Blog

This is the third in a series of blogs I’ve been writing on metrics: in my last blog we discussed the average percentage of sales in dealerships that can be attributed to Internet leads. This week, I’d like to talk about average front-end gross per vehicle.

In a recent survey we conducted, we asked dealerships representing all types of makes and models:

These were the two questions related to front-end gross in the survey:

1) What is the average front-end gross per vehicle sold in the showroom (floor sales) in your store?

2) What is the average front-end gross per vehicle sold in the Internet department in your store?

We wanted to first quantify the difference between gross from showroom sales and Internet sales, and we wanted to compare the averages of stores in different “performance brands.”

Here are the survey results:

• 29% of respondents said the average front-end gross per vehicle in the showroom is > $1,300

• 15% of respondents said the average front-end gross per vehicle in the Internet department is > $1,300

At the same time:

• 9% of respondents said the average front-end gross per vehicle in the showroom is < $800

• 21% of respondents said the average front-end gross per vehicle in the Internet department is < $800

It’s clear there’s quite a disparity between averages in the showroom and the Internet department. We consulted David Kain of Kain Automotive on this question, because he believes (and the survey results reflect this), that most Internet salespeople tend to discount too soon. This tendency leads to lower front-end gross averages in the Internet department.

Regardless of what your dealership’s average gross per vehicle (PVR) is, the goal is for the showroom and Internet department averages to be the same. Why is this important? The higher the gross per vehicle, the higher your ROI and profits are.

We compared answers from dealerships making seven times or more ROI on their Internet spend, to those making three times or less ROI on their Internet spend, regardless of make or model. The results were compelling:

So how can you increase your average front-end gross per vehicle, as well as get the Internet department gross in line with the showroom gross? Here are a few tips:

1)    Always provide the customer with choices and carefully review leads for model selection and trim levels. If you’re quoting your customer the loss leader or base model and they want the luxury model, then you’re setting them up for a price expectation way lower than is reasonable.

2)    Just like when you’re face-to-face with a customer, focus on building value in the vehicles. Customers want to know what they’re buying is worth the money, and you have the opportunity to explain why the price is what the price is

3)    Don’t be tempted to immediately give a discount, and be wary of programs that send inventory selections to customers with quotes designed to beat your competition or that are loss leaders. Big discount quotes make the customer believe all vehicles can be significantly discounted.

4)    Mystery shop your competition from time to time on key vehicles to ensure you’re pricing your vehicles to market.

5)    Consider location. If a customer is close to you, then price in the convenience of shopping with you. If the customer lives 20 miles away and has to drive past multiple competitors in order to get to your store, you may be more aggressive in your pricing.

6)    Set the rules in the Internet department based on what vehicles are selling for in the showroom. If they know the ‘floor’ price, you’re less likely to have a significant discrepancy between the showroom and the Internet gross.

What other tips do you have to raise the average front-end gross per vehicle, and more importantly, to increase the averages in the Internet departments to be more in line with showroom averages?

http://www.internetsales20group.com

Helion & The Internet Sales 20 Group Are Giving - A - Way $1,000 CASH For The "Best Idea Contest" - Automotive Sales

NEW YORK (CNNMoney) -- U.S. car buyers flooded showrooms in September, sending auto sales to their highest level in more than four years.

Overall sales were were up 13% from a year ago, according to sales tracker Autodata, which put the pace of sales at an annual rate of just under 15 million vehicles. That easily topped most forecasts and was even better than the spike in sales caused by the government's "Cash for Clunkers" program three years ago. The last time sales reached this level was February 2008, before gas prices surged and the financial meltdown caused a deep, sustained drop in auto sales.

The sales pace came despite some disappointing results from the two leading Detroit automakers.

General Motors (GM, Fortune 500) reported only a 1.5% increase in sales from year-ago levels on Tuesday, while Ford Motor (F,Fortune 500) sales slipped 0.1%. Both results were a bit below forecast.

