as a car salesman and later managed dealerships, using scientific methods to make decisions in the showroom isn’t the first and most natural inclination for many of us. And when I say science, I mean actual science – not the junk out there that claims to be science (remember when everyone threw around the term “big data”), but the kind of science that has no skeptics, that sees trends within a data set that not only others don’t, but that no one’s even thought to look for before.

When we hear a number or statistic over and over again, especially one published by a known source, we believe it to be true because…why wouldn’t we? We all know not everything we read on the internet is true, but this example is perhaps the ideal case in point of one widely accepted “truth” the automotive industry has come to accept without any empirical evidence whatsoever.

Automotive leaders in search, analytics, digital advertising and consumer behavior have all published findings stating the number of dealerships customers visit before purchasing a vehicle is somewhere between 1.3 and 1.6 dealerships. This number has been kicked around at conferences for years. So naturally, we decided to challenge the claim that customers visit less than two dealerships before buying a car.

In May of 2018, AutoHook and Urban Science decided to conduct our own survey. We asked real consumers we know bought a car within the last year how many dealerships they visited prior to their purchase. Out of 2,748 responses, what we found is people are visiting more dealerships than we thought. According to the survey results, people on average visit at least 2.4 dealerships before buying a car.

Furthermore, 70% of customers surveyed visited two or more dealerships before purchasing. Almost half, 46% to be exact, said they visited three or more dealerships before purchasing, and 26% said they visited four or more dealerships. The unfortunate reality is that we’ve all been thoroughly brainwashed with the misconception that people only go to about one dealership before buying a car which we now know is not the case.

Regardless of whether customers visit two dealerships or five dealerships, the takeaway here is that everything we’ve been told about consumer buying behavior in the digital age is skewed. The truth is that today’s car shoppers go to at least 2 dealers before purchasing. What’s so significant about this finding is that it proves people have a choice and decisions are being made both on AND offline. The blindly accepted notion that the majority of car shoppers have already made up their mind on what to buy and where to buy before ever stepping foot in a dealership is completely false. In fact, in another study completed by AutoHook and Urban Science, 78% of over 66,000 respondents said they were still shopping multiple brands before visiting their first dealership.

The underlying message we’ve all come to believe is that customers are making buying decisions based largely if not solely on what they read online…which by the way conveniently plays to the ultimate gain of the big publishers, search and media companies. Maybe they are doing this so dealers and OEMs will continue to spend more and more money with said companies on their digital advertising, but we don’t have the science to back that up just yet.

Anyways, down here in the real world, cars are still bought and sold in physical showrooms and the process is still dependent upon a positive exchange between two living, breathing people. The only difference between today and 50 years ago is that customers walk in armed with information and salespeople need to provide a less painful buying experience. Other OEM-specific customer surveys AutoHook conducts on an ongoing basis show that when asked why they didn’t buy a car from a particular brand, the overwhelming majority of respondents selected “bad dealership experience” as their #1 reason for not purchasing.

So, if you think people are going to fewer dealers than they were ten years ago, it may be because the experience they expect to have when they’re at a dealership is a negative one. Not always – I know plenty of dealers who recognize the importance of their people and the in-store experience they provide, and I also know these dealers sell much more effectively as a result. This alone makes the argument that dealers need to focus more attention on hiring and retaining better salespeople who understand the value of relationships if they’re interested in repeat, loyal customers.

Another common misconception is that millennials are taking over the market and they buy everything online; therefore dealers need to move towards models where ~99% of their selling happens online, and their salespeople just need to walk the customer through the paperwork upon arrival. The first part of that statement is true in that Millennials are quickly overtaking the market as they now account for almost 30% of all new vehicles sold. By 2020, JD Power and Automotive News project they will account for 40% of all new vehicle sales.

What’s NOT true is the assumption that Millennials want to buy their cars online. In fact, it’s the exact opposite. The test drive experience is more important to the Millennial generation than ever before, so much so that they want to extend the test drive experience to get a solid feel for how a vehicle will fit into their everyday lifestyle. Millennials also spend more time on the buying process and are less brand-loyal than previous generations. As a result, we see more and more extended test drive programs popping up like Toyota’s Try Before You Buy program which allows customers to take home a vehicle of interest from anywhere between 24 hours to a full week.

Again, whether the total number of dealerships visited before a purchase is 2.4 or 3.4, the more important point is that people have choices and if they go to a dealer ready to buy and have a negative in-store experience I can confidently say based on data (and common sense) that they’re going to leave and buy from someone else.

I’m not saying everything we know about digital is dead, and I’m in no way trying to tell dealers to kill or even cut their digital ad spending. But what I am saying is we as an industry need to seriously reevaluate the amount of time, energy, and most importantly, money we spend on what we know is vital to selling cars and the ongoing growth and success of a dealership…good salespeople.


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| by David Metter, President of AutoHook powered by Urban Science

There is this perpetual echo of the word “disruption” in the car industry. What will be the next big disruption? What do we need to prepare for that will change everything we know about selling cars? The reality is disruption is largely incumbent upon technological advancements and the rate of societal adoption to these new, uncharted territories dominated by things like artificial intelligence and machine learning. These future “disruptors,” such as the rise of alternative online retail formats, subscription services or the transition from gas-powered vehicles to autonomous, connected cars are impossible for any one dealer or OEM to predict, let alone control.

Therefore, I’d like to propose a new approach. What if instead of the next big disruption we focused a little more on what we can control – the constants – the parts of the equation that aren’t powered by data or machines. What I mean by the constants is the people, or more specifically, the relationships that form when a customer goes to look at a car and has a positive interaction with a salesperson while doing so. The value of relationships when it comes to selling cars has been vastly undermined by the shiny new innovations of the digital age.

I think we’ve become so infatuated by the latest technology and the newest cutting-edge solutions to selling cars that we forgot about the fact that technology becomes useless without the people behind it who make it work. Relationships in the digital age still take precedence over technology and despite the advancements we have yet to see, technology in all its glory can’t replace social skills. All this talk about connectivity and connected devices yet I think we’re failing to connect the dots when it comes to knowing what will ultimately yield the highest ROI for dealerships, both in today’s world and in the future – knowing who your best salespeople are and how to keep them.

We as an industry need to stop using technology as a crutch. We’ve become so focused on the next big disruption in digital marketing that we’ve started to rely on the help of digital tools entirely, forgetting that cars are still bought and sold by actual people at actual dealerships. Deloitte’s 2018 Global Automotive Consumer Study reported car shoppers still rate physical interactions with a vehicle as critical to their buying decision – with over 8 out of 10 needing to see the vehicle in person before making a purchase decision. So, if this is the case, why are we spending the majority of our time and money on the minority of the buying public?

