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How an “old-school car dog” wins with an unlikely mix: Tech & EQ
Featuring Dustin Collins, Vice President at Bill Kay Auto
Hey everyone. I’m thrilled to share an exciting update: Starting this week, very edition of our CDG Newsletter (88K subscribers) will be available in audio format — recorded by me — for all podcast subscribers.
Here’s our first episode and the best part? It's only FIVE MINUTES!
Now — lets’ get started with today’s Car Dealership Guy Podcast recap.
On this episode, Dustin Collins, Vice President at Bill Kay Auto Group, sits down to share the latest from the frontline of retail automotive. Dustin is a veteran dealer and entrepreneur, with a long record of achieving success across multiple franchises.
1. Getting started in the car business.
Dustin has been in the business since he turned 15 when he began washing cars. Inspired by his stepfather, he started his sales career at the age of 17, becoming a manager at 20. As a new leader, he says he became really interested in the used vehicle side of the industry. His willingness to try out every department and learn new skills eventually led him to become an experienced retailer, landing him his current job with Bill Kay.
2. What makes a good service director?
Persistently detail-oriented employees make great service directors. Dustin explains it all comes down to constantly monitoring effective labor rates and hours per repair order, watching the jobs that are being sold by the service writers and technicians, and ensuring that expenses fall under industry standards so the dealership isn’t leaving money on the table. Ordering the right parts is also critical for a successful service director–failing to stock in-demand components results in wasted resources.
3. Implementing protocols for success.
Dustin follows a specific protocol to maximize the day’s success, always starting off by checking how many leads are coming in and how many result in appointments.
“I look at how the correspondence went out with the customers to make sure their questions are being answered right because you will see a customer send in an email saying ‘hey, does this car have heated seats’ and [they’ll] get a response, ‘can you come in for a test drive today’ so you’re not answering the consumer’s question and that can be frustrating for the consumer.”
4. Perfecting the customer experience.
Dustin regularly checks up on the dealership’s merchandising, making sure each vehicle has the right pictures and videos so that online customers can find exactly what they’re looking for. He adds that he keeps close track of when units are purchased and when they hit the lot, allowing him to gauge the speed with which reconditioning and merchandising occur.
Regular meetings with sales staff are also an important component of Dustin’s schedule, allowing him to energize the team and keep them focused on serving customers. One of the most important parts of his job, which he notes is easily overlooked, is making sure cars are clean and ready to be shown off to customers by the time they’re rolled out for a test drive, noting that nothing is worse for a buyer than to be shown a dirty vehicle.
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5. How to lead other managers.
Despite his meticulousness, there are still challenges that Dustin encounters. One of the hardest tasks is making sure the management team understands the big picture, especially when it comes to new vehicle turn.
“Before last year we were carrying about 50% less inventory than we are now…now that the inventory level has grown you need to get the managers to understand that number one the customer can now go buy somewhere else because they have options. So, the customer experience needs to be great in order for you to attract that customer and get the sale with them.”
The reason it can be difficult to keep managers on task is because they often don’t see the dealership’s floorplan expenses, which increases the longer cars stay on the lot. In today’s current environment of high interest rates and rising inventory, dealers don’t have the luxury of being patient when it comes to driving sales.
6. Inventory management strategies.
Net profits have come down over the last year while demand has cooled, making the market much more competitive between dealers. Dustin believes that dealers have to employ aggressive strategies to survive in this landscape, using factors such as inventory credits to their advantage. These credits, given to dealers by manufacturers, can result in profits if vehicles sell fast enough. In fact, retailers can use these to carry more supply, provided their days-to-turn remains low in response. But it’s not quite so easy: dealers must keep up an intense sales pace to make their credits work for them.
“When those inventories sit, your credits have now become an expense, so that flips upside down. So, where you may have had a $20,000 credit on your inventory, now you have $20,000 expense.”
7. On the used car side of things.
Dealers have different strategies they can use to fend off profit declines. Dustin utilizes an experienced corporate buyer to purchase pre-owned inventory for all of his locations, allowing for a centralized and streamlined acquisitions process. Tracking search results, profits, turn time and other global data metrics also helps Dustin decide which used models to carry. For new vehicles, he recommends that managers look into trading out unsuccessful models with other dealers so that they can replace them with better-performing lineups for their market.
8. Preserving profitability.
Pricing can be challenging, as dealers have to monitor each other carefully to stay competitive with the market. Dustin uses platforms like vAuto to track models and trim levels at other storefronts, aiming to come in around $500 cheaper his local competitors. Through this, he is able to maintain roughly $1,500 in front-end profits for new vehicles, and around $1,800 to $2,000 in front-end profits for used vehicles, plus $1,500 to $1,700 on the back-end.
9. Incentivizing back-of-house employees.
Dustin incentivizes his service writers in a similar manner to his sales staff, noting that back-of-house opportunities are just as important as front-of-house.
“If they bring a client from the service department up to the sales department, and they make a purchase we will give an incentive to the service writer for doing that.”
He also employs a VIP manager who coordinates with service advisors to sit clients down with a sales team member and discuss either upgrading or selling their vehicle.
“Your salespeople stare out the front door all day while everybody is coming in through the back door. You have all these great customers that obviously have bought from you, they trust you, they believe in your service so they’re coming back. Why not take care of those people again and find a program that can work for them and upgrade them into another vehicle?”
10. Taking advantage of tech.
New innovations have given dealers, many of whom grew up in the industry before it adapted to modern technology, opportunities to improve their performance in nearly every department. Dustin notes that several of his group’s storefronts are using tools like artificial intelligence to handle service appointments to great success. When it comes to marketing, the biggest benefit comes from data. Dealers can now see which leads are working, which need to be dropped, and which can be improved upon.
“We don’t want to shoot buckshot, no one wants to…spray everywhere and say, ‘ok let’s advertise everywhere, let’s try everything. You want to be more of a sharpshooter and find out what’s working and hit those metrics in those areas. It’s really putting the science and the data into all of this.”
Data also adds more accountability to the marketing process, allowing dealers to determine whether initiatives are bringing in customers.
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