Sales Tip: The Six Enemies of Greatness (and Happiness)

These six factors can erode the grandest of plans and the noblest of intentions. They can turn visionaries into paper-pushers and wide-eyed dreamers into shivering, weeping balls of regret. Beware!

1) Availability

We often settle for what's available, and what's available isn't always great. "Because it was there," is an okay reason to climb a mountain, but not a very good reason to take a job or a free sample at the supermarket.

2) Ignorance

If we don't know how to make something great, we simply won't. If we don't know that greatness is possible, we won't bother attempting it. All too often, we literally do not know any better than good enough.

3) Committees

Nothing destroys a good idea faster than a mandatory consensus. The lowest common denominator is never a high standard.

4) Comfort

Why pursue greatness when you've already got 324 channels and a recliner? Pass the dip and forget about your grand designs.

5) Momentum

If you've been doing what you're doing for years and it's not-so-great, you are in a rut. Many people refer to these ruts as careers.

6) Passivity

There's a difference between being agreeable and agreeing to everything. Trust the little internal voice that tells you, "this is a bad idea."

Top 100 Advertisers Boost Ad Spending, But Not In Traditional Media

The nation's 100 biggest advertisers boosted 2011 total U.S. ad spending by 4.8%. But you wouldn't know spending was on the rise if you looked only at last year's measured media. 

Measured spending for the top 100 actually slipped 0.2%. A double-digit measured-media gain for Internet display spending and a small increase in TV did not make up for losses in newspapers, magazines and radio. 

So where's the money going? Into unmeasured disciplines -- a vast pool that includes various digital plays (search marketing, online video and some forms of social media), promotion and direct marketing. The appeal is clear: Marketers are putting money into disciplines that directly connect them with targeted consumers. 

Advertisers are reshaping the media pie. Publicis Groupe's ZenithOptimedia expects the Internet to surpass newspapers this year as the nation's second-largest advertising medium, behind TV. By ZenithOptimedia's tally, the Internet was the fifth-largest ad medium until 2009, when it powered past magazines and radio into the No. 3 spot. 

Nearly three-fourths of ZenithOptimedia's Internet breakout comes from what Ad Agecurrently counts as unmeasured spending (including paid search, online video and mobile ads); the rest comes from measured disciplines (display advertising, including display ads on social-media sites). 

Fortunes of unmeasured and measured disciplines have diverged since the Great Recession ended and not-so-great recovery began in June 2009. 

The top 100 U.S. advertisers in 2010 increased unmeasured spending by 12.6% and measured spending by 6.3%, resulting in an 8.8% rebound in total ad spending. 

The 100 Leading National Advertisers' unmeasured spending jumped 11.8% in 2011 while measured media eased 0.2%, resulting in an overall increase of 4.8%. That slower growth shows how major marketers have kept a check on ad spending in this plodding economic recovery. 

Measured media's share of LNA spending dropped to 55.8% in 2011 from 58.6% in 2010. 

The tug of war between measured and unmeasured disciplines is hardly new. Since launching the 100 LNA report in 1956, Ad Age has used the term "unmeasured" to quantify ad and promotion spending distinct from media types -- such as TV, print and (in recent decades) Internet display -- that are measured by tracking services. 

The shift in 2011 was widespread: 100 Leading National Advertisers in all but two major industry categories reduced the portion of 2011 spending that went to measured media, according to Ad Age DataCenter's analysis. (The two exceptions were financial services and restaurants, where measured media scored a bigger slice of the pie.) 

Case in point: Kohl's Corp., the department-store retailer, disclosed gross advertising costs rose 10.4% to $1.123 billion in 2011. Kohl's 2011 measured-media ad spending declined 2.5% to $331.3 million, according to WPP's Kantar Media. Ad Age defines the difference as unmeasured spending: $791.7 million, up 16.9%. 

To be sure, marketers still rely on measured media to build brands and promote products. Apple's U.S. measured spending surged 82%. 

The 100 LNA accounted for 44% of Kantar Media's 2011 U.S. measured-media spending. 

