Archive for May, 2010

Death of the Traditional Auto Dealership - Part 3

Saturday, May 22nd, 2010

Every year at the National Automobile Dealers Convention, the exhibit hall is full of Customer Relationship Management and Business Development Center companies displaying their wares. Dealers spend massive amounts of money in a frenzy to buy the “magic button” CRM or BDC solution for many reasons. Unfortunately most of those reasons aren’t valid. Putting great tools in the hands of below average people with below average processes and little to no accountability equals a waste of money.

Let’s look at some of the underlying reasons why dealers buy these tools. Dealers see their dealer friends, fellow twenty group members and competitors buying these tools and feel the peer pressure to “keep up with the Jones’s.” Dealers start reading trade magazines and attending programs where a lot of the conversation is around customer relationship management and feel the force of momentum around this subject.

Unfortunately, I have been in thousands of dealerships across the country and can say without a doubt that in the majority of dealerships, between 80-90% of CRM’s or BDC’s functionality is not being used. Great technology and great tools alone do not move a traditional dealership into the new age of selling. In most dealerships with CRM tools, incremental sales and service numbers are not improved and massive amounts of money are being wasted.

In almost thirty years in the business, I have witnessed the majority of dealerships putting massive amounts of time, energy and money on acquiring new customers and giving only lip service around the importance of existing customers. All research, data and plain logic shows that putting the emphasis on your existing customer base first will reward you more than any other single thing you can do.

I conduct interviews with dealer’s everyday and it’s hard to find a dealer who actually knows what their dealerships repeat sales numbers look like. Almost none of the dealers I interview can tell me what their sale to service retention percentage is. Very few dealers can give a detailed explanation of their CRM process and how it is carried out and even to what degree it is carried out. Embarrassingly, very few dealers can tell me specifically and convincingly why a customer should buy from their dealership versus their competitors.

The traditional entrepreneurial dealer focused only on push driven sales approaches is dead. Dealers have to be better business people than ever before. Gone are the days of being successful in spite of you. The margin for ignorance and operating error is slim.

Bury your old dealership and operating approach as you know it. Take the time to step away from your dealership and evaluate what you are doing versus what needs to be done. Evaluate the 4 P’s of your business – People, Process, Product and Positioning. Evaluate all the tools and technology you use and the effectiveness of those tools and the way they are being used or most likely not being used. You must integrate people and technology together into a cohesive sales and marketing process.

Many dealers will need to come to the conclusion that they will never be able to set up a traditional process with people carrying out all the functions they want them to. Most of your salespeople and managers are not capable or willing to do all the things you want them to do. The truth for those dealerships is that they never have and they never will. If this is your dealership, you may have to let go of your ego and design a process with job descriptions that can actually succeed. You may decide to remove some of the traditional functions and narrow the focus of each person on your team. I have often heard dealers say, “I expect my managers or salespeople to do these things.” In return, I always ask the dealer, “Do they, and if so how often?” Most of the time, the answer is either no or very little.

It’s very clear, gone are the days where a dealer can accept that expectations are not being met. You must either improve your people and accountability of those people or completely redesign your dealership with processes and benchmarks that can and will be executed and monitored. I invite dealers to stop playing victim by blaming your people for not executing. You hired them, you set up the process and you created the accountability or lack of it. Therefore, it’s your responsibility and your job to fix it.

To receive a F*REE Special Report titled “New Generation” and a series of articles around The Death of the Traditional Dealership” and “The Death of the Traditional Salesperson” email me at info@tewart.com with “New Generation” in the subject line.

Mark Tewart is a sales and automotive industry expert. Mark is also a professional speaker, trainer, consultant, entrepreneur and author of the best seller, How To Be A Sales Superstar. Mark is a member of The National Speakers Association and The Authors Guild

Lead Generation = Dollar Creation

Wednesday, May 19th, 2010

All businesses are built on two areas of competency - people skills and marketing skills. Many sales people who are more than adequate in their sales and people skills are struggling today. The reason is most sales people lack enough opportunities with customers. Lead generation = dollar creation

As a sales person you are in business for yourself. Having a mentality of being the CEO of your company is crucial to developing your business. The dealership signs your check, and you fill in the numbers.

You have a better opportunity than ever to be successful. The key to your long-term success as a sales person is the creation of a dynamite marketing strategy that dealers overlook and most sales people are too lazy to do.

Your first step is to create a marketing web. Take a sheet of paper and list every way that you receive customers. The first two ways you probably listed were from walk-ins and phone prospects. These are produced by the dealership and are therefore the ones over which you have no control. Begin to control your destiny and think of ways to produce customers from other resources.

What other sources of leads did you list? Here are some suggestions: referrals, service drive, service tickets, be-backs, affiliations, repeats, targeted phone calling, database marketing, targeted list mailings, orphan owners, lost customer marketing, coupon swaps, joint-venture advertising, community board flyer, door-to-door flyers, Web site and many more.

