Straight Talk - Ken Potter

Travis Miller:
And welcome to Straight Talk with Jimmy Vee and Travis Miller. I’m Travis Miller.

Jimmy Vee:
And I’m Jimmy Vee from the Rich Dealers Institute

Travis Miller:
For those of you joining us for the first time or if you have never heard us before, of course, we are the founders of Gravitational Marketing and the Rich Dealers Institute. We’re also the authors of the bestselling book Gravitational Marketing, the Science of Attracting Customers, found in bookstores nationwide and the creators of Auto Marketing Advice.

With us today is a very special guest, someone whose wisdom and knowledge is sure to help all of the thousands of dealers listening. If you only take the time to listen and make the effort to implement, these ideas can be very beneficial to you. And with us on the line is Mr. Ken Potter, vice-president of automotive from Carsdirect.com. How are you, Ken?

Ken Potter:
I’m very well.

Travis Miller:
Good. Thanks for joining us today.

Ken Potter:
It’s my pleasure.

Travis Miller:
We really appreciate you agreeing to share your time and wisdom with us and with all of the dealers listening to this. That’s excellent. Now getting right into it, Ken, you know, one of the purposes of this call is sort of predictions. None of us have a crystal ball.

Nobody knows, of course, what’s gonna happen in the future, but a person like you with as much experience in this business as you’ve got, you’ve seen the trends, you’ve seen the cycles. You’ve been around the bend before. So in your opinion, what are your thoughts and predictions for the outlook of the auto industry over the next 12 months?

Ken Potter:
I certainly think that there’s probably three different levels of dealer out there. There’s the dealer who probably wasn’t operating very well prior to all of this. It was the dealer in the middle who was trying to figure out the operating processes and then there are those who are ahead of the curve, which is probably typical of all businesses.

And I think certainly the ones who were behind the curve are already gone and I think there’s some subset of that middle level who will either have to figure out how to go away or get better. And in the end people are still going to be driving cars and people will still need cars. There’s many different things you can look at obviously to point to that. I think it has to be more about the dealerships have to change to put themselves into the customers process as opposed to how it used to be where the customer was put into our process.

Travis Miller:
Uh-huh, interesting. What it sounds like what you said, it’s a really interesting perspective that it’s like this circumstances I think extenuating circumstance. In other words, the worst – the bad get worse and the good get better.

Ken Potter:
That’s exactly what I see happening and ultimately it all just revolves around people and process and if you have good people and good process or can figure out how to get good people and good process, you got a chance. But if you don’t’ have any – you don’t have great people or great process, you have no chance because I believe there were some dealers who could survive, even make money, however, those opportunities which were usually somewhere around making $6 or $8 grand on a special buy customer because the banks were greedy and took it, have gone away.

Travis Miller:
Uh-huh.

Ken Potter:
So now you have to figure out how to sell cars full spectrum and make money doing it. And the only way you can make money is to provide value.

Travis Miller:
Okay, yeah, that’s interesting. Now what do you see is the biggest hurdle that dealers are gonna have to grapple with this year?

Ken Potter:
I think just changing their business model and doing it on a lower cost structure. I think dealers – every dealer who I’ve ever talked to could always tell you what his neighboring store did or what the others in the district did and they all chased that, right. It wasn’t could I sell 100 cars and make a nice net profit off of that. It was, hey, the other guy sold 150. How do I sell 150?

Travis Miller:
Okay.

Ken Potter:
So I think we all chase that and in order to chase that, you add on people, you add on process, you add on advertising, and you go after that. And I think that given the current economy now with the cost structures the way they are, dealers have cut all that out. So they’re gonna have to figure out how to do it on less.

Travis Miller:
Uh-huh. The fat and happy days are behind us.

Ken Potter:
I think so, yeah.

Travis Miller:
Yeah, uh-huh.

Jimmy Vee:
Well, this is really like you’re telling them they’ve gotta play their own game. They’ve gotta stop worrying about what everyone else around them is doing. They’ve gotta decide what they want – a goal that they want to shoot for and then they need to figure out how to get there and at the same time do it on less.

Ken Potter:
Correct. You gotta start with the end in mind, which is, okay, where do I want to be 12 months from now? I want to worst case be still in business and still have jobs for all my employees who have been with me a long time. You know, I’d like to make some money and here’s how I’m gonna do that.

