Today on the More Cheese Less Whiskers podcast we're talking with Isaac Partita who helps car dealers and car consultants to grow their business.
Isaac has a great enthusiasm for applying the 8-Profit Activators to the auto industry and we had a really great conversation about where to start, looking at what are the metrics he can establish to measure everyone against. That's the great thing about the 8-Profit Activators... we use it for context, and a set of metrics and measurements to let people know they're on track.
Because every business is different and every business has its own metrics and expectations, if you're going to be in the business of helping other businesses grow, you've got to be able to establish what those metrics are for them and create a systems that can grow that business predictably.
Once you've cracked the code once, it's then scaling and duplicating everything that you've learned.
This is exactly what I do with the real estate agents I work with in our GoGoAgent.com business. I've figured out all the things that help the real estate agents get the things they want... More listings, more referrals, how to multiply their listings, how to find buyers, and how to convert leads. All of those things are from my application of the 8-Profit Activators to the real estate business.
I love talking with people who have that kind of aspiration to create something they're going to syndicate. I think you're going to really find this an interesting conversation and let me know if you have something that could be syndicated.
Send me an email to Dean@DeanJackson.com and let's have a conversation about it.
Show Links:
ProfitActivatorScore.com
BreakthroughDNA.com
EmailMastery.com
Want to be a guest on the show? Simply follow the 'Be a Guest' link on the left & I'll be in touch.
Download a free copy of the Breakthrough DNA book all about the 8 Profit Activators we talk about here on More Cheese, Less Whiskers...
Transcript - More Cheese Less Whiskers 117
Dean: Hello, Isaac Partida.
Isaac: Hey Dean.
Dean: How are you?
Isaac: I'm doing awesome.
Dean: I bet. I'm excited to spend some time here hatching some evil schemes with you.
Isaac: Me too, thank you so much. Just being part of the podcast is something really awesome.
Dean: That's great. So I know a little bit about what you're working on here, but I think it'd be good if you set the stage a little bit, and then we can pick up from there.
Isaac: Yeah, absolutely. What I'm working on is basically I'm trying to create all eight profit activators for the auto sales industry, not on the service side or in the parts department side, but on the sales side.
Dean: Okay.
Isaac: Everything from the marketing all the way to orchestrating referrals and getting repeat business and everything in between.
Dean: Yeah. I love it. It's the perfect thing.
Isaac: Yeah, it's definitely needed.
Dean: So how far along are you? Where ... I've got some ideas, I'm sure. But what kind of things, what have you done so far, what are your ideas, or what do you want to focus on here?
Isaac: Well, how I started in this, the reason I'm telling a backstory is so you understand where this all came from and the research I did before I did any work. Maybe I'm on the right track, maybe I'm not. But basically, I used to be a sales consultant about six years ago, and I came from another business. I used to follow Joe Polish a lot with the Rich Cleaner System.
Dean: Okay, yeah.
Isaac: I started in auto industries and noticed that, didn't take me too long, took me about six months to realize that it's an important industry, it makes a big impact on people's lives, but it's the most distrusted, and for good reason. There is a lot of shenanigans and false representations, advertising, and lots-
Dean: Right, right right.
Isaac: ... other things that go on in the industry, which gives it the bad rep.
Dean: For sure.
Isaac: How I got started in this is a customer of mine, she was saving up for years on Social Security, she came in to buy a car, and she bought cash, she paid it in cash because they wouldn't give her a loan. She was too old and her credit score wasn't there. I'm sorry, I get emotional about this. She paid the car in cash, and the finance manager sold her gap insurance. Not only did he sell her gap insurance, completely ripped her off, gap insurance usually about three to $500. Charged her $2,800, and he completely bragged about it and said that he raked her over the coals. The nicest lady in the world.
I was like well, that's enough. I got extremely mad at the dealership, slammed the finance office and started yelling at the finance manager. Lucky ... I mean it's amazing I didn't get fired.
Dean: Yeah, I bet.
Isaac: That sparked a desire, drive in me to want to completely change the industry to the most hated and distrusted to one where people can actually walk into a dealership, know what they're doing, have an enjoyable purchase experience, and not get ripped off.
In my research, I stopped at well over 100 dealerships as a secret shopper and uncovered what I believe is every single scam, trick, and con that's out there. So I wrote a book on that, called Dealer Defense. And I didn't stop there. I interviewed thousands of clients, I would say probably literally two to 3,000 clients and asked them what do they not like about shopping for a car? And every single one came up with the same five things that I mentioned yesterday.
Dean: Maybe share some of those, because this will be new people that wouldn't have heard what we were talking about yesterday. You've found that these people, there's five things that they hate about buying a car, or that they're most concerned about?
Isaac: Correct. The number one thing that really came up is the lack of transparency. The false advertising, we'll pay you $2,000 more for your car, et cetera, which they're really just taking off the price of the new car or overpricing a used car on their lot so they can legally quote you a $2,000 value than what your car really is. So, lack of transparency. They also hated the high pressure of the back and forth negotiating nonsense just to feel like they got a fair price.
