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Online Car Sales: An ocean of opportunity, if you know how to fish

Online Car Sales: An ocean of opportunity, if you know how to fish

As automotive brands and dealers increase their investment in digital transformation, the necessity for new and efficient standard processes to take root in online sales has never been more vital.

Since the outbreak of COVID-19 and the consequential quarantine period that followed, dealers have had a lot of information rammed down their throats, emphasizing the necessity to switch practices and embrace digital more than they ever have done before. While it may be correct that online offers the largest ocean of opportunity to catch sales, it is seemingly useless if a dealer doesn’t know how to fish, and with this lies a big danger to their bottom line.

Inefficient digital processes can take a very cost-efficient sales channel and turn it on its head in a matter of days. Here are just a few examples of how going online can become more costly and inefficient with the wrong methods implemented. I’ll try to stick to my fishing analogy as best as I can for the meantime, even though I know very little about angling. 

1. Every fisherman catches one fish a month.

fishing1-autodeal

So let’s say as a dealership you pay to purchase around 100 leads, this volume of leads is essentially your pond and sat opposite you are two of your competitors, also fishing at the same pond. You’re pretty gung-ho about making sales, so you decide you’re going to put your five best fishermen (salespeople) to work. Being good salespeople, they know how to identify who’s ready to buy and within a month they’ve already hooked their first fish (sale). However, is one fish per one fisherman really the output you want in one month?

What typically causes this inefficiency is that salespeople hone in the majority of their efforts on prospective consumers who have already fallen very far down their lead funnel. Rather than simply catching these prospects in a net they exert all their effort by catching them on a line. In the process, they do very little, other than reply, to the prospects who don't show the same eagerness to purchase. While you can complain at your sales force until you're blue in the face, the only thing that management teams can do to counter this is to become highly attentive to the sales conversion of individual performers or implement appropriate data systems to manage prospects over longer periods of time.

2. Your fishermen never revisit the same pond twice.

Feeling proud with themselves, your fisherman asks you to repeat the same process the following month by buying another one hundred leads; completely ignoring the 80-90 or so fish that weren’t yet caught by either yourself or your competitor from the first pond. If that pond cost you $100, then each fish consequently caught in the first pond would have cost you $20 plus the salary of the fishermen.

As your team set themselves up at the second pond, they look across the way to see that your competitors have three fishermen still fishing at the first pond and another two fishermen sitting at the second. As the month progresses, you make your usual five fish while your competitors get five fish from the new pond and five more from the first one. Your fish still cost you $20, whereas the fish from the first pond is now only costing your competitors $10. In total your competitors have fifteen fish and you've only caught ten.

3. No Lure. No Process.

Fishing2-Sales

As you look to repeat the process for the third time, you notice that your competitors have built a strange contraption of tubes that are leading from the first and second pond to a new privately-owned pond that one of your competitors' fishermen is sitting at. The contraption is enticing the fish from the first and second ponds using a variety of bait (marketing materials) and is sucking them up and dropping them into the private pond. From there your competitors are reeling in fish left, right, and center.

Now you can tell that this contraption might have cost the dealer a pretty penny, but what you can also see is that your competitor is now incrementally catching more fish from every pond as time progresses. After three months, he now has 15 fish from the first pond, costing him just $6.66 per fish, 10 fish from the second pond at $10, and 5 fish from the third pond at $20 dollars. For the same investment, your competitor now has twice as many fish as you and is now using less fishermen to further reduce his costs. Quite simply; increased sales + reduced cost per acquisition = improved profit margins, from which you will eventually pay off your investment in the process.

When it comes to setting up these processes, don't fall into the trap of thinking that you need super expensive customer relationship management (CRM) software. While there are perks to having a CRM system in your company, the practice of proper prospect management can be achieved for a very small amount by utilizing a simple database tool paired with low-cost third part marketing tools (like an electronic direct mailer subscription). Another trap to avoid is the misconception of "more data is better", just remember the more data you have, the more data you have to manage. Keep an eye on the quality of your lead sources, because accumulating too many low-quality leads will make finding sales like finding a needle in a haystack.

Forget the fish, how does this all relate?

The point of this demonstration is to provide an explanation as to why when given the same opportunity, a competitor can win more sales online than you. It’s far too common for salespeople to blame leads (those fish aren’t really fish) – but when you take a more analytical stance and start examining crucial factors involved in your process you can begin to highlight and subsequently fix problems to become more efficient – and remember, more efficiency in your sales channel equals better business economics and improved margins.

So what can dealers do to adopt better process?

First and foremost, not all of the responsibility should fall on your salespeople. To incrementally win more sales over time you need to have established digital lead management processes at the dealership level (and preferably at the brand level). Secondly, you need to monitor performance data more acutely than you ever have done before. Above all else, you must keep a watchful eye on conversion rate (the volume of sales over the volume of leads you generate) for every sales agent in your team. Over time you will begin to see a disparity develop which should become a basis for employee improvement and training. Managing where the needle falls on conversion rate will ultimately affect overall business economics, particularly on cost per sale and dealer margin per sale; as such it should be a figure that is as religiously measured as overall sales.

What are AutoDeal doing to further support dealers?

As official partners of more than three hundred dealers in the Philippines, we’ve recognized during these tough times that we can do more to support the online car-buying process. Recently we launched an online reservation payment service; which provides consumers with a convenient way to make an initial payment for their vehicle while at the same time providing dealers with the ability to acknowledge customers with high intent to buy.

In addition to this, we’ve also released more automation and enhanced lead-management processes that will help dealers retain prospects in their lead-funnels for longer periods of time. Together with these processes, we’ve also launched some brand new customer surveying tools that will help rank customer satisfaction over time and help develop strategic insights for automotive brands and dealers.

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