#279 - Stocks Are Up, Cars Are Down

You are listening to the Independent Dealer Podcast with hosts Luke Godwin and Jeff Watson.

Hello and welcome to the Independent Dealer Podcast brought to you by Buckeye Dealership Consulting. Luke, what's up, buddy?

You know, just sweating here in beautiful South Carolina and trying to sell some cars. Jeff, how about you?

Yeah, you know, we've had a slightly slower month than normal. I don't know if everyone's feeling that. Not sure if that's just a general uneasiness of what's going on out there. Everyone's crypto markets have tanked and the Fed and FCC are shutting everybody down. But I mean, I guess if you own some Carvana stock, if you bought the Dip when we all thought they were going bankrupt, you're probably looking pretty smart right now.

I tell you, I remember when all that was going down. I guess that was just maybe a month ago, a month and a half ago, Jeff. And the. I think Goldman Sachs or somebody said that there was more probability, there was a higher probability of it going to zero then if it going to 10.

Yeah.

And now we're at $25 a share. What happened?

I don't know if this is a Wall street bet situation and these guys are squeezing out the short sellers on purpose, I can't imagine. I mean they had some decent guidance, I feel like, right. And they're like Q2 report or Q1 or whatever it was, but it wasn't. I don't think it was anything to write home about, was it?

No, I mean, they're still losing money. I mean, you know, all of us listen to this podcast and working on this podcast make more money than Carvana. Right.

It's not negative.

And it's just, it's crazy to think that a company that is continually losing money has a stock value, you know, $25. And I guess that puts them probably at close to a billion dollar market share, I guess. I don't know. I mean it's, it's high.

I don't know how they lose money on their wholesale side because there's stupid 24 hour auctions that they run here in my corner of the woods. They do a bunch out of Phoenix, a bunch out of California. They always go 10, 20, 30. They go over MMR every single time. I'll put bids on it and be like, I'm going to watch this.

Yeah.

Nope, the last five minutes the price shoots clear over. I'm like, what's going on? How can these guys bring so much money on the wholesale market? You know, understand it.

You know, I May have told the story before, maybe not about CarMax years ago, right. And I remember my dad going, and this was, I think in 94, and they were buying cars off the street, right? And my dad going, oh, this, this place is never going to make it. Right. And. And then fast forward to about two months ago. A really wise dealer sent me a text and said that he was at some picking up a car at a Carvana location and there were just cars everywhere. And he said, you think they're just going to fake it till they make it? And I said, yeah, I think they are. So yeah, when you have this kind of money and you have this kind of buy in, I think it's possible that you can fake it till you make it.

Jeff, do you think they bought back in at the bottom? Do you think Garcia's were smart enough? They sold that after the IPO when it kind of peaked. Made a ton, took a ton of money off the table. I would be interested to go look at the, see if they bought back in mid April.

I guarantee you they did. Those guys have a lot of money.

So my advice for Mr. Garcia III would be just do a. Give me the VIN give. Get rid of the retail side. Screw the go to public park. Stop delivering cars to doorsteps. That's probably the most unprofitable side of it. Just buy cars from the public and send it to fricking Odessa in Manheim. Because you're obviously killing it on the wholesale market. You're making two grand a copy if you're giving a customer mmr. I don't know, man. That just seems to be in my neck of the woods.

They're not giving them mmr.

But yeah, that's probably true.

So there is a lot of money to be made on the wholesale side for sure, Jeff. But there is money to be made doing it right on the retail side. This is a business model that is going to last. Don't, don't think it's not. But you just have to have the cash to get over that hump and they have the cash to get over the hump.

Whoa, whoa, whoa, whoa, whoa. You're saying you think the direct consumer, e commerce type, remote dealer location situation is a model that can work 100%.

There's no doubt in my mind. And you've talked about it, you've talked about it over the years, Jeff, about how you love their interface on the website, right? How awesome it is. This is what consumers want, Jeff. This is the reason you and I love. This is the reason you and I love Tesla. I can, I can sit at my house.

