Let’s start with auto responders. I realize that some misguided manufacturers have forced this upon many of you, but customers can spot an auto responder. I recently purchased a vehicle for my daughter. It was a great experience from a fantastic Internet manager, but the automated responding technology was frustrating. My daughter already knew what she wanted, so I clicked on the icon next to vehicle that said, “Click here for Internet Pricing” and filled in a response form. I was pretty specific in the form including the fact that I’d be doing the legwork since she is a teacher and can’t take phone calls or mess with all the paperwork.

After completing her finance application for her online, I went back to work. Then the e-mails started coming. When an e-mail comes on my computer, a little alert pops up and needless to say, three of them came before anything directly from a human. I knew this because all the e-mails came to her name instead of mine. In fact, the Internet manager called me to say that he got the information and the loan was approved and we set up a time for her to come down and have a test drive. He warned me that I’d be getting some automated e-mails from their contact management software. That was an understatement!

Between the automated e-mails, robot calls and letters from the dealership, manufacturer, captive finance company and three different service providers, we have been contacted over 20 times in just two weeks.

The worst are the robot calls that start with, “We have an important recorded message from…” and then on comes a loud voice that tells me that they appreciate my business. The first robot call warned me that a second one would be coming in a few days from their parts and service department. I tried to ignore the second one, but the re-dialer was relentless and late at night, so I finally picked it up and listened to it.

Of course since I was the contact number for the deal, I’m getting all of these e-mails, letters and phone calls. I’m thankful because both my daughter and her children are asleep by then. My favorite e-mail was a coupon for a free gift if we would come down and test drive a new vehicle. I clicked on the opt-out link and discovered that the e-mail came from their DMS contact management system and after my daughter had agreed to buy the vehicle. When I checked the dealership’s website a few days later, the vehicle she bought was still listed and incorrectly. It didn’t include the option package that I knew was on it. In fact we thought the dealership would have to dealer trade to get the vehicle she wanted, but surprisingly they had many with that option package. The Internet manager agreed that the website was pretty messed up. We had almost traveled to the “big city” to get a better selection, but I really like to buy locally. This poor technology might be costing the dealership sales each month.

What is the difference between a response and a reaction? A reaction is when you actually do something (act) when a customer contacts you. For example, the Internet manager called me. He also sent me an e-mail addressed to me with the information that I had requested. Both of these are great reactions.

I’m not saying that you need to get rid of all of your auto responders, but someone needs to make a list of everything that is going out to your customers. This list should include everything from your dealership, manufacturer and service provider and once the list is done, listen and read the content. I have a feeling that much of this was set up and purchased long ago and nobody is paying attention…except your customers – and not in a good way.

Fortunately, we like the dealership and the Internet manager so much that we’ll do business with them again – in spite of their technology.

The first reason is accuracy. Let’s say that one the places where you prefer to use a manual process is issuing technician flags. Your service manager, advisors and technicians all think those manual “lick and sticks” are just much easier to use than trying to pay flag hours with your DMS. I agree – anyone can fill those out. But let’s look at the accuracy of the flags. If your flagger enters 1.2 hours when it should have been 2.1, your technician will immediately find this error and get it corrected. What if they enter 2.1 when it should have been 1.2 hours? Does anyone catch that? Sure, we’re supposed to check those off in the office – but we’re buried and when we do double check, 1.7 hours does looks a lot like 7.1 – so easy to miss. We also total the flags wrong and then enter them wrong going from a spreadsheet or calculator into payroll. It is very easy to enter 173.4 hours instead of 123.4. We call this “fat fingering!”

Our second key reason is internal control. What if someone enters flag time for a repair order that doesn’t exist or is void? What if one of your technicians gets together with the flagger and decides to pad their hours? It is easy to do and hard to catch (honest mistakes is always the answer when we catch them!) Does your dealership have a step commission program? It is common in the sales force for a lower performing sales person who was going to make minimum wage to “sell” his deals to another salesperson that will make the step bonus or increased rate. All they have to do is go into the F&I or accounting office and tell them that the Jones deal wasn’t theirs and an F&I manager or billing clerk will happily change that. If you have used a good DMS with CRM – or CRM alone, the notes will all be there along with deal tracking to catch this trick.

