January 2013 - DME Automotive

January 2013
Charlie Brown
Rob Bennett
ROB
Bennett
General Manager
Charlie
Brown
Internet Director
Lithia Chrysler Jeep
Dodge of Eugene
page 18
Social Media:
Social Media Illiteracy: How to
Stop it Before it’s too Late
page 16
Inventory Management:
2013 Used-car Acquisition Strategies
to Stay Ahead of Competitors
page 22
Online Service Marketing:
Nothing to Hide – Gain Customer
Trust by Displaying Service Prices
page 25
TM
COVER STORY
Charlie Brown
Rob Bennett
ROB Bennett
General Manager
Charlie Brown
Internet Director
Lithia Chrysler Jeep
Dodge of Eugene
DD 18
January 2013
Dealer-magazine.com
Lithia Chrysler Jeep Dodge of Eugene is the number one Chrysler Jeep
Dodge dealership in sales volume in Oregon, beating out 29 other Chrysler
Jeep Dodge dealerships in that state.
The store is doing a brisk business selling new and used vehicles over
the Internet to customers as far away as Maryland, New York, Texas,
Florida, and Michigan.
Overall marketing spend is down 3%, while Internet sales are up 61%
for 2012, compared to 2011.
The store sold more than 2,000 vehicles over the Internet in 2012,
with a 50/50 split between new and used vehicles.
GM Rob Bennett and Internet Director Charlie Brown recently
discussed their strategy for success with Dealer magazine.
First, Rob, how did you get into the business of selling cars?
Rob: In 1988, when I was in college in
Montana, my brother and Bryan Osterhout,
who is now my current boss at Lithia, convinced me to quit school and move to Eugene
to sell used cars with them at Selective Motors.
Over the years, I worked at various dealerships. Then in 1998, Bryan, who had been
hired by Lithia Motors a year before, hired
me again, this time as used car manager at
this store. Subsequently, I worked for Lithia
Motors in five different dealerships before
coming back to Lithia Chrysler Jeep Dodge
of Eugene as general manager in 2010.
Charlie, how about you?
Charlie: I had been with Lithia Motors for
10 years, and was a new vehicle sales manager
here, when Rob arrived. Within a month,
Rob promoted me to general sales manager.
How have the two of you driven up Internet
sales 61% in the last year?
Rob: It’s a lot simpler than you might
think. We keep our website updated daily.
We have cut back and shifted our advertising
spend. We are extremely aggressive with our
pricing. And, we work to build trust rapidly
with customers by giving them everything
they want upfront.
Would you elaborate on each of those
points?
Rob: The first thing we did when Charlie
and I got together here in this store was
manage our own website, www.lithiadodgeeugene.com. Dealer.com hosts our website and we’re very happy with that because
Dealer.com’s software makes it easy for us to
update and manage the site ourselves.
One of the key ways we manage our website is to make sure we have pictures on every
car, new or used. We get those updated and
loaded daily and we get them into inventory.
Charlie: We have a staff person that
takes all of our pictures of our vehicles.
We take approximately 21 pictures of every
new and used vehicle on the lot. When
you go to our website to look for a used
car, all of our cars’ pictures start with the
same type of view -- front view – and each
subsequent picture in the sequence of 21
pictures offers a similar view for every car
– side view, rear view, etc. There’s continuity in everything. It sounds simple, but
it’s amazing how well that simple process
works for us and for consumers.
Rob: All of our rebates, discounts, and
pricing are updated and monitored every
single day. Charlie spends his first couple
of hours every morning just going through
the Internet and our website – making sure
that everything the public sees is correct and
up-to-date. Rebates or discounts, especially
with used cars, continually change. As cars get
older, their pricing should continually change.
I think one of the pitfalls of a lot of stores is
just not keeping their websites up-to-date
daily. Charlie does a great job of keeping our
Internet presence up-to-date.
Isn’t your competition doing the same
thing?
Charlie: We’ll go to the websites of other
dealerships in our area to see what they are
doing. More often than not, they won’t have
updated prices, updated rebates, and they
won’t have pictures of the cars.
How do you drive traffic to your website?
Charlie: The Lithia marketing department handles our SEO and SEM and they
are extremely effective in driving traffic
to the site. We also use DMEautomotive,
out of Florida, to produce our newsletters
and they are helping contribute to our
success in driving up Internet sales leads.