That is not the reason I love Tesla. For the record, their buying process is absolutely not the reason I love Tesla.

Really?

Tell, tell me why you do.

Well, I love it that I can just. If I want something, I can, I can click two buttons and I can buy it. I love that. I love that. Now Tesla not delivering it to my house, I do not like. Okay. Carvana is delivering it to your house, right?

Yeah.

But anytime I can go. And it's the Amazon effect, right?

Okay.

Anytime I want something and the interface is so easy that it takes me three buttons to buy it, I'm more likely to buy it. That is what.

So I would dissect a couple of those things. Ease of purchase. Yes, I get that friction sucks. Nobody wants to have a friction buying process. Whether that's in person, online, whatever you got to do, it's got to be smooth, quick, easy. Especially because car buying is notorious for being wrapped up in a dealership for an entire day, right?

Yep.

So sure. If you can do that online, deliver a car with a guarantee and have the customer service to make it right. You talk to anyone who has tried to buy a car through Tesla that was not perfectly in their box. It is a shitstorm, absolute.

What do you mean perfectly in their box? I don't understand that.

If it's. If. If your car shows up at the wrong time, in the wrong color, with the wrong. With a scratch, with.

Okay.

If your financing is unconventional, if. If you're self employed and can't prove income, if. If you need to just literally talk to someone on the phone because you want a different license plate than what they're going to give you. That it is impossible. Impossible.

Okay.

Okay. I don't know that corporate lemmings. And if it doesn't. A means B is C. That's all they know, Right. That's the argument of the local dealership model, whether it be used independent or franchise. Right. I have a problem with a brand new car that I bought from the new car store down the street. I roll down there, raise hell with the gm, they fix it for me. Right. I'm not stuck in some endless loop of phone calls and emails to some who knows who in Palo Alto that could care less about me. So that's my argument with Tesla and I think the argument with going D to C with any major brand. I don't want to call Ford and try to get something fixed on my Ford. Could you imagine if corporate Ford ran your local Ford Store. Holy geez. Stab me in the eye.

Yeah, I don't know, I don't know where this model is going, but I do believe it's going direct to consumer, period.

I think, you know, it's interesting, I was reading something also that Carvana has gone around the franchise laws in states by putting their dealerships and service centers on Indian reservations.

Interesting. They didn't do that. They didn't do that in South Carolina.

They didn't have to because whatever. Franchise laws. And in Utah they have it. I don't know how they have it because it's a service center. But they're not a dealer. Delivery.

But they're not a franchise. They're selling. They're selling used cars. So they're not a franchise. They don't have to worry about franchise laws.

But they're delivering new cars.

Carvana.

Sorry, sorry, sorry. I jumped to Tesla.

Yeah, okay.

Yeah, yeah. Tesla is the one putting their dealerships on Indian reservations in places like New Mexico and New York to go around the franchise laws. Right. So that might be the solution moving forward for those brands that want to go around franchise laws and someone like, you know, Ford or, or Toyota that peel off an electric version and all of a sudden set up shop down the street.

I think all those reservation. Yeah, I think there's franchise laws at some point will probably be changed in most states. But for, for now you got to go around it. Tesla doesn't even have a store in South Carolina because of franchise law. So you have to get it.

What, you don't have an Indian reservation? They should set up there.

We do. And that, that's odd that they didn't go there. But you know, I guess North Carolina laws are lax on that. So they went straight to North Carolina.

Yeah. Yeah. Well, like in New Mexico they put it inside an old casino. Like perfect man.

Makes perfect sense.

Repurpose an old casino. Yeah, big old indoor store like repair facility. Huge areas. You could have your service bays. I mean, keep some slot machines. It's pretty much like gambling. Regardless, for any of you that have held a Tesla over the last six months and finally sold it, you know you lost your shirt. So it's just like going to Vegas.

I didn't sell mine, I just kept it. I said, what the heck.

