January 25th, 2011
Toward the end of last year I spent time consulting with one of our dealer group clients. The client was frustrated because their team worked like crazy during 2010, selling and servicing more cars in 2010 than in 2009, but ended up making less money because of decreasing front-end grosses and declining finance residuals. We know from working with our dealers that this is not a unique case: gross and residual pressure is being felt across the industry.
The economic crisis of the past two years has forced everyone in our industry to cut costs, focus on what works, and to rethink business models to find a way to add more gross, profitably, to every car sale. By retooling their processes to add an accessories sales process to their showroom sales process, izmo dealers using our AddOnAuto accessories solution are doing exactly that: selling tens of millions of dollars in accessories in 2010! The AOA average dealership 2010 generated an average of $475 in accessory-revenue-per-vehicle-sold, up from $80-$120 per vehicle sold before the new accessories sales process was implemented. Furthermore, these dealerships enjoyed average gross margins of 45%, adding an average (results vary depending on your franchise, geographic region, etc…) of $40,000 per month in additional gross revenue, which translates into additional ANNUAL NET PROFIT of $150,000.
Only 10% of accessories sold in the U.S. are sold by dealerships. The tragedy is that dealerships actually have powerful, built-in advantages to ‘own’ far more of the accessories market than they do today. Psychologically, consumers are far more likely to spend on accessories at that exciting “sweet spot” moment of purchase.
My comments (and the data cited) all come from dealerships using our AOA product. But whether or not you opt to use our tool there are some key accessory sales best practices:
• Take advantage of any “wait time” after the purchase has been negotiated and financing is being arranged to let the customer digitally configure their new vehicle with accessories.
• Find an online tool that can literally configure the exact vehicle (including the year, make, model, interior and exterior color) with the accessories on the fly so the customer can immediately visual the enhancements.
• You will likely sell mostly genuine OEM accessories, but After-market accessories can play an important role in supporting OEM sales and prices, as well as filling in fast-moving accessories not offered by the OEM (e.g. window tint, remote starter, etc…).
• Interior accessories (like DVD players, navigation, dash kits, etc…) are critical to your accessories profitability, so make sure the tool you choose has interior as well as exterior visualization capabilities.
• Ease the financial pain by calculating the enhancements into the overall financing and monthly payment as well as providing the upfront price.
• Ensure that the accessories sales, financing, and installation process is coordinated across the entire dealership, facilitating the efforts of everyone involved (customer, sales, F&I, service, parts, management). Your accessories sales efforts will crash and burn quickly if any one member of the value chain has a bad experience.
November 29th, 2010
Innovation is one of the reasons that I love the auto industry. From the incredible innovations in the vehicles we sell (heard last night on Top Gear: “…making your Porsche into a 350 horse power mobile phone” – made me laugh), to the performance and styling innovations of the aftermarket, to the business innovations of our nation’s dealers – who are the U.S.’s greatest entrepreneurs – I’m never bored being a part of the industry.
And it is this love of innovation – as well as the results we’re creating for our customers – that drives my passion for AOA (our AddOnAuto accessories product). This passion is something that I haven’t exactly hidden (just spend a few moments on the izmocars.com website or read any of my interviews). In fact, I haven’t felt as passionate about a product since I ran my own company! Heck, the izmocars dealership customer I just visited (a Wards Top 10 mega-group) is building its own dedicated accessories retail location, which will be powered by AOA!!
Expanding into accessories (powered by proper tools and processes) is nothing short of a powerful business innovation, one that creates a sustainable new source of income for dealerships and dealership employees. Manage it correctly, and it’s nothing short of a money-making machine, the likes of which we haven’t seen since the emergence of the F&I office back in the 70’s.
So, how much money is AOA actually making for the dealership – and how much money are accessories innovations putting into the pockets of the sales team and sales managers? To find out, I created an Excel tool as a good “back of the envelope” estimator to determine the value a dealer can rapidly create by starting an accessory sales program.
The results? The average izmocars AddOnAuto (AOA) store stands to profit (after cost-of-goods sold and sales costs) by nearly $20,000 per month! Even at this average level of performance the sales team (sales person plus managers) makes nearly an additional $10,000 — each month!! And what if the store is a top 10 AOA performer, you ask? Looking at October numbers, that store is PROFITING (not just revenue, PROFIT) by $33,000, and the sales team has $16,394 to spread around!!! Each month!
That’s real money, especially in this economy!
