Digital marketing guru Jared Hamilton shares his insights
The Internet has hit the auto industry in a very big way. It touches virtually 90 per cent of all consumers and affects every single profit center within a dealership. There is substantial opportunity for dealers to harness the Internet and grow and I’m excited to have a column here as another avenue for regular dialogue with car dealers about how to maximize the Internet opportunity.
Most people know me as the guy who created DrivingSales.com, the world’s largest automotive social network. It’s like Facebook, but rather than people around the world sharing social information with each other, it’s car dealers around the world sharing best practices. I created the site while at NADA’s Dealer Candidate Academy in 2003 because I wanted a better way to share information with my classmates. Today, we have users in nine different countries and roughly just shy of one out of every three car dealerships in the United States has a user in the community, all sharing best practices.
Always wanted to be a dealer
What many people don’t know is that I was raised in my family’s dealership in Northern California. I grew up one half tech nerd, just outside of the Silicon Valley, and one half dealer principal son. All I ever wanted when I grew up was to have a car dealership, just like my dad. So after I attended NADA’s Dealer Candidate Academy and NADA’s advanced education program, I was recruited to help run a decent sized Ford dealership outside of Salt Lake City. When I got there, the Internet was a couple of years behind what I knew from the Silicon Valley.
I realized that if we studied the market, we could extrapolate the trends from the proactive marketplaces and come back anticipating the trends before they happen. With financial data from NADA, buyer behaviour data from Polk, and help from a research professor at University of California, Berkeley, we overlaid Internet trends against broadband connectivity and looked to understand what happens to dealerships’ business models when Internet connectivity picks up, how consumer behaviour changes, and the answer to the holy grail question, “How should dealers operate to maximize their success online?”
No magic bullet
While I wanted a statistically proven answer of how dealers should maintain their online presence, what we found was that it didn’t exist. After six months mystery-shopping the top 100 performing e-dealers in the U.S. trying to figure out what they were doing, we discovered there isn’t a single secret to success. Rather, we found a framework in play that consists of operational pillars that a dealership must dominate to be successful online.
The first of the three pillars is marketing. There are 16 marketing levers that dealers can pull to drive traffic to their dealership. This traffic of course appears to come through email, phones, and walk-ins. In fact, a great majority of the Internet customers just walk in to the dealership. We don’t even know that they are Internet customers, but they come armed with information they gathered on the Internet.
The second pillar is process. We studied all the high performing dealerships in the country looking for the perfect communication templates. The fact is, it doesn’t matter! I saw templates of all different shapes and sizes work. What does matter is that all high performing stores shared seven points that a dealership must execute in their lead handling process to maximize their close rate.
Content is king
The third pillar is structure, meaning job responsibilities, pay plans, and who reports to whom. Anytime you have massive pressures on an industry, new business models adapt and change requires organization models to adapt and change as well. For example, most dealerships today do not have a content writer. Yes, that’s right; dealerships need some form of editor on staff. Why? You cannot succeed in the social media world or in the search-marketing world – two of the largest channels that will drive the most relevant traffic equaling the most Internet revenue – without creating relevant, valuable content for your customer.
It’s important to note that we cannot solve structural problems with marketing. You can throw money at the problem all you want, but until you hire the right people, give them the right pay plans, and train them appropriately you cannot succeed. You cannot fix marketing problems simply by adapting your process. Bad marketing is bad marketing. Marketing problems are solved with marketing solutions, process problems are solved with process solutions, and structural problems are solved with structural solutions.
There are many different strategies within each pillar that I will discuss in future columns, but it’s important to first identify which pillar you’re working in to accurately assess what needs to be addressed. I never did find one secret to Internet success. Instead, I found many roads within a framework, leaving opportunities for dealers to find the path that works best for them.