Yeah, don't rebook it. Do not rebook it. I lost my shirt on my ex, but I really enjoyed driving and it's not going to stop me from buying another one. Anyways, speaking of Vegas, I'm looking forward to seeing the guys at Buckeye down there. This next week I'll be at convention. We're going to be hanging out. I'm going to get educated better on my CPI product. Right. I don't feel like I push CPI as good as I can. It's a huge, huge moneymaker. We talk about it all the time and I'm the last one to actually implement it. I'm pretty sure all of our listeners have done it way quicker than I have.

I tell you, the folks at Buckeye will teach you how to use reinsurance properly. And I just got back from 20 group and the one thing I went there for, Jeff, was CPI education from other dealers that are using Buckeye and other dealers that are using the CPI product. And I am behind the eight ball on this. And let me tell you, we, this past year we bumped our game and man, I can see the light in the tunnel and I can see how CPI can make me probably just as much money as my dealership operation. So Buckeye is there to help you. Buckeye is a way to go. They will teach you CPI and teach you how to really, really make it money making part of your dealership.

Yeah. So when you talk to your other dealers out there at 20 group, I haven't had a 20 group in a couple of months, so I don't know what the temperature is there. I saw the Manheim market report that wholesale prices are waning a little bit. The MMR retention has come down. Are you seeing that on the street? Yeah, prices soften.

I am seeing down the street. What was funny though on the CPI index that came out on Monday this week they said that used car prices, what, 4.4%, I haven't seen an uptick, so I thought that was kind of interesting. Prices have come down. Prices I think will continue to come down. One thing I saw this week though, that was a little concerning about that was lack of inventory, the inventory that I buy. So this week I only bought. I've only bought like five or six cars. And that didn't keep me. That didn't keep me ahead of the eight ball. Right. So we've got to figure out in the next coming days how we're going to buy more inventory this week. But we'll see.

You know what's an interesting thing for me is I'm seeing like the off, off rental stuff. Right. Those have higher miles. Right. They ran them all up to more miles. So now finding they bought them originally.

With more miles too.

Oh, yeah. They could have picked them up from Carmax with 30,000 miles and then rented them out for six months and whatever. But I'm seeing a lot of like 2020s, 2019s coming onto the market, which for me is a really new, nice car. Right? It's got 80,000 miles, but guess what? That makes it a 1412 or $13,000 buy. I can buy here, pay here. That ish. And I can also credit union that car. So I like seeing some of these rental cars come back with higher miles because I'm getting a newer car. They've put a ton of miles on it and depreciated it. Now all of a sudden, I have a new body style that's in my price range. So, yeah, it's really kind of an interesting thing right now.

Yeah, that's. I mean, that's kind of my model, and that's where I've lived for a while in that model of that price range. And it is a lot because you can get lending on the outside for these cars, and your. Your buy, your pay. Your customer is astonished by what they can actually buy.

And they can't see. No one can see the odometer. They don't care.

Who cares? It's got a 85.

It's got a new body style. Yeah, it's a Toyota with 150,000 miles, but it's a new body style. And the bank, the mmr, hits it more for mileage than the bank does. So that's what's interesting me, is it those things take a larger hit on the wholesale value than what the lender hits it for with high miles. It's kind of been an interesting thing. So I don't know if anyone else is doing that. But what's interesting, too, is the correlation between interest rates. Right? And that's kind of what they talked about in some of those data reports is because of the high interest rates that's causing assets to come down, whether it's homes and cars, right. They charge them as much because people just aren't getting approved and they can't afford it.

We were actually sitting in a 20 group, and a guy, really nice guy, really knowledgeable guy, is running a. A deal, buy your pay here dealership, and his actual rate is 12.95%. And we were like, that's. That's prime lending rate right now for used cars. So that doesn't work. You got to. You got to look at that, because I'm afraid that there's not enough, not enough meat on that bone when you start taking the losses that are coming. I believe Severity of loss that's coming from buy your payer.

