With September’s arrival, the many signs that fall is fast approaching surround me. Leaves changing color. Kids returning to school. Days getting shorter. Winds becoming cooler. Another football season kicking off.
Fall’s arrival also brings to a close the hot summer selling season for car dealers. As temperatures begin to drop, used-vehicle sales typically begin to flatten as automakers offer incentives to clear out older vehicle inventory and make way for newer models. So what can dealers do to put some sizzle into their used-car sales and avoid the fall sales swoon?
Below are some tips to help dealers manage their used vehicle inventory more effectively and improve their speed-to-market without losing sales momentum.
Use stocking tools for efficient inventory management
Among the many dilemmas facing any dealership is proper inventory management. It’s predicted that we will continue to see tight competition among dealers for wholesale vehicles as more turn to auctions to build used vehicle sales volumes and dealership profits. This means there will be greater pressure to find the right cars at the right price — and more temptation to raise a hand at auction even though a unit may not make financial sense for a dealership.
Instead of wasting time researching high-demand inventory, dealers should use online sourcing to identify inventory from a wide net of resources for quicker, more confident decisions. Knowing exactly what cars to pursue, where to find them and what price to pay will yield more operational efficiency and allow dealers to sharpen their competitive advantage.
Replenish inventory online
Some industry observers predict that half of all auction vehicle purchases will be made online by the end of this year. Various online channels allow dealers to purchase vehicles anytime and anywhere.
Avoid unnecessary risk
With more dealers going online to buy cars, including a condition report can speed up the sale by up to four times faster than those without them. And if arbitration is a concern with buying online, dealers can protect their wholesale purchases with a buy-back guarantee or other assurance products.
Get vehicles reconditioned at the auction
Whether a dealer is selling at the auction or off their retail lot, they’ll need to move inventory as quick as possible and get the best price. The right reconditioning not only increases condition grades, but it also makes vehicles more attractive to buyers and maximizes profit.
Post your vehicles online before leaving the auction
It’s simple — the quicker dealers get their vehicles online, the sooner they sell. If a dealer’s inventory purchases need reconditioning work, it’s wise to consider detailing first for a great first impression and immediate merchandising. By taking advantage of retail-ready solutions, along with other services such as vehicle listing and title management, dealers can market front-line ready vehicles before they reach their lot.
Tweak your transportation and logistics model
Whether dealers narrow their buying radius or expand it, a major factor in their decision-making should be getting inventory to their dealership as quickly as possible. Dealers should consider centralizing with a trusted transportation and logistics provider who can transport their cars quickly and have them ready to sell in a few days versus a few weeks.
If you’ve been in this business for a while as I have, you know how cyclical it is. Supply and demand trends yo-yo as the economy fluctuates, consumer buying power ebbs and flows, and factory gluts and shortages strike. These factors make the job of acquiring the right used vehicles for any dealership challenging.
And as sure as fall's arrival, the competition among dealers for wholesale vehicles will continue to intensify. However, those who make the proper adjustments now will not only prepare their operations for the future, but also create front-end efficiencies they can benefit from today.
Mandy Savage is the general manager at Manheim Detroit.
If you’re unfamiliar, Waze is the world’s largest community-based traffic and navigation app. You can join other drivers in your area who share real-time traffic and road info, saving everyone time and gas money on their daily commute.
In this post we’ll show you how to create a Waze ad for your dealership and dive a little deeper into why you should consider it as a place to advertise.
Your potential customers are driving by your dealership every day, but what are you doing to make them drive into your dealership instead of past it?
Giant inflatable gorillas, sign-spinners and dancing flags are one way to do it; another way is to purchase a Waze ad. Waze is a smartphone GPS app with many features that drivers love: traffic reporting, turn-by-turn navigation, accident reporting by severity and many more features. It even features celebrity voice navigation.
Not only do drivers love Waze, but advertisers should love it, too. Now you can advertise your dealership to those driving by for as little as $60 a month. If you already use Waze, you may have seen ads pop up on the screen while you’re at a complete stop. Your dealership will also appear in local searches and you will have access to reporting as well.
Download Waze for iPhone or Android to see why it’s so popular.
Steps to create a waze add for your dealership
1. Go to biz.waze.com.
2. Hit the "get started" button.
3. Create a Waze account.
4. Enter your business name. Hit next.
5. Add an 80-character business description.
6. Search for the name of your business (it should auto-fill). Hit next.
7. Choose your business type. Hit next.
8. Choose your budget (the minimum is $2/day). Hit next.
9. Enter your credit card information. Hit "verify payment."
10. Accept the terms of service. Hit "create account."
You’re now on your way to driving more people to your dealership. Waze can take up to 48 hours to review your account and you will receive an email once your account is approved. Once your account is approved, it will automatically go live and Wazers will be able to see your ads on the map.
