Article

Dealership Increases Sales By Using The Web And CRM To Improve Their Business

September 2006, Auto Dealer Today - WebXclusive

by John Zieglar - Also by this author

Red McCombs went from selling 40 vehicles a month on the Internet to more than 500 vehicles a month. How did they do it? By changing the way they advertise, market and sell. McCombs implemented an Internet marketing strategy alongside a CRM program to increase their monthly sales without spending more money on advertising.
Rad Weaver, director of e-Commerce for McCombs, said “We realized that in order to increase our sales we needed to increase our traffic, so we changed our marketing strategy to attract more quality traffic for less cost. TV, radio, print, direct mail and other advertising were not delivering the results we needed. When we learned that more customers use the Internet to research their next purchase than TV, radio or print we decided to make the switch to digital marketing. Best of all, the Internet allows us to measure our return much better than any other media, and we can use our CRM tool to manage and measure all of the opportunities we get from all of our advertising to ensure we convert a large percent of our prospects into customers. Our new strategy drives more traffic, generates more sales and is easy to measure. Our goal now is to leverage this new advertising medium to double the size of our dealerships.”

It is no surprise McCombs has been recognized with many awards for being among the best e-Dealers in 2004. They have accomplished more in one year than many dealers have accomplished over the last five years.

“The best part is that most dealers in Texas are not on top of this opportunity, so it’s like shooting fish in a barrel,” Weaver said.

Weaver said he used some new and innovative practices to increase their sales from 40 to 500 units a month. Here is what Weaver had to say:

“Using the Internet to make money requires a major shift in how we run our business as well as the right technology partner. Even the smartest entrepreneurs may resist change, and the decision making process can be tough with so many choices, products and new ideas the different vendors have to offer. Let’s assume they have the right technology. Many dealers still fail because they have not outlined a detailed strategy, or maybe they invest in a Web site and appoint somebody to handle the leads and think the rest will take care of itself. I’ve found success requires dealer commitment to a clear marketing plan, the right people, processes, pricing and tools in order to succeed, and if you’re missing any one of these components right, you fall behind.”

What are some keys to success you can share with dealers who are ready for change?

I have my top eight tips listed below:

THE TOP 8 TIPS FOR INTERNET SUCCESS:

1.   Leadership commitment: The dealer, general manager and entire management team must become involved and committed from the beginning. We found it helpful to bring in an outside consulting company to facilitate our initial strategy meetings.

2.   Define your Internet sales model (Internet department vs. centralized CRC) and support it: Depending on the size of your dealership or dealer group, you may find a dedicated Internet department is the best way to handle lead volume. Or, you might choose to set up a customer relationship center (CRC) that handles all inbound phone and Internet traffic. We identified the pros and cons of each model, made some tough decisions, clearly defined our strategy and support our decisions with the right budget, the right people and the right tools.

3.   Track your cost per sale: Like most dealers, we rely on third-party providers for some of our Internet lead volume. Because we use our CRM tool to track and measure all of our performance results, we know that our closing ratio for leads that come from our own Web site is 20 percent to 25 percent compared to 10 percent to 15 percent for leads that come from third-party providers. Therefore, our goal is to ensure the majority of our leads are coming from www.RedMcCombs.com and only use lead providers who give us a clear return and can keep our cost per sale around $200 per vehicle.

4.   If you’re not getting results from your Web site, partner with a provider that can deliver: The quality of a Web site can be measured by its conversion ratio, which indicates how well a Web site converts visitors into leads. Averages range from one to three percent, and before making the switch to our new site, we struggled to improve our average by improving our template Web sites from many of the other industry Web site providers. Still, we were failing to generate results. When we made the switch, our conversion ratio shot up to 15 percent and even reached as high as 21 percent—which translates to a 900 percent increase in leads. The lesson here? Abandon what has proven to be unsuccessful, and sign on with a Web site provider who’s capable of converting visitors into leads.

5.   Define your Internet marketing strategy: To increase traffic to our virtual dealership, we built an Internet marketing strategy that includes high-end, animated bulk e-mail campaigns. We’re able to launch and execute a targeted marketing campaign that is quick, easy, cheap and measurable.

6.   Recruit, hire and train the right people: By studying the industry’s most successful Internet sales staff, we learned it’s easier to teach technology to a great salesperson or to someone who’s a superstar on the phone than it is to teach sales skills and phone skills to someone who’s a technology whiz. We then created a profile and a clearly defined job description for each position within the department, so when lead volume increases, we’re prepared to bring on additional staff. Fortunately, our digital marketing system automates much of the process, which means that we can handle more leads with fewer people.

7.   Clearly define each step of your Internet sales process: The process is very important because if you have a lot of leads but you don’t have the process to turn them into sales, the department will not succeed. To implement the right process, you first need to define a process that incorporates proven best practices. The second step is to train the process. The third step is to use reports to monitor and measure the process. The last step is to use the reports to identify problems and opportunities to continuously improve the process and the results. This approach will help you make smarter decisions and target your training to ensure positive growth.

