Dealer Survey Points to Three Ways to Combat Inventory Shortage Problems

Exploring recent survey data from the Urban Science® COVID-19 Dealer Survey

This survey was conducted online within the U.S. by Urban Science to understand the impact of the pandemic on dealers and how they are evolving to fulfill the changing needs of consumers while remaining a successful business. Survey responses were evaluated for margin of error at a 90% confidence level.

While it is no secret that inventory shortages have become a common struggle for many U.S. dealerships, our recent survey data indicates opportunities can be found in an otherwise disadvantageous situation. Overall, dealers are recognizing that ongoing vehicle shortages are influencing consumers to increasingly use dealer website inventory to inform their decisions on which retailer(s) they will visit before making a purchase.

Below are three critical implications of the pandemic and actions dealers can take to turn them into opportunities:

1. 80% of dealers report consumers are submitting leads from further distances based on inventory

As consumers become more willing to take a drive for the car they want, they become less likely to be loyal to their nearest dealership. This means dealers in strong inventory positions should expand their media and test drive incentive campaigns to reach further-out geographies. On the contrary, dealers with limited inventory should deliver test drive incentives to all consumers visiting their digital inventory pages to entice them into their showroom, even if they don’t have the specific model that in-market consumers are looking for.

2. 82% of dealers say inventory views have increased during the pandemic

The world may be upside down, but the fact than an increase in VDP views still correlates directly to an increase in vehicles sold is a good sign for dealers. Current industry trends indicate tight marketing budgets would be well spent on things like test drive or purchase incentives to help you convert active, in-market consumers by encouraging them to come in and test drive the exact vehicle they could be taking home. Test drive incentives continue to be a surefire tactic to getting more of your VDP viewers into your showroom, where you have a higher chance of closing the sale.

3. 76% of dealers agree that consumers are more likely to buy the vehicle they submitted a lead for

Increasing lead close rates should give dealers reassurance to work their leads persistently and confidently. If there is a greater likelihood for people to purchase what they say they want, dealers should be mindful to not allow their competitors to steal a sale due to insufficient follow-up. They should follow up with their leads for as long as it takes to get in-market consumers into the showroom and into the vehicle. More specifically, this means salespeople shouldn’t call it quits after seven days and should prevent leads from defecting during that critical 8-14-day period. If you get a customer on the phone, don’t let them hang up without setting up an appointment to come in and take a test drive. If they’re on the fence, lock in the appointment by issuing an instant test drive offer over the phone or in a follow-up email, such as a $25-$75 Visa e-Gift card as a thank you for coming in. For elderly, at risk, or just nervous customers, offer to bring the vehicle to them!

As we settle into the fourth quarter, supply concerns don’t seem to be dissipating. While demand is certainly rebounding from the two months of production lost to the pandemic, pent up demand can contribute to even more of a scarcity of vehicles as automakers struggle to keep up and replenish outputs. More than ever, dealers need to continue to make the most of what they have by keeping the right mix of vehicles in stock to the best of their ability and taking advantage of incentive programs that they can control based on their own unique inventory situation.

As of last month, 2021 models accounted for only 3% of dealership inventory, according to Cox Automotive, compared to a quarter of dealer stocks being new models at this time last year. Therefore, OEM-sponsored clearance deals and incentive programs have been slower to materialize, calling for individual dealerships to take matters into their own hands and work with vendors that can help them convert more of their growing website visitors to actual showroom visits, test drives, and ultimately sales with more targeted and personalized incentives.

© 2020 Urban Science. All Rights Reserved.

BEYOND BEST PRACTICES: 10 Outside the Box Ways to Use AutoHook’s Private Offers

[The 2020 Edition]

AutoHook is best known for converting online traffic into showroom visits using private offers and test drive incentives on dealer websites and third-party sites. These private offers and incentives, combined with our untouchable attribution model, has proven to be one of the most (if not the most) cost-effective ways to get customers physically into your showroom and into the driver’s seat of a vehicle, where you have the best possible chance of closing a sale.

What many dealers don’t realize, is that AutoHook’s capabilities go far beyond rewarding customers for visiting your showroom for a test drive. Our most successful dealers use AutoHook to boost revenue across multiple departments – not just new car sales.

Customized incentive campaigns can be executed at any time to support any and all of your unique initiatives from securing more service customers to acquiring more quality trade-ins for your used inventory. The following are 10 ways to use AutoHook’s private offers to further boost your bottom line. All customization options below have proven successful at actual dealerships across the U.S. and are free of charge for current customers. In this case, more sales (and the data to prove they came from us) really are just a phone call away.

1. Boost Specific Model Performance

Depending on your brand, we know there are certain models you can’t stock enough of and others that overstay their welcome on your lot. Use higher value test drive offers on the vehicle details pages (VDPs) of the models in your inventory that may need a little help. If you know you have a high defection rate tied to a specific new car model, you can incentivize customers who land on those VDPs or submit a lead for that model with a greater value incentive, say a private offer for $50-100 when they come in for a test drive. Target and boost any model that may be underperforming or even a single VIN.