They hated the time it took at the dealership, usually three to five hours. They feel it could be spent, a better time, instead of ... Part of it is because the salesperson never listens. They're not taught to listen. They're taught to sell them today on a car, doesn't matter what, just push them into a car, the feel of the wheel is the seal of the deal, et cetera. So they hated how long it took, which leads me to the next thing of they hated that the salespeople didn't really listen to them and help them to find a car that actually fits their needs and wants based upon what they're telling the salesperson.
And the last is ... I'm sorry.
Dean: It's the last one.
Isaac: The last one. I did the same thing yesterday. I basically designed a mission statement. It's to provide a totally transparent, 100% pressure free shopping experience that's entirely focused on you and your needs. They wanted to get a fair price without having to go through the hours of negotiating, high pressure nonsense. So that was the fifth.
I wrote a book, the Car Shopper's Companion, which I told you about yesterday that basically addresses these five things. What to look for when you're buying a new or used vehicle, to make sure you don't buy a problem waiting to happen, three steps to make sure you get a fair price on a new or used car. Lease, most people don't understand the leasing. They completely ... They think it's a form of renting, which is nothing is further from the truth. And so called gurus out there on the internet say the same thing. If you lease, you always want to buy a new car, which is false. Leasing provides five unique benefits and four advantages that financing can't even touch. And that's even for people who want to travel well over the normal mileage and keep their car.
I wrote that book, and ... Also a checklist. Something that they can walk into a dealership and actually have a step by step checklist that walks them through ever single step, from selecting the right vehicle, because if they're overwhelmed with so many different choices they don't know how to make the right choice. And they think they have to drive every car out there. But the truth is, studies shown that one out of five people who buy a car, within days or weeks they feel like they made the wrong purchase decision.
Dean: Right.
Isaac: And then one out of-
Dean: And then it's too late.
Isaac: Yeah. And one out of three within months. All this shopping around for a car, which they think they have to go through, doesn't get anywhere. It doesn't help the person actually make the right choice.
There's seven simple steps basically to selecting a vehicle that not only fulfills all your transportation needs and wants, but also to stay within your budget, and how to purchase it, what's the best method of finance, if you lease, should you ... Traditional loan.
But that's where I'm at. I also developed a follow up series newsletter. Holidays, put together articles for the long term nurture for customers if they don't buy, how to stay in touch with them and provide them with education. I'm almost, I'm probably three months away from actually launching this thing.
Dean: Okay. So who is it that you're going to launch for? Are you going to launch this to car dealers or to the public, or who is it that you're trying to be a hero to?
Isaac: Well, it's going to be a hero to both the dealership or the consumer, because everything is either one sided towards the consumer, where dealerships should be a 501c3 corporation and give the car away or all kinds of nonsense that a business can't do and stay in business, and then on the other end the dealer thinks that they should rip the customer off, buyers are liars, and there's nothing that actually joins the two together to have a mutual agreement that's beneficial to both.
Dean: Yeah. When you see what's happening now, when you see what's actually going on in the world, and what the internet has done to the auto industry, it's really addressed a lot of those things that people are concerned about as far as transparency, because they have access to more information. It's a lot like the real estate industry in a lot of ways, in that 30 years ago, the only access to information that people had would have been going into a dealer and seeing what the prices are or maybe seeing the blue book value to see the things.
I actually had heard something that the blue book was actually invented by car dealers. Is that true, or do you know that story?
Isaac: I don't know if that's accurate. I know the auto lease guide was. It was designed by somebody who sold Oldsmobile.
Dean: Hmm. Interesting. Yeah, I guess that the thing that I look at for this is, okay, if we're going to say that your intention is to model the eight profit activators for the car industry, for the auto industry, that comes down to what is going to be the process here? That you get this in front of the dealers, for one thing, and what is it actually going to do for them? When you start thinking about this, if the focus is going to be on the dealers, then the idea is going to be what is going to be the dream comes true for them? What is it that relationship with you or your system or your materials is going to provide for them? How is this going to ... What's the outcome that somebody's going to have that you're able to create for them?
Isaac: It's going to be beneficial on several different levels, the biggest one being ... The way a customer shops for a car right now, and most customers, they shop around trying to find the cheapest, dirt cheap price out there. How can I get the cheapest price? They don't look for the other things that really matter, like it's so easy for finance people to completely trick customers all the time and side with the back end office in order to make additional profits selling additional products like gap insurance, Scotch Guard, other things that, yes, some of those are beneficial, but some dealerships don't even apply it that they need to do that in the back end just to make a profit, because on the front end a lot of the new cars are sold at a loss. So it's going to help the dealerships get a higher quality customer, one that is more concerned with the overall value that's provided to them instead of the cheapest, dirt cheap price. They're going to be different when they come into the dealership.
