Opinions & Advice

2009 – A Change We Need

Great Management and Great Leadership

This coming year will be a sad year for many car dealerships, so I’m writing this article to offer hope and encouragement, and maybe it will help save at least one from despair. But before I continue, let it be known that I am a very optimistic, positive, “glass is half-full” kind of guy. To me, adversity is nothing more than an opportunity for growth, and without challenges no one would develop perseverance. Now, I’m not saying that I like adversity or being challenged all the time, but lately it seems the world I’m living in serves up more and more of it everyday.

Managing The Dealership

Every dealership needs to start by looking at the way they are managed. Thousands of dealers have operated with blinders on for too many years. This mentality avoids true management of people and their processes, and has no chance against the Godzilla-sized problems facing every dealer in the country right now.

First, ask yourself, “Whose hands are on the wheel?” I’ve been in far too many dealerships that have a really great Salesman working as a Manager. NEWS FLASH: An excellent Sales Person does not equal an excellent Manager! The best Manager might not be able to sell their way out of a wet paper bag and that’s ok! Maybe this challenges your way of thinking about management, but that’s ok too…you reserve the right to change your mind when given new ideas.

Consider this. Right now, as you read this article, Managers are making big decisions. Hiring and firing decisions, vendor decisions (who to keep, who to cut, who to add), advertising and marketing decisions, decisions on what to buy at auctions and pricing used inventory, decisions on how to process incoming internet leads, website decisions, decisions on training and education initiatives and so on and so on.

Poor Managers make the above BIG decisions based on instinct alone, which is a display of ignorance. Ignorance is not only unacceptable, it represents a coffin nail that every dealer should avoid at all cost. A bad Manager has no idea what his or her employees are truly capable of and how to motivate them. When a Manager only evaluates sales people based how many vehicles they sell, they fail to identify the reasons why they sold that number of vehicles. If you don’t know why Johnny-Sales-Guy only sold five cars this month, you are a bad Manager.

Bad Managers don’t recognize, or even see the need, for tools that track sales efforts; they don’t know how to determine the value of their vendors; they don’t understand what advertising and marketing choices return the best results; they don’t know what their ratio is between their showroom traffic and their internet traffic; they don’t know what makes a good website (or even know why their website exists); they don’t know when they need training; and they don’t know how to hold trained employees accountable. Managers such as these have no right to be managing in today’s dealership.

Great Managers, of course, do all of the above well because their experience, knowledge, abilities and talents match the needs of the position. They know the strengths and weaknesses of those he or she manages and they will position their employees to play to their strengths, NOT their weaknesses. A great Manager knows what days showroom traffic is at its peak and cross-trains sales people for traditional showroom sales as well as internet sales. A great Manager tracks sales people’s response times, follow-up discipline, appointment setting ratio, closing ratio and uses metrics to help the dealership thrive not just survive.

Again, good management is a dilemma for many dealerships because so many stores are being managed by people whose greatest strength is not managing.

Helpful Hints and Encouragement

  • Choosing to keep an employee should be based on the fact that their abilities, strengths and talents match your needs and that they are well utilized to make your business successful. Establish an employee rating scale (i.e. “Outstanding,” “Exceeds Expectations,” “Meets Expectations” and “Needs Improvement”), then MANAGE your staff toward success or out of your dealership.
  • Keep and/or add vendors that increase sales conversion. Now more than ever, vendor choices need to be based on ROI. A good vendor will stand behind their product or service by not forcing long term contracts. Having the best tools available is useless if there is no proven process for them.
  • Make cuts in places like newspaper, television and radio. If you spend more than $5k a month in any of these areas, separately or combined, sharpen your axe and start swinging it!
  • Manage your processes or you will make bad decisions. If you don’t know how to effectively communicate with your customers (especially online), you will not be able to identify good leads vs. bad leads. You won’t know why one CRM tool fits your business needs vs. another. Solid processes give you critical management tools like visibility, accountability and responsibility.
  • If you are the Dealer/Owner/DP, do some self-examination related to your leadership skills and abilities. If you aren’t the one casting the vision for how the business moves forward, who is? A leader must exist. Here’s a video that includes 13 great leadership rules.

Properly managing your people and processes is one of the biggest keys to your dealership’s success. Just signing-up for the latest and greatest product or service will do nothing to help you if the wrong people work for you or if you have the right people in the wrong roles. There will be amazing success stories in 2009, but they will all have two things in common, great management and great leadership.

