- ■ Volume 7: July 31, 2017
As part of its yearly New Autoshopper Study, J.D. Power asks new-car buyers to evaluate how their dealerships rated in five F&I areas. The past three years show improvement across the board:
Welcome to Tips & Tools to Do It Right, a project between Ally and the Automotive News Content Studio. On this page, we'll highlight news and insights from around the automotive world — information, research and insider tips to help you do it right at your dealership. Some of the topics we'll cover include F&I, training and innovative ways to help your dealership flourish. We'll feature industry experts to address real life situations that arise in the retail automotive environment, and recommend proven tools to lead your store and your employees on the path to continued success.
Look for new content in the pages of Automotive News every month, and frequent updates on this page.
As part of its yearly New Autoshopper Study, J.D. Power asks new-car buyers to evaluate how their dealerships rated in five F&I areas. The past three years show improvement across the board:
Gabe Garroni visits dealerships on his travels around North America as VP-sales, U.S. and Canada, for Ally Insurance. We asked him about marketplace trends affecting F&I, and how dealers can prepare for what's ahead.
1. Move F&I information online. Many manufacturers and dealers are studying selling a car online, from beginning to end. "We think the dealer network and OEMs are going to figure out the right way to transact F&I online," Garroni said. "My first suggestion is finding the right F&I partner to help you figure out this space. Some feel it's taboo to give away too much information online, but when you give customers control and access, you can build their trust. Post information online about the F&I products you offer, the ability to prequalify online. Offer video content about what the customer's F&I process will involve."
2. Shift with the market. "As drivers begin to think they might keep their current car longer, Garroni said, "There's a shift in the ownership thought process. Dealers can tap into those customers who might have passed on things like a service contract or a warranty extension three years ago. Be strategic–stay in contact with your customers, in the service lane or while they're online, and keep them up to date on the types of products that are available if they're keeping their car longer."
3. Stick to what you know best. Some of today's most successful companies–think Apple and In-N-Out Burger–are those that master what they do, but also keep it focused, Garroni said. He thinks there's a lesson for dealerships in that. "While the economy has been good and credit cheap, dealers found they could be incredibly successful almost in spite of themselves. But over the next three to five years–or however long the trough lasts–the successful dealers will be those who have tightened their operations, are students of their craft, and have their people, processes and procedures right," he said.
Much has been written about millennials and driving, including that they delay getting driver's licenses and are less interested in owning and taking care of a car. But more than half of millennials are currently saving for their next vehicle purchase, and 24% have a specific vehicle savings account, according to exclusive research conducted for Ally by Jason Dorsey of The Center for Generational Kinetics. When it comes to F&I, 33% of millennials have had a family member cosign on a car loan–significantly higher than other generations, Dorsey said. Dorsey offered two tips for dealing with millennial customers in the F&I office:
Millennials are now the largest generation among consumers and workers. In 2016, millennials overtook baby boomers as the largest generation in the U.S., at 75.4 million people, Pew Research Center reports. According to the 2016 NADA Dealership Workforce Study:
This month, Automotive News and Ally will announce the newest group of 40 Under 40 honorees—bright, young stars working at dealerships around the country. We asked three former 40 Under 40 honorees who have gone on to further success in the auto industry what dealerships can do to help younger employees thrive.
Current Position: Director of Marketing, Sheehy Auto Stores
Her recommendation: "It's something we see younger employees want, to support work/life balance. That's one of the biggest challenges dealerships have, balancing the desire to give employees flexibility with the productivity of the dealership. But I believe if you give flexibility to people who have a strong work ethic, it will work out for everybody."
Current Position: Co-founder, automotive technology company Singlethread
His recommendation: "The old school idea–coming in at 8:30 in the morning and working until 9 p.m.–is based on the old retail idea of being available if someone comes in the door. But today, most people will email, call or text to set an appointment. Why not adjust your sales staff to be there at peak times? Twenty years ago, for dealership employees it was all about the money; today, it's all about work life balance."
Current Position: Managing Director, automotive consultancy Maryann Keller & Associates
His recommendation: Invest in technology
"Many dealers have installed technology that allows salespeople to work and perform many functions remotely. This includes checking inventory, delivery status or even credit. With the advent of digital retailing, more of the customer's transaction can be completed online, thus also saving the salesperson time."
Millennial expert Jason Dorsey of The Center for Generational Kinetics conducted exclusive research in conjunction with Ally. His findings may improve your interaction with this generation of customers.
As the National Association of Minority Automobile Dealers prepares for its annual conference starting July 11, we asked Damon Lester, NAMAD president, about the outlook for African-American-owned dealerships, and why the next generation is so important.
