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A Big Old Can of Nonsense: Who Needs Loyal Customers Anyways?

August 2, 2016 By Arnold Tijerina

With all of the recent epiphanies that thought leaders in ours and other industries that businesses should be spending time and effort cultivating relationships, spending money and basically treating customers right, I thought it time to re-visit this whole “customer loyalty” phenomenon. Customers don’t really care about car dealers, do they? I mean, dealers are ranked below Congress in surveys about trustworthiness. They don’t like coming to dealerships for ANY reason much less to buy a car. In fact, companies are popping up out of the woodwork with the sole benefit of making it possible for people to buy cars WITHOUT going to dealerships.

We know through many articles and trends that customer loyalty is dead. The Gen Y and Millennial generations could care less who they do business with. Sure, they’ll show up for that $19.95 oil change special but is it because they’re loyal? No! It’s because it’s a deal. And believe me when I say that they will eagerly go to another dealership the next time they need their vehicle serviced that offers a coupon or special when you don’t have one at that time.

People need to buy – and service – cars and regardless of whether you’re a franchised, independent or buy here, pay here lot, dealers are all they have. It’s way too much work for consumers to obtain financing, process paperwork and facilitate a private party sales transaction. In addition, most of these are “as-is” transactions so they’re essentially throwing the dice hoping they aren’t getting a lemon.

As for service, there’s a Jiffy Lube or other independent auto service center promising convenient, fast and friendly oil changes upon demand. Sure, maybe they’re using generic parts that might not fit perfectly but are serviceable. Who cares? They’re cheaper, right? Who needs certified technicians, nice waiting areas or free coffee? They’d rather go buy a $12 Triple, Venti, Half Sweet, Non-Fat, Caramel Macchiato than drink the Keurig produced coffee dealers provide for them.

As a business, dealerships have been wildly successful acquiring new customers for the past decades. It’s easy. Sure, maybe it’s gotten more expensive over the years but what’s $640 per customer when dealers can high gross them on the huge profit margins manufacturers give them to work with.

And rewards? Really? Dealers are seriously expected – yes, expected – to give away free stuff to customers who happen to give them money? Get serious.

The bottom line is that dealers sell and service cars. Dealers have this industry so tightly wrapped up and in control that even Elon Musk with all his money, influence and consumer backing can’t even manage to convince many states to let him sell his cars direct to consumers. The new companies promising excellent customer experiences and complete online transactions account for such a small percentage of sales that they’re inconsequential. Consumers HAVE to buy their cars from a dealership and they certainly have a monopoly on warranty and recall work, too.

So let’s all just calm down and sit back while OEMs take used car inventories online and auction prices skyrocket (goodbye used car grosses), the NHTSA opens up recall work to independents (see you later recall revenue), the CFPB begins to regulate consumer financing (so long F&I reserve), new car front end margins shrink (you didn’t have these anyways) and complete online buying experiences become the preferred car purchasing experience…

Wait a minute. Who needs loyal customers? Dealers do.

Pokémon Go as A Traffic Driver to Dealerships

July 15, 2016 By Arnold Tijerina

So it’s been a long time since I wrote a blog (for myself, that is) but after attending Jim Ziegler’s Internet Battle Plan and watching a kid yell “I found a Pokémon!” then promptly walking into a wall then watching adult auto industry attendees, vendors and speakers choose to go Pokémon hunting rather than network with industry colleagues and dealers, it got me thinking. First, yes, I downloaded the app just to see what all of the fuss was about. My Pokémon Go experience lasted all of about 15 minutes. I’ve seen people argue that Pokémon Go is silly and a waste of time while also seeing others relay the benefits of the game including physical exercise, exploring one’s neighborhood and connecting with new people with (at least one) similar interest.

I probably wouldn’t have been even interested in exploring the app at all but for the fact that a client created a clever ad that tied into their business message and we started exploring ways in which we could exploit this trendy craze. Who knows how long this game’s popularity will last but, for now, it’s the hottest thing around. Playing to trending things is nothing new and if you can leverage it in a way that supports your message or drives business, I’m all for it (sans tragedies, politics and the other taboo topics).

In my research, I found that there are things called “lures” in the game. You get these by catching Pokémon and doing various things BUT you can also purchase them for $1 each through the app. These “lures” are like catnip to Pokémon and the area in which the lure is set shows up within the game to other players. Of course, seeing as the goal of the game is catching Pokémon, it’s easy to understand why dropping a lure (which lasts 30 minutes) would attract nearby players. For $1 per half-hour, a dealership could pretty much leverage lures to the tune of $20 per day (given a 10-hour business day) and get a fair share of explorers. [EDIT: A fellow automotive colleague and self-professed Pokémon Go addict informed me that lures can only be used at already established Pokéstops. I do know that there are businesses that have been designated as such so this strategy would only work if your dealership were already a Pokéstop apparently. The overall intent of the article is discuss the marketing opportunity soon to be available as described later in this article.]

There are also things called Pokéstops and gyms which naturally attract players but Niantic (the game’s creator) decides where these Pokéstops are located. Of course, the concentration of Pokémon or the ability to train them (level them up) make these popular places for players. While actual user numbers haven’t been released, I’ve seen articles that report that daily use of Pokémon Go is extremely close to surpassing the daily use of Twitter. That is huge.

Well, it looks like (unsurprisingly) that Pokémon Go is going to make it very easy for dealerships (or any business) to leverage their game to drive foot traffic to their location. Of course, a company that’s pulling in $1,000,000 (yes million) per day just through in-app purchases decided to commercialize by extending business sponsorship opportunities. It’s reportedly always been in their plans but, due to the super-fast popularity (including a 50% increase in Nintendo share price), those plans have been expedited. Soon, businesses (read: dealerships) will be able to pay to be a “sponsored location” which would (hypothetically) make the business an uber-popular place to visit for Pokémon Go players.

