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Don't Blindly Follow a "Best Practice"

(This is basically an expansion of a comment I made on a previous post, but thought it was worth repeating)

 

Generally-speaking, I am not a fan of dealership "best practices" because of the way they are pitched.  If they are pitched as a "thought starter," I can live with that.  But if they are pitched more like a plug-and-play solution (which unfortunately is more often the case), then we are doing dealers a great disservice because every dealership (and even brands for that matter) have very different dynamics, nuances, facilities, logistics, etc., and one solution rarely, if ever, fits all. 

 

Dealers should really try to understand what is behind any "best practice" before blindly jumping on that bandwagon, implementing that "best practice," only to discover that it did nothing to improve performance (and quite possibly, it made things worse).  Textbook example...the myth that shorter internet lead response time leads to higher closing ratios. 

 

Too many people mistakenly attribute high closing rates to quicker lead response times.  What are people pushing now, 10 minutes or less by phone and e-mail?  Totally ridiculous and unnecessary.  This is a classic example of a plug-and-play "best practice" that has no meaningful impact to the desired result (i.e. more sales). 

 

There is a positive correlation between quick response times and higher closing ratios, but this is NOT a direct cause-and-effect correlation.  Quick response times are a by-product of a very good internet lead management process in the dealership, which results in strong closing rates, regardless of whether the response time was in 10 minutes or 90 minutes.  Simply responding quicker to an internet lead with a still-broken process and a lousy customer message will yield the same result...a lousy closing rate. 

 

Instead of blindly chasing a bad "best practice," focus on implementing a simple, efficient, and effective process that consistently delivers a superior message and a superior experience to the customer.  Do this, and you will beat out any competitive dealership that responds to the customer first but with an inferior message.

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Tags: Best Practices, Charles, Closing Rates, Kim, Response Time, TrueCar

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Comment by Keith Shetterly on April 27, 2011 at 2:15pm

Living in the Houston area, I hear it all from other dealers.  How their cars aren't recon'd properly.  That they have a constant heat case level that's absurd.  Yadda yadda. 

 

A half-billion dollar lot sits in just one part of a metro area (and it broke $100million without a real lot as it has now).

 

And still the rest of the industry pays little attention.  I remember years back trying to talk my principal into cloning their operation.  He replied "They're near $100million, there's not room for another."

 

Ok.  Evidently, there was room for FIVE MORE.

 

Here's the video for their new lot:

Comment by Keith Shetterly on April 27, 2011 at 1:56pm

www.texasdirectauto.com

OFFICE HOURS

9 AM to 6 PM Monday-Friday
9 AM to 6 PM Saturday
Closed - Sunday

They used to be open only until Noon on Saturday.

Comment by Keith Shetterly on April 27, 2011 at 1:55pm
I'm sorry.  That's now $500million in annual sales.
Comment by Keith Shetterly on April 27, 2011 at 1:53pm
$100million+ in sales, Thomas.  You have it about right.

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Comment by Thomas A. Kelly on April 27, 2011 at 1:51pm

http://www.texasautodirect, Largest single point used auto reatailer in the country??, a large percentage of their clients never touch or see the vehicle until they own it. If you drop in to browse and decide to buy, you are directed to a kiosk and asked to submit on line. This was my understanding, please correct me if I am mis-speaking the facts??

Comment by Keith Shetterly on April 27, 2011 at 1:50pm
I know a very successful u/c dealer in Houston who has $15/hour employees show and deliver his cars.  No commissions, though they do have some 1st and 2nd place salesperson money per month.  His lot is one-price, no negotiation, and he headed almost to 200 sold in February.
Comment by Brad Kelly on April 27, 2011 at 1:48pm

It's certainly difficult to predict, especially given the success of Texas Direct Auto and others similar to them. It shows that people will buy a used car without driving it, however, the circumstances under which they will do so are difficult to break down, confirm, and then re-apply in a different product and different sales method.

 

I think a lot of the success or failure of things like the CarMax pilot and AutoNation Direct hinges on implementation and execution, the creation of customer trust, etc. I don't think the failure of either would indicate a problem with the core idea they're built on: that selling used cars over the internet is possible. I just don't think that anybody has figured out the best way to do it yet.

Comment by Keith Shetterly on April 27, 2011 at 1:47pm
The used part is the game changer, imho.  They expect a TD, but they do as much as they can to get the customer's commitment before the visit.  If they roll it out nationally SUCCESSFULLY, it changes the u/c market for good as far as how to handle an interested customer.
Comment by Charles Kim on April 27, 2011 at 1:41pm
The CarMax pilot is another step in the online direction, but not really revolutionary, just evolutionary.  AutoNation has been piloting AutoNation Direct for a while now, which already does more than what CarMax is planning.  The CarMax dilemma is that it is a used vehicle, so the customer will definitely want to see and drive that vehicle before they purchase it, so I am curious to see what the volume of sales will be from that program.
Comment by Brad Kelly on April 27, 2011 at 1:35pm

Interesting links Keith! It's both a very exciting and very scary time for dealers with things like that just in their infancy. I'm interested in the possibilities that perhaps none of us have thought of yet.

 

This is a really stimulating topic guys; thanks for the insight you're sharing.

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