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Category Archive: General Management

NCM Institute

#AskNCM: What is the Key to New Vehicle Success?

Used vehicle sales, service, and customer retention suffered in the wake of increased sales in the new vehicle department. As the economy ebbs and flows, we see the tides shifting; now the new vehicle department is beginning to suffer. How do we keep every part of the business profiting?

NCM Institute instructor Robin Cunningham gauges the situation and pinpoints what it’s going to take to keep your new vehicle department afloat in our ever-changing market.

Have another question for Robin or the other #AskNCM experts? Leave a comment below!

Permanent link to this article: http://blog.ncm20.com/2017/08/askncm-what-is-the-key-to-new-vehicle-success/

Lycia Jedlicki

WHO Thinks We’re Overpriced?

Torso of a businessman standing with folded arms

I recently held a luxury brand parts and service manager 20 Group meeting, and one of the parts managers was proud of the fact that his counter gross retail percentage had increased by 3% that quarter. When the group asked how he achieved this, he told them something that stunned the room. He had reduced his pricing so his employees would stop discounting and overriding parts prices for their customers.

In the past, when his employees saw the cost of the part, for example, $1.25 for a fuse, they thought it was entirely inappropriate that the dealership marked it up and charged the customer $8.00. However, before you yell, “Fire that parts team,” realize that this is happening all over YOUR dealership and you may not even be aware. Many times, employees take it upon themselves to “right the wrongs” or “cheat” in business, so they can make the sale, reach the goal, gain the customer, or earn the SPIFF. Fostering an environment of open and honest communication, appropriate encouragement to meet goals, and a little room to make decisions to sink a sale can make all the difference.

The 20 Group proceeded to ask the parts manager if he thought the customer was going to leave their dealership without purchasing the fuse because it was $8.00. I’m willing to bet the answer is “No.” This scenario led me to remember an article I had just seen that says, “We are not going to be the least expensive, we are going to be the BEST and deliver the BEST experience possible.” Instead of the parts counter person discounting the part to $4.50, or another “acceptable” amount, he/she could say to the customer, “Let’s take this fuse out to your car and try it, just to make sure it works before you buy it.” I guarantee the customer would be pleasantly surprised and wouldn’t think twice about paying $8.00 for the fuse. Your employee ensured it worked correctly and solved their problem before they left our parking lot, so why would they question it? Taking the extra time to qualify the sale and genuinely help the customer has been linked to increased customer retention. As a consumer, don’t you enjoy shopping at and returning to businesses who care about you and your reasons for buying?

We also need to remind our employees how many complimentary things we do for our customers. Coffee and food in the waiting rooms, topping off vehicle fluids, safety inspections, car washes, battery checks, rental cars, shuttle services … the list is endless. Remind your employees of the value your dealership offers so they can project this value onto customers during the sales process. Instruct them to point out the complimentary amenities and casually offer them whenever possible. Emphasizing the value of a product or service, and the value your business brings, is another helpful retention strategy and continues to build the business/customer relationship.

Let me leave you with one last scenario: you hire a rookie salesperson and do a great job training him or her, and what do they do? They do exactly what you taught them to do. They sell the oldest vehicle for the most amount of money and retain a happy customer. 2017 is the year to train our employees to be the best, demand it even, to ensure both our businesses and team members thrive, and our customers leave happy and keep coming back. Which dealership do you want to be? The least expensive? Or the best?

Help your team become the best with training from the NCM Institute and membership in a manager 20 Group like Lycia’s.

Permanent link to this article: http://blog.ncm20.com/2017/08/who-thinks-were-overpriced/

Joe Basil

NCM Case Study: Five Successful Dealerships Regain Lost Net Profit

Portrait of call center worker accompanied by her team. Smiling customer support operator at work.

I’m going to make it crystal clear. Your net profit is sitting right in front of you, and it walks right past you (and out the door) every day! Let’s get it back.

During my years in business, I’ve observed that 80% of the dynamics that impact a business or industry originate outside its four walls; however, 80% of the forces that impact the dealership’s profitability originate inside them. It’s my opinion that your increased profitability walks in and out of your dealership every day and right in front of your eyes.

Five case studies: regain lost profits with simple changes

Your opportunities for increased net profit are in every step of your customer transaction management process. The gap or disconnect is that some dealers and managers can’t see it, even though it’s right in front of them. Here are some specific examples from some of my NCM 20 Group and consulting clients who have discovered big profits from small changes.

1. The BDC conversation turnaround

A used vehicle manager observed his business development center (BDC) customer-contact phone calls. The business development representatives (BDRs) were making their 100 calls per day; however, the tone of the calls was flat and lacked sincerity. The calls could have been made by a computer; they were so impersonal.