So I think you gotta understand your cost structure now and what it’s gonna take to hit whatever it is goal you set for yourself, whether it’s three months, six months, twelve months, and then everybody has to give more than they used to give to achieve that. So it’s just – I think it’s just a lot harder than what it used to be.

I have a friend in the mortgage industry who I’m very close with who made a lot of money two years ago doing loans in California and the bank would give him one or two percent. You do a million dollar loan and you make $20 grand. And now I look at him, the parallels to our industry, and he continually tells me, “Man, it’s so hard. It’s so hard. You gotta have full ________. You gotta have full ________ and these customers take a lot of your time.”

And from his perspective as he’s continually telling me it’s really hard, I’m just like no, no, no, that’s just work and that’s what it used to be. I think we –

Jimmy Vee:
That’s right.

Ken Potter:
We all got carried away with ourselves a little bit and now we’ve gotta go back and work hard.

Travis Miller:
Uh-huh. You know, Ken, this has been a pretty crazy six months that we’ve gone through here, or I guess some could say it’s been a crazy 18 months, but whatever. There’s been a lot of turns, a lot of dips, and surprises. Do you think there are any surprises in store for us this year, for the auto industry?

Ken Potter:
You know, I tend to be a very optimistic person, so I focus on the positive, so I’m trying to continually think that whatever – every day when I get up, you know, is the day that you move one step closer to where we all need to be, but given the fact that you’ve had just these large companies fail that we would have never thought would have failed.

If you just even look at what Citi is trading at today, we would have never said, “You know, that’ll be a $2.00 stock,” or the trouble that Ford and GM are going through. So I think you have to be open minded that there certainly could be other things out there that affect us.

And in fact, I think the dealers should really be prepared for that. They should – you know, that’s one of the things that you should be talking about, okay, what else could happen to us and if these scenarios happen how will we continue to work toward our goal despite them happening?

And that could be a myriad of different things. You know, a manufacturer could go under. While I don’t think that would happen, it certainly could. And if you’re a single point GM store, what do you do if that happens? So I think you have to think through these contingencies a little bit, but not necessarily dwell on the negative. You know, deal with what you can do today that you can affect your business in a positive way.

Travis Miller:
Uh-huh. Well, based on what you’re seeing going on right now and your vast knowledge of this industry, I mean you guys obviously see a lot of specialized information doing what you do, what are the top three recommendations that you would have for dealers, you know, things that they should be focusing on to, as we say, keep business growing and not just going?

Ken Potter:
I think dealers traditionally have had a weed out mentality as opposed to a pull through mentality from a customer perspective.

Travis Miller:
Okay.

Ken Potter:
And if you just look at the way dealerships are set up from the perspective of the newest most inexperienced person out talking to the customer first and the most experience person is three levels back. And unless that customer gets through a series of hurdles, they never make it back there to that individual to talk about a transaction.

And I think that model has to be flipped upside down where you have to look at every single opportunity you have from your website to where you’re spending your advertising dollars to the customers who walk on your lot and you have to say, “Okay, here’s what I’ve generated. How do I pull these people through the system? How do I show them the value of what we offer and provide a solution to what their needs are?”

And I think we all got carried away and consumers got carried away with, oh, I just want that car, I just want that car, I just want that car. And because they had the financing available to do it, they got whatever they want.

Well, now I think customers have to be more realistic. So the dealer has to figure out, okay, what is the customer trying to accomplish and how can I pull them through the system because it isn’t about creating more and more and more buyers, which dealers certainly could do, but that costs money.

Travis Miller:
Sure.

Ken Potter:
Everything is gonna cost you to create more buyers. So the question is if you’ve already restructured your cost level to a certain level, then what am I getting out of that and how do I maximize that? So I think it’s just flipping what their model.

Put the guy who’s the smartest guy three levels behind the desk, put him out front. And they probably don’t need or don’t have that person who was out front who was trying to weed out the customers who, you know, are they a serious buyer? Did you get them into a test drive, all that sort of stuff? So I would say that’s certainly one thing. The other –

Jimmy Vee:
You know, by the way, that’s a really interesting point you make, you know, cause I think and going back to what you said earlier that – or the way I paraphrased what you said which was the good get better, right? The successful dealers in the past were already doing stuff like that. They had this pull through idea. They realized that they were more than just order takers selling the car that the person came in and asked for and actually were advisors and really helped to tote a deal from the beginning stage to the completion stage, kind of like your friend in the mortgage business was saying.