The same logic can be applied to your used and CPO inventory. Offer higher value incentives only on stubborn or aging inventory you can’t seem to move. A great example came from Jim Burke Automotive Group on a 2016 Subaru Impreza.

“We needed to move the Impreza ASAP and we were able to accomplish this utilizing AutoHook’s Web2Show solution via our Dealer.com website. We did an increased, targeted offer for the Impreza’s stock number only of $100 for a test drive and sold the vehicle in just 4 days. We are thrilled with the quick turnaround of this specific vehicle targeting campaign and will definitely continue to use AutoHook’s solutions in the future.”

-          Gordon Gibbs, President, Jim Burke Automotive Group

2. Target Underperforming ZIP Codes

Increase the value of private offers in areas where you’re struggling. AutoHook can set up custom filters to target your website visitors located in specific ZIP Codes where you see high defection rates or where you know you’re getting crushed by competitors. For example, offer a $65 test drive incentive only to customers located in the ZIP Codes you define and a $35 reward to website visitors in your backyard. The further away the ZIP Code, the higher the reward should be. Planet Honda did this and saw outstanding results. They identified three ZIP Codes where they were losing the most sales to competitors. They increased their test drive offers from $35 to $50 for any customer viewing inventory on their website located in one of these areas. We tracked their sales attributed to AutoHook incentives over six months, and their results speak for themselves. Check them out below or read the complete case study here.

3. Incentivize Your Service Drive

With new car sales forecasted to decline in 2019, dealers need to shift focus to service and parts to make up for potential losses in new car sales revenue. We’ve had dealers get extremely creative with using private offers to persuade customers to choose their dealership for their service needs rather than the local body shop shown the street. Use AutoHook to get more service appointments by offering customers who book appointments online a special reward that can only be redeemed when they come in for their appointment. You can also use our Issue Instant Reward feature when setting up appointments over the phone to help ensure they show up.

Another idea is to target specific segments of service customers by pulling contact lists from your CRM that meet certain criteria. For example, pull a list of customers that are due (or overdue) for their first service appointment and email them an offer for a $25 reward when they complete their first scheduled vehicle maintenance at your location. The same can be applied to your parts department or special service events. For example, “Get an instant Amazon eGift Card when you schedule an appointment to come in for our Spring Tire Sale!” Or, “Receive a $100 Visa eGift Card when you purchase a complete set of tires!”

Dealers have also used AutoHook to incentivize service customers who have a desirable vehicle for their used inventory or vehicles that exceed a certain mileage range. In addition, you can always pull a list of appointments you already have on the books and use our Bulk Coupon Generator (just call us and we’ll do it for you) to reward your service customers with a $25 gift card to test-drive one of your new vehicles instead of sitting around waiting for their car to be serviced. Who wouldn’t want to get paid to take a spin in a vehicle that peaks their interest while they wait? Use our Issue Coupon Code or Issue Instant Reward features for customers sitting in your waiting area that may not have received a pre-generated offer to test drive a new vehicle.

4. Revive Dormant Leads

Use the Lead History report in the AutoHook portal to pull a list of anyone who completed an AutoHook test drive offer lead form but has not yet come in to redeem their gift card. You can also pull a list of all leads in your CRM that are 90 days or older (or a timeframe of your choice) and reengage them with a $50 offer to visit your showroom for a test drive. AutoHook can help you set up custom targeted offers based on the leads (or even lead sources) you want to influence.

5. Integrate Across Digital Marketing and Social Campaigns

Using AutoHook’s Triggered Links feature, custom incentive campaigns can be set up on your dealership’s social media pages and in paid social ads. We can also integrate private offers into paid search and display campaigns, or on any landing page or microsite. You can even use AutoHook in your social ad campaigns to reward customers for booking a service appointment online or to promote a discount on parts.

6. Get More Quality Trade-Ins for Your Used Inventory

Target customers with a private offer to get them to trade in their desirable car and purchase or lease a new one from you. Simply pull a list of customers in your CRM that have a lease expiring in the next 90 days or a time frame of your choice. Offer them a $50-100 Visa Gift Card to come in and test drive a newer model and trade in their lease early. If you have equity mining software, pull a list of lease pull ahead customers and email them with a unique offer to get out of their lease early and into a new vehicle.

7. Get More Positive Reviews

Who doesn’t need more positive reviews? Use AutoHook as an enticement for customers to leave reviews, testimonials, or feedback of their experience buying or servicing their vehicle at your dealership. Give happy customers a reason to take the time to write you a good review by emailing them a link to instantly redeem a Visa or Amazon virtual gift card. Our Issue Instant Reward feature is the perfect way to say thank you on behalf of your dealership for submitting a positive review. Testimonials can be used in a multitude of ways to show off the value of your unique dealership experience or a specific salesperson.

If you identify a list of customers you want to solicit for reviews, you can call our Client Success Team and they will help you utilize our Bulk Coupon Generator to create unique incentive codes for each contact on your list. We can create email campaigns on your behalf or you can include a unique triggered link in your own personal emails to customers.

