and...as an advertising girl I have to make one little comment. When are dealers going to start bitching about the thousands their flooring is costing them for every day their inventory isn't moving rather than the couple of thousand they spent to get the sales? Just saying....

Writing a response (kinda venting..sorry about that) to a few comments I've read. I worked for Autotrader.com for ten years. (Don't now) Edmunds was the third largest site to link into ATC, only second to Google and Yahoo. One down fall for Edmunds previous to 2012 was ATC fueled the used car search that was on their home page. Consumers would search for a vehicle many times mistakenly searching for a new car...but really were searching for a used. They were instantly sent to ATC (of course not realizing they were not on Edmunds anymore) Edmunds ended the Contract I believe some time last year around August. ATC results have gone down severely since then. From my experience with what dealers told me, ATC had a higher conversation rate when they were partnered with Edmunds. Many sourcing studies were done and Edmunds.com consistently sent used car sales to dealers...however ATC took the credit. It's my humble opinion that Edmunds is launching a direct sales team to get that used car revenue and TMV is really no different than ATC's partnership with V-Auto and the trade in center or KBB. ALL in one now, right? To all 3rd parties defense it has become virtually impossible to perfectly track where all your sales are directly coming from. Every major study is showing that around 71% of consumers have NO prior contact with the dealer before coming in to the dealership. That was in 2010. I saw a huge decrease in emails and phone calls in the last three years nationally by two thirds while maps to dealerships increased by the same. This backs up the studies that show there is less contact the dealer prior to the visit.

One major merchandising issue is the custom comments and 1-800 numbers in your ads. Many listings end up with three numbers including your sales people requesting a text to their cell etc. Tracking becomes impossible. (on a funny note...make up a sheet with logos of companies like Cars, ATC, etc and put one on the page on the top left that you don't use to advertise. (hopefully that's your local paper) Have your sales people/customer each circle where their customer said they came from online. I did this for one dealership and had a good laugh when 41 sales were attributed to some random company the dealer was not using nor had I even heard of.) Anyway, always amazes me when a dealer has his IT guy show conversion and they only base it on phone calls/emails. With that percentage being such a small amount of all sales it seems like an inaccurate way to determine where sales are coming from. I believe your data is being mined no matter who/what you are using. Including v-auto, auto trader, cars, etc. Your data has paved the way for 3rd parties to keep growing their business in other ways like this site...(found from google) and partnerships with companies like Reach Local, Yellow Pages.com etc... Not just from your dms. It's really no different then me being on match.com and my profile pic showing up on someone's cell in another state considering to sign on.

Merchandising is going to have the largest effect on sites working for you. Edmunds/ATC/Cars are all similar in results, they just show them to you differently and some of them rip you off. If you have started to take a look at your srp/vdp counts and are comparing results, keep in mind how srp's are based on showing up and things like how many vehics show up on the page can double the results. For instance ATC has like 25 vehics and Cars has like 50 per page. So automatically you would think that cars has more views if you were simply comparing srp's to srp's. The layout matters too. More info shows up on ATC's srp(custom comment) so less people are likely to click through to the vdp vs they almost have to on sites like edmunds and cars. So vdp's should be more. Keeping your vehicle facing the left side of the screen in a corner position where you can see the front two lights and the back rear light on driver's side is the most appealing to the consumer eye. A simple thin banner around your pic is better than trying to fit the car in front of your building sign. And a custom comment starting with why I would want your car vs the next one priced low...like LOW miles, THIRD seat, DVD, LEATHER, AWD, ONE owner, etc...will get you a VDP. VDP's are a virtual test drive. Make sure you have videos of your dealership and a great response to negative reviews.

There's a reason why ATC lowered all their prices including going from an A market to a C or D market in many large areas as of Feb 2010. ....it's because dealers were over paying for results that had gone down.(If you are still paying the same rate as you were previously to Feb 2010 and are not paying less I'd be angry and requesting a credit with results and pricing for the last two years) Sellers were allowed to sell you the new contract but there was about a $500 area where they could charge you more or less based on whatever they wanted to do. It felt like a lot of pressure for a sales person because if I was your rep and your partnership went from $6200 down to $4200 I had the option to take you to the new contract with a better product for less money but I would have to try to sell enough to another dealer to make up for the $2,000 loss in addition to meeting my quota. If I didn't sell enough to make up for the loss it would impact my income for three months. Having integrity really hurt my bank account and in the end resulted in a not meeting my standard because I had so many contracts I needed to lower the price on or else I would have felt like I was ripping off all my dealers who I consider my friends/family. With a standard of only $1200 a month to sell, one contract going down by $2,000 was very difficult to replace in a market that already saturated and over priced for the small dealers left to sell to. If I sold you alpha and it was $4,000 only 1/12th of the $4,000 would count towards meeting my standard, but if I lost the alpha from your dealership I would be negative $4,000 that month and that would be calculated into a three month rolling average for standard/pay. So basically sales reps were paid to over sell their dealers and pray to god not to lose your business or they couldn't pay their mortgage for three months.

I'm happy for Edmunds now that they parted. Glad I quit ATC before the parting because it was one of my selling points. Edmunds does send qualified buyers who have been researching what car they want for over two months on average. I saw the results while with ATC. Happy selling and much love. <3

I wish consumers could buy directly from the manufacturer.  Dealers charge too much for everything, especially maintenance and repairs.

Reading through this, literally made me nauseous.  I worked for one of the large groups and they don't allow anyone access to their DMS.  I seriously doubt that they have changed.  Blame the manufacturers.  They started all of this when they decided to provide invoicing to third partys.

sorry, i was referring to Edmunds (though we were on zag at several stores). the lead count has been decent, but the closing ratio hasn't. as i said though, they havent' asked for any transactional data

Dealers
can shoot themselves in the foot as much as they want, for God's sake at least
learn to use proper grammar and punctuation when arguing. You need one question
mark for one sentence and I hope you aren't yelling at everyone in your posts.

However
funny it might be to read through the majority of "reactions", it is
also a bit disheartening. Using things such as F&I ect... as a means to
make money, isn't exactly that honest of a business practice. I do don't go to
a grocery store and argue a price for groceries, I pay what is listed on the
shelf which in most cases is pretty fairly priced and in-line with all other stores
across the country. Nor do I pay the grocery store directly for the time the
items sat on the shelf. Come on, get real and move with the future, everything
is moving online and open to a consumer. People enjoy being lazy, but they also demand information and want it quickly, thus the internet.

Another request maybe, just maybe,
stop making annoying commercials on TV, most dealer's commercials can be made
by high school students in an intro video production class.

P.S.

I found
this post through Google, maybe they will get into cars one day? They enjoy
buying consumer research databases, fully opening them, and using the data for their
own profit advancement through advertisement and royalties. Them and Microsoft
of course. And they aren't all that forgiving of corporations when it comes to data mining and acquisition.

My 7 dealerships have been on the program for 90 days. ours is a flat fee and they do not have access to our dms. We were expecting double digit close, but it hasn't performed well for us at most stores (under 5%). Anywone else on the program with better results?

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"