Article

Keys To Successful Internet Retailing

September 2006, Auto Dealer Today - WebXclusive

by Greg Goebel - Also by this author

It would be easier to read “War and Peace” in 90 minutes than it would to pare down a 90-minute conversation with Tom Vann on his success in Internet retailing, for this space here. To put things into perspective, in 1996 he and his brother were retailing 55 to 60 retail units (combined new and used) in the small community of Hillsdale, Mich., which isn’t too far north of the Indiana-Ohio border. Vann didn’t like being known as a "car guy" because he didn’t like the selling model or process. With that, he set his mind to growing the dealership to the No. 1 full-line Chrysler dealer in Michigan by 2003, and he appears well on the way. He and his brother now own three franchises and are retailing out of Team Hillsdale 55 to 60 units per month...on the Internet.

Vann is recognized nationally as one of the pre-eminent retailers of vehicles on the Internet, has spoke to many groups and conferences as well as being a partner in I-Net Training Technologies (www.AutoClosers.com). There is no way this space can begin to do justice to his expertise.

Q. - How long ago did your first store get into Internet marketing and why?

A. - A little over two years ago, primarily because I don't like the traditional selling model. I was reading Inc. magazine and recognized Pete Ellis (Autobytel - CEO) in an article. I called after being assigned a small territory in Michigan and received 28 leads in the first month. We sold 21 of them. After sharing the success with Autobytel, they gave me a bigger territory, and the rest is history.

Q. - What is your average monthly volume per store?

A. - We are averaging in the 50s in Hillsdale. A really lousy month is 35 to 39. A good month is 60.

Q. - What is your mix of new to used sales?

A. - We run about 80 percent to 85 percent new vehicles.

Q. - How many leads per month per store?

A. - An average month is around 250, but we have seen as high as 400 when a lead generator is really advertising heavy.

Q. - Did you get into the same way as most dealers - one person in charge?

A. - For a long time I was really doing it all. I would contact the lead, sell the value, close the deal, arrange financing and even delivery. Once is started to grow, I had to bring on more people.

Q. - How many people do you have involved now?

A. - We have 10 in the department and need more. I have six full time sales professionals, two support people for dealer trades and administrative efforts, one online finance director and a person handling deliveries. I need more people, but geography is the biggest inhibitor.

Q. - What is the source of your leads - Your Web site or third party?

A. - We use third party lead generators. We have been with Autobytel.com from the very beginning, and we have tried every other service there is. We also use AutoVantage.com. Our Web site is currently down, undergoing revamping, but I am convinced the best use of a dealer\'s own site is retaining your current customers and developing them for long term.

Q. - In your opinion, what are the keys to success?

A. - Very much the same that you view special finance - the commitment to a long-term plan of innovation and marketing, the right people and then cost containment. People and training them is key. We spend three to six weeks training an Internet sales person before we ever let them touch the phone. They have to be a financial expert, product wizard and understand the Internet. It should go without saying that you also must be able to effectively collect information and manage your database, and be able to communicate with them electronically.

Q. - In your opinion, what are the most common mistakes made?

A. - Probably the biggest, is non-support. A dealer throws the task to someone in the store, sends him or her to school, and turns them loose. They inevitably start out like a house afire, then 90 days later, the lot attendants won't even help them. Their sales drop to three or four in a month, and suddenly, they are gone. Then you are back at zero.

Q. - Any closing thoughts?

A. - Well, the nice thing about this subject is the possibilities are endless. You are truly only limited by your imagination and your commitment. Also, the selling model is important. I believe the Internet salesperson has to be more skilled than those in "bricks and mortar." I have developed the selling process that I teach and use religiously. We aren’t closing 70 percent anymore, but we expect to close 35 percent to 40 percent of the leads.

Also, people might expect us to give our cars away. Not so. Our Internet department front-end gross profit generally outpaces the bricks-and-mortar side. F&I is stronger with bricks-and-mortar, but often the Internet customer has already done their shopping for financing by the time our online finance director speaks with them.

Finally, remember that the Internet buyer is generally smarter, shrewder and more educated than the average customer that comes walking on to your lot.

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