There are so many excellent, innovative companies in this industry. I left out our companies’ names from the chart, because whether you feel we are leading in any of these areas isn’t relevant to this article. Point is, dealership managers are left to themselves to aggregate processes within at least 6 separate technology platforms. In our opinion, it’s Mission Improbable for most. Running a dealership is hard, it’s competitive, and it isn’t easy. Adding a technology integrator into the mix shouldn’t be part of the job description.

It doesn’t matter how great individual companies are or become in their respective swim lanes. There are just too many different technologies that will never integrate, strongly biased opinions, glowing reports, and conflicting priorities for dealerships to make sense of it all. I applaud the effort (we are participating) in trying to develop a new integration standard (ADF-XML 2.0) across multiple platforms. But at best, it will only make a small dent in the real challenges dealerships face in today’s increasingly complex world of retailing.

Not even Fortune 500 companies have as many technology platforms to communicate with their customers and market themselves in an integrated fashion. Every speech I hear has at least one reference to Amazon or Apple. They deliver world class experiences because they have a single fully integrated platform that connects their marketing, their customers, their inventory and their logistical operations. They treat their existing customers (like me) very differently than new customers, by heavily factoring my purchase history and my relevant data across every touchpoint I have with them. That’s one of their most powerful advantages. 99% of dealerships can’t do that because their data lives in 6+ places, not including accounting. Just go to any dealership’s website and look for the ‘Sign In’ button or ‘Current Customers click here’. You won’t find it. When someone who you already do business with starts out by asking your name…well that says it all. Today’s consumers demand to KNOW ME BETTER. SERVE ME FASTER. WOW ME EVERYWHERE.

Even if a dealership kept it simple, and only picked the largest company in the limited number of technology categories I outlined, they would still be left trying to make it all work. These companies are hugely successful and best in class. Guess what? They also have the least desire to work together, are fiercely competitive, and nobody can blame them for that.

When I started in the business, it was common for dealerships to use separate finance systems (like Coin) or service retailing systems. We walked many deal jackets upstairs to accounting for them to keypunch into the DMS, which sounds nuts by today’s standards. But, once dealerships got used to the integration – they couldn’t live without it. Most of those independent companies were either purchased (like us) or they vanished. Not anymore, they are now entering the space as fast as they can, typically with a singularly focused solution, and a pocket full of investment cash.

I was fortunate enough to start my first company at 22. I worked in dealerships nights and weekends, plus developed and sold some great software during the day. After 3 to 4 years, I was able to just focus on building our first business. So, I asked lots of questions to anyone who was successful so that I could learn -because I knew nothing except how to out-hustle most. I truly did not know what I did not know. I heard a lot of inspiring thoughts, but the one piece of advice that remained consistent was, “Do one thing, and do it well. Do it better than everybody. Focus.” And ultimately, we did. It was good, sound advice, and I think most entrepreneurs in the automotive space subscribed to the advice I was given both then and now. That’s why all the leading and largest technology platforms are still different today. They stayed in their swim lane. But a whole bunch of new platforms are on their way. Because Silicon Valley is betting and banking that these siloed tech platforms are the answer.

That strategy no longer makes sense in a complex business environment like automotive retailing. In fact, I think the opposite. So much has changed, and today’s consumers’ expectations are now being established by companies like Apple, Amazon and Google. They are fully integrated across every touchpoint. The bar is high.

That’s why we have been on a long-term mission (aptly named Apollo) to build one fully integrated omni-channel technology platform that can facilitate every ounce of communicating, marketing, retailing and servicing a vehicle online or offline from one database. We couldn’t license or buy the technology, or piece-meal it together through a series of acquisitions. It had to be designed and constructed from the infrastructure level up. It’s been difficult, it’s been filled with setbacks, and it’s been five times as challenging and expensive to create as we initially thought. We are not done, but we have tackled the most difficult technical aspects of the mission. We are doing this because we firmly believe this is the only logical way for dealerships and OEMs to facilitate the changes required to meet the demands of today’s consumers through one integrated omni-channel platform. The large aggregators have struggled to cobble together integrated solutions, through acquisitions, and the start-ups don’t have enough capital or the desire for this level of competition.

