Raynard M. Fenster entered auto retailing in a novel way.
He was a customer at a Saturn dealership when a fellow customer mistook him for a salesman and asked about a showroom car. After Fenster obligingly answered his questions and did an impromptu walk-around, the man said he'd buy it.
“I took him over to the sales manager and explained what happened,” Fenster recalls. “The manager finalized the sale, then offered me a job.”
Fenster, who until then was an aviation safety inspector, now is e-commerce director for the Lindsay Automotive Group with dealerships throughout Virginia and Maryland in the Washington DC area.
He was among the sharpies attending the first Ward's Spring Training Conference presented by Autobytel in Tampa.
The event provided a venue in which the brightest minds in auto retailing charted out what effective marketing initiatives affecting auto dealers will look like in years to come.
Participants offered insights, shared best practices, discussed trends — and attended a New York Yankee-Cincinnati Reds baseball game.
The following stories focus on the conference presentations and workshops.
How to Market to Generation Y
Score one for the suits at Toyota Motor Sales U.S.A. Inc.
Their apprehensions over a hip Scion marketing gimmick unwittingly made it better, admits Will Travis, vice president of ATTIK USA, an agency hired to hype Toyota's Scion youth brand when it debuted three years ago.
Promotional schemes ATTIK came up with included plans to paste Scion posters to utility poles and such in major cities. Toyota balked, questioning the legality of that.
“We said to ourselves, ‘Oh corporate.’” Travis recalls.
So the agency revised plans and ended up using magnetic-backed Scion posters for the product-awareness scheme. Young people proceeded to rip them off. That pleased Travis.
“They took them and put them on their refrigerators,” he says. “Suddenly, I am right where I want to be with the Scion message: In their homes.”
It can be tricky marketing to young car buyers, Travis says. “Youth marketing is very thick and very fast moving, and for an audience with an attention deficit.”
On the other hand, 76.7 million members of Generation Y, born between 1977-1994, are influential consumers, he says. “They are not just the annoying kid with jeans hanging off his butt and who doesn't like car dealerships.”
They make up a diverse social group that is time-poor, tech-savvy and connected. Family and friends highly influence their buying decisions, Travis says. He offers these automotive marketing tips on how to reach Gen Y buyers and gain their trust:
- Demonstrate you're worthy of their attention. Respect them, but don't try to act like them.
- Involve them, particularly at the dealership level, by encouraging them to see the product and take a test drive.
- Empower them. Join the conversation, but don't control it. Make it feel fluid.
ATTIK's efforts to interest young consumers in Scion included edgy TV spots, Internet games and online viral advertising.
Some of the latter might make sensitive viewers wince. In one viral ad for the boxy xB model, a cartoon character spurts blood while using a machete to reshape his head to look like a box.
“We also had people walking around in public with boxes on their heads,” Travis says. “Students work cheap.”
To enhance the youthful brand image, he prefers all Scion buyers be age 21 and under. “We felt like telling Toyota, ‘Don't sell Scions to old people.’”
But the reality is that there are older people who like Scion and younger people who don't, say dealers at the conference.
Michael Baker, CEO of a dealership group in San Diego, says many of his Scion buyers are empty nesters and retirees who like the vehicles' functionality.
Daniel Buechlein, a sales manager at Usbelhor Toyota-Scion in the farming community of Jasper, IN, tells Wards: “We don't have Generation Y in our market. We have farm boys. And they like pickup trucks, not Scions.”
— By Steve Finlay
Send In the Data Crunchers
In gauging the effectiveness of auto dealership marketing, some things are more measurable than others, says Mike Spadafore, a product-strategy marketing director for data-cruncher R.L. Polk & Co.
“A lot of stuff is going on that can't be measured,” he says. “Branding is hardly ever measured, yet you know it has a positive effect.”
But elsewhere, metrics are available to assess online-marketing efforts, including emails, banner ads, search-engine optimization and sales leads from various sources.
“It can be highly measured, that's why it's great,” says Spadafore, yet some dealers neglect to use such data.
He is not an advocate of flooding dealers with excessive information that he dubs “infobesity” — the inflated result of “producing data because you can.”
But measuring, analyzing and acting on relevant performance data is crucial to a modern dealership, he says. “The reason you are measuring it is so you can change what is wrong. So be prepared to pull the trigger.”
Polk offers a service in which dealership Internet leads are ranked by their likelihood of resulting in sales. The system helps determine if a store is getting bad leads or if sales people are bungling good ones.
Lead quality can be a sore spot with dealers. Many of them fret over leads, says Matt Strickroot, a vice president at Digitas, a digital-marketing firm.
“Most dealers worry about buying leads, because they worry their sales people will drop the ball,” says Strickroot, a former dealership group Internet director.