But Chrysler Group reported that sales jumped 12% from a year earlier, easily topping forecasts. Toyota Motor (TM) also beat expectations, reporting its sales surged 41.5% from year-ago levels, while Honda Motor(HMC) posted a 30.9% jump in sales as well. A year ago both automakers were struggling with limited supplies of vehicles due to the Japanese earthquake and tsunami. 
But it wasn't just the Japanese automakers who posted strong gains. Volkswagen Group, which includes the VW and Audi brands, posted a 32% jump in sales while Hyundai Motor, which operates the Hyundai and Kia brands, posted a 23.4% gain.

Related: The 11 best cars in America

"Pent-up demand continues to be released, and it's being supported by the fact that car loans is more widely available," said Michelle Krebs, senior analyst with Edmunds.com.

The automakers were able to achieve the strong sales even without using cash-back offers and other discounts to attract buyers.

"It's a dream scenario for automakers - low incentives, higher sales. It all equals higher profitability," said Jesse Toprak, analyst with TrueCar.

Consumer confidence has also been on the rise, which helps to boost sales. But Americans are also hitting showrooms due to the limited supply -- and high prices -- of used cars, said Krebs. Production of new cars was at such a low level three to four years ago that the supply of late-model used cars is now much tighter than normal.

"Retail sales in early September were 15% higher than they were a year ago, which is reflective of a healthy market," said John Humphrey, senior vice president of global automotive operations at J.D. Power and Associates.

GM and Ford had strong months a year ago due to the supply problems at Japanese competitors, which kept them from posting some of the big gains that their rivals reported in September. Part of the reason both companies missed forecasts was a drop in their less profitable fleet sales to businesses such as rental car companies. Sales to consumers, the more important sign of strength, were pretty much on target. 

Source - http://money.cnn.com/2012/10/02/news/companies/car-sales/index.html?hpt=hp_t3 

As a follow up to my recent blog on Internet Lead ROI, I would like to discuss another important metric for dealerships to track: the percentage of a store’s sales that can be attributed to Internet leads. Just like Internet lead ROI is not a simple formula that everyone can agree on, the percentage of sales that can be attributed to the Internet is not easy to measure.

In a recent survey we asked 184 dealership personnel this question: What percentage of your store’s overall sales is generated by the Internet department? Fully half (50%) of the respondents reported they were in the 20-40% range. Only 15% of respondents reported less than 20%, while 35% of respondents reported their dealerships attributed more than 40% of their sales to Internet leads.

Why such a disparity? I’m guessing that not every dealership answers the following question in the same way:

How do you define an Internet customer?

Since roughly 90% of your customers use the Internet before coming into the dealership, you could argue that 90% of sales are coming from the Internet, and that many of those customers don’t e-mail beforehand—they just call or walk in. But the opposite can also be true. One dealer group I know of, Homer Skelton dealerships in Tennessee, recently created a promotion for their new Payment Pro^SM feature on their website. The dealer group ran a radio campaign and produced a television commercial promoting that customers could pre-qualify for “real payments” without giving their social security number or date of birth. When the traditional ads ran, Homer Skelton saw a huge spike in visits to their website, which then turned into pre-qualified website leads. So are these Internet leads, or should they be attributed to the traditional ad campaign?

Although it may be difficult to arrive at an industry standard for what the definition of an Internet sale is, your dealership should have its own definition. Just as important as a standard measurement is tracking the performance over time so you can identify growth opportunities.

Best Practices for Improving Closing Percentages

.

The most effective way to increase the percentage of sales attributed to Internet leads is to improve the closing percentages of your current Internet lead volume.

From the same survey I mentioned above, we filtered responses from the highest-performing dealerships based on the metrics they shared. The most successful Internet departments claimed the following best practices were critical in order to make an Internet department successful:

1)    Quality & Speed of Lead Response (72%)

2)    Website search visibility (66%)

3)    Management Buy-In and Support (61%) and Staff Training & Accountability (61%) tied for third.

