Wayne Pearson
A LIFELONG commitment to best practice can put any dealership in the top 30 per cent of performance but it involves relentless self- assessment by the business owner or general manager and daily monitoring of the fundamental underlying data that is driving the operation.
Last week I outlined the top 10 attributes that delivered a best-practice dealership. Many dealerships have a number of those characteristics; the key is pulling together as many of those characteristics as possible.
How do you get there?
Start the day early
Start each year, month and day with a clearly-defined plan
Measure your processes as robustly as you measure your financials
Processes that can influence the daily outcome:
1 2 3 4 5 6 7 8 9 10 11 12 13 Conclusion
How do you get there?
I recommend you do your own self-assessment against the top 10 points, I know when I did my own in my dealership it really did change my focus and level of day-to-day involvement in the business.
Once you have done your self-assessment, below are some of the things that can help to drive best practice.
Start the day early
With four or five people from the factory wanting your undivided attention pretty much on a daily basis, you might think there is no time for giving the level of close management I recommend.
But that is what seven in the morning is for.
Nobody from the factory will ring you before 10 in the morning.
So I would spend the first two hours of the day going through all my numbers, getting everything planned and prepared and meeting with the general managers and sales managers and even the sales people, talking to them about their sales targets and how they were going following up their leads.
So they will be using the second hour and a half of their day productively because they spend the first hour and a half working out what they need to focus on.
It’s the old story, if you want to be successful you need to start early to get in front of the pack and make sure your people are all armed for the day. If you want to show up at 10am then this sort of focus will not work.
Start each year, month and day with a clearly-defined plan
Most dealerships start each year with a budget. This is based on figures from the last year plus X per cent. In reality this is a negotiated position to appease investors, brands and management.
What it rarely does is drive the business to best practice.
Rather than doing a budget, do a dealership optimisation exercise. This will highlight immediately where you are not optimised and what the upside opportunity is for your business.
Then pretend you are the consultant giving your business advice.
What advice would you give yourself to achieve the goal? Implement your plan and measure and monitor progress with your team.
You need to become the immovable rock on these changes. Your team has been conditioned (possibly by you) to believe they can’t optimise their activities, so if you become goal-focused and have a clear plan you will achieve improved results.
Break your plan into daily actions, activities and outcomes which can then be implemented and monitored in each department.
Rather than hope for the best, plan to become the best. Get this right and you can become a best-practice operation.
One of the things I found was really important was to make the daily analysis granular – to really get it down to a transaction-by transaction level. By that I mean having access to your data on a really high level of detail on a daily basis rather than weekly or monthly.
A lot of the people have monthly budgets and monthly targets but to really stay on top of your business progress you need to break that down by the day.
Measure, audit, benchmark and report in your Daily Operating Control the actions that deliver outcomes in your business each day.
For example, if you want to sell 100 cars a month, you have to work on selling 100 cars a month from day one. You cannot work on it from day 25.
So 100 cars a month is three and a half to four cars a day. I have three sales people so they have to sell one car a day each. So you give those people a target of at least a sale per day.
Measure your processes as robustly as you measure your financials
Praying to the target god will not get you to your target.
So by crunching it down into small granular steps I was then able to incentivise on daily, weekly and monthly goals rather than purely monthly goals.
A target is a goal achieved every day by having a clear action plan, delivering on the action plan and measuring its outcome. Each month when you “rego” your way to target for bonus money, you are admitting you are not a best-practice dealer.
A best-practice dealer will “sell target” each month and not just “hit” target because winning target was planned at the beginning of the year, planned at the beginning of each month and game planned each day.
All of the below are processes that you can influence the daily outcome:
1. Number of appointments made in sales by each sales consultant
It stands to reason that if someone is prepared to make an appointment to buy a car then they really are in the market for a car. Whereas someone just walking in off the street can be just shopping.
We looked at the productivity in the showroom and worked out that if you made two appointments you sold one car. So they needed to achieve two appointments a day to sell a car a day.
A lot of salespeople think that if they talk to enough people they will eventually sell more cars. But once we showed them that the more appointments they made the more cars they sold, they became more confident because there was a strong chance of selling a car every day.
