Matthew Buchanan, Managing Partner of Sarasota Ford and President of the Buchanan Automotive Group, is a Stanford University graduate and a commercially rated helicopter and jet-airplane pilot. He also co-founded Dealers United — a network of dealerships that joined forces to boost their collective buying power from vendors.
Buchanan initially had no interest in the car business, instead he pursued a career in finance with Merrill Lynch, which he loved and at which he was very successful. But when the big crash came in 2008/9, his father, who owned three dealerships: Sarasota Ford in Sarasota, Fla.; Space Coast Honda in Cocoa, Fla.; and Toyota-Scion of Elizabeth City in Elizabeth City, N.C., asked him if he would be open to coming back in and running the business. He jumped right in and has never looked back. As Managing Partner he has overseen phenomenal growth and Sarasota Ford is now the #1 volume Ford dealership in the Southern Florida tri-county area of Sarasota, Manatee and Charlotte.
In 2014 he completed a three million dollar retrofit and launched an entirely new dealership to change the way consumers buy and maintain their vehicles. The new Sarasota Ford features a Quick Lane Tire & Auto Center, a cafe, relaxation room, movie theater and state-of-the-art showroom that focuses on a VIP customer experience.
The store is currently on track for its most profitable year and annually breaks new records in profitability, sales and market share growth. This year alone it is set to sell 4,600 plus retail units, close to $200 million in sales.
Buchanan recently talked with Dealer magazine about how his strong emphasis on digital marketing, along with changing the structure of the customer buying experience at Sarasota Ford, has helped propel the store from an average of 170 monthly vehicle sales to over 400 per month, and growing.
Tell me about your background?
I graduated from Stanford in 2007 with a degree in Science, Technology and Society, and was quickly recruited to work at Merrill Lynch in Boca Raton. I loved it; it was an incredible opportunity and experience. Then the big crash came in 2008/9. At that time my father owned a Ford, Honda and Toyota store, which were under-performing. He called me one night and asked if I would be open to jumping in and running the business, as he had other commitments and could no longer run the day-to-day operations. To make a long story short, he asked me to give it a try for one year to see if I liked it and if I didn’t, I could go back to the finance career I loved.
I had no experience in retail or running a dealership, so I enrolled at the NADA’s Dealer Academy in McLean, VA, and then went to work at the Honda dealership for one year. I started at the bottom and then rotated around and leaned all the different areas of operation. Before NADA’s Dealer Academy I could read a financial statement blindfolded, but I did not know how to apply that knowledge to dealership operations. This is where Dealer Academy helped me immensely. I learned every aspect of dealership operations, and saw the opportunity in this industry and fell in love with it.
I was at first being groomed to oversee the group of three stores, but our Flagship store, Sarasota Ford, needed a new GM. Dad asked me to step in, run it and see how it went and reevaluate as I moved forward. At that time I only had a year in the business and had not yet run things on a day-to-day basis. My father said, “Son, it is time to sink or swim.” I was thrown into the fire and since May of 2011, I have not looked back. I work a ton of hours, but the time flies as I really enjoy what I do.
I love the Internet and digital marketing and realized if I tied these closer together at the dealership, it would expand faster. When I started at Sarasota Ford in May of 2011, we averaged 170 units per month and are now at over 400. A lot of that is due to implementing digital strategies and totally changing the structure of what the buying experience should be.
What is your biggest differentiator and what makes you most successful?
I had no prior automotive experience when I first started and I am an outside-of-the-box thinker which allowed me to be creative and to try new things that other dealerships were not willing to try.
I do not believe that if you just follow the old ways you will be successful. Thinking outside the box and constantly innovating and planning how we will take the store to the next level is what has made a difference.
We no longer have salespeople; we have product specialists. The term has been around for a while, we just stepped it up a notch or two. In my opinion, our industry has a serious situation because people hate going into dealerships. They feel they are always being sold something in a high-pressure environment. Consumers want to walk in without feeling pressured and we provide that environment for them.
Our product specialists have an insane amount of knowledge and we have a great lineup at Ford. We believe the product should sell itself at a price where we don’t have to be best, but just need a great price and then match it with an incredible buying experience. There is little need for negotiation. We remove the pressure and the negotiation – the points that the customer most hates about the buying process. That is step one.
Step two is appointment-based selling. Even if you are a great store at closing and logging customer ups, you still only close around 20 to 25 percent of fresh ups at a domestic dealership. That is not good enough. I wanted to see how we could drive a huge increase in this percentage by focusing on appointment traffic. I did not want to wait on traditional ups with such a small closing rate. So now most of our car sales are based on appointments, which are critical because the average dealer closes over 50 percent of appointments that show. But, if you are very good, you can close at 70 percent. I loved this. As a numbers guy, I saw that we could close more if we focused on appointment-based selling. I can drive a 50-70 percent closing ratio, rather than lose most of my ups and close just 20-25 percent,
So how do you get more appointments?
