The Heat Is on in the Automotive Selling Game

Industry insiders predict that by 1991, there will be 15 automakers in the United States, as compared with only four just 10 years ago, and 15 million cars for sale in a 10 million car market. With such a vast array of product choices at the customer’s command, car dealers will really have to rev-up their competitive engines, in what is already a high pressure race for market share. Add to this a current average dealer profit overall of 1.9 percent and you’re looking at a competition crunch that rivals the race to the Super Bowl.

The race will go to the movers, the shakers and the award winners. Automobile dealers who have made it to the top are the ones with closing ratios of up to 43 percent, repeat business factor of over 60 percent – dealers who have parlayed small car lots into multi-million dollar automotive centers. Here’s a look at some of the techniques, practices and selling secrets of five top automotive sales leaders.

Galpin Motor Company, Sepulveda, CA – An Eye for Detail

Bert Boeckmann started in new car sales at Galpin Motors in 1953. Fifteen years later he became sole owner. Today, Galpin Ford sells approximately 13,000 retail cars annually, for a sales volume of $150 million a year.

During the past 20 years, Galpin has received over 100 awards for outstanding achievement from the Ford Motor Company. Today, over 70 percent of Galpin’s sales come from repeat customers, or new customers referred by current buyers. The reason these figures show an extremely high level of customer satisfaction is Bert Boeckmann’s unfailing attention to detail.

“As a young manager, I was often accused of being a perfectionist. It was true,” Boeckmann explains. “Galpin’s former facility had a 3-car showroom. I gave the salesmen the responsibility for parking the cars in a very precise manner. I had a pretty good eye, and it used to drive them crazy when I would spot a car that was one inch to the right, or just off center.”

Dressing Up the Previously Owned Vehicle

Galpin’s used car lot is a perfect example of his concern for fine points. The lot, carefully arranged with two rows of cars in front, then three rows, then two rows in the rear, “creates a visual impression that there are a great many more vehicles on the lot than there are,” says Boeckmann.

Front line cars receive a daily wash, are rotated every five days, while back rows get a scrubbing every other day. Every two days, Boeckmann’s car jockeys hoist a shiny new showpiece auto onto a giant rotating turntable like some colossal record where it spins slowly in the sun for eye-catching appeal. The entire dealer area is carefully landscaped, the streets and sidewalks swept daily. The salesmen must conform to a dress code, wearing jackets, slacks and ties in designated colors.

“Uniformity and cleanliness is welcoming,” explains Boeckmann the perfectionist. “Lee Iacocca once went to our used car lot and said, `My God, I think I should salute.’ Every car was exactly straight, and every aerial at precisely the same height.”

The dealership operates its own reconditioning center, where they spend an average of $763 on each trade-in deemed suitable for their lot.

The system works. Galpin profits from astonishing sales of 1,800 used cars a year at an average profit of $1,600 per car.

A Highly Structured Organization

Boeckmann’s employees take pride in striving for perfection. He motivates them with a structured system where everyone knows exactly what their responsibilities are and how to carry them out. Forty-five department heads attend a weekly managers’ meeting. “In most dealerships, there is a division between the back and the front end. Our luncheon sessions provide a meeting of the two, a chance for them to communicate. Any new policies that come out of the meeting are put in writing, then circulated throughout the company. Managers are required to make regular inspections of their departments to ensure that workers are adopting the new policies.

Their motivation to do so springs from Boeckmann’s strict policy of filling all positions by promoting from within. In addition to serving as a reward for talented employees, this policy also ensures that the entire operation continues to run smoothly. It provides leaders well versed in the Galpin Ford system.

Furthermore, Boeckmann is a man on the scene. He attends every sales meeting and periodically stations himself by the cashier in the service area to listen in on customer complaints to be sure that the system for handling these complaints is functioning efficiently.

Inventory and Pricing

Boeckmann is equally meticulous in his pricing and inventory. Galpin Motors was among the first to “sticker” cars. On used cars, this includes a checklist of all items repaired during the reconditioning process. Boeckmann trains salespeople to negotiate by quoting sticker price, rather than starting from a discount.

