#302 - The Retail Doctor Marshall Zoerner

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, how you doing, man? How was Thanksgiving?

Oh, Thanksgiving was great. You know, just living the glorious life of a slowdown. And I'm mad about it, Jeff. Yeah, so I'm mad about it.

Yeah.

Luke didn't sell a single car last week.

It's.

What?

Oh, I. Marshall. And by the way, you personally didn't.

You personally didn't sell a car.

No, my dealership did not sell a car last week. Which y'.

All.

I. I can't remember the last time that happened, and I don't know what I'm gonna do about it. So that's. Yeah, the month had started out. The month had started out so amazing. And y', all, I don't know if it was. We had dead turkeys on our lot or. Or buzzard turkeys or turkey buzzers, whatever, but I can tell you this last week was the crappiest week I've seen in. In quite a while. I'm left. I left everybody speechless. That's how bad it was.

I have an idea, Luke. I got a couple ideas for you we'll talk about later. One might just happen to be your pay plan, which everyone knows I didn't agree with.

Get out of my place.

But if you guys didn't notice, we have a. When we think about Thanksgiving and we think about friends and family and people that are. We appreciate. We've got Mr. Marshall here with us. Marshall Friendly podcast, Our go to guy. When Luke and I need to get our heads out of our little hole. That is buy here, pay here. Marshall's the guy that educates us on how the real world works. Marshall, thanks for being here.

Hey, thanks for having me.

How was your Thanksgiving week? What'd you guys sell last week?

It was a slow week. I mean, for having a black Friday. And that's typically, you know, that's typically a day that's busy. It's like another Saturday for us. We were off by, oh, 35%. And that's not just. I think, the thing that's important to look at, Luke. It's not just sales. You got to look at your leads. So, you know, if you still have the same amount of leads coming in and you're not selling enough, then you've got a people problem. If you don't. If you're not getting the leads, then you have other problems. You either have a broken advertising or you have the Wrong cars or the wrong prices.

Yeah. And we're going to actually go down that wrong price rabbit hole here in a minute. But our leads were the same, essentially, and our people have not changed, and our people have been really good for the first half of the month. So one week is not something that you, that you have a knee jerk reaction about. And, and it's not going to be one I'm going to have a knee jerk reaction about, but it is something, as both of y' all pointed out, that I have to dig into and figure out what, what went on. And we did take a bunch of deposits last week, so I know those deals will, will, will happen this week. I just think it was, I think it was something that we didn't do that. A necessity of urgency to get it done. Last week, I think, was really the, the biggest issue there.

Everyone was kicking back, eating stuffing and cranberry in the break room.

Huh?

Maybe, maybe. But I, I tell you what, I can look at the phone calls and look at the way they work the leads. I, I just think it was a, a hangover or something of our consumers. Last week, I might be totally wrong, but.

So I was closed Thursday, Friday, and Saturday. We decided to just be closed the whole. And yesterday was an absolute mad house. Monday after Thanksgiving, being closed for three days, absolute mad house. So that's what happens when you push three days worth of conversations and sales into one day. But I think this could be beneficial to go down this road with Marshall without getting into the details or getting too bogged down. Marshall, if you were in Luke's situation or any dealer out there that's listening, if you, and if you have a slowdown in sales, say you had a bad week, a bad two weeks, maybe a bad month. Marshall, what would you do in your dealership to try to get to the bottom? Give us some, give us some specifics without getting too, too crazy or bogged down. But I want dealers to have this practical game plan when they get off this podcast to say, oh, my gosh, what step in my process is broken. Where would you begin?

Well, let me tell you this. First, as dealers and owners and managers, we have to determine if we're planning for the future or constantly triaging. Right. And what we get caught in is a constant triage situation, which causes us not to look ahead. So even if Luke fixed this problem next week, if he didn't take the time to go, okay, well, what are we doing the week after that and week after that? That's an important step to look at. And that's something we're peeling back at our dealership right now and really going, okay. Are we planning for all of next year? I know it's, it's, you know, nearing the end of November, but we're going, you know, we have a problem at our dealership. It's slowing down and it's, it's industry wide. I mean, it's slowing down everywhere. What's our game plan? And then what in that, what are we able to triage without taking our 100% focus off? So if you're going to take, you know, 30% of my focus off so I can triage this, that's fine. And so I think that's an important distinction to make. And then, sorry, I would, I would dive into my leads and then I need to look at. I always say it's, it's people, it's your products and, or it's your price. Right. So you could have the right product. And then I, I don't know how often you guys change prices. How often do you. Well, Jeff, you don't seem to change prices. I don't think. Is that your philosophy?

My prices go up and my down payments go down. That's the only thing.

Luke, do you change your prices?

Yeah, we look at any unit over 60 days, we will, Tom, we will determine if the markets move past us. We maybe we price it wrong from day one, which, which happens.

But you don't check it till day 60.

Till day 60. Yep.