Among the 100 largest advertisers, total 2011 U.S. spending (measured media plus unmeasured spending) increased in all but three major industries, according to Ad AgeDataCenter's spending analysis. 

Telecom had the sharpest spending drop, falling 7.9%. AT&T, Deutsche Telekom's T-Mobile, Sprint Nextel Corp.and Verizon Communications all cut measured-media spending. 

Marketers of cleaning products reduced total ad spending by 3.3%. The LNA's 10 food companies trimmed spending by 1.5%. 

Two major industries saw double-digit increases in total U.S. ad spending: automotive, up 16.1%, and financial services, up 11.2%. 

During the 2007-2009 recession, automotive and financial-services imploded as industries and ad categories. But the two industries have rebounded sharply, scoring double-digit ad spending increases in both 2010 and 2011. 

Fiat's Chrysler Group boosted U.S. measured-media spending by 48%; Chrysler's stated worldwide ad spending jumped 49%. 

Estimated total U.S. ad spending for JPMorgan Chase & Co., the largest financial advertiser, rose 22%. JPMorgan Chase's stated worldwide marketing costs in 2011 were 77% above the company's recession-period low (2009). 

Among the 100 LNA, about two-thirds of marketers increased U.S. spending in 2011, with 32 cutting spending, according to Ad Age DataCenter's analysis. 

What about 2012? Kantar Media last week reported some sign of a modest rebound in measured-media spending. Overall U.S. measured spending increased 2.6% in the first quarter, the best quarterly growth since second-quarter 2011. 

Kantar Media's top 100 marketers increased first-quarter 2012 spending by 3.4%, vs. a 0.2% spending decline in full-year 2011. 

ZenithOptimedia forecasts total U.S. spending for major media and marketing services will grow 3.2% in 2012 and another 3.2% in 2013, up from 2011's tepid 1.8% growth. That hardly signals a boom. But it's better than a bust.

(Source: Advertising Age, 06/25/12) 

How to Succeed with Digital: 5 Strategies

Chaos. If there's a single word to encapsulate today's digital environment, that one clinches it. The dizzying pace of change has been hard to keep up with (never mind get ahead of) from every perspective: Channels and platforms. Devices and tools. Customer behaviors...and expectations. 

For marketers, the challenge is to understand how to best manage the chaos, and that is a do-able proposition. It takes a strategic orientation that is grounded in five key tenets. Making these the basis of your approach will result in a powerful pathway to better customer engagement and better harness both the chaos and the power that digital represents. 

1. Your customers, engaged -- your story, amplified

The digital environment is a milieu characterized by shared ownership in your brand by you and your consumers. You can't control what's being said about your brand here, so focus on what you can control: what it stands for. The better its promise and positioning are focused, defined, and communicated internally and externally, the better you will be able to encourage consistent storytelling about it by your customers. 

2. Know the customer "fragments" 

Digital tends to create a marketplace of people with multiple personalities, which makes the challenge of targeting much more complex. An individual may have multiple identities on Twitter, share their professional persona on LinkedIn, and on Facebook, reveal another persona. 

Telling the right brand story requires an understanding of the multiple dimensions of the individual, and figuring out which one you want to connect with. 

Just remember. Your audiences are allowed to have multifaceted online personalities. Your brand, however, can't afford a fragmented identity. 

3. Don't rush to follow

Digital is a relentless and omnipresent environment that has dramatically altered how we consume and share information. It can be overwhelming. If you respond well, you can capitalize on the opportunity to make your brand a bigger part of customers' lives -- but you must be very clear on your digital strategy. There's a risk of getting caught up in (and overextending your resources on) the hot new channel or capability of the moment. 

Understand which insights matter by truly listening to and assessing the data to design a strategic approach that is aligned to your brand and your target customer. Remember: Missteps are less tolerated in this realm, as there is a permanent digital footprint. 

4. Integrate the CMO and CIO roles

Digital intensifies the need to break down organizational silos. It takes both marketing and technology know-how and capabilities -- bound by respect for the medium -- to envision and activate the most effective digital strategies. 

