Have you ever wished you can get people excellent used cars you’ve cleaned up and refurbished well so that they can drive them for years to come with a big smile on their face?
Or, imagine this – how about you get in cahoots with BMW and Toyota and become an authorized dealer for their fine new automobiles?
Sounds grand and it is, but in order to pull off these two arrangements, so to speak, you’ll need to establish a car dealership first. The thing is, having your own place to sell cars from represents a great prospect, but kick-starting it means you’ll have to secure a location, hack through some red tape and bureaucracy, and also get your marketing strategy right.
In this article, we’re going to talk about what it takes to start a car dealership. As you will see, establishing a career in car sales is not for those faint of heart, so you’ll have to put both your best entrepreneurial and financial foot forward in order to make it.
That said, it’s nothing that can’t be achieved with some hard work and dedication, so as long as you’re willing to put these two in the mix, you can rest assured you’ll have plenty of success.
Right then folks, without further ado, here’s the deal.
How to Start a Car Dealership
Choose the Location
Even though much of the commerce in any given category nowadays is done on the Internet, establishing a car dealership does mean you’re going to have cars on the ground and ready to be sold.
So, the first thing you should take into consideration when starting up a car dealership would certainly be the location of the dealership itself. The larger and more accessible this place is, the more likely you are to get a steady stream of customers walking in your premises to make a purchase.
Another important part of the entire ‘location equation’ would certainly be the financing. If you can outright buy a venue for yourself, that’s a big part of the financial problem already resolved. (Even though the initial cost may be steep.) If you plan to lease, on the other hand, you will need to incorporate the rent payments into your budget plan, so that you can continue paying it every month down the road.
Pick Your Target Market
Are you selling low-end used vehicles that used to be in witness protection, or new cars that have been built only last year?
Is your ideal customer a group of youngsters with about $2,000 each in their pocket, willing to buy your old cars for fun, or do you want to target more wealthy individuals willing to dish out much more for a brand new Porsche 4×4?
Of course, depending on the size of your dealership and on your location, you may even succeed in marrying these two concepts, but this would be considered more of a pro move for a weathered car dealer. (We’re not suggesting you can’t pull it off, but it may be a bit of a challenge if you’re only starting out and you have a limited budget.)
Establishing what sort of audience you’re willing to work with is important because any subsequent marketing effort you put forth is going to be shaped toward the sort of buyer you want to invite.
Starting any sort of budget inevitably means you’ll have to concoct a special budget for it that can both support your current needs as well as those that may pop up in the near future.
The thing is, running a business represents a pretty unpredictable prospect, so having money to spend if something unexpected pops up is of utmost importance for tackling a crisis when it starts rearing its ugly head around the corner.
Also, having a set budget will prevent you from overspending, which is a malady that affects many young business owners who want it all and want it now. In fact, any sort of business involving buying and selling takes time to develop, so playing it slow and being patient is certainly a mindset you may want to adopt early on.
Market Your Product
Once you’ve taken care of all the legal documents, acquired all the necessary licenses and permits, you can start thinking about your marketing strategy. You can start thinking of it before that, of course, but it makes sense to ensure you’ll be able to start your business in the first place before committing to a pricey marketing campaign.
That said if you’re certain you’ll secure all the permits and you already have an arranged location, putting the word out on the street that there’s a new business coming may be a great move to attract people even before you have cars on your premises.
Your marketing campaign should, before all, be aimed at your target audience, and the means you can employ to make this happen vary. For example, you can put up billboards, invest in online marketing, get some leaflets circulating around the town, or install a couple of display flag banners.
Flag banners, in particular, represent the staple of car dealerships, so if you like this last marketing idea, you can get some of these at Display Me, and then set them up in front of your property for everyone to see.
Obtain the Dealer’s License
In order to start any sort of automobile selling business, you first have to figure out the licenses and other documents in your country.
So, what these licenses do for you is they authorize you to buy and sell vehicles, get your own special dealer plates (so that the folks who want to try the car out can drive it about with these on), as well as allow you to hire salespeople who specialize in car sales.
Not to mention how important it is to have all the papers ready when the inspection folks come a-knocking, which can and will happen.
All in all, as long as you make an effort to get all the necessary papers early on, pick your target audience, and invest in a marketing strategy, chances are – you’re going to see success with your business venture sooner or later.