DMEautomotive also does all of our direct
e-mail to customers. We have an extensive
e-mail list and they manage that for us very
effectively, and that results in a substantial
amount of sales leads.
Dealer-magazine.com
January 2013 DD 19 How many Internet sales leads do you get
per month?
Rob: We averaged 1,446 Internet leads
per month in 2012 – that includes e-mail
and phone leads. We basically doubled our
Internet leads in 2011, over 2010, and in
2012 over 2011.
What changed over that time span?
Rob: Basically, just the way we spend our
money. We’re spending a lot more money now
on our third-party lead providers: AutoTrader.
com, Cars.com, Craigslist, Kelley Blue Book,
and Edmunds.com.
And, we continue to grow in our spending in other areas to attract people to our
website, and once there, convert them into
viable sales leads. In particular, HookLogic
has helped increase the quantity of viable
leads from our website through their incentive program, where a pop-up appears on our
website offering visitors a $25 gift card for
filling out some basic information online for
us that then becomes the sales lead.
With this shift in emphasis to digital, what
is your split now between traditional and
digital advertising?
Rob: It’s changed substantially over the past
two years. When I started here, only 20-25%
of our budget was spent on digital; the rest
was spent on TV and newspaper advertising.
Now our digital spend has increased by 37%.
Our overall marketing spend for the store
is down 3% because digital is less expensive,
and so we’re spending less to drive more sales
and get more of a return on investment.
Charlie: We don’t even advertise in the
newspaper anymore. You have to be generationally current. I’m going to go out on a limb
here. I’m 34-years-old. A lot of our up and
coming customers are in their mid-20s and
30s. If you are trying to market to a 30-yearold, hoping they subscribe to the newspaper
and will look at your ad on Saturday, forget it.
Nobody in my age group gets the newspaper,
and everybody has a Smartphone and is very
comfortable with technology.
So, our website is optimized for mobile.
The shift into mobile is supposed to double
and double and double every year. Dealer.
com handles our mobile website as well as
DD 20
January 2013
our main website. Our store also has their
own mobile app, called “My Lithia” (available
in the Android and Apple stores), and the
mobile app is powered by DMEautomotive.
All these mobile users are going to be our
best customers, because when you are in
your 20s, you’ve got your starter car. Then
when the family comes along, you’ve got
your upgrade to the family car, and things
are always changing in those years of your
life and to get in touch with that consumer,
you have to be on the Internet, not in the
newspaper.
For our traditional advertising, we do
mainly cable TV, and some local spots. In
our TV ads, we talk about coming to our
website, instead of coming to our dealership.
We talk about how to navigate our website
and use it for the most benefit. So we tie the
two media – TV and digital - together.
Let’s talk about your sales process and your
lean sales team.
Charlie: We use ADP for our CRM. We’re
very satisfied with it. All of our leads from
our third-party lead providers, from our own
website and from our Chrysler website, are
filtered through our CRM.
We currently have two Internet managers,
who handle all the e-mail Internet sales leads.
They don’t pass these leads on to any other
salespeople. In total, we have 14 salespeople –
that includes the two Internet sales managers.
So we have 12 salespeople handling walk-ins
and phone calls, many of which originate
after the caller has done their research on
the Internet.
Our average response time to an Internet
lead is 15 to 20 minutes during business
hours.
How long do you follow up on an Internet
lead?
Rob: This is our biggest challenge – managing the overwhelming amount of traffic we
receive and following up with the leads that
are not immediate buyers. The first week, we
follow up with customers intensely.
What is your close ratio?
Charlie: Our e-mail sales lead close ratio is
over 11%. Our total Internet leads close ratio
Dealer-magazine.com
is certainly higher, when you include, as many
stores do, the phone call leads or walk-ins
that come in as a result of Internet research.
How does having a lean sales force contribute to increased sales?
Rob: We run with a highly experienced
sales staff and finance managers that have been
here for many years. I’ve been with Lithia for
13 years. Charlie has been with Lithia for 10
years. Many of our sales and finance managers
have been with the company for eight years.
