Getting Small in the Crisis Economy

What is your dealership's Internet department ROI (return on investment)?

Most dealers don't even know, yet allocate tens of thousands of dollars - or more - each month to maintaining these departments.

Stop.

Stop paying for employees that are working dead leads most of the day, leaving messages that are never returned and sending countless email to no avail.

Stop pulling your hair out trying to determine whether or not a deal is attributable to the Internet department; or which CSRs might be "gaming" the system by backdating deals or other nefarious CRM enabled tricks.

Stop spending any more money for technology on sales to customers within a 10 mile radius - you’re probably thinking: "hey, that’s 90% of my Internet sales;" exactly - in most cases these folks are familiar with your organization and will visit your website, call, or walk-in anyway.

Stop patronizing Internet-based CRM software that is so slow that over the course of a week's time you essentially end up paying people to stare at blank screens for several hours.

Revenge of the Nerds

Does it sometimes seem like every month there's a new (and costly) "must-have" widget to add to your website? That's because there is. People are hard at work every day inventing new ways to repackage the same old crap and take your money - and by the time you figure out that it doesn't work (if you are one of the few who cares enough to check) you're out ten, twenty, thirty grand, or more.

How about the new opening at the top of that (money losing) lead provider's inventory page? For $3,000 per month you can get the "premier" spot; but if you don't go for it, your competitor just might. Hmm. Pay no mind that it's never going to recoup its cost, as these guys will just keep selling the scam to a new dealer every couple of months; and once you've all been pitched, they'll "reinvent" the same deal (on a new page) for another go-round. Forget also that such a program potentially sets up your inventory as the hook by which the service might promote your competition, or that your manufacturer might even be competing with your ad and/or inventory on the same page. Hard to believe that companies could come up with such arrogant ideas; harder still to believe that dealers continue to buy into them.

What about a simulcast of a new infomercial across radio station websites via an invisible player? Sound preposterous? Well, this "service" does indeed exist, and it’s out there just waiting for you to throw some more of your good money after it.

Have you not yet added a service scheduler, newsletter, virtual test drive, talking credit app, online assistant, chat service, auto callback system, call back request service, real-time inventory valuation, instant trade-in valuation, history report service, analytics, monitoring service, video inventory (panning of photos), 360 views, pop-ups, pop-unders, inventory syndication, SEO and/or SEM programs to your site(s)? What about a PPC campaign, subset of mini-sites, alternate language sub-domains, model specific landing pages, or flash graphics? Maybe you’ve already been pitched sub-prime leads brokered via a lead exchange? Are you taking advantage of Twitter, YouTube, Facebook, LinkedIn, Flickr, eBay, Blogs, RSS feeds, VXML, VOIP, SMS, texting, WAP, AJAX, text-links, social networking sites and web 2.0? Are WhosCalling and MarketScan integrated into your CRM yet?

Getting the picture? The automobile industry is 100 years old and nothing new has happened in all that time except the Internet; and by now everyone should have realized that the Internet can be much more trouble than it’s worth, that it often adds layer upon layer of costly yet worthless complexity to an otherwise simple and straightforward process; yet after more than ten years of bust, most everyone in the auto industry remains convinced that it is still going to revolutionize the car selling business (see Why Dealers Shouldn't Read Automotive News). It’s just a matter of finding that one "killer app" and the rest will take care of itself, right?

Wake up. Believe it or not, there are dealer groups out there that have never employed an Internet/BDC department, yet they’re still in business; in fact, some are doing just fine during these trying times.

So, again; stop giving your hard earned capital to modern-day snake-oil salesmen.

The Emperor and His Clothes

An emperor of a prosperous city who cares more about clothes than military pursuits or entertainment hires two swindlers who promise him the finest suit of clothes from the most beautiful cloth. This cloth, they tell him, is invisible to anyone who was either stupid or unfit for his position. The Emperor cannot see the (non-existent) cloth, but pretends that he can for fear of appearing stupid; his ministers do the same. When the swindlers report that the suit is finished, they dress him in mime. The Emperor then goes on a procession through the capital showing off his new "clothes". During the course of the procession, a small child cries out, "But he has nothing on!" The crowd realizes the child is telling the truth. The Emperor, however, holds his head high and continues the procession. - Wikipedia

Do you know that every time you link outside your website, your site gets weaker in the estimation of the search engines and you risk dropping down in the search results? That's right, and to make matters worse, there are a multitude of opportunists out there that expect you to do exactly that - send your hard-earned visitors to their sites, whereby they then have the audacity to sell them back to you in the form of leads. Yes, like many other dealers, you're probably spending tons of money in advertising to attract visitors to your website, but then turn around and send them to someone else’s - strengthening their site, while weakening yours - ultimately buying your own traffic back from them.

Stop this insanity, and stop appeasing parasites.

How about that "long-tail" theory, have you heard about this concept? (I’m not going to explain it.) Have you also heard that it's now been debunked? You’ve got to stop concerning yourself with this kind of extraneous nonsense and get back to simply selling cars.