“About 45% of leads go unanswered, he says. “Some dealers are paying $18 per lead and not tracking them.”
Spadafore says dealers should ask themselves:
- Are my leads likely to close?
- Do I have too many leads?
- Do the leads my store fails to close end up being closed elsewhere?
Understand lost opportunities, he says. “And only measure what you will use to drive change.”
— By Steve Finlay
Some Dealer Websites Make It Hard to Book Service Times
More and more dealerships offer online booking of service appointments, but some scheduling systems are superior to others.
So says Dinos Constantine in reviewing various dealer websites and showing examples of how easy and hard it can be for Internet users to slate service times and order parts.
Less than half the dealerships in the U.S. offer online scheduling of repair work — but that number is expected to increase fast, says Constantine, director-marketing for DealerTrack's Accessories Solution Group.
“In 1994, 10% of airline tickets were booked online, and now 10% aren't,” he says, predicting a similar shift toward using the Internet to book car-repair time at dealerships.
“It is not for all your customers, but if 15% to 25% move to it, it takes the scheduling burden off the dealership,” Constantine tells dealers.
To make it work, “you've got to get buy-in from the service manager,” he says. “Regardless of what you do on the Web, make sure you have the process in place to handle it on the other side.
“You can't have customers randomly throwing out appointments if you can't accommodate them,” he says. “Last thing you need is 11 appointments for the same time. That's a train wreck.”
As Michael Maroone, president of dealership chain AutoNation Inc., notes at an earlier trade conference: “One of the pathetic things in this industry is when a customer makes an appointment, and it doesn't mean anything.”
Constantine cites what various dealer websites do right and wrong, as he shows examples of online scheduling features.
He pans a Honda store in Florida for not including a calendar with dates and days and for putting users through needless bother.
“You have to pay attention to details with this site,” he says. “If you click on March 23 as an appointment date, the result is the date is closed. So why is it there to be clicked on?”
Conversely, Constantine praises the site for sending an automatic appointment confirmation and telling customers to call if there is a problem.
An online scheduling system at a Buick store in Wisconsin has pros and cons, too.
“You click for service appointments, and then you are asked to do another click,” Constantine says. “But it does let you see what hours are and aren't available.”
The site's major drawback is it asks customers to enter three potential service times. Users are told the dealership will phone later to confirm one of them.
Constantine's reaction: “If I'm doing it online, why do I want them to call me?”
He is impressed with how a Chevrolet store in Wisconsin books appointments it in real time.
“The site is ahead of the pack,” he says. “It allows you to log in, so the information doesn't need to be reentered. It has a drop menu, asking for type of service. Based on what service is requested, the software searches for the number of hours it will take.
“Then it gives you available times, with unavailable times blocked out.”
Meanwhile, the Buick store in Wisconsin also is not customer friendly in selling parts online.
“For parts, it asks people to enter the trim coat, paint code, production date and engineering code,” says Constantine. “What consumer knows those?
But with accessories, the site is much easier to use, offering drop boxes for makes, models and prices.”
He praises a Rhode Island Honda store's online auto-parts sales operation.
“It is one of the best sites,” Constantine says. “It asks for model, parts number —
if you have it — or the VIN (vehicle identification number). They have duplicated what every successful site does: provide a user-control experience.”
Some dealers fail to grasp the importance of the Internet to help the back shop, even though some domestic-brand dealerships rely on fixed operations “to stay afloat these days,” says Todd Swickard, CEO of Auto Dealer Traffic Inc.
He says: “If you say to some dealers, ‘We had 1,000 service appointments and 50 sales requests for parts online,’ they'll say, ‘I don't care; how many cars did you sell?’”
— By Steve Finlay
Expect Regional Dealer Auto Ad Changes
Auto dealers' regional joint advertising should get a better return on investment for now that local dealer groups control much of it, says ad executive Rob Mudd.
Spearheaded by General Motors Corp., several auto makers have turned over control of such ad spending to local dealer associations and ad groups that “know their markets,” says Mudd, president of Mudd Advertising's agency division in Chicago.
Dealers praise the move. The down side is regional dealer groups can get bogged down struggling to develop a unified message, says Mudd and others.
Still, there's general agreement that regional advertising is best left to local dealers. Auto maker ads tend to tout the brand, dealer ads urge consumers to buy.
“Dealer associations will put out a message, not so much ‘Chevrolet is great,’ but ‘buy one now!’” Mudd says. “You'll see an increase in GM market share for that reason alone.”
Auto maker-controlled regional advertising can be virtually identical, yet run in different markets, he says. With dealers having a greater advertising, “you will see spots appropriate to their markets.”
