Kenny Atcheson: Hello Kenny Atcheson here from Dealer Profit Pros. In today’s interview we will dissect one of the most important topics, in my opinion, for the dealer industry. It is one of the most talked about subjects and the most confusing until you learn more about it. It is also one of the most underutilized. But that is changing rapidly. We are going to talk about dealer CRM. (Customer Relations Management)
The person I am interviewing today has 45 years of experience in all aspects of dealer operation and management. He attended New York University in 1976 and completed Computer Programming in Language Specialty. He combines his automotive skills from real world lessons with his computer skills to provide a unique expertise to accomplish solutions that benefit the automobile industry. His name is Howard Leavitt, the Founder and President of Auto Raptor CRM, a web-based automotive application.
So Howard, are you there and how are you today?
Howard Leavitt: I am here, having a great day and I hope you are too.
Kenny: I am. I am having a fabulous day, thank you for asking. So are you ready to get started, Howard?
Howard: Absolutely. Fire away.
Kenny: Okay. I’ll ask a few questions and you can expand upon them as you like. The first question Howard, what is the most important reason to have a CRM Solution? What’s the biggest advantage for the dealer?
Howard: Well it’s not just one advantage. CRM is a misnomer in a lot of cases because everybody has a different idea of what a CRM is.
But the reality is that what it really tries to do for the dealer, is manage data. Manage the information that the dealer pays for when clients come into his or her office, sends an email, or is a walk-in. It doesn’t matter where the information comes from, but its how you manage it correctly and try to manage it in today’s DMS (Dealer Management System). It just doesn’t work right. You just never get it. You need to get it to be able to manipulate it quick enough to turn it around into a sale.
So the important reason is really trying to increase sales and customer retention. You spent money to win that customer and you want to be able to keep that customer for multiple sales if you can and get referrals.
The first questions you have to really address when looking at a CRM and the reason you want it is, do you want to maintain your current sales? Do you want to increase your sales? Do you want to stay competitive in the market place with other dealers that use technology?
So you have to address your own processes first before you even start to look at a CRM and to decide what the solution is. If you can figure out your plan and you’re sitting in your office and a customer walks in, then two minutes later they walk out and you ask salesman, “What’s the guy’s name?” and he answers, “Well I don’t know. We don’t have the car he wants, he was asking directions”…any kind of silly answer you get from a sales guy who is not used to collecting information.
That guy walked onto your lot. Somehow he got there. It would be nice to be able to collect what you can from that person and use it as you need in trying to prospect him from the marketplace. If you’re looking for a follow up, do you want to go to match book covers and find that information? Do you want to find a piece of paper buried under 15 pieces of paper? Can you picture the desk with all the folders and papers scattered around? That’s being going on for centuries, whether you’re selling horses or cars and looking for that lead. You just got a car that matches that lead and you can’t put the two together.
If you are working in that environment, a CRM will get you from that step into modern technology. It doesn’t mean you will sell more cars; you have got to learn how to use that technology. You get internet leads; you’re getting into your outlook. It comes into your outlook. It comes into your Gmail and you respond there. And then you don’t do anything and all of a sudden you’re trying to find that customer.
It’s not easy when you need to find things. You need to manage that data for infinite reach. There is a huge amount of business. Your territory is not just the territory that you can drive around in. It’s a territory where anybody can get your information from the web and get contact with you and buy a car.
In today’s world, we all sell cars in a much bigger area than we have ever sold cars in our lives, simply because of technology and the ability to get the information out there. Well, if you spend the money to get all the information out there, you have to be able to have a way to manage it and be able to try to sell to that customer and get referrals from them as well.
Then you have your owner base, the people you sold to. You need to manage those people. You shouldn’t forget about them just because you sold them a car. They will get more cars. A certain percentage of people who own cars from you will buy again or send a relative or friend. You need to know when their birthdays are.