“The customer has to feel that the deal he ends up with is favorable to him. You do that by establishing a starting point which makes sense, which the customer can identify with and confirm by looking at the sticker on the car. When you do that, you have a higher closing ratio, particularly among customers who are in here for the first time,” says Boeckmann.

While most dealers stock a month’s supply of cars, Boeckmann believes in having twice that amount on hand. “I feel that I’ll make more sales if I have a better selection. When buying volume drops, the other dealers lose a lot of business to us, because of our heavy inventories and the greater choice they provide. And, if there’s any disruption in the allocations, I’m still sitting with sufficient inventory.”

Wide Range of Services Equals Profit

Boeckmann believes profits are tied to ability to meet all customer needs. “We maintain a careful balance of leasing vehicles (about 3,000 a year), a strong rent-a-car fleet (550), strong service and parts, and a large used car dealership. We even have a restaurant on the lot. We also do a lot of what we call “Galpinizing” – giving the customer a custom car with, for instance, built-in rumble seats, which personalizes the cars and serves as an attention grabber for driver and dealer alike.

“We’re not here just to provide cars, but all around auto service,” explains Boeckmann.

Checkered Flag Motor Car Company, Virginia Beach, VA – A Team of Winners

In 1987, Checkered Flag Motor Car Co., with President Ed Snyder at its helm, retailed 5,771 cars, for total dollar volume of over $93 million. The credit, of course, goes to the 57 snappy salespeople who average an amazing closing ratio of 24.9 percent! These salespeople have been carefully screened and trained in one of the industry’s most successful and innovative training programs ever: The Checkered Flag Automotive Academy.

Checkered Flag spends an average of $8,000 per student for a four-week, intensive training course. As a result, employee turnover is among the lowest in the industry – with two-thirds of new salespeople staying on for more than one year, as compared to only one-tenth in the rest of the industry.

Personality Screening

Only one in thirteen applicants to the Academy is accepted. “We look for people who fit the Checkered Flag image – honest, straightforward, someone you’d take home to dinner,” says Dave Strom, Checkered Flag’s organization development manager. “We want someone who’s outgoing, goal-oriented, has a positive attitude, and an ability to relate to people. Applicants with wimpy handshakes, salespeople who don’t look you in the eye, just won’t do well here.”

Strom also points out a surprising hiring preference, “We look for people with prior nonautomotive sales experience, though 75 percent of our people have never had any sales experience at all.” Those with more than a year of prior car-sales experience are usually eliminated as having been “contaminated” by other dealerships.

After filling out a specially designed application form, applicants must also answer a skills/qualifications self-evaluation questionnaire. Applicants assess levels of competence in specific selling, prospecting and documentation skills. Then they take a psychological exam, the Personal Selection Inventory (PSI), which scores them in five categories: honesty, drug avoidance, work values, customer relations skills and supervisory attitude.

Orchestrated Interview

Only 2 out of 13 make it past the testing stage and go on to the interview. Strom supplies interviewers with a list of open-ended questions aimed at soliciting the most information from the applicant: “You have a background in selling refrigerators. Tell me about one sales transaction that you were particularly pleased with.”… “I see that you previously worked for A&D Appliances. If we called them for a reference, what do you think they’d say?”

Armed with an evaluation form, interviewers can rate applicants on: appearance (grooming, dress, etc.); first impression (smile and other nonverbals); atmosphere created (tense, relaxed, etc.); ability to make points, apply knowledge, and solve problems; temperament, and demeanor.

Finally, the applicant’s driving record and references are checked, and then, if accepted, he or she is ready for training.

Eight-Step, Goal-Oriented Classroom Course

Two weeks of intensive classroom instruction, featuring training sessions on sales and motivational techniques, introduction to company history and the service facilities, kick off the course. “We teach them an eight-step, structured, goal-oriented approach to selling,” says Strom.

