Automotive Alchemy
Welcome to 'Automotive Alchemy', a podcast that dwells in the cavernous depths of data, unearthing precious gems of wisdom to illuminate your path to digital marketing success. As alchemists, we understand that each nugget of information is a vital ingredient in our elixir of knowledge. So ready yourselves as we embark on an enlightening journey through the arcane world of data-driven automotive marketing.
Automotive Alchemy
What Tariffs Can't Touch: Growth Moves Dealers Can Still Control
While tariffs dominate the headlines and stir anxiety across the automotive industry, the best operators know that real growth comes from mastering the controllables. In this high-impact episode of Automotive Alchemy, automotive veteran and Dealer Alchemist CRO, John McAdams, brings three decades of front-line experience to the table to talk about what dealers can still control—regardless of market disruptions.
With the spotlight on resilience and strategy, this episode dives deep into the profit centers that remain fully within a dealership's command: used inventory, fixed operations, and website conversion. The conversation covers tactical insights into sourcing vehicles smarter and faster, improving service retention, preventing customer defection, and converting more of the traffic dealerships are already earning—organically and through paid efforts.
Beyond best practices, the episode also delivers perspective. John discusses the dealer sentiment he's hearing on the ground—fatigue, frustration, and determination—and offers grounded advice on how to stay focused, sharpen your operations, and avoid overreacting when the industry throws its next punch.
Whether you're trying to adapt your go-to-market strategy or just need a reminder of what really drives sustainable growth, this episode is packed with clarity, confidence, and dealer-tested wisdom. Because when chaos is loud, control becomes your competitive edge.
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Welcome back to Automotive Alchemy, the podcast, where we mix experience, strategy, a little bit of magic, to help dealerships get smarter and grow smarter. Today's episode is all about shifting focus because, you know, there's a little bit of discussion about tariffs, right, there's some uncertainty, a lot of headlines dominating the news. So we want to talk about the parts of your business and your dealership that no one can take from you Things like your used inventory, things like fixed operations and, of course, your website's ability to actually convert the traffic that you're already getting, some of it organically, some of it that you're paying for. So I am joined, of course, by one of the best and he happens to be the chief revenue officer at Dealer Alchemist, john McAdams, and we're breaking down the smart moves dealerships can make right now to keep growing, even when the market feels like it's maybe working against you. So if you're looking for clarity, confidence and control in your strategy, well, you're in the right place.
Speaker 1:I want to get right into it. You guys know John McAdams, of course 30-plus-year automotive expert, he's been on both sides of the fence. So that's what always, I think, makes people most valuable in any industry when they've had experience both in the retail side of an industry and also on a vendor or service provider side. Well, that's John. He has about equal number of years in those 30 years on both sides of the aisle. So welcome back, john.
Speaker 2:Yeah, thanks for having me on. It's awesome being here. I know a lot of people will say they love being on these shows. I love being on these shows. I love really just shooting it with you, sean, and really just kind of having a fireside chat about the car business. At the end of the day, like I, it's in my blood, it's always been in my blood, so when you know things come up like the topic we're going to talk about today, it's important for me to get that verbally out there and let everybody know what conversation I'm having at the dealership level and what are they doing differently than they were doing, say, 60 days ago.
Speaker 1:Yeah, than they were doing, say, 60 days ago. Yeah, yeah, the whole purpose of having podcasts like this is a lot of people they miss it. They're like, yeah, I'm going to have a podcast, I'm going to compete with the number one podcast in a particular category. That's so not the point. This is content that we really want primarily the automotive industry, but specifically dealers, to be able to grab insights and perspectives and maybe help them think a little bit differently. That basically contributes to how they're going to find success. You and I have both been in this industry for a long time and it doesn't take very long to realize that it's conversations like this that you have in person with people. But now you have the ability to have it in the form of a podcast where people are like I'm starting to become really familiar and almost a little bit addicted to hearing some of these perspectives that then help me in what I'm doing day to day. So we got a lot to get into, but this is going to be a good one.
Speaker 1:So everywhere we're turning, it's tariffs, tariffs, tariffs. It has been for weeks and weeks and weeks. What if we shifted? And that's what we want to do today is shift some of that focus to the parts of the business that tariffs can't really touch, and I think that's important. So let me set the. Stage Tariffs they are definitely the hot topic in auto retail. Stage Tariffs they are definitely the hot topic in auto retail. What is your take on how it's affecting dealership strategy? Or maybe it's distracting from their strategy?
Speaker 2:I think it's a bit of both. I'm going to take you back on a little journey to a podcast you and I did at the end of December, maybe the beginning of January. It was the end of December and you said, john, what's your prediction for 2025? And I remember what my prediction was, and I was right on target. Man, I was rolling deep, january, february. What I didn't know was tariff, tariff. Tariff was going to come in and wreak havoc on the predictions and those models, by the way and I'm not the only person in the car business that built out models based on our experience and the data we had.
