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Mining for Customers

February 2010, F&I and Showroom - Feature

by Bruce Foster

What if there was a way to save time and money by targeting only the best prospects? What if you could identify potential customers who could trade in their current vehicle with zero cash down and still lower their monthly payment? With today’s technology, both scenarios are possible. The real question is, will your dealership be nimble and responsive enough to make this new, traffic-generating sales process effective?

Everyone has heard that success in the car business depends on three things: people, process and pay plans. Easy enough to understand on the surface, but complicated to implement. A common excuse for failing to enforce a solid traffic-generating sales process is, “I can’t get them to do it.”  Imagine, as a business owner, saying to someone that the reason you aren’t implementing a solid business practice is because you can’t get your employees to do it. With unemployment hovering around 10 percent nationally, this mentality seems off. Unfortunately, excuses like that one stem from the fundamental nature of our industry, which is to be reactive.

As a salesperson, there is not a lot of time spent aggressively seeking out business. In fact, one could suggest that the majority of salespeople spend little time proactively marketing themselves and seeking new business. Instead, they spend their days waiting for one of three things to happen.

First, they wait for someone to cross the curb. This is nothing new, as salespeople making a living from curb crossers dates back to the early days of our industry. Second, salespeople wait for the phone to ring. Whether they are waiting on a new prospect to call or waiting for a previous customer, they are waiting nonetheless. Third, though not nearly as common, they wait by their computers for the e-mail chime. In all three cases, they are waiting, waiting and waiting. This is a paradigm that those in our industry have been struggling with for many, many years.

Shifting Gears

In an effort to shift our thinking from reactive to proactive, let’s take a look at what we already know. Many studies reinforce the understanding that most dealerships retain between 25 and 40 percent of their customers for a second vehicle sale. At the same time, current market conditions, while improving, are not within our control. A dealership’s internal response to plummeting retention rates and the market conditions is to do one of three things: (1) Do the same thing it has always done, hoping for a different result; (2) Give up and do nothing; or (3) Try to take control by doing something different.

As hard as it is to believe, most dealers will typically go for the first option. The most common tactics include:

•  Advertising more (or less)

•  Changing management

•  Reducing sales staff

•  Internally pressuring margins

•  Reducing inventory

•  Lowering internal goals

•  Changing pay-plans

To truly shift your dealership’s mindset, you must attack the market and engage your existing customers who are capable — and likely — to trade in their current vehicle for a new or pre-owned one. The best thing about this customer segment is they’re right at your fingertips.

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