8. Protect Your Reputation

On the flip side, you can use the Issue Instant Reward feature for any customer who complained or had a poor experience at your dealership. Not that that would ever happen at your store…but know it’s available for you to have in your back pocket, should that problem ever arise.

9. Get More Customer Referrals

Use the Issue Instant Reward feature as a great way to say “thank you” to any customer who refers your dealership to their friends and family. Issue Coupon Code can be leveraged to lock in referrals over the phone in those states that allow referral payments. Check with your state Dealer Association for more information.

A great example came from a Kia dealership that runs a strong referral program and uses AutoHook incentives as their fulfillment and measurement tool. AutoHook worked with their Internet Sales Director to build a set of special Issue Instant Reward placements ranging in value up to $200 and marked each as a Referral Gift. This dealership loves having the gift card fulfillment process completely handled for them. They can also track the specific placements to see who refers the most people to buy and how much they need to offer to incent the best referrals. Additionally, this will make your accounts payable department very happy, in that they only have to write one single check for all of the output in a given month.  

10. Magnify Existing Campaign Success

Piggyback on OEM launch campaigns including new model launches, holiday sales events, loyalty programs and more. Use higher dollar offers to drive those intenders into your showroom instead of defecting to a competitor. Holding a private or special sales event unique to your dealership? Use AutoHook as a way to get more customers to attend and test drive one of your vehicles. One of our largest dealer groups loves to use our Issue Instant Reward feature to create customized marketing campaigns around holidays including Black Friday, Valentine’s Day and Summer Sales Events.

The customization opportunities AutoHook offers are endless. So much so, that we truly struggled to cut this list down to 10. If you ever think of your own creative way you’d like to integrate our private offers, give us a call and we will help make it happen.

Contact AutoHook’s Dealer Support Team anytime at 855.532.3274 or email us at DealerSupport@UrbanScience.com.

2019 YEAR-END REVIEW: How Did AutoHook Impact the Industry in 2019?

WHO'S WORKING YOUR LEADS? On the Dealer Front Lines (Part 4)

It’s day 23 of shelter-in-place, and other than the world needing a haircut, there’s positive news for the auto industry. Sales are certainly down, but they’re not gone. Whether your dealership is open or closed due to COVID-19, you still have leads to work - or your competition will.

Lead volumes are in fact declining, but not consistently across the board. Some brands are even seeing increases right now, and there are still approximately 20,000 vehicle sales happening each and every day. So how are you going to capture them?

At Urban Science, we have a tool called TrafficView™ that shows the highest rate of sales defections happen after 14 days. This means leads that came in during March need to be worked now. So do not shut down, and if you have to, then your internet teams should be working the leads in your CRM from home.

This is a time to be innovative and proactive, whether you are a salesperson, or a manager a GM. Here’s another easy idea. Focus on consumers with lease expirations and positive equity opportunities. Did you know that there are 1.8 Million leases due to expire between now and July of this year? Let’s just start there. You can sustain your business doing only that. In the words of Abraham Lincoln, “The best way to predict the future is to create it.”

In Part 5 of On the Dealer Front Lines, where we’ll cover how dealers can start preparing to capture the pent-up demand once the market recovers. Stay tuned!

ON THE DEALER FRONT LINES: Real-Life Stories, Tips & Data to Help Dealers Thrive in a Volatile Market

Part I: WHY NO INDUSTRY IS MORE RESILIENT

Over the next few weeks, AutoHook will be interrupting your daily COVID-19 newsfeed of doom and gloom to deliver a much-needed dose of positivity to dealers and automotive professionals across the U.S. In our mini blog series, “On the Dealer Front Lines,” we will share real-life stories and lessons learned during some of the toughest times in the auto industry - from the 1989 recession to 9/11, to the Great Recession of 2008, and through ongoing natural disasters.

We’ve been fortunate enough to interview a “task force” so to speak of auto industry veterans, dealership owners, CMOs of large dealer groups, pioneers in the AdTech space, and leaders at the OEM level to collect first-hand anecdotes of how this industry adapted during the catastrophes of the past and the priceless lessons they took with them.

What’s interesting about the way each of these crises in our history unfolded is that each one had a V-shaped curve. Although we were forced to navigate through turbulent times, in most cases, we came back out of these situations better positioned for success than when we went in.

Even more noteworthy is that the real-life stories we’ve collected are not negative ones. They are stories of innovation and of dealers, technology vendors, and OEMs utilizing these times to come together and sharpen their blade while inventing new and better ways of operating.

Today, we face an unprecedented, worldwide pandemic that will undoubtedly bring new challenges no industry will be immune from. However, the silver lining is that there are things dealers can do now in order to weather this storm and come out of it smarter, more prepared, and stronger than ever.

This series will serve as a reminder of the one theme that has consistently united the hardest times in the history of the car business: innovation.

Stick with us during this journey as we share best practices, real-world examples, and lessons learned, infused with near-real-time data to help dealers thrive in a down market.

As Winston Churchill once said, “Those who fail to learn from history are doomed to repeat it.” So, let’s repeat the positivity that came from the lessons we’ve taken with us.

Stay tuned for Part 2 of On the Dealer Front Lines: What NOT to do Right Now.