It’s all about striking a perfect balance between technology, the right data and the right people. It takes all three to get the job done. Technology is a powerful tool that can be leveraged to enhance or continue existing relationships, but it can’t create them in the first place. When it comes to the right data, we are extremely fortunate because our solutions are powered by the Urban Science® DataHub™, which allows us to be the first to know when a customer buys a car, what car they bought, where they bought and if they didn’t buy from you. And we get that sales data and the equally important defection data within days – not months.

In the same way that technology lacks value without good people, the right data can uncover things about your salespeople you otherwise never would have known. For example, you consistently see all these closed sales opportunities by let’s say, “John,” so naturally you think John is one of your best salespeople. But how many opportunities is John losing every month to one of your competitors? You’d never know without the right data. So it all goes hand-in-hand. The person selling the most cars may be losing more opportunities than he or she is closing, so your “best” salesperson can quickly become your worst salesperson when you can compare what they’re winning to what they’re losing at the same time.

Having that ability to layer sales and defection data on top of your CRM data is critical if you want to operate more efficiently. Without it would be like making decisions for your dealership based on a cost-benefit analysis but forgetting to include the cost part of the equation. It’s the only way to add enough dimension to your CRM data to make it truly actionable – instead of looking like Flat Stanley.

Having the right data combined with great technology can help your operations in a multitude of ways. It can suppress the leads in your CRM that have already purchased so your people can stop wasting time following up with them. It can pinpoint the ideal time and channel to re-engage your lapsed or dormant leads. Technology can help dealerships interrupt a customer while they’re shopping online and grab their attention just long enough to influence their decision-making process. It can also help ensure a customer chooses to visit your showroom instead of your competitors with things like test drive incentives.

The reality is technology will never be able to stop a customer from walking out of your dealership after a negative experience with one of your salespeople. Furthermore, when it comes to closing lead opportunities, your salespeople may already be at a disadvantage. A recent Automotive News dealer training webinar reported that as many as 98% of qualified leads fail to result in closed business. So instead of pouring all your focus into staying ahead of the next big disruption promising more and better leads, maybe we need to shift our focus back to the one thing capable of converting those leads into sales once they hit your showroom – your people.

Great employees are what gives meaning to the capabilities that stem from great technology. Your salespeople are the foundation needed to ensure data-powered solutions work in favor of your dealership. In a word, the future state of our industry’s digital landscape is unpredictable. But there are two things we do know. Change is constant and retaining great salespeople is still paramount. There’s not a lot we can do to control the rate of change, but fortunately for dealers, there’s a lot we can do to help our salespeople and to make sure we're holding on to the good ones.

Stay tuned for Lies the Digital Age Told You About Selling Cars, Chapter 3: Power to the [Sales] People to learn more about the importance of retaining your best salespeople and how to provide a better in-store experience.


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| by David Metter, President of AutoHook powered by Urban Science

I’d like to begin with a subtle reminder of the harsh reality of how car shoppers in today’s technology-first world really feel about the car buying process. Below are a few highlights to help paint the picture…

  • 52% of car shoppers feel anxious or uncomfortable at dealerships and millennials are leading the pack in their dislike, with 56% saying they’d rather clean their homes than negotiate with a car dealer. (The Harris Poll Insights & Analytics)

  • “Stressed,” “overwhelmed,” “taken advantage” and “panic” were among the top 10 words used by female car shoppers when reviewing their in-dealership experience. (CDK Global)

  • Studies suggest that some Americans would rather get a root canal than take their car to a dealership. (Automotive News)

I could go on for days with stats like this, but we have more important things to discuss - such as how to change the current perception. The upside to all the negativity around car buying is that we have A LOT of room for improvement. And dealers aren’t necessarily to blame either. The problem is, what we’re told about consumer behavior in the digital age compared to what car buyers themselves actually do in the digital age are often two very different things.

We live in a constantly connected, convenience-based universe inundated with unsanctioned opinion and as a result, we’ve become conditioned to rely on technology to solve problems. We know the in-store experience is important, but we’re too fast to look to the latest technology to solve the problem rather than focusing on what we can actually control. Not just something dealers have the power to influence, but also something that may ultimately yield the highest ROI out of any available technology in the market…which is your salespeople. How did I come to that conclusion? Funny you should ask.

In the article, “What’s the REAL Cost of a Bad Salesperson?” I dissected the monetary difference between what good salespeople can contribute to your dealership over time versus what just one bad salesperson could cost you. A salesperson selling 15 cars a month yields about $270,000 a year in gross profit. Then when you factor in the lifecycle of the vehicle and any potential service revenue associated, you’re looking at a minimum value of $325,000 a year in pure gross profit for any one good salesperson. Read the blog if you don’t believe the numbers.

Now consider the reverse. One salesperson that loses 15 sales a month to one of your competitors is costing your dealership $325,000 a year in gross profit. Multiply that by just four people and you’re looking at $1.3 million in lost gross profit a year. But here’s the kicker. Without the right data processed through the right technology, you would have no way of knowing how many customers your salespeople interacted with that left and bought a car from someone else. Perhaps due to a negative experience?

A recent study from Cox Automotive suggests that initial experience may be more important today than ever before. The rate of car buyers returning to dealerships where they have previously purchased or leased from is increasing. 40% of new vehicle buyers in 2018 are repeat dealer customers compared to 31% in 2016. This is great news, but it puts even more pressure on getting it right for that first-time buying experience and, in most cases, your sales team is directly responsible for it. Customer loyalty and the chance of them coming back to buy a second or third car depends on the experience your dealership provides them with upon arrival. So your people better be armed and ready.

Jeremy Beaver, COO of Del Grande Dealer Group, told Automotive News, “Retention is the Holy Grail, and the experience is what drives retention. You have to shift away from a ‘visit’ mentality and think about a ‘lifetime value’ mentality.” I could not possibly have said it better myself. This is an example of a dealer that just GETS IT – both on the sales side and on the service side. Their Fixed Operations Director, Trully Williams said, “The technology enhances the experience, but you start with the fundamentals of people and process. You get those right and then add the technology.”

There is a seriously infinite amount of opportunity for improving your dealership’s operational process, and it starts with your people. Dealers don’t have time to guess who their good and bad salespeople are – that’s where the technology comes in. You can’t retain good salespeople if you don’t have the technology to know who they are. The right technology can tell you who is letting the most opportunities walk out the door. It can tell you which leads your people are struggling with and the exact time frame during the month they struggle with the most. There’s a lot technology can do to help your people and to enhance the car buying experience, but it can’t drive the car buying experience entirely. At least not before flying cars become a thing.

So before your brain explodes from all the numbers and reporting being thrown at you during any given moment, or from all the external pressure you’re getting to improve 50 different KPIs at the same time, remember that your people are what gives meaning to the metrics. Retention, should be your absolute number one focus and priority in the digital age – and that applies to both your salespeople AND your customers. Running a successful dealership ultimately translates to retaining good salespeople, but you need the help of good technology to be able to do that. Ironic, I know.

