Lone Star Chevrolet is the number one Chevrolet dealership in overall sales volume nationwide.

As for Internet sales units, last year, Lone Star Chevrolet was in the top 100 dealerships nationwide among all brands – boasting 3,000 new and used Internet sales units. And the numbers for this year are heading in the same direction.

Lone Star Chevrolet is ahead of the curve in implementing innovative digital technology and best practices to capture today’s auto shopper leads and convert them into Internet sales.

Joe Healy, Lone Star Chevrolet’s Internet sales director, recently gave Dealer magazine the inside scoop on why this is so.

Joe, first of all, how did you get into the automotive industry?

I got in car business 10 years ago, after 20-plus years in the grocery business. My degree is in food marketing. I thought I’d be a career grocery man, but a little company called Wal-Mart came along and took the fun out of the grocery business. So, one day I met somebody at church who asked me to go in the car business. I prayed about it, tried it and loved it. Now it’s about doing it forever.

After working as Internet director at Lawrence Marshall Automotive in Hempstead, TX, I came on as Internet director at Sonic’s Lone Star Chevrolet, five years ago. I’m also Internet director for Sonic’s Lone Star Ford and Ron Craft Chevrolet – Cadillac, both in the Houston area.  I love what I do.

Share with us some of your secrets for success?

We’re going fast forward with video.  Recently, I hired a full time professional videographer to shoot our videos.  He likes his job – when it’s not raining – and does about 15 videos per day: walk-arounds, service videos and “how-to videos” – everything from how to pair your Bluetooth with your cell phone to how to operate your navigation system.

One of the advantages of our video walk-arounds is we can change the audio anytime. Say a rebate changes on the Suburban, we just change the voice overlay for that video. So the customer doesn’t realize we may have shot that video a month ago. It looks fresh.

Lone Star does an owners’ clinic every quarter and we take the most frequently asked questions and do videos on those topics and put them on YouTube. We also send video in email to thank customers for their business and also to get new business.

All this video has a dual purpose. It’s customer centric, plus it helps us online with search engine optimization (SEO).  Google pays attention to what happens on YouTube. So posting a lot of videos ranks us higher in the search engines. This in turn drives traffic to our websites.  We have one video on YouTube that has enjoyed close to 9,000 views.

How do you manage your websites?

I manage three websites for Lone Star Chevrolet. We have our Dealer.com-supported e-commerce website, as does every Sonic dealer in the nation. Then we have our Cobalt-supported website, which is our factory/Chevrolet website. And, recently we added another website we are really excited about – hosted by DealerOn – which focuses on Lone Star Chevrolet’s service.

Before we set up our service website, when I was doing my due diligence, I met the folks at DealerOn at a Digital Dealer Workshop in Houston. I learned that when most people Google anything for service, they come up with Pep Boys or Sears. They don’t come up with car dealers. I wanted to change that.

So several months ago, we launched this new website strictly for service. We have tons of coupons on it –for oil changes, sets of tires, etc. Research shows that if a customer buys their tires from the dealership, they are more likely to have their service done at the dealership – or wherever they buy their tires.  Furthermore, if they buy their tires from us, they see how clean our facility is, and how well-trained our staff is. That makes them want to come back.

Our Dealer.com site, branded for Lone Star Chevrolet, gets 35,000 visitors a month, www.lonestarchevrolet.com. We get about 14,000 visitors per month on the factory site supported by Cobalt, www.lonestar-chevrolet.com.

And, thousands of people are already visiting our new service site looking for coupons on www.lonestarchevroletservice.com. This is remarkable because it usually takes a long time for Google to recognize a URL. We do 160 to 175 ROs per day.  We have 40-plus bays in our air-conditioned shop and we have a waiting list for technicians to work here, because we have such a good reputation.

Service usually represents more than 50% of the store’s profit, so this new DealerOn website is just unbelievable. I can see the day when more people will visit our DealerOn service site than our e-commerce site. Right now, we have a 120 employees working in our service area out of a total of 205 employees and as business grows, so will the number of employees.

From these three websites and our third-party sales leads, we get a little over 2,000 Internet leads per month and we sell about 250 new and used cars from those leads. Our conversion ratio for Internet leads is a little better than 11%.

Who are your third-party lead providers?

Our newest lead provider is ActivEngage, which is live chat. That has turned out great. We get almost 200 chat leads every single month, and they are typically further down the sales funnel. When people go on our website and are willing to give their phone number and email address, we close a very high rate – almost 15% of chat leads. Our sales people drop everything they are doing for a chat lead, because they know the customer is usually still sitting in front of their computer.

We also use the standard third-party lead provides, AutoTrader.com, Cars.com and we use TrueCar. TrueCar is a great lead provider for us. They are growing and they entered into a multi-year contract with Yahoo and so, we get a lot of good leads from Yahoo.

We don’t hire the lead aggregators, the traditional lead providers. We think they are dinosaurs. We didn’t like the idea that we were buying leads from them and then they were competing with us on SEM and driving our costs up.

We redirected the money we were spending on those aggregators to our own SEO and SEM and that has worked very well for us. So we don’t have our leads going to five other dealers that are all trying to see who can give the cars away.

Dealer.com, our web provider, manages our SEO and SEM and they have great analytics. We have two other stores, Ford and Cadillac, and I’m able to compare, test and change the SEO and SEM budgets for each according to the month. For instance, March was Truck Month with Chevrolet, so I increased the budget for SEM for Chevy for March.

How do you process your Internet leads?

Lone Star Chevrolet has a staff of 13 Internet sales managers – 10 in new car sales and three in used.  We don’t have a BDC. We don’t believe in them. So the salesperson who takes in a customer will be with that customer all the way doing everything but the finance, because they are not trained in finance.

We have a 15-minute response time guarantee. Our CRM is ELEAD One and our ILM is Nettrak/ADP. When a lead comes into our system, it goes in a round-robin fashion to our sales people.

They are on the clock! At the 10-minute mark, if they have not answered the lead, I move that lead to another salesperson and tell that person they have five minutes to make the call to the customer. It keeps us on our toes.

We call the customer right away to verify equipment to make sure we give them a proper quote. Then our ResponseLogix system sends a price quote and shows our inventory within a 200-mile radius. That’s the beautiful part of this system!

For example, if the consumer is looking for a 2012 Silverado, we’ll quote them two or three – everything from a fully loaded to a basic model, and then we’ll also give them a used car option. We’ll offer a brand new Silverado for $27,000 or a nice certified unit for $14,500.  If the customer has sticker shock at $27,000, then they have the used car option.

Then we have our secret weapon, which I almost hate to tell you, because I know everyone will read this, but if we can’t reach the customer on the phone, then we send the consumer a personalized video that goes something like this:

“Hello (customer name), this is Joe Healy at Lone Star Chevrolet. I understand you’re looking for a Malibu.  I’m going to send you a price quote and I’m going to be with you from ‘start to finish’ helping you find the right car.”

If we have previously talked with the customer on the phone, then we send a video like this:  “It was nice chatting with you. I look forward to seeing you on Saturday. I think you said 1:45. Please make sure you come in and ask for me. I’m going to text you my contact information.”

Texting helps them. We used to ask: ‘Do you have a pen handy?’ They might not have one, or the customer might lose what they write down. But, a text message stays on their phone. It’s handy.

Now, everybody’s on mobile technology. The receptionist tells me: When customers come in and say: ‘I’m here to see…’ they pull out their phone and look at the text message to find out who they are here to see. Texting is a valuable part of our process.

What’s your follow-up process?

Many customers do their online car searches from work and we can’t get them on the phone during working hours. With ResponseLogix and Nettrak, we immediately go into a follow-up mode and for 10 days we hit them hard.

We have something we call ‘40 days and 40 nights.’ Our ILM Nettrak tracks it for us.  If I call a customer at 11 a.m. and don’t reach them, the ILM will make a phone appointment for me to try again tomorrow at 3 p.m. If we don’t reach the customer then, the Internet manager will schedule our call for 7 p.m. that night. Each Internet manager has a daily work plan that includes these call appointments for 40 days and nights. We are very process driven!

Our follow-up system goes a full year. We send prospects newsletters, produced by IMN, which are very effective, and also emails telling them about changes in inventory and changes in incentives, to find out if they are still in the marketplace. Most dealers don’t go a full year; they give up after four or five weeks. We find the year-long program is successful and we get a good closing rate.

Some customers start their research and don’t know if they want a Ford, Chevy or Lexus. By constantly staying in front of them, we maximize our results. I hear it every day from customers who say: ‘Lone Star is the only dealership that stayed with me.’ That helps us sell cars.

As part of this follow-up, we send a personalized video – talking about the model they’re looking for and we include a price. We’re not afraid to show price right up front, and that’s why we’re the number one Chevy dealer in the nation.

Each one of our Internet managers uses a pricing matrix, because of all the discounts we offer – for specific credit union members, AAA members, etc.  We don’t know what the customer is eligible for until we talk to them, but when we send out the price quote, we are fairly aggressive and it’s usually below market price. We give our customers the lowest price we can, because we are totally volume driven.

What is your biggest challenge?

Training. There are two areas that we focus on. The first is customer care and the second is technology.

I call Lone Star Chevrolet the Disneyland of car dealers. It’s a happy place to work and because of that, it’s a happy place to buy a car.  We care very much about our employees; we invest in them (see related Dealer cover story this issue) and they in turn care very much about our customers.

We send our staff to the Disney Institute to be trained in caring for the customer. I never knew anyone who went to Disneyland who came back and said they didn’t have a good time. They come back and say all positive things: ‘It was clean. I had fun. I was blown away. The customer service was way beyond expectations.’

So as a result of the Disney training and our own internal training, our employees are extremely effective in building customer loyalty.  No company is perfect, but our policy is to make the customer happy and create a customer for life. We realize that reputation management is critical for our long-term success and Lone Star Chevrolet’s reputation and track record have always been that of integrity and performance.

Steve Blanchard, our GSM, really understands that, and he really understands the Internet, as well. He is one of the best trainers in the United States. He knows our Internet managers get more at bats, so we train them on our proven customer-centric process.

Training in technology is our second and equally important focus. Technology is moving at the speed of light. I am blessed with what I believe is the best Internet team in Texas. To keep them on the cutting edge, I have weekly training sessions.

Today was about doing video walk-arounds. We are doing custom videos for eBay right now.  At first, the sales people were shy about doing the videos. Now they are asking: ‘When’s the next time I can do video?’ Today’s meeting was strictly about the advantage of the videographer. That is the wave of the future.

I’m a news junkie and go onto aol.com and The Houston Chronicle daily. The first thing I look at is the video. The MTV generation would rather see a 30-second video than read or look at pictures.

How do you handle social media?

I do most of the social media. We have 1050 likes on Facebook. We put video on Facebook and we just bought a solution, Empathica from Canada, that helps us with customer retention. We put Empathica’s hangtags in every new car we deliver that directs the customer to a website where they get a chance to win $1,000.

Empathica runs this program for multiple companies, like Starbucks, etc. and every day someone nationwide wins $1,000.  To enter the contest, customers have to answer a six-minute online survey that gives us valuable information about how satisfied they are with Lone Star Chevrolet and our service. Then, customers can increase their odds of winning by 10 fold, by “liking” us on Facebook.

With this information, we publish internally a daily ‘Wow!’ Report and give spiffs to the service people who have exceeded customers’ expectations.  This month we had 430 customers go online to fill out the hangtag surveys. It’s unbelievable how many people are doing this.

The program also lets us see month-to-month trends in how customers are hearing about us and adjust our advertising spend accordingly.  So if we see more people heard about us on radio, then we may beef up our radio spend.

We’re big in Twitter, Facebook and YouTube and we’re starting to experiment with Foursquare. To be honest with you, I do most of my research on what to do in social media by listening to my two children in college. They say: ‘Dad you gotta be with it.’

My daughter is the Foursquare ‘mayor’ of Chili’s. When she goes there she registers on her phone that she’s on the Route 290 Chili’s.  Chili’s rewards her by giving her a free appetizer each visit. Foursquare is up and coming, but Facebook is so huge, you can’t ignore it. If Facebook were a country, it would be the third largest in the world.

We keep Facebook friendly and use it for branding. If you asked me how many people come in from Facebook, YouTube and Twitter, or a billboard out on the highway, I really couldn’t tell you that. But social media just takes a little bit of my time.

If a customer ‘likes’ us on Facebook, we’ll give them a trade evaluation on Black Book. That doesn’t cost us a thing. We’ve had 300 people so far that have asked for a Black Book trade evaluation.  I’ve seen other car dealers put their specials on Facebook. That’s not what we do.  We keep it social. We put our informative, service videos on Facebook.

Last September 11, Lone Star used social media to organize the biggest 5K Heroes Run in the country in honor of U.S. Marine 1^st Lieutenant Travis Manion who was killed in the Iraq War.  We had 4,000 runners gather for the run. There’s a four-minute video about this on our website. This will become a tradition for Lone Star. Three hundred of our employees and their families participated in the event. The Heroes Run was held in 40 cities and three countries, and the father of Travis Manion came to Houston. He was blown away by the turn out and the amount of money we raised for the Travis Manion Foundation. Proceeds go to the families of fallen heroes.

Our GM, Carolyn Cross, is the most generous person I ever met in terms of caring about our community and it makes me proud to work here at Lone Star. Long a supporter of the local community, the military and many other causes, last year we at Lone Star Chevrolet were inspired to create a “Season of Doing and Giving” that would eclipse our efforts in years past.  Winning the Better Business Bureau’s Pinnacle Award in 2011 has been an amazing inspiration for the entire Lone Star Chevrolet team. 2011 was a record year in sales and profit, a true testament that giving back blesses everyone.

What advice would you give to someone starting out as Internet director?

There are things that they need to learn for themselves. I went to the first Digital Dealer Conference, and have been attending ever since. It’s great that they are geared to all levels, so people can pick the sessions that fit their needs. Even though I’m blessed to work for Sonic with its 125 dealerships, and we get direction and leadership from the staff there, I‘ve learned a whole lot more sitting at roundtables or meeting with vendors at the Digital Dealer Conference than anywhere else, so I go twice a year.

I plan to attend the next one in October. I promise my team that whoever are the top producers for the previous quarter will go with me to the Digital Dealer Conference. I use it as an incentive. The sales people that went to the last conference said it was a lot of work, but so much great information to take in.

It’s sound advice to send anyone to the Digital Dealer Conference, because I have made so many professional friends there that are not in my market and that I can call up to see what’s working for them. If they are outside of Texas, I’ll stay in contact with them and help them as much as I can and they reciprocate and help me.  I also go to NADA every few years.

How else do you keep current in tech?

I go outside the automotive industry. I’m still active in the grocery business and I’m a member of the Founders Club of the Academy of Food Marketing in Philadelphia. A lot of the same principles that apply to the grocery business apply to the car business — like taking care of customers.

You’ve got to think out of the box. I make an annual trip to Philadelphia, visit friends and family, and go to the academy’s marketing library to I find out what’s happening in the grocery business. Those trends are going to come to the car business.  Sometimes, I also go to a techie conference and I try to go to the Apple store every week.

We just put iPads in all our sales people’s hands. Each service advisor also has an iPad. So we can take a photo of the driver’s license of each person that pulls into our service drive and feed that into our database.  I can see when they had the last oil change or other service, what day they bought the car, and if they are in a trade position.

Now we can go up to the customer and say: ‘Hi (Name). It’s time for your 100,000 mile checkup.’ Or, ‘Did you know we have $7,000 rebates on Silverados? What if I have you visit with a sales person and he can lower your payment and get you a brand new car and lower your service costs?’

Sonic is on the cutting edge here, being committed to buying that many iPads. It took us four days to train everyone.

What do you see for the future?

Everything is going mobile. Twenty percent of the visitors to our website are from mobile phones. A year ago it was 3%. We have to understand consumers are going to come to our lot on days we’re closed and scan the QR code on the car and look at pictures and pricing on the Internet.

I have a meeting this week with the Houston Chronicle, the local newspaper. They have a mobile application so people can read the newspaper on the go. They have banners on their mobile site and I’m the first one to buy a banner.

I went to them and said sell this space to me and I’ll pay you per impression for every person that clicks on my deal. We talked about truck month on the banner – and it has been fantastic. I can look at the backend metrics of our website and see how many of these people came from the Houston Chronicle’s deal and it’s just astonishing!

Two years ago nobody knew what a QR code was and people in the car industry didn’t care about Facebook and Twitter. They thought social media was a kid thing. Now adults are on Facebook. Using Twitter is commonplace. Social media becomes more of a force every day.  The same thing will be true about mobile technology. And, we’ll have our own mobile website by the end of the summer. That’s the near term.

For the future, I foresee that Lone Star Chevrolet will continue to focus on providing excellent service, building customer loyalty, staying ahead of the technology curve and supporting our community and remaining the number one Chevrolet dealer in the USA.

Just out of high school, her dad took a young Carolyn Cross in hand to her first job, at a car dealership. That typing job started a life-long career she loves. Today, she is dealer operator of three Sonic Automotive dealerships in Texas. One of them, Lone Star Chevrolet, is the nation’s number one Chevy dealership. We spoke recently to her about her life, the stores she operates, and how she handles this business’ challenges.

Click here to read Carolyn’s full interview with Dealer magazine.

