Autospeak-Straight Talk contains articles covering digital and social media marketing social communities and events marketing

3 reasons SMS Mobile Ads Work

(Posted on Jul 12, 2013 at 02:21AM by William Cosgrove)
Before smartphones and tablets ruled the world, SMS text ads or text messaging was what mobile advertising meant.

If used correctly SMS should be highly considered by marketers to boost sales.

1.  One-to-one communication

Unlike mobile search or display across mobile web and applications, a text message is a dedicated piece of communication.  Some would argue that it is better to reach users while in-app or surfing the mobile web as these people are in a state of engagement, but that could also be said of receiving a text message.  The beauty of a text-based ad is that it is simple, direct and easy for someone to respond to.  You are limited to 140 characters, but include a call-to-action via link or text back short-code.  With any strategy, the data will speak for itself.

2.  There are still non-smartphone users!

Yes, there are people that have not embraced all that mobile has to offer.  Don’t miss out on extending your reach or on the opportunity to engage with specific audiences that are slower to adopt.  Craft a strategy that may use SMS text ads to encourage other actions online, in-store or across social platforms, but always get the opt-in via short code text back.

3.  A proven way to (re)engage with current customers

It’s smart to let the consumer choose how they interact with your brand.  If a current customer opts-in to receive your mobile text messages, take advantage.  All engagement funnels matter, whether a person subscribes to your email newsletters, likes you on Facebook, sign-ups for your mailing list, mobile texts communication is the perfect way to engage on the go.  Focus on both consistent and flash promotions.

Here is a great example from our friends at Digiday.

A Domino’s Pizza franchise in Charlotte, NC., wanted to get consumers to like it on Facebook, so it could push deals and offers out to fans.

The pizza chain had traditionally advertised the franchise’s Web address, which redirected to the Facebook group, on the big screen and other displays in the University of North Carolina’s basketball arena. The arena’s announcer read the advertisement while it was displayed. The spots typically lasted between 30 and 60 seconds. The problem with this approach, however, was that most students are not going to jot down a URL during a basketball game. While many students have smartphones, they were unlikely to spend a couple of minutes during a basketball game to visit the Facebook group. On the other hand, taking a couple of seconds to send and receive a text with the URL of the group makes sense. After the game ended, students could then review the text and visit the Facebook group on their smartphones or computers.

To kick things off, the pizza chain created a new ad for the arena displays, offering a free pizza to anyone who texted 49ER to 313131. They received the following response, “To get FREE pizza, join our Facebook group at Once you join, post a message (I GOT A TEXT) & you will get FREE pizza code Reply STOP 49ER 2 Optout.”

Roughly 10 percent of the 3,000 students attending the game texted in within a few minutes — and another 5 percent did so by the end of the night — resulting in nearly 600 opt-ins. Approximately 350 students had joined the Facebook group by the morning. Nearly all of them redeemed the offer. The response to the advertisement confirmed that texting was dramatically more effective at driving conversions than simply displaying a URL. The pizza chain revised its creative for subsequent games, offering deals like discounted pizzas. Every time the SMS ads ran, the pizza chain saw 100 to 200 opt-ins, nearly all of whom also joined the Facebook group to get the deal.

By the end of the semester, the Facebook group had collected nearly 2,000 fans. They had also added over 850 students to its SMS marketing list.

“The sales at the store when we send text messages, or [use them to] drive people to Facebook, are unprecedented,” said Ryan Swanson, area director for Prairie Pizza, a Domino’s franchise in Charlotte, NC.

World’s first physical Facebook fan-gate

(Posted on Jul 11, 2013 at 09:06PM by William Cosgrove)
RealLifeConnect launches the world’s first real-life Facebook fan-gate for the retail sector.

Vienna- and Hong Kong-based RealLifeConnect ( announced “Are you a Fan” today, offering fan-gating in real life for retail stores and shops. Everyone is familiar with Facebook fan gates in the online world, and now, thanks to RealLifeConnect’s social media RFID turnkey solution for agencies and brands, it is finally possible to do the same in the physical world. 