Once he brought it to the attention of the business development manager (BDM) and they did some training, his appointment show ratio began to climb. Just imagine how many deals the dealership had already lost before this simple change!

2. Lead with the winner

During a pre-owned digital merchandising review, our NCM 20 Group noticed a photo of a clean 2013 Silverado crew cab pickup truck with 9,000 miles on it. It was a great vehicle, but at over $36,000, it was priced exceptionally high for the market.

Three or four photos later—buried in the vehicle description—the dealership showed that the Silverado was a handicap/wheelchair accessible vehicle! Not only that, but a little research revealed to us that a new one would cost between $67,000 – $69,000. The vehicle was priced under market for an accessible truck, but it couldn’t find buyers because of the poor photo choices and lack of relevant keywords in its description.

Take a look at your digital merchandising. How many of your vehicles are overlooked because of simple mistakes?

3. Walk around for more profits

During a training session with service managers, I asked how many of them do walkarounds on customer vehicles in the service lane? All nine raised their hands. Then, I asked how many do walkarounds on 100% of customer cars, 100% of the time? Only three out of nine said yes!

Insist that each and every vehicle get a walk-around. Every time your team skips one, you’ve missed flat rate hours and parts sales that are just waiting for you in the service lane.

4. The difficult customer hand-off

In a general sales manager meeting, we were discussing the customer handling process in the BDC and the sales desk’s involvement. One sales manager discovered that when the BDR got stuck with a customer, they just chalked it up as a difficult customer and moved on to the next one, missing out on opportunities to set the appointment.

The sales manager changed the system straightaway. Now, when a BDR gets a difficult customer, he or she turns them over to a sales manager. Their show rate and close rate increased immediately.

Think about your BDC and sales deck system: How many deals have you lost over the last six months because your BDC and sales desk weren’t well connected?

5. The sales hot spot

A used car manager began paying close attention to his vehicle details page (VDP) activity and the sale of the related cars. Every day, he shared the top five VDP activity vehicles with his salesforce, requiring each salesperson to select one of the top performing VDP vehicles. They were required to make sure it was clean, ready to demo, and parked in a “hot spot” on the used car lot.

The UV team quickly upped their closing ratio on these cars by 25%. It makes me wonder just how many used vehicle customers we “unsold” because we didn’t have the car ready for the customer to demo.

Awareness improves profits

I think these five mini case studies demonstrate how small changes in your dealership can quickly result in improved profits. Take a good long look at your customer transaction management process and discover your own plentiful opportunities to make the most of the customer traffic flow you already have!

Discover how Joe Basil and his NCM colleagues can help your dealership through 20 Groups and in-dealership consulting.

Permanent link to this article: http://blog.ncm20.com/2017/06/ncm-case-study-five-successful-dealerships-regain-lost-net-profit/

Adam Robinson

Will Graduating Millennials Want to Work for Your Dealership?

Diverse International Students Celebrating Graduation Concept

In just a few short weeks, countless new college graduates will be entering the workforce, actively seeking job opportunities in a variety of industries and positions. In fact, during the 2016-17 school year, colleges and universities are projected to award nearly 4 million degrees.

This surge in the candidate pool will be made up largely of millennials, who come with their own set of expectations and needs from an employer. This means they will be vetting potential companies just as much as they are being vetted. Will your dealership look attractive to them?

Unlike their predecessors, millennials are interested in working with companies they feel a connection to, that will give them a sense of purpose. They also want to know there will be room for advancement within the company throughout their career and place value on flexibility and a steady income.

Here are some key elements your dealership can focus on to help ensure it stands out to top-tier prospective employees:

Employer Branding

Now a requirement for grabbing the attention of today’s top talent, employer branding reflects a company’s reputation as an employer and how great a place it is to work. Because millennials are looking past the paycheck for enterprises they feel align with their values, it is important your dealership has a good reputation with both your customers and employees.

You can give potential employees an understanding of your company’s message through your website’s career page, which should contain details of your business beyond the typical description. Let prospective candidates know how your dealership is involved in the community, what initiatives are on the horizon, and highlight special perks of the job. Take it a step further and be active on your social media platforms, spreading your dealership’s message to your audience and encouraging them to do the same. Fostering a healthy work environment will also make your employees more likely to share the positives of working for you on their own, lending further credibility to prospective candidates.