Speaker 2:But much like cash for clunkers if you're that old, remember that or much like COVID, where we went through that, or the supply era issue after COVID. Things happen in the car business that we just cannot predict right, as best as we try. And what does that all really mean? It means that, yes, tariffs are here, right, we have to deal with them as automotive professionals, our car guys and gals. But what I can tell you that don't let it be a distraction, because for those of us who have lived through cash for clunkers or COVID selling cars, or the issues with supply, or the issues with supply. The one thing I do know about car dealers is we are the most resilient people on the planet, and the great thing about our business, if we're franchised car dealers, is we have multiple ways to make revenue and if we're smart, we shift those priorities to be in line with what is in our future.
Speaker 2:Now, tariffs for as long as they may last, I think. Sar 15, 16 million units, right. Sar for 2025, set at 15 or 16 and a half million units. My gut will tell me that SAR will be adjusted based on the tariffs situation that we're in today. What does that mean from a dealer perspective? It means that we need to just refocus our energy and our efforts and not buy into. The sky is falling. Yes, they're here. Let's just deal with it. So let's talk about the other departments that we have at our disposal, right, to help us still drive revenue.
Speaker 2:Now, some brands aren't as affected by the tariffs, right, and some brands have more days to sell and sales on the lot than others, right? I think I read an article from Kia that they're down to like a 23-day supply. Well, they've sold almost everything on their lot. Yet there's another brand out there that has 143-day supply, so that brand is going to have an easier time moving the metal because they're going to have the metal Hopefully it's the right metal when some other brands may not have that ability because their day supply is already low and they've already sold through most of what's already on the lot, right.
Speaker 2:So my suggestion or my outlook on tariffs is this is another wrinkle in the car business that's going to test us and go back to simple blocking and tackling. And I'll tell you that for one reason when we came out of COVID and a monkey could sell a car and I don't mean that disparagingly, because I sold cars right, but if you had a vehicle you could sell it it was an order taking situation. And once the rebates and sensors came back, sales took over again and the people and the dealers who did not adhere to that blocking of tackling in the road to the sale had to revamp everything, get their team back up to speed on how to actually sell again. And I'm going to say the same thing is going to happen with tariffs. We need to just refocus on what we'll need to do to drive traffic, whether it's fixed ops or used vehicles. We'll talk about that in a second, but, along the way, keep very strong control over those processes on the new car side. That helps you get the gross and the volume that you needed, because it will be back again.
Speaker 2:Trust me, it'll be back. I don't know. I don't know, first of all, but tariffs will not be here forever. I read something the other day that, well, if tariffs on automotives persist till 2035, there'll be reduction in SAR by 7 million units. Well, listen, it's 10 years from now. I'm not sure who's predicting that in 10 years. Can we just get through 2025? Let's just get through 2025, right, let's just get through 2025 and we'll figure out 2026 when he gets here.
Speaker 1:Survive through 25, as they say yeah, I like it yeah.
Speaker 1:So I know you specifically said even a monkey could sell a car. But to me in my brain it said, sean, even you could sell cars. Like I could do it. It's been a long time since I did it, but you are absolutely right. I wanted to ask you. As I was listening to you, I just realized you have conversations with dealers every single day, maybe not on every weekend, but almost. I mean, you're literally, you're like, probably maybe it's just Sunday, like, give me Sunday dealers. But you get the point With conversations happening with dealers every day, like people, but you get the point with conversations happening with dealers, uh, every day, like people like you and the industry are. Are you hearing or seeing any particular like dealers that are maybe there's some fear, or maybe it's frustration, or they're feeling kind of worn out and fatigued or just in what general sentiment? Like, like what? What have you been picking up on? Is it a is, is it a mixed bag, or is it more one thing than the other?
Speaker 2:You know what it is. It's for those of you who ever watched Muhammad Ali box. Of course, a lot of dealers feel like they're in a boxing match with Muhammad Ali, and not that he had an incredibly strong knockout punch, he just punched you and punched you and punched you and punched you and punched you until you couldn't take it anymore and couldn't get off the mat. That was Muhammad Ali's go-to-market strategy and it worked for him, and I feel a lot of the dealers may feel the same way right now. We've had back-to to back punches right Over the past five, six, seven, eight years has been back to back to back.
Speaker 2:So are they fearful? I don't believe they're fearful. Is there frustration? Certainly, they just want to get the business back to normal. They want to go, help their communities and sell and service people that live in those communities, provide them with a great service and a great product for the community, and it seems like when they just get their legs underneath them after the storm passes, they just get their legs underneath them, they start rebuilding. Things seem to be on an even plane and the next punch comes from Muhammad Ali. Now it's the tariff punch from Muhammad Ali.