Watch This Video:

“Are you a Fan” is based on the idea of recognizing and rewarding fans in real time and in-store via RFID social media integration. Millions of retail stores and outlets currently use social media to reward and address their audiences online, but so far, there has not been a way to also reward or recognize them in-store. Now, thanks to RealLifeConnect’s “Are you a Fan” solution, the missing link has been found, and it is all possible with just a simple swipe.

The concept is straightforward and easy to implement.

The customer links up his/her loyalty card from the retail outlet with his/her Facebook account, and the turnkey solution of RealLifeConnect automatically detects if the person is a fan of the retail outlet online within social media channels. Once the user enters the store, he/she can be recognized, addressed, and rewarded. In simple means, they are treated like a fan, friend, or pal—something beyond the average visitor. A concept like this puts the customer fully into the spotlight and gives him/her the attention and special treatment he/she deserves.

Fan-gating is a popular way to reward and recognize fans within Facebook fan pages and applications but has thus far never extended beyond the digital world into physical space. As the world of retail is changing and new concepts are needed to attract and retain buyers, “Are you a Fan” bridges the gap between online and offline buyer behavior, and rewards them as well liking the page is not the only thing a brand should expect from its followers and friends. People want to be recognized and rewarded for their loyalty to a brand or store, and retailers should go the extra mile to do what is needed.

“Are you a Fan is based on RealLifeConnect’s turnkey solution, which is now a way for retail stores and shops to implement social media beyond the Facebook fan page or Twitter stream, whereas previously, we addressed the event and promotion space. However, based on multiple inquiries, we also saw interest and demand to develop a meaningful concept for the retail sector in order to spearhead our leading position within the space,” said Michael Ionita (CEO of RealLifeConnect). “Now, even retail stores and chains of all kinds and sizes can utilize social media RFID solutions and integrate them into their shop environment and loyalty system. But there are far more advantages, such as using and combining valuable data collected from different sources (social media, offline behaviour, CRM…) itself.”

RealLifeConnect is known as the world’s leading provider of social media RFID installations, resulting in the usage of its social solutions on five continents in more than 20 countries. The primary focus so far is on projects within the experiential, promotional and event space with a strong focus on the beverage, fashion, and automotive industry. With “Are you a Fan” RealLifeConnect is showing that fans are valued people whether they are online or offline. Linking these spaces via social media RFID solutions is a great leap for retail and events.

RealLifeConnect has been an Austrian- and Hong Kong-based global solution provider for agencies and brands of social media RFID installations for experiential and interactive promotions, brand activations, loyalty programs, conferences, trade shows, and events since 2011. RealLifeConnect’s products consist of hardware (swipe stations, photo stations, roaming photo solutions and RFID tokens) and software (cloud based campaign and user management as well as reporting system) for linking social spaces instantaneously and without hassle.

For more information on RealLifeConnect, visit,
find us on Facebook at
or on YouTube at

Additional information about the “Are you a Fan” product can be found here or contact us at

Trade Secret Litigation Over Social Media: Is It Worth The Cost?

(Posted on Jul 11, 2013 at 10:06AM by William Cosgrove)

With the continually increasing popularity of social media websites like Facebook, Twitter, and LinkedIn, where members can be connected to friends, family members, co-workers, clients, and potential clients all by logging in to one account, it is understandable that companies and employers are concerned about the security of their trade secrets.  However, the distinction between what is part of an employee’s personal profile and what portion may belong to the employer is not an easy one to establish.  In the past few years, a number of lawsuits have been filed, by both employers and employees, alleging misappropriation of social media accounts under trade secret law.  However, a court or jury has yet to find at trial that a LinkedIn profile or a Twitter account contains protectable trade secrets capable of being quantified into recoverable damages.  This article summarizes a few of the recent cases involving social media and discusses some of the issues to consider when litigating these kinds of trade secret actions.

