Ryan Hanlon was working in the payment industry, doing phone sales and calling on a lot of dealers. One of them was Jeremy Lux, GM at Miller Honda in Van Nuys, California, whom Hanlon had been relentlessly following up with to earn his business.  Recognizing raw talent when he saw it, Lux recruited Hanlon over to Miller Honda in 2002.  Hanlon’s first job was to build out the BDC and call centers for Miller’s Nissan and Honda stores, with the goal of building relationships, referrals, and repeat business with floor traffic customers. Little did Hanlon realize at the time, but he was setting in place the cornerstone for one of the most successful Honda Internet departments in the U.S.

Kristen Stanton: Thanks for sitting down to share your experience with our readers, Ryan.  Yours is a great success story.  Why don’t we start by talking about Miller’s Internet department?   

Ryan Hanlon: When I started with Miller Honda in ’02, the Internet department was really comprised of two guys from the fleet department selling about 25-30 cars a month and not making any money. They were getting leads from Honda, the website, and third parties, but it was definitely not a profit center. 

When Jeremy (Lux) asked me to take over the Internet sales department, we tried a number of different ways to make it work.   I really credit Jeremy’s leadership with the success of our program.  Jeremy took me under his wing and taught me everything I know about the car business.  Having that kind of support from your GM is a blessing.    

We’ve built the department to a core group of four sales people, who are dedicated solely to Internet customers; an Internet response coordinator who helps with administrative work; and me.  Each ISP handles about 130 leads per month.  We plan to grow to six or eight sales people.  It’s just a matter of finding the right people.

KS: How do you plan on doing that?

RH: We are very selective. I will interview about 15 people for every one person I hire.  We check everything - background, references, job history. We even do a psychological profile to make sure they have the right personality for the job.  We want high energy, quality, long term people. I think it’s counter productive to hire people you think will just be there for the short term. There’s a lot of that in this business – people jumping from store to store.  We don’t want that.  

KS: How would you describe your philosophy for success?

RH: Our focus is on volume, gross and QDS (Honda’s CSI).  We accomplish that by responding quickly, treating people right, defending the value of our product and developing long term relationships with our customers. We work hard to earn our customer’s trust, because people do business with people that they like, trust and respect!

KS: How do you present yourself to your Internet customers? Do you do things like provide pricing over email or the phone?

RH: We believe people will pay more for good service – for the perception of value.  In some cases we offer pricing over the phone, especially if it is promised from the lead provider – if there was an offer for a free price quote.  Again, what’s important is the perception of a good price and value.  Take the Ritz Carleton and Motel 6. Both are places to sleep, but the Ritz offers a higher quality experience.  Every person working at the Ritz is polite to their customers. If you say, “Thanks,” I can guarantee every one of them will say, “My pleasure.”  We want to offer that kind of environment. People want trust and respect, whether it’s by email, over the phone, or in person.  If a person needs a vehicle, we build value into that product.  For that, we think people will be happy to pay more – because they’re getting good value. 

KS: Let’s talk about some metrics.  What do you pay attention to? 

RH: We track absolutely everything.  We use NetTrak (by Internet FX), a CRM tool that I highly recommend. One of the things we closely monitor is response times.  Our average is 30 minutes or less, but some of our ISPs respond within 12-13 minutes.  Customers get the auto responder, and then they get a personal email or call.  We also monitor close rates, monthly cost per sale, number sold, gross, and QDS.  On a daily basis, we track unit grosses.  I also look at everyone’s individual close rates – tracking a 90-day moving average.  We always pay attention to how well actual Internet sales are matching our forecast – are we on target or do we need to pick up the slack?

KS: What about appointments?

RH: Yes. We have about a 50% show ratio. That’s not unrealistic.

KS: What percent of your dealership’s overall sales would you say are from the Internet?

RH: About 20%-25% of our new sales and 10%-15% of our used, which we’re starting to put more of an emphasis on. 

KS: Do your Internet sales yield a higher gross than floor sales?

RH: Internet sales yield a slightly lower gross than floor sales with new cars, and it’s about equal for used.  We focus on making up lower grosses on the back end.

KS: What about close rates for your Internet leads?

RH: It’s about 10%-12% across the board.  We know we could do 15%-plus, but we have an equal focus on profit.  We’ve all heard of fleet departments that sell 100-120 units a month, but are losing money.  At the end of the day, gross pays the bills. We’re not an activity center, we’re a profit center.

KS: Along those lines, what would you say is your average cost per car sold with your Internet leads?

RH: It’s about $250-$275 per car sold.  We could bring that down, but we are not afraid to walk away from a sale if we’re not making what we want on it.    

KS: How do you manage your territory or the leads you get?

RH: We accept leads for vehicles that we have readily available. We’re not going to compete with a rock bottom price on hard to find cars.

KS: About how long does it take to close your leads?

RH: It depends. We have people we can close in three days – they know exactly what they want, so we are responsive and ready for them. Then we have three-week people.  We provide them with as much information as we can and try to set the appointments with them. And then we have people who take three months or greater – they’re doing their research. It’s important to establish yourself with them, to show yourself as the guy or gal they’ll want to buy from. 

KS: Are you able to determine their readiness level fairly quickly?

RH: Yes. By asking the right questions, you’ll know what phase they’re in.  And, we just ask them directly.  It’s about building a relationship long term. You have to meet them where they are and give them a great experience.

KS: What franchises do you think do particularly well selling to Internet customers?  

RH: I know that Honda, VW, BMW, Mercedes, and Jaguar all have Internet savvy customers. But, really, the Internet crosses all demographic and geographical lines.  Every dealer should be able to sell to Internet customers.

KS: Looking forward, what role do you see the Internet playing in your overall sales?