Mining Internet gold in Silver Country

Two years ago, Ken Smith was downplaying the role of the Internet in his business. Now, Dave Smith Motors is the top revenue generator of the automotive e-tailers.

With nearly $50 million in 2000 vehicle sales revenue generated via the Internet, the multi-line dealer in the former silver-mining community of Kellogg, ID is #2 on the inaugural Ward's Dealer Business e-dealer 100.

In 1999, a trade publication reported that neighboring dealers were upset that Mr. Smith was using the Internet allegedly to raid their territories and that he was doing the bulk of his business with customers online.

“Back then the story was that we were making all our sales on the Internet,” says Mr. Smith. “We were at the very edge of making the Internet happen, but didn't want to talk about it much. At that point, it was about 5% of our business. It's about 20% now and by the end of the year it'll move up to 35-40%.”

The dealership took in $38.1 million from the web-originated sale of 1,313 new vehicles and $10.9 million in Internet used-vehicle sales last year.

Mr. Smith says he gets 99% of his web-based leads from his own site, USAutosales.com, which gets about 1 million hits per year. He says his dedicated Internet sales staff of eight closes between 7% and 15% of the actual leads they get from the site.

“You still get a lot of ‘Lookie Lous’ and duplicates, but our closing rate is fairly good,” he says. The dealership gets anywhere from 100 to 140 e-mail leads daily.

Mr. Smith says he owes much of his e-business success to a system his staff developed for tracking the Internet sale. He calls it the Automaxx Tracker System.

“I could not have done it without this system we built,” he says. “We track the lead from the time it comes in until the sale, with comments and everything the sales person does in between.”

“I could not have done it without this system we built.”
— Ken Smith Dave Smith Motors

Mr. Smith says the Automaxx system tracks leads by geographic area, which aids the advertising department, and even pages sales people when they need to follow up with a customer.

“There's nothing out there like it,” he says. “It really puts managing Internet leads into the hands of the sales manager and general manager.”

He plans to introduce a version of the Automaxx Tracker System for other dealers at next year's NADA Convention. “The ultimate goal is to have a good working model by then. We do so much volume, we've had a chance to fine-tune the process.”

Mr. Smith is considering partnering with a dealer management system provider to help bring the product to market.

Mr. Smith, his brother, Eric, and two full-time programmers have spent three years developing Automaxx. He estimates the cost thus far at $300,000.

He says he's easily recouped the development cost from sales, and hopes to make the investment pay dividends by offering the system to other dealers.

The dealer also is planning to start a web site development company to complement Automaxx.

“I think it's great that the manufacturers have web sites that give leads to dealers,” he says. “But I do not believe that dealers need all the other third-party sites.”

Dave Smith Motors added the Jeep franchise in the last year, which should more than make up for the coming demise of the Oldsmobile and Plymouth brands. The dealership also sells Chevrolet, Oldsmobile, Pontiac, Cadillac and Dodge vehicles.

Mr. Smith says his Internet customers aren't favoring a particular brand. “They're all over the place,” he says. “It depends what product is hot at the moment.”