dealix ralph paglia automotive marketing interview part1

Effective Online Automotive Sales: Interview with Ralph Paglia of Courtesy Chevrolet

December 2006 Effective Online Automotive Sales VOLUME 5 ISSUE 12

HOME

CONTENTS

Interview with Ralph Paglia of Courtesy Chevrolet

Third Party Auto Sites: the Trusted Source for Online Car Buyers

Want to Sell More Cars More Efficiently?

Ask Gilbert: Getting Buy-In from the GM

What Drives “Dealer Satisfaction”?

The Annual “Bad Leads” List

Metro Areas with the Fastest Close Times of Q3 2006

Internet Training and Industry Reminders

Previously in the Dealix Dealer Newsletter

View a Movie to See How Dealix Can Help You Sell More Cars

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Interview with Ralph Paglia of Courtesy Chevrolet The Intelligent Approach to Challenges Big and Small

The Dealix Dealer Newsletter recently sat down with Ralph Paglia, CRM/e-business director at Courtesy Chevrolet, consistently one of the top Chevrolet dealers in the country. A well-known expert in online automotive sales, Ralph shared so many best practices with us that we decided to publish his advice over the course of two issues. In this first installment, Ralph talks about adapting to market trends and competing with the imports. Dealix Dealer Newsletter (DDN): Thanks for taking the time to share some of your experience in online auto sales with our readers, Ralph. According to a recent survey by Cobalt and RL Polk, 56% of new car leads wound up as sales; but only 8% of these sales took place at the dealership where the lead was first submitted. On top of this, 34% of these buyers wound up with a different model - and frequently a used car. In your opinion, why is this happening? What can dealers do to make that original sale? Ralph Paglia (RP): At Courtesy Chevrolet, we handle over 5,000 leads per month, and we get those leads from a wide variety of resources - so we are uniquely positioned to spot trends in the nature of these leads. What we’ve seen is an evolving landscape of lead generating business models and strategies that have contributed to the “Fickle Prospect” syndrome. My explanation of why so many leads wind up elsewhere is simple. Over the past 10 years, shopping online for a car has become mainstream, and so many customers are submitting multiple leads to multiple dealers simply because it’s so easy to do. If a single customer submits five leads to five different dealers representing five different brands, then 80% of those dealerships will experience a perceived failure to close the sale. However, we still need to keep in mind that with Internet leads, the cost per sale is generally lower than with traditional advertising. Where before, we could assume that car buyers were viewing many different ads and different brands in newspaper ads, with Internet leads – we can actually measure that behavior. Consumers love choice. On the other hand, seeing new car leads ending up as used car sales is nothing new. It’s just that the explosion of Internet leads is making it much more visible. Those of us who grew up selling cars have long known the value of switching a new car buyer to a used car. “Switch to get rich!” we used to say - referring to

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the greater gross potential on the sale of used vehicles. Now let’s look at the question of lead defection to competing products. The number of cars sold each year in the US has been holding steady at around 17 million. With lead volume increasing at the same time, it’s inevitable that the rate at which dealers lose leads to other brands will increase. Don’t think my point is that dealers should be comfortable with high loss rates. But you have to look at the causes behind these rates and figure out where you can have an impact. For example, at Courtesy Chevrolet we’ve recently modified our lead management processes to acknowledge the reality that most leads wind up buying a different car from the one they initially said they wanted. We’re now following up with a second round of price quotes for certified pre-owned vehicles - quotes selected based on the lead’s original inquiry and any information collected by the Internet sales specialist. DDN: Given the huge array of choices buyers are presented with online, it’s easy to understand a certain amount of fickleness. But one thing we’ve learned in our research is that a dealer’s ability to connect with online buyers exerts a powerful influence over where and what they wind up buying. As a very successful dealer, you’ve no doubt developed some really effective ways to make this connection. This is probably all the more true, since you’re doing very well selling a domestic brand at a time when domestics are a tougher sell. What advice would you give to domestic dealers who are struggling to improve their Internet business? RP: At the risk of giving away the secret sauce, I’ll tell you that one of the most effective ways for domestic dealers to increase sales is to aggressively pursue buyers who are considering Asian brands and competing domestic brands. We take great pride in convincing Toyota and Nissan buyers to consider a Chevy. We use search engine marketing to target customers shopping for competing brands. We bid for keywords related to these brands, and we place our ads on sites devoted to these brands. Targeted campaigns of this kind can push Corolla buyers to consider a Cobalt, Sequoia buyers to consider a Tahoe, and so on. Something else we do that makes an enormous difference is using a “triage” lead management process. Instead of making random or round-robin assignments, we assign leads to a specific Internet sales specialist based on the leads’ characteristics and that sales specialist’s historical strengths. Then we have a customer service representative in our BDC contact every unsold lead 72 hours after it comes in, in an attempt to get the customer to visit the dealership. Then, a third person follows up three days later, if there is still no appointment registered in our CRM system. Multiple interactions early in the process ensure that we win our fair share of deals with buyers who are deeper in the sales funnel. Involving additional people in those interactions serves as a safety net that keeps leads from slipping through the cracks. Dealers have to stay focused on a basic fact that’s part of everything we do at Courtesy Chevrolet: anytime you can replace randomness with a process that’s geared to a desired outcome, you have a greater opportunity to optimize sales results.

