Hi Joe.

I'm not trying to peg you. While your electronic communication often comes across angry and sometimes combative, I honestly respect your view of our industry and hope you don't think I harbor any hard feelings or ill will toward you.

It should be clear to anyone that reads or contributes here at DR that you're an experienced, intelligent guy. I did read your "Winds of Change" article previously and agree that the businesses you highlighted are indeed "game changers." I consider myself a member of the "game changer" fan club and try to genuinely encourage more change.

It will not come as a surprise to anyone reading these comments that I believe in treating people the way you like to be treated yourself. Yes, it may seem simple and to some maybe even naive, but in the end all the arguments about the industry differences can be tied together based on very basic human interaction.

If someone treats me in a way I find offensive, condescending or manipulative, there's a good chance I will have trouble liking them. If I don't like them, I won't believe them, I won't care about their knowledge/confidence and I absolutely won't trust them. For me... no trust, no sale! Perhaps I'm the minority, but I doubt it.

Do you really think that we see things all that differently?

Respectfully,

Shaun

Shaun,
Just when you think you've got me pegged, check out this DR blog entry that addresses your topic, written by me:


>>>... Let’s talk about auto retailers that are busting the mold and trying to offer the shopper a fresh new "shopping game". The game is still alive and well, consumers still need and want to smell, feel and touch but they are hungry for a “new way” to buy.

Who dares to be different?
Who among us is hard at work breaking the (perception) of the auto sales business model?...

Jeff,

I think Dubis should have to pay for the shameless plug for both Carfolks and DealerSynergy.

And... my new album "Dr. Phil Wannbe" drops on April 22nd.

Please don't confuse a "Get Me Done" (GMD) with a "Regular" customer. All the GMD wants is to get into a decent car that they can drive for an extended time and a payment they can handle. They don't care about the rate. Because of their bad credit they are at the mercy of who they are getting the car from. There is no real buying experience for them except sweating the approval process. Unfortunately, this is were a lot of GMD's get abused. Inherently, secondary finance in a franchise store should be there to reestablish peoples credit. Very rarely does this happen. Independents typically hammer their GMD's and rip their heads off. I know I have seen too many coming back to us after they have been beheaded.

So, subprime is a whole different animal and doesn't count in the realm of the regular customer buying experience. That doesn't mean they should be abused or treated in a harsh manner.
However, its a one way conversation in most cases with the dealer telling them what they qualify for.

Ideally, in a fantasy world, they should be treated like everybody else. In reality they are looked at as "mutt financing". I don't necessarily agree with that mentality, but it is a reality in our industry. However, they are the ones who put themselves in a bad credit situation and they have to sleep in the bed that they made. Sorry.

WOW! This issue has a lot of passionate responses from a wide audience and judging by the length of the comments some folks seem to have too much time on their hands.

There are as many consumer types as their are car salesman types and that will probably never change. Some will always haggle and others won't mind paying retail for good service and a great experience. Consumers are starting to find out (if they haven't already) that any dealer can meet or beat any legitimate price. And if that is the case you will see more and more consumers do their price shopping and then look for a dealer who will "treat them right."

There is no accountability today and currently CSI scores are kept private by the OEM so they do not help the consumers. All that will be changing.

You gotta love this business. Here more in New Orleans at the Synergy Sessions Event. http://www.synergysessions.com

I work in the auto industry, and I've purchased two vehicles in two years. I can safely say that while I will be in the market for a vehicle in another two years, I would rather have a root canal than go through those shopping experiences again.

We were shopping for the "perfect" family vehicle, and ended up test driving every single make/model of every single SUV/Crossover ever made. It took 4 months to make a purchase, which we finally made at Carmax, because their sales staff were the only ones to didn't make every minute of our visit completely miserable.

WHY do salesmen make you wait for HOURS at their desk while they go "check on something?" Why didn't we leave that dealership, you ask? Because the jerk took our keys to do a "trade assessment" and then disappeared. We were held hostage like this time and time again. We got hip to this practice after Dealership #4. What is with that? Does this practice actually help you sell cars? Are people just so exhausted and tired by the time you get back to them that they're hypnotised into buying any car you put in front of them?