Please let me know if you’d like a copy of my ‘back of the envelope’ Excel tool. It makes it super simple to do your own simulations – heck, our consulting team will even be pleased to help you put together an accessories business plan, so you can see firsthand how your numbers could skyrocket.
There is no shortage of innovation in our industry, and nowhere is its power better demonstrated than when applied to accessories. With AOA, and the right processes, our customers are now profiting from accessory sales, hiring instead of laying off (just ask Hendrick Toyota and Burien Toyota), and growing instead of just surviving!
August 17th, 2010
I was fortunate to have chanced upon the concept of CRM very early in the phenomenon. I was a manager working for Microsoft (I’m a technology guy by training, a car guy by choice) back in the early 1990’s when it was decided that we needed to start tracking the service requests of our customers. Finding nothing in the market at the time that would serve our needs, we engaged on a very large project to track every single interaction with Microsoft by every single Microsoft customer across the U.S., then the rest of the world. This system was deployed to thousands of Microsoft employees in locations around the world. Proud of our creation, we demonstrated our support tracking system at industry conventions to managers from other companies. Those managers immediately asked if they could purchase our system. Microsoft was not interested (at the time), but a group of us saw the potential and left to join or start our own CRM start-up companies.
CRM had just arrived when I joined the auto industry 10 years ago this month. The capabilities of a CRM system had advanced from what we built at Microsoft, but were still limited in what they could do for dealerships, cost several thousand dollars per month, and required $10,000 per store in up front setup costs. Nonetheless, dealers saw the potential of managing every interaction and rapidly implemented CRM systems. Today, a CRM system is in use in nearly every dealership in America, helping dealerships realize new revenues and take care of customers in ways scarcely imagined 10 years ago. Today, as our economy slowly rebounds, dealers are retooling their CRM strategies to take advantage of a resurgent market. Whether it’s to expand the capabilities of their old system, to tie all of the operations of the dealership together, or to consolidate several disparate tools into one CRM system that delivers all that and more, smart dealers are getting ready.
How far we’ve come. In its time the Microsoft system was considered one of the most complex software installations of its kind, costing into the tens of millions of dollars to develop and manage. Today, you can get a far, far more capable system from izmo for less than $2,000 per month that meets every customer tracking, marketing, service management, desking, contracting, and financing need you may have. Moore’s law, indeed!
July 20th, 2010
These guys just don’t seem to get it. It’s an unseemly fight that Insignia is picking with Dealer Track (see below), to be caught in a war for a difference of less than $30 PNUR. They’re missing the point because in this economy where every dollar counts, technology and tools are important but there’s much more money to be made with the right process in place.
Dealer’s using izmocars Add.On.Auto product, supported by our iConsult team of in-store consultants and process experts, realized an average PNUR of $455 in June, almost 3x that of Insignia, and more than 3x that of Dealer Track/Chrome. PNUR for izmo customers using AOA for the first half of July is up to $472. Process + Superior Product = Superior Results.
But regardless whether or not you opt to use our tool, there are some key best practices that can really help:
Top Five Simple Tips to Rev Up Accessories Sales
- Take advantage of any “wait time” after the purchase has been negotiated and financing is being arranged to let the customer digitally configure their new vehicle with accessories.
- Find an online tool that can literally configure the exact vehicle (including the year, make, model, interior and exterior color) with accessories – on the fly – so the customer can immediately visual the enhancements.
- Interior accessories (like DVD players, navigation, dash kits, etc…) are critical to accessories profitability, so make sure the tool you choose has interior as well as exterior visualization and configuration capabilities.
- Ease the financial pain by calculating the enhancements into the overall financing and monthly payment as well as providing the upfront price.
- Ensure that the accessories sales, financing, and installation process is coordinated across the entire dealership, facilitating the efforts of everyone involved (customer, sales, F&I, service, parts, management). Your accessories sales efforts will crash and burn quickly if any one member of the value chain has a bad experience.
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From: Insignia [mailto:igmail@insigniagroup.com]
Sent: Wednesday, July 14, 2010 3:42 PM
Subject: [Spam] PNUR Higher with Insignia
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GM DEALERS USING INSIGNIA – AVG. PNUR $165 vs $137
July 14, 2010:
Analysis of 2010 PNUR data reveal higher accessories sales from GM Dealers using Insignia.
<http://www.insigniagroup.com/marketing/email/2010Temp2/Rework/Illustration7.jpg>
Bottom line: dealers using Insignia sell more GM Accessories. Despite nearly a year of GM forcing the use of Chrome, 14 of the 20 highest volume accessories dealers still use Insignia – including the highest volume and PNUR dealer.
