Imagine for a moment you are walking along a trail in the forest which has a swollen swiftly running creek off to your right with a 100 foot waterfall drop-off well downstream. You decide to venture over to the edge and take a closer look. As you approach the creek’s edge you fail to notice a tree root exposed above ground and you trip. Your fall tumbles you down the hill and into the fast moving turbulent water. As you are rushed downstream you become a prisoner to the creek and cannot escape the power and grip of the water ever mindful of the impending upcoming falls. You are pushed under the water for several seconds at a time, surfacing briefly gasping for air. Becoming fatigued due to your struggles as you surface for the fifth time you notice someone downstream on the upcoming bank holding a life ring with a rope attached. You have to make a decision. Are you going to prepare and position yourself to accept the life saving ring which will pull you safely to shore or are you going to say to yourself “Well, I have never done that before so because I have no experience doing it I will continue to drift downstream”? Like most people in this life threatening moment you would go for the life ring.
Although not life threatening, in business we often get caught up in what appears to be never ending swift moving tasks of running the business where we often need a life ring to pull us out of the slump or craziness. The good news is that it doesn’t matter what is causing the craziness or poor performance. What does matter is if and how you go about identifying the problem and instituting a winning strategy to correct the proverbial sinking ship. I will attempt to provide some insight to problems and then address how you can implement a few solutions. Remember, this is an ongoing battle and you’re not alone, but if you don’t monitor and affect solid change, things can become worse.
Ask yourself this question; could we be doing 20% better? When I ask that same question, 90% of the dealers answer by saying, yes. Unfortunately, most of them will continue putting off the critical steps that will give them that 20% gain. They say things like; “we have other things in the fire”, “we just don’t have the time”, or “well, let’s get through the quarter” or some other irrelevant time sucking reason for not growing. Most people are living in the Land of Just Good Enough. I see a lot of dealers personally making big money so their concentration is not on improving but maintaining. The problem with this thinking is if your people are not growing they will leave you and while they are in your employment they are not engaged nor productive waiting the next job opportunity. We can’t just settle for good enough anymore. We must begin to expect only the best performances from the dealer and all departments.
I continue to hear from dealers things like;
“Yea, but my people don’t know what to do, they simply reply to inquiries.”
“We can’t get people in on appointments.”
“I can’t make my people follow processes”
“We have a hard time attracting quality employees”
“We are selling a lot of cars but our gross profits are down”
“Nobody knows how to really manage their department to get the results we need.” Or,
“We haven’t had much luck selling shoppers because they only want best price.”
Now is the time to forget the past and look toward the future. We can’t change the past even if we wanted to. But you can do something about tomorrow and the day after that. You have a huge windshield in your car to see the world to coming at you yet some want to look in the small rearview mirror most of the time looking at what has passed them by. You need to impinge upon your professionals things that color their forward thinking view as it relates to their business into a positive “new” growth potential. Replace doubt with confidence, faith and discovering the awesome new ways to excel within your dealership. Get excited about new opportunities you can create because emotion creates motion. Your thoughts are the software telling the hardware what to do. Therefore focus on the right stuff.
Procedures and Processes for Business Increases.
Your dealership is not a branch of the military. For morale reasons it shouldn’t feel like it is. Your employees probably don’t follow every command while dotting every “i” and crossing every “t”. And this isn’t all that bad; your people who best connect with your customers are normally not that detail oriented anyway. The challenge is helping your team members remain on the right track and stay focused doing the correct things through effective process adherence and giving them “proper” training techniques. Below is a 5-step progression to continuously enhance your people, processes and as a consequence, building a solid growing dealership.
Step 1: Assess your current processes. Retired GM chief executive Jack Welsh, in his book about Winning in the business world writes, “Candor is important”. Using candor as you look introspectively at your processes is vital. And, to facilitate a clear view, you need the right information. Don’t be fooled by monthly sales numbers or total gross profit because both are influenced heavily by multiple factors – to find real value look deeper. Deep dive down into your CRM software to find relative numbers, success ratios that are sub-divided into all the steps involved in a profit and customer process then compared them against total opportunities to do business.
Once you have the right information, focus on finding those real areas of improvement. Make a list of your highest failure points. For example, your highest failure point may be in e-mail response time and your second highest failure point may be customer appointment show ratios. Whatever you find, be honest and prepare for change to make it better.
Step 2: Compare process assessment to industry averages and set goals. Step one is all about finding where to make improvements and Step 2 involves quantifying the level of improvement required in comparison to industry benchmarks. Once you’ve developed an idea as to the level of improvement, set your goals accordingly.