Referring to market differences, David Armitage, Autobytel Inc.'s vice president-advertising, says, “There are things that make sense in the Pacific Northwest that don't make sense in Phoenix.”
Dealers celebrated when GM relinquished control of ad spending to local dealer groups, says Ralph Perkins, vice president-sales and marketing for the Potamkin Automotive Group based in Miami Lakes, FL.
“We all cheered,” he says at a panel discussion on marketing strategies. “It seems like a test. So dealer associations are trying to get up to speed.”
There should be an integration of advertising by auto makers, regional dealer ad groups and individual dealers, says Michael Baker, CEO of the Bob Baker Auto Group based in San Diego. “The three should be singing the same song.”
It is hard to find a common marketing message if dealer ad group members differ on intent.
“Some dealers want the regional message to focus on moving slow-selling vehicles in their inventories,” Baker says. “To me, that's not the purpose of a regional ad.”
He wants more accountability on the effectiveness of regional advertising. “If we are dedicating 50% of a regional ad budget to the Toyota Corolla, I want to see Corolla sales go up.”
Strong differences of opinion can delay the final product, Mudd says of dealers collaborating on ads. “The way to make it work is to get the message out — now. That's a problem with some dealer associations. They take too long.”
An inherent hindrance is that the collaborators consist of same-brand dealers competing against each other.
“We don't want to share some stuff,” Perkins says.
Thomas Vann, owner of Team Hillsdale (MI) Chrysler, adds: “You get the desire for a team effort and rah-rah spirit. But, as a Chrysler dealer, I'm fighting other Chrysler dealers more than Ford and Chevrolet dealers.”
Baker says: “It's more of a dogfight among dealers today.”
—By Steve Finlay
MySpace the Place for Some Dealers
Despite popular misconceptions, the average age of someone with a MySpace.com Web page is not 12.
It is 31, a demographically attractive age to automotive marketers.
“This is your market,” Larry Bruce, president of marketing firm AIMData, tells dealers.
More and more marketers are looking at online social networking sites as places to advertise to targeted audiences.
There are about 240 such sites, including MySpace, MyFace, FriendWise, FriendFinder, Yahoo! 360, Facebook, Orkut and Classmates. Individual users build their own pages filled with personal information and profiles, but prime space is reserved for ads.
The growth of social networking has been phenomenal. Worldwide, there are 122 million users, 70 million of them in the U.S.
“Those numbers didn't exist four-five years ago,” says Michael Barrett, who at the time was executive vice president of Fox Interactive Media, a News Corp. division that runs MySpace.
Some executives at Fox Interactive were skeptical when MySpace was acquired in 2005, he says. “It was first thought of as a wasteland of teens.”
But doubts soon disappeared. “There has been huge traction and a huge interest by marketers,” Barrett says. “It's not just for kids. Moms and dads are in their own network. You can't reach 70 million people without spanning demographics.”
Social networkers check out each other's profiles, upload photos, read comments and post them. Marketers hope they also are checking out adjacent ads.
“The information they are posting creates fertile territory for marketing,” Barrett says.
For instance, social networks of vehicle enthusiasts are a no-brainer for ads from auto makers, virtually all of which have a presence on MySpace. So do many dealers, with varying degrees of success.
“There are thousands of dealers involved in social networks, but it is unorganized for the most part and not terribly well done after the initial effort,” Barrett says.
He emphasizes the need for fresh content. “You are not doing social networking if you are not alive and active.”
Bruce recommends dealerships set up social-network Web pages as a way to garner leads.
One way for a car dealership to draw people to its own social-network site is to offer a section where consumers rate the store, Bruce says. That presumes customer-satisfaction levels are high to avoid getting rapped by discontents.
“People are talking about their dealership purchase experiences on places like MySpace and FaceBook,” says Famous Rhodes, director-parts and accessories for eBay Motors.
He predicts such websites will play a bigger role in vehicle-sales and dealership referrals.
— By Steve Finlay
Dealers Love Leads, Hate Costs
Dealers love Internet leads. They just don't like to pay for inferior ones that go nowhere.
“It's all about quality,” says Kent Bozarth, general manager of Ed Bozarth #1 Park Meadows Chevrolet in Denver.
But some dealers focus too much on the cost of leads, rather than their effectiveness, he says.
“Shame on us if we are not determining the true return on investment,” Bozarth says during a panel discussion on the rising cost of leads.
Still, for some dealers, “there is something about surrounding yourself with lots of leads,” says David Kain, president of KainAutomotive.com and a partner in a family-owned dealership group in Kentucky.
Dealers get leads from various sources, including their own websites, auto makers' sites and third-party lead aggregators that sell them. Quality varies, with some low-level leads coming from people who turn out not to be particularly serious buyers.
