Webinar Recap: Bold Strategies & Key Takeaways
Moderator: Jeff Ranalli, COO of PureCars
[sic] = intentionally left as it was originally said by speaker during webinar.
Presenters (Jeff Introduction):
David Kain (DK): David is the President of Kain Automotive and industry leading provider of automotive internet sales, fixed ops, BDC and digital marketing training, and consulting, which he founded in 2003. Kain Automotive has been recognized as the number one dealer rated internet training company in the US.
I think for anyone who has had the pleasure of interacting with David, not only is it the smile that you see on the screen, but a sincere love for the industry, love for what dealers bring to it, and [a constant willingness] to do whatever it takes to help a dealer in need. David, thanks for the time, and thanks for joining us.
Rick Ricart (RR): And we’ve got Rick Ricart, who is president of Ricart Automotive Group in Columbus, Ohio. Ricart Ford was founded in July of 1953 by Rick’s grandfather. It was his grandfather’s philosophy that to lead, you must work alongside the employees first. So Rick literally started out as a lot attendant, worked his way through the entire business, and is leading the business today. What we’ve noticed about Rick is his true passion for marketing innovation and mobility advancements.
Currently, Ricart is employing over 500 folks in and around the Columbus market. Sells 15,000 new and used vehicles across seven product lines, and is the #1 franchise used car operation in the US for the past three years running, and also quickly becoming known around the Columbus area as the “C-Bus Bandit.” Rick, thank you for donating some of your time today, we’re thrilled to have you here.
Lauren Donalson (LD): Lauren grew up in the auto industry working for her family’s dealerships in sales, F&I, accounting and fixed ops. She’s one of our resident fixed operations specialists at PureCars, always helping us figure out new and innovative ways to help dealers promote that business.
Currently, Lauren is leading the Northeast team of account managers [who] have been working very closely with some of the dealers that have been the hardest hit by this crisis. She’s here today to share some of the front-line strategies and examples of what seems to be working best.
Jeremy Anspach (JA): Jeremy is Founder and CEO of PureCars. His drive and passion for the automotive industry started at a very young age. His whole career has been around helping dealers get ahead by leveraging data and technology, and solving problems to help dealers sell more cars.
Among his accolades are not only founding PureCars in 2008, successfully selling the business to Raycom Media in 2015. But then back in the CEO seat once again, leading the sale of PureCars to private equity.
Having worked alongside Jeremy for the past six and a half years, I can honestly say that no one is more passionate about finding innovative ways to help dealers succeed. So with that, thank you once again for joining us and I’m going to go ahead and turn this conversation over to Jeremy.
Take Action: Being Frozen is Not the Way to Win
Q (JA): Rick, being a dealer of multiple generations, you guys have continued to grow generation after generation. What are some of the bold actions you guys have taken that are working?
A (RR): The bold moves [are] what we had to really look at first. What happens if our community and our industry is impacted to the tune of 25% to 50% off, right? We didn’t know exactly how long this was going to last and what was going on. So we had to make some bold moves. We had to ask some people who worked for us a long time that weren’t deemed necessities to just go home for a while.
You know that word furlough seemed like such a bad word on day one, right? I was afraid to say it – it was another ‘f word.’ Then I learned more about it and realized, no, actually it’s a mechanism in place for situations like these; it’s bold but it’s the right thing to do and we have to do it.
I’m all for hitting the brakes when you need to hit the brakes – you’re in a race car and you’re coming up on a turn. You’re going to have to hit the brakes or you’re going to fly off the turn there in that same scenario. But as soon as we get that car straight again, and we can point it towards a target, we have to find those opportunities to hit the gas pedal again.
Then we jumped right in at the beginning with some of those PR community efforts. We got involved with some curbside concerts with the “Can’t Stop C-Bus Initiative,” which isn’t what broke the hat out; the hat broke out because that kind of bandit mentality of, I’m not going to flee I’m not going to freeze. [sic]
I’m here to fight it out here to fight it out with our guys with our troops, keep the culture strong and find those opportunities to hit the gas pedal as quick as we can so that we can find opportunities to keep our head above water and get out of this thing and maybe get to the other side of it stronger than we were before which is always a challenge that I’m up for. [sic]
Q (JA): David you want to add to that?
A (DK): Yes, so no surprise that dealers are innovative. It’s incredible to me how dealers figure out the new model. The ability to satisfy team members, make them feel that they’re healthy and safe and the dealership cares about them, is paramount to their ability to go out there and attend to customers needs.
