Focus on mastering basic rules of business to improve your bottom line.

The following four rules of business can act as a template for charting and planning overall performance improvement for your variable and fixed operation.

As a dealer principal or general manager, consider writing the following four rules on a wall-sized whiteboard in your office or meeting room. Divide the whiteboard into four vertical columns or “buckets” with each rule.     

In each vertical bucket, list all of your ideas and initiatives to increase dealership performance. Documenting these visuals will allow you to decide which one of your buckets is current priority and opportunity. From the list of initiatives within each bucket, you can then prioritize your top three.

RULE #1: Keep your customers

Improve your lease penetration.

Set a target penetration and ensure that your sales consultants, sales managers and financial services managers all understand the inner workings, build, terminology, benefits and presentation of a retail lease. Reward sales consultants for increased lease penetration.

Focus on Portfolio Management of Finance, Lease and Cash customers (not just lease).  Use both people and technology (CRM, equity tools) to establish a contact schedule for connecting with customers throughout their ownership/lease experience (phone, e-mail, text).

Establish call scripts that have a purpose. Contacting lease customers three months prior to maturity is far too late — set lease maturity contact benchmarks at 12 months (latest). Give customers incentives for visiting the dealership for an Options-Review Meeting (free vehicle detailing, free oil change, etc.).

Plan and schedule upgrade sale events throughout the year. There are numerous companies that specialize in planning complete three- to four-day marketing executions and sale events; scraping and contacting the dealership’s customer database via direct mail, web, e-mail, text and phone.

Implement monthly or quarterly Service Department Car Care Clinics for both new and used vehicle customers that have taken recent delivery of a new(er) vehicle.

Implement Service Department appraisal campaigns.

Each day target four- or five-plus-year-old vehicles in the Service Department that may be entering an equity position. Provide a no charge Pre-Appraisal or Market Analysis with an offer to upgrade the customer’s present vehicle to a new one.

Plan exclusive customer appreciation events such as BBQs, fishing tournaments, off-road events, Jeep club, performance driving schools, car rallies, wine tasting, a Broadway musical, Hell’s Kitchen cook-off, etc.

Implement a dealership/dealer group rewards program for sales, service, parts, accessories and collision.

RULE #2: Get new customers

Marketing has become much more complex. Some dealerships/groups have an internal marketing department while others partner with established agencies (e.g.: my editor/publisher, Universus Media Group).

However, if your group has an internal marketing department, what is their specialty and expertise? Digital? Radio? Television? Sale events? Customer appreciation events?  Community events? Sponsorships? Social media? Artificial Intelligence? Non-prime?

Few marketing departments have expertise in all; doctors, lawyers, accountants have specialties.

Many progressive dealer groups have established a marketing department and a separate social media department that work hand-in-hand or have outsourced to experienced, reputable and proven agencies.

At the very least, as social media continues to exert flex (and now Artificial Intelligence), it may be time for a dealer principal or General Manager to take a deep dive into social media and to really gain a first-hand understanding and appreciation of its capabilities; some have spent their time and money to enroll in two- and three-week training programs in Silicon Valley.

Each sales consultant should also have a minimum of one (ongoing) prospecting initiative to bring in new customers. Initiatives can be divided into high tech or low tech. High tech includes marketing through personal social media, YouTube, Facebook Marketplace, etc.

Low tech prospecting includes initiatives such as joining clubs and associations, sponsoring community festivals and events, visiting local businesses, contacting companies with preferred manufacturer preferred pricing, etc.       

RULE #3: Maximize every transaction

Do your dealership and sales consultants provide a purchase experience that builds value and excitement in the brand, the vehicle, the dealership and the sales consultant?

Have you justified the price of your new or used vehicles and earned it? Has your dealership provided credible reasons for charging the MSRP that make customers feel more at ease (e-mail me if you would like an example of such a document)?

Have you provided customers with market comparables on used vehicles to hold your price? Does your dealership explain the trade-in appraisal process; the combination of trained appraisers, market-scrape technology and nationwide online auctions?

Does your dealership have the appraiser present the trade-in value with confidence and expertise to the customer? Does your sales manager meet every customer within the first 10 minutes of them visiting your dealership?

Have you provided a payment-based proposal (multiple payment options) to every single customer that has selected a vehicle? Have you included (and disclosed) an OEM extended warranty or vehicle protection package in your payment options? Have you offered and suggested vehicle accessories to personalize the customer’s vehicle or outfit it for their work or weekend living?

Does your sales manager attempt to secure more money from the customer if the deal is below MSRP or below asking price? At time of vehicle delivery, are customers properly introduced to the service department to secure the first service appointment?

Do you have a dealership/dealer Group rewards program for all departments that incentivizes customers to continue to do business with your company?

RULE #4: Improve efficiency

Improving efficiency with dealership processes and customer flow ultimately enhances the first three rules and tremendously improves the customer experience.

How often is a showroom customer staring at white walls? This is an expression we use as a training organization when we observe showrooms that operate inefficiently;

• E-leads are forwarded to the sales manager first where they sit in their inbox too long while customers have already been replied to from a competitor;
• The sales consultant makes too many, unnecessary trips to the sales manager’s office for consultation while customers sit at their desk staring at “white walls”, sometimes for extended periods of time;
• Vehicle key fobs, dealer plates and the vehicles themselves are not set up for quick and easy access for presenting and demonstrating new and used vehicles;
• Trade-in appraisals are completed toward the end of the sales process instead of the beginning. Long after the demonstration drive, customers (and sales consultants) are forced to wait an additional half hour or more for the appraisal to be completed. This is one of the worst misuses of a customer’s time;
• Sales managers often take too long to create payment-based proposals, finishing a text or e-mail, talking to other staff members simultaneously, etc., again while customers stare at “white walls”;
• Customers often wait too long to transition to the financial services manager when a vehicle is sold.

Using the simple four rules of business as a template creates simplicity and clarity and allows you to more easily focus on your current areas of opportunity.

The post Consider the 4 rules of business — and prioritize appeared first on Canadian Auto Dealer.

Let’s take a closer look at the bottom line return from leasing vs. financing.

According to industry figures, lease penetration nationwide has dropped from 35 per cent down to 20 per cent, the lowest level in the history of leasing.

Leasing has also not been as strong as it has been in the past, mainly because of how the current interest rates are affecting the ability of consumers to get adequate financing.

While these are all contributing factors, one of the biggest reasons for declining lease penetration is that many dealer principals/general managers have made a conscious policy decision not to offer leasing to all customers, unless the customer asks for it. 

These dealerships have stated that they would rather the customer finance their vehicle for 84/96 months and reap the large F&I reserves and stronger F&I gross profit. 

Hence, allow me to deal with the elephant in the room. Dealerships do make more money in F&I on finance deals versus lease deals. True. However, it may only be once, and in the end, leasing will win the total gross profit race. Think Tortoise versus the Hare.

A dealership (depending on franchise) may make $3,000+ F&I gross profit on a finance deal and only $1,800 F&I gross profit on a lease deal (40 per cent less).

However, we make the assumption that when the finance customer returns in 5 years to buy another new vehicle, the dealership will make another $3,000 gross profit in F&I.  This is most often not the case. 

Although the Financial Services Manager may have the ability to sell this much, they can’t. They are most often dealing with negative equity on the trade-in and the total finance amount is capped on the new vehicle by the dealer plan lender (there is simply no room for the F&I products). 

Hence, it is more likely that we will keep a lease customer for more vehicle transactions.

Furthermore, because the customer is rolling negative equity into the next, new vehicle, they simply can’t afford the payment increase that goes along with a fully (F&I) protected payment.

Moreover, leasing compresses trade cycles. A customer financing a vehicle for 96 months may be able to trade at 6 years. However, a customer leasing for 60 months can most often trade at 4 years and be at (or near) an equity position.

We also need to factor in that the dealership is more likely to retain a lease customer for 5 vehicle transactions versus a finance customer’s 4 transactions.

Dealerships tend to more carefully track and manage their lease portfolios versus their finance portfolios. Hence, it is more likely that we will keep a lease customer for more vehicle transactions.

Further, what is your win ratio of lease maturities versus finance trade-ins?

Because the trade-in value of a lease is established at inception, is it possible that your dealership’s win rate is higher?

Is it possible that you simply get to appraise more lease maturities ( per cent) because lease customers are tied to your dealership (or feel they are)? And because a strong lease penetration creates a future used vehicle inventory, is it possible that lease maturities may have lower overall acquisition costs versus buying used vehicle inventory at auctions and from wholesalers? 

Is it possible that your dealership makes more gross profit on lease maturities sold as used vehicles in your Pre-Owned Vehicle Sales Department (1 lessee/owner, credible vehicle history, etc.)? 

Some dealerships argue that they make more money on finance customers versus lease customers in the Service Department. This could be true, however, it is not necessarily a fact. What percentage of your finance customers versus your lease customers defect once the manufacturer’s warranty has lapsed? 

Do you consistently offer OEM extended warranty programs to lease customers that have leases beyond the manufacturer’s comprehensive warranty (e.g.: 60-month / 120,000 kms lease)? Do you offer lease customers OEM maintenance programs? Do you offer lease customers winter tires and tire storage? Do you offer lease customers accessories such as ski/bike racks, running boards, etc.? Do you offer lease customers quarterly or semi-annual detailing packages?

