Ten years ago, the Internet entered the world of automotive retailing.
Companies such as the Cobalt Group, Kelley Blue Book and Edmunds celebrate 10-year anniversaries online this year. And since Autobytel Inc. listed the first vehicle online in February 1995, dealerships have been using the Internet to improve operations and spur sales.
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This is the fifth year of the Ward's e-Dealer 100, the first-ever independent ranking of dealerships selling the most vehicles online. There has been an explosion of such sales. The inaugural 2001 Ward's e-100 tallied 61,356 vehicles sold the year before. The total on this year's list is 144,136 deliveries originating from initial Internet customer contacts.
Dealerships on the list have progressed beyond just counting sales. There has been a maturation process as to how dealerships use the Internet.
It happens in stages, according to Matt Belk, e-Commerce manager for the Hendrick Automotive Group chain of dealerships based in Charlotte, NC. “You have to crawl before you can walk, and you have to walk before you can run,” he says.
A dealership that is crawling has a website and a person who, at least in title, is responsible for what little Internet activity there is. Many dealerships are still at this level.
Some dealerships have progressed to the walking stage. They employ an Internet manager and a few sales people who are passionate about selling on the web. They are beginning to buy leads from various sources, develop their online processes and see sales increase.
But the industry is starting to see some dealerships in a full sprint with their online strategies. These dealerships have moved beyond having Internet departments that handle only Internet sales.
Dealership chains such as Hendrick and AutoNation Inc. have taken the equipment they use to track Internet leads, and now use it as part of a customer relationship management system (CRM) to leverage all sorts of customer contacts.
Those dealerships are now applying the processes used for the Internet customer — quick response times, transparency of information, intense follow up and selling the value of the dealership — for every customer.
CRM spans across all of those dealerships' profit centers. It's not just a buzzword or novelty.
Typically, these dealerships' Internet departments have evolved into full-scale business development centers where the phone is an important tool.
Some call centers follow up every lead in attempts to schedule appointments. Others actually set appointments and sell the vehicle. There's an irony in using the old-fashioned phone and new-fangled Internet together.
“It's weird how it all comes back around to the same thing,” says Belk, who has Hendrick at a full sprint. The group sold more than 15,000 vehicles last year online.
Belk is working with Who's Calling developing scripts and strict follow-up processes to create a solid phone culture at Hendrick. “There is a lot of opportunity to make strong grosses if you're good on the phone,” he says. “But you have to be real good at it.”
Sean Wolfington, president and CEO of BZ Results, a website design firm, says dealers need to beware.
“Just because you're selling a lot of cars online doesn't mean you're making money,” he says. “We see Internet managers who want to be Internet dealer of the year who are selling a lot of cars, but are losing money.”
Dealers should look at how much the dealership is spending to acquire leads and also make sure they aren't virtually wholesaling units that they could be making money with online.
Dan Chasins, executive vice president-marketing for the United Auto Group, believes true CRM is the future. “It is where we need to go,” he says. “CRM is the great for boosting the customer satisfaction scores and productivity.”
UAG, despite selling more than 32,000 vehicles online last year, wants to take it to the next level.
“We're still learning how to walk when it comes to CRM,” says Chasins. “We tell our managers not to make the investment unless they are prepared to change their processes and manage that change carefully.” Right now, UAG has approximately 40 dealerships practicing CRM.
Jack Ryan, general manager for Honda of Nanuet (NY), a UAG-owned store, believes many dealerships aren't wholehearted in their Internet operations
“They only go after it 30% or 40%,” he says. “They think you leave money on the table with an Internet sale. But if you manage it properly, your grosses online will be higher than your showroom grosses.”
Rusty Strange is Internet director for the Beaman Auto Group in Tennessee. Its Toyota store sold more than 1,000 vehicles last year online and has grown 192% in two years.
Strange believes a dealer needs to look at the Internet department as having inherent value to the rest of the operations. He says his group is probably in the walking stage, but is strategically and methodically advancing.
“One sign of a successful Internet department is that it is breeding a successful floor effort,” he says.
Adds Wolfington, “You can be selling a lot of cars, but you need to ask yourself, ‘How can I leverage the Internet to make more money in all of my departments?’”