"The count is challenged; there are only 263 African-American-owned dealerships out of the country's total 18,000. We lost 40% of our dealer body as a result of the recession. Today the average African-American dealer is over 60 years old, making important family and business decisions, and some are selling their dealerships. We are trying to put a lot of energy and focus on convincing the sons and daughters of those dealers to stay in the business," Lester said. "Our NAMAD NextGen brings these young people together to talk about their future in the industry. In addition, we as an industry need to do a better job of going out to communities and schools where minorities are, to expose folks to this industry's career opportunities."
People shopping for cars are doing more of their research online-and social media platforms have become a regular part of the process.
Five experts offer suggestions about what dealers can do to get the most out of social media.
Build your reputation.
Advice from: Allison Musante, general manager
Kuhn Honda, Tampa, Fla.
"Social media has become more and more relevant, even if just for referrals. Consumers go to social media to see not just what should I buy, but who I should buy from. You need to have a good reputation online. The buzzword this year is trust: We all sell the same car for mostly the same price–how do you win the consumer's trust? Family and friend referrals and consumer reviews matter. Facebook now has a recommendation feature, where people can ask for dealership names. And in terms of marketing campaigns, social media is targeted and the cost per dollar is a lot lower. You need to be there. It's an efficient spend."
Get expert help.
Advice from: Trace Przybylowicz, autos lead
"Leverage a third party's expertise. It's become too big a job to imagine that you can take care of it on your own. But the common pushback I hear from dealers, internet managers or media managers is, 'Hey, if we hire someone it will put me out of a job.' But if you hire a third party to do all the heavy lifting, then in turn it's your team's job to manage the vendors and agencies. The juice is worth the squeeze; the third party can provide tools, optimization, teams, measurement, the ability to test ads in a 24-hour environment. They can help you understand a platform that's incredibly powerful."
Advice from: Emal Noor, general sales manager
Biggers Mitsubishi, Elgin, Ill.
"Social media is one of the most difficult things for car dealers and even manufacturers to wrap their heads around. Remember that it's something a lot of people hold near and dear–you have to respect the news feed. You don't want to be intrusive. Some dealers will be pretty aggressive with content. You don't want to be constantly peppering people with your inventory or coupons. Sometimes it's better if you don't talk about cars at all–just be conversational."
Advice from: Elizabeth Primm, director of automotive
"Auto shoppers tell us they want more video content about the features of a car. Dealers should be thinking about making their messaging more visual and specifically video-centric. They should think about all the visual assets they have. That might be walkaround videos, interior tours or assets coming from their OEM's content delivery system. There also are always a slew of photo assets of inventory. Dealers should think about how they can bring those visuals to complement their messaging."
Measure—and measure the right things.
Advice from: Beena Kalaiya, VP/ director of social media, Mediavest | Spark Performics
"For a lot of dealerships, the first thing they do is run a generic photo or video ad on Facebook, and measure their success based on engagement. Many don't think about doing lead-generation ads or geo-targeted ads, and measuring the effectiveness. You shouldn't be satisfied with an engagement rate. You should be asking your partners and agencies or whomever is running social media, 'OK, I spent $5,000 on social media ads, how many people did that bring into the dealership? How many cars did it sell?' Social media can do that; it is more than a post that gets 100 likes. But that's still sometimes how it gets sold, unfortunately."
For more insights about social media and dealerships, look for Ally's special digital, online, social marketing Supplement in the June 19 issue of Automotive News and online at AutoNews.com/bestpractices .
These leading dealers have become believers in the value of extended training for themselves and their employees.
"Professional training is an investment in your business and your people that can help equip your team with the practical knowledge and tools they need to succeed in today's dynamic business environment," said Jim Whiteford, executive director of learning and development at Ally. "Ally Academy's comprehensive dealer training programs have reached more than 32,000 dealership employees, driving education and engagement at all levels of the dealership."
Name: Richard Herod III, general manager
Dealership: White Bear Mitsubishi, White Bear Lake, Minn.
His training investment: Two years ago, Herod participated in an intense, five-day off-site workshop that allowed attendees to simulate managing five months of a dealership's retail operations. He then committed to sending the rest of his management team to the workshop, and five have attended so far.
The payoff: "It was an eye-opening event for me. Each day we were given a month's worth of data and it really demonstrated how every part of the dealership works together. Now when I see one of my management team taking a moment to step away from themselves and consider how a decision- like ordering too many parts or stocking too many used cars- might impact the rest of our business, I see a real-time impact from this training investment." Why training matters to his business: "The fifth tenet of our company is a commitment to ongoing improvement. We believe that's the real measurement of a dealership's success. These days, if a dealership isn't getting better, its position is getting worse."
Name: Markus Kamm, director of sales
Dealership: Tynan's Nissan & Volkswagen, Aurora, Colo.
