2020: Training for the End

The year 2020 is on the horizon, and along with it are huge changes for the automotive industry. In 1987 the rock group R.E.M. released a song with the main lyrics “It’s the End of the World as we know it.” That song will be the anthem for the automotive industry over the next three years.

The issues that will force the changes in the car business have been building for years; the continued resurgence of subprime financing, the reappearance of large factory incentives, increased vehicle leasing and the lengthening of finance terms.

With customers increasingly “upside down” and only getting worse as 84 and 96 months become the financing normal what is on the horizon? How can the prediction of some analysts that car dealerships are dying be proven wrong?

Daily the news points to retailers that are either closing or closing multiple locations. Circuit City, Sears, event the mighty Walmart’s Sam’s Club. How can local dealerships avoid the fate of many brick and mortar retailers? The answer may be found in the one company hated by most franchised dealerships, Tesla.

Meeting The New Retail Head On

paradigm shift // an important change that happens when the usual way of thinking about or doing something is replaced by a new and different way*

Part 2

In the last segment we determined that whether we like it or not, in person retail sales is going to look different after the economy opens back up for business. Consumers have been introduced and trained to use online ordering and delivery services for everything from groceries to fast food, this habit is not going to disappear just because retailers have opened the front doors.

I think that most companies realize the trends and may publicly say they are adjusting their businesses to allow customers to continue to use these services, however deep down they secretly are hoping that things just go back to the way they were pre-Covid.

Hope is not a plan. If a company is just hoping things will go back to normal, they are missing a huge opportunity.

Even if most consumers do go back to pre-Covid patterns why wouldn’t a company want to keep the “normal” part of their business and add to newly found consumer patterns to that? That is the key to meeting the New Retail market head on.

For a few there may be a fundamental change in the entire sales process while for most other organizations there may be two processes, perhaps even two teams that approach the sales process differently. That means while there are certain truths that businesses have felt to be self-evident in their operations that may prove to be incorrect moving forward or may need to be compartmentalized in the old normal process.

In the automotive business one of those old truisms and sales manager sayings that may still get quoted during a Saturday sales is “the feel of the wheel seals the deal” meaning that if a customer is unsure about buying a vehicle the test drive is important to convincing a customer that they should move ahead with the purchase. Is that always the case in the new normal?

Some customers absolutely need to drive a vehicle to ensure it fits their needs, but a surprising number of customers do not want or need a test drive. Online customers over the past 45 days have not been concerned about the test drive and this customer, perhaps conditioned to buying shoes on Zappos and clothes through Amazon Closet, simply want the opportunity to try it on and perhaps exchange it if the size is not quite right.

In this case in order to meet the new retail it may be that during the online car buying process car dealers should consider some sort of limited exchange policy for customers that use the online purchase process. That may be divergent from the old normal process and some dealers may choose to use such an exchange policy for online sales only.

This is what it means to Meet the New Retail Head On, it means that successful businesses that want to move forward from this crisis and improve their market position need to identify what needs to change to attract and retain new customers and then make those changes immediately. Companies that examine their process and do not let the ‘that’s the way we have always done it’ crowd stand in the way of changing the process will thrive.

It is time to get started as we reopen so how could dual processes be used in the same company? Follow me for the next installment to discuss how to position yourself for a successful transition to the new retail.

Do You Have a Plan for the New Retail?

paradigm shift // an important change that happens when the usual way of thinking about or doing something is replaced by a new and different way*

Part 1

The extraordinary events of 2020 are the pure essence of a paradigm shift in so many areas of life and business that selecting just one is difficult. History will surely fill in more weighty and societal changes caused by the medical and financial crisis but one thing that has changed without question is in person retail sales.

Even after businesses reopen there has been enough time elapsed that many consumers will have formed new buying habits. The idea of buying most items online and having them delivered that might have seemed difficult before will seem normal to many. Of course, the ability to drop by a retail store and quickly pick up an item will be an important part of life again, there will be a definite drop in frequency of the in person visit for the foreseeable future.