The decline in lease penetration can also be attributed to the fact that many dealerships simply do not present a lease option to all customers (showroom and online) and many sales consultants either lack a fundamental understanding of leasing or shy away from it if the lease rate is a ½ point higher than the finance rate.

However, even when the lease rate is slightly higher than the finance rate, can we not sell this to the customer? Since 2020, we have been immersed in a turbulent used vehicle market with unpredictable and unimaginable swings in pricing (think used EVs). Could it not be comfort to many customers that (if they lease), their trade-in value will be guaranteed, like a G.I.C. – with no worries about the ups and downs of the market and the economy? 

What percentage of your finance customers versus your lease customers defect once the manufacturer’s warranty has lapsed?

Could it not be comforting to many lease customers that if their vehicle is totaled in an accident, that the negative equity (balance owing on the lease agreement versus insurance company financial settlement), will be covered by the OEM’s GAP coverage? 

Could it not be comfort to many lease customers that if their vehicle is in an accident (and repaired by an authorized collision centre), the accident will not impact and lower the Residual Value of their vehicle (it would most certainly if they financed the vehicle).  Is all of this additional security and peace of mind not worth an additional ½ point or full point of interest?

The post Why leasing makes sense for dealers appeared first on Canadian Auto Dealer.

Showing customers how used vehicles are appraised can help avoid negative experiences.

For both customers and Sales Consultants alike, the final presentation and discussion of the trade-in appraisal number is often the most awkward, nerve-wracking and contentious part of the entire sale.

Sales Consultants walk from the Used Vehicle Manager’s office to their waiting customer at their desk as if taking their last few steps on earth to the electric chair.

Inevitably, customers are often shocked and dismayed to learn their vehicle’s trade-in value: “I saw cars like mine on Kijiji for $30,000 — and my car is nicer than most of those!.”

Sales Consultants then go into defense mode: “Mr. Lee, that’s retail. We pay wholesale.”  Worse, the Sales Consultant then starts listing all of the issues with the customer’s vehicle; “It needs front and rear brakes, front tires, ball joints, etc.”.  This just amps up the customer’s frustration.

Consider adding several of the following strategies to your dealership appraisal process to facilitate a smoother delivery of the trade-in value, gain better acceptance of the number from customers and win more trade-ins!

Explain your trade-in appraisal process.

Most people don’t know anything about the vehicle appraisal process (how and why would they?). Most customers perceive that a manager quickly road tests the vehicle (or not) and then simply puts a value on the vehicle based on their opinion.

Allow the customer the choice of continuing on with the sale with their Sales Consultant or joining the appraiser while they examine and road test the trade-in vehicle.

The reality is that, yes, the vehicle is being appraised by a manager, however most are also using significant technology such as vAuto, CARFAX Vehicle Valuation Reports, EBlock, TradeRev, CarTradeGo along with training and experience to determine a trade-in value. Hence, the trade-in appraisal is a combination of people and expertise along with the industry’s most sophisticated technology.

Have your Sales Consultants take the time to provide an overview of the appraisal process and technology tools when having their first coffee with their customer (email me if you would like examples of visual tools). Add this information to your dealership’s website and social media. Also consider producing short videos:

• How we appraise your vehicle
• How we arrive at a trade-in value

Review the Vehicle Inspection Checklist.

If (as part of your used vehicle reconditioning process) you have a 90, 120, 150-point Vehicle Inspection, have your Sales Consultants show a laminated version of the checklist to every customer prior to the vehicle appraisal. This will inform customers as to how thorough your appraisal process is and specifically what the appraiser will be assessing.

Have the appraiser meet the customer before appraising the vehicle.

In most dealerships the customer never meets the Appraiser.  Hence, having the Appraiser meet every customer prior to the trade-in appraisal will have your dealership stand out amongst the competitors.  Customers are also more accepting of the trade-in value because they have met the Appraiser and trust and likeability has been established.

Allow the customer to join the appraiser during the appraisal.

This builds a relationship with the appraiser and establishes both rapport and trust in the appraisal process.

Introduce your appraisal and auction technology.

If your dealership employs tools such as vAuto, CARFAX Vehicle Valuation Reports, EBlock, TradeRev or CarTradeGo, introduce customers to your technology. If your dealership has an open concept tower (SUPERdesk) where the Sales Managers work, invite customers to sit behind the tower to see the impressive bank of computer screens and software used to establish the market value of their vehicle. Otherwise, simply show customers how you upload their vehicle information into cell phones and launch them onto nation-wide auctions.

Have ALL Used Vehicle Sales Managers within a dealer group bid on trade-In appraisals.

Why do we let buyers from all across Canada bid on customer trade-ins during the appraisal process but we don’t have the Used Vehicle Sales Managers within the same dealer group bid on trade-in appraisals? 

It is certainly a known anomaly that a used Toyota RAV4 (for example) will sell within hours on the front line of a dealer group’s Honda dealership, but will sit for weeks just a block away at the same dealer group’s KIA dealership. Why? No one knows. 

What we do know is that the RAV4 is worth more to the Honda Used Vehicle Sales Manager versus the KIA Used Vehicle Sales Manager within the same dealer group.  Hence, why doesn’t the Honda Used Vehicle Sales Manager have an opportunity to bid? Why are we selling it to a Honda or Toyota dealer outside of our group instead?  Why are we allowing competing dealerships (and groups) to bid ahead of your own group?

Why not have 20 Used Vehicle Sales Managers (within your own group) bidding on every vehicle instead of just one? At the very least, why not establish a 2-round bid system; all Used Vehicle Sales Managers within a dealer group bid on all appraisals via a closed internal auction, then the appraising dealership allows a second round of bidding to the open market. 

If an outside buyer bids higher, then the Used Vehicle Sales Managers within the group have a final opportunity to match or beat the outside bid. Companies such as TradeRev and CarTradeGo can set dealerships up with their own internal appraisal auctions. If need be, it can also be done free with group chat. 

Create a TradeRev/CarTradeGo Lounge.

If your dealership used live auction platforms such as TradeRev or CarTradeGo create a “TradeRev Lounge.” This could be an unused office space or a corner of a showroom sectioned off with a sofa, chairs and a large screen TV.  When the customer’s trade-in is launched on the live auction platform, the customer is invited to sit down, relax with a coffee and watch the show. Over the 20-45 minute auction period, the customer sees live bids from all over Canada dropping on the screen. And, in some cases, they may also see the lack of live bids. Customers begin to quickly realize that it’s not the dealership that decides the value of their trade-in, but rather the market; bidders and buyers from coast to coast.

Have the appraiser present the trade-In value to the customer.

Instead of having a 3-month Sales Consultant nervously present the trade-in value, have the appraiser present the trade-in value.

Customers begin to quickly realize that it’s not the dealership that decides the value of their trade-in, but rather the market; bidders and buyers from coast to coast.

Wouldn’t it make sense to cut out the middleman (the Sales Consultant) and simply have the appraiser explain the valuation with confidence and expertise? Following an appraiser’s explanation (and customer acceptance or negotiation of the number), the Sales Consultant then provides a detailed payment-based proposal on the newer vehicle considered. The trade-in value is no longer the elephant in the room and the big psychological roadblock to selling the newer vehicle.

The post 8 ways to win more trade-ins! appeared first on Canadian Auto Dealer.

Dealer groups often act as “frenemies” instead of allies. It’s costing you money.

One of the significant advantages of a dealer group versus a single-point dealership is the ability of the group to centralize many of its resources and initiatives to work together to dominate a given geographic marketplace. Or is it?

The truth of the matter is that many dealerships within a given dealer group compete with each other as much as they compete with dealerships outside of the group — often to the detriment of the group.

Hence, many dealer groups are really just a bunch of dealerships that happen to be owned by the same guy; they do NOT work together, and are often in a battle of internal egos, sending customers directly into the arms of competitors.

Managing Partners and General Managers within a group do need to have a level of autonomy to allow their entrepreneurial spirit to flourish; this also has overarching benefits for the group as the cream rises to the top.

However, the creation of chieftains that smile and shake hands with each other at group meetings but hold their winning ideas close to the vest does not help the group to achieve its potential. The following are areas where dealer groups could and should collaborate more:

USED CARS: Appraisals

Why do we let buyers from all across Canada bid on customer trade-ins during the appraisal process (with technology such as TradeRev), but we don’t allow the Used Vehicle Managers within the same dealer group to bid on trade-in appraisals?

The creation of chieftains that smile and shake hands with each other at group meetings but hold their winning ideas close to the vest does not help the group to achieve its potential.

It is certainly a known anomaly that a used Toyota RAV4 (for example) will sell within hours on the front line of a dealer group’s Honda dealership, but will sit for weeks just a block away at the same dealer group’s KIA dealership. Why? No one knows.

What we do know is that the RAV4 is worth more to the Honda Used Vehicle Manager versus the KIA Used Vehicle Manager within the same dealer group.

Hence, why doesn’t the Honda Used Vehicle Manager have an opportunity to bid? Why are we selling it to a Honda or Toyota dealer outside of our group instead? Why are we allowing competing dealerships and groups to bid ahead of our own group?

Why not have 20 Used Vehicle Managers (within our own group) bidding on every vehicle instead of just one?