The third reason is analysis. It is time-consuming to create closing ratio reports or properly trend technician productivity. Often key measuring reports don’t get done – or done in time for managers to make the type of decisions they need to improve performance.

Fourth and finally there is follow up and marketing to your customers. Let’s say this month there is a special on tires. Can you quickly find everyone that you have recommended new tires for when they were last in for service? What if a customer comes in looking for a used Corvette? Can you find all the customers who came in with a Corvette as the trade-in that you couldn’t make a deal with? Going through a huge stack of write ups or deal logs is not an easy task, but a DMS or CRM system that keeps a potential trade-in inventory can make this a snap!

The fifth reason that I didn’t mention is cost. Your DMS and CRM software costs combined is already one of the highest outside costs that you pay per month. If you’re also paying for the duplicate or manual system like the clerk who has to total those expensive technician flag forms, then the cost is even greater.  To save even more money, should you consider some of the newer DMS systems that include CRM? Your first chore is to determine what portions of your current CRM do you actually use and does the new DMS perform those functions? Is having two systems causing you duplicate entry or interfacing problems?

These should be some of the factors to consider when selecting one of the newer DMS systems with CRM. Regardless, try to use your DMS and CRM software more fully and you’ll make more profit.

Since then, the online car-buying revolution has blown past all early expectations. Eighty percent of buyers research online before their next car purchase. With such a profound statistic, it is mandatory that dealers have a comprehensive, well-thought-out online presence.

Online usage among car shoppers has proven how desperately they desired an easier, less stressful path to ownership.  Many dealers now realize the efficiencies of online versus traditional marketing, and have reallocated advertising dollars to reduce expenses and reach more potential sales.

So here is the question: How far have you progressed in cost saving and customer satisfaction?

Dealers have transitioned a lot of customer acquisition efforts online. They have a website and solid Internet marketing plan. Additionally, dealers maximize online visibility by continually\ refining their inventory-merchandising formula, social media plan of attack and reputation management procedure. To ensure that dealers continue to be seen, heard, remembered and easy-to-reach, a person or department handles incoming and outgoing responses to consumers.  All of these “nuts and bolts” are essential to operate more efficiently.

But what about the people aspect? When was the last time you as a dealer re-evaluated, redesigned and blueprinted your customer follow-up process, ensuring maximized consumer responses and conversation?

Dealers can have the greatest online presence, but how many sales are falling through the cracks due to response time, quality and long-term follow up that have lacked attention? Negative consumer feedback and low-closing rates dictate that there is room for improvement. Dealers must ask themselves regularly “are our sales numbers reflective of our online marking efforts?” If not and there is a looming concern over marketing investment, leads generated and sales, then dealers must take the time to identify where potential sales are imploding.

Points to consider: Is it our response time? Is it our response quality? Is it our phone and appointment-setting skills? Is our overall sales follow-up process undefined, undocumented or murky?

Dealers must have a standard, trackable process allowing them to see where the kinks in the sales process lie.

Take time to go through all of the above and know that the dealership process delivers the results the dealer and customer are looking for – sales and satisfaction.

In the U.S., 90 percent of mobile users have used a smartphone to search or look up local information, according to the study Global Mobile Research: The Smartphone User & The Mobile Marketer  conducted by Ipsos GmbH and TNS Infratest for Google. In addition, 87 percent of those searching took action after performing a local search.

Here are five tips to expand your profile to get the most out of search engine optimization and help your customers make an informed decision in their choice of dealership.

1. Service areas and location settings: Help potential customers learn about your business by defining the geographic areas that you serve. If you have more than one physical location, make sure to create a profile for each location.
2. Hours of operation: Select your hours of operation using the drop-down menus.
3. Payment options: Select the checkboxes next to the payment methods that the dealership accepts.
4. Photos: You can add up to 10 photos to your listing. Move beyond product photos and show potential customers the people and satisfied customers behind your dealership. Product photos can be found almost anywhere, but when you put a human touch to them, people will take notice.
5. Videos: Up to five videos can be added to your listing. To add a video, simply enter the URL of a video on YouTube. Use videos that showcase the people behind the dealership – give customers a feel for what they’ll experience at the dealership.

After you have all of the options filled out to their fullest extent, make it a habit to check on your account in regular intervals. Google Places provides some metrics, such as the top search queries that led to your listing and how many times viewers clicked through to your website.

