“Used Car” vs. “Manager”: Which Piece of the Title is Most Important?

A dealer asked me to stop by about a week ago and do some in-depth, one on one training with a brand-new used car manager. I consider this dealer a friend and a customer, and since the dealership was close to my home (and near the famed BBQ Trail in Central Texas for a late lunch), I was happy to oblige.

When I arrived for the meeting, I was a little surprised to find that when the dealer called him a brand-new used car manager, he meant brand-new to being a used car manager, not brand-new to the dealership! In addition to covering appraisals, pricing, stocking, and on-line merchandising in FirstLook, we covered topics like how to check for paintwork, repping cars at auction, and managing the service department for his used inventory in recon. It was like drinking from a fire hose, but the questions that I got and the insights he gave me were things that I hadn’t gotten in a while.

When I train “experienced” UCD’s, I get more procedural questions about the software, which makes sense because these folks have a process down and are just adapting to the software. When you have to step back and talk about the influence of market data and prior sales history in the pricing tool, or the relationship of acquisition cost vs. customer offer on a high-demand trade-in, or the effect of Time To Market on turn and gross, it emphasizes an entirely different part of the title “used car manager”.

I think more often than not, we in the dealerships are looking for the “used car” part of the title, and not enough of the “manager” part. I watched an interview with the CEO of Cinnabon not too long ago, and she felt like that during her hiring process, the part she can’t train or teach is the cultural fit for an organization and that is the key to having great people. This particular dealer recognized that organizational fit and a history of looking out for the dealer’s best interests were far more important than knowing what clean book on a 2012 Ford Focus is.

And the BBQ brisket at City Market in Luling, TX was fantastic, as always.

Five Essential Tactics to Hit Your Used-Sales Goals

Even though business is better, running a successful dealership has never been more difficult. Today, dealerships are more complex; markets are highly competitive; and hitting healthy margins are more difficult than ever before. Further complicating matters, consumers have become more knowledgeable on the value of vehicles, and far less willing to compromise during the car buying process. The bottom line, managing retail operations has never been more complex and chaotic.

But that’s OK. We’re here to help.

Used by leading automotive retailers – below are five essential tactics you can perform at your store to gain better visibility and control of your pre-owned sales performance.

So what are you waiting for?

1) Analyze appraisals from every day

Identify trends in your previous day sales, and devise a plan to replace this inventory with additional pre-owned units.


Look at the Days to Sale, Margin, and Market Days Supply of the car in the market. What is your current stocking position? How did you acquire this car (trade or purchase)? Was this a market performer, or a store performer? Does it make sense to replenish your stock based on current conditions and the results that you saw at your dealership?
You may want to consider reaching out to other dealers and put together deals for their aging inventory (that match your core needs). Simply locate cars already in the market that have already been reconditioned and have low Market Days Supply. They may be overpriced or poorly marketed by their current dealer. In addition, check your Custom Inventory Analysis for the segments that make you the most gross and/or that you turn the fastest.
2) Execute your pricing plan by aging buckets

Put together a game plan for execution. Which cars do you price? It is easy to look at your aged cars or just the cars you bought/traded for (if multiple people are appraising), but when you are just making daily updates to the prices. Here are a few recommended best practices:

1. Stick to your Aging Policy and re-evaluate based on activity and market criteria.

2. PHYSICALLY pull the keys to each car on the planning tab. Book it out, check market listings, open the car (does it smell like wet dog?), start it, check the tires, do a “walkaround”. If you are doing this everyday, there will only be a handful of cars on the list.


Draw a ‘line in the sand,’ and say “When a car hits XX days, I will re-evaluate its position in the market for pricing and ONLY when it hits this age.” You HAVE to give a car time to adjust to new pricing and have a chance to sell. Be “in the game”. Don’t just look at a report to tell you the cars you are asking above AND below market average, know WHY you fail into each category on EVERY car.
3) Assess Time to Market and Low Online Ad Performance

Accelerate your Time to Market and streamline your process from appraisal through recon, and into Online ads. Follow up in your service drive to push cars through recon and get new inventory to market.


Recommended Benchmark: Time to Market should take no more than: 72 Hours. Time to Market will vary based on the dealership. Know YOUR setup and benchmark based on your top performing months and shoot for a 20% improvement each month.
4) Assess core inventory stocking levels

Plan for next week by identifying the best place to source these cars at auction.