At the very least, why not establish a two-round bid system; all Used Vehicle Managers within a dealer group bid on all appraisals via a closed internal auction, then the appraising dealership allows a second round of bidding to the open market.

If an outside buyer bids higher, then the Used Vehicle Managers within the group have a final opportunity to match or beat the outside bid. Companies such as TradeRev and CarTradeGo can set dealerships up with their own internal appraisal auctions. If need be, it can also be done free with group chat.

USED CARS: Inventory Sharing

One of the biggest advantages of a dealer group versus a single-point dealership is the ability to share the used vehicle inventory across the group.

In theory, this occurs at many dealer groups. In reality it occurs (successfully) at very few. Inevitably, managers play games with each other within the group.

When a Sales Consultant contacts a sister dealership with a customer wanting to buy one of their used cars, the car is still in reconditioning or a customer has taken it for an overnight test drive or (all of a sudden) the vehicle has a deal written on it, etc.

Used Vehicle Managers sometimes fiddle with the internal price and want to charge a sister dealership a “retail” gross profit to release the vehicle.

In the meantime, the Sales Consultant is frustrated with the games and logistical roadblocks and worse, the customer buys a used vehicle from a dealership outside of the group while managers don’t answer each other’s texts and phone calls.

When a Sales Consultant has a customer wanting to buy a used vehicle from a sister dealership, both the Sales Consultant and the customer should be treated as honoured guests by the dealership stocking the vehicle.

Managers from sister dealerships should work together to ensure that used vehicles move seamlessly (and seemingly effortlessly) between the physical locations.

In some dealer groups, if a Sales Consultant sells a used vehicle from a sister dealership, the Sales Manager at the sister dealership works the deal with the Sales Consultant — and if the vehicle is sold, the stocking dealership retains all of the gross profit and pays the guest Sales Consultant the commission (based on their home dealership’s commission plan). The selling dealership retains the Financial Services gross profit.

Other dealer groups do the reverse; the stocking dealership retains the Financial Services gross profit and the selling dealerships retains the vehicle gross profit. Other dealer groups will simply sell the used vehicle to a sister dealership for the cost of the vehicle + reconditioning cost + a stocking/marketing fee (e.g.: $300-$500).

One Canadian dealer group (with just under 20 dealerships) shared with me that in 2021 they sold an additional 1,700+ vehicles as a result of sharing inventories!

USED CARS: Unique Value Proposition

A Unique Value Proposition is a clear statement that describes the benefit of your offer, how you solve your customer’s needs and what distinguishes you from the competition.

Simply put, it represents what’s included in the price of a used vehicle (e.g.: a safety standards certificate, a vehicle inspection, mechanical reconditioning, a warranty, detailing, exchange privilege, etc.).

Over a three-year period, our Sales Trainers and Consultants have asked every single dealership we’ve visited a simple question; “What’s included in the price of your used vehicles?” (we research the answer in advance).

We have asked Sales Consultants, Sales Managers, General Managers and even Dealer Principals. Not one has got the answer right so far. Moreover, there is often a completely different, fragmented, misunderstood used vehicle program at each dealership within a given dealer group; different vehicle inspection and reconditioning requirements, varying cosmetic reconditioning, some with 30-day warranties, some with 3-month warranties, some with exchanges privileges, some with money-back guarantees and even some with fixed “one pricing”, but never all the same.

Is there an opportunity for dealer groups to create, leverage and market a simple, well-crafted Unique Value Proposition; Platinum, Advantage, Certified Plus, Secure, SAFEcar, BESTcar, NEXTcar, VALU-car, AUTOselect, MYcar, etc. – a program that is branded and exactly the same at each dealership within the group?

SALES PROCESS: New and Used Vehicles

Whenever we begin a training relationship with a dealer group, we ask the question, “Does the dealer group have a documented, trained, coached and enforced sales process?”

Our query is often met with eye rolls at the simplicity and naivety of our question. “Of course!” is the normal response.

At our first meeting with the Managing Partners/General Managers we will ask everyone to jot down the steps of their group-wide, documented, trained, coached and enforced sales process. Rarely does every piece of paper collected from the group read the same.

There are various training influences and incredible experience with respect to the senior leadership of most dealer groups. The sales process of any given dealership, however, is often the sales process and philosophy brought in by the most recently hired General Sales Manager or General Manager from outside the group.

Dealer groups have an incredible opportunity to bring together the experience of their leadership team in a post-pandemic era to re-imagine and recreate three necessary sales processes:

• NEW Vehicle Sales Process
• USED Vehicle Sales Process
• DIGITAL Sales Process

Moreover, dealer groups have an opportunity to create their own automotive universities; ongoing training facilitated by Sales Managers, group Sales Trainers and outside Sales/Leadership Trainers that continually train, coach and evaluate the dealer group’s values, culture, customer experience, sales process and leadership skills.

As a training and consulting firm, we have built several dealer group universities. Some eleven years ago, we partnered with The Trotman Auto Group (Vancouver area) and created TAG-U.

Because the values, culture and sales process are aligned at each of its 12 dealerships, Sales Consultants and Sales Managers are easily interchangeable and deliver a consistent customer experience.

Because the training and coaching is continuous and effective, it also draws talent from competitors, even people from across Canada clamour to join the group.

MARKETING      

This is certainly not a new concept. Many dealer groups do indeed have a centralized Marketing Department.

Many General Managers, however, are extremely frustrated; “The head office Marketing Department is too busy, too slow, understaffed, bureaucratic out of touch with the market, etc.”.

Hence individual dealerships within groups are starting to hire their “own marketing guy.”

As a result, the dealer group’s brand slowly erodes and the marketing becomes sporadic and disjointed with last minute campaigns and events that have little or no continuity and limp from month to month.

Part of the challenge is that traditional marketing (long term branding, community involvement/events, radio, TV, website, etc.) bears almost no resemblance to the light speed and ever-changing world of social media.

Should dealer groups be growing their internal Marketing Departments instead of letting individual dealerships go rogue with “their guy”?

Is it time for a traditional Marketing Manager (with big group or corporate experience) to work hand in hand with an expert Social Media Manager with both reporting to a Marketing Director or V.P.?

Is it time to bring on more Social Media Content Creators and Videographers? And if so, should the entire marketing team not spend as much time outside of the head office as they do within — visiting each and every dealership within the group, establishing relationships with General Managers, Sales Managers, Service Managers, and (how about) Sales and Service Department customers?

Maybe it’s time for dealer groups to dispense with the harmful internal competition that makes enemies of sister dealerships, the secrecy and lack of sharing with respect to winning concepts and ideas, the inflated egos of so-called leaders and the Machiavellian politics to win the favour of the Dealer Principal/CEO.

Instead, have leaders come to the table and collaborate and truly leverage the incredible experience, knowledge, intelligence, and entrepreneurial spirit within the group. Reward the contributions to the group at large as well as their individual dealership successes.

The post Do you work as a dealer group or warring tribes? appeared first on Canadian Auto Dealer.

It should be a no-brainer to attract high-energy and motivated people into auto retail careers

As we slowly emerge from another winter, dealerships across Canada will be hiring salespeople for the spring market and hunting for “The Next One.”

However, I am not convinced that dealer principals, general managers and sales managers themselves are always “sold” on the car business as a career choice for young people or those seeking a second career. For 37 years I have been hearing, “There are no good salespeople out there”, “It’s hard to find salespeople”, “We’re not getting any quality applicants”, and so on.

Yes, it can be a little depressing staring out of a showroom window when it’s -20 degrees on a bleak February night in Canada. Sometimes it can be equally depressing in the spring or summer when you’re caught with a customer at closing time on a Saturday and you’ve been invited to a get-together with friends or family and you show up two hours late—and you didn’t make the sale. The retail automotive industry certainly has its ups and downs and challenges.

However, consider the following thoughts, and afterward ask yourself if this messaging is getting through in your recruiting efforts, your hiring process and in your marketing efforts to attract people to your organization. This may also serve as a reminder and motivator to your current team.

In the retail automotive industry, we welcome people with no sales or technical experience. This is a people business; cars, SUVs and trucks just happen to be our product. When people without experience bring to a dealership energy, enthusiasm, a positive attitude and a desire to succeed, this industry gives them an opportunity. Many companies will only hire people with experience and hence the conundrum, “How do I get experience if no one will hire me.”

In the retail automotive industry, we hire both young and old. A few months back, I had the pleasure of meeting a sales consultant on the West Coast that was 19 years old and had just delivered 26 new vehicles in a single month. On the East Coast I know a sales consultant that is 86 years old (he looks 66) and he continues to be a positive and productive contributor to his dealership. In corporate Canada it is extremely difficult to get hired if you are “too young” or lacking relevant experience. At the other end of the spectrum, corporate Canada places less value on employees that are over 55; they are either pushed out the door (packaged off) or moved to a dead-end job within the organization.

In the retail automotive industry, we welcome the energy, ambition, information-retention and technical savvy that younger people bring to this business, and we give them an opportunity without previous experience, (and in many cases), without related experience.

At the same time, we also welcome the life experience, knowledge, people skills, calmness and confidence that comes with age. The retail automotive industry has provided a new lease on life for many enthusiastic people that want to begin a second career, or escape from the mundane of their current. Where so many industries close the doors to those under 25 and those over 55, the retail automotive industry welcomes both—with open arms and limitless opportunities.