 

Stay tuned for the upcoming fourth and final chapter of Lies the Digital Age Told You About Selling Cars: The Executive Edition. Dealer Managers will learn real-life examples of how to apply new technologies to directly support the success of your salespeople instead of relying on technology to do the selling for them. The more you can do to help your employees be successful at your dealership, the more likely you are to retain them, which ultimately leads to everyone’s mutual benefit – not to mention the benefit of your bottom line.


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| by David Metter, President of AutoHook powered by Urban Science

In Part I of Lies the Digital Age Told You About Selling Cars, we overturned one of the most blindly accepted industry-wide standards about the current state of consumer car buying behavior. For far too long, the assumption has been vehicle shoppers have everything they need to make a purchase decision online, and they already know what they’re buying before ever stepping foot in a showroom. The common misconception has been that the average consumer in the digital age only visits one dealership before purchasing a vehicle.

What we found after surveying 2,748 U.S. consumers that have purchased a car in the last year is that the above statement couldn’t be further from the truth. In reality, not only does the average customer visit at least 2.4 dealerships before making a buying decision, but almost half – 46% – said they visited three or more dealers before purchasing. Over a quarter of our sample size, 26%, said they visited four or more dealerships before buying. All of this data was collected by AutoHook and Urban Science in May of 2018 from people who purchased or leased a vehicle within the last year – not from a published study conducted five years ago.

As a former general manager of a dealership, CMO of a privately-held dealer group and as a marketer in general, I found the fact that roughly 1 in 4 people (26%) in the year 2018 visit four or more dealerships before buying a car to be personally absurd. Though surprising, this statistic solidified a new truth about the state of our industry. Contrary to what dealers have been told, the in-store experience is arguably more important in the digital age than ever before in the history of the car business – and for several reasons.

The most prominent reason being if a customer has a bad experience with one of your salespeople when they come in for a test drive, they will leave and buy from someone else. If they go to two dealerships and have a bad experience at both, they will go to a third and even a fourth dealer to buy from the one that provides them with the experience they expect and deserve.

Just like everything else that has surfaced from the digital age, car shoppers have a LOT of choices when it comes to what they’re going to buy and who they’re going to buy from. Purchase decisions are still made at physical dealerships, most likely following a test drive – NOT exclusively online. Shoppers in-market for a new vehicle don’t have their minds made up about what they’re going to buy by the time they visit their first dealership. Outsell says 6 out of 10 car shoppers enter the market unsure of what they want to buy. Our own research and survey data consistently shows 78% of people are still considering multiple brands by the time they visit their first dealership.

So we as an industry, we HAVE to get this right. Instead of operating based on pure, often biased assumption, dealers need to seriously reconsider their order of priorities in terms of how they run their business and where they spend their money. The digital age has armed us with so much intellectual power, yet at the same time, it’s made us a little lazy. It’s cast a shadow over what’s really important – defining value and personal worth by likes, clicks and follows rather than interpersonal relationship skills.

Part II of Lies the Digital Age Told You About Selling Cars verified the auto industry has become too quick to rely on technology as a crutch to do the work for us, rather than picking up the phone and having a conversation - or dare I suggest having the inventory knowledge and social skills to not only sell a car, but to foster ongoing relationships that lead to repeat, loyal customers. It is officially time for a new dialogue to emerge. The question we as an industry need to be asking is not how can we leverage new technologies to help us sell cars, but how can we leverage new technologies to help our salespeople sell cars?

Rather than answering the above question based on my expertise and years of experience in this business, I’ll share the real-life success stories of how two actual dealerships in the digital age are using great data processed through great technology to help their people sell more cars and lose fewer opportunities.

DEALERSHIP #1

One of our dealer clients needed an accurate way to measure the true effectiveness of their follow-up process by knowing what was and wasn’t working within their current lead mix as well as how many opportunities their salespeople sold compared to how many they lost to competitors. Using their individual salesperson data, we analyzed each person’s sales and defections and identified who had the most potential to improve. We then pinpointed the time frame during their follow-up process when their people struggled the most, which for this particular store was during days 0-4 after a lead hit their CRM. Lastly, we exposed their highest defecting lead source.

Armed with a roadmap highlighting their greatest areas of opportunity, the owner of this dealership shared this data with his sales staff and reviewed each person’s sales and defection trends with them one-on-one every month. He created an environment of transparency and friendly competition by making this defection analysis technology available to all his salespeople, thus holding them personally accountable for every sale they lost in addition to what they closed.

The dealer then helped his staff implement a more aggressive follow-up strategy for working leads 0-4 days old. He provided additional training on how to better work leads that came from their highest defecting source (especially during this time frame). He took the time to listen to feedback from all his salespeople and found opportunities for peer coaching to help further reduce their collective number of defections. He also implemented a system to reward the people who showed improvement each month.

With a refined follow-up strategy fueled by better prepared, more empowered salespeople, they saw the following results in just 90 days:

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  • Their overall defections decreased by 89%, with a 44% decrease in defections specifically during days 0-4 post-lead.

  • They increased their number of closed sales tied to their highest defecting lead source by an astounding 242%.

  • Most importantly, when it came to the salesperson identified as having the highest defection rate, that individual successfully increased their closed sales by 78% and went from being the worst performer on the team to one of their top performers.

DEALERSHIP #2

This store needed a way to identify any potential problems with their lead mix to see which sources were underperforming and why. Using the same defection analysis technology as Dealer #1, they were able to determine the issues they were having with their highest defecting lead source were due to external factors outside of their control – rather than a lack of effective internal follow-up. They then confidently decided to cancel this lead provider and put those marketing dollars back towards their bottom line.

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Ninety days later, they saw a 61% average increase in salesperson performance after removing that lead source – not to mention they were able to free up a total of 40 man-hours per week that were previously devoted to working those high-defecting leads. The best result of all? Four of their salespeople went from being average or below average performers to their TOP FOUR salespeople.

And they didn’t stop there. This dealer applied the same technology to define which model(s) in their inventory represented the most defections specific to their salespeople so they could go after leads tied to underperforming models more aggressively. Model A represented the most opportunity for improvement, and again within 90 days, they increased closed sales specific to Model A by 51% and reduced defections by 30%.

What we can conclude from the examples listed above, is that technology can help your people in a multitude of ways. Technology can help your salespeople close more deals and reduce their defection rates. Technology can help your people free up wasted time chasing leads from a faulty source. Technology can identify which models your people struggle with the most in order to boost specific model performance. Technology can even tell you if your customers are leaving your store to buy the same model somewhere else, or if they’re defecting to another brand entirely.

But the most important thing to take away is that technology in the digital age still doesn’t sell cars. It can do a lot to light up the right track for your people to do just that, but at the end of the day your salespeople need to know your inventory like the back of their hand – what makes it better than competing brands or models, and what makes doing business with you a better option than anywhere else.  

