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Not all dealers had today’s Internet customer in mind when they joined the digital revolution. For Sun Toyota, the Great Recession was all the motivation it needed.

July 2014, F&I and Showroom - Cover Story

by Justina Ly

Sun Toyota, which has operated along the Gulf Coast of Florida for 37 years, is well known for its state-of-the-art facility and no dealer fee policy.
Sun Toyota, which has operated along the Gulf Coast of Florida for 37 years, is well known for its state-of-the-art facility and no dealer fee policy.

The Great Recession was a painful period for Sun Toyota, which has operated along the Gulf Coast of Florida for 37 years. Showroom traffic slowed to a crawl, leaving salespeople with nothing to do. That’s when management decided to enlist the sales team in the store’s Internet sales efforts.

That decision set the stage for what the dealership now calls the I-Team, a group of veteran salespeople who are leading the dealership’s charge into digital retailing. They officially got their name last October, and today they’re driving more than 10% of the dealership’s business.

“We had two Internet managers for new cars and one Internet manager for used cars. And they were getting a lot of email leads, and the salespeople were not getting leads on the floor,” recalls Chris Johansen, the dealership’s finance director. “We started handing off those leads to our showroom salespeople so they could get to work. And it evolved from there.”

Generating Sales
Converting leads into showroom appointments was the I-Team’s main goal. But that objective led the team to begin exploring ways to improve the store’s digital storefront. What they discovered was the stickier they made the dealership’s website, the better chance they had at turning that lead into a sale.

Today, Suntoyota.com’s home page features a “Live Chat” tab from CarChat24. Toward the middle are four green buttons: “Get Preapproved,” DealerCentric’s online credit app; “Value Your Trade,” Black Book’s trade evaluation tool; “Service Specials”; and “Schedule a Service,” which is powered by Service Dynamics’ Shop Watch. The site also features VinSolutions’ payment calculators, a parts-ordering tab, dealership videos and a host of dealership specials.

Collectively, these website add-ons are driving a process that has deals signature-ready by the time the customer reaches the showroom. “If [the customer] spends three or four days with the selection process online, it cuts down on the showroom time,” Johansen says.

And just about everything the I-Team does is tracked using VinLens’ web analytics tool, which measures customer responses to phone calls and emails.

“Their job is to handle inbound emails with customer inquiries and talk about what vehicles are in stock and set appointments,” Johansen explains, noting that the I-Team can only discuss pricing at his direction or at the direction of the dealership’s sales managers.

Sun Toyota is housed in an impressive 86,000-square-foot facility, which is gold certified by the Leadership in Energy & Environmental Design.
Sun Toyota is housed in an impressive 86,000-square-foot facility, which is gold certified by the Leadership in Energy & Environmental Design.

Once an appointment is set, the I-Team touches base with Johansen or a sales manager, who are the first ones to greet the customer when he or she arrives. From there, the customer is given a tour of the dealership’s 86,000-square-foot, state-of-the-art facility, which is gold certified by the Leadership in Energy & Environmental Design’s green building certification program.

If the customer already has a vehicle selected, the dealership will have it ready to test drive before they arrive. Johansen and his F&I team, which are averaging $1,300 in profit per deal, are also at the ready should the customer require vehicle financing.

According to Sales Manager Mike Chaparro, the I-Team fields between 2,200 and 2,500 phone-in and Internet leads per month, with about 60% of those leads converted into appointments. Internet leads alone are being converted into appointments at a 15% to 20% clip, with about 13% to 14% of those showroom visits resulting in a sale.

Chaparro says the goal this year is to increase the I-Team’s Internet lead-to-appointment conversion rate to 40%. To help, the dealership is working with consulting firms to improve how the I-Team responds to customer inquiries. Phone scripts were revised, email templates were refreshed, and response times are being tracked. The dealership has also incorporated text messaging to reach mobile shoppers.

Sun Toyota’s connection with Capital One has also helped the dealership’s online efforts. Six years ago, it became a member of the finance source’s Diamond Dealer Program, which provides special services like dedicated underwriters and fast-track underwriting. Johansen says the speed and consistency of the program has helped his finance team close many deals that originated online.

“All the finance managers have a lot of comfort with them, because they know they’ll hear the same two or three voices every time they get on the phone to discuss a deal,” the finance director says.

Business Transformation
Insiders point to the years between 2007 and 2012 as a period of major change in how dealers viewed the digital realm. The thought is dealers sought to cast a wider net in hopes of pulling recession-weary consumers off the sidelines.

According to Polk, the share of new-car registrations for consumers earning under $50,000 per year decreased by 10% between 2007 and 2011, but the firm notes that the decline began to slowly improve after bottoming out in 2009. The belief is that much of that buying segment — car buyers between 25 and 64 years of age — began crawling back into the market through the Internet.

And the more car buyers consumed online information, the more vehicle information sites like Cars.com, TrueCar and Edmunds.com emerged as key sources. But even that segment has evolved, transforming into car-buying portals that funnel consumers to paying dealers. But not all dealers are fans of the relationship these sites are forging with consumers.  

Sun Toyota’s I-Team handles, on average, 2,200 to 2,500 phone and online leads per month, with about 60% of those leads converted into appointments.
Sun Toyota’s I-Team handles, on average, 2,200 to 2,500 phone and online leads per month, with about 60% of those leads converted into appointments.

According to the National Automobile Dealers Association, Internet advertising has increased more than any other marketing channel since 2003, climbing nearly 30 percentage points in that time. Last year alone, digital advertising accounted for 33% of the $7.6 billion dealerships spent on advertising. The association doesn’t break out how much of that total was directed to lead-generation sites like Cars.com, but dealer groups haven’t been shy about their objections to the rising cost of doing business with these firms.