Recent Cases Alleging Misappropriation of Social Media

Christou, et al. v. Beatport, LLC, et al. was filed in December 2010 by Regas Christou, the owner of several nightclubs with national reputations as venues for electronic dance music. A former employee of Mr. Christou, Bradley Roulier, booked well-known DJs to perform at the clubs.  He also created, with financial and promotional support from Mr. Christou, Beatport, a popular online marketplace for electronic dance music.  After Mr. Roulier stopped working for Mr. Christou, he founded his own competing club.  Mr. Christou alleged that Mr. Roulier threatened DJs that their tracks would not be promoted on Beatport if they performed at Mr. Christou’s clubs.  In his cause of action for trade secret misappropriation, Mr. Christou alleged that Mr. Roulier and other defendants misappropriated the log-in information for his clubs’ profiles on MySpace, lists of friends and customers, and lists of cell phone numbers and email addresses for DJs, agents, and promoters.

On March 14, 2012, the court denied the defendants’ motion to dismiss the trade secrets causes of action.[1] The court first noted that whether the plaintiffs’ MySpace friends list was a trade secret was a question of fact.   After considering all the factors for determining trade secret status, the court then held that the plaintiffs had alleged sufficient facts to maintain their trade secret claim at the motion to dismiss stage.

On March 26, 2013, the plaintiffs dismissed their claims against Beatport due to an informal resolution and voluntarily dismissed the claims of all but the two clubs that featured electronic dance music.[2]  The case remained set for a jury trial beginning June 24, 2013.

Another lawsuit, PhoneDog v. Kravitz, filed in July 2011, involved the claims of PhoneDog, an interactive web resource that reviewed mobile products and services, against its former employee, Noah Kravitz.  While Mr. Kravitz worked as a product reviewer and video blogger for PhoneDog, he was given use of and maintained the Twitter account “@PhoneDog_Noah,” which generated approximately 17,000 Twitter followers during the course of Mr. Kravitz’ employment.  When his employment ended, PhoneDog requested that Mr. Kravitz surrender the Twitter account and Mr. Kravitz, in response, changed the account handle to “@noahkravitz” and continued to use the account.  In its complaint, PhoneDog alleged misappropriation of trade secrets, intentional and negligent interference with prospective economic advantage, and conversion.

On November 8, 2011, the court denied Mr. Kravitz’ motion to dismiss, finding that PhoneDog had sufficiently alleged a claim for misappropriation of trade secrets.[3]  Like the court in Christou v. Beatport, the court inPhone Dog v. Kravitz noted that to the extent that Mr. Kravitz challenged whether the password and account followers are trade secrets and whether Mr. Kravitz’s conduct constitutes misappropriation raised evidentiary issues more properly raised on a motion for summary judgment.  Id.  However, no motion for summary judgment was ever decided as the case settled on December 3, 2012 and Mr. Kravitz was allowed to keep both the Twitter account and its 17,000 followers.[4] 

One of the few trade secret lawsuits involving social media information that proceeded all the way through a bench trial is Eagle v. Morgan, a case brought by Linda Eagle, the co-founder of Edcomm, Inc., a banking education company that provided on-line and in-person services.  In May 2009, Dr. Eagle created a LinkedIn account with her Edcomm e-mail and used it for sales and marketing purposes.  However,  after her termination following the buyout of Edcomm by another company, Dr. Eagle’s LinkedIn password was changed and she was locked out of the account.  After Dr. Eagle filed suit in July 2011, alleging, inter alia,  unauthorized use of her name, misappropriation of name and publicity, identity theft, and conversion, Edcomm filed counterclaims for misappropriation, unfair competition, and conversion.

After a bench trial, the court entered judgment on March 12, 2013 for Dr. Eagle only on her claims for unauthorized use of name and invasion of privacy, finding that Edcomm used Dr. Eagle’s name without her consent for commercial purposes when it changed the content on Dr. Eagle’s LinkedIn page to provide information about Sandi Morgan, the interim CEO of Edcomm, even though the url still contained Dr. Eagle’s name.[5]  However, the court found that the evidence was insufficient to support Dr. Eagle’s request for damages and therefore did not award any compensatory damages to Dr. Eagle.