Ciocca Subaru Closes AutoHook Leads at Over DOUBLE the Average Rate of All Other Lead Sources Two Years in a Row

In addition to the select models determined by SOA, Ciocca Subaru used AutoHook’s Web2Show solution to incentivize all new models in their inventory not covered by the program, allowing them to:

• Boost performance of all new inventory by converting more VDP views into showroom visits

• Customize the value of the incentive offers (ranging from $25-$65) based on their location’s unique needs, sales goals and specific models they needed to move

• Increase offer amounts for models they wanted to target or in specific zip codes where they had the most opportunity to increase market share

Click below to see the complete set of results and how we did it.

Infographic: How Many Dealerships? Customer Survey Results

Infographic: 2018 Year-End Review

THE FOUR-PART SERIES: Lies the Digital Age Told You About Selling Cars

| by David Metter, President of AutoHook powered by Urban Science

As part of Urban Science, it’s in our blood to question everything. Not only do we look outside the box to solve complex problems, but we then question each element that makes up the box, down to each individual line, 90-degree angle and the composition of positive and negative space that define the constraints of the box. Better yet, approaching a problem from a true scientific perspective means questioning why the box even exists in the first place. While the process can be painstaking, making observations through the unbiased lens of science can also lead to accidental discoveries.

Granted, for someone who started in the business as a car salesman and later managed dealerships, using scientific methods to make decisions in the showroom isn’t the first and most natural inclination for many of us. And when I say science, I mean actual science – not the junk out there that claims to be science (remember when everyone threw around the term “big data”), but the kind of science that has no skeptics, that sees trends within a data set that not only others don’t, but that no one’s even thought to look for before.

When we hear a number or statistic over and over again, especially one published by a known source, we believe it to be true because…why wouldn’t we? We all know not everything we read on the internet is true, but this example is perhaps the ideal case in point of one widely accepted “truth” the automotive industry has come to accept without any empirical evidence whatsoever.

Automotive leaders in search, analytics, digital advertising and consumer behavior have all published findings stating the number of dealerships customers visit before purchasing a vehicle is somewhere between 1.3 and 1.6 dealerships. This number has been kicked around at conferences for years. So naturally, we decided to challenge the claim that customers visit less than two dealerships before buying a car.

In May of 2018, AutoHook and Urban Science decided to conduct our own survey. We asked real consumers we know bought a car within the last year how many dealerships they visited prior to their purchase. Out of 2,748 responses, what we found is people are visiting more dealerships than we thought. According to the survey results, people on average visit at least 2.4 dealerships before buying a car.

Furthermore, 70% of customers surveyed visited two or more dealerships before purchasing. Almost half, 46% to be exact, said they visited three or more dealerships before purchasing, and 26% said they visited four or more dealerships. The unfortunate reality is that we’ve all been thoroughly brainwashed with the misconception that people only go to about one dealership before buying a car which we now know is not the case.

Regardless of whether customers visit two dealerships or five dealerships, the takeaway here is that everything we’ve been told about consumer buying behavior in the digital age is skewed. The truth is that today’s car shoppers go to at least 2 dealers before purchasing. What’s so significant about this finding is that it proves people have a choice and decisions are being made both on AND offline. The blindly accepted notion that the majority of car shoppers have already made up their mind on what to buy and where to buy before ever stepping foot in a dealership is completely false. In fact, in another study completed by AutoHook and Urban Science, 78% of over 66,000 respondents said they were still shopping multiple brands before visiting their first dealership.

The underlying message we’ve all come to believe is that customers are making buying decisions based largely if not solely on what they read online…which by the way conveniently plays to the ultimate gain of the big publishers, search and media companies. Maybe they are doing this so dealers and OEMs will continue to spend more and more money with said companies on their digital advertising, but we don’t have the science to back that up just yet.

Anyways, down here in the real world, cars are still bought and sold in physical showrooms and the process is still dependent upon a positive exchange between two living, breathing people. The only difference between today and 50 years ago is that customers walk in armed with information and salespeople need to provide a less painful buying experience. Other OEM-specific customer surveys AutoHook conducts on an ongoing basis show that when asked why they didn’t buy a car from a particular brand, the overwhelming majority of respondents selected “bad dealership experience” as their #1 reason for not purchasing.

So, if you think people are going to fewer dealers than they were ten years ago, it may be because the experience they expect to have when they’re at a dealership is a negative one. Not always – I know plenty of dealers who recognize the importance of their people and the in-store experience they provide, and I also know these dealers sell much more effectively as a result. This alone makes the argument that dealers need to focus more attention on hiring and retaining better salespeople who understand the value of relationships if they’re interested in repeat, loyal customers.

Another common misconception is that millennials are taking over the market and they buy everything online; therefore dealers need to move towards models where ~99% of their selling happens online, and their salespeople just need to walk the customer through the paperwork upon arrival. The first part of that statement is true in that Millennials are quickly overtaking the market as they now account for almost 30% of all new vehicles sold. By 2020, JD Power and Automotive News project they will account for 40% of all new vehicle sales.