Tell us about Carolyn Cross

I am the dealer operator for three Sonic Automotive stores: Lone Star Chevrolet, Lone Star Ford and Ron Craft Chevrolet-Cadillac in and around Houston. Lone Star Chevrolet is the number one Chevrolet store in the country. We have been a GM Dealer-of-the-Year for more than 10 years. Last year Lone Star Chevrolet won the south Texas Better Business Bureau’s BBB Pinnacle Award, one of just three dealerships ever to win this honor.

I started my role as a dealer operator in 1989 as a GM for Ron Craft Chevrolet-Cadillac in Baytown, TX. The store had been selling roughly 60 new and 20 used cars a month. That dealership today consistently sells 150 new and 120 used a month.

My first job in this business was in 1967, right out of high school. Dad said, “We don’t have money for college, so what do you want to do?” I liked cars and told him so. He knew the used car manager at Southwest Lincoln-Mercury in Houston, so he took me there, literally, by hand. I started there, typing new car stock cards. The staff soon noticed I couldn’t type. So I was moved to assistant service cashier and I worked as receptionist part time. From there I moved up through billing clerk, title clerk, and accounts receivable.

In 1972, Chick Smith Ford hired me to be their office manager. I moved up to controller, a position I held for 11 years. I joined Haskins Chevrolet in 1984 as fleet manager and then as truck sales manager. I then joined Ron Craft, which had been purchased by Sonic in 1998.

In 2003, I moved to Lone Star, which had become a Sonic store the prior year. In 2006 Sonic placed me as GM for Ron Craft as well, and when Sonic acquired Lone Star Ford in 2010, I picked it up as well. I now oversee these three stores.

I love the car business. It was the greatest blessing to have been as young as I was at the time and fall into something I loved so much. I eat, sleep, and breathe the car business, and I am truly blessed for that.

What strategy helped turn Ron Craft around?

If I could bottle it, I could sell some books and make a lot of money. Really though, there is no magic to this business, no secrets. Working hard every day and hiring the right people though is paramount. I’m often asked how I successfully operate three stores, when some people can’t run one. My answer is a simple one — I don’t run them—the people do. As long as you have the right people, you can do just about anything.

You focus then on…?

I spend my time on advertising and training our sales managers and associates. These weekly meetings are I’m-going-to-teach-you-something sessions. These sessions focus on character building and developing productive attitudes. My content is based on my reading of leadership books by authors like John Maxwell, Tom Peters and Brian Tracy. I have read 456 books by these men and others writing on leadership issues.

You’d think I’d read a lot about sales training as well, but I don’t. When I started as dealer operator, I noticed that an individual couldn’t sell a car if he or she doesn’t feel well or has problems distracting them. I thought if I could teach them how to control themselves, if I could give them that motivation and they could feel better about themselves and their world, then they would sell cars.

It can be a challenge to link specific outcomes to training endeavors like this, but sales production is certainly one sign. Lone Star Chevrolet is 29 acres; we have 1,100 new cars in stock and about 250 or 300 used. We retail monthly 350 to 357 new cars and 250 used. We also do another 250 to 300 a month through our fleet sales. The only way to achieve results like these is to sell more cars! We started out 27th in the country and are the nation’s number one Chevy store!

Your training focus is more soft than hard.

You mean, I don’t train on how to do a vehicle walk-around? No, I don’t train on those sorts of important skills; that’s the stores’ sales managers’ jobs. My focus is at a higher level. Because, frankly, people like to ignore their home life and everything else in this business, so I focus on helping them right size their focus. If their home life stinks, they’re not going to sell cars. I think of the training I do as a full-body press; I’m out to improve the whole person.

All this has a practical application, for sure. My training tries to communicate how to deal right with customers by projecting and applying a helpful, upbeat attitude and demeanor. If we look and feel good, a customer who encounters one of us won’t leave feeling worse than when they walked in.

I try to break some of the bad habits that car sales people can have. I hope to convince them their personal problems don’t have any room in their customers’ meetings with Lone Star Chevrolet. I want them to think about what their customers really want and what they feel being with us. If a person would rather have a root canal than buy a car, when you can change that perception, then you’ve changed that person’s world.

Here’s an example. One time I looked out the window onto the lot and noticed light-reflector umbrellas and a photographer. I walked out and said, “What are we doing?” The sales associate’s name was Gerald Martin and the customer said, “I’m taking Gerald’s picture to go in my family album. I’ve got my mother and my grandparents and the rest of my family in it, and now I have my car salesman.” You just don’t hear that happening often.

These characteristics would seem to be largely innate qualities. How do you find people having them?

We do all we can to hire the right people. The premise is if you don’t, none of the training is going to work. I look for attitude in those we’re considering. We can train about the car, we can train about how to do walk-arounds, we can train about a sales process, but if the associate doesn’t have the right attitude to begin with, training is probably not going to be productive. Those we employ have to fit into this culture of taking care of the customer; it is not just something we say, but something that we live, eat, sleep, and breathe. If they don’t want to buy in to that culture, then they’re probably not going to make it here.

What is your advertising strategy?

Our philosophy is to stay consistent with advertising, in the bad as well as good times. I know of no other way to keep our name in the market. For us, this means a steady buy on TV and radio. We also reach customers through e-mailers and Internet newsletters, and our e-commerce manager Joe Healy does a great job with our digital marketing.

We are also a female friendly dealership.  That means our associates, working in sales, service and parts, and our body shop, understand what a woman seeks and how to work with her in a very unthreatening manner.

This business still has the aura of being a male-dominated business. We do get many female shoppers here and they tell us in surveys, letters and e-mails about how comfortable they are shopping with Lone Star Chevrolet and the other stores. We try to make the store look — I don’t want to say “feminine,” because that’s not it; the store features live plants and orchids, and we have candles around, and the bathrooms are spit-shine clean. I can’t tell you how many times women have stopped and said, “OK, there’s a woman running this place.” Unfortunately, the GM facilities changes require us to give up these personalized accents customers tell us they really value.

To the question, “How do you gauge ROI?” for being a female friendly dealership, I’m not sure you can. I will just tell you that a dealer cannot ignore that part of the population that makes 85 percent of the buying decisions when it comes to auto purchases. As part of our efforts in this area, we make note on our website of where women shoppers can engage in programs and events like Breast Cancer Awareness, read up on auto-related topics, and otherwise understand we care about them and their vehicle shopping process.

You must have a number of women sales associates.

We have 64 sales people. Unfortunately, only four of those are women. It has been very hard to attract them – or to attract just about any younger individuals – to this business any more. I guess I understand, probably, more than anybody, that this business is intensive. The rejection factor is huge and the hours are unattractive, but in turn, the sales associates who persevere are extremely successful.

What providers have been important to the dealership’s success?

We’re happy with eLead for our CRM and NetTrak from ADP for lead management, and we use @utoRevenue for database mining to identify sales opportunities. We use ActivEngage for Live Chat, and we recently launched a service-only website through DealerOn to help us build service volume and profits. We also use Aspen Marketing for customer communications.

To change gears, you’ve had remarkable success with the recent Ford acquisition.

I attribute that turnaround — if I had to sum it up — to our success at changing that store’s culture. It takes an enormous amount of energy to change a culture. To some people, the way we used to do it is good enough. Enough said!

How is this strategy different from your other stores?

It’s not, really. I would describe our overall strategy as 100 percent customer-oriented. We strive for an open and transparent relationship with customers. Customers walk into a dealership fearful because they aren’t sure how they’ll be treated. As an industry, we tend to take customers into interior offices darkened by mini-blinds so customers aren’t sure of what’s going on.

Our dealerships have no walls between sales desks. They sit in the open, like a bank lobby, at a table and if a particular associate wants to start lying to a customer, the next customer is going to hear it. On the contrary, it can be powerful for a customer to hear the same words coming from the sales associate at another table as he or she’s hearing from his or her own sales associate.

Carolyn, how do others describe you?

Uh, driven? Perhaps a challenge to work for; I don’t think I am, but it is certain that you have to work and you have to be accountable—you’re accountable for your production, you’re accountable for your CSI, and you’re accountable for knowing and being the best you can be.

And you hold associates to that same accountability?

I do. We work very hard to make our stores an easy place for customers to spend their money. You have to look around your business and identify your WAYMISH, “Why are you making it so hard” for me to spend my money? Getting culture to the point this doesn’t happen requires much repetition – communicating repeatedly your culture to make it stick with staff. My report card is the comments customers give to us.

What keeps you up at night?

Well, frankly, nothing. That may be peculiar to hear, but the only thing that might keep me up is if I thought I had the wrong person in the wrong seat on the wrong bus going in the wrong direction.

How will OEMs’ facilities programs affect you?

For Ron Craft, it’s going to be a plus. For Lone Star Chevrolet, it’s tearing up something that doesn’t need to be torn up.

Here’s an interesting story about that. GM sent a mystery shopper to Lone Star Chevrolet, and as a result wrote up 75 things that she raved about: How the place looked, how homelike it feels, how warm it was, etc. Now, with this GM program, I have to turn the store into white walls and white floors – just like a hospital! I’ve been fighting this and I’m not going to win, so I’m trying to reconcile, but it is for the good of nothing that I can see.

What would you do differently if you could?

This is probably going to be bizarre: I wouldn’t do anything different.

Not a second-guesser, are you?

No. No. I can make a decision and it sticks.

Who’s Carolyn Cross when not at work?

You ready for this? I’m really nothing outside of these dealerships. People ask me what I do for a hobby and I tell them I sell cars. They ask where I go on vacation. I tell them, I sell cars. I know it sounds as if I should have three heads, but selling cars and operating these dealerships is just what I love to do.

Ray Huffines, 59, is the dealer principal for the Huffines Auto Dealerships, with eight dealership locations in the suburban Dallas market, begun in 1924 as the Huffines Motor Company by Huffines’ grandfather, J.L. Huffines, Sr., and later operated by J.L. Huffines, Jr. Today the Huffines Auto Dealerships sell more than 13,000 new and used vehicles a year, still embracing an 88-year-old mission—to treat customers right and support the communities in which the Huffines’ dealerships operate.

Ray, what’s the Huffines story?

We have two Chevrolet dealerships, two Chrysler-Jeep-Dodge-Ram dealerships, two Hyundai dealerships, two KIA dealerships and one Subaru dealership. We sold 13,451 new and used retail vehicles in 2011.

We’ve been very fortunate. What if we had been an Oldsmobile, Pontiac, Isuzu, Saturn or Hummer dealer? Our story wouldn’t be so rosy. It’s good to be diversified but you can’t really plan outcomes like this, so I can only say that we have been blessed.

My grandfather, J.L. Huffines, Sr., started with a Willys-Overland auto dealership in Denton, Texas in 1924. Huffines Motor Company was awarded a Chevrolet franchise in 1927 in Lewisville, Texas. We started to grow significantly in 1984 when we opened Ray Huffines Chevrolet in Plano, Texas, the first dealership I operated.

In ’86 we added Huffines Dodge in Lewisville and Huffines Chrysler in Plano. Other dealerships followed.  Most recently, we added Huffines KIA in McKinney, Texas. When my dad, J.L. Huffines, Jr., passed away in ’09, I had already been running the group for a number of years.

The Huffines Auto Dealerships have been honored with the Consumer’s Choice Award for Auto Dealership Group of the Year for 2008, 2009, 2010, and 2011. The Dallas Morning News recognized us with its Top 100 Places to Work for 2011 Award and the Neighbors Choice ‘Go’ section, Best Auto Dealership and Best Auto Repair Facility Award. We’ve also been recognized by the DFW Community Newspapers for the Best New Dealerships, Best Pre-owned Dealerships, and Best Repair Facilities Awards.

We’ve just received word that Huffines Kia Subaru Denton has won the DealerRater 2012 Texas Dealer of the Year Award for both Kia and Subaru. We’ve also earned GM’s Mark of Excellence and Standards for Excellence awards, the Chrysler Five Star and Customer Care Standards awards, the Hyundai Board of Excellence Award, KIA’s Dealer Excellence Program Award, and Subaru’s Stellar Performance Award.

How did the downturn affect you?

For us, the bottom was ’09…2010 was better, and 2011 even more so. To prepare the Huffines Auto Dealerships for those times we set about right-sizing operations. We looked at every expense and renegotiated vendor contracts. We stopped all newspaper advertising, a big expense for us. We cut back other advertising like Internet, radio and TV, as well. These mediums historically worked well for us. However, we needed to mirror the general market’s decreased demand for vehicles during those years. We did lose a few team members as well, mostly through attrition, and we have now rehired for those positions.

To help us get good results from our electronic media, we use a media buying company called Keystone to buy ad spots. They do a good job for us and they are very efficient. Our creative advertising is done by the Montalbano Group and our strategy is to promote the “Huffines brand” for all of our dealerships.

Today we’re focused on achieving continuous improvement through out all departments. For instance, we use a service called Performance Management Group of Minneapolis to evaluate and negotiate vendors for us. We also rely on vendor’s technical expertise to help us perform. FirstLook helps us do a better job with our pre-owned operations. We rely on JM&A to help with F&I training, DealerTrack and Reynolds & Reynolds for Dealership Management Systems, and Reynolds and Reynolds and VinSolutions for Customer Relationship Management Systems.

Because health care is such an expense, we shifted to Health Savings Accounts for our team members a few years ago. This has been a positive move for us, as that is now a pre-tax savings for team members, which helps build up reserves for deductibles they may face.

Another phase of continuous improvement is team building. We strongly believe in training our people to improve their overall performance and value to the company and to themselves. We believe continuity is very valuable to our organization and to our customers. Our emphasis on training and other team-focused efforts help build team member retention and customer satisfaction.

One way we help our team members perform at their maximum, enjoy their work and enjoy their lives more is providing counseling through Marketplace Chaplains. Marketplace Chaplains is an organization we contract with for chaplains to call on our dealerships. The chaplains come by our dealerships weekly to say hello, speak with our team members and handle any personal issues they need to talk about. The same chaplains come to the same dealerships so relationships are built. Female chaplains minister to our female team members. These chaplains conduct funerals and weddings, visit our team members and their families in the hospital and otherwise serve our 600-member team.

What a unique benefit.

The chaplain service is based on the military model of chaplains. They are there to address peoples’ spiritual needs, or anything that might come up which a manager might not feel trained or qualified to handle should a team member come to them with a problem. On the other hand, team members often won’t seek out their manager or other team members to talk about personal issues and Marketplace Chaplains fills this need—a nonemployee who will treat what they hear with total confidentiality. The team member also knows that these individuals are equipped to handle the issues they’ll bring to them. We provide this service, at no charge, to our team, as a benefit of working at Huffines.

How has your team responded?

Of course, I don’t ever hear anything about who speaks to the chaplains or what they talk about; this has to be if the team is to know their time with the chaplain is private and confidential. However, I do often get feedback from the team; it’s not uncommon for me to receive a comment or note from a team member along the lines of, “I just want to thank you for providing the chaplains because they just really did a great job.”

Since we’re discussing morale and retention, let me mention that we also build team improvement through organized team member-recognition efforts. Team member recognition is powerful, and we actively recognize our team members. We have recognition programs for team members at key anniversaries. Our team members can choose a gift from a catalog. We then present this gift to the team member at their anniversary celebration. At the team member’s anniversary celebration, we recognize that individual’s performance and contribution to the company with fellow team members. As part of this celebration, honored employees receive a congratulatory letter from me and a plaque celebrating their tenure.

We provide all team members who interact with the public with nametags. As the team member receives their work anniversary recognition, we change their nametag to include their years of service. Technicians and others who do not deal directly with the public receive a recognition ball cap with our logo and their anniversary year award embroidered on it.

Furthermore, once a year we get together at an amusement park with team members and their families and enjoy the rides, have a bar-b-que dinner, play games and enjoy other entertainment as a group. The team seems to enjoy this recognition outing very much.

My grandfather always had personal relationships with our team members and we have always operated like this. As an aside, this kind of focus on our team is advantageous to us in that I believe people really prefer to work for a family owned dealership that recognizes and appreciates their contributions.

What troubles you about the business today?

Reduced car sales in recent years, and the drop in units in operation along with better-built vehicles have created challenges for our service departments. Fortunately, we have a prosperous fleet business with local businesses and governments that keeps service active.

One real concern is a shortage of inventory for our Kia and Hyundai dealerships. The demand is very strong and I am concerned that the production capacity is inadequate to meet the need.

I know many dealers have concerns and challenges to comply with the manufacturers’ facility image programs. However, our Chevrolet dealerships were mid-80’s vintage and needed a refresh, which we just recently completed as part of this latest push by GM for facility upgrades. Therefore, the new program was needed and timely for us, but for dealers who had remodeled their facilities a few years back this new effort will affect them and will be costly and frustrating. We do need to keep facilities looking good and fresh. As operators, we’re so used to seeing things everyday that often we fail to notice when the image begins to sag. Taking a step back and looking critically at facilities to see what is old and tired and needs freshening up is something we must do.

Final advice for the dealer body?

It helps to seek expert advice. There are some situations we as dealers just aren’t best able to deal with without expert advice. For instance, we rely on consultants to help us stay current and get the most from all the new technologies available. We have a company helping us with Human Resources, which developed online training. This training helps us comply with the maze of regulations we face today. Because our HR training is recorded, we know when the team is current with this program. We also have carefully documented how we operate in a Policy and Procedures manual. An expert’s help is necessary with these business processes and practices, if we are going to stay ahead of the changes coming our way.