To improve the success-rate of your process improvement goals, utilize the SMART goal setting method. The acronym SMART stands for specific, measurable, attainable, realistic and time-based goals. In practice, a goal simply stated as “decreasing e-mail response time” wouldn’t be as effective as a goal to “send initial e-mail reply within 15 minutes to 95% of leads received during operating hours by the beginning of next month.” or, “shoot for a 60%-70% show ratio on appointments made”. These goals will give your employees an unambiguous objective with a clear deadline, and if the goal is attainable and realistic, it will give you basis for reprimand if the goal is not met. Now, take your areas of improvement from step one and develop a SMART goal approach for each process to be put in place during step three.
Step 3: Implement changes. If you’re stuck in limbo between steps two and three, you are not alone. The term “analysis paralysis,” identifies the problem of defining goals and only planning to implement change, but failing to follow through. Please don’t do this. Failing to break through analysis paralysis is one sure fire way to destroy your momentum. Now, let’s discuss implementing winning changes.
Implementing process changes is the hardest step and it takes genuine leadership. You must rally your employees, deliver the new processes, support their progress, and lead by example. In a well-documented study, the Hawthorn effect describes the tendency for employees to be more efficient when managerial attention is applied. For your purposes this study reads; to rally your troops you must spend time on the floor and experience the problems first hand. Then, when you deliver your new processes, your goals will have a much greater impact due to the empathy & respect you have gained from being on the front line. Your employees will be excited about implementing new processes because you showed leadership in understanding firsthand what they are experiencing and finding solutions with them! They now are part of the solution ownership.
Once the new processes and your implementation goals have been communicated, it’s not time to retreat to your office and look at more numbers. It’s time for you to be visibly engaged and offer any assistance you can. If an interim benchmark is successfully completed, buy lunch. Show that you appreciate the effort expended by your people. Finally, you must lead by example. If the goal is to decrease e-mail response time, when a team member sends you an e-mail, respond as quickly as possible. Apply the new rule of leadership – do as I say and as I do!
Step 4: Monitor process adherence. In step one I asked you to look at relative numbers, and I explained that units sold and average gross profit are not good indicators of healthy processes – keep that concept front and center. Almost invariably, dealers that institute solid processes, with the right people in the right job and technologies, will experience success to a greater degree. The problem is that when most dealerships experience success driven by solid processes, they forget the driver – the processes – and they start focusing on more units and higher gross. And guess what, the solid processes are abandoned and the increased success is gone shortly thereafter. This syndrome has plagued the car business for years, but if you can keep your people focused on utilizing the new processes and monitor their adherence to those processes, your success will continue. The key is to keep focused on the little numbers throughout the all paths-of-the-sale and your big numbers will continue to grow.
Step 5: Repeat. This concept is simple. Continue to look for opportunities to improve your processes then implement winning solutions. It’s important to remember we live in a “good, better, best” world. You will always be able to find something new to improve. And don’t stop with industry benchmarks, because for the most part, our industry is filled with poor performers. Take this as an opportunity to push beyond average and move towards greatness for all of your processes.
Technology. Disclaimer – The right technologies can enable all departments. The wrong technologies can, in the best case scenario cost your dealership thousands of extra dollars, and in the worst case scenario be so cumbersome, ineffective, and/or labor intensive that they undermine the ability of your great people and solid processes to be effective. Our purpose is to advise the best possible combination of technologies to enable your people within the restraints of your store size and budget.
Technology is your new storefront. While we’re not at a time where the average deal happens completely through electronic channels, it’s of great value to make the comparison of your technologies to your storefront. Customers are visiting your website instead of your lot, they are e-mailing and now beginning to call again because email is just too slow for some. It’s incredibly important that your website looks great and feels warm and inviting, just like your lot and showroom, and that your e-mail/texts are functional and always-on, just like your phones.
If I looked at your web site would I see that you are community minded or just another dealer wanting to sell me a car? Better put your “Relationship Building” and “Trust” messages right on your landing page else you will look just like everyone else and then it becomes all about best price. But just like your showroom, lot, and phone system, technologies don’t sell vehicles; they simply enable great people and solid processes. This should help put the overall purpose of technologies for your sales and service departments in perspective. If you would like to receive a little more clarity or a few ideas on dealership process responsibilities send me an email. Make this New Year the year you bust though to making your store and your people the very best they can be!