Both dealers and vendors are beginning to realize that online platforms like google analytics play an important role in a dealership’s digital marketing strategy, and our guest today knows better than anyone, the importance of independent marketing measurements. We’re excited to welcome back Brian Pasch, CEO, and founder of the PCG Companies and host of Auto Marketing Now right here on the CBT Automotive Network. Today, Jim and Brian discuss some of the concrete tools that help dealers understand which marketing practices bring in customers.
Jim Fitzpatrick: Brian, so glad that you could take the time out of your very busy schedule. Man, I follow you on Facebook and you are crisscrossing the world.
Brian Pasch: It’s been a busy year. I think the busiest in my 13 years in automotive [crosstalk 00:00:53]. But exciting. There’s a lot of really exciting things happening in our industry that we need to talk about.
Jim Fitzpatrick: Well talk to us about the automotive analytics and attributions summit. What are the hot topics out there?
Brian Pasch: So obviously analytics and attributions were a part of it. I had 90 people come out to a Google Analytics seven-hour workshop which was an amazing accomplishment. So I was very pleased to hear that Cox and CDK and other big players are embracing more support for Google Analytics so the dealer can look at their dashboard and Google Analytics, compare. What we don’t have is an independent way to inspect the attribution levels.
Jim Fitzpatrick: And dealers are still struggling with that very issue, the attribution right? Spending so much money, where is it actually coming from? And am I just following that very last click at the bottom of that funnel to go, oh, here’s where it came from.
Brian Pasch: Well I did a keynote and it kind of blew the audience’s mind talking about the Google tax and we as an industry have to take a step back and look what’s changed. So we had some very interesting conversations about how we should be looking at our marketing and I threw out the gauntlet is that we need to see what incremental new shoppers the marketing is bringing.
Writing off the dealers’ name in paid search or organic and taking full credit is really not the right thing. It doesn’t make any logical sense to a dealer and it doesn’t help them see, hey if I did this, I got more new shoppers. Not people who knew my name, but net new shoppers.
Jim Fitzpatrick: Right. Right. And we pay dearly in this industry for the net new shopper, don’t we? I mean if a dealership stopped advertising tomorrow, what would you say the percentage would be at an average dealership? Toyota, Chevy, Mazda, whatever it might be. How many sales of the 200 they were doing a month would they continue to do?
Brian Pasch: Well one of the speakers actually was challenged with that question and he said, listen, if you advertise every month, you can’t test anything. Which was the first time I heard that kind of an extreme thing. I’ve also challenged dealers for a 90 day period, if they’re spending a lot on buying their own name to stop that for 90 days. Reach out to me, we set up the benchmarks.
So I think that what you’re suggesting isn’t that crazy because we know that shoppers are in-market for 30 or 60 days. We know that the brand awareness is pretty strong. Free things like Google my business will still brings people to the dealer’s website. The real question is dealers are so addicted to spending every month, it’s almost unthinkable for them to do a cold turkey test.
Jim Fitzpatrick: Right and at the end of the day for the average dealership that writes a 1000, 1500 RO’s, let’s say, they’re going to get their service business. So there’s going to be business [crosstalk 00:03:51].
Brian Pasch: There is business. The question is in today’s world where we have some attribution tools, we have better data. Can we help dealers find net new shoppers? And one of the things that was thrown out for a challenge to the audience is that if you’re 100% digital, are you really capturing the whole audience? And I’ve tested this and the answer is no. There are dealers say I’m a 100% digital and proud, then I’m saying, well you’re kind of stupid too [crosstalk 00:04:18].
Because for example, we saw data that was Set Top Box data and Polk data, dealers can see what channels consumers are watching and to be able to target a very wide audience that may not be clicking on Google ads, may not be on Facebook, so I think today, cable’s gonna get a resurgence because of their digital marketing strategy and I think people are gonna get a little bit more sober on how do they spend on Google to find the better marketing.
Jim Fitzpatrick: From your perspective, and you work with a lot of dealers and now world traveler, where are we in your perspective in the digital retailing world. Where’s it going? And how long is it going to take us to get there? In your opinion?
Brian Pasch: In my new book called “Just Faster” with co-author Thomas Gage, we tackle the whole digital retailing ecosystem and we came up with levels, automation levels. That talk about different feature sets that are available to the consumer with the highest level, B7. For most dealers today, they don’t have digital retailing tools, they have shopping tools. Approximate payments, appropriate credit score, approximate trade in and that’s been fine.
So one of the sobering pieces is that, hey, if we don’t have great trade in tools, if we don’t have consumers who know their credit score, if we don’t have the right selling price, is digital retailing ever going to be penny perfect online? So people are saying penny perfect, but the infrastructure still has some potholes.
Jim Fitzpatrick: So how do companies like Carvana, how are they doing it? There’s nobody that’s watching this right now that hasn’t seen the commercial of that vehicle getting delivered right to the front door and kind of a joke made of car salesmen and the traditional lot so to speak.
Brian Pasch: So there’s big difference between the new car and the used car right? So what Carvana has done is automate that paperwork process.
Jim Fitzpatrick: Like a DocuSign deal?