The court then entered judgment against Edcomm on its counterclaims for misappropriation, unfair competition, and conversion, finding that Edcomm never had a policy requiring that its employees use LinkedIn, did not dictate the precise contents of an employee’s LinkedIn account, and did not pay for its employees’ LinkedIn accounts. Edcomm also failed to put forth any evidence that Dr. Eagle’s contacts list was developed and built through the investment of Edcomm time and money rather than Dr. Eagle’s time and money.

The court’s description of the outcome in Eagle v. Morgan as a “somewhat mixed bag for both sides” highlights the importance of doing a cost-benefit analysis before making the decision to litigate over who owns a social media account.  While the primary lesson to be learned from these cases is that employers should have specific policies in place regarding personal and company social media, a secondary issue to consider is whether it is cost effective to litigate a trade secret case through trial, even if company policies purportedly establish ownership of social media accounts.  Because the issue of whether Twitter followers or LinkedIn connections is a trade secret is a question of fact, courts will not usually sustain a demurrer or grant a motion to dismiss on the ground that social media connections do not constitute trade secrets.  Thus, an employer or employee who files a complaint alleging trade secrets misappropriation should be prepared for the possibility of litigating the case at least through the summary judgment stage, if not through a jury or bench trial.  Further, because of the uncertainty of damages from a misappropriation, there is no guarantee that courts would even award damages because it would require the fact-finder to put a value on each friend, contact or follower.

Establishing a Company Policy Regarding Social Media that Best Effectuates Trade Secret Protection

In response to employers seeking guidance on social media issues, the National Labor Relations Board has issued multiple reports regarding the results of investigations in dozens of social media cases.  The third report, which can be found at, contains a sample media policy with general guidelines relating to posting content online as well as specific guidelines instructing employees, for example, not to register social media accounts using their work e-mail addresses.  While the sample media policy does not address all the factors discussed in Eagle v. Morgan (e.g. who pays for the account, who is responsible for the content), it provides a good starting point for employers seeking to establish ownership of social media accounts.  It is also a good idea to become more familiar with the options available to companies on social media websites, such as business pages and accounts on Facebook and LinkedIn.  When companies create separate social media accounts and allow their employees to post content and develop business on those accounts, they will not have to be concerned about the commingling of corporate trade secrets with personal social media posts and the possibility of misappropriation of those trade secrets after employees leave.

About the Authors
Ellen P. Liu is an associate at Sideman & Bancroft LLP.  Her primary practice areas include civil litigation and enforcement of intellectual property rights.  Constance J. Yu is a partner of Sideman & Bancroft LLP in San Francisco.  Her primary practice areas include civil litigation and business crimes defense.  Sideman & Bancroft LLP is a certified Women Owned Business Enterprise.  The firm is the largest women-owned provider of legal services in the Western United States, certified through National Association of Minority and Women Owned Law Firm (NAMWOLF) and Women’s Business Enterprise National Council (WBENC).

DealerNet Services

Forgive Me For I Have Sinned (The Debacle)

(Posted on Jul 11, 2013 at 09:58AM by William Cosgrove)
 With all the noise about making the Industries more transparent you would think that the vendors that supply those Industries and say they their purpose is to provide consumers more transparency would  reciprocate and be transparent with their client base before launching their new strategies.

When launching new programs that impacts the clients that you serve it is critical that you take the initiative to collaborate with them to understand their point of view and communicate yours.

How do these big companies stumble and make these grandiose errors that cause such uproars. There have been so many instances of these blunders and right or wrong it is always better to first apologize to control the damage done and institute measures to repair the damage that has been done. If you do not it projects arrogance and produces animosity and distrust.

Whatever's intentions, they were wrong if not for any reason but for not collaborating with their dealer base and should have apologized. It was even more damaging to find out that they were doing other things that they were not communicating. One blunder is bad enough but when it causes other things to be uncovered it makes the situation worse and the saga seems to be uncovering more.

Do the right thing and Apologize and the sooner the better. Don’t just stop doing the things you obviously realized you shouldn’t have been doing hoping it will all just go away. Don’t appear to be like the some liberals who are for big government because they think that they know how to run things better than their constituents.

