Earl,

I feel your pain. But, whether you like it or not, most customers now use the internet first to shop for cars. Here's some interesting bullet points on the online auto industry:

-88% of shoppers shop online first (usually with a search engine)
-60% of online shoppers request a price quote (convert to a lead)
-55% of internet leads end up in a sale
-90% buy at another dealership and purchase another brand

So, we know that half of all leads purchased cars from another dealership. Why? Well some don't like your brand. You can't do anything about that. But, for the most part, dealers don't handle leads well:

-30% of leads are never contacted at all by the dealership
-customers want dealers to respond within 4 hours but it takes dealers an average of 5.4 hours to contact leads
-only 25% of shoppers felt dealers answered their questions
-only 19% of shoppers felt dealers tried to sell them on their brand

I'm making the point that differentiating yourself from this average pattern might make a difference for you. Take a look at how old the leads are that you're getting from your internet manager. Call the customers right away and answer their questions. Try to convert them to a used car in the brand they are looking for. Sell the benefits of your brand and your dealership so they don't defect. Will you sell all internet leads? No. Will you make huge commissions on informed customers? Not often. But working the leads in a way that sets you apart puts you in a position to make the best of the situation.

I wrote more about the study where this information comes from in my blog at TheSubprimeReport.com (click my name to take you to the blog). I'll be focusing on the implications of this study in the next couple weeks. I'm sure Jeff can add to the discussion as well, given his experience on this topic.

Best of luck,

Jim Wagner
TheSubprimeReport.com

This will be a very different industry in 10 years.

To Brandon Hoffman: Just want to let you know that you can indeed nogotiate pricing at Best Buy, as I did it myself a couple years ago. It involves finding the right salesperson (hmmm sound like our business?), and making it a deal that will work for both parties (sound like the car biz again?), and will probably only work if you buy more than just a tv, ie complete entertainment system. With the research to backup your claims in hand they will work with you if you take the right approach. I've negotiated pricing on many items that I never before thought possible, but when you see something at a store you like to shop at that's much more expensive than another store's advertised price, you don't just want to give your money away! But by taking the right approach you can probably get them to match that price a lot easier than you might think.

I personally believe this goes for all business though. Before getting into the car biz I worked selling assembly and packaging services for a Non-Profit Organization that helps adults with disabilities. I had to work deals in that business in an obviously different way than selling cars, but when it comes down to it, it's all about having the right research done ahead of time and being able to back up what you say. With some customers I had relationships with the right people that could tell me when I submitted a quote that I was off the mark from the competition so I could take the appropriate action if possible, I had other customers that didn't go to anyone else for quotes, I basically named by price. In the car business, there are some customers that certain salespeople may not want to haggle with, and tell them for whatever reason the price it what it is. For others we may bend over backwards to get them the truly best deal we can.

I don't think anyone likes a customer beating them up with spreadsheets and binders full of other vehicle listings similar to yours at lower prices, but it is what it is. Adapt or move on. I do believe as much as the business has changed (I've been in 2 years and seen a lot of change myself), it really goes back to the early basic sales training. Build value in yourself, your product, your dealership, and realize that price isn't everything to everyone, but it is to some.

I hear your frustration, brother, but what you need to do is ENGAGE the customer early, and sell yourself and your dealer. If you are not doing this, you are simply selling the same vehicle someone else has (assuming it is new). Why would someone want to buy from you? Is price their ONLY consideration? What about financing? What about customer service before, during and after the sale? Are these not important to them? If they answer negatively to these items and want "Your Best Price", give it to them and move on to the next.

I have found most people are simply afraid since they are on "your turf" and have all the information and power. They are simply trying to equalize the playing field by getting as much information as possible. Another tactic is to explain you and the other store are both in business for a profit, right? We both pay the same for the vehicle, right? So, how are they going to make money on the deal they are giving you? They are going to pre-sell the vehicle, load it up (if it isn't already) with dealer options, or stipulate they buy extended warranties, GAP, etc.

I don't think THAT much has changed since the adoption of the Internet. There has always been the expert who used to sell them, or he knows a guy who can buy them at auction, etc. Just kill 'em with kindness and move on.

Have you ever tried to sell something to a car dealer?

As negative as this is, it's a realistic picture of why this industry has such trouble attracting & retaining sales people. The industry has driven "mini-deals" to be the norm where it's a game to see who can drop to invoice or below the quickest for the consumer. It's a game where you fall down the well and are thrown a sheckle for managing to live after you've hit rock bottom. Thank goodness for used cars otherwise many in this industry would be starving to death.

This is the ultimate game of polynomial incompleteness.

Or, as my old game theory prof put it, five card draw with four players and three blindfolds.

Any way you slice it, information is a good thing unless you happen to be the person without it. Selling is still selling, and buying is still buying, no matter what technology we throw at this equation; the real heart of the problem is that what some buyers know has changed in ways that some sellers just aren't able to adapt to.

The solution? Either adapt to those buyers, or maybe find some other buyers... or find some nice cushy government job somewhere. Same options that have been available at the start of every new era, really.

I completely disagree with this post. You are blaming the wrong people for your issues with selling cars. It's not the publics fault for wanting the best possibly deal. Its the shady auto industry's fault for not just publishing a damn price and having that be the price (which will be the future of auto sales, mark my words). As soon as you introduce haggling and opaque pricing into an industry and encourage haggling you are pitting your sales force against the public. The public has the idea that you aren't their to help them (you are there to make the largest commission possible), hense forth they couldn't care about anything other then getting the best price on the car they want. They don't care if you make money or lose money and you can't really blame them, its not their job to care.

