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Rick Wegley

Groundhog’s Day at the Dealership

ground hog marmot day portrait

Most of us wake up every day in the same place, listening to the same sounds. We follow unchanged routines as we prepare for the day ahead. If a friend were to ask you about your life, you’d probably shrug and say, “Eh, nothing much’s happening.”

But that rut takes a toll. I know that when my life starts to feel mundane, I can let the passion for what I do wane. You’ve felt it, too—that moment when your ability to think creatively and your normally supportive personality slips away.

Our frustration with everyday life can cause anger. We stop helping others to serve our own selfish needs, thinking that will solve the problem—and, yet, we’re still lost. Why? It’s because our passion and creativity were born from helping others. And, trust me, when you lose that passion, it profoundly affects your life on the job and those around you.

Groundhog’s Day at the Dealership

I remember when it happened to me. After several years of consulting, I was starting to feel like Bill Murray in Groundhog’s Day. Do you remember that movie?

The plot always resonated with me. Murray plays Phil Connors, the salty weatherman who finds himself stuck repeating February 2 over and over again. At first he’s pretty angry and self-destructive, but caught repeating the daily loop, he finally discovers fulfillment in helping others.

After several years of dealership consulting in the field, the repetition of my work was starting to get to me. Then, like Bill Murray’s Phil Connors, I realized the true value of service.  If I wanted to make significant change happen in a dealership, I had to commit to making a difference in someone else’s life. I had to actively decide to move beyond the day-to-day repetition I was experiencing and choose instead that I was going to adopt a meaningful and positive attitude that would encourage others.

Just like the movie, I only had a day at each dealership to make all of the pieces fit together and help the customer. In order to do my job well, I needed to use that limited time to inspire my clients and foster their passion for change.

When I redirected my focus on the assistance I was providing my clients, my attitude dramatically improved. I found my creativity had returned and the passion for my work not only alive and well, but deepened into a calling. It’s all about helping others.

Escape from self-serving patterns  

One day the repetition of your work is going to get to you. You’ll experience a personal Groundhog’s Day, and feel trapped in a world you created—and you’ll most likely feel like what you do makes no difference to anyone. It will be, in a word, horrible.

But when that happens, think about all of the things that you can do for others that will inspire them. Challenge yourself to work in service others, not just in service of your career goals. When we help others achieve their goals, or inspire them chase their dreams, there is a multiplying effect—one that fuels the fire and creativity in others—that in turn fulfills our own lives.

In any long-term career—whether in automotive or another field—you’re going face times of frustration in your work. How have you rediscovered your passion for work? Did you, like Rick, discover meaning from helping others? Tell us your story.

Permanent link to this article: http://blog.ncm20.com/2016/02/groundhogs-day-at-the-dealership/

Rebecca Chernek

Turbocharge Your Profits by Extracting the Sales Bottleneck

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Everybody knows that bottlenecks are the killers of progress and productivity. Where there’s a bottleneck, there’s a problem! Unfortunately, the vast majority of dealerships aren’t aware that their biggest bottleneck—the one that exists between sales and F&I and brings things to a crawl—can be removed. How? By seamlessly integrating the two.

Getting to the Root of the Problem

Consider how many customers these days are flocking to third party platforms like TrueCar. The reason for this is easy to understand. Buyers have grown tired of the century-old model of traditional auto sales. They want transparency and straight talk. And when given the opportunity to participate in a buying process that offers this—especially a car buying experience that doesn’t require them to sit in the dealership for hours on end waiting for financial approval—they’re only all too eager to snatch it up!

So what’s the best way for dealerships to combat this? It’s certainly not to go on the offense against the likes of TrueCar and Carmax. They’re only offering a service that people want. Instead, the answer is to look within and to take decisive action to enact changes that will bring your dealership up to speed with the most highly performing auto sellers on the planet.

It Takes Two to Tango!

As with all collaborative efforts, the success of my approach hinges on teamwork. Without cooperation between sales managers and F&I managers, success simply will not happen. This is why I urge dealerships to have the departments to work together. It isn’t always an easy task to break tradition, though, so I often recommend that representatives from both attend a retreat or workshop together. Not only does the experience build camaraderie, but they learn how to communicate about the issues related to both their divisions. And, once everyone gets on the same page and stays there, you can start seeing results!

