Irony: Automotive Retail Innovation Often Inversely Proportional to Dealer Profits

For the last 17 years I have dedicated my career to consulting with automotive and RV dealers on their marketing strategies and sales processes. I have been first-to-market with breakthrough research to help dealers avoid scams, improve business outcomes, and provide educational services to meet market needs. Most of my best friends are in these industries and this LinkedIn newsletter helps me stay connected with industry leaders.

So, you can understand why I'm so pleased to see how dealers pivoted during COVID in order to emerge financially stronger. Many dealers have hit all-time record profits in 2020 and 2021, and this makes up for many difficult years in the recent past.

With record profits in the bank, dealers now face new challenges with the proposed EV sales model and vague OEM initiatives that will once again create headwinds for entrepreneurs. With so many things changing, you would think franchise auto dealers would be investing in retooling their business operations to lower costs and investing in educating their managers in the latest retail sales and marketing strategies.

The irony is that when dealers are the most profitable, they often reduce investments in retail infrastructure because the sun is shining and they believe they have time to upgrade/change later.

Compare that to 2008 and 2009 when the sky was falling. Dealers were under severe financial pressure, and some dealers were forced to close their franchises. I remember those days well. I started my business in 2005 and dealers were very eager to learn how digital marketing could help accelerate sales. When their livelihoods were being challenged, they knew to call on experts for help.

Great innovations came out of this hard time for dealers.

Dealers Still Need Experts To Help

My challenge to dealership managers who are reading this article is simple. When the sun is shining, it is the best time to repair the roof. I can list a dozen new ways for dealers to reduce costs, increase customer satisfaction, and increase their retail effectiveness in their PMA. However, many dealers I speak basically respond with something like this:

"Thank you, Brian, for the call. I'm not interested in changing anything right now. We are doing well (i.e., making record profit) so check back later in the year."

Let me clarify this statement. Dealers are using record profits to purchase weaker stores that have underperformed in their markets and grow. Stronger operators are getting stronger.

But let's not lose sight of the main thrust of this article. Are dealers really changing their business model, marketing tactics, hiring processes, technology infrastructure, and data management during this record period of profits? For the larger dealer groups, the answer is yes. They see the aggressive stance that OEMs are taking in regards to the consumer experience.

However, for groups with under 10 stores or single point operators, you might be shocked to see how often necessary investments in retail infrastructure are pushed off. I understand the challenges of running a business, but it is critical to have a budget for education, training, and a process to welcome new technologies that can save the business time, money, and resources.

If you been following this newsletter, you also know that OEMs are coming after dealership sales models and used car profits. This change in positioning for some OEMs are moving them closer to becoming competitors rather than partners. Those who prepare for change today will be able to act without emotion and find the right path forward to preserve the franchise model.

Make An Investment in May: 10 Highlights

For the 12th year in a row, I will be hosting the Digital Marketing Strategies Conference (DMSC), which is May 22-24th in the Napa Valley. The conference will continue the traditional of bringing first-to-market ideas to dealers who want to gain a competitive edge in their markets.

Let me list 10 of the 25+ topics that will be addressed and are valuable to dealership managers and internal marketing teams:

Marketing Discussions

• Dealers should be leveraging Google's new Vehicle Listing Ads (VLA) for used cars which place inventory photos/prices at the top of the Google search results page. The performance of these ads, when done right, are very attractive yet many dealers are not using these powerful ad units according to Denise Galiatsatos, President of PCG Digital, who is seeing amazing results for our clients.
• The popularity of OTT video advertising and Amazon display ads are getting lots of attention, but over half of the agency campaign performance reports I have reviewed show little accountability and a reversion to impression-based mumbo-jumbo claims. Online video works, and Amazon advertising can work, but dealers are getting ripped off again and we need to clear out the junk.
• Should dealers build their own data warehouse to protect consumer data, build their own first-party audiences, and develop a compliance solution for the upcoming deadline for the Gramm-Leach-Bliley Act and the FTC’s Privacy Rule? If yes, who should dealers partner with for the technology infrastructure? We will provide insights for dealer groups to consider.
• With EV models coming, how should dealers prepare their websites and local content marketing strategies? Search Engine Optimization (SEO) for EV models is a great opportunity for dealers who act first. We will discuss what the blueprint for success can look like and challenge the doubters that SEO may no longer work. ?Tim Martell will definitely have an opinion on that!

Sales Process Discussions

• While many dealers have embraced some form of digital retailing, there are new insights to reduce costs, improve the buying experience, and handle consumers with low credit scores. Are dealers ready for real-time retailing? We will discuss this very topic and learn about the latest updates to market leading retail platforms.
• The biggest breakthroughs in retail sales effectiveness are coming from moving toward a SPOC sales model. We have two industry pioneers, Chip Perry and Tom Ryan, sharing their results this year. We will hear from dealership leaders who have taken the leap to empower their sales associates to deliver an end-to-end purchase experience and increase PVR.
• Enabling dealership personnel with devices that leverage video to communicate with consumers is not a new topic. However, having a consistent, unified video presentation platform for all departments is still something dealers desire. Instead of having three video platforms in the dealership across sales, service, and BDC, why not consider unifying all messaging so that all departments can see consumer communications?
• If OEMs continue to mandate a single digital retailing platform, how do dealers pivot to provide the best experience for consumers? We will have an active discussion on how dealers, dealer groups, and OEMs can find a middle road that works for both parties.

Fixed Operations Discussions

• Artificial Intelligence (AI) is finally delivering products for auto dealers that provide measurable improvements in service appointment bookings by allowing consumers to book service on their very first attempt, every time. For some dealers, this is exactly what they need to lift their CSI scores even higher and increase service revenues. We will hear from Brooke.ai and Stella.ai on their approaches to lowering operating costs and significantly improving the fixed operations scheduling experience.
• Customer retention is highly linked to the service experience and customized consumer outreach. Oddly enough, innovations in customer lifecycle marketing have been very limited until now.?We will discuss the latest tools and technology to increase retention and customer loyalty. Who is doing a great job with retention? The answer is often dead silence. Why?

Will You Join Me

The list of workshops, keynotes, and panel discussions can be reviewed in detail here on the DMSC agenda page. The very best in automotive retail technology will also be exhibiting at the conference, so consider sending at least one manager to DMSC this year. Speakers? Yes, you can see the full list here.

The automotive industry continues to evolve and dealers will also have important issues to address each day. However, all owners and managers needs to get out of the dealership and get a fresh perspective on the changes that are all around us.?DMSC is a great environment for learning, so I hope that this article has whet your appetite to join me in May.

Take a look at the great list of sponsors for DMSC 2022 and plan to have some one-on-one meetings with company executives. https://digitalmarketingstrategies.org/sponsors/

C-Suite executives of dealer groups with 10+ stores are coming into Napa a day early to attend the Automotive CXO Summit on Saturday, May 21st.??If you work at a large dealer group and would like more information, contact me directly.