We’ll continue our conversation with Ralph Paglia next month.



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Effective Online Automotive Sales


INSIDE







NEWS


The Dealix Dealer Newsletter recently sat down with Ralph Paglia, CRM/e-business director at Courtesy Chevrolet, consistently one of the top Chevrolet dealers in the country. A well-known expert in online automotive sales, Ralph shared so many best practices with us that we decided to publish his advice over the course of two issues. In this first installment, Ralph talks about adapting to market trends and competing with the imports.

[FULL STORY]

Third Party Auto Sites: the Trusted Source for Online Car Buyers Interview with KBB’s Manager of Automotive Partners Sherrell Kovach

There’s no doubt about it: with the Internet, today’s car buyers have a wealth of options at their finger tips. OEM websites, dealership sites, and independent, third party auto sites all promise the quintessential “user experience” to entice car buyers into their worlds. While having your own website has become a necessity for today’s dealerships, and no one is going to say no to subsidized leads from their OEM, the best third party auto sites continue to win the hearts of consumers as a “trusted source” for information - and a great source of leads for dealers. We spoke with Kelley Blue Book’s manager of automotive partners, Sherrell Kovach, who talked about why this is, and how premium third party auto sites continue to be on the cutting edge when it comes to consumer experience and lead generation.

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Effective Online Automotive Sales November 2006

Effective Online Automotive Sales October 2006

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Effective Online Automotive Sales August 2006

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lead providers and to get more

success strategiesfrom experts in

online auto sales.

[FULL STORY]

Want to Sell More Cars More Efficiently? Check Out this Movie to See How You Can

What’s the remedy for the sales challenges that dealers are facing today? Connecting with as many car buyers on the Internet as possible. Dealix helps you do this by bringing you the Highest Quality Leads in the industry, Superior Service, and Dealer Control FeaturesSM. Now we have even more great ways to help you sell more vehicles more efficiently. Click here to see a short movie on Dealix's award-winning New Car Leads Program, and learn more about the provider that

dealers rated Highest in Overall Dealer Satisfaction in the 2006 J.D. Power and Associates Dealer Satisfaction with Online Buying Services StudySM. View the Flash movie.

Ask Gilbert: Getting Buy-In from the GM How to Save Your Internet Leads & Your Department by Gilbert Chavez

Gilbert Chavez is Internet director for the Phil Long dealerships of Colorado, the largest privately-owned dealer group in that state. Many dealers turn to Gilbert for advice about their dealerships and how to be successful with Internet sales. Gilbert frequently shares his responses with the Dealix Dealer Newsletter. Here's the latest.

[FULL STORY]


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What Drives “Dealer Satisfaction”? Interview with J.D. Power's Senior Analyst Min Cho

In September, J.D. Power and Associates (JDPA) announced the results of its 2006 Dealer Satisfaction with Online Buying Services StudySM, and in the October issue of the Dealix Dealer Newsletter, we spoke with former JDPA senior director Dennis Galbraith and senior analyst Min Cho to learn more about the study's findings. This month, we continued the conversation with Min Cho to gain a better understanding of the factors that make up “dealer satisfaction.”