Any final comments, Ray?

We’ve survived through the downturn because our dedicated team members and loyal customers pulled us through. We believe the only way to have satisfied customers is to first have satisfied team members.

Joe Myers Toyota is among the top 15 dealers nationwide in Internet sales, with 2,531 new and used car Internet sales units in 2010, and close to that number in 2011.

The dealership received the 2010 Toyota Board of Governors Award for being among the top 60 dealers in non-fleet vehicle sales volume nationwide, and the prestigious Toyota President’s Award for 2010. The dealership has won both awards numerous times in the past decade.

For the past eight years, Joe Myers Toyota has been Toyota’s top used car volume dealer in Houston and a top three new car Toyota dealer in the entire Gulf State region.

Jerry Rocco, general manager, partner and vice president, and Lance Lewis, general sales manager, recently shared with Dealer magazine their formula for success.

Jerry, how did you get into the car industry in the first place?

In 1974, I started working for Lone Star Ford of Dallas. I sold cars for two years and worked in the finance office for six months. Another dealer bought the store and wanted me to stay there. But another dealer wanted me to come to Houston, where he had four stores.

I elected to go to Houston, where I sold cars for six months; then a position came open in a Dodge store. I worked there from 1977 to 1980. Then I worked at Joe Myers Ford for seven years as a sales manager. Then I left to work at Lone Star Ford for two years before coming to Joe Myers Toyota, as general manager, in December of 1989. Now I’m GM, partner and vice president of Joe Myers Toyota.

This store had a 500 unit new car planning volume when I came onboard in 1989, and last year we sold 3,200 new cars and 3,200 used cars.

Lance, what is your background?

I’ve been at Joe Myers Toyota for 21 years. I started out selling cars and worked my way up to my current position of general sales manager in 2001.

Growing up I had no idea I’d ever be in the car industry, but I was always intrigued by the business.

I had been working in the banking industry for eight years. Then, in 1990 the banking industry was in turmoil; I worked for a large bank and my job was being phased out. I took a severance package offered to me and tried to decide what to do next.

I was looking for something different and I always loved automobiles. That’s when I saw the ad in the newspaper for a car salesperson. After talking it over with my then fiancée, now wife, I decided to apply.

After meeting Jerry, I knew this was where I wanted to work. Jerry held a training class for all the new hires for a week. The first month on the floor I sold 16 cars and I was hooked. I worked as a salesperson here for five years earning numerous sales awards including Master Sales Award in 1994. That is the award for the top 50 Sales Persons in the nation for Toyota. There was even a story in the local paper mentioning me.

Soon afterwards, in 1995, I was promoted to new car manager. I was then promoted to general sales manager in 2001. The industry has been very rewarding for me and my family and I’m glad I pursued my interest in the business.

You two have worked together as a team for a long time and your dealership is highly successful. What’s the foundation of that success?

Jerry: We basically have no turnover. We treat all the guys and gals with respect that work here. They like working here. We pay them well, and there’s a lot of longevity in the store.

I’ve been here for 23 years; Lance has been here for 21. We have three new car managers, three used car managers, and three finance managers and all of them have been here five years or longer. One finance director has been here over 20 years.

I think one of the most important things a car dealership can do is keep the turnover low and not lose your upper management, because when they leave, they take people with them.

I believe it’s unhealthy for a company to have turnover, so we do everything we can to keep people here. All of the people I just mentioned started selling cars at this dealership. Nine managers sold cars here, and five of the seven finance producers started here selling cars.

We promote from within. This gives us more stability. Our people know what and how management thinks. And if we’re not here, they know how to make decisions. We’ve all been working together for so long that basically we are going to make the same decisions. It works well with everyone on the same page.

Lance: An important part of our success is our consistency in our management style. Jerry and I have the same philosophy on making things work and that is clear to our entire management staff and sales team. Everyone knows their role and they are encouraged to handle any issue they encounter personally. As Jerry says, we always look from within when we need to fill positions. When we can’t fill a spot internally, we are extremely selective when interviewing applicants.

We have been very successful using an ASM system to sell vehicles. These assistant sales managers run their own teams of five to seven salespersons. We have a total of seven ASMs currently who have all been promoted from the sales floor due to their exemplary performance. These ASMs are crucial in getting new hires up to speed quickly and effectively. They help hire, train, and manage, and close deals whenever needed. They are an important part of our management team.

How did you weather the economic downturn?

Jerry: Our used car business stayed about the same. Our new car business, with the Tsunami and the Toyota recall, and subsequent bad press, was not as steady. And, we didn’t have as much product to sell, because they weren’t making enough of them.

So, we had to cut expenses. We cut back mostly on advertising to get our expenses in line, but we also tightened our belts in other areas. As a result, last year we had the second best year in the history of the store for net profits. And the best year for net was 2010. In 2007, we sold a lot more cars than the past two years, but our net wasn’t as much.

With doing so well, in the past two years, have your advertising budgets returned to prior levels?

Lance: We had cut back somewhat on newspaper and other advertising during the economic downturn, but now that business is coming back, we are going back to doing more advertising. We currently run newspaper advertising five days a week. We are also spending more on electronic although we are very selective on sources and look for a very good ROI when reviewing budgets. We have also started doing some direct mail over the past six months with good results. The message has to be timely and aggressive to get the responses we are looking for.

Why, in the digital age, are you still doing so much newspaper advertising?

Jerry: Everyone has asked us: ‘Why are you still in newspapers?’ All the bigger volume stores in Houston are still heavily into newspaper advertising. I don’t know if we are doing the right thing or the wrong thing, but I know when we have ads in the newspapers, especially very aggressive ads, it brings traffic to the store.

It’s been working for us for years and we’re very successful, and that’s why we do it. We know that if we put a great offer in a newspaper, we sell a lot of cars. We might not make a lot of money with today’s margins, but we sell a lot of cars.

What percent of your total advertising budget is traditional vs. Internet advertising?

Jerry: About 75% of our budget is for traditional advertising. Of that, 25% is for radio, 35% for cable TV and 40% for newspaper ads.

I do all the radio commercials, and my daughter Lauren and I do all our TV commercials.  Lauren is 26 now, and we started doing TV commercials together when she was 16 in high school. We’ve had a good time doing them.

Lance:

On average about 25% of our ad budget is spent on Internet. Internet historically has a great ROI vs. traditional advertising. We are continually reviewing our opportunities in Internet advertising and making adjustments as needed.

Where do most of your Internet sales leads come from?

The majority of the leads we work are from our distributor, Gulf States Toyota and from our own website, which is managed by Gulf States Toyota. These are also the best quality leads versus buying them from some lead provider.

We also have a new Toyota mobile website and a new Scion mobile website for our dealership. All have separate contact information and phone numbers and we can monitor that. We even have a free Apple app for customers to download.

How do you drive traffic to all these websites?

Jerry: Our corporate management company handles our SEO and SEM. We just set the budget for them on a monthly basis. It’s $3,000 per month right now, but we might increase SEM and SEO spending this year a little bit.

Lance: Once consumers are on our website, our use of photos, prices and good selection draws them further into the sales funnel. We have pictures of our new cars and used cars on our website and on AutoTrader, and we also have discounted prices on new and used cars on AutoTrader and on our website. That’s not the case with competing Toyota dealers – most of them do not advertise a discounted price on new vehicles. We do it to increase our leads – to get more phone calls and e-mails.

How many Internet leads per month do you get?

Jerry: We get 2,000 Internet leads per month, and that includes phone calls that track from our websites or our third-party lead providers.

If we sell 600 new and used cars per month, 180 will come from Internet leads. It’s 30% of our business on a regular basis.

How do you work those leads?

Lance: When the leads come in, they go to our CRM, DealerSocket, right away. We’re very happy with DealerSocket. Our response time target is 15 minutes. We don’t use an auto-responder. We have two Internet directors, one for new cars and one for used and they make the first response call or e-mail. We have 10 Internet salespeople, who specialize as either new or used car sales – five of each. We are working on building that back up to seven or eight in each department.

We keep leads in our system until we mark them lost – until the prospect says: ‘Don’t call me anymore, don’t e-mail me anymore or I bought a car.’

If our Internet salespeople give up on a lead, those leads are turned over to our BDC manager and he passes them out to salespeople on the sales floor for follow-up.

We have a very active BDC. All of our salespeople for new and used cars are required to spend at least one hour every day doing their follow up and prospecting.

Are you doing anything new with parts and service on the Internet to increase business?

Jerry: Parts and services have come up quite a bit in the last few years too, as a result of the email blasts we send to our customers. That’s very cost-effective. And, Gulf States Toyota has done some very effective e-mail blasts for us as well.

How do you handle online reputation management?

Jerry: We’re on DealerRater.com and if we get a negative review – as all stores do once in a great while – we get a notification before it goes live on the DealerRater website and we have 10 days to rectify that issue with the consumer. If it’s sales-related or finance- related, I respond myself, or if it’s service-related, our service director would respond.

 How about social media?

Jerry: We’re really getting into Facebook. We had a membership drive last year and did a free TV giveaway. Everyone that registered on our Facebook page was eligible. It went well. We added hundreds of new members.

Lance: We take a photo of every new car delivery with the consumer and their family in front of the car. We generally take the photo with the consumer’s own phone so they post it on Facebook.

We’ve found that if we take the picture with the consumer’s phone, we don’t even have to tell them to put it on Facebook. They put everything else on Facebook so why wouldn’t they put a brand new car on Facebook?

If they don’t have a camera phone, the sales person will take a photo and e-mail it to the customer and they can do whatever they want from there.

This is a great way to get our name out there in front of customers’ friends and families. We have had numerous incremental sales from this and our customers love the process.

What is your biggest challenge?

Jerry: Probably making gross in the new car department. It’s very competitive everywhere, but we have some very large stores competing here in Houston. And, it’s making the amount of return we should make on each car a little less than we’d like. It should be higher than it is. The manufacturer has lowered the margins considerably over the years.

What is your typical day? 

Jerry: I get here around 8 a.m. and drive the lot. I go back through service. I’m involved in used cars, and go through make-ready.

We have a managers/save-the-deal meeting every morning at 8:30. We cover anything we need to discuss from the day before and review the deal board to see what deals are pending, what deals are cleared up, and solve any problems.

Every day at 9 a.m., we have a sales meeting with the team that’s onboard that day. We have 30 different training sessions scheduled throughout the month. So whatever the training session is that day, the manager that handles the meeting that morning does the training.

Sometimes I attend the sales meeting and sometimes I don’t. Then I do a used car walk with the used car salespeople to decide if we should keep each used car or wholesale it. After that, we mark the cars and have a list for make-ready and start sending these cars to the shop. We stock about 150 used cars at any time, and we sell about 300 per month. So that process has to be efficient.

Every Monday we have a 1 p.m. CSI meeting. On Tuesdays and Thursdays at 2 p.m., we have CSI meetings for the salespeople, technicians, service writers, F&I personnel and managers that didn’t have a high enough CSI score the month before. Gulf States Toyota has given us a way to measure our employees’ effectiveness with an objective survey of performance.

Each individual turns in his/her survey response, and if the score for that month isn’t above the green standard that Gulf Toyota sets, that person has to attend the CSI meetings. The meetings are basically training sessions and they know why they’re in there. We already know what customer issue brought the score down.

After that, I go to auction every Tuesday. I buy cars at various places in the afternoon.

I also visit every department at least once a day and sit down and go over what we’re doing, what we could do better, what we did the day before, and see if there are any issues or problems.

The controller and I sit down every day to go over numbers, projections, issues, problems, and expenditures.

As for selling, I get calls all the time, and when they come to see me, I’ll turn them over to a sales person and they do all the leg work.

Lance, how does your day go?

Lance: I arrive at the same time of 8-8:30 every morning. We start the day with a general manager meeting lead by myself or Jerry to discuss any outstanding deals and our progress for the month so far.

After that meeting, we hold our sales persons’ meeting at 9 a.m. and another one at 12 p.m. for the late shift. I frequently lead these meetings, along with my management staff, and discuss advertised incentive packages and month-to-date progress, along with any pressing issues in any departments.

We have a training schedule posted the beginning of each month and have a training topic preselected for each day. Each manager knows the topic in advance to arrange their meetings.

We have CSI meetings three times a week that I often attend. We discuss any issues that may present a problem for our customers at every contact point.

I am continually reviewing our advertising to remain competitive and design the ad with our creative agency. I often help appraise trade-in vehicles, especially on Saturdays. I review our new car inventory frequently and make sure our mix and stock levels are correct.

I never miss a chance to fill in on a desk in the sales tower and desk a deal when I have time. I have a lot of customers that still come in to see me on a weekly basis, since I’ve been here so long, and I always try to stay involved with their deals to make sure they are handled correctly.

A large part of my day is being mobile and making sure all our processes are being followed and all customers are being handled correctly. I also personally interview any prospective employee before they are offered a position with us. This helps to ensure the culture we have built continues to thrive.

Jerry: As a dealership, we also do a lot of community work. To cite just one instance, we donate to the Children’s Art Project here in Houston by purchasing 10,000 cards every year for Christmas for customers. We spend about $15,000 – most of which is a donation to the Children’s Memorial Hermann Hospital.

What do you see for the future of the dealership and the future of the industry?

Jerry: We are remodeling in the Toyota Image USA II, and we project that will be complete in 2013.

Both for us and for the industry as a whole, I think 2012 will be a great year. There’s a lot of pent up demand right now. The average car on the road is about 11 years old. So there are consumers that are going to have to trade. A lot of the trade-ins we see have 150,000 or 200,000 miles on them. So I think it’s going to be a better year than last year.

Toyota Marin’s Numbers Tell an Impressive Story:

• Toyota Marin is among the top dealers nationwide in Internet new and used car sales, with 1,710 Internet sales units in 2010 and close to that number for 2011.
• The dealership ranks 10^th in the region for new car sales. That’s up from 41^st in the region when the Price-Simms Group acquired the store in 2004.
• Toyota Marin is 145% sales efficient – selling almost 1.5 Toyotas to every Toyota registered in its primary market area, as defined by Toyota.
• Toyota Marin’s fixed operations are up 21% year over year.
• 2011 was Toyota Marin’s fourth consecutive year winning Toyota’s President’s Award.

An open mind, an aggressive sales strategy, and ongoing critical evaluation of the performance of its digital technology vendors are keeping Toyota Marin among the top dealerships nationwide in Internet sales.

And, the dealership has just completed remodeling to Toyota Image USA II standards a Scion facility that will be its new direct sales building.  That is expected to more than double the dealership’s capacity for new car sales and for the direct sales department in 2012. 

Toyota Marin’s General Manager Mike Christian and General Sales Manager Jay Brownrigg recently shared with Digital Dealer magazine the secrets to the success of this remarkable dealership.

Click here to read Mike and Jay’s full story and the rest of the March 2012 Digital Dealer magazine.

First of all, Mike, how did you get into the car business?

Mike: In 1985, I was 16 years old, my mother was in the business and I was hired to sell cars on weekends and after school at Ricart Ford, in Columbus, OH. I fell in love with the business and worked my way through high school and college and never looked back.

I worked at a few different dealerships. Then, I moved to California and went to work for the current owner of this dealership, Tom Price in 1998. He had a group called First American Automotive. In the early 2000s, he sold out to Sonic and I stayed with Sonic. Then in 2004, Tom Price bought Toyota Marin and in March of 2007, I came back to work for him here.

Jay, how did you start in the business?

Jay: I started in the business in 2001 after I got off of active duty in the U.S. Air Force. I responded to an ad in a local newspaper and was hired by County Ford and worked there for five years. Then I was recalled to active duty to serve in Afghanistan and Iraq. When I was done with my tours of duty, my wife and I moved to California and in 2010, I applied to Toyota Marin and I was hired as a sales manager. I’ve since progressed to general sales manager and I manage our Internet sales.

Tell us about the company culture that fosters so much success at Toyota Marin.

Mike: The dealership group we are part of – Price-Simms – is unique. We are very open-minded and generous. We are constantly looking at other dealers and vendors in order to help improve our own operations. We also bring dealers in from outside the organization and share information with them. We all stay actively involved with what’s happening within our industry. For example I am on the dealer advisory board of AutoTrader.com and others sit on boards like ResponseLogix.

We’re embracing a lot of things that many dealers are resistant to — such as the intangible results from a blog or from postings on Facebook. Some dealers may feel: Why waste the time on it? We’re trying to be more forward thinking than that. We’re constantly looking to evolve.

We pride ourselves on our ease of doing business, and whether it’s for our sales people or the consumer, we like transparency. We have transparency at our sales meetings; we will talk about aspects of our financial statement or why and how things may operate. We have transparency with the consumer. We pre-discount all of our cars. We quote prices, terms, rates, and availability questions right up front.

We’re completely negotiation free on pre-owned. We sell 165 pre-owned cars a month and our goal this year is to expand that to 250 and it’s based upon a totally upfront, straightforward and transparent sales process.

From a new car standpoint, a couple of times a month we’ll shop and determine what price cars are transacting at by model. We use Toyota’s reports as well as outside sources like; Edmunds.com, Zag and other third-party providers. Once we feel we have an accurate picture of the transaction price we simply price the cars there right out of the gate.

It just makes good business sense. The least amount of control I have is over my new car margin. So, I want to spend the least amount of time trying to manage that aspect of my business. Our transparency in pricing makes it easier for everyone (consumer and salesperson alike) to do business, after determining what price the car is transacting at, we just put it at that price and go.

