It appears reports of the F&I manager’s demise have been greatly exaggerated.That was the big revelation to come out my discussion with one of the analysts of a consumer poll conducted this past February by The Harris Poll on behalf of Urban Science. The study gathered responses from 2,001 U.S. consumers age 18 and over.

The individual I spoke to was Randy Berlin, who serves as global director of dealer consulting. My line of questioning began with whether the study’s findings refuted all those consumer studies published earlier this decade, and what the new finding meant for the future of digital retailing.

“We were surprised, too. We had no idea what they were going to come back with,” Berlin said, adding that his firm expected The Harris Poll to come back with findings that point to consumers, especially younger generations, wanting a more click-to-buy experience.

“But what the research told us is that younger generations have no brand identity or loyalty, so they don’t know what to buy,” he said, highlighting the most critical takeaway from the study. See, whereas boomers like Berlin have experience purchasing vehicles and have an affinity toward certain vehicle brands, the young people are just not brand loyal — “… except for maybe Apple,” Berlin quipped.

According to the study, Generation Z and young millennials — the two demographics every consumer study said would skip the dealership experience altogether — visit, on average, 3.5 dealerships before pulling the trigger.

Remember when those shopper studies also told us consumers were visiting less than two dealerships, and those visits would continue to decline in the Amazon Age? Well, older millennials, Gen X, and boomers are visiting, on average, 2.2, 2.3, and 2.2 dealerships, respectively.

What surprised Berlin and researchers at The Harris Poll is the unwillingness of younger consumers to buy a vehicle without seeing it. Overall, seven out of 10 respondents said they would never buy a vehicle without a dealership. Eighty-five percent of respondents also agreed a vehicle is too big an investment to risk not seeing it before they buy.

These insights led Berlin to the most stunning conclusion to come out out of his analysis — that younger car buyers desire the knowledge of a well-trained F&I professional. “These younger folks don’t know what they can afford. So there’s uncertainty there, where they need help understanding their finance options and what they mean for them,” Berlin said.

So, does all that mean digital retailing is dead? Not according to Berlin.

The dealer consultant said car buyers, particularly younger consumers, want to do as much as they can online. “Remember, for many of these younger consumers, it’s their first purchase,” he said. “So they rely on the expertise of the dealer to help them get through the process.”

Berlin knows they’re online because, according to the study, the average car buyer is submitting, on average, three lead forms. The reason is consumers want to make sure they’re getting a good deal, so they’re cross-checking pricing. And dealers, for the most part, have embraced this desire for pricing transparency. That’s why 81% of survey respondents said they trust the information they receive from an OEM dealership.

“So they know invoice. They know everything about it,” Berlin said. “But a majority of consumers aren’t coming in to write a check. So price is one thing, but then, as you relate that to the payment, is it a two-year lease, three-year lease, a 48-month loan, a 60-month loan, or 72. That’s where the F&I manager really starts to play a role.”

This is where things got interesting. Berlin equated digital retailing to autonomous vehicles, noting that “a majority of people aren’t raising their hand and saying, “I’m all in on that.”

“But if you think about it, from autonomous vehicles, we’ve seen a lot of safety features come out of that, such as adaptive cruise control, lane-departure warnings, and automatic stopping,” he continued. “Digital retailing is synonymous with that: I can do most of the transaction online line, and it’s more than just submitting a credit application. It’s a doc you can sign electronically and those sorts of things. Then I go to the dealership to complete the transaction because I want to see the vehicle.”

And to Berlin, consumers are only going to want more of this experience. The challenge for software providers like my employer is to show dealers how these digital retailing platforms work with their current process. It has to be seamless.

“Like what we’ve learned from the whole autonomous vehicle, when it comes to digital retailing, however the customer wants to engage and transact with you, it has to be the same process,” Berlin said. “They don’t want to have to start over.”

The proliferation of small type in online ads and social media could make dealers more vulnerable to digital accessibilities lawsuits, filing of which should increase thanks to a recent Supreme Court decision.

The U.S. Supreme Court just did something that should make your stomach turn the next time you are in the mood for Domino’s Pizza. Actually, it’s what the high court didn’t do that will have you reaching for an antacid.

