AutoDrive1- Bridgewater Location

We’re proud of our relationships with our dealers – we have several who have worked with us for years because they’ve had so much success with our auto finance leads.

This post kicks off a new series: our Featured Carloan.com Dealers. The first time out, we’d like to introduce you to our dealer partner Joe DiBiasio and his two stores in Massachusetts, AutoDrive1.

In the three years that have passed since he started working with us, Joe has built his business around using Carloan.com leads and our internet lead management (ILM) system, DOLLAR.

And no wonder – they’ve been closing 15% of the auto finance leads they’ve received from us and have seen an ROI of nearly 20:1.

Joe himself puts it best: “They really care about my business. And for the dealer that knows how to handle these leads, Carloan.com is the best to do business with. They truly turn leads into money – it’s the best form of advertising you could do in our business.”

Thanks Joe! And congratulations on your phenomenal success!

You can read more about it in our Carloan.com Client Success Story, available here.

Our resident account executive Mike Sadowski, a 15 year veteran in the car industry, had differing views regarding statements about auto-financing and how consumers would be purchasing cars in the future. I sat down with him and highlighted some excerpts from the article to get his reaction to the statements being printed.

Subprimenews.com article: ‘KBB indicated 57 percent of total respondents intend to research vehicle financing options online. Meanwhile, 50 percent plan to obtain pre-approval through a bank or credit union.’
Mike Sadowski: Over the last few years, Internet use has boomed and more people are going online. Being online is more convenient and discreet. Who really wants to be rejected at a dealership/bank in person? The Internet saves the embarrassment of being denied.

Subprimenews.com article: ‘Furthermore and most relevant to auto finance companies, more than one-third of in-market vehicle shoppers involved in the survey say they plan to pay the entire cost of their next vehicle purchase in cash, and they are not influenced by incentive offers.’
Mike Sadowski: With the economy the way it is who can really afford to pay for a car with cash? No one is saving to pay cash for cars. If anything dealers are financing more than ever now. In an ‘I want it now’ society, the likelihood of saving up for a new or good quality used car is doubtful … at least for a middle class buyer. Say your salary is 50k yearly, and you want to purchase a 15k car. How long do you think it would take someone to save up 15k for that vehicle?

Subprimenews.com article: ‘KBB indicated 74 percent of the individual’s surveyed plan to purchase a vehicle within the next six months. Of that cluster, more consumers emphasized they are in the market for a used vehicle (67 percent) rather than a new one (33 percent). Again, returning to what could pique the interest of finance companies, KBB found that 42 percent of used-vehicle shoppers and 20 percent of new-vehicle shoppers said they plan to pay the entire cost of their next vehicle in cash.’
Mike Sadowski: If you’re looking at a used car then cash does make sense. The used car market is much stronger than what it has been in the past, and it is easier to save up for a used car as opposed to a new one. The basis of this survey also concerns me. Where was this done? Most of KBB is mostly concentrated in the west coast, so a biased survey is a possibility if the 338 in-market car shoppers at Kbb.com surveyed, were centered in the west coast where salaries are up to 30% higher than most other regions.

So what do you think? Are Mikes views valid? Share your thoughts.

Contact Mike Sadowski:
Phone: 804-521-8577
Email: mike@carloan.com

At this point I don’t know any more than you do, since this purchase was just announced today, but the landscape seems to lend itself to AmeriCredit sticking with what they’re good at, at least for a while. GM seems to have carved out a comfortable relationship with Ally Financial to service their prime and super prime paper, so why not bring on AmeriCredit with the intent of allowing them to continue to service the customers upon which they have built their business? I think that AmeriCredit (or whatever they end up being named) will continue to be a higher end sub-prime bank, giving a lot of dealers a way to go when a 560 walks into their showroom and wants to buy a new car.

My real question is will AmeriCredit continue to service non-GM dealers? My guess is that they won’t sign any new business from outside of the GM family, but if you’re already in and have a performing portfolio you’re probably OK. Things will no doubt be up in the air for a while, but AmeriCredit has been pretty successful lately with the dealers with whom they currently do business, so it seems like a no brainer to keep doing business with those folks long term. If you aren’t a GM dealer and want to keep AmeriCredit as a lender, it is probably worth taking a little time this week to see how your portfolio is performing, and to shoot them an extra deal or two that you might have put elsewhere.

A great place to begin is with Search Engine Optimization (SEO) and the primary underlying principle, keywords.

