White Papers

The New Wave of Sales and Marketing Tools

Classification is important to understanding, and I'm concerned our industry is off on the wrong foot. I'm hearing a lot about new mobile applications, but apps fall into a number of tool classifications. Some simply do what you tell them to do; some help you remember how to do it, and others extend your management programs to guide or control the work of others. Here are the four categories as I see it:

1) Wrenches and typewriters have no memory. There is nothing about them that can help the user understand the process of tightening bolts or writing letters. These non-memory tools are great for users who know or can figure out the process of completing the task without assistance. The user works the tool.

2) Many software products come with a help button. The process for completing a task is recorded in the help menu and can be called up when needed. The user accesses additional process memory within the tool.

3) Everything in Microsoft office has a multitude of features, but does not memorize processes unless a macro is created to do that. Macros do tasks according to a recorded process. The user starts the process as recorded within the tool.

4) A GPS determines the process for getting somewhere, then tells the user what to do. This is what some of the new apps coming out offer, and it is a boon to areas like sales and marketing involving complex processes. The tool directs the user.

I'm going to call this fourth group management tools, because they manage the actions of others. This is often essential for process control.

Configurator tools guide shoppers through the path of designing their dream car. More recently, apps are being sold that guide the salesperson through the sales process or guide the F&I manager through the menu process. The if-then nature of computer programming allows for branching, making it possible for the system to design a nearly infinite number of process combinations. Each solution is produced to optimize the process based on the situation as input. The user is guided through a process of information inputs, and those inputs optimize the remainder of the process.

A Canadian company, cDemo, caught my eye in Dallas several months ago with their Mobile Inspector Application. It guides the user through a process that simultaneously develops vehicle photos, live video, and a vehicle condition report. That process varies from vehicle to vehicle. The photos for a pickup truck are not the same as for an SUV or a sedan. If something is found to be wrong in the vehicle condition report, additional detail is captured on that item. There must be millions of combinations, but the user doesn't have to remember any of them. Just about anyone can complete the process. In fact, cDemo asserts it's so easy a monkey could do it, and it all happens on an iPhone or Droid based smart phone.

This is a radical departure in the purpose of tools, yet it is not entirely new. Twenty years ago, I had a sales interview that involved me giving a sales presentation on the product of my choice. I sold them on buying my Hewlett Packard 19B programmable calculator for each sales person. Buy programming in the formulas for quoting rates, no salesperson would ever again need to remember the variables, the formulas, or how to execute. The program tells them what variables to entry and takes care of everything else. No more missed information, no more miscalculations. Sales people could function faster and more perfectly by letting the tool direct them. I provided break-even analysis to demonstrate the how quickly this simple management tool could pay for itself. The interviewing team quickly understood the importance of management tools in sales and marketing. Needless to say, I was offered the job.

If you can hire highly skilled professionals, it may make sense to give them tools they control, and maybe even tools with additional memory support. However, if the process and discipline is more than your people can live up to, then put a tool in place that runs the employee the way you want them to be run. Most of these tools can be modified by the manager. For example, the cDemo tool allows steps to be added or deleted from the process by the manager or through company support.

In many ways, these new tools are an extension of management, and it is badly needed. The cars we sell and merchandise are more complex than ever. The buyers are more knowledgeable than ever. But the people selling and merchandising vehicles are generally not any more talented than those we worked with ten years ago. These management tools are not coming out a moment too soon. If you want to insist that vehicles be sold or merchandised the way you want it done, then consider duplicating yourself through one of these new tools that manage your people in your absence.

Yes, I do practice what I preach. I've developed internal tools to guide myself, preventing mistakes when I'm working tired. I've talked to several companies about helping them develop and/or market management tools and will remain involved in this growing field as it relates to the marketing and sales of durable goods. I recently lured my brother, Gary Galbraith, into the auto industry to help cDemo introduce their new tool in the United States. As I look at the collision course of product complexity, product proliferation, transparency to the consumer, and an undereducated workforce, these tools appear essential to the future profitability of retailers. Management tools cannot be looked at as just another kind of application.