If you asked our employees, they’d probably
tell you they enjoy coming to work. We try
to create an atmosphere that’s fun and that
keeps them motivated. Motivated salespeople
sell more cars.
With the volume of sales that we run, we
could very easily have 20 people on the sales
floor, but I get more production with our
highly experienced sales staff. I’ve always got
my best people in front of our customers and
they’ve got the opportunity to sell a lot of cars
and make a good income. If your sales force
is busy selling cars and making money, they
are happy and your customers are happy too.
Let’s discuss your pricing model and how
that has increased Internet sales.
Rob: We are very aggressive with our pricing. At the end of 2010, we were averaging
19 new vehicle sales from Internet leads per
month; in 2012, we averaged almost 88 per
month.
If you look at our pump outs – cars sold
out of our current selling market or DMA
-- we averaged three a month in 2010; now
we’re averaging around 25 a month. Pump
outs are directly tied to the Internet. We are
selling our cars over the Internet to some other
dealership’s market. A lot of that is driven
by our aggressive pricing and because of the
way people out of the market see what we are
doing on the Internet.
How far away are these customers?
Charlie: We are selling cars to customers
in Maryland, New York, Texas, Florida, and
Michigan. The power of the Internet is crazy.
We sell a lot of conquest vehicles. If I was
relying on my drive-by traffic, there’s a lot of
used car inventory that I wouldn’t necessarily keep, because we are mainly a domestic
Dodge store.
However, when you have the power of the
Internet, it doesn’t really matter what kind of
franchise you are. It’s about having the right
product at the right price. Our used volume
has done similar to our new volume – running about 50/50. A lot of that is getting
the right product, aggressively priced, and
creating those opportunities that are released
through the Internet.
Does the customer from Maryland or New
York fly here to Oregon to pick up their
car?
Charlie: In most cases, the customer will
see the car over the Internet, we’ll close the
deal over the phone, and then we’ll arrange
to have the car shipped. There are occasions
where people fly in, but more often than not,
we have the car shipped out to the customer.
What do you mean when you say you build
trust by giving the customer everything
they want?
Rob: When our leads come in, we have
a different mindset for handling them,
than when I started in the car business. For
instance, you have a customer calling from
California, 500 miles away and they have a
trade-in. There’s a way to make that deal. But,
the way I was taught when I started in this
business was this: when the customer called
in, you tried to be as vague as possible. You
tried to get them into the showroom without
giving them any sort of pricing information
or trade values, or payments, or any information like that.
We operate very differently today. I work
closely with our two Internet sales managers
and I tell them to use their best judgment.
Does the customer live down the street or far
away? The online customer wants to know
right upfront what’s the best price and the
best deal, and oftentimes what the monthly
payment is going to be.
The dealership that can provide that customer with that information on the phone
or via e-mail and deal with them in the way
they want to be dealt with will end up making
a car deal. You have to have that mindset. It’s
very rare.
I don’t think we would do the volume that
we do if we would ask everybody that was a
six-hour drive to just bring their trade-in into
the dealership in the hopes that we can get
to their figure. You have to be comfortable
working these deals with real numbers. This
is not the traditional way of selling. That’s a
big part of our success.
A lot of dealers don’t want to give that
information up over the phone. If a customer
doesn’t hear what they want to hear initially,
they’ll pick up the phone and call somebody
else. They are going to buy from someone
who gives them the information they are
trying to get.
Each customer used to visit four to five
stores before they bought a car. Now they
visit 1.4 stores before they buy a car. People
don’t have to go to the dealership anymore.
Are you making less of a margin to get a
bigger volume?
Rob: Yes, margins are down, but our gross
is up. Revenues and gross are way up. You
still have to manage your assets and make
money, but you’d be surprised. Handling the
customer the way they want to be handled
really provides you with an opportunity to
work the rest of the car deal and negotiate
trade-ins and financing and all that.
Charlie: Once you give the customer what
they want to hear, their guard almost comes
down, so to speak. As you listen to your customer’s needs and provide them the right
information, the relationship starts and it’s
an easier negotiation and good practice for
both sides. We still maintain a good margin.
It’s not as good as it was prior to this, but we’re
selling four times as many cars.
Customers have evolved over the last few
years with the ability to get online to do their
research without having to come into the
store. In some cases, people still like to negotiate, but if they can eliminate that in person
initial investigating part of the car deal, they
are much happier.