“… when we look at the investment of our marketing resources and how it generates business, the third-party lead providers are our most expensive business,” AutoNation’s Michael Maroone said during the company’s first-quarter investor call back in April.

Aside from the cost, AutoNation officials said the handoff between third-party lead providers and dealerships has been problematic, with Maroone describing it as “disruptive” and “not very consumer-friendly.” It’s an issue companies like Dealertrack, RouteOne and Black Book are hoping to solve.

“The industry’s main focus this year has been digital retailing, ecommerce and converting shoppers to buyers,” says Ali Mendiola, senior manager of business development for Dealertrack. “People finally understand that future is here.”

In February 2011, Dealertrack launched its Digital Retailing Suite with the release of PaymentDriver, an online payment calculator. It then released FinanceDriver, a web feature designed to prequalify buyers for vehicle financing. The company added its shop-by-payment SmartFind feature last year and officially rolled out its TradeDriver trade appraisal tool this year.

RouteOne has come to market with its own set of online tools. Marketed under its Online Retail Services, the tech firm offers tools that allow a dealership’s website visitors to appraise their trade, review F&I product pricing and complete an online credit app. Last fall, the company launched a revamped version of its online credit app, FinanceConnect. It works on dealership websites, connects to social media pages and can work on mobile devices.

“From our perspective, the whole online process is really meant to emulate the in-store process, providing the shopper with an experience that is totally within their control …,” says Mike Jurecki, CEO of RouteOne.

Going Digital
What companies like Dealertrack and RouteOne aren’t doing is prescribing how dealers connect their tools to the showroom process. Instead, they are allowing them to self-discover how best to take advantage of their solutions. But not all dealers started down this digital path with today’s Internet shopper in mind.

For LaRiche Chevrolet, a Findlay, Ohio-based operation that averages 120 new- and used-vehicle sales per month, compliance was the reason it adopted RouteOne’s online credit app. As it turned out, the dealership uncovered a simple way to connect Internet shoppers to its in-store processes.

Sales Manager Mike Chaparro and Finance Director Chris Johansen help drive the online sales and finance process at Sun Toyota.
Sales Manager Mike Chaparro and Finance Director Chris Johansen help drive the online sales and finance process at Sun Toyota.

“Trying to be proactive, we started using the credit app as a way to protect our customers’ information,” says Jason Rumschlag, an F&I specialist for the Chevrolet store. “It’s just more secure, and you don’t have to worry about salespeople leaving paperwork on their desk.”

Three months ago, the dealership placed digital signature pads on every sales desk. The dealership also equipped salespeople with iPads so customers can start their application while shopping the lot.

“So if it’s a customer on the phone, we direct them to our website to fill out the app. If they’re here in person, our sales staff takes their info into our CRM, which pushes it to RouteOne,” Rumschlag says, noting that his department averages between $900 and $1,000 per copy. “Customers seem happy. We have the highest retention rates in our market zone as far as what GM tracks.”

Chris Merritt, finance director for Beaumont, Texas-based Classic Southeast Texas, says RouteOne’s online credit app helped correct a nagging issue when the dealership adopted it four years ago: incomplete or incorrect credit apps from sales. RouteOne’s recent iteration of its credit application, which breaks the app into an easier-to-digest, five-step process, is also driving up online completion rates.  

“It gives us the correct information before the customer gets to the store, which cuts down on the length of time the customer spends in F&I,” Merritt says. “And it’s easy for the customer to use, which is the biggest benefit.”

And Merritt’s department has put up impressive numbers this year as a result, with his team averaging $1,845 per copy on 245 new- and used-vehicle sales per month.

For Cicero, N.Y.-based Driver’s Village, a family-owned dealer group that retails about 900 cars per month, the web plugins it began testing about a year ago were the perfect complement to the single-touch sales and F&I process it adopted in 2003. These web features, produced by Dealertrack, are now fueling the store’s drive toward a full digital retailing experience.

“I can get a mortgage, buy movie tickets and groceries online, but I can’t buy a new car from a dealership,” Bregou says. “Sometime in the future, that’s going to change. And that’s what’s we’re preparing for.”

Visitors of Driversvillage.com can start by either selecting the “Finance First” button, which is Dealertrack’s online credit app, or by selecting a make from one of the group’s 21 franchises. The shopper then narrows his or her search to a specific model, with a “Qualify Instantly” button — Dealertrack’s FinanceDriver tool — appearing throughout. Once a vehicle is selected, a vehicle display page containing photos and vehicle details appears. It contains five action buttons: “Email Dealer,” “Trade Appraisal,” Dealertrack’s TradeDriver plugin, “Make an Offer,” “Loan Calculator,” and a “Get Pre-Approval” button.

“For the last decade, everyone has been focusing on helping customers find the right vehicle on their websites, but finance and trade are responsible for getting customers started in the buying process,” Bregou says, noting that the web feature with the highest closing ratio on the site is the “Finance First” button.

“I’m kind of a futurist and I believe ecommerce is the future,” Bregou adds. “And I’d like to be the first one to have it, because I think customers want it.”

For Sun Toyota, joining the digital revolution was simply about weathering the economic downturn. “There were growing pains and a lot of trial and error at the very beginning, but now I feel like we’ve got it dialed in,” Johansen says. “Now it’s up to our I-Team to stay on top of that and make sure we have the tools that bring customers in the door.”

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