I am sitting here reading all of these responses and I can't for the life of me figure out why you would let a third party, much less a third party like Edmunds have access to your DMS.  For a few internet leads.  Really?  How about this do marketing, prospecting, SEO, PPC if you need to and leave these parasites like edmunds, autotrader alone.
If you are a dealer go into your DMS and pull every deal from the internet and then compare that to deals from Radio, Direct Mail, referral, walk in and prospecting to see what your true ROI is.
Nice article Jeff.

Found this on KBB after digging further, "The Fair Purchase Price is not a number influenced by dealers or manufacturers -- it is actual transaction data representing a range of what people actually paid for specific vehicles."

They don't, however, state where they harvest this data from, but I think we know.

This question has caused us to review all of our existing agreements with vendors, and it's frightening what we're finding.

I'll never just glaze over the boilerplate again.  It's amazing what these guys slide under our noses, fully expecting us to do exactly what we've done...ignore it!!!!

Do I really need a 3 page contract to buy a vendors service?  I do if they're asking for the keys to the palace. 

Another question to ask is on KBB's "Fair Purchase Price".  I've gone over our CDM agreement and they state quite clearly, "CDM agrees to use the Sales Transaction Data only to match Sales Leads with transaction/purchase activity."  That's not to say somewhere else in the 4 pages of Ts and Cs that they don't have another use layed out. 

So this begs the question, where is KBB getting they're numbers from?  BTW, they have a Prius II listed in the middle of True Car and TMV at $24,766.00.

true car rocks.......just picked up a silverado at 1k under dealer cost.  didn't even invlve true car and made some calls myself seeing who wouldk match the price....you internet fellt guys hate me....LOL

Shame on me.  I've signed up for both of these companies at one time or another over the years.  In my haste to get leads and sell cars I just glazed right over the boilerplate.  Needless to say we're done with both.

Reading through these posts has raised a couple thoughts.

1)  Who's auditing these companies to make sure they provide accurate data in the first place?  What's to keep TrueCar or Edmunds from juicing the numbers?
 
While it's a slightly different model, Costco and AAA's new online modules have done the same thing.  Month after month they keep telling us we have to come down on our pricing in order to get the requests, because, "...your competitor down the street is at $1100 back on altima, and you're only at $600 back."  One of these companies we caught with their hand in the cookie jar. 

At some point they'll be competing to see who's site shows the lowest value.  Currently, TrueCar says a 2011 Toyota Prius II Average Paid is $24,993.  Edmunds TMV says $24,480.00.  I don't know what your customers are  saying in your local market, but $500 is a pretty substantial difference.  How long will it take for the newbie on the block to realize they need to take on the big dog, and jockey the pricing accordingly.

2)  Let's follow the logical conclusion of True Car and TMV.  The consumer sees the MSRP, the Invoice and the "TMV".  Let's say today the TMV is $500 over invoice.  How many of your internet customers are going to be good with paying that $500 over?  None, they're going to want to be somewhere under this number.  So 150 of these models are sold in your district this month, and the TMV adjusts.  Now you're $400 over next month.  Before you know it you're $500 under, and only picking up $100 of holdback....and so it goes.
 
If you're really looking for opportunities to sell cars check out companies like AutoRevenue and AutoAlert.  These companies are using our data for us, not against us. 

As a very small part of a fairly large group, I was shocked to learn that there was a DMS polling component to this deal (issue was never discussed at my humble level).  I mean, why would there be?  We're paying for a territory and for leads, right?  After reading through this for a few days, and seeing only one weak explanation as to WHY Edmunds describes this as a value to dealers, my question is still:  WHY?  Are we really that desperate for those leads.. especially these noted higher-funnel leads?  But aside from that....  If I was a dealer, or owner -- and I'm not, please don't misunderstand -- but if I was, I would probably realize that my database is a very, very valuable entity.  (Anybody disagree?).  So if someone comes to me with a deal where I'm going to PAY for a territory and leads, and I'm also going to GIVE them my precious data, at the very least (after I'm done scratching my head at the utter audacity of the proposal), I re-negotiate.  Again, I'm not an owner, but if I go to bat with the notion that MY DATA is more valuable that THEIR LEADS, perhaps I get a favorable outcome.  We have to remember that Edmunds has no magic wand -- there's lots of people on lots of sites, and frankly I've never heard of a consumer doing 100% of their research and shopping on Edmunds.  In other words -- if you're a good dealer, competitive, reasonable marketing mix -- you'll be found.  We're paying them, AND giving them our data... wow.  I don't think that's the type of negotiations that have kept the T3 space "strong."  Edmunds has to be laughing all the way to the bank!

