Show Me Your Pay Plan

Show Me Your Pay Plan

Pay influences behavior. We see this statement validated every day in the car business. Want more units sold? Hand out a unit spiff. Want higher customer labor per RO? Pay your advisors a bonus on hours per RO or give the technicians an opportunity to use a “pull board.”

Do these incentives help address the current business realities we face? Yes, but only partially. They stimulate the generation of gross, but there comes an inflection point where higher and higher grosses will, over the long term, influence and possibly shift consumer choice. The reality of our business is we have in most cases too many dealers chasing the same customers, while selling the same product or slightly differentiated products in close proximity to one another. In addition, we must now contend with the Internet, leaving us no real geographical boundaries to protect us as we move forward in an attempt to gain market share.

Read More

Treat Each Day Like it is the Last Day of the Month

Treat Each Day Like it is the Last Day of the Month

Whether you want to admit it or not, there is way too much “fat” surrounding the way you finalize transactions at the retail level. Blame it on complacency or tradition, i.e.,  “this is the way we have always done it,” but in the end it really hurts dealership performance in the areas of cash flow, asset management, management information and ultimately dealership profitability (the quicker you accelerate cash flow, the quicker you pay off floor plan and reduce this expense).

Read More

Preparing for Customer Retention

Preparing for Customer Retention

Before buying a new computer application for your dealership, it is important to make sure it will have a great chance of success. Not only must your key people buy into the acquisition, but the application must quickly perform so all involved dealership personnel can breathe a sigh of relief and enjoy the fruits of making the correct choice.

There are a number of essentials that must be in play for successful application execution. The in-dealership processes have to align themselves with the way the application works (or vice versa) and the data being used must be current, accurate and validated. The more sound data the application has to work with, the greater the opportunity to leverage this data and produce superb result and benefits.

Read More

Understanding the Misunderstood Work in Process (WIP)

Understanding the Misunderstood Work in Process (WIP)

My thoughts on work in process are quite simple. The way we account for this asset is unwieldy, clumsy and awkward, but we handle it this way because it is the way we have always done it. When it comes to managing WIP, there is a much easier and simplified accounting process that I want to share with you, but first there is a need to completely understand how this asset is created and, in turn, how the current system works.

Read More

Used Vehicle Reconditioning

Used Vehicle Reconditioning

Used Vehicle Reconditioning – Reducing the Conflict

I am a fan of simple solutions to age old problems. One of the reasons I love what I do is because I am constantly exposed to resourceful dealers who share elegant solutions to vexing issues rather than reverting to the old hat adage of  “because this is the way we have always done it.“ I don’t know whether I picked this up at our most recent General Manager’s Bootcamp or General Sales Manager Bootcamp, but it makes all the sense in the world.

Read More

What is the Right Size for Growth?

What is the Right Size for Growth?

Unfortunately it is not a surprise that there is currently great pressure on dealership profitability. The economy is soft and consumer spending is down in many segments of the economy, including automotive retail. Many dealerships are down over last year in terms of gross generated, and expenses have not decreased sufficiently to cushion this impact.

I remember clearly a few years ago the chief executives of the publicly-traded auto dealer groups making a point of stressing to the Wall Street investment bankers that during economic downturns dealerships do far better than many other industries. The reason for this phenomenon is the dealership’s relatively low amount of fixed costs, as well as a high degree of variable costs that can be quickly adjusted should a downturn occur. The variable costs alluded to here, personnel costs, are the dealership’s largest expense component.

Read More

Are Your Salespeople Sales Efficient

Are Your Salespeople Sales Efficient

That is the critical question.

What makes certain franchise specific dealerships more successful than others? What is the magical blend of process and training that works better for them than for their peers?

Much of their success (not all, but a lot) has something to do with sales productivity. Obviously, the more sales productive the dealership, the greater the ability to generate gross.

How do you become more sales productive? There are two components to sales productivity and each must work well in order to succeed. The first is sales efficiency and the second is sales effectiveness.

Read More

Change to Deliver and Book!

Change to Deliver and Book!

I believe certain processes in the car business need to be changed. In the face of rising interest rates and the drive to accelerate cash flow, we believe car deals should not be held in F&I for longer than 24 hours. Crazy notion? Apparently not, as we have dealers – and large ones at that – who insist that all deals delivered on Day 1 be processed into accounting on Day 2. No exceptions.

Read More