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There is a formula to being a great car salesperson. If you want to start that sales career,you must learn that formula. To have a career in car sales, you must know how to relate and properly respond to potential customers. Once you have the necessary skills, it’s time to make your first sale. That first sale is not a car sale. Instead, it is you selling yourself to a potential employer.
Earn your high school diploma or GED, which is the minimum requirement for most car dealerships.
Get some experience working in sales. This does not have to be car sales. It can be any kind of sales, including retail and insurance. When you have prior sales experience, it increases your chances of getting hired as a car salesperson.
Enroll in a sales training class offered by a community college, chamber of commerce or other organization that teaches you skills necessary for successful sales. Some dealerships will send you to training class. However, it is still a good idea for you to come in with some training under your belt.
Create a resume that includes all of your sales experience and sales training. Take your resume to local dealerships. One way to determine which dealerships are hiring is to check the classified ads of your local newspaper, specifically the “sales” section. When you visit the dealership, make sure you are dressed like a salesperson. This means no jeans, t-shirt or tennis shoes. Wear a conservative business suit.
Sell yourself to the branch manager. If you can’t sell yourself, you will have a hard time selling cars. Come up with a 30 to 60 second sales pitch, the average length for most commercials. If the branch manager wants to hear more, he will give you more of his time. During your sales pitch, briefly mention your passion for sales. Let your personality shine through. Talk about your experience in sales and any certifications you have.
Attend any sales training classes offered by the dealership. Upon completing the class, petition the state for a car salesperson license. Some states, such as Alabama, Florida and Texas do not require individual salesperson licensing as long as the car dealership has a dealership license.
- DMV: Salesperson License
- Car Sales Professional: A Car Salesman License
- Trade Schools: Sales Training & Development Programs
Faizah Imani, an educator, minister and published author, has worked with clients such as Harrison House Author, Thomas Weeks III, Candle Of Prayer Company and “Truth & Church Magazine.” Her dossier includes JaZaMM WebDesigns, assistant high-school band director, district manager for the Clarion Ledger and event coordinator for the Vicksburg Convention Center.
There are many different varieties of car salesman training being taught today. Some are better than others and some are practically nonexistent. I will try to explain the different types of auto sales disciplines that are needed to become a successful car salesman or saleswoman along with the groundwork that anyone can pursue to have a prosperous automobile sales career.
Basic Car Sales Training
In some dealerships the car salesman education required to start selling cars is not much more than an orientation or indoctrination of the auto sales training steps or the steps to the sale. Many times this is done by a sales manager and it is often seriously lacking when it comes to building the solid foundation required to become a successful salesperson. The turnover of the sales staff at these dealers is usually high and the success rate along with the profitability of these types of dealers is at best dismal. The pay plan for sales people is often poor and it does little or nothing to motivate the staff. This type of place is not where you want to start your car sales career if you can help it unless you don’t care about succeeding.
However in most new car dealerships today car sales training is taken more seriously. They may have a member of the sales management team do the training, but it consists of two or more full days and it includes word-tracks, scripts, drills and it provides a true car salesman sales education. It usually includes a printed or copied car sales manual or handbook and the basic skills required to get started. Then the Green Pea is let loose on the lot to start selling cars in order for them to get a taste of the territory that is the business of selling cars for a living. They will be monitored and coached by a sales manager or a senior member of the staff until they learn the basics and from there they are usually on their own other than some occasional advice, guidance or a car salesman tip.
Some of the larger and more successful dealers and dealer groups have a car sales training manager on staff and some actually use an outside firm that comes in and trains their Newbies. Both scenarios are usually very good at readying any new additions to their sales staff and often supply and ongoing education to sales staff. This is a good place to begin your car sales profession along with the description on the one above.
Product Knowledge and Automotive Sales Training
Most of the auto makers’ offer some sort of training to a dealership’s sales team, but it usually involves product knowledge. This type of training is valuable and important because product knowledge can make the difference between making and losing a sale. Knowing the benefits of your product over your competitor is priceless when it comes to closing a deal. This type of education is great, but these manufacturer hosted events are usually only done when a new model or restyle is launched. Some dealerships will regularly train and host product knowledge classes in house because they understand that knowledgeable sales people will make more deals. To sell more cars and further your earning ability you would be wise to take the initiative and educate yourself on the product your represent. This website is loaded with free auto sales training articles and posts that you can use to further your training.