With a few additions, you can have a robust Google Places profile that provides potential customers a feel for your business and enough information to entice them to find out more.

The reason that I bring this up is that Brad’s dad proudly paid more than $600 for their television set with remote – despite the fact that the screen measured less than 23 inches and the picture quality was still dependent on the set-top rabbit ears. Today, a 23″ LED HDTV can be yours for under $160. More than the difference in cost, today’s 23” TV is lighter, uses less energy, has a better picture, has the capability to display more channels, comes with stereo sound and has a multi-function remote. Plus, let’s not forget that $600 in 1978 would be equal to more than $2,000 today.

In short: technological advances in electronics have resulted in televisions that provide better performance and quality at a much lower price. The question for you is simple: is the same true for the technology-impacted products you buy for your dealership?

Let’s start with costs…

Has your overall technology spend per vehicle sold decreased over the past twenty years? How about what you spend on advertising?

The Internet brought with it the promise of lower overall marketing costs, yet according to NADA, dealers continue to spend several hundred dollars per vehicle on advertising. In fact, the marketing cost per new vehicle sold has increased by more than 70% since 2000 – despite the move from traditional to digital.

Email is cheaper than direct mail. Banner ads are cheaper than billboards. Websites are cheaper than real estate. Given all these digital means for marketing and the shift from traditional, why are dealers still spending so much more per car today? I think the answer to that is two-fold: first, many dealers didn’t fully shift all of their spending to digital – they added digital marketing to their overall spend; and second, dealers continue to overbuy marketing that doesn’t drive sales. The old adage of “fifty percent of my advertising is working; I just don’t know which half” still holds true today; though fifty percent now represents a much larger number.

What about your DMS costs? Have these decreased over the past twenty years? In 1992, a personal computer like the IBM PS/2 with 4 MB of RAM and a 160 MB hard drive sold for $5,995 (without a monitor, of course; for that you had to add $950 to get the 15” model). Today, you can get an all-in-one desktop computer with 1,000 times more RAM and 4,000 times more hard drive space for under $600.

Now, while I don’t expect that your overall DMS costs should have decreased by the 91% that this PC example shows, I certainly expect that what you pay for the hardware itself should reflect this. Additionally, while your DMS software can and should provide more utility today that it provided in 1992, those costs should have decreased relative to everything else you buy. This, of course, begs the question: have these expenses decreased? If they haven’t, then your dealership is not gaining the cost benefits that technological advances bring to every other business.

What about utilization?

Having technologically advanced products is one thing; actually using them is another. One of the hardest ideas for me to wrap my head around (especially given the current recession) is why any business would pay for something and then never use it. With underutilization, you not only fail to reap any of the benefits that new technologies bring, you really are just wasting money.

What do I mean by underutilization? Well, if you’re an average dealer, then probably some of what you’re paying for from your DMS or CRM provider(s) is going unused in your store. For many dealers, this might specifically mean that you’re paying for a DMS shop capacity planning module that’s intended to help you maximize your billable hours, but your service advisors are still using a pen and paper to schedule customer repairs. Additionally, underutilization might be something as common as buying an expensive CRM tool that can help you manage customer relationships across the entire store, though using it solely for your Internet team to manage inbound email leads. In either scenario you are wasting money and losing revenue since the unused tools were created to help you maximize revenue with minimal effort.

Of course, underutilization issues don’t just affect DMS and CRM installations, but also simple and often overlooked technology-driven marketing like your website’s specials pages, vehicle comments on AutoTrader.com, or the number of images you display of your used inventory. When your team fails to exploit every possible digital advertising medium, you’re missing great opportunities to stand out, drive leads and increase sales.

Are you overbuying?

I discovered the other day that there are plenty of dealers who (believe it or not) are still overbuying. That is, they are paying multiple vendors for the same or similar product. I was training a large group of dealers, and during a break a dealer principal approached me to let me know she had just completed a technology audit on her dealership and found four CRM tools that all did essentially the same thing. The monthly costs for these four ranged from about $500 to over $2,000; yet as this dealer discovered, there was no correlation between price and quality (or features or ease of use).

If this is happening at your dealership, you’re in luck: this is an easy one to fix, though it probably should have been addressed a couple of years ago (during the height of the recession).