I worked for a guy who told me to get in touch with everybody every month on their birthday. I told him he was crazy. So what are you going to do that for? It’s the anniversary of the car and not the anniversary of the guy’s birthday. You see people buy cars in and around their birthday. Well I bet him lunch.
He said, “Okay the winner wins lunch and in 90 days we’ll address it. We’ll see what happens and the winner gets to pick his restaurant.” It was the most expensive lunch I’ve ever paid for. Sure enough people do buy cars in and around their birthday or they’ll buy one for somebody they know in and around their birthday. A good percentage of it. How are you going to manage that on paper? You got to manage that on a CRM system. So it’s not just one major reason, there’s a ton of reasons. And when you add them up, this philosophy becomes a passion in data management because you know it will increase your sales at the end of the day.
Kenny: Yeah. You said a couple of things you expanded on there. Well one, the birthday thing, the anniversary of buying the car; I would bet that most people, unless it’s their first car, couldn’t tell you within a month of the anniversary of when they bought it because they really don’t care. They do care about their own birthday however, so if you keep track of that then they may know you care about them versus your own sale so that’s the first thing.
Howard: Imagine the sales person calling Mr. Smith and saying happy birthday or send them a card. You’d think that guy is going to remember that sales person versus the guy who never contacted them? He sure is!
Kenny: Oh yeah. It makes him stand out.
Howard: It makes him stand out and that’s what a CRM can help you do with all the other facets of it. At the end, it’s Customer Relations Management. It’s trying to get you to have a relationship with the customer in a way that will help you sell another car. And you are the only dealership he has ever thought about? And he thinks, how did you know about this? I mean there should be a section in CRM about the customer. You should know about his wife, his family, special interests and stuff that should be easily accessible when you pull that Ups card out. Whether it’s digital or paper. I had a woman sales person when I was in the Jaguar business years ago. She was an ex-lawyer and decided not to practice law anymore so she started selling cars. Well, she was much more detailed than anybody else in the showroom.
She used 5 x 8 index cards and collected all this information. And I sat there in amazement watching her doing this administration stuff; and she was the top sales person. She was pretty and attractive which didn’t hurt, but she was the best sales person on the floor even though she wasn’t actually the best skilled, but she had the best results.
You can take somebody who is marginal and improve them, and you can take somebody who’s great and make them super. You have to learn how to use the systems to be able to get to that point.
From the management level, you need a CRM for accountability to measure how many people walked in. How many get closed? Do you want to do it in an old fashion way in a log or have a system to manage it for you? You know there’s two sections of it, make it easy for the sales person to collect the data and follow up, and make it easy for management to monitor the system without spending more time than they were on paper. It’s common sense if you start to think the process through. Part of the problem in the marketplace is the reason why people don’t use CRMs. The biggest culprit of anything is culture. They don’t want to change their culture.
Kenny: Yeah that starts from the top on down. That requires a mind-set shift which isn’t the problem of the CRM itself; it’s the challenge of the mindset of the people who are going to be using it. I don’t know how many times I have heard a dealer, owner, or even the general manager say something…about anything…it could be about social media…it could be about CRM… “Oh I can’t get my sales people to do that.” And I’m thinking, Well who’s in charge?
Howard: And that’s the problem. A lot of dealers have a sales person who’s been there a long time and they have never measured them. They’re afraid to push the person because they know he or she produces a certain amount of sales, so they don’t want to put things in place. So they operate from group decisions versus from the top on down.
It’s my opinion that every system no matter what you put in place, needs a champion. The champion is there to take of running the process and making everything almost dictatorial in a way, but not so structured that it ruins the sales process. Make everyone realize this is the way we want to operate our business. We want you to get the email addresses, we want you to collect phone numbers, we want you to get their home addresses, we want you to get information on their family.
