Best PracticesIndustry News & Trends

The Power of Misinformation

This is a guest post from Bill Playford. If you don’t already know Bill by his name, you may recognize him from the videos he and Joe Webb are featured in. Bill is Vice President and Chief Rocket Surgeon over at DealerKnows. We were on the phone earlier this week discussing some of the false claims in the industry. Our conversation fueled this article..

For those of you who have entered a supermarket in the last twenty years, at some point in time, I’m sure your eyes have fallen upon a tabloid. Is the Pope an alien? Is Lindsay Lohan dead? Is Pat Buchanan a transexual? Unless you just woke up from a coma, you probably just snicker to yourself, and buy your spirulina and flax seeds.

Sometimes, though, throwing out random “facts” can be dangerous. A few weeks ago, I was sitting through a sales pitch that was thinly disguised as a presentation. The audience was subjected to a barrage of “statistics” without any listed sources or sample sizes. In fact, this likable gentleman guaranteed a 20%-23% closing ratio (on third-party leads, no less) if you followed his five-step plan. He GUARANTEED it!

Now I’m guessing most of you are probably scratching your heads, thinking aren’t there a lot a variables to be making those assertions? Inventory? Pricing? Market? Value proposition? Salesperson hygiene? After seeing the results from 30,000 leads/month (give or take) for about 9 months, I would tend to agree with you. Imagine, however, you’ve never read an article or attended a conference regarding automotive Internet sales. You’re a Green Pea. You don’t really have any reason other than to take these proclamations as the rule because you have nothing to compare them to. Therein lies the problem.

I am a big supporter of continuing education and I encourage dealer personnel, no matter what department, to learn as much as they can about their craft. BUT, don’t take everything at face value. The old “don’t believe everything you read” adage still holds true. If a speaker starts offering up benchmark numbers, put on your referee jersey. Here are a few things you should be considering when you’re presented data (dare I say, call someone out on it):

They don’t include source data on their slide
Only a handful of companies commission large scale studies (e.g., Cap Gemini, comScore, JD Powers, Cobalt, etc). If the presenter is trying to position themselves as an authority, they should be confident enough to let you check on the data yourself. Also, since many of these studies are conducted annually or semiannually, the data frequently changes from year to year.

They present the biggest dealer/manufacturer as the rule

Unless you are the biggest said dealer, how can you possibly compare? What if you only have six new Hyundais on the lot and no allocation? What if you live in Juneau, Alaska? What if your dealer insists on retaining dial-up? What often works for the top ten, rarely works for the bottom 1,500.

They use a tiny sample in their study
We work in an industry where 10 million sales is a disastrous year. Think about it. One thousand sales in a national study borders on irrelevant. Would you make bets on 1/10,000 odds? Look for context, qualifiers, and/or statistics based on bite-sized chunks (e.g. 10,000 Jetta buyers, 36,000 non-GMS Buick owners, 100 regional Ram dealers, etc). This is what makes it relevant for your dealership or market.

They use one city in their study

I love slides that start with “we sampled 20 Metro Detroit Ford Dealers,” or “8 Orange County Lexus dealers, or “10 Toledo Jeep dealers.” Those markets are hardly the representative of the whole based on their regional demographics, or proximity to manufacturers and tier one suppliers. If best practices are truly the best, they’ll work everywhere, and not just one area.

Now imagine you are closing your new-vehicle third-party leads at 4%, and the national average is 4%-6%*, and some “expert” tells you that you should be closing at 20%-23%. What do you do? Believe that Elvis does indeed work at Burger King? Take it with a grain of salt. If a dealership just started from zero and it flips 50% of its leads to bad, then it’s plausible. There are always exceptions to the rule, however I personally feel that presenting the “only case” scenario is just plain irresponsible. Start doing your homework, ask questions, and analyze your own results. Don’t be the kind of person who believes that an octogenarian gave birth to a 48 pound baby.

What about you…how do you react when you see or hear false claims or numbers with little to no supporting evidence?

*Data culled from Trilogy’s SmartLeads program

G
Bill - this is so well done, I had to check and make sure that I hadn't written this somewhere before.  As a cynic myself, I always look at statistics with disdain because they are so often biased based on what the presenter wants to convince the audience of.  
 
Equally concerning to me is how an uniformed opinion can sway decision makers - often innocently - when they profess to know what they are talking about even if their data is old or misunderstood.  
 
True, unbiased data is gold ... just gotta make sure it's not fool's gold.
 
Well done, Bill. Well done. 
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    tomwhitejr
  • July 5, 2012
WOW! Couldn't agree more with one very small point of difference.  Just because the REAL number is 4%, 5%, or whatever - doesn't mean you should pat your back that you are doing a really good job.  I do know of a VERY SELECT few dealerships that close in the upper teens on third party leads.  It can be done...  Unfortunately, the guys that are really really good at anything in our industry rarely speak or show up at industry events... 
 
I guess my point is this - question everything but constantly work on improving everything within your organization...
 
LOVE LOVE LOVE the post though...  Spot on per usual, Bill.
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    JoePistell
  • July 6, 2012
114 Years ago:
 
"There are three kinds of lies: lies, damned lies and statistics."
- Mark Twain 
 
Another quote, now 204 years old:
"...there were three sorts of liars, the common liar, the damnable liar, and lastly the expert"
 
Fast forward  200+ years and now we think we're oh-so modern & sophisticated.... NOT.
 
Some things NEVER change.
 
http://www.twainquotes.com/Statistics.html
http://www.york.ac.uk/depts/maths/histstat/lies.htm
B
@tomwhitejr
Couldn't agree more about resting on your laurels. We both know that just doing the basics consistently can get you above the average. However, you (of all people) know how hard it is to move just 2% over a quarter, and what mountains have to be moved to close consistently in the teens.
 
I've personally seen leads that have closed as high as 40%. However that was in one zip code, during the heyday of incentives, on one make of vehicle. Do I present that as the rule? %&#@ no! How those leads would have performed in the other 40,000+ zip codes is way beyond me. I always make sure to use the median, as opposed to the average, when there are major statistical outliers. I do this because I want those who see us speak, or read our blogs, or are our clients to be able to replicate those results. Plain and simple.
 
If one is presenting himself or herself as an expert, one has to be responsible to one's expertise.
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