What We've Learned

ALOT! It's very interesting being on "this side of the fence" in the industry. We're transparent enough to share what we've learned.

Product Or People Oriented?

Motorwebs is a service oriented website provider with an industry leading product. But what does service really mean? After all, everyone promotes great service.

Viewed differently, companies can be classified as product oriented or people (service) oriented.

What distinguishes a product driven company from a people driven company?

Product driven companies are easier to market. They create a platform and training for a templated product and sell it. The marketing includes the benefits of doing it yourself. The downside of their limited or elementary support is not fully realized until the product is purchased (usually with a contract).

People driven companies have their names and reputations on the line. They are more challenging to market because each person has limited time to engage, work with and win over clients who have never heard of them. Marketing is primarily word of mouth and referrals.

Product driven companies are far easier to scale initially. With funding, they create their technology platform. And, with funding, they create industry alliances and carve out major marketing budgets.

People driven companies are not designed from the beginning to be scaled (and sold).

Product driven companies are far easier to scale incrementally. Let's say you have 5,000 customers. You create a new add-on product that is a template / widget for $100 a month. Do the math: that's $500,000 to the bottom line with very little personnel cost. You invest in a trade show, buy some speaking time and sell a new package with a creative title.

Product driven companies are not custom or partnership oriented. You buy the template, the package, the program and there's very little influence you will have to get something different initially or along the way that works better for your dealership.

Product driven website companies (Do-It-Yourself platforms) require added personnel hours and skill sets. The dealership pays for extra labor and time, either internally or through outsourcing. Depending on the skill sets, the efficiencies can go down significantly. For example, a professional graphic designer with programs will do work much faster than someone who is learning. The website presence can also start to lean more amateurish than professional.

When shopping just remember the nuances between people and product and which of those fits best for your needs.

The Basics in Life (applied to digital marketing)

Vast amounts of industry, research and opportunity have come from the human's desire for basic needs: staying alive and having enough money to live (as one wishes).

Let's take the first one: staying alive. It's much easier if you don't get a disease, like cancer. While massive resources have been spent on curing cancer, the historical focus has not been on prevention. It's been on gene mapping, molecules and cells. While we've made great strides in the last few decades, there still is no cure for all of our efforts. The closest thing we have today to a "cure" is doing our best to not get it: Prevention. We all know how. Don't smoke, eat your vegetables, exercise more… While these don't guarantee the outcome, they greatly increase the odds of staying disease free. Of course, when we go to the doctor and hear: eat more vegetables and exercise more, we roll our eyes.

Unfortunately, digital marketing (as of 2016) also has no single cure. What we do have is disciplined (boring) best practices that, when implemented over time, equal much higher odds of success.

While you can spend a lot of money mapping genes and data or buying into some new digital magic you might also want to eat your vegetables in the meantime and be aware of going too far down the expensive rabbit hole.

Building wealth (aka, having enough money to survive as you wish) is the other basic in life. Some of the most brilliant minds and conglomerates in history spend lifetimes and generations striving for perfect portfolio models, ultimate PEG ratios and performance indicators. Still, we have no magic bullet ~ no "cure". Imagine a glitzy convention, hotels, cocktail parties culminating in one speaker getting up on stage for five minutes and promoting "methodically saving your money" or doing dollar cost averaging (investing the same amount, month after month, year after year). The speaker would be booed off the stage and everyone would ask for their money back. However, that five minute speech is true. You can have an extra million dollars, just find the boring formula to get you there, stick to it over time and you're done.

Ever stop and wonder why best practices and "boring" advice don't get a spot in the limelight? No one wants to get booed off the stage.

The High-Tech World of Automotive Website Providers

We'd put an 'LOL' after that headline but we don't want to be patronizing, we just want to add a little more context.

Many dealers are encouraged to believe that this industry is high-tech. In many ways it is. Yes, we perform in the digital arena which is classified as "high-tech." And, yes, Motorwebs employs some extremely smart people. However, we've noticed that some of the vendors and consultants in this space go out of their way to promote that notion. Even to the point of intimidating with geek speak (see our Glossary of Terms). How do we know? Over the years, we've listened to hundreds of sales pitches, been on conference calls, sat through many seminars and have been asked to dissect proposals and conversations.

The bottom line is that all of the automotive website vendors, whether a David or Goliath, write their code and do their development the same way: with existing languages, frameworks and platforms. While their developers and our developers are highly skilled, the ultimate kudos belongs to those who wrote the core code and languages in which the industry uses.