You might not get it all the first time around but you want to work on getting it. And get those numbers up because at the end, those numbers mean money. And we don’t want you sitting there just staring out the window and waiting for the next person to walk in. We want you to be proactive. I build systems where we made it easy for entry and easy for management and very structured. The natural sales process of the sales person — everyone is a little different, its personality to some degree — but there’s some requirements that you should have in a dealership that this is the way we operate our business and if you don’t like it you got to leave. And when people do that, systems work much better because everybody knows what’s happening.
Kenny: Yeah and you get everybody on board.
Howard: You get everybody on board. Let’s say you go to the auction. You are a small shop. You got three guys working there. You’re the buyer and the manager. You’re going out to the auction to Manheim to buy cars and you want to know what’s going on in the dealership. CRM gives you the capability if your people are disciplined and they understand it’s what they need to do.
At the same time you can assign leads, you can work the deal; you can do things remotely without having to physically be in there. When the sales people know that you are watching there’s a tendency to do the job correctly. People do slack off if they don’t think anybody is watching. When I was managing on paper, I’d sit there with the salesman doing one-on-one using sales track, and pick-up the phone and call a customer. The salesman just told me the guy is not interested and all of a sudden I’m putting the deal together. So I called the customer just to check if the sales person called. Once the sales people know they are being checked, there’s the accountability section of it which is CRM gives the capability. But it’s also the culture thing and the idea of getting people to change.
I had this 5 percent rule for a while. Five percent of 70,000 used car dealers actually get technology. And most of them had difficulty with the CRM. They understand they’re going to buy leads from auto traders, for example. I’m going to pay this much money a month, I will get this much leads and then I can see if I’m selling these leads, maybe. They see whether that money is worth it. They’ll spend $2,000 to $3,000 on different services and they can justify that. They go to buy a CRM, and the money changed because CRM is really a philosophy on how you’re going to manage your data, and how you’re going to use it to try to sell cars. They have trouble wrapping their arms around it. So their culture and familiarity stops them from going to the next step. Now you’re right about CRM being the buzzword in the industry but how many blogs have things about people unhappy with their CRMs?
Kenny: Yeah and the big part of that, which I will have you address at some point in this conversation, is that they have a CRM and they invested in more than they could handle. It could have all the capabilities in the world but if you don’t use it, it doesn’t matter. So they won’t use it if it’s too complicated. In my opinion, a CRM has to be easy to use. It has to be easy to use or it won’t get used. So it doesn’t matter how cool or how many gadgets it has or the data it provides because it won’t provide any data if you’re not using it.
It has to be easy to use. We can actually talk about that for the moment. One reason I wanted to have you on this interview about CRMs versus numerous other people is because I know that yours is easy to use. I took a demo of it myself prior to this interview. Lorrie was very good and answered all my questions and I thought, “Wow this is really simple.” I can see people using this which would make it more effective. So I wasn’t really planning on talking about this but because it is important, talk about that for a minute…how it’s easy to use and why you designed it that way?
Howard: Well I’ll reverse it a bit; I’ll talk about why we designed it that way. If anyone is familiar with Software-in-a-box, they used to send you a box and you just downloaded it. You still get it on featured pages on websites. You would see columns of base application, middle application, top application and you see the check boxes. Most people would go to the boxes and get most of the features because they need them, then they spend the money for it. Then when they had the application and started using it, they realized that they could save a lot of money using the base thing there and get the same thing accomplished because they’ll never use that other item.
Being in the automobile business and dealing with ADP and rentals and UCS and a lot of services when people are making decisions to buy these for the dealership — which are very expensive. They realize that at the end of the day that they are only going to use a certain percentage; they don’t need to buy the whole ball of wax.
We were just at the dealer track expo and some dealers admitted that their customers only use 30 percent of the application. Well why is he paying 100 percent? So when I came to this application to bring a CRM into the web marketplace, I said that we are going to start at the opposite end of the spectrum. We are going to develop what I think we need to get dealers to sell more cars. We’ll build a base application and then start listening to dealers. It’s amazing the feedback you get at the end of the day. They give you really good ideas and you can get a consensus.