Marketing and technology capabilities must work together to create the best possible outcomes. This means that marketers and their IT counterparts must increase their understanding of the interplay between technologies, how they work, and how they are best utilized to create customer experiences that drive the brand and business forward.

5. Measure not for Klout, but business impact

The impact of digital strategy is measured in ways that traditional media is not -- via a stream of data that can be analyzed to continuously fine-tune and refine approaches for maximum impact. Ultimately, however, metrics must connect back to business impact. But the reality is that nothing in digital exists on its own. 

Mobile links to social media, which in turn may link back to a company Web site. The trick is to ensure that linkage models are being used to measure the effectiveness of the digital strategies -- especially considering the fuzziness of some digital measurements (like Klout and "liking"). It's better to link those digital measures to traditional ones like awareness, consideration, and conversion. 

The explosion in digital has created an exciting and challenging environment for society and culture. The marketer's imperative is to learn how to manage the chaos to grow deeper customer connections and successful businesses.

(Source: Chiaki Nishino, Marketing Daily, 06/27/12) 

Obamacare Just Created a Huge Ad Category

Health insurance companies already moving toward consumer advertising 

It's official: the Affordable Care Act (or Obamacare, depending where you sit on the political spectrum) has been upheld by the Supreme Court as of this morning. While the announcement certainly wasn't the proudest moment for cable news networks (easy on the trigger there, fellas!), it's likely to be very good indeed for television as a whole.

Pivotal Research senior researcher Brian Wieser (formerly the top forecaster at Interpublic) has a solid predictive track record, and he's extremely bullish on the possibility of a rapidly expanding healthcare category on television and in other consumer media as the hotly contested individual mandate becomes a reality in 2014. Individual healthcare policies are the exception, rather than the norm, but if everyone in the country is required to have some kind of coverage, the number of those policies sold is going to skyrocket. That, said Wieser, means new business models.

What will probably happen at first, according to the analyst, is that a single company will grab a lot of attention when it rolls out an effective campaign. "A reference point could be the auto insurance market until the last decade," said Wieser. "It was a lot of smaller companies, and then Geico catalyzed the entire sector. It will make a huge difference in market share."

Since health insurers market mostly (sometimes exclusively) to businesses, there's a steep learning curve ahead for big insurance companies that don't yet have a consumer-friendly infrastructure. "These marketers are going to have to reorient themselves from being B2B brands to being consumer brands," said Wieser.

And it's worth noting that some of them have already started to do just that. Last April, Cigna bgan its pivot toward consumer-focused advertising by hiring Hill Holiday to handle its needs in that department; the company also rolled out its "Go You" campaign a few months later (see link above). Meanwhile, WellPoint has hired Interpublic agency Deutsch, also with a conumser focus in mind, and even earlier—in May 2010—Humana retained Omnicom.

"I'd be surprised if you see them in next year's upfront, but I think you'll see a little in the fall of 2013, more in 2014, and a lot more in 2015," said Wieser. Still, health insurance advertising increases may be a safe bet, but there's no guarantee that it will be a net gain of the $1 billion-plus that Wieser predicts the market will eventually reach. "Health insurance goes up and maybe it makes it more difficult for soft drink manufacturers who were, uh, on the other side of the health proposition," said Wieser with a laugh.

It's also probably safe to expect the larger insurers to start retaining the larger advertising agencies; consumer ad spending hasn't yet been a priority, but the Kaiser Family Foundation (a nonpartisan nonprofit that lobbies on behalf of the health insurance industry and is formerly affiliated with Kaiser Permanente) predicts that the number of individual policy holders in the U.S. will at least double from 14 million to 28 million by 2016.

Sam Thielman - Adweek, 6/28/12

Newspapers lose auto ad dollars

Dealers have turned the page on newspapers, at least when it comes to buying advertising in them.

The annual National Automobile Dealers Association's state-of-the-industry report released last week highlights just how much their choice of advertising media has changed in the past decade.

At the typical store, NADA says, newspapers accounted for more than half of total ad spending in 2001. Last year it was just 20 percent. The Internet, in contrast, accounted for 5 percent a decade ago and 25 percent in 2011.