The retail automotive industry also recognizes the positive qualities of both men and women. We have so many women in this industry that have become highly successful sales consultants, financial services managers, sales managers, service managers as well as general managers and dealer principals.

Most importantly, women are paid the same as men. It remains a fact that in much of the corporate world, women often earn less than their male counterparts with the same education, experience and qualifications. Dealerships compensate people based on performance and attitude, not gender.

The retail automotive industry also welcomes people of all ethnic and religious backgrounds. Whether white, Black, Asian, Indian, Latino or other, dealerships recognize that people from different cultures bring determination, ambition, a work ethic and serve the various people that walk through our dealership doors.

And, if candidates bring to us a post-secondary education; a college diploma or a university degree, we think they are pretty amazing—it demonstrates determination, commitment and organizational skills.

However, if post-secondary education was not part of the journey, people with a high school diploma are not discriminated against based on their lack of education. Instead, they are judged on their life experience, energy and attitude. And with no post-secondary education, literally thousands of men and women in the retail automotive industry have been promoted into management positions and senior leadership roles. Corporate Canada requires a university degree; without it, you need not apply. Depending on the organization, most will also require an MBA or CPA to advance into senior management.

The retail automotive industry teaches us the skills of customer service—and serving people of all income and ethnic backgrounds. It teaches us organizational skills and time management. It teaches us marketing and entrepreneurial skills. It teaches us product knowledge, a sales process and presentation skills. It teaches us negotiation and closing skills.

Dealerships also expose us to a wide range of some of businesses’ most advanced online and software technologies. For those that choose a path in management, it teaches us team building, coaching and leadership skills.

For those that want the opportunity to lead and inspire, the retail auto industry allows numerous paths to management positions. Sales consultants can become financial services managers and sales managers. Sales managers can become service managers and general sales managers. General managers can become managing partners and Dealer Principals.

Others can leave the retail dealership and find leadership roles with industry suppliers and even OEMs. Further, retail automotive dealerships promote people based on performance and attitude, and often quickly.

I work with a highly successful West Coast dealer group with the honour of being recognized as one of Canada’s Best Managed Companies—amongst all of their general managers and managing partners, there might only be one that is over 40 years of age. In corporate Canada, people often compete with 20 or more other people for a first level promotion—one that can take years, and where people are often promoted based on their schmoozing skills and Machiavellian politics.

And with all of this, this is an industry where sales consultants, financial services managers, sales managers and general managers can earn an incredible income. The average Canadian income currently sits at $60,055 annually (Stats Can). The average combined household income sits at $75,452 annually (that is 2 people working and earning).

Many Canadian sales consultants will earn that much or more (as a single earner) in their first or second year of the business. And yes, there are significant numbers of sales consultants and managers that earn well over $100,000 annually—some earn $200,000 or $300,000 annually, and we even have Canadian sales consultants that have topped $500,000! Executive pay is considered $300,000 annual. Canada’s top one per cent earn $253,900 annually (Stats Can). You are creating one per centers with Grade 12 educations!

So, yes, the retail automotive industry is not always easy and nor is it perfect. It can be long hours with highs and lows and many challenges. Customers are not always right, but they are always our customers.

Colleagues and bosses may sometimes have differing opinions. However, this is one of the very few remaining industries that allows virtually anybody with integrity, a positive attitude, an outgoing personality and a work ethic to truly succeed, be recognized, grow and advance—and to do what they love.

Dealer Principals, general managers and sales managers, you have transformed so many people’s lives. You have taken them away from mundane, dead-end jobs. You have taken others away from high pressure jobs with crushing hours, toxic cultures, little recognition and no upward opportunity. You have allowed blue collar workers with broken bodies to wear white collars and start new. You have taken that chipper, young man that sold you your cell phone from $40,000 a year to $80,000 a year.

You have helped people buy their first home and their first vacation home. You have helped put kids through university and pay for weddings. You have provided people with a dynamic, ever-changing work environment selling many of the most recognized brands in the world. You have given people life-long, transferable skills, opportunities for advancement. You have even given them opportunities for ownership.

Can we not sell this?

The post Selling cars! What an opportunity! appeared first on Canadian Auto Dealer.

It’s time to get your sales team back on track delivering amazing customer service

Over the past two years, many dealerships have made record profits, and salespeople have enjoyed the biggest commissions in the history of the retail automotive industry. 

I just left a Canadian RAM Jeep dealership where a salesperson made a $13,000 commission on a RAM pick-up (not gross, commission!). But what about the customer? 

What does the customer get for these exorbitant commissions? What do you get as the General Manager or Dealer Principal? Arguably, the more money we make, the poorer the customer experience. Most customers (of recent) have received the lowest levels of customer service ever while buying a new or pre-owned vehicle. The sales process has often been replaced with; “Well sir, if you don’t want it, someone else does.” 

As a result of high consumer demand and low vehicle supply over the past two years, as well as the new phenomenon of factory-orders, sales processes at most dealerships across Canada have literally evaporated. Customers have been buying willingly (and easily) and salespeople would argue that they don’t need to follow a sales process to sell a new or used vehicle—sometimes true. 

However, the landscape is shifting yet again. Many new vehicle manufacturers will be able to supply dealerships with stock vehicles in 2023—less than pre-pandemic, but nevertheless, there may be vehicles on-ground.

This situation will start to see the return of a more cautious or even aggressive customer; one that is less inclined to jump at the first stock-vehicle they see. Price negotiation and discounting may return as a result of competition. It is already happening with brands such as Ford, RAM and Jeep. 

Used vehicles have also depreciated and the market has slowed. This (again) creates a buyer’s market, whereby consumers will not be so openly eager to pounce on the first used vehicle they see for fear of losing it. 

When you add to the mix a current Prime Rate of 6.70%, and used vehicle lending rates hovering at 8.99% or more, dealerships and salespeople need be mindful that potential customers may be a little more aloof. 

Back to your sales process. By our definition (a sales training and consulting company), a sales process is a step-by-step approach to selling a new or pre-owned vehicle that is documented, trained, coached, enforced and measured. 

By this definition, most dealerships no longer have a sales process. Gone. You think you have a sales process or you have simply turned a blind eye to the complacency that consumes the showroom floor. If you doubt me, have every one of your managers and salespeople write down the steps of your sales process on paper (without conferring) and have them hand it in to you.

Critical steps of our sales process are being allowed to erode. For example, we are selling the most gorgeous, technologically advanced and content-rich vehicles ever, yet have virtually abandoned salesperson-facilitated vehicle presentations. Again, the argument is, “Well we don’t necessarily have to present the vehicle to sell it.” 

This may sometimes be true, however, there are two considerations; 

1. Regardless of how easy it might be to sell a new vehicle to a wanting customer, does the customer not deserve a spectacular presentation on their potential new vehicle? When they are spending $100,000 on a pick-up or SUV, do they not deserve a passionate, energetic, choreographed, feature, advantage, benefit presentation that blows the shoes and socks right off their feet! Do you, as the general manager or dealer principal, not also deserve an incredible vehicle presentation for the mind-blowing commission that you are paying? 
2. Regardless of how easy it is to sell a vehicle without presenting it, we still don’t close 100 per cent of our customer traffic.

We have also permitted unaccompanied demonstration drives; “Oh, our customers are concerned about COVID.” Baloney. That horse left the barn months ago. We have simply allowed our salespeople to toss key fobs to potential customers and have them go out ALONE on nerve-racking, meaningless drives, while the salespeople smoke or vape at the back of your dealership beside the dumpster. The purpose of today’s demonstration drive is to not only showcase the vehicle’s incredible comfort, convenience features and road manners, but to creatively and safely demonstrate 4-6 of the vehicle’s newest technologies. 

If a customer were alone driving one of your new vehicles, would they know how to locate and operate the adaptive cruise control? Would they know how the engine stop/start feature behaves? Front and rear autonomous braking? Would they know how the lane-keep assist feature works on your brand? Autohold? Would they know how to operate park-assist? Massage seats? Would they know how to operate the cameras, apps and integrations of your brand’s infotainment system?

In addition to a pride-filled education and orientation of your vehicle, a salesperson-accompanied demonstration drive is also designed to advance and strengthen the customer-salesperson relationship.

These are just two examples of steps within most dealership sales processes that have been allowed to fade to extinction. There are more. In some dealerships, salespeople are simply meeting a customer, sitting down at their workstation, gossiping about the town for a while and going straight to a build & price tool on your manufacturer’s website; “Do you want to place a factory order?” “Don’t worry, if you don’t want it when it comes in, we will give you your deposit back.” “It’s really just a reservation.”

It might be time to take a very hard look at your dealership’s sales process (or lack thereof). If you are thinking, “We have to factory-order most of our vehicles”, there are inspiring examples of dealerships that have created an entire sales process specific to, and built around factory-orders (call or email me if you would like ideas and details).

What do you want your salespeople to do with every customer that walks into your dealership? What do you want your salespeople to do with every customer that walks into your digital dealership (e-leads)?

