autosuccess jan09

AutoSuccess Best of the Best NADA 2009 – Details Page 4

January 2009

AutoSuccess Magazine is published monthly at 3834 Taylorsville Rd., Building A, Ste. 1B Louisville, KY 40220; 502.588.3155, fax 502.588.3170. Direct all subscription and customer service inquiries to 877.818.6620 or [email protected]. Subscription rate is $69 per year. AutoSuccess welcomes unsolicited editorials and graphics (not responsible for their return). All submitted editorials and graphics are subject to editing for grammar, content and page length. AutoSuccess provides its contributing writers latitude in expressing advice and solutions; views expressed are not necessarily those of AutoSuccess and by no means reflect any guarantees. AutoSuccess accepts no liability in respect of the content of any third party material appearing in this magazine or in respect of the content of any other magazine to which this magazine may be linked from time to time. Always confer with legal counsel before implementing changes in procedures.© All contents copyrighted by AutoSuccess Magazine, a Division of Systems Marketing, Inc. All rights reserved. Reproduction in whole or part is prohibited without express written consent from AutoSuccess. AutoSuccess may occasionally make readers’ names available to other companies whose products and/or services may be of interest; readers may request that names be removed by calling 877.818.6620. Printed in the USA. Postmaster: Send address changes to AutoSuccess Magazine, 3834 Taylorsville Rd., Building A, Ste. 1B Louisville, KY 40220.

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FOCUS ON THE ‘WILDLY IMPORTANT’

PaulCummings

TomHopkins

KarenDillon

PARTS CHOICES - NOT ULTIMATUMS

StephenR.Covey

SUCCESS BEGINS IN YOUR MIND

MichealYork

THE FOOLISHNESS IS OVER

WHAT CONSTITUTES A GREAT CUSTOMER EXPERIENCE?

Dr. JohnC.Maxwell

SeanV.BradleyINTERNET SALES 20 GROUP XIII

STOP WHINING AND START WINNINGThe Attitude Development Plan

CAN WE HANDLE THE TRUTH?

GAME CHANGER1 Solution for Automotive Internet Marketing

SusanGivens

FINDING JOY

LloydSchiller

SMALLER PIECES, BIGGER PROFITS

SeanStapleton

PaulSnider

SteveBrazill

WHY DO SALESPEOPLE TAKE SHORTCUTS?

YOU CAN’T GO BACK AND YOU CAN’T STAND STILL

RIGHT SIZE, RIGHT NOW

MattBaker

JohnBrentlinger

JohnDobrick

WHAT’S THE DIFFERENCE BETWEEN DEALERSSUCCESS AND FAILURE TODAY?

DalePollak

RonAlexander

CONSIDERING GOING DARK?Let’s Talk About What That Looks Like

HOPE IS NOT A STRATEGYGaging Providers for Cost Effectiveness

MarcSmith

LEADING THE WAY TO PROFITABILITY - Loyalty and Membership Programs

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www.autosuccessonline.com

StephenR.Covey

FOCUS ON THE‘WILDLY IMPORTANT’

leadership

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Leadership starts with defi ning priorities, but

doesn’t stop there. Previously, I’ve talked about the gap between setting a goal and achieving it. To close the execution gap, a dealership must practice four disciplines:

• Focus on the wildly important goal• Create a compelling scoreboard• Translate lofty goals into action• Hold everyone accountable all of the

time

In this column, I will explain the fi rst discipline.

There’s a key principle that many fail to understand, hampering their ability to perform. According to science writer Nigel Calder (The Mind of Man), one of the most self-evident characteristics of the conscious mind is that “the mind attends to one thing at a time.” A person wearing spectacles with one green and one red lens will see either green or red, but never some grayish combination of the two.

Suppose you have an 80 percent chance of achieving a particular goal with excellence. Add a second goal to that fi rst goal, and your chances of achieving both drop to 64 percent. Keep adding goals, and the probability of achieving them plunges steeply. Juggle fi ve goals at once, and you

have only a 33 percent chance of getting excellent results.

How vital it is, then, to focus diligently and intensely on only a few crucial goals. While many of our goals at the dealership are important, only a few qualify as “wildly important.” A wildly important goal carries serious consequences. Failure to achieve this goal renders other achievements relatively inconsequential.

Consider the situation of the air traffi c controller. At any moment, hundreds of airplanes are in the air, and all of them are important. But the controller cannot focus on all of them at once. Her job is to land them one at a time, and to do so fl awlessly. Every organization is in a similar position. Few can afford the luxury of divided attention; some goals simply must be landed.

How do we know which goals are wildly important? The fi rst step in achieving the crucial goal is to clearly defi ne it. Which goals bring the most leverage in terms of strategic, stakeholder and economic priorities? All potential goals should pass through these three screens.

Organizational strategy is crippled unless it takes the form of a few vital goals that everyone understands. Everyone in your dealership should be able to defi ne how the goal:

• directly supports the organization’s mission

• leverages core competencies• increases market strength• increases competitive advantage

Additionally, a goal cannot be wildly important unless it is the most consequential thing you can do to advance your strategy.

What are the most important things you should do to fulfi ll the needs of your

stakeholders? Your answers constitute wildly important goals. Customers, employees, suppliers and investors all have a stake in these goals. Therefore, everyone should be able to describe how the key goals:

• increase customer loyalty• ignite the passion and energy of your

people• favorably impact suppliers, business

partners and investors

For a business, a goal cannot be wildly important unless it is crucial to the economics of the fi rm. Everyone in the organization should be able to clearly defi ne how the goal improves:

• revenue growth• cost reduction• cash fl ow• profi tability

Wildly important goals bring the greatest payback. Of all your potential goals, which few would bring you the most signifi cant economic return?

Putting the goals through the strategic, stakeholder and economic screens positions a clear “why” behind the “what” of the goal.

The most vital work of the leader and of the fully engaged team is to defi ne the wildly important goals — to defi ne those goals so clearly and to make the rationale so plain that no one misses their signifi cance. It is to distinguish the wildly important from the merely important and to focus intensely on it. You can’t afford to waste precious time and effort on anything less.

Originally ran in CLO Magazine

Stephen R. Covey, Ph.D., is co-founder of FranklinCovey, and is the author of the best-selling The 7 Habits of Highly Effective People. He can be contacted at 866.892.6363, or by e-mail [email protected].

“...to defi ne those goals so

and to make the rationale so plain that no one misses their signifi cance.”

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tion TomHopkins

SUCCESS BEGINSIN YOUR MINDA good attitude is one of the most important

traits a sales professional can have. Most people who fail in business fail because they don’t know how to keep their attitudes positive on a daily basis. They start their careers learning and practicing the basics, applying these ideas and end up making lots of money. Then, they go into a slump. They will stay in their slump until they go back to the fundamentals, until they return to doing what they get paid for — accepting failure and rejection without letting it stop them.

The key to success is in how you handle failure. Handling failure does not come naturally to most people. It is an acquired skill. Some of your emotions tell you to sulk and avoid any situations in the future that are likely to put you in line to feel the pain of rejection again. Other emotions tell you to get more out of life for yourself and your loved ones. Concentrate on what you have to gain, and learn how to change your attitude toward rejection.

I am going to present fi ve sayings that have helped me move forward in all areas of my life. Memorize them and recall them when you’re rejected or have failed to achieve what you wanted. I never see failure as failure, but only as a learning experience. Every sale that doesn’t go through is a learning experience; every challenge you have is a learning experience. Learn from your failures. Thomas Edison, who conducted more than 10,000 experiments on fi laments before he produced a practical light bulb, was once asked, “How did you keep going after you failed more than 10,000 times?” Edison replied, “I did not fail 10,000 times; I learned 10,000 ways that didn’t work.” Like Edison, try to look at failure and rejection in a different light — as a learning experience.

I never see failure as failure, but only as the negative feedback I need to change course in my direction. Outside a restaurant with a lively bar, I once saw a gentleman who’d had too much to drink try to unlock his car with the wrong key. No matter how many times he tried, the wrong key still didn’t work. After I’d talked him into taking a taxi home, it occurred to me that sometimes we all keep trying to make the wrong key unlock the door — keep using techniques that don’t work in our selling endeavors, keep applying the wrong solution to the problem long after we’ve tried it and failed. I never see failure as failure, but only as the opportunity to develop my sense of humor. Have you ever had a traumatic experience involving a sales presentation? Three weeks later, you fi nally tell someone about it and suddenly that same event is hilarious. The longer you wait to laugh, the more that failure will hold you back. Make a determined effort to laugh sooner, and learn the trick of telling a good story on yourself. I never see failure as failure, but only as an opportunity to practice my techniques and perfect my performance. Every time you present your service to others and they don’t buy, at least they gave you a chance to practice. Many people don’t realize the importance of this. Learn to appreciate the opportunity to become better. I never see failure as failure, but only as the game I must play to win. Selling is a game. Life is a game. Both have their rules — luck plays a small part, but the winners play ball. Over the years, I’ve discovered that a single rule dominates every situation: Those who risk failure by working with more people earn more money; those who risk less failure earn less. If you risk failure, sometimes you will fail. But every time you fail, you’re that much closer to

success. Success demands its percentage of failure. Here is a philosophy that I teach my students to live by: I am not judged by the number of times I fail, but by the number of times I succeed, and the number of times I succeed is in direct proportion to the number of times I can fail and keep trying. Work with this creed and the fi ve attitudes toward rejection. What counts isn’t how many transactions fall out, how many doors slam, how many things don’t work out or how many people go back on their word. What counts is how many times you pick yourself up, shrug and keep on trying to make things come together. There are challenges, obstacles and troubles in every kind of business, but they are all temporary if you take control of your thoughts and develop the right attitude. I believe that winners are winners because they’ve learned to fuel their success drives by overcoming failure.