I’m certain that Rick and his team have spent a lot of time making sure all of his team members know that [they care]. Doing that gives them the ability to provide the confidence to the consumer that we’re going to work through this, and surprisingly, what we’re seeing is that consumers are very resilient to this. If they’re able to secure their income; if they’re able to secure their job; if they’re able to satisfy what their situation is. [sic]
The next thing we tend to see out of consumers is that they want to take advantage of a good deal, and my goodness there are some really really remarkable deals out there in the marketplace.
Additionally, what we’re seeing is the dealers who didn’t just wholesale lay people off, they basically took a learned approaching and said, “where is this market going to go? Who are the real vital team members that need to benefit from making the adjustment? What do we need to do for those who are unable to be essential so to speak? How do we provide some income security for them? Whether it’s letting them use unemployment or putting them in a furloughed status at reduced cost. [sic]
So, we’ve seen lot of structural innovation not the least of which is critical to the foundational security of the dealership, but then stepping back up and saying okay, we got the home fire set. Now, let’s go back to the marketplace and let people know we can help them buy a car.
Q (JA): Lauren, can you share stories based on actions your team is taking with dealers?
A (LD): Drive Taylor and Taylor Automotive Group is out in Western Pennsylvania, as we know PA [was heavily impacted by] this crisis. They’re down, I think close to 80% in sales volume over the last 30 days.
So the Taylor AG had what I’m calling a ‘Vanilla Ice moment.’ They stop, collaborate, listen, right? They paused all media spend and everything came to a screeching halt. [sic]
We quickly got with their executive team as well as their marketing team and took a look into the PureCars Covid-19 Tracker and found that likely because of manufacturing incentives (0 for 84 available at Chevy; 0 for 75 available at Kia), that there was still a lot of engagement around these brands. [That engagement] was just not panning out in sales due to consumer behavior; you know, people are afraid to go out, showrooms are closed etc.
Deploying the Three R’s
So we took a breather, and then we deployed what I’m calling the 3 R’s. We reduced spend. We reallocated spend and then we reactivated this spend.
What we did in this reallocation is we took a look at the goals, and if our goals are not store visits [right now], our goals may shift higher up the funnel. We redeployed their spend across a different set of channels.
We weighed it heavier on social, paired back on some of the higher funnel keywords and search. They actually built out custom campaigns specific to online buying keywords as well, and we saw a higher output despite shrunken spend.
I’m pleased to report, Jeremy mentioned the goal is to try to beat the S&P, this group has beaten that by 25 points since redeploying this strategy, and as luck would have it, PA just reopened online sales this week. I would imagine that the folks at the Tailor AG are busy with that pivoting that’s been in the funnel for the last several weeks. [sic]
Adapt: Rethink Processes and Internal Resource Allocation
(JA): One big land mine we all have on the dealer level right now is used cars, and this has been a focus area for PureCars from day one. At the end of the day, used cars is an area that action needs to be taken very, very, quickly because there isn’t going to be a manufacturer or an incentive to help get out from underneath it if you do have water in your used cars. [sic]
Q (JA): Rick, one thing that I’m always blown away by is that your used car factory is a monster. What action have you guys been taking here?
A (RR): You know a lot like the 3 R’s that Lauren was talking about, when it comes to marketing. We kind of coined the phrase Lean and Clean.
Number one is clean meaning: have you been processing trades quickly? Is there stuff sitting on the lot that you were waiting to take to auction? Because if there is stuff waiting to go to auction, you’re kind of in a corner with that stuff right now.
We want to run as clean as we can, clean in the literal sense of the facilities; clean also leads to lean because with social distancing I can’t have 82 sales reps on that floor. In fact, [of] the 40 sales reps that are there, currently about 20 of them were managers, and we kind of man down a little bit and we cleaned it up when it comes to inventory itself. It’s the same rules.
You want to make sure that what you do have in inventory can be retailed because retailing out of it is going to be one of the only true decent exit strategies for the next couple months, in my opinion, and hopefully it’s only a couple of months.
So, we want to stay lean and clean with the inventory and going back to our day-to-day activities, our reporting is better than ever. We are looking at our real-time daily reporting and PureCars reports where we’re looking at how we’re doing in specific model lines.