Key Elements for Desking and F&I Success

Once everyone is operating as a team, you much consider what you want them to do. The approach you take will vary by your product and marketing, but I recommend that all dealers consider these essentials when combining the two:

  • Establish credit criteria early in the sales process. Among one of the most important changes any dealership can make to their approach is to start talking credit scores long in advance of negotiations, and well before the customer decides on a car to buy.
  • Determine the best time to talk payments. Is it something best discussed up-front in sales, or is it a conversation more suited to the F&I office? When it comes to selling vehicles, there’s no room for ambiguity here. You need to decide how sales and F&I can position you for success in menu presentation and improve profit.
  • Identify “The Interview” and clarify why it is so important. An essential component to expediting the sale (and, in turn, cutting delivery time in half) is something I call “The Interview”—a question and answer phase that starts at the initial meet-and-greet. This includes having the F&I manager engage in conversation with the customer early on in discussions to learn the reasons behind potential low credit ratings and slow pay histories. What’s the best way for this team to determine customer creditworthiness and plant the seeds for menu sales further in the process?
  • Getting the paperwork straight the first time. Sending a customer into F&I with an incomplete deal checklist and no idea if they will be approved for credit is one of the principal contributors to the dreaded bottleneck. In my workshop, participants will gain an understanding of the importance of getting paperwork right the first time.

Ready to solve your Desking and F&I bottleneck? Join Becky Chernek for her upcoming NCMi® class, Desking and F&I Integration. In this workshop, you’ll learn how to develop a seamless customer transition that results not only in happier customers, but also in dramatically improved sales and profit.

Permanent link to this article: http://blog.ncm20.com/2016/01/turbocharge-your-profits-by-extracting-the-sales-bottleneck/

NCM Institute

Profiles in Leadership: Building the Ledezma Legacy

We recently caught up with Amanda Ledezma, General Manager at Cable-Dahmer Chevrolet in Kansas City, Mo. The second generation to work with NCM Associates, we asked her to talk about creating a family legacy in the automotive industry and what it takes to be a leader.

How has NCM helped your family build a legacy? Tell us below. 

Permanent link to this article: http://blog.ncm20.com/2016/01/profiles-in-leadership-building-the-ledezma-legacy/

Chelsea Magee

Intimidated by digital marketing? Don’t be!

mobilesite

It doesn’t matter what amazing deal, video or article you have, unless someone sees it! That’s why digital marketing is so important. It drives traffic to your website, and that traffic to your website drives leads to your CRM. Sounds easy and not super complicated, right?

It all starts with search

Fortunately, Google wants it to be that way. Most traffic starts with search. After all, whenever someone has a question, what’s the first response?  I ALWAYS say, “Just Google it!”

Your customers use Google to look up certain vehicles, your dealership reputation and much more. In fact, the search engine giant receives more than 3.5 billion searches per day. A solid digital plan makes their searching easy and quick, like a drive thru window.

You don’t need a web developer

So often, I find that dealerships think digital marketing is a super complicated thing. Many are concerned that they need to have—or hire—someone with extensive technical knowledge, like a website developer. You’ll probably be surprised to read that the best online marketing strategies aren’t about understanding computers, but understanding people!

People are the secret to digital marketing

Expanding your online presence starts with learning what online shoppers expect so you can get consumers’ attention.

Think about what grabs your attention at drive thru windows. Is it the price? Probably not—it’s about the tantalizing photos and descriptions. Digital marketing is about offering the right content, images and offers in the right places. Once you understand how your customers interact with the web, you can identify the best mobile strategy, website design, and social media presence. Then you learn how to use performance metrics to gauge your results. This part is a little technical, but with many resources to guide you, you don’t need to worry!

You can do this

Really, the biggest takeaway I want you to get from this blog is that digital marketing isn’t all that different from skills you already have: understanding what customers need and knowing how to talk to them. It’s just that you’re doing it in a different way. When you focus on people, not the technology, you can see that the digital landscape is really all about relationship building … with a few extra bells and whistles!

Join Chelsea for Kain Automotive and NCMi course, How to Lead in the Digital Marketplace, for more actionable insights and strategies for digital marketing.

maximize_cta

 

Permanent link to this article: http://blog.ncm20.com/2016/01/intimidated-by-digital-marketing-dont-be/

NCM Institute

Developing the right pay plan for service advisors

Mechanic wrench tool

Last week, George Gowen wrote about the importance of service advisors to retaining your customer base (Miss it? Check it out.) This naturally leads to the question: How much should I be paying them?