First off, what is SEO?

Any online marketing website worth its salt is going to start out by talking about SEO. These are the “rules” you can use to structure and tweak your dealership website in order to make it appear near the top of search results for any of the top search engines.

I say “rules” because to quote Captain Barbossa: “they’re really more guidelines than rules.”  They’re fluid, and you have to keep up with the changes — SEO is never really complete.

There are several websites out there that can help you with that, and my favorite is Hubspot. They make their money from helping people “Get Found” online using their software, but they are also a great resource for getting a general grasp on the concepts behind SEO and its parent concept, Search Engine Marketing (SEM). Full disclosure: we’re not clients. I just like their content because they know what they’re doing.

What’s great about these two acronyms – SEO and SEM -  is that they represent a way to get some free advertising  for your dealership if you’re willing to put in the time. Many dealers outsource this activity when they outsource their website development – which means it’s technically no longer “free” -  but this is an activity you can do in-house. It can be spectacularly time-consuming to do it correctly and stay on top of it, but it can be done.

If  you don’t have a website yet and you’re interested in building one, check out our sister companies at Dominion Dealer Solutions. They’ve got you covered, up to and including SEO.

So where do keywords come in?

Keywords are important because they are what make your website visible to the car buyers you’re trying to reach when they’re using search engines on the web.

Take for example our auto finance lead generation site, Carloan.com. Because of the way the site was built and the density of the auto-finance-related keywords on it, a Google search for “car loan” in most parts of the country will bring it up first in the organic search results. This is great because consumers are more likely to trust the organic search results than the paid placements that line the top and the right side of the results page.

Again, it can take a lot of work to get the mix just right on your own, but it can be done.

How do I find the keywords for my site?

Depending on what your strategy is (again, see my previous post), you’ll identify keywords based on geography, your business focus, even your lot inventory to bring more people in to your website via a web search.

For example, if you’re the truck specialist in your area, focus on highlighting the makes and models that you know are popular on your lot. Emphasize your location to make sure that folks searching for “Ford F-150 in Alpharetta, GA” find your website first.

Another way to tackle it is to check out your local competitors’ websites to see how they’re featuring their inventory. If you’ve got someone who’s coming in ahead of you in search results for your area, definitely check them out.

All web browsers have a “View Source” capability where you can look under the hood and see what keywords they’re using. Copying and pasting theirs won’t get you to the top of the results, but you can at least see what’s working for them.

You can also create a Google account and use their Webmaster Tools to find ways to tweak and update your site to be more competitive on the search results pages and drive more traffic to your store. Go to Hubspot and search for “keywords” for their tips on finding and using keywords.

Believe me, it’s worth checking out.

It’s not enough to just have a dealership site anymore, you have to put some thought into how it’s structured, what it focuses on and how it brings in web traffic that you can turn into lot traffic. Taking a good look at what keywords your site uses is a great place to start.

Fast forward a couple years to the summer of ’06, and every dealer under the sun was beating down our door looking for leads.  The gravy train was rolling full steam, and no one wanted to miss the easy profits that huge advances the Special Finance banks were throwing out.    A quick review of our sales from June of that year shows that we signed up Lexus, BMW and Audi dealers, all of whom had heard in their 20 groups how profitable Sub Prime was for their buddies.

You know the rest of the story.  Like all bubbles, this one burst as banks realized that they were playing a little too fast and loose with their money.  It wasn’t a slow down, rather it was like someone pulled the emergency brake.  Dealers that were doing 50+ special units per month suddenly found themselves unable to get anyone under a 600 bought, and no inventory to fit the few calls that they did get.  Life wasn’t very much fun for anyone who made their living in the challenged credit world.

History is cyclical, and in many ways we’re right back in 2004.  Banks are back to buying properly structured deals that make sense, and there are some folks out there cornering the Special Finance market in their town.  Capital One just raised their advances, Drive’s fees have come down a little on some deals, and IFA has stepped up their calls with larger advances and less restricted vehicles.  Rental fleets have been replenished, and you can buy cars that will fit bank programs.  If you dove into a bunker when things got bad, take a couple minutes to pop your head up and look around.  Special Finance penetration is growing every month, don’t be the last to figure it out.