What is the purpose of selling a car at your dealership? Is it just to get to the finish line as fast as possible and close a deal? Is it to “gross the customer”? Is it to get a “10-pay”? Or do you also wish to provide an incredible customer experience—not because you have to, but because you want to. 

If you would like to discuss what a modern new vehicle, pre-owned vehicle, factory-order and digital sales process looks like in today’s landscape, call me and I would love to share what Canada’s best and brightest are doing to deliver meaningful, engaging and successful customer experiences.

The post What happened to your sales process? appeared first on Canadian Auto Dealer.

How to actually increase your market share during a slowing vehicle sales environment

Vehicle sales may slow down over the next two or three business quarters. This depends on your brand and geography. However, even during periods of sales decline, there are dealerships/dealer groups that actually increase their local market share. The following are thoughts and strategies to proactively lead during periods of slowing vehicle sales:

Be a leader.

Any Dealer Principal, Managing Partner or General Manager can be upbeat, gregarious and an all round “great guy” when sales are easy and strong. What about the opposite? 

Too often senior management show its colours when sales are down, with erratic mood swings, tyrant behaviour, micro-managing and “seagull management”; entering through the side door of the showroom, flapping around all over the showroom, squawking, crapping on people and then flying out the other door leaving everyone in their wake stunned. The once jubilant atmosphere in the showroom is replaced by tension, anxiety and fear.

The mood of a showroom is set each and every day by its senior management. If the Dealer Principal bolts through the showroom with a dark storm cloud above him, expect the exact same from the rest of the team. 

Too often salespeople are ordered to “get on the phones”, “get out there and get people in the door”, etc., without being instructed as to how, and they feel as if the weight of the entire dealership (and its success or failure) has been put squarely on their shoulders.

In times of slower sales or economic uncertainty, salespeople, service advisors and the entire team look to senior management for hope, positivity, encouragement, recognition and guidance, and the forging of even deeper individual relationships. One of the (many) tests of leadership is how we nurture (and protect) an energetic, upbeat work environment and carefully navigate our team through periods of economic uncertainty—and how we instill trust and confidence in “today” as well as the future.

Complete a technology audit in the dealership.

How much of your CRM do you really use? Although most of the software in your dealership is brilliant and has seemingly endless (and useful) capabilities, how much of it is actually used in your day-to-day business? 

Are there other, scaled down, less expensive versions that have the functions that you actually need and use? Several years ago, a Dealer Principal shared with me that he purchased a generic CRM software from Staples for $199 (one-time purchase) and that it did virtually everything that he wanted it to do. 

Many dealerships are also paying far too much for software and monthly support fees. The automotive industry pays amongst the highest of all industries in monthly fees with gross profit margins of up to 70 per cent. New businesses have sprung up that facilitate comprehensive technology audits within an organization and re-negotiate monthly support fees. 

Have more than one person appraise customer trade-ins. 

The used vehicle market is highly volatile. Having several people weigh-in on vehicle appraisals will avoid finger-pointing and blame later with respect to vehicle ageing and declining value. 

Many Used Vehicle Managers feel that they can’t win; if they don’t appraise aggressively enough (“look to book”), then they are blamed for a low win rate and losing new vehicle deals. If their win rate is high, they are chastised for overpaying for trade-ins and the resulting aged inventory. 

Consider appraising all customer trade-ins as early as possible in your sales process (literally Step 1). 

Doing this provides ample time for several Sales Managers to examine and road test all trade-in appraisals, use your technology tools (vAuto, etc.) and discuss and agree upon the value. Furthermore, could your technicians not be part of the appraisal process (upfront) in order to make more accurate estimates of reconditioning dollars? Would you buy a car privately without having a technician examine it before handing over your money? 

Implement an internal auction for all trade-in appraisals. 

It’s a universal truth in the car business that any given used vehicle (pick yours) just does not sell on your lot no matter how attractive the vehicle or how low the price. 

Yet, that exact vehicle might be displayed three doors down the street on another dealership’s lot (within a dealer group) and will be one of the most highly sought after and valuable used vehicles. 

Hence, one Used Vehicle Manager within a dealer group might be willing and wanting to pay much more for a front-door trade-in and still be able to sell it with excellent gross profit. However, many dealer groups do not leverage their size and power by working  together to keep front-door trade-ins within their group. Egos get in the way; individual silos are built and trade-ins are lost to outside competitors.  

Companies like CarTradeGo.com and TradeRev.com can create inexpensive proprietary technology that has all dealerships within a dealer group bid on customer trade-ins during the appraisal process. 

Appraisals are entered into the system by the originating dealership and all Used Vehicle Managers bid on the vehicle in a closed auction of 20 minutes or so. The originating dealership has the option to trump all the bids and keep the vehicle, or give it up to a dealership within the group that has the highest bid. This approach wins more trades and additional new and used vehicle sales. 

Don’t be a gross profit piggy.

Over the past two years we have increased our gross profit per vehicle (significantly) due to low supply and high demand. 

However, there are now many Sales Managers that are walking deals that have healthy gross profit and a new customer opportunity. These are deals that we would have been very pleased with pre-pandemic. 

Ensure that Sales Managers are counselled carefully on gross profit expectations. “Get as much gross profit as you possibly can through the deliveryof an incredible customer experience, but ultimately take the deal if the customer is going to buy a vehicle from a competitor.” You set the guidelines and philosophy. 

Have Sales Consultants complete daily activities.

It seems like a huge surprise every January and February when showroom traffic slows down. This is the norm of the Canadian market, but may be scary for newer salespeople. 

The biggest reason for salesperson depression and defection during these challenging months is the lack of productive activities—they are simply idle much of the day and staring out the showroom windows into the abyss. 

Ensure that your Sales Managers are meeting with their salespeople at each and every shift change to ensure that they are not only (quickly and effectively) following up unsold showroom and online customers, but also provide a minimum three or four sales-related activities that can keep them busy and working toward sales (e-mail or text me if you would like a digital version of a Success Planner the includes Sales Consultant Daily Activities).

Don’t cut Sales Consultants compensation plans.

This is such a cliché. In many dealerships, experienced Sales Consultants almost expect this as the first measure to reduce dealership expenses—a knee-jerk reaction to the panic of January and February or economic uncertainty. 

Decide to take your sales process seriously.

Today there is a lethargic and complacent feel to the retail industry—or one of, “We’ve got this”, as dealerships have broken net profit records (either in 2021 or 2022)—more as a result of the “perfect storm” of consumer demand, inventory shortages, pent-up demand, etc.

In fact, in many dealerships, the more money they seem to make, the less customer service and showroom experience provided. 2023 represents an opportunity to bifurcate and disrupt. 

Let’s not provide an incredible customer experience because we have to—(to compete and make money), but how about because it is simply the “right thing and the only thing to do” when someone is spending $85,000 on a new truck.

We can begin by getting serious about ensuring that each customer (whether showroom factory order or online) is treated to a documented, trained, coached and enforced sales process (Purchase Experience). 

Unfortunately, even most sales managers lack the will, desire and consistency to enforce a dealership sales process (many are now overwhelmed with new administrative duties related to tracking hundreds of factory-orders and communicating with customers). 

A sales process will only happen (consistently) if the General Manager/Dealer Principal mandates it and takes a keen, active interest.

The post Proactive attitudes and strategies to combat slowing vehicle sales appeared first on Canadian Auto Dealer.

Strategies to encourage factory order sales and mitigate delay and price increase problems

Dealerships across Canada are losing anywhere from ten to 50 per cent of their factory order sales. Although there are situations where vehicles are delayed for prolonged and unreasonable wait times, the fact of the matter is that most factory order cancellations (by customers) are preventable. Let’s explore the reasons for cancellations as well as potential solutions.

Factory orders are not being sold with enthusiasm, conviction and a sales process. “Well you know, you will have to factory order that, sir (sigh).” 

“Don’t worry, if we factory order a vehicle for you and if (when it arrives) you decide that don’t want it, you don’t have to take it—we can sell it to someone else—and your deposit is fully refundable—and you only need to give us $500 to place the order.”

These are the statements and conversations between sales consultants and customers all across Canada. I refer to this as “unselling.” Many sales consultants are spending more time instructing customers as to how they can get out of a factory order versus selling the vehicle, the brand, and the dealership. 

Solution

Dealerships need to stop wimpy conversations about getting out of deals and replacing them with unabashed, enthusiastic salesmanship. Make factory orders “sexy” for your customers; “Mr. Lee, we are going to custom-order your vehicle like a bespoke, London suit. It will be the exact trim level, features, accessories and colour that you want. When your order is received at our manufacturing facility, a team of professionals will see your name and your tailor-made vehicle order will come up on their screen—and the work will begin on your vehicle. As a sales consultant, I love being able to give our customers exactly what they want!”

Financial services managers need to meet customers at time of vehicle sale. When customers meet a friendly, professional and enthusiastic financial services manager at time of vehicle sale, it serves to firm the commitment; the customer is buying a car!

We can still provide an incredible purchase experience—even for a factory order. The following is an example of a factory order sales process (when you have no vehicles on-ground to present and demonstrate). If you would like more detail in the form of a document, e-mail me.