What’s NOT true is the assumption that Millennials want to buy their cars online. In fact, it’s the exact opposite. The test drive experience is more important to the Millennial generation than ever before, so much so that they want to extend the test drive experience to get a solid feel for how a vehicle will fit into their everyday lifestyle. Millennials also spend more time on the buying process and are less brand-loyal than previous generations. As a result, we see more and more extended test drive programs popping up like Toyota’s Try Before You Buy program which allows customers to take home a vehicle of interest from anywhere between 24 hours to a full week.

Again, whether the total number of dealerships visited before a purchase is 2.4 or 3.4, the more important point is that people have choices and if they go to a dealer ready to buy and have a negative in-store experience I can confidently say based on data (and common sense) that they’re going to leave and buy from someone else.

I’m not saying everything we know about digital is dead, and I’m in no way trying to tell dealers to kill or even cut their digital ad spending. But what I am saying is we as an industry need to seriously reevaluate the amount of time, energy, and most importantly, money we spend on what we know is vital to selling cars and the ongoing growth and success of a dealership…good salespeople.

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| by David Metter, President of AutoHook powered by Urban Science

There is this perpetual echo of the word “disruption” in the car industry. What will be the next big disruption? What do we need to prepare for that will change everything we know about selling cars? The reality is disruption is largely incumbent upon technological advancements and the rate of societal adoption to these new, uncharted territories dominated by things like artificial intelligence and machine learning. These future “disruptors,” such as the rise of alternative online retail formats, subscription services or the transition from gas-powered vehicles to autonomous, connected cars are impossible for any one dealer or OEM to predict, let alone control.

Therefore, I’d like to propose a new approach. What if instead of the next big disruption we focused a little more on what we can control – the constants – the parts of the equation that aren’t powered by data or machines. What I mean by the constants is the people, or more specifically, the relationships that form when a customer goes to look at a car and has a positive interaction with a salesperson while doing so. The value of relationships when it comes to selling cars has been vastly undermined by the shiny new innovations of the digital age.

I think we’ve become so infatuated by the latest technology and the newest cutting-edge solutions to selling cars that we forgot about the fact that technology becomes useless without the people behind it who make it work. Relationships in the digital age still take precedence over technology and despite the advancements we have yet to see, technology in all its glory can’t replace social skills. All this talk about connectivity and connected devices yet I think we’re failing to connect the dots when it comes to knowing what will ultimately yield the highest ROI for dealerships, both in today’s world and in the future – knowing who your best salespeople are and how to keep them.

We as an industry need to stop using technology as a crutch. We’ve become so focused on the next big disruption in digital marketing that we’ve started to rely on the help of digital tools entirely, forgetting that cars are still bought and sold by actual people at actual dealerships. Deloitte’s 2018 Global Automotive Consumer Study reported car shoppers still rate physical interactions with a vehicle as critical to their buying decision – with over 8 out of 10 needing to see the vehicle in person before making a purchase decision. So, if this is the case, why are we spending the majority of our time and money on the minority of the buying public?

It’s all about striking a perfect balance between technology, the right data and the right people. It takes all three to get the job done. Technology is a powerful tool that can be leveraged to enhance or continue existing relationships, but it can’t create them in the first place. When it comes to the right data, we are extremely fortunate because our solutions are powered by the Urban Science® DataHub™, which allows us to be the first to know when a customer buys a car, what car they bought, where they bought and if they didn’t buy from you. And we get that sales data and the equally important defection data within days – not months.

In the same way that technology lacks value without good people, the right data can uncover things about your salespeople you otherwise never would have known. For example, you consistently see all these closed sales opportunities by let’s say, “John,” so naturally you think John is one of your best salespeople. But how many opportunities is John losing every month to one of your competitors? You’d never know without the right data. So it all goes hand-in-hand. The person selling the most cars may be losing more opportunities than he or she is closing, so your “best” salesperson can quickly become your worst salesperson when you can compare what they’re winning to what they’re losing at the same time.

Having that ability to layer sales and defection data on top of your CRM data is critical if you want to operate more efficiently. Without it would be like making decisions for your dealership based on a cost-benefit analysis but forgetting to include the cost part of the equation. It’s the only way to add enough dimension to your CRM data to make it truly actionable – instead of looking like Flat Stanley.

Having the right data combined with great technology can help your operations in a multitude of ways. It can suppress the leads in your CRM that have already purchased so your people can stop wasting time following up with them. It can pinpoint the ideal time and channel to re-engage your lapsed or dormant leads. Technology can help dealerships interrupt a customer while they’re shopping online and grab their attention just long enough to influence their decision-making process. It can also help ensure a customer chooses to visit your showroom instead of your competitors with things like test drive incentives.

The reality is technology will never be able to stop a customer from walking out of your dealership after a negative experience with one of your salespeople. Furthermore, when it comes to closing lead opportunities, your salespeople may already be at a disadvantage. A recent Automotive News dealer training webinar reported that as many as 98% of qualified leads fail to result in closed business. So instead of pouring all your focus into staying ahead of the next big disruption promising more and better leads, maybe we need to shift our focus back to the one thing capable of converting those leads into sales once they hit your showroom – your people.