Classified Ventures, LLC who owns is a strategic joint-venture owned by five large media partners whose objectives are to collectively capitalize on the online revenue growth opportunities in the automotive, rental and real estate advertising categories. Our strategic partners are A. H. Belo Corp. (NYSE: AHC), Gannett Company Inc. (NYSE: GCI), The McClatchy Company (NYSE: MNI), Tribune Company and The Washington Post Company (NYSE: WPO).

Author Bill Cosgrove


Special Finance At Your Dealership-Qualifying

(Posted on Jul 11, 2013 at 09:53AM by William Cosgrove)
This is one reason that you need qualified personnel in your Special Finance Department. Your personnel must have an in-depth and thorough  knowledge of
the entire operation of the Special Finance Department.

Whether or not your dealership interviews every customer, if you’re serious about Special Finance you need to be interviewing every Special Finance customer.

Your personnel must have a complete and thorough understanding of your financing sources and  completely review the customer’s application and credit report. Let the customers know the financing process and keep them engaged. Review the application and credit report with the customer to confirm its completeness and accuracy.

Prepare your customers for the sale and sell based on a complete understanding of income, credit, desired vehicle, down payment and trade information. It will load you with all the information you need about what your customers’ primary concerns are, build your customers’ confidence in your ability to help them and give you the knowledge on how to structure the best deal.

The interview  will get you all the information you need and establish repoire all of which will help you find the best fit for your customer while involving them in the process at the same time.

There are many things to consider if you are to have a fully functioning Special Finance Department. If done right you will be will have an effective program and another profit center that will drastically increase your average front and back end grosses and sell more units.

By Bill Cosgrove

How to Reach Today's Buyers with Modern Prospecting

(Posted on Jul 11, 2013 at 08:56AM by William Cosgrove)

Face-to-face sales interactions are typically viewed as the most valuable activity by Sales Leaders.  5 years ago they were right. Nothing was more important than executing in the trenches.  But during those times, the trenches were out in the field.  In this post describe the imagewe will explore how the trenches have changed. Today, getting in the door is more difficult than executing face-to-face sales calls.

Today your sales people have multiple product specialists, overlays, and management support.  But these resources don’t engage until they get in front on someone.  The vast majority of training is focused on selling once you are face-to-face.  But buyers are much more informed today. This fact makes getting in the door more than half the battle.

The primary differentiator of today's top Sales Rep is the ability to prospect.  This could be prospecting for new business or different buying centers within existing customers.  Both are difficult.  Both are where the potential is.  Managing a relationship or taking orders from existing customers are table-stakes.  Opening new doors is a unique and difficult skill.  Few are really good at it. 

We have captured 5 modern prospecting best practices from top performers.  Download this tool to rapidly improve your prospecting results. 

I recently had a discussion with a Sales Leader about his team’s ability to prospect. 

He told me that, “Prospecting is a basic skillset all my reps should have.”

I asked what skills he was referring to.  He couldn’t articulate their prospecting strategy.  He basically told me they should make cold calls and “beat the streets”.  I then asked how they make phone calls and what their success rate is.  He gave me a blank stare.  "What do you mean?  They call and explain who they are and why they are calling.  Then they ask for an appointment."

As shocking as this example may seem, it is the norm.  A majority of sales people are terrible at prospecting.  They call the same buyer each week hoping something has changed. They open a phone call with what their company provides.  They knock on a door and leave a business card.  The success rate using outdated methods and poor messaging is under 5%.  And Sales Managers wonder why their people aren’t prospecting.


Why do sales people inflict so much pain on themselves?