[FULL STORY]

The Annual “Bad Leads” List Even with State-of-the-Art Scrubbing, the Jokers Keep Coming

Since we first published our list of "bad lead names" in the Dealix Dealer Newsletter back in November 2001, Dealix’s lead scrubbing technology has become more efficient, so our real people quality team rarely has to deal "up-front and personal" with questionable leads that come through our system. Yet, in keeping with tradition, our Dealix sales reps, and even some of our dealers, continue to send us bad lead names, or "leads that lead no where," throughout the year. So, without further ado, here's the 2006 list of really bad leads - and no doubt, they're all in the market for a Dodge Viper.

[FULL STORY]



Metro Areas with the Fastest Close Times of Q3 2006 Top Dealers Beating the Average by Weeks

What are they putting in the water in these ten metro areas? Two weeks or less - that’s how quickly, on average, they’re closing their Internet leads. It’s the result of a combination of factors, no doubt, including strong leads, skilled salespeople, and finely-tuned sales processes.

[FULL STORY]

Internet Training and Industry Reminders Upcoming Workshops

Cobalt's Breakfast of Champions Workshop Series - What to look forward to in 2007

Click Full Story for details.

[FULL STORY]

Previously in the Dealix Dealer Newsletter November 2006

"Owner Marketing” via Email Marketing

Bergstrom Automotive: United When It Comes to the Internet

Holding on to Slippery Leads

Fine-Tune Your Online Used Car Business: Generation Y

Vehicles Generating the Most Leads in Q3 2006

October 2006

Anderson Auto Group: High Sales in Rural Markets

2006 J.D. Power and Associates Dealer Satisfaction with Online Buying Services StudySM

10 Best Practices for Responding to Phone Leads

Email or Phone? Don’t Let the Customer Decide


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Stop Internet Leads from Slipping Away

The Value of Trade-Ins

Dealers, Factories Spending Less on Print Ads, More Online

Make the Customer Come to You

Top Internet Teams of Q3 2006











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The Dealix Dealer Newsletter recently sat down with Ralph Paglia, CRM/e-business director at Courtesy Chevrolet, consistently one of the top Chevrolet dealers in the country. A well-known expert in online automotive sales, Ralph shared so many best practices with us that we decided to publish his advice over the course of two issues. In this first installment, Ralph talks about adapting to market trends and competing with the imports. Dealix Dealer Newsletter (DDN): Thanks for taking the time to share some of your experience in online auto sales with our readers, Ralph. According to a recent survey by Cobalt and RL Polk, 56% of new car leads wound up as sales; but only 8% of these sales took place at the dealership where the lead was first submitted. On top of this, 34% of these buyers wound up with a different model - and frequently a used car. In your opinion, why is this happening? What can dealers do to make that original sale? Ralph Paglia (RP): At Courtesy Chevrolet, we handle over 5,000 leads per month, and we get those leads from a wide variety of resources - so we are uniquely positioned to spot trends in the nature of these leads. What we’ve seen is an evolving landscape of lead generating business models and strategies that have contributed to the “Fickle Prospect” syndrome. My explanation of why so many leads wind up elsewhere is simple. Over the past 10 years, shopping online for a car has become mainstream, and so many customers are submitting multiple leads to multiple dealers simply because it’s so easy to do. If a single customer submits five leads to five different dealers representing five different brands, then 80% of those dealerships will experience a perceived failure to close the sale. However, we still need to keep in mind that with Internet leads, the cost per sale is generally lower than with traditional advertising. Where before, we could assume that car buyers were viewing many different ads and different brands in newspaper ads, with Internet leads – we can actually measure that behavior. Consumers love choice. On the other hand, seeing new car leads ending up as used car sales is nothing new. It’s just that the explosion of Internet leads is making it much more visible. Those of us who grew up selling cars have long known the value of switching a new car buyer to a used car. “Switch to get rich!” we used to say - referring to

http://news.dealix.com/e_article000706890.cfm?x=b8ylmVJ,b4bG84ht,w (1 of 3) [1/11/2007 9:34:13 AM]




