I believe it is actually in Zag's terms and conditions that you may not offer USAA customers financing if they've been pre-approved. Certainly a rule we won't be following. We do get two or three alright deals out of them per month. We get around 30 leads on average. Maybe it is just that not many dealers close to us are signed up with Zag. We set our pricing higher to account for the $300 fee. It's just a matter of getting someone willing to pay our price. 

The other factor is that the customer builds up the vehicle rather than picking one from our inventory. Rarely is that exact vehicle in stock so it's easy to work around "the quoted price." It has benefited me as the ISM but I do feel bad for our sales guys because they rarely make money on Zag customers.

Great insight Jeff. I've been approached several times by ZAG and still try to figure out how I will be coming out ahead with their leads. Chances are, I will have a lead from that customer anyway and they would want to double dip me and increase my cost per vehicle sold. I'm with you in saying I would give my money to cars and AT before them and they won't be digging into my DMS. Why should us dealers give Edmunds and truecar any more transparancy in this business.

When you look for a boat or an RV/camper, you won't find truecost, invoice pricing, or any rebates anywhere. Guess the car business is just different.

The best part of this program is what's coming down the pike. Remember folks, you are only paying for the New Car part of the program at this point. Used cars and CPO's are coming so get ready to dig into your pocketbooks because Edmunds wants it all. For those of you paying $3-4k a month for multiple stores, I have a suggestion - put one store on Edmunds and with the other, spend the $3-4k running a Pay Per Click campaign and compare them side by side. Get ready to send Edmunds your cancellation. Edmunds spends $1.5million a month on PPC to steal your customers from you and sell them back to you. Wake up! Edmunds gets a lot of traffic, there's no disputing that. They also have a bounce rate that hovers around 50%, please remind them of that once in a while.

We have 7 dealerships all on Zag and we do not let them have access to our database we do have to give them a custom report of sold units so they can match up customer info but that is all they get.  It is possible not to give them your transactional information and still get the leads.

As a standard practice we give NOBODY full access to our DMS it is way to risky and nobody should be allowing that to happen.

If dealers are doing that currently I urge you to STOP change the password and access to your DMS and tell Zag ( or any other provider) that your will give them a a custom report of only the sold info no transactional information and start protecting yourselves!!!

Jon Sherrell

I am sitting here reading all of these responses and I can't for the life of me figure out why you would let a third party, much less a third party like Edmunds have access to your DMS.  For a few internet leads.  Really?  How about this do marketing, prospecting, SEO, PPC if you need to and leave these parasites like edmunds, autotrader alone.
If you are a dealer go into your DMS and pull every deal from the internet and then compare that to deals from Radio, Direct Mail, referral, walk in and prospecting to see what your true ROI is.
Nice article Jeff.

Found this on KBB after digging further, "The Fair Purchase Price is not a number influenced by dealers or manufacturers -- it is actual transaction data representing a range of what people actually paid for specific vehicles."

They don't, however, state where they harvest this data from, but I think we know.

This question has caused us to review all of our existing agreements with vendors, and it's frightening what we're finding.

I'll never just glaze over the boilerplate again.  It's amazing what these guys slide under our noses, fully expecting us to do exactly what we've done...ignore it!!!!

Do I really need a 3 page contract to buy a vendors service?  I do if they're asking for the keys to the palace. 

Another question to ask is on KBB's "Fair Purchase Price".  I've gone over our CDM agreement and they state quite clearly, "CDM agrees to use the Sales Transaction Data only to match Sales Leads with transaction/purchase activity."  That's not to say somewhere else in the 4 pages of Ts and Cs that they don't have another use layed out. 

So this begs the question, where is KBB getting they're numbers from?  BTW, they have a Prius II listed in the middle of True Car and TMV at $24,766.00.

true car rocks.......just picked up a silverado at 1k under dealer cost.  didn't even invlve true car and made some calls myself seeing who wouldk match the price....you internet fellt guys hate me....LOL

Shame on me.  I've signed up for both of these companies at one time or another over the years.  In my haste to get leads and sell cars I just glazed right over the boilerplate.  Needless to say we're done with both.

Reading through these posts has raised a couple thoughts.

1)  Who's auditing these companies to make sure they provide accurate data in the first place?  What's to keep TrueCar or Edmunds from juicing the numbers?
 
While it's a slightly different model, Costco and AAA's new online modules have done the same thing.  Month after month they keep telling us we have to come down on our pricing in order to get the requests, because, "...your competitor down the street is at $1100 back on altima, and you're only at $600 back."  One of these companies we caught with their hand in the cookie jar. 

At some point they'll be competing to see who's site shows the lowest value.  Currently, TrueCar says a 2011 Toyota Prius II Average Paid is $24,993.  Edmunds TMV says $24,480.00.  I don't know what your customers are  saying in your local market, but $500 is a pretty substantial difference.  How long will it take for the newbie on the block to realize they need to take on the big dog, and jockey the pricing accordingly.

