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Interview With Ben Keating of Keating Auto Group

Interview With Ben Keating of Keating Auto Group

After graduating from Texas A&M University with an honors degree in Engineering in 1995, Ben Keating went to work selling cars at a Ford dealership in Austin. Shortly thereafter, he went to work at his father’s Ford dealership in 1996, where he ultimately became general sales manager and part-owner. He bought his first car dealership in 2002 and, thoroughly enjoying the experience, continued to acquire dealerships, at an average rate of one dealership a year for the next 15 years. Today, Ben is the principal owner and chief visionary of the Keating Auto Group, a family-owned company that currently includes 17 popular automobile dealerships across Texas, selling 17 different brands. Collectively, the Group generates more than $1 billion in revenue and sells more than 25,000 cars per year. Ben owns 80 percent of every business in the Group, with the remaining 20 percent split between each store’s operator and business partners who oversee the financial side of the business.

A professional car racer in his spare time, Ben has competed in the American Le Mans Series, Grand Am, and the IMSA WeatherTech United Sportscar Championship.

In the following interview, he talks about his racing and retailing success, and openly shares his insights, with the hope of giving other dealers interesting tidbits as useful takeaways from the article.

I’d like to start by asking you to talk about your life as a race car driver. In addition to owning 17 car dealerships across Texas, you own Keating Motorsports. When did you get your start racing cars?

My wife bought me a weekend at Texas World Speedway for Christmas in 2005. In mid-2006, I took a Dodge Viper off the showroom floor and drove to TWS with no tools, or helmet, or any knowledge at all. It was the most fun I’d ever had, and I was completely hooked. I started racing in 2007 in the Viper Racing League, which is a club-level, gentlemen’s racing series. I found success in 2008 by winning my class. I continued to move up to more challenging classes through the years and continued to have success.

As a driver, I have won the 24 Hours of Daytona, the 12 Hours of Sebring, Petit Le Mans, and many other endurance events. I did 15 races in 2017, which took up about 25 percent of my year. I drove a Mercedes Benz AMG GT3 car in the WeatherTech IMSA championship and won the North American Endurance Championship. I have driven in the 24 Hours of Le Mans for the past three years, and my goal is to win this race in 2018.

What attracts you to racing cars?

Believe it or not, I find racing to be relaxing. I call it an adrenaline flush. The focus required to perform well behind the wheel won’t allow you to think about anything else, and I love the way I feel after a race weekend. I also love the teamwork required for endurance racing. And, of course, the competition. The fact that I can compete in the same car, at the same tracks, and in the same race with the best racing drivers in the world is still very humbling. I imagine that it would be like playing basketball with Michael Jordan. I get to compete with the best of the best, and I continue to learn every time I go out there. Racing is extremely time-consuming. Realistically, too time-consuming when you factor in I have two great kids and a lovely wife, who let me get away and do all this fun stuff. Obviously, I also have an incredible bunch of guys to mind the store while I go out and play.

How has this experience as a championship-winning race car driver helped you in your auto retail career?

I really believe there is some truth to the old adage “Win on Sunday, Sell on Monday.” I was a Viper racer before I was a Viper retailer. In fact, for the past nine years in a row, I have been the #1 volume Dodge Viper dealer in the world. This was mostly because of relationships I developed at the track. These relationships with the people who really love sports cars make a huge difference. The people buying these cars know if you are a poser. I have also become a better salesperson because I can talk about handling characteristics, or braking, or the differential, or any other topic in a way that most people cannot. I would also say that my racing has helped improve my relationships with my partners. It makes me more relaxed. It keeps me from micro-managing them. It gives me some perspective outside of the car business.

Now, I’d like to back up a little. Could you tell us how you got started in the retail auto industry?

Sure. I am a third-generation car dealer. I wanted nothing to do with the business when I went to college to get an engineering degree. However, I fell in love with the business during an internship between my junior and senior year at Texas A&M. I told my wife she could take a job anywhere in the USA, and I could get a job in the car business. We ended up in Austin, Texas, where I sold cars at Covert Ford. I was impatient to grow quickly, and I eventually asked my father to be his Used Car Manager. I worked for my dad for five years.

Eventually, I got an opportunity to purchase a very small Ford store in Port Lavaca, Texas. I learned the car business in Houston, and I thought this was how the entire retail automotive world worked. When we chose to continue to operate the little Port Lavaca store just like we ran things in Houston, we saw lots of success very quickly.

What is your management philosophy?

I have been blessed with attracting and retaining a bunch of extremely great people. I really believe a big part of my management philosophy is about relationships. If we have the right people in the right place, then it is all about supporting them. I empower people to run their own businesses.

Also, I believe in sharing. I don’t want them to “act like an owner”; I want them to BE an owner. It is all about finding the person who is the right fit for our management style. It is always the same—it is all about people.

Are there any special skill sets you look for when hiring?