Speaker 2:So, when I say we're resilient, I mean we're resilient. It will never keep us on the mat, but it constantly makes us readdress our priorities. Where and why do we do them? What's my go-to-market strategy? How do I quickly pivot and move more into a service or fixed ops regime? Or how do I do that plus use cars? How do I acquire them faster, quicker, cheaper? How do I recon them faster to get them on the front line?
Speaker 2:Because, listen, if we don't have new cars which we've been down this road before very recently we have two ways to make money, maybe three, but let's stick with two. Right, I can drive more people through my service department. Right, and hopefully you have some hours left to sell, you've got some techs and your absorption rates can handle what's about to be put on them. Right, get more customer paid tickets in, get more of the right warranty tickets in, not the ones that take too long to get to the shop and we don't make money on. And the other choice is let's go out and go. Get more used cars cheaper, faster, recon them, get them to the shop, get them frontline ready so that I can get them into a very loved low mileage vehicle.
Speaker 2:Because what's going to happen it's already happening now is when the consumer, the general public, pulls back from the new car side of buying and some manufacturers are offering employee pricing and that'll go for a couple months and that might be a band-aid.
Speaker 2:But for the general consumer, who also knows about tariffs and also knows that you probably don't have the vehicle that they want on your lot, they might either stick with their vehicle which is a good possibility, and I have to drive them back to my service department to continue the revenue, to keep the lights on or I might say you know what, this vehicle is not for me, but I'm going to go after a very low mileage vehicle that's available in a lot which is going to do this to the used car market.
Speaker 2:It's going to tighten up and I think I saw some stats the other day that the used car volatility market in terms of value of vehicle has been increased by about 18% over the last two or three weeks. So that's a big number. So if it was a $20,000 used car at 18 points to that now it's that so keep that in mind as we go through this that we have to be able to make sure we can get the right cars at the right price, recon them lowest possible price, get them frontline ready, get it over the curb and keep that cycle going until either the tariff thing stabilizes or gets resolved completely.
Speaker 1:I don't talk to dealers every day anymore. I used to. Sometimes I miss that, but I was actually about a week and a half ago. I was actually in a dealership up in Fort Worth springtime with the owner for several hours and we talked about a lot of things. Of course, all of this as well, and his sentiment was a lot of the things that you were sharing. I mean, there's frustration. There definitely was, and I'm not going to say who this is or what the story is. I'm just going to say it was painfully obvious to me that there was a little bit of the like you use the muhammad ali when you're just getting punched and punched. There was a little bit of the. You know, is there going to be a time like when we can just like get kind, get kind of, the seas will calm down a little bit and so we can kind of sail the way we'd like to be sailing, without all of this disruption and just forcing triage of some sort into the industry, the industry. I was like, yeah, that's a good question. It is one of the reasons why people always kind of remember how strong this industry bounces back. Resilience is a perfect word for it, and it's been challenged with so many things in just in our professional careers in this industry, and you named a bunch of them. But yeah, I happened to be in a dealership about a week and a half ago and a lot of that sentiment One of the things also that you mentioned I want to ask you about, let's talk used inventory.
Speaker 1:It's a really powerful area that the dealers control. You mentioned it being, you know source, where you're sourcing is it auctions? Is it private sellers? There's a you know, the last handful of years has really opened up that private seller, uh, that vehicle acquisition market, as well as what people would do with auctions, as well as what you may be doing and maybe leveling up your, your trade-in uh program. Um, I'd love your thoughts on that area, where it's such a powerful area for dealers. What are your thoughts there? Are there some things that it's like hey, don't miss. You should be focused on this around used cars?
Speaker 2:Yeah, it really kind of goes back to best practices. Right, here we are facing another storm, another tsunami wave, and we're all going to get really creative and we're all going to do everything we can to source cars cheaper, faster, quicker. We're going to do all these things and then the tsunami passes and we lighten up on that and we go back to. You know, we're just going to go summon cars. I'm going to say that if we don't lighten up on it, and whatever the lessons we learned through this storm, we carry on forward Even when it lightens up, you'll be a winner. Right, because this is where steel sharpens steel. Right, this is going to be one of those cases. Right, this is not a place where we want to be a piece of aluminum. I want to be steel sharpening steel at this point.
Speaker 2:And when it comes to acquisition, you mentioned a few ones, whether it's auction or private party vehicle acquisition, I fully believe that it has to fit individual dealers, because I've heard it from both ways. The auctions, they're no good anymore. There's 15,000 people in the lane. They're all been in the same car. They're running the prices up. I know plenty of dealers that go to the auction and get great cars, by the way, just for the record. I also know the ones that do online auctions and get great cars, by the way, but I also know a lot that have been doing that, but really focusing on private party vehicle acquisition, and a lot of people will say, well, we do that today. And when I look at their strategies, it's not really a strategy, sean, it's more of a. We do private party acquisition. Somebody told me how to do that a couple of years ago. I'm doing it that way, but it's really a multi-pronged approach, right, and there's thousands I take that back there's millions, millions of vehicles on online classified sources today where, at a dealership level, we don't do a great job at harnessing them.