Advanced Car Sales Training
Few dealers offer anything more than the type of car salesman training that I have described above. With any profession ongoing education is always an asset and the same goes for selling cars. Even the seasoned veteran can benefit from more and regular training. There are many areas of the car sales profession that you will learn over time such as prospecting, referrals, follow up, using the telephone and closing the sales, but are you willing to wait to learn how to make more commissions and sell more cars? If not then you usually have take it upon yourself to further your auto sales training. You can check out our car salesman training manual on the right for more information.
Optimum Car Salesman Training for Selling Cars
In the car business auto sales training is like pay plans because every dealer handles this responsibility differently. Whatever the type of sales foundation or indoctrination you have received is better than nothing although there are plenty of sales people that have started in this business with relatively no seasoning other than being told to go out on the lot and get a customer. In order to cultivate a true car sales professional the schooling should be ongoing and never stop.
The constant seasoning that comes with experience and formal sales training provided by automobile manufacturers and professional trainers is ideal. I was fortunate enough to sit in on Ford salesman training, Honda, Toyota, Chrysler and GM. These classes often consisted of car salesman training videos and Power Point slides and focused on the product more than the process. In addition to these methods the salesman or saleswoman should also supplement the training they receive on their own by role playing, reading, studying the competition and observing. The time, energy or monies spent on additional training is merely an investment that pays for itself many times over throughout the course of a car sales career. There is big money to be made in the business of car sales and those that are prepared will reap the rewards that the industry has to offer.
One of the reasons for this car sales website is to help the many thousands of sales people out there that are looking to improve their sales skills. The automobile sales training manuals and books offered below are designed to help the ambitious person that doesn’t want to sit still and wait to get more experience and earn more money. I put this collection together based on the questions and request by the many readers that regularly visit this site. Take a look and decide if you want to further your car salesman training and the ability to earn a larger car salesman salary selling cars or wait until it happens on its own.
Check Out the Car Sales Steps
Published by KB on August 26 August 26
Hey, it is a great time to be selling cars or to start a career in car sales. The auto manufacturers have had to make course corrections and there are now less new car dealers. To the person that sells cars for a living that means that the remaining new car dealers need to sell more cars and that means more car salesman income.
Selling Cars for a Living – A Car Sales Career
Throughout all the chaos in the car business and the restructuring of the car dealerships there is a greater need for the Car Sales Professional and those interested in a car sales career and being a top car salesman. Not the shyster of the past, but the true professional that can make a great living and a great car salesman income selling new and used cars. If you are of those people that lost their job from the mess in the car sales industry, I feel for you. But if you were a true Professional Car Salesman the time is right for you to get hooked up with one of the many remaining car dealerships. If you never sold cars before it would be a great time to become a car salesman and start a career in car sales so you can start selling cars for a living.
A Car Sales Career for a Nice Income
Any of you that have been in the car business for any amount of time know that there is always a need for a good car salesman or woman. The high turnover in the car business is always been an issue, but a true car sales professional is like a commodity. The professional car sales person can practically go anywhere and make a good living selling cars. (unless you sell Yugo or Daewoo) The car sales business is one field that you can work anywhere as long as you know how to sell cars professionally you have a car sales career. I am not talking about the person that thinks they might try selling cars, I am talking about the true Car Sales Professional making a car salesman income of six figures, now that is an automotive sales career.
There is going to be a new face to the business of selling cars. If you are looking to start a career in car sales, this will probably one of the best times to get started. You can have a great car salesman career or car saleswoman career if you are ready to accept the challenge.
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Car sales consultants work for dealerships and use their skills of persuasion to sell new or used cars. The job is a good fit for open, personable people who have a gift for building rapport with customers – you must be able to make customers feel comfortable about making one of the biggest purchases of their lives. Most car sales consultants earn a modest base salary, plus a generous commission. So the more cars you sell, the more money you make.
The main job of a car sales consultant is showing cars to customers who visit the dealership and negotiating the sale. You’ll need a good understanding of the various car models, as well as options for financing and warranties. You’ll also need persuasive selling skills and a head for negotiating car prices and trade-ins with customers. Once a car is sold, you’ll walk the customer through the paperwork and coordinate repairs and servicing through other departments in the dealership. You’re the face of the company, and your success depends on your ability to educate a customer about the options available and make her feel at ease.