2)  Let's follow the logical conclusion of True Car and TMV.  The consumer sees the MSRP, the Invoice and the "TMV".  Let's say today the TMV is $500 over invoice.  How many of your internet customers are going to be good with paying that $500 over?  None, they're going to want to be somewhere under this number.  So 150 of these models are sold in your district this month, and the TMV adjusts.  Now you're $400 over next month.  Before you know it you're $500 under, and only picking up $100 of holdback....and so it goes.
 
If you're really looking for opportunities to sell cars check out companies like AutoRevenue and AutoAlert.  These companies are using our data for us, not against us. 

As a very small part of a fairly large group, I was shocked to learn that there was a DMS polling component to this deal (issue was never discussed at my humble level).  I mean, why would there be?  We're paying for a territory and for leads, right?  After reading through this for a few days, and seeing only one weak explanation as to WHY Edmunds describes this as a value to dealers, my question is still:  WHY?  Are we really that desperate for those leads.. especially these noted higher-funnel leads?  But aside from that....  If I was a dealer, or owner -- and I'm not, please don't misunderstand -- but if I was, I would probably realize that my database is a very, very valuable entity.  (Anybody disagree?).  So if someone comes to me with a deal where I'm going to PAY for a territory and leads, and I'm also going to GIVE them my precious data, at the very least (after I'm done scratching my head at the utter audacity of the proposal), I re-negotiate.  Again, I'm not an owner, but if I go to bat with the notion that MY DATA is more valuable that THEIR LEADS, perhaps I get a favorable outcome.  We have to remember that Edmunds has no magic wand -- there's lots of people on lots of sites, and frankly I've never heard of a consumer doing 100% of their research and shopping on Edmunds.  In other words -- if you're a good dealer, competitive, reasonable marketing mix -- you'll be found.  We're paying them, AND giving them our data... wow.  I don't think that's the type of negotiations that have kept the T3 space "strong."  Edmunds has to be laughing all the way to the bank!

Amen Unlce Joe!

Jeff,  I love your article and agree wholeheartedly with your main point regarding our data.  What I have been trying to say, and what I don't think you can grasp until you deal with these customers directly, is that buyers do not care about Edmunds the way they care about organizations of which they are a member.  People trust the NRA, the NEA, PenFed, and Consumer Reports to send them to a good place.   You would not believe the zealous loyalty people have to USAA - the lead source where the highest volume of Zag leads come from.  I have two years of lead data at my store which show that when these people show up, they close at nearly 3 times the rate of manufacturer leads that show. 

These customers are similar to manufacturer plan buyers.  If you were to look at USAA members who know about the USAA Buying Program, I would bet you over 3/4 of them buy from a USAA Recommended Dealer.  We're talking about 8 million proud members here who really like and trust their organization.  No comparison between these people and Edmunds.

Sure, there are other avenues of marketing with better potential ROI, but  most small stores lack the resources to leverage that kind of marketing.  It may not be a bad idea to make these avenues the focus of the next few Dealerrefresh articles.  You've got 4,500 dealers on Zag that need to be persuaded to get off of it.

---BUYER BEWARE!---

Edmunds Pay per Sale is the ultimate "Trojan Horse". It's pretty to look at, but it's built to OWN YOU.

Read this post  "Who is making all the profits?"
Be scared..., be very scared.

You've been warned. The fox is in the chicken coop!

Confessions of a Salesman from Edmunds...

"...every single time I get a dealer/manager on the phone, I hit them with my magic weapon....  'Edmunds is free, pay only for leads you sell'.  And, every time, the phone goes quiet for a moment and then the manager kicks everyone out of his office!   BAM!!!  FISH ON! I got him!!!   The concept is worded to perfection.  It preys on the busy multi-tasking manager and this NO PAY  promise plugs right into their reward system.  I love it!

I set the hook deeper... I walk the manager thru our giant audience stats and paint a picture were managers all over the USA are signing on & loving our FAIR system AND it's scaring the hell out of AutoTrader and Cars.com because of their UNFAIR rates.  Managers everywhere love the idea of dumping AutoTrader and Cars for our FAIR system, and it's only logical, as more & more dealers sign on with Edmunds, AT and Cars will have to adopt our FAIR billing system.

I race past the DMS stuff and I go for the close.

Cha' Ching.  Nuthin' to it. "

The above post is me from my iPhone by the way, just didn't want it to come across as someone else.

Dennis,

Thanks. I fully understand that all marketing isn't for everyone. My true belief after being on all sides of the fence is that this offers great value, especially for dealers who have good processes in place. 

As you know about me Dennis, I'm a big believer that the best way to earn more sales is through follow up and prospecting but sadly most dealers are either to lazy or too ignorant to do both or either well. The best part about that comment is that the only folks it'll offend are the ones that are too lazy or too ignorant to do it.

Technology has made us lazy. Heck, I got asked to speak at an event which I'll leave unnamed, one of the folks on the phone said "what are you going to speak on exactly" and I said: "I'm going to GIVE dealers a 12 month training outline with topics, words and everything they need to grow their sales and profit. This 45 minute session will remind em of why then need it, then show em how to get it, then give the tools they need to get it done." 

