The Engine Starts Humming as Ertle Brothers Secures Relationships

Ertle Brothers Discount Auto, the Dealer Business Journal $100,000 Challenge dealership, has taken advice it’s gathered from a variety of sources in the past month and has run with it, meeting the expectations of both the consultants they are working with and from the team itself.

Butch Moore, Leedom and Associates, LLC Twenty Group moderator, conducted a two-day onsite visit with the rural northeastern Colorado dealership in late January. Moore said the dealership had a variety of issues it needed to address promptly, including inventory aging, expanding its inventory, improving both front- and back-end profitability and increasing its advertising budget.

“The dealership is somewhat off the beaten path and Ertle Brothers needs to expand its inventory choices to attract a wider cross-section of the buying public in their area,” Moore said.

He noted that the dealership, which is located adjacent to the local high school has done well selling Saturns, Sunfires, small pickups and similar vehicles to high school students, but needs to attract additional customers as well. There were also inventory-aging problems in that there were several vehicles on the lot that had celebrated “birthdays.”

Moore spent more than a day and half going over operations from all aspects.

“We talked about increasing their advertising budget by about 300 percent,” Moore noted. “I don’t want to address specific dollar amounts, so as not to alert nearby competition of Ertle Brother’s strengths or weaknesses.”

Moore said he also addressed benchmarks for profit margins, reconditioning and various other areas of the business.

Alexes Ertle, the dealership’s business manager, said the entire staff was very pleased with Moore’s recommendations.

“The general consensus was we should tie Butch (Moore) up and keep him here,” Alexes Ertle said. “He talked about selling techniques. He taught us how to stay in control of a deal. It’s an art, and he does it very well. We went through a complete inspection of all our processes and our numbers.”

Alexes said she creates the monthly profit and loss statement, but that this was the first time the Ertle Brothers team went through a detailed analysis of what would appear on her monthly composite as part of a Leedom and Associates Twenty Group.

“We’ve learned that as we move forward the numbers will dictate what we do,” she said. “They’ll tell us how well we are doing, and we’ll be able to compare that with what others are doing in our group and across the country.”

Moore said he recommended the dealership expand its reach by increasing its advertising budget and perhaps selecting new advertising mechanisms. Alexes Ertle said she has since approached several local newspapers and weekly circulars to come in with a prepared a marketing plan for them.

“I’ve taken a more aggressive approach,” Alexes Ertle said. “Instead of having them come to me to sell me an ad, I’ve asked them for marketing ideas, suggestions and the best way to reach the most people.”

This relatively small rural dealership doesn’t have a Web site, but not for lack of trying.

Alexes Ertle said she really has a horror story, and hopes in telling it to the nation, other dealers can avoid similar situations.

“We had three different companies at the time, and a local vendor here said he could put a program together for all three businesses,” she said. “He kept telling us he had one more thing to do, then he became ill and never finished. We spent nearly $3,000 with him.”

Still another vendor came along and took what had been done and said he would complete the project. Learning from its past mistake, Ertle Brothers had the vendor sign a contract. He simply left town after taking another $3,000 from the dealership.

Dealer Business Journal approached several reputable national Internet business integration and Web design companies on behalf of Ertle Brothers. The companies made presentations and the Ertle Brothers team selected a vendor.

“We had several companies prepare a proposal and we selected AutoApproved,” Ertle said.

 AutoApproved.com, based in Wichita, Kan. has been an automotive lead generator since 1993 and is headed up by bothers Tyler and Caleb Eastman. Tyler Eastman is the firm’s Operating Partner, and Caleb Eastman is the director of marketing.

Caleb Eastman said AutoApproved is waiving some costs for Ertle Brothers, and plans to work closely with the store over the next year to demonstrate the firm’s capabilities and skill in helping dealers achieve success using the Internet.

“I have been creating Web sites since 1997,” Tyler Eastman said. “In 2005, we began working with dealerships to develop comprehensive Internet marketing solutions.”

“We have learned a lot from working with our clients and feel we have systems in place that can deliver improved services and profits,” Caleb Eastman added. “We are proud to have the Dealer Business Journal $100,000 Challenger dealer select us as their Internet services company.”

Alexes Ertle said she had other Web designer presentations given to her, but Caleb Eastman and AutoApproved.com really took the time to get to know her dealership and learn her needs.

“They were just out here to pay us a visit,” Alexes Ertle said. “This was really far beyond our expectations.”

Caleb Eastman said the plan is to develop a new logo with an integrated Web site address that Ertle Brothers can begin using in its print marketing, letterhead and business cards. The Web address will also be integrated into the dealership’s radio spots.

“The dealership will have a complete turnkey system when we are finished,” Caleb Eastman said. “We will help them with search engine optimization, sales content, psychological word play to keep users returning, a trade-in evaluation form, online inventory and our ‘e-Book.”

Caleb Eastman said the e-Book is a proprietary digital book that helps consumers learn more about the used-car buying process as well as lending and other aspects of dealership operations.

“It’s designed to help improve the image of the automotive retailer by providing factual information consumers can use to make better buying decisions,” Caleb Eastman said.

Alexes Ertle said the Eastmans who are affiliated with a dealership had a lot in common with Ertle Brothers, and she felt at ease immediately.

