Dealers, Stop Majoring in the Minors!

Transcript is auto-generated from the episode recording and lightly formatted. It may contain transcription errors.

Chris Keene (00:00): In this week's episode, we find out what made Chris say this.

Chris Keene (00:03): You go to sit there and keep doing what you're doing and look up 90 days later and go, well, what the hell happened?

Chris Keene (00:13): Well, here we are, folks. We are back. You have tuned into LotTalk, powered by Lotpop. I'm Chris Keene, one of the co-hosts, joined by the infamous people himself, Mr. John Anderson, and also the guns up, Mr. Renaldo Leonard. Good morning, gentlemen. How are we doing?

John Anderson (00:30): Morning, morning. Good.

Chris Keene (00:35): Listen, brother. Yeah, the air is brisk. Fall time is here, it's got a nice little bite in the air this morning. And I'm going to tell you now, we go ruffle some feathers today. We are through the first month of Q4. We are staring down the end of the barrel at the end of 2025. And by God, I want to make sure that we help these dealers get through 2025. But most importantly, get ourselves set ready to go for 2026. John, what you thought about that?

John Anderson (01:10): You know what, I'm back to, I was still thinking about your comment about we're going to ruffle some feathers today. I think, is that unlike any other Friday that we're on talking about what we talk about? You know, so not really, but kind of maybe. No, I think, listen, yesterday I had a common unusual day for me yesterday, five meeting calls. What you talked about, what you addressed, Chris, was kind of what I was trying to convey to those dealers. You know, we're looking at really 30 days, right? Tomorrow is the first of November. So if you've got inventory that is out around, in other words, you've got aged inventory, your bucket management is off. You got inventory, you know, a high percentage of your inventory sitting in that 31 to 60 day or above 60 days. You really have a month to try to get the ship right. Because you're going to start to see shopper counts, actually in our data, there's a little bit of a hook already. And I looked yesterday, the last two years, so 23 and 24, shopper counts started to begin their upward track to the middle of end of November. So, you know, by the time we hit the end of November, you're going to start to see shoppers coming back into the market. And here's the deal. If you've got a bunch of aged inventory, what do we do as dealers? What have we always done when inventory is aging out on us? What's our number one move? Right? We keep changing the price and lower the price, right? So if you've got a bunch of aged inventory, and that's your lowest price point, guess where those customers coming to the market are going to land. They're going to land on that price point inventory and you're going to be screaming, we can't make any money. Well, there's a reason for that, right? Is that you've allowed your inventory to get out of whack and, you know, every customer is looking for a deal. So if you got 61 day plus inventory, you've got priced at 90% price to market, guess where those customers are going to come in and land? We see it day in and day out. You know, Renaldo, I know you start out with dealers and training them, and a lot of those dealers that we start out with, they do have a lot of aged inventory, and you see it when you see the lead totals, the active leads on inventory in stock, that typically that high percentage of active leads on inventory in stock is sitting where, right on that aged inventory, right?

Renaldo Leonard (03:42): Absolutely. So, you know, it's not rocket science. It just, it's what we're going to get into today. Get yourself out of the way, right? It's not rocket science. It's just having the ability to get yourself out of the way.

Chris Keene (03:55): So, you know, John, you talk about that. It's getting yourself out of the way, but we were backstage before we started. And I was telling you guys, I was on, you know, All Things Used Cars, and it's been over the years a really great platform. And it's been a great place to go in and help find some great ideas, collaborate with one another, David Long, Jasen Rice, several others that started that during the pandemic. You know, of like, how the hell did we get out of this funk? How do we navigate through it? Really great platform. You know, this morning, I heard some really great things from some people on there that have been really good industry experts for a long time. But then also heard some things that just made me want to jump out of my damn skin. And you know, although you've heard me say it a million times over, stop majoring in the minors. Stop majoring in the minors. You know, John, you've said it a million times over. You talk about egos, edging greatness out. But then in that conversation this morning on the back channel, Brian Kramer from Cars Commerce Accutrade, him and I were having a conversation in the back channel of it. And he shared a pretty funny comic strip and it really resonates with so many different things, even beyond the acquisition part of our industry. I got to share this comic strip because John, I know you got a kick out of it. We all know you got a kick out of it. I got a kick out of it. But for the viewers, you guys are watching it; for the listeners, I'll do my best to describe it. He sent me this comic strip and whether it's the used car manager, the dealer principal, the GM, whoever, standing right there in front of the search for it going, hey, where else can we find some used car inventory besides going to the auction? And he's got his people like, hey, look behind you, bro, we've got a full blown service department right there with hundreds and hundreds of cars coming through each week. How about we start there? You know, that's kind of the look they're giving them. And it's really just in front of you, six inches in front of your face. But sometimes we want to look past that. And I said to Brian, during that time that he and I were talking, sometimes people get scared by the simplicity of things. They want it to be complex, because the more complex it is, sometimes people think that, hey, it's super complex, so this must be a really good idea. Once we can figure the complexity of it out, man, this is going to really run and it's going to run great. And then he came back and said, you know, most people make the simple complicated, because that's what people that don't have a deep level of understanding do. Which takes me back, John, to the acronym EGO, that you make sure at our company we keep that in check, and you do a pretty damn good job of it. Edging greatness out. Stop with the complication. And if you don't have an understanding, there are so many resources out there. Raise your damn hand up and say, hey, okay, I see the end result. I know what that end result should be. Somebody give me some help. Help me understand this, help me simplify it, so I get the hell out of my own way and get the results that we're looking for. And that just resonated with me. It quite frankly kind of pisses me off, if you want to know the truth of the matter. I mean, it just pisses me off. You know, we forget the KISS method. Keep it simple, stupid.