Creating an offer for your dealership using Waze
Waze wants you to think of its ads as “virtual neon signs.” Drivers will see a virtual pin on their map. Pins expand to show business information, deals and more. Ads also appear when driving naturally stops, which means potential customers are one tap away from driving to your dealership.
Waze reporting dashboard
Once you have finished creating your account, you can view your dashboard. You should see a Go To Dashboard button on your screen.
Here is what you can expect to see in your Waze dashboard:
—Views: How many people viewed your ad.
—Engagements: How many people engaged with your ad.
—Effective Cost/Action: The cost per action.
Waze is used by many locations across the country to drive more people to their business. Are you using Waze for dealership now, or strongly considering it?
If you are already a LotVantage customer and would like help experimenting with Waze, contact us, and we’ll happily walk you through it.
Adam Goldberg is the marketing manager at LotVantage, a provider of digital marketing solutions for automotive, marine, powersports, RV, trailer and outdoor power equipment dealerships. He can be reached at [email protected]. You can also access more social media tips at motors.lotvantage.com/blog.
TransUnion recently pushed out a series of recommendations to help companies that specialize in third-party debt collections. However, some of the suggestions could help first-party companies who are involved in repossession and recoveries in the auto finance space.
TransUnion emphasized that with a primitive strategy at play, a collections company cannot function at its full potential. With that sentiment in mind, here are some of the tips from TransUnion’s Collections Insights team:
Group inventory for scale and performance
TransUnion stressed the collections challenge is knowing how to work a large inventory for the best return at the lowest cost. The firm recommended that a logical, scalable grouping is a way to help companies approach their plan and that it’s essential to efficient and effective operations.
“Our experts suggest grouping your inventory with the top 10 percent comprising your A group and splitting the rest into equal thirds,” TransUnion said. “This grouping allows you to achieve good recovery performance with the maximum operational productivity.
Quarantine specialized inventory
TransUnion pointed out that every portfolio contains specialized segments of inventory important to both compliance and recovery. These should not be included in your general inventory because they require unique collection treatments.
Those special segments can include accounts where the debt holder is an active member of the military or filing for bankruptcy.
Create a control group
TransUnion explained that a control group allows companies to know whether or not your strategy is working, and can provide insight into where to make necessary improvements. Peter Ghiselli, vice president of third-party collections at TransUnion, said that it’s imperative to truly understand the value recovery scores bring to your business and prove return on investment.
“If you don’t have a control group, you can’t measure reliably,” Ghiselli said. “You don’t know if it’s the score or the treatment that’s causing a particular behavior and your (control) group strategy becomes a self-fulfilling prophecy that makes you question the value you’re getting out of scores."
Document your intentions
TransUnion went on to mention that companies should document workflow and decision points on paper for future challenger strategies.
“Make sure your organization sees and understands the process you’re implanting. And hold the team accountable,” TransUnion said.
To download the complete rundown of collections recommendations from TransUnion, go to this website.
Used-car consumers buy service contracts because they understand their value to help offset future mechanical breakdown costs. Dealerships like customers to purchase VSCs because they help increase customer use of their service department.
However, if you want more confidence that these customers will indeed return to your dealership for vehicle maintenance and repair — and possibly purchase a new car down the road — the most productive way (the data confirms this) is to put a dealership-branded prepaid maintenance plan in their hands (and in their glovebox).
The used-car purchaser is the most likely customer to defect after purchase, so be sure to connect them to a dealer-branded PPM that is redeemable only at your dealership.
As with service contracts, many prepaid maintenance programs offer buyers the option to redeem those programs’ benefits at different service providers. As good as these plans are for consumers, they don’t tie the customer back to your dealership for plan use or future engagement.
So, be sure the plan your dealership uses actually brands your dealership — not other brands — and can’t be used at aftermarket service providers, which is certainly true with many service contracts.
Whichever option you chose to implement, make sure it does a number of critical things:
- Drives consumers to your business, and especially your service department.
- Delivers a positive experience, so customers continue to come back to your store.
- Has baked-in accountability tools to measure the lift in customer-pay dollars for each visit, so program ROI is measurable.
As a refresher, prepaid maintenance programs, or PPMs, help buyers offset the cost of everyday routine vehicle needs — oil changes, rotations, alignments, cabin filters, and similar services.