Speaker 2:We don't do a great job at harnessing them, and what I find is we say that because in the past somewhere five, six, seven years ago we had a bad experience and maybe we didn't get really good advice, so maybe we didn't really get to put a process in place. But I'm going to blame the experience five years ago and I know people and dealers all day long that have a solid process, for example, of acquiring late model, low mileage vehicles on a marketplace or some of the other classified listings that are out there. Is it easy? No, it's not easy, but neither selling cars and running a dealership right. But if you have a process in place to do it, you'll start to win in that market. Could you list your vehicles for sale in marketplace? Sure, I know plenty of dealers that do that today. Yet I still hear stories today that people you can't do that. Well, that's not the truth, because I know people do it right. I know dealerships that do it. So what I would say is, when it comes to vehicle acquisition, there's data out there today that if you wanted to find out everybody who's driving a two-year-old car and older within 20 miles or 50 miles of my store that are driving my brand, and then take your DMS records and subtract them out and come up with a pure conquest list, well, I'd have a process of place to get ahold of those people all day long. I can do that today. I've been doing that for years Now.
Speaker 2:What do I do with the people that are in my DMS, that are maybe in a position of equity or getting ready to defect out of my service drive? Well, even more important now today than ever, to not let them defect. They might not defect to another brand. They might defect to another dealership, same brand, or they might defect to a Midas or a Jiffifilube or a Maves, whatever it is. Our job is to keep those units in operation into my ecosystem.
Speaker 2:So I would intrinsically look at that number, my percentage of my overall units in operation.
Speaker 2:How many of them are in a position of getting ready to defect, meaning they haven't done business with me in six months, haven't come back in six months, and then do one step further and say, well, how many have already defected?
Speaker 2:So for me, if I haven't seen you in nine months, sean, you're probably defecting right, you're probably already gone right. I need to know what that number looks like as a percentage of my overall units and operation, what that number looks like as a percentage of my overall units in operation, because that'll tell me if it's growing or shrinking. As I sell more cars, my UIO increases. My question, which everybody knows, that number, the question is how many are getting ready to defect and how many have already defected? And on top of my units in operation, because that'll give me a litmus test of where I am in my fixed operations department. Am I really growing it or am I just adding more people in the top of the bucket and more people are flowing out of the bottom of the bucket Right, so it's really important. But vehicle acquisition is going to be the name of the game, at least in the short, short term, for sure.
Speaker 1:Yeah, yeah, I definitely think. I mean certainly hearing a lot of people from conversations in the industry that a lot of dealers have been hyper-focused on that. I think you told me now, several weeks ago actually, that even just the auction markets, everything's just going pretty wild, clearly because of what's going on in the market. Let's talk a little bit about fixed ops as well. Um, and you know, is it still uh, I I kind of know the answer to this. I want your perspective though.
Speaker 1:Um, underutilized as a growth driver? I mean, I fixed ops has always been near and dear to my heart because I was a service rider and I've always had a little soft spot in my heart for fixed ops, so I've always felt like it's an underutilized growth driver. But especially in moments like we are in now, when a dealer's wondering if their new car margins are ever going to be predictable again which they will be, but because they're kind of in this turmoil that they're in, what are your thoughts there? Is it a fixed ops, is it the growth driver that I think it should be, and how they should focus on it?
Speaker 2:Yeah, listen, I'll tell you a quick story, right, and this is just a story, just a real-time Johnny Mac story. It's a very quick one. My daughter drives a Wrangler 4XE. It's a couple of years old, it's on a lease, right. So I take it to my local place here to get an oil change and it takes me three weeks to get an oil change right. Three weeks to get an oil change.
Speaker 2:But whatever I'm flying, I'm driving, I'm in the car business, whatever, I'm not going to hurt anybody, if I was a regular consumer I probably wouldn't wait three weeks, just for the record. I'm not going to wait three weeks. But because I'm in the car business, I'm willing to wait three weeks. Bring the car in. Not the greatest experience, not the greatest communication level. I'm doing more of the reaching out than they are reaching out to me. Right, and near the end I said hey, his name is Scott. Scott, do me a favor, can you call Bill, the GS GSM at the front end, and have him come back here? I want to see about turning this lease in. He goes. Well, yeah, he's up front. I said yeah, I'm aware. I said yeah, I'm aware. I said do you call Bill? And I'm going to come back and meet me here because I'm the consumer and we'll talk about doing lease trading. So this went on back and forth. I waited 35 minutes, no Bill. I called Bill, no Bill. My message on the last day of the month is hey man, I'm ready to turn this in. I got a deal, I can get this done in five minutes. Never heard back from Bill.