The initial step is called Meeting and Greeting. “We teach people how to shake hands, introduce themselves, and ask some initial questions like `Have you talked to any of our salespeople?’ (We like to steer them back to the same rep) or `Have you any previous experiences with Checkered Flag?’ “

“The next step, Fact-Finding, is the most crucial,” says Strom. The objective is to find the answers to such critical questions as: Does the client need what we’re selling? Can he use what we’re selling? Can he afford it? Is the decision-maker in the family present so we can close the deal?

Rule one: Don’t intimidate the customers; encourage them to talk about themselves. Encouraging the customer to talk about his or her children will tell the salesperson how large the family is, and therefore whether a two-seater sports car would meet their needs.

Finding out where the person works, what area he lives in and whether he owns his own home helps answer the question of what he can afford.

Using Positive Language

Trainees are carefully taught just how to phrase questions. “Words are the fingers that mold men’s minds,” quotes Strom. “There are subtle connotations to words. So, for example, asking `What kind of vehicle would you like to own?’ feels different than asking `What kind of vehicle would you like to buy?’ “

Thus trainees are instructed in the use of “positive” terminology – budget rather than payments, agreement rather than contract. Not “How far apart are we on price?” but “How close are we?”

Closing the Deal

After learning how to present and demonstrate the vehicle that will meet the customer’s needs, the sales trainee arrives at the close.

“Closing is where most new salespeople panic,” says Strom. “Closing consists of two actions: Getting the customer to commit to owning the car and negotiating the terms of sale. Notice I say terms rather than price because price is not the issue. The monthly payment is. If we can get their monthly budget in line, they will commit.

“If the client says no, we teach salespeople how to overcome potential objections. One survey indicated that 14 percent of people who did not buy a car didn’t because they did not like the salesperson. It may not be the salesperson’s fault. It may just be a personality conflict. If that happens, he has the option of calling in a manager to close the sale.”

Closing does not mark the end of trainees’ responsibilities to the customer. They get a vehicle delivery checksheet indicating the points to review with the customer when he or she takes possession of a new car.

Follow-up call methods, techniques to prospect for new customers via mailings, plus phone contacts, notebooks, daily quizzes, and printed tip sheets to ensure that the trainees keep up with their classroom training, all play an essential part in the intensive training effort. But instruction goes beyond the dealership. Evenings are spent visiting other dealerships to do some “mystery shopping,” pretending to be customers and experiencing the system from the other side. And after the two week classroom session, rookies shadow a veteran salesperson for hands-on experience.

So far, only one graduate failed to sell a car his first day on the lot. One gung-ho graduate rolled out 17 vehicles his first month.

Consumer Education

Education is an on-going focus at Checkered Flag – not just for staff, but for consumers as well. Noticing that women made up an increasing portion of their buying public, Checkered Flag instituted a “Women’s Roads Scholar Program” consisting of special seminars for women, addressing topics such as auto comparison and evaluation, consumer rights, warranties, insurance, financing, maintenance and on-the-road safety. This program won an Award of Excellence in the National Dealer Safety Award program for 1987-88.

“A recent survey of American women showed that the majority would rather go to the dentist for a root canal than go to a car dealership. Many have had bad experiences with pushy, hard-sell car dealers,” says Strom.

The result of all this training has been a dramatic rise in the level of respect which customers now show car salesmen, and which the salesmen themselves now feel.

Says Checkered Flag salesman Mike Allen, “Car sales does not usually get a lot of recognition. But we bring credibility to the job.”

Longo Toyota, El Monte, CA – The Race for the Top

In 1964, world-famous race car driver Roger Penske left auto racing to work for a car dealership. The next year he bought it. Today, he owns dealerships all across the country. One of his most successful, Longo Toyota in El Monte, California, run by son Greg Penske, has been the number one Toyota dealership in the world for 21 consecutive years. Last year they became number one in retail sales for all makes and models, selling 19,452 new cars and trucks. They also sold 2,380 used vehicles, wrote 26,585 repair orders, and earned the Toyota President’s Award for customer satisfaction.

Bigger and Better

In true California style, everything about Penske’s dealership is bigger and better than its competitors.