• Welcome
• Trade-in appraisal
• Discovery and relationship
• Sales manager early introduction
• Why order from us
• Finance/lease pre-approval service
• Virtual vehicle presentation
• Dealership tour
• Payment options
• Financial services
• Customer communication

Sales Consultants don’t get paid for months. Many Sales Consultants have shared with me that it’s difficult to get excited about selling a new vehicle when they know they’re going to have to wait three to 12 months to get paid for it. Yes, we all tell them that it’s “money in the bank,” “something to look forward to,” etc. However, many sales consultants are wired for instant gratification—they want it now, whether they need it or not. Others live much more hand-to-mouth and feel stressed waiting for commissions when bills are pressing.

Solution

Many dealerships are paying flat commissions of $200, $300 or even $400 at time of vehicle sale with the balance (if any) paid out at time of vehicle delivery. Some dealerships are even paying as much as half of the payable commission at time of vehicle sale. 

Also remember that most Sales Consultants crave recognition as much as or even more than money. Hence, if you have a traditional sticker board in the Sales Manager’s office or meeting room that just tracks vehicle deliveries, change the board.

Beside each sales consultant’s name, have a row of stickers for sales (including factory orders) and a second row for deliveries. As overly simplistic as this sounds, many sales consultants get down or defensive when the sticker board is shy of deliveries, yet they may have sold significant factory orders (and it is not being recognized on the board).

I also witness dealerships excitedly delivering vehicles coming off the transport from factory orders and the atmosphere is jubilant. However, the dealership and sales consultants are distracted with deliveries and not filling the pipeline by selling new vehicles this month.

Factory Order deposits are too little. Deposits for factory orders are commonly $500. Wait, what, $500? 

Deposits were $500 when I began selling cars in 1986! 

Why is the retail auto industry so timid and afraid to ask for a real commitment in the form of a substantial deposit (yes, I am aware that some provinces have percentage maximums, but we don’t even ask for those!)? 

Home sales often ask for deposits of ten per cent or more of the selling price just to accompany an offer. In the retail automotive industry, a $500 deposit often represents one per cent (or less) of the purchase price.

Deposits are about creating a psychological commitment to a purchase. Many customers will walk away from a $500 deposit at the drop of a hat if they see a vehicle on-ground and available at a nearby competitor.

What’s worse, if there’s only a $500 deposit, they will often not only forfeit the $500 deposit, but not even tell the sales consultant that they actually bought a car elsewhere.

If a customer provides a deposit of $3,000 or $2,000, or whatever seems real and current, at the very least, they would be forced to come to the dealership to request and explain why they want their deposit refunded—and whenever Sales Consultants and Sales Managers have the opportunity to meet customers face-to-face, deals are saved!

Forgive me, but what’s the old expression, “Money talks, bulls#*t walks”? Consider re-examining your dealership attitude and policy with respect to deposits, not only on factory orders, but on all deals.

Financial Services Managers are not meeting factory order customers at time of vehicle sale. The rationale for this is that the dealership may not have the new 2023 vehicle pricing or a stable interest rate.

Financial services managers also fear that if they take a turnover at time of vehicle sale and successfully sell products/services, that it gives the customer too much time to think, talk to friends and family, and ultimately cancel products that were sold.

Solution

Financial services managers need to meet customers at time of vehicle sale. When customers meet a friendly, professional and enthusiastic financial services manager at time of vehicle sale, it serves to firm the commitment; the customer is buying a car!

The Financial Services Manager should meet with the customer in their office like any other customer and make them feel like a V.I.P.—big thank yous and big congratulations! The financial services manager should explain (in detail) the factory order process including when and how the dealership will communicate to provide information and updates. 

Decide how often to contact factory order customers to provide updates. As a dealership, do you want to contact customers weekly, bi-weekly or monthly? Do you want to contact them by phone, text, e-mail or a combination?

This is also an excellent time to complete the credit application. Some dealerships will choose to complete it at this time, but submit it closer to the actual delivery time to accommodate for changing interest rates, etc. 

If financial services managers are concerned about selling products and subsequent cancellations, they can choose not to sell their products/services at this time and (instead) meet the customers a second time at time of vehicle arrival/delivery. Selling becomes much easier, because the customer already met and established a relationship with the financial service manager at the time of the vehicle sale.

Sales consultants are not staying in touch and updating factory order customers. Many sales consultants have poor organizational skills and simply forget to stay in touch with factory order customers. Others do not see the need to stay in touch if there are no updates. And of course, others are walking on eggshells; “I made a huge gross on this deal—I don’t want to talk to him!” Other Sales Consultants do not want to contact a customer for fear of disappointing them or worse, having them cancel.

Solution

Decide how often to contact factory order customers to provide updates. As a dealership, do you want to contact customers weekly, bi-weekly or monthly? Do you want to contact them by phone, text, e-mail or a combination? What is the nature of the contact? 

For example, often there is no news. In this situation the contact may simply be a Sales Consultant phone call to deliver no news: “Hi Mr. Lee, it’s Chris Wiseman from Langley Chrysler. I don’t have any new information with respect to the delivery time of your new 2023 RAM Sport, however, I wanted to stay in touch—and let you know that I am watching our factory order status reports on a daily basis and that (of course) I am eagerly tracking yours.”

Sales Consultants are afraid to contact Factory Order customers. Earlier this year I was facilitating a large seminar for sales consultants and sales managers. Just a few minutes before the start of the seminar, several sales consultants near the front of the room began to panic. They had just received word that there was a $3,500 price increase on their best-selling pick-up truck and that the increase was retroactive and included all factory orders in the system. Each sales consultant had 10 or more factory orders and they were stressing about making the phone calls and texts to their customers to inform them of the price increase; their entire day was ruined.

Although factory orders are now a permanent and bigger part of our business, the fact is that the majority of sales consultants are afraid of the uncertainty, and often bad news, associated with factory orders; no 2023 pricing, interest rate increases, vehicles arriving at dealerships with missing equipment and of course, the inevitable delays.

When these situations arise and customers need to be contacted and updated, not only do sales consultants dread or delay making these contacts, many simply don’t do it. 

Sales managers are often under the impression that factory order customers have been updated on a monthly basis by their sales consultants with respect to the status of their vehicle. In many situations, customers have had no contact whatsoever since the date of placing their order.

Some customers even reach out to the sales consultants seeking news, but their inquiries go unanswered. When this occurs, many customers simply walk away from their deal (and deposit) and buy a new vehicle elsewhere.

Solution

If 2023 pricing is significantly higher than anticipated, if interest rates increase, if vehicles arrive at the dealership with missing equipment and if there are delays, instead of having sales consultants make these unpleasant customer contacts, make it a policy to have sales managers make the contacts instead. 

If sales consultants associate factory orders with potential problems and upset customers, then they will lose their desire to sell them—this is already occurring. 

If, however, the sales consultant can hand over the unpleasant part to the sales manager, they will not be apprehensive, or worse, dismissive with respect to selling factory orders. When sales managers make these difficult calls, customers appreciate the proactive initiative and the fact that the sales manager took the time to personally make the contact. Most importantly, when sales managers make the calls, deals are saved!

The post Why you are losing up to 50 per cent of your factory orders! appeared first on Canadian Auto Dealer.

Overcoming customer objections to rising interest rates

Both sales consultants and financial services managers are increasingly facing showroom and e-lead objections to higher interest rates on both new and pre-owned vehicles. Some customers are fully aware and reluctantly accept today’s higher interest rates while others are not as informed. Often, frustrated sales managers simply bark at sales consultants, “Focus on the monthly payments, not the interest rate!”. While, to a certain extent, they are right, many sales consultants and financial services managers will still need to deal with the elephant in the room, and provide reassurance and an explanation to make customers feel confident about buying in this market.

The following are concepts and word tracks that sales consultants, sales managers and financial services managers can share with customers when forced to confront this issue:

Interest rates are going up higher

“Interest rates are going to go up higher. Today you can lock in your rate and be protected from future hikes. 

In the highly unlikely event that interest rates go down in the near future, you could pay out this vehicle loan with a line of credit at a lower rate. With our dealer plan loans you can pay them off at any time without interest or administrative penalties. If rates go up, you are protected and locked-in with the lower, fixed rate. If rates go down, you have the option of refinancing your vehicle at a lower rate. It’s a no-lose situation.”

We don’t set the interest rates

“If you went to the bank and said that you weren’t happy with the higher interest rate on your mortgage, they might be sympathetic, but there isn’t much that they could do for you. The rates are based on the Bank of Canada. The same goes for a new vehicle loan. Interest rates are not set by the manufacturer or the dealership. They are set by the Canadian chartered banks. We all get our money from the same place.”

Don’t forget your trade-in

“Yes, the interest rates are higher, but so is your trade-in value. Much of what you are paying with a slightly higher interest rate is being offset by the highest trade-in values in decades. You might be losing a little on the interest rate, but you are gaining much of it back on the trade-in value.”

It all evens out

“Over the course of your 50+ year car-buying career, you will buy new vehicles at various different interest rates from zero per cent -13.75 per cent (1986), and everything in between. Interest rates are set based on the economy and Bank of Canada policy. 

Sometimes you will buy vehicles at low interest rates and sometimes you will buy vehicles at slightly higher interest rates. It is almost unavoidable, but it tends to even out over a longer period of time. The overall average of your interest rates over many years and many vehicles purchases time is extremely low. Look at it in the same way you would look at investments or the stock market.”