Great employees are what gives meaning to the capabilities that stem from great technology. Your salespeople are the foundation needed to ensure data-powered solutions work in favor of your dealership. In a word, the future state of our industry’s digital landscape is unpredictable. But there are two things we do know. Change is constant and retaining great salespeople is still paramount. There’s not a lot we can do to control the rate of change, but fortunately for dealers, there’s a lot we can do to help our salespeople and to make sure we're holding on to the good ones.

Stay tuned for Lies the Digital Age Told You About Selling Cars, Chapter 3: Power to the [Sales] People to learn more about the importance of retaining your best salespeople and how to provide a better in-store experience.

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| by David Metter, President of AutoHook powered by Urban Science

I’d like to begin with a subtle reminder of the harsh reality of how car shoppers in today’s technology-first world really feel about the car buying process. Below are a few highlights to help paint the picture…

• 52% of car shoppers feel anxious or uncomfortable at dealerships and millennials are leading the pack in their dislike, with 56% saying they’d rather clean their homes than negotiate with a car dealer. (The Harris Poll Insights & Analytics)

• “Stressed,” “overwhelmed,” “taken advantage” and “panic” were among the top 10 words used by female car shoppers when reviewing their in-dealership experience. (CDK Global)

• Studies suggest that some Americans would rather get a root canal than take their car to a dealership. (Automotive News)

I could go on for days with stats like this, but we have more important things to discuss - such as how to change the current perception. The upside to all the negativity around car buying is that we have A LOT of room for improvement. And dealers aren’t necessarily to blame either. The problem is, what we’re told about consumer behavior in the digital age compared to what car buyers themselves actually do in the digital age are often two very different things.

We live in a constantly connected, convenience-based universe inundated with unsanctioned opinion and as a result, we’ve become conditioned to rely on technology to solve problems. We know the in-store experience is important, but we’re too fast to look to the latest technology to solve the problem rather than focusing on what we can actually control. Not just something dealers have the power to influence, but also something that may ultimately yield the highest ROI out of any available technology in the market…which is your salespeople. How did I come to that conclusion? Funny you should ask.

In the article, “What’s the REAL Cost of a Bad Salesperson?” I dissected the monetary difference between what good salespeople can contribute to your dealership over time versus what just one bad salesperson could cost you. A salesperson selling 15 cars a month yields about $270,000 a year in gross profit. Then when you factor in the lifecycle of the vehicle and any potential service revenue associated, you’re looking at a minimum value of $325,000 a year in pure gross profit for any one good salesperson. Read the blog if you don’t believe the numbers.

Now consider the reverse. One salesperson that loses 15 sales a month to one of your competitors is costing your dealership $325,000 a year in gross profit. Multiply that by just four people and you’re looking at $1.3 million in lost gross profit a year. But here’s the kicker. Without the right data processed through the right technology, you would have no way of knowing how many customers your salespeople interacted with that left and bought a car from someone else. Perhaps due to a negative experience?

A recent study from Cox Automotive suggests that initial experience may be more important today than ever before. The rate of car buyers returning to dealerships where they have previously purchased or leased from is increasing. 40% of new vehicle buyers in 2018 are repeat dealer customers compared to 31% in 2016. This is great news, but it puts even more pressure on getting it right for that first-time buying experience and, in most cases, your sales team is directly responsible for it. Customer loyalty and the chance of them coming back to buy a second or third car depends on the experience your dealership provides them with upon arrival. So your people better be armed and ready.

Jeremy Beaver, COO of Del Grande Dealer Group, told Automotive News, “Retention is the Holy Grail, and the experience is what drives retention. You have to shift away from a ‘visit’ mentality and think about a ‘lifetime value’ mentality.” I could not possibly have said it better myself. This is an example of a dealer that just GETS IT – both on the sales side and on the service side. Their Fixed Operations Director, Trully Williams said, “The technology enhances the experience, but you start with the fundamentals of people and process. You get those right and then add the technology.”

There is a seriously infinite amount of opportunity for improving your dealership’s operational process, and it starts with your people. Dealers don’t have time to guess who their good and bad salespeople are – that’s where the technology comes in. You can’t retain good salespeople if you don’t have the technology to know who they are. The right technology can tell you who is letting the most opportunities walk out the door. It can tell you which leads your people are struggling with and the exact time frame during the month they struggle with the most. There’s a lot technology can do to help your people and to enhance the car buying experience, but it can’t drive the car buying experience entirely. At least not before flying cars become a thing.

So before your brain explodes from all the numbers and reporting being thrown at you during any given moment, or from all the external pressure you’re getting to improve 50 different KPIs at the same time, remember that your people are what gives meaning to the metrics. Retention, should be your absolute number one focus and priority in the digital age – and that applies to both your salespeople AND your customers. Running a successful dealership ultimately translates to retaining good salespeople, but you need the help of good technology to be able to do that. Ironic, I know.

