Combining the power of “instinct” and “knowledge”

I remember when I purchased my first car. My sister had a friend who worked in the loan department of a bank. This friend had access to two books, a ‘black book’ and a ‘blue book’.  I had no idea what those colors meant, but it had to be important and secretive, or they would have had more descriptive names!

I was told that these ‘books’ were used by the bank to determine vehicle value and loan amount, and this knowledge was considered inside dealer information.  That ‘best friend’ relationship my sister had, and the knowledge it provided created a feeling of empowerment. Now armed with a plethora of non-consumer information, I was ready to buy a car.

Fast forward several decades and “amazing how the car buying process has changed!”, all for the better!  Now that the playing field among consumers, banks and dealerships has leveled out, how are automotive retailers adapting?

Like most movements, there are stages of innovation, awareness, adoption and even resistance.  The current ‘pricing analytics’ movement in the automotive industry is no different.

There is a segment of the dealer population that continues to rely on the ‘gut instincts’ of a market savvy used car manager with close ties to street wholesalers and local auction pricing. Their marketplace is viewed as ‘local’ and these dealers have built a successful business on knowing their customer’s needs. These managers’ likely buy and price inventory much the way they always have, with possibly some additional help from price points found from simple searches on a few popular shopping portals.  While this practice has worked tremendously over the years, I anticipate this legacy dealer behavior is shrinking, as more dealers move to embracing real time market intelligence, robust information from total market overviews, and inventory analytics provided by the growing popular segment of pricing analysis tools. 

There have been new businesses created around this movement, and more industry vendors adopting some form of analytical tools within their current product offerings to meet the diverse needs of the dealer universe.

The ‘friend at the bank’ has since been replaced by the internet. There is no more ‘inside information’ rather transparency and empowerment to all parties in the retail process. ‘Profits driven by high grosses due to higher retail prices’ are being replaced by ‘profits driven by accelerated turn due to the right stocking and the right pricing’.  It is an exciting time for automotive retailers due to the growing insight and access into business intelligence provided by innovative industry vendors. While yesterday’s dealers could only rely on the strength of its used car manager, tomorrow’s dealers will derive their success from the rich balance of ‘gut’ and ‘business intelligence’. 

A growing % of dealers have moved with passion to gain an early advantage, others are ‘fast following’, and others are ‘waiting to see’.  Yet all dealers will eventually be forced to adopt some form of advanced science into their pricing and stocking methodologies lest they risk being out-smarted by their competition and their customers, and they may not even know it.

What has been your experience of combining the power of “instinct” and “knowledge” to evaluate inventory price points?

by Glen Garvin, Group General Manager

It is an exciting time at Dealer Specialties for many reasons and the most tangible reason is the release of our new Inventory Management Software, IVM 3.0. With an incredible amount of new tools enhanced by a new customizable user-interface, IVM makes inventory management easy and robust at the same time. The press release with more information can be found on our website. The most recent feature is the ability to post vehicles to Twitter which will be available next week in IVM 3.0.

There is a cautionary tale to be told about this, however. This is similar to giving my son a $300 baseball bat. Used under the right circumstances, he’ll have great results. However, my son is seven and left to his own devices, I’m quite certain there wouldn’t be a piece of furniture, door knob or light fixture without significant damage. There needs to be some rules or at least some guidelines in place before he takes possession.

So, let’s say you don’t want to damage your furniture with your new bat… how do you utilize Twitter without messing stuff up? Here are some things to do:

1) If you don’t have an account, get one. Easy to do. Go to www.twitter.com … you’ll figure it out on how to sign up. If you struggle with this… seriously… give up. Spend a couple minutes uploading a photo and putting your information in your profile.

2) Figuring out what to do on Twitter seems difficult at first… that’s why a lot of people quit quickly. Try to find some folks you know to follow. Follow @getauto @dealrspecialts @ggarvin for sure (duh). Follow people and they’ll start following you back… some will anyway… people are cool like that.

3) As much as you want to play with your new toy… you really can’t make much use of it yet… sorry. You need to start listening, following conversations and watching news items. Explore. Search. Try http://search.twitter.com/ and type in some topics of interest. After you listen, then engage…

4) Once you understand the landscape, you can start to post some stuff where you might be able to make some money… but don’t think about the goal of selling a car. Think about engagement and how you can help people. For instance, winterizing tips or other points of value…this will engage more people.

5) So, you want to sell a car on Twitter? Think of a win-win scenario… are you the type who walks into a cocktail hour or happy hour and announces that you have cars for sale with a megaphone? I hope not. Same thing here…do you have a nice car for sale? Maybe one that stands out, one that is unique, one that is specially priced or in high demand? Well, then… now you’ve got something. Post it out there… just don’t do it too much or people will stop following you. Who wants to be solicited all the time? Maybe one a day or 3-4 specials per week? It is easy to do in IVM, just set your Twitter account up under settings, then click on the vehicle to post to Twitter. It’ll give you the default information for the vehicle like the year, make and model and a shortened URL… be sure to add some description to why it is a special vehicle or special price.

Just realize that even a $300 bat sometimes misses the ball… so just keep swinging – just not too often