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the greater gross potential on the sale of used vehicles. Now let’s look at the question of lead defection to competing products. The number of cars sold each year in the US has been holding steady at around 17 million. With lead volume increasing at the same time, it’s inevitable that the rate at which dealers lose leads to other brands will increase. Don’t think my point is that dealers should be comfortable with high loss rates. But you have to look at the causes behind these rates and figure out where you can have an impact. For example, at Courtesy Chevrolet we’ve recently modified our lead management processes to acknowledge the reality that most leads wind up buying a different car from the one they initially said they wanted. We’re now following up with a second round of price quotes for certified pre-owned vehicles - quotes selected based on the lead’s original inquiry and any information collected by the Internet sales specialist. DDN: Given the huge array of choices buyers are presented with online, it’s easy to understand a certain amount of fickleness. But one thing we’ve learned in our research is that a dealer’s ability to connect with online buyers exerts a powerful influence over where and what they wind up buying. As a very successful dealer, you’ve no doubt developed some really effective ways to make this connection. This is probably all the more true, since you’re doing very well selling a domestic brand at a time when domestics are a tougher sell. What advice would you give to domestic dealers who are struggling to improve their Internet business? RP: At the risk of giving away the secret sauce, I’ll tell you that one of the most effective ways for domestic dealers to increase sales is to aggressively pursue buyers who are considering Asian brands and competing domestic brands. We take great pride in convincing Toyota and Nissan buyers to consider a Chevy. We use search engine marketing to target customers shopping for competing brands. We bid for keywords related to these brands, and we place our ads on sites devoted to these brands. Targeted campaigns of this kind can push Corolla buyers to consider a Cobalt, Sequoia buyers to consider a Tahoe, and so on. Something else we do that makes an enormous difference is using a “triage” lead management process. Instead of making random or round-robin assignments, we assign leads to a specific Internet sales specialist based on the leads’ characteristics and that sales specialist’s historical strengths. Then we have a customer service representative in our BDC contact every unsold lead 72 hours after it comes in, in an attempt to get the customer to visit the dealership. Then, a third person follows up three days later, if there is still no appointment registered in our CRM system. Multiple interactions early in the process ensure that we win our fair share of deals with buyers who are deeper in the sales funnel. Involving additional people in those interactions serves as a safety net that keeps leads from slipping through the cracks. Dealers have to stay focused on a basic fact that’s part of everything we do at Courtesy Chevrolet: anytime you can replace randomness with a process that’s geared to a desired outcome, you have a greater opportunity to optimize sales results.

We’ll continue our conversation with Ralph Paglia next month.


Effective Online Automotive Sales: Third Party Auto Sites: the Trusted Source for Online Car Buyers


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Third Party Auto Sites: the Trusted Source for Online Car Buyers Interview with KBB’s Manager of Automotive Partners Sherrell Kovach

There’s no doubt about it: with the Internet, today’s car buyers have a wealth of options at their finger tips. OEM websites, dealership sites, and independent, third party auto sites all promise the quintessential “user experience” to entice car buyers into their worlds. While having your own website has become a necessity for today’s dealerships, and no one is going to say no to subsidized leads from their OEM, the best third party auto sites continue to win the hearts of consumers as a “trusted source” for information - and a great source of leads for dealers. We spoke with Kelley Blue Book’s manager of automotive partners, Sherrell Kovach, who talked about why this is, and how premium third party auto sites continue to be on the cutting edge when it comes to consumer experience and lead generation. Dealix Dealer Newsletter (DDN): Thanks for taking the time to share your perspective on why third party auto sites are so important for dealers, Sherrell. Why do you think consumers choose third party auto sites, and do you see their role changing in the coming years, as dealerships continue to improve their own websites? Sherrell Kovach (SK): Third party auto sites allow the consumer to receive unbiased information and education, not only about the car they are interested in, but others that may compare. Furthermore, a consumer is given the opportunity to choose a myriad of dealers either by name, distance, etc. to accommodate their needs. While this may bother dealers at first, the fact is that consumers love choice - just like they like to shop at auto rows or auto malls. And, choice attracts more car buyers. KBB averages 10-13 million unique visitors per month who are browsing new and used car value information – this is something