Yeah. So I think that's one thing I picked up over the last couple months. We're just in a very volatile market. And again, I'll say this is, this is probably back to normal car market. This isn't, this isn't. Oh, my gosh, what's happening? This is something new. This is just. We've had it so good for so long. We've had an artificial interest rates, we've had just artificial prices on cars and we've had an artificial demand really. And so now we're back to, hey, what, what was it like in 2014 and 2015? You know, and that's really where we're at right now. And people have more knowledge than they've ever had. And when you get on a, when you get on a platform like a customer, and I'm going to look and say, okay, how does a customer search for a car? They, they either get on your website, they get on Autotrader, Cargurus, Carfax, whatever it is. Right. But now all of these have a rating system. I'm a good deal or I'm a bad deal. And we might go, yeah, but ours has more options. Ours is a better deal. Well, who cares? They're looking at it and going, this is a bad deal. And, and so you have to be checking that. And I don't know, if you guys check this on the back end of Cargurus, you could be a bad deal by a hundred dollars. You could change that price bucket by $100. And, and, and then what they like to do is after you change the price, they shake up the al them, and then they say, okay, hey, even though you priced it by $100, that took that into consideration, you're still a bad deal. So maybe you got to change it by 250, right? But you wouldn't know that until you check it the next day. So what you got to do is you got to stimulate some customers. And the way I stimulate them is I go in and I start changing prices by 300, $500. And then you change them right. On the back end of Cargurus or Autotrader, it sends an email to everybody can save those. And I'll look and I'll say, okay, how many saves does this one have? 2. Is it really going to change much? This one's had 11 saves, and it hasn't sold what's going on? And then, you know, if that's not working, then you got to go look at your car, and maybe, you know, your car is broken and it's not recon properly, and all your salespeople are like, dude, this car sucks. And then you get in like, no, it's a great car. And then it has that weird, funky smell, and nobody can get over it. Right.

I think that is. I think that is key in the buy here, pay here space. And we. Jeff's going to argue you should never change price in the buy here, pay here. I argue that you probably should. And Marshall says you should always change price. The one thing I think if you look at people's old inventory, the biggest reason it doesn't sell a lot of times is because of a. Of a smell or not detailed properly or a mechanical issue. And then your salespeople start to walk around it. So that's definitely something that, that we try to figure out. And lately I've. I've parked my car and I'm driving cars on the lot every day to figure out what's going on, because it. I got to the point where I wasn't driving inventory cars, and I think that's probably not the best thing for me to do.

Yeah, I agree with that, Luke. We, we got away from that too. Just a liability standpoint, but there is the, the prop. The other problem we're facing right now is just the increase in cost and everything. And so to recon a car and, and we like to be a reputable dealer and recon our car and we really pride ourselves in that. But the recon costs are going up and so our margin is already being, you know, shortened by how much we have to pay for cars. So then you have to pay more in recon and then if you don't catch it in the recon process and it becomes a problem, you know, customer leaves and they have a check engine light or their, something went wrong with their car and we're a kind of dealership that wants to fix it for them. It's no longer a, oh, that's a 200 fix. That's like a 300, a 1500 dollar fix. Or in our world it's a $15,000 fix when you know it's a head gasket on a Range Rover.

Yeah, I, for sure the cost there have gone up. I, I was going over policy expenses the other day and, and I saw where an alternator job cost me like 700. I'm like, what is going on here? You know, a $250 job just exploded, right?

Yeah.

So Marshall, you're gonna start, you're gonna start by shaking up the prices to get more leads. If you're a little bit slow at your dealership and you see you're not getting the sales, you're gonna start shaking up those prices. And I want to dig into that a little bit more before you go to the next step you look at. But at what point, like if you're trying to turn your inventory in 30 days, like the whole concept of selling a car for a loss or at a break even, that's just completely, that's like foreign to me. Right? Like that could be freaking Hindu. Like I have no, I don't even comprehend selling a car at a our loss. What philosophy? Or when do you get there? When do you say, hey, I bought this $80,000 Land Rover. I had to put some recon into it. I really only had a $3,000 margin to begin with. Now I got a $500 margin and it's been sitting on my lot for 30 days. Do you finally just say I, I, I gotta lose 500 to put this thing at, at 100% of market or 95% of market to be a good deal on car gurus like.

Yeah, well, I think, man, I think it's all about your pricing philosophy. When you buy a car, Jeff, do you price it based off the market or do you price it based off of your profit margin after you've put some recon into it?

Hey everybody, real quick, just to make sure, we mentioned Buckeye Dealership Consulting, obviously the sponsor of our podcast and the place we go to to get our reinsurance and aftermarket products taken care of.

Yeah, I mean we're sitting here right at the end of November, Jeff, and it's very important to have this stuff hammered out before the start of the year. I'm not saying they can get it all done by the first of the year, but they probably can, Jeff. And starting on January 1st with a reinsurance company, if you've never had one before, is just the way to go. And Buckeye is the place to do it.

Yep, excellent place to go. Good time of year to do it. Give the guys a Buckeye a call for me because I'm buy here, pay here and a little bit of retail. I have a combination of both. Right. So like if something's straight buy here, pay here. Yeah, the, the, the market price of this is not going to be what I sell it for. I'm going to sell it for a buy here, pay here price to, to help me cover all my expenses. If I'm dealing with a slightly nicer car that I think might go out and it's an easier car to replace, a little less recon, then of course I'll go with market or closer to market. So, so yeah, I have a mixed philosophy because of buy here, pay here.