Did they warn you ahead of time that it might be a little low? Did they even know what their score was?  In an article from Autonews.com titled Subprime Segments Losing some Lenders, it placed emphasis on the subprime segment and how the economy is boosting its growth. It also stated that according to Americredit, ”more than 40% of the population could be considered below-prime credit.“ Once upon a time, before the economy tanked, people paid their bills on time and monitored their credit. But when you’re faced with job loss, some bills, such as your mortgage and car note, become more important than others and you reluctantly fall behind.

Many subprime lenders went belly up or merged with larger corporations.

This left few who are hesitant to compete for fear of collapse. A study showed that the number of finance companies servicing customers with risky credit shrank about 20 percent in 2009, going from 220 to 175. With being considered in the subprime segment becoming the norm, more banks and finance companies will probably swell again this year as they are able to tap improving credit markets for funds. Lenders recognize the increase in the subprime customer pool due to the economy and know that the subprime auto business is slowly recovering since the recession.

According to Experian, 16% of new vehicle loans in the 2009 4^th quarter were to subprime buyers.

Most banks do have 2-tier lending, servicing both prime and non-prime…but a few lenders, such as Ally Financial Inc, are pulling out of subprime lending because it is too risky in this economy. GM, one of Ally’s customers, is currently failing in the subprime market because of this. Honda made 20% of their sales subprime customers in their fourth quarter 2009, while GM only got 1% because they couldn’t access subprime loans for their buyers. GM now knows the importance of subprime customers and is currently lining up banks and other financial institutions to make loans and lease deals for buyers with poor credit.

So you find that this customer cannot be approved… at least right now.

Do you work with them so that 6 months down the road, after a little credit repair, they can get financed? Do you turn them away and move on to the next one? Although 40%+ of Americans are considered subprime, with the economy improving, those Americans will be looking to get their credit back on track. Wouldn’t assisting them with that effort benefit you more when they finally reach their ideal score.

Now let’s cover the other two pieces that are crucial for building a successful social media marketing program.

Who is going to manage it?

It’s an ongoing effort, not a quick hit. Bottom line: someone needs to be designated to run your dealership’s social media marketing program. It’s got to have content updates – photos, blog posts, status updates, tweets – on a regular basis to show that someones minding the store.

Here’s what I mean: search for auto dealers on Facebook, and you’ll find dozens of dealerships who created fan pages but haven’t done a thing with them. It’s not enough to have your store name, address and a picture of the building up there. Given the way that things have been going for the past few years, can the prospect be sure that a dealer they found online is still in business if they haven’t tweeted or had a status update in four months?

Even worse are inventory listings that haven’t been updated in more than a month — how can an online visitor be sure that what they want will still be available? They won’t even bother reaching out or coming by to find out.

These days, a social media program coordinator for your dealership doesn’t even have to be on staff. It’s easier and faster if they are, but remember what I said in the last post about all those social media marketing services? Here’s where they can help. There are so many people involved in this kind of marketing now that you could even find a freelancer to help you keep your content updates rolling.

How will you gauge your success?

Your answer here is directly related to your answer to question #1 from the last post, “What is your goal?”

If you’re looking for lead generation, you’re going to be watching metrics like inventory sold and revenue generated for your dealership from prospects who found you through social media. It can be a challenge to track where these prospects come from, but it can still be done once you have a process in place to capture the information.

Measurement for the other two choices – engagement and monitoring – is a lot fuzzier and still hotly debated in social media marketing circles.  Is it your numbers of fans or followers? What about the frequency of your tweets or your online conversations? How can you tell if you’re being successful?

It’s up to you to decide how you’re going to measure the return on your efforts — but it is a critical element for completing your plan. Without it, you won’t be able to tell if the time you’ve put into building out your social media marketing program is getting you what you want.

Good news – it’s not too late.

It doesn’t have to be written in stone, and it doesn’t even have to be in place before you get started. But without a social media marketing plan, you’ll be driving without a map.

Without one, how will you know if you get lost?

As a result, you can’t throw a rock these days without hitting a company website or press release that claims that they can help you maximize your return on your social media. A whole new industry has popped up around this shiny new communications channel almost overnight, fed by news reports about the millions of consumers who spend thousands of hours online.

These social media marketing services can be helpful, but what if you’ve already made the leap or want to do it on your own? There are three important things to consider as you put together your plan to dip your toe into the social media pool. We’ll cover the first one today.

What is your goal?

And you do need one. I’m just as guilty of this as the next person: “it looks fun, everyone’s doing it, let’s go!”  But you need to think about what you’re trying to accomplish. It’s not enough to just be present, and your goal is going to help determine your strategy for getting your dealership involved with social media.