Amen Unlce Joe!

Jeff,  I love your article and agree wholeheartedly with your main point regarding our data.  What I have been trying to say, and what I don't think you can grasp until you deal with these customers directly, is that buyers do not care about Edmunds the way they care about organizations of which they are a member.  People trust the NRA, the NEA, PenFed, and Consumer Reports to send them to a good place.   You would not believe the zealous loyalty people have to USAA - the lead source where the highest volume of Zag leads come from.  I have two years of lead data at my store which show that when these people show up, they close at nearly 3 times the rate of manufacturer leads that show. 

These customers are similar to manufacturer plan buyers.  If you were to look at USAA members who know about the USAA Buying Program, I would bet you over 3/4 of them buy from a USAA Recommended Dealer.  We're talking about 8 million proud members here who really like and trust their organization.  No comparison between these people and Edmunds.

Sure, there are other avenues of marketing with better potential ROI, but  most small stores lack the resources to leverage that kind of marketing.  It may not be a bad idea to make these avenues the focus of the next few Dealerrefresh articles.  You've got 4,500 dealers on Zag that need to be persuaded to get off of it.

---BUYER BEWARE!---

Edmunds Pay per Sale is the ultimate "Trojan Horse". It's pretty to look at, but it's built to OWN YOU.

Read this post  "Who is making all the profits?"
Be scared..., be very scared.

You've been warned. The fox is in the chicken coop!

Confessions of a Salesman from Edmunds...

"...every single time I get a dealer/manager on the phone, I hit them with my magic weapon....  'Edmunds is free, pay only for leads you sell'.  And, every time, the phone goes quiet for a moment and then the manager kicks everyone out of his office!   BAM!!!  FISH ON! I got him!!!   The concept is worded to perfection.  It preys on the busy multi-tasking manager and this NO PAY  promise plugs right into their reward system.  I love it!

I set the hook deeper... I walk the manager thru our giant audience stats and paint a picture were managers all over the USA are signing on & loving our FAIR system AND it's scaring the hell out of AutoTrader and Cars.com because of their UNFAIR rates.  Managers everywhere love the idea of dumping AutoTrader and Cars for our FAIR system, and it's only logical, as more & more dealers sign on with Edmunds, AT and Cars will have to adopt our FAIR billing system.

I race past the DMS stuff and I go for the close.

Cha' Ching.  Nuthin' to it. "

The above post is me from my iPhone by the way, just didn't want it to come across as someone else.

Dennis,

Thanks. I fully understand that all marketing isn't for everyone. My true belief after being on all sides of the fence is that this offers great value, especially for dealers who have good processes in place. 

As you know about me Dennis, I'm a big believer that the best way to earn more sales is through follow up and prospecting but sadly most dealers are either to lazy or too ignorant to do both or either well. The best part about that comment is that the only folks it'll offend are the ones that are too lazy or too ignorant to do it.

Technology has made us lazy. Heck, I got asked to speak at an event which I'll leave unnamed, one of the folks on the phone said "what are you going to speak on exactly" and I said: "I'm going to GIVE dealers a 12 month training outline with topics, words and everything they need to grow their sales and profit. This 45 minute session will remind em of why then need it, then show em how to get it, then give the tools they need to get it done." 

The genius response was: "What's that do for you?"
I said: "What's it matter, It'll give me some publicity and I'll worry about me, this industry needs a jump start and if I can help, I'll get what's coming to me down the road."
The response: "I don't see it as a good revenue opportunity for you we need to focus on technology they need to buy for the dealerships...blah blah blah blah..."

We have gone from a: Let's have our people be the best, serve the best, present the best, listen the best, overcome objections the best, follow up the best, prospect the best business model to a "My crm is supposed to do this for me...my lead provider is supposed to do this for me...my advertisers is supposed to do this for me...."weak pathetic entitlement mentality.

In God knows how many years there is something that has never changed:

There is NO TOOL....and there is NO TECHNOLOGY...that will do your entire job for you. If you have salespeople on your sales floor they darn well better be able to serve the consumer better than anyone else or you will lose to someone who can. maybe not today, but tomorrow or the next day. And once you lose 'em to the better guy, they AREN'T coming back.

This Edmunds system is an opportunity, like anything else, to get in front of consumers.

I didn't like 'em when I was a dealer either so I get it but the fact of the matter is this. When I was a dealer I didn't care what I liked, I cared about what the consumer liked and THAT is where I put my stores names and guess what?