The truth in a current landscape littered with lies is that there’s no way for any one dealer to know everything they need to know about their overall market, which models represent the most opportunity for their store, and if their salespeople are doing their jobs and following up with leads appropriately. That’s where the technology and data come into play. With a complete view of who is struggling and exactly what they’re struggling with during the initial contact and follow-up process, dealers can take immediate action to help their salespeople reduce defections and improve their performance across all facets of their sales operations – so they can be one of the 2.4 dealerships (at least) with a shot of winning the sale.

The Top 5 Benefits of Using Test Drive Incentives

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Contrary to popular belief, vehicle purchase decisions are still being made at physical dealerships, most likely following a test drive – NOT exclusively online. By using targeted test drive offers on your website, third-party sites and across channels, Dealers can positively disrupt a customer shopping online just long enough to influence them by giving them a reason to visit your showroom instead of your competitors’. Test drive incentives are one of the most cost-effective marketing tactics, consistently delivering buyers into Dealer showrooms and in the drivers’ seat of a vehicle. Below are the top five benefits of using test drive incentives at your dealership.

1.      Drive High Intent to Buy Showroom Traffic

Convert your highest intent-to-buy website traffic and third-party site traffic into showroom visits with highly targeted, private test drive incentive offers, redeemable only by test driving a vehicle at your dealership. By presenting customers browsing your inventory online with a $25-$75 incentive to test drive one of your vehicles, you’re giving them a reason to visit your store over the competition. We know shoppers viewing specific inventory pages online are lower down in the purchase funnel, therefore using incentives only further increases your likelihood of converting online traffic into showroom traffic.

2.      Execute Custom Incentive Campaigns Based on Your Greatest Areas of Opportunity

With science on your side, you can see whether the leads in your CRM ended up purchasing from you or someone else. Being able to see where, how and why you’re losing sales makes it easy for Dealers to make smarter decisions about how to spend finite, often unvalidated marketing dollars. Test drive incentive campaigns can be executed across all digital channels and customized in-flight to support each Dealer’s unique initiatives. Target underperforming models, ZIP codes or lead sources with higher value incentive offers to reduce your defection rates. In addition to your website visitors, send email incentive campaigns to re-engage all your third party leads and further combat defections and drive customers into your showroom.

3.      Increase Incremental Sales

New vehicle sales may start online, but they end at the dealership. The best digital marketing tools attribute all sales and showroom visits back to a single offer or campaign, so your ROI is never in question. Use trackable test drive incentives across channels as one of the most effective, cost-efficient ways to get customers in your showroom and behind the wheel, while properly attributing incremental sales directly back to an offer. Leads generated from these private offers consistently close at both a high rate and a low cost-per-sale.

4.      Increase New-to-Brand, Repeat Buyers

Car buyers today might be less brand loyal than ever before. CarMax says only 19.4% of their customers in 2017 purchased the same brand as their trade-in, while the remaining 80.6% bought a different brand. Our own studies show that across all OEMs, an average of 78% of buyers that submit an AutoHook test drive lead are new to the brand, meaning these are not repeat customers that would have come in anyways. If you’re able to provide your customers with a great initial buying experience when they come in to redeem their free gift card, the chance of them returning for a second or third purchase increases, thus improving your likelihood of gaining repeat, loyal buyers.

5.      Increase Lead Conversion

This one might be a given, but it had to go on the list. We know Dealers have the best chance of converting a lead to a closed sale when they can get the customer physically in front of them. Getting customers offline and into the showroom is the entire purpose of using test drive incentive offers.

THE EXECUTIVE EDITION: Lies the Digital Age Told You About Selling Cars

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| by David Metter, President of AutoHook powered by Urban Science

In Part I of Lies the Digital Age Told You About Selling Cars, we overturned one of the most blindly accepted industry-wide standards about the current state of consumer car buying behavior. For far too long, the assumption has been vehicle shoppers have everything they need to make a purchase decision online, and they already know what they’re buying before ever stepping foot in a showroom. The common misconception has been that the average consumer in the digital age only visits one dealership before purchasing a vehicle.

What we found after surveying 2,748 U.S. consumers that have purchased a car in the last year is that the above statement couldn’t be further from the truth. In reality, not only does the average customer visit at least 2.4 dealerships before making a buying decision, but almost half – 46% – said they visited three or more dealers before purchasing. Over a quarter of our sample size, 26%, said they visited four or more dealerships before buying. All of this data was collected by AutoHook and Urban Science in May of 2018 from people who purchased or leased a vehicle within the last year – not from a published study conducted five years ago.

As a former general manager of a dealership, CMO of a privately-held dealer group and as a marketer in general, I found the fact that roughly 1 in 4 people (26%) in the year 2018 visit four or more dealerships before buying a car to be personally absurd. Though surprising, this statistic solidified a new truth about the state of our industry. Contrary to what dealers have been told, the in-store experience is arguably more important in the digital age than ever before in the history of the car business – and for several reasons.

The most prominent reason being if a customer has a bad experience with one of your salespeople when they come in for a test drive, they will leave and buy from someone else. If they go to two dealerships and have a bad experience at both, they will go to a third and even a fourth dealer to buy from the one that provides them with the experience they expect and deserve.

Just like everything else that has surfaced from the digital age, car shoppers have a LOT of choices when it comes to what they’re going to buy and who they’re going to buy from. Purchase decisions are still made at physical dealerships, most likely following a test drive – NOT exclusively online. Shoppers in-market for a new vehicle don’t have their minds made up about what they’re going to buy by the time they visit their first dealership. Outsell says 6 out of 10 car shoppers enter the market unsure of what they want to buy. Our own research and survey data consistently shows 78% of people are still considering multiple brands by the time they visit their first dealership.

So we as an industry, we HAVE to get this right. Instead of operating based on pure, often biased assumption, dealers need to seriously reconsider their order of priorities in terms of how they run their business and where they spend their money. The digital age has armed us with so much intellectual power, yet at the same time, it’s made us a little lazy. It’s cast a shadow over what’s really important – defining value and personal worth by likes, clicks and follows rather than interpersonal relationship skills.

Part II of Lies the Digital Age Told You About Selling Cars verified the auto industry has become too quick to rely on technology as a crutch to do the work for us, rather than picking up the phone and having a conversation - or dare I suggest having the inventory knowledge and social skills to not only sell a car, but to foster ongoing relationships that lead to repeat, loyal customers. It is officially time for a new dialogue to emerge. The question we as an industry need to be asking is not how can we leverage new technologies to help us sell cars, but how can we leverage new technologies to help our salespeople sell cars?

Rather than answering the above question based on my expertise and years of experience in this business, I’ll share the real-life success stories of how two actual dealerships in the digital age are using great data processed through great technology to help their people sell more cars and lose fewer opportunities.