Renaldo Leonard (07:54): Yeah, I just think that everything, every problem that we're faced with on a day, and it doesn't matter if it's work, life, whatever, it always has a simple solution. And the complexities that we're faced with, and we've had the wool pulled over our eyes by thinking that because we can't figure it out, the solution can't be that simple. It has to be a complex problem. It has to be multi layered, it's dimensional, it's got to have a quadratic equation as part of the solution. But it's just, when we talk about and we train dealers on how to manage inventory, why is a vehicle still out on the lot? Well, you know, the market days supply, and then you've got this, and you've got all these outside influences from the other side. We're waiting for the Fed to lower interest rates. It's the man, the money or the machine, right? Those three things. Or even, well, you know, I can't get my people to follow up on leads. Well, it's because they're scared to pick up the phone. They don't know what to say.

Chris Keene (09:04): Like I told you guys, one thing that I heard was like so simple, but so profound. And I hope the people on All Things Used Cars, I hope they heard it too. She sat there and said, okay, cool. You guys keep sitting there telling your people, just get them in. Well, if that's your training, are you serious? Okay. Go ahead and look at the quality of the work that your people are doing, because sometimes it's not ego. It's fear of getting in trouble because you don't have an answer. So as a quote unquote leader, go freaking lead and go sit there and look at the game film. And although we've talked about it a million times over, the eye in the sky don't lie. Go and look at the game film and see what your people are doing in their follow up. Are they just checking a box, or are they saying all the wrong things at all the wrong times that make it all the right decision for the customer to not park on your doorstep?

Renaldo Leonard (10:04): Yeah. Well, and I mean, if you went into that call next week and asked, how does someone set an appointment to get someone into the dealership? You'd probably have 13 different versions on the best way to conduct a follow up. Right. But what's the simplest way to do it? Pick up the phone. How can I help you? What do you want? What do I have to work with in order to make that happen for you? And when, you know, we're talking about car deals, how much can you put down? How much can you budget for a month? When can we get this done? Three questions. What do you want? What do we have to work with? When do we get this done?

Chris Keene (10:46): You want to overcomplicate everything. But it's a simple question, though, because to your point, our industry is overcomplicated. As a matter of fact, I was just on the phone yesterday with a consumer, somebody that is nowhere near the car business. They work for Tinker Air Force Base. Okay. They work for the government. And he said to me, Chris, I've been online looking for a car. Holy cow. This is hard. I said, what was hard about it? There's so much out there. I don't know what to do. To that point, there's so much available to the consumers out there. How about just ask the simple question: hey, Mr. Customer, what's the next steps for you? John, you're grinning away. You're grinning away because you see I'm like a little amped up today.

John Anderson (11:34): There's just so many things I'm thinking about while you guys are talking. I know you got a kick out of me telling you you were overcomplicating stuff. You know, we talked about it backstage before we got on the call, right? About how things have changed over the years, right? And the expectations that are placed now that used to not be in place. You know, there used to be, of course, I'm dating myself, but there used to be a time in this country where there was a ladder mechanism that you walked up to attain certain levels. And now that's all changed because of money, right? We got to have everything right now, right? And so as a result of that, people show success at the dealership, people show success as excellent salespeople. And then a lot of times those excellent salespeople are brought up into management, and they haven't been in the industry long enough to really truly understand how to be a successful manager. And I'm not saying, look, there are certainly excellent organizations. You have several of them that are our dealer partners that do things the right way and have a hierarchy that they train and step up, but they have a process. They have a good internal process. But, you know, I think it's the 80/20 rule. Like everything, you can fit into the 80/20 rule. I think that's the 20%. There's 80% of them that are still working by, congratulations, you're a salesperson at the dealership. Here's your work pad and your pen. There's your desk, go sell cars, right? And so when these folks have early success and then they're put into a management situation, you know, I think about our discussion with Ed French, and one of the main things he talked about is be clear, have clear expectations, right? Nobody can, like he said, nobody can meet a secret expectation. They don't know what it is. So as you guys were talking, I was just thinking about, listen, I read this morning about a business success, and what caught my attention is it says the worst website ever developed. And then it went into explain. It was simple, it was plain. All it was was just simple graphics, nothing complicated. And then, can I sell things on there? And the owner said, yes, you can. Can I buy things on there? Yes, you can. And so the guy that developed it, his name was Craig. Craigslist. Right? He had no marketing. He didn't use anything other than this simple website. And that website makes $770 million a year. And he was offered close to $12 billion for it and turned it down. And it was just keep it simple, putting buyers and sellers together. And if you get on Craigslist still today, there's nothing complicated about that. And so when you think about what we were talking about, I think a lot of times you get folks in a position and they make things complicated to try to justify, not to help, but to try to justify how much they think they know. And that's a dangerous position to be in. You know how many times have we been on a call, I was on one yesterday, and after the call I called the general manager and I said, you've got a problem. You've got a problem because your staff is way behind, and they're slow walking stuff because of previous success, and they're not having that success now and they're failing to realize that they're not selling what they're stocking, and your percentage of inventory sitting in your middle-age bucket is growing. Right? And I'm hearing these guys on the call, I'm paraphrasing, but, we got everything under control. Well, no, you don't. The facts say that you don't. And so when you run into a situation like that, what is that? Is that them failing to see what's in front of their face, or is that them saying, I'm gonna dig my feet in, because we've had success and we're gonna fly by the seat of our pants and we're gonna have success. And I think it's the latter. You know, I've told on myself and I'll tell on myself again. When I was in a store, there were many vehicles that I purchased and I saw the data right in front of me. Or when I was having calls with Jasen, Jasen would point these vehicles out week after week, right? And my ego was in the way saying, I'm bound and determined to prove that I can sell this car. Well, I sold it, but I sold it late in the cycle. And I'll tell you how dumb I was. I'd look, Jasen, I sold this car and we made $2,800 on it. But we sold it at day 65. Did I really make $2,800 on that car? No, I didn't.