When the tsunami hit last year and supply diminished, obviously the cars were transacting at a higher price and we made a little more margin during that time. But, at the same time, we remained committed to our value pricing, and so we kept discounting when other dealers simply saw an opportunity to gouge a consumer.

How about pricing on the pre-owned side?

Mike: It’s really the same thing on the pre-owned side. We just tell ourselves the truth every day. When we take a car in, we price it right at the market price, right out of the gate. That allows us to turn our inventory two times a month. We are selling 165 used cars a month on a lot where we never can carry more than 85 on the front line at any given time.

This past year, 2011, we sold a little over 1800 used cars and sold just about 1700 new cars.

What percentage of those sales were Internet sales?

Jay: Strictly speaking, about 44% of our sales are Internet, based upon our direct sales department numbers. We get about 1,200 to 1,300 Internet sales leads per month and our closing ratio for these Internet leads is about 12%.

Unlike many other dealerships, we don’t count phone leads as Internet leads. They are an entirely separate channel, and we track them a little differently. Most of the phone leads go to the direct sales department, but a retail floor person can take the training for our own certification program and they can handle phone leads as well.

We get between 700 and 800 phone leads a month and we generally close around 10% of our phone leads.

Many dealerships do count phone leads as Internet leads. Often the store’s number that the customer is calling is only available from the dealership’s website.

Mike: In a broad sense, we actually attribute 95% of our sales to the Internet, because all customers are touched by it — even the ones who walk in with no mention of any prior Internet queries.

And that’s why most of our advertising is focused online.

Do you do any traditional advertising?

Mike: We spend about $5,000 per month advertising with Comcast in our local market, for fixed operations and sales. Our total dealership’s ad spend is around $100,000 a month.

The other $95,000 a month is spent in online ads or services such as: SEO, SEM, and third-party lead aggregators – we spend a decent amount with AutoTrader.com – and our email follow-up company.

Our e-mail follow-up leverages analytics to send targeted multi-channel communications to our customers on the fixed operations side. That, along with our superior customer service, and the fact that people are keeping and servicing their cars longer in this economy, is why Toyota Marin’s fixed operations are growing at 21% year over year.

We can also give some credit here to Xtime, which we use to schedule service appointments. Xtime is doing a very good job for us. We upgraded Xtime to become a premium dealer so our customers can do bill pay online. We’re moving towards being more transactional on our web site.

How do you manage your website and drive traffic to it?

Mike: Dealer.com hosts our website and our mobile website and does a great job with both. Our inventory lead management system is VinSolutions, which works very well for us. We do our own specials, and we also have an ad agent, ThinkOut, that specializes in online marketing and sales and helps us manage our ads, SEO and SEM as well as our web content.

ThinkOut is headed by Beth VanStory and she is phenomenal. When we brought her onboard, she tripled the number of leads that came in for sales and also for fixed operations. She does an amazing job for us.

What percentage of your leads does your own website generate?

Mike: Our web site generates 50% of our Internet leads. The other 50% comes from our third-party lead providers – mostly from AutoTrader.com, Cars.com, and Zag.

We’re constantly scrutinizing our third-party lead providers and their territories. We’re constantly redefining our territories and evaluating providers by quality and close ratio.

Throughout the year, we periodically change our third-party lead providers. If they are performing well for a period of time, we stay with them, and if they are not, we cut them off.

There’s been several that we shut off during the past year and now we’re back with them. We’re very aggressive from the standpoint that we’re always looking to get bigger and grow our operation, but we certainly want to work with quality and not waste our sales persons’ time. If we don’t feel the leads are performing – say a conversion rate drops down to 4% – we’ll take a hard look at that lead source.

Rather than just shut it off immediately, we’ll concentrate on the leads we get from that source and work a little harder on them, to see if it’s us or the quality of the lead. If we work that source’s leads for another 30 or 45 days and we can’t improve the conversion ratio, then that provider is gone.

How do you process your Internet sales leads?

Jay: We look at everything as its own individual channel. We treat an Internet lead or a phone lead with the same level of intense follow-up as most stores treat a walk-in consumer.

Most dealerships focus on walk-in traffic and they can count how many ups, demos, write ups, etc., and they handle walk-in follow-ups more aggressively than their Internet leads. We handle all our leads aggressively.

We have 26 salespeople altogether. Twelve of them handle Internet leads and 12 handle phone leads. We don’t have a BDC.

Everything channels into our CRM no matter what type of lead it is and every lead has its own type of work plan – whether its phone follow-up, or email or mail follow-up. It’s all dictated by which channel the lead came from.

What is your normal response time to an Internet lead?

Jay: We use ResponseLogix and it performs very well for us. Our immediate response to an Internet lead is a custom-tailored price quote sent out by ResponseLogix within 10 minutes. That frees our sales person to pick up the phone and call the customer while that customer is still at the computer. Our personal response time is within half an hour.

Our follow-up time for both Internet and phone leads is 75 days. We have one required follow-up call on a phone up and then we traditionally will have one of the sales managers call on that lead as part of customer relations. That call is to see if the first call was handled properly.

Then we use services like Who’s Calling, a call capture service, which allows us to track whether the prospect makes an appointment or not. So our managers can react quickly on the phone leads, if the phone call did not go in the manner that we want.

What do you use for CRM?

Mike: We are actually thinking of changing our CRM this year. We are shopping and keeping an open mind to anything out there. As the technology changes, we’re constantly looking to improve communications with consumers and make things a little easier for our sales people to do business. There are some great new advances in CRM technology that we are looking to take advantage of this year.

What specific advances or features are you looking for?

Mike: Everybody’s CRMs are good at trading, workflow and a sales person’s to-do list. The lead comes into the CRM and it quotes a price, or not, depending on your business model. Then, all the CRMs offer a set of templates for emails that go out to the prospect and, of course, all CRMs offer the sales person’s phone action plan and to-do list to coincide with all that.

We are looking for a CRM that does all that, but will also help us improve our leads to sales ratio. To do that you have to fine tune communications with the consumer.

We’re seeing different consumer behavior in today’s market. The old buying funnel is disappearing. It used to be that a consumer would start by looking at five different cars four months out, and as they got close to transactional time, they would be considering two cars – like a Toyota Camry and a Honda Accord. Today, we’re seeing the consumer typically start with two cars and eventually go to three or four when it comes down to transaction time.

So, our goal this year is to make sure that we are speaking to the consumer about what’s relevant to them when it’s relevant. Companies like Dataium can watch and track what each consumer’s behavior is and help us tailor our message to each customer and deliver it when the consumer is most receptive.

For example, let’s suppose a consumer sees that we have a really cool used car, a Toyota Supra on our home page, and submits a query, which becomes our Internet lead. Meanwhile that same consumer goes on to look at five Toyota Tundras in our inventory. If we are able to track that online behavior, we know we need to be communicating to that consumer about a Tundra, not a Toyota Supra, because based on their behavior, the Tundra is what they are really interested in buying.

It’s about using all the information that’s available about consumers online and being able to educate our sales force and improve communications, so we can talk to our customers about relevant information in a timely fashion and help drive more customers through our door.

How do you keep up on technology?

Mike: We read Dealer magazine. We go to the Digital Dealer Conference & Exposition. We are part of the Price-Simms organization, so we get together as a group twice a year and invite several vendors and listen to their presentations. We are receptive. We try to be very open-minded. We’ll look at things. We are always trying to deal with vendors that are best in class and we’re always trying to figure out what is the latest, greatest development.

How do you handle social media?

Jay: We use Digital Air Strike for social media. We are extremely pleased with the approach they take.

One of the reasons we chose Digital Air Strike is that they offer more of an agency, hands-on approach, rather than provide some automated solution. They handle Facebook and Twitter for us – posting links on those sites to wherever consumers have put reviews about us online.

Mike: Digital Air Strike is much more proactive than we have the time to be. We have a lot of things to do during the day. Sitting down and writing and posting things on Facebook, and Twitter are not top of mind for most dealers. But, I think social media is an important and growing segment.

That’s why we write our own blogs for our website. Each department head is supposed to write one blog per month. Beth VanStory and I just post them. We are constantly reminding the managers to make sure they get their blog in and I can’t say we’re successful every month, but I think we do a better job than most.

Specifically, how do you handle online reputation management?

Jay: Digital Air Strike helps us with online reputation management and we get a lot of traction with the online reviews. We personally answer all the reviews that require an answer.

We are on DealerRater.com with an average rating of 4.9, with 23 reviews. We’re constantly looking to drive up reviews. Whenever a customer reaches out to us to tell us about their experiences here, we respond with a templated e-mail that has the hyperlinks to the big review sites. When we want to push to get more reviews on DealerRater, we put its link first and foremost on the email. Google Places is probably the next initiative we need to take to get more reviews.

What is your biggest challenge?

Mike: We have several: Margin compression – that’s a problem for everyone in the industry; maintaining quality personnel and being able to grow people; and keeping on top of all the technology we use – between the CRM and the products – and having 22 different model lines.

As for maintaining a quality staff, Price-Simms is an upwardly mobile and growing organization that’s launched several new dealerships all in the San Francisco Bay Area this year: Ford of Fairfield, Mercedes Fairfield, Fisker and McLaren for all of Northern California.

That’s good for us, because it allows us to recruit more and keeps people on a career path. At the same time, it’s a challenge, because there’s constant evolution. It never stops, so we are always training.

What is your vision for the future?

Mike: Right now we have 120 employees at Toyota Marin and we’re selling over 3,600 cars per year. We’ve recently expanded and opened up a used car facility across the street to increase our used car capacity.

Our vision for the future is to constantly grow our organization and improve our CSI. We want to be number one in CSI, sell 250 used cars per month, be in the top five in the region for new car sales rankings, and top five for certified pre-owned sales. We are always looking to get bigger, including our fixed ops side. We’re constantly driving our sales volume up to increase our units in operation and our used car volume to drive our reconditioning which in turn fuels our fixed operations. We are always looking to improve, refine and grow along this trajectory.

The $2.5 billion, 7,400-employee Larry H. Miller Group of Companies started in 1979 with one Utah dealership. Today it encompasses 44 dealerships in seven states, as well as professional sports, auto racing and other entertainment venues, movie theatres and restaurants, and real estate, insurance and finance companies. We recently spoke to Greg Miller, CEO and eldest son of founder Larry Miller, about operating car dealerships, managing people, creating culture and keeping all the various plates spinning.

Click here to read the full story from Greg and the rest of the March 2012 issue of Dealer magazine.

We’re here to talk about your dealerships Greg, but the car business is just part of the story isn’t it?

Very much so, but our 44 car dealerships are the economic engine of the business. The dealerships and the company began in 1979 with my dad’s first dealership, a Toyota store in Murray, Utah. I’m 46 and I’ve worked off and on for my dad since I was a kid, doing everything from sweeping floors to managing his stores. He passed in 2009, but for some time he had prepared me to take the helm, though my mother remains chairperson of the board. Last year we retailed 61,629 new and used vehicles through these 44 stores.

What is your management structure?

I’m CEO, and have a COO for the sports and entertainment side and a president and COO of Auto Operations, Tony Schnurr. He has two operations managers reporting to him, and they have Regional Performance Managers or RPMs reporting to them. One RPM each is over Arizona, New Mexico and Colorado markets, two in Utah, and one in Idaho and the Northwest. RPMs wear two hats; each is a general manager of a store but also have GM responsibilities over the stores in their respective state or territory.

Do RPMs or GMs have equity in their stores?

Our family owns 100% of the stock except for two stores. Our GMs all receive a base, plus a percentage of their store’s net, and can earn what we call a Tier 2 bonus, which is up to 10% of the earnings of their store.

What are your top challenges managing car dealerships today?

Number one challenge: small-minded people. Too often, people tend to close off their minds, refuse to delegate out of some misguided sense of control, they laud authority over others and in general fail to be teachable themselves and in their responsibilities to teach, inspire and motivate others to excellence.

I expect every one of my managers to run their business very, very well. What I challenge them to is bigger thinking, becoming and being better students of our businesses and how we, in turn, share what we learn with those who come behind us, so we can make them better. As an organization, we’re to the point where we need to focus on philosophical and cultural ideals and goals, because if we can get that right then the operational challenges will take care of themselves.

By philosophical I mean that we have to teach and delegate; no one has the corner on the best way of doing things and when a manager fails to delegate he not only wastes time but talent – his or hers and the individual he or she should be developing to master those tasks.

By culture, I mean embracing the ideal that as you move through your career, the quality of your life is likely to increase. As blessings continue, it’s important to give back. My mom, addressing our executives at a recent conference, shared that as we earn money as an organization and as family we do primarily three things with it – pay taxes, service debt and share with philanthropic initiatives. We’re fostering a sharing culture here. We don’t push it, but we want employees aware of the idea that you don’t have to keep all the money you make. It’s OK to give some back to the community or to others who have supported our businesses or who have less.

You’re teaching or instilling humility.

Yes, and they go hand-in-hand; you have to be humble enough to learn. Moreover, part of this is stewardship, the responsibility to care for and take care of what is given to us.

I’ve been CEO now for a little over three-and-a-half years. It’s taken me a couple of years to get my legs under me and find my own identity and it’s really coming into focus now.  Therefore, when you talk about teaching and how you hold people accountable for applying what they learn, we have created what we call a “Management Pedigree.” It’s a process for evaluating executives within the organization. It helps us identify the process through which they were hired and/or how they moved up through the ranks. It helps us clarify, “OK, this person is really good at attracting, teaching, and promoting talent” or “This guy has been with us for 10 years and done nothing.”

We use this pedigree process as leverage – peer pressure – to hold managers accountable. Last week we had one of our recently promoted RPMs who has been with us 20 years present along with three GMs he had promoted. A moderator asked this RPM questions like “How did you get this GM ready for the job?” or “What talents and skills did you look for?”

You’re modeling the behaviors you want to instill.

That’s right. Last year we started the Larry H. Miller Institute for General Manager Development. We are in a position in our organization’s history where we’re on the verge of unprecedented growth. Last year we retired all of our revolving debt and all of our capital debt, so the only debt that we have right now is real estate and, of course, that’s covered by the rent from our various operations, so we’re going to be building cash at an unprecedented rate. That’s going to lead to many acquisition opportunities, so that’s why we need to be getting people ready so quickly.

The idea is that we want to have six to eight GMs ready to go as opportunities materialize to acquire new stores, so we hand-picked 10 of our middle managers, GSMs who’ve shown promise and talent. We invited them to apply for this Institute. These candidates also had to get the support of their GM and their GM had to agree to attend five of the 10 classes throughout the year with them. They fly in for intensive day-and-a-half of meetings. We were surprised when some of the GMs stayed for most of the meetings themselves!

Can you share some program content?

We cover the history of the organization, our culture and then we discuss each dealership department. We talk about inventory management, F&I including sub-prime, parts and service issues, and finally accounting. We break it down into more detail than this, of course, but they learn what they need to know so when they get the call to come run a dealership, they’re ready and able to succeed.

What vendors contribute to your success?

ADP has provided our DMS for many years, and we are quite pleased with their performance. We use DealerSocket for CRM. Used vehicle inventory optimization is supported by DealerTrack AAX and its eCarlist tool, with dealership websites provided by Dealer.com and Cobalt. We also have excellent relationships with Carfax, Autotrader.com and DME. KeyTrack helps us secure keys for the lot, and we use MOC1 advisor tablets in the service lanes.

What dealership-specific operational issues trouble you?

None troubles me, because we’ve really worked to eliminate or reduce them. We’re finally dialed in as far as inventory goes, for instance. In October of ’08 we had $267 million worth of new vehicle inventory. Today, we have $130 to $140 million and that’s where it should be with our volume. On used, we manage to a 35-day supply. Parts inventories carry between a 35- to 40-day supply. I’ve been having a hard time convincing others in the organization that it’s good to run a little leaner than that.

As far as brands, we might make a run at BMW, but we already have Lexus and Mercedes, Toyota, Honda, and Chrysler-Jeep-Dodge-RAM, as well as Ford, Chevy, Volkswagen, Hyundai, Kia, and Nissan. We don’t get into the super high-line or exotic brands or the lower volume ones, which haven’t work well for us.

One of the things that was bothersome to me when I took the helm was how little of our automotive operational net profit we kept. In other words, if we have a certain number of stores that make a million dollars, collectively, but stores that lost money require $200,000 in support, we’re keeping 80 percent of our net. In 2009, we were only keeping 73 percent. In 2010, we moved to 84 percent, and in 2011, we were at 93 percent profit retention.

What path got you there?

Here’s an example of how we got there. We had a brand that we worked through multiple facilities and GMs over the last 28 years that never seemed to work right for us. I then asked the CFO to prepare a performance summary of that store over the years. I was stunned that it had made only about $50,000 in all the years we owned it!

We had had good managers in that store, but we just for some reason couldn’t make the store work for us. We sold it to another dealer, a good friend, who has since made the brand and location work for him.

I learned from the experience that we have to figure out what we do best and then do more of it. We learned what we’re good at as operators and what we are not. Therefore, this store and some other assets were for us like sandbags on a hot air balloon. You soon get wise and start cutting loose the bags so the balloon can lift off the ground.