DEALERSHIP #1

One of our dealer clients needed an accurate way to measure the true effectiveness of their follow-up process by knowing what was and wasn’t working within their current lead mix as well as how many opportunities their salespeople sold compared to how many they lost to competitors. Using their individual salesperson data, we analyzed each person’s sales and defections and identified who had the most potential to improve. We then pinpointed the time frame during their follow-up process when their people struggled the most, which for this particular store was during days 0-4 after a lead hit their CRM. Lastly, we exposed their highest defecting lead source.

Armed with a roadmap highlighting their greatest areas of opportunity, the owner of this dealership shared this data with his sales staff and reviewed each person’s sales and defection trends with them one-on-one every month. He created an environment of transparency and friendly competition by making this defection analysis technology available to all his salespeople, thus holding them personally accountable for every sale they lost in addition to what they closed.

The dealer then helped his staff implement a more aggressive follow-up strategy for working leads 0-4 days old. He provided additional training on how to better work leads that came from their highest defecting source (especially during this time frame). He took the time to listen to feedback from all his salespeople and found opportunities for peer coaching to help further reduce their collective number of defections. He also implemented a system to reward the people who showed improvement each month.

With a refined follow-up strategy fueled by better prepared, more empowered salespeople, they saw the following results in just 90 days:

  • Their overall defections decreased by 89%, with a 44% decrease in defections specifically during days 0-4 post-lead.

  • They increased their number of closed sales tied to their highest defecting lead source by an astounding 242%.

  • Most importantly, when it came to the salesperson identified as having the highest defection rate, that individual successfully increased their closed sales by 78% and went from being the worst performer on the team to one of their top performers.

DEALERSHIP #2

This store needed a way to identify any potential problems with their lead mix to see which sources were underperforming and why. Using the same defection analysis technology as Dealer #1, they were able to determine the issues they were having with their highest defecting lead source were due to external factors outside of their control – rather than a lack of effective internal follow-up. They then confidently decided to cancel this lead provider and put those marketing dollars back towards their bottom line.

Ninety days later, they saw a 61% average increase in salesperson performance after removing that lead source – not to mention they were able to free up a total of 40 man-hours per week that were previously devoted to working those high-defecting leads. The best result of all? Four of their salespeople went from being average or below average performers to their TOP FOUR salespeople.

And they didn’t stop there. This dealer applied the same technology to define which model(s) in their inventory represented the most defections specific to their salespeople so they could go after leads tied to underperforming models more aggressively. Model A represented the most opportunity for improvement, and again within 90 days, they increased closed sales specific to Model A by 51% and reduced defections by 30%.

What we can conclude from the examples listed above, is that technology can help your people in a multitude of ways. Technology can help your salespeople close more deals and reduce their defection rates. Technology can help your people free up wasted time chasing leads from a faulty source. Technology can identify which models your people struggle with the most in order to boost specific model performance. Technology can even tell you if your customers are leaving your store to buy the same model somewhere else, or if they’re defecting to another brand entirely.

But the most important thing to take away is that technology in the digital age still doesn’t sell cars. It can do a lot to light up the right track for your people to do just that, but at the end of the day your salespeople need to know your inventory like the back of their hand – what makes it better than competing brands or models, and what makes doing business with you a better option than anywhere else.  

The truth in a current landscape littered with lies is that there’s no way for any one dealer to know everything they need to know about their overall market, which models represent the most opportunity for their store, and if their salespeople are doing their jobs and following up with leads appropriately. That’s where the technology and data come into play. With a complete view of who is struggling and exactly what they’re struggling with during the initial contact and follow-up process, dealers can take immediate action to help their salespeople reduce defections and improve their performance across all facets of their sales operations – so they can be one of the 2.4 dealerships (at least) with a shot of winning the sale.

 

Lies the Digital Age Told You About Selling Cars [Chapter 3]: Power to the [Sales] People

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| by David Metter, President of AutoHook powered by Urban Science

I’d like to begin with a subtle reminder of the harsh reality of how car shoppers in today’s technology-first world really feel about the car buying process. Below are a few highlights to help paint the picture…

  • 52% of car shoppers feel anxious or uncomfortable at dealerships and millennials are leading the pack in their dislike, with 56% saying they’d rather clean their homes than negotiate with a car dealer. (The Harris Poll Insights & Analytics)

  • “Stressed,” “overwhelmed,” “taken advantage” and “panic” were among the top 10 words used by female car shoppers when reviewing their in-dealership experience. (CDK Global)

  • Studies suggest that some Americans would rather get a root canal than take their car to a dealership. (Automotive News)

I could go on for days with stats like this, but we have more important things to discuss - such as how to change the current perception. The upside to all the negativity around car buying is that we have A LOT of room for improvement. And dealers aren’t necessarily to blame either. The problem is, what we’re told about consumer behavior in the digital age compared to what car buyers themselves actually do in the digital age are often two very different things.

We live in a constantly connected, convenience-based universe inundated with unsanctioned opinion and as a result, we’ve become conditioned to rely on technology to solve problems. We know the in-store experience is important, but we’re too fast to look to the latest technology to solve the problem rather than focusing on what we can actually control. Not just something dealers have the power to influence, but also something that may ultimately yield the highest ROI out of any available technology in the market…which is your salespeople. How did I come to that conclusion? Funny you should ask.

In the article, “What’s the REAL Cost of a Bad Salesperson?” I dissected the monetary difference between what good salespeople can contribute to your dealership over time versus what just one bad salesperson could cost you. A salesperson selling 15 cars a month yields about $270,000 a year in gross profit. Then when you factor in the lifecycle of the vehicle and any potential service revenue associated, you’re looking at a minimum value of $325,000 a year in pure gross profit for any one good salesperson. Read the blog if you don’t believe the numbers.

Now consider the reverse. One salesperson that loses 15 sales a month to one of your competitors is costing your dealership $325,000 a year in gross profit. Multiply that by just four people and you’re looking at $1.3 million in lost gross profit a year. But here’s the kicker. Without the right data processed through the right technology, you would have no way of knowing how many customers your salespeople interacted with that left and bought a car from someone else. Perhaps due to a negative experience?

A recent study from Cox Automotive suggests that initial experience may be more important today than ever before. The rate of car buyers returning to dealerships where they have previously purchased or leased from is increasing. 40% of new vehicle buyers in 2018 are repeat dealer customers compared to 31% in 2016. This is great news, but it puts even more pressure on getting it right for that first-time buying experience and, in most cases, your sales team is directly responsible for it. Customer loyalty and the chance of them coming back to buy a second or third car depends on the experience your dealership provides them with upon arrival. So your people better be armed and ready.