Taking Stock of Service Advisor Pay

Before you make any decisions about your dealership’s pay plan, you need to carefully evaluate the current market, as well as your budget constraints. In general, NCM recommends that you consider the following questions:

1.     What’s your philosophy towards advisor compensation?

2.     What’s the right amount to budget for advisor compensation?

3.     Should advisor productivity affect advisor compensation levels?

4.     In addition to monetary compensation, what other elements do you want to include in a well-balanced advisor pay plan?

What’s your philosophy towards advisor compensation?

Most dealerships have begun to view their service department as a “selling” organization, not just a “fix it and smile” division. When you take that philosophy, your compensation plans must focus on sales activities and results. To achieve this, your advisors will need to improve their customer R.O. transactional quality while decreasing their customer R.O. transactional quantity. This could result in the need to add more advisors.

What’s the right amount to budget for advisor compensation?

When it comes to service advisor compensation budget, NCM recommends using 12.0% of department gross (before any parts gross transfer) as the metric for budgeting service advisor compensation. This budget guideline may vary sometimes—a little higher for domestic franchises and a little lower for luxury franchises—but relating compensation to performance is an important step. And, remember: budgeting refers to how much you should pay, while structuring refers to how you could pay.

Should advisor productivity affect advisor compensation levels?

Advisor productivity is a critical component of compensation. You must clearly define this connection, and let your service advisors know that their income will be dependent on it. Set expectations and get their commitment to this approach. After all, it’s advantageous to them: an advisor with high transactional quality and CSI, could earn as much as 14% of the gross he/she generates; meanwhile, an advisor with below average transactional quality and CSI, might earn as little as 10%. When your service directors understand this, they will do what’s necessary to improve their pay.

What other elements do you want to include in a well-balanced advisor pay plan?

This is harder to answer. Here’s the thing: there is no “one size fits all” solution to automotive pay plans. What works brilliantly for one dealerships may be an absolute disaster in your shop. Each dealership has a different business culture that impacts pay plans. And your franchise requirements, personal priorities and state and local laws will all significantly influence the decisions you make on pay plans.

Structuring Service Advisor Pay Plans

While you must keep in mind that every dealership is different, here are the general recommendations that NCM has for any service advisor pay plan:

 

1.     Service advisor pay plan structure should be 100% incentive based, with a reasonable underlying guaranteed draw against commission.

2.     As billable hours is the force driving service and parts profitability, the main determinant for pay should be Hours Billed per Individual Advisor per Month, with $x.xx paid for each hour billed, in all labor categories. We’ve seen this as a stand-alone compensation metric, as well as combined with either customer effective labor rate or hours per customer R.O., sometimes both. This category might represent 55% – 70% of the plan structure.

3.     CSI Performance is usually the next element. The advisor should be rewarded for achieving world-class service. The payment can be quantified as “an additional $x.xx paid for each hour billed” (see #2, above). Depending on how much manufacturer money is tied to CSI, this category might represent 10% – 20% of the plan structure.

4.     Next up are the Spiffs and Incentives, which cover such things as: (a) Parts Sales per Customer R.O.; (b) Customer Effective Labor Rate; (c) Menu Closing Percentage; (d) Tire Sales; (e) Service Contract Sales; (f) MPI (ASR) Closing Percentage. The payment might be quantified as an additional $x.xx paid for each hour billed (see #2, above), as a flat amount or as a per item amount. This would represent approximately 15% of the plan structure.

5.     The final category is a Team Incentive based on Percent of Total Monthly Shop Hours Objective Achieved. The intent here is to have all service and parts personnel focus on one number—total shop production capacity— throughout the month. Their goal is to achieve or exceed full capacity operations. You may quantify the payment as an additional $x.xx paid for each hour billed (see #2, above) or as a flat amount. This should be about 7% – 10% of the plan structure.

Pay plans are tricky. What successes have you had in creating and implementing pay plan changes? Tell us below.

 

Permanent link to this article: http://blog.ncm20.com/2016/01/developing-the-right-pay-plan-for-service-advisors/

Jessica Kain

Three Tips to Improve Your Digital Marketing

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Are you spending a lot of money each month on your digital marketing and internet operation but not getting the return on investment you want? It’s a common problem.

Without the right plan, marketing investments fail

Every day, dealers spend thousands of dollars to improve their website, do search engine marketing and buy every lead source and product in the market. Sadly, though, most dealers struggle to break even on their investments— their close rate is poor and morale broken!