Your investments are happy

“Yes, the interest rate is higher. However, so is the return on your investments.

If you borrowed $60,000 at 5.49 per cent over 96 months that would work out to $14,272 in interest. However, if you also invested $60,000 you could get a guaranteed return of 5 per cent with a G.I.C. (today). That would work out to $29,435 in investment income. You are actually ahead by $15,162. 

When vehicle lending rates are zero to three per cent, your return on investments is the same, if not lower. When vehicle lending rates are higher, your return on investments is also the same—much, much higher.”

Through economic boon, recession and depression, people will continue to buy new and pre-owned vehicles. However, potential customers will always want to feel (and experience) upbeat, positive attitudes of their Sales Consultants and the reassurance that this is a good time to buy their new vehicle. 

The post Sales talking points for this economy appeared first on Canadian Auto Dealer.

Today’s new salespeople want to work differently. Are you creating the environment they seek?

Millennials (born 1981-1996) and Generation Zs (born 1997-2012) are not lazy, lethargic, entitled and directionless; and the more the leaders of an organization think this way, or worse, publicly denounce these groups, the more they alienate their employees and create more staff turnover (no one enjoys working for grumpy old men). Let’s face it, every generation thinks that we are doomed based on the generation that follows us. My son Kurt (born 1996) recently quipped, “Dad, if I am the generation of the lazy and the entitled, then congratulate your generation for creating us.”  

However, both Millennials and Generation Zs will have different priorities and motivators, and even these two generations have differences between them.

Millennials vs. Generation Z

What they have in common:

• A desire to find (or create) meaning
• A motivation to contribute to the world
• Being highly educated
• Cultural diversity
• A desire for their own personalized experience
• A desire to seek work/life balance and integration

Generation Z is also different from Millennials in many ways. Many things that Millennials foster as preferences have become expectations of Gen Zs, and they expect you to take them seriously. They define themselves differently, are intrigued by group trends, are passionate about issues that their parents may not understand, and they are willing to do research.

 Generation Zs often differ from Millennials in these ways:

• More independent
• More entrepreneurial
• More communicative
• More competitive
• More motivated by security
• Driven by career/financial goals
• Less validation expectations

The following are examples of how successful dealerships/dealer groups have aligned their thinking with the Millennials and the Gen Zs they work with.

 A domestic dealership an hour outside of Vancouver allows salespeople to work a 30-hour work week. With the blessing of the team, the dealership hired additional salespeople to cover their seven-day-a-week showroom hours. 

 One of the most successful Honda dealers in the U.S. hires college graduates only, pays them a $75,000 salary and the salespeople work a four-day work week. The salespeople have a clear set of sales-related tasks they must complete each day as part of their compensation. The sales team averages over 15 sold vehicles/salesperson per month.

 A large, domestic dealership north of Toronto allows the sales staff to do their own shift scheduling. Some of the younger, single sales people prefer to go to the gym in the morning and work later to the 8:00 p.m. closing time, while some of the older, married salespeople with families prefer to work morning and afternoons and have dinners with their families and quality time with their kids in the early evenings.

 Another highly successful domestic dealership in the Niagara region ensures that each salesperson has a schedule that includes two days off in a row every week. Salespeople have the opportunity to go away for a “weekend” and recharge their batteries.

 Yet another domestic dealership in southwestern Ontario allows its top performing salespeople to work from home as much as they please, e-mailing, texting, making phone calls, setting up appointments and coming into the dealership for appointments and deliveries only. They are not assigned to any shift schedule.

 A dealership an hour north of Toronto encourages their entire staff to get involved in the community with non-profit organizations. Salespeople, service advisors and technicians work in soup kitchens, volunteer at food banks, mow lawns and shovel snow for seniors, drive elderly and disabled to appointments, etc. For every day of community service, the dealership matches it with a day of vacation.

They define themselves differently, are intrigued by group trends, are passionate about issues that their parents may not understand, and they are willing to do research.

 A dealer group in Atlantic Canada provides salespeople with unlimited vacation from the day they start, even sabbaticals.

 A dealership south of Chicago hosts “Friday Zen”. A local massage therapy school sets up over 20 tables on the second floor of the dealership and massage therapy students provide free massages to all staff throughout the day.

 Millennials and Gen Zs are entrepreneurial and prefer to develop several revenue streams—they don’t like having all their eggs in one basket. Forward thinking dealerships encourage and support this. They do not bemoan the constant use of cell phones in the showroom—Most Gen Zs consider their cell phone as a natural extension of both their social and entrepreneurial life.  Progressive (and clever) dealerships teach salespeople how to use various video apps and how to create YouTube and TikTok channels that not only brand and promote their sales career, but actually generate revenue from social media platforms. Several Canadian salespeople are generating a six-figure income from selling cars as well as a second six-figure income from their social media followers. One of our current and most successful one-day workshops teaches salespeople exactly how to do this.

 Baby Boomers and Gen Xers have traditionally put in long hours and five or even six day work weeks and relish their time away from the workplace and co-workers. Millennials and Gen Zs on the other hand, love to socialize with their coworkers outside of the workplace. Progressive dealerships encourage this with organized events for the sales and service teams such a ping-pong tournaments, pool tournaments, poker nights, online gaming tournaments, golfing, basketball, volleyball, wine tasting, paintball, axe-throwing, horseback riding, salmon fishing, kayaking, zip-lining, skydiving and track days.

 Furthermore, Millennials and Gen Zs enjoy constant banter with their colleagues (salespeople, service advisors, technicians as well as their sales managers) via group chat both during and after hours. Sales Managers form strong bonds with their teams by participating and learning more about their people through this informal and often highly charged chirping and chatter.

 Finally, and perhaps most importantly, Millennials and Gen Zs do not respond to autocratic and dictatorial styles of leadership. Yelling and shaming at sales meetings, humiliation, “My way or the highway” statements and attitudes and high pressure work environments are considered repulsive. Millennials and Gen Zs want leaders that respect their input and opinions, and “truly” listen to them and not patronize them. They respond to team environments, where the sales team both wins together or loses together. When the team wins (achieving sales/profit/CSI targets, etc.), the team shares both the spoils and the accolades and celebrates together. When the team loses, the leadership does not point fingers, but instead takes ownership and responsibility. The entire team (including the leaders) support, nurture and coach each other. 

 The pandemic seemingly has been the catalyst for a transformational shift of the entire workforce, including retail automotive. Dealer Principals and managers that live in the past and constantly talk of “what we used to do” and drone on about the habits, lack of work ethic and cell phones of the “younger generation” will be left behind with empty showrooms. Progressive, enthusiastic leaders will not only adapt to the new generation of young entrepreneurs, but will look for ways to inspire and delight them in the workplace.

The post Creating a culture that supports your Millennial and Gen Z workforce’s priorities appeared first on Canadian Auto Dealer.

Dealerships who don’t provide a great test drive experience are missing sales opportunities

The vast majority of test drives in Canada do not have a sales consultant present in the vehicle. Is this considered “great salesmanship,” or a new habit, and perhaps a laziness, brought on by the pandemic and current inventory shortages? 

Obviously, we could not, and did not, have sales consultants and customers together in vehicles during the pandemic, but what about today? 

Yes, I also know that we do not always have a vehicle to demonstrate as a result of inventory challenges. However, what about representative new vehicles and pre-owned vehicles?

I am constantly told in my travels that customers prefer unaccompanied test drives, yet nowhere, and I mean nowhere, can I find the research that substantiates this. 

Moreover, I work with dealerships all across Canada and the States, and I am often working at the showroom level and talking to customers directly. Almost never have I received pushback, or refereed a negative experience, when a skilled sales consultant treats a customer to a “dynamic” test drive. 

Small town dealerships often tell me that they are more “relaxed,” and that customers expect unaccompanied test drives. Is this because they have never experienced something so much better? 

Most often, the sources of this bad intel are sales consultants that, for a variety of reasons, do not want to accompany their customer on a well-planned, scenic, exciting and informative test drive. 

We need to be there to provide a proper (and safe) vehicle orientation, to build value, to answer questions, to build a relationship, trust, credibility and to ensure that customers actually drive far enough to enjoy the vehicle, soak it in and take mental ownership.

If your dealership’s sales consultants are simply tossing keys to customers and telling them to, “take it for a boot”, and worse, with no walkaround vehicle presentations, what is the point of even having sales consultants and paying out record commissions? 

Many sales consultants, and even sales managers, accept or believe that customers should take the vehicle out on their own as the new norm. Far beyond the need to protect the vehicle, we need to be with customers during the test drive. 

We need to be there to provide a proper (and safe) vehicle orientation, to build value, to answer questions, to build a relationship, trust, credibility and to ensure that customers actually drive far enough to enjoy the vehicle, soak it in and take mental ownership.

Customers that take a vehicle out unaccompanied usually don’t take it far enough to familiarize themselves with it and enjoy it. They feel that the dealership or sales consultant is doing them a favour by letting them take the vehicle on their own, and hence they only take it out for a very short time so as not to appear rude or ungrateful for the privilege. 

Furthermore, many customers that take a vehicle out alone will only take it out for a short drive because they are nervous with respect to the operation of the vehicle; “Where is the temperature control?”,  “How do I change the radio station?”, “Where is the telescopic steering lever?”, “How does the Apple CarPlay work?” and so on. 