World-renowned master sales trainer Tom Hopkins is the chairman of Tom Hopkins International. He can be contacted at 866.347.6148, or by e-mail [email protected].

“The key to success is in how you handle failure. Handling failure doesnot come naturallyto most people. Itis an acquiredskill.”

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SusanGivens

A dealership is an eco-system. Every effort is interconnected or interdependent and must perform in harmony for the dealership to survive and prosper. If one area is weaker than the rest, or doesn’t contribute as expected, the other elements in the dealership’s system are all at risk. Your profi t – your very survival – depends on all the parts operating in unison.

To put it another way, if your lungs, brain, kidneys and liver are all functioning perfectly, but your heart underperforms, your body is sick and can’t perform effectively. If your heart stops, your body dies. Only a body with all its parts functioning correctly and effi ciently can achieve to its potential.

What does a dealership need to bring its various parts into harmony? A powerful online sales and marketing platform, coordinating all functions so that each section can compliment and support the other, is key. This would change the game for dealers, and create a solution where the whole is greater than the sum of its parts.

And now, the good news: That platform has been created.

The PlatformDealer.com’s platform is the decade-long result of consulting dealers and applying best practices to the solution dealerships have been searching for.

Just as the human body is more than the sum of it’s parts, the platform uses its modules — a Web site, an ILM, vehicle images and an inventory management system, to name a few — to create harmony within the dealership. This solution, unlike other platforms that are cobbled together from

“Changing the Game” with a comprehensive, feature-rich online sales and marketing platform, driving more

sales and more productivity.

multiple vendors, is fully integrated and comprehensive. In other words, the dealer won’t have to learn how to make the parts play together — they were created to work together from the start.

Out of the box, information across the platform can be shared and acted on, enabling dealers to drive more traffi c, capture better leads, and make faster — and more accurate — decisions. The Internet department’s effi ciency will be greatly increased, benefi ting “the body” as a whole.

Example: If a vehicle is sold and removed from inventory, the platform can automatically disable any online ad specifi cally referring to that vehicle. And, as a result, a dealer’s Internet ads are never dated and always refl ect current inventory; ad dollars are more wisely spent and customers fi nd the exact vehicle they seek. Just as you don’t have to consciously remind your heart to beat, all this happens automatically in the background.

Planning:Know Your ROI before You SpendThis platform consists of several components that take the dealer beyond a standard 360-degree view. Take, for instance, the Web site, perhaps a dealer’s single most important sales lead generator. When a dealership hires a fi rm to construct a Web site, there is no recognized, objective way to determine if the Web site’s ROI will pay off. The Web analytics and site traffi c are presented after the site has gone live. By then, it’s too late and the dealer could be stuck in a vendor contract with a low ROI.

By utilizing a decade’s worth of research and best practices collected from more than 7,000 dealer sites across the country, the Dealer.com platform allows dealers to estimate potential leads from sales from the Web site before making the investment. Dealers will know what they can expect from their paid search efforts, along with their organic searches. Also, based on the dealership’s average closing rates, potential

sales revenue for the dealership can even be estimated. For dealers, the game changer in a tight economy is being able to accurately gauge their ROI.

Marketing: Control Your SEM ResultsThe effectiveness of your Web site is directly impacted by how it stands out in a fi eld of sites competing for the consumer’s attention. The goal is that, when a customer types a search into Google or another search engine, your site stands tall at the top of the results. Dealers hire SEM (Search Engine Marketing) vendors to achieve this goal. It’s the way it’s been done for the past decade, but is it the best way now?

Today, dealers can take advantage of a radically different approach from most traditional SEM vendors. Dealer.com’s Total Control DOMINATOR™ (TCD) incorporates what the company refers to as a “big brain” of SEM data, gathered over the years from dealerships in every corner of the market. By applying sophisticated software rules and analytics to this data, it automates the process of keyword selection, confi guring more than 8,000 top keywords and enabling dealers to create effective SEM campaigns in minutes. Dealers no longer have to wait for a vendor, or manually change keywords themselves.

The system also aids dealers in bidding for keywords to achieve the greatest ROI, and helps link consumers to the page on your site they are searching for to eliminate frustration. In addition, with this system, search engine marketing experts carefully analyze keywords, customize Web content, enhance the site’s behind-the-scenes coding, build inbound and outbound links and submit the optimized site to search engine directories, including Google, Yahoo! and MSN. Again, it’s as automatic as your heartbeat.

Selling: Engage Shoppers,Close DealsGetting the consumer to your site, however, is only the beginning. With Dealer.com’s platform, dealerships have a great tool to

keep the visitor longer and, ultimately, get them to act. To do this, dealers need intuitive sites, available in English and Spanish, that give visitors the information they need in the manner in which they want it. This includes one-click inventory pages, full vehicle detail pages, vehicle reviews and compelling inventory videos. For the dealer, more than 35 lead-generating forms allow for an immediate connection to visitors, which is the Web site’s reason for existence.

Today’s customers are expecting video. According to The Pew Internet and American Life Project, almost half of all Web users watched online videos last year. Clearly, it’s no longer enough for dealers to post still or stock images of their inventory, or even 360-degree views. They must now also add videos of their inventory. Generic video that doesn’t promote each vehicle’s specifi c benefi ts just won’t do.

Your dealership can stand out from your competition using a patent-pending process that can automatically create unique, realistic videos of every vehicle in a your inventory, using a human voice. Once vehicle data is loaded into an inventory system, it produces a professional video within minutes. Human voices can be pre-recorded; then words and phrases are seamlessly blended to create video voice-overs. A vehicle model’s key features and associated talking points are pre-loaded, enabling a video for a truck to automatically promote, say, the vehicle’s four-wheel drive capability and V-8 engine.

Through this technology, the system takes it one step further: the automated script can discuss not just features but the benefi ts of those features as well. The result is a high-resolution, convincing inventory presentation with sound and special effects, such as panning, scrolling, zooming and pictures within pictures. This solution also includes a library of context sensitive music, call-to-action dealer branding and built-in lead forms. It will make an impression.

Managing: Executive Reporting Made EasyWith all these parts working in unison, it’s critical to know what’s working — and what’s not — especially since dealers can make changes on the fl y. The platform’s activities are refl ected in a set of fully confi gurable executive reports. These reports include side-by-side metrics for a dealer’s advertising sources, such as cost per sale, closing ratios and gross profi t, as well as data on the number of site visitors to average cost per contact to search engine rankings. Additionally, these reports come with account managers who read and interpret the numbers for the dealer, and

work with each dealer to constantly improve results. You’ll know where you stand.

One for All, and All for OneA common expression that’s often used in motivational seminars tells us that the acronym T.E.A.M. stands for “Together Everyone Achieves More.” The same can now be said about the game-changing Dealer.com platform.

Dealers benefi t from the platform by enjoying a more effi cient process, and an increase in sales and service leads. The platform is more cost-effective, allowing dealers to replace multiple vendors with one vendor making the marketing dollars go farther while at the same time driving dramatic productivity gains for the dealership. Perhaps best of

Dealer.com Platform “Parts”

all, the platform is feature-rich, combining tried-and-true solutions, with leading-edge technologies. These are not mere features but best-in-class features wrapped in industry-proven best practices.

Forty years ago, the Hertz Corporation made marketing history with a successful ad campaign based on the slogan “Let Hertz put you in the driver’s seat.” Today, dealers can get in the driver’s seat of their own online sales and marketing campaigns through the use of a virtual platform.

And, don’t forget, selling cars is a team effort.

For more information about Dealer.com contact us at 866.898.4617, or by e-mail at [email protected].

LVLC™ V2.0The platform includes a revolutionary decision-making tool known as the Live Visitor Lead Calculator™ (LVLC), an easy-to-use solution that enables dealers to estimate leads and sales before they invest in the site. Based on a decade of data collected from more than 8,000 dealer Web sites, the LVLC can predict the approximate number of visitors a site will attract. Version 2.0 of the product enables dealers to see how much business they can expect from their paid search efforts, not just from their organic searches. Plus, based on the dealership’s average closing rates, the LVLC can even estimate sales revenue.

LeadMachine™Complete lead tracking system that enables dealers to create an automated process for assigning, following up and managing leads to individual sales reps, including tools such as Integrated Call Tracking and PowerMail™ (personalized, branded e-mail campaigns).

Total Control Dominator™A simple-to-use search engine solution that enables dealers to build completely customizable paid search campaigns in just seconds, allowing them to create ads around specifi c keywords or go head-to-head with their competitors.

