On-the-Point

It's a Nerd Meltdown

January 6, 2017

Marketers have extended Black Friday through Sunday, which leads into Cyber Monday. The entire week following Thanksgiving has become the biggest engineered consumer shopping spree imaginable. In fact, some of the car manufacturers decided the entire month should be “Black November,” extending the sale to 30 days. Customers flooded the showrooms.

Then, just when everything was going so well, at around 10 o’clock on Friday morning, the reports started coming in on social media. The car hashtags on Twitter and private car groups on Facebook all lit up at once: VinSolutions had crashed.

The panic was immediate and widespread. If you’re not on VinSolutions yourself, you should know it’s one of the premier CRMs on the market today. I would guess that thousands of dealerships use it as a desking tool and console to run their sales departments and BDCs.

I watched the meltdown play out on Facebook. From the looks of the comments, you’d think nobody knows how to work a deal anymore. Many managers were totally paralyzed without their CRMs doing a lot of the multitasking. They had showrooms full of customers and no access to bank and credit links or their favorite desking tools. What is a Digital Age dealer to do?

I can’t sum up the answer any better than the dealer who wrote this comment on Facebook: “VinSolutions crashed all weekend but didn’t stop us from selling 70 cars.”

Cut the Cord

As a man of action, my response to this so-called crisis was to hit the message boards and coach people on how to work car deals with a piece of paper, a 10-key calculator, a payment factor, and the ultimate desking tool: a green Sharpie.

I’m not just picking on VinSolutions here. There are only three or maybe four CRM providers out there that are worth a damn, and Vin is one of them. Like any major online technology platform, every CRM is likely to crash and go out of service at some point, or at least slow to a sputtering crawl at the end of a month. Stuff happens. You have to be prepared!

Whenever there’s a discussion about CRMs or any other dealer technology solution, I always advise dealers to look past its function and investigate the provider’s tech support and reliability. It might look like a fantastic program, and every company will tell you their tool does what their competitors’ can’t, but if it crashes a lot, they can’t keep it running and their tech support is unresponsive or rude, then what good is it?

In other words, don’t be that dealer who says, “This is a really great program. It can do incredible things — when it works.”

If you buy a system that experiences frequent glitches, maybe you’d be better off equipping your salespeople with Rolodexes, day planners, Sharpies and calculators. They should know how to use those old-fashioned tools anyway. The real shame of what we saw on Black Friday was the fact that so many salespeople and managers can’t function and sell cars without their technology crutches.

Understand this: Hardware and software are designed to increase productivity. They can never be an excuse for inaction or a replacement for a human being with a personality and a working knowledge of how to structure deals.

While we’re on the topic, it might be a good idea to take a look at your vendor contracts. Do you know when each contract is scheduled to “auto-renew”? The slickest trick in the vendor’s arsenal is getting dealers to sign contracts that automatically re-up on a certain date if you don’t cancel. If you miss it, you’re stuck for another six months or year.

I frequently advise dealers and general managers to be receptive to alternatives. Loyalty to a vendor is a wonderful thing as long as you’re getting the best deal on the best product. The purpose of an auto-renewal contract is to trap those who fail to keep an eye on their cancellation dates and eventually forget about changing vendors altogether.

I communicate with hundreds of dealers and managers every month. It amazes me how many of you are paying thousands more than your competitor across town. They’re getting the same services, from the same vendors, for thousands less. How many times have I seen a dealer cancel a vendor only to have that same vendor come back with a better offer? This is especially true in the lead provider business.

Of course, the best practice is to never sign a contract that auto-renews. But if you do, you had damn well better flag the date in your calendar to remind you before it’s too late.

How Low Can You Go?

“But I sold 20 cars!” Ziegler says AutoNation’s rumored pay plan revision would crush the dreams of young sales professionals hoping for a long career in automotive retail.
“But I sold 20 cars!” Ziegler says AutoNation’s rumored pay plan revision would crush the dreams of young sales professionals hoping for a long career in automotive retail.

In recent years, I’ve warned repeatedly that, when you pay peanuts, you get monkeys. My sources tell me AutoNation is out to prove it once and for all. What I’m hearing is that the new pay plan they’re rolling out will compensate sales professionals at $10/hour plus $50 per sold unit with bonuses for highlines.

In California and other high-cost-of-living markets, I’m told, the per-unit bonus goes up as high as $200. I have also heard that tenured salespeople will be allowed to stay on the old commissioned pay plans, but new hires will start on the new plan.