Pay Plans

Millennials today are not fans of the traditional commission-based payment models dealerships have employed for decades, instead wanting a consistent, guaranteed income. The pay plan must be worth their while financially to appeal to millennials. Rather than an “all or nothing” approach to sales, dealerships are encouraged to consider offering a starting salary with bonuses along the way. Employees will be able to enjoy peace of mind, which results in an increased chance of your dealership retaining them for a longer period. What’s more, the customer experience improves because the salesperson focuses less on making the sale and more on genuinely meeting client needs.

Dealerships that have recognized the changing landscape, and reacted accordingly, have seen positive results for both their employees and customers. The elimination of the pressure to make a sale has allowed for a more relaxed approach to interacting with the client. Sensing the shift in salesmanship, customer loyalty and trust in the dealership tends to improve as a result.

Career Fairs

We highly recommend that dealerships attend, and even host, career fairs to become top of mind for upcoming graduates. By making students aware of their options before graduation, potential candidates can begin looking at your dealership and taking the necessary steps to be ready for employment consideration as soon as they earn their degree. Through hosting and attending these fairs, your management team will have the valuable opportunity to meet potential candidates in person right away, allowing for informational interviews that can save time and money on a formal vetting process when these candidates are ready to apply.

Career fairs save you time because rather than waiting until after graduation to begin the tedious job search, spending countless hours on cover letters and filling out applications, the right candidates can go directly to your dealership first, providing you with a larger pool for consideration in a shorter amount of time.

Internship Programs

Implementing internship programs at your dealership has a number of benefits, including the ability to test drive the talent, increased productivity, and an increased employee retention rate. Not only will your dealership be front and center for a new graduate, but you will also have the time to train and mold a potential employee long before he or she is ready for full-time employment, giving both the employee and your dealership a head start. This approach saves money and time in bringing a new hire up to speed and helps ingrain a prospective employee into your team and culture ahead of time, allowing them to hit the ground running once officially employed.

Internship programs can be tailored to your company requirements, ensuring you train students for positions your dealership may need most, using the strategies and tactics that translate into results for your demographic and marketplace.

By placing emphasis on what millennials are looking for from potential employers, your dealership can become a prime target for the fresh wave of college graduates polishing their resumes this summer, giving you the opportunity to not only attract the right talent for your team but also to retain them for years to come.

Thanks to NCM Associates’ partner, Hireology, for sharing their guidance on attracting and managing millennial employees. Learn more about Hireology and join NCM’s experts for more actionable advice on hiring the best people for your team in our Hiring Top Talent and Success-Driven Pay Plans classes.

Permanent link to this article: http://blog.ncm20.com/2017/05/will-graduating-millennials-want-to-work-for-your-dealership/

NCM Associates

#AskNCM: Three Simple Solutions to Employee Retention

Employee retention is an ongoing challenge, particularly in the automotive industry, and we receive lots of questions about this hot topic. Given that 80% of dealership employees churn within 18 months, retention is clearly something we need to address.

NCM expert Robin Cunningham explains the three elements to improve employee retention in this new #AskNCM video. And, while pay plans play a role in keeping good people, it’s not quite as important as you may think.

Have another question for Robin or the other #AskNCM experts? Leave a comment below!

Permanent link to this article: http://blog.ncm20.com/2017/05/askncm-three-simple-solutions-to-employee-retention/

Steve Emery

6 Steps to Control Dealership Expenses

NCM-CD-413 (3)

While most of your managers are driven by sales and gross, volume doesn’t necessarily equal more profits. If anything, pushing more volume through a bloated expense structure typically yields less net profit. And, if your manufacturer is too optimistic and producing excess cars with high volume goals, you face even more problems. Expanded production challenges your gross and leads to increases in the “Big 3” expenses: sales compensation, advertising, and floor plan.

Get a better handle on dealership expenses to make the most of your sales opportunities with an expense review. It’s a fast way to see how you are spending your money and to find the areas where you can cut back.

The Expense Review Process

  1. Get organized. Pull a list of every vendor and get all of your contracts in one place. Categorize your expenses and assign responsible managers. Make “spending management” a top priority for your office manager/controller/CFO.
  2. Vendor review. Sit down with your management team and determine which vendors provide overlapping services and can be reduced or eliminated. Identify vendors that provide services with minimal or no added value for your business and eliminate them as well.
  3. Vendor list. Designate a “preferred provider” in each of your expense categories. These firms may not offer the lowest cost, but they should all offer best-in-category services or products for your dealership. Once the management team has agreed to the preferred vendors, publish the list for staff use.
  4. Purchasing policies and approvals. Limit changes to the Preferred Vendor List and commitment authority (contracts, purchase orders, invoices) to as small a group as possible.
  5. Usage reviews. Usage and process reviews will often reduce your costs more than the negotiating of new pricing. To get started, review all transactions from the last six to 12 months and identify expense categories tied to sales, such as units, services, and parts. Pulling this information can be time-consuming, but if you’re already using LiveAudit it should go pretty quickly. If not, you’ll need to set aside time to get your financials in order. In most cases, dealerships use a vendor item/service when selling something (e.g., credit card processing), so ask yourself, “What are the processes behind each usage?” Evaluate each process: Are you wasting items or needlessly using services?
  6. Sourcing. Organize your contract bids on a calendar according to how far out you need to get competing bids. Nothing is more effective than a good old fashioned RFQ, or Request for Quote, to identify the highs and lows of the marketplace and your target pricing.