Managed SEO™Allows the Dealer.com team to continually evaluate and upgrade keywords to ensure a dealer’s site receives consistently high organic search engine rankings, more form submissions and higher conversion rates.

SmartSites™Award-winning, easy-to-navigate and search-optimized Web sites that contain multiple lead-generating forms, as well as sales tools such as SpecialsBuilder™ and CarFinder™. Also includes SmartSite™ Composer, a tool that enables dealers to update and edit their own Web content.

ePricer™Tool that prompts customers to submit their contact information and receive an immediate price quote via e-mail.

Video IntegrationIncludes Vehicle Showroom™ featuring CarFlix Virtual Test Drives™, keeping visitors longer and making it easier to convert them into buyers. Also includes a Video Streaming Toolkit and a Video Gallery. The most recent video addition to the platform is CarFlix™ with Human Voice, a process that automatically and instantly creates high quality, full-motion videos with real human voices from pictures and data in a dealer’s inventory system.

Sales Analytics™A full set of sales, Web site and search ranking performance reports that can be downloaded or accessed via FTP using a single login. Assigned account managers review the reports with each client, helping to interpret and improve site performance.

Mobile MarketingAllows on-the-go shoppers to browse a dealer’s new and used online inventory via a microsite optimized for smart phones, such as the iPhone.

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tion KarenDillon

WHAT CONSTITUTES A GREAT CUSTOMER EXPERIENCE?The quality of your dealership’s customer

experience is ultimately determined by the way customers feel after their last interaction. If the customer is unhappy, your dealership’s customer experience is bad. If the customer doesn’t have a feeling one way or the other, your dealership’s customer experience is mediocre. If the customer feels good, your company’s customer experience is satisfactory. In today’s economy, as we attempt to encourage more customers to return to our dealerships for service, none of these experiences will accomplish our goal. We need the customer to feel “delighted” — this will provide a substantial competitive advantage.

Your customer’s experience and their feelings about their interactions with your dealership are actually driven by several specifi c factors:

TimeMost people today suffer from “time poverty.” Time is the one thing that most customers don’t have enough of. So customers’ perceptions about your dealership customer experience are largely infl uenced by time. This means you have to reduce the time it takes for them to get in touch with you, as well as the time it takes for them to communicate their need.

CompetencyCustomers need to believe that your dealership employees are good at what they do. They must perceive that your personnel are well informed about the services offered by your service department. So, to project a perception of competency to your customers, you must make sure that each member of your staff who interacts with your customers is fully empowered with information that is complete, accurate and up to date.

PersonalizationCustomers don’t want to be treated like a number. The differentiation of the experience your dealership delivers will be contingent on how well your customers feel recognized when coming to your dealership for service.

CareCustomers like knowing that you care. This feeling of care can be projected through

courteous language and empathetic tone. It can also be projected through proactive contact with the customer, including timely follow up to inform them of the areas of concern once their vehicle problem is diagnosed, having their vehicle ready at the promised time and explaining thoroughly the repair and associated costs.

A J.D. Power study makes some signifi cant points as to the importance of service satisfaction:

• Customers satisfi ed with their service experience are more likely to return for service.

• Customers satisfi ed with their service experience are more likely to repurchase the same make.

• Customers satisfi ed with their service experience are more likely to recommend the make, leading to new vehicle sales.

• A gain in CSI score of 10 points is estimated to add $40 to $300 per customer annually.

As you look at addressing these factors that affect your customer satisfaction, what are some proactive steps you can take?

1. Offer your customers the ease and convenience of making a confi rmed service appointment from your Web site 24/7. This will allow your customer to make their appointment at their convenience — not yours — and eliminates the need for them to call the dealership for a service appointment. According to GM, 35 percent of calls that come into the dealership for service are either dropped or the customer is placed on hold and hangs up before speaking with someone. Also, as more and more customers begin making their appointments online, in-bound telephone calls are reduced, lessening the number that do not get answered properly.

2. Keep and maintain an appointment schedule, and schedule your customers in properly, so they do not have to wait in line on the service drive to be greeted by an advisor. According to Auto University, the average wait time for a write up is 11 minutes. When we consider this number, keep in mind we can assume the fi rst person in line was written up right away; so consider the length of time some of the customers have to wait in order to achieve this average wait time.

When a customer calls for service, it is tempting to tell them to “come on in”; however, if we can’t accommodate them and complete the service on their vehicle properly and timely, we’ve not only possibly lost a service customer, but also damaged customer satisfaction. Train your advisors to greet the customers by name — with a smile — so the customer feels they are important and the dealership personnel are pleased to serve them. I had a friend of mine ask me recently, “Why do service advisors always seem to be in a bad mood?” If this is the impression your advisors give your customers, some attention needs to be directed to this area immediately.

3. It’s important that the customer understands there are services that should be performed to prevent a safety or mechanical problem. Always take the time and provide a full explanation of what you are recommending, why you are recommending it and the benefi t to them of having the service performed. We must earn the customer’s trust by only selling needed services. Trust is a huge deciding factor in a customer determining whether or not to return to a dealership for future vehicle services and vehicle purchases.

4. Remember how critical the last impression is. Be certain the last words the customer hears when leaving your dealership are “Thank You, Mr./Mrs….” Also, when you utilize an online appointment system, you can customize an automatically generated pre-CSI e-mail to the customer after the vehicle is picked up, thanking them for their business, letting them know they may be receiving a survey regarding their satisfaction with this service and requesting they contact the service manager with any issues or concerns.

Constant attention to these areas can lead your dealership to increase your service business, service CSI and service effi ciency, along with providing “a great customer experience.”

Karen Dillon is the president of TimeHighway.com. She can be contacted at 800.901.3170, or by e-mail [email protected].

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HOPE IS NOT A STRATEGY:Gaging Providers for Cost Effectiveness

Many of you may have seen the recent

article in Automotive News talking about the credit crisis and how lenders are becoming reluctant to fi nance dealership’s inventories, forcing hundreds of dealers out of business. Dealers have been subjected to poor sales, high gasoline prices and destructive price wars.

The National Auto Dealers Association predicted that as many as 700 dealerships could close by the end of 2008. It is more important than ever to evaluate the full profi t potential of every department in the dealership.

Perhaps dealers should start by taking a closer look when dealing with their providers. After all, the area in the dealership that can offer the largest deliverable margin on the current volume of business is the Finance and Insurance portfolio. In fact, most dealerships can increase deliverable profi ts by as much as $300,000 per year without selling any additional vehicles. What today’s dealer needs is a business strategy of effi ciency. Dealers need to be more cost-effective on everything from advertising and personnel to the cost of goods and services and the providers they obtain them from.

First, I recommend reviewing all expenses. When dealers take a drilled-down approach to their fi nance portfolio, they can often fi nd nuances in their agreements that cost them enormous

profi ts. A complete audit of the cost of the products should always be performed, paying special attention to whether the provider is truly bringing a cost-effective solution to the table — no matter what their size. I have found that the smaller, more specialized provider usually has a better cost-structure than the 800-pound gorilla.

Likewise, I want to point out that there are two types of relationships dealers can have with a provider which, in the end, affect product profi tability: a participating and non-participating relationship. In a non-participating relationship, the dealer simply remits the cost of the products and retains a small profi t. When a dealer participates, it gives them the ability to share in the reserves and investment income. When a dealer is participating the agreements could be purposefully written in a way that might not deliver 100 percent of the profi t to the dealer. The fi rst red fl ag should be raised if your provider is reluctant and drags their feet when asked to deliver the agreements for your audit. Once granted access to them, consider the following to determine just how well your provider agreements deliver:

What is in your administrative fees?In many of the agreements I have read, language regarding administrative fees has not been clear. Generally, these administrative fees are made up of several components, included no doubt to hide

additional costs and confuse dealers. Remember, your administrative fee should be inclusive of all fees, including

administrative, stop loss and dealer obligor.

Do you have vesting and volume requirements? Having these requirements normally allows the provider to set unrealistic goals. If these goals are not met, the provider can keep some of the dealer’s profi ts. You should always receive 100 percent of your reserves and 100 percent of your investment income with no requirements.

Are there embedded incentives?Never use embedded incentives. They create nothing but misguided loyalty. Not to mention it is the best way for the provider to use your money to incentivize your people. Do you receive 100 percent of unused maintenance coupons?In most cases the provider takes up to 50 percent of the dealer’s unused maintenance coupons and does not even seed the dealer’s accounts with maintenance reserves. Watch out for this.

In today’s business climate, taking a close look at all products and services is a prudent move and will make your entire operation more effi cient and profi table. If, after putting your agreements to the test, you elect to change your provider, be sure the products your new provider offers are backed by an “A” rated carrier.

We can all hope the market comes back strong, that the banks buy deeper and the economy comes back fast, but hope is not a strategy. When you position your dealership with top-rated products at the lowest possible costs, it will set the foundation for additional margins and improved customer satisfaction as the market rebounds and grows. Good luck and good selling.

Marc Smith is the president and CEO of Marc Smith International LLC. He can be contacted at 866.665.4479, or by e-mail at [email protected].