Speaker 2:So if we're in the middle of tariff land and I'm trying to move units, is the experience going to really be the one that's going to win this whole thing out, from both sales and service. We have to work together to make this work. This cannot be a push or a pull. Now my RAM 2500, by the way, I'm also on a three-week wait for my oil change and I could pull the card. And you know the card I could pull, I'm in the business, I know the owner, I get in tomorrow, but I'm not pulling the card.
Speaker 2:But when it comes to friction and experience, if we're going to get by this next bump, I would suggest that we all do a little mystery shopping of ourselves and we stop thinking that the OEM survey where everybody says, mark me five stars, mark me a five. It means a lot to me. It's really giving us the right answer, because I would be wrong if I were to say a lot of the experiences I've had would make me want to go back to the store, right? Instead, I found a buddy who is 60 miles away who said hey, just bring it up here, john, I'll take care of you. Okay, right, the chances of me going back there are pretty great, right?
Speaker 2:So, when it comes to these things of how do I drive more revenue through fixed ops, be super friendly, be super helpful, be the four seasons. Be the four seasons. Be the four seasons. Do everything you can possibly do for that consumer so that they would want to continue to do business with you, and then inspect what you expect out of that whole process, which is not an easy process, because I was a service advisor. Like you, I lived a lot of my life in the back end. I didn't turn ranches, but I lived with those guys and those gals. It's not an easy job and consumers are never happy spending $60,000 for a ride to have it come back and be repaired. I get it, but the one thing that I know and it's probably true for every industry is the better experience that you give, the better results you're going to get back out of it.
Speaker 1:And I wasn't looking to get a freebie.
Speaker 2:I was looking for anything for free, I was looking to jump in line, but what I was looking to get was a little bit of empathy and sympathy. And hey, let me try to help you out with this situation. Right, because that's the best way to grow the back. And the other thing I would say is, when it comes to the back end, truly look at what you have left hours left to sell, go ahead, pull it Right. I mean, I know, I know dealers that you know they've got hours left to sell at the end of the month all the time. And I'm like, well, how did that happen? Right, like shouldn't I sell?
Speaker 2:Let's be honest, service is about selling hours. It's not about selling service. It's about selling hours. The technicians can work to service a vehicle. So I have X amount of technicians that work X amount of hours. I have X amount of hours per month to sell. Did we sell all those hours? And if we did, is there a way to grow that in any way, shape or form during this short period of time, to get more throughput through the shop? Because we're gonna need the back end to help us carry the front end for this little short time, just like we've done before. Right, but we all have to work together to make sure that that works.
Speaker 1:So this is such an interesting story and context that you have shared because, for me, every time we have a moment in the automotive industry, it immediately creates opportunities, and those opportunities are so important to understand the magnitude of doing something or not doing something. Recognizing, in your case, an existing customer who's asking to communicate with the head of the sales department at the store, right, who, for all he knows, it could be yeah, I'm ready to bring a lease back, but there could be like I'm, you've got something that I want to purchase, right, this, even if you don't know that this is going to be like we're going to roll another car today or what, even if you don't know that this is going to be like we're going to roll another car today or what, even if you don't know that, it still ties into service retention. It still ties into lifetime value of customer. It still ties into how loyal, how hard are we were willing to work to earn loyalty correct. And you just gave a story that talks about compromising, not helping, like not complimenting the building of loyalty, the compromising of it to the point where and I've said this before when that happens in the service department, it's the worst place in the dealership for it to happen because you feel more betrayed there, because you feel more vulnerable there. You just mentioned it. I bought a sixty thousand dollar car and now I'm here getting I'm gonna have to spend money on it, right, okay, yeah, well, that's part of maintenance of a vehicle if you want to be a responsible vehicle owner.
Speaker 1:But it still doesn't change the fact that most it's not just a um, not just women feel vulnerable in service. A lot of men don't know their you-know-what from a hole in the ground when it comes to repairing a car or, like, I don't even know how to change a tire, especially younger generations Sorry, younger generations, but you don't know how to change a flat tire, so you're losers. I should come up with an idea, yeah, but the point is that most people in the service department are a bit uneasy. They are vulnerable, for sure, and if they're taken advantage of, if they're discounted, if they're not respected oh my goodness, you have just put the likelihood of that person never like they will look for ways not to come back and do business with you. Not service business, not buy another vehicle from you, business like any business and the other thing that we've talked about recently.
Speaker 1:In fact, you did a webinar little shout out to webinar number one with Dealer Alchemist on reputation management. You have those experiences. What are you going to do? You're going to tell your family. You going to tell your friends. You're going to be sitting around having a beer with your buddies, whatever you look. Oh, my goodness man, I took the daughter's ranger in for blah blah blah and this blah blah blah and I was like, hey, gsm, and I was like I used to do that job. And you know what I would have done? I would have went right into the service department say, hey, mr mcadams, how can I help? What's going on? That's why I was a winner, but this guy was a loser and right this, right, right, don't breathe the cuss or like so.