You’ll need a high school diploma or minimum GED for this position. Some employers prefer candidates with an associate’s degree in business or credentials in automobile repair. The best qualification is a willingness to work hard and learn, however, since most of the training happens on the job. As a new trainee, you can expect to pair up with an experienced salesperson for a few weeks or months until you have learned the trade.
What can you expect in return? The median car dealership salary is $39,903 annually in 2018 on a pay scale that ranges from $23,574 to $95,627. Median means that half of automotive sales consultants earned more than this amount and half earned less. This salary is significantly higher than the median for all retail positions, which was $22,900 per year in 2016.
Car sales consultants are attached to car dealerships, and their primary duty is to make money for their employer. They spend most of their time showing cars to customers on the car lot, in the office finalizing the paperwork or out on test drives. The working hours are fairly regular, although you generally will be expected to work weekends and holidays since these are among the dealership’s busiest times. Expect to be on your feet for long hours and constantly on the move.
Years of Experience
The amount of money a car sales consultant makes does not go up with time and experience, at least not directly. That’s because consultants are paid mostly by commission, which represents around two-thirds of their take home pay. So, the more cars a consultant sells for his dealership, the more money he will make. The amount of commission varies by dealership but the traditional structure is 20 to 25 percent of the profit amount. For example, if a car sells for $25,000, and the dealership makes $1,000 profit, the sales consultant will make $250 based on a 25 percent commission rate.
Job Growth Trend
Jobs for all retail sales workers, including car sales consultants, is expected to grow by 2 percent by 2026. This represents the addition of 92,400 new jobs. This figure is significantly lower than the average growth rate for all occupations. The outlook may be better for car sales consultants than for general retail staff, however, because car sales are not affected by the boom in online sales that is causing other retail sectors to shrink. People still buy cars face-to-face, and this is not expected to change any time soon.
CareerExplorer’s step-by-step guide on how to become a car salesman.
In this article:
- Step 1: Is being a car salesman for me?
- Step 2: High School
- Step 3: Sales Experience & Training
- Step 4: Get Hired by a Car Dealership
- Step 5: Obtain a License (where required)
- Step 6: Continuing Education
- Step 7: Consider Post-secondary Education
Is becoming a car salesman right for me?
The first step to choosing a career is to make sure you are actually willing to commit to pursuing the career. You don’t want to waste your time doing something you don’t want to do. If you’re new here, you should read about:
Still unsure if becoming a car salesman is the right career path? Take the free CareerExplorer career test to find out if this career is in your top matches. Perhaps you are well-suited to become a car salesman or another similar career!
Described by our users as being “shockingly accurate”, you might discover careers you haven’t thought of before.
While some dealerships will hire applicants with no experience, most seek candidates with at least some sales background. It is therefore wise to start preparing in high school. Take courses in economics and business foundations to develop a basic understanding of finance. Get a part-time job that involves customer sales and/or service to hone communication skills and get comfortable with meeting new people in a professional environment.
Sales Experience & Training
If you are unable to secure a car sales position immediately following high school, gain further experience in any kind of retail sales. Dealers want salespeople who are effective communicators and have a talent for customer service; so, any face-to-face customer interaction is considered a plus.
While gaining practical experience, consider taking a few classes in sales, marketing, psychology, finance, and public speaking.
Some aspiring car salesmen take courses administered by the National Auto Academy and the Automotive Training Academy.
Get Hired by a Car Dealership
Regardless of whether or not a newly hired salesperson has prior sales experience, most dealerships require that new employees complete a training program. Coursework normally covers the dealership’s business culture, general operating procedures and systems, customer sales and service techniques, negotiation strategies, and car model features.
Once hired and trained, new recruits will for a time work very closely with a seasoned salesperson to learn the details and nuances of the job.
Many dealerships also sponsor customized staff training and workshops through professional organizations, such as those listed in the ‘Sales Experience & Training’ step. Some dealerships accept applications for formal apprenticeship programs which they may periodically run.
Obtain a License (where required)
Some states require that automobile salesmen obtain a license. In California, for example, individuals wishing to work in the field must pay a fee and submit an application to the Department of Motor Vehicles. In Colorado, applicants must pass an exam, remit a bond, complete an application, and pay a fee.
