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Archives for July 2011

Dealers In California May Be Forced To Change The Way Salespeople Are Paid

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In a class action lawsuit filed on June 21, 2011 against AutoNation (Santa Clara Superior Court, entitled Lilly v. AutoNation, Case No. 1-11-CV-203569), attorneys are claiming that AutoNation is in violation of the California Labor Code by misclassifying commissioned sales reps as exempt from overtime and, in addition, issuing deduct vouchers post-sale for losses in commissionable gross due to repair or service costs incurred.


It’s standard practice in California to consider minimum wage as a “draw” against commissions. This hourly wage is only paid if the salesperson’s commissions for any pay period are less than commissions earned (ie. they would get the higher of the two amounts – commissions or hourly wages). Many dealers “settle up” at month end with the salespeople meaning the view the commissions/hourly wages on a monthly basis (versus a pay period). California labor law mandates that overtime be paid for any hours over 8 in a DAY, not by 40 hours in a week. (ie. If I worked 12 hours the whole week but all in one day, I would be due 4 hours overtime even though I only worked one day that week.)

We all know that salespeople work A LOT especially hungry ones. Many salespeople who aren’t making a ton of commissions will make sure they work a lot of hours to insure that they get a decent check in the first place. Of course a salesperson that is getting paid hourly too many times has a short lifespan within a dealership.

Now onto the deduct vouchers. Dealers in California pay commissions in one of two ways: upon approval, or upon funding. Most dealers pay upon approval. This is designed so that salespeople don’t have to wait forever to earn their paychecks and dealers don’t have to cough up minimum wage while the salesperson has unpaid commission vouchers pending funding. It’s also pretty common that grosses decrease post-sale for many reasons: a dealer has trouble with funding and/or has multiple approvals, spot-deliveries based solely upon credit, repairs and due bills completed post-sale, unforeseen bank fees, option contracts cashed in, back-end product cancellations, etc.

Typically, since vouchers are issued upon approval, those vouchers are issued based upon the gross at the time of delivery and/or approval and included in the salesperson’s check for the next pay period. If dealers cannot issue deduct vouchers for loss in gross, this will force dealers to restructure pay plans as something that was spot-delivered with a high front-end gross that gets cut back due to financing issues or any of the other reasons mentioned above, could go from a nice voucher for the salesperson to a mini. If the dealer continued to pay in the way that they are now, and could not issue deduct vouchers, they would risk losing money by issuing commission vouchers prematurely.

Then you have to consider that a sales manager would be forced to structure the deal differently taking into consideration potential cut-backs to take into account the future inability to issue a voucher. The only way to structure a new pay plan without risk to the dealer would be to issue the voucher upon funding which would open the dealer up to the possibility of having to pay the salesperson hourly wages (including overtime), while the salesperson had unissued commission vouchers pending funding. A salesperson who knew how to game the system and/or a passive F&I manager could further complicate things while awaiting stipulations from the customer.

In any case, dealers in California need to watch this pending litigation carefully as it could have a great impact on how they compensate their sales staff and, if the lawsuit is successful, would open up ALL dealers in California to future lawsuits for the same reason.

Right now, AutoNation is the only target, but your dealership could be next.

(Originally published July 22, 2011 on Dealer magazine)

Why The First Car Dealership Groupon Failed

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In a first, a dealership in Michigan partnered up with Groupon to offer Groupon’s first car buying groupon. The deal offered was $500 off the purchase of a vehicle for $199. Keep in mind that Groupon typically takes 50% of the price of the offer (in this case about $100) if the Groupon is successful (ie. meets the minimum purchase requirements). So in the event that the minimum of 10 deals were sold, this promotion would have cost the dealer $1,000. Not bad.. IF 10 cars were sold.

The deal failed. Why?

In my opinion, there are several reasons.

First, any kind of “deal” needs to have value to a consumer. This deal didn’t have that because consumers “expect” to negotiate with the dealer and $500 off the purchase of something that could cost $10,000-$40,000+ is just not “enough.” The deal itself cost $199 so, in reality, the consumer is only receiving a $301 discount.