See, Dominos was sued three years ago by Guillermo Robles under the Americans with Disabilities Act (ADA). The pizza chain’s customer charged that Domino’s failed to design its website and web app to accommodate screen-reading software that could read and vocalize contents. This, he alleged, prevented him from taking advantage of the chain’s online discounts after he was unable to order pizza online on two occasions.

Dominos argued that the ADA applies to its store but not its website.

The Ninth Circuit Court of Appeals disagreed. Although the ADA does not directly address websites, mobile apps, or other web-based technologies, the appellate court ruled that the chain’s website and app provided a way for customers to access its physical storefronts for delivery and pickup. This “nexus” put Robles’ complaint under the purview of the ADA.

Domino’s then asked the Supreme Court to rule that the ADA does not cover the internet.

The high court declined the pizza chain’s appeal on Oct. 7. The decision clears the way for the more than 2,250 digital accessibilities lawsuits expected to be filed this year.

For California dealers, the Supreme Court’s decision is especially damaging. That’s because California law, according to Auto Dealer Compliance’s Randy Henrick, sets a minimum dollar amount for damages of $4,000 plus attorney’s fees for each violation of the ADA. Most other states don’t have a minimum and only allow for equitable relief to be sought. However, businesses located in all but 12 states have paid between $10,000 and more than $90,000 to resolve website-related lawsuits and threats of lawsuits.

Now consider the special internet pricing you might be advertising on your site, the digital retailing tools you may offer, all those vehicle details pages you’ve created, and the fine print explaining rebate and incentive eligibility. If you employ any of that on your site, you could be a target, Henrick says.

What makes compliance tough is the definition of “disability” in the ADA is broad. Keep in mind it’s a legal term, not a medical term. That’s significant, because the ADA defines a person with a disability as a person who has a physical or mental impairment “that substantially limits one or more major life activity functions,” Henrick notes, adding that this includes people who have a record of such impairment, even if they do not currently have a disability. The ADA also makes it unlawful to discriminate against a person based on that person’s association with a person with a disability.

“With the Supreme Court letting the Domino’s decision stand, I would expect more of these suits to be filed by the plaintiff’s bar,” Henrick says. “Whether and to what extent auto dealers will be targeted is uncertain, but I think they have the same exposure as other retailers and the proliferation of small type in online ads and social media may make them more vulnerable.”

The big concern here is there is no standard for compliance. Yup, it’s a moving target.

The Obama administration’s Department of Justice was in the process of developing precise standards for making websites ADA compliant. Four Advanced Notices of Proposed Rulemaking were issued in 2010. Henrick says it is likely those standards would have been less costly and complex than the Web Content Accessibility Guidelines, which is the standard followed by the European Union and other countries since 1999.

The Trump administration, however, withdrew those notices as part of its deregulation stance. That’s why this Domino’s case is something to watch, and why DealerSocket chose AudioEye as its web accessibility partner.

Under that pact, DealerFire websites now support AudioEye’s Ally Toolbar, which allows users with disabilities to have text read to them or played automatically. The solution, which conforms with WCAG 2.0 standards, also offers automatic captioning and voice-enabled site navigation.

So, you’ve been warned. The good news for DealerFire customers is we got your digital front door covered.

An interesting observation causes a general manager for a Toyota store to wonder if the industry has reached a tipping point in today’s Digital Age.

A general manager (GM) for a Toyota store in Arkansas made a stunning observation: A “super-loyal” customer who has purchased five cars from the same salesperson, who he loves and “won’t buy from anyone else,” came in as an internet lead.

Yup, instead of calling his beloved Jackie to say he’s coming in to look at a new Toyota Tacoma, Mr. Super-Loyal visited the dealership’s website, found the vehicle he wanted, and submitted a lead form. The horror, right? Well, it wasn’t the first time the GM observed such a thing.

“He was an internet sale, so the website got credit for that sale,” the GM told me. “It wasn’t a conquest sale. We didn’t go out and get us a new customer, but, technically, on paper, it’s an internet sale.”

Remember when market studies told us car buyers were shopping less than two dealerships before pulling the trigger. Well, according to a poll of 2,001 consumers conducted by The Harris Poll on behalf of Urban Science, consumers are visiting, on average, 2.5 dealerships. Wait, it gets better.