Other choices and responses included: quality of leads (58%); quality of staff (42%); tracking & measurement of leads and ROI (33%); online reputation (33%); quality of online merchandising (33%); written policies and procedures that are closely adhered to (22%); lead mix (17%); social media involvement (14%); and number of leads per person (14%).

Dealers continue to stress how critical it is to have a process in place to prevent salespeople from closing out their own leads. It’s too easy for them to say “this lead is bad,” or “that lead isn’t valid,” and simply close out those leads, which results in a higher reported closing percentage—albeit a false one. It’s no different than if 100 customers walk through the door and 10% of those customers are lot drops, and then you calculate the closing percentage of 90 customers instead of 100.

At most dealerships, a valid lead is one that comes in with good contact information; but I have heard some salespeople say a valid lead is one that returns their attempt to contact within three days. How many customers return a single call or e-mail? Most of the time, it takes repeated attempts to get through to a customer.

So I bring up many questions here, and I’m looking forward to everybody’s responses. I think it’s important to discuss metrics so that eventually, an industry standard or benchmarks can be established, to which all dealerships can compare themselves.

http://www.dealersynergy.com 

Automotive Social Media - Automotive Digital Marketing - Car Dealerships Social Media - How To?

4 consumer points to consider when selling car accessories

Since the release of the popular film “The Fast and the Furious”, car accessorizing has shifted from being a secret of car gear enthusiast to a main stream phenomenon. Two sequels later and the aftermarket accessory market continues to average 8% growth annually. Car dealerships would be wise to keep up. The demand for car accessories is high. And, just like fashion accessories there are hundreds of options. And, trends change rapidly. Here are four reasons why people love certain car accessories.

1.       Making a Personal Statement

Crisp leather jacket, “I’m a rebel”, Eco-friendly seat covers “I care about the planet”. Just like fashion accessories, car accessories help your buyer make a statement about who they are.  A car is an extension of its owner, and we all want to present a certain “self” to the world. So, whether it’s a bike rack on a rugged Jeep Wrangler or a spoiler on a sporty Mazda 3, accessories gives buyers another way to express themselves through their car.

2.       Affordable Luxury

It’s inevitable. There is always going to be a prospect that’s eyeballing a Mercedes-Benz but their budget lines up more with a Toyota Corolla.   The right accessories can make that Corolla feel like a Benz. With today’s economy more and more people are learning to live within their means. That doesn’t mean buyers don’t still desire luxury.  But, in terms of cost efficiency it’s harder to justify. Rather than stretching their budgets almost $20,000 more on a luxurious brand consumers will invest $5,000 more in alloy wheels and seat heaters giving an economical brand a very similar look and feel.

3.       Protects the Value

A new car loses 11% of its value as soon as it leaves the lot. So unless they plan to ride until the wheels fall off, it’s not an ideal investment. People are aware of this and are more concerned than ever about protecting the value. Accessories like bed and trunk liners, covers, and deflectors can protect the resale/ trade-in value of a new car. This makes your buyer more confident about shelling out so much of their hard earned cash.

4.       More Convenience

 We as Americans are always on the go, we love to multitask, and prefer to be able to do things in our car just as we would if we were in our homes. Certain accessories were designed to offer a level of convenience that many buyers are looking for. The iPod adapters are one of the hottest selling accessories right now. It offers buyers the convenience of listening to their favorite music without needing CD changers.  Navigation systems and Bluetooth are other accessory options that appeal to a buyer looking for convenience.

Insignia Group, the leading provider of accessories sales systems and training has helped dealers maximize profits for over 10 years. Supporting 20+ brands and dealerships nationwide, we help our customers establish and grow their Accessories Profit Center. Call 888-579-4458 to learn more or schedule a demo.

Some dealers will even LOSE money to sell you a car, because it could mean tens of thousands of bonus dollars or incentive money from our manufacturers. I have watched the owner of a dealership that I previously worked at actually lose over $2,000 to make a deal. You say how? That particular deal, made on the last day of the month, was the number 30 new car for the month, and we hit our OEM goal and got $1,000/copy for EVERY new car we sold that month.

http://www.internetsales20group.com

http://www.willissmyrna.com/

Congratulations to Willis Automotive, located in Delaware for WINNING the "BEST Dealership Testimonial" Contest!!! We received a LOT of Video Testimonials from dealerships from different parts of the country and I have to tell you they were fun to watch!! Thank you for taking your time to make them and upload them.