Second, the offer needed a minimum of 10 people buying it for any of the 4 people that DID buy it to be able to use it. Since only 4 people bought it, those 4 people were never charged the $199 and the offer was never “live” for them to use. Obviously, if someone is willing to commit to spend $199 to get $301 off the price of a car, they are not only planning on buying one, but they are planning on buying it from THAT dealership. Seeing as the deal quantity wasn’t satisfied, you now have at least 4 people who think that either A) the deal isn’t a good one; B) something is wrong with the dealership; or C) all of the above. I highly doubt Groupon would provide the dealer with the names & contact information of those 4 people as that would circumvent Groupon getting any of the money.

Third, this Groupon, being the first of its kind, got some great press yet, when contacted, the General Sales Manager didn’t respond to inquiries. Those would have been golden opportunities for some exposure they wouldn’t have been able to buy. Rather than “seize the moment,” if you will, and take advantage of those opportunities, the General Sales Manager chose to engage potential buyers of this deal straight on Groupon in ways that, I feel, would have DETRACTED from the perceived value and may have actually discouraged customers from participating. Here are some of the comments he left:

VALUE GUARANTEE OFFER!!!!
In the unlikely event that we are unable to come to an agreement on a vehicle purchase/lease, for whatever reason, I will honor your voucher toward $199.00 in our service, parts or body shop departments. Purchase accessories, have routine maintenance done or have those annoying dings, dents and scratches repaired. 

So, now the General Sales Manager is saying pay $199 for the coupon and, even if you don’t buy a car, I’ll honor the coupon in our parts, service or body shop… in the amount of $199. Where’s the value there for a customer? That’s just pre-paying for things. Give me $199 and you can have $199 worth of “stuff.”.

William P visited our store yesterday. He selected and test drove the vehicle he was interested in. He worked out all of the pricing details with our sales staff until he was satisfied with the pricing. He THEN AND ONLY THEN explained he had purchased the Groupon voucher but needed a vehicle immediately. We reduced his amount due by $500.00 and honored the voucher in order to accommodate a customer. He took delivery today. We’re still confident that the sales requirement will be met.

This comment was left BEFORE the Groupon was satisfied (ie. 10 deals were sold) which further reinforced the fact that customers really didn’t need to purchase the Groupon to get the $500 discount since the above referenced customer, who may have “committed” to purchasing the Groupon, ultimately was never charged anything for the Groupon since the minimum quantity sold wasn’t met, making the Groupons invalid.

So, while customers are bantering within the comments of the deal over the true value of the Groupon, the General Sales Manager chose to try and convince everyone it was a really good deal and that they should buy it by making statements that detracted from the value of the offer and, at the same time, failed to take advantage of the free exposure. There were almost 50 articles written about this offer. All of which could have been turned into golden PR and marketing opportunities for the dealer – if the dealer had responded.

This is a perfect example of why you should carefully analyze any deals/social media offered on such a large scale. Many dealers have website pop-up coupons that have the same offer “$500 off a car.” In fact, this particular dealer has a STILL LIVE “special offer” pop-up which features the Groupon offer (even though it’s now expired), even further detracting from the value of the Groupon.

I’m not surprised that this offer failed. Groupon is ultimately in the business of making money. Since the deal r
equirements weren’t met (meaning nothing was sold), Groupon didn’t make any money further reducing the chance that they will participate in any future similar Groupon offers by dealers.

If you’re considering trying to run a deal via social media or bulk offer sites (ie. Groupon, Living Social, etc.), you need to make sure that the deal is truly a good value for the consumer and only offered via that promotion. The dealer could have leveraged this deal in many ways even if they didn’t sell any cars from it. As you can see, while this deal is not available to buy anymore, it still exists in internet-land both on their website and via search engines and it’s even on the first page of a Google search for “Lafontaine Auto”. This is almost as bad as having a negative review because it plants the seed to a prospective buyer that $500 off a car at your dealership isn’t worth $199, which, by extension implies that a $301 discount isn’t valuable.

Don’t jump into social media unless you know what you’re doing. If you do, your promotion can backfire, just as this one did.

How To: List Inventory On Your Facebook Wall & Succeed

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Facebook is designed and centered on engagement. Social media professionals all have various ideas on how you should do it and what works. My quick take on this is: whatever works for you – do that.

