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Tag Archive: Management

Tom Hopkins

How to Handle an Angry Client

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Too many people, when faced with clients who range from dissatisfied to downright angry, choose the loser’s path by postponing handling the situation. Worse yet, they handle it inappropriately.

Postponement doesn’t make the problem go away. It results in one of two things happening:

  1. The angry client decides the problem isn’t worth the aggravation and cools down.
  2. The client gets so angry that the next time you hear from him or her is through some sort of official (and possibly legal) manner. Worse still, you’ll see your company named on the local news channel in one of those consumer protection segments.

If you’re the business owner, you may think it’s ok to lose one client who’s unhappy, but it’s not. You see, when we have a good experience with a company we tend to tell three to five other people about it. Positive word-of-mouth is great for business. However, someone who is displeased with a situation tells, on average, 11 people about it. Can you see how your business could be hurt by that?

Naturally, no one wants to walk into a lion’s den and face an angry client. Yet, you must consider the value of this client to you, your reputation and the company. In most cases, I would guess that it will be worth your while to face that angry customer and get the situation resolved as quickly as possible. As the sales professional, it’s your reputation at stake, as well as that of your company.

Here are nine steps I’ve developed for facing and dispelling another person’s anger. They work well in most situations mainly because you’re giving the client the attention their dissatisfaction deserves.

1. Acknowledge the other person’s anger quickly.

Nothing adds more fuel to a fire than someone having his or her anger ignored or belittled. The faster you verbally recognize their anger, the better. Sometimes all you have to say is, “I can see that you’re upset, Mr. Smith.” You’re not admitting to doing anything wrong before the situation is analyzed, just acknowledging their displeasure.

2. Make it clear that you’re concerned.

Tell them you realize just how angry they are. Let them know that you are taking the situation seriously. Make notes of every detail they give you. And, tell them you’re making notes. Get them talking! The more they speak, the more time you have to consider how to resolve the issue. The better your notes, the better documentation you have if you must take the concern to someone else to resolve. Be sure to put the date and time of conversation on your notes.

3. Don’t hurry them.

Be patient. Let them get it all out. Never try to interrupt or shut them up. In many cases, the best move is to simply listen. They’ll wind themselves down eventually. In some cases, they’ll realize they blew the situation out of proportion and feel foolish for it. They are then likely to accept nearly any solution you offer.

4. Keep calm.

Most angry people say things they don’t really mean. Learn to let those things pass and take them up after you’ve solved the present challenge —only if you feel it’s necessary to do so.

5. Ask questions.

Your aim is to discover the specific things you can do to correct the situation. Try to get specific information about the difficulties the issue has caused, rather than a general venting of dissatisfaction.

6. Get them talking about solutions.

This is where you will learn just how reasonable this client is. By the time you get to this step, their anger should have cooled enough to discuss the challenge rationally. If it hasn’t, tell them you want to schedule a later meeting—even if it’s in an hour—to come up with some reasonable solutions. Let them do the rest of their fuming on their time.

7. Agree on a solution.

After you know exactly what the challenge is, you’re in a position to look for some kind of action that will relieve the challenge. Propose something specific. Start with whatever will bring them the best and quickest relief. Don’t get into a controversy over pennies at this time.

8. Agree on a schedule.

Once you’ve agreed on a solution, set up a schedule for its accomplishment. Agree to a realistic timeframe that you know you can handle. The biggest mistake you can make is to agree to something that cannot be done. If you do, you’d better be ready to face another bout of this person’s anger when you don’t come through.

9. Meet your schedule.

Give this schedule top priority. You’ve talked yourself into a second chance with this client, so make sure you don’t blow it.

Once you’ve satisfied the client with regard to this situation, you will have earned another opportunity to serve their needs in the future… and the needs of those friends they’ll tell about how well you handled their concerns.