Step one, we created a BDC. Now, BDCs have been around forever and I knew we had to go beyond the traditional BDC. My perfect vision of a BDC was a sales arm that didn’t just take inbound calls and set appointments, but rather one that focused on generating their own traffic from marketing campaigns we put together. The second part that makes our BDC so successful is the fact that we compensate our employees so that they are order makers, not order takers. They are only paid on customer appointments that show within a certain timeframe. This has helped us create a complete appointment culture. The last, and probably most important step in sustaining this appointment culture is ensuring your sales team fully buys into it. I can tell you firsthand; initially your team will fight and scream about it. However, if you execute and train correctly, it will drive a ton more business your way with the right management team leading the effort.
What are you doing on the digital side to drive more appointments?
Since May 2011 our web traffic has increased 15-20 times due to more emphasis on driving traffic and getting more eyeballs on our site.
We track number of leads, quality of traffic and time on site. We also do a lot with SEO, Pay Per Click and social media and are having a huge success with our Facebook ads.
Our website is an extension of our showroom, so we have to be consistent in image and show who we are at our dealership as people. We redesigned the website and worked to create a “cool” aspect to make it so that it is not very salesy. It has a video of a young lady with a convertible Mustang and is not all “in your face,” but is all about creating an experience any customer would desire. We aim to show the customer that they can have a similar experience at our dealership and try to lead up to that experience by giving the site a cool and edgy feel that ties into how we are at our dealership.
We also offer incentives. When potential customers view inventory, we use AutoHook’s Web2Show, which offers them a $25 gift card incentive to come into the dealership. It made sense to me because we were paying about that much for third-party leads and many of those people we never even saw. So to only pay that much when a person comes into your showroom is a bargain. We also use AutoHook’s Lead2Show to incent customers who submit leads through third-party sites. You pay for the third-party lead and then you pay again if the person walks in to your showroom, but the extra cost is well worth it as we can close them more than 50 percent of the time
What else do you do differently to drive a high closing ratio?
I thought if I were a consumer, what would the perfect buying experience look like? And then I tried to achieve that experience at our store.
I want the customer to feel special, like a VIP. The aim is to differentiate our dealership from the competition. Upon arrival, a big screen welcomes each customer with their first name and last initial. They are immediately greeted at the reception desk by their very own VIP Manager who has a folder, clearly marked “VIP,” with all the information about the customer and their appointment. If they do not show, the VIP Manager calls them to ensure the customer is okay.
The VIP Manager welcomes them as follows: “Mr. Smith, I am your VIP Manger, Tim Smith, it’s a pleasure having you here. I want to ensure that your experience is incredible. While your vehicle is being pulled up I would like to confirm it is the one you wanted. And, if you like, we can appraise your vehicle for you while you are taking the test drive.” Most customers reply “yes.” At that point the VIP Manager introduces the customer to a product specialist, “This is your product specialist/technology guru who is along for the ride to make sure all your technology questions are answered.”
The vehicle is quickly pulled around for the customer. It is cleaned and gassed up prior to the appointment and has a hang tag inside that states “VIP,” so each step of the way the customer gets a VIP experience. We want to stand out from everyone else so that the customer will notice the difference if they go to, or come from another dealership. As a result, we close more than our competition. Our customers have a “wow!” experience.
And then we build business off referrals, as the customer has had such a great experience they tell all their family and friends.
We also aim to price aggressively so that the customer does not have to negotiate, as they hate that. We show as much info as we can on the invoice and what we paid for the vehicle and the market-based price. We are very transparent and once we show that information the customer knows how aggressive it is and they love it.
I understand that you recently invested over about $3 million in a new facility for Sarasota Ford. Tell me about this.
In 2014, Ford offered financial incentives to retrofit stores. We were one of the first stores to complete renovations and offer our customers such a selection of outstanding amenities.
The first thing I did was to study what consumers like to do if they have to spend any time at retail locations similar to ours. Most people hate coming to dealerships in general. So I wanted to change things up and create an environment where customers enjoy the experience. They can come in and get any kind of drink you can think of — anything you can get at Starbucks you can get at our café — smoothies, expressos, etc. We also offer omelets –everything. Now when the customer drops their vehicle off, they can wait and have breakfast
If they need to de-stress, we have four top-of-the-line Brookstone massage chairs that cost $5,000 each. We also have a water feature that provides the atmosphere and sounds of being by a river, along with white noise speakers. It is a very Zen- like experience. The customer can for a moment forget they are at a car dealership and think they are at a spa.
And last, but not least, is our Ford theatre which offers movies on-demand. The theatre has state-of-the art surround sound speakers, a huge screen and the walls are built for an incredible sound experience for the customer to enjoy high-definition movies The chairs all tilt back and the customer can even fall asleep – it’s like an out of body experience.