I know it's kind of hard to believe, but you can't understand it unless you sell a car. When a customer comes in, they could be the nicest customer on the planet when they ... 364 days of the year they could help out in the neighborhood, help out with children, senior, elderly, everything. They come into the dealership, they think they have to raise their barriers, lie to you to protect themselves.
Dean: Oh yeah, yeah. Mm-hmm.
Isaac: ...and behave like a jerk because of the atmosphere or the perceived vision that the dealerships have because what they've done to themselves. So it'll get a much higher quality customer, one that actually allows you to help them, because they view you ... "Wow, this place is honest, it's trustworthy, I can actually work with them and not have to be scared about being ripped off."
It's also going to help with repeats and referrals by having that relationship with the customer so they give out referrals, they come back to buy another car, or if they're even looking for a different brand, a lot of the pre-owned vehicles, like a year old, the dealership ... What I've noticed is the customer really likes you, even if they're looking to purchase new they'll buy a pre-owned from you, the same year, with 2,000 miles on it just to do business with you.
Dean: Mm-hmm (affirmative). Yeah, I think there's certainly an element of that they're not going to do it just to do business with you. They have a need for a car. I think that's really the reality. It's all going to be driven by somebody's need. If they need a car, and that they're going to maybe do business with you. But it's all going to be driven by selfish desire. That's what everything, the whole world revolves around that, right?
Isaac: Correct, yeah, so they-
Dean: Yeah. So tapping into that is really the thing that is the best case scenario for everybody, is you can't go wrong making things play into what somebody really wants. And there's a way of ... I'm noticing that there's a difference between just doing it and doing it in a way that they're telling you that they're doing it, but it feels more like a technique or a tactic when you're telling people what you're doing. It's almost like showing the math, in a way, is very different. Yesterday ... And when you're saying we were talking yesterday, just to let people know, that was in the context of a member call for our email mastery program. So we had a shorter conversation about some of this yesterday. That's why when you're saying yesterday, that's what you're talking about.
Now, as I'm thinking about it right now, these things that you're saying, addressing these things, we mentioned yesterday how I look at things like CarMax, for instance, and how they are addressing these things in the auto industry. When you look at how they - excuse me - go about it, that lack of transparency is addressed by their standard pricing, their sticker pricing. There's no negotiation because the price that you see on the sticker is the price that you pay, that because of that, you can walk in, pick the car on the lot, and get the one that you want, and know that there's no trickery, and that you don't have to feel and second guess that you actually got the best price. That you feel like everybody is on a level playing field.
It seems to me, as an observer, that that's why that sort of model seems to be a little ... Getting down that road. That seems to be the way things are going. And I'm speaking completely as an auto industry outsider, an observer of it.
Isaac: Yeah. Yeah.
Dean: So I wonder if the thing is that addressing those things rather than trying to tell people what you're doing kind of thing, there's something about that, that that's a little bit more authentic.
I did have a CarMax experience where I was selling. I had a Mercedes SL500, and I was selling it, and I had an opportunity to sell it on my own, I guess, what would be ... If you look at the blue book value of cars, you've got the retail value, and then you've got the trade in value, and then you've got the private seller value, I think that's the way they organize it, that you can ... If you're a private seller in a situation, you're gonna be able to get more money than as a trade in kind of thing.
Isaac: Correct. Most of the time, yeah.
Dean: Yeah, yeah. So what I looked at was, and I think that the numbers at the time, the car was like four years old, but I think that the top, the private sale value was like $37,000, and the trade in was like $30,000, or something like that. And I went into CarMax, and the actual, the price that they gave me, literally in 10 minutes ... You drive in, you put the number on the car, whatever, they come, they do an inspection, take it for a little drive, and 10 minutes later you have an offer. And they offered me, I think it was $34,000. It was more than the trade in value of going to a regular dealer, and less than what the private sale was. But it was two or $3,000 less than what the private sale was.
For me, being able to just leave there right now, close that window in my mind, and not have to do anything else about thinking about the car was worth that to me. It was the smoothest experience. I've only ever spent that 30 minutes in a CarMax situation, total. And maybe it was 45 minutes all said and done between the time that I went in and they made the offer and I accepted it and I left with a check, and never thought about the car again. That to me was a really good barometer of what's actually coming right now, like what we're at in the ... How that world is working.
Isaac: You're right.
Dean: And I imagine it's the same if you're going to buy a car, right?
Isaac: It's starting to try to get a little bit more transparent, except for most dealerships do not participate in that. They're not a one price dealership. And even those that are one price, there are negotiating aspects of it that you can do that most people don't know about. But the thing with CarMax, or every other one price dealership, is they only address two of the five issues. They don't address the other three that people want, and they have no desire to do that, because they won't make the extra profit in the back end off of the customer. They don't know how to do it.
Dean: Right. You mean that they're not looking ... They don't ... I don't believe, I don't know, but they don't have a service department, they don't do servicing or anything like that?