So you could argue the point of if he's done it for a while and he's got a successful model, given his market, his car, if his repo charge off rate is very low, similar like yours, right. You have a pretty low charge off rate and if you own the money, you're not borrowing it, giving yourself a 12% return, you know, with your overhead and expenses, like that's okay. And now all of a sudden you are competing with near prime rates. You could bring in some even better customers than you were before, right? I mean is that not an argument to say that model could work?

It is a model that could work. But two things. You've got to sell a really nice car in my opinion and you have to have short terms and any. And he does. And your charge off rate has to be really low.

And that's done by making sure your underwriting is solid. Right. Using a good scoring model like NEO or some alternative data and making sure you've gone up the credit rank. Don't sell a nicer newer car with a lower interest rate to the same 500 credit score person. Right? Yeah, that's a recipe for disaster.

You can't do 480s and, and 503s with that. I mean, yeah, you know, at our average, our average score I think has been sitting around 565 or so, you know, and every once in a while we do 700. So yeah, you gotta, you gotta look at that.

I want to ask you a question because this is completely off topic and not on our agenda here, but do you think there is a place? You know my struggles with my second location, right. Getting it off the ground, getting the ball rolling. So much of that is momentum. Right. Like my established flagship location does a lot of sales, repeat referral, we've got a reputation, blah, blah, blah. Do you think there's a low cost leader type attitude to have when you open a second location to say look, this second location I'm either going to have a better interest rate or I'm not going to mark my cars up as much or I'm going to maybe be a little more aggressive on my lending because I want to establish a footprint here, I want to get the word out that I'm here. I want to get cars moving, I want to move things. Is that I think you have.

Yeah, you have to be aggressive on lending. You keep everything exactly the same. It. But you have to be aggressive. You have to build your portfolio quickly in that location, you have to get cars on the street. People have to know who you are. Are you going to make some mistakes? Your charge off is going to be higher. Yeah, they are going to be. But sometimes you just have to throw a bunch of spaghetti up against the wall and see what sticks. Because when you got to get over the hump.

So when you say aggressive, but you said keep everything the same, so you mean not necessarily the same as my main location. Be more aggressive in that location. As far as like maybe I'm going to approve somebody with less down or maybe a little less job time. I'm going to take a few more risks up there. Do you think the philosophy would be, hey, maybe I can keep my underwriting the same and try to keep a good customer, but what I'm going to do is maybe have a better interest rate or maybe have a better price point because maybe the community's more sensitive to price.

No, I don't think you, I don't think you mess with price and I don't think you mess with interest rate. I think you keep that the same. I think you take chances that you wouldn't normally take and either that's less down payment or less customer and it might be both too.

Down payment's the thing. I mean that's really the, in this small, these small rural communities that aren't used to this. Yeah. A lot of them don't have the money saved up. They don't understand down payments. A lot of them don't want to finance anything. They just want a $3,000 cash car.

What you, what you might find is that in a certain area that your average income is lower. And if, if that's the case, then you need to adjust your, your down payment and your monthly payments to meet that. So might be less car for that particular area or, or just less down payment and a longer term. I don't know.

Yeah, I wonder if it'd be wise to extend term.

Could be, I guess that get cars out there.

Yeah, I guess that that answer applies to all growth minded buy here, pay heres. Right. Like if you want to grow outside of the ball, the outside of the sphere that you're in right now, which of those levers do you pull on to accelerate your growth? Right. If you're in the buy here, pay here space, is it the advertising? Is it the, you know, I think, I think it's interest rate.

I think it's down payment ready. I think it's always down payment.

Lower the down payment requirement, just lower.

The down Payment that will speed up growth quickly and, and then, and then you may have to call Primal in to get some more money.

Yeah, you definitely want to model that out and say, okay, I'm going to do less of a, I'm going to do less down payment. So do I need to make sure I've got a lending source that's going to advance on those cars now that I'm more cash into them and can I sustain that? So now I'm not getting less down and I'm trying to grow more. I mean, of course the guys at Primal Land are going to be able to model that for you.