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Permanent link to this article: http://blog.ncm20.com/2015/08/how-to-handle-an-angry-client/

Laura Madison

A Personal Brand: Why Automotive Salespeople Should Go For It

Personal Brand

A personal brand is an incredibly powerful tool for salespeople to increase visibility with prospective clients and increase sales, so why aren’t more salespeople taking action? Perhaps because automotive salespeople do not realize how creating and maximizing a personal brand can solve two important challenges they face. Here are two problems having a strong personal brand can solve:

Challenge #1 – Leads

A common complaint among car salespeople is there are too few leads to keep them busy. A number of factors can be blamed for this complaint; slow phone traffic, a quiet season, or minimal walk-in showroom traffic.

How a personal brand can solve this challenge:

A personal brand is an opportunity for salespeople to come out of obscurity. Salespeople can use social media sites like Facebook and YouTube to promote themselves and their role selling cars to begin to gain local visibility. Participating on social platforms allows salespeople to connect with prospective customers and ultimately motivate them through the front door. Social media is also a phenomenal way for salespeople to build and maintain relationships with previous customers, so they’ll never forget who to refer and work with on the next purchase.

Challenge #2 – Differentiation

Differentiation may be the largest problem a salesperson faces. Whether the challenge is an inability to differentiate their Toyota store from the one down the street, or the Toyota Camry from the Honda, or differentiate themselves from other salespeople on staff, differentiation is an enormous salesman struggle.

How a personal brand can solve this challenge:

By creating and using a personal brand salespeople are building value in themselves. They are introducing themselves to prospective buyers and utilizing a platform to speak with customers genuinely, on a human-to-human level. An opportunity for an automotive salesperson to speak with prospects about what differentiates himself, his store, and the product is invaluable.

A personal brand puts a salesperson’s face in front of a prospect and begins building trust and relationship. By the time that customer comes into the dealership, he will know how to ask for and recognize his automotive professional and online connection. Creating a quick video, for example, to follow up an incoming internet lead can be an extremely powerful differentiator. If the customer submitted leads to five stores, the salesperson maximizing personal branding will likely be the only who has used something like video to communicate, and begin to build trust with, this customer. Building this type of value can not only earn a sale, but also make a customer fiercely loyal in the future.

In summary, a personal brand can help salespeople create a pipeline outside the walls of the dealership and build value in themselves, their dealership, and their product. That should be enough motivation to begin encouraging salespeople to create a strong personal brand on social media, so get to it!

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Permanent link to this article: http://blog.ncm20.com/2015/07/a-personal-brand-why-automotive-salespeople-should-go-for-it/

Tony Alessandra

Customer Service – The DISC Styles Way!

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Everywhere you turn today, you hear about the importance of customer satisfaction. From the bank to the phone company to the video store, every business seems to proclaim “The Customer Is King,” that “People Are Our Business,” that “Your Satisfaction Is Our No.1 Goal.”

 So, you might think that service is getting better with each passing moment. Surveys, though, suggest otherwise. In fact, one customer in four is said to be thinking about leaving the average business at any given time because of dissatisfaction.

What’s wrong? One answer is that that too many companies and employees view customer support as something that happens once and then is over. But true service focuses not on a one-time event but on building a sustained, positive relationship.

A second reason for poor service is that we often treat customers and clients as if they’re all pretty much the same. But only by honoring their individuality can we hope to build lasting rapport. Firms and people with a positive attitude toward service know that each contact–even a conflict or a complaint–is an opportunity that may never come again. Such encounters typically fall into three categories:

Moments of Magic: Positive experiences that make customers glad to do business there.

Moments of Misery: Negative experiences that irritate, frustrate, or annoy.

Moments of Mediocrity: Routine, uninspired service that leaves neither a strong positive impression nor a strong negative impression.

Moments of Magic might include a hotel clerk who greets you with a warm smile, uses your name, shakes your hand, and sincerely asks that you call her with any problems. You remember such experiences.