Chris Keene (17:13): No, your point is valid though. I mean, to simplify or condense down what you're talking about, you're on those calls and you're sitting there looking at it and they keep doing, I hate using this because I think it's overplayed so much, but you know that definition of insanity, that over and over and over and expect a different result. One of the great things about the different resources that are available for people out there in our industry over any industry for that matter, because of the interweb: when you start seeing the decline, you've got resources right there in front of you to show you where some of those declines are. So why do you continue to keep doing what you're doing if you're not getting what you were getting, but you keep doing what you're doing to keep getting the same shitty result that you're getting? So why keep doing that? Stop. You know, I mean, stop majoring in the minors. Stop looking at it like a one size fits all, because this is not a one size fits all economy. It's not a one size fits all industry. It is like an amoeba defense. It is always on the move. And are you going to stay two, three steps ahead of it, or you go to sit there and keep doing what you're doing and look up 90 days later and go, what the hell happened?

Renaldo Leonard (18:34): Well, I mean, yeah, and you know, I appreciate the Jerry Tarkanian reference and UNLV Running Rebs going to that amoeba defense. But that was all built around, they were firm in principle, but flexible in approach. Yes. Controlling what they could control and then shifting as they needed to to accomplish the goal. The goal was simple. You know, play good defense. Don't let them get the ball to the goal. If we need to move a little bit this way to kind of cut off a passing lane or to cover somebody who's gone in the corner, we'll do that. But the center or the foundation was firm and it was always stable. Everything else just kind of swiveled around it. Simple concept, but a lot of people can't do it because they try to, well, what happens if we just move this player out a little bit more, or we run a box in one, or we do this and that. And I see this in people's faces whenever I'm having that first training call and I talk to them about stocking what they sell, so they sell what they stock. And when we're working through the system, getting to the point where we can identify the wins so we can duplicate it, also identify the losses so we can mitigate loss moving forward. You have to get to a point where you can take the blinders off, look at the KPIs, the metrics that define how things are working, and then be honest about it. I'm winning here or I'm losing here. If I'm losing, let's put a stop to it. Or if it looks like I'm going to lose, put a stop to it and just get back to the basics of how you win.

Chris Keene (20:13): So, but do you really know? I mean, do you really know you're losing? I mean, you should. All of the indicators are there. I mean, go ahead, John.