Isaac: No no, when you're talking about front end or back end in regards to car sales, is front end is the vehicle, is the actual purchase price of the vehicle itself, the back end is arranging the financing, the extended warranties, maintenance contracts, et cetera, for additional products that you can purchase on the vehicle, which nobody really addresses for the back end.
Dean: I gotcha. So CarMax, they must offer financing there though, don't they?
Isaac: Yeah, they do. And I've been in a few CarMaxes. And of course they're not all the same, but there are a lot of misrepresentations in the back end to try to extract additional profit out of you. Because-
Dean: So if you're a consumer, is the best way to go about this to arrange your financing outside, to get the best ... Say, "I'm going to buy a car," and get all pre-approved and get your approval up to that amount, and then go negotiate the price of the vehicle as if you're buying it for cash?
Isaac: Yes and no. What I mean by that is before you go into a dealership, you absolutely, you want to know what you're getting financed for, because you want to know if the dealerships are actually being honest with you as far as your financing rate, because dealerships make additional profit by holding points on the loan, and they are legally allowed to hold up to three points, meaning if you qualify for 3.9, they could give you a 6.9% interest rate. All that extra is profit.
So you do want to arrange your own financing before you come into a dealership just to make sure that the dealership is honest. Now another thing that a lot of people actually get hanged up on is that they have such distrust for the dealership that they're not even open to the dealership arranging the financing. But if you're dealing with an honest dealership, you're going to, because of the tremendous amount of volume we provide banks and credit unions, most of the time we're able to give you a much better rate than even the rate that you got from your own banking if you banked there for 20 plus years.
Dean: Okay. Got it. So how does this then translate into how do you find ... Because ultimately the end result here, the outcome, has to be for a dealership, that more people are going to buy cars for them, because it costs them less to find a buyer, and to monetize that buyer over the lifetime of the relationship.
Isaac: Absolutely. Otherwise they won't be interested in it, because it's all about what's in it for them. How they attract customers is by giving out that free book, which starts into the relationship, and educating them on how to shop for a car, and providing an irresistible offer of a free vehicle discovery and trade analysis session, and if it isn't everything we claim it to be, we give them $100 cash whether they buy a car or not to help alleviate the risk of actually coming into the dealership if they actually have the intention of purchasing a vehicle.
Dean: So they pay somebody to come in? How am I ... Yeah, walk me through this, if I'm a car dealer? The client you're looking for, am I a dealer or a sales associate?
Isaac: Well, eventually, this would be targeted to dealerships. As soon as I have it finished I'm going to approve some case studies in different markets. But this will be targeted towards dealerships as the product when it's finished as a complete marketing system, which would be either the GM or the GSM. I would provide it to them free of charge, set everything up for them the first 30 days, and then I would charge per unit sold based upon the system for them, whether it be a referral or whether it be a new customer.
Dean: Mm-hmm (affirmative).
Isaac: So it's completely risk free for them because they're bombarded by advertising places that never fulfill up to their promises. So it would be offered to them free of charge. I would track every customer that came in either through referral or new sale. And the industry average is five to $750 of what they spend in ad spend in order to acquire a new sale.
Dean: Okay, that's what I was going to ask is that's the happy number for a dealer, if they can say, "We spent 500 to $750 and we got a sale for that."
Isaac: Correct.
Dean: Okay. That's good. Now we got something to work with here. Then we just back it out of how much does it cost to do that at scale, to do that as a system. So we've got ... It's almost like, I always talk about how the before unit, what we want to think about it is as a separate division that is a supplier to the during unit. So if you say the dealership there, that this before unit, even though it's part of the dealer and being run by the dealer or on behalf of the dealer, that it's almost like what we're looking at is that they can have a vending machine and say, "I want to get a new car buyer and I'm willing to pay $750, so here's $7,500, send me 10 of them this week." Right? That's really what the predictability that a dealer would love, if that was available to them.
Isaac: Correct. Yep.
Dean: Okay. So now, then it becomes do you have that capability? Can you deliver that?
Isaac: I don't know yet, because I've never made it live. I'm going to launch it live at the end of the year as a case study for myself, and then also my business partner in Colorado, and proving it in two different markets, and then okay, here's the results off of it, here's repeats, referrals, this is the ad sources or the distribution sources that we used, and these are the results that we get off of it.
Dean: Right. So now when you're ... Are you acting as a car sales associate in your testing, you and your partner, or are you acting in conjunction with a dealer?
Isaac: I'm an auto consultant for dealerships.
Dean: Okay.
Isaac: Same with my business partner.
Dean: Okay. So that means, right now you sell cars to people. You help people find cars, individuals.
Isaac: As of Monday, no, because I quit ... I took the rest of the year off, to the end of the year, to finish this all up. But yes, I will be selling automobiles.
Dean: Okay, great. And that's really the greatest thing is that you've got to be able to create ... You've probably heard me talk about the idea of your scale ready algorithm, that that's what you're looking for, is you've got to be able to have a prototype, be able to point to something and say, "This is how it works. This is what it looks like." Have you read, by the way, the E-Myth?
