From giddy-up to getting on line

Internet conference participants embrace these fast-changing times SAN DIEGO - Angel Grajales remembers his younger years when he'd get around on horseback. Now he's galloping into the age of the Internet.

He's learned a lot about on-line auto shoppers in the year he's been Internet manager at Davis Chevrolet in Houston.

"People are different," he explains. "Some people dive right into a swimming pool, some people walk down the steps and into the water, and still others stick their toes in. It's the same way with how people use the Internet."

Mr. Grajales participated in an eAuto World conference in San Diego last month. He attended to "get up to speed." But he found other benefits as well.

"Sometimes I thought I was the only one with certain ideas, but I'm learning here that a lot of people share those ideas," says Mr. Grajales. "The Internet represents a world of ideas. Some of them go to right field, some to left field. The important thing is to keep it in the ballpark."

Although eAuto World conferences target the entire auto industry, car dealers and their Internet managers seem to get more information they can use immediately opposed to their counterparts in the supplier, aftermarket and on-line vehicle areas of the business.

While each of the conference's "tracks" feature presentations offering various information, dealers are hearing case studies of their brethren who successfully integrate the on-line buyer with the physical showroom.

"We're just getting into Internet sales," explains Kay Sauter, Internet manager at Sauter Toyota in Santa Fe, NM. "It's my job to learn everything."

Sauter Toyota currently has a basic informational web site. Ms. Sauter wants to put into action what she learns at eAuto World.

"We're hoping to generate more leads with a more interactive web site," she says. "I do all of my shopping on line now; that's where the world's going. We're just trying to keep up. It's going to take longer than I thought to get the new web site up and running. I'm here to see what we can do."

Mr. Grajales already has done that. But he recalls the start-up hassles with such things as antiquated phone lines, impenetrable GM firewalls and trying to decide which application service provider to go with.

It was worth it, he says, because the Internet is not a fad. "It's here, and my essential job is to turn a profit on it."

Gomez Advisors, a Massachusetts-based web site evaluation and counseling firm, predicts 15 million Internet-initiated vehicle sales by 2004, worth an estimated $190 billion.

Dawn McGreevey, a senior analyst at Gomez, says 98% of those who used the Internet for their last purchase would use it for their next. More than 80% of those people say they plan to do more in the sales process on line when looking into buying their next vehicle.

Another eAutoWorld conference speaker, analyst Baba Shetty of Forrester Research, says, "People who use the web tend to be more satisfied with the deal they got and with their vehicle. The web really does improve the (vehicle-buying) process. But it's the research the customer does, not the buying sites that does it."

Rob Goldsberry, the former Ford Motor Co. executive who now is chairman & CEO CarStation.com, tells conference participants that "one year of growth on the Internet is equal to several years of traditional business growth." He adds, "The Internet may not be a panacea for all parties, but it certainly offers a tool."

It's a tool that the Ed Witt Auto Collection appears to be using well, with the help of Carabunga.com, which offers customer relationship management (CRM) software and systems.

A comprehensive automotive retail CRM strategy covers acquisition (conquest of new customers), retention (installation of processes to get customers back to the dealership on a regular basis during their vehicle ownerships in order to continue sales) and re-acquisition (getting customers who have defected elsewhere to return to the dealership). That's according to Carabunga.com President Jim Roche.

With Carabunga, the Ed Witt Auto Collection (the former Ford-owned Lincoln Mercury consolidation effort in San Diego) adds demographic data to the dealership's database to personalize customer communications.

The result is mailers and e-mail, personalized maintenance schedules and electronic capture of customer responses.

"Our first promotion was a discount tire promotion in which we sent out 3,600 mailers, to which 600 responded. That's a 17% response rate," says Scott Witt. "We found that the return on investment was over $19 for every dollar spent for this particular promotion."

Mr. Witt says that by using personalized, relevant and preference-based customer communications, he lowers campaign costs, increases their rate of success and gets higher CSI scores.

While vehicle sales and repair orders have increased in the three years the Witt collection has used Carabunga, the average service retention rate has increased from 17% in 1997 to 40% in 2000.

