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Driving Impressions

Two dealers from Florida and Illinois reveal the roadmap their dealerships followed into the digital age.

April 2012, F&I and Showroom - Cover Story

by Justina Ly

Matt Buchanan (left) and Joe CAstle (right).
Matt Buchanan (left) and Joe CAstle (right).

Before they got serious about their organizations’ digital marketing efforts, Matt Buchanan and Joe Castle were like most dealers: They’d spend big money on newspaper, direct mail and cable TV ads, complete with crazy stunts, to set the stage for big weekend sales.

“I was blanking on a Saturday, selling two or three cars with a full newspaper ad,” said Castle, CEO of Chicago-based Castle Auto Group.

Buchanan, the fresh-faced 27-year-old who serves as dealer principal for Sarasota (Fla.) Ford, says he looked to the Internet as a way to level the playing field with the mega dealer groups in his area. “It gives us an opportunity to compete against them,” he says. “If I didn’t go digital, I would be losing market share every year to my competition.”

Castle and Buchanan don’t call themselves “digital dealers” — at least, not yet. Instead, they consider themselves students of the digital marketing game. But several key components of their in-store sales and F&I processes have migrated online, and they’re working hard to strike the right balance between the showroom and digital experience.

“We have to be careful about being driven completely by surveys that claim to show what customers think they want,” said Cory Mosley, F&I and Showroom’s Sales Driver columnist and principal of Mosley Automotive Training. “The smarter thing to do is to try to create a simplified process and abandon old ideas and processes like the 13-step sales process. I think that’s key.”

Digital Entrance

Sarasota Ford is the flagship store for the Buchanan Auto Group, which was founded by Matt’s father, Vern Buchanan, in 1990. A Stanford graduate, Matt joined the family business in 2009 after spending a few years at investment firm Merrill Lynch. After starting at the group’s Honda dealership in Cocoa, Fla., he was transferred to Sarasota Ford two years ago and was named dealer principal in May 2011.

Buchanan didn’t steer the dealership down its digital path right away. He first had to strike the right chord with the people manning his store. As he puts it, being a Gen Y’er has its pros and cons when it comes to managing a dealership.

“I think being young is a positive, but I also think being older is a positive,” he says. “Being a little bit younger means you’re tied into this digital stuff, but I’m young and humble enough to say that I don’t know everything.”

The first thing Buchanan did was seek out an ad agency that was focused on both traditional and digital marketing, as he believed his dealership was missing opportunities by relying solely on TV and print ads. His search led him to Schenectady, N.Y.-based Potratz Automotive Advertising, which he hired last June. By July, Potratz had begun implementing its Internet marketing strategies, which included the purchase of Google key words, such as “used cars,” to drive traffic to the dealership’s Website.

Buchanan also took advantage of e-mail marketing, which he limits to once or twice a month, and pay-per-click campaigns. His store also creates YouTube videos of vehicle walkarounds. And under the guidance of his new advertising firm, the dealership invested in a live chat feature for the store’s website. The investment paid off: Live chats alone deliver about 100 leads per month.

In total, Buchanan estimates he spends about $250 to $350 on advertising per vehicle sold. That amounts to an estimated $50,000 to $60,000 per month for his 200-vehicle-a-month store, which is actually less than what he spent before his digital drive. He adds that his budget would be a lot smaller if he could go completely digital.

“Our district is older than most in terms of population, so we’re not in as digital an area as other places,” Buchanan says. “I still think digital is growing and you need a balance of both types [of advertising].”

John Giamalvo, Edmunds.com’s director of dealer strategy, said the balance Sarasota Ford attempts to strike is a challenge dealers across the country are wrestling with.

“The more conservative stores are directing about 12 to 15 percent of their advertising budget online, while the more forward-looking stores are directing as much as 70 percent of their advertising budget online,” he says. “Edmunds.com is seeing that dealerships are getting more and more comfortable in the space, understanding its value to them and jumping in with both feet to take full advantage of the opportunity to be where car shoppers are.”

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