Yeah. And, and this, this will be a knock at you and no offense, but because you have a what's in Jeff's head philosophy that'll be impossible to pass on to other people. So if at your deal to have some sort of pricing strategy that you can, that you can articulate and write down and then people can follow and, and most dealers do it your way, Jeff, but if you're in the retail business, that that car's not getting a better deal. And so even a month later and I go, oh, I'm taking it is what it is. I can't, I can't control the loss at that point. I can only control when I can get rid of that car. And for most of us that have a flooring line, you don't want to own a seventy, eighty thousand dollar car tied up that you can't turn around and make more money on. Even if you don't have a flooring line, why would you want to tie up your money that you could be making and turning it faster? And the other thing is you want to provide. Sorry. Other opportunities for finance money and trades and other opportunities that might get there to make money.

Yeah, I think that's, it's. That's definitely a retail mentality. Right. Like, I think that's 100% coming from a retail world. It's. I'm gonna price this thing at 98 of market, and I'm gonna chase that 98 every single day or every two days. I'm gonna reprice this thing and stay at 92% of market all the way to the bottom.

Right.

Like, just because I'm into it 80 grand, that doesn't mean I'm not gonna have to sell it for 78 at some point maybe and hopefully make. Yeah, but I think finance money, take a trade.

There's a second thing to it. And this is where I go, okay, this is where I can get. Agree with you. Where you got to get. You have to put some intellect into it, right? Because the auto doesn't. If you auto did everything you wanted to, then you wouldn't need sales managers and you wouldn't need, you know, buyers and all that. But you do, because just because you're 90 to market doesn't mean you're the best deal out there. Maybe you have a terrible color or terrible options or the worst wheels on it. And so we, you know, if you come up with your pricing strategy, like, we're not, we're not 98. We like to be. Most of our cars, we like to buy good colors, good options. Right? Look. Right. So that's going to be 100% to market, sometimes 102. But then you go on there and you go, well, I'm the only one within 500 miles. What the heck do you do with that car? And then you so. Well, sometimes we do, but I think you Then you have to look at, okay, what's up? What's a price point for a customer? Right. Just 41,900 sound like, you know, is that out of a price range of 39,900? Because at that point, I think you're just trying to find a price range that somebody's comfortable with. And they go, I was looking at cars in the 35 and under price point or the 40,000 under price point. And you're just a tick above it, even though you're the Best out there. You're just missing the price margin that people are looking for. And right now more than ever, I mean, if people aren't paying attention to the finance rates, then they're fooling themselves. So right now, if you like, for us to get somebody into a $400 payment, you know, that was a $45,000 car before. Now it's a $35,000 car. And so our customers didn't get richer. Nobody is making more money now, but we're going, oh, that's okay. Let's keep the same. Our average selling price was picked the number. Right. Our average selling price was 40,000, and we're going to keep it there even though people are making more money, but the payments are going up. So we had to adjust our prices down and say, okay, our average price point, man, our average price was like $52,000. We got it down to 35.

Yeah. And that's part of what you talked about in the beginning, right, where you say, instead of just dealing with, like, the micro of what went wrong today, let's look at the larger picture of, like, where am I going to be in six months or three months? And that's your buying. Right. You guys. You guys are purposely going downstream to make your inventory more affordable. So, Marshall, outside of, say, say I'm a dealer and I've got all my prices right, I feel like I'm competitive. I'm everywhere. Car gurus loves me, blah, blah, blah. If I'm still not selling, what do you look at after that?

Okay, well, can I go? Let me just address one more thing on prices, because Luke said he checks this after 60 days. There's a thing. Somebody told me this, and I love their term. It was called ad decay. And basically it's the. The decay of your ad because you priced it wrong at the beginning. And then even though you changed the price after, it's been there for 60 days, nobody cares about it. It's like a. It's like a real estate listing that's been on the market for so long. Be like, why is it up there still? I don't like. It's a great home, but nobody cares because it's old.

And nobody saw your price change. Nobody really paid attention.

Yeah. Yep.

So if you price it wrong in the beginning, it could just be. You could be doomed.

Yeah. That's why you have to have a pricing strategy. And that's why I say it's got a. Ours is okay. It's 100%, you know, price to market. And then after 21 days, you know, it drops to whatever it is, 90%. But we're also changing prices now daily because the. The market is so volatile. We're looking, and I don't want to change. You know, I put my car out there, was the best deal out there, and then all of a sudden, you and Luke put a car out there, and your guys were cheaper than me, and I didn't check it for 21 days, and I was the third worst deal. And so two other people went out and bought cars, and the third person is not in the market, so my car got old. So you're not checking them daily or.

Every other day, and they traded a car. That could really have made you some money, right?