But you probably remember even more clearly Moments of Misery, such as clerks who won’t take responsibility for solving problems–personnel who don’t know what they’re doing-and worse yet, don’t seem to care–or salespeople who first ignore you, then act as if they’re doing you a favor by taking your money. We’ve all had those experiences, but usually not more than once at the same place. Because we don’t go back.

Exceeding Expectations

The key to creating a Moment of Magic is exceeding a customer’s expectations. Sounds simple enough. But because people’s expectations vary according to personality type, what works for one may not work for another.

Handling a complaint is one of the most common, yet difficult, service situations, for customer and employee alike. So we’re going to look at that process and how we can use knowledge of the DISC behavioral styles to create Moments of Magic.

As anyone who’s ever dealt with upset customers can attest, they can be a diverse bunch: some loudly belligerent, some agitated but overloading you with details, others low-key and almost apologetic. But if you respond the same way to the belligerent, the agitated, and the apologetic, you might increase the irritation for some of them. You might even produce a Moment of Misery.

That’s because each style shows different symptoms of stress and reacts in different ways. But if you can recognize and respond to these patterns, you can reduce stress, yours and theirs.

Dealing with High ‘D’ Dominance Styles

As complainants, High D’s can be aggressive and sometimes pushy. And they may become intrusive, perhaps saying something like, “I demand to see the president this instant!” or “If you don’t furnish me every last bit of correspondence in this matter, you’ll hear from my lawyer in the morning.”

High D’s may appear uncooperative, trying to dictate terms and conditions. But ask yourself: what do they need? You can help defuse them by providing:

• Results, or at least tangible signs of progress;

• A fast pace;

• Evidence that they have control of the situation;

• A belief that time is being saved.

The last thing you should do is to assert your authority and argue with the High D’s. They’re not going to be listening, and they’ll probably out-assert you. “Nobody ever won an argument with a customer” is an axiom of service. And that’s doubly true with High D’s.

Dealing with High ‘I’ Influence Styles

High I’s with a complaint may seem overeager and impulsive. “I need this settled right this moment,” they might say, despite your logical explanation of why this complex situation can’t possibly be cleared up for 48 hours. High I’s, usually skilled in verbal attack, may also come across as manipulative, perhaps saying, “I wonder if a letter to your CEO and chairman of the board would improve your attitude?”

Under stress, High I’s’ primary response may be to disregard the facts and anything you say. But you can address their needs by giving them:

• Personal attention;

• Affirmation of their position;

• Lots of verbal give-and-take;

• Assurance that effort is being saved.

You may think the best course is to sit there impassively and let the High I’s harangue you. But, actually, you’d probably be better off to give them a quick-paced, spirited explanation that shows you aren’t just brushing them off.

Dealing with High ‘S’ Steadiness Styles

High S’s are the least likely to be loud and argumentative. When they do come forward, they may appear submissive, hesitant, or even apologetic. Worse yet, they may not even complain openly but just internalize their dissatisfaction and then take their business elsewhere. So if you suspect a problem, you may need to draw them out.

High S’s hate conflict, so they just wish this whole problem would go away, even if it weren’t necessarily settled in their favor. “I’m sorry to make such a big deal out of this,” they often say.

High S’s will be made most comfortable if you:

• Make them feel they’re personally “okay”;

• Promise that the crisis will soon ebb;

• Guarantee that the process will be relaxed and pleasant;

• Show you’re committed to working with them to iron out the problem and save the “relationship.”

You might be tempted to think the diffident RELATER is not to be taken seriously and can be shunted aside with mere lip service. But, remember, they’re just as upset as High D’s are; they just express it in a much more low-key way. And they’ll quietly go elsewhere if their needs aren’t met.

Dealing with High ‘C’ Conscientious Styles

High C’s won’t loudly carp and cajole like High D’s or High I’s, but they won’t be submissive, either. And their complaints may have a sharper edge to them than will the High S’s.

High C’s tend to recite the chronology of events and the litany of errors they’ve had to endure. They’ll provide data and documentation and get quite involved in the details of the snafu.

