Rise of the Text
When Deal Depot president Darla Booher began to implement texting four years ago as a way to communicate with her customers, she used it strictly as a collection tool to remind them about upcoming payments.
That turned out to be a success, so two years later, she had her team add texting as a sales tool.
Today, as texting continues to grow – especially among millennials – it has become an important component for reaching prospective and current customers of her dealerships in Greer and Spartanburg, S.C. Booher is not alone.
A large number of auto dealerships have found that form of communication to be more efficient and economical, as it provides an excellent return rate of users responding to texts over a phone calls or emails.
“Dealers are feeling more comfortable with text,” said Justin Osburn, NIADA’s Retail 20 Groups Moderator and instructor for the newly relaunched Certified Master Dealer course.
“Many are scared not to use it. They certainly don’t want to miss the train if their competitors have adopted it. With the advent of third-party vendors that can answer their questions about compliance and other regulations, dealers’ fears have subsided.”
One of the earliest providers was Solutions by Text, a third-party vendor that offers platforms for auto dealerships.
“We could see texting was going to be the next big channel in communications,” company president Mike Cantrell said. “All you had to do was watch early episodes of American Idol to see texting was going to
become quickly adopted by a new generation.
“Early on there were about 900 million texts a day but when cellphone carriers began to offer unlimited texting, it took off. In three years, texting went from two billion texts per day to currently seven billion texts per day. It didn’t take long for auto dealerships to see that growth and want to adopt it.”
Texting’s expansion was a perfect storm between the growth and usage of smartphones, consumer insistence as a primary method of communication and proof texts are read faster than any other form of communication.
Chad Randash, president of Randash Auto Sales, said he’s seen that proliferation at his independent dealerships in Bozeman and Billings, Mont.
“Texting is an efficient means of using our time and reaching our customers,” he said. “It’s just a better form of communication.
“A few years ago, we noticed that a high percentage of prospective customers were driven to our website from a mobile application rather than from their desktop. Nowadays, people carry their smartphones everywhere. They’re even sleeping next to them.”
Randash uses a texting platform from CRM provider AutoRaptor that’s built into the dealership’s CRM. For the past three years, they’ve used texting for sales, collections and service. “Auto dealers have found
their customers prefer to text because it is a platform that is not as intimidating as a one- to-one phone call,” NIADA’s Osburn said. “It’s a complete change in the sales dynamic because the consumer is taking the lead.
“Using their smartphones, consumers have already asked pertinent questions via text and are already three to four steps into the sales process when they walk into the dealership. Auto dealers are really behind if they’re not using texting. Texting has pulled dealers into the 21st century and is giving customers what they want.”
At Deal Depot, Booher’s sales force is equipped with tablets using a Text Now app, giving the dealership a digital trail and displaying the entire conversation for the sales manager.
Many dealers have found millennials – those aged 22-36 – are the most tech-savvy generation of customers yet, and they prefer to be connected via text. That younger generation, which tends to ask direct questions and get right to the point, has adopted texting and email as their preferred methods to do business.
A 2014 Gallup poll found 68 percent of millennials use text on a daily basis, compared to 47 percent for their Gen X counterparts (ages 35 to 55). More important, 90 percent of text messages are opened within three minutes, according to a 2010 report from SinglePoint and Mobilesquared.
“Text is the most popular way to communicate today,” TextMaxx Pro president Chris Leedom said. “Phone calls are not returned and emails are not opened, but a text is instant engagement. It is read in three minutes or less.”
Since her dealership began to use texts to communicate with customers one year ago, Brenna Stansberry, owner of Park Marina Motors in Redding, Calif., has posted a 40 percent increase in customer response rates. “There are so many advantages to texting,” Stansberry said. “We’ve noticed people like its anonymity, its privacy.”
Confidentiality and discretion are especially valuable for customers making payments to
a dealership. Bob Mulkey, owner of Regal Auto Sales, a 30- year-old operation with 14 locations in Oklahoma, Kansas and Missouri, uses texting strictly for collections purposes. He places texting at the top of the list for customer communication.
“At least 50 percent of our communication is via text,” he said. “We use email very little since it only gets a 10 percent response rate due to people changing email addresses or going into spam. Mail is a last-ditch effort.”
Mulkey’s multi-state operation, which uses TextMaxx Pro as its texting platform, now has the lowest delinquency it’s ever had, he said. Leedom said half of dealership texting activity is for collection purposes by Buy Here-Pay Here dealerships.
“It is very effective, efficient and less intrusive,” he said. “Texting can be used as a payment reminder and can go out in two minutes, compared to a labor-intensive phone call.”
All that said, there are potential pitfalls and challenges dealers must be aware of, most notably regulatory compliance issues. High on that list is ensuring consumers want to receive texts. Opt-in/opt-out agreements are necessary to avoid large penalties.
Many dealers are aware they must get consumer approval to begin the texting conversation. Deal Depot
marketing manager Eric Siecke, for example, said he usually gets an opt-in for texting through a Facebook lead or online, and the dealership’s website asks consumers what their preferred method of communication is.