John Anderson (20:25): No, I was just saying that was a great point you made, Renaldo. But man, look, I know this call, we're just having conversation today. But really, for those that are listening and watching, I would say to you that the reason why we're having this conversation is, look, you guys are, I have an utmost respect for people that work in dealerships, because I did. And it's a tough job. You know, we use the phraseology all the time, you got bullets whizzing past your head all day long. When you're a salesperson, you're out there on the lot, you're working customers for hours. From the time you meet them virtually and then they come to the store, I mean, you've invested hours of your time into that customer. And then from a sales manager perspective, you're trying to wrangle all the things that are coming at you on a daily basis, and then trying to submit deals and appraise trades and all the things that go on on the daily basis in the dealership. So by no means are we trying to downplay that, and I want dealers to understand that. But the reason why we're having these discussions is, you guys are in the dealership and you've got your blinders on, you're focused on your operation, which you should be. You absolutely have to be. And 80% of your focus is in the bricks and mortar side of the operation. Once again, it should be, it has to be, because that's what's right in front of your face. What I would ask you to think about and consider when we're having these types of discussions on our podcast is we're seeing the other side of that on a daily basis. We're looking at a 20,000 foot view, and most of it has to do with the virtual side. Yes, there is some crossover and we do look at a lot of things that are happening on the bricks and mortar. In other words, how much are we selling and what are we selling at, things like that. But some of these things that we're discussing are just common things that we see time and time again. And I ask myself a lot of times, how can I improve the way I'm communicating so that they understand better what I'm trying to communicate? Because here, I'll bring up one scenario, guys, that's extremely frustrating to me. I asked this question yesterday on a call and I got the same answer across the board that I always get. Would everybody agree that the best time to sell a car, and I was specifically on used cars, is in the first 30 days? Everybody said yes. And I said, well, why do you agree with that? Well, that's where we make the most money. Okay. Well, Chris, you said earlier, the KISS method, keep it simple. Well, okay. So if we all agree that the best time to sell a car is in the first 30 days, then why isn't everything that we're doing geared towards that goal? You know, we get a vehicle that we bought at the auction and it doesn't show up until day eight, or worse than that, doesn't show up until day 14. So now I have 16 days. If we all agree the best time to sell a car is in the first 30 days, and it arrived at day 14, I have 16 days to get it through service, get it online, and try to sell it in the first 30 days. Then why in the world would I hear from a manager at that store, well, it just got here day 14, so I'm going to leave it priced at 105 until day 45, because it didn't get here till day 14. And again, we laugh about that, but how many times do we hear that? And so, listeners and viewers, this is a serious issue going on within your stores. If the facts are right in front of your face, and we all agree that the best time to sell a vehicle is in the first 30 days, then why shouldn't everything we're doing be geared around that? If I get a car at day 14, my anxiety level should be up big time on that car. And I'm going to do everything I can to try to get that car out of there. Look, that's a car that I definitely want to get out of there by day 30, because it got there late. And that's a car that probably is going to be one that ages out on me if I don't have a maximum focus on it. So I just don't understand the disconnect. When I hear everybody agrees that we need to sell our cars in the first 30 days, but when you see the actual processes based on what the dealer's doing, that's not what they're processing.

Chris Keene (25:07): Yeah, they don't align. They don't align. And we have to remember, take this note down, dealers, because John is spot on. You've heard us say it before. Renaldo, you've trained on it. I've trained on it. John, you've trained on it. Okay, if you're not looking at day 14, day 15 as your new day 30, if you're not looking at day 21 as your new 45, if you're not looking at day 30 as your new 60, you're missing the boat. You're missing it. Naldo, what was you gonna say?

Renaldo Leonard (25:43): Well, okay, so clarify that, because I was going to say, with what John added a minute ago, that if somebody gets a vehicle at day 14, they're stuck thinking that day 14 starts day one of 30. As opposed to thinking, I think the simplest way to look at it is, if it's here day 14, I got 16 days to sell it. Agreed. And so a lot of guys will sit in there thinking that, okay, I got it on day 14, so day 15 is gonna be the first of that first 30 days it's in inventory. That's not right. And if you are being flexible with how you define first 30 days, you're setting yourself up to not hit that metric, because you're being flexible in how you define things. It's simple. And we don't paint inside the lines, we don't have lines. Each vehicle stands on its own two feet. Comes in day 21, I got 30 days, which means I got to sell it before day 50? No. Before there's a deal, okay, you're in the hole. But let me ask you this question then, because I know you hear that all the time. And for all the reasons: my transport, my reconditioning process, I'm short on technicians, my photographer was out, three people called in sick, we couldn't get a title on it. Fill in the blank with the reason. I'm not going to call it the E word, but we'll call it the reason. Waiting for the trade to be delivered. Whatever. The reason. Okay. So here, let me ask this question. Does Mother Market give a damn that it took 18 days for you to get that thing reconned? Is she going to give you grace? No, she's going to steamroll your ass and say, you should have had a better process. She's going to steamroll your ass and say, no, you should have been prepared during flu season, knowing you're going to have people come out sick and you're going to be short in your shop. Shame on you. I don't care that you have people out. The market is still the market, and Mother Market is going to dictate it. And the best case scenario, she'll go pat you on the back and say, hey, good job, you got rid of it in 30 days. If not, I'm going to steamroll your ass.

Chris Keene (28:08): Well, Renaldo, what do you want me to do? I mean, the vehicle, we just got it ready. Here, let me share this on the screen of why we're so emphatic about this. And this is what John was talking about that we see. Yeah, we look macro, but we also look micro. And we do respect the fact that you're in the dealership, you got bullets whizzing by your head all day long. You're supposed to be a sales manager, you're supposed to be a general manager, you're supposed to be a general sales manager, supposed to be a dealer principal. But all the same while, you have to be a cheerleader, you have to be a coach, you have to be a counselor, you have to be a life coach. You got to do all those things too. But why we are sharing this is because of the reality. And what I'm sharing on the screen, for those watching, for those listening, what I'm sharing on the screen is nothing but the facts. The facts of the matter are, we have been screaming at our industry for months now, and matter of fact, very specifically since August the 12th, when we have watched this shopper index take a dramatic decline. There it is, red line going straight down. We've watched the shopper index decline all the while we've watched the inventory go up. So supply and demand has been dumped on its head. And this is why we went back to the basic fundamentals that we should stay in each and every day. And it's not a matter of how many widgets can we throw at this, how many tools can we throw at this. It's a matter of, can we get down in the foxhole with our people and figure out what's going on? Because we have less opportunities and more inventory. But with the opportunities that we do have, they're still going to buy a car. So where are we missing that boat? Where is that one degree of separation? And like the young lady said on the call I was on this morning, stop telling people just get them in. Start training your people and find out where your disconnect is.