Something as basic as making sure that every single medium a dealership is advertising with (from free to paid) consistently has the exact same offers, payments and disclaimers for every single model, trim and for every piece of inventory in stock. When something changes like incentives, price, compliance, or a state regulation, within minutes everything is automatically updated across all the mediums and on all the major platforms. Retaining current customers is so vital to a dealership business that it has to be 75% easier and faster to transact in sales or service than it would be for a brand-new customer. A dealership’s primary website should cater to their existing customers as much as it does to the public. By simply cross-referencing a phone number from a customer who is speaking, texting, or using Voice, you can find out 100 other pieces of critical data to make it so easy to facilitate another profitable transaction in minutes with zero friction.

My gut is that we are not only going to continue to see further dealership consolidation, but we will see vendors consolidate, merge, get acquired or vanish because omni-channel technology integration is going to be the future. OEMs are going to start looking at the logic and power of entire platforms for their retailers that connect Tier 1, 2 and 3 seamlessly. Today, they overload their dealers with individual technology platforms, picked out by some uninvested third party to evaluate, primarily based on getting the lowest price. The CO-OP programs have a purpose for sure, but dealers are left to try and make sense of all the separate technology platforms that will never work together. So, who wins? Not the dealership, and certainly not the customer.

And finally, the consumer experience itself won’t be frictionless because so many important touchpoints are inconsistent and SLOW on mobile devices. 85% of customers finance or lease their vehicles. So just start with something as basic as payments, much less actually attempting a transaction online.

Take one common vehicle/trim that you have in stock (that you are advertising), and do the following:

1. Search for that car in Google, and jot down the payments and terms you are advertising -if any exist.
2. Do the same thing on YouTube.
3. Then go to your primary website, jot those down.
4. Then go into your Equity Mining Tool, jot those down.
5. Then go into your CRM and see what those emails would have for payments?
6. Then go to Facebook, jot those down.
7. If you send mail and/or email, jot those payments down.
8. Then pull up your Retailing plug-in (if you have one), jot those down.
9. Then go to the Third Party Sites and jot those down.
10. Then call the store and ask about the payments for that same car you might purchase or lease.
11. Then email your dealership and ask the same question.
12. Now, be the customer. Because many of them are exposed to all of the above.

If you are advertising or communicating payment-based offers (which work two times better), you had a massive amount of work to do make sure everything was consistent. But most dealers give up, because it’s Mission Improbable. So, they go back to the ads that don’t include the single most important information that should be available to today’s consumer which is: “Do you have it, and how much is it?” Especially repeat buyers.

To my many dealership friends, do your best, don’t get frustrated, don’t switch vendors as often. Start asking questions about how things work together, demand consistency because your credibility depends on it, shop yourselves everywhere. And most importantly, start looking for omni-channel platforms that do more -and are as integrated as your phones, computers and the favorite companies you transact with. Licensing more single-channel technology platforms just overloads you with tech and requires more of your time to learn it.

We have different piggy banks in the automotive industry. Dealers need to deposit local, profitable sales and service transactions into their piggy banks to measure growth and success. The metrics on the right of the image above are useful measurements, but can’t be deposited as real profit. I wrote this article in hopes of gaining feedback and insight on a subject where I believe our industry could improve. A new, smart client of ours asked me a basic question that served as the catalyst for this article. Before I could answer he said… “You are not allowed to use any of these tech words: Conversion, Impression Share, Clicks, Cost Per Click, Cost Per Lead, Time On Site, Bounce Rate, Engagement, VDP, or anything similar. You can use words like Transactions, Sales, Repair Orders, Gross Profit and any other industry term you like as long as it involves us making money.” Seemed like a reasonable request and right down my alley.

His question: “What’s the return on my digital advertising investment? I know how much money I spend with Google, Bing and Facebook…prove to me the transactions and money we deposit in return for our investment.”