This forecast however is not a retail Armageddon. There are two factors that will encourage shoppers to return, pent up demand and governmental fiscal intervention.

Consider that for many consumers by the time they are able to freely shop again it will have been a 45 to 90 day hiatus and while basic necessities were available, secondary items such as hobby supplies, household goods, and clothing have been difficult to obtain. That pent-up demand will be an important component of the return of retail.

Also, while many consumers have been laid off they have been receiving government stimulus and unemployment and while this income may not have matched their previous income many businesses will participate in the government loans that turn into grants when they continue to pay laid off employees. For many households this may mean that their income increased during the shutdown. This could lead to many consumers having additional disposable income in the long run and would be an encouragement for discretionary spending once retail stores open.

One of the largest retail industries that has been impacted in this shut down has been automotive sales. Most states have closed dealer showrooms, auto makers have been shuttered for 60 days, and many automotive lenders have begun preparing for large loan losses. What should be expected in the automotive industry as local, state, and the national economy opens? Like all retail industries the answer to that question is unknown, however there are things that can be now to ensure a quick recovery.

Follow me for the next installment to discuss how to position yourself for a successful transition to the new retail.

*“paradigm shift,” Merriam-Webster.com Dictionary, https://www.merriam-webster.com/dictionary/paradigm%20shift. Accessed 4/20/2020.

 

Turn 1 Star Reviews into 5 Star Customers

“The whole atmosphere was negative, I couldnt wait to get away from there. Stay away” -One Star

“The salesperson didnt even know where the car was I wanted to see, and the manager wouldnt get out of his chair to help, he just said to look at another car, so I left.” – One Star

“We bought a car and it had a flat tire the very next day and when we called the dealership no one would even talk to us, zero customer service.” – One Star

If you own or manage a business, you may have nightmares about online reviews like these. You may wish the whole review and rating “thing” would just go away. Trust me, it is not a “thing” that will be going away, but really that can be a good thing.

First of all, understand that reviews and ratings do matter. People look at them and they do influence buying decisions. Come on, admit it, you use them too. You jump on Amazon and I know you look at the product ratings before you buy, so why would your company’s customers be any different?

Secondly, and most importantly the review and rating system gives businesses a chance to hear from customers that in the past would just not come back, but now they let the business know why they do not plan on returning. These insights can be customer retention gold if handled correctly.

So, how is it possible to Turn 1 Star Reviews into 5 Star Customers?

The first step is to get the customer to engage with you either on the phone or in person. I usually immediately post a reply that simply says “I am sorry to hear we did not meet your expectations and would like to find out more, please call me at (I usually put my office phone since it is forwarded to my mobile phone, but you have to talk to them when they call so DO NOT put an office phone that you never answer as your contact number. If you are serious about turning around your reviews and ratings why not use your own personal mobile number? If you dont believe I put my cell number in responses just check out my responses online, I do it, and it works.)

I feel like around 30-40% of reviewers contact me just off of that first message, it may take 24 to 48 hours before they get back to me but they do respond but I try not to wait for them. Once I post my reply I try to immediately find a way to call the customer which sometimes is easy sometimes it is impossible, if the Google user name is ‘bigpoppa23’ and give no other details in the reivew, kinda hard to track down a number to call them so I have to wait on their call.

In short once I receive a negative review or rating, I try to get in touch with that customer like they owe me money, you cannot be passive and you have to get involved immediately if you are going to turn that negative review into a 5 Star Customer.

I felt like this would be a quick and easy post, but now that we are into it, I think this needs to be more in depth so I want to end here and pick up next time with more information on how the communication needs to proceed once you reach that negative reviewer. So I will pick this up again with more ideas on how to handle reviews like a true professional.