I am a true internet car guy and the Vice President of Marketing at DealerOn. My automotive career started in a parts warehouse after I fell in love w...
"An excellent Sales Person does not equal an excellent Manager"

This is true. People are often promoted to a level of incompetency. They call this the Peter Principle

  • W
    Wendell Dossett
  • January 1, 2009
Dealerships are like a "Deer in the headlights" now a days. They are not accustomed to what they are facing today. This doesn't turn around in a few months(although most should have seen it coming). Deep seeded problems of management and hiring have sprung the trap that they find themselves in today. And most deserve where they are now. To wake up and go in the right direction will be monumental. Easy money and lazy ways in a business almost gone bankrupt. I guess that's almost fitting. But being in the business over 15 years it makes me sick. You are right that the wrong people have been put in management. To attract the right people into this business now - ponder that for a minute. There must be a new movement of the right people to turn these dealerships around. I think that is the real problem with Owners and existing management willing to go down with the ship. Everything you say is right on Shaun. But that takes someone willing to really care and learn. You must be willing to do what a few of us do and that is to learn daily. And make that a part of your being and understand that the ole ways are just that OLD. How many people do you know like that - or have you ever have known a handful of people in your life like that. Who really want to put themselves out there and do all the things day in day out. The problem is they always have the other driving motive. No one knows anymore how to think and be creative(or Think and Grow Rich). It 's a different world, but it will come on around 180 to roost.I think it is right now. What makes me more upset than anything over the years is watching all the good salespeople leaving the business because of bad management. Salespeople are the ones that make it happen. The management must be knowledgeable enough to give them the tools so they may blossom into great builders of their sales business.
We all knew this day was coming. How did we know?

How in the h*ll can a sales rep get paid a flat for a $60,000 vehicle that takes 2-3 hours to deliver?

It was like musical chairs. The music stopped and all the ugly parts of our industry came right to the surface.

What we're witnessing is the begining of the death of the Automobile business as we knew it. For those that survive, this is the birth of a far better career.

On the way to a better day, it's gonna be messy and painful. We'll witness the death of entire brands. Many stores can't take another year of cash loss like 2008.

Darwin's rules are in full force now. The strong will eat the weak. Ask yourself, is your management team going to eat your competitors, or, will your store be eaten?

Sure there is cost cutting going on, but, are they communicating a new attack plan for 2009?

We're in the top of the 2nd inning, there's a lot of drama to play out yet. If your management team is a bunch of slackers, I suggest you get your resume tweaked ASAP.

Are we having fun yet?
A light switch is not far from flicking on. With the light will come a move toward a different industry. The speed of this move will be dictated by the economy and/or manufacturers. If things bounce back within the year, the move will be extremely minor. If things don't bounce back for 5 years, the move will be much stronger.

The problem is in the managers. Management does not become management without a keen ability to survive. Even when times are good survivability is the name of the promotion game in the car business. It is a dog eat dog business, and I bet the same pit bulls will be sitting in the same seats if this is a short storm.

Change does not happen over night - it comes on the back of lots of time and a majority of acceptance (forced or wanted). It also requires a drastic reason.

Management should <u>currently</u> be looking at a few things:

1. Are the dealership's cash reserves enough to weather 2 years without profit?

a. If not, what are you cutting to get there?
b. If there isn't enough to cut, when are you selling the dealership?

2. If you've already taken care of number 1, have you evaluated your inventory for positioning amongst a more rational buyer? Save the emotional options (smart keys, remote car starters, 20" wheels) for orders. Carry cars that are most likely to have dealership service and warranties straight from the manufacturer a year from now. Make sure they're affordable for over 80% of your market.

3. Design a plan of attack for marketing. Are you going to push the perception that you're the cheapest guy in town? Are you going to be customer service oriented? Are you going for profit or volume? Figure it out and stick to it for 12 months - don't waiver because you were off one month. We can no longer live month to month.

4. Once number 3 is figured out, put your people on a process that follows your marketing strategy. Don't expect a volume-oriented sales force to immediately start making huge PVR's if you decide to go for profit. Have patience and water your garden daily.

5. Do I really need to go any further? This is Business 101. So if you're going to continue to be in the game, get back to basics - I bet it worked when you were selling cars too.
  • J
  • January 2, 2009
Well this is the best article I have read on here.

The only FEAR most management has is CHANGE.

If you are not making a profit CHANGE your business model IMMEDIATELY!!