Use your Inventory Manager to see which of your top volume, gross and turn cars you are under stocked in. Over/Under Stocking Guide and see what you need to source. Find them at local auction.
Drill down past the make/model (Are there certain years, trims, or price bands you excel at?)
5) Analyze immediate wholesale P/L

How close to $0 on the positive side did you get? How many deals did you save/miss by being too aggressive/ conservative on my numbers?


Manage the managers involved. Don’t knee-jerk and start giving $500/car more on every opportunity. Analyze the numbers and create an individual action plan for the people that are affecting the data the most. Your most expensive investment is PEOPLE – use this data to help you manage them.

Market Data – It’s Just Half the Story

I was recently speaking to a large dealer group in Wisconsin and the topic of CarMax came up. The big box auto retailer is finishing up construction on two stores in town (their first venture in that market), and there was a sense of urgency to “figure this out” before CarMax set up shop and put them all out of business.

As a former manager with CarMax many years ago, I saw this attitude many times before. I remember buying cars at auction in San Antonio in preparation of the Austin store’s grand opening and hearing dealers that were not exposed to a huge CarMax presence before screaming at me “are you going to leave any cars for us?!?!?”. Fast forward 10 years, and upon visiting a dealership in Katy, TX (outside of Houston), the tone was much different. CarMax was hanging their sign out in front of a brand new location, and the GM of the dealership across the street couldn’t have been happier. This market had seen CarMax for the last decade plus, and he knew what they represented. He was excited at the prospect of droves and droves of potential customers being drawn in by CarMax and was confident he could flip them. CarMax was basically sending hundreds of new customers right in front of his dealership for free! Why was he so confident?

Because he was dialed into what his store performs well with and knows which units he can hold gross on and which units need to be turned quickly by having an incredible amount of analytics behind every pricing decision. Relying on only market data in an area that has a large CarMax presence is a recipe for disaster. CarMax has teams of analysts and data engineers that have become really good at predicting market trends and staying ahead of the buy, meaning they are predictive, rather than reactive. Market Data-only dealers will only be able to stay a couple hundred dollars behind CarMax on units they have a much higher acquisition cost due to CarMax’s efficiencies. Race to the bottom anyone?

What keeps CarMax ahead of the curve is their ability to repeat successes and recognize their opportunities based on their own data. Market data is only half the story, and it is the half that drives grosses to the lowest common denominator.

1/4 of Your Website Traffic Could Be Intercepted by Your Competition

In my last post I discussed how to identify and measure your “true” SEO traffic. There’s an important implication of SEO traffic that I’d like to cover in this post, traffic that appears to be organic but is closer to direct.

The best site traffic a dealership gets is direct traffic, which occurs when a shopper enters your website address to go directly to your site. All other sources of traffic give your competitors an opportunity to intercept your customers.

Similar to this is traffic in which a customer knows your store’s name but not your website address. In this case, the customer types your dealership’s name into a search engine. Like direct traffic, this is traffic you’ve earned through traditional advertising or branding efforts. But while customers intended to visit your site directly, this traffic is being funneled through Google’s organic search.

This is dangerous because organic traffic through Google is always at the risk of being intercepted, either by other organic results on the search results page or by competitors who target your name using Search Engine Marketing.

It’s important to recognize traffic that intended to come direct to your website and to protect it from being intercepted. According to a recent national sample of dealership website traffic:

  • 57 percent of dealerships’ organic (non-paid) traffic from search engines actually typed in the dealership name, typically looking for the dealership website. Think about that – more than half of dealers organic search engine traffic intended to go directly to the dealer website yet ended up at high risk of being intercepted by the competition. This traffic actually accounted for 24 percent of total website traffic. Yes, nearly one in four customers came to these dealers websites through a route giving the competition a chance to steal them.

It’s critical that you figure out a way to convert these searches into direct traffic. So what’s the solution?