Seeing as the game’s developer, Niantic, is a spin-off owned by Google and the game engine itself uses Google Maps for the GPS function within the game (i.e. finding Pokémon) it’s no surprise that the revenue trigger (i.e. what needs to happen for revenue to be produced) has been altered from the traditional cost-per-click to one of cost-per-VISIT. Yup, you read that right.

Now, knowing that you’d be charged based on how many Pokémon Go players show up at your dealership, the question now becomes… Is that something you’d want to pay for? Are these people worth having around, running around your lot searching for these cartoon characters while staring at computer screens?

I was told of at least one dealer group that’s already running a promotion leveraging Pokémon Go by running a contest in which players explore the lot and, when they find a Pokémon, screenshotting the Pokémon at the dealership then sharing it to social media including Instagram and naming the dealership. This is a new promotion (just like the game) so I don’t know how it’ll work out for them but I wish them well.

In my opinion, whether a dealership should become a “sponsored location” will depend on several things – the dealership’s demographic and whether they want people running around looking for Pokémon rather than buying a car (I mean, even people really there to buy a car are staring at their phone showrooming you so you probably wouldn’t know the difference between the two unless one of them is 10 years old). The opposite side of that argument is that a busy lot snowballs and attracts other buyers. I mean, we do use inflatable gorillas and wavy tube men, right? Now you can have Pokémon hunters attracting others and forgo the gorilla. (I wonder if the gorillas and wavy tube men qualify for unemployment or food stamps.)

All of that being said, we don’t yet know what the “cost-per-visit” will be but my guess is that it will be determined just like any other Google advertising – based on bids. Get into an auto mall and that might get expensive. It could offer the kids something to do while the parents are shopping or you could see the parents hunting Pokémon WITH their kids. If you subscribe to the “happy, sense of community, getting out and meeting people” philosophy, it could be a way to make a name for yourself (or become a more popular destination) within your community. Of course, being a sponsored location probably won’t end when you lock the doors. There could easily be people jumping your blocker cars to explore your closed dealership just to hunt Pokémon. I may know of someone that might possibly have broken into a miniature golf course just to catch a Pokémon… but that’s just a story I was told so I totally have plausible deniability… besides I would plead the fifth anyways.

So what do you think? I’d love to hear from dealers and/or vendors on their thoughts as to whether this sponsored location option about to come around through Niantic, Nintendo, and Google via Pokémon Go is one that a dealership should consider.

Do I believe that it will make the dealership a popular place to visit? Yes. Do I think that it would increase foot traffic? Yes.

The real question is whether it is foot traffic that a dealership would want.

If You Can’t Keep What You Have, Getting Bigger Isn’t Going to Solve Anything

September 29, 2015 By Arnold Tijerina

There is little doubt in anyone’s mind that the millions of recalls are going to increase the demand for technicians while straining existing franchise dealer’s service departments. Manufacturers are desperately trying to convince dealers to take on expensive expansion projects in their service departments in an effort to avoid losing service business to independents. To this point, according to an article in Automotive News, FCA US announced that it will be launching on online analyzer that will allow dealers to calculate the potential revenue increases of additional service capacity and technicians. Dealers will be able to play with variables such as number of bays, technicians as well as toggle shift lengths to see whether the expenses involved will be fruitful. Of course, with the massive amount of available recall work in and of itself, my guess is that the calculator is pretty much going to show numbers in the black in most instances. The one piece of this article that really got my attention wasn’t the fact that a manufacturer is trying to get its dealers to expand their fixed ops capacity… no, it was this:

“Now, almost two-thirds of customers who buy new vehicles from FCA US dealerships are no longer visiting the dealerships for service one year after purchase.”

Wait. What?

So, FCA US is telling us that 2/3 of their new vehicle buyers defect from their dealerships’ service departments with, at minimum, two years left under warranty? Now, they’re trying to convince their dealers that they should expand their service departments? Something doesn’t add up here.

Sure, it makes sense that with almost 10 million recalled vehicles since 2014, FCA US is concerned about wait times for consumers to get their warranty work completed. The more completed recall work, the less liability for the automaker and a chance at retaining some brand loyalty.

FCA US has made some great strides and breakthrough initiatives in our industry as relates to employee retention by offering free college tuitions to all FCA US employees and dealership employees. They recognized that employee turnover in dealerships is unacceptable and hurts customer loyalty and stepped up to the plate to help dealers retain more employees by offering this one-of-a-kind benefit.

Perhaps FCA US should now shift it’s focus to what I see as a huge problem right now – the fact that, by their own numbers, their dealers only have a 33 percent customer retention rate average in service. It would only be logical to assume that the retention rate naturally decreases as more time passes. Wouldn’t it be easier to try and retain the 66% of the customers they are losing within a year of a new vehicle purchase before asking dealers to spend millions to expand service operations?

So now the dilemma, do you focus on retaining the water in the dyke frantically placing fingers in the holes just to see new ones appear? Or do you build a larger dyke?

I would suggest that perhaps increasing the size of the dyke would only create more holes in the long run. There may be more recall work but if dealers expand the sizes of their service departments, have a great run of service revenue for 3-4 years taking care of these 10 million vehicles only to find empty bays once everything settles down, that might hurt financially.

Just as FCA US saw a problem in employee retention and took initiative to fix it, perhaps they should now shift their gaze on what I see as a huge problem in customer retention in service. I’m pretty sure that if they don’t they will eventually run out of fingers and be forced to watch as all of the water leaves the dyke.