The only thing that surfaces during times like this is POOR management and a lack of decision making , or long range planning.
Then when we have a complete turn around you will reap hugh profit benefits. ie as long as you stay lean and mean. JMHO!
"But that takes someone willing to really care and learn." Right on the money Wendell! I have had the great opportunity to work in the Net side of our Dealership, and watched the Manager of the Internet Department, who was a great Salesperson, but not much in the Management area. By no means putting that person down, just was not Management material. Would get his ten cars, and then feet up on the desk. Not willing to make change or even approach the G.M. with new or fresh ideals. Myself at the time being wet behind the ears, so to speak. Had all kinds of new ways of looking at things like we should. Like a consumer and not what would take more time or effort. From better and more photos, to video of the cars, and Sales staff, and real time tracking of Leeds. My old G.M. would say, "Wow you really think outside of the box Lee". That felt not only great, but further encouraged me to bring him more! That's what I call a real Manager. Approachable, and down to earth. As part of the many cuts in our Company, I was one of them. I was saved by an e-mail 15 minutes before the ax was to fall. Now working on the Service side of things. I'm still blessed to be part of this great Company, and feel really grateful and lucky to be here. After seven years, and doing everything from Service, Sales, to having my feet wet all day in the Prep shop, I feel have a real grasp on the day to day operations, and how you are only good as your people. That starts with Management and the training and guidance they provide. After being in the Internet Department, I was hooked, and still am! I find myself looking up my old web site and weeping at the lack of care I had once put in. Noticed I said my old web site. That's because it might as well been Lee.com. That's just the way I looked at it. I really did care, and poured my heart into it. Even went out and got a Blackberry and had all the Leeds come to me so there would not be one missed, and could reply back to Leeds immediately. not when we could, but right now. Less than a minute and not during business hours only. Literally until I went to bed at night. That use to blow the socks off my clients who were surprised to get a real person as late as 1 am, and within a few moments of pushing enter on there computer. This comes from the days, and I mean the eighties when the phone was the first contact to your business. How important it was, and how this first impression meant everything. Not can you hold. I use to have to study and provide a cost of how much it cost to make it ring. Back then it seemed like a lot. Even worse if you fouled that up, how much it would cost if the other guy did it better. We would phone shop on a weekly bases just to see if someone was better than us. Well that's the past and today it's the Web site. If you have stock photos, and descriptions that have no meaning, well someone else is eating your pie that you paid for. Well ok time for me to step down from my soap box, and freshen my resume. I again feel truly lucky to have been part of the Net, and one day soon hope to be back. It's in my blood and will do what it takes to do it again. For all those Managers who refuse to look at the people who love what they do and embrace them and ignore the Internet Department as a need, well good luck. All other Managers who want to succeed today and into the future, please e-mail me at [email protected] or call my cell phone 757-406-5777. Thanks for the time and all the education from Dealer Refresh. I will still be an advert reader. Lee.
Fantastic post with an excellent message.

Dealers have been reluctant to change for too long now. Change is inevitable, and dealerships must rethink and reallocate resources. New direction and/or new initiatives must be directed from the top down. If the DP doesn’t “buy-in”, no manager (good or bad) will have any success.

Dealerships in the past made “enough” money to mask their inefficiencies. This economic shift we are experiencing has simply exposed what has been a myriad of poor decisions by management. I too see great things to come in 2009 – it will be bloody – but “change” will be good.

Again, great article and a fantastic forum.

Thank you for the great article and th embedded video clip! I agree that all conditions point to a loss of a significant number of dealerships in 2009... continuing the trend started with over 700 franchises lost on 2008. My own personal experience has been less of seeing dealer principals and General Managers who are unwilling to change, and more of witnessing a lack of daily task execution on a consistent basis, for a wide varity of reasons... Sometimes, this ack o daily excution is driven by quality of human resoures, but more often origintes from the sheer drudgery of getting on people every day for the same issues... Almost seems lke a form of management fatigue in some stores. In other dealersips, certain employees are asked to do more than is reasonable to expect within any given day. This problem smming from a fear of head count. You know which ones I am talking about, where the Internet Sales Manager is expected to supervise 6 sales people, update site specials, photograph used cars, manage the invoices and billing, desk deals, appraise trades, etc., and of course I am exagerating but you get the idea.

At any rate, I believe the biggest challenge car dealers face in 2009 is related to EXECUTION... In the past, many dealerships were able to be profitable DESPITE a lack of daily business process execution, but in 2009 the wilingness and discipline to execute consistently will be a big part of which stores are around for the good times coming in 2010, and which ones end up as Recession Roadkill.
  • G
    Gregg Hunter
  • January 3, 2009
Wow, I could have written Lee's post! I've been in the business for over 30 years and the current lack of innovation at most stores absolutely staggering. I switched jobs back in the summer for the opportunity to run an internet department the right way. After 2 months, management pulled the plug and are doing it their way, to save money. Well, guess what, you can't save your way to prosperity! Leads are not being responded to properly, the website is stagnant and sales are in the tank. And, I get to stand on the showroom floor and grab ups. But I have a plan to approach other dealers in our area with a plan for growth with the internet, so I'll be moving on down the road soon. A good internet/BDC manager can grow a dealership's business, plus reduce the cost per sale.
It's rule #3 that gets a lot of dealers in trouble.

"Avoid having your ego so close to your position that when your position falls, your ego goes with it".

So many dealers need to get their heads out of their ass. If the economic situation continues as it is, this will really change the landscape of our industry. Something that most would agree that it needs.

This is a great article Shaun. Thanks for sharing.
  • K
  • January 7, 2009
Excellent article! It's what I have been preaching for the last year. The traditional way of doing business has changed. Which means, the business model has to change along with it. Change of perception, change of attitude and change of behaviors. Dealerships have to take a real close look at how they market; both internally and externally.
First the change must begin internally with effective leadership and training. Second is to impliment a solid staff development program to insure processes are followed.
It all requires change, which we all know most are resistant to. Those who understand that change is needed, are on the course for success. Congratulations to those who make the neccesary changes in 2009.