Yeah. I mean, I don't know if you guys track your most profitable buys, but we track it per buyer, and we throw trades in there as well, and the trades are always, always our most profitable with the fastest turn. Yeah, yeah, for sure. Even worthy. God trade. Okay, so if. If you're not getting enough leads or if you're not getting. Because I'm looking at leads, and I'm going, I'm not getting enough leads. So not enough leads says I have the wrong inventory or I have the wrong price. Right. If I do have enough leads, then I got to dive into those leads and see the quality of what they are. You know, a lot of them might be out of state, which is tough. You know, that was a period of time we dealt with a lot of out of state. And so maybe your. Your sales people aren't trained on how to handle out of state. Or, you know, your salespeople are lazy because they're. Lazy is the wrong term. Maybe they're just getting complacent because they're concerned about their vacation for Thanksgiving. The other thing that I think happens with, you know, leads is sometimes we look at the leads and we go, oh, you know, how many leads you get a month? Let me just ask that Jeff or Luke, you know, how many get a month?

Yes.

Okay. Yeah. So, okay, so if your leads go down, let's say you get 400 leads, Internet leads a month. Not phone calls. Let's just get. And it goes down. You're on pace to 300. You might look at that and go, okay, we have a problem. But if you're on pace for 400, you might say, I don't have a problem. The only thing is, you bought this one off car, and it was a Toyota 4Runner, and it was 49.95, and everybody. You got an insane. You got a misproportionate amount of leads on that one car. This happens a lot. I had an 88E 30M 3 BMW that somebody put on consignment. It's a manual transmission, just really desired car. And you go, oh, our leads are tracking really well. Well, 15 of all of our leads were for that one car. So we weren't actually tracking that well. We thought we were, but it was. That's why you got to look at particular cars. We take a car on trade, and we're like, let's just try to retail and send it to the auction. And you put it for such a stupid price that it's getting 30% of your leads.

I never even thought about that. That is such a precise dive into leads that I would have never even thought of. Do you. I mean, is that. How do you pull that out? Marshall? Do you look in the CRM and see what's coming in and then. And then.

Yeah, CRM will tell you on what cars they're on. So you just kind of. I mean, what we do is we look at, you know, we have two stores. So we look at our CRM dashboard, and you got this many leads at this store and this many leads at that store. And we go, okay, one's trending better the other. Then you click into them, you say, who's getting the most? And we run web lead conversion ratio every week. And then you say, okay, some of them are doing better and some of them are doing worse. And then you go into. Then you can see, oh, this car is. Wow, I saw this car like, five times in a row. That's kind of weird. And then that would trigger you. So go ahead.

I was just saying if. If that weren't the case, but your leads were. Were slowing down, what's the next step of that process? Do we spend more ad dollars? Do we price differently? Where does it go at that point?

Yeah, that's. That's a great question. And you have to look at what are your most effective. So, you know, is it autotraders@cars.com? is it CarGurus? And this changes. I mean, I'd love to say one is better than the other, but it changes from quarter to quarter. And so we're constantly tracking that and going, okay, you know what? Maybe we need to take some ad dollars and put them over here. And then maybe you need to get some attention to your website. And so we might send out an E Blast or a Facebook market campaign. I don't know if you guys do those. Any social media. That's a really tough one. But you can get a lot of those going because they click right to your website from that. And then I would also look at your salespeople, too. I mean, we do this all the time. We'd love to say we treat them all equally, but we 100% do not. We. If somebody's not very good at their closing ratio, then they're gonna slow down on their leads, and we're not. Say they're scheduled for 9 to 6. We're gonna put them on the CRM to schedule 4 to 4 to 6. They don't get any of the morning leads because they're going to go to my best people. I can't afford for them not to go to our best people right now. I need. When I'm slow like this, my best people are getting the majority of the leads.

That's an interesting philosophy. And I think, you know, I'm gonna dig on Luke, because I know that he knows I don't like his pay structure. You know, could complacency be the fact that all your salesmen are just on salary and it doesn't matter what they sell?

Ooh, what? They're all on salary?

Yes. We've talked about this, Marshall.

You know, it. Maybe it was such a dumb idea. I forgot.

He thought it was a dream. He thought it was a dream, what he was talking about.

Yeah, he's like, all the stuff I've taught you, Luke, and this is the best thing you have. I can. I can show you.

Anyway, let's talk about employee motivation, Marshall, because I think that's the last piece to that puzzle, right? If I got my Cars are Priced right, I got the right mix. I. Because I can control that. I can control ad spend. I can, you know, maybe turn the volume up on leads by running some ad campaigns and doing all this. But if all these leads are coming into a bucket and my salesmen are not the best at handling it or brooming people or not working every lead to the end because maybe they're overwhelmed with leads. Maybe they're just not.

