This form is a guide to rate Internet providers. The first section will help determine what the site will cost. Some providers charge a flat fee, some charge per lead, and others charge a combination of both. The points in this section are comparative, so all potential providers must be investigated before points can be given. Let's say that the setup fee for provider A is $1,500, the fee for provider B is $2,500, and the fee for provider C is $10,000. I would give provider A the maximum of 5 points, provider C would get 0 points, and B would get something in between.
The next two sections are for when you visit the site and try to buy a car. Spend a lot of time in these sections: this is where your customers will be and in the end, if they don't use the site, you won't get the leads. While you are still on the Internet, go to the last section and perform the searches. All three of these sections should be tested at various modem speeds and while using Internet Explorer, Netscape, and AOL. The fourth section, "Interface with the Dealership," can only be rated if you are currently a customer or by calling an existing dealer client.
The decision to adopt new technology into a dealership conjures up images of past experiments that failed to deliver on their promises, were significantly more expensive than planned, and/or were quickly replaced with "better" solutions. Often the "better" solutions suffered from the same problems experienced with the earlier solution. Does the Internet suffer from the same risks and how might a dealership make an informed decision concerning its approach to this medium? Before we answer these questions, we need to examine some hard facts.
According to Internet Valley (www.internetvalley.com), in 1993 there were approximately 100,000 www Internet "hosts." A host is defined as a "uniquely reachable computer." That number can be sampled electronically but we are unable to accurately determine the number of individuals who use the Internet, since several hosts may have multiple individual users. In 1998 there were at least 38 million hosts. We can safely conclude from this that the Internet is not going away any time soon and the number of persons using the Internet will increase.
The U.S. Government publication, The Emerging Digital Economy, estimated that 16% of all new car buyers in 1997 researched their purchase over the Internet. The publication goes on to estimate that by the year 2000, that number will have increased significantly. Automobile dealerships felt the effects of this trend with even more downward pressure on already thin new car margins.
These facts tell us that not only will the Internet continue to impact how business is conducted, but also that the effects of the Internet will strain our resourcefulness as business owners and managers. In short, we must learn to use this tool effectively by creating and implementing an Internet strategy.
There are a number of business service providers emerging today that promise to assist you in your quest to master the Internet medium. Examples include automobile locator services, Internet web creation and hosting services, and companies that provide a credit application distribution service to improve response time and back-end profitability.
There are five basic questions that a dealership should consider when evaluating an Internet service or technology: 1) What is the value to the organization? 2) What are the risks of implementing the technology? 3) How easy is it to implement? 4) Is the industry moving in this direction? and 5) What are the alternatives?
The first question concerns the potential return to the business. The value of a proposal is measured against its ability to return more profit to the dealership and/or reduce cost by a factor that exceeds the initial and continuing investment in the new technology. While we often evaluate a proposal based on the initial investment, the continuing costs associated with training, lost productivity, required management attention to the technology, maintenance of the system, and other factors often exceed the initial investment. Before committing to a new product or service, make certain that you have assessed the continuing costs associated with that technology.
In the case of Internet technology, the minimum initial investment required is a Pentium-class computer, an ISP (Internet Service Provider), and a dedicated phone line. This will enable the dealership to access the Internet. For more committed Internet users, high-speed access is achieved through an ISDN line. The continuing cost is usually limited to the cost of the Internet access service and the local phone line. Internet browser training (Internet Explorer or Netscape Navigator), in addition to more specialized training on the particular service software, should also be considered.
When you decide to make your dealership accessible through the Internet, you might evaluate several Internet web site creation and hosting services. Some OEMs have web design and hosting available to their franchisees. Other Internet related service companies offer web site hosting services. Finally, the dealership may decide to have web sites in several locations if a large Internet presence is part of the strategy.
The return to the dealership is access to those customers who research their automobile purchase through the Internet. If the dealership does not have an Internet presence, that portion of the market, estimated at 20%+ of all new car purchasers in 1999, will be missed. As we discussed earlier in this article, those customers are becoming an increasingly important group.