The National Automobile Association (NADA) sponsors various types of training. NADA’s Academy offers six different programs for careers with a dealership. Among these are Operations, Department Management, Fleet Sales, and Consumer Sales.
The NADA General Dealership Management Academy prepares professionals for general management roles and includes classes in financial analysis and decision making. NADA’s Special Ops program provides in-depth specialized training for sales, service, and parts managers.
Consider Post-secondary Education
Following a few years of experience, car salesmen may have the opportunity to advance to a senior role.
While some dealerships may promote experienced salesmen to management positions or management trainee positions, it is not uncommon for sales managers to have an associate or bachelor’s degree in marketing or business administration. These programs include courses in economics, statistics, and advertising.
Used car dealerships brought in more than $118 billion in revenue this year. This business may be perfect for those who are interested in selling cars without having to franchise through a major automotive manufacturer.
Many used car lots are independently owned and include cars of various makes, models, conditions and prices. So there’s plenty of room for you to make the business your own.
How to Start a Used Car Dealership
If you’re interested in getting started in this industry, here are some of the basics you need to know.
Perform Market Research
Before you can get started as a used car dealer, you need to know what your market looks like. You should learn about the consumers in your area first. What types of cars are they looking for? Where does price come in? What attracts them to a particular dealer?
Then you should get to know the competition. Is there already an influx of one particular type of car dealer in your area? Is there an opportunity for you to stand out in another way or should you focus on a market that is less saturated?
Choose a Location
During your research, you need to zero in on a location for your used car lot. Ideally, it should be somewhere easy to access with enough vehicle traffic to attract customers. Start by getting a general idea for the area you want, then focus down further to find an open lot with enough space for all the cars you want to eventually include in your inventory.
Identify a Niche
Even though many used car dealers do not specifically affiliate with a single auto manufacturer, you still might find it useful to choose a niche for your business. You could sell just one brand of vehicle or even just focus on a specific price point. This will help you more effectively market to your target audience. As you grow, you could always branch out into new brands or price points as well.
Learn About Regulations
Used car dealerships do need to comply with the Federal Trade Commission’s used car rule, which states that dealers must include a buyer’s guide for each vehicle and allow buyers to inspect the vehicle before purchasing, among other requirements. Some states and local communities also have rules that apply to car dealerships. So make sure you do your homework about compliance standards before starting up.
Register Your Business
In order to officially get started, you’ll need a business license, dealer’s license and you’ll probably need to register with the DMV in your state. Specific processes vary by state and local community. So check with your state and local governments or converse with someone from your local chamber of commerce to make sure you meet the necessary requirements in your area.
Build an Inventory
When starting a used car dealership, you probably aren’t franchising with a manufacturer who provides you with vehicles. So you need to source them yourself. Register with auctions in your area so you can find low cost vehicles to sell, or source cars from social media. Most independent dealers will need to start small and then build inventory as you earn money over time.
Jamie Jones, who has managed car dealerships across the U.S. for more than 25 years, said in a video “As your cash flow builds, you’re workflow has got to build. That’s just how it works. You kind of have to crawl a little bit. Then you get a little bit faster pace. Then you start to walk. And then you start to run.”
Develop Buying Policies
Moving forward, you’ll need to come up with a plan for keeping your lot stocked with vehicles without draining all of your resources. Whether you’re in charge of stocking your inventory or relying on a team member or partner to do so, it’s important to have a limit or number in mind.
Dale Pollak stated in his book, Like I See It: Obstacles and Opportunities Shaping the Future of Retail Automotive, “I propose that every dealer institute a hard cap or limit on their used vehicle inventory investment. Managers have X dollars to spend and manage in a given year, and that’s it.”
Develop an Online Presence
Today, car shoppers do a ton of research online before even heading to a dealership. That means there needs to be enough information about your business and the products you offer on those relevant online platforms. According to Garrett Smith of RepCheckup, it’s important to have accounts and accurate information on online business directories, social media sites and review platforms. You might also list cars on your website and other marketplaces that people can easily find online in order to bring more traffic to your dealership.
Consider a Service Department
Used cars tend to need more repairs and service than newer models. So you have the opportunity to build in a significant extra income by offering a service center right at your dealership. This might be something you choose to open after building your dealership income for awhile. In order to do this, you’ll need a garage, some equipment and skilled mechanics. Then you might offer specials or incentives to keep your car buyers coming to your service centers over other auto repair shops.
