Best Practices

According to the 2008 Cobalt Automotive eShopper Experience Study, the “traditional” dealership gives up on a lead after three days, no longer actively pursuing them as an in-market buyer.  This just doesn’t make sense, considering that J.D. Powers reports in their 2008 New Autoshopper.com Study that those in market for a new vehicle begin using the Internet to research their purchase about 12 weeks before they actually buy.

Lead nurturing or follow-up (whatever your dealership calls it) is so important if your dealership wants to sell as many cars as possible.  The most important thing for your sales people to do is respond to each and every email that you receive from potential customers.  It’s amazing how many incoming leads don’t get responded to.

Check in with your leads at regular intervals to ensure that your dealership has done everything you can to earn their business.  Ask if they have any questions about a specific vehicle or your dealership.  Try sending short surveys to make sure they feel that they have been treated how they want to and nothing is holding them back from eventually choosing your dealership for their purchase.

There is no doubt your dealership staff have full plates, so why not automate some of your lead nurturing?  Take full advantage of your CRM and any web tools your dealership uses to take some of the load off.  These programs can schedule emails to be sent at various time periods to ensure none of your leads fall through the cracks in the long term.

Get to Know Your Customer

The 2008 Pied Piper Prospect Satisfaction Index® U.S. Auto Industry Study set out to study how customers were treated while shopping for new vehicles.  They used mystery shoppers to visit auto dealerships nationwide who reported back about the customer service they received.  Among many other, interesting facts, the study found that auto sales people were more likely to:

• Mention the availability of different financing options.

• Handle any required wait professionally.
• Make special orders simple and easy.

Sales people were less likely, however, to ask info-gathering questions like:

• Why the shopper was considering the particular brand.

• What the customer’s price range was.
• How the vehicle would be used and by whom.

Judging by the types of questions these sales people asked, it appears as though their main goal is to make the car shopping process quicker and easier for potential buyers.  While this will help improve the experience of your shoppers, it’s important that it go beyond this.  Customer service shouldn’t stop at the efficiency and ease of the transaction.

It is extremely important that your sales people are actually finding out what their customers want and need their cars for.  Many shoppers will come into the showroom, full of facts and figures that they found on the Internet, but it’s still the job of a sales person to discuss the car choice and make sure it’s the right fit.

It can be tempting to get the sale and get out, quickly moving on to the next.  However, your long term sales, referrals, and overall customer satisfaction will be much higher if you take the time to ensure your customers are getting a vehicle that is right for them, their lifestyle, and their budget.

If this isn’t incentive enough, think about the possibilities of an up-sell.  Asking what the budget is, the down payment amount, or their ideal monthly payment all open the door to finding a “better” vehicle to fit their needs.  When you find out more about the buyer and their lifestyle, you have more room to negotiate and open their eyes to the vehicles they could end up wanting and buying.

As a sales person, it’s imperative that you know your product; but it’s also extremely advantageous to know your customers.

Dealership Market Segmentation 101

One of our most visited blog posts talks about using market segmentation and customer profiles to attract used car buyers.  The study was pretty general, and split pre-owned car buyers into only four categories.  Since there seems to be an interest in the concept of market segmentation, I wanted to give a brief, simplified overview of how to conduct one for your own dealership.

Let me define what I mean by market segmentation.  It involves taking your customer base, both past and future, and separating it into smaller segments of people grouped by shared characteristics.  This allows you to market to, appeal to, and focus on the specific groups that are most likely to buy, increasing your marketing ROI.

Even Ford is tightening up their segmentation.  Rumor has it that when the 2009 F-150 is released, the marketing focus will be on promoting it as a work truck, not trying to appeal to everyday drivers who will most likely be turned off by it’s low MPG rating.

The first step in creating a market segmentation is to decide what you will “segment” by.  Start with a huge bucket list of criteria and characteristics you can use to separate and group your customers.  Throw in everything you can think of; you’ll narrow it down later.  The two types of characteristics most likely to be helpful to your dealership are demographic (age, gender, location, etc.) and psychographic (lifestyle, family stage, personality, etc.).

From the long list you’ve created, decide which factors are most important and relevant.  For example, if you live in an area where the population is generally homogenic (made up of similar people), then dividing people by zip code wouldn’t make much sense.  Take these chosen factors, and start separating your customers into groups, creating customer profiles.  This may take some playing around with to determine which factors will most appropriately group your customers.

You can do a market segment for your entire dealership, or drill down into Make or even Model to determine who your customers and future customers are.

Often the most difficult part of segmenting your market is getting information about your customers.