The Profit Filled Back End of Velocity

This paper, reveals the real profit-making potential within the velocity pricing strategy. The paper is proudly sponsored by Continental Warranty.

The Obsolescence of Sales Events

Introduction (download the PDF below for the full article)

For used vehicles, sales events are largely a function of a bygone era, when shoppers had little transparency into vehicle prices or values without entering the store. The purpose was to use a sampling of low-price/high-value demonstrations to generate urgency in shoppers who are thinking about buying a vehicle and store preference for those who are definitely in-market for a vehicle. Today, shoppers have access to market pricing on millions of vehicles and enough information about many of them to formulate initial value estimates.

New-vehicle sales at the dealer level are quickly losing their impact, and coming changes will further erode their effectiveness. Information transparency regarding vehicles, prices, and interest rates is leading to the obsolescence of dealer specific sales events. This is not unique to the automobile industry. Other durable goods industries are already responding to the changes in consumer behavior brought on by readily available market information. Auto dealers must do the same.

More and more dealers are turning their used-vehicle inventory in less than 45 day, and many in less than 30. Keeping new-vehicle inventories to less than 60-days supply has become a priority for many manufacturers as well. When every shopper has 24/7 access to information in a competitive market place, the job of blowing out inventory is constant, and the blowout sales event becomes obsolete.

Receiving Referrals from Membership Programs

Membership programs are often overlooked by auto dealers. Those who do utilize these programs generally lump them in with leads programs, resulting in less than full value from the service. It's not the dealer's fault. Membership programs are more complex than they first appear.

The Inventory-Level Video Decision

There is no doubt that inventory-level video helps drive more ready-to-buy traffic to the store. The question holding most dealers back is whether or not it is cost effective for them. The answer is yes for some stores and no for others. In many cases the mathematics needed to determine the difference are not all that difficult.

The objective of inventory-level video is to produce more contacts from a given number of vehicle exposures. Most of the benefit comes from more Vehicle Details Page views (VDPs) to contact the store by phone, email, chat or walking in. Secondarily, shoppers with a strong preference for video may choose to view vehicle listings on third-party sites that include video over those that do not, raising the number of VDPs. Regardless of the increase from one benefit as compared to the other, the end result is a higher quantity of ready-to-buy shoppers contacting the store.

This benefit is very measurable. How many contacts is the store receiving from its listed vehicles and how much does it need to go up in order to cover the cost of producing the video. To establish the value of a contact, one need look no further than the marginal cost per contact from the poorest performing source used or the expected cost per contact from the next best service being considered.

[See attached PDF for the complete article]

Using Galbraith’s Information Wheel for Auto Dealer Promotions

Information continues to alter feelings and perceptions and drive purchase decisions. In a world with increasing product choices and increasingly complex products, meeting the information needs of shoppers is more important than ever. Shoppers do not think of information in terms of the media that deliver it (internet, TV, newspaper, etc.), and marketers can no longer afford to do so either. Whether the delivery mechanism is an advertisement, social media, or people talking to one another, the art and science of persuasion starts with the message not the messenger.

Galbraith’s Information Wheel provides a framework for thinking first about what kinds of information marketers want to push at shoppers and what types of information shoppers want to pull from the market place. Marketers can later consider the best content and media mix necessary to maximize ready-to-buy traffic to the store.

(The full article is available in the pdf file below.)

Dealer Marketing Strategy

Executive Summary (Click the link below to download the complete paper.)

Most dealers do not have a marketing strategy, and it is hurting them financially in a number of ways:
1. Buying the wrong kind of advertising
2. Not buying enough of the right advertising
3. There is little or no synergy among the components of the overall advertising campaign
4. Advertising is not working in conjunction with pricing and the rest of the marketing mix
Advertising cannot be purchased cost effectively without consideration of how each advertising purchase works together and how the overall advertising effort works in conjunction with pricing, distribution (location and sales operations), and the product mix. The dealer’s marketing strategy maximizes the result of all these elements working together.

Dealers have but two fundamental advertising objectives, branding and traffic now. Branding should be done sufficiently or not at all. This is a key consideration in formulating the dealer’s strategy. Vehicle price is the top consideration impacting the effectiveness of traffic-now advertising. These two considerations, branding and pricing, define the four major marketing strategies dealers embark upon.

