BrandingWire: Auto Dealers

For regular readers of Branding Strategy Insider, you know that every month BrandingWire members come together to tackle real-world business problems. This month we are reaching out to auto dealers.

We have touched on this subject before here, here, and here. We’re taking a different approach this time. I’ve asked Bill, a friend who consults as a manufacturer-dealer liaison to join me in a candid conversation of the top problems facing auto dealers today. My thoughts follow the problems Bill describes.

Problem Number 1.  Traditional Mentality – Get the iron over the curb, leverage the buyer into a car today.

Bill, this is definitely at the heart of the issue. More than one hundred years in the making, the auto dealer culture has created one of the most vicious sales processes in business, resulting in a low reputation and or perception that impacts even the best of dealers. How can this cycle be broken?

Begin with the obvious - flush out traditional mentality. It’s obsolete. Remember what Charles Darwin said, "It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change."

What has changed? The consumer. They won’t be pushed. They are armed with more product knowledge than the sales force. They are numb to high-decibel advertising and keen on fine print.

Now dealers have to adopt new thinking or change personnel with those that possess new thinking. Which leads us to the second problem Bill points out…

Problem Number 2. Professionalism - the industry does not attract competent people.

The guys on the floor who have the "big book" have built it for years and their re-sales are automatic. For a smart, relationship-oriented young sales person, it is a tough club to join.

Same is true in the back (service) - a good advisor is the most important professional in the store - yet they are over worked, under paid, and get no acknowledgement. If these people were given more time to attend to customers, up sell them with class, and gain their trust - there would be no Pep Boys or Jiffy Lube’s.

Bill, we know strong brands have a much greater ability to attract and retain quality employees. For auto dealers we know a radical change in the culture is required to attract a higher caliber employee:

•    Recruit non-car sales people – no experience (with auto sales) is required.

•    Recruit senior citizens. This group was raised with a different value system. They understand the importance of relationships and have years of experience building them. They also understand integrity. Begin the search at local churches and senior centers.

•    Recruit women. If possible have only women on the floor. Women will disarm the sales process and relate better with women buyers who influence 85% of the buying decision. In my opinion less men=higher satisfaction ratings and profits.

•    Throw out the commission only sales model. Hire the sales people. Sales people hold most of the cards in your reputation. What sales person is thinking about building customer loyalty when they don’t think they’ll be around for the next sale with that customer?

Problem Number 3. Management - Everyone is promoted because they are a member of the family or kicked ass in their job. No leadership skills required. Or developed. You get elevated to your level of incompetence, and then you are fired - and go to some other store to sell cars.

The bottom is a reflection of the top and its clear what has to be done here. David Ogilvy once said, “If we hire people who are smaller than we are, we will become a company of dwarfs. If we hire people who are larger than we are, we’ll become a company of giants.” Would management be a problem if the ownership followed David’s direction?

Problem Number 4. Analog Prevails - radio, newspaper, billboards, infomercials, (go to www.frankgalos.com - meet the team and click on the infomercial link - my word!) - some dealers are worried about ROI (the smart ones), some are leading with innovative Business Development Centers (the winners), and some are ignoring the new path (close the doors).

The McKinsey Report shows that great dealers lead average dealers
(By 3 times in net before taxes) due to talent management, customer loyalty and planning. Most dealers will tell you they are in a bad location, have the wrong brand, are too small to compete, and most often - the factory sucks. Wrong. They can't build internal systems and develop a local brand (or Internet image that pulls people from other DMAs).

Bill, as you pointed out old school methods are weakening as the level of choice and noise increases. This is absolutely the worst time for dealers to continue on the same path with the same messaging and marketing vehicles. It’s time to differentiate in not just messaging but also the vehicles carrying the message.

What makes matters more critical for dealers is their lack of relationship skills are driving consumers to choose and prefer an internet transaction versus running through the auto sales gauntlet. Most dealers are encouraging the change they fear.

We are connecting with one another like no other time in history. A strong digital handshake is not optional — dealers must evolve and embrace the Internet and new media platforms.  Evolution is about advancement. Dealers should be excited about new ways to connect with potential customers.

Finding the Compass
One thing I don’t want to lose sight of in this discussion is that there was a time when a car salesman was a respected member of the community. It was a big deal to work at a dealership selling ‘advancements in transportation.’ Dealerships were very selective in the hiring process. Integrity was paramount. The goal was long-term relationships. Customers were king.

As time passed dealers lost their way. The trade became a hustle and transactions trumped relationships.  Dealers made it all about money and conditioned the consumer to make it all about price.

Today the customer is in control and they expect more on all fronts. They are the brightest to ever shop the planet and they have more choices than ever before. So how does a dealer survive?

By remembering the one common denominator that keeps a dealer in business: At the beginning, middle and end of the sale are people – not ‘units’. The dealers who understand this and focus on the human element will be the dealers who thrive.

Read more on this topic from our BrandingWire colleagues...

Olivier Blanchard, Becky Carroll, Kevin Dugan, Lewis Green, Ann Handley, Gavin Heaton, Martin Jelsema, Valeria Maltoni, Drew McLellan, Patrick Schaber, Steve Woodruff

Comments

[Valeria Maltoni]

Derrick,

This is top shelf advice and it read so well. I am now amending the link in my post to come here directly.

I especially enjoyed the travel through time with dealer as respected member of the community once. I have a friend in Italy who is a sales person at a dealership and he takes pride in his job. This is the one case where being behind with the times may benefit the country.

[Derrick Daye]

Valerie,

Thanks for your thoughts. Good timing, I'm accepting compliments all day today.

:)

Regarding being behind the times as a benefit - that's a great point, and a prime example of coming full circle as 'behind' is now 'ahead'.

If you ever fly to the Far East you'll see a supporting example on carriers from that part of the world as being a flight attendant is still a coveted position. Only the sharpest make the cut and the golden days of customer service in the air has never missed a beat.

Thanks again.

Derrick

[Brice]

Derrick,

Great insights into an age-old problem. I appreciate your reference to the McKinsey report which does a fantastic job of capturing the key differentiators for top and bottom quartile performing dealerships. My question and what I cannot find is any available solution to meet their #1 need, talent management.

NADA reports that in 2006 the average dealer spent ~$364,000 per month in advertising and, in comparison, ~$2,493,000 in payroll. Ultimately, dealerships are and will always be driven to sell cars and ancillary services. I would like to understand how a dealer can scrutinize each dollar in their ad budget but can COMPLETELY overlook optimizing their #1 asset and #1 expense item (ex-inventory, their people.

Many thanks for your insights and I could greatly benefit to any other resources you may suggest.

[Pinny Cohen]

Brice,

Since the turnover on dealership jobs (especially sales) is so high, the defining characteristic of a successful dealership, aside from customer loyalty, will always be low employee turnover.

In my experience, it appears that car salesmen don't have any particular incentive to "always be on", since they are getting paid by commission, and hey - if they are eating lunch, they are fine with missing out on a deal once in a while because of it...the difference is, a dealership owner would have more incentive to serve the customer immediately.