Speaker 2:Another quick, funny story with my ram. I called to make that that oil change appointment. They told me three weeks out but it. But they've got a quick lane, quick loo, whatever mopar calls it. So he says just come down, you'll get right through, cool man.
Speaker 2:So I run to Home Depot. I do what I got to do. I run 30 minutes to go see him. I go pull in, I go to hop out, give him my keys and he says what are you here for? I said well, I called like an hour ago. He said just bring it on down, you're ripping right through, I'll beat it out. He goes uh, you're leaving it.
Speaker 2:I said well, what's the part of the quick express if I'm just going to run right through it? He goes well, I got three in front of you. It's going to be about three or four hours, but we'll probably be closed before then, so you might have to leave it overnight. Do you want to do that? I said what part of that makes any sense to you? I said that makes zero sense to me. I got things to do.
Speaker 2:He said well, I'll tell you what if you come back anytime this week, sean, I'll give you five dollars off your oil change. I said, listen, no disparaging here, but you know the nickel is not going to hurt me. To get my oil changed right. I said time, time is what I value. And I now burnt 30 minutes to get to you, 10 minutes with you to find out you can't change my oil, and then 30 minutes to go home. And so I get my oil changed right.
Speaker 2:But I had all intentions of going there. So all of a sudden, you know, meet a couple of friends over at the barbecue, grilling up some ribs, popping a few tops on some beers. How do you like your truck? I love my truck, I just can't get the oil change done on it. Oh really, right. So that's where this all comes into play. It doesn't always happen at the dealership. It happens in those backyard barbecue conversations inside of your community that the next time I want to go buy or service a vehicle, I might be like hey, remember John talked about that. Let's not, uh, let's go over there instead.
Speaker 1:Right, and that's that's where it all happens, absolutely yeah, both of those stories are just. They literally stack so many important things up for dealers. I you know, I think there'll be really good moments, actually hopefully to make some, some clips that would make people come and watch the full episode. To get to that. This really feels like a really important part of the discussion for dealers to remember that, especially in times of distress and uncertainty tariffs, whatever it is, cash for clunkers, covid, supply chain issues, on and on and on All of those are examples of times when you have to actually be more on your A game than you would, when everything, when the seas are calm and sailing is smooth, and it's all great, like okay, great you, you and you referenced this actually a few minutes ago where it's like you can't just learn it and then forget it Right Every. When everything's like okay, now we're good. It's about getting better all the time, and I use this example for a lot of people when they're like trying to debate me on why they want to go to all these conferences and events still in the industry. It's like if you're a dealer who continues to go to conferences and events outside of NADA, you should probably go to that one every single year. But if you keep going to all the rest of them and your dealership hasn't literally learned so much and you've applied all of it that you're number one in your category, number one in your market, that so much, and you've applied all of it, that you're number one in your category, number one in your market that's proof alone that you might know some different things, but you're not doing them. And so, in the case of all of this, dealers have to really think about all of these lessons they've learned about their reputation, about how you treat people in service, how the experience of selling the car yeah, it's important, but the experience of servicing people is important. The retention of your customers, because you want them to buy more from you, you want them to stay in service, you want them to tell their family.
Speaker 1:There's just so much of this in these times that I think dealers need to be reminded of that. It's not just yeah, used cars are maybe going to keep your ship floating. Yeah, doing what you can with your website to get every. We're going to talk about that in just a second. What can you do with fixed ops? Those are all really important factors, but, on top of all of it, your demeanor, your personality, your care for your customer, which you cannot fake. All of that needs to be really, really hyper-focused in these moments or it will create catastrophic misses for you that you won't realize how terrible they are until the damage is done.
Speaker 1:I mean so anyway, I want to. I got a few questions. I want to ask you Fire away Around doing more with you know, maybe the same traffic. So dealers are still doing all the things they can, as they should, to make sure that they've got organic and probably some paid traffic as well that is hitting that website and that website. Of course, every single dealership is like ground zero, super important, right, it is the place, and you've said before that. You know it's not always. Traffic isn't the problem. Conversion is, and it still is, and it's a hot topic currently and I don't think it's going to not be a hot topic anytime soon, not be a hot topic anytime soon. Can you expand a little bit on how hard it is even to buy good traffic now and why?
Speaker 2:that's kind of important with what's going on. Yeah, I'll probably say until the day I die, which will be the day I get out of the car business sector. I'm 30 years in now. I'll spend the next 20. I'll be the guy doing the swaps with the brown paper bag, doing my Beagle swaps.