Generation Z and young millennials — you know, the ones who were supposed to skip the showroom experience altogether — are visiting, on average, 3.5 dealerships. Gen X visits 2.3 dealerships, while older millennials and Boomers visit, on average, two.

Randy Berlin, global director of dealer consulting for Urban Science, says the reason visits are higher among the younger demographics is “they have no brand identity or loyalty.”

“The young people, they’re just not brand loyal at all, except for maybe Apple,” he adds.

And get this: Berlin says the average customer is submitting an average of three leads. The reason, he says, is customers are cross-checking prices. See, price (84%) is the most significant influencer of a buying decision — even above a “low-pressure sales approach (72%).”

The GM’s story and all this new data makes me wonder why data mining isn’t getting more hype, especially when we’re dealing with a less loyal customer who is focused on price and is cross-checking two to 3.5 dealerships.

All of this reminds me of something I heard from one of our Strategic Growth Managers for our RevenueRadar tool. His name is Winston Harrell, a 33-year industry veteran and a serious data-mining pro. To demonstrate the power of the tool to new clients, he asks them to load the solution with the conditions that point to a high-target prospect or are important to the dealership. Then he has them run a report to see how many people the dealership sold a car to in the last month fit those parameters.

“It’s pure amazement,” he says. “Unfortunately, no one reached out to those customers, so they showed up as a fresh up or an internet lead.”

And you know your third-party lead providers are more than happy to take credit for those sales.

Harrell says the reason most dealers lose faith in data mining is they don’t have a defined process that’s written down, implemented, and managed by a dedicated person. Think BDC manager.

DealerSocket commissioned its own study. Conducted by Strategy Analytics, nearly 50% of the 500 dealers polled listed “Identifying the best places to invest marketing spend” as their No. 1 pain point. Again, I’m not sure why data mining isn’t getting more hype when it’s clear the answer is buried in the data.

Departing from my recent rants about digital retailing, I thought I’d get a little controversial this month by asking: Why do some dealerships not allow their sales teams to use the CRM to create their own customer lists? Wouldn’t their customer communications be more personalized?

If every car or service you purchased from a dealership was from a particular salesperson, wouldn’t you be more willing to listen to what he or she had to say?

I raised those points during a recent conversation with Regis Saffold, a DealerSocket Customer Success Manager. We were talking about CRM usage rates and why some dealers struggle to get their sales teams to engage the tool. I just wondered if I was crazy to think that access to list builder-type features should not be limited to only general managers and BDC managers?

“Not at all,” Regis said. “All users should have a BDC manager mentality. If not, huge portions of the tool are being ignored — the most important features, in my opinion.”

Having led an industry publication for more than a decade, I had the pleasure of meeting and learning from many of this industry’s great minds. One of them is Jim “The Alpha Dawg” Ziegler. The one piece of advice he imparted in one of his columns that I’ll never forget is the importance of the sales team marrying the CRM. It’s “the heartbeat of sales and service,” he wrote.

I figured “Da Man,” as he’s also called, would set me straight. Well, he did. Through Facebook Messenger, I posed those same questions to him. Having sat through his workshops, I knew what his answer would be before I hit send.

“I would NOT allow it,” he responded.

With my tail between my legs, I reached out to one of my old buddies, an F&I director at a Cadillac store in Colorado. The guy is one of the most talented F&I professionals in the business, and I knew his dealership was a Socket store. I posed the same question I posed to Ziegler.

“We don’t restrict access here, and we encourage them to interact with the CRM,” he said.

Feeling less crazy, I reached out to another one of my old friends, a former F&I director-turned-GM from Maryland. She responded with a “No,” adding, “The sales manager or I create those lists.”

Listen, I get it. As a general manager, you want your salespeople working the hot leads you or your BDC serves up. You also don’t want customers getting hit with emails or mailers twice in the same week. And you certainly want your sales team focused on the campaigns your dealership is pushing, and the programs your promoting.

Then there’s the floor “ups” your sales team needs to handle and your road-to-the-sale process. Keep in mind the car business is the only retail vertical in which salespeople are required to stay with the customer through the entire transaction. Add that all up and there isn’t much time for salespeople to be working their own lists.