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dealers want to tap into. In order to keep car buyers coming back, third party sites need to provide a superior consumer experience. For instance, we ensure that what consumers get is: 1 – intelligent and data-driven, with a fresh intuitive interface focused on usability, easy navigation, dynamic content, and the latest interactive Web applications. These include virtual showrooms, product specs, side-by-side comparisons, and third-party reviews. And, 2, we have a customer-centric focus. Effective Internet strategies that identify and convert consumers are not enough. This must be supported by a comprehensive approach to service the buyer throughout the customer life-cycle. Continually providing new products and services and acting as a resource helps to nourish the relationship, which ultimately keeps consumers coming back, and increases the performance of the site and brand. The other thing consumers like about third party sites is that they don’t feel a heavy pressure to buy, just the satisfaction in knowing that they, the consumer, have been helped through phase 1 of the car-buying experience and with any luck, phase 2 will go as smoothly. And, because of this no hassle experience, sooner rather than later, they’ll find themselves driving home in their brand new car. More and more dealers will unavoidably shift to the Internet because of the efficiencies it provides, and because this is where the customers are. They need state-of-the art websites, and they also need leads from third party sites. DDN: How are third party auto sites, like KBB, able to generate such high quality, ready-to-buy leads? SK: In order to create a strong lead, it’s imperative to, not only be recognized as the “trusted resource,” but to create a feeling of comfort to the consumer, so there is no hesitation when they’re asked to provide their personal information. As well, you need to empower the consumer to do their own research and further define their own wants. Once a lead is submitted, it is imperative for both the third party site and the lead provider to “scrub” that lead – ensuring the information is genuine and accurate, and, most importantly, delivered to those dealers who are ready and willing to assist the consumer to their fullest



capabilities. DDN: From the vantage point of KBB, what constitute a strong lead? SK: A strong lead, or a high quality lead, is submitted by an active in-shopper buyer. The shopper has made it far enough through the funnel to know what they want and where they are willing to go to buy it. The more specific a lead is, the higher the probability that it will close. But it’s up to the dealer to meet the challenge of satisfying their new customer and turning a great lead into a sale. DDN: How does a third party site like KBB measure its effectiveness? SK: There are a variety of ways to measure effectiveness and whether we’re meeting consumers’ needs. Surveys are the most common these days; and there is also consumer satisfaction indices, such a CSI scores, partner testing, and shared information with others in the industry. For example, we get feedback from Dealix that your dealers are closing their KBB leads. Plus, on an individual basis, through visitor feedback and simple word of mouth, we know we’re doing a good job. DDN: Dealers today know that Internet customers are better informed. Is this a blessing or a curse? SK: Oddly enough, I find these days that many consumers try to stump the sales person. I’m not quite sure if this is a negotiation tactic, but nonetheless, with the amount of information available on the Internet, it happens. So, it’s imperative for dealers to know all the “ins and outs” of the cars they sell. The dealerships I see flourish typically hold “walk-around” contests with their sales people every month so they’re fully prepared for the educated consumer. So, an informed customer can be a headache for a dealer who is unprepared; or, they can represent an easier sale to a dealer who is prepared, because they already know what they want.



DDN: How does KBB describe its overall purpose? You serve dealers, you serve car buyers, and you provide pricing information. How do you sum up your mission? SK: Kelley Blue Book has been, is, and will continue to be the facilitator of the transaction. It only strengthens our brand and culture to understand all aspects of the industry, by working hand-in-hand with everyone from the OEMs, to dealers, to third party providers like Dealix. In the end, you have cars and dealers, and we have buyers. But first and foremost, we’re focused on benefiting the consumer. While revenue is vital, the consumer experience is essential. Our data, products, and services are received by an audience who trust the information via the source from which they are receiving it; not only as an educational tool, but as a purchasing tool. This is why Kelley Blue Book is the trusted resource. All said and done, it’s imperative to recognize and appreciate that the consumer is the backbone of all industries, and the automotive industry is no different. To confirm that a consumer has been well informed, been given the proper data, and has received a superior customer experience will not only lead to a smile, but that smile will undoubtedly lead to word-of-mouth endorsements - which is good-as-gold advertising to be passed on for years to come.










Effective Online Automotive Sales: Want to Sell More Cars More Efficiently?


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Want to Sell More Cars More Efficiently? Check Out this Movie to See How You Can

What’s the remedy for the sales challenges that dealers are facing today? Connecting with as many car buyers on the Internet as possible. Dealix helps you do this by bringing you the Highest Quality Leads in the industry, Superior Service, and Dealer Control FeaturesSM. Now we have even more great ways to help you sell more vehicles more efficiently. Click here to see a short movie on Dealix's award-winning New Car Leads Program, and learn more about the provider that dealers rated Highest in Overall Dealer Satisfaction in the 2006 J.D. Power and Associates Dealer Satisfaction with Online Buying Services StudySM. View the Flash movie.