  • Review your advertising with your ad agencies. Odds are that your website address is not memorable enough in your advertising materials. In a majority of cases, the address is not featured prominently enough, sometimes not at all. Your website address should be a major focus of your ads.
  • Too many ad agencies believe their No. 1 job is to drive traffic to your store. Too many ads are focused on the pre-Internet goal of getting people to go straight to your dealership. The problem is that a majority of customers visit your digital dealership in order to decide if they want to visit your physical dealership, so instead of fighting that reality, you should be focusing your agencies on driving traffic to your website. If you can give customers a compelling reason to visit your website first to see your inventory, you have a better chance of breaking through the clutter.

The Internet is a pay-for-performance world, and you need to manage your traditional ad partners this way. Work with your vendors to improve the memorability of your website address in your ads. After implementing a plan, check to see if the organic traffic using your name moves from the risky search engine path to direct to your website. That way, you’ll be able to hold your vendor accountable and — most importantly — drive more traffic to your website for the money you’re already spending.

How To Demystify the Origins of Your Website Traffic

At every digital marketing conference I attend, there are multiple presentations filled with dealers asking where online traffic is coming from. The truth is this information is readily available to you — if you know where to look.

If Internet shoppers don’t look at your cars online, they are unlikely to come to your showroom to buy a car. That’s why it’s not enough to know how much traffic you’re getting — you need to know how online shoppers are reaching you.

Typically, there are three top sources of traffic:

  1. Direct traffic. This is your best source of traffic. Because these are the shoppers that entered your website address to go directly to your site, they bypass any opportunity for your competitors to intercept them. Some of this traffic may come from returning customers, but it’s often driven by other forms of advertising. That’s why direct traffic is a great way to gain insight regarding how your traditional and digital ads are working. It’s also a critical reminder to emphasize your website address in your advertising materials.
  2. Organic search. These are visitors who find you through search engines such as Google, Bing, and Yahoo. This traffic typically comes from two sources:
    • Those who typed your company name into a search engine, which means they were familiar with your brand
    • Those who typed a term that led them to your website, such as “Phoenix Chevrolet dealers,” indicating strong search engine optimization performance for that term. I’ll talk more about this in a future post.
  3. Search engine marketing. These are the sponsored links that appear above and to the right of organic search results (Google AdWords are the most popular type). This is an underleveraged opportunity for dealers that we’ll dive into in my next post.

If you’re interested in finding out the sources of your website traffic, talk to your vendor about how to use Google Analytics, which can tell you where the traffic from your site is coming from. You can then go into the dealer analytic portals of Autotrader.com, Cars.com and other sites to compare with each other and your website. Since this can be labor intensive it’s easiest to have it in one place with a tool such as MAX that combines the various sources in one location to help you measure and manage your online traffic.

My next post will cover optimizing spend and testing.

How To Increase Profitability By Reducing Time-To-Market

Every dealer knows that the inventory that turns the fastest is often the most profitable. This is compounded by the carrying cost of the vehicle (often cited as $10 to $25 per day), for both reasons, the longer a car remains in inventory, the more it eats into your profits.

That’s why it’s critical to measure and improve “Time-to-Market”, or how long it takes for a car to get through the service department and become fully merchandised online. But for many dealers, the problem goes undetected because they fall into two common traps:

  • First, cars spend too much time in the service department. We all know that the customers of pre-owned vehicles are the service department’s top customers. But we also know that because the service department is focused on serving retail customers, this can lead to inventory that moves through the reconditioning process slowly, resulting in expensive fresh inventory. For many dealers, it’s hard to maintain visibility on this process, which makes it difficult to manage.
  • Second, the handoff to digital marketing is too slow. When a car completes reconditioning, too often there’s lag in getting vehicles fully merchandised online.

It’s obvious that a vehicle unavailable for sale prevents a quick turnaround. But that’s also true for a vehicle that’s available for sale but isn’t visible to consumers on the Internet. So what can you do about it?

You can’t improve what you can’t measure, and there are three easy ways to get started:

  1. Measure your “Time-to-Market”
    • Compare the date a car was received in inventory to when it was fully merchandised online. This simple metric allows you to keep a pulse on both your service activities and digital marketing efforts. Cars should make the transition from service to digital marketing in three to five days.
  2. Identify potential gaps in your current process
    • By tracking vehicles that fail to meet this goal, you can identify opportunities for the teams to work more efficiently, as well as hold people accountable for their responsibilities. There will always be outliers — vehicles waiting on a title or critical parts on order, for example. But by measuring time-to-market, you will be able to identify those outliers and focus on vehicles that had a breakdown in process.
  3. Accelerate your “Time-to-Market
    • Before a vehicle enters the service department, have the digital marketing team immediately take three exterior photos and post them online immediately (in states where this is appropriate). This will help speed the process of getting a vehicle fully merchandised online once it’s reconditioned.