• Use Your CRM: Do some data mining, especially if your dealership has been good about collecting and recording customer information there.
• Research Online: The US Census website has a wealth of demographic information.  While this may not be specific to who is buying or will buy from your dealership, it will help you get an idea of who is buying on a more general level.  For more local info, try doing an online search for “demographic data” and your location.
• Ask: Send surveys, take notes while selling, call your customers, or even shoot them a quick email.  This is often the most effective and accurate way to interpret who is and who will be buying.

When the market is slow, it pays to know who you’ve sold to and who you could be selling to.  Exploring market segmentation can help you drill down your marketing and sales techniques, focusing where you need to, and ultimately, increasing your sales.

Use Your Dealer Website to Earn the Trust of Prospects

Many people are hesitant to give up their contact information online, especially to auto dealerships.  They are concerned about things like identity theft and email SPAM.  Because of these fears, getting a visitor to raise their hand can be difficult.  Diminishing the fears that many have about providing their contact information to your car dealership will help increase conversion rates and earn you more sales.  Earning their trust before they become sales leads is a critical step in turning those visitors into leads and upping your conversion rate.

Below are some ways that you can use your website to help earn the trust and overcome the fears of your website visitors, thus increasing the chances that this web traffic will convert to leads.

• Be Upfront: Many people see the auto industry as a pariah, always trying to get one over on anyone they can.  Convince them that your dealership is on their side, and wants to do business in a fair and ethical manner.  Try putting a video on your home page with your General or Internet Manager explaining the dealership’s sales philosophy, or add a short letter to your customers relaying the same message.  Getting over this hurdle can be what makes your dealership stand out from the rest.

• Security: This is a huge issue these days.  People have to be very careful about who has access to their personal information because of the increasing threat of identity theft.  Make it clear that you won’t sell or rent their information and that your site is secure.  This security is especially important if you have online credit applications which should have a 128-bit SSL Secure Certificate.  Make sure this is clear to your visitors so they feel safe providing their private information.

• SPAM: Nobody likes to get it, and it doesn’t do your dealership any good to send it.  Make sure that your leads are only getting the information they’ve requested.  Have it written on your website that when they submit their information, they won’t get any unsolicited emails.  One piece of unwanted email can be enough to erase the trust you’ve built with your sales leads.

Besides the potential annoyance to your customers, SPAM can also become a legal headache.  It’s extremely important that your dealership is CAN-SPAM compliant.  Make sure each email has an opt-out link included, and that you respect the right of your patrons if they decide to not receive emails from your dealership.

Take a look at your online presence.  Examine each part and ask yourself, “How does this aspect help to earn the trust of my potential leads?”

According to recent reports, the private investment firm of Michael Dell, founder of Dell Inc, is entering the automotive retailing industry.   Jeffrey Rachor, former Pep Boys chief will be running their future dealerships of MSD Capital.  In a recent meeting of the Detroit Economic Club, Dell was asked about the outlook for Detroit’s auto industry.  “I think,” he said, “there is opportunity all, up and down the spectrum.”

There seems to be a general consensus that the auto industry, much like the rest of the economy, is in trouble.  But Michael Dell is right.  Even in the worst markets, someone is always buying, and there is always opportunity.

So what types of things can you do to help your dealership adopt Mr. Dell’s attitude?

• Focus on the Positive: More people than ever are looking to downsize their current vehicles, opting for smaller sizes and higher gas mileage.  This provides a great opportunity for promotion and getting people in the door.  There are always people that need cars, for one reason or another.

• Measure, Measure, Measure: You have to measure to get results.  Without it, you can’t determine what is effective and what isn’t.  Make sure that all of your online efforts are measurable and check these reports as much as possible.  In a market where sales are harder to come by, you need to make sure that what you’re doing is working as best as possible.

• Convert More Website Traffic:  Website leads are seemingly perfect.  Not only do these leads close at a higher rate than third party and even OEM leads, but they are also free.  Explore different ways to increase the percentage of web visitors you can turn into leads.  Try using incentives to prompt visitors to raise their hand, asking to be contacted by your dealership.

• Work Your Leads Smarter, Not Harder:  Now that you have more, better quality leads, make sure you don’t lose their business.  Because of the increase in competition among dealerships, making your customer service stand out is imperative to winning a sale.  Explore web tools that can help you contact these leads as soon as they submit their info, putting you ahead of the other dealerships they may be shopping.  Also, ensure that you are providing effective and regular follow up.  Use a web tool that automates some of this nurturing so that no one slips through the cracks.

• Focus on What is Working: What is profitable for your dealership is most important, but don’t let the areas that aren’t as strong fall by the wayside.  Just like almost everything else, the auto market is cyclical.  What no one wants to buy today will be tomorrow’s must-have.

How are you keeping your (and your customers) heads up during these increasingly downtimes?  What are the bright spots for your dealership, the money-makers?  What do you WISH your money-makers were?