During a recent 20 group meeting, it appeared that many of the top dealers in the group were always on top. Thus, they were asked to identify five items that seemed to separate these stores from the other stores. As each dealer presented his or her secrets to success, I was amazed at how similar they were in their philosophies. There are a lot of different ways to run a dealership, but there are definitely some recurring themes that occur in very profitable, successful stores.
First, the dealers and managers of these stores are students of the industry. They get out of the store and attend 20 groups, NADA, finance seminars, marketing workshops, conventions, conferences, Internet bootcamps, BDC bootcamps, etc. They read trade magazines such as Auto Dealer Monthly, Dealer Magazine, Successful Dealer, etc. They also read magazines outside the industry such as Success Magazine and Entrepreneur Magazine. Finally, they read books to enhance their management skills such as “Good to Great,” “The Rockefellar Habits,” “Gung Ho,” etc. What do they do with this knowledge? They use the knowledge to improve both themselves and their people. There is a saying that “readers are leaders.”
Second, they map out a plan and meet regularly to review it.. Mapping a plan could include a yearly forecast which includes month-to-month results that are broken down into short weekly and daily meetings. These daily meetings might cover the number of ups compared to the number of sales, the number of sales compared to the forecast, how each department is tracking compared to the forecast, gross per unit, hours per RO, the number of appointments set and kept, finance penetration, F&I gross per unit, etc. The main focus of these meetings is to see how the store is tracking for the month and what adjustments need to be made to keep it tracking in the right direction. Furthermore, it gives the employees a quick moment to communicate with each other on a regular basis so everyone is chasing the same goals.
Thirdly, these stores get the employees involved in establishing goals and culture. How do they do this? By meeting on a regular basis and by occasionally meeting outside the store, the employees develop goals and they develop processes that they own. One of the dealers commented that his goal is to be the “dumbest guy in the room.” He is basically a moderator and his employees talk about the issues and what to do to improve the processes so they can attain their goals.
What is an example of this? Let’s say the employees had a goal to sell 240 used vehicles for the month at $3,000 per copy. When they meet on the fourteenth of the month, they are tracking 195 units at $2,800 per copy, but they only have 190 units on the lot ready for sale. The dealer might ask, “How are we going to sell 240 units when we don’t even have a 30-day supply lot ready for sale?” This might engage a conversation between the used vehicle manager and the service manager that might improve a process to get the vehicles through service in a faster manner. Or the dealer might ask about the consistency of their desking process. This might get the sales manager thinking about holding some more money on trades so that they can increase their gross by an additional $200 per unit. If you meet every day and everyone has their tracking reports, these meetings only take 15 to 30 minutes.
The fourth item that was consistent with these organizations is that they had long-term employees. There was very little turnover at key positions. Why was there little turnover? The employees feel like they are a big part of the success of the dealership because they are trained and valued, and they have very competitive pay plans that are based on performance. Most of the employees are commission-based and these plans are based on a percentage of the gross or net profit. Thus, there is no reason to make pay plan adjustments. If the store has an outstanding month, so do the managers. If the store does not do well, then their pay reflects this. These stores also do a lot of promotion from within. Thus, employees can have a career at one store.
Finally, all four stores have a culture of fun. What is fun in the car business? Fun is having pizza and beer to celebrate a milestone. Fun is having contests for things such as high gross where the winner gets $1,000 cash but has to buy pizza for the rest of the salespeople. Fun is celebrating a goal by taking a limo with spouses to a fancy restaurant. Fun is texting “Go Blue” when you set a new used-vehicle record because you just happen to be a Michigan fan. Fun is loving the people you work with and giving high-fives because you are getting outstanding results.
What makes your store unique and how much fun is it to be at the top on a yearly basis? Now is the time to embrace these five items. See you at the top!
Vol. 9, Issue 4