Reduced Sales in the Auto Industry Requires New Responsibilities For Automotive Advertising Agencies

The role of the automotive advertising agency in today’s consolidating auto industry must change to accommodate the needs of the auto dealers that they serve. Reduced sales volume and profits have forced auto dealers to reduce their automotive advertising budgets and sales staff. As a direct result, automotive advertising agencies are being challenged to deliver more for less and reduced budgets and floor traffic suggest that they must increase their areas of responsibility to justify their agency fees or risk losing accounts. More importantly, they must learn the auto industry from the auto dealer’s perspective if they expect to be able to contribute in any meaningful manner.

Assuming that we all work our pay plans to maximize our own ROI in our chosen careers in the automotive advertising industry, I thought I would share some best practices regarding an auto dealership’s Internet sales processes with my fellow automotive advertising professionals to help them better serve their auto dealer clients. Not all of the situations I discuss will apply to every auto dealership so take note of ones that do and save the others for future reference in case they surface in some other form. I will cover common issues that are part of human nature. After all, the key to success in the car business is in the people – not in the franchise or facility – so most problems start and finish with people.

The Internet Department — From The Dealer’s Perspective

As a former new car dealer and current consultant on dealer operations and marketing I am constantly amazed by the disconnect between dealers and their key personnel. I liken the miscommunication of their common goals — to sell more cars/service and make more money — to that of a long marriage. Courting equates to the interview and the first few months are like an extended honeymoon. Once the excitement wears off it is a lot of work to remember why you got married in the first place; but worth the effort!

Dealers are people too! They often indulge their emotions in the hiring process based on the fact that they need help more than the applicants need the job! Great interviews get an applicant the job with the dealer’s hope and desire to solve a problem – not make a friend. Their business needs eventually outweigh their emotions and words like bottom line profits, accountability and the latest buzz words — verifiable R.O.I. — take over. Dealers should always have job descriptions and areas of responsibility along with supported compensation plans based on individual and department guidelines and objectives. Unfortunately, not many auto dealers have those today and few automotive advertising agencies are prepared to provide them.

Today’s market losses have forced dealers to make difficult decisions that should have been made before a position was even considered. The survival of the fittest must apply! It’s a dirty job but someone has to do it and the Dealer must base his decisions on performance and individually contributed profits or we will all suffer the consequences! That observed deficiency is a perfect opportunity for a forward thinking and prepared automotive advertising agency to earn their fees when direct sales won’t support them by passing on the observed need to their auto dealer clients while providing them proven processes to satisfy them.

Re-defining the role of the Internet Sales Manager, (ISM), at the Dealership – Customer Communication Center, (C.C.C.) vs. Business Development Center, (B.D.C.)

The A, B, C’s of the car business — Always Be Closing — go beyond the showroom floor and apply to the ISM as well as their staff. The key to the close, however, is to know the answer before you ask the question, or at least provide a limited response that you can control!

Based on your new found knowledge and understanding of the dealer’s requirements of their ISM, I suggest that you ask the hard questions before your dealer client does! The more you and the ISM are involved in the selling process in both vehicle sales and fixed operations the more productive and profitable you will be. The more accountable and verifiable your R.O.I. to the dealer the more secure your income and the account. Sell yourself and the added value that you bring to his Internet department to your dealer with the leverage of verifiable performance in a clearly defined position on the team beyond what most dealers envisioned from their automotive advertising agency and be paid accordingly.

I propose that you literally have the tail wag the dog, so to speak, by suggesting that the Internet Department become more than a lead generator with limited selling responsibilities. All communications, before, during and after the sale can, should and soon will be handled over the internet and/or on the dealership’s website which should now be part of your shared area of responsibility with the ISM.

Currently, Business Development Centers, or B.D.C’s., coordinate selling opportunities developed on the telephone, showroom floor, service drive, data base marketing and in many cases the Internet. They rely on linked technology like telephony systems, vendors, such as Whos Calling, and onsite data base management systems, (DMS), such as ADP or Reynolds and Reynolds and customer retention management systems, (CRM), like Higher Gear or DealerUps, that are all now available on the internet.

Who is better prepared to coordinate communications and even transactions on the Internet than the Internet Manager supported by an involved and educated advertising agency? Who has the best understanding of computers, software and integrated links to access and apply information directed to the contacts sourced from the auto dealer’s automotive advertising investments? It better be you!

Customer Communication Centers, or C.C.C’s. provide a more integrated and accessible central point of contact at the dealership for their customers in both their brick and mortar dealership and their online virtual showroom. All customer contacts for sales, service/parts and office should be channeled to one location from all sources including telephone, email, mail, internal DMS and CRM, Internet — you name it! The cross-sell opportunities between sales and service/parts by having one contact person suggesting shared opportunities is obvious but unlikely if they are handled by two different people or departments! Less obvious opportunities like customer complaints and key vendor communications provide the ability to turn a problem into a solution but only if channeled properly.