The risks of implementing an Internet strategy are relatively minor. The greater risk is associated with not having an Internet strategy and presence. Since there is no alternative to the Internet, choosing to not participate in this communication medium is only postponing the inevitable. By carefully considering each of the points discussed in this article, your dealership will adapt and adopt the Internet as part of the dealership marketing, sales, and management practices.
As the vice president for e-Fin Electronic Financial Marketplace, Michael Hucks uses his unique blend of sales, marketing, and technology capabilities to further the development of the world's first fully comprehensive electronic financial marketplace for automobile credit applications. If you have specific questions or require more information about this subject, please check the appropriate box on the reader response form on page 3. mhucks@dealeronline.com
It's all around you, but have you taken the plunge? I'm willing to bet that your customers and many of your competitors have. If you haven't, you are missing leads and sales opportunities in one of the fastest growing segments of the auto industry.
I'm talking about the Internet, of course, and the rapidly growing number of car buyers who use online services to research and buy new and used cars, as well as order parts, schedule service appointments, and perform dozens of other dealership-related activities.
The size and potential of this market is staggering. A recent study by J.D. Power & Associates found that by the year 2001, more than 60 percent of all auto purchases will be initiated through the Internet. More than 50 percent of Americans have a computer and half of them regularly use e-mail.
Look around you at the mall, in a restaurant, or on an airplane. One out of every two people you see has access to a computer. Many use it as a shopping tool to research and buy things from books to homes. So how do you get your dealership into the digital marketplace?
Getting your dealership connected to the Internet is neither difficult nor prohibitively expensive. You'll need a computer--either a PC or a Macintosh will do--and a modem, which connects your computer to others via a telephone line.
You'll also need an Internet connection, which could be an online service, such as America Online or the Microsoft Network, or an "ISP"--an Internet Service Provider. These services enable you to connect to the Internet, send and receive e-mail, and set the foundation for a "web site."
The Web is the interactive part of the Internet, offering photos, video, and sound as well as text. Your web site is your dealership's online presence and will be a extension of your brand identity. It can offer your customers online access to nearly every facet of your brick-and-mortar store.
Once you have set up the hardware, connected to the online world through an ISP, and established several e-mail accounts for the dealership, it's time to build your own web site.
There's growing evidence that the majority of auto shoppers in the next five years will use the Web when they shop for a new or used car. It's crucial to begin thinking of your web site as a dynamic, interactive virtual showroom.
That doesn't mean you have to start big. One of the most attractive features of the Web is its flexibility. You can enhance and upgrade your web site from the most basic information to a full-fledged retail division, all at your own pace.
Begin with the construction and operation of a custom web site that encourages customer interaction. Internet car buyers are looking for current, searchable new and used inventory and special Internet deals. Good sites also feature an easy navigation system and e-mail request forms for parts, service, and financing.
Make your web site flexible enough so it can grow as your comfort level grows, adding features such as interactive maps and directions to guide shoppers to your door, or coupons and specials that reward customers for returning to the site.
Just as you keep your inventory current and your showroom fresh, the same should be true for your web site. It's important to regularly update your searchable inventory, Internet specials, and time-sensitive references. Reliable, current information will keep car buyers coming back.
Finally, find an experienced vendor who can help you build your web site. The Web is a quickly changing, ever-expanding field of expertise. You'll benefit from a company who knows how to make the most of the medium. Invest in someone who understands the needs of a dealership and will build a web site that will increase and enhance your business from the first day.
John Holt, co-CEO of the Cobalt Group is the nation's largest provider of Internet marketing solutions to automotive dealerships, currently serving more than 6,500 dealers nationwide. If you have specific questions or require more information about this subject, please check the appropriate box on the reader response form on page 3. jholt@dealeronline.com
Where consumers find dealers:
From the 24 million pricing reports generated on Kelley Blue Book's web site in January and February 1999
223,384 went directly to dealer web sites of their choice
220,243 went on to get directions to their local dealer
39,479 went directly to manufacturer's web site
Since closing sales is the name of the game in the new automotive e-commerce world, how can you significantly increase their closing ratio? What is a good closing rate? How do you separate good leads from bad leads? How many leads should you be closing every month? Let's start by saying that just as in the real world, you should be closing 25% of the leads you receive via the Internet. If your dealership is below that, apply the techniques that we are about to discuss. If you are already closing that percentage, apply the following techniques to add an additional 5 to 10 percent on your closing percentage. Each of these techniques can move your closing ratio up by 1 to 3 percent. By putting them together, you'll receive compounded results. The following four techniques are simple and easy to put to work immediately within your Internet department.