The banner of true high-tech more accurately belongs to sectors that are forging and creating paths that have never existed. When you think about technology sectors such as Aerospace, Robotics, Biotechnology, it puts some distance between working Wordpress platforms or creating new functionality and widgets for a car dealer website platform.

We're just saying.... There's no need to be intimidated by "them". If in doubt, call us and we'll get you up to speed.

Freemium Pricing Strategies

Ever heard, "There's no such thing as a free lunch." Or, "You get what you pay for."

We've heard hundreds of variations of those phrases. The first time was probably from Mom or Dad before kindergarten. They were probably complaining about something that fell apart or counseling the kids never to take free candy. Unless you're doing a transaction with a non-profit charity, we know from experience these phrases are the truth.

Still...our eyes pause on:

  • FREE webinar: What you don't know could skyrocket your portfolio.
  • Get a FREE vacation at our resort.
  • Take a FREE test drive of our website platform.
  • Get a FREE analysis of your SEO.
  • Try our FREE lead-generating widget.

Freemium is a derivative of two words: Free & Premium. It's a relatively new term because it typically involves a digital component and was coined to describe pricing strategies for software and gaming. Here's what happens to us. We receive a digital service or product for free or highly reduced cost because the vendor knows they can then charge you a premium for their accompanying product (s). Or, you get something for free but then learn that you need to pay more, or even more, for the functionality you were originally attracted to.

As we know, Freemium products and services DO have their price. We invest our valuable time setting it up and then again trying to unwind it or paying more (and then unwinding it).

The close cousins of a Freemium strategy are penetration pricing or predatory pricing strategies. The buyer becomes part of an overall strategy to drive competitors out. This results in increased prices once competition is reduced and they gain market share.

So, the next time a vendor offers something free, make sure in advance it's not free for a premium.

Perfect Market Pricing

(doesn't exist in the Automotive Digital Landscape)

Here's a light economics topic. We know that consumers who live in this country enjoy a mostly competitive market for their goods and services. If we find a better price, superior service or enhanced features from a store or service we need, we are free to choose and change.

The primary features that create a perfectly competitive market are especially rare in the automotive website vendor space. Why? Let's look at a few qualities of the term perfect market pricing and contrast that with the current landscape.

Feature #1: Large number of firms supplying the product or service. There are many automotive website vendors. In a 2011 Automotive Website Vendor study by Soregenfini, they listed 284 automotive website vendors. Today, many OEM Digital Programs have narrowed the choice from only one certified vendor (Lexus dealers and CDK or Subaru and Dealer.com for example) to a choice of 16 website vendors (Toyota*). Even though the remainder of the OEM digital programs have an average choice of 2-4 vendors, they typically set minimum pricing for all packages. Because there is commonly a financial penalty for going outside programs (less co-op funds, etc) many dealers do opt to use one of those providers. Again, for a set price. With programs like these there is no negotiation. As we know, the less the effort required to gain and keep a customer, the lower the motivation to provide a superior experience for their customer. While the OEM receives the upside of administration ease and controlled homogenization across their brand for product distribution, the dealer may be on the losing end, paying more money for a less superior product and service.

Feature #2: Low Entry and Exit Costs to Enter Market. In a perfectly competitive market, there would be very low barriers to entry. This is not true with automotive website vendors. While any technically savvy person can patch together a somewhat functional website for a low cost, it will be lacking in the many functionalities of displaying and merchandising what can easily be millions of dollars of inventory.

Feature #3: No Individual Supplier has any influence on market price. The facts seem to point to a path of market price influence. In 2014, Dealertrack Technologies acquired Dealer.com for $1 billion. In 2015, Cox Automotive Inc. announced the acquisition of Dealertrack for $4 billion. Cox currently has an estimated 55,000 employees, $17 billion in revenue and many major companies under their umbrella such as Autotrader, Dealer.com, Dealertrack, Manheim, Kelly Blue Book, VAuto, VinSolutions, Homenet, and Haystack. Dealertrack spun off their product Inventory+ to ensure that they did not become the dominant inventory management solution provider in the United States.

Motorwebs is a smaller player. Pricing is based on a highly efficient model of operation in which we grow our business from highly superior service** and referrals. That's why you typically won't find us selling at trade shows, sending "objective" speakers to seminars, putting on events or buying items for customers. In our quest to be competitive and provide a solution for the more value conscious dealer (goes to pricing philosophy page), we feel that there are many other website providers to choose from should those be factors in a buying decision.

