On-the-Point

The Best-Laid Plans

The Alpha Dawg is kept busy by prosperous dealers and the OEM executives, inscrutable vendors and bogus industry reports that seek to derail them.

July 15, 2014

“Whatever you think is gonna happen may not be the way it turns out.” I think Batman might have said that to the Joker once. Perhaps it was a Dirty Harry quote. Or maybe it was a one-liner subliminally recalled from a late-night rerun of Pee-Wee’s Big Adventure. I’m not really sure where I heard it, but it’s one hell of a thought-provoking statement. 

I’ve been in the car business for 38 years. Although it has never been my plan to retire, I really did think it would have slowed down a little by now. But instead, I’m busier than I’ve ever been and more relevant than ever. 

There’s a lot happening in the retail automobile space, and it seems I’ve just unpacked my suitcase before I find myself back at the airport. I’m giving more keynote speeches to dealer groups than at any time in the last 20 years. I’m also producing conferences, speaking at other people’s conferences and dropping in on 20 Groups — and there’s no end in sight. Five million miles with Delta and I’m still earning Platinum status. In my “spare time,” I write for three of the premier magazines in the industry. 

At the moment, I’m back home in Atlanta after three days in San Diego. I will be in Vancouver next week and Orlando the week after that. July and August will bring flights to Seattle, Philadelphia, Kansas City, Columbus, Ohio and Asheville, N.C. September starts with two full days at Industry Summit in Las Vegas, then trips to Boston and Tampa. And that’s just my road schedule. 

Despite all my travels, I still log countless daily phone conversations with dealers and managers and stay connected with more than 100,000 friends and followers on social media. I can say with certainty that I talk to hundreds, if not thousands, of dealers and dealership employees every month. I believe this makes me uniquely qualified to call bullcrap on some of the hoaxes being perpetrated on dealers by vendors and manufacturers. 

I don’t know or care much about surveys, statistics and analytics or predicting consumer trends and behavior, especially in our industry. I’ve seen enough to know that the overwhelming majority of these alleged statistical reports are self-serving and bogus. Figures lie and liars figure.

Reports identifying so-called industry trends are slanted to steer dealers in a direction that benefits those who produce them. Modify your processes at your own risk. You could be buying into someone’s secret profit agenda. You know how to run your business. All you have to do is look around at what’s really happening in your showroom with real customers in the real world. 

José Muñoz is chairman of Nissan North America. The author believes Muñoz represents the Renault-Nissan brand’s best chance of earning enthusiastic buy-in from U.S. dealers and propelling the company toward its goal of becoming a Top Three global brand. 
José Muñoz is chairman of Nissan North America. The author believes Muñoz represents the Renault-Nissan brand’s best chance of earning enthusiastic buy-in from U.S. dealers and propelling the company toward its goal of becoming a Top Three global brand. 
Nissan En-vy

The industry propaganda machine has produced a string of articles in which Renault-Nissan CEO Carlos Ghosn unveils his latest theory of what it’s going to take to elevate the Franco-Japanese alliance to a Top Three worldwide brand. There was a time when I thought Ghosn was a pure genius, but that time has long passed. I worry that he may have stalled out creatively. Like the old Soviet Union and Volkswagen, his five-year plans seem to keep crashing. 

Nissan is building some really great product. Renault, in my opinion, has yet to fully distance itself from the crappy cars in its past. But whatever the quality, the company needs to succeed in the U.S. market. To do that, they will need dealer support. Based on my conversations with dealers, they have a long way to go. Whether they build their cars in Dalian, China or Smyrna, Tenn., and however they price them, they will not reach the Top Three without buy-in from their dealer network. 

The biggest complaints center around unrealistic sales goals not supported by the manufacturer, the dealer’s market or the economy. (Nissan did outsell Honda stateside in the first two quarters, but at the cost of heavy incentives approaching $2,500 per unit.) Secondly, dealers have been harassed and browbeaten with stupid stair-step bonus programs with two-tiered pricing and unrealistic arbitrary goals and expectations, all of which seem designed to benefit “favorite” dealers. 

Ghosn has created a corporate culture of impatience and intolerance that I feel is working against them. Right now Carlos is cracking the whip with ambitious plans to step up their game with manufacturing in the U.S., Mexico, Brazil, Indonesia, Russia, Thailand, England and China. But there is hope: José Muñoz, chairman of Nissan North America, could provide the motivational spark that puts them over the top. It’s too early to tell, but Muñoz appears to be making the right moves at the moment. 