8.   Manage and measure your performance results: The best part about Internet marketing is that everything is measurable if we use the reports we have access to. This has been key to our ability to grow our sales from 40 to 500. Fortunately, our reports are automatically e-mailed to us daily, weekly and monthly which makes it easier to identify issues before it is too late at the end of the month. The most important numbers are the following:

  • Number of visitors to your Web site
  • Conversion ratio (this is the percentage of visitors converted into leads)
  • Closing ratio (percentage of leads that turn into sales. This is driven by other metrics including quick response times, high appointment and high show ratios.)
  • Average gross profit drives the monthly and annual profits.
  • Cost per sale by lead source including your Web site and third party lead providers.

You talk about partnering with a Web site provider that gets results, what makes a good Web site good or bad?

The most important difference to me is results. The old site generated a handful of leads, but we relied on other lead providers for the majority of our leads. Our virtual dealership today is designed around our mission to serve our customers and in so doing, it generates massive amounts of Internet leads and phone traffic: we increased our sales by more than 200 vehicles the first month. It does this, not by overwhelming the customer with a ton of information, but by creating lots of transactional opportunities for the customer to research the products and actually conduct business online which in turn provides us with opportunities to gather information from the customer.

What can customers do on your new Web site? What makes your Web site so effective?

Here are some of the things customers can do on our new Web site:

  • Research product info
  • View side by side comparisons
  • Read positive third party vehicle reviews
  • Gather trade-in information
  • View Carfax reports & viewing of tutorials
  • Search inventory
  • Print coupons
  • See specials
  • Buy parts
  • Schedule service appointments
  • Sign up for a personal Web page.

You had mentioned recruiting, hiring and training the right people to staff the department, can you share any best practices?

Sure, first of all, our lead management tool automates a lot of the follow-up activities taking the load off our people and freeing them up to spend more time on the phone. Secondly, we’ve worked hard to build a team of people who are passionate about customer service and incredibly skilled on the phone. When we need to add or replace someone, we use the following profiles:

Internet Sales Person: (person handling the leads)

  • A lot of desire to do the job
  • Great sales skills
  • Great phone skills
  • Good CSI scores
  • Good work habits
  • Good follow up habits and skills
  • Ideally computer savvy

Internet Director:

  • A lot of desire to do the job
  • Good leader
  • Good manager (a sales manager on deck)
  • Organized
  • Good critical thinker
  • Good work ethic and habits
  • Ability to do what their team can do is a big plus
  • Previous experience running an Internet department is a big plus but not necessary
  • How do you recommend dealers price their vehicles?

“How a dealership prices their vehicles is critical to the profitability of the department. Many stores do a good job with volume but actually lose money in the department because they do not have a clearly defined pricing philosophy for their Internet sales. Or, if they do have a pricing philosophy the strategy is to sell more cars by selling price rather than building value. In our dealership, our average Internet gross profit is similar to our retail showroom floor and in some stores it’s even a little higher. We created a pricing strategy to drive volume and gross profit by sitting down with the entire management team and thinking through the most important issues:

  1. Do we want to put price on our Web site? If yes, what price?
  2. Do we want to post invoice and trade in values?
  3. When do we quote price in the process? Over e-mail? Over phone? On the showroom?
  4. Who sets the price? How? Is it a dollar amount over invoice? A percentage over invoice? How often do we change it?
  5. How can we build value in the dealership, people, process and product and not just sell price?
  6. How can we distinguish our dealership from the competition other than using price?
  7. How do we stay competitive but also make a fair profit?
  8. How do we handle requests for price, payments, trade in values, rates, rebates, etc?
  9. How do we price our used cars on our Web site? How do we price them on third party Web sites?
  10. How do we price specials? Who updates these prices and specials?

Eight Tips for Internet Success

  • Leadership commitment
  • Define your Internet Sales Model (Internet Department vs. centralized CRC) and support it
  • Track your cost per sale
  • If you’re not getting results from your Web site, partner with a provider that can deliver
  • Define your Internet marketing strategy
  • Recruit, hire and train the right people
  • Clearly define each step of your Internet sales process
  • Manage and measure your performance results

Vol 2, Issue 1

Your Comment

Please note that comments may be moderated. 
Leave this field empty:
Your Name:  
Your Email:  

Blog

On-the-Point

Jim Ziegler
Objects in the Rearview Mirror

By Jim Ziegler
The past is right behind us and the future is coming fast. The Alpha Dawg plots a course for your store’s success and shares advice for Elon Musk, Johan de Nysschen, and pre-owned managers.

The Big Talent Drain

By Jim Ziegler
The Alpha Dawg tackles the shortage of talent in the managerial ranks and reflects on Amazon’s rumored foray into vehicle sales, the imminent used-car correction, Hyundai’s plan for the Genesis brand, and the untimely passing of Tammie LeBleu.

A Faster Horse

By Jim Ziegler

Strangers in the Mall

By Jim Ziegler

Opening Observations

Over the Curb