Plans the dealer can customize for the local market will have more value to customers, so be sure the plan you opt for allows you this flexibility.
Additional questions you need to ask when looking at a plan:
- Is the plan one-size-fits-all or adaptable?
- Are plan configurations available in 1-, 2- and multi-year options?
A best practice recognized by many dealers is to choose a pre-loaded maintenance plan that is offered free to vehicle purchasers. The incentives tie the buyer to that all-important first service visit. NADA has noted that 75 percent of new customers who have regular maintenance performed at their dealership become repeat purchasers/customers.
Preload 1- or 2-year programs on all new- and used-car purchases, and offer a multi-year upsell option through your F&I department for longer term retention. Provide the plan to every buyer.
The used-car purchaser is the most likely customer to defect after purchase, so be sure to connect them to a dealer-branded PPM that is redeemable only at your dealership.
I mentioned earlier that there was proof that dealer-branded PPMs drive retention. Such plans produce:
- 85 percent first-year retention, 65 percent each of the following two years
- $70 customer-pay upsell per repair order
- On average $1,105 in customer-pay service business a year with you, for the majority of the six years consumers own their vehicles today
If well-designed, PPMs will appeal to used finance and lease buyers. Here’s how these plans simplify consumers’ lives – and why they buy them:
- Routine: Plans reduced missed opportunities. A plan keeps upkeep on schedule and a vehicle operating as designed.
- Plan: Like a great habit, using prepaid maintenance plans helps ensure that motorists don’t miss critical services.
- Budget: Bankrate.com reported that most consumers could not cash flow a $500 emergency expenditure. Plan assets, both prepaid and discounted (and often rolled into a monthly car payment), save money on routine maintenance services in advance, so when needs arise, the expense is covered. Dealer-branded plans ensure those services are redeemed at the issuing dealership.
Every decision a dealer makes about an investment factors in at least two objectives: How will it streamline operations to remove waste and cost, and how will it drive service volume, retention, and thus revenue.
If a dealer isn’t evaluating purchases for their ability to achieve both goals, dealers leave potential revenue on the table. That is not the way to situate the dealership for leaner days ahead.
Ryan Williams is president of Fidelis PPM. He can be reached at [email protected].
Rapid Recon founder and chief executive officer Dennis McGinn pinpointed what he called five common mistakes that go undetected and unresolved in vehicle reconditioning that can cost dealers gross margin and erode their ability to be more competitive.
“As the industry tightens over the months ahead, fixing these five broken processes now will increase reconditioning’s productivity, resource utilization, and time to market or speed to retail,” McGinn said.
“Recon’s efficiency — or lack of — permeates the entire store, so fixing these mistakes, it isn’t just a ‘recon’ issue,” continued McGinn, whose software company manages reconditioning time-to-market workflow to transform dealership reconditioning operations into profit centers.
Here are the five frequent reconditioning mistakes that put used-vehicle profitability at risk, followed by McGinn’s recommendations for correcting them:
1. Us versus them
McGinn explained recon touches so many areas of the business that managers who understand this knock down siloed “us versus them” attitudes that erode recon’s value to the bottom line.
For example, what adjustments might be suggested to appraisers and buyers so vehicles that flow into recon will require less time and money to become frontline ready faster? McGinn insisted this strategy will improve used-vehicle grosses and inventory turn.
2. Shared resources
McGinn pointed out a dealership’s largest customer is its used-vehicle department, but that it shares its critical need for service department resources with customer needs. This situation keeps waiting either retail or internal needs, thus the common tension here.
“Separate retail and internal service, physically if possible, but certainly philosophically,” McGinn said. “Where done, dealers report improved recon output and quality, and retail advisors and technicians become better at inspection thoroughness and upsell results.”
3. Overconfidence
Without measuring and monitoring recon processes, McGinn stressed that it’s impossible to gain an “honest” grasp of how efficient or inefficient recon is.
When dealers ask their recon departments about their cycle times, McGinn indicated their best estimates will be about five days.
“Yet when the clock measures recon, the actual cycle is eight to 10 days or more,” he said. “You will not maximize gross where a vehicle spends half or more of its magical 30-day retail window in reconditioning.”
4. Not counting the cost
McGinn maintained that the money-meter runs from the day the dealership acquires a trade or buys at auction until that unit is sold. This is called holding cost. NCM Associates pegs this daily cost at $32 per vehicle, on average, though some brand costs can be upward of $50 and more.
At $32 per vehicle per day, McGinn calculated that shaving six recon days off 100 units saves the dealership more than $19,000 a month or more than $230,000 a year.