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CAN WE HANDLETHE TRUTH?When speaking with fi nance executives,

there appears to be one common difference between those who are very successful and those who simply remain stuck at the same volume month after month. That difference is “understanding the truth” about non-prime customers and why they often provide us bogus information.

Long before instant bureau scores, electronic approvals and Internet leads, we were forced to accept every lead at face value, contact the customer, arrange for them to come in and, most of all, conduct a proper interview. Successful dealerships still operate that way; however, a good number of managers still believe that whatever is on a lead sheet is real and only call customers back if their beacon score is high enough for instant approval. Let’s take a look at the Facts/Truth surrounding non-prime credit customers today.

• Credit quality continues to decline; a recent survey of over 325,000 applications

showed an average credit score of 544. This means we have to work smarter in order to gain more approvals and deliver a higher number of vehicles.

• Privacy fears have caused customers to fi ll out applications with bogus information. Because of this, we must do a better job interviewing customers.

• Recently, a Florida-based marketing company contacted 1,500 customers in 20 states who applied for credit online in the past month, where 41 percent said they purchased a vehicle. Not all, however, were from the dealership that received the lead. That tells us that just because customers do not buy today they are still in the market and, with proper follow up, could buy soon.

• Another survey with a national bank discovered that more than 40 percent of customers apply numerous times at different sites. That is why we continue to see duplicate leads.

• The difference in credit scores between

applicants who rent versus those who own was only 14 points. That tells us we can no longer assume that, because a person rents, they have worse credit than homeowners.

• Customers want us to give them all the information prior to coming into the dealership, which often results in appointments never showing up. Train your entire staff how to handle outbound calls to customers who have applied and make sure they understand the importance of getting that person to show up. Don’t lose sight of the fact this customer may have cash they are not telling you about, or a co-signer who can put strength into your deal.

The bottom line is, in order to increase sales, dealerships need to work every lead, go back to the basics, conduct proper interviews and accept the fact that customers today have many choices and must be worked properly.

Paul Snider is the CEO of Voisys. He can be contacted at 866.492.9209, or by e-mail at [email protected].

I want you to be open all day Saturday. I

want you to market to and retain your pre-owned customers. And now I want you to offer choices to your customers. I want you to stop the “take it or leave it” mentality.

If you buy a concert ticket, there are different prices for different seats. If you go to McDonalds, they have different sizes of practically everything they offer on the menu. These businesses, like most businesses, are offering you options. Your choice — if you can’t afford front row seats, how about something further back, but more affordable? Need something just to hold you over until dinner — how about small fries and a small soda?

We do it in the vehicle sales department — new, certifi ed pre-owned and pre-owned. Every new vehicle comes with a variety of trim packages and prices. The fi nance department has a myriad of choices when it comes to protection plans and other aftermarket items; yet many service departments hold steadfast to the belief that the customers are coming to your service department to pay top dollar to have their vehicle serviced, and that’s just the way it is.

Now before you say, “But we offer competitive prices for our maintenance work, and, look, we have choices for tires,” consider why you are doing that. Is it because the customer would otherwise never visit your service department more than once? All of the factory-trained technicians in the world will not convince a customer to overpay more than once or to authorize a repair they cannot afford.

When a customer is given a quote for a repair and he says, “Let me get back to you,” what do you think he’s doing? Do you think he’s calling his friends to tell them what a great dealership he took his vehicle to today? Each customer is unique; some may only need their vehicle to last until they have an opportunity to sell it, others may plan on keeping their vehicle forever. By giving your customer only one choice, we’ve given them a reason to shop us.

In order to provide the best opportunity to retain your customers, use your best efforts to offer your customers two or three choices — BEST, Better, good — when it comes to some suggested parts and repairs.

Sometimes the original equipment part prices out too expensively, and our customer ends up going elsewhere. If our competitor performs a quality repair, we didn’t lose the job, we’ve lost the customer… permanently. There are numerous parts you can offer BEST, Better, good choices on: alternators, starters, batteries, water pumps, steering gears, power steering pumps, steering gears, ball joints, tie rod ends, brake pads, brake rotors and drums, master cylinders, power brake boosters, A/C compressors, condensers, evaporators, heater cores and radiators.

Since the automakers make very few of their own parts anymore, they use outside suppliers who manufacture, box and ship these parts for the automakers, as well as other supply chains, including the aftermarket.

The good news is the aftermarket vendors make it easy for you to offer these choices. Top-quality providers, CARQUEST and NAPA have programs designed for new vehicle dealers. Web-based parts catalogs make it easy for your service advisors and counter people to check pricing and local availability. Then, they can offer BEST, Better, good choices to your customers wherever such options exist.

You will use these same quality (not junk) aftermarket options to offer your customers choices. By telling your customers “we already did your shopping for you, and here are the choices available,” we have proven you can close more service and parts sales, and retain more customers.

Taking care of your customers results in them coming back for more service, more parts and future vehicle purchases — and maybe even in recommending you to their friends. Not offering choices is basically issuing ultimatums, and Americans don’t respond well to ultimatums (“You need a new starter. Take it or leave it, bub.”).

Yes, I want you to offer parts choices. I want you to be open all day Saturday. I want you to take care of the pre-owned customers. I want you to be successful.

Lloyd Schiller is the founder of Dealer Services Corporation, a division of NCM Associates. He can be contacted at866.703.1479, or by e-mail [email protected].

LloydSchiller

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PARTS CHOICES -NOT ULTIMATUMS

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the #1 sales-improvement magazine for the automotive professional

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What’s the difference between the masses

and the true “car stars” in the marketplace? Between the individuals and organizations navigating these uncharted waters of a shifting economy and those crashing on the rocks of the same old ways of doing things?

How lucky they are? Their location? How about their focus?

What should you and I be focused on today? What are most individuals focused on, and does it really have anything to do with how things work out?

If you’re a photographer, focus is key. Lose your focus as a leader and your team or company will soon follow. Take your eye off the ball as a hitter or wide receiver, and you’re down and out — no touchdown, you’ve struck out. And so it is in the marketplace today, focus is critical.

I’ve mentioned on several occasions a powerful lesson I’ve gotten from the book Change the Way You See Everything. I was impressed by the overriding message in the book. Here’s the message...

Most people focus on these two things: 1. What’s worst about what’s going on

right now in their life, or work, or “the news” or whatever. What’s the worst thing you can imagine? Now focus on that for a day or week or weeks and see what happens — is it any wonder that, if this is the focus of most individuals, we are a fearful and worrying society?

2. What’s happened, happening or may happen (see #1). In essence, something that is beyond your control.

That’s the prevailing victim mentality that says you’re at the mercy of outside forces; more fear and worry that literally paralizes individuals from taking action

and lulls them into a pattern of “waiting on things to change or someone else to change things.”

If you were going to change things, would you wait for everyone else to change or just begin with you?

Here’s the power of the “Change the Way You See Everthing” message. The two things that the uncommon minority (top performers, high achievers, “car stars,” etc.) are focused on:

1. What’s best (just the opposite of the majority) about what’s now or what you’ve

done or seen or achieved or provided to the marketplace. What’s best with you? By focusing on what’s best, it provides a measure of encouragement and positive reinforcement allowing you to make decisions that bring greater commitment.

2. What’s next for you, your business,

your life, your family, your (fi ll in the blank)…

When you focus on what’s next, it brings an energy and inertia that propels you in that direction. It’s actually a law that states a body at rest tends to stay at rest, while a body in motion or a mind in motion to remain in motion or be propelled in the direction of the new thing that is next.

This is the kind of “entrepreneurial adrenalin” that most individuals who opened their own business or started an enterprise or pursued an idea have felt. And it’s diffi cult to explain to anyone who hasn’t.

It’s an entrepreneurial experience that brings positive energy and can bring an excitement and a passion that transcends the day-to-day stuff that we all have to deal with.

It’s just that when we focus on what’s next, all the other stuff seems to become less and less a paralyzing force and must step aside for anyone who is on their way to what’s next and has made a commitment to go there.

If you need some positive reinforcement to help with your focus on what’s really important today, go back to basics with some of these books and timeless messages:

• Think and Grow Rich by Napoleon Hill (re-read it)

• The Strangest Secret by Earl Nightingale

Don’t neglect the power of positive messages and focusing on these two things that bring you through the diffi cult times toward big success: What’s Best and What’s Next.

Michael York is a professional speaker, writer and business consultant. He can be contacted by e-mail [email protected], or visit www.MichaelYork.com.

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INTERNET SALES20 GROUP XIIIWe recently just concluded another

successful Internet Sales 20 Group. Dealer principals, GMs and OEMs traveled from all over the United States to get educated on Internet sales. Given this economy, with everything going on — the uncertainty, the fear, etc. — I could see the stress and panic

on their faces, and hear it in their voices.

One thing I made clear to them, as I want to make clear to all of you reading this, is as Stephen Covey would say, “we need to sharpen the saw,” meaning you can’t keep going at a crazy pace at your dealership, bell-to-bell, six-day, seven-day or 13-day

work weeks. You will crash and crash hard. Over the years I have seen numerous people die. That’s right I said die. It is very sad; they put all of their time, energy and essence into the job.