John Anderson (30:15): Hey, Chris, so scroll down to that chart again, because of what we've been talking about today, let's dig into that a little bit. You addressed the shopper count on the red trend line. Look at the blue one, right? That's auction sales, right? It's dropped off. Now, why do we choose today to talk about what we're talking about in the middle of our leadership series? Because we were talking behind the scenes about some scenarios we had this week with dealership leadership, and, I guess for lack of better terminology, the ignoring of facts right in front of them. And so for those that are able to watch, focus on the green trend line. And for the listeners, we have a green trend line on this chart that is dropping off just as dramatically as the red and the blue, which is shopper count and auction. And that green trend line, that's actually our dealer platform. That's our dealers. And that's indicative of a two week sale rate. And it's dropping. So again, we're seeing it across our dealer platform that the two week sale rate is dropping. So some of these things that we're talking about on our end and the frustrations we're talking about, this is stuff that we coach on and have coached on. I've been with the company nine years now. And Chris, go back to referencing how we started this call, right? Go back to the left where that red trend line starts to pick up, where it starts to trend up. Actually keep going left, keep going a little bit more, down where it's the dip right there. So what's that date?

Chris Keene (31:59): 11/26.

John Anderson (32:01): Right after Thanksgiving, right? So 24, right? Go over to 2023 and tell me what the date is when that happens in 2023.

Chris Keene (32:07): 12/19.

John Anderson (32:11): So as we started this call out saying, you're a month away from shoppers beginning to start coming into the market and looking at inventory. And as a dealer, if I want to have shoppers looking at my fresh inventory, I mean, this is just, two plus two equals four. This is simple math. If I want shoppers to look at my fresh inventory, then I got to have a majority of fresh inventory. I can't have a bunch of aged, because guess where they're going to gravitate to. Now listen, this is not 100%. Nothing we do is a hundred percent. But what it is is a high percentage, right? You know, I tell the story all the time about Peyton Manning when he signed on with the Colts, and he outworked everybody in the building. And people were asking him, why are you the first one to come in and the last one to leave? Because I want to know every position on my team and every position on the other team. Because if I do that, I'm going to put my team in the best percentage chance to win. Right? Did he win them all? No, but he won a lot of them. So if I want a winning formula, then I've got to understand how much damage aged inventory does to me. Look, this isn't something that is new. I mean, Gibbs, one of the greatest in our industry, how often has he referenced aged inventory and your 10 most expensive? I mean, this has been going on for years and years and years. And what frustrates me, and I was right there, so I get it, what frustrates me is the fact that we're in 2025 and we're still struggling with this stuff. It just doesn't make sense to me, especially when you understand all the tools that the consumer has at their fingertips now. Look, I would ask this question to the dealers out there listening and viewing. Have you ever had a customer walk in your dealership and say, I've been watching that car for two months and you finally got it to a price that I wanted to pay, and that's why I come in and bought it? Right. What is the customer telling you really? They've been watching your cadence for two months. They know you change your prices every seven to 10 days, and they're just waiting you out. Right. So customers have all the tools at their fingertips. So why are we continuing to make every excuse that we can make in the world for inventory aging on us? And listen, for those of you that are not dealer partners of ours, our goal for our dealers is sell what you're stocking. And then when you're selling what you're stocking, the next goal is 65% of those sales need to come out of your first 30. So 65% of your sales coming out of first 30. What is that also saying to you? That's also saying that 35% don't come out of your first 30. So for those one-offs that you guys always talk about and those things like that, right? We allow 35% not to come out of your first 30. Right. So it just baffles me. And Chris, to your point before we got on this call, your frustration. It frustrates me so much that this is something that we are constantly working at, and dealers get bound up in all those things. They focus more on, well, this car didn't get here till day 14, or this car was stuck in service for 12 days, or all these things that are the reasons why the car is still in inventory. Instead of just, the car is now 25 days old, I've got five days to sell it before it flips into my 31 to 45 day bucket, so I'm going to throw everything I can at it to try to sell it in five days. Instead, we're focused on, well, no, I can hang on to it a little bit longer and make more gross on it. Well, no. At $55 a day holding cost, no. You're eating up your chances the longer you hold that car. And what do we do as that car ages? What do we do? We start lowering the price. So now we have building holding costs and we're lowering our price, which shrinks our margin. I'm not the smartest guy in the world, but that's pretty simple math.