Isaac: I have, but-
Dean: By Michael Gerber. Okay. I like to have people start at that level for sure so that you understand this idea of the duplicatable model. Okay. So then what are you proposing here that if you start out as the prototype of this, the system, what are you looking to test and prove first?
Isaac: I would ... Well I think the most important thing, like we talked yesterday, is continuing the client relationship after the sale. So many dealerships completely forget about their existing customer and just scream "Next" onto the next one, when they could be orchestrating referrals and then also repeat business from that existing customer three years, four years down the road.
Dean: Yes.
Isaac: The first thing I would like to prove is have an effective referral program. There is not a single effective referral program that I have seen in hundreds and hundreds of different dealerships. Every dealership will say they have one on the surface, but when you actually dive deeper than that, they don't have anything.
Dean: Right.
Isaac: I want to really focus on orchestrating referrals, is number one.
Dean: Yes, okay. Here’s the thing. This is really interesting. Is that that's going to come largely from the sales consultant. That's really where that's going to come from on the front line, because it's going to be one person referring one person. If you really uncover and look at the mechanics of how the referrals actually happen in a car dealership, what does it look like? Have you done any kind of analysis of that or done, had some experience of that? How long have you been selling cars?
Isaac: Six years.
Dean: Six years. Okay, so in that time, you've gotten referrals, I'm sure.
Isaac: Oh yeah. At one point I was only working off of referrals.
Dean: Okay, great. So when people would refer, what was the scenario? How did that happen? Describe what, when the last ... The one that comes to mind. This particular situation, what happened? How does it unfold? Do you get a call? Or does somebody walk in?
Isaac: The number one reason why I got referrals, of what I heard from almost every customer that came in, is they told me that this was a different kind of car buying experience. That was the number one way. The way that I got referrals, no, I didn't orchestrate them. They were either passive or-
Dean: Reactive.
Isaac: ... reactive referrals. It would either be a phone call from a customer saying, "Hey, I have a friend who's looking for a car," because I'd follow up with them in 24 hours, 72 hours, and then 30 days, and then during that time at the 72 and 30 day mark, I would ask for referrals. I would get referrals that way. And then I would also have a customer show up at the dealership asking for me and say that so and so referred them.
Dean: uh huh. So people, they'd say, "Yeah, go over to the dealership and ask for Isaac when you're there," and that's how, people would walk in and say, "Yeah, I was looking for Isaac," or, "Is Isaac there?" Right?
Isaac: Correct, yep.
Dean: Okay. And would that happen more often than they would call you ahead of time, or email you.
Isaac: No no, they would just show up. They wouldn't call or email me.
Dean: Okay. Would you say that was predominantly how it would happen? That they would walk in and ask for you by name?
Isaac: Yes.
Dean: Okay. That's awesome. That's a good ... That says a lot about the trust that people have with you. Now when you look at it, no matter what, the ultimate scale ready unit that we're looking at it just what you're describing. One guy, you, as a sales consultant, with a relationship with the ... I asked you yesterday how many cars a typical dealership would sell. You said typically around 200 cars a month would be what a typical dealer would sell, and that what I didn't ask was then what a typical sales consultant would sell in a month. How many cars would one person sell?
Isaac: They say the industry average and how dealerships actually sell their staff is if they sell 200 cars ... Well, I'll do simpler math. If they do 160 cars, they want 20 sales people, so eight per sales person, which is a ridiculous low number. But that's about the average.
Dean: That's about the average. So the average salesperson is selling two cars a week, basically. 100 cars a year. Is that about right, what they're looking for from that? That makes sense.
Isaac: Correct.
Dean: Okay. When you look at this, is that something that most ... That's the average. What would be the scale really? I mean, you're going to have people who are selling ... What would a really strong sales consultant sell in a month?
Isaac: 20 plus.
Dean: Okay. There we go. Your top performers are going to double that, and your weakest performers may sell half of that again, right? Half of the eight that they're looking for.
Isaac: Correct.
Dean: Okay. What we're really looking for then is if you're looking that somebody is selling 100 cars a year on average, that person, and if we look at the average, you told me yesterday the average was 36 to 39 months that somebody's in a vehicle, that over that period of time, a consultant who's been at it for three years could have sold 300 or so people. Right? That there could be, if somebody's three years into their consulting career, that they would have 300 cars on the road that they helped people buy. That would be the peak before ... If we started today, the person I sold on a three year lease or a three or four year financing, they're going to be in that car and then three years from now, they'll be the first person that's graduating. Or what do you call it in the industry, that somebody has gone through the whole term? Coming to term, or what do they call it?
Isaac: Loan maturing or lease maturing. But most of the time people don't wait their full term of the loan, so it's just the vehicle exchange program.