The Dislike Button: Facebook Is About To Open Pandora’s Box

September 15, 2015 By Arnold Tijerina

According to Business Insider, Facebook CEO Mark Zuckerberg announced today that Facebook is working on – finally – implementing a feature users have been clamoring for for years – the “dislike” button. In the interview, Zuckerberg explained that “what [people] really want is the ability to express empathy. Not every moment is a good moment” and that the addition of the dislike button was to allow users “an option to express feelings other than ‘liking.’”

While his sentiment – and goals – are good, I believe that Facebook is about to open a big giant can of whoop-ass. This action could easily become the equivalent of opening Pandora’s box – or Face-mageddon.

Let me explain.

I get it. Someone posts about a death in the family, an illness, an injury or just a bad life experience. We’ve all seen those and hesitate to interact using the “like” button ‘cause who wants to “like” someone’s tragedy? Facebook’s thought-process probably followed the lines of “if we give users a way to interact with those types of posts in a way that shows empathy (as Zuckerberg said) then.. well.. people will interact with more posts… which gives us more data. Don’t think for a moment that every article you share, post you like, comment you make or status you interact with in ANY WAY isn’t translated into Facebook’s mysterious algorithm that determines what is shown to you in your news feeds. In addition, I’m fairly certain it is also integrated into your Facebook user profile data… permanently.

Here are a few scenarios in which a dislike button is bad:

Right now, Facebook can only tell what type of content you interact with. It doesn’t know your personal feelings about that content unless you comment in a positive or negative way. There is already software designed to automatically identify positive vs negative sentiment. With the introduction of a “dislike” button, Facebook will now be able to better understand how you FELT about the content, not just the fact that you interacted with it.

Why is this important?

Let’s look at things that people post on Facebook… sports, religion, politics, guns… all things that could be very polarizing or controversial topics. We’ve all seen posts turn into bitter arguments. Heck, one of the most popular memes has got to be this one:

We love us some drama. Don’t deny it. How many reality shows exist again? Facebook is like one huge reality show except the actors are actually people you know.

Back to that list. Let’s go with the easy one first… sports. Are you a fan of (insert team name here)? If not, every time your friends post something positive about that team, you may feel inclined to hit that “dislike” button. Not only will this probably annoy your friends (especially if the “dislikes” outweigh the “likes”) but now Facebook knows that you more than likely do not like (inserted team). How will your friends know that you disliked their post? Well, you can already view the people that “like” your posts so I would guess it’s safe to assume that you’ll also be able to view the people that “dislike” it as well.

You see where I’m going? Religion. Politics. Gun Control. Gay Marriage. Kim Davis. Abortion. Hunting. Confederate Flags. Prayer in schools. Civil rights. Whomever’s Lives Matter (this week), Legalized drugs, Immigration Policies… this list could continue but I think you get my point.

Not only does a “dislike” button offer the option of inserting a passive-aggressive “vote”, if you will, on the subject matter rather than chiming in but it can also provide valuable data about YOU to Facebook. Instead of being forced to actually GIVE your opinion on a controversial topic, now you’ll simply be able to click a button and subtly share that opinion. I can’t wait to see friend’s calling other friends out in comments such as “Hey [friend], why’d you dislike this? You suck!” etc.

What about (God forbid!) someone “dislikes” something your BUSINESS (i.e. Facebook page) posts?

It’s really a pretty genius move on Facebook’s part. Its users have been asking for this forever… so now they’re giving it you them… and they can collect more data, keep you on Facebook longer and provide you with more content you like. Once it figures out you don’t like [insert team name, political figure, movement, etc here], it simply won’t show you that content any longer. Facebook will become a happy place full of Skittles, unicorns, puppies and motivational quotes… unless, that is, you don’t like Skittles, unicorns, puppies and motivational quotes. You know all of those “I’m going to flood Facebook with cartoon pictures to drown out all of the negativity” posts? Well, now you won’t have to anymore ‘cause Facebook will be your personal screener. Sort of like that poor guy who gets to taste all of the king’s food before the king eats it to check to see if it’s poisoned.

Perhaps advertisers will soon be able to start targeting “People who don’t like Donald Trump” or “People against gay marriage.” Even scarier is how ELSE could Facebook monetize this data. Can you imagine a world in which employers, insurance companies, government agencies, etc. could access this information? I can. And no, I’m not a paranoid conspiracy theorist. What I am, however, is a realist. Facebook is a public company that needs to find ways to monetize itself. It does that mainly through Facebook ads at the moment. That being said, we all know that data is money… and we certainly give it data. Lots of it.

Now they’ll be able to combine CONTEXT with ACTIONS and that’s a slippery slope into creating a more perfect data profile of a user which, of course, allows them to, at the very least, open up new ways for advertisers to better target their audiences. You better believe that Facebook will – and already is – keeping track of everything you do on it’s site. I’m sure that buried someplace in some Terms of Service document, by using Facebook, you’ve given them ownership of the data they collect about you. Now they’ll just get better insight (cough.. data) into your thoughts and beliefs as well.

Like one friend of mine said when I posted the article this blog refers to in the beginning, “ Oh, it’s about to get fun again.”

Yes, it is.

Compliance: Can You Be Harassed By A CRM?

February 4, 2015 By Arnold Tijerina

For the past 2 years, one of the items on my daily to-do list has been grading Internet leads for DealerKnows Consulting. This process involves assisting DealerKnows in monitoring the progress of their clients through monitoring the ISM’s lead handling within the CRM. This provides valuable insight into what exactly is happening with leads (i.e. is the store following the process installed through DealerKnows and, if not, what exactly is happening) and indicating where additional training is needed.