After Penske bought the dealership, he built an incredible new facility. Occupying 22 acres just off the San Bernardino Freeway, it has 270,000 square feet of indoor space and the capacity to display 2,300 new cars and trucks. The sales and administration area occupies 43,000 square feet. Yet Penske also took pains to maintain a close, busy atmosphere. The showroom’s tables and chairs show all sales activity in full view. “This gives customers an open feeling. They feel more at ease than they would in a small, walled-in office,” explains Roger Penske.

The 46,000 square foot service department, longer than a football field, has 105 stalls, 66 lifts, and a fully stocked library where all 58 technicians can access reference manuals and technical bulletins.

Customers who wish to use this facility first enter a service drive/reception area, shielded from the elements by a steel canopy. There, 10 service advisors occupy booths equipped with computer terminals for instant access to a customer’s service history. This area was designed to serve more than 300 customers a day.

A totally equipped body shop complements the service department with 43 stalls, two drive-through, down-draft paint booths, and the latest in frame-straightening and alignment equipment. In its first week in the new facility, the shop increased business by 100 percent.

The 16,200 square foot parts department sold a staggering $7 million in merchandise last year. Customers also can browse at a Retail Parts and Accessory Sales Center.

Stronger Sales Force

Longo has 72 salespeople, described by Penske as “the best in the industry.” “Because we’ve been number one for so long, we don’t have to advertise for salespeople – they come to us. There are 40 to 50 on the waiting list.

“We look for people who like to work hard. If you work hard in this business, the money is automatic,” he says. Indeed, Longo’s salespeople are among the best paid in the business – many earning 6-figure incomes. Penske looks for experienced salespeople, those who can handle the enormous volume of business passing through their doors. “We do 250 retail units in one weekend. A salesman has to be able to handle three to four customers at a time.

“There are 1,050 car dealerships in the LA metropolitan market. We attract top salespeople because we sell so many cars,” explains General Manager John Clark. “We have a tough screening process. We don’t want a guy who’s aggressive to the point of obnoxiousness. We don’t want a shark. We want someone who’s extroverted, people-oriented. Candidates are first interviewed by a three-man panel, then by the general sales manager, then myself. He may be able to fool one of us, but not all five of us.”

Training consists of a five-day course emphasizing product knowledge. Each department, in fact, has its own training room. There is a training manual, but Penske is reluctant to discuss its contents. “That would be revealing our secrets,” he says.

The Customer Is Always Right

One thing that is no secret, though, is Penske’s emphasis on customer satisfaction. “Our salespeople know what we expect, which is to treat the customer right,” says Penske. “We make sure the sales staff follow up on every customer, pursuing every lead to the max,” says Clark. “We don’t give away cookies or digital watches or calculators…We just try to sell you a car and give you the best possible deal.

“If a guy goes out the door and is not happy with the deal, I’ll give him all his money back and try to put him in another vehicle, or see what else we can do,” says Penske.

Two customer relations specialists are assigned to call back every service customer and two others reach every sales customer. Penske himself contacts about 20-30 customers a week to make sure their problems have been handled properly.

Ricart Ford, Columbus, OH – The Biochemistry of Sales Success

In 1973, the Ford dealership which Fred Ricart’s father had founded 21 years earlier hit the skids during the oil crisis when drivers were turning in droves to small, fuel-efficient imports. They left American car dealers like Paul Ricart with huge inventories and no buyers.

Fred, a biochemist by profession, and his brother came home to help put the business back on its feet. He didn’t know much about cars. But he did know about research and testing. So he put those techniques to work in the field of auto sales and managed to build Ricart Ford into the leading retail Ford dealership, selling nearly 6,000 cars, trucks and vans last year.

Relaxing the Customer

A careful scientific study of car buyers led Ricart to the conclusion that most people are very tense about car buying. “I believe the key is in relieving the anxiety of the customer in every facet of car buying. We want to eliminate the anxiety of driving around for a parking space, walking into a sales showroom where the salesmen are clustered over in the corner like wolves.”

Insisting that car buying should be fun, Ricart developed his “Scientific Sales Method” based on three elements: A psychologically designed sales reception area, IQ-oriented advertising and computerized customer-tracking.