And WHY do dealers insist on the Bait & Switch? If I get to your lot, and you don't have the vehicle that I just saw on the internet - cause what? I think you're unprofessional, and I don't want you to "show me something else." Come on.... I'm hip to that game.

AND WHY do some dealers insist on listing a fake price, or a price after billions of imaginary rebates? Again.... Don't think that just because you lured me into the showroom that I'm going to fall for anything else you try to sell me. If I get all the way there, with my husband and kid in tow, I better be pleasantly surprised, or I'm leaving and you won't see me again.

I'd love to buy a new car. But I know that when that time comes, it will be the most miserable, stress inducing, painful period since the last time we bought a vehicle.

Can't Dealers just STOP all the shady practice? Be the better man/woman?

Doing SEO research, reading the uber-famous ShoeMoney.com, came across this post:


It reads:

This is why SEO’s are like used car salesman…
1) They can always sell you something.
2) They can never guarantee results.
3) They can not be held accountable.
4) They have a answer for everything.
5) All the magic happens behind the curtains - they cant tell you what they are actual doing because that would be getting to much into the secret sauce.
6) Anyone can be a SEO.

This comment is aimed right at the core of this thread. EVERYONE with a position on this thread will use this to defend their stand. We all know that Mr. Car Shopper has one hellofa bad attitude when they finally land on the lot. Does Mr GolfShith shopper have the same defensive posture with their GolfSmith commisioned rep?

Our industry has "roots and heritage" that are very negative and IMO, that only Consumers can solve. If consumers so hate the back and forth grinding, then they'll look for one price solutions like Scion and Saturn, or One Price new car dealerships.

Either way, it is clear that the New Car MSRP has dissapeared and everyone is quoting from invoice (at least the domestics are). There is only one conclusion, Dealerships must die to thin the ranks to return the balance of supply and demand. IMO, the mom & pops are at greatest risk due to lack of inventory depth. I am refering to the mom and pops where the principal is asleep at the wheel and prefers to avoid the day to day biz at all costs.

Like one of my earlier Blog Posts here, "Change is in the air...."
Joe

Nice to see how Al's and BJST's posts tie together, both talk about how personal relationships with customers bring benefits that can be counted. I agree completely, but in the end the real common denominator to sales sucess is EFFORT (read: hard work & dicipline).

Joe

There are quite a few excellent points made in this discussion. I particularly find Lao's comments very insightful. Having information obtainable in no way means that you'll be able to find and digest all of it. Information overload is very real. I've been involved in the automotive industry as a vendor, consultant and car buyer. My experiences have been all over the place with regards to professionalism, service and support when buying a car.

It disturbs me when businesses utilize questionable and misleading tactics to draw people into a business - I don't care what type of business it is. When a local appliance and electronic store advertises a special on a HD TV and I take time out of my day to go there only to find they only had a "few" of those items in stock (and they are no longer available), I make one single determination - this store will not be getting any of my electronic or appliance business! The same goes for a car dealership. And, I'm a new technology guy who will share this experience on my blog and with all my friends in an email. Bad news has already traveled fast, but today, bad news travels faster and farther than ever before.

I purchased a van for my wife in the past 12 months and the experience still sticks in my mind. Why? Because I couldn't believe the types of tactics that one dealership salesman tried on me, even after I told him that I was in the business. It was "old" car sales 101. I thought there might be a change when he had to involve his sales manager for some "insight", but the manager just reinforced and ratcheted up the tactics of the salesman. Needless to say, the event did not work out to their benefit even though we were only $500.00 apart.

Did the $500.00 mean that much to me? No. Taking time out to find the same van in another dealer's inventory with the options and color my wife wanted would take some work, and this was after a fairly exhaustive research and dealing with my wife's feelings. I was ready to end this van search, but I just resolved to not enrich the people who would act this way. And, I shared my experience with my friends. How much did this cost the dealership in question? It cost them one sale and all of the service follow-up (because we have our cars serviced where we buy them as do a number of people I know), and any potential sales to my friends.

If I had liked and trusted the salesman, the $500.00 difference would have melted away and I would have purchased the van. The price the dealership was willing to sell at was still a good price and I place more value on a relationship where I believe the dealership will support me in service and support issues.