In one particular client ‘s CRM, I started noticing one of the employees tasked with responding to, and communicating with, Internet leads inputting questionable notes into the CRM. Keep in mind; he was not doing anything inappropriate in his communication with the customer but, at times, expressing his frustration and/or opinions of customers through notes in the CRM.

Notes like:

F$@k this bitch!
Screw this mooch!
What a stroke!
I hope this customer gets fired for being an a$$hole!

Now, I was in retail a long time. I understand his frustration. That being said, I mentioned to him and his manager that he shouldn’t be using derogatory terms in the CRM. First, this particular store works as a team (ie. the leads aren’t solely one person’s responsibility). Whoever is working when a call or email needs to be made handles it. In the past, this team was a bunch of guys. Recently, a female was added. I mentioned it again within the context of the fact that the notes bring negativity into the lead for the next person who looks at it. In addition, it could offend someone else looking at the lead within the CRM. Even a female member of DealerKnows chimed in that the notes offended her.

The real question, however, is not one of appropriateness but rather one of compliance and liability. I was curious as to whether there could be harassment or employment issues. In that spirit, I decided to contact an expert in automotive dealer compliance. I contacted the founder of Dealer Compliance Consultants, Jim Radogna, a longtime auto guy with over 15 years experience in just about every dealership management position, over 6 years experience in assisting dealerships with compliance as well as an avid writer and frequent speaker in the automotive industry.

His answer was simple:

“It doesn’t matter where offensive material resides. It can be comments in a CRM that others can view – on a computer screen, mobile device or hanging on a wall – if anyone sees it and is offended by it, it can create a hostile work environment and put the dealership at risk.

People often have such different perspectives on behaviors that it is easy to offend someone through ill-considered attempts at humor, teasing or sarcasm. Remember that only the impact, and not the intent, matters in determining if a reasonable person would consider the behavior to be harassment.”

I was in retail. I get it. Sometimes customers can be frustrating. Sometimes we (being salespeople, managers, etc.) express our frustrations verbally and, perhaps, everyone on the team (or within hearing distance) is okay with the language or sentiment.

The bottom line is that allowing or condoning this type of behavior only accomplishes two things:

1. It permanently etches that customer in a negative light for any future employees. Think about it… perhaps the employee who inserted the notes gets fired (not that anyone EVER gets fired or leaves dealerships) and a new employee is tasked with going through and/or following up with these leads. Do you think these notes will encourage them to follow up or discourage them? Would they be quicker to mark them “Lost” and move on? What happens if you want to do some data mining and try to resurrect some leads? Negativity is a virus. It spreads easily. Allowing anyone to cultivate negativity in your business is simply a recipe for failure – not only for them but also for all of your employees.

2. It creates liability for the dealership. Allowing anyone to continue with this behavior transfers liability to you and, as a manager, to the dealership. Those notes may seem harmless now but when a harassment or hostile workplace environment lawsuit is filed, it could get quite expensive. In addition, by allowing these types of notes, you could technically be cultivating a PERMANENT hostile workplace environment. If you fired the offending employee today and two years from now another employee comes across these notes (perhaps by getting a new lead from the same customer… not like that ever happens) and is offended, what then? What if that that customer eventually buys the car and your dealership uses your CRM for service and a service advisor, cashier or other employee is exposed to those notes?

Imagine this scenario: An employee writes something offensive in Sharpie on the wall in the bathroom. It doesn’t offend anyone and nobody cleans it off. Three years later, a new employee comes along, reads the note and is offended.

What then?

It makes no difference WHEN the notes were made or whether the person who wrote the note(s) works there any longer. It is still the dealership’s responsibility and it would still be held responsible (and liable) for the existence of the notes.

My advice is simple:

If you wouldn’t hang it on the wall in your office for anyone to see, don’t put it anywhere – and that includes inside your CRM.

A Seamless Buying Experience Trumps the Race to the Bottom

January 24, 2015 By Arnold Tijerina

Large companies seem to be adopting the mentality that an excellent customer buying experience will lead Millenials and other car shoppers to rethink the old stereotypical process of buying vehicles. In the past, customers had retail experiences filled with Sharpies, high-pressure sales tactics, long waits and upsells in finance which ended up filling entire days in many cases and left consumers with bad impressions of the buying process. As the Internet evolved and offered consumers with alternatives, transparency in information and ways to circumnavigate as much of that process as possible, dealers found themselves altering their strategies.

A wide spectrum still existed amongst dealers in exactly how far they were willing to take the process with some willing to be completely transparent & provide information online to those who only pretended to be helpful but truly only offered invitations to the dealership disguised as transparency. Some large dealer groups are trying to transition as much of the buying process online as possible now (a la MakeMyDeal etc.). Of course, the largest complaints I hear from dealers is the whole “race to the bottom” involved when encountering cross-shoppers. It’s always another $100 that it would take to make the deal on vehicles already being quoted into holdback.

What if, however, instead of transitioning the process online to make it more efficient for consumers, you transform the in-store process instead? Both would achieve the same goal of offering a pleasant and efficient buying experience without the involvement of Sharpies and countless trips to “talk to the manager.”

A solution may already be available.

I had the pleasure of sitting with Jason Barrie of DealerTrack who showed me some incredible innovative technology – some of which is available now and some which is coming soon – that would essentially transform the buying experience into one of consumer choice and efficiency. This tablet based sales process completely and seamlessly integrates everything from the initial pencil – leases and purchases – with multiple options for a consumer to choose the one that best fits their financial budget. Yes, I understand that this is very close to e-pencil products that have been around for quite awhile. What makes this unique is that it eliminates the back-and-forth that most consumers hate and transforms the buying process from adversarial to one that is consultative. All of the options are configured by the sales managers prior (in the sense of how much leeway – if any – they allow the salespeople to have in the process) so there is no loss of control and/or fear of a salesperson ditching gross to win a sale taking the easy path.