We tell our customers we will send them a text message when their vehicle is ready or if we have any questions. 80 percent of customers opt in for text alerts. They can be anywhere on our property and get a text message if their vehicle is ready, or approve their recommendations right from where they are sitting — customers love it.
You have a unique market demographic in the Sarasota area, how to you overcome this challenge?
We are the second oldest district in the country with a lot of veterans and an older demographic. Therefore, newspaper and TV have a bigger impact here. So we spend more on traditional advertising than if we were in an area with a younger demographic. People in my generation typically will not pick up a newspaper and read it, but our demographic prefers to, so we need to ensure we reach them in their preferred medium.
We study our market and know our demographic and make our advertising as efficient as possible. While the digital aspect and incorporating digital strategy in business is a huge part of our success, it is so important to know your market and find ways to drive traffic. We analyze what works and what does not work and then we put a plan into action ensuring it’s successful.
I understand that you also made extensive changes in the service department and that this has greatly increased service department revenue, and also vehicle sales?
Yes, we added seven lanes for our onsite Quick Lane service, which is Ford’s version of a Tire kingdom or Pep Boys. Customers love it as they get in and out faster. Our total service ROs have almost doubled and grown from a monthly average of 1,400 in 2010, to 2,842 this past May.
Digital technology from Pocket Express allows us to more quickly and efficiently communicate with our customers. Calling and trying to reach a customer is so time consuming and inefficient. With Pocket Express, the service advisor can text the customer that their vehicle is ready. That can be a five-minute conversation on the phone, so it saves a lot of time. Now we can immediately text and the customer can text right back. The system asks the customer to rate the experience via text and they can choose to rate that they are happy with their experience, feel it was average or are unhappy. If they are anything less than happy the service advisor, fixed ops director and my service manager get an alert so they can handle any issue before it grows into something bigger.
We also encourage customers to come over to our main facility so they can experience our amenities. They have to first walk through our showroom where our vehicles are on display in all their glory. So, when customers come in to get an oil change, if they are a non-Ford owner, they get to see our new product lineup in the showroom. This has been hugely successful. Many end up purchasing, even when they did not intend to buy, as they see that incredible line of vehicles and our beautiful facility – it’s like magic and brings them right in. Before we had sub-par facilities and now we have one of most state-of- the art facilities that exist. It is really a thank you to our customers, as they are really the ones who built it.
Tell me about how training is one of the key factors to your success.
I am a huge believer in training and I can’t imagine anyone that spends more on training per employee than us. We train everyone from the lot porter to the top person in the organization. You always have to get better every day. At the end of the day, there is no better way to improve. In my opinion, our technicians are far better trained than anyone else. We want to show our customers that when they bring their car in, we have a better way of doing things and offer a superior customer experience. We constantly do vehicle walk arounds with our employees to learn how to better demo the car and get an exact route to demo.
We have processes in place that our employees are familiar with. They perform better that way. We have all kinds of training including finance and compliance. If you are not getting better you are going backwards. So we work on constant improvement every day all across the board, it makes us who we are.
I believe you do all your training in house?
It’s mostly all done in house, except for a couple of training areas. And, on top of that, we are part of the Ford Customer Experience movement. I love the coaches we use for our Ford stores and non-Ford alike. We work with a trainer who really thinks outside of the box. He helps us look at and think of how we can take better care of our customers and improve follow up. He comes in twice per month. It is not inexpensive but it has helped us improve how we take care of our customers.
We also have a BDC coach who has helped us get where need to get as far as growing the BDC. Our motto is constant improvement every single day.
And the results?
As a result of the training and changing up our processes for how we appraise and quote trade ins, and changing how we take the customer through the arrival process, as well as what we do to provide a VIP customer experience, we have rocketed our retail unit sales from a total of 2,479 in 2010, to 3,890 in 2015, and are well on target to sell 4,600 plus retail units this year. This growth drastically outpaces the industry growth rate.
On top of everything else you are a commercially rated helicopter and jet-airplane pilot. Tell me more about that.
I fly all over the place. We just purchased a Nissan store in North Carolina and we have two stores there now, so I fly to North Carolina a lot as well as all over the South East and beyond. I love flying; it’s a big part of my life. I fly everything from jets, to small piston single engines and even helicopters. Flying is my freedom and allows me to get away and take my mind off things. I feel blessed that I am able to fly to locations and get there quicker which makes us more efficient as an organization.
I hear you have big plans for Sarasota Ford and Buchanan Automotive Group’s future.
Yes, I love this industry, as there is so much opportunity for growth and success. We will continue to expand and buy more stores if that’s God’s plan. My goal one day is to be the biggest private retail group in the country.