I used to live in another city where I luckily came across a man who is the most honest car salesman I ever met. He was truthful about service issues with different models, always was easy to deal with when it came to price questions, and was there to support me whenever I had issues with my cars. Over the course of 20 years, I purchased 9 vehicles from this man. It didn't amaze me when he was alwasy busy. Everyone that dealt with him appreciated his approach and he told me that all of his business came from referrals. I think he had something!

As a consumer, and someone that works along side dealers to try and understand how to get the consumers in the door. I do believe it is stil considered and "emotional" purchase. Yes, it can be frustrating, but when you're talking the sub prime, cash car, or even BHPH customer, they are on a VERY tight budget. They are normally not going to get what they want, they get what they can get for the money.

That's where the emotion comes into it. They see the options for what they can afford and then think.... "will my family like it?" "will i look cool in this?" "will my friends like it" "is it going to run for as long as i'm paying for it?"...

That is where the consumer wants the sales person to tell them a "story" about that car. Buy painting a picture in the ad, to just telling.

The reason I bring up this "sub prime" type buyer is because it is EVERYWHERE and if the economy is bad, the smaller independent lots are going to be the ones reaping the benifits of the down swing in the economy because they CAN and WILL work w/ these types of customers. And most of them are the owner, sales person, marketing guy, gm, and secretary for their dealership... so they do care about the consumer, but at the same time, they do want their friends and family to come back. Something some franchises can teach their sales people, because the training is poor, and the management usually sucks. (that's another rant)

Than probably made no sense, so I'll summarize...

1. The purchase IS more emtional because of the down swing in the economy. So dealers need to know what their really want from the beginning.

There is only information and choices most people can absorb, maybe some more than others enjoy searching a data base of information but not many want to. The choices now available to consumers in terms of automobiles, new and pre-owned are overwhelming for some.

How to market and sell your product depends on your vision as an entrepreneur, the interests of the market, the feasibility of the product in short, it depends on many things. You look at Mercedes, Toyota, Honda, they all have their methods. The successful entrepreneur will be flexible enough to adapt to the changes in the market, strong enough to keep his original goal in mind and wise enough to know what can and can't be done. The same is true for dealers.

The Internet is a rich source of information for learning about products, comparing them and finding where they can be purchased.

Most consumers’ research products to either make themselves comfortable making a choice, make sure they are not being victimized, paying to much or to rationalize their primary choice. They need to defend it to themselves, parents, and people who matter to them.

If consumers research and choose a product, they are expressing a view about themselves. Once the purchase is made and they find out they overpaid or could have received a better product for the same money elsewhere or their Uncle told them he got the same car for a deal over at this place they will remember this the next time they make a purchase and they will never forget who took advantage of them.

The US has become a post-industrial nation. An increasingly large amount of US business is in the service sector. Is this not what a vehicle lease is? Are we selling a product or service? They sell what people do rather than deliver product and merchandise. How we service the client needs. We give them loaners when the vehicle will be tied up for 2-3 days or more, we let them have a nice vehicle, one they may want to purchase or lease the next time they are in the buying cycle, we remember their birthdays and send holiday cards, we email them pertinent information, we shuttle them to and from the dealership.

The consumers are now purchasing on line from a variety of suppliers many who are internationally based.

The dealers who learn who the new consumer is and how to work and service their needs will be in a happier place.

I highly doubt that any consumer would find a huge difference in buying from me or Joe. I think they could careless as long as they get the price they want. Their loyalty is dollar deep. Regardless of how great our CRM tool or process is.

When I'm car shopping at the retail level, I like to do everything on my own. I like to research cars online, compare pricing (actually value) between dealerships, and when I step onto the lot I want to be left alone. Nothing is more irritating than a salesperson who keeps talking to me when I don't have any questions. I'm the kind of shopper that most salespeople hate, because I tell them to stay away from me, but also the kind that salespeople love because I typically don't make them work hard for a sale. When I find a car I like I'm a bit of an impulse buyer. I've bought cars before after being on the lot for just 5 minutes. I hate the sales process because as a salesperson myself, albeit not a car salesperson, I know their every move. I never pay attention to advertisements offering cash back incentives, free gas cards, low monthly payments, or any of that garbage, because my #1 priority is getting a car that I like. I could care less whether that car is $10,000 or $10,000 plus a $1000 rebate - if I like it I'm going to buy it. I think a significant portion of the market DOES pay attention to those ads though, which is why they persist.