Grow Your Business, Not Your Inbox
After creating her fashion jewelry line KiraKira in 2006, Suzanne Somersall Allis knew her year of design school and dual degree in English and art history hadn’t prepared her to run her own business. What she needed was real-world sales experience. So Allis created her own sales apprenticeship, juggling three part-time retail jobs for a year.
“Working at the stores helped me understand how much money people were willing to spend,” says Allis, 28. “I started to learn the psychology of people who buy my product.”
Today, KiraKira is sold in 15 stores around the country, and last month, Allis opened her first storefront at the Dekalb Market in Brooklyn, N.Y. With the recent addition of a luxury line called Suz Somersall, her sales rose to $400,000 this year from $150,000 in 2010.
For entrepreneurs like Allis, learning the ins and outs of selling is a major, but manageable, challenge. To start boosting your sales skills, consider these 10 tips:
Find your comfort level. Getting comfortable with selling is a key first step for any entrepreneur, says Matthew Schwartz, author of Fundamentals of Sales Management for the Newly Appointed Sales Manager (AMACOM, 2006). To gain the inside knowledge and confidence you need, you could work temporarily for a similar business as Allis did, seek guidance from a mentor or coach, or enroll in a sales class.
Define your target audience. Identifying a specific customer target will help you refine your selling strategy and be more efficient. Let’s say your company sells photocopying machines. Is your target audience small retailers? Corporate offices? Schools? “People fail often times because they try to be all things to all people,” Schwartz says. “You have to segment your selling efforts.”
Study customer buying habits. Once you’ve identified your audience, pay close attention to customer behavior. For example, if you’re selling a high-priced item, you’ll observe that customers often take longer to make a decision. That means you should plan to spend more time closing the deal. When Allis sold jewelry similar to her own at the boutiques where she worked, she soon noticed that her prices were too low. “I initially charged a lot less and realized that customers were starting to question the quality of the product,” she says.
Fawn over your first customers. When you start out, Schwartz says, you should do everything possible to please your first customers, even if it means not making as much money from sales as you’d like. Those first customers will help create your company’s reputation. “You are going to need testimonials,” Schwartz says. “It means so much to have those references early on.”
Take time to build relationships. One of the biggest mistakes entrepreneurs make is failing to build relationships with customers, says Rick Segel, author of Retail Business Kit for Dummies (Wiley, 2001). “The first thing you are selling is yourself. If they don’t like you, the sale is not going to happen.” Allis makes a point of sending personalized emails to buyers rather than a standardized message. She also devotes plenty of face time to customers by hosting trunk shows and working the counter at her Brooklyn storefront.
Stay on the radar. Once you’ve established rapport with customers, find ways to stay top-of-mind with them, such as through regular newsletters about your business. When Allis is running a sale or hosting events, she updates her blog, her website’s events page and her company’s Facebook page. “Facebook drives so much traffic to my site,” she says.
Don’t make assumptions. Too often, small-business owners sabotage their sales by assuming they know what customers need or are willing to pay, says Keith Rosen, author of Coaching Salespeople into Sales Champions (Wiley, 2008). Instead, try to ask customers as many questions as possible to learn what’s driving their purchase and what criteria they’re using to make their decision.
Establish a daily ritual. It’s easy to neglect sales prospecting when you’re wearing all the hats in your company. To avoid that pitfall, create a sales routine. That might mean reserving an hour each day for prospecting calls or setting a weekly goal of meeting at least 10 potential clients. “A defined daily routine is non-negotiable,” says Rosen.
Showcase your success. Your website is often the first and only contact people will have with your company. Not only should it be clean and professional looking, but it also should help build credibility. Schwartz recommends including testimonials, along with case studies of clients you’ve worked with. “People love case studies,” he says. “They’re not buying talk, they are buying [your] actions.”
Become an industry expert. Establishing yourself as a leader in your field will strengthen your sales pitch and attract new customers, Rosen says. You can write articles, start a blog or seek media exposure, all of which can build credibility and trust. Earlier this month, for example, Allis talked about jewelry trends on Martha Stewart Living Radio. “People want to see you as someone who understands the industry,” Schwartz says.