That's a real thing. And the other. The other thing that happens, too, is they get. They get used to a certain amount, right? And they're like, well, I need more leads. And you go, do you, though? I mean, you know, what's. What's your web league conversion ratio in your store? And you got to determine that. And then you go, no, you're. You're at 9%, and I got people hitting 20% over here. So you, you need to, you just need, I need, you need better training is what you need. And then you do got to come up with some goals for them because they, that's just how human beings operate, right? And so the other thing that happens is when things start to slow down, they become, it's just kind of a pipe dream. Maybe they're, I don't know, whatever you set their goals at. But I'm going to say ours are 15. 15 car sales is kind of the minimum that you make money. If you sell less than that, you're not making a lot of money. But if somebody at this time of the month is at eight, I mean, how are they, how are. They're not thinking about. They're going, I'm sandbagging to next month, I'm 100% going to Sandbag. So how do I get them motivated? Maybe you do a one off, you do a one on one with them and you say, hey, you know what, if you can get to 12 before the end of the month, I'm going to get you your 15 car bonus and you make some adjustments on the fly. You don't do that with everybody, but you do that with certain people. The people that have been with you for a long time, the people that you know are good. And I mean, when your best people are struggling, you know, that's a sign of the times. And then you gotta put small incentives out there too, like on a, on web leads. What's the goal of a web lead right now? And I think everybody, if you ask most salespeople, and we just did a training on this last Friday with our, at our store, you know, what's the goal of a web lead? And you would say to get the person in for an appointment, right? And it's not. Right now the goal of a web lead is to make contact with the customer because so many people are ghosting us right now. So many people are firing off, 75 emails are just going, I'm interested in this car, I'm interested in this car, I'm interested. And then our salespeople reply back and they get nothing. And they go up burned out on that one. And then they go to the next one, they go burnout. And then they're just starting, they're mentally losing it and going, I, everybody I talk to, they're just, they're not in the market to buy a car. So then we got to shift our training to go, okay, how do we make contact with somebody? And some of that training we Put in places is, you know, one, always address the question. But two, you know, give them something to, you know, give them a nugget to hold on to that they don't know, like, you know what? Hey, this car actually has a lot of options that aren't featured on our website. I'd love to tell you about. When's the time for a phone call? Either later today or maybe tomorrow, you know, or actually, you know what? Like, what are some things that set yourself apart? Hey, did you know we sell over 150 cars a month? And. And these cars go quickly. And I know that's like a really cliche car statement, but every time I'm shopping on Facebook Marketplace, and they say, oh, I got somebody already coming at 4 o'. Clock, I get in panic mode. I go, what? They already got something. I knew that was a good deal. Right? And. But we think, oh, wait a minute, we shouldn't pressure our customers. And yes, 100%, we should. Every time my salespeople go, I don't. Oh, that sounds a little salesy. Well, guess what? You're in sales, and that's what I pay you for.

Hey, Jeff, you know what time it is, right?

It is tax time, Luke. I have actually started the tax max program. So I have my logins. We are starting the fourth quarter program tomorrow. You guys are listening to this. On the 30th of November, December 1st, I'm starting my fourth quarter program, which is just for my good customers that want to do a deferred down. They either want to get a second car or they want to upgrade the car they're in. I'm doing the deferred down based on their estimated upcoming tax return. That's the fourth quarter program.

Yeah. And you know, I finally have enough staff this year, Jeff, that we're going all in on. On the first quarter. I believe that it's. It's a really good way to get more sales, to get that money to stay in house.

Tom.

And to sell the cars early in January. You know, we. We've noticed over the last years we didn't use tax max, that our January sales weren't as good as they could be. So hopefully we can change that this year and have a really good January, February, March, and April instead of just a good March and April.

Yeah, and a lot of that. You know, when you guys listen to this episode of Marshall and you, we talk about planning for the future and making sure you're managing your turn time. This is one way to do it right. Instead of just Stocking up and saying, I'm going to have this amazing April, and I'm just going to have so many cars in inventory and sit on it for three months until tax time happens. This is a good time to just even that out and say, okay, I'm going to have great January, February, March, and April. Right?

Yeah.

And just kind of. And just smooth those sales out over four months instead of taking them all in one. So that. That's the beauty of that tax max program. Sell. Sell more cars now and not later.

So you got to. You kind of got to be a little salesy.

Yeah, I mean, that. That's exactly what. What you're here to do is to sell. So if it sounds salesy, it's probably about right.

Yeah.

My opinion is be salesy, but don't sound salesy. Right. Like, I. I just. I have a hard time when I go into the CRM and I see the greetings, customer, ma' am or madam, how has your day been? I would like to show you my inventory. Like, I'm like, come on, man. I don't want to interact with Robot.

100, but if you're going to get some complaints from customers, I need mine. I think all of us probably need our salespeople more on the edge of pushy than the edge of not trying hard enough. Because the complaints that I've. If you get a complaint and say, oh, you know, I walked through your whole dealership and I never got helped, you're gonna be like, that's outrageous. But if you got a complaint where somebody is like, man, they were kind of aggressive, and they, you know, they called me three times in three days. You're like, dang, that person did their job.

Exactly. They did exactly what I want them to do.

But. But my theory is this. I get that. But what I want it to be is me trying to peer pressure Luke into doing something stupid at 2am in Minneapolis. Right? Like, that's the kind of pressure I want, like a best friend that's trying to peer pressure me into doing something crazy, as opposed to a salesman who's trying to peer pressure. Trying to pressure me into buying a car. And for me, that's tone. That's wording. That's. You got to treat that customer, that lead like, I don't know, I just think more impersonal, more friendly, more. I'm here to help you make the best decision because I'm your best friend, and let's get this done. As opposed to, I'm just trying to sell a car. And make some money.

Well, that all goes back to how you train your people at your dealership. Yeah, of course. I mean, you don't. And we don't want to be really, really pushy, sleazy car sales people. But I will say, if you're not getting those complaints, you're not training your people enough. Yeah. If you're not getting one of those complaints, then we're not being pushy enough.