I am always saying that you can’t get to know someone in an interview. We have recruited graduates at various colleges over the years, and I have learned a ton from this experience. First impressions are not always the correct measure of a great fit for this business. We rely heavily on the Omnia profile, which is an independently-validated behavioral assessment that takes about 15 minutes to complete. This has been our best tool for determining whether or not someone has the personality traits to be successful in this business, especially since the test can be applied specifically to retail automotive. I am a huge believer in the Omnia assessment and we only hire people with a positive profile.

How do you ensure your employees are up-to-date on products and processes?

Much of this is based on our results. If our people are not effective, then it is our fault as leaders. I am not someone who wants to be at the bleeding edge on products and processes. I have been there, and I’ve developed the wisdom that “old school” is still sometimes the most effective. I look at key metrics, and I look for the effectiveness of our people. If they need help with product knowledge or process knowledge, then we will teach them and work with them. We are always learning and growing, but never forgetting the mistakes from the past.

What steps do you follow to help create a positive customer experience?

In my opinion, there are no “cookie cutter” steps. It is all about people. It is an attitude. Whether or not a customer has a great experience or a poor experience can always be pointed back to the person they worked with. If we have a servant attitude towards the customer and we do what we say we will do, then we create a positive experience for the customer. We definitely follow processes, but it is not about the process. It is about how we interact with the customer. As long as we tell them why we are doing something and they understand the reason behind the process, they are OK with it. If the customer has full control of the process, then you will typically not sell them anything and they aren’t going to be happy about their experience. We are the experts on the best and quickest way to make a decision on buying a car, and we genuinely enjoy helping customers do this. It all comes down to communication.

With 17 stores, including both small and large stores, how do you measure business success within and across your group?

I like to joke with my partners that it is simple: I want to sell more, make more, and keep more. From a business standpoint, I measure gross generated by each department, because this is what ultimately pays the bills. Then, I measure each department and each store based on net income as a percent of gross, because this is how I choose to measure expenses. This net-to-gross percentage is the best way I’ve found at comparing all stores together side-by-side to measure how effectively they are operating the business, no matter what size the store is. I always measure every expense as a percentage of gross. To me, it is obvious that a store making $3,300 per retail should be able to spend more than a store making $2,200 per retail. Beyond the big-picture metrics, we measure CSI pretty well. I focus on the short term with CSI. If we take care of today and this week, then the 30-day score, or 3-month score, or 12-month score will take care of itself. All we can influence is today, and that is what we focus on. We also spend a lot of time focused on internet effectiveness.

A long time ago, I backed into my metrics like this: I can’t deliver a car until they show up at the store; the customer won’t show until I have an appointment with them, and I can’t make an appointment until I make contact with them. Therefore, I measure four things: contact ratio (benchmark 80% of all leads); appointment ratio (70% of all contacts); show ratio (60% of all appointments); and sold ratio (50% of all shows). If we perform at these levels, then we end up with a 16% delivery ratio on total leads, which is a good job. By measuring these four steps independently, I can determine where we need to improve.


What is your marketing strategy?

We do lots of small tests and experiments to determine what is working in certain markets. Right now, we are mostly digital and direct mail. When it comes to digital marketing, it is all about being able to process information.

For the past eight years or so, we have partnered with Client Command for our marketing in a huge way and they continue to really impress me. Not only do they have access to scary amounts of data and information on people in our markets, but they have the ability to process the information in a way that creates tangible results. They are up to about 177 different algorithms for determining when someone is in the market for a car. This is the key to effective and efficient marketing. What is so awesome about Client Command’s ability to learn about our customers is that the longer we have been with them, the better they have gotten with results. I feel like this is one area where we have shined.


Which DMS system do you use and how effective has it been? And which CRM system?

We use CDK, of course I still call it ADP across the board for our whole group. We want every store on the same DMS so that we can manage all the stores through the same group of people who know and use the same system.

We use EleadOne as our CRM across the whole group. The system is only as good as the people who are working it. But having one system across the board allows us to hold stores accountable better, and do a better job of solving problems, and allow for some cross-training between stores. What I care most about is the result. I want to turn opportunities into car deals. At the end of the day, I only hold them responsible for results.

In what ways do you use social media and how effective has it been?

We are pretty big on Facebook advertising. Unlike most media, it is a constantly changing medium with several unique opportunities. Facebook has the ability to be both a reach and frequency medium. We like how it can deliver true engagement from prospective customers over whatever time we deem appropriate, from a month-long campaign to just a few hours. And, of course, it is all very trackable and easy to measure the effectiveness.

If you could keep only one tech. tool, which would that be and why?

The main technology we like is Google Analytics. We consider our use and interpretation of Google Analytics as one of our competitive advantages. Recognizing it’s not about last click attribution or even asking the customer “what brought them in,” but using the analytics to discover what types of advertising and offers are driving conversations in our stores. Of course, it still comes down to good people and good processes, but the technology we can’t live without is Google Analytics and the software we use to interpret it, Dealer Insights.

