While we can’t control various economic factors that affect the auto sales market, what we can control are our reactions, our attitudes and our competitive spirit. In this series of our Dealer Panel, we’ve been asking our panel how they manage to “create their own luck” when leads aren’t coming in as quickly and the market begins to tighten up. To conclude this series, we’ll examine how our panel takes on the competition and makes sure they have the inventory customers are demanding in both new and used vehicles.
AutoSuccess: Describe the changing role of competition when leads are harder to come by. How does your focus on conquesting evolve?
Andrew DiFeo, GM of Hyundai of St. Augustine: We try to focus more on retention than conquesting. Conquesting is very expensive and a lot of that has to do with your brand and what they’re doing from a Tier 1 aspect, creating awareness and consideration for the brand. Sometimes we dovetail on that. If we know that there’s good cross-shopping on the endemic sites like Edmunds.com or Kelley Blue Book, for instance — if we know that people who shop for a Toyota Corolla also shop for a Hyundai Elantra — we might create a pay-per-click campaign around the Corolla or a direct mail campaign toward Toyota Corolla owners. Again, though, we do that on a very limited basis because it can be extremely expensive and the return on investment isn’t as great as a dollar spent in working our own customer base for owner retention.
Chris Saraceno, VP and Partner of Kelly Automotive Group: On those occasions when leads are more difficult to acquire, we focus our efforts more on SEM and SEO and retargeting campaigns. We also go back to some of the basics of focusing on referrals, working with previous owners, prospecting the service lane and working with our sales consultants on doing their own marketing online via social media or other avenues available to them.
Mike Good, GM of Street Toyota: I’m not sure leads are harder to come by as much as realizing leads are coming in different ways. For instance, click-to-call from mobile Websites is becoming more and more popular.
Actually, the slight decrease in Internet leads we are experiencing are offset by a slight increase in quality showroom traffic. This leads us to believe people are doing their research online, then coming directly to the dealership verses submitting a traditional “lead.” To further support our theory, our phone inquiries are up slightly and, when customers are asked about their shopping process, they tell us they often move directly from research to a phone inquiry. Our conquesting efforts are driven as much by our dealership’s reputation and the “no-pressure” experience as any other factor. All in all, our conquest ROI has remained constant over the years.
AutoSuccess: How does inventory change when the market tightens up? How do you select what goes on your lot in more competitive times?
AD: We use some technology to determine, for both new and used cars, what is selling more quickly in the market. We focus on more of a faster turn than on higher-gross vehicles, so we look to acquire vehicles in the market that will move quicker. A lot of that is based around the make, model and year of the vehicle, as well as the color and the package. Certain vehicles sell quicker in certain colors and packages than others, so we use technology to determine what the fastest-moving vehicles at any given time in the market would be and that’s what we try to acquire. This might be with our own brand through off-lease vehicles or putting more money into customer trades on the service side or some select vehicles we purchase through auction or other avenues for off-make units.
CS: First, let’s talk about used. Tools like vAuto have made it easier because you have data to review when deciding the best vehicles to stock and what turns/sells quickly. The biggest challenge is finding the inventory you need, but now knowing what moves and what you need to stock in your used inventory is logical by reviewing the analytics and the data. For new, again with the benefit of technology, you can take a look at your day’s supply, look at your previous sales and see how quickly you move your vehicles. During leaner times, however, you sometimes have to talk to your manufacturer when they’re trying to sell you vehicles. At these times, we have to learn the word “no” again and let them know that we don’t need any more right now. What happens is we see leaner times before they do; it hits us first. They build them and start pushing us to take those vehicles, so they can get rid of them. We have to tell them that, “We already have a six-month supply; we don’t need anymore — the answer is ‘no.’”
MG: In a relatively small trade area of 300,000, we are known for having the newest, nicest and greatest number of previously enjoyed cars in the area. Approximately 55 percent of our inventory is trade originated and 45 percent are purchase units. Quality, selection, process, service and experience-centered selling are the heartbeat of our operation. We believe in putting forth whatever amount it takes to satisfy a used car purchaser; it signifies that we are committed to complete customer satisfaction. This builds reputation-based sales and defies the temptation to alter our values in the face of difficult market conditions. It’s the least expensive advertising available in a tight market, and the result is winning the market in both new and previously enjoyed categories. We continuously monitor both the new and pre-owned lots with a radio-controlled concierge system, and, in regard to stocking new cars, we believe in the same strategy, which also helps my OEM managers accomplish their goals. That’s a win/win proposition.