Chris Keene (36:35): Well, to that point, though, John, to that point: you got that aging inventory. Okay. You got that aging inventory. And yeah, what do we historically and typically do? We play Whac-A-Mole. We just keep cutting it, cutting it, cutting it until it gets there. But why we press our dealers to sell 65% or more of your sales in the first 30 goes back to what you were talking about, John. There's nobody that could argue that you're going to gain the most profit and mitigate the least amount of loss in that first 30. But in that same vein, CarGurus is blatant enough to put it out there. Look right here on this left rail on CarGurus. They give the consumer the opportunity to sit there and go, hey, do you want to look at fresh inventory? Do you want to look at aged inventory? And if you pick up the phone, dealers, and call your third party listing reps and ask them, hey, if I get an aged piece of inventory, how relevant is that on your site? And they'll tell you it's not very relevant. It starts getting moved down, because that fresh inventory is going to hold value over the aged inventory. And just as one more reminder, these third party sites are serving up by default the lowest price vehicle first? No. CarGurus calls it best match. And we look at Cars.com, Cars.com calls it best match. And then we look at Autotrader, Autotrader calls it relevant. Now dealers, I promise you, go pick up the phone, call your third party company. Their aged inventory starts becoming less relevant. And Autotrader, Cars.com, CarGurus, contrary to what anybody may believe, they're pretty damn smart. And they follow all the consumer behavior. There's a reason why they're not putting in there as their auto default the cheapest rig to the oldest rig, or the cheapest rig to the most expensive rig. Because based upon the way that the consumer shops, that is not how they start their shopping out. What these guys are serving up to them is the most relevant inventory to the consumer search. And you just saw, on the big three websites in our industry, it was not price. So why do we continue to go straight to price? What'll it be, Naldo?

Renaldo Leonard (39:07): I have an answer. All the things that are in play in order to be able to say that you are world class at merchandising your inventory and managing your inventory through age buckets. What's the easiest thing to do? Change the price. Change the price. Change the price. Path of least resistance. I look at it and, oh hell, it's day 78. Let me lower the price. Rather than going in, reading your description, looking at your images and your photo cans. Never mind that underneath the hood, you got all kinds of rock salt from a vehicle that accumulated some stuff last winter all over the engine bay, and you took a photo of it and you put it up on your website and said, this is the greatest rig, pickup truck you've ever seen. Rather than going through those things, which I mean, if you break it all down, if you do things properly the first time, right? You don't default to, let's just lower the price, right?

Chris Keene (40:14): Hey, how about that picture on the bumper of a bumper sticker that says, at least I can still smoke in my car. That was a good one to see online, right? Hey, I mentioned, I grabbed a picture of one the other day that had a bumper sticker from the 2020 election, I think it was. I'm like, seriously guys, what are we doing here? Yeah, I was really proud of one of our performance engineers the other day that was doing their weekly call with one of our dealer partners. And he point blank said, hey, the area of the United States you're in, I'm pretty sure your weather has changed, and it is not 96 degrees outside. Why did he say that? Because one of the pictures in the infotainment center showed it was 96 degrees outside. It was like, come on, man. We're not gonna finish your thought because you were on it there with what you were saying. So yeah, I'll let you finish your thought. I jumped in there, but please.

Renaldo Leonard (41:25): No, I mean, there's nothing else to say. I mean, we default to the easiest thing to say that we've put some effort towards correcting a problem. We got a vehicle, it's over age, change the price. Yeah. And it amazes me. We were talking a minute ago, if you've got some aged inventory and you want to drive traffic to your fresh inventory. Talked to a dealer the other day. 45% of their inventory was over 61 plus days. And they have just been knocking it down, knocking it down, knocking it down. Hey, I'm gonna try a different approach with you. Let's take a look at the vehicle on your list. There's gotta be a reason somebody's not clicking into that ride. And then at the end of it, because after I mentioned, you could do this, you could do this, have you ever thought about this, or has anybody discussed with you the effects of doing this? I said, you know what? Probably the best course of action for you would be to raise the price. Well, what? I said, you just need to raise your price. Yeah, you've got a 7.5 SRP to VDP conversion rate. So people are finding your vehicle, they're laying eyes on it, but they're just not submitting leads and taking the last step. So I'd like to raise your price. Cause I'm betting maybe half of those people that are seeing it, I think it was maybe 115, 116, half of those people have saved notifications at that site. You raise the price, they get a notification the price went up. We just need one person to call and say, hey, what's going on? Why'd you raise the price? You've been lowering it for six months. Why did you raise the price? And if I came down and bought it today, could I buy it for the price that you had it advertised for yesterday? Problem solved, you sell the vehicle. Now we can go to that vehicle that is now two days in inventory and just think about implementing this process 90 days from now. All right, so just save that and put it in your backpack. But no, from day one, take more pictures than you need, high quality photos. And if there's anything in a picture that is going to dissuade somebody from taking the next step, which is what we want them to do. We want them to see those photos, click on, I need more information, I want to submit my name for more information, or I want somebody to contact me so I can buy that vehicle. Take more than you need. And this is easier than calculating how much you're going to lower the price. And I know that $75 is usually the number that we land on, we'll just knock it down $75. But if you just throw another image in there, you'll get the same effect as lowering the vehicle $75. Change your image count. And then while you're at it, just go in and change the character count on your description. Same thing.