In some cases, customers that go out alone with the vehicle will actually use it to visit and shop at other dealerships nearby. There have even been numerous incidents of people speeding, off-roading or using a pick-up truck to move a fridge or furniture. And of course, there is also the concern of vehicle theft.

More importantly, the entire flow of the sale is broken by the absence of the sales consultant.

For many customers, getting behind the wheel of a new 2022 gas, hybrid or electric vehicle is like getting behind the yoke of a Boeing 777. It is overwhelming, and can be nerve-wracking. 

The technology is changing so quickly; would customers really know how to self-teach, operate or understand adaptive cruise control, lane departure warning, reverse brake assist, automatic emergency braking, park assist, safe self exit, Apple CarPlay/Android Auto, wireless SmartPhone connectivity, teen driver tech, and everything else?

As trucks and SUVs go upmarket, are you really delivering a “luxury-premium experience” by tossing the keys to a customer that is spending $85,000 on a pick-up truck? Again, I am keenly aware that because of low current inventory levels it is a sellers’ market and that we don’t always have to try hard to sell a new vehicle. Does the Four Seasons Hotel deliver a lesser client experience when the hotel is sold-out?  

Beyond showcasing the vehicle’s newest safety, performance and convenience technologies, an accompanied test drive also provides the necessary time for a sales consultant to forge a trusting relationship with the customer and go deeper with a true understanding of their wants and needs.  

Being present in the vehicle also allows the sales consultant to gauge the customer’s level of interest and enthusiasm and answer questions. Many high-performing sales consultants also begin the trial closing process toward the end of the test drive in order to firm up the vehicle selection and to prepare the customer for the closing phase of the sale.

As new vehicles continue to become more technologically advanced, consider making sales consultant-accompanied test drives mandatory at your dealership. This will vastly improve your customer’s purchase experience, even in times when you don’t need to.

Ten concepts that constitute well-designed test drives:

1. Create at least 2 routes to account for local traffic flow. The dealership should create and map the routes to ensure that you always know where your people and vehicles are at all times.
2. Vary the length of the routes; routes should vary from 30 to 60 minutes. Customers do in fact want longer drives, not shorter. Provide options.  
3. Create scenic routes; Express Route, Adventure Route, Luxury Route. Showcase your vehicles and your local scenery; include country roads, parks,  golf courses, ponds, lakes, oceans, marinas, hills, mountains, upscale neighbourhoods, cityscapes. Imagine that you are creating the backdrop for a national television commercial. Create the dream!  
4. The sales consultant should drive first to establish the route and acclimatize the customer to the new cabin environment.
5. The sales consultant should creatively and safely demonstrate four to six new vehicle technologies of the “live” vehicle; those that are of interest/curiosity to the customers, and those that are new to the industry.  
6. Establish quiet, scenic and safe driver change points. Weather permitting, this can also be an opportunity to complete an express walkaround vehicle presentation. Also take photos or video of the customer with the vehicle and email following the dealership visit.
7. Encourage all parties to drive the vehicle: “I would love your opinion.”
8. Allow some “quiet time” when the customer is driving so that they can focus on their driving, the overall feel, size and road manners of the vehicle.
9. Trial close or transition close 1 or 2 minutes prior to the end of the drive. For example: “Carly, provided the payments fit your lifestyle, is this the vehicle you  would like to own?” or, “Mr. Lee, when we get back to the dealership, I will provide you with some various payment options available on this vehicle.”
10. Ensure that all  customers are transitioned back to the showroom and the sales consultant’s work station. You can’t close an empty chair. Provide all  customers with a payment-based proposal. 

The post Unaccompanied test drives… No way! appeared first on Canadian Auto Dealer.

As dealership leaders we train and coach our sales consultants to ask a myriad of qualifying questions so that they gain a better understanding of a customer’s needs and wants in a newer vehicle.

There are, however, two questions that the majority of sales managers continually direct sales consultants to ask that create awkward confrontations and result in depleted gross profit. The first question sales consultants are directed by sales managers to ask customers is; “How much do you want for your car?”

In fact, many sales managers insist that this question be posed before appraising a customer’s vehicle and the creation of a proposal.

This question dates back to the 1970s and may simply be a habit passed down from generation to generation of sales managers.

If you really think about this question, however, what value does this question really have—or what harm?

When it comes to the value of their own vehicle, a customer has three numbers in mind. The first is the want number. This is the value that the customer truly believes their vehicle is worth based on their own independent research on retail websites such as AutoTrader, Car Gurus, Kelley Blue Book or Kijiji.

The second is the wish number. This value is much higher than the want number. The customer’s attitude is, “Who knows, maybe my car is worth a lot more in the market than what I think. My car seems to be in better shape than the ones I’ve seen online. Maybe there is a big demand for my car. Maybe the dealership will offer me crazy money because I’ve heard that there are shortages of used cars. If I shoot for the stars with my number, maybe I’ll land on the moon.”

The third number is the would number. The would number is lower than both the want and wish numbers. This is the number that (in the customer’s mind) they would take if they were highly motivated and excited to buy a newer vehicle—or had been provided a credible explanation from the sales consultant as to how the dealership appraises their trade-in and how they arrive at the final trade-in value.

This begs the question; why are dealerships (appraisal experts) asking school teachers, accountants, engineers, truck drivers, factory workers, fitness instructors,etc. what the value of their vehicle is?

The following is an example of a customer’s wish, want, and would: wish number: $18,000 “What I wish I could get for my car—who knows.” Want Number: $16,500 “What I really want for my car.” Would number: $16,000 “What I would actually take for my car if I really want yours.”

If a sales consultant is directed to ask the customer, “How much do you want for your car.” which number is the customer going to serve up; the wish, want or would? The wish number, of course.

It gets worse. When the sales manager asks the sales consultant for the customer’s number, the sales manager is frustrated with the customer’s response: “Where did your customer come up with that number? That’s a retail number! Did you tell the customer that we pay wholesale, not retail? Go ask your customer where they came up with that number.”

When the sales consultant now questions (or even confronts) the customer with respect to the source of their number, the customer defends their number and digs in, entrenching. Now they feel that they must vehemently defend their number and their pride—and the customer is befuddled as to why the sales consultant and sales manager seem somewhat annoyed (“If you don’t like my number, why did you ask?”).

This exasperating and backwards questioning actually breaks the first rule of negotiation; He/she who puts the first number on paper wins. If a customer puts the first number on paper (because they have been asked to), the dealership is now attempting to negotiate downward from the customer’s wish number of $18,000.

This makes for tough, drawn-out and often confrontational negotiation. It significantly reduces the gross profit as the dealership struggles to appease and come close to the customer’s wish number. Also consider the fact that dealerships employ trained and highly experienced appraisers that are expert in establishing the value of a vehicle.

Dealerships also invest tens of thousands of dollars annually on technology tools such as vAuto and CARFAX Vehicle Valuation Reports to assist appraisers in determining credible, accurate, market-researched values.

This begs the question; why are dealerships (appraisal experts) asking school teachers, accountants, engineers, truck drivers, factory workers, fitness instructors, etc. what the value of their vehicle is?

Customers often wonder the same: “You tell me what my vehicle is worth.”

The second question that sales consultants are directed by sales managers to ask customers is; “What would you like to offer for our car?”

This is most commonly asked when selling used vehicles. Again, this puts the customer in an extremely awkward and uncomfortable position. Customers do not have intimate knowledge of new and used vehicle profit margins, and of course, most people perceive the margins to be much higher than the reality.

Hence, just like their trade-in, the customer has a wish, want and a would number with respect to how much they want to pay for the dealership’s vehicle.

For example, if the price of a used vehicle is $29,997, the customer’s thought process might be as follows:

Selling price: $29,997

Wish number: “I wish I could pay $28,000 for the dealership’s car—who knows, maybe they’ll take it!”

Want number: “I really want to pay $29,000 for the dealership’s car.”

Would number: “I would actually pay $29,700 for the dealership’s car if I really want it.”

If a sales consultant is directed to ask the customer, “What would you like to offer for our car?” which number is the customer going to serve up; the wish, want, or the would?

Despite what many sales managers would like to admit, the simple practice of asking, “How much do you want for your car” and “What would you like to offer for our car?” is the norm rather than the exception—yes, still today.

Eliminate this practice altogether—stop asking. If you don’t want bad answers, then stop asking bad questions.

Instead, offer to appraise a customer’s trade-in as early as possible within your showroom and digital sales processes. How about step number one as part of the customer welcome: “Mr. Lee, I will arrange to have your vehicle professionally appraised. It’s free and there’s no obligation. If you would consider it, we would also like the opportunity to buy your car even if you don’t buy one of ours.”

Come time to present a proposal (ideally following a vehicle presentation and demonstration drive), simply present the vehicle’s selling price, manufacturers’ incentive where applicable, trade-in value, and 3-6 strategic payment options.

Instead of asking a customer how much they want for their car and to make an offer on ours, let’s make them an offer!

Confidently, present a proposal (let’s get our numbers on paper first), guide the customer, reduce stress on both sides of the negotiation and retain gross profit.

The post The two worst questions to ask a customer buying a vehicle appeared first on Canadian Auto Dealer.