In their new digital playbook for dealers, Google classifies the ability to answer this question in the “advanced attribution” category, which is basically their futuristic bucket because of how rare it is for a digital vendor in the automotive industry to prove attribution. Many dealers I know would respond with “are you kidding me if you can’t answer this basic question”. This is where the disconnect has happened in the industry. The mediums that capture the most consumer data should be the easiest and most logical to determine an ROI based on a dealership’s actual sales and service transactions. Dealerships today are putting more of their ad budget into digital mediums. Naturally, they want to fish where the fish are…but very few digital agencies can identify how many fish are actually caught and how much they weigh.

After all, we have the data, right? In order to determine an ROI, all you need is two readily available pieces of data. First, you need at least one unique data point on a consumer that identified themselves while engaged in shopping online…like their name, address, email, or their mobile phone number they may have used to call, text or chat. The second is a list of all the sales and service transactions and the gross profits associated with each of those transactions. Just cross reference the people who engaged with your advertising against your transactions. Pretty basic, but why do hardly any digital agencies do this? A dealership could get that information from TrueCar in less than 1 minute, but not from their digital agency? Is that logical?

This new client asked me for something so simple and he claimed he just can’t get this basic transactional ROI data anywhere else. All he wanted was for us to give him a list of everybody that used Google, Bing or Facebook, who clearly identified themselves by calling, filling out a form, claiming an offer, chatting, etc…who also completed a transaction at his dealership. He then asked us to divide the matched list into folks who had already done business with the dealership before and those that had not. For a dealer, that makes perfect sense and connects all the logical dots from his investment in Google, Bing and Facebook right into their piggy bank.

You simply add up all the money the dealership ACTUALLY made on real transactions where customers were influenced enough to identify themselves and subtract the digital spend to acquire those customers. So, if Susan Jones, who never purchased a car from this dealership, saw a Google ad on a pre-owned vehicle, clicked the ad to call the dealership from her cell phone, spoke for 4:18, then provided the dealership with the exact same mobile number she originally called from (2 basic data points) when she took delivery the next day…and the dealership made $4,000…and that happened say 10 times in a month…you get the math.

I wrote a previous article that provides anybody a step by step process on how to do this. It’s not rocket science, which is why so many other types of marketing vendors do this routinely, but very few digital agencies consider a sales or service transaction as the ultimate conversion. Let that sink in. Rather, they use technical jargon which collectively sounds impressive, but doesn’t necessarily ring the cash register. After all, the only reason a dealer advertises anywhere is to ‘ring the register’. Why is this considered advanced or aspirational? A transaction is the only way dealers make money and the only way they can properly attribute their advertising to a real ROI. They certainly can’t deposit ‘clicks and views’ into their bank accounts.

Some of you out there will read this and claim this is trying to give 100% attribution to a particular search or click. That isn’t the case at all. This purely provides a starting point that shows the influence each medium has in the actual buying process. We can get into complex attribution models in the next article but not until we answer these simple questions dealers are asking first.

My hope is the best digital agencies in the industry will improve the methods we all use to deliver an ROI and a better level of standardization develops. I see dealerships changing digital vendors with totally unrealistic expectations based on promises that sound incredible, but often fail to deliver a return on their investment. In the meantime, we are going to keep working closely with companies like Google, Bing and Facebook to include simpler, easier to understand transaction based reporting.

So, the experts were right. The first quarter is over and YOY sales are slightly down. Not so bad in general, however March was down 1.7%, with some brands down in double digits. Unlike the past few years where everyone could win, this year we will see actual winners and losers. Market share gains and losses have already been realized and now is a logical time for OEM’s and dealerships to re-evaluate everything.

This reminds me of the old adage “give a man fish and he will eat for a day, teach a man to fish and he will eat for a lifetime”. Since 2009, most dealers have benefited substantially from consistent YOY growth. In 2017, it’s a different story, you must know how to fish to catch more than your fair share. Just waiting for fish to jump in your boat or dropping a line into the same old spot isn’t going to work.