Disney-like Atmosphere

The customer approaching Ricart Ford is met by no less than 30 welcoming signs along the highway. Upon arriving, he sees no fancy showroom, but rather a cluster of gray cedar shacks (mobile buildings, really). Instead of being met by an onrush of aggressive salesmen, “Greeters” – girls dressed to look clean and fresh in uniforms with bow ties – welcome customers.

The “Greeter Girls” take the customers through some of the cedar buildings which serve as a video welcome center and an information display area. The greeters also log the customer and certain basic information about him or her onto the computer. Once on the computer, the customer is filed, tracked and permanently stored in the Ricart memory.

“Singing Salesman” Commercials

Ricart’s advertising, designed to project a fun image, sets customers at ease. Ricart writes, produces and performs the commercials himself. Strummin’ on his guitar, he sings humorous takeoffs of popular hits. His favorite, for example, is Dealin’ on the Ceilin’, inspired by Lionel Ritchie’s Dancin’ on the Ceiling. (Ricart is featured upside-down in that one.) Others include This Van is Your Van and Whole Lotta Dealin’ Goin’ On. His songs have become so popular that some local DJ’s play them on the air for free.

Although fun, the ads are the result of extensive market research and are carefully placed based on scientific analysis of the target audience.

“You can’t run the same ad on 60 Minutes that you do on Hee Haw,” explains Ricart. “Six or seven years ago, we ran an ad on Hee Haw saying we had Escorts available at 7.7 percent APR. Nobody showed up. The next week we went back and said, `We have the lowest interest rate in 10 years.’ We got flooded. The average listener just didn’t know what APR is.”

In one successful campaign, the dealer held up a cute stuffed bear and announced, “Buy one of my teddies for $6,000 and I’ll give you any Escort on the lot – free.” Customers were pulled in like nails to a magnet. Within three months, there were 1,500 happy bear owners driving new Fords. “They would come in and pay the $6,000 for the bear, then insist on going out on the lot to pick out their car. Sometimes they’d pick cars that were priced under $6,000. But they bought them anyway,” recalls Ricart. They just liked the gimmick.

Careful Research And A Willingness To Experiment

Ricart hired an out of town research firm to keep him abreast of customer trends. “We study three-month market trends so I know when people want interest rates, and when they want rebates. We interview our past customers, our competitors’ customers, and our potential customers to find out our weak areas.”

When he senses that customers are not happy, Ricart experiments with new and innovative approaches. “Since 1982, we’ve done 300 complete retail experiments – everything from the way the employees look, to what people want to see in advertising, to the way the showroom is designed.”

As an example, the mobile buildings provide flexibility that far outweigh the advantages of a standard showroom. “I decided to separate my mini vans by putting them in one of these buildings. I call it Mini-Van Land. They have their own center, their own greeters. Mini van sales went up 35 percent since we did that. But you cannot try such things within the confines of a typical showroom,” he says with a grin.

The experimenting never stops. Ricart is currently working with the Center for Science and Industry to develop an automated electronic welcome center. “Wait ’till you see it.”

Service With a Smile

Ricart’s 117 salespeople must conform to the relaxed, friendly image he is trying to project. His criteria for hiring: “someone I’d want to go to a concert with…someone who smiles a lot…someone who is willing to work hard.”

His salespeople have a phenomenal closing ratio of 43 percent. “They know what I expect. I’m never off on the golf course. Each salesperson must submit exit interviews on every person who walks into the place. Telemarketers follow up on each person the next day to find out why they did, or didn’t buy from us. And I read each and every one of those reports. The salesman knows that, so he does everything he can to make the customer want that car.”

A Little Extra Goes a Long Way

Ricart also provides customers with extraordinary service. “Last year we gave away $380,000 in free service for things not covered under warranty. That’s more than a lot of dealers made in a year. “We also have mobile service units that come directly to the house to service a customer’s car. They look like Disneyland shuttles, equipped with fast-track diagnostic computers. We even use them for warranty work. If you say, `Hey Fred, I bought a car from you last week and there’s a slight hesitation, the wipers don’t work, there’s a problem with the radio,’ I say `Fine. We’ll be in your area on Tuesday. Just leave the car in the driveway and leave the keys in it.’ Ninety percent of such service problems are handled right on the spot.”

