This is my attempt to be more specific on five tips I gave in a recent article titled These Are the 5 Automotive Tips You'll Love in the New Year.
I gave brief descriptions on all five tips but I wanted to give you more specific examples, ideas and strategies. I want to show you how great concepts from other industries can also work in your specific dealerships. The first tip was to "Save time and money by avoiding costly learning curves."
Avoiding costly learning curves enables you to run circles around the dealers you compete with before they figure out how you did it. An easy way to do this is by borrowing success practices from other industries and applying them to the auto industry.
There are a lot of people (this includes me) who have spent virtually their entire career in the auto industry. Maybe you’ve done that, too. There is a big risk when you've spent all your life in one industry, all you know well are the common success practices of just that... our industry.
We have all benefitted from learning at various industry events such as 20 groups, factory meetings and conferences. However, limiting yourself to these events, you only understand how people in the auto industry sell, advertise or promote. And let's face it, almost everyone in the auto industry markets, sells, advertises and promotes pretty much the same way as everyone else.
Dealers continue to basically just put ads using digital, direct mail, email, TV, radio and maybe there are a few left that use the newspaper. Dealers continue to do the same types of offers that appealed to car buyers before they relied on everyone else for research information.
[bctt tweet="This is What You Need to Know to Save Time & Money in 2019" username="JandLMarketing"]
When you limit your dealership to doing things the same way every other dealer does, you can only produce modest, incremental gains – at best. At worst, you could easily lose ground.
I continuously study and identify the fundamental principles that drive the successes in other industries. I'm always looking to pick and choose the most powerful, effective and state of the art breakthrough approaches that can be introduced to the auto industry. With a little effort on your part, you can engineer stunning advances for your dealership and leave everyone else wondering how it happened.
How these examples, ideas, and strategies are generated
I often get these ideas, examples, and strategies from Fortune 500 CEOs, successful entrepreneurs, or high performing managers. I've vetted and applied many of them at my own stores and J&L Marketing. These are universal solutions that can be successfully used by General Managers and/or Dealer Principles who own/manage one store or own a large dealer group.
Here's an example
I was reading a story about Dave Liniger, the Founder of Re/Max Real Estate and thought it was worth putting in this article because the auto industry has a serious problem with turnover. Dealers who decide to also provide a subscription service may find it has a variety of other benefits such as helping them retain top talent.
Dave built his company to a billion dollars in sales by using the 100% solution, which lets sales people keep 100% of their commissions while charging them a monthly fee for office facilities and equipment. His agents were making so much money, they rarely left.
So apparently, one day Dave went into his regular barbershop. The owner was complaining how hard it was to keep good barbers. Dave explained how his real estate company held on to talent using the 100% solution. The barber nodded politely.
The next time Dave was back and reached for his wallet to pay, the barber said, “This one’s on me. I took your advice and now we’re a 100% solution barber shop.”
Who knows where Dave Liniger came up with the 100% solution in the first place and who cares? It doesn't matter if he came up with it himself, or if he got the idea from another industry... all that matters is he saw a potential solution and applied it.
This exact example may not work because I'm not confident we can get sales reps to pay us a monthly fee for showroom space. However, it got me thinking... what would happen if dealers who offered subscription services, paid their sales reps full commissions every month the client was active on the subscription program? For dealers who are currently doing this, I would love your feedback in the comments below. Are you paying commission each month or not, and why? What are some of the advantages and disadvantages.
Imagine a team of sales reps who have built up a book of active monthly clients. It's in their best interest to keep these clients active. Why would they ever leave you with a commission floor that continues to grow each month? How much easier would it be to recruit new sales people if you already had a book of business to have them manage? With a book of business to hand off it changes who you recruit and who you're able to attract.
Earlier I said I have not vetted this idea or concept yet. That's because my stores have not started a subscription service yet. However, if we want to solve the turnover problem within the industry we have to think outside the box for a solution. I have a lot of respect for the Jeff Wyler Automotive Family. It's where my father and later myself, got our start in the auto industry. More importantly, it's an innovative dealer group who is always pushing itself to grow and prosper.
Here's an idea
Nobody is 100 times smarter than everyone else. Today, there really isn't many dealerships that have technical advantages over their competitors, nor does a dealer really have any major distribution or labor edge. So, why do certain "automotive A-listers" gain levels of success so much higher than others?
They have a better philosophical strategy. They approach everyone they deal with in a totally different and more effective way than everyone else.
In the auto industry we use terms to describe car buyers in a variety of ways... ups, prospects, leads, customers, conquest traffic. We call the people who have done business with us customers or previous customers.
Recently, I stole an idea from another industry that has started to change the philosophy at my companies for the better. I want everyone involved in my businesses to refer to the people who have done business with us as a “client” instead of a “customer.” Look at the difference The Webster’s Dictionary uses to define these two, seeming identical words:
- Customer: One who purchases a commodity or service.
- Client: One who is under the protection of another.
I believe words matter. The difference in the meaning is incredible. And there’s a massive difference in the way a person who does business with you could or should be treated.
What exactly does “under the protection of another” mean? As it translates to the auto industry... It means that dealers don’t sell people a vehicle or service just so they can make the largest one-time gross possible. You must appreciate exactly what your clients need when they do business with you. What would the customer experience look like if every employee in your store understood their role was to protect the client? Would the way they communicate be different? You need to become a trusted advisor who protects them. Give them real reasons to remain your client for a lifetime.