Brian Pasch: Everything is pretty simple. But I think what separates the new car and the used cars is there’s a tremendous amount of complications. Used car side is much easier, also, the biggest challenge for digital retailing isn’t technology, I want to go on record with that, it’s process. It’s culture. Everyone said the same thing. If there’s no buy-in at the top of the dealership, then we need to create a retail experience that consumers like. It may still take the same amount of time to buy a car, but let the consumer shift it to, I want to do a little bit at home, a little bit at the office [crosstalk 00:07:13]
Jim Fitzpatrick: Kind of a hybrid of the [crosstalk 00:07:15]
Brian Pasch: That’s right. Meaning give people the ability to buy a car the way they want to. If we look at today, where we are today, we need a playbook for how do we change the culture at a dealership from a traditional model to a more consumer-centric, transparent one.
Jim Fitzpatrick: So I know you work with a lot of the big OEM’s out there. They come to you and say what’s going on in digital and you had a great relationship with them. Do they want digital retailing in their stores? Are they fighting it or are they a proponent of it, an advocate?
Brian Pasch: From the OEM’s we interviewed for the book, they 100% believe that we need to protect our brand. I’m talking for the OEM. We need to protect our brand and our market share. One OEM said I’d like to be the first in-market when a consumer thinks of our brand as the easiest brand to buy a car from. And I thought that was really a beautiful way of saying that we don’t know exactly what consumers want or what the tools, but when we surveyed consumers the book is called “Just Faster” because the number one thing, they wanted the process to be was faster.
And so their perception of speed was important so I think the OEM’s, and I think in 2019, we’re gonna see a push either single solution like Ford is doing AutoFi and encouraging their dealers to test AutoFi. Other OEM’s are going to be offering maybe two or three. I think every OEM is gonna have a stance and a strategy in 2019.
Jim Fitzpatrick: So you think we’re just kind of wading in the waters right now and just saying take one slow step at a time.
Brian Pasch: We are. We are still in the early innings, but here’s what I do believe. Dealers who are willing to embrace change, start with the culture, test different technology. It may take them a year, maybe take them two years to really have a well-oiled machine, but those people will have higher CSI. They will have better reviews. They will be more aligned with what the consumer wants and I think they’ll increase market share.
Jim: Yeah. I would agree. But your message today is definitely they need to get started on some [crosstalk 00:09:22] degree of a process.
Brian Pasch: It’s starting now and I’m working on a number of projects, going into dealerships, looking at their process and one of the big things, which I haven’t got my head around, but some of the most successful, digital retailing installations are single point of contact. Meaning when the consumer calls and says I want to buy a Honda Accord at Schomp, the salesperson they speak to the first time is the only person that they deal with during the entire transaction.
Jim Fitzpatrick: Including F&I.
Brian Pasch: Including F&I and the meet and greet. Now the Morris Auto Group is testing not only the shop platform, but this single point of contact and Karl Schmitt shared with me, he said Brian, single point of contact, boom. We saw an immediate lift. But of course, think about that. We’ve been in a BDC centric model for a long time [crosstalk 00:10:18]. And people have built BDC’s and shut down BDC’s. We’ve been going back and forth. But no one has said how do you scale single point of contact?
Now Shomp has 140 salespeople, they’ve figured it out. But it makes sense to me, if I wanted to buy my next car, I would like a single point of contact.
Jim Fitzpatrick: Sure. Well, I appreciate all your time today. Before you get out of here, if I’m running my dealership today and we’re heading into 2019, some experts, some analysts say, there might be some headwinds in 2019. Might not be crushing 17 million SAR in 2019. Everybody’s got to tighten up, make sure their efficiencies are there and such. Certainly, marketing plays a big role in that. What are you telling your marketing managers and your agencies today to ensure … What are the things they need to focus on to ensure a successful 2019?
Brian Pasch: I think that looking at hundreds of dealers marketing budgets a year from large public groups to single point stores, because dealers were never trained on how to inspect their marketing data, I see consistently still 30 to 40% of ineffective spend. And if there’s headwinds and labor costs continue to go up, insurance costs, floor planning costs, we have a lot of upward pressure on margins.
We need to eliminate waste so one of the things I’m encouraging dealers to do is to get serious about inspecting what they’re getting, put the proper framework in place because for example, if a dealer’s spending $50,000 a month, which is not an [crosstalk 00:11:58] unreasonable number on their marketing and $15,000 is not effective, I mean imagine what you could do with that $15,000. You could put it to the bottom line for one, but you may have said, hey I got out of cable, let me do some cable spots. Or hey, I got out of some targeted direct mail, meaning you have money to test and reinvent. Somebody at our conference mentioned that the next gen. Is that Gen Z or something? I don’t know.
Loved direct mail. The first time I heard it, he just said that out of all population groups, the fact that someone took the time to send them something personal. Because they maybe are playing Fortnight all night, I don’t know.
Jim Fitzpatrick: What’s next? Phone calls? Personal phone calls?
Brian Pasch: I don’t know, but we need with the challenges that are coming, just with rising interest rates alone, are taking a cut out of profits. We need to be as efficient as possible.
Jim Fitzpatrick: Well Brian, I want to thank you so much for joining us and spending so much time with us on CBT. This is great. And certainly, all of your contribution over the years, so thank you so much.
Brian Pasch: Thank you.
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