This fishing analogy is really called “Push-Pull Marketing”. It’s simple, “Pull” marketing is a strategy to pull consumers who are already in the market into your dealership. To fish where the fish are biting. A “pull” strategy is easy when there are more and more fish to catch, plenty for everybody. However, “pull” marketing won’t be nearly as easy in 2017 because more people are fishing and the number of consumers in the market will be the same as 2016 or potentially less. We also have an increasing number of 3rd party lead providers trolling the waters. They are going after the same fish and they are really good at fishing for in-market consumers.

Digital Advertising has evolved substantially and the number of vendors that supply this type of “pull” marketing has never been greater and dealerships have never devoted more of their marketing budgets to fishing online. We are looking forward to releasing some case studies with Google in Q2 2017, that highlight the dealerships that have the most successful digital strategies to “pull” in market consumers into their dealerships and show continued growth in a flat market. If your digital strategy does not include content that features every year, make and model you sell with real payments based on live inventory and OEM incentives, online fishing is going to be very difficult for you in 2017. Why? Consumers are no longer biting on ads featuring “Save Thousands”, “Dozens in Stock” or “Whopping Good Deals”. If your ads don’t look like this, then change your bait! And you have to update them daily to make them accurate, real and compliant.

You should be testing your ads often against your competitors, including third parties who are amazing at generating click bait. Don’t pay for this, Google has a free Ad Preview tool that simulates your ads on any device without costing you any clicks or impacting your click through rate (I suggest desktop and mobile) and you can set it for your local market. Just go here, it’s easy.

www.google.com/adpreview

But, to really win in 2017, you have to PUSH.

The dealers who will gain the most in 2017 also know how to “push” consumers in a flat market. They fish off the back of the boat, really well. Its harder, the fish are deeper, but they are also much bigger. In addition to “pulling” in-market consumers, they have strategies and processes to “push” consumers who are not yet shopping… into realizing all the logical benefits of upgrading into a newer vehicle. They know that 50% of consumers don’t realize they can upgrade for a lower or similar payment. Most dealerships do some very basic equity mining, but are not good at this type of fishing. Think about it, they have people (who don’t want to call customers all day…that are very likely not in the market) calling consumers who don’t want to be called.

How do we push customers into the market? To start, STOP sending generic static email blasts. Rather, send custom emails with actual upgrade options built into the email for the vehicles your customers are most likely purchase. Use your historical trade patterns to build customized offers and stop sending your core models to everybody. It’s got to be personal. Also, stop sending your own customers to your public website. Can you imagine starting over every time you went to Amazon? Instead, build private shopping portals for every customer and stock it with custom, personal offers that include their equity, service coupons they can download to apple wallet, and pre-configure their lease and finance payments on every model you sell. Finally, when your customers visit your service department…don’t present them with some bad paper printout. Get yourself a 55″ touchscreen display and show them their options right on their private portal in seconds, then offer to email or print out what they are really interested in purchasing. Or save it, so they can review it when they get home on their private shopping portal. Or maybe just do something crazy and walk them over to that exact vehicle you already know they want because you saw them shopping for it the day before on their portal history. That’s how the best dealers fish for the big grosses by logically “pushing” people into the market who are not yet shopping. Technology is key and there are some incredible companies pushing this industry. Don’t settle for a flat market, you can have a balanced approach to fishing and gain market share. Good luck and let’s make 2017 a winner.

The barriers to entry for these new vendors is next to nothing and there are few credentials to verify their claims versus their actual results. Unfortunately, many dealers have found themselves in a “buy and try” cycle for years. That trend will change as the market flattens and real YOY growth becomes harder to achieve. If you need help or just advice about fishing in a flat market, contact us.