All those reports are critical right now because we’re assessing and realigning everything on a day-to-day basis and we’re looking at even more detail of where we’re spending money because now it’s more lower shopper funnel. [sic]
One of the things that we’ve had to do is really be careful as we’re sourcing 2018, ’19 and ’20s taking them on trade etc. to make sure that we’re in a position in our inventory to be strong on September 1st. And it’s not so much the same mindset we’ve had in the past that okay, it’s April. We’re buying for these May and June months and kind of throw the book out. We need to get cars on the lot.
It’s very strategic. It’s very disciplined. We want to be as lean and clean as possible in all of our inventories and really anywhere that there is cash liquidity because it all goes back to the word cash.
As a dealer the first thing that comes to mind when these things is are my people safe? And what [does] my cash position look like? And then once you get those two things aligned then it’s how can I start pushing the gas pedal to create some cash flow, because we need revenue and cash flow. That’s literally the oxygen that lets us get our head above water and breathe, so lean clean cash flow, and look out for the late model used cars. [sic]
Q (JA): Follow-up question on that. When you think about the landmine of used cars the incentives that manufacturers are putting out in potentially this next ‘Cash for Clunkers’ if it happens, it really seems to threaten pricing on late model vehicles. Are you guys getting more aggressive with lower priced used cars?
A (RR): Yeah, and I think a lot of others in the market have picked up the same pattern.
I just watched the car that I priced at 90% to market two weeks ago, at 96% 10 days later when I went to reprice it. Well, why did that happen? Well, it’s because everyone else in the market lowered their price also, so it’s something you got to look at even more often.
If you’re pricing every 10 days to two weeks – some dealers a month. You really should have a disciplined process to reprice used cars and look at where the market’s at every 6-7 days, with every used car and especially the aged inventory that’s already depreciated a little; it’s depreciated more, and that’s going to depreciate even more. You want to make sure you’re on top of those and the late models even more.
Q (JA): David, one of the things I love about you is you have access to some of the smartest minds in the industry. You mentioned you recently spoke to Dale Pollock around used car values, and what’s happening at the auctions. Anything to add here on the used car topic?
A (DK): If you go back to what Rick was talking about on studying the market, and if you have a cadence to where you check every 10 days or 15 days, we really are in a position to where we can’t let that get away from us. The cash position of the dealership is typically all tied up in used cars.
And when you think in terms of what happened overnight, this really hit home with me during my conversation with Dale. If you go into your VAuto report, and if you were right with your inventory by the 15th of March through the 15th of April, you probably lost 10 to 20% of value with some of those vehicles. And there’s a lot of tiers to be considered.
If you look at the class of vehicle that people can get financed on, and you’ve got a good credit situation in your marketplace, you can probably retail out of those vehicles pretty easily because if you’re working that lower to mid customer class, and they’ve got job insecurity or income insecurity they’re unable to participate in that, those are the risk vehicles of thinking consistent with what Rick was talking about. We need to look at all of our vehicles and think of a way to retail out. And I’d rather free up capital right away while the market is optimistic as opposed to if this thing lingers.
I think we need to be very cautious with our marketing so that it doesn’t make us look like we’re at risk of going out of business, but at the same time making an opportunity and going back to that Clean and Lean strategy that I love that Rick and them are talking about.
If we present it properly to the consumer, consumers are opportunists and they’re going to want to take advantage of that and if we can afford them an opportunity to trade up or trade them into a more secure vehicle at a time like this, I think that is a good message for the market.
Q (JA): Lauren, I’d love to see if you have anything to add on some of the Bold actions you’ve taken with the team and if you’re open to sharing some of the success.
A (LD): There’s a dealer outside of Los Angeles, Valley High Kia that I’d like to touch on.
We’ve hammered the point home that used cars are top of mind for dealers right now. And going through the same cadence we’re tackling with each dealers individually, we start with our COVID-19 data tracker. What you’ll see on the left side of the screen here, we filtered this down all the way to this dealer’s metro looking through used car engagement: what’s hot? where’s the demand?
The very first used Kia that we found, it’s the only Kia that cracked the top 50, was at 46. It’s the Sorrento.
You’re not going to rip through your inventory when there’s nobody interested in it, right? So, that [led us to develop] the strategy of [generating] some demand. So we pivoted, And what was great about working with this group is that we also were in, David touched on this as well. What’s important to the customer?
We really have an opportunity with this crisis to actually revolutionize the industry, and solidify the car dealer as someone who can be trusted who is watching out for the consumer who cares about the consumer, right?
There’s a few things that if you can see in the ad copy where this dealer took care of what Rick touched on, are my people safe? As well as are my customers safe? So they talked about consumer safety and then cash position. They called out that their vehicles were recently reduced prices.