What do I mean by that? Facebook provides analytics on a per post basis. Use those to determine what types of content are causing your fans to interact with you. If people like jokes, post jokes. If people like to answer fun questions, ask fun questions. It’s that simple. I think pretty much EVERY social media professional will advise you, however, NOT to post your inventory to your Facebook page’s wall.

I absolutely agree BUT, I have found one very creative and unique dealership that can get away with it. In fact, not only can they get away with it, I LOOK FORWARD to seeing new inventory being posted to their Facebook wall. I’m not a buyer. They’re not my client. I’m not even in the same state that they are in.

How do they do it? By following one best practice and using massive creativity.

I doubt anyone would disagree that one fundamental best practice of internet marketing is to merchandise your inventory well through multiple photos and detailed descriptions. They do this, and they do it very well. EVERY car has photos and descriptions – new and used.

Do you still doubt that this dealer can post their inventory on their Facebook wall and get away with it? Certainly ONLY doing the above wouldn’t warrant that… BUT

…enter the creative part. Here are a few of examples of vehicle descriptions, cut and pasted straight from their website:

“You know, I feel so pure just sitting in this vehicle. It’s like I should put on a button up sweater and some sneakers and sing a melody like Mister Rogers. The vehicle has some type of Good Energy that removes the darkside. I’m going to put in a request to the Prison Board to have all inmates sit in one of these so they’ll become good honest citizens. A 2010 Chrysler 300 Touring with stellar fuel economy, 1 owner and factory warranty. $299 payment on 72 months with $0 down (with approved credit) is nothing short of a Disney movie (in this case, Disney, would be called our Finance Department). After you buy this, can we hold hands and go pick flowers?”

“Driving this makes me feel like I’m doing the waltz on Dancing with the Stars. Carrie-Anne Len and Bruno would be watching me from the audience and I have no doubt that their scores would all be 10. And if it wasn’t whoever gave me less would be run over. Yeah cause that’s how I roll. All 10’s all perfection because that’s what this lovely Journey is. 3rd Row Seating and killer fuel economy is INCREDIBLE. The only thing pathetic is that I’m selling it to you for this kind of price. The way it rides and handles is a dream come true. Call me the Genie in a Bottle because that’s what I do!!!”

“You’ve heard of Michael Myers from Halloween, yeah, well that’s like me at the dealership. I am a nightmare walker, price slashing talker. My machete is my pen and in the end you can NOT escape me. I don’t do a dance, I don’t run, I frigging just throw the ax that says my vehicle still has a moonroof, all power amenities on the inside,1 Owner, and killer fuel economy for an SUV. So think of it as a horror flick but in a good exciting kind of way. You can’t stop me. Just let me do the deed…SAVING YOU MONEY!!!”

I’ve been watching them for a while. I look forward to seeing new inventory shared on their wall. In this highly competitive market, you need something that sets you a part from all of the other 1,000 similar vehicles for sale. These descriptions undoubtedly also get sent to all the websites they participate in. At times, I browse their website JUST to read vehicle descriptions.

If I were a consumer, in their market, do you think this dealer would be memorable to me? Absolutely. Would you look forward to reading these descriptions? I bet you’re already on their website checking them out.

The person that writes these descriptions is a genius and needs a raise and THIS is how you can market your inventory via social media and not only get away with it but have your fans looking forward to more.

(For more information, and to see what I consider to be one of the best inventory marketing dealers I’ve ever seen, check out their website at http://www.bigredsports.com and check out their Facebook page at http://www.facebook.com/bigred.sportsimports)

How Social Media Campaigns Can Fall Apart

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(originally published on Dealer magazine)

Social Media marketing isn’t just about “doing it.” If you want to succeed, all of the pieces must fit together. You must be committed to doing it.. all of it.. not just some of it.

In this real-life example, I’ll be referring to a few things that I want to define for those unfamiliar with them.

1.       Klout – Klout is a company that measures a person’s social media influence by monitoring their usage and actions from others in relation to it. Think of it like a credit score. The highest score is 100. My Klout is currently 61, which is very good. Klout stated that the average users Klout score is 11.