Here’s how you can lessen tension with complaining High C’s:

• Suggest that they’re right

• Explain the process and details

• Show appreciation for their accuracy and thoroughness

• Help them save face”

You may see them as compulsives more hung up on the process and on showing they’re right than getting the problem resolved. But if you want to retain their loyalty, you’ll deal with them precisely and systematically, emphasizing your firm’s interest in seeing justice done.

An Important Head Start

Knowing and using The Platinum Rule to deal with complaints gives you an important head start toward creating a Moment of Magic. It allows you to collaborate with your customers in solving the problem, reducing the likelihood that they’ll make outrageous demands, become abusive or take their business elsewhere.

In fact, studies show that customers who feel that a business has responded to their complaints are more likely than non-complainers to do business there again. They actually become more loyal than if the problem never happened.

So look at your complaints as opportunities to show much you really care about the customer. Remember: Your customers aren’t just part of your job; your customers are the reason you have a job!

 

Permanent link to this article: http://blog.ncm20.com/2015/07/customer-service-the-disc-styles-way/

Robin Cunningham

Five Tips for Creating a More Predictable Work Environment

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Most Monday mornings I find myself standing in NCM Institute’s beautiful training facility in Kansas City, welcoming a new class of dealership managers who come to us for formalized training specific to their job responsibilities. Even before introductions, sometimes I will ask the class some questions:

“How many of you, when you interviewed for your first job in the car business were shown a written job description and job objectives or expectations that you would be expected to perform?”

Typically, almost no hands are raised! Then I ask them if, in the dealerships they now are in management positions, if written job descriptions, objectives and written processes are regularly in use. And guess what… very few hands are raised!

Think back to your first interview for a job in a car dealership. What was the discussion like? What did they tell you you would be doing? Was that in writing? Were you coached and trained on that consistently? Now reflect on the organization or department that you now lead, manage or coach. What are your hiring discussions like? What is in writing? How consistently do you coach and train on these expectations?

At the NCM Institute we focus heavily on the Six Primary Elements of Accountability Management. Today  I’d like to focus on one of these:

Clearly Defining and Communicating Your Expectations

I am sure we have all heard something to that affect numerous times in our careers. But this element seems to get little focus, and therein lays a lot of, shall we say, “unrealized opportunities.” We believe this is such a big deal, we devote an entire training module just for this subject. We begin by identifying a number of tools any business can and should use to accomplish this. The first one being an Organizational Chart.

1. Implement an Organizational Chart

It is a rare dealership we work with that has a current, updated organizational chart in place that every associate has a copy of. In our General Manager Executive Program it is a requirement that one is created between the first and second class. We had a very experienced, hands-on General Manager return to class to proclaim he picked up 2.5 hours per day of productive time by putting this in place. He essentially said that he had made himself too available to everyone, spending much of his time out of his office doing hands on coaching. When the rest of the associates began to see how the organization was actually structured, they began going to their immediate supervisors as a first contact and he picked up more productive time for leading the organization.

2. Use Written Job Descriptions and Objectives

The next tool, which we have already talked about, is written job descriptions and job objectives. These tools are created with the associates so that there can be some feedback, which ultimately helps create buy-in. Again, almost none of the dealerships we work with have these in place and if they do they certainly are not current. Remember, we are looking for opportunities, not “gotchas!” So this is a really big deal.

3. Define the Parameters of Authority

Then we need to have well defined parameters of authority. Who is in charge? What do they do? How do they fit into the whole? How are they perceived by the organization?

4. Keep Track of Daily Tasks

Next, is a daily tasking enforcement. We call these tools, D.I.T. sheets or “Did It Today” sheets. These are daily recaps of associate’s daily responsibilities.  The primary things to focus on are:

  • These are the opportunities I had
  • These are the items I sold
  • These are the activities I performed
  • This is where and how I compared to my plan
  • This is how I “won” at work today
  • This is where I could have done better
  • I need your help with this

Note the last one: “I NEED YOU HELP WITH THIS.” Imagine the trusting relationship you could have with your associates if that was part of the daily discussion. These can and are created for every single associate in the dealership by some clients we work with.  The truly revolutionary part of this is each of these DIT sheets is handed in to their manager each day before the associate goes home. This gives the manager daily coaching opportunities they otherwise would not have.