I remember riding in the car with my dad about 15 years ago as we drove passed this particular store. Dad was on the phone, very agitated with the GM of that store, asking why it was so hard to make that investment profitable. I remember saying to him, “Why not just sell it.” He turned to me and said, “Greg, we bought these stores to run them, not to sell them.” In my mind, I thought, “He’s a really smart guy. He knows a lot more than I do. Maybe there’s just something about that I don’t understand.”

Here we are years later, we sold it; life got better. If we have to divest of a few sick or poor performing operations in order to get stronger and healthier, I’m all for doing it.

One final question – your five points for operating successful car dealerships.

We have to protect the legal, financial, and moral well-being of the company. Within that context, we must execute consistently the fundamentals. These fundamentals for us are proper inventory levels and mix; the right people in the right places doing the right things at the right times; and, a fierce commitment to having what we call DPR meetings, daily performance reviews, every morning.

Larry H. Miller Group – Cars and More

The Larry H. Miller Group of Companies, headquartered in Sandy, UT, is a $2.5 billion group of companies, in five business elements: Sports and entertainment, including the Utah Jazz, the Salt Lake Bees, Miller Motorsports Park, EnergySolutions Arena, the Tour of Utah, and 94 Fanzz retail apparel stores. This element also includes a television station, a radio station, and about 95 theater screens in six locations.

Auto-related elements are Total Care Auto, which markets service contracts, GAP and casualty insurance, mostly to Larry H. Miller auto dealership customers, as well as a third business element, Prestige Financial Services, a subprime finance company with $423 million in receivables. Interestingly, only about 25 percent of the loans it originates are with Larry Miller dealerships.

The fourth business element is Miller Family Real Estate. This element manages the group’s various dealership facility needs. This element works with a half-a-dozen contractors to build facilities. The final element is the group of 44 Miller Family dealerships, which is clearly the economic engine of this organization.

Most of the second-generation Miller family is engaged in the organization. Sister Karen Williams, though not actively engaged in business operations, is involved in the Larry H. Miller Family Foundation. Greg Miller’s brother Roger, the next oldest, is an IT professional and handles systems facilitation, mostly for Miller Motorsports Park. Steve Miller until recently oversaw global new and used car inventories, but has since turned that important job over to a successor and followed his passion into the Tour of Utah, which is a UCI-sanctioned, multi-stage bicycle race. The youngest brother, Bryan, is the assistant manager of Miller Motorsports Park.

To manage this diverse operation, Greg Miller along with his brothers, their mother – the organization’s chairperson of the board – and a nephew, Zane, who worked in Miller Family Real Estate, meet every Thursday for three hours. Discussion covers all facets of the operation, though conversation follows no set agenda. On the first Thursday of the month, the current generation – called “Miller 3.0” and consisting of nieces and nephews – also attend. The older generations believe the third generation’s participation in these meetings, on which regular business issues are focused, helps them understand what it looks like to run a business and helps them understand expectations of them in such key areas as character, motivation and stewardship.

Greg Miller said the younger generation’s participation in these meetings helps keep them from having a sense of entitlement, for which Miller says he has no tolerance for anyone working with the family companies. “ They need to be part of what produces the fruits of this business and we talk about that a lot in this meeting, how one can’t be just a consumer but must be a producer too. To their credit, they’re really catching on to that. I’m very proud of them,” he says of Miller 3.0.

As an early adopter of Internet technology, Casey Coffey, general manager and owner of Gwinnett Place Ford, in Duluth, GA, has led his Internet sales team in achieving some very impressive results:

• 65% of Gwinnett Place Ford’s sales are Internet sales.
• Gwinnett Place Ford ranks within the top 57 dealerships nationwide for Internet sales, with 1,499 new and used car Internet sales in 2010.
• The dealership’s growth rate for 2011 is 65% higher than 2010.
• 75% of its Internet sales leads come from its own website and the sales team’s closing ratio is 18%.
• In 2010, Gwinnett Place Ford won a Ford Motor Company President’s Award.

Casey Coffey recently shared with Dealer magazine how he and his Internet Sales Manager, Craig Hooten, and the Internet sales team at Gwinnett Place Ford achieved these impressive results.

First, Casey, please tell us how you got into the business of selling cars.

I went to the University of Missouri and had a fraternity brother who had a brother-in-law in the car business in Kansas City. I went to work there for a summer with the intention of saving up money to go to law school. I wound up being successful in my first couple of months and decided the car business was the right one for me.

How and when did you decide to buy Gwinnett Place Ford?

I started in the business at a Cadillac Store in Kansas City and worked for that group until 1999, when I was presented an opportunity to buy into a couple of stores in Atlanta. I had always wanted to move to the south and thought the two franchises, Ford and Nissan, were great opportunities. We are going on our 13th year here in Atlanta and both stores are doing well.

What is unique about the way you run your business?

We were early adopters of the Internet and we’ve got a good head start on other dealerships that are just catching up now and discovering this thing isn’t a fad. The Internet is going to be out there to stay. We realized that many years ago. My staff is geared for the Internet. They understand it. They are technology driven. We’ve really worked on perfecting our craft.

Internet marketing has been and will continue to be a huge focus for us. I believe virtually the entire marketing of the dealership in years to come will be Internet focused. Certainly, the advent of the Internet over the last 10 years has changed the landscape of the business and it will continue to do that.

Right now, 65% of our business is the Internet – for both our Ford and Nissan dealerships. But, let’s focus on Gwinnett Place Ford, the dealership I run.

When we started out, we were much like everybody else. We used a lot of third-party lead providers. As time went on, we found out we could do most of that lead generating ourselves. We still use AutoTrader.com and Cars.com, but we get over 75% of our leads directly from our own website.

That’s impressive. How do you drive traffic to your ecommerce site?

We handle all our SEO internally. Craig Hooten, our Internet sales manager, is paramount in that arena and we’ve got a group of people here who enable the key words and stay on it for us. We’re constantly monitoring all that through Google Analytics.

How about SEM?

We also manage all SEM internally. We have the budget set up for SEM and it’s a vital part of what we do, but it is something that is being significantly eclipsed by our organic marketing as we have gotten stronger over time on our keywords. And that’s the way we want it to be.

What percentage of your advertising dollars are spent on the Internet vs. traditional advertising channels?

We are 40% Internet spend, and 60% traditional spend. Internet advertising is not as expensive as traditional advertising, so overall we have reduced our total advertising budget considerably over the years.

That 40% Internet spend goes toward SEO and SEM. Plus, we have a couple of lead providers I mentioned — Cars.com and AutoTrader.com – that we spend some money on.

On the traditional side, we don’t do newspapers anymore. We predominantly advertise on talk radio – WSB – the top radio station in Atlanta.

We also do network TV spots certain times of the year, such as Christmas and right after Christmas. The only other TV we do is cable to reach out and have presence in our market area which is Gwinnett County – the largest county in Georgia. We are about 25 miles North of Atlanta.

One thing you have to keep in mind is that even though we call it ‘traditional’ advertising, every single ad we do, whether it’s on network, cable or talk radio, there is one goal in mind and that’s to drive the customer to our website. So, our messaging is all about driving people to our virtual site. Our website URL is prominent in all these traditional ads.

How do you manage your website?

Dealer.com is our website host. They do a great job. They are very responsive to all of our needs and move very quickly when we need to make changes to our website.

We update our content constantly. And, everybody knows that having as many great quality pictures as you can possible have on your website that provide all the information that a buyer would want is paramount to success on the Internet.

So, we’ve hired professionals to help us with that. CDM, a local company, takes all our photos. On our site, we have a feature where you can click on the main photo of the automobile for a 360-degree walkaround. It’s not video, but it appears like a video, and along with audio, it gives our customers great in-depth information on each vehicle.

CDM also handles all our stickers and uploads all our content to our Dealer.com hosted website. We provide all the information to spice up the ads and make them more appealing to consumers. That’s really a huge part of what we do – making sure the right information gets to the consumer.

As a result of all this, how many Internet leads do you get each month?

Incoming form submissions from the Internet run about 600 per month, and then we also get about 600 telephone calls per month that go into our BDC from Internet sources. So, we have a total of 1,200 leads per month.

What is your close ratio?

When we started out, we were like everybody else. We were at a 6 or 7% closing ratio for a long time, until we decided we needed to limit the amount of leads each salesperson got and treat them very much like you would business managers, where they are not overwhelmed by the number of leads and they have enough time to work on those leads and serve the customers’ needs. This month we are closing at 18%.

How do you process your Internet leads?

All of our leads come into our DealerSocket CRM. It’s a very robust system that we’ve been on for a long time now. And, DealerSocket continues to make improvements to their system.

Craig Hooten, our Internet sales manager, looks at those leads and makes a response immediately. Response time is critical to us. Overall, on every lead that comes in — including the ones that come in at night that are responded to by an auto-response system — we run about 6 ½ minutes for response time.

We feel it’s paramount to be that responsive. The inquiring prospects are typically sitting at their computers and they’ve just sent you the lead. People today are in a hurry. Everyone is busy. They want a response right now. That’s the time they have to shop and you want to get right back to them. If you get much over 10 minutes — and I don’t have a scientific study on this — but I think your opportunity to reach them decreases tremendously. They’ve moved onto the next website or they are gone.

A lot of our leads are during the day, so people are shopping while they are at work. They pop on the computer, they find the vehicle they are looking for and they send a lead to us and it’s just paramount that we get back to them right then.

During business hours, as soon as a lead comes into our CRM, Craig gets on the phone and calls that customer to set an appointment. Whether he does or he doesn’t secure an appointment at that time, he puts that lead into the appropriate salesperson’s queue, based on how many leads each salesperson has currently vs. everybody else in the department.

So the person with the least amount of leads gets the next lead. It’s not exactly on a round-robin basis, but on who is ready for the next lead.

Each year our Internet department is growing. At our Ford dealership, we currently have eight dedicated salespeople getting Internet leads.

The quality of our team; their dedication; the fact that they are progressive; and that they understand that our Internet marketing and our ability to be able to respond to customers in a timely manner is critical – all this is just paramount to what we achieve.

I’ve got a really strong philosophy that the customers out there shopping have a goal. Their goal is to eliminate choices. We need to make sure that we are not being eliminated by not being able to handle the lead quickly enough or professionally enough.

We have to make sure that the customer feels over the phone or through the Internet that we’re experienced, that we have expertise in the marketplace and that we can provide them with the services they’re looking for. So our goal is to not be eliminated.

It’s so different from a brick and mortar business. The bottom line for being successful in Internet sales is this: You have to stay on top of your technology, you have to have the right inventory and the right people, and you have to make sure those salespeople are getting to the customers as much information as they can, as quickly as possible, to keep your dealership in the game.

How many days out do you follow a customer?

I’ll give you an example. Two days ago, one of my Internet salespeople sold a car to a customer he had followed for 396 days. I don’t want to make it sound like we are incessantly on these customers each and every day as hard as we would be in the first 3 days, but our CRM system is set up to follow that customer until they buy an automobile from us or someone else.

In line with your progressive attitude toward technology, what are you doing with mobile technology?

We’ve started our own mobile apps for iPhone, Android and Blackberry. It’s a work in progress, but it’s a very robust system, which allows us to get content to our customers — who have downloaded the apps – on a moment’s notice. We have certain mobile specials that we offer only through our mobile applications. You can see any inventory, new and used, with one click and contact anyone here in any department with one click. We also let customers know through our mobile apps when their vehicle is ready to be picked up after service.

Whenever we have a customer in the service department, we ask them to download our free apps. We also have a lot of point of sales material in the store that explains the benefits of the apps. We’re continuing to expand on those apps.

As part of our mobile apps, we are currently developing stickers for each one of the cars so customers can scan QR codes. We haven’t implemented this system just yet. The QR coded stickers are not on the cars yet, but are currently being made.

Did you develop the mobile apps yourself?

Solution One Mobile Marketing developed the apps for us. I looked at a lot of app providers before I decided to go with Solution One. They had the most robust interactive apps out there at the time.

How do you handle your online reputation management?

We are on DealerRater.com where we have 28 reviews right now. We are getting good reviews, since we’ve got good customer service at the dealership.

When customers are here and they’ve had a good experience, we encourage them to go online and tell others about it. Certainly, Google has changed that landscape and we’re working through that.

How do you use social media?

We use both Facebook and Twitter. Craig takes a lot of pictures of events we host and we try to get that out in front of all our customers and fans. Solution One Mobile Marketing is helping us with posting photos and content on Facebook.

I don’t know at this point in time how much social media is helping in terms of sales, but I don’t want to not be there.

What is your biggest challenge in the Internet realm?

Our biggest challenge is getting people to make appointments and show up. We want our ratio of shown up to appointments to be about 75%. Currently we’re only running 58% in that area.

What is your typical day like?

I come in at 7 a.m. and first thing I do is review all of the previous day’s operations, what the Internet leads were, how many phone calls we got, and the number of service ROs.

We do a ‘virtual save a deal’ meeting where the staff reviews the previous three days of Internet leads and incoming telephone calls to determine if there’s anything to follow up on and as a group we determine how we are going to market effectively to sell those customers a car.

After that we have a “sold save a deal meeting,” about automobiles that are sold, so we can stay on top of those and then an assets meeting, covering inventory, marketing, a contract in transit, and anything else of that nature.

With all this hard work and success, do you have any plans for expansion?

We just finished building a new store for Gwinnett Place Ford, and we moved in July 1. We tore down the old store and started from scratch and built a very open area that’s very technologically savvy. It’s more like an Apple store. We don’t have any offices. There are computers on each station. There are no towers, or glass walls. It’s all open.

All of our salespeople do their sales transactions at the sales bar. Our customers can speak to any one of the managers. It’s a very open atmosphere.

We’re a very progressive store. The personnel here, myself, my GSM, we understand it‘s all about customer service. It’s not the old school anymore. We don’t employ any of the tactics that have been used in the industry for years.

We think the Internet is where it’s all going and that relationship starts when that customer clicks on your website. Your website is your front line, not the store. And we think we have world class there on the website and on the telephone to get that relationship started and get the customers to believe in us and trust us that we are going to serve their needs. My salespeople have done a great job at doing that.

Can you tell us why your new car sales business increased so dramatically in 2011?

Our sales were up 65% in 2011 over the 2010 numbers, on the new car side. Of course you have to remember these numbers are a little bit skewed because we were under construction in 2010. If we hadn’t been under construction then, with the climate out there today and with Ford’s inventory today, I think we would have been up in the 25 to 30% in new car sales for 2011.

On the used car side, our sales have been about flat due to the lack of inventory out there and the transaction prices on used cars inching up closer to new car pricing. New car sales have become the stronger part of our business, but we are certainly committed to growing our used car business.

What do you foresee five years down the road?

I wish I had that kind of insight. Obviously as I said before, it’s only going to become more technology driven and we’re working on staying on that cutting edge.

As you know, technology changes at a very rapid pace, so you know we’re just going to have to stay close to it, and be agile and nimble.

How do you keep current in the digital technology world?

I read Dealer magazine. And, we try to glean as much as we can out of our neighboring auto dealers. We are located in an auto mall and we spend a lot of time talking with other dealerships. Plus, there are a lot of vendors that are trying to bring something to the table and we have an open mind.

We also have gone to the Digital Dealer Conferences and NADA every other year to see new technology.

Besides staying current with technology, how else will you maintain your leadership position?

We’re bullish on Ford. We think Ford is positioned in a tremendous spot in the marketplace and I think we’re going to keep growing with Ford for many years to come.

Ford has excellent quality leadership and I think that 2012 is going to be a fantastic year for the company. Ford has got some fabulous products.

Beyond that, I reiterate: everything will be weighted toward the Internet and we plan to keep up with it from a technology standpoint and from a personal service standpoint to make sure we stay a leader in Internet sales.

Forty-eight years ago, Ray Ciccolo, a young coin-laundry entrepreneur, stopped by a car dealership to buy a new car. He left with the car – and owning the dealership too. Since then he’s amassed 11 dealerships as Village Automotive Group, in the Boston area, with three more to go online by year’s end, retailing about 14,000 new and used vehicles a year. We spoke to Ray recently to learn more about how he turned risk into reward.

Let’s start at the beginning Ray. How did you get into the business?

Forty-eight years ago, right out of college, I was looking around for what I wanted to do. I knew I was entrepreneurial; I had already opened a coin-operated launderette while in college and by graduation owned three of them. I built those stores mostly with debt, but had paid it off and was doing okay with them. I decided I needed a car, and knowing a friend, who was a general manager of Gene Brown Motors, I went to see him. They sold Rambler and Volvo.

While I was talking with him, he mentioned that the dealership owner was in financial trouble – the bank was trying to close him down –and had I ever considered getting into the automobile business. So, he set up a meeting with the bank and the bank thought that with my entrepreneurial background that I was a good risk to take over the note. I sold my three coin-operated launderettes and along with the note took over this car dealership. I often say I went in to buy a used car and came out with the dealership.

A rather big jumping off point…

This was 1963 or so, and I was about 25. I didn’t know anything about the automobile business, but I had gotten a degree in business, was entrepreneurial, and so I had an idea of what to do and used my instincts. One of the first things I knew to do was to look at our expense structure. Back then, all the expenses were Rambler and all the income was Volvo. The used cars, most all Nash-Ramblers, were under water because we had to put too much money in them as trades if we wanted to sell another new Rambler. We eventually gave up Rambler, and the history of that car company proved my decision correct. As a result, we solidified the balance sheet and became a stronger company, and we grew from there.