Since the customer’s information is already in the system, soft pulls on credit are performed and, once a deal structure is chosen, they are automatically submitted for approvals by the dealer’s lenders.

The process continues into F&I as all of that information is immediately available to the F&I manager via tablet and aftermarket products, including explanations and videos of the features & benefits of each, are available via a menu based system. Customers can pick and choose the products they are interested in which instantly shows them how additions/subtractions of those products affect their payments.

Once the consumer has solidified his or her choices, the contracts are immediately produced WITHIN THE TABLET for the consumer to sign without the phone book of paperwork necessary currently. Of course, compliance requirements still allow dealers to have physical copies for records but it creates a more pleasant and interactive experience on the consumer facing side. After all is said end done, deals are then submitted for e-funding through the chosen lender.

There’s no doubt that individually many of these products exist. What impresses me most is the seamless experience this complete integration brings to the in-store buying process and it’s potential to create a customer experience that is enjoyable and pleasant. Ultimately, whether we are talking about shifting car sales (and processes) completely online or transforming the in-store experience, it all boils down to one thing – consumers want a more efficient, faster and enjoyable buying experience.

Rather than shift focus to an online buying process, why not make it easy and pleasant for consumers to buy from you in whatever manner they want – online or in-store.

I’m writing this from the 2015 NADA Convention and felt compelled to urge dealers to go check this out at the DealerTrack booth #2219S – You don’t have to join the race to the bottom to create a better customer experience. You just need the right tools and this, my friends, is an excellent tool to implement.

[Note: In no way was I paid or otherwise compensated for this opinion nor was the article written at anyone’s request.]

Jim Radogna: Avoiding the Eye of Mordor in Social Media

December 22, 2014 By Arnold Tijerina

Just like in the blockbuster series “The Lord of the Rings”, the Eye of Mordor is always open. Until now, its focus has been on larger battles and more interesting things. Then a Hobbit found a golden ring and slipped it on his finger. And the Eye started paying attention to this little being that had avoided the Eye’s gaze… until now.

The intersection of advertising, marketing, and compliance is not easy to navigate. It seems as if each week, rulings are being rendered from one of the myriad of regulatory bodies making it more difficult for dealers to know what they should – and should not – be doing in regards to social media in order to stay compliant. In an effort to bring clarity to an increasingly confusing and misunderstood topic, I sat down with Jim Radogna, the president of Dealer Compliance Consultants, to get some answers.

Arnold Tijerina: I believe dealers aren’t vigilant enough ensuring that social media performed on behalf of the dealership meets the same compliance rules and standards that all of their other advertising requires. It’s sort of like an afterthought to them. What are your thoughts?

Jim Radogna: Very true. First, many dealers aren’t aware that advertising regulations apply to social media every bit as much as traditional media. Advertising regulations don’t go away despite the fact that social media tends to be a low-key, casual type of communication. In fact, The FTC recently updated its document Dot Com Disclosures: Information About Online Advertising. The primary focus of the publication, which was first issued in 2000, is to inform advertisers that consumer protection laws and the requirement to provide clear and conspicuous disclosures applies to the online world in addition to the offline world.

So in a nutshell, if inventory is posted or prices/payments are quoted on social media it’s likely that the posts will be deemed to be advertisements and will be subject to state and federal disclosure and truth in advertising regulations. Lack of space is no excuse either. Even if you’re advertising on Twitter and are limited to 140 characters, you must include a clear link to any necessary disclosures.

Next, even if the dealer is aware of these facts, it’s likely that dealership employees and/or vendors posting to social media do not have the same level of awareness.

AT: I’ve interacted with some dealers who operate under strict compliance conformity across all advertising – including social media – and others that don’t feel the need to adhere to the same rules when it comes to Facebook, Twitter, Pinterest, etc. It certainly wouldn’t seem to be unreasonable to assume that most dealers know compliance rules for their advertising. Why do you think they view social media differently?

JR: Until recently, virtually all enforcement actions for non-compliant advertising have been focused on traditional media, so this is a brand new area. In my experience, most dealers have a limited understanding of what constitutes “advertising” in the eyes of the powers that be. When dealers place an ad in the local newspaper, on the radio or TV, it’s pretty evident to them that they’re advertising and that they need to be diligent in following state and local compliance guidelines. But they don’t tend to think of social media as formal “advertising” because their intention isn’t to advertise their products and services on the social networks as much as to engage with customers, brand themselves and showcase their inventory. It really is an innocent mistake in many instances. The problem is that any time they mention prices, payments, interest rates, or the availability of financing etc. – anywhere – certain disclosure requirements are triggered.

So, a dealer or ad agency that is diligent about being compliant in their advertising may have their attorneys or a compliance consultant, like myself, review every one of their ads, mailers, TV commercials, and radio spots before publication, but not even think about having their social media posts reviewed because they simply don’t realize that these are considered “advertising”.

Another area where dealers are vulnerable on social media is transfer from traditional media. Here are a few examples: The dealer may have a full page print ad in their local paper that is fully compliant, but when they post a reduced-size pdf of the ad on Facebook, all of a sudden the fully-legible and compliant disclosure on the bottom of the newspaper ad is now unreadable. Instead of being 10-point type, it’s now 4-point type because of the size reduction. Another example is the TV commercial that’s posted on YouTube and shared on the social networks. Again, the disclosure on the bottom of the screen may be easily readable on TV but becomes indecipherable on a computer or mobile device.