We crushed everyone in our DMA in EVERY make. So to me it's simple, cry about what you can't control or take the reigns on what you can

And thanks for being a hard ass all the time when I worked for ya, it's paying off well enough lol

Interesting and disappointing Ralphie since you wanted to e part of this k owing full well all of the program details. I have to say my friend; I expected something more from someone I respect as much as yourself.

Classy response and thanks for the adorable nickname. Apparently you are the one out of a few thousand who just realized both of those facts that I clearly stated.

They pay me.
Consumer is always #1.

However, they didn't know I was responding nor did I do it on their behalf and YES I believe the new program is more beneficial than the old one and has a 30 day safety net.

If you have any intelligent questions rumbling around in there is be happy to answer them thoughtfully but I believe I've used more energy than necessary to respond to your immature post.

Good luck in your career "dog"

"I'd say Edmunds is trying the best way they know how to make it 'safe'
for you as a dealer since UNLIKE THE OTHER GUYS WHO LIST YOUR INVENTORY
they are: Month to month with a 30 day out."

You totally full of shit. Edmond's is not going to do any dealer any favors.They have been talking shit about how dealers suck for years.

"Edmunds doesn't write me any bigger check if they're on or not."
So you admit to being paid by those scum bags anyway.

Dealers stay away from Edmond's and don't pay attention to their paid spokes person Matty here!

Their pre-approved financing is easy to beat.  We've been doing it for the last year.  USAA is not a threat to f&i $ and penetration.

While I agree with you the use of our data for consumer consumption is abominable, the reality is that these buying programs are not going away.  Each month, Zag is adding more and more of these organizations.  If we can't trust other dealers to not price below invoice on these programs, as you astutely pointed out, then we certainly cannot trust dealers to hold firm on not allowing Zag/Truecar to publish our DMS data while still allowing us to participate in their programs.  The two go hand in hand.

If we don't allow access to the DMS, we can't be on their program.  If we don't get on the program, some other dealer will.  Remember, we can't trust the other dealers to hold firm and not participate.  10-15 deals a month for a store that is doing 40-50 cars total is huge and has too much appeal to pass up.  If they don't get the data from us, they will  get it from another dealer's DMS.

I fully support what you are getting at here, but the Zag/Truecar buying programs are a behemoth that will only get bigger over time.  Close rates are 3 times that from manufacturer leads.  And if done right, they still make money.  The big stores dominating markets have too much market power to compete against directly.  Once a small store grows big enough, they can shed the Zag lead source, but until then it is one of the most powerful lead sources available.

Billboards, newspapers, radio, TV & mailers can't sell or service cars....?   What is your point on that? 

An excellent article Jeff, well writen and considered. A warning to independant  Australian dealers who may be releasing vital data directly to their competition thru certain relationships and JV's some Groups have with local Automotive Research and Online Advertising companies here!

Congratulations on all of your success. But FYI, billboards, newspapers, radio, TV, and mailers can't sell or service cars either. Guess I don't get your point. As I mentioned, MILLIONS shop on Edmunds.com and we CAN send them to you, so YOU can sell a car. I'll stand clear of the blow torch. Gheeze

From the horses mouth:

We outsell 20 other dealers in our market and know EXACTLY what people pay for Nissan's and have so for 20 years. We know the RMV - that's "Real Market Value" - better in our market than Edmunds or TrueCar will ever think they know. Pulling numbers from the DMS is one thing, but can these websites be really trusted they are in fact sharing the REAL NUMBERS? We can't know! And we do not! The bottom line is they could care less about dealers, because they know dealers will pay up to be listed.

I truly feel within the next 3 years, a better research/pricing website paradigm will emerge, that is car dealer fueled, by honest dealers like you and I, who love their customers, and the product we are privileged to sell.

You will see vastly improved Lead generation that will make an edmunds free car quote form look like a stomped on piece of origami, lit with a blow torch.

1. A customer cannot buy a car from Edmunds.
2. Edmunds does not service nor do they warranty vehicles.

Why are they acting like they can or do?

Jeff,

 

Edmunds’ new
advertising program is neither pay-per-lead nor pay-per-sale.
 Pay-per-lead from a site like Edmunds misses the point. We have over
14 Million consumers a month who are researching the purchase of a new or used
car on the site, yet less than 1.5% of them actually submit a “lead” to a
dealer. The other 98.5% are using the site to decide where to buy, they are
just not sending leads, I mean, would you?  JD Power recently did a study
that showed that Edmunds has twice as many buyers using the site in the month
that they purchase as the average automotive research site (including Cars and
AutoTrader).  In addition, according to Comscore 64% of our audience is
not using any other 3rd party automotive research site (once you take out the
Million uniques we are directly sending to AutoTrader, its 58% otherwise).
 There is a reason that every OEM advertises to Edmunds' audience, and the
same reason applies to dealer advertising.

