HowTo to Finding the Loss Leader Car

I sold a car yesterday, a 2016 VW Jetta SEL 1.8 TSI. According to TrueCar, this morning (4/17/16) the target price for this car is $22,556, or $2,909 below the MSRP of $25,465.

I sold it for $20,900. That’s a huge saving- a $4,566 discount! How did the client score this deal? Were they super negotiators? Were they friends and family? What’s the secret? I often get shoppers looking for the best deal on the lot, and this certainly was the best deal. But why was it so low?

It all has to do with marketing. Every company has a myriad of marketing tools that they try to use to get buyers in the door. During one of our sales meetings, I heard that on average we spend something like $350 per car sold.

We do traditional things, like television and radio. We’ve been doing PPC and SEO. We are even trying to push into social media. Each sales person goes through lists of past clients trying to drum up repeat and referral client. All of it pushing hard to make sure we bring people in.

One of the big no-nos in every industry is lying to your clients. It just shouldn’t happen, and if the company is reputable, which mine is, they have to back up promises with reality. How does a company trying to make a profit make giant claims about huge discounts and still stay in business?

Enter one of the oldest marketing strategy, the loss leader. A loss leader is a pricing strategy where a product is sold at a price below its market cost (Wikipedia). Our dealership has a few things that dictate the price of cars. One of which is the age of the vehicle, as in how long it has been on the ground at our dealership. Another is availability. Sometimes manufacturers let us know that we have ten cars of the same model coming in next Tuesday, and we will be overstocked on that model. And finally, the prices at which our competitors are listing their cars. All of these things create room for us to sell one of the cars at a little bit of loss. One of our cars we will listed as a loss leader, leaving all of the other cars priced regularly.

We advertise that loss leaders heavily. We use all our usual channels to let the clients know, and get them excited about that car. Here’s the catch, if you want that car, but it’s missing some feature you need, we’ll switch you to a different car. The special pricing doesn’t apply.

To get the best deal on the car- you have to want that particular car. If you are a value shopper, keep an eye out for those loss leaders. One great way to ferret out loss leaders that I have noticed recently is to turn your cookies on in your browser. Cookies are a small text file (up to 4KB) created by a Web site that is stored on the user’s computer either temporarily for that session only or permanently on the hard disk (persistent cookie). Cookies provide a way for the Web site to recognize you and keep track of your preferences. (Source: pcmag)
Once you have turned them on, figure out which brand of car you want to buy. Go to their website. Go to the dealership website. Look at the car you like.

Do it a few times.

Now keep an eye out for banner ads! Cookies will let advertisers know which car you are interested in, and will tell them with what to tempt you. Suddenly you might notice that there are ads for cars recently looked by you! I know this sounds pretty creepy but trust me it’s totally worth it.

If you liked this article, check out my Guide to Researching Cars. 

mDimitry’s Guide HowTo Grow your Instagram

Ever wonder how people get huge Instagram accounts, every photo liked 100’s, 1000’s, of times?

I don’t. It’s easy.

Be awesome!

Save that, it might take a bit of work and consistency. There are a few… hacks to get it to grow quicker. Now- warning- they might seem a bit of gimmicky and spammy so be aware of this, and take into account that they work. So let’s cover the non-spammy stuff first.

  1. Don’t spam. No one wants to see 15 photos of the kangaroo you are looking at the zoo. Or your meal, every single bite. If you want to have a good Instagram presence, post consistently- 1-3 posts a day. And those typically hours apart. This Huffington post has a pretty good article about when to post.

  2. Keep content interesting. I like to post man crush Monday’s of myself. I add a Kanye quote, and then some sort of inspiration or encouragement for life. My followers expect it, and I imagine giggle a little as they like it.

This is really hard to do, keeping the content interesting. It takes a lot of thought. Before you post anything, think about it- and why your followers might like to see it.

