I have always been a sucker for music with a message and a story, especially tunes sung by individuals who lived a life that gives them the right to tell it. Being from the South, I was a Johnny Cash fan before the rest of the world caught on. In fact, if you get enough pop into me, you might even hear me sing one of his tunes in my best Johnny Cash impersonation.
The last tune Johnny recorded was “Hurt” in 2002. It was a cover of a song written by Nine Inch Nails frontman Trent Reznor. Both versions are powerful, but there’s something special about the music video of Johnny singing the tune.
With the love of his life, June Carter Cash, looking over his shoulder, Johnny can be seen singing while the video flashes to scenes from his life. June ended up dying within a few months of the video’s making and Johnny died before it was released. If the video doesn’t get to you, you have no soul.
I have watched the video and listened to it many times with my eyes closed and mind wide open. No wonder the video has more than 55 million views on YouTube.
Today, as I sit here putting my thoughts into this column, I am experiencing incredible pain. It’s only temporary, but the continual pain is sometimes intense and overwhelming when the medication begins to fade.
If you’ve followed my columns, you know about my weightlifting accident in 1973. It has come back to haunt me in recent years, requiring two titanium knee replacements. Well, now my good knee has given out and needs to be replaced. The surgeon was ready to go in July, but I just have way too much going on right now, so the surgery will have to wait until Aug. 26.
You see, I’m committed to giving two presentations at the National Speakers Association Convention in July. And that’s two weeks after I visited Gary Lang Automotive Group in Chicago to do some consulting work and three weeks after traveling to Asheville, N.C., to give a sales manager seminar for a huge Dealer 20 Group. I also have another Internet Battle Plan event coming up and some additional consulting work scheduled for this month, not to mention a few magazine articles to write. So, the surgery can wait.
So, why am I telling you this? Well, I guess I’m sick of hearing people whining and complaining about how difficult their jobs are and how they want to stop and smell the roses.
So many people want to be at the top of their profession, but they really don’t want to pay the price to be there. They see what you have and can’t envision what it took to get there. This isn’t about Ziegler’s tolerance for pain as much as it is about the meaning of commitments and keeping your agreements.
The speaking engagement I previously mentioned, the one in Asheville, N.C., was for a private group of big Chevy dealers called the Chevrolet Management Council. They wanted me to cover several topics, driving more traffic into the showroom was one of them. Actually, it was the main topic they wanted me to address.
I’ve been showing dealers how to drive traffic for 30 years, but the right answer has changed quite a bit in that time. What used to work doesn’t work today. Even the most successful dealers in the country are struggling to find the answer as the landscape continues to shift under their feet.
Newspaper and television advertising used to be the big drivers of showroom traffic, but results from those two mediums have diminished. People no longer read newspapers like they used to, and television audiences have become diluted with more than 400 channel choices battling for their attention thanks to satellite TV.
I’m not going to spend a lot of column space talking about lead providers. If you’ve followed my recent columns, you know I hold many of them in contempt. I will say that most of these alleged lead providers aren’t delivering the goods and leave it at that. They’re just a bunch of smoke and mirrors — big hats and no cattle — touting bogus stats that defy logic.
My advice to you — and this is the last I’ll say on this subject — is compare the rabbit pellets these vendors are feeding you against Google Analytics. You’ll soon discover those rabbit pellets are really just smart pills.
So how do you drive traffic to your dealership? Well, the battlefield for customers is happening on Google, and you have to win local Google search.
Now try entering your city name, the name of a vehicle model and the name of your manufacturer. What pops up? If you see vendors, know they are stealing your local search. If it’s a competitor from across town, know that your rival is out-Googling you in your own market. Bottom line, your dealership should be at the top of the results page, and it should consistently dominate the page.
But, as I said, the battle is fierce. Heck, if I type “Ford-Fusion-Pittsburgh” into a Google search, the first organic listing is “CarPriceSecrets.com,” which, if you didn’t know, is a dealer-bashing website owned by Cars.com. Then there is a parade of other vendors, including Yahoo, AutoTrader and CarGurus, that appear on the page.
So, how do we change that? First, you need to pull your advertising dollars back from vendors that can’t seem to accurately document the ROI they deliver. Second, staff up and train a world-class BDC. Stop doing it halfway with your wife’s (or husband’s) nephew on the phone.
Fumble at the Goal Line
Once again Volkswagen has run out of gas with the goal in sight. Of course it’ll blame the dealers, but the beatings it’s taking from other makes won’t stop until morale improves over there.
After three years of phenomenal growth and increasingly outdistancing the market, the company appeared to be on the road to — dare I say it — market domination. Now it appears VW’s projected 11 percent increase in unit sales has hit a snag.
In late July, the German automaker announced it was cutting its 2013 sales objective to 440,000 units. That’s less than a 1 percent increase from last year’s 438,133-unit performance. Currently, the company is behind 2012’s year-to-date sales figures, which means the company is in jeopardy of not even hitting its revised goal.