Understand how clients shop to improve your marketing

None of us can argue that 100% of our opportunities come from our marketing; however, all of our results come from having an effective and fail-safe process. Process and communication tactics are not always the shiny objects that dealers chase or want to talk about, but they are the only way we will meet and surpass our goals for our internet operations.

When creating your tactics, remember that the internet has changed the way we all live and operate. And, especially for auto shoppers, the wide availability of information about products has made customers extremely smart and selective buyers.

3 ways to immediately improve your digital marketing

Fortunately, you can capitalize off these trends and make an immediate improvement to your digital efforts with the right strategy.

Here’s what I recommend:

1) Go where they are. There are more than a billion websites, so discovering where your clients spend their time and putting your marketing there is key.

2) Recognize the wealth of information available to them. Buyers research—a LOT— before making a purchase. Your marketing should speak to them respectfully and give them information they need.

3) Be real. Social media plays a large role in the purchasing decision, with most people relying on their social networks to guide their choices. Don’t be afraid to include social media in your marketing mix, but be critical about choosing the right channels and voice for your dealership.

 

If you or your team members are looking to improve your internet or BDC operation for the better, then please join the NCMi and Kain Automotive for a workshop on Mastering Internet Sales. We will provide you with an understanding of today’s digital-savvy customer and how to really read the leads that hit your system. Working together, you’ll learn a proven, fail-safe process to improve digital marketing, and come home with the best communication tactics to engage your customers. The basis of this course is to set your dealership up to better connect, appoint and sell today’s internet shoppers.

Permanent link to this article: http://blog.ncm20.com/2015/12/three-tips-to-improve-your-digital-marketing/

George Gowen

Who’s your dealership’s MVP? The answer may surprise you.

Auto Mechanic

Take a look at what department affects your business the most. I know— “Nothing happens until a car is sold!”—is the answer heard the most. But what department has the most contact with your customers? Where is the opportunity to create customers for life? And which department displays your culture to your customers most often?

So who is the MVP? I’ll give you a hint: It’s not in sales.

The average salesperson sells 10-15 units a month, while a service advisor sells service to 15 customers EACH DAY! Now consider the relationship of sales dollars to gross profit dollars: Who can create 70% or more gross to sales from an inventory that has no holding costs?

Customer retention happens in the service department

Now, let’s look at the one position in your business that’s most influential in building loyal customers. A salesperson’s ability to retain that customer cannot be discounted, but often, little to no effort is made to improve retention. And there’s certainly little done on a daily basis. The service advisor, however, can make or break your relationship with the customer dozens of times each day.

Create an outstanding service culture

What people within your organization have the most opportunities to create “WOW” moments? Who displays the culture of your store to the most customers daily? Who creates the most “customers for life”? So where should you focus your training, coaching and motivating? That 80/20 rule comes into play here.

Go spend time in the service drive and see who wins your MVP!

What do you think—is customer retention made or broken in the service department? What strategies have you implemented to make the most of this relationship with the customer? 

Permanent link to this article: http://blog.ncm20.com/2015/12/8089/

Lindsey Quinn

Holiday Wishes from NCM Associates

It’s the season of good tidings and cheer! So, we asked NCM Associates to share their Christmas wishes with us.

Our biggest wish? That you and yours have a wonderful holiday season and a happy new year. 

Permanent link to this article: http://blog.ncm20.com/2015/12/holiday-wishes-from-ncm-associates/

Lindsey Quinn

Automotive pay plans that work: 4 elements for success

Bundle, Money Roll, Currency.

Developing an effective compensation strategy is an ongoing issue for most dealerships. You need a plan that drives solid performance from Sales. And you want to motivate employees … but you can’t afford to overspend for the market. So, what do you do?

NCM’s experts always advocate keeping pay plans simple and making sure that the criteria you select allow employees to track their earnings on a daily basis. Choose items that are under the direct control of the employee—after all, they can’t develop buy-in without feeling a sense of ownership!