Some people are workaholics, some are forced to by Gestapo management and others simply feel that they have no other choice because they are commissioned based, and they need to keep working to support themselves and their families. The problem is that there is something called a point of diminishing return. Meaning, there is only so much you can squeeze out of something.

Covey says that there are four main categories in which you need to sharpen your saw: Physical — exercising, walking, running, yoga, sports etc…Social/Emotional — spending time with spouse, children, family, going on a date, movies, talking with other people not work related, clubs, dancing, etc… Have fun!Mental — Reading books, magazines, Web sites and blogs; puzzles, Sudoku, having fun on Google, practicing word tracks, objections and rebuttals, conducting research about automotive Internet sales and business development for your dealership. Mental “sharpening of the saw” can be for fun as well as for mastering your craft.Spiritual — Going to church, volunteering, meditating, centering yourself. If you are not happy and at peace within yourself, you will not be able to achieve your maximum potential.

If you are working in an Internet department, business development center or phone room, you cannot make call after call after call after call every day, six, seven or more days without a day off. You need to sharpen the saw. I know it sounds hard to accept if you need money now, but I promise you that you will be more productive and more on your game if you have recharged your batteries.

We often lose sight of the obvious, such as “sharpen the saw.” Make a commitment to yourself and your dealership that you are going to start taking better care of yourself.

Sean V. Bradley is the founder and CEO of Dealer Synergy, a nationally recognized training and consulting company in the automotive industry. He can be contacted at 866.648.7400, or by e-mail at [email protected].

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The strongest consumer brands

design their loyalty and rewards programs to create long-term, reliable relationships with their customers. Major companies like BestBuy or Southwest Airlines understand that, in order for the relationship to work, customers must fi rst trust the brand. This also holds true in the automotive industry, but for dealers, a customer relationship characterized by a deep sense of loyalty and trust has to be built the old-fashioned way - step by step, one transaction at a time.

Now more than ever before, dealerships will need to realize the true value of their most valuable asset — their customers. As we see the average automotive ownership lifecycle increase, it creates both new challenges and opportunities that justify the need to reevaluate the true value of a loyal relationship. Fewer customers are buying new vehicles; they are keeping their vehicles longer and will need services and products to maintain and protect their investment. Dealerships have never needed to leverage this opportunity greater than in this current market. Dealers need to get to know their customers, identify their needs and provide products and services to fulfi ll those needs.

In order to survive the current economic and industry challenges, many dealers have taken a renewed interest in building a more-effi cient operation, one that creates a return on investment from every aspect of the business. To do that, dealers must fi rst focus on the customer’s needs, rather than their own. Dealerships spending their time creating frequent interactions with their customers will not only survive, but can actually thrive and grow in 2009.

Loyalty and reward programs can help create a foundation for developing relationships with customers, resulting in repeat business. Most current research shows that nearly two-thirds of a dealership’s customers have not purchased

any services from that dealer in the past nine months. As an industry, we have to improve those statistics if we’re going to succeed. Of course, it’s true one oil change here and there is not going to add much profi t to the bottom line. But it’s not about just one visit. It’s about creating a sense of loyalty that keeps the customer in your dealership for all their automotive needs. The idea is to bring them back to your facility again and again during the lifetime of that vehicle and the next vehicle and the next. This strategy not only means good business for the dealer today, but even better business tomorrow.

We all know the old rule of thumb that a happy customer will tell fi ve people, while an unhappy customer will tell 20. Rewards programs turn customers into advocates for your dealership and increase the number of times they pass along the good news. It’s also the most powerful form of marketing on the planet. Research has shown that these “customer advocates” spend more money in the service department, submit higher CSI ratings and refer many more customers. In addition, loyal customers cost less to market to and are more profi table, as they visit your dealership more frequently. Dealers with well-designed rewards programs also see a signifi cant increase in returns and more profi t from each individual customer. Many of our dealers have experienced returns on investment of literally 1,000 percent, after just three months. It’s that powerful of a marketing mechanism.

You can do the numbers for yourself. How much would a customer spend on repairs, maintenance, F&I products, parts and accessories during an average four-year ownership of a car? What if you could gain 100 percent of that “spend” for just half of your current customers? A loyalty and rewards program can help make that happen. And don’t forget, research also tells us 86 percent of customers purchase their new vehicle from the dealership that services their current vehicle. And that’s perhaps the

best reason to get those customers back to your dealership for whatever the reason.

Statistics continue to show retailers offer loyalty and rewards program because they work, but not all loyalty and rewards programs are the same. Dealers must understand these programs must be integrated with a philosophy of outstanding customer service, targeted messaging and rewards that resonate with the customer.

Effective and successful programs offer loyalty expertise, measurable goals for each location and ongoing support. Your existing customer information must be consistently mined, cleaned, fi ltered and validated to ensure the program being created is based on current information about your customers. This will determine appropriate offers to make, when to make them, and most importantly, how to make them.

Offers that are delivered via mass marketing that make no sense for that particular customer are worthless and damaging to your future opportunities with that customer. You have to deliver a message that is specifi c for each individual customer in a consistent and customer-preferred method. One of the keys to building a successful loyalty program that creates lifelong customers is to NEVER put an irrelevant message in front of anyone.

I don’t have to tell you that customer defection in our industry is the highest of nearly any industry today. Stop relying on broad messaging and aggressive discounts to bring your customers back. Building a loyalty and rewards platform that is relevant, timely and respectful will build a customer base full of trusting, loyal advocates for you.

Sean Stapleton is the executive vice president of business development at Visible Customer. He can be contacted at 866.406.6337, or by e-mail at [email protected].

LEADING THE WAY TO PROFITABILITY - Loyalty and Membership Programs

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STOP WHINING ANDSTART WINNINGThe Attitude Development Plan

Newsfl ash! The world is not perfect,

and neither is a career in the automotive industry. Everyone wishes their journey were a simple and uncomplicated trip, but that is not the reality of the world we live in or the industry we work in.

The brutal truth is that sometimes life is diffi cult. What measures a human being is the spirit and attitude they display during their most trying and diffi cult moments. In fact, it is in these moments we must rely heavily on our attitude, faith and belief if we wish to persevere. Whining, moaning, groaning and complaining when things are tough serves no purpose whatsoever. It may give you some temporary pleasure as you spew your negativity forth so others can join you in your personal pity party. However, until you stop the whining, I promise you it will remain diffi cult for you to start truly winning. The choice is yours.

“The strongest principle of growth lies in personal choice.”

– George Eliot

Eliminating Negative RelationshipsIn my career I have noticed a trend that zaps the knowledge, attitude, skills and habits out of even the strongest human being. What is this trend? If you continually associate with negative people you are going to fall victim to their way of life. To associate with impossibility thinkers is to surrender by choice. I don’t believe in the “blame culture” we live in, so let me set you straight before you blame the people you associate with daily. It’s your fault. No one can force you to associate with people who live their life in a negative manner. Why would you make the choice to associate with half-hearted traveling companions on the way to your dreams? Why would

you let those who possess no inspiration, no desire, no dreams, no goals rob you of your own? There is no good, reasonable or intelligent answer to these questions. The remedy is to follow the simple but powerful advice I offer below:

“ Today, I will refuse to associate with anyone or anything that might infect and harm my mind with mediocrity or negativity regardless of who or what it is.”

– Paul Cummings

Feed Your Mind Positive ThoughtsHave you ever eaten a bad meal? Did you enjoy the result of putting the spoiled food into your system? Of course not. However, because your body has a wonderful self-protection system that helped to purge your system of the problem, you were able to recover rapidly. I wish we had the same system for protection against negative thoughts. The truth is the ingestion of negative thoughts is 100 times more damaging than spoiled food. Why? The answer lies in the simple fact that human beings tend to replay negative thoughts over and over. In fact, this dangerous process is akin to continually self-infl icting career-ending wounds by choice. What about you? Do you protect your mind as a sacred part of your make-up? Do you intentionally feed your mind positive messages as a means of building emotional health and a winning attitude? If the answer is “no,” please follow this simple advice and reap the benefi ts:

“ I will drink from good books everyday until I am intoxicated by the power of positive thinking. I will not allow negative thoughts to course through my mind uninterrupted. I will instead ingest positive quotes to enhance my attitude.”

– Paul Cummings

You Must Value Yourself Let me reveal a secret to you: It is impossible for others to like, love or believe in you more than you do. I have witnessed people mired in negativity and self-pity because they are in a mode of personal destruction. Somewhere along the twists and turns of life they lost their self-confi dence and belief in themselves. Have you ever been around someone who can’t see any good in themselves? They always ask negative questions like “Why does this always happen to me?” These negative questions invite their “ghost” (your little voice) to fi nish them off. You must bring this pattern of behavior to an immediate halt. The fact is you didn’t come to this earth with a spirit of fear or equipped with limiting beliefs. You came here equipped for greatness, armed with power and destined for personal victory and high achievement. Don’t you think it is time you reclaim and reestablish your “winning beliefs” and personal power? I certainly do. If you agree and you are ready to stop whining and start winning, then follow this simple advice:

“I will make a list of all my positive qualities and attributes. I will have this list embossed on a card that I will carry with me everyday. Anytime I have a moment of doubt or negativity, I will immediately read the card as a means of reinforcing my beliefs. I will operate with a winning attitude from today forward.

