By Tom Kline, Lead Consultant and Founder, Better Vantage Point
If you’re a surgeon, you generally fix medical issues through surgery. I’ve seen this several times in my life and it’s not always the best option to resolve a medical issue. So how does this thinking affect running your dealership?
When you ask a question of someone at the dealership, consider the source, when you listen to the answer. What is their perspective on providing you with the information? Does this person have a wide scope or a narrow one? Are they considering all the angles? Or, could they be a hammer, looking for a nail?
One of my dealer clients spends over $400,000 on his property and casualty insurance every year. When I inquired why certain coverages had such low limits, his answer was essentially, “they’ve always been at that level.”
Follow The Money
In looking at this dealer’s insurance, I have found some gaping holes which make me nervous… on his behalf! He works with a reputable, national insurance broker.
Typically, insurance brokers are paid on commission. So, if you agree that people “work their pay plan,” then they are interested in selling insurance because that’s how they are paid.
So, is it in their best interest to do a deep dive into those policies to determine what is best for you? Or is it in their best interest to renew what you already have?
People won’t necessarily do more than they are required; that’s human nature. So in the case of this dealer, the broker has not looked into the various coverages likely because he is not getting paid to do that work.
Check and Audit Everything
Don’t get complacent. Audit. Absolutely. Everything.
Auditing keeps everyone accountable. You’ve heard the old adage, “trust but verify.” It’s a good one because the person checking has (intellectual) incentive to find things that could be “wrong.” It is your job as the owner/operator to evaluate and formulate conclusions and decisions.
This notion touches on every aspect of the dealership and is not focused solely on your insurance. Consider these audit tests:
• Have you picked up the phone (to check behind the BDC) to call several customer-leads “who never answer,” or who “aren’t interested in coming in for an appointment?” Can you get through? (Hint: I’ll bet you can.)
• Has anyone followed up behind the sales manager and called the customer who left the bad Google review? The sales manager may claim that he leaves messages without a return call. Can leaving the right message get the customer to call you back?
• Your clerk says he is unable to get a customer to pay the bounced down payment check. Have you called? Maybe you could send someone by the house to knock on the door? Maybe you can resolve this item by teaching the clerk a better way to produce results. (The speed of the boss = the speed of the crew.)
• When was the last time you met with a customer who had a sales complaint? Did you consider you could learn about broken processes or sales manager “talk tracks” by listening to the insight provided by an upset customer? By meeting with the customer, you are checking behind the sales process itself so you can evaluate how it can be improved.
• Do you review accounting journal entries over a certain dollar amount? Could someone in the accounting office be stealing from you? Could they be simply wiping a problem from the books so they don’t have to solve the problem? If you are checking behind them, they will be less likely to hide an issue from you.
Does your floorplan bank come to the lot to do an inventory audit? Of course they do! They are checking to make sure there are no stolen or missing vehicles. They are checking behind your internal controls.
There are many hidden issues which you will need to unearth.
By auditing and creating a routine inspection in every department, you will naturally uncover issues. This is good news as you will discover and effectively manage and resolve what you find. This is risk mitigation. So by practicing good risk mitigation tactics, you can ensure that smaller problems (1) can be identified early, and (2) can be managed and concluded at a quieter (and less expensive!) level.
Inspect the various aspects of your dealership from all angles. Use all of the tools at your disposal. Don’t settle for simply being a hammer.