But all that lost newspaper advertising didn't go to the Web. TV and radio spots, as well as direct mail, are up as a percentage of the total compared with 2001.

Mobile's Surge

Sending one-way communications to consumers on mobile devices or optimizing a website for mobile is no longer good enough. Brands must now be able to optimize mobile channels in a way that enables consumers to make purchases, track pricing and comparison shop whenever and wherever they wish to in order to remain relevant.

That includes mobile versions of websites, as well as custom mobile apps. 

According to a February 2012 Consumer Electronics Association M-Commerce Forecast, 90% of consumers own a tablet, a smartphone or a cell phone. Of these consumers, 37% are engaging in some form of mobile commerce. On average, consumers spent $642 on mobile purchases in the past 12 months -- a whopping $124 billion overall -- the report revealed. The Internet spawned e-commerce, and in the past few years, the iPhone has spawned m-commerce. 

A differentiated approach

Perhaps no company better understands the value of m-commerce than Staples. The company invested in a new mobile commerce site, M.Staples.com, in 2011, as well as new mobile apps. The redesigns came roughly a year after the company invested in its first ever mobile site and app. 

In January, Staples said it would open an e-commerce innovation center in Massachusetts, designed to bring new ideas to market in m-commerce and social media, and in early February, the company launched a new website optimized for tablet browsing. Staples partners with technology vendors Skava on the tablet site, Expicient on the mobile apps and Usablenet on the mobile website. 

The new M.Staples.com features a shopping cart that synchronizes in real time with a user's Staples.com cart, a GPS-powered store locator, store inventory look-up and enhanced on-site search, including an auto-suggest feature. M.Staples.com is designed more for research, while the apps are meant to facilitate commerce, says Staples' mobile strategist. 

"Between a smartphone and a tablet, tablets are more transactional in nature," says Prat Vemana, director of mobile strategy at Staples. "We brought out the convenience of reorders for the tablet redesign, (including) faster checkout and the ability to access rewards. We've optimized it for transactions. The mobile site is optimized for research."

Walmart also uses its mobile site to enable product research and purchase preparation. The company launched its first mobile site and apps in 2010 and has since made several upgrades. Currently, the mobile site offers product details, customer ratings and reviews, and pricing information. 

Walmart's iPhone app enables consumers to add items to a shopping list by speaking, typing or scanning bar codes. Consumers can use the app to calculate total price in real time as specific items are added to mobile shopping lists, and they can find the in-store aisle location of products in select stores across the country. 

"We're at an exciting time of transformation, both for our customers and our business, as we move into the next generation of retail that integrates online, social, mobile and our physical stores," says Paul Cousineau, VP of mobile products, Global E-commerce at Walmart. Although he would not reveal sales or traffic data, he says mobile apps drove "significant traffic" to Walmart.com during the holiday season in 2011, and many of the shoppers were customers that had never previously purchased on the site. Walmart launched its first iPad app last November. 

Amazon.com is widely recognized as the inventor of the mobile commerce space. The online retailer built its first m-commerce site in 1999 and its first apps in 2008. The company uses a distinct approach for each mobile channel. 

"It was important to include meaningful and familiar aspects of the Amazon experience (on mobile sites) like one-click purchasing, customer reviews and wish lists," says Sam Hall, director of Amazon Mobile. "We also offer mobile applications tailored to specific devices to make the shopping experience faster and easier." 

Amazon has apps for the iPhone, Android phones, Kindle Fire, iPad, Blackberry and Windows Phone 7. Unlike mobile websites, apps enable consumers to do things like access the device's camera for barcode scanning and use voice input as an alternate search method, Hall says. 

"We designed our Amazon mobile app so that a customer could both search for and find a particular item, and (then) buy it within a very short period of time," Hall says. "This means the design had to be simple and 'glance-able' at first view, but still offer a path to more detailed product information." 