Then there’s the transient nature of the business, and you certainly don’t want salespeople walking off with lists of your customers. These are all excellent points for limiting what a salesperson can access. I just wonder if focusing solely on accountability is why the CRM is often viewed by sales staff as kind of a nanny cam, recording everything they are and aren’t doing.

Earlier this year, I had the opportunity to interview Rudy T., aka El Patronn, about his Brooklyn Mitsubishi dealership. In his first year at the helm of what he described as an underperforming store, Rudy increased sales and profits by 65% and 52%, respectively. This year, Rudy’s store broke into the national sales ranks for Mitsubishi dealerships.

How did he change things? He got his sales team excited about using the CRM by encouraging them to create their own lists. But he did much more than that. He instructed them to become their own brands, create their own logos and websites, get active on social media, and use their mobile devices to record vehicle walkarounds they could email or text to customers.

What he did was show them how his seemingly trivial requirement of logging every customer in the CRM helped them become mini businesses within the dealership. And that spoke directly to their entrepreneurial spirit. Truth is, many of the issues I previously mentioned can be solved with a little coordination between your sales team and BDC, assistance from your vendor rep, and employing the many features today’s modern CRM offers.

“Younger buyers still want the dealership,” read the headline for Automotive News’ Aug. 12 report on a new study from Urban Science. The firm surveyed approximately 2,000 shoppers in February, 75% of whom said they would not buy a vehicle without a dealer involved.

Inspiring the headline were findings indicating that the youngest generations shop the highest number of brick-and-mortar dealerships, with Gen Z and young millennials visiting, on average, 3.8 and 2.6 stores before pulling the trigger. These are the generations all those industry studies said didn’t like the dealership experience, hated the F&I office, and might even stop buying cars.

Well, those studies appear to be wrong. In fact, according to a column penned by J.D. Power researcher Maya Ivanova for Auto Remarketing magazine, “Fears that Gen Y… would turn their backs on the all-American car-buying tradition are unfounded.”

The research also noted that Gen Y shoppers “mostly like to close the deal at the dealership.”

I know of a few “traditionalists” who are grinning ear to ear over these findings, believing they refute all that talk about dealers needing to step into the Digital Age. I believe the opposite. My takeaway is the stats serve as an endorsement of the industry’s efforts to get dealers to embrace the internet, and I believe they point to the digital experience growing in importance in the years ahead — that’s if we can erase the mistakes of tech marketers in recent years.

So what brings me to those conclusions? For starters, the line about Gen Y being OK with closing deals at the dealership opens with the following: “While every millennial starts the buying journey digitally…”

The Automotive News article also notes that 81% of the auto shoppers polled indicated that they “trust the information they receive from a franchised dealership.” Think about that for a second: 81% of your customers say they trust the information you send them. Wait, it gets better.

Seventy-two percent of survey respondents said the salesperson is becoming a trusted advisor. Wow, right? Well, 75% of survey respondents also said they would not want to buy a vehicle without a dealer involved.

So what happened to all that talk about consumers wanting to avoid the dealership experience? Well, thanks to your digital marketing and advertising efforts, car buyers know if stores are “retailing the same vehicle for $10,000 to $10,500, then that is the price of that vehicle.” That’s what Reedman-Toll Auto Group’s Moshe Schoopachevich said in a new report we developed in partnership with Automotive News.

“They look at Kelly Blue Book and Edmunds, too,” he noted, adding, “What the internet really did was end haggling.”

Back in 2015, Google broke down the car-buying process in the Internet Age into five moments:

  • Which-car-is-best moments
  • Is-it-right-for-me moments
  • Can-I-afford-it moments
  • Where-should-I-buy-it moments
  • Am-I-getting-a-deal moments

Now consider all the digital techniques your store employs daily and monthly to help consumers through those moments. Yeah, those studies might point to consumers not minding the dealership experience, but it’s because of everything you do online to reel them in.

As for whether those findings make an argument against digital retailing, I don’t think they do. I believe consumers are just now learning what’s possible from a car-shopping perspective. And I believe their expectation will only grow in the years to come, but not at the expense of the dealership experience.

See, I think the term “digital retailing” has gotten a bad name in our industry, mainly because of the missteps of tech marketers. They believed the best way to market their solutions was to bash the people they’re designed to help, and they used the buying habits of today’s younger generations to do so.