Chris Keene (44:13): Good stuff. Well, now I'm not gonna go there. I was gonna ask you guys to pray for me, because I'm starting to believe that there's an alternate universe or a simultaneous timeline or stream or something going on goofy in the world, because it seems like we might be the only three people that believe honestly that this ain't complicated. And so I'm like, maybe we've got it wrong. Sometimes I wonder that. Talk me off the cliff.

John Anderson (44:46): I can't, because I'm on the same cliff and we're both just like hanging on. I'm on the same cliff.

Renaldo Leonard (44:54): But I mean, I'm just going to end it by saying this. We go to the path of least resistance. It's just human nature. How can I get the most out of doing the least? And so when it comes to bucket management and selling cars, the easiest thing that you can do is just discount, price discount. Those other things are equally as easy, but it's not what's ingrained in us. Even though we've been taught about green bananas and market days supply and travel rates and all that other good stuff. It's really simple. I'm gonna buy a car today and I'm gonna sell it before day 30. It doesn't matter who I buy it from or how long it takes them to get it to me. I got to sell it by day 30.

John Anderson (45:36): Yeah, for sure. There's a ton of talking heads out there in the industry, right? And we're three of them. And you got to choose, you know, everybody has what's important to them out there that the talking heads are talking about, right? Some of it's all about marketing. Some of it's all about acquisition, right? So all I would say is, we have some extremely good performing dealer partners. And I can tell you that when I look at those dealer partners that are outperforming the market and performing consistently week over week, month over month, year over year, because some of these dealer partners have been with us six, seven, eight years, and their consistency has been amazing. I'll relate it to sports. Good football programs are fundamentally sound week in and week out, month in and month out. You look at these programs that are successful consistently. It doesn't matter who comes through the door. They're fundamentally sound. And so I relate that to these dealer partners. They're fundamentally sound. And what do I mean by that? I mean that they consistently have activity levels with their customers. Every two to three days, they're contacting 90 to 95% of their customers. They are taking what we do in the bricks and mortar and they're doing it on their virtual lot. And what I mean by that is, the customer walks in the door on the bricks and mortar and says, I'm here to see that 2022 Chevrolet Equinox you have online. And it was sold two days ago. The salesperson doesn't tell the customer, sorry, we sold it, and turn around and walk away from them. They take the customer and say, you know what, Mr. Customer, we sold that vehicle, but let me take you out here and show you some other options that will work for you. Right. And so these dealers, on their virtual lot, we have a thing called switch leads, where we show dealers other vehicles they have on their lot that match what that customer sent a lead to. And so they're very successful at taking those switch leads. To Chris's point he always makes, you've already paid the marketing dollars for them. So now you're just recirculating your marketing dollars. Instead of spending more on your advertising spend, you're just taking those marketing dollars and you're reallocating them, because you're skilled at taking that customer and moving them to another vehicle. So they're very skilled at that.

Chris Keene (48:12): Recycle those ad dollars, John.

John Anderson (48:15): Right. And so I just know that my eyes don't lie to me. And look, I'm not saying it's me that's doing it. It's the dealer that is taking the data, and they built solid processes in their store, and they are fundamentally sound. They do the same thing, the same thing, and they're having success month in and month out. They're selling more than what they're stocking. You know what another thing they know? They know exactly where they're selling cars at. So they draw a line in the sand. If this car gets to day 22, I know where I'm selling vehicles at, and I'm putting that car on the money and I'm moving it. Right. They're not jacking around through inventory. They're moving inventory in and out. It's flowing in and out. Cause you know what happens when you do that, guys? The whole dealership gets a lift, right? I'm gonna throw the Walmart mentality at you, right? The more transactions I run through, the better off everybody is, right? My service department gets opportunities. My parts department gets opportunities. And my sales department is excited because they have a constant flow of fresh groceries coming through the store. So I'll rest my gavel on that.