The eAuto World conference circuit heads to Detroit on April 10-12, then goes back to the West Coast next fall.

"We're working on building an event that the significant areas of the value chain can come to and learn and network," explains John Couretas, eAuto World's content chairman.

"As build-to-order moves from theory to practice, all of these various formerly separated industry silos are going to have to find a way to talk to each other," says Mr. Couretas. "And that data must find a way to move back and forth, north and south, almost instantaneously. The web does that.

"This event brings together the automotive world and the IT world," he continues. "And the whole period of hoopla is over. Very soon now, companies are going to have to explain to their shareholders what all this e-commerce stuff is doing for their stock and for their company. We'll be working to find those who have results."

SAN DIEGO - Ford Division dealers are fighting back against the third-party Internet lead generators with a web site of their own, called FordDirect.com. Here at eAuto World, several Ford dealers met to discuss the project, which was launched late last month.

FordDirect.com is rolling out first in California. The rest of the country will be phased in by the end of next year.

"We're taking our time and doing this thing right the first time," says Jerry Reynolds, owner of Prestige Ford in Garland, TX, and president of the Ford Dealer Council. "This is an automotive buying site that we feel will become the way to buy Ford vehicles on line."

One of the ways that FordDirect is unique from other on-line buying services is that it's jointly owned by the Ford dealers and Ford Motor Co., with the dealers owning voting control of the operation.

"We believe that this is the very first instance of a Fortune 500 company and its distribution channel joining forces to create an independent Internet company," says Mr. Reynolds. "The idea for joining forces with Ford originated last winter when the dealer council told us they wanted to make e-commerce a top priority and work out a solution.

"The resolution, in our opinion, was for us, the Ford Division dealers of America, to join with Ford Motor Co. to develop, own and manage our own company with its own site, to collectively offer consumers the trust, convenience and value that they're looking for in on-line transactions."

Mr. Reynolds reports that since the project was announced some 3,200 dealerships, or 80% of the company's distribution points, have agreed to participate.

"There have been many dot-coms in the news, but the way we see it, none of them truly satisfy what the Ford customer really wants from an on-line buying experience," says Mr. Reynolds. "The third-party dot-coms don't deliver to the consumer a depth of choice or the trust of working with the manufacturer, or the after-sale support that's being demanded today by the Internet-savvy consumers that we're trying to serve."

FordDirect is designed to empower customers to configure, select, finance and initiate the complete transaction with Ford dealers within minutes, 24 hours a day, seven days a week at the Ford dealer of the customer's choosing.

Customers who go to FordDirect.com will be given an opportunity to select and configure the vehicle they want from the entire Ford product lineup. Then they will be asked to select their favorite Ford dealer. If they don't have an existing relationship with a dealer they are given a choice of the five closest dealerships.

"Customers will be offered the FordDirect e-price for the vehicle that they select," says David Kain, a Ford dealer from Kentucky who is the COO of FordDirect.com. "This price represents a fair-market price for that car or truck, based on actual selling prices for similar vehicles."

Customers also will be offered a series of financing options via Ford Credit and they'll be able to have their credit applications approved on line. FordDirect.com customers can arrange for delivery of the vehicle at the location best suited for them. That could be home, the dealership or anywhere they choose.

The dealers say they were impressed with the cooperation they received from the manufacturer throughout the development of the project.

"It represents a breakthrough for a manufacturer and its relationship with its distribution channel," says Jack Valentic, vice president of Ford Div. "Best of all, it represents a breakthrough for our customers, who have made their voice unmistakably clear about preferences for shopping and doing business on line.

"While we have linked Ford Motor Co. with leading-edge companies like Microsoft, Oracle, Trilogy, Yahoo and Qualcom, what greater partnership can we have than that with our own dealer body."

That makes sense to Dave Lundell, who oversees Yahoo! Autos.

"Manufacturers have to give such enterprises over to dealers," he says. "In many states they have done that to avoid posing as dealers."

Yet he says it is important for automakers "to use the web to understand and to stay in touch with consumers."