* Motorwebs is an authorized Toyota Website Builder.

**Not perfect service, but far superior to most industry providers as relayed to us by current clients.

Learning from the best... and watching out for the Experts

The highest level people in their fields know their material inside and out. They also know what they don't know. A top neurosurgeon would not perform a complicated orthopedic hip surgery. Someone suffering from severe allergies doesn't seek out a cardiac surgeon. It's easy to understand the analogies from the medical industry because it's been around since the beginning of time.

What has not been around long (relatively speaking) is the digital, online arena. It's fuzzy to even parse out the categories. Ever hear someone tout themselves as a "Digital Marketing Expert". Maybe they are. We haven't found any ourselves, just like we haven't found any Medical Experts. Of course, they're not playing with your life, just your budget. An expert would be highly versed and accountable for value in the following:

Online marketing (search engines, video, radio networks), organic search engine optimization, website architecture and design, in bound marketing, social media networks, mobile technologies and apps, online inventory merchandising and advertising, OEM mandates and promotions, analytics and data or customer relations management. Those name a few.

In a fast changing and evolving industry, it's a positive trait to question the "experts". Just because someone is skilled at one category doesn't mean they aren't a complete quack (medical jargon) in another. We just heard one about an expert who boasted about a degree in "Ecommerce" from a major university (and graduated before Amazon existed). The challenge for the online category, unlike the medical profession, is that there are very few unbiased resources for accreditations or certificates.

A good vetting question: Tell me a few things in this space that you know very little about.

Competing, branding and investing wisely online covers alot of ground. To do it successfully requires trusted people who have experience, curiosity and confidence to teach, but also intelligently debate philosophies and recommendations.

To Pay to Play
Or Not to Play and Pay?
That is the question.

If you're familiar with the grocery industry, you know that there's a good reason that the end caps (end of aisle) are stacked to the ceiling with product and promotion. They are designed to inspire and make it easy for shoppers to throw a SKU in the cart. And, no, it's not that the grocery store decided that a little company with hard working folks and a great product were deserving of some major real estate in the store for a few weekends. The grocery industry calls it slotting fees, or other creative revenue terms.

There's nothing inherently wrong with the practice if you are in a for-profit business. The grocery and consumer goods retailing industry is challenged with extraordinarily low profit margins and it's another revenue source. https://www.ftc.gov/sites/default/files/documents/reports/use-slotting-allowances-retail-grocery-industry/slottingallowancerpt031114.pdf (An aside: We're not trying to give anyone ideas to load up the dealerships with paid product placements.)

What should create pause is being aware of exactly how industry events, community platforms, etc accrue their revenue. While most business owners and marketers naturally understand why some products get a lot of real estate and promotion in grocery stores, many shoppers are not aware of these practices. Of course, being very aware would probably make them more discerning buyers. They would skeptically think that the tomato soup display that's ten feet tall may not be the best soup, or even the lowest price.

While margins are low in grocery, they are not in the automotive vendor industry. It pays to be aware of who's paying to play. And who's not.

We all pay to play whether we like it or not. If you own a boat, have a kid playing a select team sport, etc. In business, it's comes down to return on investment. Our philosophy has always leaned toward having someone pick us for the team because we're talented, not that we wrote a check. Again, no right or wrong, we just find that the play is just a little more satisfying that way.

Real Conversion Conversations

Want more conversions!? Motorwebs can add any kind of form, pop up or coupon to your website...typically much faster and better looking than any other website provider.

Many digital vendors promise higher conversion rates to get your business and walk away with a signed contract. Over the past few years we've seen seminars with titles like 'Exploding Conversions' held at industry events. If you're in digital arena, chances are you can't turn around without hearing or reading about conversion rates. (Written Spring of 2016. This could all be an old topic by the time you read this.)

However, these conversations and pitches only scratch the surface when talking websites. Even defining the metrics vary greatly across dealerships and agencies. Below are considerations that should become your side of the conversation. Of course, some of these variables apply to other digital products you may review. This list is not exhaustive so you'll want to add your own questions.

However, the biggest question that may trump all others: Do I really want to go with a vendor that, (A) only chooses to present a fraction of the information, or (B) isn't experienced enough to understand all the variables?

NOTE: The questions below mostly assume that the definition of a conversion rate is based on website forms divided by unique visitors to the website.

What's the prominence of the phone number(s)?