The PNUR data from January to May 2010 reflects the realities that dealers using Insignia have a higher PNUR ($165 average) than dealers not using Insignia ($137 average).
No other system offers the features, service, value and track record of success like Insignia.
“Pay for what you get – get what you pay for,” says David Perry, parts manager of Suttle Motors, (PNUR $241). “From what I have seen, the Chrome product leaves a lot to be desired. GM should concentrate on building vehicles and producing parts – not pushing software.”
According to Steve Meadows, parts manager of Serra Buick-Pontiac-GMC-Cadillac (PNUR $166): “We signed up for Chrome and kept our Insignia site to compare them. After using the Chrome system, we decided to stay with Insignia because it offers more and is easier to use.”
In fact, dealers like Jon Hall Chevrolet – highest car volume dealer in Florida (PNUR $173) – stayed with Insignia. Parts manager, Scott Bowser, says: “Our accessories sales are up 37% for the year with a 45% increase in May.”
Are your sales numbers up? You can do more. We will show you how.
Dealers that want to sell accessories and make it a part of their overall dealership success use Insignia. CALL US 888-579-4458 ext. 3.
THE STANDARD IN ACCESSORIES SALES
In 2008, Insignia launched the only accessories selling guarantee. It was simple: use our product with our process and we would guarantee accessories profits.
Since that time, Insignia has trained countless dealerships and dealer groups to achieve success and profits.
Insignia offers the “whole” package:
* Fully researched, accurate and timely GM Accessory data – Let us prove it.
* Easy to use and understand interface for customers and sales/service staff.
* Complete process support through our system that set the standard and is still unmatched by the competition.
* REAL people; REAL experienced Customer Support with nearly a DECADE of working with GM dealers.
* REAL in-store accessories sales process training – stop trying to learn a new program. Use what is easiest and proven to work.
* Dealership web site integration and support – perfect with your Cobalt site!
* 360-degree vehicle configurator views – soon to include interiors!
* Feature-rich fixed operations support and order processing – since 2005.
* DMS integration to ADP Systems.
* Kiosk and flat screen offerings for merchandising and presentation.
June 1st, 2010
It’s hard to believe, but true: dealerships are leaving almost a million dollars per store, on average, per year in accessories sales literally on the showroom floor. At a time when dealership profits are being squeezed like never before, one of the highest margin opportunities available – vehicle accessories sales – simply isn’t being leveraged in most dealerships.
The data shows that the accessories market has grown dramatically over the past years and it appears that even with (or perhaps because of) the current economic environment consumers are more receptive than ever to enhancing their vehicle both inside and out with aftermarket accessory products. Furthermore the data shows that consumers would prefer to purchase accessories from their dealership. So why are dealerships only capturing about 10 – 17% of the market, while aftermarket chains and web sites are cleaning up?
We think it truly is a case of timing (and that little thing called process) being everything: In a recent national study of 120-plus dealerships, we found that one in two new vehicle buyers will purchase accessories if they are properly presented at the time of purchase with a rich visualization of the potential enhancements to the car they are purchasing. What did this mean in terms of revenue for these dealers? The average dealership in the study generated $400-$600 in accessory-revenue-per-vehicle-sold, up from $80-$120 per vehicle sold before the new process was implemented.
It’s right there in the numbers: With the right tools and process, dealerships can literally increase their accessories revenue per vehicle sold by 500%.
The fact is that dealerships actually have powerful, built-in advantages to ‘own’ far more of the accessories market than they do today. Psychologically, consumers are far more likely to spend on accessories at that exciting “sweet spot” moment of purchase. And with consumers being much more careful with their dollars, using a process that shows the consumer how easily the cost of the accessories can be added into their monthly payment makes for a much more consumer-friendly environment. But, with dealership resources strained and so much energy spent on the actual sale and the ongoing challenges of financing in today’s market – not to mention the literally millions of accessory variables and pricing combinations – it’s no wonder that the accessories opportunity slips through the cracks. But with online tools like our AOA product available on the market making the process easier, we believe that dealerships are well-positioned to ramp up their aftermarket profits.
In our study, dealerships used our AOA product to generate the $500-$1,000 in additional revenue, per vehicle sold. But whether or not you opt to use our tool there are some key best practices that can really help you cut a bigger slice of that pie:
Key best practices?
- Take advantage of any “wait time” after the purchase has been negotiated and financing is being arranged to let the customer digitally configure their new vehicle with accessories.
