Every single person at every dealership is having to adapt to the new reality. Remaining inactive in the face of significant change is a sure path to distress. As margins decline, inventories shrink and markets soften, it’s even more crucial to scrutinize digital dealership performance more closely.
An integral analysis component is to examine outdated behaviors and processes that impede performance – and replace them with an updated, holistic approach to “digital” operations.
As someone who spent most of her career managing large, successful car dealerships, I recognize there are facts that were in place long before the pandemic:
Fact #1: Consumers lack trust in car dealers.
Fact #2: The predator/prey mentality is still alive and well.
Fact #3: Until dealers reconcile Fact #1 and Fact #2, consumers will continue to disengage.
The pressures on the dealership business model today are abundant. Retailers must evolve and adapt to changing consumer expectations. This was true before the pandemic and is even truer today.
Transforming your store(s) into a hybrid of the e-commerce model is challenging. It’s one thing to know that changes need to happen but quite another to know which to tackle first. And most of it is driven by consumer demands and a pandemic we didn’t see coming, that includes a lot of uncertainty about the future.
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8 Digital Dealership Focus Areas for Greater Performance
Spotlight these areas in your operations and you’ll be much better positioned for success.
1. Lead handling process
I bet you get calls daily from vendors who say they can get you more leads. Am I right?
Everyone wants more leads but for dealers whose lead processes are unsatisfactory and/or underperforming, that’s adding way too much fuel to an already 5-alarm fire.
FACT: It doesn’t matter whether you’ve got 100, 1,000 or 10,000 leads when you’re not effective at converting them.
Poor lead process = poor closing ratios = poor performance
Answer these 5 lead process questions to answer before you spend another dime on lead generation:
- Where do my ideal leads come from?
- Which lead generation strategies and tactics get the highest ROI (Return on Investment)?
- Who fields the lead first and are they effective?
- Are my lead responders helping or hurting our conversions?
- What tools do am I using to analyze my managers’ effectiveness at optimizing the lead process?
2. Pay plans
Changes are happening in dealership sales operations. Some dealers have adopted the “One Price” model and many dealers are paying Mini’s to their commissioned salespeople. Digital operations and remote deliveries are causing shifts in the traditional pay structure for staff.
Pay plans should be examined so that they closely align with digital operations and sales profit goals.
Salesperson compensation has declined in recent years and many salespeople prefer time off to the higher pay that comes with long hours. Dealers must recognize this trend and adjust accordingly.
What are you doing to improve your salespeople’s pay plans so that they align better with what motivates them and generates more profitable outcomes?
3. Digital reputation
Are you listening?
What are your customers telling others about you?
When 94% of people are influenced by online reviews, an audit of your current practices to capture and manage those reviews is in order. Protecting your digital reputation is crucial.
The same goes for your salespeople. Prospective customers are Googling salespeople now. Tools such as Cars.com’s Salesperson Connect are designed to help shoppers find the right salesperson. The salesperson profiles include customer ratings, background about their interests, and other information that builds confidence and trust before you visit a dealership. This tool also humanizes the dealership’s brand through a familiar, friendly face.
Shoppers who select a salesperson prior to coming into the dealership have an 89% higher closing rate.
What actions are you taking to address your salespeople’s digital reputation? We provide training in that arena but a good free first step is to ask them each to Google themselves. What appears in search results when they do it? Is it what you want your prospective customers to see?
Prospective customers have a short list of the dealerships they want to buy from. Don’t give them the opportunity to cross your store off the list by missing the most fundamental of actions.
4. Customer experience
Regarding Facts #1, #2 and #3 above, there should be close attention on rectifying consumer trust in dealers.
I’ve managed dealerships most of my life and I know (like you do) that there are a lot of happy customers out there driving the cars you sold them. But the stereotype still exists – and in some cases, it’s being perpetuated by a few bad actors.
In addressing consumer trust, the first thing to do is to acknowledge that outdated behaviors within your store may be still happening. Put processes in place to change those behaviors, including measurable customer experience metrics and incentive programs to transform outdated behaviors into more customer-centric interactions.
We can’t talk about customer experience without talking about the customer’s buying needs.
The pandemic rapidly altered the sales process and digital dealerships need to engage customers where car buyers are most comfortable. Some customers prefer the entire process be conducted remotely. The positive here is that it reduces the time they have spend at the dealership, which is a top concern for today’s customer.
5. Financial reporting and analysis
One of the most common concerns I hear dealers express is their uneasiness around financial investments in digital dealership initiatives (mainly digital marketing, advertising and training staff). They aren’t sure what’s working – not sure what they should be spending on or what they should refrain from spending on. There’s a lack of solid advice from the factory. Vendors are always going to consider their best interests first (not yours).
The answer to all of this is establishing ROI (Return on Investment) through specifically designed financial reporting and analysis.
You can’t manage what you don’t measure.
New metrics and KPI’s (Key Performance Indicators), especially in digital marketing, must be tracked, measured and analyzed consistently to determine viability.
Example: Do you know the cost (advertising expense) to advertise each vehicle by model? By using sophisticated data models, this information would be very useful to your overall marketing/advertising strategy and its outcomes.
And speaking of outcomes….
Building on tracking results through financial reporting and analysis, the next step is forecasting how your digital dealership operations strategies perform.
It’s amazing the insights you’ll obtain through forecasting and you’ll find that operational decisions will be better informed. Here are the three main steps to forecasting:
- Begin by reviewing last year’s numbers for the month you’re planning to forecast. Even though the world is different now, it’s good to know what you produced for the same month last year.
- Then, forecast what you plan on achieving next month. Do this by breaking the numbers down, line by line: sales, gross profit, expenses and net profit. Do this for each department: New, Used, Service, and Parts, then combine them into one Forecast document.
- After the month is over, compare your forecast with your actual numbers.
As time goes on, you’ll get better at forecasting, add more components to track and forecast, and make it integral to operations throughout the year.
Forecasting does many great things and at the top of the list is that it keeps surprises at bay.
- If you’re having a bad month, at least you’ll know why (and if it was an operational error, you’ll have the opportunity to fix it).
- If you’re having a good month, you’ll be able to recognize those employees that had a hand in the success, and that’s a motivator!
7. Social Selling for car salespeople
Social media has opened up so many opportunities for car salespeople. Some salespeople, some of my clients, are selling 8-12 cars each month using Facebook.
Social Selling is the act of leveraging social networks to build relationships, create lead opportunities and form referral partnerships.
79% of salespeople who use social media as a selling tool outperform those who don’t.
Most dealers have one or more salespeople who are social media savvy. Rather than discount their efforts, it’s valuable to digital dealership operations to include these employees’ contributions and offer similar solutions to the rest of your staff.
I’ve been training Social Selling for over 10 years. The main obstacle to it is buy-in from sales managers. Many salespeople express frustration at this and try to work around the issue. My best advice is to embrace social media for car salespeople and put guardrails in place so you can feel more comfortable. However, don’t just turn your salespeople out to the Internet without training and/or guidance. Everyone needs to know the direction to go before they start their journey.
8. Internal communication processes
The art of communication is the language of leadership.
Customers are hyper-connected and your internal operations should be too. Leverage technology to improve internal communications but don’t introduce tools without a process in place.
There are a lot of digital retailing tools available to help with lead process and communication. But don’t forget to include protocols for customer communications, especially when it comes to Coronavirus safety.
Now is not the time to struggle. If you find yourself having more questions than answers when it comes to managing digital dealership operations, reach out to me. I’ve helped dealers just like you to improve performance and increase profits. Click >>>here<<< and I’ll get back to you within 24 hours.