You know, we really gotta work this thing now. I can no longer just be an order taker. And it’s the order takers I think that are falling down on their knees and then the guys who realize that they control the process and can move people through the process, hey, they were succeeding before and this is just even – this is a bigger opportunity for them now.

Ken Potter:
Right. I fundamentally agree with that, and my second point was I think dealers put all their eggs in one basket in many cases, whether that is I have a particular dealer who was selling – you know, he had a Chevy franchise and he was living off of Corvettes and selling many, many Corvettes every single month all around the U.S. and that business has dried up and that he scaled his business to that level.

He now has a very big place that he has a big monthly note on and he has all the people that he had to have employed and so all of that has sort of gone away and it’s hard to replace that very quickly. So I think dealers, when they build their plan out, they have to look at and say, “How do I make sure that I’m diversified so I am full spectrum on any kind of customer and don’t just shift my business one way?”

Travis Miller:
Uh-huh.

Ken Potter:
And I think the big thing that hurt people was the special finance business. I know many dealers who sold cars out the front for no money or lost money and they did it because they were selling 40 or 50 cars at ridiculously high profits. Well, what happens when the banks come around and say, “Hey, you’re not gonna be able to do these loans anymore.” They now can’t sell those other cars for a loss either and they didn’t have a plan for how to resolve that.

And so that’s why a lot of these dealers went out of the way quickly. I think they just had themselves shifted too far one way or the other. And again it goes back to pulling through your customers, right? Rather than looking for that – or I’m looking for a customer who’s got bad credit and a couple grand down who I can twist around and make $8 grand on. No matter what you get, whether that’s however you advertise through the internet, through the guy walking on the lot, you’ve gotta figure out how you can show that guy the value and sell him a car.

Jimmy Vee:
Uh-huh, uh-huh, yeah. I’m with you completely, very interesting stuff. I mean it’s really a paradigm shift here.

Ken Potter:
Right. And certainly the other thing I would say is I have a friend who owns a store and one of the things that him and I talk about all the time, we debate our ideas on the industry and talk about where it’s going.

But you already have a book of business through your sales and your parts and your service and I think dealers have always thought they had a good eye on what their previous business was while we were chasing the next piece of business and our other dealers’ business down the street and I think we have to redouble our efforts back on to our current customers.

Jimmy Vee:
I agree. If you’re looking for the fastest and easiest transaction value, it’s gonna be there in your existing customer base.

Ken Potter:
Correct.

Jimmy Vee:
And, you know, most people have – most dealers have neglected that huge asset over the last several years, not nearly taking as much time, care, and consideration and communication with that group of people as they should have been and now it’s coming to bite them in the butt now. But it isn’t too late.

You have these customers. They exist. You’ve built trust and rapport. You’ve built a relationship. They’ve already spent money with you, so that’s more comfortable. They’ll do it again. So you just need to amp up the level of communication, the level of value you provide, and build a better relationship with those people.

Ken Potter:
Right. And some of those relationships you might need to rebuild and –

Jimmy Vee:
Yeah.

Ken Potter:
I mean just simple little things. I mean certainly everyone is looking for a bargain these days. I often think to myself, which I think helps me with the dealers that we do business with, “What would I do if I were a dealer? What would I do if I were a single point store right now?”

And I think one of the things I would do is I would certainly go into my database and look what’s in there. And I don’t think there’s enough analytics going on at traditional dealerships. They’re passiveness of customers, of monthly spend, how much they’ve spent, when they’ve spent it, when was the last time they were in?

There’s a lot of companies popping up who are doing this and some are really good and some are just trying to take advantage of the fact that dealers are poor at it. But I would look into my own system and I would say, “Okay, tell me who bought a car from me at some point and time or who’s been into my service shop at some point and time who hasn’t been back?” And I would just send them a letter. You know, Mr. Customer, we know the economy is tough right now. Come in, your next oil change is free. It’s on us.

Jimmy Vee:
Yeah.

Ken Potter:
And I would gamble that I would be able to get some RO work out of those customers enough to at least pay for the oil changes.

Jimmy Vee:
Oh, yeah.

Ken Potter:
If I were going to spend money, I would at least spend money on something that puts value back into my customers and gives me an opportunity to possibly make some more money, right? So as opposed to I think a lot of dealers just said, “Don’t spend any money.” Well, that won’t work. You have to spend some money, but you have to spend money on your people. You have to retain your good people and you gotta make sure that you have enough good people to continue on with whatever process you have in place.