- Find an online tool that can literally configure the exact vehicle (including the year, make, model, interior and exterior color) with the accessories on the fly so the customer can immediately visual the enhancements.
- Interior accessories (like DVD players, navigation, dash kits, etc…) are critical to your accessories profitability, so make sure the tool you choose has interior as well as exterior visualization capabilities.
- Ease the financial pain by calculating the enhancements into the overall financing and monthly payment as well as providing the upfront price.
Ensure that the accessories sales, financing, and installation process is coordinated across the entire dealership, facilitating the efforts of everyone involved (customer, sales, F&I, service, parts, management). Your accessories sales efforts will crash and burn quickly if any one member of the value chain has a bad experience.
April 22nd, 2010
3 awesome days. Thank you!
April 21st, 2010
Based on the number of concurrent trade shows (3) going on concurrently at the Rosen this week, there’s good news coming soon for the economy. And based further on the number of dealers attending sessions here at Digital Dealer, staying for the full session, and asking questions and engaging in open dialog, our beloved industry is emerging from the economic winter and will do so better trained with new tools and more efficient processes.
Dennis Colome’s presentation today was standing room only, with over 50 dealers coming up afterward to ask questions and for copies of his presentation . Dennis’ central theme? Correct follow up over the long term yields results. How curious that after everything we’ve all been through, and with all of the initiatives we are working on, that we still can lose track of this simple but critical truth.
In other news, my hat is off to the Digital Dealer team for the great job they did on today’s lunch. I’ve been doing trade shows for a long time and this week was the first time Ive ever had dealers come to the booth to thank us for buying lunch, and to tell us how good it was.
Great work, Digital Dealer team!
Don’t despair! You still have time to win the iPad!! Click here to register to win.
April 21st, 2010
As distasteful as it is to use this forum to rail against the services provided by another company, here it comes…Can I just say that the Internet service in the guest rooms at the Rosen Shingle is really, really terrible? I’ve lost count of the number of times I had to restart my Internet connection, and with each restart I had to go through the Rosen sign-on screen and re-order Internet service. An informal poll (well, really a rant during lunch) tells me that I’m not the only Rosen guest with Internet frustration.
Then I run into Matthew Belk who was walking through the expo hall with an iPad and an aura of zen-like geek calm. After a moment of admiring his iPad (and, well, really they’re just so cool – you can still win one – click here to enter the drawing!), I wanted to know how he was managing to keep it on the ‘net. My inner geek turned green with envy as Matthew shows me his Verizon 3G mobile wireless hotspot that’s providing his iPad with wireless connectivity as he walks around the hotel. Moreover, the hotspot is the size of a small stack of business cards and can connect up to 5 wireless devices. I want one right now!
Ok. Back to business. I sincerely appreciate everyone who spent time yesterday attending my talk on the 7 Mantras of Social Media Success. We had a packed house and I really enjoyed the question and answer session. I’ve followed up with everyone who requested a copy of the presentation – here it is if you wanted a copy but didn’t have time to give me your business card.
Please join izmo’s Dennis Colome today at 2:30 in Wekiwa #6 room where Dennis is presenting “The Secrets of Selling 20-23% of all your Internet Leads Profitably”. Dennis rocks the house every time he has the chance, so it’s sure to be a good show.
You also still have time to register to win the iPad (and then run, don’t walk, and buy a mobile wireless hotspot) by clicking here.
April 20th, 2010
I was fortunate enough to spend this morning facilitating a round table discussion with a dozen multi-store dealers from around the nation. Each was doing something extraordinary with their digital marketing investment, but each was attending with a laundry list of questions and issues they wanted answered before they go home this week. Dealers continue to amaze me as they take the lead at renewing our economy through innovation and investment in new technologies.
While all of the attendees had Internet strategies in place, some more advanced than others, a common theme at the table was what to do about social networking. To the folks at the table it seems like we just started understanding the performance standards required for Internet marketing, and now social media marketing is the new new thing. And they’re right! Social media is the new land rush and it requires a new way of thinking and planning, and the forward leaning edge of social media is already starting to change.
Later today I’m speaking (4:00! See the DD 8 agenda) on the 7 Mantras for Social Media Marketing Success. I hope to see you there!
Don’t forget to become a fan of izmo on Facebook or Twitter to be entered into a drawing for an Apple iPad!!
April 20th, 2010
See you in a few hours from now!
izmocars Booth 325 at 8th Digital Dealer Conference
Sales: 866.364.1035 Support: 866.645.7880 
415.495.2955 
sales@izmocars.com