AT: A recent FTC ruling regarding personal bias disclosure across all social media platforms seems to have lead some dealers into believing that simply adding a notation that the content is an “Ad” or “Sponsored” – whether in the ad or with the use of hashtags such as #ad and/or #sponsored – is enough to be compliant. To my knowledge, while the FTC ruling is certainly applicable when it comes to employees sharing dealership offers and specials on their personal social networks, it doesn’t negate obligation by the dealer to add necessary disclaimers. Do you agree?

JR: Absolutely. Dealers may face liability if employees use social media to promote their employer’s services or products without disclosing the employment relationship. The FTC requires the disclosure of all “material connections.” These connections can be any relationship that could affect the credibility a consumer gives to statements, such as an employment or business relationship. So if employees, friends, family or vendors post on a dealer’s behalf, they should clearly disclose any relationship they have with the company. It’s all about transparency and full disclosure.

AT: As social media use by dealers grow, what are the most important things that dealers should be aware of in regards to how they use social media?

JR: There are a number of legal considerations that every company should be aware of when establishing their social media policies and procedures, such as social media use in employment decisions; posting of online reviews, testimonials and endorsements; ‘fake’ and paid-for reviews; advertising on social media; potential overtime claims; harassment, discrimination and defamation claims; copyright and privacy issues.

AT: Should dealers be concerned by how their employee’s use social media and, if so, how do you recommend that dealerships protect themselves and/or decrease liability in this regard?

JR: It’s important for dealers to craft a social media policy that’s both practical and legally defensible. They can protect themselves by insisting that participants in their social media programs comply with the law and training them how to do it. The FTC specifically says these steps may limit potential liability and will be considered in any prosecution. According to FTC guidelines, “The Commission agrees that the establishment of appropriate procedures would warrant consideration in its decision as to whether law enforcement action would be an appropriate use of agency resources. The Commission is not aware of any instance in which an enforcement action was brought against a company for the actions of a single ‘rogue’ employee who violated established company policy that adequately covered the conduct in question.”

AT: The FTC has been increasing the attention it is paying to business and social media and has recently been vocal about their intentions to enforce compliance regardless of where the advertisement resides specifically mentioning social media. How do you believe this increased action and attention by the FTC will affect dealers in the future in regards to social media?

JR: What’s become abundantly clear through recent federal and state advertising enforcement actions against dealers is that regulators are trolling through the digital world to find dealer violations. For instance, the FTC has cited many ads recently from websites and YouTube. It stands to reason that social networks are their next logical target. Let’s face it, it’s far easier for regulators to perform digital searches for violations than to read countless newspaper ads or listen to radio commercials.

My suggestion is to train every employee and every vendor that posts to the dealer’s social networks or may post on the dealer’s behalf on their own networks. Next, constantly audit all posts, either internally or by utilizing a qualified professional, to ensure compliance. Dealers are ultimately responsible the actions of their employees and any vendors they hire.

AT: Thank you, Jim. I appreciate your taking the time to help bring more clarity about this topic to dealers.

Before founding Dealer Compliance Consultants, Jim Radogna developed a strong background in dealership operations, having spent over 15 years in dealership management. His experience includes working in diversified roles including sales manager, F&I director, general manager, and training director. In addition, he served as compliance officer for a large auto group, where he developed and integrated a comprehensive compliance program. Being well-versed in all aspects of dealership operations, Jim and his team have used their knowledge and industry experience to develop unique, no-nonsense compliance and reputation management solutions for automobile dealerships of all sizes. These programs are designed to not only protect dealerships from liability but also greatly enhance the company’s reputation, increase profitability through consistent processes, and increase customer satisfaction and retention.

Jim is a sought-after speaker and frequent contributor to several automotive industry publications including Dealer Magazine, WardsAuto, Auto Dealer Monthly, DrivingSales Dealership Innovation Guide, AutoSuccess, and F&I Magazine.

Effective Communication: Stop Playing the Telephone Game

September 17, 2014 By Arnold Tijerina

Most of us are familiar with the telephone game. For those that haven’t played, the game is very simple. A group of people stands in a line. A simple sentence, starting with the first person, is whispered into the next person’s ear one by one until the message reaches the end of the line. Typically, the sentence that is revealed by the person at the end of the line is significantly different than the one that was started with.

Just as in the game, this phenomenon of simple miscommunication exists in the workplace. Once you realize just how easily spoken communications can be changed inadvertently, the importance of effectively communicating is reinforced. Car dealerships are particularly prone to this given the complexity of many of the activities occurring. If a salesperson misunderstands the sales manager when working a deal with a customer, it can alter the rapport and general experience for that customer significantly. When a service advisor communicates with a customer ineffectively, the same thing can happen.

The obvious solution is accurate and detailed documentation in every customer and internal transaction. That being said, there are simply too many things happening and sound bites of information being exchanged that recording everything would be laborious and inefficient.

The solution lies in ensuring that you have processes and technology in place that record and track everything related to a customer’s transaction with your dealership in the most time-efficient manner possible. In addition, you should take the time to train your staff some basic effective communication skills. Simply understanding these basic concepts will help avoid misunderstandings.