Willis Automotive won $300!! I will make sure that Whitney Willis Snow send us a video when she gets her $300 :)

Here is the winning video - https://www.youtube.com/watch?v=keJn-2NlIYQ&feature=player_embedded

Ok, Why did I create this contest and give away $300??? For a couple of reasons...

- First, I wanted to do something fun for the website and I know EVERYONE likes FREE Money so... :)

- I wanted to show how REALLY important Video Testimonials are and I know that just asking dealers to create them isn't enough... I / Dealers need to incentivize salesman and the internet team to create as many awesome videos as possible. It is VERY important that dealerships realize that what other people think about them and say about them is VERY important.

I was VERY pleased with the dealers that entered the contest... I was proud to see some of the dealerships go HEAVY into this project and upload a LOT of videos from their prospects / clients.

- I wanted to gauge the creativity of the videos... And I have to admit, there is a LOT of work to be done. I watched ALL the videos uploaded and noticed the same pattern... dealer after dealer. It seemed for a lot of the videos they did NOT have a strategy... a focus. I actually saw some videos where it seemed like the people did NOT want to be on video!! It is very clear that you all need to CREATE a strategy BEFORE you start to shoot the camera. Remember that there is a reason why people go online... every prospect has an expectation... what they are looking to accomplish. It is important that you "lead" the prospect / client if needed before you shoot the video. Take video testimonials on specific things like: Price, Availability, Convenience, Looking for a different way to do business, research etc... from a first time buyer, female perspective, credit challenged etc...

** Let the prospect or client talk. Try to slow down on the narration of ALL the videos...

- Make the videos FUN, interesting, passionate etc... Video is important but now a days video is all over... so you want to make your content interesting NOT just there.

All in all, this was a GREAT FIRST contest for the new AIS site!!

Thank you for all that participated and Congrats to Willis Automotive for winning the $300 prize!

SVB-

http://www.dealersyenrgy.com

http://www.facebook.com/seanvbradley

http://www.internetsales20group.com

Automotive Internet Sales is GIVING AWAY FREE CASH MONEY... $300 (Out of our own pockets...) I have a CONTEST That I put together for you all!!

Contest Details -

We are looking for the BEST Customer Testimoniasl from your Dealership(s)!

Contest Rules -

You NEED to upload Customer Testimonials to www.automotiveinternetsales.com (This Site :) AIS is looking for The Best Video... that doesn't simply mean the most expensive... It means we are looking for POWERFUL Testimonial videos that will actually influence people into wanting to vist / purchase from your particular dealership versus the competition.

AIS wants to see the diffferent types of Video Testimonials that you get... Are they for New Cars? Used Cars? Finance / Special Finance? Service / Body Shop etc... Female Buyers... etc...

AIS is looking for creativity and CONTENT!!

Contest Reason / Goals -

Here at AIS, we believe that VIDEO is SOOOO Important & We also believe that having AWESOME Prospect / Client testimonials that you can use in your marketing initiatives, your website(s), your email teamplates, your online reputation management strategy as well as SOCIAL MEDIA... Can seriously give you a competitive edge in your market. We decided to offer a $300 CASH contest to whoever uploads the "Best" Dealership Testimonial video to AIS. This is a GREAT way for us to teach & learn from each other in this community.

Contest Time (Start / End) -

Contest has officially started and it will officially END November 23rd 2010

Who is the BEST Automotive Dealership Website Company? And Why...???

Automotive Internet Sales is creating its TOP 10 LISTS! And the first section is Dealership Website Companies...

So, Please give me your feedback. Remember that is what this site is about... INFORMATION, IDEAS and FEEDBACK.

I look forward to all of your posts and thoughts.

SVB-