The Internet is hosting telephone, DMS and communications through webinars and emails so take charge and credit with the dealer. Re-define your role at the dealership by increasing your areas of responsibility!

Integrating the Internet into the selling process — Sales and Fixed Operations

Most dealers have been traumatized by software solutions they are still paying for and never used. Usually they require secondary input, are redundant with other more integrated systems to the selling process or just lack real world applications to their deal flow — which is driven by human nature on all levels. Inspect what you expect coupled with standards like you can’t manage what you can’t measure can be applied to support your close for enhanced opportunities for you, his staff and your dealer.

Place the Internet C.C.C. squarely in the middle of all selling processes. Of course be careful what you ask for since an astute dealer will, and should, hold you accountable. No pain, no gain — so go for it!

As admitted, the devil is in the details, and there is no standard application to apply to all situations. Deciding what to do and what to delegate, and how to best integrate with the auto dealer’s current systems to minimize disruption, is the key. Don’t throw out the baby with the bath water but expecting different results from the same action is a good definition of insanity.

The auto dealer’s sales staff and service writers hate you — join the team!

The automotive advertising agency has always been perceived by the auto dealer’s staff as an outsider and the ISM has only recently earned the respect that he deserves by the old car guys who may still be fighting the shift to the World Wide Web. The Internet Geek of the old days has matured into a key manager in most dealerships and the trend is growing! You can’t possibly expect to cross train on all aspects of operations — but you should try! Evaluate the current communications, customer and deal flow and create a business pro forma in concert with the ISM and the other department managers to develop a profit and increased R.O.I. for all involved and you will earn your position on the team.

Inter-department squabbles in the car business will always exist but your new position on the team — if introduced correctly — will transcend individual motives to resist your efforts to improve everyone’s bottom line. Taking on the burden of helping the ISM and his team to make appointments and providing centralized communications — both internally and externally to the dealership — will free everyone else up to sell more cars, service and parts!

Real time paperless reports available online — or in the DMS/CRM — will provide the department managers with the information and tools they need to do their jobs. Your complimentary secretarial services, automated and managed follow up systems to recapture lost sales opportunities coupled with your shared goal to increase appointments, sales and customer satisfaction is not a threat but a blessing!

Establishing goals, accountability — getting paid on the bottom line

Most automotive advertising agencies and ISMs are involved in search engine optimization plans, (S.E.O.), and search engine marketing plans, (SEM), with applications on their website that track leads, conversions and R.O.I. — or they should be! Your goal should start with continuing your efforts to increase traffic to your auto dealer’s website rather than the telephone. It represents the most sophisticated tracking software available; now and for the foreseeable future. Your ability to track results is where your accountability part gets covered!

Sales goals theoretically start with the dealer’s market share responsibility for the manufacturer, (M.S.R.), but fixed and semi-variable expenses quickly establish more pressing goals. Covering the Nut is a street level goal which must be met or none of the others matter. Have the dealer provide you with what he expects — or needs — and that should become your common goal!

An example of a realistic goal for an auto dealership should be 4-5 generated appointments per day per person; selling one. This represents 120 + appointments each month, 80 +/- that show up and an additional 20 units per person per month based on a 25% closing ratio.

Include areas that you and the ISM can directly impact and monitor like new and used vehicle sales — units and gross profit, sales and service appointments, customer satisfaction scores and all monthly sales or performance goals. Define the areas of responsibility that you will handle and decide on which ones you will delegate. Compute the budget, staff and facility you will need, online and in concert with your conventional advertising and community networking proposals, to develop the traffic required to achieve the sales and performance goals the dealer has established.

Use industry guidelines as far as closing ratios and conversion ratios specific to the auto dealer’s franchise, size of market, staff, inventory and facility to “back into” your sales vs. traffic needs. Resource local media statistics, like cost per point, C.P.P., to determine the most cost effective media to dominate within your budget focused on the Internet customer and then dominate it.

On broadcast, for example, a 5 plus frequency and a 50% reach coupled with consistent and coordinated dealer specific brand-tail messages, (branding and retail), over a ninety day period with creative directed to your dealer’s web site as well as a monitored 800 number will absolutely drive traffic.

Of course expenses must be considered based on line item percentage guidelines vs. other expenses to preserve profits. Another common budget tool is to establish a per unit cap based on experienced expenses per unit which range from $250-$500 per car but it can double in certain markets. Pick a basis for your budget, any basis, and stick with it!

Monitor shifts within budget based on results and R.O.I. per investment but never increase the budget without a proper risk to reward consideration and an acceptable projected R.O.I. The days of guessing are over; so be right!

Do all of the above, design an agency fee tied to specific performance under your control and you will have deserved a bonus tied to the total dealership bottom line because you have contributed to it. More importantly, as a valued member of the team your agency relationship with your auto dealer clients and their staff will survive today’s downturn in the economy and the auto industry with its reduced conventional advertising budgets.