The dealer principal’s technology audit showed that she could drop three of the four CRM tools, buy a modestly-priced upgrade for the one she was keeping, and save over $3,500 a month. After the audit, she conducted a post mortem that uncovered four different managers had championed the four different tools for four very different reasons. Ultimately, had someone in the dealership been responsible for all technology purchases, I doubt they would have found themselves with four CRM tools that created this much redundancy.

What does accountability look like?

Not too many years ago, a smart general manager just had to mosey over to the desk and peer at the log for a couple of seconds to see how the day was going. With just a quick glance, he could get an overall sense of whether or not the dealership was maximizing its opportunities with floor ups so far that day. By spending just a couple more minutes studying the desk log, the GM would know exactly which salespeople were successfully following the road to the sale and which ones were not. For those salespeople who were falling short, the good GMs would provide coaching and/or ensure that their desk managers were holding everyone accountable.

Today, because of technological advances, the desk log should be electronic and can include information on floor ups, phone ups, Internet ups, be-backs, appointments and even current and future activities due for all of the above. With all of this additional information at their fingertips, this must mean that managers are experts at providing coaching and holding folks accountable today… If only.

Even more maddening to me than the thought of a dealership purchasing redundant technologies, is the concept that there are managers out there who cannot hold their teams accountable because they steadfastly refuse to fully use the tools and reporting that is literally at their fingertips. This is not the same as underutilization, where you forgo an opportunity to use something that you’re paying for (like shop capacity planning). This, you see, goes to the heart of accountability and execution – and your managers are giving it lip service (at best).

One of the biggest areas of opportunity I see again and again in dealerships today concerns managing activities and results more efficiently using technology. From simply using the reporting that you already have available, to making informed and meaningful decisions based on the data in your CRM and DMS; general managers can instantly go from being clueless about what happens in their stores to seeing and knowing all. If there was one thing that every successful general manager whom I’ve ever met has in common, it is that they know everything that is going on in their stores at any given moment. In the past, this meant lots of walking around and engaging everyone; today it might mean just pulling up the electronic desk log on their iPad.

Brad’s dad’s TV…

Part of the reason we don’t take full advantage of technology in our stores today likely comes from a combination of a fear of technology and a simple lack of understanding of how these tools can help us make more money. The reason that a GM studied the paper desk log years ago is because the generation before him did the same thing. Your service advisors are more comfortable writing down their appointments than they are using a shop capacity planning module because it’s the way they’ve always done it (and the way it was done by the generation who preceded them).

While I expect the next generation of leaders in our industry to fully embrace technological advances as a way to more efficiently drive down costs and increases revenues; the need is already upon us, and your current managers need to ensure everyone (especially themselves) is taking full advantage of all that you’re currently buying. Advances in technology are great, but if your team is spending more money to be less efficient and sell fewer cars, then they’re missing the advantages that technology brings to all other industries.

Brad’s dad wasn’t a jetsetter or even a first-adopter, but he enjoyed sitting in his recliner and he didn’t like getting up from it “to change the damn channel,” as he put it. He spent his money wisely and brought efficiencies into his life by fully utilizing the technological advances of the day. Interestingly, Brad’s living room TV would never have been updated to the fancy remote model if not for the fact that Brad’s younger sister became a cheerleader in high school. It seemed she was beginning to spend so much time away from home that Brad’s dad no longer had anyone around to get up and change the channel for him.

In other words, there was something in it for Brad’s dad to upgrade his television. Until your team finds something in it for them to become proficient with your technologies, they’ll continue to have their daughters changing channels for them.

Good selling!

As a reminder, the Road to the Sale describes a structured process by which the sales associate walks the customer through key phases of the car-selling process.

This process begins with the customer greeting and continues through the vehicle walkaround; demo drive; price presentation, negotiation and closing; and concludes with the service department introduction and the vehicle delivery.

Among the many reasons for walking every customer down this road is, it tends to build an emotional connection between the shopper and the vehicle — and the shopper and the sales associate:

• The walkaround helps you differentiate your make from the competitions’ and provides opportunity to highlight the vehicle’s safety features and interior features.

• The demo drive helps the shopper visualize themselves driving the new car and their family and friends admiring it.

The walkaround, which we unfortunately too often neglect in the sales process, should include an invitation that asks the shopper to sit behind the wheel.