Now help me out here, because my math might be a little fuzzy, but that doesn’t sound like much. I’m calculating $10/hour at 40 hours/week as $1,600/month, and I’m adding 20 units at $50/unit for another $1,000/month. That comes out to $31,200 per year in most markets and maybe $50,000 in California. That’s less than half of what you’d bring in on a traditional pay plan. A skilled salesperson could earn much more in a much less demanding industry.

AutoNation has always had ridiculously high “packs” on their cars to support the corporate bureaucracy. Now they’re shaking it up again and trying to emulate CarMax. If any of these suppositions are true, talented young salespeople are going to stay away in droves or check out after a few months on the payroll. (I have heard their F&I managers are getting the bend on their pay plan revisions as well, but details are sketchy.)

My friend, Mat Koenig, founder and CEO of KonigCo, wrote, “The sad part is they could pay a good salary with bonuses and recruit top talent, but this type of stuff is just taking advantage of the high unemployment rates and will attract short-term people who want a paycheck until they can find a quality job. This is an example of a company not caring about people building a relationship with their salesperson, but rather hoping they’ll remember the company instead.”

The reality is that, with new-car grosses at ridiculous lows, we’re going to see a shift to dealers and dealer groups putting together pay plans capping compensation at $65,000 for top performers. This is what the manufacturers, consultants and vendors are whispering in the dealers’ ears. This trend will make car sales just another starter job, and it will no longer be a career.

That is why the certified pre-owned business is about to surge again: higher perceived value and higher per-unit profit. Of course, the manufacturers are now trying to control that too.

Meanwhile, AutoNation’s chief executive, Mike Jackson, just announced they’re investing $500 million in standalone used-car lots. In a strange twist of fate, they’re reverting to the original Wayne Huizenga model that failed so miserably 15 years ago. Wasn’t it Jackson who finally pulled that plug? Well, times have changed, and as far as I can tell, they’re going to go one-price on all pre-owned units in a heads-up imitation of CarMax.

The author loves the look and feel of the 2017 Lincoln Continental (pictured at its Detroit auto show premiere) but worries Ford has so far failed to aggressively market the new car.
The author loves the look and feel of the 2017 Lincoln Continental (pictured at its Detroit auto show premiere) but worries Ford has so far failed to aggressively market the new car.

Did I Miss the Launch?

I must have fallen asleep for a few months. I felt sort of like a modern-day Rip Van Winkle. I was driving down I-10 in Florida earlier this month when I caught a glimpse of a rare and elusive new vehicle I had only seen in pictures. Is that what I think it is? And is that a dealer tag? I had to put the pedal to the metal and weave in and out of traffic to catch up with it. I pulled up alongside at a stoplight and marveled at the sight.

Yes, there it was, the new Lincoln Continental.

To me, this is one of the most exciting things to happen to the brand in many years. When I got back to Georgia, I stopped into Gwinnett Place Ford Lincoln to get a better look. Sure enough, there was one right there on the showroom floor. It is every bit as beautiful and masterfully designed as all the writeups I read about it said it was going to be.

As you may know, I have always had a deep love of Ford Motor Co. But you might also know I have been a vocal critic of what Lincoln has deteriorated into, with the MKZ, MKX, MKC and all the other unidentifiable alphanumeric models selling in low numbers. I have owned and leased literally dozens of Lincolns, but they all had names like “Mark XVIII” and “Town Car.” I never could make myself buy one of those downsized sleds with letters for a name. In 2015, I chose the new Ford Explorer Limited over a Lincoln or Cadillac. (My wife, Debbie, a woman of more refined tastes, stuck with Cadillac.)

I predict the new Continental will be the salvation of the brand, vaulting it to the top of the competitive luxury car market again. While Cadillac is adrift with goofy clueless management (see any of my recent columns), Lincoln is in a position to restore an iconic American luxury brand to market dominance.

All of that being said, where is the aggressive, over-the-top advertising and promotion? At the next Lincoln dealership I visited, there was one Continental sitting over in the corner of the showroom as if it were nothing special.

Do you remember the launch of the Cadillac Escalade back in the early 2000s? They produced a Super Bowl commercial featuring Escalades screaming through darkened streets with a Led Zeppelin soundtrack — raw excitement and high energy! Well, believe it or not, that campaign was engineered by the same Mark LeNeve who is now heading up Ford’s marketing division. Come, on Mark! Get the lead out and let’s launch this car like the royalty it deserves to be.