Remember: if you measure it, you can manage it. A number of tools, including MAX, make it easy to monitor these metrics. Just make sure you set up alerts that keep this information in front of you on a regular basis. Once you get a handle on where the bottlenecks are in your time-to-market, you’ll be able to make your digital marketing efforts more efficient, and your inventory more profitable.

My next post will cover the importance of understanding exactly where your online traffic is coming from.

3 Ways to Make Your Online Ads Stand Tall

Our previous post explained the importance of converting your vendors to a pay-for-performance ad model. That is, knowing your cost per lead across your various online traffic sources. When it comes to measuring your cost per lead, we see top performers achieve at $70, while typical dealers perform around $100.

But once you have those figures in hand, what tactics should you employ to get the most from your online ads? First, make sure your online ads are standing tall. Here’s what I mean.

  1. Include all the details that influence a customer’s decision. Dealerships can be chaotic, making it hard to manage the finer details of your online ads. But the reality is that you’re a digital dealership now. You would never leave gaping holes in your front line or on your showroom floor. But too many dealerships post incomplete listings, leaving gaping holes in your digital dealership. Photos, prices, and complete vehicle descriptions are essential components to drawing customers to your dealership.An AutoTrader.com survey found that dealers who include original photos and prices with their postings had significantly greater traffic to their vehicle detail pages (VDPs) than those who didn’t. Including this information increased VDP views by 140 percent and shopper interaction by 110 percent. And don’t try to cut corners — the survey revealed that listings with stock photos didn’t perform much better than listings with no photos at all.
  2.  Monitor your ads. Staying on top of the details requires a commitment. The old saying “you can’t expect what you don’t inspect” isn’t just a cliché. You need a digital performance management system in place to measure the effectiveness of your ads. A digital performance management system, like MAX, can alert you to issues in your online inventory that need immediate action, such as missing photos or vehicle information.
  3. Make sure a human is keeping tabs. Technology alone isn’t enough. You also need someone in place who’s responsible for overseeing the program. Whit Ramonat, executive vice president of Penske Automotive Group’s central region, regularly reviews an exception report that shows him which of his dealerships have cars with incomplete online listings, or no listings at all. Because he employs this and other digital performance measurement practices, Penske’s dealerships are among the top performers on most benchmarks across all sites.

The bottom line is that the more customers that click through to your VDPs, the more likely they are to interact further with your listing, including details on your dealership. And as I mentioned in a previous post, when your sales force knows where your leads are coming from, they’ll be better positioned to get the necessary “ups” to close a sale.

This is the first of three posts to show you how to reach the ranks of the top performers. My next post will cover the importance of getting your inventory online quickly.

5 Metrics That Tell if You’re Getting Your Money’s Worth Online

You probably know that 50% of your new car buyers and 59% of your pre-owned buyers found your dealership online. Your online vendors are likely bringing you reports and presentations justifying all of the money they are charging your dealership to attract those buyers online. These reports show an alphabet soup of metrics (“SRPs”, “VDPs”, etc.), but they don’t tell you if you are really getting your money’s worth.

I am always impressed when I visit a dealership and see the “sales board” measuring how many sales each salesperson has each day of the month, often compared against a goal or prior period. It is equally remarkable that dealers don’t do this as regularly or publicly for their web traffic, even though it’s now driving the majority of their business. If you want to start managing your traffic and getting the most out of your spend, there are 5 quick and easy ways to measure your web vendors just like salespeople.