Dean: Okay, perfect. So when you look at this ... That's three years. So that person, first of all, has to generate enough business to get those people. But where we look at, I mentioned yesterday, starting with the after unit as the four of this, that you're looking at nurturing those relationships, to have a measure of return on relationship. So when you look at it that if somebody's got some number of people, and if ... Car dealer, same as sales consultant, same as real estate, I would look at them picking their top 150 sphere of influence too that they have, the people who know them already, that if they did have a car need coming up that they would consider working with you to buy that car.
Starting with those people, I would be constantly monitoring that return on relationship, and know what that number is. So if I'm starting out and after the first year I've got 100 people, I've helped 100 people buy a car, so that means that there are 100 people out there right now driving the car that I helped them get, plus I've got 150 people that I know that I have a relationship with. And by relationship, I mean that if you saw them at the grocery store, you'd recognize them by name and you'd stop and have a conversation with them. So I've got, potentially, 250 referral sources out there right now. I've got 250 relationships.
What I would be looking to establish is the metric of return on relationship, meaning I would look at it that, let's say that in that second year, over the next 12 months, that I got 25 referrals over the course of that year. That would be a 10% return on relationship. If we look at the 250 people, generated 25 car sales for me, either directly or one of my friends or somebody I know buying a car or referring me to somebody who bought a car. And you look to establish what the right number is for that? If you're going to go out into this environment, the thing that's very helpful for you offering a system that helps people generate more business is to have some what I call proprietary metrics. There are not probably many people talking about that as a metric ,specifically return on relationship.
It's one of those things that if you can show, like I can with a real estate agent, that the gold standard, what's a reasonable expectation of what we're able to create for people is that we can generate a 20% annual yield on their relationship portfolio as a real estate agent, that that now, if we take somebody who's not proactively focused on their after unit and show them what happened in the last year, if we look at, out of the 100 people that they sold cars to how many people were referrals or direct business from somebody in your sphere of influence, and if that number was 10, let's say, that their return on relationship would be something less than 5%.
To know that if you did it, lined up each of the sales consultants in a dealership, if you've got 20 salespeople, there's gonna be somebody who's got a higher return on relationship than somebody else, but nobody's probably measuring that.
Isaac: Well, yeah. Nobody actually is effectively registering referrals or have an effective referral program. What me and Adolfo ... Adolfo's selling right now. But when I was selling cars, on average it would be about one out of every four people would send me another referral within that year. Same with, Adolfo's about 50%, so if he sells two cars-
Dean: That's awesome.
Isaac: ... he'll get a third car from that referral within the year. Which I think is a really low number, because I think it could be almost one to one if you really had an effective referral program.
Dean: Right. And that's part of the thing, right? When you look at it, this is why dividing the business into those three divisions, the before unit, the during unit, and the after unit, that's why when you're focused on one of them at a time, you can really go all the way and see how high is high with this. How high ... When you're saying, like Adolfo, if he's getting a 50% referral rate, that's pretty incredible. Some of it, I would attribute, I would look at the difference in the first 90 days I would attribute in the during unit, which you have a metric as well, right? When you look at the during unit, that one of the strategic objectives is could we get a referral before the first 60 or 90 days is up. That would be one set of strategies. But then after you're into the relationship period, I would say after that 90 days, then you're into the after unit.
Part of your whole strategy, part of your whole architecture of this, is to decide where are the boundaries. We call on the real estate side, we're 30, 60, 90 days after the sale are profit activator 6, which is still part of the during unit. It's providing after sale service. And our objective in that of course is to get a referral, and we call that during the transaction.
Isaac: Exactly. Exactly.
Dean: So, I love it. I mean, that's kind of ... I would look and monitor what is Adolfo doing that is repeatable? Documenting. Getting into the situation where what could you now, because here's the thing, is once you get the actual recipe for what he's doing, the next thing that you have to be able to do is now duplicate it in somebody else once.
Isaac: Yeah. Yeah, which we have every single stage of the eight profit activators individually have spent a lot, a lot, a lot of time on this. A lot of time. So we have scripts and everything on how to call the customer.
Dean: Yeah.
Isaac: Our after sales service is the first 30 days after the purchase.
Dean: 30 days. That makes sense, because that's ... It's reasonable that somebody's going to... They're not going to spend months and months looking for a car like they would look for a house. It's a shorter period. 30 days in that shopping experience and 30 days after, that makes total sense. Like you said, that 24 hours, 72 hours, and then 30 days. That's a good thing. If you get somebody instituting that system as a process, that's going to be a nice ... That'll be a fun way to document.
That becomes then your proof that you show ... If you go into a car dealer and you say, "Listen, job number one here, we're going to get you an ROI on every dollar that you spend on implementing this program, and the first thing we're going to do is focus on your referrals and repeat business." To show them that typical dealer, you're building case studies, both on an individual sales person, which you can then extrapolate times 20 to what it would take there, what an impact would be ... If you're looking at it, if the typical dealer, when you uncover everything and you do the measurements, if you find out that across the board, their average return on relationship among their 20 consultants or salespeople or 5% or 10% or whatever it is, and then you're showing Adolfo and the 10 people you've implemented this with are at 50%, that shows that that's an amazing impact.