Speaker 2:But I'm a firm believer that sometimes less is more, especially when it comes to traffic to your website. The big numbers. Although in the car business we chase big numbers, more traffic doesn't necessarily mean more opportunities to sell cars, right. More traffic, more quality traffic, better quality, low funnel traffic. You know, from a person who is in market or ready to buy, or a vehicle of my brand that might be five miles away, that just moved in from out of state maybe not know who I am that needs service. That kind of traffic is really what I'd be looking for, right? I think we've all been through the days of what we'll call saturation mailers and you can apply that term digitally if you wanted to. So licking and stamping it. Just throw it out onto the digital world and that's they're still. You know, spray and pray, lick and stamp Like it's all there, right? But be more focused and be really diligent about the who and the why you're marketing to Right Now. If you want the big number, just throw it out there, you'll. You'll get really big numbers of traffic, but when you look at your conversion rate, that's well below an industry average of 1.8. Did that really help grow your business? Or did it really just hurt your sales and your service BDC with a lot of extra work that they did not have to do? And for those of you who haven't, extra work that they did not have to do, right. And for those of you who haven't, you know, really gone down the path of a service BDC you know whether it's a sales and service combined, or at least a service BDC for declined work now might be the time to really think about what that looks like, because what if you could advertise directly to the people who and communicate with them, who have already declined work at your store, right?
Speaker 2:I came in for lube oil filter. You did your MPI and your look over and three more lines got added to the RO. Sean, you're my service advisor. You call me up and say, hey, congratulations, mr Rick Adams. We did your lube oil filter. We also checked your pads are lower than spec and your rotors need to be swapped out and I think in the spring you're going to need some new tires. Which one would you like me to go ahead and do for you, right? And here's the price. And I say you know what, sean, that's great. I'm not going to do the tires because I know I can wait on those, but go ahead and do the brakes and the rotors right.
Speaker 2:Next thing, you know, the RO gets cashed out and my declined item, my declined line, is the tires, and nobody ever calls the person again. Nobody ever calls John and says hey, by the way, john, did you know that next week, next month, next, whatever we're having to buy three get one free, or whatever your special may be? Can we get that service scheduled now for you to have you come in and take advantage of that right? Or could you advertise to people who are driving your same brand that live in your market but don't do service with you today? Think about that. Could you send an ad?
Speaker 2:I'm just going to go on a limb. Let's say I'm a Toyota store and and I wanted to market everybody who lives 15 miles within my pma. Let's keep it that way. We'll keep it in my pma that drive my brand, that I see no service record for in my dms and they're two years older elder or a year older and older. Whatever, whatever primary you want, does it make sense to market to that person with a really nice offer and your value adds as to why they would want to leave dealer A service department and come to your service department, knowing fully well the experience that they're having there might be?
Speaker 1:just like my experience.
Speaker 2:I just went through, because I can tell you right now, sean, if I had the same thing marketed to me from what my experience, just I had, I would have been down the road at another dealership for the same brand in a heartbeat. In a heartbeat, right, that's all it would take, because the loyalty for brands is at an all-time low. It's my money. I spent $60,000 for this vehicle. You told me in the front just come back in for service anytime I need it. And now I go back for service and they're like hey, three weeks for an oil change? Okay, well, that's going to take a while, right? I mean, that's kind of crazy. But what if somebody said hey, john, I know you're driving this vehicle. Based on certain X, y, z factors, I know it's time for an oil change. I'd love to get you in here. Maybe I don't offer a free oil change, maybe offer 20% off, maybe offer for $9.99. You make the call, right? But at the end of the day, you should be preaching the speed and the satisfaction that I'm going to get from going to that store, right, because I would lift in a heartbeat.
Speaker 2:So, when it comes to advertising, be very in a heartbeat. So, when it comes to advertising, be very surgical Surgical is the word I'm going to use, right, so slice it really thin, make sure the audience, that is the intended audience for that particular message, is the one that should be getting it, and then inspect and expect what you expect on the backside. So when you get to your website, look at the traffic. Is that ad, particularly landing on your website, converting at a higher rate or a lower rate? And, by the way, ladies and gentlemen, sometimes it doesn't work out as we planned, which means that you have to go back to the drawing board and say you know what? Four out of those five campaigns, sean, they ripped the cover off the ball. The fifth one that we thought was going to work did not work. So we're going to reinvest that, retweak it, move it around, whatever the case may be, to make sure that that one does work. So, when it comes to advertising, be very surgical. Know what your outcome is going to be, not just traffic, because if you just want traffic, we could all do that. Anybody can drive traffic. The question is will it convert?