Me personally though, I like to be left alone to make my own decision without any "guidance" from a sales rep. I'm not afraid of pushy sales reps like a lot of people are, thinking they'll end up in a car they don't want. I just find them to be a nuisance and will head to another lot if they don't let me come to my own decisions on a purchase.

Maybe a little on my personal background is in order. I grew up in the car business, literally. My family (both sides actually) have been in the car business, quite literally, since there was a car business. My father is still a dealer, though not as an extension of his father's business (not even in the same market). I began taking an interest in marketing/merchandising as it relates to the auto industry around my sophomore year in High School. I used to sit at my father's desk (when I wasn't too busy sweeping up cigarette butts etc. on his lot) and help spec out cars, evaluate advertising opportunities, and study his interactions, as a very "hands-on" dealer, with his staff. I attended Northwood University on golf and academic scholarships, and graduated with a BBA in Automotive Marketing (an odd degree, I know...NU is the only school in the USA that offers it). I have worked in various capacities in the retail auto industry, most outside of my family's stores. I have worked for one of the largest dealer groups, as well as single points in small towns.

Point is, I don't have any "preconceptions" about the car business that just happen to conveniently fit into my side of this discussion. Any of my conceptions regarding the car business come from a lot of years of experience and formal education. The word preconceptions makes it sound as though you believe I form my opinions, then look for an argument to support them. This is simply not the case.

I feel the need to reiterate that it was you who first compared the car business to a sporting good store (think Golfsmith), by defending the practice of loss leader ads. I simply wanted to highlight what I see as a crucial difference in that comparison. I totally agree with you that they employ a quite different business model, and therefore may not be worth the comparison.

As far as your "intellectual challenge" goes, I'm in. I don't see the business as "victims and predators." Though I believe you do. Here is why: in your first post on this thread, you said "The days of old are gone. Consumers have all of the information tools needed to chart their own course, they can take control of their own fate. What of the personal responsibility to understand what rolling over negative equity means down the road? That falls into the realm of education does it not? We're here to move iron, not be mini Dr Phils." In other words, you believe in the theory of survival of the fittest. If the customers are too weak (read: stupid) to take advantage of all the tools available to them, then we should prey upon their weaknesses in order to move the iron, and they get eaten, right? You made the argument for the very definition of the predator/prey relationship.

I simply see a lot of room for improvement in the business with regard to how we "talk" to our customers. I think that we can do better by setting proper expectations...do you really still wonder why customers "beat us up" for better prices and not salespeople in other verticals?

My only point on this thread so far has been that there are better ways to market our products and services to the car buying public. We need not resort to pricing tricks, numbers juggling, and hard-sells. As Shaun's video and his post seem to suggest, our customers are asking us for better than that.

Tim

PS. I'm not mad, don't you be either. I love marketing as much as I love a lively debate!

Tim,
This GolfSmith/Dealership is an excellent model to help us illustrate that the shopper & seller interaction varies in each vertical AND is highly complex. I challenge you, not to get you to dig into your current position; my reply to you is to give you more data to reflect on.

I am here to tell you that you can't draw comparisons from the GolfSmith experience and a NEW car dealer, but, USED CAR DEALER??? Now you can draw a million parallels and that my friend is TOTALLY a different story.

re: NEW CAR DEALERSHIP EXPERIENCES.
Example: Loss Leaders, Transparency & Our Industry.
Have you ever been a merchandise buyer? I have. Buyers fill merchandising slots. Merchandising slots are extensions of marketing campaigns. Marketing brings them in, merchandising completes the buying process. Pretty simple stuff, you see an ad for a Driver, visit GolfSmith, find that promo item, find it in depth, you also find it with different lofts and shafts. ALSO, you find a sea of other brands and a zillion golf balls, rows and rows of accessories and lots of high margin clothing too! Yumm!!

This is a typical "Catagory Killer" experience. These mega stores exist in industries where demand is high but sales outlets are fragmented (aka: mom and pops). The depth of presentation is so overwhelming that why go anywhere else?

I ask you, did you go anywhere else to shop? Did you grind the commissioned reps for a better price? Probably not. The other outlets are so trivial compared to this goliath AND we’re only talking a few hundred dollars… Why Shop?

Tim, can you see the entire picture that I am drawing?