How You Relay Information Matters – People learn and retain information in different ways. Think about when you were in school. Did you retain information better by reading the textbook or listening to the lecture? The same applies in the workplace. Some people retain information better and more accurately when it’s delivered to them in a visual manner while some prefer to have it spoken to them. By learning how each of your co-workers best process information you’ll increase the effectiveness of communications and decrease the likelihood of mistakes and misunderstandings.
The Content Relayed Must Be Tailored for Each Individual – This simply means that everyone must be cognizant of the knowledge level of the person that they are speaking to. A service advisor and technician can have much more complex and technical conversations about what’s going on with a customer’s car than they may be able to with the cashier or receptionist. A finance manager may be able to interact with a sales manager on a higher level than they can with a customer or salesperson. When you are interacting with someone and they will be relaying information to another person, make sure that you are speaking to their level of knowledge so that they understand what you are saying. Most miscommunication occurs simply because the recipient didn’t understand exactly what he or she was told and this can cause a lot of problems that could have been avoided. This is especially true when the information is being relayed to a customer.

By understanding these two fundamental concepts, you’ll be able to increase the effectiveness of communication between all employees and reduce the probability that miscommunications occur. By doing this, you’ll create a powerful environment that will allow you to operate more efficiently which will translate into a more efficient workplace, better customer experiences and increased revenue.

The Unfair Advantage Automotive Mastermind Group Story

September 8, 2014 By Arnold Tijerina

In my career I’ve probably been to 30+ conferences and events. I’m working on helping to organize my 19^th event currently so to say that I have a little experience with conferences & events – having attended as a dealership manager, a vendor and even working for the conferences – would be a fair statement. All of them have their unique personalities and attractions. No matter our profession, none of us should cease to want to learn how to do things better. The second a person thinks they don’t need to learn is also the second in which they need to learn the most.

Tracy Myers and Troy Spring had a vision. This vision originated from a mastermind group that Tracy attended which revolved around real estate. Tracy’s a smart guy. He’s also pretty busy. As a dealer principal, consultant, author and filmmaker, he doesn’t have a lot of time on his hands for extra activity. That being said, he saw promise in the format of the mastermind group and thought that it would offer value to the automotive industry. So he and Troy made it happen.

Lots of people have great ideas but it’s (sadly) not as often that those ideas come to fruition. It takes a lot of work and many people aren’t willing to put forth the effort to make their visions into reality.

I’ve known Tracy awhile now. I can honestly say that what you see is what you get. He’s a genuinely good person. Sure, he’s image conscious. He’ll run from you if you try to take a photo of him wearing jeans, in the end however, it’s only because he always wants to represent himself in the best light possible. It’s not any different than women who won’t go outside with makeup on. Tracy’s makeup just happens to include suits and an Uncle Sam (or Frank Myers, I should say) hat. I get it. I have interacted with him socially and on a personal level and he’s just a good guy: plain and simple. He works hard and makes his dreams come true, whatever it takes.

That’s where the Unfair Advantage Automotive Mastermind Group comes in. Tracy and Troy saw the value in the format and made it happen. I’m sure there was risk involved. Events aren’t cheap. Despite that, they pushed forward and overcame all obstacles to create a unique group that brings value to its members year round. I would argue that some of the greatest value I’ve seen is not at the events but in the resources, interactions and expertise offered to the group’s dealer members every single day. Dealer members gain unprecedented year-round access to industry experts who are at their beck and call for free. The events themselves are the icing on the cake.

Members are vetted and decisions are made based on desire, commitment and willingness to contribute. Contributions aren’t monetary; they are based on things like character, integrity and passion. While I’m not positive of this, I truly believe that one of the things that goes through Tracy and Troy’s mind when deciding whether to accept a member is this…

Do I want this person to be a part of my family?

That may sound odd but it’s really not. I don’t know everyone’s motivations for wanting to be a part of the Unfair Advantage Automotive Mastermind Group. What I do know is that the people that become a part of it join a family. I feel it and I believe that members do as well. The atmosphere and camaraderie is contagious for both dealer and vendor members. Members stop being members and start being friends. The ones that don’t “get it” stop participating. Relationships are formed that transcend the Unfair Advantage Automotive Mastermind Group itself. Tracy and Troy may be the guides but they lead at the group’s direction. I believe in my heart that the members of this group would continue to assist and care about each other regardless of the lifespan of the group. In fact, I don’t know that Tracy or Troy could kill it if he wanted to (not that I think they’d want to).

Tracy and Troy have created a community of people who are caring, generous, and passionate and also have a desire to help each other succeed. In the ultra-competitive industry that we are in, that’s a steep mountain to climb.

Tracy and Troy have firmly planted the Unfair Advantage Automotive Mastermind Group flag on the top of the mountain…

And they brought their family with them.

In the spirit of the September 2014 meeting theme of “Masterminds Go Back to the Future”, I’ll leave you with this:

“Family is not an important thing. It is everything.” – Michael J. Fox

Forget SEO, Naked Women Will Increase VDP Views

August 1, 2014 By Arnold Tijerina

In the middle of July, a small dealer in Oregon started to get a lot of attention. I’m fairly certain their website visitors spiked and at least one VDP started to get massive traffic. You see, somehow a 2001 Mercedes-Benz got transformed into a picture of a naked woman. Yes, you heard that right. Word started spreading amongst the automotive circles on social media AND, more importantly, to the public through a very popular automotive blog, Jalopnik. We (being my friends in the automotive community) found it quite amusing. The author of Jalopnik reports that he called the dealership and the faux pas was blamed on… wait for it… a computer virus. This “naked woman” VDP was appearing all across the Internet – the dealer’s website, Cars.com, and Auto.com being amongst them. I bet that dealer got more phone calls, leads and VDP views on this 2001 Mercedes than any vehicle it has ever had in its history.

The problem didn’t stay there, however. Once I verified this on their website and Cars.com, I started researching to see exactly how widespread this was. That vehicle (and picture) was everywhere. Not only that but once I SAW the picture, I couldn’t UNSEE it. Yes, the remarketing magic kicked in. All of a sudden, I had a naked woman stalking me on the Internet.

