Are "Old School" Sales & Marketing Techniques Dinosaurs?

Somewhat about 10 years later the automobile business has reached a fork in the road. The industry was challenged by a newly (or soon to be) informed and empowered customer base. From that point forward dealers have been faced with a choice: hang on to those old school sales and auto motive advertising methods or join the ranks of the next generation dealers who depend on a "more sophisticated" method… a kinder, gentler car business.

This choice is still facing thousands of dealers who’ve yet to "choose a side"… but time and distance have now developed the possibility to look back and ask, "Are those ‘old school’ techniques really out of date?"

In an effort to simplify (but at the risk of generalizing), let’s check  some of the elements of the "old school" approach:

• Higher-pressure selling environment
• Dealer-controlled selling process
• Less price/margin transparency
• Emphasis on front-end revenues
• More reliant on traditional advertising like print, radio, television or direct mail
• "Hook" based marketing messages
• Customer’s vehicle choice affected by profit potential and bank advance
• Bigger push for substantial down payment
• Pre-qualification encouraged toward front of sales process
• Sales are made in person, on the spot, on the lot

Now let’s take a glance at the "more sophisticated" new way of doing things:
• Low-pressure selling market
• Customer prohibited buying process
• Completely clear pricing and profit margin
• Emphasis on achieving money in the long term and willingness to forgo immediate profit
• Focus on quick turn, high volume
• Less reliant on traditional advertising
• Price-based marketing messages
• Customer’s car choice uninfluenced
• Little or no pre-qualification
• Sales procedure exists in large part in email, on the web, on the phone

So which is better? Which do you believe we think is better?

Of course, there’s no correct answer. At last dealers should always decide to do the business in the same way that which they feel most comfortable... and find to be the most efficient way.

However, We strongly suggests against the flatly rejecting either "old school" or "new school" techniques and instead support dealers to become self-determining thinkers and operators who are keen to take the best and most effective elements of any approach and use it in their company.

The real hazard is in the vast assumptions that have been made about the "new economy" and the "new consumer." There’s a sense in the business that all customers are informed and all informed consumers will challenge the lowest price and reject any form of pressure. These assumptions are simply not true.

In reality, consumers still have the same lizard brains they had a decade ago. And as clever as it would be if the Internet could speed up the pace of evolution, it can’t and it hasn’t. People still have desires, which are fulfilled by owning a nicer, newer car. They still have anxieties or doubts, which avoid them from entering the buyer’s circle. An effective dealer’s job is to influence the desires and overcome the doubts.

The thought that consumers in 2010 are data-driven drones who make only purely logical decisions is false and will harm this business. You’ll be very careful to reject that notion and to prevent it from harming your business.

Tactics vs. Intent

Nowadays generalizations are made about dealers who use specific tactics. For instance, we’ve heard dealers who consider themselves part of this newer generation accuse other dealers who proceed to make extremely high front-end profit making use of "old school" tactics of being somehow unethical.

The broad philosophical question: Is making a profit unethical?

That’s for you to decide. But for the purpose of this article, let us assume that we all agree to the point that making a profit is real ethical. This is, after all, the car business… not the car basis.

In fact, Dealers provide the valuable services to the public by the means of finding, sourcing and arranging for the transportation of vehicles to their location, inventorying those vehicles so that clients can browse multiple options, helping customers find and arrange for financing of their chosen vehicle, providing the opportunity to service the vehicles, etc.

For that service dealers deserve a profit (As an aside, nobody questions or criticizes grocery stores, or clothing stores, or electronics stores for making a profit. Why should making a profit at a car store be any different?) How much profit is the right profit? As much profit as the market will bear, one customer at a time.

That aside, the question becomes: Is the use of "old school" tactics wrong?

We submit that the tricks used are far less vital than the intent of the dealer utilizing them. A dealer whose mission is to help as many people as possible satisfy their emotional desires by helping them own a nicer, newer car is not a bad person. Can we agree on that?

Then it should generally follow that whatever tactics are utilized to make a sale, as long as the techniques are not dishonest, regardless of "old school" or "new school", are good and reasonable. And a dealer should find and execute any and all tactics that help secures sales that they feel comfortable with.

"Old School" Plus "New School"

Makes the Most "Profitable School" In The Industry

In our view, "old school" tactics are wrongly demonized and cast aside by an increasingly contemporary-minded industry simply because they’re old.

Additionally, "new school" tricks are refused by the dealers who are not willing to embrace the new technology, simply because they’re new.

But such division doesn’t need to exist. This isn’t Washington! What good do partisan-style, ideological, intra-industry politics do for a dealer? None. The reality is the best approach is a hybrid approach.

"New School" Dealers should realize:

• The Internet has not reinvented the car business. It is actually a tool which is to be used and leveraged, not a savior.

• There’s much more to Internet marketing than just listing vehicles and prices (in fact, that may be the most horrible thing you can do). People are looking for information online beyond just prices.

• Traditional automotive advertising still works and limiting your marketing to the Internet is a dangerous proposition. You’re easily leaving money on the table if you ignore traditional media.

• While more informed, consumers are as emotionally driven as ever.

• Low pricing is not the only, or best option (it’s simply the convenient option, chosen by lazy and unimaginative marketers…that’s a topic for a different article).

• Making a profit is not wrong… even in 2010.

• While earning a profit long term is important, your business will grow faster and better if you can also turn a profit immediately. The larger profit you make on the front, the more you can invest to acquire new customers. The more wealth you invest to acquire the new clients, the better you grow.

• Dealers provide extremely valuable service, and should strive to provide that service to as many people as possible.

• It is completely possible to sell a decent volume and make a decent profit. The high margin does not directly equate to the lower volume.

• Applying pressure for a customer to make a buying decision is not wrong or evil. In fact many customers are worried for someone to help them finalize their decision, and a little nudge from the individuals is all they need.

• As of this writing, people still buy cars in person. We don’t see customers entering in their credit card online and having their car delivered by UPS. Until that becomes the norm, the car business is still a brick and mortar business.

"Old School" Dealers should realize:

• You’re being talked about on the Internet whether you like it or not. You can join and direct the conversation or you can be a victim of the conversation that occurs without you.

• More and more customers on a daily basis are turning to the Internet for information. If you’re not there, you will be invisible to those people.

• Making money in a short span of time is important. But long-term profit and the existence value of a customer are at least equally as important.

• Because of the proliferation of information, many buyers will know more about your vehicles than you do. Now you will need to go beyond features, and start talking about all other benefits and helping the buyers to realize how his car will make a difference to feel good.

In the final research, the most successful and stable dealers are those who provide high value in exchange for high profit and utilize all the tools and techniques available to them, regardless of age, to achieve that. Like the dealer who has a video blog AND a radio campaign, or uses a trade hook AND an opt-in form. Old and new are not mutually exclusive and should coexist for best results at your dealership.