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Effective Online Automotive Sales: Ask Gilbert: Getting Buy-In from the GM


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Ask Gilbert: Getting Buy-In from the GM How to Save Your Internet Leads & Your Department

Gilbert Chavez is Internet director for the Phil Long dealerships of Colorado, the largest privately-owned dealer group in that state. Many dealers turn to Gilbert for advice about their dealerships and how to be successful with Internet sales, and he frequently shares his responses with the Dealix Dealer Newsletter. Here’s the latest: Dear Gilbert, I have been working in our Internet sales department for two years, and have been director for six months. There was a revolving door of directors for quite some time. I was the top Internet sales rep for over a year, and they convinced me to take the helm - after I turned them down a couple of times. To be honest, I was reluctant at first because there is a hell of a lot of work to do, there was high turnover, and I was concerned about the level of support for what we wanted to do from management. Now, I have two other Internet reps in my department. Our numbers have been respectable since I took over. The problem is - our owner, who is also the GM, has ordered me to cancel all my third party leads. Our return on these leads has been good. My total cost was $500 for one lead source, and we averaged $2,500 gross. I do better with the leads from my dealership's website and our factory leads, but I’ve found that having a varied diet of as many good leads as we can get is the key to more sales. But, our store sales across the board have been down for both new and used. However, my GM has not slowed down his print, radio, or TV spend. He goes way back with his





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newspaper rep, and, really, I think he keeps these things more out of fear and habit than anything. I seriously do not want to lay off my team. What can I do to save my department and convince our GM that the Internet is the wrong place to cut our ad budget? Thanks, Down, But Not Out Dear Down, When times get tough, people tend to stick with methods they’re comfortable with. Your boss sounds a little like Charlie Brown’s friend Linus with his security blanket, or a dateless person at home alone on a Saturday night, eating a tub of ice cream. The blanket isn’t going to protect Linus, the ice cream won’t help a lonely person get a date (probably just the opposite), and traditional advertising isn’t going to fix your dealership’s slow sales. Your GM would resist cutting back under the best of circumstances. He’s going to resist even more in the current situation because traditional advertising is familiar and comforting. It’s the only way he knows to bring people into the showroom. You’re facing an uphill battle, my friend. You’re going to need a solid plan to win this fight and may have to pull a Beastie Boys: “You gotta fight for your right to party!” Before you begin, look at it from your GM’s perspective. Business is slow, and he has to cut costs somewhere. In his mind, the Internet is the easiest place to do it – it’s still seems new and experimental. Other managers may be pushing him to advertise more in their departments, and they may be pulling him away from the Internet to protect their own budgets. I have always said the greatest thing about Internet sales is that it's measurable - and the worst thing about Internet sales is that it's measurable. In other words, you can’t hide poor performance. On the other side of the coin, traditional media is often difficult, if not impossible, to measure the true ROI on. When you sit down with your boss, lay it all out in dollars and cents: what you’re paying for leads, and what this outlay is



bringing in. Remind him that this is incremental business - business your dealership wouldn’t otherwise get – and might lose to competitors who are being more progressive. Show him that you can look at your budget with a cold eye: compare the ROI you’re getting from different providers and offer to ax any that consistently don’t cut the mustard - just like Britney cut off K-Fed! And don’t stop at past performance. Ask him for 90 days to prove that your team’s sales process works so well that third party leads are a no-brainer. Get that commitment and then really crank it. If there are any kinks in the process, this is the time to iron them out. Your team should be especially cooperative, given that the department’s existence may be on the line. Car guys might not like to admit it, but we like being “closed.” Your GM is a salesperson at heart, and he’ll appreciate the effort you put into closing him. So, find your common ground, present the features and benefits, build value, and go for the close! Remember, most sales are won or lost in the first five minutes, so make it good right from Jump Street! Good luck and good selling, Gilbert










Effective Online Automotive Sales: What Drives “Dealer Satisfaction”?


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What Drives “Dealer Satisfaction”? Interview with J.D. Power's Senior Analyst Min Cho