We have some very unique ways of measuring online performance. We are not interested in visits, or VDPs, or impressions, or many of the familiar metrics. We are focused on engagement. We have figured out how to use Google Analytics to measure engagement on our sites and for each source of traffic. This allows us to determine the real quality of the traffic generated. This is changing our model for how efficiency is defined.

In what ways do you and your dealerships give back to the local community?

We are very involved in the community as an employer, as a group, and as a business owner. This year will mark our 12th annual retreat for employees, where we alternate topics each year between marriage and parenting. This is a great weekend where we get the opportunity to get to know our people better away from the store. But also, this retreat has resulted in serious life changes at home for many of the participants.

In addition, we have recently given a building to Habitat for Humanity for them to operate out of in Victoria, Texas. We have built a gym for a local high school. We have been one of the major contributors to Pine Cove’s effort to build a new summer camp for high school students. We are active and feel a serious responsibility to give back to the communities we serve.

Another way we give back in an unconventional way is that we are about halfway through ten different major facility remodels or new construction. We don’t typically think about this as giving back, but when we have had Grand Openings, and I listen to the feedback of how proud the community is to have a nice building out on the highway, I realize that this is also a big part of being a part of the community.

What separates your dealership group from other dealerships in the region and the country?

These days, being a privately-held group seems to separate us more and more. But even among privately held groups, one thing that separates us is that we sell partnerships to our operators. I think this is extremely important for us and it is a competitive advantage, for sure. It is a mindset and a commitment. It also enables us to attract great people from groups that don’t offer this opportunity. I own 80% of all my stores and I have partners in every store. This gives everyone at the store a different feeling about the way we operate. It truly becomes “their” business.

Additionally, about seven years ago we got to the size where getting into the insurance business made sense. It was very difficult to get it up and going, but now this gives us a serious competitive advantage. We are in the insurance business bigtime. Not just underwriting to an offshore account, but actually a domestic insurance company. This helps us make sense of many deals that other dealers can’t.

What do you like most about working in retail automotive?

I like to win. I like to compete. I have found a lot of success in the retail car business, and that is fun. I have also had a huge number of failures, which has given me wisdom that I enjoy sharing with others. I love it when my partners come to me with a problem, and I have a confident answer about a solution because I’ve been there before. This business offers unlimited opportunities and it changes all the time. There is always plenty to learn and plenty to achieve. That quest for growth keeps it interesting and fun over the long haul. Do what you love and love what you do.

If you could describe your business philosophy in one word or phrase, what would it be?

Ambition. There’s nothing that describes our approach to business, or our approach to buying more dealerships, or selling more cars or having better CSI. Why is owning 17 dealerships better than owning 15? The only answer I can give is I enjoy buying dealerships. I enjoy putting deals together, solving problems, creating success. Growing is almost like an addiction for me, because it’s fun and I enjoy it. When I think of all that in one word, the word that comes to mind is ambition. That’s probably a pretty good answer in life, as well.

Where do you want your business to be in the next five to 10 years?

Ten years is a really long time. My dad used to say that long-term in the car business is 90 days. I have learned through the years that this is a moving target for me. Traditionally, I have opened a new store every year in the Fall. Then for about six months after, I say I don’t want to purchase anything else. Somewhere in the middle of the summer, a great opportunity comes up, and I end up adding another store. This is how it has been for 15 years. Having said that, I bought three stores at the end of 2016 and none in 2017. I know enough to never say never. I would expect that we will continue to grow. But I will also say that we have enough stores now that we always have a handful of them that aren’t performing well. And, I have a hard time aggressively looking for a new opportunity when we have a store that is not performing. It is all about people. If we have the people who are ready to make the jump to GM and enough players to fill a team at a new store, then great. If not, then that’s okay too.

I do feel like our industry is in somewhat of a renaissance period. Everyone seems to have a different opinion on the subject, but I am very excited about what the future holds. I believe there is a healthy, long-term viability for the retail auto dealer and the manufacturers. I don’t put much credibility on the political speeches given by the CEOs from the public car companies who need to say what Wall Street wants to hear. It is different in the extremely densely populated cities, but in Texas, we are a long way from having an autonomous vehicle delivering a bale of hay to the pasture. I have a love affair with cars, and I know that I am not alone. Whether on the race track, or through the mud, or cruising down the boulevard, people will want to experience their cars and express themselves in this way. The future is bright.

Any final comments?

What I care about is the end result. I’m an avid Dealer Magazine reader. I know these interviews and read them all the time. Once you get beyond the surface stuff, every dealer out there knows their business. Other dealers probably don’t care about my racing program, because it’s about me. They’re reading the interview because they want to get something out of it. I hope I gave enough tidbits about the way we do things or our philosophy or our processes that will make it interesting and useful for them. I’m very much an open book and I don’t have a problem sharing.

 

-Previously printed in Digital Dealer on April 3rd, 2018.