Jeremy Beaver, COO of Del Grande Dealer Group, told Automotive News, “Retention is the Holy Grail, and the experience is what drives retention. You have to shift away from a ‘visit’ mentality and think about a ‘lifetime value’ mentality.” I could not possibly have said it better myself. This is an example of a dealer that just GETS IT – both on the sales side and on the service side. Their Fixed Operations Director, Trully Williams said, “The technology enhances the experience, but you start with the fundamentals of people and process. You get those right and then add the technology.”

There is a seriously infinite amount of opportunity for improving your dealership’s operational process, and it starts with your people. Dealers don’t have time to guess who their good and bad salespeople are – that’s where the technology comes in. You can’t retain good salespeople if you don’t have the technology to know who they are. The right technology can tell you who is letting the most opportunities walk out the door. It can tell you which leads your people are struggling with and the exact time frame during the month they struggle with the most. There’s a lot technology can do to help your people and to enhance the car buying experience, but it can’t drive the car buying experience entirely. At least not before flying cars become a thing.

So before your brain explodes from all the numbers and reporting being thrown at you during any given moment, or from all the external pressure you’re getting to improve 50 different KPIs at the same time, remember that your people are what gives meaning to the metrics. Retention, should be your absolute number one focus and priority in the digital age – and that applies to both your salespeople AND your customers. Running a successful dealership ultimately translates to retaining good salespeople, but you need the help of good technology to be able to do that. Ironic, I know.

 

Stay tuned for the upcoming fourth and final chapter of Lies the Digital Age Told You About Selling Cars: The Executive Edition. Dealer Managers will learn real-life examples of how to apply new technologies to directly support the success of your salespeople instead of relying on technology to do the selling for them. The more you can do to help your employees be successful at your dealership, the more likely you are to retain them, which ultimately leads to everyone’s mutual benefit – not to mention the benefit of your bottom line.

Planet Honda Sees Surge in Targeted Model Sales with TrafficView™ & AutoHook's Private Test Drive Offers

Planet Honda enlisted AutoHook to help improve their overall sales performance by executing the following goals:

  • Increase sales specific to the models that represented the most opportunity for their store

  • Re-engage lapsed leads over 90 days old and convert them into showroom visits

  • Identify and eliminate ineffective lead providers to reduce wasted marketing dollars and focus on the leads most likely to close

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Learn how this dealer increased their overall close rate by 60.5% despite a 30% reduction in lead volume!

Click below to see the complete set of results.


Lies The Digital Age Told You About Selling Cars [Chapter 2]: Are We Using Technology as a Crutch?

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| by David Metter, President of AutoHook powered by Urban Science

There is this perpetual echo of the word “disruption” in the car industry. What will be the next big disruption? What do we need to prepare for that will change everything we know about selling cars? The reality is disruption is largely incumbent upon technological advancements and the rate of societal adoption to these new, uncharted territories dominated by things like artificial intelligence and machine learning. These future “disruptors,” such as the rise of alternative online retail formats, subscription services or the transition from gas-powered vehicles to autonomous, connected cars are impossible for any one dealer or OEM to predict, let alone control.

Therefore, I’d like to propose a new approach. What if instead of the next big disruption we focused a little more on what we can control – the constants – the parts of the equation that aren’t powered by data or machines. What I mean by the constants is the people, or more specifically, the relationships that form when a customer goes to look at a car and has a positive interaction with a salesperson while doing so. The value of relationships when it comes to selling cars has been vastly undermined by the shiny new innovations of the digital age.

I think we’ve become so infatuated by the latest technology and the newest cutting-edge solutions to selling cars that we forgot about the fact that technology becomes useless without the people behind it who make it work. Relationships in the digital age still take precedence over technology and despite the advancements we have yet to see, technology in all its glory can’t replace social skills. All this talk about connectivity and connected devices yet I think we’re failing to connect the dots when it comes to knowing what will ultimately yield the highest ROI for dealerships, both in today’s world and in the future – knowing who your best salespeople are and how to keep them.

We as an industry need to stop using technology as a crutch. We’ve become so focused on the next big disruption in digital marketing that we’ve started to rely on the help of digital tools entirely, forgetting that cars are still bought and sold by actual people at actual dealerships. Deloitte’s 2018 Global Automotive Consumer Study reported car shoppers still rate physical interactions with a vehicle as critical to their buying decision – with over 8 out of 10 needing to see the vehicle in person before making a purchase decision. So, if this is the case, why are we spending the majority of our time and money on the minority of the buying public?

It’s all about striking a perfect balance between technology, the right data and the right people. It takes all three to get the job done. Technology is a powerful tool that can be leveraged to enhance or continue existing relationships, but it can’t create them in the first place. When it comes to the right data, we are extremely fortunate because our solutions are powered by the Urban Science® DataHub™, which allows us to be the first to know when a customer buys a car, what car they bought, where they bought and if they didn’t buy from you. And we get that sales data and the equally important defection data within days – not months.

In the same way that technology lacks value without good people, the right data can uncover things about your salespeople you otherwise never would have known. For example, you consistently see all these closed sales opportunities by let’s say, “John,” so naturally you think John is one of your best salespeople. But how many opportunities is John losing every month to one of your competitors? You’d never know without the right data. So it all goes hand-in-hand. The person selling the most cars may be losing more opportunities than he or she is closing, so your “best” salesperson can quickly become your worst salesperson when you can compare what they’re winning to what they’re losing at the same time.

Having that ability to layer sales and defection data on top of your CRM data is critical if you want to operate more efficiently. Without it would be like making decisions for your dealership based on a cost-benefit analysis but forgetting to include the cost part of the equation. It’s the only way to add enough dimension to your CRM data to make it truly actionable – instead of looking like Flat Stanley.

Having the right data combined with great technology can help your operations in a multitude of ways. It can suppress the leads in your CRM that have already purchased so your people can stop wasting time following up with them. It can pinpoint the ideal time and channel to re-engage your lapsed or dormant leads. Technology can help dealerships interrupt a customer while they’re shopping online and grab their attention just long enough to influence their decision-making process. It can also help ensure a customer chooses to visit your showroom instead of your competitors with things like test drive incentives.

The reality is technology will never be able to stop a customer from walking out of your dealership after a negative experience with one of your salespeople. Furthermore, when it comes to closing lead opportunities, your salespeople may already be at a disadvantage. A recent Automotive News dealer training webinar reported that as many as 98% of qualified leads fail to result in closed business. So instead of pouring all your focus into staying ahead of the next big disruption promising more and better leads, maybe we need to shift our focus back to the one thing capable of converting those leads into sales once they hit your showroom – your people.

Great employees are what gives meaning to the capabilities that stem from great technology. Your salespeople are the foundation needed to ensure data-powered solutions work in favor of your dealership. In a word, the future state of our industry’s digital landscape is unpredictable. But there are two things we do know. Change is constant and retaining great salespeople is still paramount. There’s not a lot we can do to control the rate of change, but fortunately for dealers, there’s a lot we can do to help our salespeople and to make sure we're holding on to the good ones.

