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7 Changes I Would Make to Your Dealership If I Bought It TODAY

By Zack Klempf
CEO & Founder
Selly Automotive

I started out in automotive retail at the age of 19 and fell in love with the industry. That experience led me to start a software company focused on the used car market and has given me the opportunity to travel across North America and visit various used car stores from the south side of Las Vegas to Honolulu, Hawaii. Moreover, my company has gathered valuable insights from quantitative and qualitative observations of the used car dealer segment.
 
Recently, I was speaking to a group of used car dealers about embracing technology and one very outspoken dealer broke-down at the end of my presentation. This dealer was from the baby boomer generation and had worked in automotive retail all of his adult life. Needless to say, he had seen a lot of change in the industry, most noticeably over the past five years. He exclaimed that he works seven days a week, can't compete with new car dealership buyers, his margins are shrinking, millennials he has hired in the past can't sell cars and no single man could know every software application needed to run a dealership in today's market. 
 
This fragile moment for the dealer exposed some of the vulnerabilities of smaller independent and BHPH (Buy Here Pay Here) dealers. Long gone are the days where used car dealers could operate without being data driven. The ever changing industry has redlined adoption of technology to interface with Gen X and Gen Y (Millennial) consumers. This means dealers need to embrace the new tech savvy consumer and offer the digital customer experience from cradle to grave consumers have grown demanded.
 
Typically when I ask a dealer principal or sales manager these two questions, they get stumped:
  1.  How do you track your ROI from Internet leads and which of your lead providers have the highest close rate?
  2.  If one of your salespeople left the dealership tomorrow with all of their prospect data and text exchanges with your clients, what would you and could you do to recover that data?
I leverage these two simple questions to identify whether a store is data driven and on top of compliance, which is key for survival in the competitive, litigious, fast-moving automotive industry. To assist dealers in identifying weaknesses with their processes, I've compiled a list of seven changes I would make if I were to buy your dealership today.
  1. CRM with ILM (Internet Lead Management) – The majority of used car dealerships don't have a CRM system to manage internet leads and customer follow-ups. If your store isn't tracking your ROI from internet marketing spend then you're more than likely paying for lead providers that are not converting. 
  2. Staff – If you have anyone on the sales team who “doesn't use technology” or is outdated in the way they interface with customers, then it's time to bring Millenials into your store that can manage the “Digital Showroom” and the “Digital Consumer” through their road to sale. They could complement or replace older staff members at your store.
  3. Responsive or Seamless Website – If you have a legacy website that gives your dealership a dated look, you are doing a disservice to your business. A websites cost is a fraction of what you lease your brick and mortar lot for and acts as your dealership's digital showroom. The majority of consumer are starting their research online and your dealer website will play a key role in bringing traffic to your store. 
  4. DMS – Get a DMS system that is rock solid and integrated with key services that run your dealership (i.e. RouteOne, Dealertrack, Credit Pulling, Desking, etc). An integrated DMS and CRM are suggested but due to the fact that many DMS systems are not integrated with CRMs, recommend that your DMS vendor integrates with the CRM product your store uses.
  5. Lead providers – If your store is tracking ROI (Return on Investment) from lead providers, do an internet lead provider audit and cut services that are underperforming and eroding your margin. If you aren't tracking conversions then you need to start in order to figure out what lead providers aren't performing. 
  6. Reputation Management Software Whether you like it or not, there are always upset customers and if you have the proper tools in place you can mitigate the negative reviews that could harm your dealership's reputation. This software catch a customer issue that could turn into a negative Yelp/Google/Facebook review before it happens
  7. Compliant Texting - If you plan to text a customer make sure Opt-in messages are sent and you are TCPA compliant with best practices. Otherwise, your dealership could be involved in litigation or fined $500 - $1500 per non-compliant text.TCPA - https://transition.fcc.gov/cgb/policy/TCPA-Rules.pdf
While not all seven of these changes may be needed at your dealership, they make you think about your store's processes and what you may be overlooking.  Ultimately, independent and BHPH dealers need to leverage technology and become more data-driven otherwise they may face extinction. Competition for used cars has become more and more aggressive with e-commerce vendors like Carvana and high volume pre-owned departments at new car dealerships. Moreover, even franchise dealerships can engage in BHPH as well as offering sub-prime loans to consumers. On the other side of the spectrum, consumers have become accustomed to interfacing with businesses online and customer experience and transparency are key in a successful business in today's market. 

Zack Klempf will be a featured presenter at the TIADA Annual Conference & Expo, July 23 - 25, 2017. Register for your spot today!

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