  • They are instructed to use outdated prospecting techniques
  • They are resistant to change and make excuses such as, “our buyers aren’t on social media”
  • Most sales training is focused on execution once in the door
  • Organizations inhibit the use of modern prospecting methods
  • They make the mistake of relying on someone else to prospect


How to get in the door:


  1. Approach the right doors - some doors aren’t worth approaching.  Is your sales team focused on customers with the highest potential to buy your solution?  Or do they call on low value prospects and saturated customers?  Clearly define your target audience first. 
  2. Buyer Centric Messaging - have you ever had a feeling that an advertisement was meant for you?  It may have been 1 out of 100 advertisements.  The goal is to make every communication speak directly to your buyer.  You should understand them so well they think you have their job.  Speak directly to the buyer’s fears, objectives, and personal wants.
  3. Use Social Listening – understand what your buyer cares about.Social Listening  Is there a better way than watching their behavior first hand?  This works whether using social prospecting, email, or phone.  Your buyers will give you the answer to the test and you aren’t cheating. 
  4. Refine Writing Skills – produce succinct, clear, and compelling copy that drives an actionable response.  Think of how many more emails you send than conversations you have each day.  We communicate via the written word much more frequently than orally.  Yet we focus most of our time on improving oral communication skills.  Your prospects spend more time reading about you than listening to you. 
  5. Incorporate Social Prospecting – LinkedIn is not a clogged channel.  Email and the phone are.  You can use relationships to get access to buyers.  Using social is more effective and less painful than cold calling.

Use this tool to spread these best practices across your sales organization.  Prospecting can be enjoyable and effective if approached correctly.

Mary Meeker’s Famed 2013 internet trends: all the slides plus highlights

(Posted on Jul 10, 2013 at 08:02PM by William Cosgrove)
The waiting is over. For the second year in a row, Mary Meeker is unveiling her now famed Internet Trends report at the D11conference.

Meeker, the Kleiner Perkins Caufield & Byers partner, highlights growth of Internet usage and other activities on mobile devices and updates that now infamous gap between mobile internet usage and mobile monetization.

But there are many new additions. Among them are the rise of wearable tech as perhaps the next big tech cycle of the coming decade and a look at how Americans’ online sharing habits compare to the rest of the world.

Here’s Meeker’s full presentation: Follow This Link

DealerNet Services

The two words Bill Gates doesn't want you to hear...

(Posted on Jul 10, 2013 at 07:41PM by William Cosgrove)
                    Watch This Powerful Video (See Link Below)

They spooked the Microsoft founder into early retirement. Now they're going to bring down his empire.

Take the investment advice or not this powerful video puts into perspective the evolving revolution that is upon us now.

On October 30, 2005, something incredible happened...

In Redmond, Washington, one of the world's richest -- and most powerful -- businessmen sent an urgent memo to his top engineers and most-trusted managers.

It sounded the alarm that a very disruptive technological revolution was about to wash over the entire world -- forever changing the way we get information and do business.

It also warned this would wipe out the $250 billion business empire he'd spent his life building.

Meanwhile, a few hundred miles south, on the banks of the Columbia River, a mysterious outfit known only as "Design LLC" quietly constructed two massive, windowless warehouses.

This mammoth undertaking was code-named "Project 2," and the International Herald Tribune described the towering monolithic structures as "looming like an information-age nuclear plant."

I realize this may sound like something out of a Tom Clancy novel, but I think you'll want to bear with me, because...The Two Words..........Video

By Bill Cosgrove
DealerNet Services

Do You Want to be a “HERO OR A ZERO?”

(Posted on Jul 10, 2013 at 07:30PM by William Cosgrove)

Part IV of A Business Model That’s Just Plain Bad For Business.

Do you want people who are going to tell you “What You Need To Hear” or do you want people who are going to tell you want you “What You Want to Hear?” If you are the later than you might as well stop right here because I am not here to stroke your ego, I’m here to make you money and make you proud of your business and of what your accomplishing.

Have you heard the expression that you need to “Spend Money to Make Money?” Have you heard the expression that you need to “Save Money to Make Money?” Let’s Get Real!

Bottom Line Growth is not sustainable only Top Line Growth is and only Top Line Growth will get you the results that will take you where you want to go with the rewards and pride that come with it. (Tell your bean counting consultants to put that in their pipe and smoke it.)

So how can you think or where did you get the idea that you will get the best Marketing, Sales, Service or Parts minds on the cheap? These people who are on the front lines day after day “Are you Business” and are the one who are going to make or break it.