The genius response was: "What's that do for you?"
I said: "What's it matter, It'll give me some publicity and I'll worry about me, this industry needs a jump start and if I can help, I'll get what's coming to me down the road."
The response: "I don't see it as a good revenue opportunity for you we need to focus on technology they need to buy for the dealerships...blah blah blah blah..."

We have gone from a: Let's have our people be the best, serve the best, present the best, listen the best, overcome objections the best, follow up the best, prospect the best business model to a "My crm is supposed to do this for me...my lead provider is supposed to do this for me...my advertisers is supposed to do this for me...."weak pathetic entitlement mentality.

In God knows how many years there is something that has never changed:

There is NO TOOL....and there is NO TECHNOLOGY...that will do your entire job for you. If you have salespeople on your sales floor they darn well better be able to serve the consumer better than anyone else or you will lose to someone who can. maybe not today, but tomorrow or the next day. And once you lose 'em to the better guy, they AREN'T coming back.

This Edmunds system is an opportunity, like anything else, to get in front of consumers.

I didn't like 'em when I was a dealer either so I get it but the fact of the matter is this. When I was a dealer I didn't care what I liked, I cared about what the consumer liked and THAT is where I put my stores names and guess what?

We crushed everyone in our DMA in EVERY make. So to me it's simple, cry about what you can't control or take the reigns on what you can

And thanks for being a hard ass all the time when I worked for ya, it's paying off well enough lol

Interesting and disappointing Ralphie since you wanted to e part of this k owing full well all of the program details. I have to say my friend; I expected something more from someone I respect as much as yourself.

Classy response and thanks for the adorable nickname. Apparently you are the one out of a few thousand who just realized both of those facts that I clearly stated.

They pay me.
Consumer is always #1.

However, they didn't know I was responding nor did I do it on their behalf and YES I believe the new program is more beneficial than the old one and has a 30 day safety net.

If you have any intelligent questions rumbling around in there is be happy to answer them thoughtfully but I believe I've used more energy than necessary to respond to your immature post.

Good luck in your career "dog"

"I'd say Edmunds is trying the best way they know how to make it 'safe'
for you as a dealer since UNLIKE THE OTHER GUYS WHO LIST YOUR INVENTORY
they are: Month to month with a 30 day out."

You totally full of shit. Edmond's is not going to do any dealer any favors.They have been talking shit about how dealers suck for years.

"Edmunds doesn't write me any bigger check if they're on or not."
So you admit to being paid by those scum bags anyway.

Dealers stay away from Edmond's and don't pay attention to their paid spokes person Matty here!

Their pre-approved financing is easy to beat.  We've been doing it for the last year.  USAA is not a threat to f&i $ and penetration.

While I agree with you the use of our data for consumer consumption is abominable, the reality is that these buying programs are not going away.  Each month, Zag is adding more and more of these organizations.  If we can't trust other dealers to not price below invoice on these programs, as you astutely pointed out, then we certainly cannot trust dealers to hold firm on not allowing Zag/Truecar to publish our DMS data while still allowing us to participate in their programs.  The two go hand in hand.

If we don't allow access to the DMS, we can't be on their program.  If we don't get on the program, some other dealer will.  Remember, we can't trust the other dealers to hold firm and not participate.  10-15 deals a month for a store that is doing 40-50 cars total is huge and has too much appeal to pass up.  If they don't get the data from us, they will  get it from another dealer's DMS.

I fully support what you are getting at here, but the Zag/Truecar buying programs are a behemoth that will only get bigger over time.  Close rates are 3 times that from manufacturer leads.  And if done right, they still make money.  The big stores dominating markets have too much market power to compete against directly.  Once a small store grows big enough, they can shed the Zag lead source, but until then it is one of the most powerful lead sources available.

Billboards, newspapers, radio, TV & mailers can't sell or service cars....?   What is your point on that? 

An excellent article Jeff, well writen and considered. A warning to independant  Australian dealers who may be releasing vital data directly to their competition thru certain relationships and JV's some Groups have with local Automotive Research and Online Advertising companies here!

Congratulations on all of your success. But FYI, billboards, newspapers, radio, TV, and mailers can't sell or service cars either. Guess I don't get your point. As I mentioned, MILLIONS shop on Edmunds.com and we CAN send them to you, so YOU can sell a car. I'll stand clear of the blow torch. Gheeze

From the horses mouth:

We outsell 20 other dealers in our market and know EXACTLY what people pay for Nissan's and have so for 20 years. We know the RMV - that's "Real Market Value" - better in our market than Edmunds or TrueCar will ever think they know. Pulling numbers from the DMS is one thing, but can these websites be really trusted they are in fact sharing the REAL NUMBERS? We can't know! And we do not! The bottom line is they could care less about dealers, because they know dealers will pay up to be listed.

I truly feel within the next 3 years, a better research/pricing website paradigm will emerge, that is car dealer fueled, by honest dealers like you and I, who love their customers, and the product we are privileged to sell.

You will see vastly improved Lead generation that will make an edmunds free car quote form look like a stomped on piece of origami, lit with a blow torch.

1. A customer cannot buy a car from Edmunds.
2. Edmunds does not service nor do they warranty vehicles.

Why are they acting like they can or do?