Yeah, you know, I was talking actually I think was said during our interview with Primal and that they, they score people, right. And they score dealerships when they go in there because they really want to make sure the dealerships running properly. And one of the first things they score a dealer on is how many locations they have. Jeff. And if you have one location, you have one location, you get the best score. And every time you add a location it just goes down. You know what, our friends at Primaland they will lend you money and I really believe our business is getting good. It's going to be probably good for next five years. You need to have cash to do business and prominent people that will help you get there and they will help you be able to grow responsibly.

Yeah. And I think when you say I'm feeling the pains of a second location, definitely ready to just plow that thing over and put up a mini mall, street mall on that location. It is a struggle, you know, and I see some of my dealer buddies who are, you know, the kind of the V auto type. So this is to talk to our retail guys right now, you know, when these prices start inverting. And now all of a sudden I'm seeing, I'm seeing a difference between MMR and retail these days that I didn't see before in some of these off lease and you know, specifically, even when I look for stuff for myself or my wife, you know, the cars I don't typically dabble in the higher end stuff is that V auto type, quick turn model. I mean, other than interest rates being hard for them, this is kind of a good situation for them. Right.

You know, I think that margin is going to come down, Jeff, between MMR and retail. I think there's some there right now, but I have seen it shrink on some cars shrink quickly, but others are still, others are still holding base model cars are that margin has shrunk a lot. And so I think as soon as inventory is building back, and I think it's getting close to building back, you drive around right now and look at new car stores, you see that inventory is back. It's interesting. I don't know how quickly that model is going to come back. I never liked that model. I think I've told the listeners that many times. I think it's better to make money on the front end and on the back end, not just relying on back end. With interest rates rising and, and indirect lending pulling out, I don't know if there's a lot of money to be made on that back end. So I don't know. I think it's going to come back and I don't like it.

You know, we have addressed this in episodes in the past. Yes, it is tough when you are doing a lot of lending with Cap 1 or citizens or 5th 3rd, and these guys just decide to shut off all indirect lending. Right. You are strongly beholden to these indirect channels. I think as a retail dealer, man, you have got to diversify. If you haven't diversified by now, it may be too late because I don't know that a lot of these guys are signing up indirects right now. The ones that are still in it. Maybe they are. But, man, you. You really hope that you've got an array of lenders and you weren't putting all your eggs in one basket.

Yeah, I've seen this happen before. It's not happening as fast as it happened before, but just if you're a retail dealer and you stuck along and listen to us, make sure you have every option available to you. Do not, and I'm gonna repeat this a hundred times, do not do something that is even close to being immoral or irresponsible or whatever. Book the car exactly how it should be booked. Do not fib at all on people's income. Make sure that you're doing everything by the book. Because if you don't. If these indirect lenders have any, any reason to drop you, Jeff, what are they going to do?

Yeah, I mean, they're going to drop you anyways, but.

Yes, yeah, but don't give them a reason.

I'm sure when they tighten up, they shed the. They. They shed the ones with the bad headaches, the reviews, the what? You know, those people get cut off. And to that point, guys, I mean, we saw it in Covid, right, Your flooring lines too. You know, Cap One got out of all flooring lines from. I think I've Read that a while ago, but yeah, geez, man. Those flooring lines can be shut down or capped off. And there is still some more bank pain to come. Right. We had kind of a big hurrah about it a month or two ago with SVB and First national or whatever that one was. Silicon Bank. I don't think it's completely out yet. You know, there's still going to be some shoes that drop on the small regional bank side. So I don't know. I think I'd still be very, very aware of that stuff. Great. One thing I'm looking for Luke. You know, we talked with the guys, Troy, and about the unfair advantage marketing group that's going on in South Carolina. I'm going to try to make it out there. Right.

Mastermind group.

Yeah, the mastermind group. It. I need marketing help.

These guys. These guys know marketing help. So this would be an awesome event to attend for anybody but marketing. Those two, Tracy and Troy know it.

