Article

New Year's Resolution: Why Can't We All Just Get Along?

August 2006, Auto Dealer Today - WebXclusive

by Greg Goebel - Also by this author

For those of you that have been reading my writings for the last seven years, you may remember that I am not a big fan of New Year’s resolutions. Do not fret, that has not changed, but for those of you that subscribe to the belief that once a year you should reassess your life and reestablish goals, I will offer you a suggestion that should become one of those resolutions.

Each day I receive at least one call or e-mail from a successful dealer with a common problem looking to me to provide a solution. While I was looking for my monthly inspiration, wondering what opinion to offer to you, one of these calls came in.
Like most, this call was from a very successful franchise dealer from the Midwest. A very successful dealer! They are located in a small town, truly in the middle of nowhere. This dealer has a Special Finance department, selling somewhere between 55 and 70 units per month, comprising about half of the dealership’s total units, and over half of the variable gross profit. So, you are asking, how can there possibly be a problem?

Well, as I was told by both the Special Finance manager and the dealer, they are already doing a terrific job. However, the dealer is very forward thinking, and realizes that in their market, they truly are leaving many more opportunities on the table. They currently have a “stand alone” Special Finance department, and while they are doing a great job in volume, there is disconnect between the conventional and SF departments.

This is a very common situation in many dealerships. Generally, it is the result of having two talented people on opposite sides of a fence (aka compensation plan), each of which is very capable of delivering sales and gross profits.

While I don’t necessarily believe this is the scenario with this dealership, I have seen all too often situations where a talented F&I manager and an equally talented Special Finance manager are at complete odds, in a winner-take-all situation that would leave the WWF in envy.

When walking into these stores to consult, almost always with “stand-alone” departments, I almost instantly feel I need to be both, wearing a flak-jacket, as well as possess a Ph.D. in psychology.

Before I go any further, I am not picking on the stand-alone departments. Yes, for most of my years as a dealer I used a blended floor, but without a doubt in many cases, separate or stand-alone departments are the better way to execute Special Finance. The problem with having a stand alone department is that it is extremely difficult to avoid both the conflict that occurs between managers, as well as the dysfunctional sales process that is a result of the conflict.

With 23 years as an owner in the automobile industry, and four more years as a trainer and consultant, I believe that I have the ability to identify talent. Sometimes I am envious when looking at the talent that some dealerships have. What is disturbing is to see how some of these individuals almost seem to take delight in prospering at the expense of another department or profit center. Specifically, it seems to happen frequently between the conventional and sub-prime departments. I simply ask, “Why?”

As a dealer, I could have cared less whether the deposit slip or the electronic funds transfer was the result of a conventional or sub-prime deal. All I wanted was the gross profit deposited in the bank. With the frequency of the calls and e-mails, I know there are many dealerships at odds. Whose deal is it? Who gets to look at it or work it first? Prime? Special Finance? Where is the dividing line? Eventually you begin to understand why I used a blended floor at all of my dealerships during the last nine years.

I just wanted my team to deliver a vehicle with the highest customer satisfaction and the highest gross profit. For my situation, the better scenario was for the entire team to focus on a process that would allow us to achieve the next sale and not on whose deal it was.

For those numerous stores that have stand-alone departments, my suggestion for a New Year’s resolution is to find a way to get along. To have talented people or staff at odds is crazy. Those of you that are in this position know who you are. There is always some sort of undertone permeating the store, people always at odds, and likely, always some sort of crisis or even turnover.

It doesn’t have to be “us versus them,” even with a stand-alone Special Finance department. A common problem is that so often, dealers or upper-level management set up either work flows or compensation plans that wind up creating chaos.

This happens most often when dealers try to define Special Finance. Where does conventional finance end and Special Finance begin? Unfortunately, that question is answered differently for almost every store.

The question that I always ask is, “Why should it matter?” Even with a stand-alone department, why should any GM or GSM want to put a strong F&I manager and a strong SF manager at odds? To me, what is more important is that a consistent sales process is determined. The best sales process for the consumer and the dealership is one that will solve the buyer’s needs in the most efficient and quickest way possible. To think that a dealership would want to show a SF customer a vehicle that they couldn’t qualify for, even in their wildest dream, just doesn’t make sense.

How do you resolve the discord if you can’t define Special Finance? One of the first places I look is the pay plans of the sales management team. Is a dealer favoring one side or the other? Is there a directive to assume a customer is either a conventional or sub-prime credit customer until proven differently? Do the pay plans of the manager isolate one from the other?

If the answer to any of these questions in your dealership is “Yes,” then I suggest you need to rethink your strategy. Regardless whether your dealership is set up as a blended floor or a stand-alone department, consider focusing all parties on the common goal—the sale—and the resulting gross profit. Modify your compensation plans so that at least a portion of the individual compensation is based on the performance of the other side, or combined gross profit. Create incentives for all parties to work together.

Good talent is far too hard to find in the retail automobile industry to render it ineffective by placing it at odds. The goal of every dealer should be to sell as many vehicles as possible with the highest level of customer and employee satisfaction. If you find a way to achieve the latter, you will almost always achieve the former. And with both, you will most certainly achieve benchmark or above net profits. . . without needing a flak jacket or Ph.D. in psychology.

Vol 2, Issue 12

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