And while you’re at it, get your team to work on kickass campaigns for the new Ford Bronco and the resurrected Ford Ranger — which never should have been discontinued, by the way. From everything I’ve read and heard, the Bronco is going to be a category-killer that will give the Jeep Wrangler a run for its money. I’d love to see it launched as a 2018.

This Pinnacle Is Out of Reach

Ziegler believes an underwhelming response to buyout offers and the continued delay of Project Pinnacle indicates the countdown could be on for Cadillac President Johan de Nysschen.
Ziegler believes an underwhelming response to buyout offers and the continued delay of Project Pinnacle indicates the countdown could be on for Cadillac President Johan de Nysschen.

It’s becoming more and more obvious to me that the top management team at General Motors, including Chairman and CEO Mary Barra, is starting to sober up and ask themselves, “What in the hell have we done?”

In late November, Cadillac announced they’re delaying the launch of Project Pinnacle … again. You may recall it was originally scheduled to kick off in October. Then January. Now April. The program, which brand chief Johan de Nysschen once described as “bulletproof,” would divide Cadillac’s 925 dealers into five tiers with five different sales targets and incentive plans. The lowest-tier stores would maintain “virtual showrooms.” Yeah, right.

GM says they want to give dealers more time to prepare. I predict that Project Pinnacle is dead on arrival. They had to kick it back past the convention for fear of facing an angry lynch mob of pissed-off Cadillac dealers, most of whom also operate other GM franchises.

If Cadillac ever does launch a program and call it Project Pinnacle, they will just be saving face. It won’t resemble anything like the ill-conceived plan they tried to force-feed to dealers. All of this thinly disguised treachery is going to cost GM dearly. If they keep pushing these dealers up against the wall, they’re going to find a lot of former Caddy showrooms stocked with South Korean luxury models, which are going to be the real new contenders in the space.

The bigger problem — the elephant in the room, so to speak — is what to do with de Nysschen. If his time has run out, they have to find a noncontroversial, low-key way to drop-kick him through the goalposts without alarming the stockholders. It might reflect poorly on them that they let it go this far already without pulling the trigger. Of course, I am assuming a lot here, thinking the top management of General Motors doesn’t want to admit they allowed this human wrecking ball to totally destroy their flagship luxury brand.

In a recent interview, Baron Johan was quoted as saying, “Pinnacle’s going to be around for the long-term, so there’s no need to rush it into execution.”

“Execution” is right! And as far as Pinnacle being around for a long time, dealers are screaming bloody murder and there will probably be lawsuits and investigations by government agencies if they try to implement it. Many are saying it’s a stair-step multilevel pricing scheme that favors certain dealers over others and constitutes price-fixing with an overbearing required investment.

Lest we forget, Cadillac offered dealers a paltry walkaway figure if they preferred not to make an unreasonable investment in this guy’s cockamamie vision. Our man Johan offered 400 dealers $180,000 to give their franchise back and fewer than 20 of them took it. Of course, in his own goofy false logic, Johan decided that was a resounding vote of confidence for his magnificent business plan and the future of the Cadillac brand. Will somebody please get this guy off the stage?

Low six figures is some reward for decades of loyalty, investment and dedication to a company that wants to throw them away like an old dishrag. The number would be an insult even if somebody did want to bail.

Cadillac has 925 dealerships that will probably close out 2016 with sales of somewhere just north of 150,000 units. In other words, they will probably come in around 6% lower than last year with a down arrow. All the luxury imports are up in sales and percentages. Has it occurred to anyone that it might be because of Johan? He is systematically running off the traditional Cadillac customer base with no one to replace them.

I have to believe the top management at GM has got to be fed up with this buffoonery. Of course, this is all just opinion and conjecture on my part. I might be wrong.

Debbie and I are really looking forward to seeing everyone at the NADA convention. New Orleans is an ideal location. As I have dialed down my NADA speaking engagements, Deb and I have had more free time to visit with dealers and other friends. But I am looking forward to my Friday-night roundtable with Google and Stream Companies. Maybe I will see you there.

Well, I’ve been on this rant since yesterday with more than 20 hours invested in researching and writing this article. I hope it made you think and smile. Heck, I hope you found something you disagreed with. Keep those emails, calls and Facebook and Twitter posts coming. I always enjoy hearing from you, even if you think I’m wrong, and even in the midst of a meltdown.

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