Volvo was a little-known brand then. Wasn’t that risky?

No, it wasn’t well known, but it was an up-and-coming car back then. Volvo had one model, the 544, and not too long after that they came out with the 122-S. There was some demand on the east coast for imported cars; Volkswagen was extremely strong in the early ‘60s. We were retailing about 15 or 20 Volvos a month and that amounted to a solid service business as well. We focused on one product for which we could do a much better job at selling and servicing. It has become my mantra, to serve one make as opposed to throwing everything into the showroom, which many dealers did back then.

How long did you stay this single point?

I soon realized that my customer base was coming from the college community across the river: MIT, Harvard, and several other colleges in the Cambridge area. To protect my market, I opened a second Volvo dealership in Cambridge. I eventually merged the first store with this one into one big dealership, which made us, in sales, the largest Volvo dealership in North America. This merged operation, still going, is Boston Volvo Village.

What did you learn those first years that you still apply today?

I treat customers as I want to be treated and I treat my employees exactly how I want to be treated. I’m not condescending; I’m just business-like, but I’m like a friend. I treat them very, very, very well and they, in turn, respond and reciprocate my loyalty.

I learned that cash flow is king. This business is a fragile model that needs watching constantly; otherwise, you get in trouble fast. When I took over the dealership, I was handed a long list of receivables, most of which were inside company charges – customers running a tab with the dealership, which was common then. I immediately notified our customers we were no longer going to accept those charges, but invited their credit card charges. Collecting those receivables helped the cash flow immensely.

What are your dealerships?

All of our dealerships are in the Boston area, and include Boston Volvo Village, Cadillac Village of Norwood, Honda Village, Charles River Saab, Saab of Norwood, Hyundai Village of Danvers, Nissan Village, Volvo Village of Norwell, Audi Norwell, Porsche of Norwell and Volvo Village of Danvers.

In which of your stores is your office and what is your style of management?

My office is at Boston Volvo Village. My style has always been very hands on, but I have always had GMs. Interestingly, the fellow who got me into the business was the GM of the store. It didn’t take me very long to realize that he would be best in another position. Moving him was a tough, tough decision, but it had to be made. So, I promoted the GSM, a younger, more aggressive guy, to be the new GM and made the old GM, a sweetheart of a guy, my sales manager. He stayed with me until last year, when he died at 90.

Decisions like this can often take too long to make – if at all.

In one of my 20 Groups, everybody started to talk about what’s the worst mistake they’d ever made. Almost to a man, they said, “Sticking with an employee too long that isn’t doing the job.”

How do you know when it’s time to let them go?

You know immediately. Nevertheless, it can take a year to get rid of a top manager who isn’t doing the job. Moreover, those are difficult decisions. You tend to rationalize, if you’re like me; I just hate to be confrontational. Nevertheless, you work with them and if you don’t see improvement after considerable effort, you can start to get angry…and I suspect it isn’t really a surprise to the person you’re letting go by then, either.

What is their management structure?

General managers operate all stores; I still insist on personally interviewing my GMs. None is an equity partner. I decided a long time ago not to go that route. Because I don’t do well at confrontation, I wouldn’t want to have to face a partner who wasn’t pulling his load.

I have an HR Department that handles all the HR in all the stores. I have a comptroller who oversees everything financially. Each store is required to have a weekly meeting for which the GM prepares an agenda of specifics about running that particular store. Every month all GMs meet with me to discuss their stores and their best practices. I find that my GMs prefer not to disclose their best practices and I sometimes find I have to pry their success methods from them.

I also have monthly service managers meetings, much like a service 20 group, which helps evaluate their performance and departmental results, but it also applies peer pressure to their efforts too. They come prepared with their numbers on spreadsheets, which we combine and project for all to see. They discuss what is working well for them to drive service results. Likewise, I have monthly meetings for parts managers. Then as often as needed, certainly quarterly, I have an office manager’s meeting and they meet with the comptroller and discuss issues specific to the office.

Overall, I evaluate each store’s performance based on return on sales and return on gross. I’ve had stores that haven’t done well. Some, over the years, no matter what I did, I couldn’t make money, so I sold them. I’ve had a half a dozen significant franchises that for any number of reasons I couldn’t make money on them, so good-bye!

What is your per-store gross threshold?

I look for a minimum of 2 percent return on sales. I’ve had stores that have done 5 to 6 percent, which is completely outrageous. Success depends on so many factors – the facility, the management, the location…you name them. With my new stores coming on line, I’ll expect a 20 percent on gross and at least 3 percent return on sales. We should see that because of their newness factors, better locations, different personnel, etc. I’ll move a store until I get that level of return.

For instance, I’m on my fourth location in four years with Hyundai. I moved it originally because the first location was too small, then the second location was on a too-busy highway and then we moved into a temporary facility while I built a new facility, Hyundai Village of Danvers. This one is a winner.

A dealership re-lo isn’t like moving a suitcase to other side of the street, Ray.

Absolutely it isn’t! It’s very, very expensive and it’s not without its problems. I know many peers wouldn’t relocate like I do. However, I don’t believe in throwing more marketing money to fix an ailing dealership. It is rarely a marketing issue.

What does the current economic climate tell you about your future?

In 2008, when Lehman Brothers went down and the whole economic world was turned upside down, if you didn’t change your business model you died. If you didn’t sit down with your management staff and get everyone to cut expenses so they would be in line with revenue, trouble would come fast.

Surprisingly, we made these changes with very little staff reduction. The shock of 2008 was a wake-up call and the good dealers responded to it the right way. I have had many dealers tell me that 2009 was their most profitable year. It certainly was mine!

I’m not worried about the future. I am very bullish on the economy. I have new facilities under construction and I bought three over the last 12 months. I’ve spent almost $32 million this year in expansions, buying real estate and building facilities.

I just finished the Hyundai facility and we relocated one Volvo dealership, now Volvo Village of Danvers. I just began construction on a new Cadillac facility, Cadillac Village of Norwood, relocation. Finally, I just finished a brand new, ground-up Nissan facility, the 35,000 sq. ft. Nissan Village.

So, further answering the question about my outlook, let’s consider that with the 20% reduction in the dealer-body, plus the fact that high scrappage rates vastly exceed new-car sales, the industry is going to sell more cars for the next four to five years.

It’s also my opinion that the automobile industry is going to take the country out of recession instead of the housing business. The factories are starting to roll again; Volkswagen is coming online with a new factory and many of the factories in the states are going to be expanding because of the earthquake and tsunami in Japan. Many of those cars’ parts will be sourced in the United States. We certainly are going to see expansion in the automobile business in the United States.

Are you concerned about your Saab stores?

Well, I’d be foolish not to be a little concerned, but Saab is a good icon. My guess is the new Chinese partners will eventually own the brand. Already Saab has two new products, the first in a long time. Saab now has a joint venture with BMW on engine technology, and a new JV with Boston Power to produce electric vehicles. Saab will be all right, though it has been nerve wracking the last four years.

How are you engaged in dealer affairs, Ray?

I’m the line chair for Volvo and Saab, and the NADA Director from Massachusetts. I’m on a half a dozen NADA committees including the Charitable Foundation, Dealer Operations, and Government Relations, which has always been a favorite of mine, dealing with the bureaucrats and the elected officials in Washington.

How do you market the stores?

We do very little traditional advertising; we test it and it if it doesn’t get much response we stop it. Most marketing we do is electronic, meaning digital marketing to drive leads into the dealerships, and at the moment we are doing a lot more with Facebook and Twitter.

Who are some of the vendors who’ve contributed to your success, Ray?

There are a number of them, probably starting with Reynolds and Reynolds, who I have been with for almost 50 years. We also use CallSource in a number of our stores. For processing leads and customer relationship marketing we use iMagicLab’s CRM, and for online leads we use AutoTrader.com and Cars.com. We rely on auction services Manheim and ADESA, and for many F&I products, Zurich Financial Services. CARFAX provides our vehicle history reports, and our key banks are Sovereign Bank and Wells Fargo.

Any final observations, Ray?

I’m very, very grateful. I have three daughters and a great wife, and all three families are involved in the business, so it makes me very proud.

One last question: When you went to buy that used car in ’63, and walked away owning the dealership, what car did you end up buying?

I went in to buy a used Volkswagen. I told the salesman I wanted something that gets good gas mileage and is small, because I live in Boston where it’s hard to drive and park. I came out owning a Lincoln Continental that got about four gas stations to the mile. I learned my lesson about sales: They don’t necessarily go out with what they came in for.

Darin Partin, Internet sales director for Crest Auto Group, in Plano, Texas, doesn’t worry at all about beating the competition. Partin and his team are focused on beating their own record. Based on their sales numbers, that strategy is working to their advantage.

Crest Auto Group, with its two franchises, Crest Cadillac and Crest Infiniti, is among the top 26 dealers nationwide for new and used car Internet sales units. In 2010, Crest Auto Group sold over 2,000 new and used car Internet sales units.

For 2011, the group has done even better, finally breaking into the 200-plus Internet sales units per month, with a monthly closing ratio ranging between 16 and 20%.

Darin Partin recently shared with Digital Dealer magazine his strategy and tactics for helping his Internet sales and marketing team beat its own records.

Click here to read Darin’s full story and the rest of the January 2012 Digital Dealer magazine. 

Darin, first please tell us how you got into the car business?

Family and friends have always told me that’s what I should do. Even when I was a child, I was always bartering – trading MatchBox cars.  So, they told me that’s what I’d be cut out for and I pursued it from there.

I worked at dealerships in Atlanta, GA, originally. Then I was recruited by CarMax and they relocated me to Texas. I spent a couple of years here for CarMax, and then was recruited to a traditional dealership.

I worked in various positions at a couple of Toyota stores in the Dallas-Fort Worth Metroplex and found I not only had a knack for online marketing, but excelled at that.

Then, while looking for a change, I was put in touch with the general manager at Crest Auto. I interviewed and started at Crest in October 2008, as Internet sales director.

How have you grown the Internet sales business here?

When I first got here, I spent time getting a feel for Crest and the scope of its business — seeing what our presence was online. It became apparent the store had a lot of opportunity online. I began to reorganize the department to lower the number of leads handled by each sales person and I implemented strict customer follow-up procedures –both with the goal of improving our close ratio.

I did a lot of training on how to handle an Internet lead and how to handle a phone call.  And I grew it from there. When I started here, five or six were handling Internet leads. Now we have 18 handling Internet leads.

How many Internet sales leads per month do you get and where do they come from?

We average 1,200 leads per month.  Twenty percent come from third-party lead providers, and 80% come from our own websites.

We use only the third-party lead providers that I would say are necessary. But, I think the leads that are most effective are the ones coming from our own websites. We take a very hands-on approach to our websites.

We have a landing page that links to two websites – www.crestcadillactx.com and www.crestinfiniti.com, as well as our new mobile website. We update the websites ourselves, using the marketing team at our consultant, Van Tuyl Group, Inc.

What do you do about SEO to drive traffic to your websites?

We do all our SEO working with our consultant, Van Tuyl Group, Inc. We don’t use an SEO vendor. I don’t think there’s any real secret to effectively managing SEO. I think it involves constant monitoring and constantly trying new optimizations and then seeing what works. It’s important to not be afraid to try something new.

I’ve seen the way Google changes its algorithms. It’s something that you almost cannot keep up with and they do that on purpose. So, there’s not any one SEO method that wins so much as constantly looking at your analytics and seeing how your ad words and pay-per-click campaigns are working, or not, and then making week-to-week or day-to-day changes to improve performance.

I spend a lot of time reviewing the analytics myself, along with the Van Tuyl Group, Inc. marketing team.

What do you think about using microsites to augment your web traffic strategy?

Microsites are one thing I hear a lot of people talking about.  But, I am not a big believer in microsites.  They just give you one more thing to spend money on. I want to see all my analytics for each of our websites coming from those websites, not multiple microsites.

What are you doing to pull in leads using mobile technology?

We have a completely optimized mobile site that we spend SEO and SEM money on. Our mobile site started as a place for scheduling service appointments, but it’s grown into a site for helping our customers do many things – including getting a value on their trade-ins, and shopping inventory.

The leads we get from it still come predominantly from scheduling service appointments, but the amount of inquiries for sales is definitely growing month in and month out. Plus, we have iPhone, Android and BlackBerry apps for inventory and specials that link into our mobile web site. It’s all working very well for us.

How do you process all these leads?

We use a CRM that encompasses almost every aspect of what we do to close leads. We use it to distribute our sales leads in round-robin fashion to our sales team.  We have created several custom follow up campaigns and schedules ourselves in order to maintain the level of follow up we want.

What is your typical response time to Internet sales leads?

Our response time to Internet sales leads is always under 10 minutes.

But, focusing on response time too heavily is a mistake. Quality of response is much more important than the actual time you get back to someone. If I’m the customer and I receive an email back from you in two minutes, but it doesn’t address what I need, it’s the same as not responding to me at all.

I don’t subscribe to using templates or automated responses for this. So each response to a customer is totally customized. A short personalized email, direct and to the point is what we do first.

I personally believe in looking at an Internet lead the same as if the customer walked through the front door.  With an Internet lead, you just have a different tool initially to use to communicate, instead of having face-to-face contact. The moment that you view an Internet lead as something different, typically it becomes more difficult to deal with.

So, it follows, I don’t have any devoted Internet sales people. My Internet salespeople are also my floor salespeople. Once salespeople prove themselves on the sales floor, then, they are also added to the Internet team.

What is your biggest challenge as Internet Director?

Our biggest challenge in the Internet business is consistent, long-term follow-up. We typically follow a customer for 120 days. That’s the ongoing thing you have to work at every single day to get better at.

Toward that end, we have sales training every morning with a rotation of trainers and I’m in that rotation. It’s essentially 30 minutes where we go over proper follow-up, new trends, what we’ve observed, areas of opportunity, where the guys need help, and what they are struggling with – the gamut of things from meet and greet to negotiation handling, to closing the deal. The daily sales meeting encompasses every part of our process.

I firmly believe that you receive an Internet lead to set an appointment, not to sell a car. The interaction part of the process, the follow-up phone call, is the most important thing.

You’ve got to get the customer here first to look at the car. That’s your opportunity to show them what’s good about that car. That’s very hard to do via computer.

So, you feel very strongly that the personal touch is still necessary in Internet selling?

Selling cars is a people-oriented business and the one element we’ll never be able to take out is the people element. I know one day it will get to the point where you are signing paperwork via a computer, but you still can’t replace the salesperson and when people deal with people you have to trust each other.

If you treat your customers right — and this is one thing my GM says, and I firmly believe — if you present someone with all the options in the selling process, they’ll make the right decision. And, if you do that, people will learn that they can trust you. They’ll see you are just another person making a living to support your family, and they will help you in your endeavor.

If you ask them to go out and write a review for you, they will. They will contribute to your success, once they know you. That personal relationship is very important.

How does that carry over online? What are you doing for online reputation management?

What’s out there about you online is, in a sense, everything you are. It’s very important. We are currently engaged in an aggressive campaign on Google to get more people talking about us online – to get more customer reviews. Reviews optimize extremely well on any search engine and will help drive traffic to our websites.

Crest Infiniti has about 87 reviews on DealerRater.com and a 4.9 overall rating out of a possible 5.0 for customer service, quality of work, friendliness, overall experience and price. Crest Cadillac has 20 reviews on DealerRater.com and a 4.8 overall rating.

To help remind our customers to review us online, we pass out postcards at the dealership, but we are finding mobile technology is opening up even greater opportunities for us in terms of people being more apt to write a review.  A Google Places app allows people to write reviews spontaneously — when they are in the moment.

Social media also serves as a review platform and is another place where we want to keep our name out in front of people.

What are you doing with the social media giants Facebook and Twitter?

We’ve seen some tremendous results from a new initiative we’ve taken with Facebook in the past four months.  We’ve gone from 100 fans to 4,000 fans on Facebook. We are using a social media marketing company and they’ve done a lot of really good work on both Facebook and Twitter since they started working for us several months ago.

They do daily content updates and put a lot of action items online — asking people to talk about their favorite movies and music — all things to start and keep a conversation going online.

They are very contest and game driven. They run games for us with iPads and iTunes gift cards for prizes and that’s been working very well for us too.

So you are reaching out to the younger market?

It would seem so with the contests we’ve done, but with the people who participate and show up to pick up the prize, it would not seem so.  The customers showing up for the prizes are 40 and 50-year-olds.  It seems that everyone is on social media.

I believe social media will get us a lot further than some of the bigger, more expensive advertising campaigns we could do.

Are you still doing traditional advertising?

About 60% of our advertising budget is digital and 40% traditional. We do a few radio spots, but we haven’t done newspaper advertising in quite a while. So the 40% is going mostly into TV spots on a variety of local cable TV channels.

We actually do the creative for these with our consultant, Van Tuyl Group, Inc., and a local advertising agency.

While we are still doing some traditional advertising, we are focusing heavily on digital marketing. My general manager Mike Brosin completely understands and knows how important and impactful the digital realm is and that’s just one of the reasons it’s great to work for him.

How do you stay up-to-date on digital sales and marketing techniques and technology?

I regularly read the Digital Dealer magazine. And I read all those myriad emails Internet managers get from vendors. Over the years, I’ve found good ideas in them too.

And I’m never afraid to listen to what someone has to say and not make the assumption that I know more than they do. We take input from our entire staff, not just the sales staff, but our service technicians, porters, everyone at the dealership.

