KEEPING UP THE GOOD WORK…
KEEPING UP THE GOOD WORK……
As the mobility concept is preparing to transform within the next decade, retail industry still needs to sustain profitability for as long as it exists and some of the shifts in business trends are critical in order to survive.
As the cyclical down turn of new vehicle sales start to impact the industry the focus has inevitably shifted. Increased used vehicle inventories along with volume driven manufacturer incentives have caused new vehicle profitability to decline. Now the opportunity is to focus on used vehicle sales and that is just what the public companies and privately owned large retailer groups have done to maintain profitability. However as everything else in this industry, the rules of this game have changed as well. In order to run a successful used car department you must maintain a dynamic inventory that turns every 45 days and priced competitively in your primary market. All your efforts must be placed on digital marketing with majority of the focus on your own web-site. Proactive price adjustments must be made sometimes 4 or 5 times a month depending on the availability of the same make and model in your market and how aggressive you want to be with your margins.
The second area that you must be focused on is your fixed operations department where customer service becomes the key for your success. Overall auto retailing has been a scale based, production driven industry which has been about moving metal at all cost. All of the training and the processes that have been in place suggested very little for customer care, loyalty, integrity or conspicuous negotiation standards. Our sales people have been taught bazaar concepts and terminologies to deal with customer objections; such as “Don’t worry about the price just sell the car”, “are you ready to buy today?” or “Can’t give you a price for your trade unless you are committed to buy our car” so on and so forth. All of this, over the decades created an industry that has no credibility. However that is about to change and pretty quickly. This era is about customer service, loyalty, integrity and delivering promises and more. That is the reason why your service department has become your training ground to cultivate the culture of highly effective employees who deliver exactly that. It is no longer a priority to determine if a customer is ready to buy a car today, it is however imperative to treat them with an everlasting positive purchase experience when they visit your store. It is crucially important to promote customer loyalty all the way from service department to former purchase customers just to have an opportunity to earn their next vehicle purchase. In a down market this is particularly important to sustain reasonable amount of unit sales whether new or used.
Here is the deal, over the years you have spent enough money to make some sales training companies millionaires in this country only to experience the definition of insanity, they showed you sales staff “Meet, Great, Qualify, Demo, Write up and Close” over and over again. Time has come to educate your staff culturally. They need to be given tools to understand building relationships with customers and learn effective interview techniques that do not offend customers while collecting the necessary information to structure a proposal. They also need to be empowered with enough information and knowledge so that they don’t look like fools in front of customers who have the ability to collect all of the information on internet. Then they need to be educated about retaining their own performance statistics so that they can improve their production on their own measurable scale regardless of what your company process dictates them to do. They also need to learn to use these stats to factor in their earnings potential based on their pay plan so that they can plan their lives as they also motivate themselves everyday to perform.
During tough times, one of the most important survival strategies is efficiency. It is imperative to run a lean operation and save every dollar and pay attention to return on sales. While it is critical to control every expense line on your financial statement, some of them have a higher tendency to run away from you. Especially the dollars spent in advertising has a profound impact not only in your wasted dollars but the results that you get as well. The old school of”let’s throw some money against the wall and see what part of it sticks” in today’s world is a suicide mission. Most of your advertising dollars should be spent on digital marketing and on your own web-site, it is you web-site traffic and your responsiveness that will determine your sales efficiencies along with the customer handling skills discussed above.
As to your service department, I suggest you figure out a way to calculate your shop capacity, determine your benchmark hours per repair order and your effective labor rate. Then design pay plans that directs your service staff’s attention to those items and reward them for achieving their benchmarks. Institute a process to measure customer retention and loyalty and take the red carpet out when it comes to killing them with kindness.
Above all, create a company credo that promotes employee care, loyalty and satisfaction like never before. Hire with scrutiny, pay well and perpetually educate, improve and keep them at all cost.
We still have a few good years before throwing the towel but it is time to arrive.
See you next month.
Arlan
arlan@tarhangroup.com