Speaker 2:And when I started in this business a long time ago, a mentor of mine said John, never pre-qualify anybody who comes on this lot and I had no idea what he meant. And I looked around at some of my peers. They'd see a car pull up and they'd run and hide and say, hey, the new guy's got this one, new guy's got that one. Hey, that's your up, this is your up. I can tell you that. You know, four times out of five they were wrong because that person that got pre-qualified because of the vehicle they drove up, in the clothes they were wearing. Whatever the case may be, you know they had the 800 beacon score. They had the 800 beacon score. They had the 5G in their pocket to put down, they had everything they needed, but somebody pre-qualified them on the way in, and I'd say that should be the case in service as well. Right, we should be giving four-season service on the front and the backside of the house every single time.
Speaker 1:Yeah Well, we're almost at the end. Yeah Well, we're almost at the end. I got a it's kind of a two part question. Yeah, you people that know you would agree with this. You've always had a measured voice in the industry, so I want to get from your perspective, what would you say and what maybe are you saying to dealers who are kind of overwhelmed, maybe, by all that's going on right now. Maybe they're struggling to focus and maybe how would you advise them to kind of recenter around the strengths that they do control?
Speaker 2:Yeah, Great question. For me, now is not the time to do some fancy footwork and decide that you're going to throw some different punches you've never thrown before. Now is not that time right. If you've been practicing, you've been going to the gym, you've been working out with your buddy, you've been sparring right and you want to change some things up and you know the good and the bad, the pros and the cons, Now might be a good time to step outside your normal punch zone and do something Right. But if you haven't done that, now is not the time to take that knee jerk reaction Right now. It's not that time.
Speaker 2:Right now is a time to really settle down and just kind of look at your business from an inward and outward perspective and see how you can make some small course corrections that will improve your business and lean on any trusted advisor that you know that's been in the business, that has actually steered dealerships through tough times and I'm going to say this politically correct as I can, If you know somebody in this industry that has been in it for a while and has seen some of the things that we're about to go through, but from a different perspective cash for bunkers, even the OPEC oil thing back in the 70s. Remember that calamity. When you've weathered some of these storms, lean on those people that you've met throughout your career, even if you don't do business with them today. Reach out to them, because those are the people that love this industry so much, so much that it that is almost secondary if you're doing business with them. You know what I mean. Like I love what I do, but what I do is help dealerships grow, and if that means I can help you with my company, awesome. But it also means if you need to call me at a Saturday at 2 o'clock and say, John, I'm just struggling with X, Y or Z, I don't know if you can help me.
Speaker 2:What would that look like from your perspective when you fixed your five stores that were running so deep in the red to get them to the black? Or when you had to roll through cash for clunkers? Or how did you help some dealers get through COVID with actually selling more cars than they were before? It's no secret sauce and it's a lot of hard work. I can certainly tell you that. But lean on the people that literally would have your back.
Speaker 2:I look at it this way. I've got. I was going to say three or four. I've got one or two people that I could call at three o'clock in the morning. If somehow I find myself in a South America prison and I need to be broken out, Call those one or two people. Right, You've got, everybody has their one or two people. Call those one or two people that could help you kind of escape from where you are and get profitable or whatever you're trying to accomplish. But lean on those people because those are the ones that are in it for your success and when that is the case, then you'll always win.
Speaker 1:I love it. Dealers, that's a great reminder that growth is still very possible, even when it's super noisy out there. It's also Mr McAdams inviting you to their free, by the way complimentary strategy session. Reach out to him. He's deaf. I've said it probably on every time we do a podcast that he's definitely one of the people that you want to be networked with. So control what you can. Amplify the stuff that is working right. Double down on the stuff that you're figuring out through these kind of times of turmoil. Let the rest just be background noise. It'll be just like everything else we've been through and that sounds like Automotive Alchemy to me, and that's a perfect place for us to bring an end to this episode of Automotive Alchemy.
Speaker 1:Dealer and automotive friends. Like I mentioned, conversations with John are completely free. So is his friendship, if you can get on that list. His genuine interest in helping dealers develop modern growth strategies to get better every day, well, it makes him the must-have in your network, not just a guy. I want to know that guy, so connect with him on linkedin. Uh, it's easy to do that. You can hit him up also at john dot mcadams. That's mc a, d, a, m, s, j, o, h n.
Speaker 1:Traditional spelling john dot mcadams, dealer alchemistcom. If you look him up on linkedin, you will definitely easily find him. You can alsoams at dealeralchemistcom. If you look him up on LinkedIn, you will definitely easily find him. You can also connect with Dealer Alchemist on LinkedIn and everywhere else you'll find socials. If you want to learn more about Dealer Alchemist, well, just go to dealeralchemistcom. And, of course, every single time, we have to thank you for spending your time with us and spending it where you may be watching or listening in one of those places where we would love it if you'd subscribe or share. You know all the stuff and we'll be back sooner than you think with another episode of automotive out.
Speaker 2:Thanks, john all right, thanks having me. I appreciate it. Y'all have a good one.