Yeah, yeah, yeah.

So.

So real quick, you need to be out there August 3rd. It's in South Carolina. Some Myrtle beach, some armpit of Carolina. I don't know that anyone goes there.

I'm not even sure say that this is. This is North Myrtle Beach. It's okay, I promise. No, it's really nice.

And it's a free event right before the Carolinas Convention. Carolina's convention. I'm sure you have to pay for it, right? Because you guys are cheap. But before the event, you can go to this thing and hang out with Tracy and Troy and learn a bunch of great stuff. So we definitely recommend that really cool event.

It's free. It's free, Jeff. It's on the. The Thursday before the convention. Stay, have fun at the convention. See us. But it's a bunch of dealers in there and it's a really tight group. I've been involved with this group for almost since it started. And let me tell you, the relationships you make in that group will extend and make you money over and over and over again. So I recommend everybody to go that can go to their website. I think it's unfair. What is it, Jeff? Unfair. Automotive Mastermind group.

Google it. They're the only ones out there. You'll see.

Very Show Notes amg.

So what I struggle with this is Luke. Luke here is Facebook Marketplace. Dead Facebook kind of dying, right? Where do you put your fricking cars? So I get it. If I'm a retail dealer, I'm on cars.com, i'm on CarGurus. Maybe I'm doing some Google inventory ads. Like is Craigslist a thing now? Like, literally, if I want to buy a car in my community, what is the go to now? And A, I don't know what that is. It's maybe Cars.com or CarGurus or something. B, why has not nobody stepped up and challenged Facebook Marketplace? Because it's a dumpster fire. It's still a dumpster fire. It's been a dumpster fire for two years. Right? Especially from a dealer standpoint when I can't post my stuff there. So it's all just scammers and old ladies. Like, who has not?

I've never posted a car on Facebook Marketplace. My inventory has never been on Facebook Marketplace.

You're crazy, man. It's a killer for everybody. And even still, you know, I mean, Tracy will say that and Nick Marcosi and they get a ton of leads off Facebook still, right? Instagram, Facebook, it's still a big lead magnet for them for sure.

And it's still a lead magnet for us. But we don't run our inventory on Marketplace because I think that's just, that's just the only people that will respond to that are cars price under the money. Right? And why do I want to just do that? I want to, I want to, I want to sell. Me. I want to sell the brand that is Godwin Motors. You come to my website and you buy. I've never understood that Craigslist advertising mantra of just putting every, every car I have on the Internet. I've got a website for that and I've got Google Marketplace for that.

But, but I, but, but how are you getting them to your website like your website if you're running Google Ads or whatever they call it now?

We're retargeting, we're retargeting people looking for cars that are, that are key searching that. We are running, we're running 15 second ads on YouTube. We're running 15 second ads, video ads, video ads on Facebook, Instagram. We are a brand. We're selling financing. We're not selling cars. We're gonna, we're gonna get them to our website. As soon as we get them to our website, we're going to run them down our funnel and we're going to close them. I'm not selling a car.

Right.

I'm selling us.

No, no, I get that, I get that. And my, my rub right now is not the branding. Well, my rub probably is the branding side, which is what creates the rub. But it is. Who do you go to to make sure you're doing it efficiently. Right. And that's, that's what I ran into this problem, like in the beginning days of, of Facebook ads, I felt like I had a grip. It was fairly straightforward, right. It's like, post a video, post a picture, run an ad to a group of people based on their 50 mile radius of your dealership. Right now there are a million different campaigns. There are a million different placements. There are a million different versions of an ad. How do you cut through the noise? You can't target people based on certain things. Like, and then your Google Ads. Stuff like I'm running Google Ads. But hey, guess what? Yeah. You're paying to compete with your own website name. Why would you do that? Now they're just clicking on the ad instead of clicking on your own name. Like there's so much to it. That is a dealer. I thought I had a grip on maybe four or five years ago. I'm realizing it's a fricking. It's a rat's nest, man.