With being able to talk to these people over
the phone or via the Internet, and giving them
the information they want upfront, it’s amazing how you can build trust so much quicker
than with the traditional way of selling.
they want to hear and they come back to
you because you gave them the information
upfront.
Because of our new culture and reputation,
we went from being one of the lowest volume
dealers in Oregon to being the number one
Chrysler Jeep Dodge dealer in the state, and
we are 100 units ahead of the next closest
dealer in the state.
It’s all about understanding the customer
and providing them with what they want to
hear and treating them with respect and doing
things that maybe 10 years ago we wouldn’t
have done.
One more thing, the majority of folks in
my age group are very uncomfortable with
face-to-face negotiations. 28-year-olds do not
want to have an uncomfortable encounter
with a salesperson that hammers them down.
They want to do their research independently.
They want to get a fair deal and have everything pretty much worked out before they
even come into the dealership. That’s how
the majority of my generation prefers to buy
a car. For those dealerships that can provide
an experience that’s comfortable, there’s a lot
of business out there.
How about reputation management?
Rob: We use DealerRater’s 360Certified for
monitoring the store’s social reputation, and
we have a team of people in the Marketing
Department that help all of the stores with
posting and monitoring.
When a negative post appears online, I
work with our team to respond in a quick and
professional way. We did have a third-party
managing that for us for about six months,
but I didn’t see the value in what we were
spending, based on what was happening and
so we went with the corporate system.
What is your typical day like, Rob?
Rob: I’m at the store every day managing each department. I spend most of my
time on the sales side, managing the used car
salespeople and I do all the new car ordering. I manage the sales department through
Charlie, and the parts and service departments
through our departmental managers.
If they get off the phone and call a competitor, in most cases they don’t get what
Dealer-magazine.com
continued to P-DD23
January 2013 DD 21 Digital Dealer cover story, continued from P-DD21
How about your day, Charlie?
Charlie: I spend usually my first 30 minutes at the store on our website going through
each vehicle, new and used, to insure that
proper pricing is displayed and that it includes
our discounts, as well as current manufacturer
incentives. I re-price our used cars constantly,
as they age in our inventory. If something is
60-days-old, I price the car online to sell.
The second part of my day, I see what type
of inventory has landed -- new vehicles, and
used vehicles that have come through our
inspection and detail department, and I create
a list every day.
On average, we have seven new cars land,
and there’s always new cars coming in on
dealer trades, and our used car department
pumps out four to five cars out of detail a day.
So we have about 12 cars a day that are turning, that need photos, as well as pricing and
I make sure all this information about them
is correct for the website. This is extremely
important. These really simple things we do
get us big results.
When a consumer 200 miles away begins
to search for a vehicle online, and you happen
to have just the car that customer is looking
for, it’s important that they see on your website: real time pricing, accurate information
on how the vehicle is equipped, good pictures,
especially if it’s a used vehicle, and an easy
way to contact you. To capture a customer
out there in cyberspace, you have to provide
them quickly with the information they are
looking for.
Do you have any plans for expanding your
facilities?
Rob: We just added a new Fiat showroom
and began selling Fiat about two months ago.
How is Fiat doing?
We’re still getting our feet wet here. We’ve
sold 10 cars each of those two months. We’re
still learning and are very excited about the
brand.
How do you keep current with technology?
Rob: I read a lot of magazines, like Dealer
magazine, and other web blog articles on the
new best things. As part of Lithia Motors
Group, we have the opportunity to try a lot
of these new products and work directly with
these vendors.
What is your vision of the industry five
years from now?
Charlie: I think in five or 10 years customers will prefer to complete an entire transaction online: Finding the vehicle, getting the
price, filling out an online credit application,
and having the vehicle delivered to their doorstep – almost an Amazon.com model.
What will the dealership’s role be?
Rob: We’ll be the fulfillment center. You
have to have your brick and mortar. Especially
for used vehicles, some people will still want to
come to the lot to touch and see the vehicle.
But with new vehicles, I think consumers will
simply point and click to the car they want
to buy and then proceed to the checkout,
and have the vehicle show up at their house.
[email protected]
[email protected]
Dealer-magazine.com
January 2013 DD 23