|During this unprecedented time in economic history, we all need to ask ourselves if we’re willing to work twice as hard for half as much. Times are tough; times are uncertain. In fact, the only certainty is that things will only get worse before they get better. Only dealers who face facts and improve their business processes will make it through this time of uncertainty. So, are you willing to work twice as hard for possibly half as much?|
Auto sales account for about 20 percent of all retail sales in this country, so when the auto industry slows, the economy as a whole takes a significant blow. The concern all dealers currently face is: am I the next victim? In September, auto dealers cut 12,000 jobs, and sales floor traffic decreased about 50 percent, so it’s a legitimate concern. Surprisingly, however, despite the low floor traffic numbers reported in September, total vehicle sales volume was only off 27 percent. I believe this is because good dealers did more with less.
How do half the sales opportunities disappear, yet overall sales only drop 27 percent? It is because more customers than usual on the showroom floors across the country got approved for financing and drove off the lot in September. Believe it or not, closing ratios actually went up in September.
Outside of GMAC, captive finance companies have been reassuring dealerships that they are still lending money. Both Toyota and Ford sent memos to their franchisees to let them know they were still financing. The real root of the problem is not the finance companies, but a lack of buyers. Customers are staying on the sidelines. So, now is the time dealers have to do more with less.
This fact really stood out in early October when I sat on a conference panel with my friend Denny Long from ProMax. The panel was supposed to discuss lead generation and advertising during a conference workshop, but instead, the workshop topic quickly turned into a discussion on sales processes. The questions were almost all the same. How are dealers successful with your leads? Why is my dealership having trouble when other dealers are successful? How do we turn the leads into sales?
Denny answered the questions the same way I always do. He said, and I am paraphrasing a bit, the problem is half the leads generated for dealerships never even get a call. I agree with his statement 100 percent. With floor traffic so low, these bad business processes have to change. If dealerships need floor traffic, then their sales teams had better get on the phones. Dealerships need to put a process in place to make sure their lead sources are being covered properly and thoroughly.
I believe the things I’ve consistently preached to dealers working with our leads are more important now than ever. 1. Never, ever pre-qualify a buyer over the phone. I’ll say it again; never, never, ever, ever pre-qualify. 2. Call every lead no matter what, and get them onto the lot. I don’t care who you are or how much you think you know about sales; you couldn’t sell a car over the phone this time last year and you certainly can’t do it now. Get every person possible onto your lot. Don’t use their lead information to try and pre-determine their ability to get a loan. Just look at the name, phone number and best time to contact, and call them. If you are looking to maximize the efficiency of your business, start here.
Most dealers think if they gather some information on the phone before they set the appointment, then the people who come to the lot will have a better chance of getting in a car, but this isn’t true. What really happens is you dwindle your opportunities down to the point where your margin of error is way too thin. Even some of the best dealers these days are only closing one out of every 10 customers that come to the lot. So what does that mean for dealers who take a 100 leads and filter them down to 10 or 20 appointments? It means they will only see enough customers to sell one car out of the original 100 leads.
With all the downsizing in the auto industry, many dealerships don’t have the personnel in place to work leads effectively. If your dealership is cutting staff and reducing payroll, then you might find yourself in the same circumstance. If 50 percent of your leads never get a call back, this number will only get worse as you cut staff. So what’s the solution?
Many dealerships with staffing and customer outreach issues choose to outsource these responsibilities to a third party. There are a lot of companies out there who offer telephone services that will set, confirm and call missed appointments to help improve sales floor traffic.
There needs to be a mad dash to every lead. If you’re only calling half your leads – or worse yet, none of them – you’re completely removing yourself from the game. So, commit to working twice as hard, even if that means only half the returns while the going is tough. Commit to calling every lead, and don’t pre-qualify customers over the phone. If you don’t have the personnel to manage the lead properly, then outsource these tasks to a third party who can help improve your customer traffic. If you work twice as hard now, the benefits will be more than plentiful when the market improves.
Vol 5, Issue 12
Market Scan’s new management software suite promises to ensure a cohesive and consistent online-to-instore customer journey.