There are several possibilities here:

• Lead generation – help people in your market find your store and see what you’re about…then get in touch with you to buy a car
• Engagement – start online conversations with prospects and peers to demonstrate how well you know the car business and how you can help
• Monitoring and troubleshooting – keep an eye out for online critics of your operation to respond to problems before your reputation takes a hit

These are not mutually exclusive, you can be doing all three at the same time. But if you are more interested in lead generation, you’re going to focus on showing off your showroom and your inventory.  If you’re only going to be monitoring and troubleshooting, you’re fighting fires instead of actively pursuing relationships with potential customers.

Your goal has a direct effect on how you present yourself online. Even if you’re already working with social media, you can still take some time to think about how what you’re doing maps to what you want your dealership to get out of it.

In the next post, we’ll take a look at the other two elements of a good social media marketing plan, management and measurement.

In the meantime, what do you want to get out of social media for your dealership?

We have all seen a 560 credit score that just does not make any sense, whether it belongs to someone that has one or two hiccups but otherwise looks pretty good, or to someone that just doesn’t seem to like paying their bills. In fact, I am willing to bet that you have seen at least one of these folks in the last week or two. Because you know your banks and their programs, you feel pretty sure that you can get the customer that doesn’t seem to deserve their score hung at the bank you’ve sent a few gift deals to, and you know where to get the best call for the customer that may have gotten the shaft from FICO. It all makes logical sense, but in the eyes of someone looking for a problem, could it look like discrimination?

I’m certainly not an expert in all things legal, but it doesn’t take Ben Matlock to see how with a little effort a hungry plaintiff’s attorney could find two people that went to the same dealership, have similar credit scores, but different terms on their loans. Imagine his excitement if one of those customers is a member of a protected class and is paying a higher rate. Now picture the little victory dance when he finds out that those deals weren’t submitted to the same banks and were not given the same opportunities. Yeah, it’s not fair and doesn’t take into account the context and details of the individual deals, but if someone is just looking to sue, does any of that matter?

OK, so if we know that not all deals make sense to send to the same banks, and we know that lawyers are always going to be out looking for an easy buck, what can we do? Well, you can’t control who knocks on the door looking for a problem, but you can control what they find. TRACK EVERYTHING! It is a lot harder to make you look like a bad guy if you can produce documentation showing what kind of deals you send to specific banks over a long period of time. The law of averages says that if you are working every time to make the best deal for the customer and the dealership, the demographic information will be evenly spread among all the banks and scenarios that drive your decisions.

The first thing that absolutely smacked me in the face is that EVERY successful dealer had a person who does nothing with the leads but call them and get them in the door. Conversely, the dealers that didn’t have the success we’d expected all had one person wearing multiple hats, making calls, hanging paper, chasing inventory, etc. The cool thing about the successful dealers is that not one of them had hired a person specifically to call our leads. Some had existing BDC’s and just plugged our leads in, but most had taken a salesperson or receptionist and paid them a small spiff (ranging from $10 to $25) for every appointment that showed up. You’ll notice that I didn’t say per sale, just per show. That’s a big deal, because those folks were absolutely pounding the phone and answering every customer’s question with some version of “I don’t know, but they will answer that when you get here”.

The second, more subtle, thing I noticed was that the successful dealers use a very consultative process. They all took to time to review a customer’s credit file with them, and explain to them why they couldn’t buy a car if that was the case. When I asked why they take so much time with someone who can’t buy a car, the universal answer was that by investing those 5 minutes they end up getting about 50% of those folks into a car within 6 months, and often get some referrals.

Finally, all of these dealers keep their trades. I hear on a daily basis that the hardest part of putting a deal together is finding cars to fit the programs, and that the auction prices are still out of control. All of the dealers I spoke with agreed with that assessment, but found that they didn’t need to get inventory at auction. They simply worked with their used car manager and made sure that they have first right of refusal on every trade that comes into the store.

I know, you’re reading this thinking “Bob, what’s new here, this is the same thing you’ve been saying for 5 years”. You’re right, but it was cool to get back out and be up to my elbows in it to make sure that it hasn’t changed. It turns out that the same thing works that did 5 years ago, so I guess for the next 5 years you’ll hear more of the same from me. Do these simple things and you can’t help but have success delivering cars from finance leads.