Back in the early 1990s, Ken Smith's father, Dave, had a vision.
At the time, the Internet amounted to little more than a much joked-about business model. There were few car sales and even fewer profits being made online. But the dealer felt that his small operation in Kellogg, Idaho could get big – virtually. The Smiths determined early on that in the future, buyers would routinely turn to the Internet to find their next car or truck.
Dave Smith died in 1994. That same year his two sons – Ken and Eric – started to lay the foundations for their online dealership.
Eleven years later, Dave Smith Motors is doing gangbuster business on the Internet. Last year the dealership sold 10,400 cars and trucks—not bad in a town with a population of only 2,400 Ken Smith said. His inventory has swollen to about 2,000 units, and he sells more than a thousand units a month. In March, Smith estimates he sold 840 new cars and 250 used cars, with the bulk of inquiries flooding in through the World Wide Web.
That kind of record qualified them as the number one dealership in the country for Internet sales in 2004. It was the fourth straight year at the top of the list for Dave Smith Motors. And Ken Smith is so sure of expertise in the field that he's begun to sell the management system they've built to other, non-competing dealers around the country, along with a big dose of Ken Smith's personal advice on how to double sales.
The hard way
It's taken a lot of work, but Smith says it was his dad's inspiration in those pioneering days that got them to where they are today.
“He really wanted to get this thing going," Smith said. "It was his dream and his idea to be the top Internet dealer in the country. If we got started early and did it all the hard way through the dealership, he felt we could get there."
The hard way meant bringing in their own software programmers to design a customer management system – now dubbed Lead Rocket. The software system not only gathers and organizes the leads that come into the dealership, but it automatically generates mass e-mails to some 165,000 people in the Smiths' database as well – instantly disseminating offers on special deals and new offerings to a steadily expanding pool of potential and repeat buyers. The system also gives them quick access – through the Internet -- to the transcripts of conversations that take place between sales people and customers, a handy tool when it comes to coaching sales people on the best ways to follow up with a customer and land a sale.
It's helped make them the dealership of choice for customers around the country.
"Most of the people come from the northwest," Smith said. "But we continually sell to just about every state in the United States."
Every advertisement they run puts their Web address in front of would-be customers. A fishing show produced by Smith which also runs on the 50-inch screens inside the dealership's customer lounges, helps to hook new customers, too. And the Smiths have been so successful that they now get a little extra promotional help from the competition.
"Right now, a group in Seattle is actually advertising 'Why would you go to Kellogg, Idaho for a new car?' And when they do, people go to their computers and search Kellogg dealerships and find me. I hope they continue it for the next couple of years,” Smith said.
Smith said his lead system is the secret to his success. "Number one, you have to have the management tool. Then you have to have the dealer and management behind that tool. You can have the best tool in the world, but you need someone pushing it. We're the only dealer that developed a lead system inside a car dealership. All others went outside the dealership. Ours is built on hands-on experience, every day."
If you buy a management system, Smith said, it can take months for a supplier to make a requested change in the way a program operates.
But it takes more than bright ideas and good technology to double sales. It also takes plenty of day-in and day-out effort to keep sales on track.
"We have sales boards that track the sales. We have teams and set goals for our sales people," Smith said. "Since were a multi-line dealership, we have a goal for Dodge, GMC and so on, and track which sales people hit the goals. It's important to actually have a board that every sales person can look at. They're in competition with each other."
Smith said he rewards on high volume. Anyone coming into the organization starts learning his job from day one.
"It takes a good two weeks to learn the system, because we're teaching them the whole thing," Smith said.
Smith also provides a few perks along the way.
"The employees have a huge gym, with more equipment than a World's Gym. It's free to customers and employees, and we also make it available to law enforcement at no charge."
Still not satisfied
One of the other reasons why the dealership stays on top is that Ken Smith is never truly satisfied with his performance.
"When I can handle all the leads we get, I'll really be selling a lot of cars. But we haven’t finished yet. We're going to move the sales staff. There's a total of 67, and move it to 80 or 90. We're remodeling and expanding our building. And we've been adding lots. When we started this Internet stuff, we had three acres, now we have 37 acres in various locations."
Cameras are going in to monitor their inventory round-the-clock.
"We actually put sensors around all different areas of the building and lots, so as a person comes into the zone, we know they are in the zone. If somebody leaves for lunch for two hours, we'll know it,” Smith said. “When we're selling a thousand units in a month, we need to know where people are, so they don’t lose the sale. This system will end up tying into Lead Rocket, so we will actually pull up a vehicle where that a customer is looking."
For a price, Smith is beginning to roll the system out to other dealers, starting with one in Georgia.
"I can't tell you exactly [how much it will cost], but it will be way lower than anybody would ever expect. They don’t just get Lead Rocket. I fly out engineers, programmers; they have to inspect the site,” Smith said. “Some of the dealers may not have computers, and we outline hard-drive requirements. Then, after we establish what it takes, I fly out to the dealership. I walk around their facility, and I'll give them tips on doubling and tripling sales.”
"I'm going to pick dealerships that are a good distance away. And then we're going to make them a success. At this point I'm not looking to put it in every dealership in the U.S. I'm interested in doing some consulting. I don’t charge for it, I just enjoy making suggestions."
For the dealers willing to take them, there is an ever-larger number of customers finding their next car on the Internet.
"I think customers are pretty much Internet-savvy any more," Smith said. "Last year 65 percent of customers hit our site, and it's getting closer to 70 percent that hit our site before they come into our store. The Internet's easy to use, to find what you want. So I'm not surprised the customers are savvier."
By continually fine-tuning Lead Rocket, growing his sales department and finding new ways to generate inquiries, Smith believes he can add another 2,000 sales in each of the next two years. And if he ever starts to think that he's reached his full potential, he has a few other moves in mind.
"At the time I feel like this dealership is reaching the pinnacle, then I'll probably look at buying some other dealerships."
Vol 2, Issue 6
In a move billed as an industry first, DealerPolicy will showcase an all-inclusive dealer auto insurance solution at NADA 2019.