“These costs (and savings) go against (or toward) actual sold gross,” said McGinn, who computed a sold gross of $3,200 is “actually” $3,008 if the vehicle took six too many days to get to the front line.
“A focus on improving workflow and production through recon puts dollars directly to the bottom line,” he added.
5. Allowing poor communications
McGinn explained that repair approval delays, misplaced vehicles, untracked sublet work and other communication delays wreck recon’s speed to market, throw efficiency in the ditch and frustrate staff.
To rectify those scenarios, he suggested that dealers get all departments on the same track — internalizing a collaborative time-to-market culture. Specifically, McGinn recommended:
—Devise recon repair/parts preapproval buckets based on vehicle mileage to eliminate approval delays.
—Use mobile devices with VIN, bar code or QR code readers to track recon inventory.
—Use software tracking to alert everyone about vehicle status and whereabouts, so everyone takes ownership of faster and more productive recon results.
Rapid Recon is leading time-to-market reconditioning software for franchised and independent dealerships. Rapid Recon benchmarks and best practices can help general managers, used-car managers and service managers fine-tune their reconditioning practices to achieve faster time to market that helps retain vehicle gross.
More details can be found at www.rapidrecon.com.
Security breaches can devastate a business, and dealerships — with their cast stores of customer information — are no exception.
Citing data from a recent survey conducted by Osterman Research, Helion Technologies announced that 75 percent of small businesses have experienced security breaches in the last 12 months.
The findings were published in a July report titled IT Security at Small to Mid-Size Businesses (SMBs): 2016 Benchmark Survey.The results were obtained from organizations ranging in size from 100 to 3,000 employees.
“These findings are similar to what we are seeing in auto dealerships, and unfortunately we are seeing the rates of attack continuing to increase,” said Erik Nachbahr, president of Helion Technologies. “Every time a hacker successfully breaches a network and profits from the attempt, 10 more hackers get into the game.”
Small businesses — those with 500 or fewer employees — were most vulnerable to security attacks, as they are less likely to have full-time security experts on staff.
Nearly one-third of the survey respondents have two or fewer IT personnel focused solely on security, indicating that smaller companies do not have the expertise necessary to deal with attacks, infections and other problems quickly and efficiently.
“Security doesn't have to be this massive, complicated problem for auto dealers,” said Nachbahr. “Prevention is actually pretty inexpensive and easy. What’s really costly is when a breach happens. A single incident may result in the loss of hundreds of thousands of dollars. Yet with simple technology precautions as well as employee awareness and training, these incidents can easily be prevented.”
According to the survey, the most successful form of security attacks included:
Phishing: 43 percent of SMBs experienced a successful phishing attack, which involve emails that appear to come from a legitimate source, such as a bank. The message contains a link that takes the victim to a fraudulent website; for example, a website that looks exactly like the bank's website. The user is prompted to provide login information, which is then used by the hackers to access the dealerships’ real bank account.
Spear phishing takes the scam a step further by targeting specific individuals within organizations; in auto dealerships, this is usually the controller or someone in the accounting office. The employee receives an email that appears to be from a dealer principal or general manager, with a request and instructions on how to wire money to an account. Once the money is wired, there is no way to retrieve it.
Virus or Worm Infection: 36 percent of SMBs experienced these types of attacks, which are computer codes that replicate themselves and spread through a computer network. Viruses and worms are designed to destroy data, use available memory and bring systems to a standstill.
Ransomware: 23 percent of SMBs were victims of ransomware a type of malware that infects computer networks and lies dormant for a period of time. Once activated, ransomware encrypts all files in an organization and the hackers demand a ransom for their release.
The survey also found that SMBs’ overall security-related costs have increased an average of 23 percent in the last 12 months. The increase is likely correlated to the growing number of security threats; for example, in 2015 the number of phishing URLs increased by 55 percent and the total volume of new malware increased by 14 percent.
One of the primary targets in SMBs is data, such as the extensive customer records in dealership management systems and customer relationship management applications. Stolen login credentials, credit card numbers, Social Security numbers and account numbers can be used for a variety of purposes; including gaining access to corporate financial accounts, selling credit card numbers on the open market or creating new identities for criminals.
Helion Technologies offers the following advice to dealership employees to help them minimize risk of an attack:
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Don’t click on any links in emails or download documents sent by an unknown party.
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If you receive an email from your bank, don’t use that link to go to the bank's website. Instead open a new window to navigate to your bank's website. If you have any concerns about the content of the message you received, call your bank.
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Require verbal authorization for all email requests to wire or transfer money
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Keep every computers’ operating system and other software applications up to date, installing patches and updates regularly.