This invitation connects them tactilely to the vehicle, which if done again during the demo drive, is reinforced.  Again, the reason for encouraging the customer’s connection to the vehicle in this way is to build an emotional desire.

It is this emotional desire that helps sell cars online. You can’t physically engage an online shopper in a physical walkaround or invite a demo drive, but you can do the next best thing.

You can provide virtual walkaround images or videos that showcase the vehicle inside and out, under the hood and inside the hatchback to show the vast cargo room.

Tell the story of each vehicle you list online through real, high-quality video with voice and graphics. Here’s why video like this works so well to help take online shoppers through a powerful part of the Road to the Sale:

• Raises your website in search engine ranking – driving more traffic to your site and more consumers to your showroom.
• Stops shoppers so they spend more time on your website and drives them to your showroom floor.
• Makes experiencing your inventory more meaningful for shoppers
• Enhances shoppers’ sensory attachment when by adding text-to-voice or customized professional voiceover. Now to visual sensory engagement you’ve added audio engagement as well, describing vehicle features, options and unique highlights.
• Helps brand your dealership when you feature “wrappers” at the beginning and conclusion of each video presentation. Use wraps to highlight your dealership or convey a common message about your store to every vehicle presentation.

When you also market these videos on YouTube as well, you further maximize your exposure. All this is to add life and appeal to your online vehicle listings to create a visually compelling reason why shoppers should buy your vehicle!

A true equity data mining tool takes the power of the data held in your Dealership Management System (DMS), accounting for total sales history, and combines that with service history, current inventory, current wholesale values, as well as national and regional rebates and incentives. Managers can provide this data manually by pulling finance and lease deals over the past few years and then identifying qualified customers who, with no money down, could lower their payments. Many of these customers can purchase a newer vehicle for less. Equity tools provide a much faster and easier method to deliver a daily list of invaluable leads, which are calculated by combining:

1. Original sales contract
2. Calculated payoff while taking into consideration refundable F&I products
3. Current book value for each vehicle based on model, mileage and market conditions
4. Specific term and rate based on buyer history
5. Best match to your current in stock inventory
6. Customers buying habits

However, these calculations are just the tip of the iceberg. For years, many dealers were manually predicting a customers’ equity position by comparing the book value to the payoff. With the abundance of customer data, the “old school” approach leaves a lot to be desired. Do you think that matching customers with your current inventory would result in more sales? Would giving your sales managers everything they need to desk deals make the buying experience much more positive for you and your buyer? Are sales calls with a guaranteed advantage for the customer going to drive even more business? In my experience from working with hundreds of auto dealers across the country, equity tools provide all of that and more.

Some would say you should not talk to a customer that is upside down by a few hundred dollars. Why not? An intelligent equity tool will uncover upside down customers that you thought were not important and create even more opportunities. These equity tools identify available rebates and incentives to get the customer even or better yet, right side up. So again, why would you not contact these customers?

Auto dealers are trying to find ways to make the most out of what they are spending. With sophisticated technologies out there it can make an auto dealer’s life much easier. The importance of an equity-mining tool these days is imperative. It is a great way to find customers who are not currently in the market and push them into it. After finding customers who can buy today, start thinking about ways to market to them effectively. This is a way to intelligently discover new business opportunities in your highly-qualified equity customers. Start generating even more business from every customer today.  Stop focusing on just the tip of the iceberg; what you cannot see under the surface has far greater potential!

Acceptance of new technology needs to start long before you buy the technology. I’ve met lots of technology salespeople that tell me they will only talk to the dealer when making a sales presentation. I always disagree. If you sell technology first to the employees, then acceptance comes easier. Nothing is worse than having a dealer buy a new product and have it shoved onto the employees. A better method of acceptance is when an Internet manager attends the Digital Dealer Conference and Exposition (next month in Orlando) and sees a new product and then goes back to the dealership and presents it to the technology committee and dealer for approval. Technology committees are new to our industry, but a long time tradition in larger corporations.  A typical mission statement for a technology committee would be “the forum for reviewing, evaluating, and recommending strategies, plans, and policies for dealership information technology. The specific elements of the committee’s charge include: Identify strategic directions, capabilities, and objectives IT support, including learning technologies. Identify opportunities where IT can help achieve the dealership’s goals and recommend priorities.”