  1. Always evaluate what you are posting. If one post gets 100 likes, and another very similar post only gets 5… try and figure out why. This constant self-evaluation has taught me a lot about my audience.

  2. Keep in mind- your audience is going to have characteristics. I’ve been helping a hairstylist friend of mine to build her page, a lot of her followers are women- fashion designers/makeup artists/ hair people. These are the people she is targeting. Thus, she tries to put stuff up that they might find interesting.

  3. Hashtags are your friends. #hashtag everything. I like to write long posts. After the post- I post the image with the long post- I immediately post a comment with all of my hashtags.

Finding the right hashtags is very important. I usually go to the search page (detective glass) and look for applicable hashtags. There’s an option for “Trending” and to the right of it says “See all.” I’m pretty bad, I grab anything that even remotely relates to what I’m posting.

I also add stuff that I know is relevant. For example, I post selfies on Monday’s- so #Monday #mcm #mancrushmonday #mancrush. If I was in Miami -#Miami. If it was a sunny day #sunny. You get the picture.

  1. Have fun. Unless it’s your job, then stress out or hire an expert. If you have any more question you can ask me.

Now for the Hacks.

The big one I use I call Churning. Not sure if this is a name for it… but whatever. I add and drop followers. This might seem super simple, but there is a trick to it. And some things to remember.

  1. Limits. Adding a ton of people might seem easy, but for some reason, it works much better if you have more followers than you are following.

There is a maximum number of actions you can do per hour. As of the writing of this post, you could only follow 160 people per hour. Conversely, you can only unfollow 19 people per hour. If you use a program, you have to be careful to follow the rules. Instagram will suspend you if you break them.

  1. Apps. I really like the app called InsTrack by Innovatty. It allows you to manage a few accounts. Yes- you have to pay for some of the features.
This is the simple interface of the program I use to manage my churning.
This is the simple interface of the program I use to manage my churning.
  1. Rhythm. I follow a bit of a rhythm. I will follow people at the peak posting times. Around 4-5 pm. I then choose a time to do my unfollows. On the hour works for me. That way I can just keep track. It takes a lot more time to unfollow people, so getting the most out of the day is important.
  2. Target. When adding people, don’t be random. When I want to start adding people I think about the type of audience I want to build. I post a lot of Kanye quotes- maybe I’ll find a Kanye Instagram account and follow of those people. (That was actually a pretty terrible idea.) If you are a hairstylist- find other hair stylists and follow their followers.

  3. Metrics. Keep track of how well did with everything. For example. I tried following Kanye followers. They didn’t like me. I didn’t get as many followers following them.

I recently found a self-help guru with a ton of followers. Her followers love my Instagram. Because I’m keeping track, I know now that the best use of my time is self-help people.

  1. Like and comment on anything you find interesting. When I am Churning I go through my news feed and immediately like and comment on practically everything. The more engagement you have with people, the more likely they will follow back.

  2. Drop everyone. When I am done clearing out people who aren’t following, I go back and unfollow people I don’t want to follow. If you are selling something, I’ll probably drop you. If you post 12 selfies in a row. Or things that are very negative. I’ll prune the people I follow down to people I actually want to follow.

  3. Repeat. Then I’ll start the process all over again.

  4. Feel free to follow my Instagram. @mDimitry

 

Buying a car- Cash or Financing?

Word is finally getting out to my friends that I am working at Dick Hannah Volkswagen as a sales and leasing consultant. I haven’t really been spreading the word as aggressively as I should, and my circle of friends is very wide, so it makes sense that its taken so long for people to catch on. It’s pretty awesome getting calls about cars.

Recently a long-lost friend of mine asked me if he should pay for a car outright with cash or purchase it through some sort of financing.

This gentleman served in the military for about 8 years. He was Navy, and I assume spent a lot of time on tour, billeted, on the government’s dime. He had had a steady income, fairly low expenses, and was able to save up some money. He’s now a civilian trying to figure out what’s best for him and his family financially.

