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A Dealership's Best Strategy for Success: KISS (Keep It Simple, Stupid!)

I've had the fortunate opportunity to run dealerships, work face-to-face with hundreds of dealerships nationwide, as well as with numerous dealership suppliers, be they CRM/ILM companies, advertising/marketing agencies, lead gen companies, etc.  And while I am often impressed with some really great ideas and technologies they create, at the end of the day, are we just making some very simple processes overly complex?

 

For example, when I help dealers maximize internet lead management performance (or just lead performance in general, be it walk-in, phone, or electronic), it's easy for someone to dazzle (or more likely overwhelm) a dealer with fancy metrics, data, research, tools, dashboards, etc. to show them how poorly they are doing "something," and how they SHOULD be doing that "something" instead.  The reality is that a rank beginner/amateur can do this as I've seen it happen hundreds of times.  But at the end of the day, while the metrics were "impressive," it provides minimal value-add to a dealer because it is either a) not directly actionable (that "50,000-foot view" analysis), b) too difficult to self-implement, and/or c) not sustainable for a variety of reasons.

 

Case in point...there are literally hundreds and hundreds of things a CRM system can do for you.  And they're all pretty nice things to have too.  But...what percentage of dealer principals/managers/sales consultants honestly have the aptitude, time, attention span, and/or skill to use that system COMPLETELY and PROPERLY?  The answer is VERY FEW.  There are rather simple reasons for this, but I won't bore you with that now.

 

I always encourage all dealers to crawl before they walk, and walk before they run...in other words, master the basics first, then build on that foundation instead of shortcutting (like we normally do!).  There are many great CRM systems out there.  But regardless of what you get, start with and master these very basic things:

 

  1. Ensure ALL customer leads AND follow-up events (calls, quotes, etc.) are entered into the system CORRECTLY by whomever (Sales Consultant, BDC, Manager, GM/DP).  If they can't do this because they need training, train them!  If they can't do this because they don't want to, then they don't need to work there.
  2. Ensure ALL daily "to-do" tasks (e.g. call Mr. Jones, e-mail Ms. Anderson, mail postcard to Mrs. Smith, etc.) are completed by the close of each day.  If they can't do this, then don't let them have any more new customers until these are completed, because if they can't manage what customers they have, they don't need any more (especially considering how much a dealer spends to get someone to just contact the dealership!).  The exception here is if the tasks are building up because of "overfollow-up" tasks that have been programmed into the system.  PLEASE...STOP TRAINING THE CUSTOMER TO IGNORE YOUR CALLS AND E-MAILS!!!  Instead, establish a smart, progressive contact schedule that makes sense, and builds a positive relationship with your customers (and potential customers) instead of annoying the hell out of them.
  3. Run two simple management reports at the end of each month:  a) "Sales and Closing Ratio by Source" and b) "Sales and Closing Ratio by Sales Consultant."  Understand WHY the numbers show what they show, develop a plan to make improvements accordingly, and make it happen.
  4. Build simple, customized templates that effectively communicate YOUR brand and competitive strengths (i.e. don't use what came with your CRM system)...and use them!  I can't tell you how many "customized" templates I've deleted out of a CRM system because they are just garbage; or, how many dealers I've asked, "So tell me the Top 5 reasons I should buy from your dealership, and the Top 5 reasons I should buy this brand?" only to get 10 different written lists from the 10 people in the room (try that in your store and you'll see my point).  This message must be consistent to be effective, so DEFINE that message (not just with a flowery "mission statement," but substantive competitive advantages too), and ensure that everyone in the dealership knows it, and that everyone can proudly share them with a prospective customer, a friend, a new hire...anyone!

 

Focus on these CRM basics, do them REALLY well, and I am confident you will outperform any of your competitors trying to do 50 different CRM things at once, but likely doing them poorly or mediocre at best.  Once you master these, then we can move on to mastering more advanced tactics and processes to help propel you even further ahead of the competition!

 

Written by Charles Kim

Views: 32

Tags: CRM, Charles, Dealership, Keep It Simple Stupid, Kim, TrueCar, lead, management

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Comment by Keith Shetterly on April 26, 2011 at 9:57pm

The dealer I mentioned put three things in the salespeople's pay plan:  No commission if a sold UP is not in the CRM; no commission if the email was not in the deal or invalid; no bonus if they weren't logging follow-up calls.  Very simple to check all three.

 

Very dramatic result.

Comment by Charles Kim on April 26, 2011 at 9:02pm

And you're right about pay plans too...they should be properly designed to incentive people to do the right things.  But they can easily become TOO complex or cumbersome to the point they aren't enforced properly and/or no longer incentive people to do the basics, so there is a balance that still relies on good, sound management. 

 

For example, here is a classic...paying a service advisor a bonus on "hours per R.O."  That is probably the most archaic and counterproductive pay plan component out there.  Why dealers still do this is beyond me...it is a loser for the dealership, the employee, and the customer.  Many similar examples exist in Sales and F&I too despite so many good alternatives out there.  I keep reminding dealers that you get what you pay for, so don't complain when you get what you paid for. 

Comment by Charles Kim on April 26, 2011 at 8:54pm

@Keith...yup, like I said at Bootcamp, I've been quietly working with/for dealers and OEMs on this for a long time, so it's always good to see what other people/companies/dealers are saying and doing in the e-commerce space.  I don't always agree with what's out there (especially when it comes to social media...I really hate a lot of what I'm seeing out there and what dealers are being told to do...maybe that will be my next post!), but a lot of it is really good stuff too. 