Jimmy Vee:
Uh-huh, uh-huh. And I second that. I think you’re right. Those metrics are huge and the people are huge assets as well.

Travis Miller:
Well, Ken, this has been great. I mean really sophisticated insights into the business, good information for everybody. You know, I think most people listening to this are probably very familiar with you guys, but just in case they’re not, if someone’s listening to this saying, “You know.”

Jimmy Vee:
This guy’s sharp.

Travis Miller:
This guy’s sharp. I want a little more of this.

Jimmy Vee:
I like him.

Travis Miller:
And, you know, want to learn more about how Cars Direct can help them right now or at any time, give us a little blurb on how that can happen.

Ken Potter:
Well, we started ten years ago when everyone was jumping into the ecommerce or internet game and honestly when we started I wasn’t at the company, but it was started how everyone else started an internet company. “Hey, we’ll just roll out this internet company. We’ll – we won’t make any money, but everyone working here will get rich.”

And obviously, you know, I think that I came right when the internet was experiencing – the whole ecommerce model was going through what the world’s economy is going through now where it all crashed, you know, the dot com, if you will. So I think we learned a lot inside of there.

One thing that we figured out because we sell cars, which we still do today. You can buy a new car from me. If you’re a customer and you came on my site and you wanted to buy that car, you could buy it from me, and that’s how we drive our business to dealers because I start with real car shoppers.

So we still do that today, but we found nine years ago that customers really like our process, right. It was very transparent. Upfront we gave them everything they need to do. Now over the years we’ve transitioned because our scale is so large, we have so many customers that I couldn’t handle them all, and we transitioned into the lead generation business for dealers which is murky waters.

The lead generation business is murky waters. There’s all sorts of different people out in that space who are just trying to take money out of a dealer’s pocket. The one thing that I would say certainly about my company and myself is that if you’ve ever done business with us, we believe you should get a good return on investment and you shouldn’t be at risk for your money.

So as long as we’re going into business with somebody who has a good plan with good people and process in place, we’ll take on some of the risks with them and we’ll partner with them, which is what I think you have to do nowadays anyway.

Travis Miller:
Uh-huh, uh-huh.

Jimmy Vee:
Great. And how does someone get in touch with you, Ken?

Ken Potter:
They can e-mail me at kenpotter@carsdirect.com or they can call me at 310-280-4282.

Jimmy Vee:
Awesome.

Travis Miller:
Oh, this has been excellent, like I said, lots of great information here and thank you so much for sharing your time and your expertise here. I mean this is priceless information.

Ken Potter:
No worries. Thank you.

Travis Miller:
Yeah. Now folks listening, thank you for joining us and being one of the many dealers around the world tuning in right now and remember if you ever need help attracting more customers to your dealership and getting a higher ROI from all the marketing you do please just contact one our Rich Dealers advisors and request a hidden wealth evaluation.

They’ll help you uncover some untapped potential in your dealership, and as always, this is a free service that we provide and you can learn more about this free hidden wealth evaluation and hear other interviews with experts just like Ken all at automarketingadvice.com.

And this has been Straight Talk with Jimmy Vee and Travis Miller. Of course, I am Travis Miller, the big idea guy.

Jimmy Vee:
And I am Jimmy Vee, the five foot high marketing guy.

Travis Miller:
And as always, we’re looking out for you. It’s been great to be with you. Thanks a bunch. I think you’re on mute, Jim.

Ken Potter:
No, I can hear him.

Jimmy Vee:
Awesome.

Ken Potter:
Yeah, good. I’m happy to do it. So obviously you guys have been at this for a while. Why don’t you tell me a little bit more about what you guys do and maybe I can help with the 3,000 dealers I’m already doing business with, send them over your way.

Travis Miller:
Sure. Well, you know, we primarily focus on marketing. Our belief is that marketing goes far beyond just advertising and it involves everything from the way you communicate with new and unconverted leads to the experience at your dealership to your processes, all the way through the way you deliver the vehicles to how you capture and use social proof and testimonials.

Ken Potter:
Right.

Travis Miller:
And so we train dealers on those topics through a program that we call Rich Dealers which is basically has various levels, but from in person training and small group sessions to telephone and internet training and we also have some home study products that they study on their own time while driving around in their truck or at home or whatever listening to our CD so that they can sort of imprint our information onto their brains and –

Jimmy Vee:
Instill better processes and systems in their business.