The “Big 5” are:

  1. Rank Your Spend: Rank your monthly spend for each digital marketing channel. While this sounds obvious, you’d be amazed how many Dealer Principals and General Managers lose track of how much they are spending with each vendor and how much it can creep up if you aren’t on top of it every month. This ranking is important because it provides the lens through which to look at everything else.
  2. Rank Your Consumer Impressions: The number of times a consumer actually clicks on one of your cars to look at it, referred to as a “consumer impression” in other industries, is measured through “Vehicle Detail Pages” (“VDPs”) on most automotive sites. Since someone is unlikely to visit your dealership to see a car they didn’t even bother to click on online, this is a simple yet powerful way to compare how many “eyeballs” a site is producing for your dealership. Watch this trend from month-to-month and you learn a lot about how much sites like AutoTrader.com and Cars.com are producing for you versus your dealer website.
  3. Rank the Cost of Each Consumer Impression: If you really want to understand what it’s costing you to get those “eyeballs” on each site and see where you are really getting your money’s worth, divide the number of consumer impressions (#2 above) by your spend (#1 above) and you’ll be able to see where your ad dollars give you the biggest bang for your buck. Once you know what each consumer impression costs you can see if the sites you pay the most justify the extra spend. This will also reveal if a site is producing consumer impressions at a bargain, and therefore might justify more spend.
  4. Rank Your Direct Leads: One of the real challenges with measuring your online vendors is that they will tell you since most of your in store traffic doesn’t email or call you before showing up, they can’t be measured. One way to overcome this problem is to compare the number of direct leads (phone calls and emails) you get from each vendor. While this doesn’t give you the “invisible leads” vendors talk about, it does let you compare vendors on an “apples to apples” basis so you can see which vendors are serving up opportunities to your internet department or BDC.
  5. Rank the Cost of Each Direct Lead: We also encourage dealers to divide their direct leads by the spend allocated toward each vendor to compare the cost per direct lead for each vendor. This should give you a good feel for how each vendor compares to the others on direct leads to help you bring “Pay for Performance” to your leads.

The Big 5 metrics may seem simple but that’s because these are the “drivers” of your web business. When tracking critical metrics, the key is in how you use them to manage your business and, in this case, how you manage your vendors. If you are serious about “Pay for Performance” you need to know these metrics and use them to make spend decisions every month.

The real power comes in when you start benchmarking the Big 5 so you can see how you stack up against other dealers. Our MAX Digital Performance Analysis introduces benchmarking to the equation and gives dealers the insights to manage their vendors and spend so that they can take performance to the next level.

The Auto Industry Has A “Wanamaker” Problem

“Half the money I spend on advertising is wasted; the trouble is I don’t know which half.”

As much as those words still resonate in the automotive dealer community today, they were famously first spoken more than 130 years ago by John Wanamaker, considered the fathers of modern advertising. In 1874, Wanamaker printed the first-ever, copyrighted store advertisement for his eponymously named Philadelphia department store. Customers came to trust him for delivering on the honest, straightforward claims in his newspaper advertising, and business boomed.

But as much as Wanamaker leveraged newspaper advertising to fuel his success, he also recognized inherent challenges long before the internet made them obvious. Newspapers, of course, were only able to sell advertising to Wanamaker based on their readership size, regardless of whether those readers actually looked at his ad or came to his store. In other words, he was paying simply for ad “placement” instead of paying for ad “performance.”

For the newspapers of Wanamaker’s era, as well as the magazines, radio, television and other offline media that followed, “paying for placement” has been a great business model; they’re paid the same amount regardless of how the advertisement performs for the brand. But how well is this model really working for advertisers, especially dealers?

When I put that question to dealers, I often hear a refrain very similar to Wanamaker’s famously worded frustration: “we can’t really tell what’s working and what isn’t.” In many cases, dealers are left to wonder how many shoppers actually came from their TV, newspaper or radio ads and the same is often true for their internet advertising. Consider this: in 2012 alone, US advertisers spent a whopping $128 billion in offline media, according to eMarketer. One can only wonder how much of it was ultimately wasted.

Helping dealers tackle this problem is so much a part of our core mission that the original product codename for MAX was “Project Wanamaker.”

The good news, of course, is that the internet has changed all of this. Because it’s inherently an interactive, data-driven medium, advertisers can hold their internet advertising partners accountable and pay only when their ads “perform.” While most industries have already embraced the shift from “Pay for Placement” to “Pay for Performance”, the auto industry still needs to embrace a new mindset in order to catch up.

Our industry has a Wanamaker problem. In our next post, we’ll discuss the solution.