Typically the technology committee would include the parts manager, Internet manager, controller, dealer or GM, and other interested employees. If this committee gets excited about new technology and then talks to the other employees – you’ll get better acceptance.

Training is the next step in avoiding technology inertia. If you used to play the game Frogger, you’ll remember that the risk in crossing the road is getting smashed by cars. Inertia can come from fear. Nobody likes making mistakes and new technology seems to either create mistakes or point out mistakes, like forgetting to put in email addresses on every repair order. If employees are well-trained, it will ease their fears, but what is the best way to train? An old saying is; “I hear and I forget. I see and I remember. I do and I understand.” This means that you need to do result-based training. Instead of making employees go through the typical learning process of lessons, instead they perform an action that provides results. There are three levels of training; data entry, inquiry, and results.

As an example, if you are installing a new DMS, then you would start with training on data entry. This level requires accuracy and speed. Accuracy should come partly from the software and the rest from company policy. An example of this is requiring the color on trade-in entry (company policy) and making it a required field (software.) Speed comes from practice. While developing data entry training at DealerStar, we’ve tried to make it fun by having records of the best times that someone can enter a repair order, parts ticket, check, or quote a payment. It becomes more of a game.

The next level is inquiry, which involves being able to retrieve valuable information like, “How many cars do I have over 60 days old?” Results happen when we take that same report of over 60 day old vehicles and find where they were purchased (trade-in, auction, etc.) and provide information to management that enables them to make decisions or policy to avoid these mistakes in the future.

Hopefully you can use these two steps; acceptance and training to avoid technology inertia in the future and if you’re already suffering from inertia with your current technology, you’ll need to focus on training to get the results that you’ve been expecting from your technology investment.

Mobile. Nielsen reports that 54% of the U.S. population aged 18-44 has a smartphone. With more than half of the buying population actively accessing the Internet and apps on their smartphones, it’s a good move for dealers to have a plan in place to reach those customers in 2012.

Recently, comScore reported that 38% of smartphone owners have used their phone to make a purchase at least once, and 13% have used it to make an automotive-related purchase. That number is only projected to increase as consumers become more comfortable with mobile purchasing, just as they quickly adopted online purchasing.

Retailers, the service industry and automakers are experimenting with ways to attract, engage and move consumers to action through mobile. Many of these businesses are using texting and QR codes as a way to connect with shoppers. According to the J.D. Power and Associates 2011 Automotive Mobile Site Study, 59% of vehicle shoppers have used, scanned or taken a picture of a QR code or barcode for products or services.

Just as business owners were skeptical that individuals would make major purchases online, the same can be said for mobile. However, those consumers who have experience with online purchasing are more likely to acclimate to mobile purchasing, especially as a means to convenience.

As of November 2011, more than 127,000 auto parts and accessories, and 2,800 vehicles are sold every week globally via eBay mobile applications.

Local. Even though consumers may be searching and shopping with mobile devices, they still use those devices to find local businesses. Consumers are acting on impulse buys while they are on the go, and being found as a local option can increase foot traffic and sales.

Now, consumers who find something online may want to immediately seek it out at a nearby location to “kick the tires” and confirm a purchase decision. Also, shoppers who design their vehicles with the features they want included also want to be able to “find it nearby” once they decide on what they want to purchase.

Mobile apps allow consumers to read reviews, find photos, compare prices and find out what’s in stock nearby. If your dealership does not come up on these searches, you could be losing out on sales.

Bundling parts and services. Just as “Do you want fries with that?” worked for the restaurant industry, asking a shopper if they want a related service when they purchase a part can lead to an increased stream of revenue. Bundling parts and services together online can be a win for both the seller and the customer. Instead of leaving money on the table, auto dealers need to think service with parts and provide additional offers to the customer.

Online parts sales are a huge opportunity as online inventory has not caught up to the buyer demand. More than 56 million people have shopped online for an auto part in the past 12 months. Offering services along with parts online can provide additional showroom traffic and increased customer engagement so the dealership is top of mind when it comes time to purchase a new vehicle.

The new year will bring about several changes in the automotive industry. Social media will continue to play an important part with customer relationships, and moving those relationships through mobile and local can help build the dealership’s virtual brand.