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Use firewall and antivirus software.
According to a recent study by the Sierra Club, electric vehicles are not widely available on most lots. The demand is there, but the study informs that dealerships are not keeping electric vehicles in inventory, salespeople are not prepared and educated to talk about them, or the vehicles are not charged or unavailable for a test drive.
The Sierra Club conducted a multi-state study called Rev Up EVs, which examined the EV shopping experience. Respondents visited 308 dealerships across 10 states.
Rev Up EVs also found that:
• Respondents were 2.5 times more likely to find no EV on the lot in the nine other states involved in the survey, compared to California.
• The average number of EVs on the lot in California was twice the average number on lots in the nine other states.
• Respondents who asked to test drive an EV were told at 14 percent of the dealerships that the car was not sufficiently charged.
• Of the visits to dealerships with at least one EV on the lot, respondents indicated that about 33 percent of the time, the salesperson did not discuss the federal and state tax credits and rebates available to lower the cost of an EV.
• Of the visits to dealerships with at least one EV on the lot, volunteers found that 42 percent of the time EVs were either “not prominently displayed,” or were only “somewhat prominently displayed.”
Competitive advantage
Your dealership has a competitive advantage if you have EVs in inventory, especially with National Drive Electric Week coming up Sept. 10-18. The week is a nationwide celebration to heighten awareness of today’s widespread availability of plug-in vehicles and highlight the benefits of all-electric and plug-in hybrid-electric cars, trucks, motorcycles and more.
If you have EVs, you may want to reconsider how you are marketing that inventory. The Rev UP EVs study found that 65 percent of California drivers surveyed wished there were more purchasing options.
You can also craft specific dealership social media posts around your EV inventory. Consumers are looking for these types of vehicles and it’s important you take advantage of it. A good place to start is by determining how to get your inventory in front of a national audience.
List your electric vehicle inventory nationally on eBay
eBay is a national marketplace that lets you market your inventory to customers all over the country. Your dealership can list inventory on eBay via a national auction or national classifieds.
—National classifieds: eBay has introduced a new option called national classifieds that is gaining traction with dealers. Think Craigslist-style listings, but with a much broader audience. This option is 100 percent hands free and by syndicating your pre-owned inventory to eBay, you can get national exposure for a set monthly fee.
—National auction: Most eBay listings are in an auction-style format. Bidding on items in this format is fun for consumers and gives them more control in the buying process. Dealers like national auctions because every bid is a lead.
Consumers are using eBay
eBay builds consumer confidence with a number of programs to put shoppers’ minds at ease. The site offers free vehicle history reports and financing options, and consumers can even schedule a third-party inspection via WeGoLook.
As you can see from the Sierra Club’s Rev Up EVs study, there is a demand for electric vehicles, but consumers are struggling to find them. Take advantage of this demand and promote your inventory nationally in a place where customers are looking for it.
Adam Goldberg is the marketing manager at LotVantage, a provider of digital marketing solutions for automotive, marine, powersports, RV, trailer and outdoor power equipment dealerships. He can be reached at [email protected]. You can also access more social media tips at LotVantage.com/blog.
Since last spring, the Justice Department has leveraged the regulatory teeth contained within the Servicemembers Civil Relief Act (SCRA) to reach a record settlement with Santander Consumer USA and to bring a lawsuit against a Michigan credit union. The developments both involved the SCRA and vehicle repossessions involved with members of the military and their families.
To help repossession agents, finance companies and dealerships that hold their own paper, two legal experts from BuckleySandler are participating in a free webinar aimed at providing assistance so other industry participants aren’t caught up in the growing number of legal cases alleging violations of the SCRA.
The session, orchestrated by RepoPulse.com, is set for Thursday at 1 p.m. EDT. Scheduled to review the SCRA and offer strategy recommendations during the webinar are BuckleySandler partner Valerie Hletko and associate Sasha Leonhardt.
“The SCRA is clearly in the crosshairs of state and federal regulators, so it is incredibly important for repossession agents and auto lenders to be up-to-date on the law and how it applies when repossessing vehicles,” event organizers said.
To register for this free session, go to this website.
A new CRM is one of the biggest purchases any dealership can make. And like any big purchase, it’s not easy. It takes time, effort and resources to decide which system is the best fit for you. So once you’ve gone through the whole purchase process and signed with a new CRM, you can’t wait to fire it up and get the results and ROI you were promised.
Put a pin in that, though — because now’s not the time to rush. Believe it or not, what you do before you go live with a new CRM is more important than anything you do after.