– Paul Cummings

Paul Cummings is president and CEO of Paul Cummings Enterprises. He can be contacted at 866.865.3171, or by e-mail at [email protected].

By the time you read this article, it will be

2009 but due to printing deadlines, I am writing this in mid-December. Without the knowledge of what Congressional negotiators will decide, I nevertheless believe the events that will impact the dealer community in 2009 will be as dependent on how well you manage your own used car lots as on any decisions made on Capitol Hill.

Right now, there are an unprecedented number of under-water vehicles awaiting sale at the auctions. These supplies have grown as a result of the unwillingness of their owners to let them go to the highest bidder because, for the most part, these vehicles are owned by public companies. These corporate sellers have held off selling in the hopes that the market might recover. As public companies, they are very much concerned about their stock prices and lender covenants. In other words, when they recognize the loss in their corporate fl eets, they could experience signifi cant stock devaluation and, even worse, a potential loss of credit. However, these companies are required to write down their assets by the Securities and Exchange Commission to the lower of cost or fair market value on a quarterly basis. As we are approaching the end of the quarter and year, this process will occur. Once the write-downs are taken, what do you think these companies will do next? There should be little doubt that they will instruct the auctions to immediately turn these vehicles into much-needed cash.

I believe that this phenomenon, rather than

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YOU CAN’T GO BACK AND YOU CAN’T STAND STILL

what is occurring on Capitol Hill, represents the greatest immediate threat to the retail automobile dealer. This is because every vehicle in stock after January 1 is prone to unprecedented devaluation. As you read this article, I believe that we will already be in the midst of the largest defl ationary period in the history of used cars.

If, on January 1, you owned a 2008 Impala that was purchased 60 days earlier, after reconditioning you probably own it for around $13,500 to $14,000. I am anticipating that this same vehicle may be purchased right now for as little as $8,500 to $9,000. This will be true for virtually every used unit on a similar scale. As a result, by the time the majority of the present supply has passed through the auction at unprecedented low values, many dealers will fi nd themselves in short supply of cash and inventory that can not be liquidated without creating insolvency.

In anticipation of this problem, I encourage

dealers to reduce their inventories as quickly as possible. The ideal position would have been to have had no used inventory on January 1 and, instead, a pile of cash to buy fresh units at bargain prices. To the extent that you are in a position to buy vehicles in this defl ationary market, you are very fortunate. However, for those vehicles currently owned, I would advocate immediate disposition of aged units through a means that I call “whole-tailing.” This means utilizing traditional retail channels to sell vehicles at wholesale prices. Whatever losses are incurred with this strategy will pale in comparison with the losses that will ensue should you wait. And, I take limited comfort in the hope that, because spring is right around the corner, values will bounce back. Under the current economic conditions of large supply and weak consumer demand, I do not anticipate the usual spring wholesale market uptick. At best, I expect that the defl ationary spiral may begin to subside, but this is not suffi cient justifi cation for hanging on with the hopes of having your investment cost gradually return.

If we keep a close watch on the auction values, we will begin to see this defl ationary period leveling out. If we could precisely predict this bottom, it would be the moment to buy big. But, as none of us have a crystal ball, we need to be highly focused on velocity, not Capitol Hill, without exception.

Dale Pollak is an author and the chairman and founder of vAuto. He can be contacted at 866.867.9620, or by e-mail at [email protected].

Lifting small objects is usually easier than

lifting large ones. If you are struggling to maintain profi tability in current market conditions, consider managing your organization in progressively smaller pieces.

Common practice segments dealerships into departments which can be managed as profi t centers: new vehicle sales, used vehicle sales, service and parts. A simple truth is that if each profi t center produces a profi t every month — even if only one dollar — the dealership will never operate at a loss. In a store that is losing money, getting each department to its break-even point can be a stabilizing achievement. Profi t centering can make it easier to see which activities in a dealership are producing profi ts and which are generating losses. Problem areas tend to stand out more clearly and, because each department is smaller than the dealership at large, those problems can be easier to tackle.

Depending on the dealership, departments themselves can be segmented in smaller operating units. A new vehicle department might be segmented into “new car” and “new truck,” “sales team A” and “sales team B” or even down to the level of each salesperson as an operating unit. A service department might segment into “quick-lube service,” “maintenance/light repair” and “heavy repair.”

Segmenting a parts department into “warranty/internal,” “wholesale” and “counter retail operations” might reveal that the department’s wholesale business fails to cover its direct costs. Drilling deeper might reveal that certain types of wholesale customers are profi table but others are not. Drilling down an additional layer might demonstrate which specifi c customers are profi table to serve and which are not.

Department managers should be intimately familiar with the break-even points of their own departments. Dealers and general managers should understand the break-even dynamics of every department. Break-even analysis can also be applied to segments

within a department, such as wholesale activities within the parts department or the quick-lube segment of the service department.

Because break-even analysis is about the relationship between a business unit’s gross profi t and its overhead, the results provide an opportunity for proportional response. For example, performing a simple break-even analysis of the parts department will provide two actionable pieces of information. At one extreme, it reveals the minimum level of gross profi t (and sales) necessary to cover a given level of overhead — at the other it reveals the maximum level of overhead that can be sustained by a given level of gross profi t. Break-even can be achieved by moving gross profi t or overhead or both until balance is achieved.

When it comes to problem solving there is, of course, a great distance between analysis and execution, and the greater diffi culty is almost always in the execution. Discussing problems in a few hundred words does not do justice to the tasks required to ultimately solve them. If analysis makes your efforts more focused or improves the payback of your initiatives, then it has served a purpose.

It goes without saying that the accuracy of your analysis cannot be better than the accuracy of the data you put into it. If your dealership accounting is sloppy or manipulated, your ability to identify problems and execute solutions is compromised. Insist that expenses and revenue go into the correct accounts and they be posted into the months in which they really occurred. Take advantage of the start of a new year to get your accounting right — then keep it that way.

Steve Brazill is the chair of automotive marketing for Northwood University, Texas Campus. He can be contacted at 866.861.1515, or by e-mail [email protected].

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SMALLER PIECES,BIGGER PROFITS

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“This is because every vehicle in

stock after January 1 is prone to

unprecedented devaluation.”

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RIGHT SIZE, RIGHT NOWAs we all know, there is a signifi cant

issue with our business. Sales, as well as profi ts, are down nationally. Some stores, though, are doing quite well. They are very profi table. But how?

I recently had a conversation with a dealer that brought this problem to light. That day, he had let go some key management — people that had been with him for years. To me, it was sad to see this previously successful dealer nearly in tears because of the state of his business. He said, “You know, I’ve been in business for 30 years, but I just realized it had been one year repeated 30 times.”

In this time, we need to operate smarter than ever. This is when stuff like turn rates and service absorption separates the men from the boys, so to speak.

Let’s take a look at how we view our pre-owned inventory. Most dealers look at a car, trade or otherwise, and form an opinion on their gut. Yes, we use different books and such to recommend an investment level. We deduct for things, sometimes because a book tells us to, and sometimes because our gut does. But, in the end, that is the extent our pre-planned exit strategy.

Now, it’s a depreciating asset, and you own it. What now? Well, it goes to service for a week for repairs and heads to be sold on the pre-owned lot. There it sits. Before you know it the vehicle is 45 days old and showing up on your “hot sheet.” Then it’s 60 days old, and you spiff it. You have to because if you take it to the auction, you will lose money, right? Even if you sell it for a small margin, you feel you have won. You made a small profi t and gained a customer, right? We have been thinking that way for years. Frankly, it’s not a solid business choice.

Ever see dust on the top of a can of soup at

Wal-Mart? No. They closely monitor each piece of inventory and measure its sales velocity. They know what each square foot of space is selling and how fast. They know how long that can has been there and how long until it sells. They don’t carry soup that doesn’t sell. They measure every aspect of the sale of that 87-cent can of soup.

Now, some of us use tools to measure trends and market values. But nearly none of us actually measure lot activity day by day on existing inventory. Our current levels of vehicle management processes are lacking important data. Let’s go back to our 60-day-old car. If we could have measured its individual activity data early on, could we have made a choice then? No opens on day 19, no demos on day 27 — what would you do? “But wait,” you say, “what about my ‘small profi t’ and customer I gained?”

Well, fi rst, you lost money. Second, the car probably sold because of the spiff. Third, with a proper turn rate you, would have gained two customers, and really profi ted. Figure your daily holding costs per vehicle: the average daily holding cost is $43 a day per unit. You lost nearly $2,600 in just holding costs, plus a $500 spiff.

This is one of the areas where we are missing it. Look back at your sales records. How many times is this decision made per year? If you are like most dealers, there is a huge profi t leak sitting right in front of you. It comes from not knowing critical information when you need to know it. By holding each vehicle accountable for its share of the daily holding cost, it’s clear that a process change is in order. While occupying a spot on the shelf, each can of soup holds a responsibility to the store’s net profi t. Having this data is priceless; it can help with all sorts of issues from advertising to training.