In 2017, we will all start to read and hear about some progressive dealers delivering “a lot” of vehicles to customers outside the dealership. All that hard effort is being worked on now behind the scenes. Like everything in our industry this service will evolve and dealers will obviously experience some ups and downs. Smart dealers are setting the table now. My sense is the first group of consumers who will love the option of completing a sale online and taking a delivery off site…are your existing customers. On average, 50% of your customers will remain loyal to your brand. They clearly love your products, live nearby and you already have all their information to create an excellent experience for them. Think about it, when you got your first iPhone you probably went to the Apple store and they helped you set it up. But, how many phones have you ordered online since then? Why? Because they make it easy for their customers and you already know how it basically works. What’s different for a consumer who wants to upgrade to another model of a brand they already love?

My advice is stop treating your customers like the public. They have already purchased and/or serviced with you. Why market to your customers and send them to slow public websites where they can’t log in, and you can’t track them or do anything special for them? Can you imagine going to Amazon and starting over every time you wanted to buy something? With today’s technology, you can start to create an online shopping experience that rivals the best retailers. Silicon Valley is already betting billions on outside companies that are promising a “dealer less” experience. Let’s beat them to the punch this time.

Here are a few things you can do now to “set the table” for your success in 2017.

1. Create an Amazon like experience by giving your current customers a private, secure, fast and mobile friendly place to shop. Include personalized offers and coupons that are relevant to their vehicle. Make it easy for them to configure a lease or finance payment that includes their trade equity and all OEM rebates and incentives. Enable them to save personal offers to their Apple Wallet or their image library. Allow them to browse your inventory by payment, and ultimately allow them to schedule their delivery. You already have all their data; use it!
2. Car buyers are highly motivated by monthly payment. More than 85% of todays’ consumers finance or lease their new vehicle purchase. You must get used to making sure you have a realistic lease and finance payment on every vehicle in your inventory. Having a price is great, but only 15% of people write a check. It all starts with an actual VIN and a real payment. There is some very innovative technology to properly price and configure pricing and payments for every vehicle you have in stock. Again, give the shoppers what they want.
3. Change your advertising content to be more relevant for consumers who want to buy your products. It’s simple. They want to know “do you have what I searched for and how much is it?” Just go search for any new year, make and model in your hometown. Most ad copy still looks like 1980’s newspaper ads. This is not a joke. “Huge Discounts, Big Savings, Great Selection”. That’s dead and not credible. Find an accredited company with Google and Bing that can generate relevant pre-owned and new car ads for every year, make, model and trim you sell and update them nightly in Google, Bing and Facebook…based on your stock and pricing. Your traffic and phone calls will a see significant increase instantly when you give consumers the information they want. Trust me on this. Pundits say you can’t increase traffic without sacrificing quality. That’s nonsense. Relevancy trumps everything in marketing.
4. You can efficiently communicate with your customers through calls, mail, email, and text. Do this simple exercise and you might be shocked. Take your largest conference room table and lay out every single piece of communication your customers received from your dealership or your OEM (on your behalf) in the last 90 days. Grab all of them, including emails. Write the description of which type of your customers received these communications. Ask yourself 4 questions. First, do you have a clearly defined strategy to communicate timely offers to your customers? Second, are the offers relevant to the vehicle they own and where they are in their life cycle. Third, how much overlap and confusion is there? Fourth, where do you direct your customers, to a public or private site? Often, less is more when directly communicating with your customers. Simple and relevant is always better.
5. Decide if you want to manage relationships with more or fewer vendors. There are plenty of pros and cons to both approaches. There are literally hundreds of innovative options and their products are more niche than ever. Other companies, like us, have developed a broader technology platform to support an entirely integrated marketing strategy across every medium. It’s not for everyone as some dealer executives are not comfortable with all their “eggs” in fewer baskets. There is no right or wrong. However, if you survey the largest and fastest growing dealers they have far less vendor churn because they develop consistent processes around fewer tools.

Start working now to make sure your dealership is ready to offer all the information and options today’s consumers prefer. My favorite quote from Ali, sums it up.

“The fight is won or lost far away from witnesses – behind the lines, in the gym, and out there on the road, long before I dance under those lights”.

Good luck in 2017.