When you set your software up for success, you set your team up for success, too. If you don’t spend the time and energy on that setup phase, you set your team up for a disadvantage. Changing your CRM can drive improved retention and CSI, more sales and more money — but only if you manage the change.
Following these four steps between purchase and go-live will set you up for success with your new CRM.
1.Get your team on board
The most important part of setting up your CRM actually has nothing to do with the software. It’s not technical; it’s cultural.
Does everyone on your staff know you bought a new CRM? You wouldn’t believe how many dealerships I’ve seen where management was ready to go live with a new system, but the staff didn’t even know they were switching. Be clear and specific: We’re moving from System X to System Y, and it’s going to happen on this date.
But don’t be surprised if your team isn’t on board right away. People don’t like change. By CRMs, you’re basically asking them to keep doing what they’ve been doing … just differently. To get their buy-in, explain exactly why the new CRM is good for them and for the dealership — and let the system sell itself.
Maybe it closes some functionality gap that lets your team do their job better. Maybe it integrates better with the other systems they use. If they can see why you’re upgrading — and how it will be an upgrade for them as well as the dealership — they’ll be more likely to buy in before they log in.
2. Partner with your provider
When you buy a new CRM, you should also buy into a new relationship with your CRM company. Mary Olson of Ferman Automotive said it better than I ever could: “You don’t really want a provider, you want a partner. You want to know that if you need anything, you can reach out, and they’ll respond with answers.”
And she would know — she’s been with her CRM team for over six years!
Before implementation, meet regularly with your provider to set expectations and discuss what you want your system to do. Do you want to improve KPIs like CSI or retention, or bridge a certain functionality gap? When you clue your provider in to your needs and goals, they can make sure your CRM supports you.
Goal-setting is huge, but so is on-the-ground support — and that means in-person training. Take advantage of online video tutorials if your provider offers them, so you can get oriented and make the most of facetime with your trainers. “If you don’t train your team on the CRM, and keep training them, no one’s going to use it properly,” said Mary.
And remember, training’s not just for salespeople. GSMs, ILMs, desk managers: Everybody who uses the CRM should be formally trained on how to use it.
3. Prepare your data
Now that we’ve thought about culture and training, it’s time to talk data. To use your new CRM, you need to migrate your data carefully — from your old CRM and from your DMS. Let’s say the records in your DMS and your old CRM don’t quite match up, though. Which one should be your default? Talk with your provider to determine your go-to source, because to get real results from your CRM, accurate data is everything.
Our trainers see dealers struggle with data all the time. We’ll show up on-site and sit down with a salesperson — who, a lot of the time, didn’t know his dealership was changing CRMs at all. Of course, the first thing he wants to do is log in and look for his best customer. If that customer’s not listed under his name, you’ve probably lost his buy-in. When he can’t count on the data, he’ll feel like he can’t count on anything.
4. Assemble your CRM team
Organizing your data is important, but so is organizing your team. For a smooth transition, think about who’s going to own what. As you build your new processes, the person who’ll use them the most needs to be involved. Have your desking managers set up desking processes, internet managers set up internet processes, and so on.
Here’s what happens when a dealership doesn’t do this: I’ll sit down with their internet manager, and when they see the internet process someone else set up, they tell me there’s no way they’re following that. If you can get key folks involved early, you’ll have higher-quality processes — and getting buy-in will be less of a pain.
As is the case on most successful teams, you’ll also need a leader. I recommend nominating one person in your dealership to take complete ownership of the system. At Ferman Automotive, Mary assigned a CRM champion for each of her 12 rooftops.
These people’s top priority is the CRM. They understand how the tool works and how it affects every inch of the dealership. And they’re the go-to person for managing CRM training — both for new hires and on an ongoing basis. The dealerships with in-house CRM owners almost always perform better than those without them.
Your champion is the ideal point person to field your team’s CRM questions and feedback, and interface with your provider to find a solution together.
“As a CRM champion, I’m the one who reaches out to my provider, and it’s for a lot of different reasons,” said Mary. “Sometimes it’s a technical issue. Other times it’s just an idea or suggestion we have.” Think of your provider as a trusted partner, not just tech support.
It’s tempting to go live as soon as possible after signing a new CRM, but rushing the critical setup phase will only cause problems later on. Remember: You’re changing CRMs for a reason. Hold onto that reason, manage the change carefully and your effort will pay off big.
Mark Vickery is the senior director of performance management at VinSolutions.
You have painstakingly constructed a talented sales team that truly understands how to demonstrate the value and benefits of your product — they really know how to sell cars. You have invested in your team's technology, training and continuing development to make certain you are positioned and poised for success in diverse economic climates.