 

You Want me on that Wall

Absolutely not serious, and only BDC Alumni will appreciate, but I was watching A Few Good Men this weekend and thought Jack Nicolson’s speech could be used to describe the often felt tension between the Sales Department and the BDC.

You want the truth? You can’t handle the truth! Son we live in a world that has phones, and those phones have to be answered by people with skills. Who’s gonna do it you? You Sales Manager? You Salesperson? You Service Advisor? I have a greater responsibility that you can possibly fathom. You weep for leads and you curse the BDC. You have the luxury. You have the luxury of not knowing what I know, that the BDC sells cars and my existence while grotesque, and incomprehensible, to you, sells cars. You don’t want the truth because deep down in places you don’t talk about at parties, you want me on that phone, you need me on that phone! We use words like appointment, followup, show rate. We use these words as the backbone of a life spent defending something, you use them as a punchline. I have neither the time, nor the inclination to explain myself, to a man who rises and sleeps, under the blanket of the very appointments that I provide, and then questions the manner in which I provide them! I’d rather you just said ‘thank you’, and went on your way. Otherwise I suggest you pick up a phone and stand a post. Either way, I don’t give a damn what you think you are entitled to!

#BDC

Turn It Around by the Numbers

My goal was to write a very specific guide on gathering information that would help track a dealership’s progress by the use of metrics. This is the sixth draft and it is garbage.

Metrics or KPI are great tools, but metrics are not going to turn anything around, if your dealership is dying, tracking the fading pulse is not going to help you.

I am going to publish this but understand: If your dealership is in decline, or if you are brought into a dealership to turn it around, the only thing that will save it is your culture. If you want the magic bullet, it is not tracking your hours per repair order, sorry, I wish it was that easy, the magic bullet is to realistically assess the culture in each of your departments and if the culture is broken, fix it. KPI and metrics are important but not more important, in fact not even close, than a no excuses no exceptions, leader led leader enforced culture revolution.

DTCARGUYCULTUREREVOLUTION

So what is the right culture? Along with culture what part does process and KPI play? It is a tease, I am working on that post now.

All of that being said, here is the pile of garbage I had been working on.

Having witnessed the death of various car dealerships from both the outside and inside, I understand. If you are present during the decline or are tasked with turning around a failing dealership it may seem like an impossible task – but there is a clear path to follow to stop the decline. It all starts with the hardest and simplest rule.

Rule #0
First and foremost, DO SOMETHING NOW.

This is especially difficult if you have been there during the good times and have watched the ship start sinking. Having been in that position a couple of times there is an inclination to blame external factors, and sometimes there are external factors, but if you are really honest usually it boils down to something you, your managers or your dealership could have done better.

The NOW part of the DO SOMETHING NOW statement is very important. It means today, right now, get started.

Think about this: Does one month of decline equal a downward trend? If you are only paying attention to your metrics once a month, one month is not a trend – of course until the second month ends. If you only look at your numbers once a month it takes at least a month for you to notice that things are changing and sometimes it is well into month 3 before a trend is recognized.

Which brings us to Rule #1.
Pay attention to your metrics (benchmarks, KPI, whatever you want to call them) daily.

You are deep in the weeds most days with customers, employees, recalls, manufacturer webinars, and the list goes on; and you don’t have time to look at numbers every day. Understand that everyone in the business has the same pressures and time in a day but if you really care about your dealership and your employees you will make your Metric Report the first thing you do in the morning or the last thing you do before you go home every day. This is the difference between being average and being a star.

That brings us to Rule #1A.

Define your metrics and how to quickly build a Metric Report.

Start by defining what is important to measure and track. Of course all dealerships have unique circumstances however there are certain benchmarks that always need to be tracked. The biggest yardstick that we are all measured by is profit and you know how to measure that. Obviously everything else becomes slightly less important if it is one record net profit month after another, and if that is the case I would not finish reading this I would be out spending that money. Still reading? Join the 98% of us that are not riding back to back to back to back record net profit months.