Stay tuned for the upcoming fourth and final chapter of Lies the Digital Age Told You About Selling Cars: The Executive Edition. Dealer Managers will learn real-life examples of how to apply new technologies to directly support the success of your salespeople instead of relying on technology to do the selling for them. The more you can do to help your employees be successful at your dealership, the more likely you are to retain them, which ultimately leads to everyone’s mutual benefit – not to mention the benefit of your bottom line.

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| by David Metter, President of AutoHook powered by Urban Science

In Part I of Lies the Digital Age Told You About Selling Cars, we overturned one of the most blindly accepted industry-wide standards about the current state of consumer car buying behavior. For far too long, the assumption has been vehicle shoppers have everything they need to make a purchase decision online, and they already know what they’re buying before ever stepping foot in a showroom. The common misconception has been that the average consumer in the digital age only visits one dealership before purchasing a vehicle.

What we found after surveying 2,748 U.S. consumers that have purchased a car in the last year is that the above statement couldn’t be further from the truth. In reality, not only does the average customer visit at least 2.4 dealerships before making a buying decision, but almost half – 46% – said they visited three or more dealers before purchasing. Over a quarter of our sample size, 26%, said they visited four or more dealerships before buying. All of this data was collected by AutoHook and Urban Science in May of 2018 from people who purchased or leased a vehicle within the last year – not from a published study conducted five years ago.

As a former general manager of a dealership, CMO of a privately-held dealer group and as a marketer in general, I found the fact that roughly 1 in 4 people (26%) in the year 2018 visit four or more dealerships before buying a car to be personally absurd. Though surprising, this statistic solidified a new truth about the state of our industry. Contrary to what dealers have been told, the in-store experience is arguably more important in the digital age than ever before in the history of the car business – and for several reasons.

The most prominent reason being if a customer has a bad experience with one of your salespeople when they come in for a test drive, they will leave and buy from someone else. If they go to two dealerships and have a bad experience at both, they will go to a third and even a fourth dealer to buy from the one that provides them with the experience they expect and deserve.

Just like everything else that has surfaced from the digital age, car shoppers have a LOT of choices when it comes to what they’re going to buy and who they’re going to buy from. Purchase decisions are still made at physical dealerships, most likely following a test drive – NOT exclusively online. Shoppers in-market for a new vehicle don’t have their minds made up about what they’re going to buy by the time they visit their first dealership. Outsell says 6 out of 10 car shoppers enter the market unsure of what they want to buy. Our own research and survey data consistently shows 78% of people are still considering multiple brands by the time they visit their first dealership.

So we as an industry, we HAVE to get this right. Instead of operating based on pure, often biased assumption, dealers need to seriously reconsider their order of priorities in terms of how they run their business and where they spend their money. The digital age has armed us with so much intellectual power, yet at the same time, it’s made us a little lazy. It’s cast a shadow over what’s really important – defining value and personal worth by likes, clicks and follows rather than interpersonal relationship skills.

Part II of Lies the Digital Age Told You About Selling Cars verified the auto industry has become too quick to rely on technology as a crutch to do the work for us, rather than picking up the phone and having a conversation - or dare I suggest having the inventory knowledge and social skills to not only sell a car, but to foster ongoing relationships that lead to repeat, loyal customers. It is officially time for a new dialogue to emerge. The question we as an industry need to be asking is not how can we leverage new technologies to help us sell cars, but how can we leverage new technologies to help our salespeople sell cars?

Rather than answering the above question based on my expertise and years of experience in this business, I’ll share the real-life success stories of how two actual dealerships in the digital age are using great data processed through great technology to help their people sell more cars and lose fewer opportunities.

DEALERSHIP #1

One of our dealer clients needed an accurate way to measure the true effectiveness of their follow-up process by knowing what was and wasn’t working within their current lead mix as well as how many opportunities their salespeople sold compared to how many they lost to competitors. Using their individual salesperson data, we analyzed each person’s sales and defections and identified who had the most potential to improve. We then pinpointed the time frame during their follow-up process when their people struggled the most, which for this particular store was during days 0-4 after a lead hit their CRM. Lastly, we exposed their highest defecting lead source.

Armed with a roadmap highlighting their greatest areas of opportunity, the owner of this dealership shared this data with his sales staff and reviewed each person’s sales and defection trends with them one-on-one every month. He created an environment of transparency and friendly competition by making this defection analysis technology available to all his salespeople, thus holding them personally accountable for every sale they lost in addition to what they closed.

The dealer then helped his staff implement a more aggressive follow-up strategy for working leads 0-4 days old. He provided additional training on how to better work leads that came from their highest defecting source (especially during this time frame). He took the time to listen to feedback from all his salespeople and found opportunities for peer coaching to help further reduce their collective number of defections. He also implemented a system to reward the people who showed improvement each month.

With a refined follow-up strategy fueled by better prepared, more empowered salespeople, they saw the following results in just 90 days:

• Their overall defections decreased by 89%, with a 44% decrease in defections specifically during days 0-4 post-lead.

• They increased their number of closed sales tied to their highest defecting lead source by an astounding 242%.

• Most importantly, when it came to the salesperson identified as having the highest defection rate, that individual successfully increased their closed sales by 78% and went from being the worst performer on the team to one of their top performers.