With all this hard work, your customer service index scores (CSI) and per vehicle retail (PVR) numbers are still not exactly where you want them to be. You have thought a lot about what you and your team can do to move the needle. You have felt that something might be “wrong” on the sales floor, but you just can’t quite put your finger on it. You recently lost an exceptional salesperson (or perhaps even a manager) to a voluntary termination that really surprised and disappointed you.
You find yourself asking: What is going on in my dealership?
Whether this scenario describes your dealership dynamic or not, hidden conflict has probably had an impact on your sales department, your bottom-line profits, and it may be the root of some of your recent challenges. If you have been lucky thus far and avoided the costs of conflict, be aware that it most likely will impact your business in the very near future.
The fascinating reality about conflict is that it influences so many things outside of the simple visible disagreements or the discord and disharmony that you can feel between individual participants in a conflict. In fact, conflict can infect your team’s culture and can rob you of customer loyalty, your dealership’s reputation, and if hidden and allowed to exist over a long period of time, conflict can cost you a tremendous amount of money.
How much money you ask? Various factors have to be considered when calculating the real (and sometimes hidden) costs of workplace conflicts. In addition to the cost of wasted time and opportunity. It’s evident that employees who are impacted by conflict have lower job performance, customer service, motivation, and overall productivity. Conflict can also lead to absenteeism, vandalism, degraded decisional aptitude, and the loss of expensive (and thoughtful) investment in a skilled employee who comes to suffer from the dreaded “I don’t care anymore” attitude.
Often, hidden conflicts can lead to false whistleblowing allegations and lawsuits against your organization. It can also be the gateway to surprise bursts of attrition where previously well-trained and professionally developed employees choose to leave the organization for other opportunities. Your dealership becomes an amazing training ground for the success of others.
The direct costs of conflict are, luckily for us, observable, measurable and accrue over time, making them easy to calculate utilizing a proven tool called the Dana Cost Calculator highlighted in a 2003 issue of HR Magazine. Let’s examine one example of the true cost of losing just one mid-level sales person in your dealership due to a covert (or overt) conflict within your organization.
1. Employee’s annual salary and commission: $80,000
2. Multiply by 1.4 (140 percent) as the investment you have in the employee: $112,000
3. Multiply by 1.5 (150 percent) as the cost of replacing the employee: $168,000
4. Multiply by .6 (60 percent) average role of conflict in voluntary terminations: $100,800.
Now, multiply times the number of voluntary terminations in your organization annually.
If you have a 10 percent turnover rate in a company of 100 employees that’s 10 employees. Calculate 10 times $100,800 equals $1,008,000. Over $1 million of expense was wasted due to conflicts, which usually remains hidden, or ignored, until it is too late to do anything.
What to do when you find a problem
Now that we have determined that conflict can impact your customer service, culture and bottom-line in a very real and tangible way, what can you do about it?
Here is a brief blueprint to help you move forward through overt conflict, identify hidden conflicts and begin to adopt a plan that makes constructive conflicts a part of your successful and profitable dealership strategy.
1. Create a culture of accepting the reality of conflict.
It all starts with the creation of a culture where it is common knowledge that conflict exists and that any attempt to utilize conflicts constructively should be rewarded. This is where true leaders stop assigning blame, and instead strive to understand the causes of conflict, and buttress the replication of any successful strides made in constructive conflict resolution by their teams.
2. Take the lead and call out for conflict.
As your dealership’s leader, you won’t hear about any kind of conflict unless you demand to. Many owners and general managers have a hard time seeing the need for differing opinions (which can actually propel the dealership forward if fostered and supported) and instead, they encourage group-think.
This strategy creates a team of people eagerly waiting to know what their boss thinks, just so they can provide ideas and comments that fall in-line with this position.
3. Introduce constructive conflict training.
You have invested a tremendous amount of money in training your salespeople how to sell cars and your sales manager leadership on how to structure deals, assess car values, coach, counsel and train their teams. Why not add constructive conflict resolution techniques to your training and development repertoire?
If Google, Apple, and Microsoft have made communication and conflict resolution skills part of their core development and training strategies, it may be worth a second look and the small investment required, compared to replacing just one voluntary termination.
4. Adopt the Carnegie Hall approach.
Arthur Rubinstein was approached in the street near Carnegie Hall in New York by a man who asked, “Pardon me, how do I get to Carnegie Hall?” Rubinstein replied, “Practice, practice, practice!”