The first place to start building benchmarks is in the Service Department. The reason to start in Service is twofold, first, as a generalization, most General Managers and Owners came from the Sales Department and although most have gained an understanding of the fixed side of the building many do not understand the importance of both Service, Parts, and Body Shop (if equipped). Starting with these metrics in service puts the gears in motion to tracking and rebuilding:

RO/Advisor (Repair Order per Advisor) Pretty simple formula here although there are two parts to watch, the overall formula is the total count of RO’s divided by the total number of advisors. You also need to watch what the actual count is for each advisor.

TARGET METRIC: 15 TO 20 RO’S PER DAY PER ADVISOR (20 TO 25 PER DAY IS POSSIBLE DEPENDING ON THE MIX OF WORK BUT WATCH CSI)

Sales/Advisor (Sales per Advisor) Again pretty simple formula Gross Sales divided by total number of advisors. Again watch that each advisor is actually selling their share.

ELR (Effective Labor Rate) Total Sales Dollars divided by Total Flagged Hours.

TARGET METRIC: IS A MOVING TARGET BUT ELR SHOULD ALWAYS BE BETWEEN 90 – 100% OF YOUR POSTED LABOR RATE

HRS/CP RO (Hours per Customer Pay Repair Order) Total Customer Pay Hours divided by Customer Pay RO count.

TARGET METRIC: EASY ANSWER IS 2.0 TO 2.5 BUT AS WITH MOST OTHER MEASUREMENTS THE MIX OF WORK IN THE SHOP WILL DETERMINE YOUR DEALERSHIP’S NUMBER.

Technician Productivity – Actual time worked by a technician versus the number of hours available in other words Hours Worked/Hours Available

TARGET METRIC: 85% TO 88%

WIP (Work in Process) There are variations to WIP but the first concern should be How many Open RO’s does each advisor have and why are they still open at the end of the day?

Parts:

Sales/Parts Person
Parts/CP RO
Parts Turn
Parts Gross / Parts Profit on Wholesale, Internal, Retail

#Automotive #CulturalRevolution #Culture #KPI #ManagebyMetrics #dtcarguy #advertisingboss #carCultureRevolution

Marketing is a Waste of Money

Are you ready to throw away some money? Are you ready to waste some time too? Great. Here is the simple formula: Develop an awesome marketing campaign; support it with television, radio, social media, and search marketing; follow up with having no people to handle the calls and leads. That sounds crazy but businesses, specifically your local automotive dealerships, do it every  month.

The disconnect is especially evident when a consumer sees a high energy television commercial and then calls and speaks with an untrained and unmotivated so-called salesperson or receptionist. The caller usually hangs up without proceeding with setting an appointment or making a purchase, wasting their time, the company’s time, and wasting those advertising dollars. There are ways to avoid this massive money pit.

The easiest way to avoid this is to hire quality people, train them, and compensate them well. Easy, right? At the very least you should always be training. At the very very least you should be training on what the advertisement is and what people should say when customers call or come in. Phone training is difficult because it is not just the words you want people to say but how they say it. A great script delivered with no feeling or excitement is the same as having no script.

It really comes down to training. Who is training your people? Who trained the trainer?

If you want to stop wasting your advertising dollars feel free to email me at dtcarguy@dtcarguy.com

PS. I really dont think that advertising is a waste of money because once you get trained people they need something to do, but which comes first? Join me next time.

You Hire Who You Attract

Companies often think of marketing and hiring as two different and unconnected jobs and departments, but I propose that hiring is your biggest advertising need if you are trying to grow a business. If your marketing department is not involved with attracting job applicants you are wasting the money you spend advertising your jobs.

It may only be one thing that ruins your job advertisements.

I had been noticing that our recent pool of job applicants for our sales department seemed younger and less experienced than the previous batch of young inexperienced applicants. As I pulled up the online job posting that our hiring manager had posted everything seemed fine until I reached the end, he had posted a salary of $20,000 a year.