But the philosophy of that simple user interface and intuitive type application that works the way you work at the dealership, even just from paging from up-sheet to up-sheet like you would look through paper at the desk, that makes the most sense to me in transitioning people or starting people from nothing or starting people with a complicated CRM. Dealers want to go to something simpler, so it really came from years of actual trial.
Back in the 80s, I started using contact managers, realizing that paper wasn’t going to work. It wasn’t until later on that some of the technology made it capable to take it on the web and make it a web application. You didn’t have hardware involved and you didn’t have real software involved; your guys just signed in to a website.
Anybody who is paying a lot of money with set-up fees and a lot of money for application parts they don’t use just because they like bells and whistles, or paying for a very structured application that stops the sales process at the end, they think they’re losing because they want the system to manage the sales floor because they don’t want to manage their sales floor.
I’ve actually had sales managers and GMs tell me that. So who’s running the business then? You are sitting there letting the system dictate whether the lead should be worked or not worked vs. a manager working with that sales person?
You can’t do that in today’s world. You need to be actively involved. We’re having success doing this because there are a lot of dealers who are starting to think through about what they are trying to accomplish.
I recently put a seminar together; part of it has to deal with “Why do you need a CRM?” Before you want a CRM, you’d better know your processes first. You’ve got to know exactly how you’re doing everything. If you think those are really good processes but they might be cumbersome; they might be old fashioned, but they might work in the CRM. You need to marry that to the CRM that marries your processes.
If your processes aren’t good, you need to start from scratch. That goes back to the culture thing about wanting to change. They’re nervous and can’t get past it. We teach as much as we sell; a lot of people just don’t know how to manage the information and how to work it. And they don’t want to change everything in the beginning because even though the system is simple, you got to use it a little bit. Once they start using it they realize it’s easier and then they throw the paper away.
I will tell you a quick story. I took software off the shelf and ACT. A lot of people still use ACT. I customized it and networked it in our dealership in the ’80s. It was unheard of, anybody doing that stuff. DMSs didn’t have CRMs, sales reports. They have a billing system, but they didn’t have the CRM and I had the same culture with sales people trying to hack on me. One guy who’s one of the best salesman used ledger books. So I didn’t start with him; I started with other sales guys. Then all of a sudden the other guys were starting to sell cars. More cars than they were selling before. Meanwhile this guy, was doing paper and digital because I made him enter anyway.
But one day I’m walking upstairs to the accounting office and he yells up, “Howard!” He holds up his ledger book and threw it in the trash. It was the last time he ever used paper. He made the culture change because he saw the data management was there. I had patience with him. It took six months and that’s way too long. We don’t take that long anymore in today’s marketplace, but the guy was just a real character.
The point is that you have to take charge and make that culture change. And you have to know the way your people work and how you can acclimate them, get them into the CRM application, and how it fits them. Show them the benefits.
You know a lot of people you sell cars to, and sales person doesn’t sell benefits then what are you supposed to do? You’re supposed to sell benefits aren’t you? You’re not supposed to be sitting there and saying this bumper is, these doors are this way and this is that. Find a reason, find a customer’s pain and match yourself up to that pain and then you’ll have a better success in getting to know why he needs a CRM and how the CRM will work for him.
Kenny: Yeah. I couldn’t agree with you more there, Howard.
You mentioned a couple of other things there I want to expand on. You talked about the fact that they need to know their process before they get into a CRM. I would say to them that even if they do know their process, once you get the CRM, the CRM can also help improve the processes because it could test something in your process. Because the CRM gives you that data, you can then make decisions based on the data. So you introduce the finance manager early on the process instead of at the end. Just have him stop by and say “Hi” and then when you walk him into that office later and measure the conversion percentage a hundred times and then you say, “Oops that didn’t work,”or it did work, and then you implement that process all the time now.
You can continually test and find out what works best vs. guessing. A CRM is really what is going to allow you to you that.