 

As for the
pay-per-sale model, it sounds great since you only pay when you sell, but you
are relying on the company that is billing you to tell you what they
"sold" for you, which sounds like more than a little bit of a
conflict of interest to me.  In addition, as others have pointed out in
this thread, most programs that charge on a per-sale basis also create an
environment that either force dealers to sell cars at a loss, or to play the
games that cause sites like Edmunds to write things like "Confessions of a
Car Salesman".  That article ends with the following:

 

"Of all the advice
I've offered, I'd just like to stress that it's important to remember that
buying a car should benefit both you and the dealer. While I have focused
on deflecting the sales techniques in the dealership, I don't recommend
becoming overly defensive. If you deal fairlywith the car salesperson, and you
get the same in return, the transaction can be enjoyable — even exciting. It
really should be. So, I wish all of you a great shopping experience and many
years of driving pleasure in your new car."  

 

The entire article
is still on the Edmunds site, maybe this will work: http://bit.ly/gXMUdH

 

As far as Edmunds
"Suckering Dealers" into submitting transaction data to us as a
result of our new advertising program; we are clear in our pitch and in our
contract that we require transaction data to participate in our advertising
program.   Even before the new program, we have had over 40% of all
transactions being submitted to us from dealers that have elected to do so because
they want to ensure the accuracy of TMV.  As for our new program, we feel
that you have to participate to participate, meaning that if we are going to
promote your brand next to TMV you have a vested interest in ensuring the
accuracy of that value.  

 

TMV is the local
MEDIAN selling price of the vehicle in the market, meaning that 50% of
transactions occurred above, and 50% of transactions occurred below TMV.
 We may be off here and there, which is why we are always attempting to
increase the accuracy of that value by increasing the number of transactions we
use to calculate the value. As we commit to in the contract that you have
published, we do not sell, share, or publish the raw data to anyone else, nor
do we expose the  individual transactions
to consumers, including those that occurred so far below invoice that were
probably demos or loaners (unlike others), and despite your speculation, we
have never forgotten the fact that we created TMV over 10 years ago to provide
guidance to consumers to help empower them to get a fair deal.

 

I will invite any
dealer on this site to look over every one of your last weeks' transactions,
including all aspects of the deal, and compare it to the TMV price on Edmunds.com right now, and if we are not close to
your average, then maybe you should send us your transaction data.

If anyone has any questions about the new product, feel free to contact me directly.

 
All the best,

 

Johnny G

Director, Dealer
Initiatives

Edmunds.com

Last number I got from Zag was that they had 4,500 dealers. If that is true there is no need complaining what's done is done. What I do not understand is why dealers will allow Zag to post your price and two others and not give any exclusivity. The bad part about that model is the dealer 50 miles away may beat your deal by 1 or 2 hundred and the customer in your backyard will drive. You never get a chance to sell the value of your store, your people, your service, the contributions you make in the local community etc. I can understand agreeing to a great price when they bring the customer to you but the online dealer vs dealer model puzzles me why a dealer would play.

I always feel websites like Edmunds.com kick dealers like us all to the ground, only to step on our hands harder when we try to push ourselves back up. I just may have to start a blog or and create a you tube video titled "What Edmunds.com doesn't want you to know about". Since they are a consumer driven site, and people generally hope to hear the TRUTH, I'm sure I can get a few million eyes on it. Perhaps Edmunds "confessions" could include a very visible positive spin on the dealer network which keeps them humming along financially.

Without the car dealer, many websites would not exist. The hefty fee's dealers are forced to pay up month after month just to show up online at the usual high traffic sites, is gradually seen as nothing more than an inflated cable bill. These companies would not have the money to have invested in the infrastructure and develop the technology which we see today - had us dealers refused to pay what they have demanded, and gotten. Just like the cell phone and cable companies who over-charge us all, we are the ones who built the towers and paid for it all. Now we are forced to belly up more each month to use what we essentially created.

Furthermore, websites like Autotrader, Cars, Edmunds, and so forth - have never made it public on their websites to the consumer, that the free quotes people send in, are in fact paid for by the participating dealer. It would be nice for these sites to make this known, so that possibly the quality of leads would go from crappy, to not so crappy.

And do we really need more "Confessions of a car salesman" from the biggest instigator - Edmunds - to further squash consumers trust of car dealers. They are quick to build your suspicion, and promote you to acquire SEVERAL quotes to obtain the most competitive price - or - they ought to come clean, and tell them we're really padding our pockets, and if your lead is junk, who cares, the dealer still pays.