Ricart even throws annual dinner parties for his customers.

“Probably the greatest problem dealers have is that they’re caught up in their own little world and they don’t see what the public sees. We have a spoiled, consumer-oriented generation. In the car business, if you don’t throw your arms around the public and tell them you love them, they’re gonna fall in love with somebody else in a hurry. I just kiss them faster than anyone else.”

Ron Tonkin, Portland, OR – A Matter of Attitude

“The key to success?” Steve Parks, general manager for the Tonkin Dealership Group, ponders the question. “You can boil it down to one word: attitude!”

Ron Tonkin, president and founder of the company, couldn’t agree more.

“A lady was transporting a screen door on top of her car. It broke loose as she stopped at the light just outside our store. Our people noticed that and ran out to help. The next day she came back with a tin of home-baked cookies. And the day after that she came in to another of our stores and traded in her car for a new one.”

The attitude displayed by the employees in this story, according to Tonkin and Parks, consists of four elements: enthusiasm, strong product knowledge, a strong desire to work with people, and dedicated hard work.

“If you have a lot of enthusiasm, you find ways to work with the customers. If you have good product knowledge, the customers will appreciate that and you have more confidence in yourself. If you have a strong desire to work with the customers, you’re going to have pride in yourself and the customers are going to see it,” says Parks.

Tonkin, who began his career by selling Nash and Edsel, elaborates on hard work: “The experience of having a lot of tough makes to sell was good preparation for buying my own little Chevrolet store on the outskirts of Portland in 1960.” Today, he has eight “stores,” gross sales of $115 million, and is president of NADA (National Automobile Dealers Association).

“My success started when I began having people believe in me, people who were willing to help me financially when the only asset I had to pledge was myself, because that’s all there was.

“We grew through dedicated hard work, 14-hour days, seven days a week. Dedicated hard work on my part and the part of my employees.”

Do As I Say, As I Teach, and As I Do

Tonkin begins instilling the proper attitude by carefully screening job applicants with psychological testing and personal interviews.

“We used to take someone’s pulse, and if we found one, we hired them,” he jokes. “But being much more selective than we were before, by trying to put the right people into positions and lessening our turnover exposure, we are doing ourselves a definite service.

“We want someone who’s eager and hungry, who feels that he or she will be an asset to our organization, rather than someone who wants to know what the freebies are. We want people who show aggressiveness and zeal, who try enthusiastically to gain employment by contacting us, writing letters, sending a resume, people who really want to work and improve themselves.”

Training consists of two weeks of in-house classroom lessons, plus an ongoing program of new product orientation and refresher courses.

Parks explains, “We teach our people that they’re transportation counselors and have a responsibility that goes beyond showing people into a car and closing the door.

“We remind salespeople of that responsibility in all our meetings. We tell them, for example, to get out to the customers quickly. A customer should not be standing out there for 10 minutes by himself, wondering if we’re brain dead. We’re glad they’re shopping with us, and we have to let them know that.”

Included in the training sessions are lessons on how to diffuse customer anger, how to deal with complaints, how to make the customer feel comfortable.

Tonkin practices what he preaches, and expects from his salespeople only what he himself puts in. The customer assistance specialist, whose job it is to take care of customer complaints, knows that any time there is a problem he can’t resolve, he can bring it straight to the company president.

On high ticket cars (Tonkin is the oldest Ferrari dealership in the country.), Tonkin even does every predelivery inspection himself “to be sure the car is 100 percent perfect.”

“I have never sold a car where I can’t look the customer in the eye,” he explains. “I don’t want to spoil that record.”

Tonkin and his fellow dealers Boeckmann, Penske, Ricart and Snyder exemplify the high performance, trimmed-of-fat new breed car dealer. They’re not out to work the customers over, but to woo and wow them. Their management, recruitment, training, closing and follow-up systems assure continued sales success into the 1990’s and beyond.