Regarding optimum performance, I just thought of something. There’s a book called Why People Do What They Do. It’s written by a couple of psychologists. You mentioned earlier that when people know that they are being watched, it improves productivity even if you’re not acting on it. Just telling them, “Hey you’re being watched,” they produce better. In this book they ran a study and installed cameras in some sort of business. They said “Today we’re going to watch and make sure everything is going right.” They tested it over time, and in the course of the month they found that people were more productive just thinking they were being watched. Even though nobody came and said, “Hey I noticed you weren’t working hard yesterday.” Nobody ever did that. Just for the simple fact of knowing they were being watched increased productivity. There’s something people probably never really think of in CRM, is that is it can help increase productivity. Would you say that Howard, would you agree with that?
Howard: One hundred percent. But again, it gets the manager or whoever the champion is, looking at the activity sheet. It’s a real time activity sheet, so you know who’s making calls, who’s entering new up sheets, who sold, who delivered. You can see the flow of the work day going, not on a paper log but on a digital log. And people know you’re looking at that.
Like you said, they have a tendency to just do better at it. When they see the benefit of it, the accountability goes away to a certain degree. I have seen this happen over and over. Sales people are tough people at the end of the day. They’re hard to convince sometimes, and its pretty across the board. A new user, it doesn’t make a difference. They know it all. But once you get them to the point that they see the benefit of the application, they are in it and they own it.
In a lot of cases and we went to the end user first before we went to management because end-users use it to sell cars and are in the trenches and see the benefit of it. They push up at management and say, “Look at what you did for us, look at this tool you gave us.” And when it’s the other way, it causes management grief. So sales people need to buy in as well as the managers, but sales people buy in after they see they sold a couple of extra cars. They were able to get through to their customer first and build that relationship with the customer.
Kenny: They need to see that there’s a benefit for them vs. the owner saying, “Hey do it because I said so.” So there needs to be something in there, you’re selling it to the owner, but you’re also selling it to the sales people. That’s part of your process from talking to Lorrie, which I think is brilliant. Because you need them to use it for it to benefit everyone, including you.
But truly to benefit the dealership, you need those sales people to be using it and to believe in it; you have to sell them on that. I think that sales people are used to being “sales people,” which means make the sale and not make the follow-up appointment; not collect the contact information. They want to make the sale right now today. And if that doesn’t happen, they’re quick to go to the next Up who walks on the lot vs. a hundred people who walked in here today and only 20 of them are going to buy cars. That means there are 80 people whom you could follow up with.
I would love to run a test where you get a sales person who only ever does the follow-up with people. They don’t ever take an Up who walks on the lot or they come to the internet. The only thing they ever do is work with the follow-up people. I bet they’ll be the highest producing salesperson because the greater number is the people who don’t buy today. What do you think of that Howard? Do you agree with that?
Howard: Yeah I do. We have the capability of doing BDCs and sharing Up sheets with people. It depends on the volume of the store and sometimes sales people, have so many fresh Ups, they’ve got more than they can handle. In my opinion, the average sales person between 40 and 60 up sheets at a time. He or she doesn’t really know when to make that Up sheet inactive.
The duty of the CRM is to never lose that data. It just goes inactive for awhile and you can pull it back in reports, you can pull it back in campaigns, you can pull it back in exporting if you want to export it to another system, for argument’s sake. But if this second person who’s on every Up sheet is sitting in an office just dialing for dollars, even if the salesman forgot, you now have two people doing the follow-up and the salesman down there is trying to catch the next one.
There are multiple levels that you can do in the CRM depending on the volume of the store. At first when I saw there was some process; it was kind of strange to me; but then I realized working it with the dealer had some benefit because nobody fell through the cracks. Let’s say the salesman did a monthly at 20 deliveries; if you’re doing 20 deliveries, your follow-ups are going to diminish. You don’t have enough physical time, so you can run into problems on deliveries. A lot of different areas will stop you from making the next phone call, the next follow-up, but if there’s a BDC person working that as well and you’re working as a team and the sales person knows separate tasks from the BDC are different from the salesperson, you can make sure you maximize everybody who walked on the lot or every internet lead that came into the dealership.