His training investment: Kamm attended a lunch-and-learn session on legal awareness and compliance for dealership managers, then two months later decided to bring the lessons in-house, providing legal awareness training to all customer-facing staff at his dealership.
The payoff: "What a lot of people don't think about is that legal awareness isn't just about what happens in F&I or in negotiations, but it starts out on the lot, with the conversations you might have with a customer. We've already created a rate markup cap that our owner signed and is put into every deal. In today's climate, you want to make sure every employee is aware that we are committed to doing the right things for the right reasons." Why training matters to his business: "It's great to relay information to our team, but it's invaluable to have a third party come in and conduct awareness training for us."
Name: Billy Mullinax, general manager
Dealership: Rockie Williams' Premier Dodge Chrysler Jeep Ram, Mount Juliet, Tenn.
His training investment: This year Rockie Williams moved into a new facility more than four times as large as its previous footprint, and the sales staff nearly doubled in size, including several employees new to the car business. Mullinax brought in an outside trainer for a class on innovative selling for the entire team.
The payoff: "Part of the class was about how to communicate with customers on the phone and in person–and how sometimes it's not so much what you say but what you don't say. I've seen an improvement in them being able to keep control of the sale, how they use the qualification process to figure out what's important to the customer, and how they really use the walk-around to emphasize what's important to that customer." Why training matters to his business: "Unless you have a dedicated person for training in your dealership, typically training can be a haphazard thing. If you are going to have professional, successful people, my advice is to bring in an outside source to do this type of training."
Training often sets top-performing dealerships apart from their peers. According to McKinsey & Co. research, of the top-performing dealerships, 57% provided formal training, including talent management, formal recruitment processes and training for employees.
The Ally Automotive Leadership Academy offers dealers a chance to experience a variety of Ally's leadership, F&I management, compliance and retail operations training classes in one four-day educational event.
Pete Shaver sent his son, a fifth-generation member of the family dealership business, to the inaugural AALA conference two years ago. He came back so enthusiastic that Shaver himself decided to attend the second AALA meeting last December. "Exposure to what's going on in different states, with different manufacturers, and with professional trainers, is great for our business," says Shaver, owner of Huntington Beach Chrysler Dodge Jeep Ram.
He brought back a personality assessment tool from AALA that he now uses with all his employees to improve leadership and management at his California dealership. He says he also implemented a recommended idea to sell post-warranty service contracts on the service line. “It is a simple thing, but it's been well received, a profit center for us and also a customer satisfaction tool,” he says.
Shaver, whose dealership also participates in NADA 20 Group programs to "keep a finger on the pulse of market conditions," says industry training and leadership experiences are important. "One of our eight core values is being innovative and being proactive towards all 8 Values that require constant adaptability. We think keeping people fresh can offer a sense of self-esteem and can convert trends into improved employee and customer experiences," he says.
Designed to help dealers optimize business performance, AALA features training classes, elective modules, guest speakers and networking opportunities.
The fourth AALA conference is planned for early fall. For more information, contact your Ally account executive or visit ally.com/leadership.
Individuals need both knowledge and budgeting skills to make good financial decisions. The Financial Industry Regulation Authority (FINRA) reports these findings:
The various financing options can overwhelm customers. Exclusive research from the Center for Generational Kinetics shows that 28% of consumers overall and 35% of millennials don't know the interest rate on their current auto loan. Many don't understand the merits of leasing versus buying. But dealers can help car shoppers become financially literate:
You can play an active role in Financial Literacy Month by reading "Planet Zeee and the Money Tree" to grade-school students. This book, published by Ally, uses a fun storyline to teach kids about money.
The idea for the book came from the Ken Garff Automotive Group, a Utah-based dealership group. "At Ken Garff, our business is about more than just selling cars. It's about helping consumers make a big purchase decision that can impact their lives," said Rick Folkerson with the Ken Garff Automotive Group. "That's why financial education is so important–it empowers customers to make better choices, which strengthens families, communities and certainly the business from my perspective. We hope 'Planet Zeee and the Money Tree' will help spread financial education and awareness for kids and families."
To help Ally achieve the goal of reading the book to 10,000 kids in April, contact your local Ally AE, who can help you find or set up a local reading event for first- through third-grade schoolchildren. Ally will provide copies of "Planet Zeee" for children at each event, and also make a $250 donation on behalf of the participating dealership to Junior Achievement.
For a sneak peek at "Planet Zeee and the Money Tree," visit AllyWalletWise.com, where you can download a digital copy.
Giving your salespeople the right technology can make all the difference to your bottom line. Today's car shopper often arrives at a dealership looking at one or two specific cars, and with more information in hand than the salesperson–especially if it's a used car that is not one of the dealership's core brands.