Meanwhile, dealers are once again drinking the Kool-Aid and rallying, however cautiously, to their OEM’s side. After all, they’re making really good money right now, and that cures a lot of pain. By removing the stair-steps and promising more realistic programs, Muñoz will be on the right track. If he puts his foot down with some of the more arrogant and overbearing mid-level managers and field personnel, and makes them lose the attitude with their dealers, he could see even more production. I am optimistic that this guy will make the right changes to the culture. 

While I’m ragging on the manufacturers, I would be remiss in failing to mention Volkswagen. In San Diego, I met with a dealer with whom I have worked for 20 years. He owns 12 franchised dealerships in California, including one VW point. He told me that he hates to even walk into his Volkswagen store. It’s the same story I hear over and over again from VW dealers nationwide. They feel they are treated with disdain and forced to sell uncompetitive products, and that the OEM is arrogant, condescending and totally out of touch with the market. They agree that the quality has improved, but the “German engineering” tag just doesn’t fit. 

Ciao di Nuovo

The headline in The Detroit News read “Alfa Romeo Comes Roaring Back to the U.S.” Personally, I think that might be a little — actually a lot — overdramatic. I would replace the word “roaring” with “squeaking.” It’s not as if the buying public didn’t figuratively ride Alfa Romeo out of town on a rail just a few decades ago. Poor quality and frequent breakdowns plagued the brand’s last U.S. appearance. I don’t know of any dealers who held up their lighters and demanded an encore. 

But there is some simmering resentment toward the brand, especially among dealers who bought into Fiat with the understanding that they would eventually receive the new Alfas. Bear in mind, I am a huge fan of Fiat/Chrysler CEO Sergio Marchionne. He is an eccentric genius in the P.T. Barnum mode. I remember laughing out loud when he took former General Motors chief Rick Wagoner for a $2 billion ride. His team may have made some serious market miscalculations when he reintroduced the Fiat brand to the U.S. market, but Chrysler is kicking ass and taking names. They also appear to have won the hearts and enthusiasm of their franchised dealers. 

Let’s face it: Domestic (if you can still consider Chrysler a “domestic”) franchises are all about trucks. No one can dispute with a straight face that the Ford F-150 has led the market in pickup sales for the last several decades. No contest! Ford loyalists are eagerly anticipating the launch of the redesigned 2015 F-150, so sales of the 2014 model are understandably flat. 

Fiat S.p.A. has high hopes for the planned return of the Alfa Romeo brand to the North American market. The author believes interest from dealers is minimal, despite the successful reintroduction of Fiat after a long absence. 
Fiat S.p.A. has high hopes for the planned return of the Alfa Romeo brand to the North American market. The author believes interest from dealers is minimal, despite the successful reintroduction of Fiat after a long absence. 
But the trend has got to be alarming, especially if you’re a top executive at Ford or GM. Through May of this year, sales of Ford’s F-150 are up 1.9% and Chevy Silverado and GMC Sierra combined are only up 1.6%. Chrysler’s Ram is up 21%. These are raw numbers, not subject to interpretation. 

Coming out with incentives in March of nearly $6,000 a unit, Chrysler caught both competitors flatfooted coming into the prime selling season. Ram pickups outsold Ford’s and GM’s offerings in March for the first time in the new millennium. In April and May, GM ramped up incentives and Chrysler dialed them back; Ford kept its cool and offered less incentive money than either. 

Incentives aside, it obviously wasn’t just about price. Chrysler/Ram continues to outpace both competitors, scoring 17% increases in both April and May. Ram is going into the second half with a lot of momentum. 

J.D. Power and Consumer Reports have been extremely kind to Ram. The quality, appearance and features are world-class. I believe Ram has shaken off the poor quality perception that Dodge trucks earned in the ’80s, ’90s and early 2000s. The public likes what they’re seeing, and the value is obvious. If I were to rate a manufacturer high on the Ziegler Dealer Satisfaction Index (ZDSI), Chrysler would be in the Top Five but trailing Hyundai, Kia, Toyota and Ford. 

Ram pickups logged impressive gains in the first half of the year, when positive reviews and high incentives helped increase sales by 21%. The Truck Wars will heat up once again with the redesigned 2015 Ford F-150, due later this year. 
Ram pickups logged impressive gains in the first half of the year, when positive reviews and high incentives helped increase sales by 21%. The Truck Wars will heat up once again with the redesigned 2015 Ford F-150, due later this year. 
Is Your Website Converting?

