Internet Sales
Commoditizing The Passion of Vehicle Ownership
By Todd Smith
110% Money Back Guarantee! Below Invoice Sale! Guaranteed Lowest Price! All Vehicles Must Go! This Weekend Only! Everyday we see these and similar headlines in newspapers nationwide selling vehicles using only one benefit of the sale: price. Through price-only sales pitches, we are leading our customers to believe that we care less about the quality of our product and more about closing the deal.
No wonder our customers have flocked to the web to help in their next automotive purchase. The web has been touted as the low price source for everything. Why not just include vehicles in that mix as well? We need to wake up and realize that as an entire automotive selling community, we are doing ourselves a disservice.
Recently, the only piece of good news I've seen is that it is becoming more obvious everyday that our customers don't want an entirely virtual automotive purchase. Priceline.com couldn't do it, and neither could Autoweb.com. The marketplace has granted us a reprieve that is allowing us to regain lost territory to the dot-coms and in some cases, allowing us to start our Internet initiative based on the mistakes and learning experiences we can derive from our competitors.
The landscape is unfolding much more clearly about how we need to manage and operate our eDealership. (You may be wondering, "What the #@$@% is an eDealership?") Simply stated, it is a dealership that is still true to the business of selling vehicles, but has developed a digital skin. Right now is the greatest opportunity for dealerships nationwide to put in place an executable digital strategy. The Internet is a tool that allows us to reap new efficiencies like never before by merging our traditional business with all the new tools of the digital enterprise. This isn't about innovation or the latest new digital gizmo. It is about application. How will this new technology impact and improve my business? If the solution isn't practical, and you can't see the ROI for your dealership, don't even pay it a moment of attention.
If you are serious about wanting to embrace the new automotive.com world, you will need to do a few things. First, create a documented business case before ever starting a web initiative at your store. The web is a tool that needs to help your business either operate more cost effectively by decreasing your cost of doing business or by increasing your sales through building incremental business. Building incremental business is a reality today for some dealerships, which I feel will dramatically shift back to normal marketplace channels and market territories as the line of commoditized dealer pricing blurs and the customer comes to expect more than the lowest price from their automotive purchase. I see this also happening because of an increased role the manufactures will play with the entire sales and distribution process. If a company like GM buys Autobytel.com, or a portion of it, don't you think it is in GM's best interest to align the leads to their respected franchised dealerships marketplace territories?
The true diamond in the rough is operational efficiency and decreasing your business costs while expanding your ability to retain a higher percentage of your customers. Keeping one customer loyal at your dealership costs you seven times less than it does to prospect and capture a new one. Imagine cutting your entire marketing budget to almost zero and having an increase in the number of vehicles you sold for the year as well as an increase in service and parts profits. The digital process automotive business model will align your dealership to make it happen.
"If the fundamental operations of your traditional dealership are loosely organized and poorly implemented, the Internet will magnify it, causing poor customer relationships, sales and department results for your web initiative. If you have the fundamentals right, the Internet will magnify it for your dealership allowing you to reap incredible customer operational profits."
Todd L. Smith
Lear Media Inc.
This quote says that if you put super high-octane fuel in anything other than a vehicle that has been specifically designed to handle it, you will get lackluster results. In fact, you might even damage, if not destroy the vehicle. How do you think our customers feel when their request for a quote is never answered? Do you think this will damage the reputation of your dealership? How do you think the customers feel when they go online to obtain a price quote and they are told that this is the dealership's lowest price on the vehicle; then they come into the store and negotiate to find the bottom line price is $200 less? Do you think these customers will refer someone else to your store?
This isn't about the Internet. It is rooted in how you run your dealership(s). Getting back to basics and really taking a hard look at your dealership and how it operates should be the first step before ever putting a web initiative into place.
Customer management will ultimately become the driving force of whether you will succeed or fail in the automotive marketplace. Changing your dealership from a vehicle distribution point into a customer management center will not only lead to your survival, but will solidify your business's future. Before I go, let me ask you one question. At the end of the day when you turn off the dealership lights, lock the door and go home, what do you feel is the one item that you have that your competitors don't? The answer is easy. It is the relationship with your customers. Plain and simple: how you manage and strengthen your customer bond will be the only driving force separating you from being commoditized as the industry evolves over the next few years.
Todd Smith is C.E.O. of Lear Media Inc., a company focused on implementing real solutions for dealership that want to embrace the web. Todd has been a top consultant to many of the OEMs, large dealership groups as well as individual dealerships nationwide. tsmith@dealeronline.com.