One of our biggest keys to success is that our team and our general manager, Mike Brosin, are not afraid to try something new and see what happens.

None of our success would be possible, if I didn’t have a general manager who completely understands and sees what Internet business can do. That’s probably the most impactful factor that gives me the ability to grow our business – having a general manager who gets it and sees the potential.

What is your vision for the future?

Right now, depending on time of year and other things going on, our close ratio has varied from as low as 16% to as high as 20%.  In 2010, we were selling between 170 and 180 Internet units per month and, in 2011, more than 200 Internet units per month.

When you are closing at 16 to 20%, there’s so much room for growth! Granted I know what typical close ratios are, and I know what we have is good. But there’s still a lot of room to move.

My vision is this: I’d like to see a 30% close ratio. I think it’s feasible. In my mind, every time I reach a goal, I immediately move it up. I think the worst thing you can do in this business is gauge yourself off of your competition. I don’t think it’s fair to look at your competition and try to beat them. I think you have to be in constant pursuit of beating yourself, besting yourself every day.

As a team, that’s our biggest pursuit. We set our own internal numbers and keep trying to best them. So for 2012, I’d like to be well into the 20-plus percent close ratio and my next mark is 250 Internet sales units per month.

It’s all about constant, predictable and moving growth — always pursuing the next step of a limitless staircase.

Third-generation dealer Bill Underriner operates Underriner Motors in Billings, MT, selling Honda, Buick, Hyundai and Volvo, and, as NADA’s leader for the next 12-month tenure, is eager to lead.

“My focus is on three goals,” he tells Dealer magazine, “abiding by the new NADA facilities study to guide our position on this key matter; helping lawmakers and our members come to a meaningful compromise about CAFE, and planning for NADA’s future.” 

Underriner will become NADA chairman at the NADA Convention and Exposition in February. 

Click here to read Bill’s whole story and the rest of the January 2012 issue of Dealer magazine. 

Bill, why does a dealer, with hands already full, take on NADA headship for a year?

I saw how the Montana Auto Dealers and NADA itself worked so hard for the dealer body and for my dealership. I felt I needed to give back. That’s why I decided to get personally involved.

I was elected in 1991 to the board of directors of the Montana Automobile Dealers Association, and in 1999 as its president. I then became its chair, and, in 2000, I ran for Montana’s representative on the NADA board. I have served three terms as NADA treasurer, and most recently was NADA’s vice chair for 2011.

My NADA 2012 vice chair is David Westcott, president of David Westcott Buick, GMC, and Suzuki of Burlington, NC, a dealer since 1981. Dave previously was North Carolina’s representative on the NADA board.

What nails will you drive this year?

There are three: One, our facility image study, the results of which will be announced at the NADA convention; two, fuel economy; and, three, long-term planning for NADA. 

Mind if we address them in reverse order?

Sure. Stephen W. Wade, NADA chair for 2011 asked me to chair NADA’s Long-Term Planning Committee and asked me to look at three future-impacting issues for NADA. The first will be the future of the NADA convention. We’re surveying vendors and dealers, and others who hold like-kind conventions, to learn what we can do to make our convention more modern. We want the NADA convention of tomorrow to attract more people and to attract the next generation of people into our business.

The second aspect of NADA’s future is to attract younger dealers into the metro associations, state associations, and into NADA. NADA will benefit greatly if we can draw these tech-savvy people into our membership- and policy-setting groups and leverage their expertise to grow our businesses, associations and the entire auto industry.

The third part of the plan?

The final aspect of this long-term plan is focusing on how we use new technology, like the NADA smartphone app just released, for the advantage of our members. For example, how do we use technologies that can help us communicate better with NADA’s 16,000 dealership members in America? Not all members communicate the same way, either with us or among themselves. To help us, I have some of the best next-generation dealers on this task force. They are doing a great job investigating this all-important communication question. These tech-savvy dealers are

Brent David, a 24-year-old Audi dealer, from Miami, Prestige Imports, and April Ancira, a San Antonio, TX, dealer, Ancira Auto Group.

I’m curious about the future NADA convention vision. Will the convention remain a physical event or virtual expo and convention?

Dealers may see more of the convention in a virtual environment, but for the most part, the NADA convention will continue to provide a one-on-one experience for dealers to manufacturers, dealers to vendors, and dealers to workshops. This important aspect of the convention and exposition will not change.

We are looking as well at physical sites for the convention; many members prefer Las Vegas to other sites, but only a handful of cities can handle an event of the size of NADA. Too, only a few cities having these facilities are located where weather is not a significant factor. Another question is: Might the convention date change to a month other than late January or early February. That’s possible; we’re reviewing the NADA convention from various angles.

Let’s move on to the second nail you’re going to drive in 2012, CAFE.

We agree fuel economy standards should exist, but it is NADA’s position that having three parties setting these standards – California, NHTSA and the EPA – is counterproductive to everyone involved. In other words, there should be one standard.

We want to make sure that the car in 2025, for example, is a car that is affordable for the average American. With what we see today, to get to the current proposal of “54.5 mpg by 2025” will add nearly $3,000 to the cost of a vehicle, according to the Obama administration.

That’s a lot of money for the American public. When you think of what the pace of price increases of the automobile has been in the last 10 years — and now looking forward to the next 13 years — the automobile is going to become very, very expensive.

The other change we’re concerned about is, will the type of vehicle that gets this kind of mileage be the kind of automobile the customer wants? I know here in Montana, for instance, we sell about 60 percent trucks. It is going to take a lot of engineering to create a truck that gets 54.5 miles per gallon by 2025 and doesn’t cost a fortune.

This regulation gambles that millions of consumers will be able to afford thousands of dollars more for generally smaller, more expensive vehicles that may not meet their needs. This policy is contrary to what most consumers are actually buying, despite the wide availability of more fuel-efficient models and hybrids.

We need fuel economy policies that encourage the sales of fuel-efficient vehicles, instead of risky mandates that frustrate consumer demand and depress fleet turnover.

The number one question that must be asked is: How many people will no longer be able to afford a new vehicle if the government raises the price of a new car by about $3,000? We will analyze the rule with this principal question in mind. We urge Congress to do the same. 

Is – will – NADA get the traction it wants in regard to CAFE?

We’re getting traction, though this does not mean my focus on CAFE will be any less. We have to keep working with the administration and different people within different agencies if we are to get a standard that is fair to all parties.

If we can’t get this agreement, I’m afraid of what will happen. If we can’t reach a fair agreement, I am concerned for how much cost will be added to CAFE-compliant vehicles. If this cost is too much, consumers will hang onto their current vehicles longer, which as they age their fuel economy decreases while their emissions tend to increase. 

Who should this single agency be?

Prior to 2009, fuel economy was always regulated exclusively by the National Highway Traffic Safety Administration, under CAFE. If CAFE ends up meaning every state is allowed to set its own standards, complying is really going to complicate the standards and vehicle costs. The final CAFE number has to result in vehicles that are affordable and CAFE-compliant vehicles have to be what the consumer wants to buy.

Now an ugly nail… facilities improvements.

You’re absolutely right. We are very, very concerned about this at NADA, which is why it is my top priority. I will address this issue with every manufacturer requiring facility programs today.

NADA is releasing at the convention results of a comprehensive, independent study of this issue, encompassing conversations with dealers, customers, manufacturers, lawyers, accountants and other businesses like restaurants and hotels who have image programs.

We’re looking to learn the answer to this all-important question, “Does an image program sell X amount of dollars versus the millions of dollars you put into that new facility?”

A study like this has never been done before, and because NADA is at such an arm’s length from the study itself we don’t know what the findings will be. Whatever they are, we will take them to the market.

It would seem that any new facility upgrade – anything that is “new, improved and bigger” does attract new traffic, at least for a time.

That has been my personal experience. When we opened our new, fresh Honda store, we had a spike in business, which then fell back, though we are still selling more units than we did when the store was at the prior location.

However, it’s hard to see things from a level playing field today, given the economy, shortage of automobiles resulting from the tsunami and now with the Thailand situation, and with production of many imports off 50%.

Different location versus new face…how do you measure?

We’re hoping the findings of the study help clear this up for all parties. We’re spending billions of dollars as dealers to build facilities and we don’t really know what the outcomes of these investments are. Will the study give us the data to say confidently that new facilities do increase business – or they don’t? We trust the study will get to the bottom of this important question, one way or the other.

Allow me to pay devil’s advocate. Should the study findings validate manufacturers’ position will the dealer body then become excited about this investment?

I suppose that will depend on the manufacturer and its program and what is affordable for the dealer. I do know, though, that many dealers are not making money in their new car department. Because that is true, it can be a real stretch for these dealers to approach their banks in this environment and say, “I need another million dollars to put a new front on my building” when they don’t know if that investment will help them to sell one more car. Therefore, this facilities issue will remain a real stickler for many dealers.

On the other hand, suppose the study shows facilities don’t improve sales. Will the manufacturers soften or back down?

That’s a very good question. I really won’t know the answer until I sit with those manufacturers with the study. I’m certain some manufacturers will be reasonable and others will hold the hard line.

Where does inventory supply fit with NADA’s interests in 2012?

We’re very concerned about the inventory because of the health of the dealer, especially the smaller dealers in the rural areas who have struggled with product even before these shortages happened.

We’re concerned about all of our members being profitable, so our focus is on not only the new car department, but also the used car department, the service department, the body shop, and the parts department. Any time the supply chain is interrupted, we feel that we need to reach out to the dealers even more to help them figure out exactly what they can do to overcome those problems.

Such as?

Well, we can’t manufacture cars ourselves, so while we can’t directly affect supply, we can help our members improve operations through their participation in 20 Groups and educational services, particularly NADA University. It is in these forums where dealers learn about tools for helping them beef up and streamline their various operations. The solutions are here; dealers have to reach out to NADA for that help.

Let’s switch to the personal side of Bill Underriner. How did you get started in the car business?

I grew up in Illinois, went away to college, and ended up working in a restaurant in St. Louis. After getting married, my father-in-law asked me to move up to Billings, Montana and work for him at his car dealership. My wife, Mary, and I agreed to give it five years. So, in about 1980 we moved north and I started a new career. By ’84 I was the sales manager. I worked up through GM and then was named dealer principal. I’ve owned stock in Underriner Motors since ’85, and took over operating ownership in 2001.

Family involved?

I have two sons. Blake works for American Honda and Kyle is at the University of Denver studying business. I’m a third-generation auto dealer here – through my wife’s family — and to have my boys in the business and come back and work with me, I can think of nothing better.

Have they talked to you about their plans?

Mary and I sat down with them a few years ago and we told them we’d love them to come back in the business, but first they had to work elsewhere for five years. I invited both boys to seek jobs in any industry they wanted. Both have been around the car business all their lives, so they have a good idea of what the life is like. Of course, the idea is for them to gain experience in the world and to learn what it is like to work for somebody other than their dad. That gives them ideas and perspectives they would not get working here right out of school. 

What is the Billings market like?

We’re a 105,000-population market, mostly engaged in various services-type work for the oil refineries and two regional hospitals in our 500-mile radius market. As a dealership, we draw from northern Wyoming, eastern Montana, and northern Montana.

We sell about 1,700 vehicles a year, new and used, across all four franchises. We operate a stand-alone Honda store and under one roof Hyundai, Volvo and Buick. About 7% of our sales originate through the Internet department, which through our website helps pull traffic in from our wide market area. We are also very active in social media, employing website videos and monthly marketing communications through our service provider, Team Velocity.

Your resume reveals that you are quite active in serving others in your community. I’ll not go into that here, except to say the list is extensive.

We feel very strong about our community. Our community has done a lot for our dealership. For us to give back is a priority. Even Mary’s engaged, chairing a committee to build a new library.

Likewise, I’m very excited and I’m very humbled to have the opportunity to serve the members of NADA. This is a very important position, especially during these troubled times, for which strong leadership is needed, and I plan to give 110% of my time to these challenges as chairman of NADA.

Click here to read more about Sean’s story and the rest of the December 2011 issue of Dealer magazine. 

Here is Sean’s full story:

How long has a Gunn dealership operated in San Antonio, Sean?

My grandfather “Pop” Gunn started the organization in 1955 as an Oldsmobile dealer. However, the business can be traced through his wife to Smith Auto Group, which has been here in San Antonio since 1916. Before that, the Smiths were horse-drawn wagon dealers.

My dad Curtis Conway Gunn took over the business from Pop in 1972 and today is Chairman Emeritus. I moved into dad’s seat four years ago. Today we operate six dealerships representing seven franchises: Acura, Buick-GMC, Chevrolet, Honda, Infiniti and Nissan. We retail about 14,500 new and used units a year.

How did you prepare for the top seat?

I had attended Texas Christian University, but left to live in Colorado for a time before returning to San Antonio. I wasn’t particularly interested in the car business growing up, but by the time I’d come back home I found the idea intriguing. Dad offered me the job of assistant to the service advisor at a Land Rover dealership we owned at the time. Over the next four and half years I swept the parts department floors; put parts on shelves; was a service advisor and worked in both new and used car departments in sales, on the sales desk, and in F&I.

When did your Dad feel you were ready?

After all that hands-on training throughout the stores, he asked me to run several dealerships. The first, an Acura dealership, was losing money. Dad threw me into managing that store out of its problems. He then moved me to a troubled Dodge store, and after that to a Honda store, where I remained as GM for five years. From there, he moved me into director of Fixed Operations over all the stores, and then three years ago he threw me into the driver’s seat right when the wheels fell off the auto industry.

How’d you correct the troubled stores?

The problems common to those stores largely grew out of our selling strategy change in the mid-‘90s to one-price. One-price was a very new concept and it was very hard to get employees to embrace it. As a result, turnover of sales associates and sales managers, in particular, was extremely high, upwards of 75% for the first three or four years after we implemented one-price.

It’s a challenge to create a new culture when managers are changing constantly. My response was to replace sales staff with sales people recruited from outside the car business. We then trained them on our products and our one-price strategy. We got the right people in place and got staff and the new culture stabilized. We also put into place rigid inventory control guidelines.

Such as?

We have a very strict inventory management philosophy. We maintain a 60-day turn on used cars and our goal on new vehicles is to maintain a 50-60 day supply.

To give you an idea of how much these controls were needed, we had used inventory 300 days old, mostly due to sales turnover and related issues. Before we latched onto the idea of hiring sales people from outside the business, we’d had streams of experienced GMs, sales managers and associates bringing in their own ideas who struggled with and resisted our new one-price process and procedures.

The challenge was to reformat the culture.

Yes. We pretty much home-grew everybody. Right now, our current general managers, with the exception of one, started as a sales associate in our company.

When hiring, did you look for customer-focus personalities?

Our one-price system is very regimented in terms of meet-and-greet and the presentation, and doing a needs analysis with a customer — before you take them to look for a vehicle — to make sure we put them on the right one up front.

With our system, when new sales people are hired, they go through a two-week training program at corporate headquarters. This training program teaches them how to follow the proper steps of the one-price sale. The training includes classroom time, as well as hands-on practice. They must demonstrate that they know how to follow the proper steps of the sale before they move into the stores.

What else differentiates your dealerships?

We have managed to keep our turnover low. We’ve done so by identifying the people we think have potential to move up into management positions and groom them as they move along. We give them opportunities and training; we try to make sure we provide benefits and opportunities they won’t necessarily find anywhere else: Good benefits programs—health, medical, dental, matching 401K. Another benefit we offer, which isn’t very common in the auto industry, is an Employee Stock Option Program or ESOP.

That’s interesting.

Every employee is eligible, and there is no cost to participate. Based on their income level, employees receive ownership in the company as the ESOP is funded. Our employees currently own 12 percent of the company. Though every employee is enrolled on their first day with us, company contributions and any dividend earnings accrue only after their five-year anniversary with the company.

This program gives employees a vested interest in the company for which they work. We see it in their attitudes with each other, customers and vendors. We want them to take pride in their facilities and we want them to know that their actions affect everybody around them.

Was this idea a tactic to address your retention issue?

It was not a tactic, but the idea that our people are our number one resource was certainly on our minds. We were trying to figure out how to make sure employees took ownership of their work – to see it as a life-long career, not just a job.

So how do you measure something like “ownership?”

When we present stock certificates or hand out annual ESOP statements showing their individual earnings and percentage ownership of the company, we use those times to talk again about pride in work and pride in place of work and about the investment we – and they – have in success. 

Let’s circle back to one-price. Doesn’t the policy limit gross?

Last year was one of our most profitable years in the history of Gunn Automotive, even with the market being tough. We were up 30 percent above our prior best year, measured by bottom line net.

Our customer retention is very good under the one-price program. Seventy percent of our customers are repeat and referral customers. That’s not necessarily the result of the one-price program, but it flows out of the one-price experience, which creates a friendly environment for the customer. Our environment is very transparent, very up front. There’s no negotiation whatsoever. We show customers our prices and we’ll show the invoice from the factory, if they ask. Everyone pays the same for the same make, model and trim level, whomever they are, regardless of their ability to negotiate.

Our goal with one-price is to be sure our pricing is within a tolerable difference to our competition. A good sales person and one-price should be able to overcome a price difference because the associate is selling value and professionalism, not just a product. One-price is a speedier process, and we believe customers these days are very time sensitive. If they can get a straight number from us right up front and we can make the process go smooth and fast and we can show them that it’s a fair margin, we think they appreciate that versus haggling.

