Kristen Stanton: Thanks for taking the time to speak to our readers, Dave. How long have you been an Internet dealer?
Dave Handel: I’ve been in Internet sales since ’96 -’97 – since the birth of the industry, so to speak. I only know that I’ve been selling to Internet customers for a long time! (laughs) Early on, we got some leads from our own sites and a few from our OEMs. Third party providers came onto the scene about six years ago.
KS: How do you go about building an Internet department?
DH: You have to determine the market, based on your franchises and demographics. Then it’s about building the right team. That’s the most important part. In addition, you must have a uniform sales process and a great lead management system.
KS: How do you find the best people for the job?
DH: The skills required for an ISM are unique. I rarely hire floor sales people to be Internet sales people. It’s just a different skill set. Many floor sales people do not have the ability to sit still! (laughs) Being an ISM is very tedious work. You need to be able to sit at the computer all day, make phone calls and email prospects. Those are the kind of critical communication skills required for the job. The other is organizational skills –being very organized to manage your leads and follow-up religiously. Believe it or not, I actually prefer people who have less experience than a lot of car-sales experience, because they’re less likely to have bad habits!
KS: Do your ISMs follow a set process, or does it vary person to person or store to store?
DH: I’m not a micromanager. Anyone who tries to micro-manage their ISMs is doomed to failure. But I do have a solid sales and follow-up process that they follow – and they see the results quickly if they stick with it.
I work with the team, checking all emails and templates for content, grammar, etc. It’s important to be professional and to differentiate yourself. It’s a good process. Day one – send an auto-responder, make your first phone call, and send a personal email that includes upfront pricing. Assuming the ISM doesn’t hear back from the customer, day two – second phone call. Day three – second email. Day four – third phone call. So, by day five, the prospect has gotten at least three emails and three phone calls. Then I mark them as “dead.” But they’re not really dead, are they? (laughs) The average selling time from the original inquiry is over 70 days!
Then I send my “Letter from the Internet director.” I write something to the effect of, “Dear Sue, my staff has been unable to get a hold of you to properly respond to your request for more information on a Nissan Altima. Please let me know if I can answer any questions or help out in any way. It’s our goal that this is the best car buying experience you’ve ever had. Any feedback you would like to provide on how my team has handled your request would be appreciated. We’ll do your best to earn your business.” – something along those lines – and I get an incredible response to that email.
We’ll also send out bulk emails every couple weeks with special offers and promotions to keep our name out there. We don’t spam people, but follow-through is the key to success.
Another thing I need to stress is that Internet dealers need to give people prices. The number one complaint we get from customers is that no one calls them back – 30% of all leads go unanswered – unbelievable, but true. The number two complaint is that they don’t get upfront prices. If you don’t give a price, it makes them feel like they’re living the old car buying experience, which drove them online in the first place. You’ve got to give them a price.
KS: When it comes to measuring your team’s success, what do you track?
DH: Again, I’m not a micromanager, but we do track things. First of all, it’s close rates. If you’ve got an ISM handling 200 leads and they’re only selling five cars, something is very wrong! I shoot for 10% close rates, at least, and 15% is great. Occasionally I’ll get 15% close rates for the whole team – that’s a great week!
I also look at response times, though I’m not insane about them calling back within 20 minutes. In fact, it’s not the worst thing if they’re not the first person the customer hears from. You know the customer will be hearing from more than one dealer. So, be the second and be so much better than the first call they got!
I also look at the percentage of the dealership’s overall sales. I shoot for having the Internet department responsible for 25% of the dealership’s overall sales. In addition, cost per sale is huge! Very important. If you’re spending $175 cost per unit sold with your Internet leads (compared to $450 through other media), you can consider that savings additional gross. But measuring gross is a bit of a political hot seat, so I try not to get too involved with that and leave that to our CFO. Floor sales people give away their share of gross too. We focus on having satisfied customers and avoiding the frustrating back-and-forth experience.
KS: Do you use CRM tools to do this?
DH: Yes. But instead of talking about what I currently use, which I inherited in some of my stores and am not totally satisfied with, I’ll talk about what dealers need to look for in a good tool. How’s that? Foremost, a good tool should be Web-based so ISMs, Internet directors, etc. get the flexibility of accessing it from different stores, or even from home. I need to be able to log-in and see what everyone is doing.
It should also “protect” the ISM, so no one can skate their deals. It should house templated emails, auto-responders, graphics – so an ISM can send their photo, the dealership’s logo, etc. in their emails. It should also give the dealer the ability to track appointments, appointment shows, etc. All leads should be held in a central location, regardless of the source. We get leads from our site, from our OEMs, and over half from third parties.
Leads need to be organized in such a way that none of them fall through the cracks. For every lead in the lead management tool, there should be a future action attached to it. If I see 200 active leads in the tool, there best be 200 future actions, whether it’s to call, send an email, etc. If there are more future actions than leads in the tool, I know the ISMs are cheating! (laughs)
KS: How do you prevent the typically high turnover of sales people in dealerships?
DH: It’s a huge problem in dealerships. It’s painful to lose people, because not just anyone can step into that position. I have two-to-three ISMs in each store, so losing one can have serious ramifications. My attitude is that I’m not a dictator, I’m a teacher and a mentor. I motivate people by teaching them and praising them, rather than being condescending. (Editor’s note: No surprise, Handel was a therapist before his career as an auto dealer.) They say 75% of people who leave a job do so because they feel insecure – not because of the money. You have to look at it as a cycle – treat people negatively, like they don’t matter, then they feel like crap, then they don’t perform to their potential. Treat them like they’re winners, they matter, and you’ll get the results you want. GMs or owners cannot treat their sales people like they’re just another car deal. Your salespeople are not pieces of sheet metal! (laughs) Paying ISMs should not be like a car deal where you try to squeeze another hundred bucks out of them! Sure, you’ve saved a hundred bucks, but now you risk angering them and make them less effective sales people.
KS: Well, that’s a great segue to my next question. How do you compensate your team?
DH: I try to keep it uniform, but it’s always a work in progress. I pay a base salary, plus a volume bonus, plus a percent of gross. ISMs should be motivated to hold gross through trade-ins. I think ISMs should also get paid higher “minis” since they don’t have as much of an opportunity for gross as the guys on the floor. I also try to get them 50% of gross on accessory sales. ISMs who get paid on accessory sales and trade-ins, so they have the ability to earn what they deserve. If you have an ISM who is able to sell 30 cars a month, they are not going to stick around for $70k a year. Give them the opportunity to make money on these other things, then they can turn that into $100k a year. That’s reason to stick around. And that’s important when you have a great ISM!