Hey, calling dealers antiquated because they’re process-driven is no way to get them to buy into your vision of the future. Dealers are process-driven because they know a proven process delivers results, because the state and federal laws governing their activities demand it, and because not every customer has an 800 credit score.

The good news is I think marketers are finally coming around. It’s why we see terms like “connected retail” and “omnichannel retailing” being used to describe “digital retailing.”

As I’ve always been told, buying a car is the second biggest purchase a consumer will make, and it should be treated as such. However, digitizing low-value steps in your sales process, such as filling out a credit app, should be something you embrace. It makes the process more efficient, saves labor, and allows your team to focus on high-value activities like selling cars, F&I products, and the expertise of your service department. That’s the true promise of digital retailing.

  • Millennials Value Exclusivity: Salespeople should use words like “unique”, “one of a kind”, or even “special” when selling to Millennials, because members of this demographic believe they’re unique and their rides should be as well.
  • Millennials Hate Waiting: Give them the VIP treatment by having the salesperson waiting and ready to show them cars based on the needs they shared when they chatted, texted, or messaged the dealership. Millennials hate being taken to the salesperson’s “lair”.
  • Millennials Want to Text: Must text millennials. You have to text with them.
  • Millennials View LinkedIn: Make sure your salespeople have a LinkedIn account with a photo, content that humanizes them, and connections, because Millennials will look them up to see if they can trust the salesperson.
That was the list my colleague jotted down while listening to millennial whisperer Jason Dorsey at our recent DealerSocket User Summit in Anaheim, Calif. Dorsey serves as president and lead researcher at the Center of Generational Kinetics in Austin, Texas, and he shared insights on various generations, including mine, during his keynote address on Aug. 21.

According to my colleague, his message was well received. In fact, she noted in her email that one general manager in attendance emailed Dorsey’s speech notes to his team and told them to review it and be ready to discuss when he returns. My colleague was kind enough to also send me those notes before being shuttled to the House of Blues to watch celebrity band Royal Machines during our DealerSocket After Dark party. How nice of her, right? She concluded her email with the following: “This might make for a good blog.”

Yeah, she’s always thinking about me.

My colleague’s thought about the blog was a good one, but I wondered how millennials would feel about the list. I mean, it kind of makes them sound entitled — that’s until I reread the list.

Yeah, “unique” was the reason I bought my current vehicle four years ago. I just hadn’t seen very many of them on the road or in the parking lot at work, and the thought of having a vehicle no one in my family had made this Gen Xer forget about the issues pointed out to me in the reviews I read.

As for the VIP treatment, why not? Heck, I know of a few dentist offices that could heed that advice. But, yeah, if they came ready to buy, shouldn’t you be ready to sell. Besides, isn’t your dealership’s sales process designed to keep customers moving so they don’t have time to second guess their decision to buy. So I guess being ready for them and not making them wait isn’t asking too much, right?

I totally agreed with the texting recommendation. In fact, I had a millennial colleague at my previous gig who came to me for advice on buying a car. A couple of days after we talked, she returned to show me how the deal went down. I write “show”, because she handed me her iPhone to show me the texting exchange she had with her salesman. In his last message, he told her she owed him for getting management to agree to her price. He then asked her out for coffee, which you probably shouldn’t do.

I also agree with the LinkedIn advice. The social media site was my go-to source for learning about people I needed to interview for a magazine article. And I just hated it when an interviewee’s LinkedIn profile had no photo and his or her “Experience” section only listed company names and titles.

In fact, I’ve used LinkedIn to look up my son’s baseball coach and fielding instructor, his tennis coach, teacher, an email solicitor, and someone who liked (or hated) a social media post I made or an article I wrote. And, yes, I even looked up the guy who sold me my last car.

So I guess that list contains solid advice, and maybe this Gen Xer was just being — as Dorsey describes my kind — his typical “skeptical,” “cynical” self. By the way, Dorsey also says Gen Xers make great managers and leaders because we dive into the details. Who am I to question an expert, right?

What I find interesting, and I’m sorry for the shameless plug, is many of our most recent updates to our DealerSocket CRM address Dorsey’s recommendations. Last month, for instance, our product teams rolled out a new mobile-optimized widget for our DealerFire websites. It’s designed to connect car buyers who request a text conversation to users of our CRM through our SocketTalk texting tool.