What happened? Well, obviously, it got its butt kicked, again. But the automaker can’t blame the market, the economy or even President Barack Obama, as other manufacturers seem to be breaking sales records monthly.
Is it the product? They’ll say “No,” but what I’m really asking is if the product is competitive enough. I know vehicle quality is better, but is it still an issue?
Truth be told, I’m still a huge fan of Volkswagen. I have joked through the years that VW always fumbles the ball at the goal line, and, so far, the company hasn’t disappointed.
Volkswagen dealers know I’ve been very supportive of the brand in recent years. There is no axe to grind, only realistic observations and disappointment. One observation is the company has been relentless in its abuse of its dealers. Of course, that’s my opinion of a company who consistently shifts blame to its dealers instead of accepting responsibility. Colonel Klink wearing a monocle has to be somewhere in that crazy management mix.
Could non-competitive programs and incentives be the problem? Or could it be that the company has the most lop-sided stair-step ince ntive programs in the industry? Or is the Passat simply passé?
OK, I’ll lighten up. I don’t mean to be hard on VW, as this definitely isn’t the end of the story. It still has a really good shot at the title, as I’m hearing about some really heated battles taking place in the upper management strata of the company, both in the company’s U.S. and German headquarters. I wouldn’t be surprised if there was another major reorganization before the convention in February. And this time, look for some of the players of the company to exit the stage. Remember I said this and when I said it. Chances are there may be a reform movement taking control from the old guard.
Bear in mind, Volkswagen set lofty goals, with Toyota firmly in its crosshairs. And until it realizes the value of its dealers and gets more realistic with its marketing, expect the company to continue reorganizing until it finds the right formula.
An interesting footnote to this story is Volkswagen plans to bring the Phaeton back to the U.S. market. The ultra-luxury model was pulled out of the market seven years ago after a dismal sales. Once again, it was totally their fault, misreading the market and failing to be competitive in establishing a new brand. Yes, I said a new brand. As I’ve said about Hyundai with its Genesis and Equus models, I think VW is biding time before it rolls out an upscale luxury brand like Toyota did with Lexus and Honda did with Acura.
The question they have to answer before they make that move is: Can the U.S. market absorb $90,000 Volkswagens and Hyundais? The highline segment is already crowded and competitive enough. So, do these two OEMs really want to jump in the ring with the big dogs?
More on Tesla
Everybody is nervous about Tesla, including investors. In fact, after analysts re-assessed risk and Goldman Sachs questioned the sustainability of demand, Tesla stock suffered the biggest one-day drop since January 2012 in mid-July, plunging 14 percent.
Uh-oh, is the bloom off of the rose? Let’s watch this one as Tesla continues to campaign against state franchise laws.
Flats vs. Markups
Brace yourself, it’s going to happen. In recent weeks, it’s become evident, at least to me, that the Consumer Financial Protection Bureau (CFPB) is going to regulate, and, ultimately, eliminate dealer finance reserve.
Rate profit on finance contracts will become a thing of the past. From everything I’m seeing and hearing in the industry, a lot of people are running around like Chicken Little, screaming that it’s the end of the world as we know it.
Is it really all that bad? I don’t think so, as I’ll be embracing the loss of dealer reserve as a good thing that’s been long overdue.
Think about it. When you average in the homerun deals with ones that are already at buy rate or zero percent, what is the actual average rate profit per financed contract? Now, how much of that is charged back or refinanced by the consumer? And what is the one area of F&I that leads to consumer conflict in the box?
If you were paid a flat fee per contract in the amount of, say, $500, wouldn’t F&I move quicker and with less stress and conflict? Imagine being able to tell a customer, “Here’s the lowest rate you qualify for, take it or leave it.”
And if we were to transition to flat fees, I know lenders will be jockeying for position to get your business. Take Ally Financial and its Champions Club. That program allows dealers to hit a homerun if they hit several guidelines that have nothing to do with holding rate profit.
Trust me on this one, all of the lenders will start bidding for your business and will be throwing in finance incentives and raising the flats higher than the other guy. It’s going to be OK. Stop worrying and go with it.
I Hurt Myself Today
I just watched Johnny Cash’s “Hurt” video on YouTube again, and I have to admit it hits those emotional buttons. The message is so deep in so many ways, especially knowing where Johnny Cash and June were coming from at that point in their lives.
It’s 2 a.m. in Atlanta and I’m wrapping up another column. Truth is, I’ve been at the desk since 6 a.m. I’m not really tired, but the pain is still there when I pay attention to it.
I’ve said it a million times, I am where I am in my life, wherever that is, because I am willing to do things others are not willing to do to get what they want.
No Remy Martin Louis XIII Cognac this time. Somehow, it just doesn’t mix well with Percocet. Please keep those e-mails, texts and phone calls coming. I love hearing from you.
Jim Ziegler is the president of Ziegler SuperSystems Inc. and the creator of the Internet Battle Plan series. To contact Ziegler, e-mail him at [email protected]
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