Not every brand goes out of its way to develop an original mobile site. Gavin Masters, e-commerce delivery manager at Hallmark, says his company's m-commerce site is an optimized version of the company's website. The retailer works with EPiServer, a content management company, to integrate their commerce platform across channels. While many industry experts bang the drum for a complete re-architecting of m-commerce sites, Masters says that can result in endlessly chasing new technology. "By the time we get around to re-architecting, the devices change," he says. "Today's mobile browsers are a lot more accommodating of standard sites than they have been.” 

Hallmark instead focuses its resources on mobile apps. Masters says the company has "double-figure apps internationally (and) five or six in the U.S." Hallmark's Story Buddies app is designed for consumers that have already made a Hallmark purchase, in order to engender loyalty. The app features interactive stories and games designed to "enrich the (customer) experience." 

Hallmark's mobile transactions increase each year. M-commerce transactions comprise roughly 10% to 15% of all of Hallmark's e-commerce transactions. 

A seamless experience

Although many retailers prefer differentiated approaches to how they develop and optimize mobile sites and apps, Michael Murray, CMO of e-commerce and online at Sears, says his company offers a seamless and uniform experience across all devices. 

"Whether m-site or mobile apps, we're really agnostic...We're looking to make sure that the customer experience is continuous and integrated," Murray says. "Mobile phone, PC, tablet, all of those expressions should be consistent and uniform to help that customer. It takes a lot of hard work to help the customer in that way, but it's worth it." He says Sears' goal is integrating online with mobile and physical stores. "Mobile is a bright tile in that mosaic." 

While Sears optimizes its sites to offer similar experiences, it does acknowledge that consumers' mobile device use differs from PC behavior. Since 2010, the retailer has enabled consumers to order an item on a mobile device and pick it up at a retail location within five minutes. Prior to the holiday season, Sears launched a similar policy for returns. 

Craig Shields, VP of e-commerce at Jewelry Television, says his goal is to ensure a consistent experience across mobile and online devices. 

"There's a number of companies that have standalone, siloed solutions that can get to market fast, but there can be differences in inventory results, search results and shopping carts," he says. "We wanted to provide a consistent experience so that the shopping cart online and on mobile is the same." 

Jewelry Television partners with Demandware on its e-commerce platform, which Shields says Jewelry Television was able to extend to mobile platforms. 

"Consistency is important," Shields explains. "Any customer with an iPhone probably hasn't had one for more than two or three years. It's still a new experience for shopping online. To interact and find that the online website and the mobile website aren't the same is an unfriendly experience. Plus, internal costs, complications and inefficiencies (are an issue)." 

Jewelry Television launched its m-commerce site and apps in 2010 and is in the process of developing an iPad app, which Shields expects to launch this summer. 

Ken Mowry, SVP of digital marketing and customer engagement at Charming Shoppes, says his company focuses solely on the mobile site. The company does not have a mobile app and Mowry is skeptical about whether apps will ever play a major role in generating mobile transactions. 

"We have not launched an app experience primarily over the concern over low adoption rate," Mowry says. "There's an (industry-wide) 70% drop-off after the initial app download. Unless you come up with a unique app experience, it's a challenge to get customers to come back to it." 

Instead of spending valuable resources on an app that Mowry thinks consumers will download once and then discard, Charming Shoppes focuses on customizing its m-commerce experience on smartphones and tablets. 

Charming Shoppes works with e-commerce platform provider Fry to optimize and tailor its various m-commerce offerings. It launched its first m-commerce site last year, and, in that time 10.5% of its e-commerce revenue has come through mobile, 7% of which came from tablet shoppers. 

Sunglasses retailer EyeSave has also foregone the app route in favor of focusing on m-commerce sites. It works with e-commerce technology services provider Mercent to handle its data feed to third-party sites like Amazon. Mercent optimizes those feeds for the best mobile performance. 

"We priced out some options for building (a mobile site) from the ground up and we thought, why don't we try this (Mercent partnership) out and see if we're doing well," says EyeSave president Darren Lilien. "We have been getting sales through it." He would not offer more concrete figures. 

New investments

Several brands recently made or planned to make their first m-commerce investments within the past six months. PriceGrabber, which has dabbled in mobile apps, built its first mobile commerce site in November. Tim Fernholtz, senior product manager at PriceGrabber, says the new site is "everything on our (e-commerce) site, but basically in a mobile version." 