Earlier this year, we rolled out the capability to send walk-around videos (up to 500 MB, or roughly two minutes) and vehicle images through SocketTalk. The texting tool can also receive images and videos, a capability your used-car manager can use to get a head start on appraising a customer’s trade. Oh, and we also added an emoji keyboard to SocketTalk.

The CRM release that really speaks to Dorsey’s recommendations, particularly tip No. 2, is SocketCredit. After having a positive exchange via SocketTalk, imagine being able to text a link to our SocketCredit credit application or a request to perform a soft pull on the customer’s credit. Heck, you can even mention to them that the soft pull won’t harm their credit. Hey, Gen Y knows how hard credit pulls ding their scores, thanks to their baby boomer parents.

Talk about a connected retail experience, right?

Dorsey also offered great insights in “Decoding Gen Z the car buyer,” a report DealerSocket developed in conjunction with Automotive News. Born after 1996, Gen Z is entering the workforce by the tens of millions while wielding roughly $3 trillion in purchasing power. The article breaks down the vehicles Gen Z wants and how they want to buy them.

There is an economic storm brewing, and it goes by the name Generation Z. The generation whose oldest members are now 23 years old are entering the workforce and beginning to make their impact felt as up and coming consumers.

Gen Z has never known a world where there wasn’t, literally, “an app for that.” They’ve grown up surrounded by smartphones and tablets and think about the world differently than previous generations.

This begs the question…how do we work with, and market and sell to this generation? Specifically, how does the automotive industry harness the power of this storm and ride the wave into future prosperity?

It’s a great question, especially considering this generation’s experience with (and desire for) ridesharing and digital retailing at their fingertips.

The research shows Gen Z is also more frugal and shyer about taking on debt. Having come of age during and in the aftermath of the Great Recession, they view finances almost on-par with the Silent and Greatest Generations that came of age during the Great Depression. That presents an interesting conundrum for an industry that relies on leasing and financing of their product.

We at DealerSocket think working with, and marketing and selling to Generation Z is going to be an important part of a dealership’s business for years to come. That’s why we’ve invited noted generational researcher and speaker Jason Dorsey to be our keynote speaker at DealerSocket’s User Summit.

Check out what he has to say for himself:

Want to see him in person? Register today!

No matter what generation you are, we’ll save you a seat.

Read more about what Jason has to say on Gen Z buying behaviors in a recent DealerSocket-sponsored AutoNews article on Decoding Gen Z the car buyer.

Whether you work in a single rooftop or part of a 10-store group, there is a good chance the person to your left, your right, and in the mirror have the same primary skillset – they’re great at selling cars.

Heavy emphasis on selling as many vehicles as possible and the absence of dedicated compliance experts on staff can make the credit gathering process tricky. In some dealerships, the receptionist doubles as the head of accounting. Sometimes that works out great. Other times…not so much, and that puts a dealership in very real danger of running afoul in this highly-charged regulatory environment.

“We all have the same problem – our skill set in the dealership has always been customer-centric and process and sales-driven,” said Rob Zandi, Director of Compliance for Ken Garff Automotive Group. “Many dealerships don’t even understand how vulnerable they are to different types of compliance issues and process issues.”

The automotive industry is heavily regulated and dealerships of all shapes and sizes are going to see more buy-backs if they fail to adhere, but the reality is, not every dealership has the resources to add a dedicated Compliance Manager to their staff, let alone an entire compliance team.

DealerSocket built SocketCredit to reduce buy-backs and mitigate risk, even for dealers who unable to hire a full-time compliance team like some of the bigger groups.

It’s all about process. Implementing SocketCredit gives you a built-in accountability process to lean on if you’re ever called into question on some commonly missed red flags, with detailed records to back yourself up.

OR…you can hope a team of salespeople with aggressive revenue goals and little to no formal credit compliance training never fall victim to credit fraud, and fine details are never missed, causing buy-backs and costing you money.

Not everyone has the resources to completely staff up from a compliance standpoint, but SocketCredit is one way to invest in your processes to ensure you accomplish your main goal, which is to sell more vehicles and keep more money.

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This content may express opinions and ideas that are not intended to be official statements from DealerSocket, Inc.