If you want a job where you make $1600 a month that is fine, but I wont expect you to be my top producer in my sales department, or my BDC, or as an advisor or mechanic in my service department. If that amount of money is my top producer in any of those positions I am going out of business quickly.

You get what you pay for is as true in hiring as it is anywhere else. When you advertise for people who are satisfied with a minimal amount of money every month don’t be surprised when those same employees give you a minimal amount of work every month.

Motivating people who are success and money oriented is pretty easy, reward them with recognition and money and they usually work on their own to achieve whatever goals are set before them. Motivating people that are not success or money oriented usually ends up being a guessing game and who has time for that?

Advertise BIG for employees, don’t be afraid to use your top producer as the template for your job ad. Does your top salesperson make $300,000 a year? Advertise that instead of advertising to attract more of your worst producers. Get marketing involved in the way you advertise your jobs and you will get better candidates.

Posted 04/06/18 on https://www.advertisingboss.com

 

February Strategy

Welcome to February, what is your play this month? It is a short month for sure but typically if you work in any kind of production based job you have the same goals as any other month so how you handle the first few days really is the difference.

Auto dealerships and anyone in the automotive business should have already been working in January getting ready for tax time, but if not it is not too late. You may not have control of the inventory at your dealership so getting the right mix of cash cars and lower priced vehicles for financing is not something you can fix. How you respond to what inventory your dealership has is totally something you control however, so make sure that you do what you need to do to sell the inventory you have.

Many salespeople will spend the first half of February complaining about inventory and how management does not provide the right inventory and how the competition is so much better at having the right inventory. Many salespeople will waste time complaining instead of just making it work.

The first February tip is that the month is short, hit the ground today with gears engaged and every day in February remind yourself that this month is short and you have no time to be negative you only have time for selling this month.

Marketing Mix

No question, as a business owner or marketing manager there are endless choices of how to burn your marketing budget. In many markets an effective televison campaign can be the entire marketing budget of a small company. How does a small business choose the balance between marketing mediums? What are the options that are available in competition or in unison with digital advertising? Consider these options.

1. Print. In most local markets this would be the local newspaper although in larger markets there may be multiple newspapers or other local magazines. Does print media make sense? In some markets there may be a reason to be present in print but overall this is an aging demographic that may not be the best choice for media dollars. Consider that every part of print media companies are in decline.

“This overall decline in circulation coincided with a double-digit decline in advertising revenue for the industry as a whole. A separate Pew Research Center analysis based on the year-end financial statements of seven publicly traded U.S. newspaper companies suggests that advertising revenue across the industry declined even more sharply than in recent years: a 10% decline, which outpaces the 8% decline in 2015.” (Barthel, M., Pew Research Center, 2017)

2. Television. An obvious favorite of all advertisers television is the “big dog” of most traditional advertising budgets. The real determination of how effective television is often depends on frequency and reach but in reality the effectiveness of television is held in the message. If a business has a strong and unique message the cost efficency of television can make the decision to advertise here simple. The danger of relying totally on television is that similar to print it is a shifting and shrinking media. Even events that usually are ratings and advertising rockstars are slipping in popularity and revenue, the rating estimates for the 2018 Olympics are down 28 percent from previous years.

“The user behavior that cable TV providers fear most — cord cutting — is projected to accelerate over the next five years. EMarketer estimates that by 2021, over 81 million U.S. consumers will have either cut their cords or never signed up for one in the first place, up 64 percent from today.” (Willens, M.,https://digiday.com/media/state-tvs-decline-five-charts,2017)

Both of these major competitors of digital advertising are worthy of consideration in any advertising budget but both are slipping in reach and both can be extremely expensive. Although it would be simple to say that traditional media such as print or television should be eliminated they do have a place in any media plan.

#mediamix #advertisingboss

Slinging Whips since 1999