The mobile site, which was built in-house, is different than PriceGrabber's e-commerce site in that it offers location-based features. The company also launched the DealGrabber app for iPhone in November, which enables consumers to view aggregated deals from daily deals companies. 

PriceGrabber is working on technology that will enable consumers to discover more information about any product on the market by snapping a picture of the product on their mobile device and then submitting it to PriceGrabber. Fernholtz says the technology will be available for the holiday season. 

Private sales site, Totsy.com, generates more than 20% of its traffic on its m-commerce site. However, the company recently began a two-to-three year mobile strategy that includes the March introduction of custom-made social- and community-based mobile apps for the iPhone, iPad and Android, says Christophe Garnier, cofounder, president and CMO of Totsy. The company is working with Diaspark to develop the apps, which Garnier says will enhance the company's "shop and share" philosophy. 

Reebok-owned The Rockport Co. launched its first m-commerce site two months ago. The footwear retailer built the site to be compatible and accessible across different devices to maintain a consistent user experience. 

"We kept the layout simple, the navigation intuitive, (with) touch screen features and prioritization of content so our customers are not overwhelmed," says Kimberly Correia Hunt, head of e-commerce at Rockport. "Growth rates in mobile usage, ownership, traffic and revenue is far outpacing the growth of desktop e-commerce sales."

(Source: Direct Marketing News, April, 2012) 

Cha-ching! Dealership Profits Soar

Used car sales driving profits.

Used Cars Drive Growth

Rising new-vehicle sales are boosting dealership profits. Most public retailers reported much higher first-quarter earnings, and other dealers tell similar stories.

All dealership profit centers are contributing. But it's in used-vehicle sales that many groups see big growth opportunities -- along with some challenges, the greatest of which is a lack of inventory.

"The biggest driver for used-car sales growth is the ability to procure used cars," says Bryan DeBoer, Lithia Motors Inc.'s COO. "We, at the top of the food chain, have a big advantage over the independent car dealer who doesn't take in the amount of trade-ins we do."

But for the Medford, Ore., dealership group to reach its goal of selling 60 used vehicles per store per month, it will have to do a better job at procurement, DeBoer says. In the first quarter, Lithia sold 45 used vehicles per store per month, he says.

"We have to open up our pipeline of used vehicles -- meaning get them from the street," DeBoer says.

Large retailers are using innovative tricks to get used vehicles.

Most say they are relying less on auctions. Instead, they look to increase trade-ins from new-car sales. They also are buying more used cars from Internet and newspaper ads. And they are using so-called equity software that combs their own databases to find existing customers with equity in their cars who might do a trade-in.

Big retailers say they are reconditioning more trade-ins for higher-profit retail sales instead of wholesales through auction.

Retail First
At Penske Automotive Group Inc., retail sales of used vehicles jumped 27 percent in the first quarter. The spike helped boost Penske's first-quarter profits by 38 percent. CEO Roger Penske attributes the increase in used-vehicle sales primarily to an internal program dubbed Retail First.

"Our initiative today is to recondition these used cars where they can be sold in retail rather than wholesale," Penske says. "It gives us a new customer."

And it results in bigger profits than wholesale yields. On average it costs Penske about $500 to $600 to make cosmetic and safety improvements to used vehicles, Penske says. But the average gross margin per used vehicle sold at retail is $2,043, Penske's earnings report says. Roger Penske says the company makes about $150 on a wholesale sale.

Vince Sheehy, president of Sheehy Auto Stores in Fairfax, Va., also wants to see more retail and less wholesale. He is relaxing his used-car standards to capture more lower-end retail buyers.

"Sometimes you put new tires on a car, and then certain people can't afford the car. So if you can bring the price down by $750, that can bring the sale into play," Sheehy says. "Wholesaling means someone else is going to retail it. We want more of those opportunities, but not anything that gets in the way of our reputation."

Sheehy's used-car sales were up about 5 percent in the first quarter compared with a year ago, and his used-car profitability was up about 10 percent, he says.