For each source at least one strategy of creating leads should be chosen. If you execute one strategy a day on 10 ways to create leads, your leads will grow exponentially over time. Your business will hit a period of critical mass and explode.

At that point, a sales person has the best job in the dealership. Your pay, hours, stress and job security will be better than the managers’. Your risk will be zero, your investment minimal and most everything is supplied for you.

Why don’t more sales people take this road of action to success? Usually, it’s a lack of buy-in. If you haven’t begun to create a business of your own, it’s because your belief system doesn’t buy into the idea of a self-created destiny in sales. Either you have “Manageritis”, don’t believe you will be selling vehicles for a career, don’t believe you will be at your current dealership in the future, don’t believe it can be done or you’re lazy. The truth sucks sometimes.

Success and failure are all about belief systems and habits. You have to believe and live it everyday for it to work. Speaker and business philosopher Jim Rohn once was asked if you had to take successful actions everyday to be successful and he replied, “Only on the days you want to be successful.” Actually, if you only take successful actions every once in a while, you can’t even be successful on those once-in-a-while days. It takes sustained effort.

If you begin to execute a strategy of marketing and don’t have immediate success, you can’t quit. It’s easier to say something doesn’t work than it is to use the lack of success as a path to figuring out successful actions. Marketing in itself is a series of miscalculations to figure out what works. The greatest marketers of all time have failed more than they have been right. To great marketers, all failures are just tests on the road to figuring out the right formula.

As a small marketer in the Internet age, you can appear to be bigger and more successful than you really are. You can create a successful brand. You can be more agile and target more than larger businesses such as dealerships can do with traditional advertising. The over-hyped, over-competitive marketplace is perfect for the dedicated and creative sales person of today.

Death of the Traditional Dealership - Part 2

Monday, May 10th, 2010

Do you feel like you are missing out on something? Are you confused as to what the next step is in making your dealership successful? It’s a different ballgame than it was even just a few years ago. The traditional dealership is dead and you must bury it to prosper in the future.

For years the car business could be a very forgiving business. There was room for a lot of error in a dealership and yet a dealership could still be profitable. Those days are gone. Dealerships cannot be run in only a “seat of the pants”, entrepreneurial fashion anymore. To be successful dealerships have to be measured intensely in four areas - People, Process, Product and Positioning.

People - You must choose a path that works for your dealership philosophy. You must recruit people on a full time basis based upon want, not need. The leadership of a dealership must have a written and executed game plan for recruiting that utilizes online services, job fairs, colleges, tech schools, high schools, web sites, micro-sites, social media, newspaper, mass media and more.

Each dealership needs a detailed plan that includes a) interview questions, b) number of interviews c) personnel trained to interview d) testing methods for potential job skill match e) screening methods f) follow up methods g) initial and ongoing training methods for new hires

Process - Each dealership should have a written and executed process for every part of the dealership - sales process, internet lead process, marketing process, service process, parts process, manager process, used car inventory process etc. As an example, the selling process must be reviewed to make sure it is up to date and matches today’s marketplace. Most sales processes being used today were created in the 50’s and 60’s and have changed only slightly. Meanwhile, for the customer, everything has changed. Information gathering, overall knowledge, shopping process, volume of choices, expectations, value perceptions, lessening of brand loyalty are all things that have changed dramatically.

Every dealership needs to review their process based upon TLC - Think Like a Customer. What are you currently doing in your dealership process that lessens customer trust or ease of shopping/buying. Most dealerships are living in the stone-age when it comes to something as simple as the meeting and greeting of the customer. Nothing in your current process is sacred and the mantra for many things should be “just let it go.”

Product - The days of “Stack’em deep and sell them cheap” are over. Your new and used inventory must be monitored daily using analytic systems and technology that measures not only your inventory but others and market conditions. Many dealers have fought using any type of turn system even though simple mathematics proved you would be better off doing so. Well, the tide has turned again. Turn systems by themselves are now outdated and can even lower your dealerships ROI without other factors involved. Each vehicle is an investment just like a stock or mutual fund and must be analyzed, bought, priced, marketed, sold and eliminated using several conditions. Just saying that you have a 45 day turn system is not good enough anymore.

Positioning - Gone are the days of running display newspaper ads and waiting for traffic to arrive. Your dealership must have a dealership strategy that combines market positioning. Selling vehicles based upon price only will not create long term success. Successful dealers will no longer be able to delegate all of their marketing to an advertising strategy without educating themselves on the marketing and positioning aspects of their dealership.

Dealers will have to massively educate themselves on things such as, direct response marketing methods, copyrighting, multi-step campaigns, integration of on-line and off-line methods, social media, continual customer relationship building strategies, and sales to service continuity programs and retention. Dealers will learn that many advertising agencies do not understand any of these things and simply create lousy to mediocre production and buy the media. Without a well thought strategy using intentional congruence with all of the above mentioned factors you cannot be successful in this and future marketplace.