In September, J.D. Power and Associates (JDPA) announced the results of its 2006 Dealer Satisfaction with Online Buying Services StudySM, and in the October issue of the Dealix Dealer Newsletter, we spoke with former JDPA senior director Dennis Galbraith and senior analyst Min Cho to learn more about the study's findings. This month, we continued the conversation with Min Cho to gain a better understanding of the factors that make up “dealer satisfaction.” Dealix Dealer Newsletter (DDN): Thanks, Min, for taking the time to speak with us. To get us started, can you remind our readers of the main areas of dealer satisfaction that were explored by the survey? How did you determine the relative importance of these areas? Min Cho (MC): The survey measured dealer satisfaction in four key areas: Business Generation, Dealer Support and Service, Lead Transmission, and Fees. Each of these, in turn, was broken down into other components. None was assigned any particular level of importance in advance; rather, we used a statistical technique called regression analysis to calculate how important each was based on the extent to which it predicted dealers’ assessment of their overall satisfaction. This technique makes it possible to determine the proper weight to assign each factor, with a very high degree of accuracy. So, dealers were able to let us know what matters most to them. DDN: Business Generation was far and away the most important factor, accounting for 53% of overall satisfaction. According to the survey, what were the factors comprising Business Generation? MC: Lead quality and lead quantity accounted for 30% and 28%, respectively, in



Effective Online Automotive Sales: What Drives “Dealer Satisfaction”?


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this particular area. The fact that online leads represent incremental business was a close third, with 26%. Gross profit margin accounted for the final 15%. DDN: The lesson, then, would seem to be that giving dealers as many quality leads as they want goes a long ways towards helping them be successful. But I see Dealer Service and Support was also important. What are the key factors here? MC: 22% of overall dealer satisfaction derived from satisfaction with service and support. In other words, the inherent strength of the service isn’t enough to make dealers happy; they need technical support (40%), regular contact (32%), and training (28%) to use the service effectively and be able to perceive its true value. DDN: Lead Transmission was the third-most-important factor, but this and Fees were much less important to dealers. How would you explain this? MC: Yes, Lead Transmission and Fees came in third and fourth, respectively, accounting for 13% and 12% of dealer satisfaction. As a category, Lead Transmission was comprised of two more specific factors: speed of transmission, which represented 66% of dealer satisfaction in this area, and amount of information transmitted, which represented 34%. One way to think about this is in the context of the high importance dealers assigned to lead quality, in the Business Generation category. It makes sense that lead freshness and the amount of information leads include are two different forms of lead quality, and that both contribute to business generation. But perhaps dealers are more tuned in to the general concept of lead quality, and less to the specific attributes that comprise it. DDN: What can we conclude about fees? Are they as unimportant as the study suggests? MC: Fees accounted for 12% of overall dealer satisfaction. That’s not insignificant, but you’re correct - it’s not a huge consideration, either. One possibility is that fees take on more importance in specific situations, such as when dealers are struggling to capitalize on their third-party leads. Otherwise, if dealers get their leads at a competitive price and enjoy an ROI in line with expectations, they’re less inclined to view fees as critical to their satisfaction. At the end of the day, what matters to dealers are sales and a solid return on their marketing investment. It’s their expectation that their online buying services will help them achieve those ends.










Effective Online Automotive Sales: The Annual “Bad Leads” List


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The Annual “Bad Leads” List Even with State-of-the-Art Scrubbing, the Jokers Keep Coming

Since we first published our list of "bad lead names" in the Dealix Dealer Newsletter back in November 2001, Dealix’s lead scrubbing technology has become more efficient, so our real people quality team rarely has to deal "up-front and personal" with questionable leads that come through our system. Yet, in keeping with tradition, our Dealix sales reps, and even some of our dealers, continue to send us bad lead names, or "leads that lead no where," throughout the year. So, without further ado, here's the 2006 list of really bad leads - and no doubt, they're all in the market for a Dodge Viper.

Al BinoAngie O'PlastyAnne TeakAziz NowarrantyBarb DwyerBorden DrousyBjorn LiarBrighton EarlyColin ResponseConstance NoringDan Saul KnightHarry MouvalIona Ford





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Isabelle RingingJim ShortzJoaquin ClosetJoe KingJoy RiderLisa CarrLynn O. LiamMarsha MellowMaude L.T. FordMike EasterMinnie Van DriverNeera NuffOphelia PayneOlive YewP. BrainPhil R. UppRick ShawShanda LearSue FlayTristan SchautVishnu VerhereYvonne Apeesamey Happy Holidays to you, from all of us at Dealix and The Cobalt Group. Annual Bad Leads Lists, a Retrospective: 2005 2004 2003 2002





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Effective Online Automotive Sales: Metro Areas with the Fastest Close Times of Q3 2006


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Metro Areas with the Fastest Close Times of Q3 2006 Top Dealers Beating the Average by Weeks

What are they putting in the water in these ten metro areas? Two weeks or less - that’s how quickly dealers in these areas, on average, are closing their Internet leads. No doubt, it’s the result of a combination of factors - including quality leads, highly skilled salespeople, and finely-tuned sales processes. It’s even more impressive when we consider an industry-wide stat: of 1.1 million leads studied, 42% closed within 30 days and 68% closed within 90 days.[1] These dealers are lopping weeks, if not months, off that figure. The advantage dealers in these areas are reaping by closing sales fast is a big one. Studies show that closing quickly is a critical part of preventing brand, and dealership, defection. Time keeps on slipping, slipping, slipping, you know - and so do customers.