Anyone who knows the path of data distribution in the car industry knows that this didn’t originate with Cars.com. If you don’t know, this is basically the flow:

Dealer/3^rd Party Photo Service -> Data Distribution Company -> 3^rd Party websites

Having worked at HomeNet for a while, I got fairly familiar with this process. Some dealers would argue that “data distribution company” should be replaced with “website provider” but, for the most part, website providers don’t actually do the data distribution. In most cases, they subcontract out the service to companies like HomeNet. As a dealer, you may or may not be aware of this as your website provider may include data distribution in their service. I cannot count the times that I called dealers whose data feed we already had to try and sell them services and they had no clue that we (HomeNet) were distributing their data already.

How could something like this happen? Well, there are several possibilities so let’s get started.

Computer virus/Hacked – I don’t buy this one. This would have to be a pretty intricate virus with the ability to identify a picture of a naked woman, log into the dealer’s account with their data company, choose a vehicle and upload the picture into the system. When I looked at their website, it was only this single VDP that had the explicit picture. If it were a computer virus, chances are more than likely that it would have replaced EVERY picture for all of the vehicles. Not just one. Viruses are malicious. They want to do damage. The same rationale goes for a hacker. Replacing one picture isn’t going to make some guy so happy he spits out his Twinkie while Mountain Dew flies out of his nose. (I know, total stereotype. It was simply an effort to be amusing.)
Dealer Accident – This is certainly a possibility. In the past, dealers have been notoriously vocal about how difficult and time-consuming it was to take and upload pictures. This motivated the industry into creating software that made it easier. It’s possible that whomever was in charge of uploading pictures at the dealership happened to have this naked girl on their desktop or in the folder with the vehicle pictures and it accidentally got uploaded. Knowing the mechanics of retrieving pictures from a camera, then manually selecting the pictures that go each which vehicle while uploading them makes this scenario also unlikely. There was only a single picture for this vehicle so you can’t say that it was mixed in with 30+ other pictures of the same vehicle.
Third Party Photo Service – This, again, is pretty unlikely. Photo services depend on their clients for revenue. For the most part, they also use technology that makes taking pictures and attributing them to vehicles pretty efficient. Scan a Vin. Take a bunch of pictures. Repeat. Upload. It’s pretty automatic. Seeing as this explicit photo wasn’t a picture of a picture, the likelihood that it was already on the camera is slim-to-none. The exception here would be smaller photo services that don’t use this sort of technology. In those cases, you would refer back to possibility #2 above.
Cars.com – Forget about it. Do you really think Cars.com has the time to upload photos for dealers? They simply take a feed that originated as a combination of a DMS vehicle record and corresponding pictures and a listing is created automatically. Obviously there isn’t a censor watching on their end. They probably don’t feel the need for one. It’s certainly not scalable for them to view the millions of inventory pictures they get daily from dealers across the country.
On Purpose – This is the most likely scenario. Someone was either disgruntled or wanted a little laugh. Based on the results of widespread distribution though, this had to happen at or before the data distribution link in the chain of events for it to get disseminated as much as it was. Unless the dealer used a small photo service that they just cancelled, the likelihood that it was a vendor is small. People have to pay the rent, you know. The simplest solution is that someone at the dealership, that had the log-in to upload a picture, is the culprit. As they say, the simplest answer is usually the correct one. Maybe they were upset. Maybe it was a prank. We’ll probably never know.

Dealers are way too lax with their vital services and log-ins. Most CRMs have unique log-ins as they need to track activity and tie it to specific employees. The same is true with MOST log-ins to a DMS. Exceptions exist, however. There are many instances of shared or single passwords being used by dealers to access services. How about social media accounts? Imagine that showing up on your Facebook page, Twitter, Instagram, etc. A lot worse can happen to a dealer than the scenario in this article.

Vendors aren’t immune to this either. Read the comments on that Jalopnik article. Cars.com got some unwanted publicity as well. Consumers don’t know the mechanics involved. They simply blamed Cars.com and had a good laugh. That picture/VDP was on their (and other) websites for HOURS. I reached out to them via Twitter. While they wouldn’t get specific with me (although I’m sure they know exactly where they got the feed from) they did deny responsibility tweeting that the image “originated from a 3^rd party site.”

The point of this article isn’t to cast blame. I’m certainly not Sherlock Holmes. I’m simply using common sense. As dealers, your website and VDPs are your virtual dealership. Unless you would place a naked girl in the middle of your lot to bring in traffic, you probably don’t want this happening to you. (Although it would probably work better than a giant inflatable gorilla or wavy tube guy. Just saying.) You should treat all of your services as if you were in the military. Log-ins and passwords (especially administrator-level ones) should be shared on a “need to know” basis. In every possible case, there should be levels of access for individual users. This way, you can control who can access what, what they can do once there, and, if something goes wrong, hold someone accountable.

Dealers also need to know, and control, exactly where their inventory is going. Most dealers get sold on the fact that there inventory will be on a gazillion websites and their eyes light up like a child seeing his or her presents under the tree on Christmas morning. Dealers should know not only whom THEY are sending their inventory to but also to whom THOSE people may be sending it to as well.

While this was an amusing venture that didn’t last a terribly long time, it’s a perfect example of Murphy’s Law – “If anything can go wrong, it will.”

Data security is something that’s becoming more prominent in the eyes of consumers. If someone can upload a naked picture of a woman and get that on hundreds of websites in a minute, imagine what someone who REALLY wants to get revenge or create havoc can do with your DMS database, social media accounts, CRM, customer information (including socials, DOBs, etc)…and guess who would be responsible…

You.