DEALERSHIP #2

This store needed a way to identify any potential problems with their lead mix to see which sources were underperforming and why. Using the same defection analysis technology as Dealer #1, they were able to determine the issues they were having with their highest defecting lead source were due to external factors outside of their control – rather than a lack of effective internal follow-up. They then confidently decided to cancel this lead provider and put those marketing dollars back towards their bottom line.

Ninety days later, they saw a 61% average increase in salesperson performance after removing that lead source – not to mention they were able to free up a total of 40 man-hours per week that were previously devoted to working those high-defecting leads. The best result of all? Four of their salespeople went from being average or below average performers to their TOP FOUR salespeople.

And they didn’t stop there. This dealer applied the same technology to define which model(s) in their inventory represented the most defections specific to their salespeople so they could go after leads tied to underperforming models more aggressively. Model A represented the most opportunity for improvement, and again within 90 days, they increased closed sales specific to Model A by 51% and reduced defections by 30%.

What we can conclude from the examples listed above, is that technology can help your people in a multitude of ways. Technology can help your salespeople close more deals and reduce their defection rates. Technology can help your people free up wasted time chasing leads from a faulty source. Technology can identify which models your people struggle with the most in order to boost specific model performance. Technology can even tell you if your customers are leaving your store to buy the same model somewhere else, or if they’re defecting to another brand entirely.

But the most important thing to take away is that technology in the digital age still doesn’t sell cars. It can do a lot to light up the right track for your people to do just that, but at the end of the day your salespeople need to know your inventory like the back of their hand – what makes it better than competing brands or models, and what makes doing business with you a better option than anywhere else.  

The truth in a current landscape littered with lies is that there’s no way for any one dealer to know everything they need to know about their overall market, which models represent the most opportunity for their store, and if their salespeople are doing their jobs and following up with leads appropriately. That’s where the technology and data come into play. With a complete view of who is struggling and exactly what they’re struggling with during the initial contact and follow-up process, dealers can take immediate action to help their salespeople reduce defections and improve their performance across all facets of their sales operations – so they can be one of the 2.4 dealerships (at least) with a shot of winning the sale.

The Top 5 Benefits of Using Test Drive Incentives

Contrary to popular belief, vehicle purchase decisions are still being made at physical dealerships, most likely following a test drive – NOT exclusively online. By using targeted test drive offers on your website, third-party sites and across channels, Dealers can positively disrupt a customer shopping online just long enough to influence them by giving them a reason to visit your showroom instead of your competitors’. Test drive incentives are one of the most cost-effective marketing tactics, consistently delivering buyers into Dealer showrooms and in the drivers’ seat of a vehicle. Below are the top five benefits of using test drive incentives at your dealership.

1.      Drive High Intent to Buy Showroom Traffic

Convert your highest intent-to-buy website traffic and third-party site traffic into showroom visits with highly targeted, private test drive incentive offers, redeemable only by test driving a vehicle at your dealership. By presenting customers browsing your inventory online with a $25-$75 incentive to test drive one of your vehicles, you’re giving them a reason to visit your store over the competition. We know shoppers viewing specific inventory pages online are lower down in the purchase funnel, therefore using incentives only further increases your likelihood of converting online traffic into showroom traffic.

2.      Execute Custom Incentive Campaigns Based on Your Greatest Areas of Opportunity

With science on your side, you can see whether the leads in your CRM ended up purchasing from you or someone else. Being able to see where, how and why you’re losing sales makes it easy for Dealers to make smarter decisions about how to spend finite, often unvalidated marketing dollars. Test drive incentive campaigns can be executed across all digital channels and customized in-flight to support each Dealer’s unique initiatives. Target underperforming models, ZIP codes or lead sources with higher value incentive offers to reduce your defection rates. In addition to your website visitors, send email incentive campaigns to re-engage all your third party leads and further combat defections and drive customers into your showroom.

3.      Increase Incremental Sales

New vehicle sales may start online, but they end at the dealership. The best digital marketing tools attribute all sales and showroom visits back to a single offer or campaign, so your ROI is never in question. Use trackable test drive incentives across channels as one of the most effective, cost-efficient ways to get customers in your showroom and behind the wheel, while properly attributing incremental sales directly back to an offer. Leads generated from these private offers consistently close at both a high rate and a low cost-per-sale.

4.      Increase New-to-Brand, Repeat Buyers

Car buyers today might be less brand loyal than ever before. CarMax says only 19.4% of their customers in 2017 purchased the same brand as their trade-in, while the remaining 80.6% bought a different brand. Our own studies show that across all OEMs, an average of 78% of buyers that submit an AutoHook test drive lead are new to the brand, meaning these are not repeat customers that would have come in anyways. If you’re able to provide your customers with a great initial buying experience when they come in to redeem their free gift card, the chance of them returning for a second or third purchase increases, thus improving your likelihood of gaining repeat, loyal buyers.

5.      Increase Lead Conversion

This one might be a given, but it had to go on the list. We know Dealers have the best chance of converting a lead to a closed sale when they can get the customer physically in front of them. Getting customers offline and into the showroom is the entire purpose of using test drive incentive offers.