DEALERS & GM’s: Are you facing any or ALL of the following market challenges and other than working harder, you aren’t quite sure how to conquer them?
- HIGH COST OF CUSTOMER ACQUISITION
- PROFIT MARGIN COMPRESSION & PRODUCT COMMODITIZATION
- SHRINKING CUSTOMER LOYALTY
What I share in this article is not theory or speculation, its factual. The inside information you are about to read has been proven out by dealers we coach. Because my company coaches dealers who have conquered high cost of customer acquisition, compressed margins, and shrinking customer loyalty. I share this with you because as their coach, I’ve seen and experienced their successes first hand. At Car Motivators, we care about the showroom floor and the people who work on it. Therefore, I want for you in reading this, is to experience the same success in overcoming these challenges. In this way, your dealership and people can continue to thrive in the car business!
To many leaders, overcoming these seems daunting and hopeless! Many dealers feel like they are playing a game and the chips are stacked against them. GOOD NEWS: This is a game, and to win you only need three things:
- OFFENSE
- DEFENSE
- PLAYBOOK
The offense is the way that you market to and attract buyers. First, go on the attack and DE-COMMODIFY your dealership! You only have ONE competitive advantage, and it’s your EMPLOYEES. Every employee at your dealership has direct AND free access to thousands of potential buyers. Start using marketing platforms like #Teir4Marketing and apps like #NextSale. Because this technology will keep your people in front of people who can and will buy from them. Stop doing the same thing as every other dealership! That’s buying a bunch of cars, pricing them with no margin, and marketing the “deals”. For the reason that it is attracting only best price, in-market shoppers who are price-driven transactional buyers.
When you can make the full transition to these modern and effective methods for attracting customers, you can expect two results. First, you will attract more customers that your employees enjoy selling. Secondly, you will be able to lower your marketing spend extensively, and thus improve the cost of acquisition. Regardless, you will want to continue your current marketing campaigns along with these tactics. Because it takes time to reach a tipping point when business generated through these new means is enough to replace your high-cost low return traditional marketing spend. Most noteworthy, this tactic helped Sansone Jr 66 Automall become the most efficient dealership in his 20 group, over the course of five years.
The defense is two-part, the first being the customer experience, before, during and IN BETWEEN sales! Start by differentiating yourself from your competition by understanding the customer experience starts before they arrive at your dealership. Technology tools like DriveCentric A.I. can engage with customers in record time, 24 hours a day through the right communication channels. Add a personal touch and improve the pre-arrival experience by sending personalized videos to each opportunity. At Car Motivators, we advise our internet sales departments to “Treat the pixels like people”! As a result, we have two Toyota dealerships who have well over 80% engagement from internet leads each month, talking to 30% more leads than the average dealer, because they use these techniques.
Salespeople must adopt the mindset that every customer is a 30-car buyer. Stop treating customers as if they are a single transactional sale because if you sell like a kiosk, you can be replaced by one. There is no “after sale” follow up with this new mindset; there is in between sale relationship development. The in-between sales experience for a customer should happen digitally leveraging tools like CRM, social media, video, and with in-store on-site events, charitable acts, and community involvement.
The critical second half to the defense which will shield you from the three challenges above is the employee experience. The reason is that a better employee experience creates engaged employees. Engaged employees are more motivated, accountable, productive, and remain with your company longer. When you multiply the effects of these engaged employee attributes across all employees in your organization you multiply results. These employees stay on the team longer, and employee retention means customer retention.
To improve the employee experience, start by having a robust onboarding process that ensures employees have a foundation for success. Stop throwing employees to the wolves without training or tests for competency because this almost always provides failure. Continue developing people through aspirational performance coaching, even after they have been trained, and understand their job.
This combined improved customer experience and employee experience is a defense against commoditization which will ensure that you build customer retention.
Finally, it’s time to discuss the playbook. Because every great team has a coach with new and exciting plays that ensure the unit performs at a high level and outmaneuvers the competition. When you look at the business side of this analogy, the right activities happen in the right way because there is a coach observing from the sidelines. In the car business, the playbook consists of several things: A process for vetting, deciding upon, implementing, and revisiting new procedures, tools, and technology. A method for holding people accountable. Leadership competency and understanding of the latest industry best practices that drive results.
You can start by working with leaders and employees to brainstorm around new ideas. We suggest involving the entire team in developing this growth mindset. You can discuss which ideas if implemented, would have the most significant impact on business. Try sending your managers to a conference or two. You could visit a top dealership in your region for a day. Another strategy is to join a 20 group. A cheap and simple way for ideation is simply to read a few articles with industry best practices on dealershipnews.com or drivingsales.com. After these activities, have each employee share their favorite idea and choose the best one to implement. Furthermore, create a game plan as a team, ensure everyone commits to activities and time frames. Furthermore, build reward/recognition programs for results, and accountability processes to ensure everyone conducts their commitments.
Another opportunity within this bucket is to develop a process for coaching up underperformers. In this way, the right people stay on your team, and people who aren’t a good fit move onto something better for them in a fair and efficient manner. This playbook if appropriately implemented, will help you quickly add technology tools and processes in the right way. Weaving these activities into the fabric of your teams’ routines are critical to your bottom line. More importantly, it will help you remove unproductive and unprofitable tools, processes and technology faster and with less wasted effort and frustration.
At a high level, we have discussed three of the dealerships most significant challenges: shrinking profit margins, lower customer loyalty, and commoditization of our cars. Throughout the article, I shared what you can start doing, stop doing and continue doing which will help you overcome these challenges. Above all, if you’re thinking, “These solutions are not what I had hoped for, this sounds hard. I’m going keep looking for a magic pill.” Then I challenge you to look at any championship sports team. Because they don’t become champions by simply wanting championship results. Nor did the championship team take performance-enhancing drugs suddenly crushing their competition and winning it all overnight.
Rather, it takes long term consistent training, coaching, and using the right tools. Combine this with taking on new modern best practices, a mindset of accountability, a clear vision, and a desire to win. Then go on the attack with a blitzkrieg offense and enhance your dealership’s brand by marketing your people. Set up a staunch defense with industry best customer and employee experiences. Develop a great playbook that ensures personal growth for every player and leader on your team, continuous improvement, a mindset of ownership across the board. Remember, you too can overcome these three challenges and set your entire business up for future success!