Most of your employees are innately uncomfortable with conflict and their overall confidence in being able to handle conflict appropriately is likely very low. The only way to earn their stripes and become skilled in constructive conflict techniques is to gain experience through the actual hard work of experiencing how to deal with conflict through practice.
So, I have gotten your attention and you are thinking to yourself, “OK, I’m sold.” If you are ready to commit and adopt a strategy to uncover and constructively solve conflict in your dealership, what should you really expect?
• Increased employee satisfaction
• Lowered employee acquisition costs
• Increased employee productivity and performance
• Increased employee retention
• Streamlined processes and increased company cohesiveness
• Increased customer service and customer satisfaction
• All of this with the added knowledge that satisfied employees save you money
Let’s get started
To get you started and show you just how easy your dealership’s first steps toward a new way to consider conflict (and its impact) is outlined below with a simple process and procedure that has been shared with sales teams throughout the nation.
Introduce these techniques in your next sales meeting or reach out to a local organizational development or conflict resolution expert to visit your dealership and share some similar methods.
Step No. 1: Cool off.
Conflicts cannot be solved in the face of hot emotions and exasperation. Take a step back, breathe deeply and gain some emotional distance before trying to talk things out. Take the time to regain the focus required to create an opportunity to choose a response rather than to simply react.
If you try to skip this step, your words may be too emotionally loaded and may escalate the conflict. Take a break, take a walk around the lot, or breathe deeply and calm down before you say a word.
Step No. 2: Share what is bothering you using “I messages.”
“I messages” are a tool for expressing how we feel without attacking or blaming the other party. By starting from “I,” we take responsibility for the way we perceive the problem and the conflict. This is in sharp contrast to “you messages,” which immediately put others on the defensive and close the doors to communication.
When making “I” statements, it is important to avoid put-downs, guilt trips, sarcasm and negative body language. Your “I message” needs to come from a place inside that is non-combative and shows a willingness to compromise.
In conflict resolution, it is “us against the problem,” not “us against each other.”
Step No. 3: Each person restates what they heard the other person say.
Reflective listening demonstrates that we care enough to hear the other person out, rather than merely focusing on our own point of view. It fosters empathy and understanding. Remember, “No one cares how much you know until they know how much you care.”
Let the other party know that you have heard them. Some examples of ways to start a reflective listening conversation are below.
“This is what I think I hear you saying…”
“I’m picking up that…”
“As I hear it, you…”
“I’m not sure I am with you….Do you mean….?”
Step No. 4: Take responsibility.
In the majority of conflicts, both parties have some degree of responsibility. However, most of us tend to blame others instead of examining our own role in the problem.
When we take responsibility for our own culpability within a conflict, we shift the resolution process into an entirely different gear; one where a win-win resolution is possible.
Step No. 5: Brainstorm solutions together and come up with one that satisfies both people. Resolving conflict is a creative act that can be stimulating and satisfying for both parties.
There are many solutions to a single problem; just make sure you enter this step with the willingness to seek out compromises.
Step 6: Affirm, forgive or thank.
A handshake, hug or kind word gives closure to the resolution of a conflict. Forgiveness is the highest form of closure available to us in conflict resolution.
The affirmation of reaching out to the other party or extending the hand of understanding and friendship creates a mood where animosity and bitterness disappear and the rehabilitators can move forward and focus on animal care.
Final thoughts
Congratulations! You have seen for yourself the expensive impact of hidden conflict in you dealership and how, if left unchecked, it will affect your customer service, culture and bottom line in a very real and measurable way.
A brief blueprint to help you move forward through overt conflict and tips to identify hidden ones was provided here, but this is just the beginning of your journey. To make the most of this new way of considering conflict will require you to adopt a plan that makes constructive conflict management a part of a successful and profitable long-term dealership strategy.
It sounds like a massive challenge, but you will find that if you take the lead, create a culture that accepts the reality of conflict, add comprehensive constructive conflict techniques to your training regimen and award attempts and the practice of resolving conflicts constructively, you will soon see higher profits, better CSI scores, and more productive, satisfied and engaged employees.
George Ewing is the vice president of sales strategy and development at Flagship Credit Acceptance, a national independent auto finance company headquartered in Chadds Ford, Pa. George has spent the last 15 years building a career in the retail automotive industry in roles that include finance, dealership management, underwriting, training and development and marketing. He is a graduate of the Department of Conflict Analysis and Resolution at Nova Southeastern University in Fort Lauderdale, Fla. George is an accomplished trainer, speaker, motivator, and university lecturer. He enjoys living on a working horse farm in Highland Township, Pa., with his best friend and wife Tara and their two children.
