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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Mining for Sales

Moving from reactive to proactive behaviors means understanding that your best prospect for new business is your existing customer database. It can be a gold mine of information and opportunity. In fact, your DMS contains enough information to determine which cars you can sell to an existing customer; the estimated mileage on his or her trade; the complete structure of his or her last car purchase; the current monthly payment; term and rate; the customer’s estimated payoff; any cancelable products he or she purchased; and the estimated equity in his or her current vehicle.

With these customers already in your database, the question then becomes, “What are you going to do
with them?” Unfortunately, the answer for most dealerships is “Nothing.”

There is a litany of technology solutions available to help dealerships retrieve the information previously mentioned. Through the use of good resources, one should be able to define specific criteria and identify current dealership customers who match this information. For example, after matching customers against your current inventory, you should be able to pull a list of those who can trade out of their current car with no money down and reduce their monthly payment by more than $100. Then, through an established in-store process, those customers can be contacted. The key is to customize that offer for each customer.

In order to maximize the effectiveness of this process, existing data should be filtered into predetermined campaign criteria. The search criteria should be customizable so campaigns can be modified and the dealership can create targeted messages. Once an appointment is scheduled, the sales staff should be accountable for the remainder of the sales process.

As mentioned earlier, there are technology solutions designed to help dealers with the heavy lifting of data collection and segmentation, but the key is in-store execution. After working with many, many proactive dealerships on this traffic-driving process, we have found that dealerships can increase their monthly car sales volume by 25 percent. The big question is, “Can you get them to do it?”

Bruce Foster is director of the Performance Development Center at JM&A Group. He can be reached at bruce.foster@bobit.com.

Sidebar: Creating an Individualized Customer Campaign
What if you could tell a customer that they could trade in their current vehicle with no money down and still reduce their monthly payment by $100? Well, depending on whether your dealership has the right processes in place, it certainly is possible. To make it simple, the process should go like this:

1. Identify those customers in the dealership’s database.
2. Analyze their previous deal, calculate any refundable products and estimate their net payoff.
3. Estimate the customer’s trade value and calculate it against the net payoff to determine the customer’s equity position.
4. Compare the net payoff to the actual inventory and apply current incentives to identify vehicles the customer can purchase now with no cash down and no increase in payment (or a reduction of any value).
5. Create a unique, specific and targeted offer with which to contact that customer.