Most ecommerce giants do not have phone numbers on their websites for sales activity or product purchases. If they added phone numbers on every page and product, their website forms and conversions would immediately plummet. More appropriate to a car dealer website is the size and frequency of a phone number throughout. The less prominent your phone numbers, the more you naturally force communication through forms, increasing website conversions. Would you rather receive a phone call or a website form?

Dynamic Call Tracking?

Some 3rd parties install code on the site to convert the phone number to take appropriate credit for a new visitor. However, if it's a paid search company and they are buying variations of your name, it will cannibalize traffic and calls (and forms) you would have had anyway.

Chat?

Chat is a great tool but siphons website form conversions and phone calls to the chat product.

Traditional Advertising, Paid Search and/or Aggressive Organic Search Optimization?

The more you stretch and reach for your audience, the lower the "quality" of that audience thus typically lower conversions. For example, if you consistently have around 5,000 visitors per month in your geographic area and then you run a TV campaign that covers your entire metro or a paid search campaign that focuses on another area, and "buy" another 3,000 visitors per month, their quality isn't typically going to be the same. SO, your conversion rate goes down. Nothing to do with the website.

How many Third Party Sources/Forms on your site?

There are many excellent third party services a dealer may want to install on their site but these siphon website conversions into other pools. Finance tools, trade-in value apps, payment estimators, etc etc. CRMs are the most efficient tool to parse all incoming sources.

Do you lean toward Quality or Quantity of Forms?

This is your call and depends on how many internal resources and people you have.

Example 1:

One of our dealers aggressively posted all under 15K inventory to Craigslist with links back to website. No prices. Instead, a prominent "Make Offer" button on all VDPs. Conversions were sky high. Hundreds of leads. But, alas, almost all junk. Almost all offers were so far below reason that it became a time liability to respond.

Example 2:

Family oriented market, lots of kids in the community. This dealer sold a lot of SUVs. He demanded that every SUV in his inventory have every option listed, especially 3rd row seats. If the prospect wanted a 3rd row seat and the vehicle didn't have it, he did not want the call. Some dealers would want those calls. Your decision. However, for this dealer, the conversion rate is lower by choice, He knows that increases his time efficiency and profitability.

Is Userability being sacrificed for conversions?

Ever been on a site that requires name/phone/email to navigate to certain areas of the site? It certainly increases "conversions" but quality goes down with every Mr. What Ever "lead". Don't risk website abandonment from quality visitors.

How many forms do you have?

It's easy to add or subtract and then track through your CRM.

What type of forms do you have?

Some buttons/forms work better for certain dealers, markets, etc. Assuming best practices are in play, refining them is easy to see which work well while maintaining quality of leads.

How accurate is your inventory?

Some inventory providers are better than others in frequency and accuracy of feeds. Problematic providers who continually resend your sold cars, have delays in feeds, etc. affect the accuracy of your conversions.

Examples: Last month an inventory provider put a $21,000 Cadillac in for $2,100. Conversions skyrocketed!

If that happens very often you better add some formula to the equation to account for those errors, otherwise your conversion accuracy rate goes out the window.

What is Your Inventory Size & Type?

The size of a dealer's inventory and the type is a significant factor in conversion. Let's say one dealer carries under 15K cars only. The other is a luxury dealer and most vehicles are over 40K. Guess which website vendor has significantly higher conversion rates?

What's Your Pricing Philosophy?

Are you a higher volume, lower profit dealer? Higher profit, lower volume? Your call. However, if you're in the latter camp, your conversion rate will be lower. Quick tip to skyrocket your conversions: Lower your prices on all inventory by 30% this weekend.

Do You Want To "Buy Leads" / Conversions?

Offers of $250 off your best price or Gift with Purchase are a quick and easy way to increase conversion. Motorwebs can add incredible graphics and great looking offers all over your site in a few minutes. Easy. However, the real question is whether you have a philosophy of wanting to buy leads or not. As one (male) dealer succinctly explained in a forum, "put a Weekend With Pamela Anderson" button on your site….that'll increase conversion rate.

What time periods are being evaluated and compared?

If the financial advisor you had in 2008 didn't produce the same returns as the one you switched to in 2010, was that the financial advisor? Tsunamis, economy, recalls, interest rates, etc all throw wrenches in the equations.

Manufacturer demand

What weight variables would be assigned to a high demand brand versus (fill in your own blank) manufacturer? And, what if a dealer's used inventory included more or less of the high demand vehicles? Buttons and conversion points on a website do not magically increase or decrease high or low demand vehicles. Similarly, huge demand and conversions for a limited release model shouldn't give more credit to the website provider.

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