Uh oh! I can hear the vendors groaning, cringing and screaming already. 

My theme most recently has been for dealers to stop throwing stupid money at vendors who might conceivably be screwing you over. Anybody you pay to create business for you should be able to statistically justify their existence with documentable ROI. 

Vendors never hesitate to take credit for all the traffic to your website and your dealership. If they can’t prove it, don’t listen. If they really drove those website visits, let them show you the report. Don’t let them tell you they are not lead generators but “advertising sources.” We don’t need another advertising source. Show us the business and document it or we’ll have to show you to the street. Only spend money with those who can document exactly which customers they produced. Show me the ups! 

There are two things you can do to do to increase your business tremendously and reduce your cost per customer sold. Hire a company that specializes in Google SEO and make sure your website is converting. That includes a kick-ass mobile website. I’ve seen dozens of dealers recently switch vendors and change their strategies with impressive results. If a dealer implements an SEO and SEM strategy managed by professionals, they will find it’s a small fraction of what they are now paying, and the results are amazing. 

I had a long conversation with several of my close friends recently about website conversion. When was the last time you really held your website provider accountable? When was the last time you reviewed a stat report line-by-line? Dealers everywhere are paying insane amounts of money to companies that can in no way justify the charges. 

There is a science to tracking a consumer’s path as they navigate through your website, which buttons they clicked, which pages they clicked off of, where they bounced or stuck and a heat map of what has the most pull on your site. There are hundreds of measurements that contribute to the effectiveness of your site keeping and converting sales. Does your website have the best, most effective forms? Are you serving up the content they’re looking for? Useful vendors can answer those questions. Useless vendors dodge them. 

Your website is your virtual showroom. You need to look around and be sure you’re getting what you think you’re paying for. Nobody will show you what’s wrong with your website quicker than a competitor that wants the business giving you a presentation. And just because they’re the biggest, that doesn’t necessarily mean they are the best. As a matter of fact, a little boutique company that really cares can sometimes deliver better results than the big behemoth that treats you as just another customer. If your website looks like everybody else’s website because it is a cookie-cutter template created with a formula by a contract employee, then it stands to reason it is not competitive in search or conversion. 

The revolution has arrived, and there is going to be a mass exodus of dealers who choose to use their own marketing to create their own business. Google is the battlefield, and there are a host of new strategies, using alternative vendors to achieve real and measurable results at reasonable prices.

I believe the CRM providers need to step up and step into the role of managing their dealers’ self-implemented marketing. I am a firm believer that every dealership needs to fully adopt a CRM-centric culture. But it takes two to tango. The CRM companies need to get in the game and provide complete, do-it-yourself SEO/SEM and social media marketing modules. They also need to back it up with expert training and reliable support. 

The problem has been that dealers aren’t paying attention. Your vendors tell you they are indispensible. You take them at your word and pay the bills. I promise you that, if you stop paying for air and double-talk and demand measurable results, your business will increase and costs will go way down. 

AutoNation has given every indication that they are moving toward a self-actuated marketing and lead-generation model. Dealers of every size have that option, whether you realize it or not. There are articles about online marketing in every issue of this magazine. Internet sales conferences have become the norm. Educate your people and yourself. If you have been dragged kicking and screaming into the Digital Age, you are part of the problem. You don’t have to know the technology; you just have to know what it will do and what it should be doing. 

We have all been told that the retail dealership model is extinct. To hear some of these vendors and manufacturers tell it, they’re going to turn your dealerships into warehouses and run your business as they see fit. I disagree. I believe you still hold the reins. Hold onto them and don’t be intimidated. Demand results or get them yourself. 

Well, that does it for another article in another issue. I downed a couple of Remy-Martin Vintage Louis XIII Cognacs during the course of this writing. Whatever your vice, I encourage you to insist upon the very best, and don’t let anyone tell you that you don’t deserve it. Find me online for a complete list of upcoming events, and please keep those calls, emails and Facebook messages coming. 

Jim Ziegler is president of Ziegler SuperSystems Inc. and one of the industry’s most recognizable experts, trainers and speakers.
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Comments

  1. 1. Curtice Spencer [ July 16, 2014 @ 12:54PM ]

    Great article Jim, spot on as usual!

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