2.       Klout Perks – Klout Perks is a service offered by Klout to companies that want to target influential social media users. These companies make offers, through Klout Perks, to these users in the hopes that they will talk about it via social media (ie. passes to movie screenings, etc.)

3.       SCVNGR – SCVNGR is a location-based marketing service businesses use to create engagement and drive traffic to their location. Campaigns can be as small or as elaborate as the company wants to make it. Consumers check-in at the business locations and complete specific tasks to earn points towards rewards and/or badges (Think: 20% off your purchase or a free soda, etc)

Now, onto the story…

Subway restaurants recently ran a cross promotion with Warner Brothers for their new movie “The Green Lantern” through SCVNGR. The promotion involved using the SCVNGR mobile app to visit Subway restaurants and complete tasks to earn a free movie ticket to see The Green Lantern. They were only giving out 1,200 tickets so I jumped on it and visited my nearest Subway restaurant two days in a row to complete the tasks necessary to unlock this reward. I did so and SCVNGR delivered to me a free movie ticket (Hey, who doesn’t like free stuff?). Life was good. I liked Subway and appreciated the free movie ticket.

At the same time, Subway was also apparently running a campaign with Klout through their Klout Perks program to offer selected influential social media users a free $10 Subway gift card to try out their newest sub sandwich. That offer was extended to me and I accepted it.I liked Subway even more.

It goes downhill from here…

So, the Subway gift card comes in the mail. I’m not sure who actually sends these gift cards out (whether it’s Klout or Subway), but it comes with postage due of .63 cents. OK, some people make mistakes and I still got $9.37 free food at Subway. No big deal but I tweeted this:

Got offered a $10 @Subway gift card from @KloutPerks and when I got it, it came with $1 in postage due. Still appreciated but funny.

So, I take my wife to see The Green Lantern and, afterwards, decide to visit Subway to use the gift card offer Subway extended to me. I arrive at Subway at 9:50pm and it closes at 10pm. I don’t know off the top of my head what time they close, but I see lights on and I see people inside. As I approach the door, I see the store’s posted hours inform me that they are open until 10pm. When I go to open the door, it’s locked. I get the attention of an employee who comes to the door and informs me that they are closed. I bring it to her attention that it’s not yet 10pm and she tells me that the owner called her and told her to close early. Now remember, there are still people in the store and a couple is even at the counter ordering and, frankly, I don’t believe her.

Frustrated, I go to my car and tweet this:

Went to @Subway before 10pm and they were inside but decided to close early. Said the owner told them to. #fail #lazy #badliars

Frustrated, but still hungry, I left Subway and went to Little Caesars Pizza.

As a social media person, I wanted to see if anyone was paying attention at all, or cared, so I tweeted this:

@Subway @kloutperks Tried to use $10 gift card last night but the employees wouldn’t let me in even though it was 10 minutes b4 closing #fail

Did I ever get a response from either Klout Perks (who was paid to run the promotion) or Subway (who paid to run it)?

No. Not even a peep.

So instead of me tweeting and raving about The Green Lantern movie, the Klout Perks offer from Subway, or their new sandwich which was the whole point of these promotions, what they did was take a customer who engaged them and started happy and turned me into a customer tweeting negative comments. I certainly didn’t hold Subway corporate responsible for the local franchise’s failure, but I did assume that they were active on Twitter so when I heard nothing in response to my concerns, that further frustrated me and left me with the impression that they didn’t care.

The point of this article is to illustrate that merely running a social media campaign in and of itself is not sufficient. If you’re going to enter the social media space at all, you better be prepared to monitor and support the campaign. Failing to do this will result in accomplishing the opposite of what you intended.

The bottom line is that Subway spent money on a social media marketing campaign and Little Caesars Pizza got my money.

(Note: While writing this article, I discovered by chance that while Subway does own the @Subway twitter account, they are not active on it at all. Instead, for whatever stupid reason, they re-direct people from that account to a @subwayfreshbuzz account, which they seem very active on. Why on earth they wouldn’t monitor the other account or, at the very least, monitor mentions of their restaurants is beyond me and a big fail.)

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