Yeah. You know, one of the things we did notice, just to harp on, on our really slow week last week, and let's. I don't think anybody should overreact to one bad week of sales. I think that's. Your process may not be broken. It may be broken, too, but. But you don't have good months, and then all of a sudden one week is bad and you throw out everything you've done because that. That doesn't work. But one thing we did notice is that we were relying too much on text messaging and not enough on phone calls. And so we are having to go back and adjust how we're contacting customers, because just like you're talking about Marshall, even in the buy here, pay here space, there's a lot of options out there. And so every time you turn on the tv, at least in. In our area, drive time is advertising. And they are direct competitors of ours. And I promise you, they're not relying just on. On robots and text messaging. They're calling people, too. So we do want. We did understand that we need to change our process just a little bit, but unfortunately, we didn't have enough staff to. To make sure we're doing everything we're supposed to be doing. So that's how. That's how we dug into it. Hopefully we'll have some good training on that in the next couple weeks.

Yeah. And look through all your leads and see what the. What the common thing is. Because the reality is a customer submitted a lead. Something was interesting to them about either your dealership or your car. And I love it. You know, my salespeople, they brought up, oh, why is it such a high price? Well, why are you looking at it if it says it was a bad price? You know, I mean, you're not going to say that to a customer, but you can. You can get that out of a customer because clearly they don't agree with Cargurus. But, you know, the car has something that they wanted that nobody else had. Either it was the right color that they wanted or it was the right options. And you say, you know what? I don't know why it's a high price. I'd be happy to look into that. But what drew you to the car? And they say, well, I've been looking for a white one. Yeah, white ones. We do have to, you know, those are hard for us to get. We pay a little bit more for them. And then you start to, you know, put in an explanation as to why it's a little bit higher. You got to find that out. And that's all part of your sales training with your salespeople. If they're not equipped to answer that.

My guess is Marshall's car lot is black, white, silver, black, white, silver, black, white, silver. I'm guessing that's what your car lot looks like.

No, I have a yellow car that's been here forever.

So to put a pin in this, because I want to talk to you about a few more things. Marshall, before we got to let you go, if you were Luke's. If you were in Luke's position, let's give some practical tips, because we talked about the practicalness to look at the leads issue now to knock the. To knock the dust and get the pipes moving at his dealership and make a sale happen. What can we do as owner sales managers to just get the mojo going and get a sale today when they drop this podcast and they go onto the sales floor and go talk to their salesman? Give us some practical things you would do in your dealership to make sure that we roll cars over the Curb today before 5:00'.

Clock. Sure. So the three things that I tell my sales managers to do is pull up all trade appraisals month to date, every single trade appraisal, and see which ones we didn't take in because those people are still hunting for a car or they bought one somewhere else. Next, bring me your hottest leads, ones that I don't care. You're gonna throw crap against the wall and see if it sticks. The hottest lead that, you know, somebody else said no to or we said no to earlier, because sometimes this is another reason to take a loss, Jeff. Sometimes you just need to break, get them going again. So, yeah, it might be worth it. Yeah, it might be worth it to take a loss or break even just to get them going. I can sell cars. This isn't a dead dealership. And then number three is your sales manager is calling all of the web leads they can. Your hottest. I mean, I would start with your hottest ones, but I mean, if you only have 40 in a week, is 40 phone calls that hard to make over two days. No. So Luke should be calling every single one of those customers. Hey, you know what? I saw you were working with one of my sales guys, and I'm just going over, making sure everybody was treated okay. And I want to know how your experience was and, you know, if you're still in the market or if, if there was something else I could help you with, you know, that that's something Luke's got to be doing or my sales manager has to be doing on every. Because I don't trust when they say in the CRM, oh, I contacted the customer. Contacted them how? You know, text message, email, phone call. I mean, did you try all three? Because if you didn't try all three, then at this point, I don't trust you. And I'm taking over.

Yeah, that.

And that's.

That's exactly where we work.

Yep. And then. And then when you start doing that, it puts the sales people, they kind of take a step back and they go, no, I don't want you to call my people. You're like, no, I have to at this point. And then that makes them a little bit sharper because they go, dang it, if I don't contact this customer, if I don't put good notes in there, and if I don't have good follow up, then Luke's going to call them.

I just pictured Luke going out there, shutting the heat off, freezing them out, and then just walking around with like a taser and just like, just zapping him every so often when he sees them staring out the window or not. Like, I see that being Luke's motivation to get things going. Have you ever gone out and just like slapped a bunch of money on the wall, just taped it to the wall and said, next person that sells.

A car gets this.

Do you ever motivate through money, Marshall?

No. I mean, not in that aspect, but yeah, sometimes. Like, we had a goal before Thanksgiving. I said, if you sell, if. If we can get to this place in the month before Thanksgiving, you guys all get a weekend driver. And we'll use money too. But sometimes it's more fun to make it fun. Tangible things, not just money, can sometimes get lost. Yeah. And so if you get them, like, some of these guys, they love date night gift cards. I don't know why, but we give them a date night gift card and they just. It's something they can take their wife out to, and for some reason it's not. It's not part of their bank account.