Because most of the dealers are thinking again ... And that paves the way and builds up the war chest for now using that money, the surplus money that they're having, because those sales are going to cost way less than $750 that they're willing to spend.
Isaac: Yep. Yep.
Dean: Right. So now you take that excess money to create the war chest to now put into the before unit to find people for less than $750. It's pretty interesting, actually.
Isaac: Yeah. Exactly. And to give you an idea, dealerships have such poor tracking ability of referrals that they would happily pay ... They happily pay five to 750 to acquire a new customer, but then when it comes to referral and paying $100, a lot of dealerships have the issue of paying the $100 out for the referral even though it's one fifth or one seventh of what they would spend to actually get a new customer.
Part of our system, I mean, we joke here and we say that we can track a needle in a haystack. We can track everything. We have to show the dealership, hey, this is an actual referral, it didn't come from anywhere else, this was a referral so that they can happily reward the customer for their efforts. But again, that's not why people refer, like you mentioned.
Dean: Right, exactly, yeah. To thank ... There's a difference between thanking, which is wonderful as a bounty or incentivizing kind of thing, a headhunting. It's better as a thank you to really encourage that. But the reality is that most people, because it's such a headache, and because it's an industry that's so fraught with the opportunity to get ripped off or taken advantage of, that it's ... There's a built in incentive that when you find someone that you trust, that you want your friends to get that, even just to avoid being taken advantage of.
Isaac: Yeah. Yeah, exactly.
Dean: So it's built in. There's a built in motivation for us to look after people. But it's exciting that you've got this framework of the eight profit activators really completely fits with the car buying experience and the relationship of it. It's even more important now as it's really threatening to become more Amazon like in a way, literally where Amazon could just deliver the car on a flatbed right to your door without you ever having to go into a dealership. That's where the relationship is what's really going to matter.
Isaac: Exactly, Dean, because unless dealerships really make a drastic change, people will only see dealerships as the showroom. They won't use it to actually purchase the vehicle. Because a vehicle is one of those things that you need to experience and feel before you actually buy it-
Dean: But once you experience and feel it, this is where the danger is, is that once you experience and feel it, a Toyota Camry is a Toyota Camry is a Toyota Camry. So if I know that I want this color and this interior and this option package, that that very instantly is going to be able to go online and see that there are 147 of those cars within 150 or 500 miles of me that could be delivered right to my door here. That that's really the thing, the actual car itself is a commodity.
It's like what happened with Barnes & Noble, that often, and I've done this myself, that you go to Barnes & Noble, and I'm looking through and I'm finding books, and then buy it on my Kindle right there. Unless it's something that I really wanna have in my collection. But you know that happens. We're equipped with the information.
But the good news is that the car is going to need to be serviced, the tires are real and are going to need to be replaced, that there's any manner of things that could go wrong with the vehicle, and those are all things that are going to be consumed on a local basis. It's not going to help you to get a better price on something from a dealer 500 miles away to ship it to you, but then you don't have a relationship if anything, if you need anything for it, you know?
Isaac: Exactly. And I've seen myself with customers before in the past that they will actually pay a higher price than another dealership down the road just because what you're able to offer them and the experience they have of working with you. It's happened to me numerous times when I was selling.
Dean: There's a great article, and I've talked about it on the podcast, that there's a great article that was in the New York Times called the Tyranny of Convenience, and I would recommend reading that and listening, letting that sink in, noodling around on that thought. Because that's really what is going to drive everything is being able to make car ownership as easy as possible. Almost like offering concierge like service for everything to do with the car. The whole experience, not just that moment in time where we're making the transaction of it. But the actual almost like managed car ownership. There's value in that. You know?
Isaac: Yep. And that's-
Dean: Experiences. That's really the thing.
Isaac: That's where smart car ownerships certainly have newsletters designed already that are designed to help them get maximum value out of their vehicle, trouble free life, and our tips to drive safer in all types of weather conditions. Everything car related to help them get more enjoyment out of their vehicle. So I have that already. I have most of everything. I think I just tend to sometimes overthink things.
Dean: Yeah, just like we build the order and start launching stuff. Are you coming to Orlando in October or December? I forget.
Isaac: December.
Dean: In December. Perfect.
Isaac: Yeah. It'll be December.
Dean: That'll be a great opportunity to really lay it out and build a blueprint for it. I think there's a big need for it for sure.
Isaac: Oh yeah, absolutely. Absolutely.
Dean: It's exciting. Well, I really enjoyed that.
Isaac: Yeah. The conversation was ... It's like wow, I already know most of this stuff. It's like hey, why ain't I doing it yet?
Dean: Right.
Isaac: I guess it was very reassuring. It's like, well I'm on the right track. Why don't I implement it already instead of crossing all my T's and dotting all my I's and making sure everything's completely perfect before I do.