He has an aging car. He knows it’s time to upgrade his vehicle to avoid the potential expense of keeping his old car running. On top of that, his car still has some inherent value he wants to use in the purchase of a new vehicle.

In the future, he wants to keep his monthly expenses down as well as limit the amount he will pay for the new vehicle by avoiding paying interest. Also, he thinks that the dealership might a prefer selling cars for a for the car and would prefer it?

Dealerships do not actually prefer to receive cash/check for cars anymore. In fact, the dealership would probably rather finance the cars. Why would they give you a discount to do something they don’t want you to do? (Don’t get me wrong, people with cash often make good clients, but it has more to their willingness to do the deal now as they have been planning for it.)

Did you know that banks will often pay the dealership to underwrite through them? Banking was once a very risky business. (To all the bankers out there, yes- I know banking is still very risky… but not as bad as it once was.) But now we have fairly accurate credit scores and high-tech methods to validate and track people, making it much safer to loan money.

That safety allows for banks to accurately gauge and manage risk. Having an accurate gauge of creditworthiness allows the banks to offer very competitive interest rates to customers.

Here’s where things get interesting. My friend has to gauge opportunity costs of spending his money on a vehicle all at once. Opportunity costs are the loss of potential gains from choosing one alternative over another.

For example. What if he can get a loan for 5 years at 2% interest? The money would be free to invest. Say he is very lucky and gets an average of 8% a year for 5 years. That would be of benefit to him, no?

But what if he takes a loan, and lacks discipline? Spends the money elsewhere, and then ends up not being able to afford the car. What if he can’t keep a job. What if the market crashes like it did back in 2008, and the US economy lost trillions and the investments he put his money into all go sour. What if you want to buy a house and your debt to income ratio is too far off to get it?

It all comes down to a matter of preference, and risk management. I personally believe he should buy the car using financing if the interest rate is low. I assume he can manage his money well enough if he is asking for advice on the topic, and also managed to save enough money for this to be a question. He must try to keep his loan from being underwater by putting enough of a downpayment to allow for flexibility in the future if something comes up. A car’s value tanks like a rock after the purchase. Should he need to get rid of it, it’s good to have a smaller loan balance than amount owed.

Why would you invest into something that is a liability? Keep the money, be wise with it. Having cash that you can invest in your future goes a long way. There is a phrase in business,  “Debt is cheaper than equity.” Read the article to see what I mean.

Another great article gives you some good advice: Here

Guide to Car Buying: Research (work in progress)

It is never fun having nightmares. I recently had one about the car buying experience. Full on a horrific, tragic, and morally draining dream. Bad dreams about buying a car are weird because I’m a car salesman. I understand this is because things that stress you out are typically things you dream about, and it’s my brain’s way of unfolding the events of my day.

But a big part of my time is spent ‘informing‘ people about what it is they should do. In a weird sense, that’s like asking an alligator to teach you to swim. I recognize this is job security for me, but I alway love those deals where the person comes in, informed, and has everything ready for me. They know what car’s they want to drive. They know their credit score, have a down payment. Everything is ready.

It is not hard to get a car, just like it’s not hard getting a loan. You can walk into a payday loan office, or log onto a website, and get one in 5 minutes. It won’t be very much, and you aren’t going to be getting anything that resembles a real deal. Same with a car. Car buying is easy, but doing it well requires a bit of research and preplanning.

This preparation should happen at home.

Google is a fantastic tool. Just type in “how to buy a car” and see what comes up. Perhaps that’s how you found this post. Awesome!

A superb starting point is building out a budget. Budgeting should be the hardest part of buying a car. Most of the car buying experience hinge on what your credit score is, how much you are willing/can to do as a downpayment, and finally what are your payments. Budgeting takes time, but it will build you up for a successful car buying experience, as well as help keeps ownership costs reasonable.