Yeah.

So.

Yeah, because if it hits, it hits Their bank account, then the wife knows they got it. And, and yeah, but, but if it's off, if it's, if it's, you know, under the table gift card or something, or like you said, a weekend driver or some fun adventure or fill their.

Car up with gas. We do that sometimes too. That's cool.

Yeah, yeah.

So just real quick, I want to touch on this. The reason we talk about this whole sales thing and not getting stagnant is the issue with your turn time. Right. And I think a lot of dealers have been experienced that right now. If you're not, if you're not replacing that inventory and pricing it quickly to get it off your lot. And we're in these times of typical depreciation on vehicles and some are a little more accelerated. Right. Like you talk about your high ends, your electric cars, some of these that have become really less desirable, they're dropping pretty quick. Marshall, talk to us about the importance of making sure your inventory mix is there. Your days on lot based on your sales. And then ultimately you're talking about like flooring, man. If you're sitting on those flooring plans for too long, that interest and those curtailments could really eat you up.

Yeah. And, and so you gotta kind of, you kind of gotta peel back your whole process and go one, how many cars am I willing to carry? So if you, if your 90 day average is in your is selling 40 cars a month, then you go, okay, I'm, I'm really not gonna break out of that mold. I might one month, but I'm not going to break out of that mold month over month. Right. Because you're, that's your 90 day average. Unless you did something crazy at your dealership. I don't think we're about to go back into 20, 21. So 40 cars is what you sell. You have to kind of face reality. And even though you go, oh, we used to be a 65 car store, well, you're not, you're 40 car store. And by you carrying the same inventory levels that you did when you were a 65 car store, that now you're 40 car store, you're aging 25 extra cars every single month. There's, it's not, you can't do special math on that, it's going to end up the same way every single month. So you have to then come to the harsh realization that maybe I need to change my inventory, but if I change my, the amount of inventory, then that changes the number of leads I get and then I might sell less cars. And so it becomes a snowball effect in your mind. So you do have to. You do have to kind of get everybody on the same page of your dealership and say, you know what? We're still getting these leads, and we. We just got to get these cars ready. So out of those, what if you're carrying 65 cars, how many of those are online and ready? And if most of the time it was 40, then you need to work on making it 50.

So I want to ask you guys both, is this a true statement? Salesman, Sales managers say if we had more cars out front, we'd sell more.

Yeah, I don't get that. That's not a. It's not a phrase my people say. They, they want more leads. That's what they'll lead, lean into. I want more leads. I want more phone calls. Costs, the car, cars out there doesn't matter.

I think you have to have. I. I think you have to have, like Marshall said, that the amount of cars you. You typically sell, if you. Historically, you need to have that many, because there is a. There's a point where if you have too few of cars, you're not going to get to that next level. So if we historically sell 40 cars a month, and we. We're stocking 25 cars a month, they have a reason to say that. I don't think by stocking 60 cars a month, you're going to get the 60. I think. I don't think that's the case. But like Marshall says, historically, what you hear is we need more leads. And, And I've said this many times, and it's not more leads. You need to handle leads you have better. So, yeah, I think, I think it's more. I hear more leads than I do inventory because I. I can keep. At this point now, two years ago, I couldn't keep enough inventory, but currently I can keep enough inventory. That is not the problem.

The other thing, Jeff, I think you got to do to your point, you got to make your lot look full. If you, If. If your sales people are used to seeing, you know, aesthetically what appeared to be 65 cars out there, then you got to make it look like that. Don't. Don't, you know, spread your lot out to make it look empty, you got to tighten it up. And some of those spots, you got to get a little bit more creative on how you park them. Maybe you angled some of them, but make it look full. And we do a good job of making it look full. And sometimes I'll have More inventory than we normally have, but they won't be out front. And our salespeople say that, man, our lot's getting low. It's not. I have more inventory than I've ever had. I just. And then I go, oh, crud. I got to get cars out front and make the. I got to fix the appearance for them. Because salespeople are like that. If a car doesn't look like it's frontline ready, I mean, those. I don't know if you guys put those sticky dealer mats in there, but that's. That's the indication that's been detailed, and that tells a salesperson that course, frontline ready. It works on us when we go to the auction. Right? When we go to the auction, we're like, dude, that's a frontline ready car. No, they just, they did a quick detail and they put those sticky mats in. If you can do that for your sales people, mentally, they're like, this is a frontline ready car.

Hey, guys, it's that time of the year. We're trying to stock up on cars. We're getting ready for tax time. And some of you out there, like, might be like me, Jeff, and go, oh my gosh, I need some cash and prime limbs. The place to go to get.

Yeah. They're great supporters in the industry. Really, really. Like the guys over there, they're always helping out, always willing to listen and talk to you and give you education. So if you've got anything money related, whether it's your flooring line, your line of credit, your property, any of that stuff, give the guys over there primaland a call. They will definitely help you out, point you in the right direction.

Yeah. Even if you are not sure that you need them, they will take the time to discuss it with you and show you the best practices moving forward. So they're not only there for cash, Tara, to help you make sure you need it. Yeah.