Find opportunities and make the most of them.

Try giving every manager a goal to cut monthly expenses by a dollar or percentage amount. Consider giving a bonus to whomever can cut the most. And at your managers’ meetings, have each manager bring an idea to cut expense for a particular item or department.

Learn more about Steve Emery and how he and his NCM colleagues can help your dealership through 20 Groups and in-dealership consulting. Also, check out LiveAudit for seamless, intuitive expense tracking power!

Permanent link to this article: http://blog.ncm20.com/2017/05/6-steps-to-control-dealership-expenses/

NCM Associates

#AskNCM: Are all dealerships losing employees over working hours?

How many hours do your employees work on average? Is it too much? Too little? Are they even working while they’re at work? Expert Robin Cunningham shares his observations about the ways successful dealerships are scheduling their employees.

Have another question for Robin or the other #AskNCM experts? Leave it in a comment below!

Permanent link to this article: http://blog.ncm20.com/2017/03/askncm-are-all-dealerships-losing-employees-over-working-hours/

NCM Institute

Behind-the-scenes: GMEP Graduates Celebrate their Achievement

NCM recently celebrated with our newest group of General Management Executive Program (GMEP) graduates. Catch a glimpse of all the fun!

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Permanent link to this article: http://blog.ncm20.com/2016/02/behind-the-scenes-gmep-graduates-celebrate-their-achievement/

Dustin Kerr

Do You Have a Business… or Just a Job with More Risks?

dealership

When I was operating dealerships in Northeast Oklahoma, there was a little hamburger joint that had some of the best hamburgers and fried squash I had ever eaten. At the expense of my girlish figure, I would attempt to eat at this burger joint about once a week. The odd thing about that burger business is that some days it would just be closed for no apparent reason. Sometimes, it would stay closed for a week or two at a time before opening back up.

We had one of the employees as our customer, and one day, I asked her what the deal was with the restaurant being closed at such odd intervals. She informed me that the owner was elderly and when he was sick or had medical procedures that he would just shut the restaurant down because he had never taught anyone else how to run the day-to-day operations. It struck me that this gentleman appeared to have built a great business with a great product, but in reality, he didn’t have a business, he had a job with more headache and risks.

You may be asking yourself what this has to do with the car business.

Well, since you asked…I recently had the opportunity to attend the NIADA convention in Las Vegas and had the pleasure of meeting a lot of independent car dealers and talking with them about the 20 Group peer collaboration concept. Many of the dealers had no idea what a 20 Group was and were very excited to potentially join a group and learn from others going through the same challenges. Everything was great until I told them we meet three times a year for a day and a half. I heard the same objection over and over again and it went something like this: “It’s all I could do to get away to this conference. I’m scared to death about what’s going on while I’m gone. There’s no way I could commit to three days, three times a year to attend meetings away from my dealership.”

Albert Einstein once said, “The definition of insanity is doing the same thing over and over again, but expecting different results.” The question is: can your dealership afford to continue facing the same challenges without viable, proven solutions?

Just like the gentleman that owned the hamburger joint, these used car dealers did not have a real business, they had a job but with more risks and a lot more headaches. As business owners or upper management, you put in a lot of hours, have a lot of investment at risk, and must overcome never-ending challenges from customers, competition, and regulators. Some people think the best way to manage all those obstacles is to just do everything yourself. It’s not. In fact, trying to manage it all yourself is a recipe for disaster. It is critical to the success of your business and, more importantly, your health, to find or identify people in your organization that can help you run your business when you need to be away, whether that is for a 20 Group meeting, illness, or simply taking a vacation.

Remember, your primary job as a manager or leader is to train and manage activities. If you are scared of what might happen if you had to be away from your dealership for a few days, you might ask yourself “Do I have a business or just a job with more risk and more headaches?”