Chris Keene (49:31): You know, John, you're spot on. Although we've been a little bit on a tirade this morning, and I know we've said it a couple of times, but I want to make sure as we near the end here that we say it one more time. And I'm going to try to say this a little bit more calmly versus my being amped up on this call today. There's zero doubt in all of our minds. Like John said, we're those talking heads that are out there as well. But there's no doubt in our minds that each and every one of you listeners, each and every one of you viewers are very competent and very sharp individuals in our business. But there's a lot of white noise and there's a lot of things that get in the way that cause you to get yourself in your own way. You skew the facts versus work the facts. And we're not here trying to bust you in the chops over that. We're here to help you. We're here to help cancel some of that white noise out and help you not overthink what you already know to do. We are here to help maybe give some ideas of how to get that white noise out of the way. You know, one of the things that I've been talking with our internal team about and some of our top performing dealers: forget all the interweb, forget all the widgets, forget all the tools. And if we just think about what we've done in this industry, as far back as when John was selling Model T's. We walk into the store every day and you look at a report and it says, here's what we've sold. Here's what we're on track for. Here's what our averages are. Here's what we got hanging out there in F&I. And we keep score. But when we identify what the score is, and if we're winning or if we're losing, the number one thing we do in our industry, when it comes to our used cars, hell, even our new cars, we go do an inventory walk. And we walk out there and we go look, and I got holes on the front line there, I got cars parked around the apron, I got three black trucks parked next to each other. And we fix it. And we look at some of these cars going, man, that one's been sitting there for two, three weeks, and we shake it down and we open it up. If it smells good, looks good, drives good, we move it around and bring some attention to it. We walk back to the bullpen to see what's back there, what's about to go into detail, what's about to get wrenches turned on it. And we go back to our shop and we look and see what wrenches are being turned on which vehicles and how long before they're out. That's what we do inside the dealership. We look at these vehicles, and you take it to the old school where we had the vinyl sticker pricing on them, or if you used money clips on the window tag or some type of pricing metric, and you went in and you said, okay, well, this one's been here for a minute. It looks good, everything's right with it. So here, let me adjust it a little bit. So we walk that inventory. That's what we did. So we keep score. We walk our inventory. And then the core basic fundamental: our number one job at that point is to walk that showroom. And we're sitting there looking at our staff going, hey, Bill, how come you ain't got a customer right now? Let me help you get one. Or, John, you got a customer right here, let me help you close one. And all day long, that's what we're doing. We're walking the showroom. So if I can leave you with one thing today: if you're doing that at your brick and mortar, the question you need to ask yourself is where are you getting more ups, your brick and mortar or your digital dealership? And if you're answering honestly, you know you're getting more opportunities, eyeballs and ups in your brick and mortar on some days, but the overwhelming vast majority of the time, you're getting more opportunities in your digital dealership. And we abandon that. So if I left you with this: go walk your digital dealership inventory every day. And then the rest of the day, go walk your virtual showroom and see what customers you got. You're the manager. T.O., close them. Coach your people up, help them close them. And if they don't have a customer, keep watching that virtual dealership and find them a customer. Cause that's what we do in the brick and mortar. Why wouldn't you do it in your virtual dealership? That's what I got. John, anything from you in wrapping that?

John Anderson (54:14): No, brother, spot on. I would say, look, we referred to it a couple of times, man, the talking heads, and we're three of them. I just sincerely hope that people, dealers, industry people that are watching or listening can hear what comes across from us. Cause look, I know we've received calls before accusing us of being too harsh and turning people off. And that's not what we're trying to do. Look, we've all had different levels of success in this industry. And we're very grateful for this industry. It's been very good to all of us. And this is truly a way that we want to give back. And the frustrations you're hearing from us are just frustrations because we want people to get it. And look, the fundamentals are still the same. And if you become skilled in the fundamentals, you'll be consistently successful. And so stop trying to outsmart the system. The system's been around for hundreds of years and it's successful. So, million percent. Naldo, anything from you in closing?

Renaldo Leonard (55:29): Two quick things. Come on, we get loud, we get boisterous, because we're passionate about what we do. And every single week, what we're passionate about is giving back to the industry and giving back to people who are in those roles that we have been in. We've made all the mistakes. And as my dad said, I'm hard to learn, so I've made all the mistakes a couple of times. But at the end of the day, I mean, we're just sharing with you what made a difference for us. And we made those mistakes so that you don't have to. And so when we get passionate, it's because we know what could come from you making one simple decision. And you're always just one decision from getting the results that you want. It's just whether or not you keep it simple and you make that decision. I'm going to keep this in the door for 30 days and then I'm moving on. That's it. And you're welcome.

Chris Keene (56:26): So, listen, folks, go to lottalkpodcast.com. If you're pissed off at us over this episode this week, my phone number is on there. And I know when Naldo talked about loud and boisterous and things of that nature, he's really pointing at me. And that's okay. I'm okay with it 100%, because I hope I ruffled your feathers. And I hope you prove me wrong. But if you're pissed off about it, go to lottalkpodcast.com. My contact information's right there. Call me, text me, email me. I am the easiest person to find. 405-234-6402. Write it down, take a picture of it, give me a call. I'm more than happy to take your inventory, take your processes, break it down and not kick you in the mouth over it, but shine the light on something that you might have overlooked. So reach out.

John Anderson (57:19): Hey, listen, Chris, the offer still stands. Hey, if any of you guys want to put your data in our tool and let us go through it with you and discuss some of this stuff, to me, that's the best way to, like Chris is saying, reach out. If you think differently, it won't cost you a dime. We'll put it in and let us meet and have a discussion, right? Because look, some of the best things we've learned and adaptations to our software have come from our dealer partners. So look, I know these two guys agree with me. We're certainly not saying we're the smartest guys in the room. Hell, I'm not the smartest guy in the room, and I'll say that all the time. So if there's something we can learn, let's learn it together. So by all means, yep, million percent.

Chris Keene (58:09): So listeners, viewers, we thank you. We respect you. We appreciate you for tuning in to season two, episode 17. We're looking forward to connecting with you. And more importantly, we look forward to you following us, reaching out to us and tuning back in to the same bat channel, same bat time next week. We have a special guest next week, not from our industry, that's going to spit down some absolute truths in that leadership. So on behalf of our Lotpop family, on behalf of Mr. John Anderson and Mr. Renaldo Leonard, I'm Chris Keene. And we thank you for tuning in to LotTalk powered by Lotpop. Have a great day, guys.