In my previous life as a magazine editor, I always enjoyed clicking or walking into a digital retailing debate between a car person and some tech vendor. The discussion always played out the same. The tech vendor would tout Carvana’s ecommerce capabilities and the car person would always respond the same way: When is the last time Carvana generated a profit?

Checkmate, right?

In fact, Carvana’s losses have expanded since it announced a $64.5 million loss in 2018, and the latest word on the online used-car retailer is it’s at least two years away from breaking even. But something happened in April that changes that discussion: Carvana debuted at No. 8 on Automotive News’ list of Top 100 retailers based on used-vehicle retail sales.

And, well, it didn’t take long to see how this news impacted dealers, as the feat came up during a recent interview with a general manager for a case study I was assigned. He made it clear Carvana‘s and even CarMax’s digital retailing exploits had spurred him to act.

And this was no “modernist” car guy. This was a general manager who cut his teeth in the business in the late ‘90s, is a traditionalist who has no love for TrueCar, and admits he’s not great with computers but believes he’s a quick study. He is also “open to change” in a “business that’s forever changing,” and he is just now dipping his toe in the digital waters.

That means the GM is asking the tough questions these days. Should he move to a one-price, no-haggle pricing strategy? Will he need less salespeople? What about the F&I office? Does a move to digital retailing mean promoting incentives on his site, a practice his store has stayed away from to avoid customer misunderstandings and any regulatory entanglements? And how does he align his showroom process to seamless take the digital baton once a customer hits the “Buy Now” button?

More importantly, this GM is wondering how to get it all done while keeping the metal moving over the curb.

To me, the questions he’s asking and the concerns he’s raising tell me the industry is making significant strides toward the Digital Age. In other words, I’m hearing less “why” and more “how.” While I plan to address the “how” in upcoming blog posts, I need to clarify my attempt to explain the “why” in a recent article I wrote for Dealer Magazine.

See, I called digital retailing a dealer website’s “greatest conversion tool — a payment calculator on steroids that can turn internet shoppers into showroom buyers.”

I still believe that wholeheartedly. The problem with that description is it cheapens what digital retailing really is, and that’s an experience. The beauty is you, the dealer, get to define what that experience is.

Should it be restricted to only your website? Should it be more of a blended experience, where deals started online are completed in the showroom? Think omnichannel.

The GM I spoke with also touched on something else I think fits under the “why” category. He had only been on our platform for a couple of months and had yet to promote his site’s new ecommerce capabilities when he noted: “Right now, it looks like I’m getting a lot of people using the tool, but I’m not getting any leads from it.”

Folks, this isn’t “Field of Dreams,” where if you build it, they will come. This is a new experience for everybody, customers included. In other words, they also need time to digest this new and developing reality.

Now, consider that only about 10% of shoppers are going to complete whatever digital retailing process you employ, at least that’s what every digital retailing provider will tell you. Hey, if consumers were really ready to buy cars online, your website would be exploding with completed credit apps. I’m guessing that’s not the case.

And that’s why digital retailing needs to be judged by the activity it generates, not the leads or sales it serves up. That’s because every deal a customer configures puts him or her closer to your showroom — at least for now. I know that’s a tough pill to swallow in an industry that coined terms like “be-backs” to describe indecisive customers. Hey, this is a results-driven business for which every dollar is accounted. But just like our store processes, consumers need time to get comfortable with this new reality.

So what’s your take? Email it to me at

This content may express opinions and ideas that are not intended to be official statements from DealerSocket, Inc.

Inventory success in 2019 will depend on how you answer the following question: Do you have a policy or plan when it comes to aging inventory. Most dealers will say they have a policy when a unit reaches 60 or 90 days, but a policy isn’t a plan. What’s the difference?

Well, what’s the process when a vehicle reaches 15, 30, 60, or 90 days? What will you do differently to merchandize units? How are you going to price those vehicles? Are you going to place those aging units in different spots on your lot? Bottom line, what are you going to do differently with a unit as it ages through its lifecycle?

The answers to those questions need to be in your written plan.

Virtual Merchandising

You also have to look internally and ask the following: How long does it take to get photos on a car? What about a description? How long do you price a unit competitively? If your inventory management system can’t report on those statuses, you’re operating blind.