Travis Miller:
Exactly. We also produce a lot of free content for dealers like this interview is part of a series that we’re doing that will be posted on to automarketingadvice.com and keep a blog and write lots of articles and publish two different e-mail newsletters that go out to several thousand dealers twice a week. So that’s sort of what we do.

Ken Potter:
Okay, good. So one of the things I can certainly offer you is if you want to write an article for our newsletter that we send all of our dealers, I’d be more than happy to have a short – I always write a short little intro article for the newsletter that I send out, but and then underneath that we always have some other article, whether that’s something we create or allow a vendor to put in there. So if you wanted to put something there and sort of introduce what you do, then we’d be more than happy to do that as well.

Travis Miller:
Oh, we’d love to do that. How long is the article that you put there?

Ken Potter:
I’ll put you together with – so if you e-mail me just a follow up, I’ll send it to my guy, Chad, and he’ll give you all that stuff.

Travis Miller:
Okay.

Ken Potter:
So it’s a few hundred words, but you can talk about like I think the perfect thing would be, “Hey, dealers, if you’re searching for answers, why don’t you try Auto Marketing Advice? It’s free. We’ve got blogs, we’ve got this, we’ve got blah, blah, blah, blah and we’d love to hear from you.” So I think something like that would be very relevant.

Yeah, I think, you know, I mean ultimately there’s a whole slew of dealers out there who got by because they had really bad practices but still were able to make money and those will all go away and there are good people in our industry too, right. So Roger Penske runs a great organization. I can think of, from the smallest operator to big dealer groups who, you know, who do it right and who want to do it right, but ultimately it is what you say.

And how I sum that up is every interaction you have with a customer, you must earn their business every time. I don’t care where it is, whether it’s in service, whether it’s in parts, whether they call you and it’s a long stinking telephone number. Every single interaction you have with a customer, you have the opportunity to earn their business at some point and time. And dealers have always said that, “I want to sell something now. I want to make some money now,” mentality.

Jimmy Vee:
Yeah, they want to sell cars to sell a car, and the whole thing is you should be selling a car to get a customer.

Ken Potter:
Yep, yep.

Jimmy Vee:
And you nurture that customer and build that relationship.

Travis Miller:
Well, that’s excellent. Ken, let me get the best mailing address for you.

Ken Potter:
Kenpotter@carsdirect.com.

Travis Miller:
And how about snail mail?

Ken Potter:
909 North Sepulvda.

Travis Miller:
North what?

Ken Potter:
North Sepulvda, that’s S-E-P-U-L-V-D-A.

Travis Miller:
Okay.

Ken Potter:
And that’s El Segundo, two words, California 90245.

Travis Miller:
Okay, excellent. What’s a good number for you, just so I can add to my records here?

Ken Potter:
I’ll give you my cell. It’s 310-895-0824.

Travis Miller:
Okay, excellent. Well, hey, this has been great. What we’ll do is when we put this up on the site we’ll send you a link to take a look at it before we do it.

Ken Potter:
Okay, cool.

Travis Miller:
And then you can give us your blessing and we’ll let it loose.

Ken Potter:
I’m sure it’s fine. I mean that – you’re not gonna be – I mean you’re not cutting and pasting around, right?

Travis Miller:
No, no, no.

Jimmy Vee:
It’s exactly as we just recorded it with some music on the beginning.

Ken Potter:
All good. You’re good to go, fire away.

Jimmy Vee:
Okay. Did you get the book that Michelle –

Ken Potter:
I did, I did, and I was leaving on a trip and I was planning to read it, so I have this – I give all my mangers books to read and some they like and some they don’t, but somebody left me a note that it had showed up. “Hey, I got your book. I’ll give it back.” I’m like, great.

Jimmy Vee:
Well, it’s no big deal. I just wanted to make sure it got out to you and –

Ken Potter:
Yeah, it did.

Jimmy Vee:
Good.

Travis Miller:
All right, excellent. Thanks for your time, Ken. Really great to connect.

Ken Potter:
Yeah.

Travis Miller:
And I’ll shoot you an e-mail to follow up on the article for your newsletter.

Ken Potter:
Okay, have a great day.

Travis Miller:
You too.

Jimmy Vee:
Thanks, Ken.

Travis Miller:
Bye bye.

Ken Potter:
Bye bye.

For more information on automotive marketing visit RichDealers.com