And one thing that I would mention, is that dealers are likely repricing their vehicles on a rapid cadence. If it used to be weekly, now it’s more like once a day. You need to get that information in front of the customers who were interested in that vehicle because that may be the thing that gets them over the 1-yard line into the end zone.
And what’s great about our dynamic ads, both in social as well as in display, is it integrates with the price inventory feed populated; if this vehicle was recently reduced $250, that’s going to be in your ad copy serving to the folks that have already looked at that vehicle. So that’s kind of tying a loose end after you’ve repriced your vehicles making sure that consumers who are interested see it. [sic]
As far as this particular dealer, I would call this campaign a success, right? We wanted to generate some demand in the first weekend that the campaign was live, 8 used cars were sold for $24K in gross profit and their overall sales increased 40% week over week.
That’s just one of many examples that we could share rooted in data, and again looking at what’s in it for the consumer is is the way to go with it.
Q (JA): Because this is unchartered times and what worked before the pandemic is working in some cases differently. Now, we saw a huge shift from search to social. Social is performing exceptionally well and it is far less expensive than it was pre-pandemic. It is doing good things, Lauren like like you mentioned.
Rick you’re leading a big business here and you turn more used cars in a weekend than most dealers turn in a month. And when you think about this pandemic, how things are moving so quickly, what type of data are you looking at? Has it changed and is the frequency of that coming to you quicker slower? What are you doing differently right now if anything?
A (RR): You know, the frequency is definitely coming quicker from a data standpoint.
We’re looking at it day-to-day and not just by date, but at the same time trying to be clean with everything means not wasting money. Unless someone is in the market to buy a car today, I think it’s falling on deaf ears and not only deaf but you sound tone deaf in the market because there’s dealers in our market that are already back to just screaming about 0% for 84, and they’re on television and they look like there was no epidemic that happened and that’s going to have a negative long-term reaction.
You want to be very sensitive to the feeling of the overall environment and make sure that the messaging you have is directly in tune. And if for some reason it’s not to someone at the bottom of the shopping funnel that you know is looking for a specific Kia Sorento or a like vehicle to try to move that late model used Sorento – like from the Valley High example – then kill it, cut it and keep it as bottom funnel as you can and if it is top funnel nobody cares if you’re open five, six, seven days a week. [sic]
Nobody cares if you got in the water actually last year, they care about what you’re doing to help your community, to make your customers and their employees, customers and families feel safe. And I think that that’s what will help come out with a better positive awareness from the brand image marketing.
Any dollar that we spend is directly on someone online who we know has put their hand up or they’ve engaged, or they’ve been on our site long enough.
We agree social, social, social, social retargeting; behavioral targeting on anyone you believe that is in the market to buy and there, and they’ve been doing enough research.
We’ve been doing a lot of Express Deliveries and by that term a lot of people think we’re delivering cars to people’s houses.
I’ll give you a great example, over this past weekend, we sold approximately 100 cars, actually was 86 – only four of them were delivered to the home; the other 82 were Express appointments where they opted to come to the dealership because we provided them and show them, “hey, do you want to come to our pristine environment?”
There is the plastic, the plexiglass dividers up in front of the operator. If you have to go up and receive money, there’s all the six feet apart [precautions].
To do a 45-minute expedited delivery also takes great interaction with the consumer before they arrive, and makes the customer experience [at pick up or delivery] easy.
Leverage All Resources: Use All Data & Trusted Advisors to Guide Strategy
If there’s definitely one thing that I can’t say enough, and I’m going to be on repeat here, is don’t be frozen. You have to take action, and it’s almost like what Winston Churchill said, “take action today.”
You have got to take action and that action starts with vendors like PureCars where the flow of data is in near real-time. It’s not on a weekly call or a monthly call. You [have] to make bold moves.
The dealers who have been making these bold moves are seeing great success. As I mentioned earlier, for anyone on this webinar that is not a current PureCars customer, that is totally okay, and just know that all of our sales team has been reactivated to just helping every dealer in their market. Download our weekly COVID-19 market reports to see national trends.
You can also reach out to us at COVIDsupport@purecars.com to get a local market data report for your dealership with no strings attached. Someone from our team will go through our data tracker, pulling up the internal reports to show you by brand what your exact market is doing.
We’re here to help, and I’m confident we as an industry will get through this like every other thing that’s happened that we’ve gotten through, this will be another one of those.