We have very successful dealers who can have a vehicle they just took on a trade merchandised on their site within two to three days. And what they’re doing is giving themselves an extra week or two to sell the car. It may not be frontline ready, but it’s available virtually to everybody in the market.

Profit vs. Turn

I want to finish up this piece with one other trend, which I think is critically important. See, one of our competitors in the inventory management space announced a major change in philosophy earlier this year. See, the biggest difference between us and everyone else leading up to that announcement is that we, here at DealerSocket, have always looked at how well a dealer performs on a particular unit. And for those vehicles the dealer does well on from a profitability standpoint, well, there’s no reason to get down in the gutter with every other dealership engaged in a race-to-the-bottom pricing war.

See, DealerSocket has always believed every lot unit deserves a chance to be sold at a profit. We’re glad our competition has finally come around, because a race to the bottom is no way to conduct business.

This content may express opinions and ideas that are not intended to be official statements from DealerSocket, Inc.

I recently reconnected with an old friend and one of my most reliable magazine columnists, special finance guru Greg Goebel. We talked about the keys to inventory success this year and beyond. In fact, my recommendation last week for conducting a credit bureau analysis was all Greg. This week I wanted to talk about another one of his recommendations: having discipline in the auction lanes.

Specifically, I wanted to talk about the importance of knowing which lane, auction or sourcing channel gets you the right vehicles for your market, your operation, and your finance sources. Yeah, it could be a GSA or CarMax auction, running buy-back ads on Facebook or working Craigslist and Facebook Marketplace. It could also mean standing in the off-rental lane vs. spending your day at the auction in the lane with one-owner, local trades.

Yes, winning at the auction could be as simple as being in the right lane. But I bet you knew that. The hard part, as Greg told me, is having the discipline to stay in your lane.

Greg also shared a recommendation for those of you clicking onto those online auctions. He said buyers need to talk to dealers who have experienced the digital auctions their considering. What you need to know is how well the auction’s condition reports reflect the true condition of the vehicles going through its digital lane.

Hey, condition reports can vary from auction to auction. Sometimes things get missed; sometimes bigger operations get preferential treatment. It’s why Greg recommends against buying older, high-mileage vehicles from an online auction.

My last comment on inventory sourcing has to do with vehicle history reports. See, today’s car buyer has been trained to look for things like vehicle history, damage, accidents, and ownership — factors that will impact how you price a vehicle. So, not only do you need to consider what’s on a report when appraising a vehicle, you need to know how something like an insurance claim impacts how you price it.

This content may express opinions and ideas that are not intended to be official statements from DealerSocket, Inc.

As the old saying goes, it takes 30 days to get into an inventory problem, but it takes a minimum of 90 days to get out of one. Given some of the chatter about further tightening in auto finance this year due to rising delinquencies, steering away from trouble in 2019 and beyond may require more than a good grasp of what does well in your market.

The New York Federal Reserve Bank raised alarms in February when it reported that a record seven million Americans were 90 days delinquent on their auto loans to close out 2019. Experian provided some perspective 16 days later, reporting that only about 3% of the 89 million active automotive loans and leases were 30 or 60 days delinquent by the end of the year.

I’m not going doom and gloom on you, but the media and some industry insiders have been predicting further credit tightening this year since growing delinquencies and losses caused banks to pull back from subprime in 2016. That tightening culminated in subprime auto loans plunging in the third quarter of 2018 to their lowest level in 11 years.

Guidelines have since loosened, with the New York Fed reporting that the share of loans made to car buyers with subprime credit inched up in the first quarter from 18.9% to 20.1%.

What I’m getting at is what happens in finance needs to be part of your inventory strategy, especially as the pendulum swings more toward pre-owned thanks to record-high, new-vehicle transaction prices.

That means you need to get with your finance sources and ask them how they advance on a vehicle, what books they reference, and what the term will be for mileage. I’d even suggest taking a page out of special finance guru Greg Goebel’s playbook and conducting a credit bureau analysis. What you need is a credit tier profile on your customers.

Then let all that research guide your inventory sourcing strategy, even if it means passing on a vehicle you can buy right. Otherwise, your customers will pay in the form of down payment or trade equity if the vehicle doesn’t meet the guidelines of your finance sources.

This content may express opinions and ideas that are not intended to be official statements from DealerSocket, Inc.