Dean: Yeah. Well part of the thing is, that's why starting with one. You want to make sure that you are starting to implement even at that core level, no matter what. If Adolfo's going to be the one, if you're stepping out of the actual active role, then Adolfo's going to stay in that role, then it's really going to be about documenting everything that you're doing. Because in your before unit, it's really going to be about creating the ongoing communication with the salespeople and the dealers that's going to educate them about all the things that you're doing. Because you're in the middle here, you've got to have ... You're applying the eight profit activators on the street level to one car salesperson applying these things to sell more cars, but then you're also applying the eight profit activators to your own business of finding car salespeople and car dealers who want to apply all of these things. You've got both of it there. And that's really, we didn't really talk about that part of it. But that's where it's really going to come down to building a separate blueprint for that, for finding the dealers and the salespeople.
Isaac: Yeah. I've never even done anything with that yet.
Dean: Yeah.
Isaac: Which, I know I do, but I have to finish developing the system. The way the system will work is once it's implemented for the dealership, the salespeople won't be required to change anything except for the way they sell. Which, you can count on them to do that.
Dean: Yes, you've heard me say that before. If the thing that you need to count on somebody to do is nothing, then you will get 100% compliance.
Isaac: Exactly.
Dean: Everybody's willing to do nothing. Everybody's willing to change nothing. That's great.
Isaac: Exactly. So it'll be completely automated on everything but the during unit, which-
Dean: Yeah, that's right.
Isaac: Of the face to face.
Dean: And everybody gets excited about that. They're happy to, if they have somebody walking in at 10 in the morning, they're happy to take another one at noon, and another one at two.
Isaac: Exactly.
Dean: Yeah. That's great.
Isaac: Exactly. Exactly. Well, thank you so much-
Dean: It's all very exciting.
Isaac: Where would you recommend to start?
Dean: I think, really starting to look at this as you got to get very serious about documenting in a way that you're creating it like recipes for what Adolfo's doing, and then picking one person who's not Adolfo and observing, sharing that with them and observing how they actually are able to implement it and get that same result. The faster that you can get started with that, the better that it's going to be. Even though you're going to go to the masses with this, all the dealers, it's going to be important that you can point to one person that from a standing start was able to go that way, or one dealership that's not your dealership or Adolfo, that you've got one dealership that will let you install that. But it has to start with the sales, it has to start with one, the unit of one, down to that scale ready algorithm. You got to crack the code for one salesperson to double their business. And that's where you're going to get scale, then, is scaling that system.
Isaac: Okay.
Dean: Yeah. And I know when you've got big plans and you got big vision, it's like ... We did an I Love Marketing episode with Daymond John about his book The Power of Broke, and we talked about that idea of everything has to start with one core thing. He started selling hats on one corner in Queens, and that was what built the empire. The same thing, if you're going to help all the car dealers in America, you've got to be able to help one car dealer, and one car dealer with one salesperson. That's the way it has to go.
Isaac: Okay. That makes sense.
Dean: Yeah. Awesome, well I'm excited. I love talking with you, I'm looking forward to seeing you in December, and keep me posted. We'll be working together in email mastery too, so a couple of weeks if you've got something else that you're implementing already, we'll be able to stay connected that way too.
Isaac: I know I will, because I'd like to talk with you about the before unit.
Dean: Yeah, perfect.
Isaac: All right. Well thank you Dean.
Dean: Thanks Isaac. I'll talk to you soon.
And there we have it. Another great episode. I loved having those conversations. I think Isaac's got something that's got some real traction there. I always enjoy talking with him. I get the opportunity to work with him in our email mastery program as we're creating a case study out of the things that he's working on. And I'm looking forward to being with him and spending some time in December at a breakthrough blueprint to really lay out the action plan to take this model and march it across the country, and take over the auto industry.
I think Isaac's got a real passion for this. He's certainly put in a lot of time and thought into his approach. Sounds like what they're doing with he and Adolfo is working. Adolfo seems to have a very high referral percentage. If they can transfer that to other people, that's going to be a wonderful outcome for everybody. So I look forward to seeing what happens over the next 12 months, 24 months, 36 months, and see if we can help Isaac transform the auto industry.
Isaac: If you'd like to continue the conversation here, just go to MoreCheeseLessWhiskers.com. You can download a copy of the More Cheese Less Whiskers book. If you'd like to be a guest on the show, you can click on the Be a Guest link. Tell us a little bit about your business, and then maybe we can get together and hatch some evil schemes for you.
We talked a lot in this episode about the eight profit activators. And an easy way for you to see how the eight profit activators are affecting your business right now is to go to ProfitActivatorScore.com, and take our online scorecard. You can go through and find yourself on each of the eight profit activators, and you'll find that even having that awareness of where you are in the grand scheme of things, you'll be able to identify where the opportunities are, and where the weaknesses are. Find out what's helping grow your business or slow your business right now. So you can do that at profitactivatorscore.com.
Other than that, come back next week. We have a whole new episode for you. Have a great week. I'll talk to you next time.