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Grabbing Market Share During a Market Disruption

Case Studies February 23, 2022

By: FUSE
4 minute read

Walser Automotive Group Case Study

Franchise auto dealers are enjoying unprecedented margin power created by continued high demand and a shortage of new vehicles. Significant challenges brought on by a worldwide pandemic and computer chip shortage remain, yet most dealerships notched record profits in 2021. 

When demand outstrips supply a common reaction is to curtail marketing investments. On the surface this seems logical. Why invest in demand generation when a dealership has more customers, ready to buy, than it has vehicles to sell? 

The obvious effect of lowering operational costs while demand and margins remain high is increased profits. But, are increased profits the only measure of success? 

Peter F. Drucker, widely hailed as the father of modern management, said that the purpose of a business is not merely profitability. Drucker stated that “ The purpose of business was to create and keep a customer.” Profit, Drucker says “is not the explanation, cause or rationale of business behavior and business decisions, but the test of their validity. 

If profitability flows, in large part, from our success in creating and keeping customers how do we measure success? 

FUSE CEO Colton Ray, “Market share is the great equalizer. You can be profitable but is your market share shrinking? Profitability is paramount. However, if your business strategy results in shrinking market share, ultimately you are not winning.” 

History shows us that market share gained during a market disruption is not only less expensive to acquire but also more easily sustained and defended when the market returns to normal.

When market dynamics return to normal, what are a dealership’s prospects of increasing the long term value of their business if they’ve recorded a couple of years of outsized profits but lost market share?

For the Walser Automotive Group, the dealership group in which FUSE was incubated and developed, market share is tracked closely by percentage, not just rank. Market share percentage is a KPI that measures current success and signals long term prospects.

Over the last twenty-four  months, Walser added nearly 5 percent of share. 23 of 27 stores across three states saw their market share increase.

Line graph showing the upward trend in Walser's total marketshare from 2019 into 2022

The pillars of the Walser strategy that led to increased share are:

  • Data driven marketing that targets in-market shoppers using first party data.

  • Dynamic new vehicle pricing.

  • A modern business model featuring no price negotiation and a single-point-of-contact sales model. 

  • FUSE Dynamic Payments software that automates VIN specific vehicle offers on dealership websites and across the internet.

  • FUSE Transact software that automates and significantly speeds up the transaction. 

Let’s dive deeper into Walser’s game plan.

Walser combines their extensive customer database with Fuel data from CARS.com to create a one-to-one (not look alike) first party audience that includes shopper activity and intent. This low funnel audience is then served messaging through paid search, paid social, display and OTT. By focusing their spend on clearly identified in-market shoppers, many of whom have familiarity with the Walser brand, the cost to acquire a customer is driven down.

Dynamic new vehicle pricing

New vehicle pricing is based on a proprietary algorithm that considers desirability and availability.  Director of New Inventory and Pricing Luke Silovich has a different take on the “win every VIN” mantra.  It’s not about having inventory right now, it’s about having the “right” inventory. Identifying and securing the most desirable models directly equates to faster turn and better allocation.  This has allowed Walser to maximize margins and over-earn inventory rather than have to search for scarce inventory from underperforming stores.

Walser has been on the forefront of modern automotive retail strategies for 20 years. They moved to a negotiation free sales model in 2001 and single-point-of-contact in 2012. Besides the improved customer experience based on trust and speed of transaction Walser has experienced other benefits. This sales model has increased the overall pool of employee candidates who would consider automobile sales as a career. Additionally Walser has reduced the direct compensation cost to sell a car to $867 dollars. Compare this to the NADA average of $1605.

FUSE Dynamic Payments software

Dynamic Payments calculates payment offers on virtually all vehicles in stock based on dealership settings for profitability and offer type. Automation then populates the dealership’s website specials page and is sent via API to Walser advertising partners. VIN specific offers are consistent from digital advertising to dealership website to payments a shopper will view in the store.

FUSE Transact software

Transact is at the center of Walser’s sales process. Transact manages the sale from “hello” to signatures and booking the sale into the DMS. FUSE allows customer specialists to present accurate payments using a “Priceline Effect”. This builds trust and allows the shopper to select from offers presented by leading lenders versus a printed dealership grid. FUSE Transact is part of the FUSE Finance Management System (FMS) that propels modern retail for both traditional and one-price dealerships. Using FUSE Transact dealerships can “put a cash register in the hand of every salesperson”. To see how FUSE can create a sale and book the transaction in the DMS in under 10 minutes click here.

Screen capture of FUSE Transact Software displaying financing options

 

Summary

During the past 24 months, in a market disrupted by a pandemic and inventory shortage, Walser has focused their marketing on low-funnel, in-market shoppers and gobbled up market share. Shoppers have experienced a better way of buying a car through the Walser one-price, SPOC sales model propelled by FUSE software. Walser’s people manage the process and build trusting relationships while software automates the transaction and speeds the completion of the deal. Walser is positioning their stores to defend and increase the share they have gained as they continue to pursue sustained, profitable growth.

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