5. Review Performance

The last tool is having a timely objective and subjective performance review process.These are sit-down, one-on-one meetings that are performed depending on the associated position: weekly, bi-weekly or monthly. These are very common in most corporate environments and almost unheard of in retail automotive dealerships.

We work with a number of very successful organizations who do none of these things and when they see this part of the class, they see how quickly their opportunities to improve would be and they get very excited. But how you clearly define and communicate these changes will absolutely be the determinant of their acceptance and therefore, success.

We believe the one thing we can control is the daily environment within each dealership department. There are a lot of your existing employees who are starving for more leadership, coaching, mentoring and structure in their work. If we want to have more predictable profitability, we are going to have to have a more predictable work environment for all our people.

Permanent link to this article: http://blog.ncm20.com/2014/10/five-tips-for-creating-a-more-predictable-work-environment/

Bob Urichuck

Can Sales Management Increase Results?

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Organizations often promote the best salespeople into management whether they desire to be there or not — it is seen as a promotion or reward for the results they achieved. However, being a great salesperson does not make someone a great sales manager.

The toughest job of being a sales manager is demonstrating appropriate sales behavior — behavior you would like to see your sales team follow. Because you demonstrated successful behaviors with your buyers to get sales, does not mean the same behaviors will increase your sales team’s results.

So, what would be the appropriate sales discipline (behavior) for sales managers to demonstrate?

 Do you:

  • Always make yourself available to your team members or spend time with management?
  • Assign targets to each, or engage each to come up with their own target and draft sales plan?
  • Monitor their numbers or their behaviors?
  • Tell your salespeople what to do, or are you engaging them?
  • Lead salespeople or empower them to obtain commitment?
  • Demonstrate the behaviors you are training and coaching them on, or you are too busy kissing butt upwards to do that.

These are just a few questions you need to answer for yourself, and there are a lot more.

  • How can you expect results if you follow traditional sales management ways?
  • How do you think telling people what to do makes them feel?
  • Do you like to be told what to do by your boss?
  • How does it make you feel when you are told what to do?
  • How does it make buyers feel when your sales team demonstrates the same telling behavior?

Ownership generates commitment.

Most salespeople don’t like to be told what to do. Neither do customers. And yet that is usually what selling is all about—telling. When you are telling it indicates lack of engagement, trust and empowerment. Is that what you want?

It is no longer about you or top management — it is about the buyer. And the buyer in your case is your sales team. Do they buy into your sales management ways? If not, you will not lead results. If they do, the results will flow easily!

Who knows their market or territory best? Top management, you (the sales manager) or the sales rep?

What if you engaged the sales rep into setting the revenue target for their market or territory? Do you think it would be lower or higher?

The chances are that it will be higher, and in some cases lower. Either way you may have to do some negotiations up or down, but the point is, in the end, who owns the number? Top management, sales management or the sales rep?

When someone has ownership, there is commitment.

Commitment is what sales managers and salespeople have to obtain to lead results.

Next, what would happen if you got each member of your sales team to draft a sales plan and present it back to the team for feedback before finalizing? Once they finalize it and sign it off, who owns it?

Finally, as a sales manager should you manage the numbers or each salesperson’s behavior according to the sales plan? Is it not the behavior that people demonstrate that gets the numbers? Also, would it not be easier to manage their behaviors instead?

Sales professionals, buyers and probably you, too, like to be engaged. To be engaged means to be involved. Being involved is the second biggest motivating factor in the workplace. Everyone wants to contribute to the success of their organization. When you are involved, you feel empowered, trusted and become more motivated and committed because you own the idea.