Yeah. So I find it so interesting, the philosophy between selling from a half empty lot and selling from a full lot. You know, we know a lot of dealers that will sell 50amonth with 15 out front. Right. They only ever have 15 to 20 cars on the front line, but they're selling 50 to 60amonth. Right. And that mentality of scarcity and that mentality of. Of hey, yeah, I know you want a Mercedes. Guess what? I got one right now. Right?

And I think.

I don't know how much that works in the retail world, but back in Covid times, it was like, well, I think that had that mentality of it was flying off the shelf.

I think that's a Covid time mentality. I don't think that scarcity, scarcity on the certain. Right inventory is one thing, but if I only had one Taurus out there, it's because I don't sell but one Taurus. Right. So I don't think so. I think you gotta have the right amount of cars.

Yeah. The other thing you got to be careful of right now, when things get like this, when the economy gets tough and people's paychecks get pinched, they start figuring out where they can get their money and they come after you as a car dealer because they go, my car's broken. I can't afford to fix it. And that happens when the economy is tight. More people than ever come out of the woodwork. So if your car is not recon properly, you're going to deal with huge policy, huge headaches, huge upset customers because they're. They're unwilling to tolerate it. In 2021, if something wasn't right on the car, you know, service departments were impossible to get into. Parts were unavailable. There was an acceptance of, I'm getting the car. I'm just lucky to have this car. I'm lucky that I got to overpay for this car and I get to drive it. That's. That was their mentality. Now they're going, nope, I want the cheapest price. I want the best, best quality. And if something breaks, you're fixing it.

Yeah, it. I've seen a shift in that whole mindset, which is a whole nother podcast we could discuss.

But.

So this all goes back, Jeff, and we talked about this before. It all goes back to the cost of, of holding inventory. And with interest rates rising, we've got to be very cognizant of how much it costs to keep this car in your lot.

Right? Yeah, it costs. It costs way more than it ever used to. One, because of interest rates, because of your flooring, but two, because prices are dropping fast with the added. Added inventory out there. And two, or three, whatever number I'm on the recon that is costing you so much more. You guys know a lot, right? Right. You have a perfectly good car, and it sat there for 45 days and developed more problems, and it's not. Yeah, Jeff, do you have a few of those?

No, no. Mine never rot. They are all.

They start growing. They start growing plants in them. They don't.

Except for this 2016 Hyundai Accent Manual double repo, triple repo, I found on the lot for 489 days.

Oh, my gosh. Just send it to. Send it to the auction. Get rid of it, dump it.

And.

And the other.

It's actually what, you have to put it on payroll.

Yeah, I'm actually paying it now. Yeah.

Make it a demo car, like a car that you had in the summertime. Now it's winter and needs windshield wipers. And windshield wipers used to be $20. I don't know. Now on an Audi, I'm paying 70 to 150 for a set of wipers. What?

Yeah, right.

Thank you. Yes. Insane. And then if. If the battery goes dead, which happens all the time in the winter. I mean, I'm paying 400 on average for a battery installation.

Ours are 220. So. Yeah, I get it.

The worst part for me is the photo. Well, the beauty thing about my accent is the photos that I took 469 days ago are actually back in season, so people don't really know that there was.

You didn't even try to change the photos.

There's not photos in the front.

I'm just glad we're getting to make fun of Jeff for a bit. I feel like I've been making fun of me the whole episode.

Yeah, yeah. It's only my accent, though. So. I had a goal coming into. Into Christmas, our Christmas party. I told my employees, I said, look, if we can get in the next hundred days leading up to our Christmas party, if we can get all of our aged units, everything that was over a hundred days, I wanted it out. So I had a hundred within a hundred. Right. Within 100 days, let's get everything that's over 100 days in inventory sold. Because I knew that tax time was coming, I was replacing them a little bit cheaper right now than I had stuff I bought earlier in the year. So that was our goal. And the reward was we were going to double up our Christmas party, make it twice as big, twice as exciting. So we're almost there. I've got a Hyundai Accent, I've got a Kia Soul that have to be sold by next week in order for us to get to our goal. But we. I incentivized it. I said, look, it's really important to me to get this turn time up. We got to get these age units out. And. And that was kind of our fun little game and goal. So.

Man, I bet you're making a bunch of money on that 100 day old car.

200 and 489 day old car, man. 489 day old car a couple birthdays. I'll send it to you, Marshall. Hey, man, thanks for your time. I think. I think we have some great stuff for dealers to look at to make sure that they make it through slow times. They don't have to be slow. And one thing I know more than anything, paying attention to the Facebook groups, it's only slow between your ears, right? Everyone's like, oh, things are horrible. I haven't had a lead in months. And then you have one dealer that chimes in three or four. Like, it's freaking amazing. We're going gangbusters right now. So it. And they could be in the exact same state in the exact same region. It's. It's just mentality. So I think that's one thing we learn more than anything else is don't be complacent. Don't just accept that. Oh, it's. It's Thanksgiving. Everyone's out buying TVs, like, no, somebody had a really killer last week, right?

Yeah.

Because that's what they believed in. Thanks, Marshall.

Hey, thanks, guys.

Thanks for having me.

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