Bark's Bites: Dealers Are the Worst Businessmen, Part One

Mark "Bark M." Baruth
by Mark "Bark M." Baruth

Imagine that you owned a successful business. For many of you reading this today (including me), you don’t have to imagine, because you’ve done it. If you owned anything from a lemonade stand to a global airline, you’d have a pretty good idea of your costs and profits. You’d know which advertising sources worked best for your business. You’d strive to know where your customers came from. You’d have a system for hiring and training employees.

You’d do all of this and more, because you must have all of your ducks lined up in pretty little rows to be successful.

Well, that is unless you’re a car dealer. In that case, you may have no idea about any part of how your business works and still make money hand over fist.

Don’t believe me? Over the next several weeks, I’ll prove it to you. Today we’ll start with a simple concept that befuddles most dealers: online merchandising.

Since the dawn of time — otherwise known as about 18 years ago — there has been a successful formula for merchandising vehicles online, and it’s been repeated so often that it’s become a mantra in the automotive retail business.

Photos.

Comments.

Pricing.

I think the acronym of PCP was introduced to make most car dealers feel right at home (Google it, youngsters). It’s a simple formula for online merchandising success, whether it’s on the dealer’s own website or on a third-party site such as Autotrader or Cars.com. Take enough photos of the car (including new cars) for the customer to become visually interested in it. Write comments that tell the story of each car, but keep it simple. Price your vehicles according to what the market will bear.

Easy enough, right? Well, you’d think so.

Unfortunately, even some of the largest and most successful dealers in the country struggle with these concepts. Every time I write a post about the failings of dealerships, somebody in the comments pops up with a statement like, “I’m sure these guys have it down to a science. The best dealers use merchandising and pricing tools, blah, blah, blah.”

Sure, the best ones do use those tools. But after visiting over 2,000 dealers in the last four years, I’ll tell you the percentage of dealers that are correctly merchandising inventory online is less than one percent.

I’ve sat down face-to-face with dealers and discussed inventories of well over a hundred cars, one car at a time, and helped them write comments about every single one. I’ve sat with dealers and watched as they went to open their pricing tools — software that costs them thousands of dollars per month — and realized that they didn’t know what their passwords were because they’ve never logged into the site. I’ve pulled out my trusty iPhone and snapped 27 photos of each car on a dealer’s lot over the course of a Saturday because they were “too busy” to do it.

So what should they be doing? Let’s break it down.

Photos. This one seems simple, but it isn’t. Third-party websites offer packages to dealers that range from 3 to 99 available photos per car, with most of them being somewhere in the 27-32 range. There’s been some discussion of “photo fatigue” in the business lately, meaning that some consultants believe that any more than 9 photos can be too many. While there may be some truth to that, the general concept is simple: take photos of everything that the customer wants to see. If it’s a used car, be transparent and take photos of any blemishes or faults that the car might have. Use a consistent background in every photo. If you can hang a banner with your dealership’s name behind the car, even better. Don’t put your dealer’s phone number on the banner, though, because then you won’t be able to track the incoming phone calls by source anymore (we’ll discuss this more in future installments).

The biggest struggle I faced was getting customers to understand that taking photos of new cars was just as important as taking photos of used cars. In fact, research shows that using a stock photo of a car is more damaging than having no photos at all. But nearly all dealers have problems getting their inventories 100-percent photographed. Some of this is for valid reasons — “It’s still on the truck,” or, “We just bought it at auction” — but most of the time it’s either pure laziness or pound-foolishness on the part of the dealer. There are companies that will gladly take photos of every car on a dealer’s lot for $25 a car, which is typically less than what it costs a dealer to own a car for one single, solitary day, but many would rather have it sitting there unphotographed than suck it up and pay the fee.

Comments. On Autotrader, you have 25 words that will show up on the description of your car on the Search Results Page. Make them relevant. Don’t simply do what’s called a VIN explosion, which is a listing of the features of the car based on the Vehicle Identification Number. Tell the customer what’s unique and different about this particular car, and do it without all the CAPITAL LETTERS and exclamation points!!!! And, for God’s sake, leave out, “Joe Schmo Ford is a family owned business that’s been supporting the community since 1956. We take pride in our customer service and making sure that every customer is treated fairly.” There’s thirty words that mean absolutely nothing. Every dealership provides great service. They’re all family owned (even the ones who sold out to Sonic Automotive 10 years ago). Nobody gives a damn. Tell me about the car.

Pricing. It’s so simple, yet so difficult for these dealers to get this one right. Price the car for what the market will bear from day one. It constantly amazes me that dealers will intentionally over-price a car for the first 30 days, just to see if it will sell for an astronomical price. This never, ever works — except for the one time that it did four years ago and the dealer made four grand, so now they keep thinking that they’ll hit the jackpot again. You don’t have to have the cheapest car on the market, but you do have to be within a 5 percent range of it. Otherwise, customers just keep on scrolling.

All of this matters for one reason: go to the third-party website of your choice and search for a 2012 Toyota Camry within 100 miles of your home zip code. For good measure, throw in a 2012 Honda Accord, too, since you’re a savvy cross-shopper. When the 300+ results show up, you’ll start to understand that customers are looking for ways to narrow down their choices, not expand them. In other words, any failing that a dealer may have in any of the above categories gives customers a reason to exclude that car from their search process. Dealers should be looking for reasons to be included, not excluded.

Okay, that’s it for today. If you have any other questions about how a dealership works, send them my way at barkm302@gmail.com and I’ll do my best to address them for you in future installments. Happy shopping!

[Image: Cadillac Man by Orion Pictures]

Mark "Bark M." Baruth
Mark "Bark M." Baruth

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  • Tommytipover Tommytipover on Jul 26, 2016

    I'd worked in the back end of dealers for 30 some years. You want to know why car dealers are the worst businessmen? Because most of them are former car salesmen or sons of dealers who are former car salesmen. Hardly ever a businessman in the bunch.

  • Greytraveler Greytraveler on Jul 30, 2016

    Too many posts to read them all but I get the drift. I know what I want in our next car purchase. So the search is for that vehicle at an acceptable price. The only person I want to see at the dealership is the finance guy to sign the papers, get the keys and pay. Good luck with that. Oh well, it is a goal.

  • MaintenanceCosts It's going to have to go downmarket a bit not to step on the Land Cruiser's toes.
  • Lorenzo Since EVs don't come in for oil changes, their owners don't have their tires rotated regularly, something the dealers would have done. That's the biggest reason they need to buy a new set of tires sooner, not that EVs wear out tires appreciably faster.
  • THX1136 Always liked the Mustang though I've never owned one. I remember my 13 yo self grabbing some Ford literature that Oct which included the brochure for the Mustang. Using my youthful imagination I traced the 'centerfold' photo of the car AND extending the roof line back to turn it into a small wagon version. At the time I thought it would be a cool variant to offer. What was I thinking?!
  • GregLocock That's a bodge, not a solution. Your diff now has bits of broken off metal floating around in it.
  • The Oracle Well, we’re 3-4 years in with the Telluride and right around the time the long term durability issues start to really take hold. This is sad.
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