Learn more from Dustin Kerr:

bhphtraining

Permanent link to this article: http://blog.ncm20.com/2015/07/do-you-truly-treat-this-as-a-collections-business/

Dave Anderson

Building a High Performance Culture (Part 21)

This article is part of a multi-part series titled “Building a High Performance Culture” by Up To Speed Guest Expert, Dave Anderson, of LearnToLead®.

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Words That Hurt: Micromanage

In this post on building a high performance culture, I’m assigning the word “micromanage” to the Words that Hurt column. Micromanagement is an often-misunderstood word, so in this piece I’ll explain what it is and is not, as well as the danger it poses to your culture, people and results.

I’ll dig deeper into micromanage momentarily. But first, quickly review the strong and weak cultural words below so you can conceptualize the ideal culture to move your organization towards, as well as what you must weed out of your culture in order to maximize your organization’s potential.

Words that work and must be woven into culture:

Earn: to acquire through merit.

Deserve: to be worthy of; to qualify for.

Consistent: constantly adhering to the same principles.

Hope: grounds for believing something in the future will happen.

Catalyst: a person or thing that makes something happen.

Responsible: to be the primary cause of something.

Tough-minded: strong willed, vigorous, not easily swayed.

Loyal: faithfulness to one’s duties or obligations.

Passion: a strong feeling or enthusiasm about something, or about doing something.

Discipline: an activity, regimen, or exercise that develops or improves a habit or skill.

Commit: to pledge oneself to something.

Prune: to remove what is undesirable.

Wise: having or showing good judgement.

Diligent: giving constant effort to accomplish something.

Words that hurt and must be weeded out of culture

Fault: responsibility for failure.

Blame: to assign responsibility for failure.

Excuse: a plea offered to explain away a fault or failure.

Mediocre: average, ordinary, not outstanding.

Wish: to want something that cannot, or probably will not happen.

Entitle: a claim to something you feel you are owed.

Sloth: reluctance to work or exert effort; laziness.

Complacent: calmly content, smugly self-satisfied.

Maintain: to cause (something) to exist or continue without changing.

Apathy: a lack of enthusiasm, interest or concern.

Interest: to be curious about. (as opposed to being committed).

Foolish: lacking good sense or judgment.

Micromanage is defined as “to control with excessive attention to minor details.” Here are seven thoughts on micromanagement and how it will influence your culture.

1. Holding people accountable for tough standards is not micromanagement.

It’s important to note that there are a handful of things within a culture that are not up for debate, must be held in a iron grip, and thus may be wrongly perceived as micromanagement. Managers who are diligent in holding others accountable for living company values and following prescribed processes are often erroneously accused of being micromanagers. This reflects a failure to understand that micromanagement involves “minor” details, and values and processes are major matters and must be vigorously enforced and upheld.

2. Making every decision, solving every problem and having all the ideas are signs of micromanagement.

You’ve conditioned people to count on you so heavily they cannot think for themselves. Micromanaged people lack passion and tend to play not to lose.

3. Over-involving yourself in others’ jobs, especially in areas where you have little expertise, may constitute micromanagement.

While your authority allows you to set clear expectations and deadlines for results for the various aspects under your charge, you err when you then nitpick and continually second-guess those responsible for producing the results throughout the process.

4. If you hire the wrong people you’ll have to micromanage them.

This is a sad truth, because it’s foolish to empower incapable or corrupt people with latitude and discretion and expect anything positive to come from it.

5. Micromanagement is a primary de-motivator for top performers.

High achievers resent having to check with you for everything. They feel that their past performance should earn them the trust to move faster and with less supervision than less-proven team members.

6. Micromanagement works in the short-term.

It’s always easier to personally make a decision or perform a task than to teach someone else how to do it. But this strategy causes you to plateau, and stunts the growth of others over the long haul; you become overwhelmed doing too much personally, and others never get to try new things or venture beyond their comfort zone.

7. Micromanagement is rooted in pride and to a large degree, insecurity.

Micromanagers feel that if someone else performs tasks or makes decisions without their involvement it makes them less important. They may also feel that “if they want it done right they have to do it themselves”, overestimating their own abilities while they sell short the potential of their teammates.

In summary, micromanagement overwhelms you, demotivates others, and creates an oppressive culture.

Face it: if you’ve hired people who must be micromanaged that’s your fault; if you don’t train people to do their jobs more independently, that’s your fault; if your ego doesn’t allow you to empower others, that’s your fault. Are you seeing a pattern here? The good news is that you can fix what is your fault. The bad news is that most micromanagers are too full of themselves, or busy doing everything themselves, to even bother trying.

Permanent link to this article: http://blog.ncm20.com/2015/06/building-a-high-performance-culture-part-21/

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