“A lot of third-party leads are from people researching vehicles,” says Larry Bruce, founder and head of AIMData, a new-age marketing firm. “They are looking at trucks, not at a truck. That's why those leads are hard to close. A true lead to me is someone who is going to buy now.”
It is important for dealerships to track leads to see which ones result in sales, Bozarth says. “Otherwise, you're kidding yourself.”
By now, online marketing should not be a novelty to dealerships, says David Wassmann, CEO of NeoSynergy Inc., a firm that aids dealers in leveraging the Internet.
“We talk of online marketing as being special,” he says. “It isn't. It's been around for a while. It is not unique anymore.”
Yet, some dealerships are more web-savvy than others.
For instance, the Bergstrom Automotive Group consisting of 23 Wisconsin stores, has a separate budget for search-engine marketing, a tool that promotes websites by increasing their likelihood of appearing high on search results.
“We really value search-engine marketing because it has given us a strong preence,” says Ted Gessler, Bergstrom's corporate Internet sales director.
Other dealerships, such as Bozarth's, are playing catch up when it comes to paying for search-engine clicks and keywords.
“We are not as sophisticated as the Bergstrom group in that area,” he says. “We know we need to be there.”
But don't rush into it, Mike Gargano, vice president and general manager of Autobytel's finance-lead program, warns dealers.
“If you go into search-engine optimization and search-engine marketing locally, go slowly, because otherwise you can quickly become upside down on your costs,” he says.
Search terms go to the highest bidder, and “it's a free for all, really,” Wassmann says.
He adds: “When ad agencies bid on search terms, the price escalates. It is impossible for consumers to know who is bidding for search attention; whether it is auto makers, dealers, dealer associations or ad agencies.”
He predicts a shake out in months to come “as to who is bidding and what they should pay.”
To keep search-engine marketing costs down, Bruce recommends a dealership limit its per-pay click ad agreements to the store's top-3 selling areas by zip codes.
“Tell Yahoo or Google, ‘I'll pay $15 a click for these zip codes,’” he says.
Dealers need a process for handling “the electronic traffic” that results from Internet marketing and lead generation, Gessler says. “Pick a process and hold people accountable.”
Dealers can't blame lead providers if dealership personnel bobble online leads, says Rick Fuss, Internet sales consultant for Coggin Honda of Ft. Pierce (FL).
“If we drop the ball, it's our fault,” he says. “If someone emails me: ‘Thanks for not getting back with me; I bought a car somewhere else,’ I get mad at me.”
— By Steve Finlay
Tips On Modern Marketing
Marketing doesn't sell cars; it gets prospects to a dealership so the sales people can sell cars, says Larry Bruce, head of AIMData, a marketing firm.
“You are not looking for someone who wants to buy a car, you are looking for someone looking for a dealership from which to buy a car,” he tells dealers.
At a workshop entitled “Marketing to Your Data Base,” Bruce, who co-owns a dealership in Houston, offers new-age ways to reach customers.
“There will always be a place for mass media in a dealer's ad budget,” he says. “But it is going to be flipped so that it's 80% targeted marketing, 20% mass media.”
Targeted marketing requires building a data base with customer information from various sources.
Among those are auto makers that can provide dealers with 10 years of detailed customer data kept by federal law for recall purposes. Some auto makers are forthcoming with such data, some aren't.
“Chrysler (LLC) has a system where you can go on line to get it,” Bruce says. “Ford (Motor Co.) and General Motors (Corp.) will send you a disc. Honda (Motor Co. Ltd.) is a nightmare; it considers the information proprietary.” But, he tells dealers, “If you look at your franchise agreements, it's your data.”
A dealership's service department is another place to garner customer data for eventual targeted marketing.
“The customers are back there, waiting for their cars to be repaired,” Bruce says. “Some haven't bought a car from you in a while but have a great service relationship with you.”
Mailing sales material is the easiest way to reach customers, “because you know the mail is going to be delivered,” he says. But mass mailings can be costly. So Bruce recommends limiting them to three zip codes where the most customers reside.
E-mailing is a low-cost way to reach customers, but it backfires “if you blast emails every week with the same stuff.”
One way to build an e-mail data base is to offer free oil-change coupons to service customers and others in exchange for their email addresses and household information, such as the number of vehicles and their model years.
Text messaging is an “awesome” way to reach service-department customers to tell them of specials and such, but text messages are ineffective when sent to prospective car buyers, Bruce says. “Those people don't want them.”
A dealership needs its own customer-contact system. “Otherwise, it's not the dealership's customer, it's the salespersons,'” he says. “And if they leave, the customer information leaves with them.”
— By Steve Finlay
For more conference coverage, go to www.wardsauto.com