If you’re like most other car dealers, you’re also probably paying a very expensive consultant to look over your Internet operation and report back to you what, if any, problems might need addressing. (Funny, with the high turnover plaguing Internet departments, any value a consultant might offer is often lost as the manager is long gone by the second meeting, leaving he or she relegated to preaching to new faces.) Of course, these folks always have plenty of recommendations and "best practice" solutions (often and conveniently involving the latest technological "services") usually involving you spending more money (they’d be out of work if they told their customers that everything was great). Are you also aware that many of these consultants do nothing more than tell each of their customers what the others are doing? In that case, maybe your consultant should be paying you for the privilege of studying the proprietary aspects of your system. Moreover, how many consultants do you think would betray their own endeavors by actually recommending that you close down, or otherwise downsize the department for which he or she is being paid to advise you?

So, send your consultant(s) packing; cancel your high-dollar websites, useless ancillary services, and costly third-party widgets that don't do a thing but increase your cash outlay. Stop buying third-party leads that close only 5% of the time - because the majority of them are fakes (how else can you explain their miserable numbers?). Above all, stop buying pay-per-click advertising that can cost as much as $6000 per sale, sometimes even more.

By the way, do you realize why PPC advertising is so expensive? Because auto dealers have to outbid the third-party lead providers (and their feeder sites) that compete with them for the same Internet traffic. In fact, many dealers are actually buying leads from the same lead providers that are also driving up their PPC costs – alas, in many cases you're competing with yourselves.

Additionally, up to 30% of third-party leads are duplicates, and although providers will give you a full credit (if you supply a list every month) that still translates into an average 40% overcharge.

Search Engines Are Not Your Friends

Another trend of late is the online forum where consumers are invited to comment about experiences with car dealers. Unfortunately, forums are now also popping up as components of lead provider sites and as such represent a conflict of interest because any mention of a dealer’s trademarks (DBA names) in posts invariably leads to negative comments showing up in search engine results. You really don’t want to be paying large amounts of money for leads to a company that is simultaneously contributing to the potential tarnishing of your online reputation via the hosting of consumer advocacy forums. Consider this: lead providers hosting forums do so for no other reason than to generate advertising revenue by piggy-backing onto a dealership’s search engine results - they really don’t care what is being posted about a company, good or bad - because the real beauty of forum integration is in the fresh and unique page content (that ranks so well with search engines) that’s created every day for free by unpaid consumers (who think they are doing a service for their community).

A related issue is that search engines have a habit of ranking stand-alone consumer advocacy, or "complaint sites" very highly - because these sites are almost always members of the search engine’s advertising program. (I refer to these sites as "complaint sites" because people are much more motivated to complain than praise, so these sites all end up heavily skewed to the negative – unless you ghostwrite your own reviews; and who’s got the time for that?) You see, it pays the search engine to show (very highly) all the complaint sites that it can find that mention your company, because they will profit from the advertising they supply to the complaint sites when they are visited (and auto dealer searches represent a big chunk of search engine traffic). In contrast, if they were to suppress these same sites, little to no money would be earned on this type of search because the remaining sites in the results (mentioning your company) in most cases do not utilize any advertising programs. Unfortunately, some search engines are now soliciting and prominently displaying consumer reviews directly. Do you really want to give your money to these companies via PPC campaigns?

Summary

What might all these "solutions providers" have in common? Why, they all want desperately to become a partner in every dealership in the country, that’s what - and sadly, some have already succeeded. They’re all founded with the same goal in mind - that they will eventually attach themselves to your business permanently, like a remora fish - except the relationship is not symbiotic, rather just parasitic. Like paying a toll to cross a bridge, or "protection money" to operate in a territory, everybody in the tech sector is essentially out to get a piece of your action - dreaming of playing golf all day while a computer in a closet somewhere is automatically calculating your next bill for its "services" rendered.

Stop making virtual partners of opportunists.

Stop following pied pipers down to the river and out of business.

Keep in mind that anyone currently supported (paid) by your Internet department initiative is not going to tell you that their service is conspiring to bankrupt your enterprise.

Rather than trying to spend your way to increased business (especially during this dire economic climate) you should instead be focused primarily on keeping the business a going concern via the elimination of any and all non-essential services and halting any further loss of revenue (via traditional hard work and customer service).

The time has come to get "small" and the best place to start is the last place to have come aboard; coincidentally, the one with the most fat: the Internet department.

Therefore:

• Depending on volume, either close your dedicated program(s) entirely and assign the responsibilities to one or two dependable sales reps, or downsize to perhaps a handful of dedicated employees or skeleton crew.
  
• Eliminate all non-essential IT expenses.
  
• Migrate to a streamlined, efficient website featuring just the essentials: business name, address, phone numbers, locations, maps and directions, contact info, inventory (debatable) and any current sales specials or incentives. Forget about all the bells and whistles, and forget about linking to any external site for any reason.
  
• Utilize an "in-house" CRM platform ensuring the maximization of return on human resource overhead, not to mention superior data security, service and flexibility.

Then close your checkbook, sit back and enjoy how much money you’re saving and how little sales are affected - while you simultaneously regain peace of mind, and autonomous control over your enterprise.

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Internet / BDC reference