Auto Dealer Monthly Magazine is the daily operations publication serving the retail automotive industry. This automotive publication serves dealer principals, officers and general managers with the latest best practices.
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industry expert / special finance In Search of the Silver Bullet Does Your Special Finance Department Need More Leads Now? An 18-year former dealer principal with focus on Special Finance since 1989, Greg Goebel is CEO of Auto Dealer Monthly, LLC, the parent company of Greg Goebel Training & Consulting. He is a leading industry consultant, trainer, author and speaker serving retail automotive dealers. Contact Greg at 941.685.9629. Greg@AutoDealerMonthly.com I have been asked the same question countless times, often not by new depart- ments but by some of the highest-skilled dealers. "Greg, I need more 'good' leads. What are your best dealer clients doing to drive more special finance traffic?" Inevitably, I an- swer the question with a ques- tion: "How many opportunities are you currently generating each month right now?" My definition of maximum ad- vertising return on investment is having every salesperson busy working with customers every minute of the day with no more customers calling or coming in than the sales team can efficiently handle—all accomplished with the small- est spend possible. Utopia? Maybe, but I sure know some dealers who come close to it. Tracking As my definition alludes, it isn't necessarily just about more customers. I know many dealers who have more leads than they can possibly work. The average salesperson can handle an average of 75 to 80 new leads per month. I talked 32 with a dealer recently who was trying to work an estimated 900 leads/opportunities a month with three people. That is impossible, yet they were convinced they needed more leads in order to grow. Another dealer client whose sales had plateaued was trying to do the same thing, with three people attempting to work roughly 600 leads. What I learned was (a) neither dealer (like most) could give me an accurate lead/opportu- nity countthey were all guesses; (b) neither really had any idea of the efficiency of the team members working the leads, just the actual sales; and (c) while neither had a problem with a willingness to spend more money, each might as well set their money on fire, as they would have had the same end success. There is an old adage that states, 50 percent of your advertising works well, you just don't know which half it is. Why not?! I have preached countless times from my soapbox: take the time to track where your traffic comes from and the success your sales team has in working the leads, and it will pay you back in spades. Over the last 10 years of working with dealers all across the country, I can unequivocally tell you those who track and use the data to analyze their business are the ones excelling. Budget The benchmark for advertising expense as a percentage of total special finance gross profit (front and back, general ledger gross, no commission packs factored in) has risen to 12.7 percent since 2007. Basically, that means if you are grossing $3,250 per unit sold, then the benchmark advertis- ing budget would have you spending $412.75 per unit sold. "Benchmark" is the 75th percentile, so one in four is doing better than this; some are doing much better. Set a budget and stick with it. So how do you accomplish this? Where and how do you spend advertising dollars? Be Different Now, if you find you do have additional capacity and have done all the simple things to incrementally increase traf- fic—like harvesting all the names and addresses from the required references and sending them a direct mail piece, then calling if they are not on the Do Not Call List; analyzing the available Internet leads and other lead sources for the best options and buying them; or direct- mailing the open Chapter 7 bankruptcy filers the day after they filethen what do you do? Everyone wants that "silver bullet." My experience is that it does not exist. I have clients and friends who collectively advertise in every significant form of media, and I have seen outstanding promotions work famously for me or someone else but fail miserably in an- other store or setting. Some popular schools of thought advocate spending whatever it takes on radio to achieve 400 gross rating points in one week and stacking the buys to basically begin on Tuesday or Wednesday. I have seen this work fabulously for some and not for other dealers. The same is said for television, direct or saturation mail, Internet leads, trigger leads/Market Thief, you name it. I do believe two things. First, you must be different. You must stand out! If you are saying or advertising the same thing as everyone else in the same manner then you fade into the landscape. Whomever has the best branding and share of mind will get the business. Some of the best operators I know push a personal brand, personal message, games, contests or even comedy to break through the clutter. My heart nearly stopped when I saw one of my clients offer a $10,000 cash-drawing