“They did what we do when we have a customer,” she said. “They built rapport, assessed our needs, and learned all they could about us before offering a solution.”

Alexes Ertle said the package they chose will have full system support as well as integration with the store’s DMS.

Ertle Brothers will need their new system integrated with one more service provider as well. Though the company had been selling some special finance deals, Alexes Ertle took up Leedom and Associates offer to attend any of the consultancy’s training seminars. Alexes Ertle attended the two-day Leedom and Associates Special Finance Seminar and Sales Manager Training in Albuquerque, N.M. in mid-January, taught by Leedom and Associates Consultant Tom Herald.

“It was tremendous,” Alexes Ertle said. “Tom really knew his stuff and shared it in a way you could take it back to the store and benefit immediately.”

She said she immediately implemented removing prices from the vehicles. She said she bought into Herald’s suggestion that by going through the value proposition before settling on a price improves gross profit. As a result of her experience in the special finance seminar, Ertle Brothers signed on with Finance Express. Finance Express has developed a Web-based platform for independent automotive retailers. Alexes Ertle said a Finance Express representative paid a visit to the dealership and explained its services.

“We had two lenders we were already working with but now we will have access to dozens more who can do business in Colorado,” she said.

David Huber, president of Finance Express, said it’s a pleasure to work with small dealers in any market and provide them the tools they need to succeed. Finance Express services include credit application processing, credit bureau access, electronic contracting, lead generation and complete escrow services. Huber said his firm has the first dealer management system integrated with accounting, collections, buy-here pay-here, and inventory management. Once Ertle Brothers goes through the application process, they will have the full power of the Finance Express system at their fingertips.

Huber said most dealers who sign up for the service are approved.

“You have to have good credit with your banks and floorplanners and we look for a least one full year in business,” Huber said.

At presstime, Alexes Ertle was still waiting on final word on her dealership’s approval. In recent months Finance Express has entered into relationships or partnerships with numerous vendors serving the used-car marketplace including: Sekurus OnTime, Black Book, Carfax Vehicle History Reports and RouteOne. In addition, it has acquired DealTrace, a software technology company specializing in integrated Buy Here Pay Here and accounting systems. Finance Express was also recently named a National Independent Automobile Dealers Association Preferred Provider.

Legal and regulatory compliance are huge issues for every dealer, and Ertle Brothers is in the same boat.

“We were concerned that with getting more into the special finance and indirect lending space our paperwork, policies and procedures were not up-to-date,” Alexes Ertle said. She said she contacted the Colorado IADA and was able to secure a lot of information regarding Colorado, but wanted to know what other services were available.

When Tom Hudson, partner of the nationally recognized law firm of Hudson Cook, LLP, heard about the Ertle Brothers needs, he put his team together to draw up a plan to help the dealership. Recognizing that good legal help is expensive, and that the goal of the Dealer Business Journal $100,000 Challenge is to improve net profit, not reduce it, Hudson put together a solid action plan.

“Dealers today are especially vulnerable to unscrupulous trial attorneys who are looking for their next class-action lawsuit,” said Hudson, who is also publisher of Spot Delivery, a monthly legal newsletter for auto dealers, and the Editor in Chief of CARLAW, a monthly report of legal developments in all states for the auto finance and leasing industry. “The consequences of not being compliant in your dealership can be catastrophic.”

Because of the attorney-client relationship, Ertle Brothers had to agree to become a client of the Hudson Cook law firm. In addition, Hudson will provide, free of charge: two new books Hudson has authored, CARLAW and the F&I Desk Book; a one-year subscription to Spot Delivery; a one-year subscription to CARLAW, the firm’s monthly Internet legal reporting service; a one-year, single state subscription to CARLAW Counselor, the firm’s Internet state law database; and a 50 percent discount on the first $2,000 in legal fees (for legal work of the type the firm performs). The offer from the firm has a value in excess of $3,500.

An attorney with the Hudson Cook, LLP firm, Emily Beck, will be working most closely with the Ertle Brothers dealership.

“This is an assignment that is near and dear to my heart,” said Beck, whose family owned and operated a dealership while she was growing up. “I am going to approach this relationship by considering what I would advise my family in a similar situation.”

Alexes Ertle said she was amazed that a firm with the prestige and recognition of Hudson Cook would help out her operation.

“Emily was terrific,” she said. “We really hit it off. We will need some of Hudson Cook’s services very soon, and we’re honored to be among their clients.”

“We had a slow January, but sales have been strong in February,” Alexes said. “We’ve also improved our front-end gross and our back-end gross.”

Again, for reasons of competition we’ll refer to any improvements or declines in terms of percentages. Ertle Brothers increased its front-end gross by 40 percent in the first 15 days of February. Back end profit jumped by more than 400 percent. Sales have increased slightly and the dealership was on track to have a record month, if “we can keep the blizzards away,” Alexes Ertle said.

“Part of the reason for the large increase in back-end profit was they weren’t going after that business,” Moore said. “They now see both the value to the customer and for the dealership and are being more aggressive in sales there.

“Let’s put it this way,” Alexes said, “we realized more back-end revenue in the first 15 days of February than we have in our previous seven years in business.”

Still, Moore said, Ertle Brothers must deal with some aged inventory that’s been sitting on their lot in some cases for more than one year, which needs to be converted into cash to secure fresher inventory. This will allow higher profit potential.