Sheehy Auto Stores is ranked No. 31 on the Automotive News list of the top 125 U.S. dealership groups, with total new-vehicle retail sales of 15,669 units in 2011.

Vince Sheehy also is looking to increase trade-ins. Starting earlier this month, he put so-called equity software in each of Sheehy's 15 dealerships.

Kuni Automotive also uses equity software and has spent the past two years using technology to improve vehicle acquisition, COO Joe Herman says. Used-car volume, revenue and gross profits are up significantly, and Kuni is up to 1.13 used vehicles sold for each new one.

In the last 90 days, Herman has added a new procurement specialist position to several stores. That person uses specialized software to seek inventory on online vehicle auctions.

"The dealers that can access inventories with some of those new Web tools can increase the size of their retail business because they can expand their reach beyond their physical location," Herman says.

Kuni Automotive of Vancouver, Wash., is No. 104 on the Automotive News list with retail sales of 6,683 new vehicles in 2011.

At Swope Automotive Group in Louisville, Ky., sales managers "source the service lane" for potential used-car inventory, says Cary Donovan, director of used-vehicle operations.

"You may source the appointments the evening before customers arrive," Donovan says. "You'll know from that particular group if you have a customer who's been in a car for two to three years."

Swope Automotive Group ranks No. 71 on the Automotive News list with 8,784 total new-vehicle retail sales in 2011.

"You've got to fish in some areas we didn't fish in before," Donovan says.

Spend more
Used-vehicle sales continue to be a strength for Asbury Automotive Group.

"Our stores broke all-time first-quarter company records for used retail revenues and unit sales," says Asbury COO Michael Kearney.

Group 1 CEO Earl Hesterberg says he was surprised by the used-vehicle market's strength to start the year. Because December was a great month for new-vehicle sales, Group 1 started January with more good trade-ins on hand.

In the first quarter, Group 1's used-vehicle unit sales soared 24 percent and retail used revenues jumped 28 percent. Gross profit on used vehicles jumped by 26 percent.

And "there's still excellent growth room" going forward, Hesterberg says. "The more trade-ins we get, we can be more competitive and have more attractive merchandise."

Group 1 is retailing all but poor-quality trade-ins.

"Most of the things that go to auction now from our company are really junk," Hesterberg says.

AutoNation Inc. and Sonic Automotive Inc. are focusing on using the increase in new-car sales to boost their used-car inventories and sales with trades as well.

"We know that we do not want to be an auction buyer other than in very select situations," says AutoNation COO Michael Maroone. "We aggressively went after our appraisals and converted almost 50 percent, which is an all-time high for us."

In the past, AutoNation's typical close ratio on trade-ins was in the high 30s, low 40s.

AutoNation retailed 45,500 used vehicles on a same-store basis in the first quarter, up 8 percent. Same-store retail used-vehicle gross profit increased 5 percent.

AutoNation continues to shift used vehicles between stores to find the best market, moving around 13,000 vehicles in the quarter.

Asbury has changed its view of lower-priced used cars.

"We used to avoid anything sub-$10,000," Kearney says. But now Asbury does a significant amount of business in the $8,000 to $12,000 price band, he says. "It gives you opportunity to reach so many more buyers."

Hitting targets
At Sonic, first-quarter used-car revenue rose by 9 percent and gross by 8 percent. Its closing ratio on appraisals was 48 percent. By selling 90 used vehicles per store in March, Sonic also hit a new milestone on its way to the goal of selling 100 used vehicles per store per month. Executives say they believe Sonic can achieve that goal by the end of 2012.

The long-term potential is even greater, Sonic President Scott Smith says. "That's a psychological number," he says. "There's a lot more upside to what we're doing."

Bryan DeBoer is confident Lithia will hit 60 used cars sold per store per month, but he says it won't happen by year end for his company.

"We believe the market is there right now; it's really a matter of our stores being able to find those vehicles and then attracting the customers to gain awareness that we are a broader used-car dealer," DeBoer says. "We'll get there, probably sooner than later."

(Source: Automotive News, 04/30/12)