That’s where CRMs can give you great value. You can massage, you could work data at a much bigger clip than you could. You can do that in duplicate on the Up sheet. Well I want five pieces of that Up sheet because the owner is getting one, the manager is getting one, the used car manager is getting one, the salesman is getting one, and we’ll put one for spare in case we want to send them something.
So now you sent five documents at one time floating around; they never connected. But when you have a CRM, all the information is in one place. Whoever has access to that particular database can see what’s going on with that customer. There are many reasons to have a CRM, but that’s a pretty good one.
Imagine pulling up Joe Smith and seeing everything about that guy you ever wanted to know and going back as far as you wanted to go. As long as you have history on that guy. I mean we just pulled in 40,000 delivered customers to a new client, his history over God knows how many years. Does that have value to him that he can access it quickly now? Sure it does. It will help him sell more cars.
So CRM is no simple answer. I had a conversation the other day about the value of CRM; how can you show more closing vs. without the CRM. It’s not a simple answer to the question. It takes some thought processes for a dealer to think it through. To know what’s best for his or her dealership in today’s market. In the end, regardless of what they do, it makes no sense not to have one. It makes no sense at all. But they have to come to the trough. You can’t make them drink all the time because they have got to come to the trough.
Kenny: Sometimes they want exact measurable results — and you can get some of that. But you can’t put an exact number on relationships. This is a big mistake that people make.
Another hot topic in the dealer industry right now is social media. We do some of that for some of our clients; but I think they mix up what that is. A key word in there is “social.” I don’t think they should have called it social media — those are two separate things. The social part is really relationship driven. You have 5,000 fans in your Facebook page; it’s not so you can sell them all cars right now, it’s so you can continue the relationship. They refer people to you, but it is difficult to measure.
And I think the CRM, increasing customer retention as you put it earlier, is critically important. It’s not exact in how you measure it, it’s very tough to do that. You could say wow we did 18 million last year, we did 21 million this year; the only difference is we got a CRM. Then you can measure it over the long term, but the difficulty is in measuring it immediately.
Howard, I just want to say just a couple of things of why I like Autoraptor and from getting the demo from Lorrie and the person down at the Dallas event, then I’ll ask where to get more information.
Number one: I like it because it’s easy to use. I could use it if it was difficult to use just because I do a lot of internet marketing and consulting and I am on the computer all day. I would figure it out. But I understand that most people don’t want to do that. So I really appreciate that it’s easy to use. One of our clients in particular who’s using your product loves it. And the biggest reason they love it is because it’s easy to use.
Number two: You provide continuous training which I think is important. When new sales people come on board where will they get that training? They need that training you provide, and I appreciate it.
Another thing that I really like is that you listen to the dealers. You don’t just shove the product down their throats and say, “Here it is, use it all.” You actually make changes and tweaks to it based on what they want and their feedback. I think that is critically important in any business. But certainly in your business.
I appreciate what you’re doing, Howard, including being on the interview today; so thank you for that. Howard, could you tell anyone who is listening how they can learn more? You provided a lot of value, so just tell people where they can get more information about Autoraptor and anything in particular you want to tell them on how to learn more and what you do for them.
Howard: If you go to Autoraptor.com, the website has a bunch of information. It continually gets updated with new information. You can call here at the toll-free number: 888-421-6533 and ask for Howard Leavitt or Lorrie Daniels. Either one of us can help you. Iff you’re in our area you can come see us; and if we’re in your area we will come and see you.
We also go to NIADA conventions and are in a number of conventions throughout the year. Those are posted on our website as well. We also tour the country showing the application.
Kenny: Terrific. Alright Howard, thanks a lot. Appreciate it. Everyone — I would check out Autoraptor. Thanks everyone, and have a great day.