 

Stay tuned for Lies the Digital Age Told You About Selling Cars, Chapter 3: Power to the [Sales] People to learn more about the importance of retaining your best salespeople and how to provide a better in-store experience.

THE AUTOMOTIVE PARADIGM SHIFT: Is it Time for Science to Take the Wheel?

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by David Metter

In baseball, one slight alteration in the way a hitter approaches the ball can be the difference between strike one and a home run. If a batter’s swing is off by only a few millimeters, or even just a fraction of a millimeter, this makes all the difference in how powerfully they hit the ball, foul it off, or if they strike out entirely.

I believe it's time to take a step back and rethink, rewire, reverse, and reevaluate the way we sell cars today. In order to solve the problems dealerships face when it comes to their operations and overall sales performance, we have to change how we approach the ball. Once again, it's time to disrupt the game and attack from a new angle.

Vendors, dealers, agencies, digital advertisers, partners, and OEMs all have the same end goal - to sell more cars and gain more customers. The dealerships and the experiences customers have at those dealerships determine whether or not people buy cars - so dealer support is what it's all about.

The car business is in desperate need of a complete paradigm shift. Revolution starts with forgetting everything you think you know and making decisions based on facts and a scientific approach.

Thomas Kuhn is an American physicist and philosopher regarded by Stanford as one of the most influential philosophers of the 20th century, if not the single most influential. The University of California, Berkeley, credits Kuhn for the defining paradigm shifts and the idea of scientific revolution as one in the same.

“Kuhn famously distinguished between normal science, where scientists solve puzzles within a particular framework or paradigm, and revolutionary science, when the paradigm gets overturned.”

During times of scientific revolution, anomalies disproving old theories are broken down, and new ones form to take their place in what’s known as a “paradigm shift.” So how does this relate to selling cars? Science’s definition of a paradigm shift is really just a fancy way of saying, “You don’t know what you don’t know…until you know.” Or in other words, you’ll never be able to know what you’re winning until you know what you’re losing. 

The fact is, science is the only paradigm to live by in the information age. Undoing everything we think we know is not an easy task, especially for an industry overpopulated with often unjustified ego. There is this mindset that dealers only need to measure themselves against themselves. But when you think about it, that’s a myopic way of looking at your business.

So if you sell 200 cars this month and you only sold 170 last month, that means you're improving, right? Not necessarily. To be able to see what’s really happening in your market, we need to look at the entire landscape of the opportunities you’re working. Selling 200 cars is great, but 240 is better – and having the ability to see all these existing opportunities without spending an additional dollar on your marketing, that’s revolutionary.

Another common misconception is that if you don’t sell a car within the first week or two of the lead hitting your CRM, that customer is not going buy. Seems logical, right? Wrong – and here’s a perfect example…

One of our dealerships was seeing a jump in sales between day 8 and day 14 post-lead in their CRM. They did a great job picking it back up and getting more sales during this time frame. However, in actuality during this same time, more than TWICE as many customers purchased from one of their competitors. The data shows that during days 8-14 when this dealership thought they were killing it with 60 sales, there were 150 customers, marked opportunities in their CRM, that they touched, that went on to buy a car somewhere else. That’s a problem.

When we approach this same data set from a scientific perspective, we see something entirely different that our industry has never thought to focus on before – the loss. If we can see all the opportunities you let slide through the cracks, along with the people or sources tied to those defections, we can then see a new side of an often-skewed story. We can’t just look at the wins, as there is a lot we can learn from knowing the number of customers our dealership encountered that left to purchase somewhere else.

Because the dealership in the example mentioned above had never been able to compare closed sales versus defections in this capacity, they really had no idea what was going on both in their own store and in their market overall. During a time frame where they thought they were winning, they lost 100 sales to same make competitors and another 50 to competing brands in their market.

So we start to see these ailments, or weakness that start bubbling up to the surface. It’s also so important to keep in mind that each and every dealership is unique – and that’s fact, not opinion. If you attack the way you sell cars with a science-based approach, you start to see sales and defection data differently than you’ve ever seen it before and the facts become crystal clear.

Never underestimate the power of knowing what you’re losing. Think about it this way; it’s a lot like choosing to watch a movie in black and white when you have the option to watch it in 3D HD, multidimensional color. Which would you choose when it comes to the way you view your CRM data?

 

CURB THE CHURN: How to Identify & Retain Your Best Salespeople

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by David Metter, Co-Founder and President, AutoHook powered by Urban Science

Dealership employee turnover rates are notorious for being amongst the highest out of all retail sectors. Unfortunately, dealers have been forced to absorb the spiraling costs associated with a lack in salesperson retention, which only appears to be getting worse. NADA’s latest Workforce Study reported salesperson turnover rates are at a record high of 74% - up 7% from last year.

What we don’t often talk about is the broader implications high employee turnover can have both on dealers and on the industry as a whole. Consequences of losing good salespeople can transcend beyond an individual dealership level, as any significant reduction in customer retention or customer loyalty has the potential to damage the reputation of an entire brand.

Dealers aren’t shy about communicating the adverse effects high churn has on their business, both in their operational processes and when it comes down to their bottom line. Wards Auto says, “The impact is significant, causing decreased sales and profits, and diminished customer loyalty,” which we know can be detrimental to the health of any business.

MAXDigital recently surveyed nearly 400 dealers in the U.S. and found 78% struggle with issues related to high staff turnover. The root of the problem is two-fold in that good salespeople aren’t just hard to keep, they’re hard to find in the first place. Ninety percent of dealers surveyed said “Hiring good salespeople is hard,” and finding candidates with previous sales experience let alone automotive sales experience is even harder.

*Source: 2018 MAXDigital Dealership Process and Salesperson Turnover Survey    
  
  
   
   
   
   
   
   
   
   
   
   
   
 

*Source: 2018 MAXDigital Dealership Process and Salesperson Turnover Survey

Over time, chronic retention problems add up and can cost dealers hundreds of thousands if not millions of dollars a year. A study by Driving Sales and Hireology determined the average cost of recruiting, training, and lost productivity for each salesperson is $45,000 (and that was back in 2016). In my last blog, we defined the value of a good salesperson over the course of one year to be more than $325,000 in pure gross profit. Add that to the cost of recruiting and training and dealers are losing out on over $365,000 per salesperson, per year.

The need for dealers to be able to identify their best salespeople in order to retain them is more critical now than ever before.

Why? Because people still heavily rely on face-to-face, personal interaction - especially when it comes to making big purchase decisions. The larger the purchase, the more inclined customers are to buy from someone they trust. Despite the abundance of online vehicle research tools at their disposal at any given micro-moment, relationships will always take precedence. And people naturally gravitate towards both consistency and what is familiar to them. They’re also much more likely to buy a second and a third car from the same person they already know and trust.