 

At the end of the day, my approach has always been focused on cutting through the clutter, and helping dealers develop simple, customized solutions designed for efficiency, LCD (lowest-common denominator) factors, and long-term survivability...win-win-win for the dealer, customer, and OEM...that's what makes it fun...=)

Comment by Keith Shetterly on April 26, 2011 at 8:34pm
Charles!  I just realized the same guy that came to my Internet Leads class at the bootcamp is who posted this.  Well done!!!!!
Comment by Keith Shetterly on April 26, 2011 at 8:31pm

I have an answer that I have seen take a dealership from the red to the black in 90 days:  Put the steps you want done into the pay plan, and then don't pay for not doing the steps.  For example, not allowing a sale to count for commission unless the UP was put in the CRM.  Another is to require a VALID email address on every deal.  Do everything else but not those and you do NOT GET PAID.  It took a single payday to get the point across, putting about ten key items in the salesmen's and the managers' pay plans.  By the way, do NOT make all of them the same key items between the salesmen and the managers--that cuts down on them "working" a pay plan together, which sometimes happens.

 

It still shocks me how reluctant dealerships are to require use of process and tools on the sales floor and paying only on that use.  The same dealers that won't pay a mechanic for shortcutting which would lead to a failing repair will go ahead and pay sales staff for shortcuts that fail the sale.

 

My $.02.

Comment by Charles Kim on April 26, 2011 at 8:15pm

You're right Scott...that is the REAL challenge...sustainability.  That's why it's critically important to focus on developing CUSTOMIZED solutions/processes centered on SIMPLICITY and SUSTAINABILITY.  Good processes that meet these two attributes usually survive employee turnover, which is really what you want as it makes life MUCH easier for everyone. 

 

But that is where most process improvement measures, new products, new systems, etc. in a retail environment fail, because everyone is trying to build a "better mousetrap" that is new, more complex, fancier, shinier, sexier, etc. that unfortunately more often than not does little to truly improving your business (with some exceptions of course).  It's kind of like exercise equipment or fitness programs you see on TV commercials...you buy it because it seems cool/efficient/compact/effective, and being in shape is a good idea, right?  But you use it for a few weeks, lose interest, and ultimately go back to your normal (inadequate) routine.  Had you stuck with it, it would probably get you in much better shape.  But at the end of the day, that program didn't fit your style or interest, so it failed.  That is another reason why I generally don't like "best practices" because they rarely work as a plug-and-play solution from store to store...the dynamics are usually different enough to prevent them from working properly.  Here is a textbook example:  response time to an internet lead.

 

Too many people mistakenly attributed high closing rates to quick lead response times.  What are people pushing now, 10 minutes or less?  Totally ridiculous and unnecessary.  This is a classic example of a plug-and-play "best practice" that has no meaningful impact to the desired result (i.e. more sales).  Quick response times are a by-product of a very good process, which results in strong closing rates, regardless of whether the response time was in 10 minutes or 90 minutes.  Simply responding quicker to a lead with a broken process and a lousy message will yield the same result...a lousy close rate.  For anyone that believes a quick response time alone will yield a better closing rate, I have a bridge available for sale and will give you a great deal on it! =)

 

In the end, a team with sound basic fundamentals will beat any team armed with nothing more than fancy trick plays.  Sure, they may score here and there, but day-in and day-out, we know who'll win in the end.  Interestingly enough, when I first made the jump from the OEM world to the retail world, what I thought would be easy (e.g. process improvement) was really difficult, and what I thought would be difficult (closing deals, F&I, etc.) was really easy.  I learned firsthand exactly why an in-depth, Six Sigma process improvement approach doesn't work in a retail environment (actually, it usually fails miserably!).  But I also learned how to modify/adapt that process to make it work in a dealership environment by simplifying it in the right places.  That is the fun part!

 

Lastly, regarding the "Road to the Sale" example, you are totally right...that is a textbook and critical process that regularly breaks down in dealerships.  But that is also where you find out if the inmates are running the asylum...if they are, then you need new managers because they either can't manage the people, or don't know how to manage people.  If they can't perform their most basic function (i.e. manage procedures/processes), you need to find one that can and will.  And that goes for sales consultants too...I didn't tolerate any Terrell Owenses on the team.  A superstar sales consultant with a bad attitude and/or who failed to follow the rules is not worth the few extra sales they generated because of the cancer they spread to the rest of the floor...totally not worth it! 

Comment by Scott Klein on April 26, 2011 at 6:38pm

Great article Charles, but like most things in this business when it comes to making strides for improvement, nothing really seems to improve. Or if it does improve, it won't be long before it's back to the original issue. It's like using one of those leaf blowers...You clean one area, and before you know it, it's dirty again. After a while, you just except that the area you want the leafs removed from will soon be "Leafy" again.

It's just like the "Road to a Sale." We all know that you need to do the steps without shortcutting. The sales manager might come down on the salespeople for not going through the steps, and there might be an improvement for a short period of time. But after awhile, the salespeople are back to shortcutting. 

T.O.'s are another example and I could go on and on. So I think the real question is, "How do you make changes so that they stick, and become part of the process 100% of the time?

 

 

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