It is. I don't know what the right answer is. You and I kind of debated on whether you hire a dealership advertising firm. I think there's some really good dealership advertising firms out there, Jeff, and we've had multiple of them on the podcast before. They know what they're doing. They know how. Some, some know how to place these ads. But you've got to identify exactly what you want from those ads. Don't let them talk about impressions and, or leads. Leads and this, that and other. You've got to be specific. I want applications, right?

Yeah.

I want cars sold and I want to be able to quantify that. If you cannot quantify those two things, then I don't want to spend money with your company. And it's a hard one, and I'm sure it's hard on their end, but just because they got a bunch of people to look at your ad, that doesn't mean anything. Right? So don't let them go down that path of telling you that.

Yeah, yeah. Or they just dumping a bunch of junk leads into your CRM, right? Like, who cares? I don't want twice as many leads. I want, I want twice as many conversions. So if I'm going to pay twice as much money than I am now because that's the recommended ad spend, I better have almost twice as many leads. Right. Because that just makes sense. You're going to be efficient at the, at the way you run my ads. Right. So maybe I'm say I'm wasting 50% of my ad dollar because my ads aren't optimized. They're not updated, they're not retargeting, they're not whatever. They're just going straight down the drain to Facebook or Google because they're not good. So A, not only as an advertising company should you make my dollar spend more efficient, but B, you're also going to recommend that I double it or triple it. So how does that not double my sales?

Yeah, so I had, we were talking about this the other day and I, and I came up with this idea. If you turned off every ounce of advertising you have today except your website, except for your, your Google, my business and your free stuff. The free stuff?

Yeah.

Yes.

Yeah.

If you turn it off, what percentage of sales do you think you would lose? Yeah.

For me it's going to be like 15, 20% maybe.

You, you may lose 25% of your sales. I truly believe this. I think if I shut everything down tomorrow, I would sell 25 cars a month. I 100% believe that that next spin is going to be a big deal. That, that to get to double that 25 is going to cost you double what you're spending. I guarantee.

See. But I would also say what you have to remember is cutting your ad spend off won't affect you next month or the next month or the next month, but it would affect you on month 6, 7, 8, 9 and 10. Right. Because now your brand awareness starts to go away. Your repeat referrals start to die off. Like I, I agree with you that it's marginal. Adding each new sale is actually going to cost you more than your first 20 or 30 or whatever. Right. As you try to grow your, for some people. But you, you have to have those fresh leads come into your system and they cost more to get because you're reaching outside of your current channels. Repeat referral drive bys, you know, you're trying to reach these new pockets that then supply you more leads through their repeat referral, right? You got to have fresh blood, you got to have fresh blood into the system.

You can't turn it off. And I, you know, it just costs a lot of money to get that extra or to double. It's not double your ad spend. It might be triple your ad spend to get that next bunch. I don't know. It's. You got to make sure you're quantifying the right, you've got to, you got to ask the right questions. If you don't, you might be in trouble with your ad spend. Know what, you know what your numbers are. We've said this so many times. Know how many applications you need each month, how you're closing those percentage wise and then back into the number. And I think, I think that's the only way to make it work.

Yeah. Yeah. I really wish that I could just go out there and double my ad spend and double my sales. I wish I could just go to Facebook and punch a couple numbers and spend twice as much on what I'm doing. But I don't have confident. I'm not confident that that's the solution for me. Yeah, I don't want to just. I don't want to pour more water into a leaky bucket.

Yep, totally.

Right. And part of that is how you handle the leads. But a lot of it is like, where is that money going? You know, am I just doubling up on spending money on myself? Freaking crazy. Hopefully I'm going to find that. But guys, that's the pod. Thanks so much for listening. Be sure that you're subscribing to our newsletter. We're going to have a great one come out this week. So go to the website, make sure you have your email into the newsletter. We've got a special guest coming on this week to help us with the newsletter and it continues to grow. And of course, if you've listened this far along, you've got to be leaving.

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