For the most part, yes, our grosses are lower, but our volume is up. As volume has gone up, so too have our F&I numbers, our used car trade-ins and our units in operation. The units in operation, to us, are the key to the automotive business. If you want to be able to weather a storm and be able to go through hard times, you need units in operation to gain the fixed coverage you need to cover costs.

How do you pay people in a one-price organization?

They’re paid a base salary plus bonuses and a graduated scale of flats. What we want our sales associates to do is, steer the customer to the type of vehicle that emerges from their needs analysis – a 4-door family car that gets XX-miles to the gallon, at X payment level. I want him to take that customer to that exact unit. I don’t want him taking him to a Corvette because there’s more money in that deal.

How do you police that?

If we find that an associate or manager has negotiated in any form or fashion other than one-price and using our process, they don’t get a second chance. They’re dismissed.

One-price has worked for you.

You know, my dad is on record saying, “I’d rather go out of business than go back to the other way of doing it.” It’s not an easy transition. Once you get to the other side of it though, one-price is a fantastic way to do business. It’s very transparent and it is customer friendly.

How do you market?

We have taken a very structured approach to determining how to best allocate our marketing resources. The

result has been an increase in digital marketing at the expense of more traditional media like newspaper advertising. Currently we have a solid marketing relationship with Autotrader and several other digital and traditional sources. We continue to re-evaluate on a regular basis to ensure our marketing is deployed where it is best found by our consumers.

A similar approach has served us well in eCommerce. Prior to 2009, we were on the Internet but not focused on the Internet. That year we began to apply the concept of Structure/Process/Marketing and have achieved outstanding results. By implementing sound structures and processes in eCommerce we maximize every dollar spent on marketing. For instance, we recently installed VinSolutions CRM to ensure our people have the best tools available when communicating with customers. This structural change along with many others has us on pace to realize a 34% increase in eCommerce deals for 2011.

What’s your future, Sean?

The used car side concerns me for the immediate future. On the new car side, I see real opportunity due to demand. My one concern is CAFE standards and where the current Administration stands. I don’t necessarily disagree, but some real challenges face manufacturers who are trying to balance and produce what they have to meet CAFÉ standards and what the public actually wants. Take electric cars, for example. Texas is a very large state. Demand here for electric cars is not strong – these cars just don’t deliver the range needed here. Plus, the infrastructure to support this technology isn’t here yet either.

Final question, Sean: Summarize your three key principles.

One, our one simple price philosophy; two, surround yourself with good people and empower them to make decisions; and three, make sure your good people stay with you.

McGeorge Toyota’s conversion ratio for “clean” Internet leads was 31.94% for October, with an average monthly range last year and this year between 27% and 32% — “clean” being defined as duplicate leads from 3^rd party providers eliminated.

The dealership ranked 52 of the top 100 e-commerce dealers nationwide for Internet sales units, with 1,549 new and used Internet unit sales in 2010. And, McGeorge Toyota is on track this year to sell between 1,700 to 1,800 new and used Internet units.

In October, McGeorge Toyota became one of 10 inaugural winners nationwide of the new Digital Dealer Website Excellence Awards – surpassing 229 other dealerships that entered the competition — in the category of “Lead Volume.”

Co-sponsored by Dealer Communications and Dataium, LLC, this new awards competition recognizes automotive dealers, managers and their website providers for exceptional performance of the websites they design, host, and support.  The competition is the first of its kind and is completely objective based upon independent, unbiased analytics of dealers’ websites performed by Dataium, LLC, the largest aggregator of auto shopper behavior. There is no voting or judging involved.

This award is only the most recent of many that McGeorge Toyota, a third generation family business, has received.

With 15 consecutive “Toyota President’s Awards” – starting in 1996 – McGeorge is one of only 22 Toyota dealers nationwide that have received this many consecutive Toyota President’s Awards.  There are more than 1,200 Toyota dealers nationwide who compete for these awards.

George Peters, BDC/e-commerce director for McGeorge Toyota, recently shared with Digital Dealer magazine his dealerships’ formula for all this success.

Click here to read the rest of George’s story and the December 2011 issue of Digital Dealer magazine.

Here is George’s full story:

George, why is your dealership so successful?

Teamwork and tenure. The word ‘team’ gets overused so much that the lines are blurry as to what that really means. But, I can honestly say this is one of the best team I have ever worked with in my career. That makes my job so much easier.

Our standard operating procedure is to “check the ego at the door” when we come into work.  We don’t have ‘this is my job, that’s your job.’ Whenever any one of us sees something that needs to be done, we get it done.

And the team is even stronger because of the tenure of its members. We have management staff that’s been here more than 20 years. One director just retired after 40 years with the company, and another after 35 years.  We’ve got sales consultants on the floor that have been here 10, 15, or 20 years. You just don’t find that in the auto business or any business; it’s something to be proud of.

And we’ve got the complete support of our owner Rod McGeorge, our Vice President, Dave Mitchell and our General Manager, Bob Farlow. McGeorge Toyota treats team members like family and everyone is comfortable.

Your Internet sales numbers and your conversion ratio are impressive.  Please tell us how you’ve advanced to this level of achievement.

We started building up the BDC in 2009, when I came onboard, and I made some major changes in our digital presence then too. At that point we only had two Internet salespeople and Internet leads were about 100 to 150 for new and pre-owed. Our website was bringing us only a small percentage of those leads.

The sales consultants would have to enter the customer information in three different ways and we’d have to make sure everything they did was documented in all the systems. That made everyone’s job of tracking the customer very difficult, and made accurate measurement almost impossible.

I did a complete analysis of what was already in place and tore it down to the basics. While that was happening I did a great deal of research on what was needed, and worked with several vendors to find the best way to streamline processes and gain efficiency.  We decided to go with VinSolutions for our CRM and Dealer.com for our website because they were the best fit for us at that time.

How is the workflow for your Internet lead system structured?

Our leads are generated mainly by our e-commerce website and supported by a variety of third-party lead providers including AutoTrader.com, Cars.com, Kelley Blue Book, Dealix, and very recently by the Toyota ELMS program.

In addition, our information is also listed on nearly 60 other websites from AOL to Yahoo to Wal-Mart, etc., where leads are generated.

Last month we had over 1,400 new and used car Internet leads from all sources combined. We use VinSolutions to clean out any duplicate leads we get from various third-party lead providers. Our total clean leads, meaning workable, active, verified leads, are generally in the 500-600 range. So out of our 1,400 leads last month, we processed 562 clean leads and we closed 31.94% of those.

Our Internet lead closing percentage year-to-date for 2011 is 27.87%.

What percentage of all of your total sales are Internet sales?

Between 40 and 55% of our total sales come from e-commerce.  Everything that we’ve researched or learned from vendors or dealers at the Digital Dealer Conference indicates that 88 to 90% of car shoppers start their shopping process online.

However, what we consider an Internet sale comes from a lead that is generated online or from a customer who comes to the showroom, and says I’ve seen XYZ vehicle online and I visited your website. We also have trackable phone numbers. So, if a sale results from a call I can trace back to a webpage, I consider that an Internet lead.

How many Internet sales people are closing all these leads?

We are a hybrid BDC because we are fully integrated with sales and service. We currently have 8 Internet Sales Consultants on the sales floor responding to these leads, but they work everything through our BDC.

In addition, we have 8 Service Coordinators in our BDC who handle between 12,000 and 14,000 incoming and outgoing service calls per month, as well as the initial activity on the Internet leads we get monthly. (During the height of the Toyota recall, we were close to 20,000 calls per month.)

Our service customers like the personal touch and so do our sales prospects. So, our first response to a sales lead is made by our BDC. It’s an introduction thanking the prospect for the opportunity to serve their transportation needs and introducing them to the sales consultant that will assist them. We don’t use auto-responders, so as you can imagine it puts a heavy load on the entire team.

Our average response time to leads received during business hours is between 10 and 12 minutes. We constantly monitor the efficiency of this system and we have some very devoted Internet sales consultants.  Our expectation is that when a sales consultant determines his/her hours that they are accepting leads, we expect all those leads to be answered during that timeframe.

We are extremely happy with our sales consultants. They understand that being a part of the electronic lead process is a privilege, not a right.  They work diligently. We have weekly meetings to review issues and share what’s been successful for them.

I have many sales consultants that are on shift from 7:00 in the morning to 10:00 each night and I’m their back up before and after. Usually I’ve got our CRM system up even when I’m not at the dealership. I have my laptop at home and my iPad on the road, as do the sales consultants and we look at leads and make sure we answer them.

Because we work late and respond by e-mail to leads when the showroom is closed, we’ve been experimenting with several new ways to communicate with our customers during off hours. The brick and mortar dealership has specific hours during the course of a normal day. However, the electronic dealership is open 24/7. If we aren’t there to answer questions when customers have them, someone else will.

We started our trial process and beta test for a few of our newer ideas after we got back from the 10^th Digital Dealer Conference, where we got a lot of information that provided us with the foundation to build on.

Everything we institute goes through a beta test first before we introduce it across the board. We want to make sure that the move is going to be a positive one, that it’s going to be easy to administer and that it’s going to be something the sales consultants want to do, because if they don’t want to, they won’t do it.

You obviously are an early adopter of digital technology. On that note, congratulations on being one of the inaugural winners of the Digital Dealer Website Excellence Awards!  Please tell us how you’ve developed such a successful and forward looking e-commerce site.

We were very pleased and honored to receive the Digital Dealer Website Excellence Award.  We have worked hard to make our website effective. We want to share the credit for this with our website vendor, Dealer.com, who has built our e-commerce site and continuously helps us optimize it.

We monitor and update our content constantly. I’m a little bit of a numbers junkie; because that’s the way we’re able to figure out what’s working, and what’s not, on any given day.  Our website pages are under constant scrutiny and we try to eliminate static pages as rapidly as possible and replace them with something that works for us.

We look at the analytics on our website through Dealer.com daily and sometimes hourly depending on the campaign. They’ve got a great analytics program that allows us to dig deeply.  When we find something not working, we pull it immediately.  We figure out why it’s not working, tweak it and put it back up.  If it doesn’t work the second time, then it’s pulled completely.

We’re constantly moving the needle – rearranging the rotating banners on our homepage. We’re able to see how much time each visitor spends on those banners and we monitor the click-throughs. If we aren’t getting a satisfactory number, we’ll rearrange or alter the banners. We try to provide the customer with the experience they want in shopping for an automobile online.

Recent studies show today’s car buyer is only visiting 1.8 dealerships before they make their purchase. They used to visit four to six dealerships to buy a car. People do much more research online now – narrowing down their choices, and deciding which dealerships to visit.  So, if you don’t make an impression online, your chances of bringing those types of customers into the dealership are greatly diminished.

Since entering the Digital Dealer Website Excellence competition last summer, the software solution produced by the co-sponsor of that competition — Dataium LLC — has also been a great help to us in monitoring our ecommerce site’s effectiveness.

When we entered the competition, we – like the other competitors – received Dataium’s VisiCogn^® INSITE application, the Basic version, at no cost to us for a full year.  Since then, Dataium has been automatically analyzing data from this application and that allows us to evaluate and fine-tune many aspects of our website’s performance.

So entering the competition resulted in even more than winning an award. We also are getting fantastic ongoing business value.

How do you handle SEO and SEM to bring customers to your website in the first place?

We work with ReachLocal for both SEO and SEM and we’re very happy with what they are doing. We’re very active in our keyword search and buy process. We are constantly monitoring all of that to see where our dollars are best spent. We look to see which of the keywords are reasonable on a pay-per-click basis and for buying results, versus the keywords that have a high click rate, but won’t necessarily provide us the return in terms of quality leads. Because there are so many choices or “solutions” in the marketplace, we look at the ROI on everything we do weekly to ensure we are moving in the right direction.

We’re very serious about the sale of a vehicle, and more serious about retaining the customer’s business for the long run.

McGeorge Toyota was established in 1968 and we have a long-standing reputation in the Richmond area for our great customer service. We do a lot of community service work as well. As a result, we’ve got good customer retention. People know us. People come back. So, we want to insure the customer receives the best possible treatment in the most professional manor and with the latest technology that customers are comfortable using.

What is your biggest challenge as BDC/e-commerce director?

My biggest challenge is keeping up with the changing technology, weeding through and deciding what is going to be the winning electronic technology and then deciding which solutions are best suited for our dealership. Because of the way our hybrid BDC operates, it’s even more important to keep my finger on the pulse of the digital market. All the research and analysis I do will ultimately help both sales and fixed ops.

How do you keep up?

Of course, the Digital Dealer Conference is a must and the Dealer and Digital Dealer magazines. Every opportunity I get to do research online, I do it — reading articles and going to websites to see what is the newest technology. But, because of my background I look everywhere for relevant information, not just relating to the auto business. Then I quantify that research by going to the Digital Dealer Conference.

What do you mean by quantify?

There’s a lot of generic information out there, and by doing the research, having the notes and relevant facts, and then going to Digital Dealer Conference, you can make sense of it all for the automotive marketplace. By networking there with dealers from around the nation who are very successful in e-commerce, as well as networking with those just starting out that are savvy, we are able to discover what the trends are, so we know what technology solutions are going to last.

There are a lot of technology innovations that come and go. You want to be sure you are on the right train. The one that pulls into the station is the one you want to be on, not the one that gets switched to another track.

How do you handle online reputation management?

Right now DealerRater is the only vendor we use to help monitor and manage our online reputation and we are very happy with the work they are doing. In addition, one of the coordinators in the BDC also monitors Google, Yelp, and other sites on a daily basis.

We encourage our customers, once they’ve made the purchase and while they are here at the dealership, to please go to DealerRater or Google and write online what they are experiencing. We can’t bring them to our computers to do this, because any comment or reference made from an IP address at the dealership would be suspect.

So we ask them to use their own connection to rate their buying experience.

We know the most joyous time in the ownership of a vehicle is normally the day of purchase.  So, we ask our customers to make a comment online that day.

We also pass out cards reminding them to write a review. On the service side, we give out a card letting the customers know they may receive a random survey from Toyota. We ask them to please take a few minutes to fill it out because it’s a report card for our ASMs and service technicians.

On the sales side, we give customers two cards. One talks about Facebook and Twitter. The other provides sites they can go to for additional information and to rate their experience. They also get surveyed by Toyota.

We take the surveys seriously and most dealers should.

To enhance our reputation, we also have our own community-oriented site, www.mcgeorgecares.com. We are proud to be serving the community in programs like the Central Virginia Food Bank, the Feed Richmond Campaign, the Juvenile Diabetes Research Foundation, and the Richmond Marathon. We’re doing something every month.

What is your typical day like?

I start checking leads at home at 5:00 in the morning and arrive at the dealership between 6 or 6:30.  I prepare for our BDC opening at 7:30 by getting all the necessary documentation in line. We have a daily “make a deal” meeting where we review sales from the previous day. The rest of my day is spent analyzing leads, training sales consultants, and handling the incoming leads. My day usually ends here at the dealership about 6 pm. I get home and relax a while, but then bring the laptop up and I’m usually answering leads until 10 or 11 at night.

You clearly thrive on your work. How did you get into the car business originally?

I got into the business in 1984. At that point, the construction industry was in a boom, but I had a young family and wanted to get into something that would provide lasting income and more stability. I always loved cars, so I started working as a salesperson at a Chevy store. In the first three months, I was salesperson of the month each month and quickly moved into a closer position, as assistant manager. I loved the challenge.

However, I was working “bell-to-bell” seven days a week. I reached burnout, so I took a break from the business. I became an advertising and marketing consultant working with shopping centers and large businesses. I enjoyed what I was doing, but not as much as the auto business.

A friend I knew from church was the GM of a Ford store and I was hired as a customer service manager to help improve CSI and customer retention. At that point, we started to get into the Internet. One of the first vendors we dealt with was Autobytel. We formed a relationship and it proved to go very well — building as we went.

After many years the GM accepted a position with a large automotive group and moved out of the area. Unfortunately, the dealership was not the same, and not long after that I decided to move on. I had the opportunity to work in real estate because it was similar in sales process, sales, and contacts. Most of the work I did was centered around e-commerce and made significant improvements in the digital footprint of many real estate agencies.

Then in the spring of 2008, I found out that a GM I had enjoyed working with before, Bob Farlow, had taken the position of GM here at McGeorge. So I came in and talked. McGeorge was looking to increase their Internet presence as well as build a BDC. This was March 2009. When we realized it was a good match, I was given the task of building the BDC and improving our digital presence in the market.

What’s your vision of the future?

We are looking at growing our BDC operations and our digital presence in 2012 and beyond. Just holding our current position is a huge task, but I think with consistent monitoring and ongoing research we will grow McGeorge Toyota to an even higher level in our market as well as surrounding markets.

I am also in the final stages of a plan to detail our moves through each quarter of 2012. The auto market should recover and grow about 8-10% next year, and if we aren’t prepared with a way to handle the increase, the customers will go elsewhere.

Today’s buyer is much more prepared when they contact the dealership; they are becoming the expert and already know the answers to the questions they ask. Their point in asking is to see if we know the correct information and, if not, will we find out, instead of trying to fumble through it.

As time goes on, we believe a far greater percentage of sales will be done online – in fact, the entire purchase except for the test drive and final paperwork. So, we’re developing our BDC to do this, providing the customer with the best use of their time. That’s where the future is and we’re working toward it.