How Auto Dealers Created TrueCar, Carvanna and Vroom...

Mark: 

Very insightful assessment and a very good reason to consider a less cumbersome approach similar to what you have been teaching for years.

That's a pretty strong advertising pitch, Mr. Rikess.  (What's with the no capitalization of your name?  Is that a new way of doing it?)  Anyway, as to the proliferation of "disrupters" or third party negotiators, they've been around a long time, originally in the form of leasing companies, but they're bigger now, because of more diverse media, the Internet, and the dollar power to afford national advertising.   And, they're definitely adding to "margin compression."  (Love that term!)

However, I don't quite understand how these "younger, less expensive sales people" are going to nearly double production, plus you didn't mention much about the cost and complexities of training them.  (Sorry!  I forgot that's what you do.)  I'd be the first to agree it easier to train "order takers" than sales people, but that old adage that "you get what you pay for" is also true in auto sales.  As to the "archaic" old-style selling process, if it doesn't include relationship-building ongoing customer follow-up, it's not being done correctly to begin with.  As to older managers resisting change to something like "one-price" selling," they've primarily lasted because they deliver what their bosses want, which is as much profit as possible.

I've been through "downturns" before, and the customers who will get you through them are the ones who keep coming back because of the relationships the dealerships, and especially the reps, have built with them.  Finally, I don't think it's ever "too late" to lower your prices to beat your competitors, Forgive me if I seem to be "raining on your parade," as while your presentation may be viable in some situations, personally, I'm too competent to ever want to work in a "one price" environment and I know the best sales people feel that way, too.  After all, "Youth and enthusiasm is never a match for experience and treachery"!  (Just joking!)

I guess CarMax has it all wrong. Not sure what dealership you work at Brian but the vast majority have not been able to build a sales for their future. If the dealership would have done a great job of recruiting salespeople in their early to mid-20's ten years ago the majority of their staff would have a 10 year book of business and many of the sales managers would look more like today's customers. The industry has lost a generation or two of sales people and managers, much of it do to a way of selling cars that doesn't appeal to Gen Y. Thanks for the comments.

Bang. Nail on the head.

http://www.autodealermonthly.com/article/story/2014/05/no-haggle-no...

All you have to do is to send the difficult customers down the road to your competitors and structure your own operation to be able to survive without the gross profit you will "avoid."  It works a lot better in good times than in bad times. 

If you want to be transparent, just divulge your triple net cost and post your margin.  Transparency is when buyer and seller have the same information and equal facility to unpack that info.  This is selling the illusion of transparency. 

Just curious, have any of the companies mentioned, "created" by auto retail, made their first nickel yet, or do they exist because they were able to sell stock to speculators.

BTW, I grew up in the business in a One Price store.  We called ourselves Moral Motors.  It was 1970.  The idea that there is an "old way" and a "new way" is a hoax.  Its always been about satisfying customers.  The consumer's mindset hasn't changed.  AND the business is LESS transparent now than it ever has been.  Just because you provide more information doesn't make you transparent.  The industry has done a masterful job of making things so complex out own people don't even know our costs.

Finally, a minute to respond to your response to me. Haven't worked at a dealership in over 20 years, but I do work for dealerships.  I don't know if CarMax has it right or wrong.  And anyway, "There's more than one way to skin a cat."  Recruit sales reps in their early to mid 20s?  Maybe women because they can multi-task better than most, but reps should be hired not by age, but by qualifications and experience.  And honestly, in this "millennial" age, how many of these often liberally-inclined youngsters can actually handle "How the sausage is made"?  (Selling isn't for everyone.)

As to "a 10 year book," how many reps would take time to effectively follow-up if they had one?  Very few.  Most don't know how primarily because they don't like to do it.  Believe me, I know.  And finally, who cares if selling cars "doesn't appeal" to Gen Yers.  They've already been coddled enough.  (A while back, a manager told me of a young new hire who, in extreme seriousness, ask why everyone doesn't pay the same for the same car?)  I visited your website and I'm not disrespecting "Your bag."  It's just not "My bag."  (I appreciated your response, but it was missing a couple of words that made it hard to understand,  But that's coming from someone who definitely "isn't the sharpest pencil in the box!")

It is important to re-read Mark's first paragraph and 5 "WANTS." Needs are rational behavior and Wants are emotional behavior.  A dichotomy exists when one understands that a business devotes better than 80% of marketing and sales processes triggering consumer rational need behavior, while consumers devote better than 80% of their buying decisions triggering emotional want behavior.  Buyers operate in the complete opposite of business!  Consumers top 3 wants today are transparency, validation of them and facts, and prefer video over every other form of communication.  It is why we recommend Personal Brands of business make your customers your brand, and for business to make their Personal Brands of business their brand.  Mark's 5 Wants are all true!  

Mark Rikess may be too humble to share what must be shared here.  This is a direct link to Mr. Rikess' LinkedIn Profile page:  https://www.linkedin.com/in/mark-rikess-0b82565  Scroll down and read Mr. Brian Benstock, GM/VP Paragon Honda and Paragon Acura RECOMMENDATION of The Rikess Group and Mark Rikess. Anyone who knows and values Brian Benstock as we all do, will read his recommendation and phone and recommend The Rikess Group without question.  This is one of those no-brainers!  Do this!

Well, Coach Weigand, your comments below left me somewhat confused.  I understand and agree that buyers and sellers are motivated in different ways, but when you started with the 80% stats and especially "Personal Brands," my "wondering" (what you're talking about) began.  I went to your bio here and tried to link to your "1 Team Synergy" website, but nothing was there.  I then tried to google it, but nothing came up.  Thinking I'd missed an important revelation about "Personal Branding," I googled it and found it is what I always thought it was.  By the way, a big proponent of "branding" was Jacques Nassar and it was one of the reasons Ford blew him out.  But, I do agree if a rep can actually create a strong identifiable image ("brand"), it can be a selling advantage.    

I'm a West Coast boy with local clients, but I do know of Paragon's success.  However, the thing I remember most recently about them was their multi-million $ settlement last year for supposedly unlawful sales of credit repair and identity theft prevention services.  By the way, can you name who the "we" are in the "we all do" statement about Mr. Benstock.  Comments like that definitely make your readers feel like they're on the "outside, looking in."  Please know I did review Mr. Rikees' link you put up, and read his DE bio here, too.  One suggestion, though.  What someone of Mr, Rikees' and your caliber thinks is important.  I only wish you both would proof what you write just to make sure it's cogent. It would sure make reading you easier.            

Thanks for the kind comments and insight Tom Wiegand!!