Response
How long does it take you to respond to an e-mail inquiry? Anything over two hours is wasting leads. Why? Would you expect someone that entered your showroom to wait two minutes before someone greeted them? I doubt it. You'd give them immediate attention; the longer you wait to respond to an e-mail inquiry is in direct inverse proportion to the amount of leads you will close. How long do you wait? If you are like many dealers who think 24 hours is a reasonable time to return the inquiry, you are letting good prospects slip out of reach. The easiest way to solve your problem is to get an alpha-numeric pager that will notify you when you receive e-mail, so you are not waiting by the computer all day. It is the same concept as returning a page. This way you will never miss a lead. It also allows you to run your Internet department and respond to leads from any place that has an Internet connection. Doing this now will save you time and money in the future.
E-Mail Management
This is a greatly overlooked program, but one that will keep you organized and on top of your Internet business. You need to have an e-mail program. I recommend either Eudora or Microsoft Outlook to manage your incoming and outgoing e-mail. You can set up individual mailboxes to sort and process all your mail. If you don't have an organized flow of information, you will lose leads and forget to process requests promptly. I also recommend that you purchase contact management software that you can use to set appointments, take notes, and remind yourself of when you need to call someone or e-mail them. The program we use at our company is Goldmine 4.0, but if you want a simpler program that you can use within minutes of taking it out of the box, then try ACT. It is very effective and will keep you on top of all your work whether you are processing 20 or 300 leads per week. Both programs can be bought off the shelf and are quite reasonably priced.
Autoresponders
Here is a great system that will keep you in constant contact during your prospect's entire buying cycle. In direct marketing, it has been proven that to close a sale, the prospect needs to have seven contacts with your organization to make a comfortable decision. This technique is called compounding or sequencing the prospect. By setting up an autoresponder program, you can send seven highly targeted and personalized e-mails to your prospect with time-sensitive offers during the eight weeks after the initial contact with your dealership. This eight weeks is the entire cycle that most customers take from their initial interest in a vehicle to their actual purchase. By marketing your dealership to them using e-mail, you create a consistency and build rapport that in return will increase your close ratio. If you set this up properly, you will increase your sales. I have personally run programs where I have achieved an 18% increase in sales just by setting up an autoresponder sales system.
Negotiations Using E-Mail
You never want to lose the battle over price alone. Adding value to the sales process is the key. When you go to buy tires, the primary difference you notice between one tire shop and the other is price. Tires have become a commodity, which is exactly what you are trying to avoid when you are selling cars. When people request a price quote, give them your "Internet special pricing" and add value to the offer by saying that all ABC Motor Internet customers also receive x, y, and z, along with the best price. If you allow the people to come into your dealership and negotiate from your Internet price, you will lose credibility. If people want to negotiate, tell them you will be happy to refer them over to a regular salesperson that will be capable of negotiating the price of the car.
In the end, those who succeed will meet or exceed the expectations of their prospects. If doing business with your Internet department is the same as doing business with the rest of your dealership, where is the value? Doing business with the Internet customer needs to be a no-hassle system that provides an obvious value differentiation. The techniques and systems mentioned above can have a dramatic effect on your closing ratios.
Todd L. Smith is the President and CEO of Target Marketing Group, the leading automotive Internet solutions provider. He is the publisher of the manual "Automotive Retailing on the Internet." Todd works with OEMs, dealership groups, and individual dealerships to create Internet strategies. Visit Target Marketing Group's website at www.tmg-online.com. If you have specific questions or require more information about this subject, please check the appropriate box on the reader response form on page 3.# tsmith@dealeronline.