Whenever possible, NCM believes you should limit automotive pay plans to four criteria. Here are some examples:

1. Volume

  • Unit deliveries for salesperson
  • Same‐store sales and/or market penetration for Department Manager
  • Hours sold for Service Advisor
  • Total hours produced by Service Department for Back Counter Parts Person

2. Margin

  • Income per delivery for F&I Producers
  • Effective labor rate for Service Advisors
  • Gross profit percentage for “Front” Counter Parts People
  • Controllable profit for Department Managers

3. Customer Satisfaction or Customer Retention

  • Regional or zone average at a minimum
  • Compensation rewards tied to “world class service”

4. Miscellaneous Incentives

  • Immediate department initiatives
  • Specific goals to drive short‐term performance

Sales compensation is a tricky subject for everyone in the automotive industry. Learn pay plan secrets of top performing dealerships in the NCM Institute class, Sales and Management Compensation. And discover how to hire motivated high-performing employees in the first with our class, Finding Top Talent.

Permanent link to this article: http://blog.ncm20.com/2015/12/automotive-pay-plans-that-work-4-elements-for-success/

Brent Carmichael

Three Steps to Structure Profitable Car Deals

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This time of year isn’t the just about the holidays, it’s also about collections. The last two months of the year definitely seem to be the toughest months of the year to collect. November and December are challenging sales months for some dealers, too—at least for those who don’t start their tax season promotions a little early.

So, whether you are concerned about collecting or about meeting sales goals, there are good reasons to make sure the deals you do make are well-structured. Here are three tips to make that happen.

1. Choose the right term and payment

A sound deal starts with the term. Your deal has to make sense. A low ACV unit on a long-term just because we got a good down payment? That simply doesn’t work. Not because the car won’t run the note, but because the customer won’t run the note. Fewer than half the deals we put on the books in the BHPH industry go to term. Almost a third will charge off, and another 20% will pay off early either through our effective repeat programs or from our competition.

Term should be dictated by two factors: What the customer can afford, based on their verified net income, and your appetite for exposure. If the customer can afford a $300 monthly payment and you are only comfortable with a 30 month term, then that customer’s total contract can only be $9,000. So, you can sell that customer any vehicle on your lot as long as they leave owing you no more than $9,000 in principle and interest.

Obviously, because payment is an integral piece of establishing term, it’s also an important factor in a sound deal structure. What we are looking for here is the same as term. The payment date has to be logical. Payment should be due when the customer gets paid and on their next available paycheck, barring any deferred downs.

Allowing a BHPH customer to go 30 days without a car payment without a deferred down is asking for trouble. We know our customers have had issues with budgeting money in the past, why not help them budget better by starting their payment right away? And, to help them even more, have their payment scheduled for the day they get paid. It’s an easy reminder: get paid; make payment.

2. Select the right rate and add-ons.

Interest rate is the next aspect of deal structure. Now, before I get hate mail, I’m not suggesting you shouldn’t profit from your state’s usury limits. But, I am saying that you may need to adjust this expectation depending on the term and payment deal structure. Yes, interest income is our reward for the risk. However, if the overall deal structure doesn’t make sense, your ability to collect your reward will greatly diminish.

Back end or add-on products are similar to interest in the overall scheme of deal structure. While they are great profit generators, their addition to a deal can effect payment and term, not to mention cash flow.

It’s a balancing act. You have decided how you want to divide the money you collect from the customer. Will it go to principle and interest in order to reduce your risk and increase your reward? Or will it go to recoup cost in a product?

3. Use common sense to help the client pick the right vehicle.

You can’t forget the customer in the deal structure. Yes, the term, payment, rate and additions are all critical to the hard business aspects of the deal, but you need to keep an eye on what they are buying.

Let me give you an example of a deal I came across during a consulting visit. A single mother with four children, two of whom required car seats, was allowed to purchase a Chevrolet Camaro. When I asked the dealer about it, he responded that the customer could afford the payment based on his criteria and the term was within his criteria. Okay. Yes, both of those do make sense, but common sense should tell us the deal doesn’t make sense. Sure enough, the owner wanted to be traded out of the vehicle within the first year because it wasn’t big enough.

Moral to the story? The overall deal structure has to make sense not only for you the dealer, but for the customer, as well.

Bringing it all together: Make the right deal

So, let’s review three main steps you need to take to create the most profitable deal structure.

  1. Term should be dictated by your exposure comfort level.
  2.  Payment needs to fit the customer’s financial ability. Interest and add-ons need not dictate the term and payment; instead, term and payment should impact how you set up interest and add-ons.
  3.  Not only should the vehicle fit not the customer’s financial needs, but it must meet their physical and lifestyle needs, as well.

Does your dealership face challenges collecting during the holiday months? How have you addressed it? Tell us below. 

Permanent link to this article: http://blog.ncm20.com/2015/12/three-steps-to-structure-profitable-car-deals/

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