Metro Areas with the Fastest Closing Times

Q3 Rank Metro AreaAverage Closing Times in Days

1 Washington, DC - Baltimore, MD 122 San Francisco – Oakland - San Jose, CA 123 Los Angeles – Riverside - Orange County, CA 134 Chicago, IL - Gary, IN - Kenosha, WI 135 Boston-Worcester, MA - Lawrence, NH 136 Miami-Fort Lauderdale, FL 13

7New York-Long Island, NY - Northern New Jersey 14

8Philadelphia, PA – Wilmington, DE -Atlantic City, NJ 14

9 Houston-Galveston-Brazoria, TX 1410 Dallas-Fort Worth, TX 14

The Metro Areas with the Fastest Closing Times Ranking is based on the average time it takes dealerships in the major metro areas of the U.S. to close their Dealix Internet sales leads. Results are derived from phone surveys of consumers who submitted leads during the third quarter of 2006. The closing time period begins on the day the dealer receives the lead and ends on the day the consumer says he or she bought the vehicle. The smallest sample size per metro area was 100 surveys. This study was conducted by Dealix Business IntelligenceSM.

[1] 2006 Automotive Industry and Dealership e-Business Performance Study by The Cobalt Group with R.L. Polk.



Effective Online Automotive Sales: Metro Areas with the Fastest Close Times of Q3 2006


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Effective Online Automotive Sales: Internet Training and Industry Reminders


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Internet Training and Industry Reminders Upcoming Workshops

The Cobalt Group Presents the Breakfast of Champions Workshop Series

2006 Seminars

December 12th Indianapolis, IN Indianapolis Marriott Downtown

2007 Seminars

January 9th Phoenix, AZ Sheraton Cresent Hotel

January 16th Miami, FL Embassy Suites Ft. Lauderdale

January 23rd Houston, TX TBD

February 13th San Diego, CA TBD

February 20th San Francisco, CA TBD

March 6th Seattle, WA TBD

March 13th Nashville, TN TBD

March 20th Westchester, NY TBD

April 10th San Antonio, TX TBD

April 17th Jacksonville, FL TBD

May 8th Denver, CO TBD

May 15th Orlando, FL TBD

May 22nd New Haven, CT TBD

June 12th San Jose, CA TBD

June 19th Portland, OR TBD

July 10th Dallas, TX TBD

July 17th Philadelphia, PA TBD

July 24th St. Louis, MO TBD

August 7th Los Angeles, CA TBD





Effective Online Automotive Sales: Internet Training and Industry Reminders


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August 14th Detroit, MI TBD

August 21st Baltimore, MD TBD

Click Here to register for any of these sessions. Or, call (800) 557 -7915.











Effective Online Automotive Sales: Previously in the Dealix Dealer Newsletter


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Previously in the Dealix Dealer Newsletter November 2006

"Owner Marketing” via Email Marketing

Bergstrom Automotive: United When It Comes to the Internet

Holding on to Slippery Leads

Fine-Tune Your Online Used Car Business: Generation Y

Vehicles Generating the Most Leads in Q3 2006

October 2006

Anderson Auto Group: High Sales in Rural Markets

2006 J.D. Power and Associates Dealer Satisfaction with Online Buying Services StudySM

10 Best Practices for Responding to Phone Leads

Email or Phone? Don’t Let the Customer Decide

Stop Internet Leads from Slipping Away

The Value of Trade-Ins

Dealers, Factories Spending Less on Print Ads, More Online

Make the Customer Come to You

Top Internet Teams of Q3 2006




















Effective Online Automotive Sales: Previously in the Dealix Dealer Newsletter


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Effective Online Automotive Sales: View a Movie to See How Dealix Can Help You Sell More Cars


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Effective Online Automotive Sales: View a Movie to See How Dealix Can Help You Sell More Cars


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