So how do we solve this industry-wide employee retention problem? There are three components that we know make up the formula for properly assessing your salespeople in order to help curb the churn:

1.     Know What You’re Losing

When it comes to evaluating the true performance of your salespeople, having the ability to view CRM data through a scientific lens is essential. CRM companies do what they do very well, but they only show one dimension of a highly multidimensional story – the wins. But what about the leads your salespeople touched that defected? Without that defection data, it becomes near impossible to properly identify the best performers on your team based on the opportunities they’re working.

In order to see who the real winners and losers are representing your dealership, you need a way to visually compare the number of leads each person sold each month in addition to the ones they lost and who they lost them to. Only then can you see who is really the most effective or ineffective because you have the complete story. You can make much better decisions on who or what needs to change based on a real visual of what you’re losing.

2.     Leverage the Right Technology – Rooted in Science

What we’ve never seen before at the dealership level, is science taking a leading role in how we evaluate our sales staff. If science-based technologies can tell you the people that consistently prove to be growing in a positive direction, or reducing their defection rates over time, then science can play a role in helping dealers implement compensation plans that serve and reward only their best people.

Keep in mind, it’s important to give newer technologies or data-driven solutions time to build, learn and improve. The more sales and defection data we can collect over time, the more accurate and actionable the tools that leverage this data will be at identifying your best (and worst) employees.

3.     Play to Your Strengths

I’ve been in this business for 27 years. If there is one thing I know without a shadow of a doubt, it’s that the chances of a salesperson closing a sale are greatest when the customer is physically in front of them. So, in addition to leveraging the right technology to evaluate your staff, leverage technology that will support what we know to be the greatest strength of any person that knows how to sell a car… get the customer in the showroom.

If the goal is to improve your lead follow-up process and eliminate inefficiencies in the way you operate (which by the way is always the goal) then it’s absolutely vital to have the tools in place that can pinpoint both the strengths and the weaknesses of your team. When it comes to retention, dealers are much more likely to foster an environment of happy employees if they play into their peoples’ strengths instead of wasting money, time and energy attempting to fix what they’ll never be good at. As stated in the national bestseller, StrengthsFinder 2.0, “People have several times more potential for growth when they invest energy in developing their strengths instead of correcting their deficiencies.”  

The takeaway here is to place a heavier focus on solutions that are proven to get people physically in the door, where you have a much higher chance of getting them behind the wheel for a test drive, building a personal relationship, selling them a car, and retaining their business. Test drive incentives are one tactic we know works. Pair that with a bulletproof lead follow-up process and what you’re left with is a prescription for lowering defections tied to your salespeople, higher close rates, and better-rewarded, happier employees.

In summary, everyone wants to retain salespeople and everyone wants to retain the right salespeople for their respective business. So many dealership compensation plans are set up to benefit the underperformers – which is completely counterintuitive to reducing turnover. Until now, it’s been impossible for dealers to adequately compensate their all-stars and overperformers because they’ve had no way to identify them. Moving forward, dealers can take this information and adjust their compensation plans to retain the right salespeople and make the necessary changes to get rid of the rest. After all, it would only make sense to reward the people that are rewarding you.

 

Morrie's Brooklyn Park Nissan Cuts Defection in HALF with AutoHook’s Traffic Conversion Analysis (TCA)

NISSAN DEALER CASE STUDY

Morrie’s Brooklyn Park Nissan wanted to prove a particular lead provider was consistently delivering high defecting leads to their showroom. They needed a way to validate their decision to cancel this service by showing incremental improvement in their sales operations after removing the lead source from their marketing mix.

AutoHook's Traffic Conversion Analysis (TCA) validated their suspicions and then some. Not only did they see a 61% average increase in salesperson performance after removing the lead source, but they were able to free up 40 man-hours a week and reallocate that budget towards their bottom line.

TCA didn't stop there. The solution helped the Morrie's Brooklyn Park Nissan see a significant improvement in their operations based on where they were losing the most sales, leading to a 50% reduction in defections to their #1 competitor.

 

See the complete set of results and how we did it. Click below to read the complete case study!

What's the REAL Cost of a Bad Salesperson?

| by David Metter

If you think good salespeople are expensive, try bad salespeople. In 2017 alone, dealership employee wages totaled over $66 billion and “auto retail continues to boast one of the highest average salaries of any industry,” according to NADA’s annual report. Combine infamously high turnover rates with a decently-compensated workforce, and I’d argue the ACTUAL cost of a bad salesperson in the car business is a lot more than you think. As someone who spent my first seven years at a dealership on the selling floor, I was always frustrated when it seemed like our comp plans served the worst salespeople, not the best ones. 

To attach a dollar amount to what a bad salesperson could be costing your dealership, we first have to define the value of a good salesperson by doing some simple math. According to Automotive News, last year’s average retail gross profit per new vehicle sold was just over $2,000. Let’s call it $1,500 to be on the conservative side. So, a good salesperson selling 15 cars a month at an average gross profit of $1,500 a car is generating $22,500 in gross profit a month for your dealership, or $270,000 a year.

But that’s really not their true value, and this is why…

A salesperson selling 15 new cars a month equates to 180 customers a year. Then you have to factor in the lifecycle of the vehicle and the potential service revenue associated. Let’s say out of those 180 customers, half of them serviced with you. And, of those 90, each returned for service five times over the car’s lifespan. That’s a total of 450 service visits. According to Urban Science, the cost of an average service RO is $128.88. Do the math, then add it to the gross profit and you get $327,996. (My math is below for anyone in question).

·      450 Service Visits x $128.88/RO = $57,996 + $270,000 = $327,996

So in reality, for a year’s worth of customers, we’re talking a value of over $325,000.

That number sets the stage for what a bad salesperson could be costing you – because you can apply the same logic to 15 lost sales, or defections to competing dealers. If you have someone you think is one of your top performers selling 15 cars a month, but they lost 20 quality opportunities, that’s the equivalent of $30,000 a month, or $360,000 a year in LOST profit. Are you willing to lose a third of a million dollars from employing just one faulty salesperson?

If that cost isn’t enough for concern, there’s also the fact that there could be multiple people under your rooftop disguised as your “best” performers. But when you overlay all the opportunities they touched that we know defected – or purchased from a competitor – on top of what they sold, the story shifts and their actual sales effectiveness comes into focus.

The takeaway here is it’s not just about the 20 cars you could have sold. It’s about the dollars attached to those sales and the potential future profit in service revenue and repeat buyers. We all know the closing ratio on a customer is higher if they’ve already purchased from you. Selling a second and third car to someone who already knows and trusts you is a lot easier than selling the first. It becomes easy to watch the total worth of a single good salesperson exponentially expand when you know their number of closed opportunities consistently exceeds what they’re losing – but you need that defection data to get the REAL story.