For instance, this translated to J&L Marketing just as easily as it did to my dealerships. Imagine for a moment that a dealer is discussing a potential marketing campaign with you (let's just pretend you are one of our Business Growth Strategist) and he wants to make a certain offer to a group of in-market car buyers. The dealer doesn't really want or need to make this specific offer - he needs or wants what he believes this offer will give him - more traffic and more sales. That's what the dealer really needs.
He has a financial, emotional, logical or intellectual need for more traffic and sales. He might think he needs to make that specific offer. But it’s your responsibility to determine the real truth and his real need. Your responsibility and opportunity is not to just sell him a marketing campaign with the specific offer he wants to make. You must figure out how to satisfy his financial, emotional, logical or intellectual need for more leads and sales... and make sure the marketing strategy he buys from you will solve his problem and give him the exact traffic and sales he needs.
Or... maybe he thinks he wants more traffic and sales, but when you find out that he needs more traffic and sales to hit an upcoming sales number that impacts his incentives, you realize that a high impact direct marketing option would work better than a marketing campaign designed to increase traffic and sales over time. So you sell the client a high impact private sales event. You have truly solved his problem.
You have also become a trusted advisor and a friend. And you should think of your clients as valued friends. The concept of viewing clients as valued friends is the essence and the life blood of a long lasting, rewarding and profitable relationship for both your dealership and your clients. And you'll learn that the value you provide to your clients and everyone you deal with can be deeper, more meaningful and rewarding than you ever realized.
I was recently visiting with Steve Gates the Owner of the Gates Automotive Group. Steve invited several members of his team including two of his General Managers and his eCommerce Director. We were setting up a comprehensive digital marketing strategy for two more of his stores. It was a long meeting and I excused myself and asked where the restroom was. Rather than point me in a direction, one of the General Managers stood up and walked me around the showroom to the restroom door.
When I returned to the meeting, I brought up the impression that made on me. I also brought up that I was reading a book or article that mentioned something very similar. The Ritz Carlton teaches all their employees to never point a client in a direction. They are taught to always walk and escort that person to where they need to go. I think we can all agree that Ritz Carlton does a phenomenal job with the customer experience.
I asked the group, "Why did you escort me?" Steve spoke up and said, "I speak to every new employee when we have our on-boarding meetings. I go over everything I expect them to do when it comes to how people (not just clients) should be treated at any Gates store." I have no idea if Steve came up with that from Ritz Carlton or if Ritz Carlton got it from Mr. Gates. What I do know... it is another example of how we can learn from other industries and apply it to our own businesses.
Here's the strategy
One example I continuously bring up is Amazon and Uber. They have benefited significantly from one thing... they make things in our lives like shopping or getting from point A to B, faster, more convenient and with a lot less hassle. Neither of these companies are known as the low price leader. There are a lot of clients who spend more each month on Amazon than their monthly car payment. Companies like Amazon and Uber are training all of us on what to expect online. Your dealership is not being judged or compared to other dealers online. It's being compared to the experiences consumers prefer most like Amazon and Uber.
Clients are screaming for... more transparency, more information... they want it done faster and easier. Amazon, Uber, Netflix are providing a perfect blueprint for all of us in the auto industry to follow. 3rd-party sites have figured it out. They have stolen all the decision making influence in the buying journey. Why, because clients trust them more. Clients get more of the information they want to make an intelligent decision. Give clients what they want - make them offers they can't refuse.
Imagine you and a friend are each going to purchase a new Honda Accord (identical options, color, trim, etc). You are leaning towards giving your business to Dealer A, the other to Dealer B.
“I’m buying from Dealer A because if something goes wrong, I know Dealer A will take care of it quickly.”
Your friend said, “But if you buy from Dealer B, nothing will go wrong.”
You replied, “Yeah, but it might, and I don’t want to have to worry about it.”
Whenever two parties come together to transact business of any kind, one side is always asking the other (consciously or subconsciously) to assume more or all of the risk. If you ask someone to take on all the risk, their first inclination is to not buy.
As dealers it's easy to stand behind the new vehicles we sell because they all have a pretty good manufacturer warranty. And if there’s any problem, you'll fix it. But what happens if the customer buys the new car and a few days later determine... this is the wrong car for me? The strategy the manufacturer has provided us and the one Carvana stole from other retail industries is called - risk reversal. Carvana did not invent this and it is something every dealer can do now. I'm not promoting Carvana because if I was buying a new car I would never pay thousands more to do so. However, their business model does prove that price is not the only motivator and to the point of this article you can steal good strategies from other industries.
The manufacturer has already eliminated the risk of something going wrong with the new vehicle. Your goal is to eliminate as much, if not all, of the risk in the transaction for your client. When you take away the risk, you lower the barrier to action and eliminate a major obstacle to buying.
What would happen if you aggressively let your clients know that if they are dissatisfied, you will, re-do the purchase at no charge, or whatever else it takes to demonstrate your total, passionate commitment to their satisfaction?
Clients will take advantage of this risk reversal strategy and very seldom ask for reimbursement. But the offer will serve you 100% of the time.