Kribs Ford City got serious about the Internet last year. The St. Louis dealership now sells about 60 vehicles a month from Web leads. While that may not make for a revolution, it showed the dealership that new digital tools actually could sell cars and trucks.
'We're just recognizing that the business is changing,' says General Manager Steve Burton.
So when he came across a trade show exhibit for a new product called the Polk Dealer Marketing Manager, Burton thought it might be worth a try.
In August, Kribs Ford used the Polk system to pitch some year-end financing and rebate deals on the Taurus.
The dealer used the software to search a database of 650,000 people in its St. Louis market area. The goal was to build a list of vehicle owners who were loyal to mid-sized Ford cars but hadn't bought from Kribs Ford in the past.
For the Taurus promotion, Burton sent out 5,000 fliers with addresses generated from the Polk database. He used a simple black-and-white flier that cost him less than half of what he normally would spend for a flashy color mailing. But the prospects were targeted more precisely.
Kribs Ford wound up selling 100 new and used vehicles of various models. And Burton attributes that directly to his Taurus mailing list.
'It was phenomenal,' he says. 'We just nailed this one.'
New technology is coming on the automotive retail scene from a number of sources to help dealers become smarter marketers. But in a business that traditionally has rewarded entrepreneurial spirit and gut instincts, the vast majority of dealers still rely on the tried and true.
Direct-mail campaigns, radio and TV advertising are still what they depend on. But mass-market promotion isn't the only route these days.
There is a wealth of data buried in the customer information that dealers routinely gather in the sales, finance and service departments. The trick is getting at the data, cleaning them up and putting them in a useful form. Teaching sales and service personnel how to use the data to find new business often involves stretching people into expanded roles.
A GOLD MINE
ADP Dealer Services Group, of Hoffman Estates, Ill., a unit of Automatic Data Processing Inc., has been developing sales management and lead-tracking tools to build a better picture of customer buying habits. Dealer data could be combined with independent demographic data to build a very specific picture of a dealer's customer base.
'It is a gold mine,' says John Gray, senior vice president of development and marketing.
But making the transformation to a digital dealership will take time, he points out. Evolutionary changes make more sense than quick makeovers for most retailers.
'There's not just one recipe that works,' Gray says.
The software tools that are designed to help businesses build closer one-to-one relationships with consumers are known as Customer Relationship Management programs. The CRM software market is expected to grow 60 percent this year to $3.71 billion, according to AMR Research Inc. of Boston. By 2003, AMR expects the market to top $16.8 billion.
Layering a little new technology over existing business practices likely will be a recipe for trouble, however. Asking a service manager or a salesperson to become a market analyst may be too much for some.
Carl Lehmann, vice president of electronic business strategies at the Meta Group Inc. in Stamford, Conn., says the new CRM tools require a thorough examination of existing business processes. Retailers need to look at how information flows between dealer personnel and customers. Reactive people need to become proactive. Separate dealership 'fiefdoms'' may need to be integrated. And success should be measured over the lifetime relationship with a customer, rather than on short-term quotas.
'It's extremely difficult to do,' Lehmann says.
A MARKETER'S DREAM
Dealers are also aware that the gold mine of data they are sitting on is highly prized by others, including the manufacturer. Having a detailed database of vehicle buyers - with street addresses, e-mail addresses and phone numbers - is a marketer's dream. But dealers worry that sharing that kind of information could be used to poach their customers.
'There's this whole battle not just for the customer but also for the customer information,' says Jay Houghton, account director for Oracle Corp., the world's largest database company.
Still, getting at all the data won't be easy. Large dealers and dealer groups that handle a number of different makes often use several different dealer management systems. That pushes customer information into isolated islands, blocking or complicating attempts to create an integrated contact management system, Houghton says.
Ultimately, the auto industry will have to sort out a way to share consumer data, says Buzz Waterhouse, president and COO of Reynolds and Reynolds Co., a dealer management system vendor in Dayton, Ohio. The industry needs to focus on doing a better job for customers, not the 'red herring' of who owns customer information, he says.
'I think the real issue is, how do we collectively use this data and our systems and our processes to build a better way of doing business for consumers,' Waterhouse says.
At Kribs Ford, the evolution marches on.
Burton, who manages the Polk dealer marketing system himself, stopped buying mailing lists and dumped his direct-marketing agency. Overall, Kribs Ford slashed its monthly $30,000 direct marketing expense by half. The dealership expects to sell about 3,600 new and used vehicles this year.
At the same time, Kribs Ford is getting a response rate of 3 percent to the Polk mailings, double what the company got with its former direct mail methods. And Burton's now using the Polk database to generate targeted customer prospects that his salespeople can telephone directly.
Nothing fancy, but it works.
'We don't need all the flash and color,' Burton says. 'We're just hitting people who are ready to buy.'