Automotive News - October 17, 2016 - Supplement - S28

28 ❙ OCTOBER 17, 2016 S TA R C H E V R O L E T, W I G G I N S , M I S S . A big difference for a small store Dealership's use of digital tools helps used sales take off Printed in Automotive News Jan. 4, 2016 Lindsay Chappell lchappell@crain.com T o make his 67-year-old Chevrolet store more prosperous, Bobby Regan Jr. faced the same challenging reality that confronts thousands of small dealerships around the nation: There is a limit to how much additional new-car sales volume is possible. The opportunity for more usedcar business is vastly larger. The nub of the question for Ⅲ Data-based approach Regan, owner of Star Chevroto buying, let in Wiggins, Miss.: "How do pricing and you grow your used-car busiadvertising ness in a small market?" vehicles With the help of a retail consultant he brought in as director of marketing, Regan has approximately doubled Star's used-vehicle sales over the past six months. The dealership did it by embracing digital market-data tools to better understand its community - a town of 4,390 people - and buying smarter, pricing smarter and advertising smarter. "We had to change a lot of things we've been doing around here," says Regan, 70, whose father started the business when Wiggins' population numbered about 1,400. Regan began by enlisting Jerry Lampley, his former partner in a direct-mail marketing business for auto dealers. Lampley's mission was to find a way to sell more new vehicles in southern Mississippi. "It quickly became apparent that that wasn't going to be the answer," Regan says. "So Jerry turned his focus to increasing our used sales." Star typically sells about 12 new vehicles a month. On the used side, the store was averaging 40 vehicles a month, most of them factory program cars from General Motors - and many of those Chevrolet sedans. Changing habits Used-vehicle sales now are running between 80 and 85 a month, give or take. And Lampley says he is confident the store will soon be selling about 100 a month. There is potential to go higher than that, he says. "We had to stop doing things like they had Embracing digital market-data tools helped Star Chevrolet to roughly double its usedvehicle sales over six months. always done them," Lampley says. "And that starts with buying right. How many dealers go to auction and they buy something because it's what they bought in the past? Or it just feels right? "We have five cars sitting on our lot that are 720 days old, and four more over 400 days," he says to illustrate the problem. "By comparison, under our new approach, Bobby and I went to auction last week and bought a 2014 Toyota FJ Cruiser at almost its original sticker price. But we sold it in four days." The reason it turned so quickly, he says, is because it had only 9,000 miles on it. And Star's data revealed that it would be the lowest mileage of any FJ Cruiser on sale in the region at that moment. Star was able to advertise the vehicle specifically on that basis - as "the lowest mileage pre-owned FJ Cruiser on the market," and price it at a premium because of that. The process, as set up by Lampley, starts with a competitive analysis of used inventory at dealer lots around Star's market area. In this case, the tracking data is purchased from vAuto, the vehicle inventory and pricing system supplier. In the old approach, Star bought used inventory based on what was available, what happened to look good or what was familiar. In Lampley's new system, Star buys vehicles that are shown by the data to be generally in demand at a certain time, or vehicles that are somewhat scarce - like the 2014 FJ Cruiser. "We're stocking Ford pickups now," Lampley notes. "This is a proud Chevrolet dealership. But you know what? People are looking for Ford pickups, and now we're selling them." Lampley and the store staff are also challenging some of Star's vendors on issues such as search-engine optimization and whether their advertising results are living up to assumptions. Lampley has been closely studying the way Star's inventory shows up in online searches. Last week, a customer drove from another state to buy a 2008 Dodge Ram pickup from Star. Lampley knew from the data how much other dealers in Star's multi-state area have been asking for that model, and he intentionally advertised it for the lowest price. The customer who drove 200 miles to buy it also knew that, he admitted to the dealership - but he asked for a better deal anyway. Just for the sake of goodwill, the store knocked another $17 off the sale price, and all parties were happy. Email results Lampley continues to experiment with ways to bring new customers to Star, even from greater distances. Bigger dealerships have bigger ad budgets. Lampley is looking for ways to work more effectively with a modest budget. One way is the time-consuming task of examining results to see how many people on a list actually converted into sales, which gives a better understanding of which lead-generators are really working. He recently conducted an email blast to a list of 100,000 recipients provided by a leadgenerator. Of those, 15,500 people opened the email. And of those, 2,185 people went to Star's website. And of those, 19 people bought a vehicle during the sale campaign; 14 of whom had opened the email. Lampley phoned all 14 of those people. "Only two of them remembered the email, and only one of them said the email influenced them in any way," he says. "What that tells you is that it's very hard to know for sure what really converted a prospect into a sale. "And what it means for a dealer is that you have to look hard through the data, and you have to have very good data about what's for sale in your market and what it is people are shopping for." It wasn't a bad email campaign, he clarifies. For the $2,000 it cost, several hundred consumers came to Star's website for the first time, which was good for the brand. Growing from 40 used sales a month to 100 might not wow a larger dealership group, owner Regan says. "But it matters to us, because I want this store to be stronger." "There's not a lot that a small dealer in a small town can do to grow," he adds. "We're still an important part of the economic base of this town. Until Walmart moved in, our store was this city's biggest single source of sales tax. "I want to continue as an economic engine." c

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