In the last year, I have asked hundreds of dealers the following questions:

#1 - What are your overall sales to service retention numbers and percentages beyond a first free oil change?

#2 - What are your number of inactive customers and what percentage is that to your overall customer base?

#3 - What is your planned and executed strategy for a continuity program to keep your customers for sales and service?

Here is the sad result. Out of hundreds of dealers, only one knew the answer to these questions. I continually find that dealers and managers do not really know what is going on in their own dealerships and are not doing anything to educate them to change that.

The reality is that the future belongs to dealers who educate themselves more, execute better and understand the value of speed in today’s marketplace. The marketplace of today and the future will continue to be very unforgiving with little room for margin of error, inattention or being slothful. The traditional dealership is dead but the exciting news is your new dealership is waiting to be born.

For a free special report titled “10 Things You Must Do At Your Dealership To Be Successful” email me at info@tewart.com with 10 things in the subject line.

The Death of the Traditional Dealership

Monday, May 3rd, 2010

The traditional dealership is dead but some have not had their funeral yet. It seems as though as much as some things change in the auto industry, as many things stay the same. Every week our trainers observe things in dealerships that look and feel like the 1960’s.

Let’s take a look at some things still commonly observed in dealerships that are outdated and should be changed.

1) Manager towers – High towers built for managers where salespeople go to get their proposal figures. The common reason for these towers is to create a good observation point of the inventory for managers. What these towers signify is demeaning to salespeople and adversarial to customers. These towers create a manager haven for never moving and an air of supremacy.

Solution: Tear down the towers. Look around your dealership and ask yourself the following question. “What do I see that looks like it’s from the 60’s?” Please tear it down.

2) The big green sharpie deal proposals. These proposals scream of adversarial “you vs. me” negotiations. The figures seem less real and more of just a thought.

Solution: Use printed or screen proposals with full disclosure

3) Manager TO’s at the end of a sales attempt – For those of you who may be new to the auto business, a TO means a turnover. Old school selling means the salesperson turns over the customer to a manager when he/she cannot CLOSE a deal. Often, the new salesperson is berated for not turning the customer to the manager. The reason is the new salesperson feels as uncomfortable as the customer with this process.

Solution: Manager/Coach/ Team Leader is actively involved in the sales process from the greeting of the customer. The new focus is to OPEN the relationship so the sale can be closed. The days of sitting behind a desk and screaming at salespeople to bring a deal are dead. Managers will be hybrid sales coaches, assistants and information providers that involve the sales process, deal process, F&I assistance. No longer will the manager be expected to save a lost deal but will be involved throughout the process with the emphasis on creating not on saving. You manage things but you lead people.

4) Seat of the pants used car inventory management. – The days of the guru used car manager who knows all the hot cars, market figures for every car on the market, what the correct appraisal is on every trade at and what every other dealership is doing and managing the used inventory strictly by feel, is dead. The truth is that person never really existed. It was a myth and a fairy tale. Nobody and I mean nobody is that good at what they do.

Solution: If you do not have a used inventory philosophy, system and technology to assist you then you will forever be making mistakes that are in today’s market very unforgiving. You must use your learned knowledge combined with inventory technology and up to date market data to be relevant in the market. The shocking truth is that the 90, 60, 45 or whatever day turn systems used strictly by themselves are also outdated models that not only do not work, they create problems. Your goals are high sales, profit, ROI and yield, not just turns. (More on that subject in future articles)

5) A staff full of professional “Do it all, salespeople” – This one can actually still be accomplished but very, very few dealers actually do the things to recruit, hire and train the right people to make this happen. If you have never done this before, you will probably not do this in the future. Don’t kid yourself. Running a help wanted ad in the newspaper, interviewing candidates without a pre-thought out plan for recruiting, interviewing, testing, screening, training and ongoing development is not trying to develop a staff of professional salespeople.

Solution: The solution for many is something most do not want to hear. For most dealerships, you will never put the amount of time, money and energy to set up a high level approach to getting and keeping great people. It’s just a fact. The solution is to create a process that involves heavy involvement with team leaders, assistants and technology that narrows the scope of your sales staff. Most dealerships are hiring average to below average people and expecting them to do a myriad of things they are not only not doing, but not capable of doing. Worse yet the managers are not showing these people or inspecting the process to make sure it happens. If you are honest with yourself and this description fits your dealership, then you must try something different. The long term health of your customer base and dealership depends on this.

I invite you to take a moment today and before you get busy with the everyday tasks to take a strong look at your dealership and what is being accomplished or not. Be honest. Are you fighting battle you have never won? Do your salespeople, managers, processes and dealership reek of the 60’s and 70’s? It may just be time for a funeral.