Was it desperation, or did some marketing executive fail to appreciate the delicate relationship between dealers and consumers? By the comments the company’s CMO made to a competing publication, I’m going to guess it was the latter.
Whatever the case, the online video ads Edmunds rolled out last month were uncalled for and definitely unneeded. I mean, how did you expect your paying dealer clients to react to your use of “outdated stereotypes” to push your Price Promise car-buying channel?
Were you not around two years ago, when TrueCar was taking fire for a similar stunt? Maybe the company didn’t think AutoNation’s Michael Maroone was serious when he put lead providers on notice earlier this year, saying he’d rather invest in the dealer group’s online brand than overpay for services that just weren’t delivering.
After dealer backlash forced Edmunds to pull those ads, the company explained, in part: “Our digital videos illustrating the ‘Absurdity of Haggling’ missed the mark. Some of our partners were deeply insulted, expressing that our attempt at humor reinforced outdated stereotypes. That was obviously never our intent.”
Attempt at humor? Really?
Posted on YouTube, the videos show a grocery clerk attempting to overcharge customers for items like milk, bread and juice. He then starts negotiating with the customers once they balk at the price. He even uses the old “What do I have to do to get you to …” line.
Edmunds’ videos aren’t the only examples of marketing gone bad. In June, Space Coast Credit Union took aim at rate markups with a very similar campaign. Shoot, it’s as if the two firms used the same ad agency. The credit union also used hidden cameras and placed them inside a restaurant to capture customer reactions to being overcharged for sandwiches because they had “long black hair” or “gold necklaces.”
The credit union was obviously taking advantage of the attention rate markups are getting from the Consumer Financial Protection Bureau. But the bureau has said publicly it isn’t questioning the underwriting practices of finance sources; it just doesn’t like policies that allow dealers to mark up interest rates in exchange for services rendered.
Of course, the credit union operates in the indirect channel, which means it was unknowingly bashing a practice that its own customers are fighting to protect. Ouch!
Yes, I have heard from and know of several people in our industry who would love to see third-party lead providers go away. But I have also talked with dealers who don’t care how they get their sales leads. They just want to move the metal. And that’s why Edmunds’ videos are so disappointing.
I just wish the Edmunds team had been at Industry Summit in September to hear George Angus talk about the pay disparities between sales and F&I. He quoted the National Automobile Dealers Association’s 2013 Dealership Workforce Study, which showed that the national average pay for F&I managers was $128,434, while the average for sales managers and salespeople was $122,549 and $63,799, respectively.
Angus also conducted his own research and found an even wider disparity. His data showed that the average annual pay for top F&I performers was closer to $206,600, while sales consultants make $65,000. Heck, general managers, according to his figures, make, on average, $228,500.
The problem is the Internet is killing margins to the point that dealers are being forced to dip into their holdback to keep vehicles rolling off their lots. The hope is that F&I can close the profit gap. Problem is, our industry is losing good salespeople because they just can’t make a living on $100 minis. It’s one of the reasons dealers are taking a hard look at F&I pay plans.
Angus detailed several changes dealers are considering, including decreasing hours and pay for F&I managers and combining front- and back-end gross and distributing it to anyone involved in the sale. But every one of those ideas had its cons, including the loss of top performers.
I guess what I’m saying is that, while it has taken a long time, dealers are onboard with the Internet. And I think they’re excited about the future. We wouldn’t be seeing them retrying this hybrid F&I manager approach in the name of customer satisfaction if they weren’t. Unfortunately, ad campaigns like the one Edmunds rolled out only serve to slow down this industry’s evolution.
Then again, I never really understood how companies like Edmunds can cater to the needs of both dealers and consumers.