Let’s talk Business Mechanics.
Try for a moment and duplicate this "category killer's" inventory selection in the auto industry (on the new car side). The cash required to stock every option, in every color and do it with depth (more than one in stock) is... not possible in most brands.

Tim, How could you have not factored this in to your analysis? I know why, because you think that dealers are making consumers into victims and this GolfSmith analysis fits your preconceptions. Heed my intellectual challenge, don't fall prey to seeing victims and preditors.

And lets talk about that "THOROUGH product presentation and demonstration/"test-drive," by a commissioned salesperson".

Amazing things happen when you’re a commissioned sales person working in a category killer that operates in an industry that is as fragmented as Golf is. GolfSmith knows that they are a destination location and that one "loss leader" sale will result in a dozen more vists IN A FEW WEEKS to buy balls, bags, shoes, umbrellas, rain gear, tees, training aids, grips, gloves, training, clothing and on and on.

Lastly, How many times a year do you see your car buying customers?

I rest my case.
Joe
p.s. don't be mad at me, I just enjoy marketing/merchandising so much that I can't help myself sometimes!

I've neglected to comment because I've been really torn on this subject. I'd love to be the foremost spokesman for truth in advertising, I'd love to come in here and say our OEM's are spear-heading change, I'd love to talk about a few of the retailers in the car industry (retailers - not car people) who try to operate like Golfsmith, and I'd love to say I believe everything on CNN too.

The truth is reality is a mean bitch. Just as I post this, two of our Hyundai ads are expiring. We advertised a Sonata for $16,777 out the door with all VA taxes and fees included, and had over 30 to choose from at that price - it failed. On the other hand, the Hyundai Santa Fe ad for "up to $6,000 off" worked like a charm. When I see an OEM ad it is always for the base car they produce the least of (the one we can't order) without freight and some other stipulations. CSI takes a long time to pay the bills, and it starts in your service department. I can go on and on...

A while back I posted a comment about the changes going on in this industry and said the current economic situation will either speed those changes up or halt them in their tracks. This is what I think will happen over the next 2 years if the economy stays like it is right now: Every manufacturer has acknowledged there are going to be less cars sold in the US this year. Those same manufacturers then said, "yes, there are going to be X million less cars sold in 2008, but we have the new XX model coming out so we'll still increase our sales this year! Keep those plants pumping those cars out because when the new XX model hits our older cars will start moving again." They'll hold onto this notion through April or May, then realize they made a big mistake, fire some people, and the new bosses will then come on board saying "the only way we can move this stuff is to put bigger incentives out than ever before" and this summer we'll start selling more cars again based on huge incentives. Trades will be worth less down the road, crazy leasing residuals or longer financing options will be introduced, and the cycle will continue. We'll continue doing what America does best: putting things on the back-burner.

I hope I'm wrong.

I dunno, I guess I like to think each customer is a little different and what might appeal to one won't appeal to another. Lucky for the consumer they have about 1 kazillion choices. When I look at my own personal buying habits it seems I like to buy from people that are like me in a way. They might be completely different but they have some way of connecting to me. Most folks are creatures of habit and like to do things in a pattern, I attended Ford training back in the late 90's and they use to suggest Mirror and Match the folks your speaking with, (meaning adjust to the speed and go at their pace), I thought it made sense? My point would be, I think consumers want somebody compatible with them and its our job to figure out what that might be and keep it flowing within a general buying process that treats them with respect. I know not all customers will go along with our process(or any process for that matter) and after trying to adjust it to their style it still doesn't work for that one customer, sometimes you have to chalk it up to a learning experience and get back to the other 90%.
@the marketing ethics group
tell the manufactures to stop first, I think I know where the Dealers learned it. (and it wasn't from the G-Pod) Ha ha I made funny <

What consumers want is:

1. Their color, options, in stock, forget dealer trade, too long.
2. Invoice pricing from first quote request
3. The quickest transaction time possible
4. 0% interest

Cars have become commoditized, zero percent has become expected, invoice pricing is available to everyone all the time. If you can't give this to them, chances are someone else will, it's only a couple more calls away.

As a consumer, Joe and Joey's comments are why I would not purchase from them.

And, I would not call Joe a liar either. As I said before, I think he is a hugely intelligent person, with some great ideas.