Providing your sales team with platforms that instantly display details on any car on the lot–including options, trim level and comparative pricing–can help turn a salesperson into an instant expert on any car.
"It levels the playing field with that internet customer; you're not at a disadvantage because the customer knows more than you do," says Patrick McMullen, senior VP of MaxDigital, whose Digital Showroom is one platform that instantly displays details on any car on the lot, delivered to a tablet or mobile phone. This helps salespeople hold the price and gross profit t by giving customers details on why a car is priced a certain way.
At the 2017 Automotive News Retail Forum, Automotive Compliance Consultant President Terry Dortch headlined a panel discussion about the evolving regulatory environment. One key message: Though changes may becoming, dealers need to stay on their toes.
Here's what Dortch suggests to keep your dealership ready for whatever changes may come:
To hear more for Dortch, listen here:
First, compliance improves customer perception of your business – Automotive News found that 73% of customers are more comfortable with a dealership that has a certificate on display indicating it has completed some type of compliance training.
Second, staying compliant can help you avoid costly fines and penalties (nearly $800,000 a year, on average). Ally Academy’s Legal Awareness training keeps you up to date on laws and regulations. It helps you easily understand how to stay on top of compliance in daily routines, and make it an advantage for your business.
Hiring and keeping the best team members is a priority for dealers around the country. Dealerships reported 67% turnover among car sales consultants in the 2016 NADA Workforce Study. "Keeping employees is unfortunately getting more challenging," said Adam Robinson, co-founder and CEO of Hireology, a Chicago-based consultancy. He shared ideas for hiring and keeping the best:
1. Have a pool of candidates large enough to allow you to find a good hire. "Don't hire out of desperation. It's just like the customer side of your business–if you're starting with better leads, you'll get better results," Robinson said. If you don't have good candidates to interview, go back and recruit more.
2. Establish a defined process to interview and hire new staff. "Don't just wing it; don't use random interview questions," he said. "Hiring people should be a structured process, just like any other part of the business." Start by generating a standard list of questions to use with every job applicant, and create a scorecard to record the hiring team's reaction to each candidate.
3. Double your three-year retention rate by making employees' first week on the job a positive experience. Focus on the experience each new employee has in his or her first week. "We've all seen it: A new employee shows up for the first day of work but no one is expecting him. His desk isn't ready; his business cards aren't printed," Robinson said. "But the single greatest factor in an employee's job success can be that first week on the job." Three-year retention rates for employees who experience a good first week are double those of employees who didn't have a good first week, he said.
4. Think of your online brand as a recruiting tool. Robinson recommended paying attention to your dealership's "employment brand," remembering that the person visiting your website or looking at your online ratings could be looking for a job, not just a car.
Listen below for another hiring tip from Robinson:
NADA reports 60% of new dealership hires are millennials. We asked millennial expert Jason Dorsey what managers need to know about working with those aged 21 to 38. He offered two pieces of advice:
1. Position employment as a career, and not just a job. When recruiting, play up the dealership's culture and local connections. Millennials tend to be visual learners and respond to graphics featuring people.
2. Provide frequent feedback. "Older generations were taught that if the boss is talking to you, something's wrong. Millennials don’t think that way," Dorsey said. "Take a minute to talk to them in the moment."
When Carl Swope accepted the 2017 TIME Dealer of the Year award earlier this year, he told the crowd, "None of us get up here by ourselves." He then asked 20 of his company's associates–"We call it the Swope family," he said—to stand up and be recognized with him.
Swope, President-CEO of Swope Toyota, Elizabethtown, Ky., was honored for excellence in managing his business as well as for his extensive community service. "What set Carl apart was the amount of impact and the real contribution he has been able to make across every facet of his community," said Jon Grice, one of the judging panel from the University of Michigan's Tauber Institute. "The words that came up in describing his community involvement were breadth, depth and longevity."
The other three Dealer of the Year regional finalists were Tyler Corder, Findlay Automotive Group, Henderson Nev.; Bryan Gault, Wind Gap Chevrolet Buick, Wind Gap, Pa.; and Keith Kocourek, Kocourek Chevrolet, Wausau, Wis.
Grice said the judges had a tough job selecting a winner from the 49 candidates. "The two pillars of our criteria are excellence at the dealership and involvement in the community," he said. "Almost more than any other year, we saw excellence in both of those pillars across the candidates as a whole…. It was awe-inspiring."
Listen to Swope’s acceptance speech below:
Do it right for your team by providing the tools to succeed. Ally Academy classes cover everything you need to know to run a successful dealership, from hiring and interviewing to effectively managing your team. Hiring a new employee costs an average of $16,000; Ally's Hiring Winners helps you find the right people the first time.