2. Number of appointments kept in sales by sales consultant
We would ring the customers first thing in the morning and move the appointment by 15 minutes. What that does is create responsibility for turning up on the customer’s part and, because the time has been moved, means they really need to turn up on time because the dealership must be busy.
It also confirms just how serious the customer is. If they are clearly not serious you need to get going to find another appointment.
3. Number of test drives conducted
Moving people from appointments to test drives is critical. Customers need to earn the right to buy a car and part of earning that right is that they must have a test drive.
We used to value the trade-ins before people had driven the car. But until someone has driven the car they have no emotional connection to the car. Really all they want is a valuation so they can shop you down the road. So test drives are critical to getting people to focus on what they are buying (emotion) rather than what they are selling (economics). So trying to work out the deals without the emotion is very difficult because then it is just about price.
4. Number of vehicles on display without finance repayment hangers
Most people don’t buy cars, they buy a repayment. So they focus on what they can repay each week. Having the hangers gets that number in front of them early and takes a lot of anxiety out of the process.
We found there was a strong chance that people wanting to buy on finance would not buy a car where the repayment hangers were not displayed. So all cars needed repayment hangers.
5. List of autogate leads over seven days old with no action
You need to sweep up the customers who have been missed for some reason. At this point it makes sense to change to another sales person. If seven days have gone by and the customer has not made an appointment it could be because the salesman is not the right person and the customer is still in the market. So it could be a personality thing and they are still shopping.
6. List of vehicles in stock with over 10 online views but no leads
This tells you that either your price is too high or the car is not presenting well online. But if they are looking at the car it shows there is demand. People want that car; they just don’t want the one you’ve got.
7. List of vehicles in stock with over five leads and no sale
You need to go and look at the car because there is something wrong with the automobile. Invariably it does not look as good in the yard as it looks online. So you need to decide to get it cleaned up more or just get rid of it.
8. List of valuations by each sales consultant per day
This shows you which salespeople who are not seeking trades-ins. The biggest friction point in buying a car is the trade-in. Most people going to a car dealership have no trouble buying a new car; what they have trouble doing is selling their old car.
Salespeople hate trade-ins because it is a conflict point so they avoid valuing cars. They are very good at presenting and selling the new car but when the customer wants to bring the trade into the mix they will tell them to sell it privately online.
So we need to know how often that is happening because if you have not valued the trade-in you have left the customer with the problem of not offering the full service. And, given that we are also in the business of selling used cars, not doing a valuation on the trade-in denies us the opportunity of getting a car to sell.
This list showed us the sales people who were trying to shortcut the process which would backfire on us because the customer would then often go to another dealer who would take the car.
9. List of vehicles traded for wholesale each day
You need to keep on top of this because we found we were wholesaling a lot of cars we should have been retailing. So these are used-car retail opportunities that people were basically too lazy to look after.
10. List of vehicles in reconditioning booked in more than three days
Obviously you don’t want to be paying to hold a car that is not even available for sale but you could also be spending too much money on the car. The longer it is in reconditioning the more likely panel work is being done on it. Panel and paintwork is expensive and it takes time. You want to avoid cars that are going to be in reconditioning for five or 10 days because eventually you pay too much to fix them and they are out of circulation for too long. In the end you wind up owning the problem because they never sell as well and invariably they are the ones you wind up losing money on. The ideal trade just needs a polish and a service before going into stock.
11. Number of handovers to service on delivery and date of first service booked
This was the core of our customer retention strategy. We wanted to make sure owners would come back to us for service and not someone else. The best way to do that is by a proper introduction to the service department by showing them where to drive in, where to park and who to speak to. We would take that opportunity to book them in for their first service.
12. Daily list of ‘no shows’ at service and rebooking date
When people don’t turn up you must follow up. Things happen; the kids are sick, the weather’s bad etc but unless you follow them up the car won’t get serviced at all or they go to another dealer. So we worked hard to rebook them for another time and we found that most customers gave us the credit for looking after them and apologised for not turning up. But you cannot wait two weeks because the goodwill will have evaporated by then.
13. List of customers in for service previous day but next service not booked
This makes sure your loyal customers are lined up for their next touch point in your business.
Conclusion
Putting these on your DOC and measuring them daily will help you start to influence the outcome on a daily basis.
A great DP is a great process auditor. A lot is invested in real estate, people and marketing so why not maximise the return.
By Wayne Pearson
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