Which strategy is best for the dealer depends a great deal on location and franchises, if any. These variables cannot easily be changed. Modification of pricing, advertising and the mix of used vehicles are relatively easy to modify. The way in which the store operates can be changed to match any new marketing strategy. However, operational changes are difficult enough to merit consideration of developing a marketing strategy around the proven competencies of the existing store leadership.

The Preference-Engagement Matrix

Executive Summary (The complete white paper is available through the link at the bottom of this article.)

Whether advertising is online or offline says nothing about its contribution to connecting the shopper with the store. Contact is a result of preference, for the vehicle and the dealership. Until the shopper has some level of preference for a vehicle at the store or preference for the store itself as the solution for finding a vehicle, most shoppers will avoid contact. For the shopper, searching online or across a variety of print ads until a preference is established makes a great deal more sense than hopping from store to store on an exploratory basis.

How each form of advertising builds preference is a function of the medium itself, the creative content employed, and the level of preference that exists at the time the shopper engages the medium. Mapping out each form of media across preference and engagement provides a platform for building strategic campaigns and designing creative content to meet the overall objectives of those campaigns.

No advertising medium can be said to be better than another without understanding the target market and knowing what the objective is. Understanding the preferences that exist at the point of advertising engagement and the medium’s ability to alter those preferences is a huge step toward maximizing marketing efficiency and effectiveness.

Providing Profit Generating Systems to Dealers

Executive Summary (Complete document is available through the link at the bottom of this article.)

Distribution must surpass advertising as a core marketing competency of durable goods industries. Unlike packaged goods, durable goods are primarily sold through small, well-run businesses that are struggling to keep up with the growing complexity of the products they sell, the systems they use, and the internet savvy customers they advertise and sell to.

Those selling to dealers must examine their offerings and determine how they can do a better job of delivering not just products and services but profit generating systems. These systems will provide dealers with the training, support, and integration they need to keep up with product, advertising, and operating system advances while staying focused on their customers.

Dealers are not, and need not become, the weak link in the distribution channel. However they are the smallest link and require more from their national suppliers. Those who provide dealers with complete profit generating systems will contribute to the strength of their product category and be rewarded with growing market share within that category.

Hiring and Training Good Salespeople

In 1964, David Mayer and Herbert M. Greenberg released a study that began to change selling, or at least who was hired to do it. Their work had taken 7 years and the empirical results were amazing. They concluded that there were two overriding attributes to good sales people. They must have empathy and ego.

Empathy, in the context of their report, meant having the ability to feel the way the customer felt. Without empathy, we are guessing at what the shopper wants or what their real problem is. With a great deal of empathy, we know. Shoppers feel that they are understood and open up even further. The purpose of empathy is to close the sale. After all, you cannot enhance the shopper’s quality of life without selling them something they need.

Sales people with little empathy often fail at sales. They are seen as poor listeners who just can’t get in touch with the customer.

Ego is the drive to get the sale. He or she needs to get the sale. Closing deals is a part of their identity. They feel much better about themselves once they close a deal. Failure hurts a person with ego. They are motivated to sell because it is the only way they can avoid failure and feel success. Yet failure does not break them. They can accept the fact that many, even most, of their sales efforts will not succeed and keep driving hard.

It really doesn’t matter if someone is interest in selling if they don’t have a good healthy balance of empathy and ego. If they don’t care enough, they will not be good listeners. While they will get some sales through perseverance, they will muck up a good many opportunities and leave the firm with a poor image. If they don’t have enough ego to drive home the close they may be seen by customers as nice and caring, but too many of them will buy from someone else.

Training is essential to becoming a good sales person. However, all the training in the world will not make someone succeed if they simply don’t have the psychological makeup to be a sales person. The combination of hiring right and training well is critical.

The necessity that inspired Mayer and Greenberg’s research was the fact that 50% of insurance sales people were turning over in the first year and 80% within three years. If turnover is high in your store, take a look at your hiring criteria and your training. Hire the right people, and your training investment will generate a much higher return. Hire the right people without providing the training and you will likely lose them to a store that will.