Saving Money is all well and good but Making Money means that you are doing the right things to be successful and to be successful you need to have the kind of people that can get the results and this means you need to “Pay for Performance.”  If you want to save money save it on office supplies, Press your vendors for discounts, change your electric company but don’t think that a gift certificate for dinner or a pat on the back is going to recruit or retain the talent you need to be successful.

Let me ask you a question.  Were you born a business owner or did you have to pay your dues and earn what you have today? Did you seek out the companies that thought people with your experience and talent were a dime a dozen and didn’t want to pay what you were worth? I think not.

I stayed at the last Dealership I worked at because they knew the value of people from Management to salespeople to every worker there and paid accordingly. I and my co-workers made more money than we could at any other place and the Dealership made even more and were consistently in the top tier of highest average front and back end grosses- A business that PROVES this all out. How can this be? It is a direct result of sharing and respecting the people who make it happen for you. It means making an investment that unlike the stock market is guaranteed to pay off. There is no complex formula here to figure out.

 Do you want to attract Independent thinking people who can create value for your business? Then you need symbiotic relationships.  Or do you want parasitic people who are going to attach themselves to you on the cheap because they have few or no other options?

If you are the former, send me an e-mail at and I will send you a commission plan that will attract and retain the talented people you need and should want if you want to be successful and stand above the rest.

By Bill Cosgrove

DealerNet Services

Automobile Manufacturers-Who are "they" really looking out for?

(Posted on Jul 10, 2013 at 07:21PM by William Cosgrove)

In my last post “Bad Management It’s Also Just Plain bad for Business“ At, David Ruggles brought up a good point when responding to a comment made by Steve Richards.

Steve stated that "The retail culture incubates mediocrity and as gross profits continue their downward spiral good luck attracting quality sales personnel. Can you name another product that sells for $30K and pays a $100 commission?”

David replied that “Gross profits continue their downward spiral because the previous asymmetry in information has become more balanced, creating a more efficient market. While that might sound good to consumers, an efficient market leads to disintermediation.  For those not familiar with this term of economics, it means cutting out the middle man while the product becomes a commodity.  Can you name us another product that sells for $30K, where consumers expect to know our base costs, and 10% is considered to be an obscene profit by industry outsiders and many "insiders?”

My mission to get Dealers to improve their business model goes back to 2010 when I started discussing what I saw as a growing movement, which was a perfect time to execute due the pain caused by the recession,  in the Industry to commoditize the Automobile Industry and that is that I saw the Giants in this Industry buying up the vertical and convincing Dealers that they need to sell for one price and buy for another and our way of marketing is the right way. That is that in order to compete and move product you need to turn more product at a lower price to survive in today’s Marketplace. This plays right into the hands of the Mega Dealers who’s Business model is based on churning out more and more numbers at low marigins.

To do this they need more and more territory to churn those higher numbers to make their business model work. Where is that territory coming from? I think you know the answer to that.

Automobile Manufactures mandate Dealers to selling numbers which is the most basic contradiction in the Franchise model for the Dealer. The Manufacturer doesn’t really care where those numbers come from as long as they are met. After all the Manufacturers profit is built in and booked as soon as it leaves the factory to its destination.

You saw what happened to True Cars when they tried to reach into the pockets of the Manufacturer but who is looking out for the Independent Dealer? No One.

Between the Manufacturers and the Giants of the Industry owning or controlling the vertical from Inventory to marketing whose mission is churning higher and higher numbers you wonder if commoditization it is inevitable.

And believe me. If this takes place the Independent Dealer is not the only one that will be affected. All of us from Marketing firms to Consultants to any Vendor in the Industry will be fighting for less and less dollars as our customer base will shrink

Where do you think the Industry is headed? Right now Franchise Laws as David stated "By law, franchise laws in every state, a new vehicle can only be purchased from a franchised dealer.” Is this being circumvented by the creation of Mega Dealers? Will Franchises as they exist today become non-exisitent in the future?

Is the only way for the Independent to fight back to start running their businesses more effectively and efficiently. This is a topic that needs to be discussed because all of this it is already happening whether you want to open your eyes to it or not.

By Bill Cosgrove