Besides, we all know a new broom sweeps clean. That fresh unit gets all the play

— 65 percent of all pre-owned cars sell within the fi rst 27 days. It’s the rest that are cancer. Salespeople form opinions about aging stock, and we would be foolish not to consider their mindset. How much do you really know about them? Are you solely relying on logs and/or CRM data? That information really isn’t 100 percent reliable, is it? How can you make sound choices without sound facts?

Successful dealers are paying close attention to what sells, how fast, and what the salespeople are really doing on the lot. They aren’t stocking vehicles that don’t prove to be something that has velocity on their lot. Because a car is “cool looking” isn’t a good reason to carry it. That cash it took to invest in that car could be used to invest in a quick-selling car or two. These dealers have increased their turn rates from fi ve to six times a year to 12 to 15. They are selling 100 with 80 in stock. It’s very possible to do.

Yes, it was tough medicine to take at fi rst, but they quickly recovered the initial loss. They mitigated that loss however they could. There are many creative ways to spread out the pain, and it’s got to be done. You might need to be a look at pay plans and what motivates managers.

I think we can all agree that aging inventory is a big issue. Working towards a plan to keep it from happening can’t hurt, especially in this volatile marketplace. Times like these require new ways of thinking. Get your people the tools they need to be successful. Implement processes and procedures that move you towards a quicker turn rate. Don’t rely on logs and CRM data; fi nd a way to “inspect what you expect,” daily and “right size” your inventory.

Ron Alexander is a sales director for intelliLot. He can be contacted at866.618.8455, or by e-mail [email protected].

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WHY DO SALESPEOPLE TAKE SHORTCUTS?So, why do your salespeople take

shortcuts? In the midst of this “softer sales cycle,” it never ceases to amaze me how a salesperson will wait for an “up” for the better part of a day and when they fi nally get in front of a prospect, they rush through the process and take every possible shortcut, only to fi nish — without closing the deal — so they can sit around, and wait for the next prospect so they can hurry through the entire process all over again.

Salespeople take shortcuts because they lack the confi dence to correctly follow your process, or your process is lacking the steps your salespeople need to build confi dence with the prospect. Either way, it’s an easy fi x. If your team is completely confi dent with each step of your “road to a sale,” they will want to do your process. When salespeople are completely confi dent, they perform at higher levels because prospects recognize confi dence, and in turn your prospect will want to do business with a confi dent salesperson. Your process should allow your team incremental opportunities to build confi dence; without confi dence, your team will assuredly take the “path of least resistance” and take shortcuts throughout the process.

Look at it this way: What if you personally had the time to meet and greet every single prospect that walked into your dealership? What if you handled each and every prospect from the start to the fi nish? What level of success would you be experiencing in this softer sales cycle? It is your complete understanding and knowledge of the situation that conveys confi dence and it is this confi dence that makes success much more likely.

So the obvious question becomes: “What is the fi x? How do I build a more confi dent sales team?” The answer: Give your sales team a couple of “baby-steps” that must be completed with each and every prospect.

These “baby-steps” do not have to alter your process — in fact, they should require very little change to your current process; but when these “baby-steps” are performed each and every time, familiarity is created, and this familiarity breeds a confi dent salesperson. This new-found confi dence will have a huge positive impact on both the likelihood of making the sale and making a fair gross profi t.

Here’s an example, and the irony with this example is that it was taught to each of your salespeople when they fi rst got into this business. In fact, you may even be of the opinion that this “baby-step” is currently being executed by your salespeople on a regular basis — my experience tells me otherwise.

This “baby-step” is utilized when the anxiety levels of both the prospect and your salesperson are at their highest point: the presentation of the numbers. Over the years I have observed many “unique” versions of the presentation of numbers and these presentations include fewer and fewer occasions of the salesperson’s review of equipment prior to any discussion of numbers.

And yet, if you were to ask your salespeople as to why this is an important step, assuredly they will tell you “we review the equipment to build value.” A salesperson understands that building value is one of the benefi ts of reviewing the equipment, and yet it is presently being executed less than 100 percent of the time. In fact, if you were to do a deal audit of your last 25 deliveries, you will almost certainly be astonished by the inconsistency of this step. There are several positive occurrences as we do a review of the equipment:

• A review of equipment reminds the prospect of all the value that is received, in exchange for the dollars spent.

• A review of equipment will lend credibility to your price. In other words, it is the equipment level that your prospect has chosen that has ultimately established the price.

• A review of equipment provides a strong reference point for the negotiation process.

Here is how that may look: Give the prospect a complete “reminder” of the equipment, highlighting some of the features and benefi ts as it pertains to their specifi c wants and needs. Next, transition to the numbers by saying something like this: “Mr. and Mrs. Customer, based on the equipment level you have chosen, the manufacturers selling price is…,” or “Mr. and Mrs. Customer, based on the equipment level you have chosen, the red tag sale price is….”

Note: Who or what just determined the price of the automobile? How much more credible is that than the typical, “OK, here’s where we are at — my manager said you can buy the car for…” ?

I am completely confi dent that this one “baby-step” will affect the confi dence of your sales team. Imagine the results that would be attainable with these “baby-steps” or “tweaks” throughout your entire process; from sales, to sales management to your F&I department. It is time to “fi ne-tune” your processes, and build a more confi dent team.

E-mail John at the address below to fi nd out more about John’s “20 Biggest Secrets.”

John Dobrick is the president of Focus Growth. He can be contacted at866.490.5672, or by e-mail [email protected].

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JohnBrentlinger

THE FOOLISHNESSIS OVER

leadership

solu

tion

Did anyone ever think that we would see the

CEO’s of the Big Three united in a cause which ultimately will help them all? The spirit of cooperation is genuine, the need is great and, ultimately, I think they’re on to something. Cooperation is better than competition — more about that in a moment.

Forget for a moment that CEOs Waggoner, Nardelli and Mulally represent three companies that built an enduring model for every industry in America. Forget for a moment that these three represent the greatest working class in the world who go about their work every day, sick or well, in good times and bad, and who don’t have the time or inclination to complain about it. And now, having provided the jobs, the creativity, and the vision for an entire country of entrepreneurs for one hundred years, these captains of industry were disrespected, mocked and interrogated like they were a bunch of common criminals.

And by whom? By a torn and dirty gunny sack full of politicians who have for the last 30 years done all they can to eliminate the working class, and the companies for which the great American working class has given their entire lives. These fat cats in Washington have driven this country into a debt in the last 30 years, so many billions of times greater than Ford, Chrysler and GM that it makes no sense to compare the two.

In 2009, there is no room for any more foolishness. It is time to get seriously down to work. Here are three suggestions/resolutions for the New Year:

1. Get a StrategyWhat we have been doing is not working. Sales are down at most dealerships, margins are squeezed and market share is so-o-o yesterday. If you’re still going after market share this year — you know, stealing from other local dealers — you’re just plain nuts.

How do you think your local market is going to be a better place if you run another dealer in town out of business? Are you so greedy that you can’t stand to see another vehicle in town with another dealer’s name on it? Has the green eyed monster got you so bad that you lose sleep if another dealer has a good month? Why? Get a strategy.

Stop doing what everyone else is doing. Better yet, look at what everyone else is

doing and do the exact opposite. How much longer do you think you can keep lowering prices?

Do you actually think that selling the most vehicles for the least money has any merit in any industry? “I want to be No. 1?” Haven’t we matured enough to stop wanting to be the biggest, the baddest and the best? For Pete’s sake, get a strategy. Want particulars? Here are some, in order of importance:

• Honesty — with yourself, with your managers, with your salespeople, with your customers — in that order. That alone will increase sales.

• Commitment — to your spouse, to your children, to your managers, to your salespeople, to your customers — in that order.

• Teach salespeople to sell and pay them for doing it — Everyone else thinks salespeople are a dime a dozen. They are not. Train them so they can reach their full potential, then leave them alone to sell all those vehicles on your lot. Everyone else is taking so much margin out that they can’t pay the salespeople. Then they wonder why the salespeople won’t sell.

• Make selling at a profi t the foundation of your business — Stop the stupid nonsense about volume. You’ll never make it up in volume. Volume is vanity; profi t is sanity. Plainer yet, volume is stupid, selfi sh, petty greed. Profi t is honest, keeps you in business and allows your people and other local dealers to make an honest living.

2. Get a BrainTake a lesson from the big three. Go to the next new car dealer meeting and get to know each other. Be honest with each other. Learn what your second grade teacher tried to pound into your thick skull, learn to get along. We sit here in America and bemoan all the wars and fi ghting in the world — and then we try to bankrupt anyone who sells another brand. Get a brain — stop competing, start cooperating. There is enough for everyone.

How in the world do you expect the community to take you seriously, and take the car business seriously, and take your people seriously if all you do is try to discount everything, beat the heck out of each other, and give a car away before you let another dealer get a fair sale?

Get rid of the spirit of competition; fi re every manager and salesperson who is not happy unless they are beating the rest of your employees and customers out of something. Selfi shness and greed is killing the car business. Don’t be a casualty.