A cool resource for budgeting is Mint. This part is a must. Stop reading – go there – now. Set it up, and begin using this. Seriously. They have articles on money, spending, and how much you should target your spending on different things. Specifically a car.

I know Mint has an excellent credit score tracker, but I like to give people options. Credit Karma is another one. I have been Credit Karma lately because it mainly focuses on just credit scores. (Side note- this is just a reference, not the exact credit score you’ll be using when you purchase a car. And your credit score doesn’t reflect all of your experience with different lending companies. If, for example, you bought a Volkswagen- using VWCredit as the lender- and had the car repossessed they might not be willing to work with you again. The opposite is true as well, if you bought a Volkswagen filed for bankruptcy but kept paying on your auto loan, they might be willing to lend you money again because you were a good client.)

Once you get the budget squared away and have been living a good clean life where you’ve been saving up some money- you can begin to look at what kind of cars you want. Motor Trend is a great resource. They have tons of reviews, news, and other critical information. Very well polished. Love it.

Another excellent site I’ve been reading quite a bit myself has been Edmunds. They have some magnificent tools. They help frame the purchasing experience. They have a splendid, long, story about how one of their new writers works at for a car dealership under cover. This story is an awesome way to learn what my job.

A solid golden standard is Kelly Blue Book. KBB is a fantastic resource to find out what your used car is worth. (A little note, what your current vehicle is worth does not always equate to what it’s value is; furthermore a car’s market value is different than trade in value. This is HUGE. I will write an article about this.)

And this final site I’d recommend is True Car. True Car a resource that helps after you have narrowed down what vehicle you are buying and gives you an excellent price reference for what you want to be paying.

After you decide on which car you one- begin looking for a dealership with which you want to work. A really good site I’ve been enjoying is Dealer Rater. Dealer Rater is where I am rated most often. Searching for the dealership on Google, Yelp, and the other usual sites are ok I guess.

[ I think this is all I have for now. This post is a work in progress. I will be updating this post, so feel free to keep an eye on it. Feel free to comment, or email me. I also have a new email for this blog. me@mdimitry.biz ]

Selling Whips

My last post was rather vague and pretty short, and there was quite a bit of time between then and now. Looking back- I was hopeful that I would have more time to write. That’s cute. 

The latest thing I’ve been doing has been car sales. I am a car sales person. I didn’t ever picture myself selling cars. How did this happen? And what do I feel about it? 

Business is hard. Good business seems to be harder. My first day in the car industry was quite interesting. When my thing with PICR ended- I was a bit adrift. A lot of soul searching about what I am, what direction I wanted to move in, and where I wanted to see myself on 10 years. I worked for the restaurant for about 8 years. I always wanted to do ‘business’ but I rejected any idea of promotion there. 

I had a few ideas of where I wanted to go. My last official conversation with one of my bosses (and good friends) at PICR stood out. He said something to the affect that I need to ‘to continue to develop my soft skills.’ Basically working on a face to face basis with people. 

Another one of my friends who I respect greatly in the business world told me about his start. He worked at a dealership for a few years and that really his ability to sell and close deals.

Long story short- after a little bit of research I found a local company that seemed to have a ethical car business in town. They have a bunch of different car companies they sell- so I chose what at the time was the strongest company. 

After a couple weeks of interviews, drug tests, background checks- My first day was at Dick Hannah Volkswagen was September 18, 2015 aka DieselGate. I remember hearing the announcement on NPR while I waited at the light on the road to work. 

My first two weeks at work was me defending a company I hardly knew to people who barely understood the problem themselves. Quite the learning experience. It’s been around half a year- and I still feel like I’m figuring it out. 

We’ll see how it goes. I’ll try to start working on this blog a bit more. I had some pretty awesome plans for this things and I think that my current position will provide me with some great insights! Should be fun! 

A new direction.

Looks like it’s time for a new direction. I won’t be working with PICR anymore. This means I might have a bit of extra time to write up a few more posts.

I have a few in mind, so stay tuned. 😀