You don't see people in masses walking into best buy trying to haggle the price of a TV because they know that they can't. Trying to negotiate with a Best Buy salesperson is a futile effort at best. When Best Buy publishes a price, thats the price. Yes they may have a limited quantity but the price is not dependant on being a government employee, having lease loyalty, an 800+ Fico score, this much down, that much per month. The price is the price.

My personal opinion is that if you want to stop the internet bottom feeders, FIXED PRICING must be instituted. Then non discolosure agreements must be signed between dealerships and manufacturers not to disclose the cost of the vehicles. If people know they can't negotiate they will stop bottom feeding. If they stop bottom feeding dealers can make a decent amount per car without anyone knowing what the dealership paid for it.

I hope this makes sense

Like I've always said, "Selling to the public would be fun if you didn't have to deal with the public."

Wow! That sounds like my old school sales manager. You wouldn't happen to be from Ky would you? lol

I agree with you Earl!

Remember back in the day when they inveted that d*mn telephone thing? Gall dern customers would shop us hard right over the phone. We'd give out quote after quote until the managers said "stop the madness!" and handed me a script to weed 'em out.

Earl, the REAL problem is that there are too many outlets, too much inventory and too much visibility (read: internet)... All of which is COMPLETELY out of your control.

If you're too old to do some old fashioned "bloody knuckle" prospecting then you are in a bad place.

I haven't laughed that hard in quite a while! Thanks

I like the Ford BFT videos

If 66% percent of auto shoppers are positively influenced by such things as "personalized offers" as this video suggests then I hope that dealers are making sure they are marketing to this audience as its core audience.

This comes by changing the way they present themselves in the marketplace...as an Automotive Retail Center versus your traditional car dealership. This requires engaging with customers months in advance to purchase and getting to know their true needs.

Social Media gives dealers this opportunity.

With more than 20% of new car buyers finding their way to an OEM site by way of Search 6 months prior to making a purchase, just think of how dealers can and should be tapping in to this market.

The tools are here today and the dealers and vendors that take the time to utilize them effectively by presenting their businesses more appropriately can and will capture these emerging virtual markets.

Listened again and realize that I misheard his remarks around the 2:00 minute mark. He said "In other countries like China and the USA, it was still really very much around cost efficiency" but in relation to gas mileage.

I heard it in reference online behavior - totally my mistake (that's what I get for over-multitasking). It struck a chord because one of our findings has been the growing impact of online information on consumers' make/model decision. To explain the data: we ask recent new-vehicle buyers to what degree information found online impacted their make/model decision, price paid for the vehicle, dealer selection, etc. In 2007, 77% indicated some impact on make/model decision vs. 73% indicating some impact on price.

It may not seem like a big deal, but given where we started (online automotive research was primarily about price), it's a notable trend. No implications for the process consumers go through while researching/shopping online.

My apologies for violating etiquette - I was trying to reference more detailed info without dumping data into my original response. We market research folks do love data.

Long-time lurker, first-time poster.
Enjoyed the video, but I have to disagree with one of the points. He indicated that U.S. automotive consumers are primarily looking for pricing information online.
Our data (J.D. Power and Associates) shows that while this is true for used-vehicle shoppers, more new-vehicle shoppers are actually influenced in their make/model decision (77%) than in the price they pay (73%). This was a major shift that we first noted in 2005 and that trend has continued. I actually just posted something to our blog.

Dealer and Brand Loyalty down this year -2007

New research compiled by Capgemini on our changing consumer auto trends and buying behaviour suggesting ways in which web sophistication is fueling that change.  Some of their findings include:

Dealer Loyalty and Branding have decreased in 2007
Incr...

Way to Jeff- cutting edge my boy. I have long suspected BLOGs would provide a terrific alternative to the traditional forms of Internet info gathering. Is it too late to start a blog? Probably not as I am guessing most dealers are late adopters any way. The role of the ISM may change, but I don't think the position will go away as was discussed earlier this year. The savvy ISM will continue to find ways to engage the customer and gain a (short-term) upper hand.

Nice global message by Capgemini. It is interesting how both Brand and Dealer Loyalty are down this year. Not too surprising however. The growth of using the Internet as a primary source of information has taken really leveled the playing field in so many industries. It has 'kicked the door wide open'. While the auto industry has struggled with this and feared it I think it is a really good thing. It is causing dealer's to have to do business in a more honest and transparent way. Let's face it - auto dealers haven't had the shiniest reputation in the past 20 years. Perhaps the phenomenon of Web 2.0 as it pertains to the auto industry is the catalyst that was needed to help the industry re-invent themselves.

Nice global message by Capgemini. It is interesting how both Brand and Dealer Loyalty are down this year. Not too surprising however. The growth of using the Internet as a primary source of information has taken really leveled the playing field in so many industries. It has 'kicked the door wide open'. While the auto industry has struggled with this and feared it I think it is a really good thing. It is causing dealer's to have to do business in a more honest and transparent way. Let's face it - auto dealers haven't had the shiniest reputation in the past 20 years. Perhaps the phenomenon of Web 2.0 as it pertains to the auto industry is the catalyst that was needed to help the industry re-invent themselves.

Very funny and right on the money.

As a current vendor that also sold cars for many years I find amusing that many dealers fail to understand this simple cycle.

> an industry of million-dollar lemonade stands

OMG!!!! TOOOO FUNNYYY!!!!!
you hit the nail right on the head!

I knew I was working in an industry of million-dollar lemonade stands when my first Sales Manager got fired in March because he wasn't rolling as many units as his predecessor was rolling in August (store's best month in past 12). And I remember thinking, don't these GMs look at a calendar?

That is hilarious Jeff! Kbb starts buying cars again!!!! Thanks for the laugh.