3. Get a LifeThere is more to life than the car business. You don’t have to be open 24/7 to make a living. OK, business is slow. The showroom ain’t got traffi c, customers aren’t loyal, salespeople keep turning over. Something is going on across the country, around the world. So, since things are slow, get a life. Let your employees have a life too. Are you daffy enough to think that making everyone spend more time at work is going to solve this global problem?

If you’re going to keep working your best people to death, why not hire a divorce lawyer in house? That way, your people who never see their wives or kids anymore could get the legal stuff done while they work.

Things are slow? Fine, go to a fi ve-day work week like the rest of the sane world. Guess what? No more scheduling problems. Are you so afraid of missing a sale that you’re willing to sacrifi ce the families of your people to “sell one more car?” Know what? If your dealership was fun enough, low pressure enough, your people kind enough to the customer, and your reputation as good as you think it is, your customers would remain loyal. They don’t come back because they don’t feel welcome at your dealership. It’s not the price, it’s not economy and it’s not the president — it is how you treat your people and how they treat their customers.

I know that this does not apply to everyone. But I also know that it applies to enough dealerships, so if the shoe fi ts, might want to try it on. And I know that this may not be the most popular advice, but I have seen enough that it is time that someone says it.

By the way: Training is not just for salespeople. Why not try dealer training for the next 90 days? Then try manager training for the next 90. After you do that, then, work on the salespeople.

John Brentlinger is a sales and management trainer, executive coach and author. He can be contacted at 866.859.6504, or by e-mail at [email protected].

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CONSIDERINGGOING DARK?Let’s Talk About What That Looks Like

Who isn’t feeling the pain these days? This

past year has been tough; there’s no doubt. As a result, many dealers have been faced with the need to make diffi cult decisions based on their current situation. However, when making these decisions, many are having trouble thinking beyond the present and acknowledging the effects of their decisions down the road.

Over the past few months, I have spoken with a number of dealers about what they foresee for themselves and their dealerships in the coming year. While some shared their optimism, many admitted their hesitations and told me of their hope to wade out the storm by going “black” with their advertising dollars.

In theory, severely cutting back on advertising expenses seems sensible when times are tough. This decision, however, often harbors unforeseen consequences. A drastic cut in advertising means a drastic cut in traffi c. With nothing established to drive new or repeat business, we enter into a downward spiral of dismal returns, lack of sales and decreased market share. While declines such as these may be assumed, don’t be fooled. The buck doesn’t stop here. Actually, these are just a few of the warning signs preparing us for the painful path ahead.

While zero advertising doesn’t necessarily mean zero customers, it can mean an increased pressure to sell what you can to whomever you can. This pressure opens the door to the dangers of desperate selling and will result in lowered grosses across the board. In addition, decreasing sales often means an increase in aged inventory and huge losses at the auction. When combined, these characteristics create a formula for a steadily declining bottom line.

It doesn’t stop there. As profi tability continues to drop, there is little to fuel energy and excitement on the sales fl oor. Without this, we risk losing our top sales

people, who are our greatest asset. While your dealership may have made the decision to go “dark,” there is most likely someone down the street who has continued to promote in some fashion, creating more hype, more energy and, in turn, more sales. At this stage, a loss of energy and momentum on the sales fl oor translates to a loss of pay for your top guys. We know the best sales people don’t work for free, so they will fi nd someone else with something to offer them that will satisfy their needs.

Without your greatest assets, “hope” does not become much of a strategy. With few customers streaming in to buy, inventory continuing to age, and with no good sales people to support the sales process, there is little to be optimistic about. Unfortunately for many, this loss of hope signifi es a closely approaching dead end. Whether the dead end signifi es the close of the business or a complex restructuring, neither option can really be classifi ed as an optimal outcome.

However, the road doesn’t have to end like this. For some, this may be hard to believe, but not every dealer has accepted “hope” as a strategy. So what does that mean for them? It means an opportunity to seize available market share while their competitors sit patiently on the sidelines.

With a drop in advertising by competitive dealers who have chosen to go “dark,” those dealers who have stayed loyal to the power of advertising are automatically gaining a stronger share of voice. Think of it like this: If 100 people are in a room and each is talking, it is hard to decipher one message over all of the others. Yet when there are 100 people in a room and only one of them is talking, you can hear that person’s message loud and clear.

As the dealers advertising voice gets stronger, so does their market share. This steady or increasing momentum helps to keep the sales staff focused on proven sales techniques versus spending their time concentrating on the economic downfalls.

By keeping them busy, your sales staff will feel no need to resort to desperate selling. In result, the sales person (and the dealer) can turn inventory at a faster rate and for a higher gross per unit.

Obviously, the more cars going out the door at a higher gross means an increase in dealership profi tability, but take a second to consider the effects of this momentum on the dealership staff. The best sales people work for the best pay, and the best pay comes from the employers whom are dedicated to creating an exciting selling environment. The energy and enthusiasm generated from strong traffi c and increased profi tability creates a confi dent and energized sales staff that is driven by performance. In addition, your dealership will begin to attract the attention of other top sales people and managers around your region whom may be stuck in a less-enthusiastic environment. This gives the dealer the pick of the litter when it comes to creating a strong sales force and building upon his or her greatest asset. In the end, an increasingly profi table bottom line combined with a strong and productive sales force will create security amongst the dealership and keep everyone happy across the board.

While there may be no good answer to what the future has in store, just remember that you are the writer of your own legacy. Consider the underlying outcomes of drastic cuts. While they may solve short-term goals, there is a good chance that these decisions are just creating more complex problems down the road. Consider all options and their effects before deciding that going “black” is the right thing to do. After all, who wouldn’t want to make the right decision (and hopefully some profi t) in the end?

Matt Baker is the vice president of sales for G&A Marketing. He can be contacted at 866.618.8248, or by e-mail [email protected].

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FINDING JOYThe pursuit of happiness. It’s one of

our unalienable rights spelled out in The Declaration of Independence, but what does it mean to pursue happiness? When so many of us are unhappy and empty, how can we fi nd joy?

We must learn to reconcile the ambition to do with a willingness to be.

As agents change, leaders sense all is not well in the world. We see problems and search for solutions. Yet, if we only focus only on what is wrong, we miss the joy of the blessings in our lives — family, friendship, health and freedom. We have to offset our discontent with the status quo by fi nding contentment in the life we have been given.

As leaders at our dealerships, we are lean and hungry, looking for opportunities to

improve and grow. However, we fi nd joy by being comfortable in our own skin. Happiness comes when we learn to take pride in our talents and to smile at our quirks.

We have an inner drive to do something — a restlessness to make something happen. At the same time, joy is discovered in the peaceful quiet of a soul at rest. Alongside our restlessness for change, we have a need for relaxation and recreation.

We won’t fully experience joy until we’ve answered life’s biggest question: Why am I here?

Without a life purpose, we fl ounder around without direction or joy. Life coach SuEllen Williams encourages clients to write out their life story in fi ve-year increments, noting life-altering events and infl uential people. During the exercise,

clients will often discover a predominant theme that has brought them fulfi llment. By re-aligning with what has brought meaning in the past, Williams feels her clients put themselves on track toward the pursuit of happiness.

If we don’t nourish ourselves, joy will elude us.

We nourish ourselves whenever we enter into activities that build our energy reserves. Consider this list of common nourishment sources:

• Music — What songs lift me?• Thoughts — What thoughts speak to

me?• Experiences — What experiences

rejuvenate me?• Friends — What people encourage me?• Recreation — What recreation re-

creates me?• Soul — What spiritual exercises

strengthen me?• Hopes — What dreams inspire me?• Home — What family members care

for me?• Giftedness — What gifts activate me?• Memories — What memories make me

smile?

To fi nd joy, we must clean up our vocabulary.

We pursue happiness when we banish the “shoulda, coulda, wouldas” in life and decide that everything is fi ne the way it is. To reconstruct our vocabulary, it’s important to understand the difference between facts of life and problems. A fact of life is something we cannot change, but we can adjust our attitude about it. A problem is something we can change, and becomes possible when we take responsibility to fi x it.

To discover joy, it’s important to celebrate success.

Timing is critical to celebration. Be sure to celebrate after the fact, and not before the job is done.

The Kentucky Wildcat football team learned this lesson the hard way. In 2002, the Wildcats led the heavily favored Louisiana State Tigers 30-27 with two seconds left to play. The Tigers had the ball, but they were 75 yards away from the end zone — an impossible distance to cover in one play.

Wildcat players dumped Gatorade on their coach to celebrate the win. Kentucky students poured out of the stands and waited to charge onto the fi eld after the fi nal whistle.

Then, the LSU quarterback lofted the football as far as he could throw it. The ball bounced off the fi ngertips of a mob of players, and landed in the waiting arms of an LSU receiver who raced to the end zone! LSU had won the game on a desperation pass!

“We won’t fully experience joy

until we’ve answered life’s

biggest question: Why am I here?”

Shocked and silent, the Kentucky fans were left to stare at their soggy coach as the LSU Tiger players celebrated their stunning, last-second victory.

In closing, happiness doesn’t always fi nd us, we have to pursue it.

John C. Maxwell is an internationally recognized leadership expert, speaker and author. To learn more about orto contact him, please visitwww.johnmaxwell.com.

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