If it seems I am being a bit combative over the golf store/car dealership comparison, it is only because I have been making the comparisons in my head since my visit last weekend, and this thread gave me the perfect avenue for venting.

Keep up the good work Joe, Shaun, and everyone else!

Joe,

You were the one who first drew the comparison to sporting goods stores, I just tried to share the difference between honest advertising and what I feel is dishonest, intentionally deceptive advertising.

You are absolutely right, "Golf Galaxy" (it was Golfsmith, in case anybody is wondering) does not face those same challenges. But how does a loss-leader ad address any of those issues in our business? If all else is equal, I would rather be forthright and transparent in my advertising/marketing efforts.

And by the way, speaking of buying experiences, I got a THOROUGH product presentation and demonstration/"test-drive," by a commissioned salesperson, who asked qualifying questions like "what's your handicap?" "can you describe your typical ball-flight?" "what is more important to you, distance or accuracy off the tee?" etc. He tailored his presentation in response to my answers. After my test-drive he closed me by asking "do you need new spikes for the season, or just the club today?" I almost fell over. He then explained their financing options, including a no payments/zero-interest til 2009 program. He asked whether I had any old equipment I wanted to trade in, then explained how their trade-in program worked, in case I wanted to take advantage of it next season and get a new driver again (gotta have the latest technology, you know?!?!??!). He showed me their club repair/customization department, just in case. He explained the manufacturer's warranty, and the store's return/exchange policies. When he learned I was in business for myself, he made sure to tell me all about their "business solutions" program. All told, he spent well over an hour with me, for what I can only assume was a pretty measly commission on one golf club.

How many of the customers at your dealership get this kind of service? If it's a lot of them, great job!!! If yours is more representative of the norm, customers are probably still getting the old "if I could, would ya?" buying experience. It's time to stop blaming the customers for our woes. The argument that "customers only try to negotiate for cars" is our own fault!!! Until the whole Monroney debacle, autos were the only consumer product that could get away with not carrying a price tag! And we wonder why customers don't trust us? Customers upside down? Whose fault is that? Our need to sell 17 million new cars a year has driven us to deceptively low price advertising, incentivizing customers to trade more often than they ever have before. Need to sell more cars? Just find a bank that will do 96 month loans, don't worry, none of your customers will be upside down when they want to trade in 3 years. Shaun had it right, the car buying process is an emotional process, but our advertising and sales processes evoke the wrong emotions.

No worries Shaun. Everyone knows that your a square shooter!

Clarification:
I'm not calling Joe a liar or saying that he supports lying. While we may see some things differently, I sincerely respect his thoughts and opinions.

Amen Joey.

Sorry, but does anybody really care about what the consumer wants as long as we sell the car and make the money? This CSI stuff is so over rated. The Factory makes a big deal about it, but they really don't care. It is all lip service to them. They just use the CSI as leverage to hold over a dealer, but it is not because they really care.

The consumer cares about price, getting in and getting out, they don't want to be your friend, sorry. Believe me, they will gladly go to lowest dealer and give two cents about their buying experience. How many of them even remember their sales reps name a week after they buy the car? Not many to be sure.

Some State's and the Fed's for sure have dealer's so regulated that it is very hard for a dealer to pull the kinky stuff they did back in the day. If they do kink it they eventually will get caught and they either get fined, suspended, or lose their license. Granted, there are several state's that have absolutely no regulation and it is still the wild west and the factory is the only one regulating the dealer. In any case, the factory calls at the end of the month for your sales numbers, not your CSI.

All this hog wash about the "Buying Experience", la dee da, stuff is for the birds. Get 'em, get 'em out, make as much gross as you can, and move to the next deal. Face it, they don't give to shakes about me, what a nice guy I am, or how community oriented my dealer is. How many times have you been the nice guy, broke your tale bone to give "Completely Satisfied" service and they blow you off for $50.00 to your competition across town. Oh, but I had better service and they still didn't buy from me........waa waa.

This doesn't mean you have to lie to them, cheat, steal, kink, badger, be mean, be insulting, etc...It just means get 'em, and get 'em out. I guarantee your CSI will go up 100% if you cut their time in the store in half. No back and forth four square Olympics, no hold them in the box forever squeezing them for every cent.

Sorry, but it's car business, not car friends.