Montana dealer Randash said he doesn’t mind when consumers let the dealership know they’re opting out of texting. Perhaps their enthusiasm to purchase a particular vehicle has cooled off, he said, but at least he knows.
“Dealers are finally finding their footing with compliance issues,” Osburn said. “The concern initially was who should have access to text and what controls need to be put into place. Another potential pitfall was ensuring they communicated the correct text message. They also asked if they needed some type of signed
permission to text. “In the end, they had important questions about it, such as does texting actually work and is it worth taking the risk?”
The answer to those questions seems to be a resounding yes. The acceptance rate of consumers wanting
to let a dealer text them is 80 percent, according to Solutions by Text president Cantrell.
Once consumers agree, he said, dealers are sending 70 percent of their texts with photos as well as loan stipulations and other important sales paperwork.
At Randash’s Montana dealerships, texting has steadily increased with consumers opting in to that form of communication. Currently, his dealerships are posting 1,200 more texts than phone calls per month.
“It’s easier to send paperwork back and forth that needs to be reviewed and signed via text than via
fax or mail,” Cantrell said. “That’s now possible due to the quality of the smartphone camera, which provides a nice image, and overall optimal ability because the screens are larger.”
Still, there is something to be said for the personal touch. While texting replaces the pleasantries of a phone call and allows consumers to get right to the point, some dealers miss the days when customer contact always meant seeing a face or hearing a voice.
“Sure, there are many consumers who would rather not speak to a person and just want to ask if we still have the Dodge on the lot and can they bring in a $200 down deposit,” Booher said. “But I guess I’m an old-school salesperson. I like having a face-to-face conversation or a phone call with customers.
“With that type of communication, you can build rapport with them and hear the inflection in their voices. Texting is another layer to getting them to visit your dealership. It can create another barrier as
an impersonal, anonymous method and can be difficult to make your dealership stand out above your competition.”
One problem, Booher said, is the lack of how-to-text training in the industry. She encouraged trainers to offer seminars on what type of dialogue should be used in a text, how to text, and how to encourage dealership appointments and sales using text messaging.
Ryan Osten, chief operating officer of Gubagoo, a provider of advanced automotive dealer communication systems, agreed.
“Some dealerships could improve their workflow messaging technology,” he said. “There is a science to communicating effectively with a customer.”
Knowing that science, Osten said, is one advantage of working with a third-party texting firm that can provide the latest updates on regulations and new technology.
For example, Gubagoo, which offers a text platform as well as live chat, video, Facebook Messenger and Marketplace services, usually begins the conversation with a prospective customer via a chat on the dealer’s website.
Once the customer identifies a particular vehicle, the dealer can get involved and send photos and videos of that vehicle by text directly from the lot. Such applications, he said, “give the dealership the ability to centrally manage all SMS conversations between team members and customers, stay in touch with customers after they leave the dealership, provide customers with up-to-the minute vehicle inventory in a text, and share rich media content such as photos and videos with customers to drive greater interest in a dealership.
Osten said dealerships that use a managed chat partner “get much better results,” especially when it comes to compliance – specifically, opt in/opt out disclaimers.
“We’re in a customer-centric world,” he said, “and you have to be able to offer all methods of communication: phone, text, live chat and Facebook Messenger.”
Stansberry, who plans to add text for the service and collection departments at Park Marina Motors to provide reminders for oil changes and payments, is on board with using an outside partner – it’s one of her suggestions for dealers considering adding text to their communication strategy.
“First, work with a reputable third- party texting company that can help you with regulations and laws, especially state to state,” she said. “Second, train your salespeople well on how to use texting. Third, keep your management team actively involved in texting to customers. Make sure they are supervising the texting process and are willing to jump in, if need be.
“Everybody needs to be engaging, even me. I’ll text a prospective customer and ask how the sales process is going. We want them to feel special and show that we care.”
But third-party is not the only option. Some dealerships provide texting services to their customers in-house.
Jim Juliani Motors in Waterbury, Conn., for example, began using text on an ongoing basis five years ago, and continues without outside help.
“Our sales manager is the point person who handles all of our texting,” dealership president Jim Juliani said. “It’s a form of communication with our prospective customers that is successful for us and continues to grow.”
To keep itself safe, Juliani has all phones registered to the dealership, rather than to individual staff members. All texts are saved for two weeks after a sale to protect both the dealership and the customer.
“There can always be a debate over a verbal conversation,” says Juliani, “but with a text, it’s in writing and a legal document.”
Advancing technology is making text easier to use than ever – which makes it the preferred way for more and more dealers to reach their customers.
“With voice detection and auto correct, a consumer never needs to touch a button or use their thumbs to text,” Booher said. “I can be driving down the road and send a text; it’s that easy. Or consumers can send a text to us during work hours without their boss knowing.
“It’s the number one way to start a conversation with your current and prospective customers.”