Are you involving your salespeople, or are you telling them what to do? Are your salespeople asking questions of their buyers or are they telling them about their company and its products and services. The chances are they are doing exactly what you are doing— monkey see, monkey do.

Be aware. What monkey do you see, and what are you doing?


Bob Urichuck’s training (Velocity Selling) is available through NCM OnDemand. 

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Permanent link to this article: http://blog.ncm20.com/2014/03/can-sales-management-increase-results/

Rebecca Chernek

The Screamer: There’s No Place for Verbal Harassment on the Job

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If you’ve been in the automotive retail business for any length of time, you’re no doubt very well acquainted with The Screamer. He’s the guy everybody loves to hate. The big guy in charge of the F&I department or over the retail operations who can’t seem to communicate a single directive to the group without raising his voice to ear-bursting decibels – as if every increase in verbal volume and every belittling word uttered will ensure his control and push his subjects to perform the way he wants them to.

In the life of The Screamer, this ritual is all in a day’s work. His needs are simple: to take control; to let everyone know who’s boss; to keep his employees in check and to prevent them from walking all over him. But for the people who are constantly forced to endure his offensive tirades, work can quickly become a miserable experience. Most people in the automotive retail industry take a blind’s eye approach to dealing with The Screamer, as if being on the receiving end of verbal abuse is par for the course or business as usual. But is it? And even if it is, does it really have to be this way?

This kind of behavior is especially commonplace in the F&I department, where intense pressures to perform – getting the customer in the box, boarding the deal, getting bank approval, trying to secure a profit and pushing for increased sales – often result in the adult version of a full-blown temper tantrum. More often than not, these outbursts are accompanied by threats of demotion, cut pay, or being fired outright.

All too often, common acceptance of The Screamer’s abusive behavior is bolstered by tough-love sayings like, “If you can’t stand the heat, get out of the kitchen!” or “You’ve got to have a thick skin to survive.” In other words, people are all too quick to accept this mistreatment as just another part of the job they signed on for.

To make matters worse, dealership owners themselves are notorious for not only allowing this conduct to continue, but for giving their silent approval of it. Typically, the solution leveled at those in the F&I department who can’t take the abuse is to find another job.

Needless to say, this is easier said than done. The majority of dealership employees who are struggling to support their families and pay bills just don’t have the luxury of being able to walk away from a steady source of income. Caught between a rock and a hard place, tolerating an otherwise insufferable workplace condition is usually the beleaguered F&I practitioner’s only course of action. Ultimately, this can create an atmosphere that’s rife with low morale and that results in vastly decreased performance – the epitome of a self-fulfilling prophecy that far too few F&I managers and dealers are willing to face up to.

Verbal abuse has no place in the car business today, if it ever did. Your dealership’s ability to attract and recruit talented individuals is crucial, as is your ability to retain an experienced F&I staff capable of performing their jobs effectively. This is the crux of the problem, the proverbial 500-pound gorilla that has to be addressed.

Here’s the bottom line:

The ensured success of your dealership rests on your willingness to effect change where it’s desperately needed. To adopt a new, enlightened mindset that’s conducive to achieving long-term profitability. This means working diligently to cultivate an environment of good will, mutual respect, and utmost integrity where verbal abuse is simply not tolerated.

In the end, if someone has to resort to screaming to motivate his or her staff or to drive them to perform better, this is clear indication that all control has been lost. In that case, it’s high time for The Screamer to either find a new career or take a course in anger management.

In the words of Dwight D. Eisenhower:

“You do not lead by hitting people over the head. That’s assault, not leadership.”

Becky Chernek offers in-house, customized training, specializing in F&I development and desking practices. Learn more about her services at ccilearningcenter.com.

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Permanent link to this article: http://blog.ncm20.com/2014/02/the-screamer-theres-no-place-for-verbal-harassment-on-the-job/

Garry House

Compensation Philosophy

A Consultant’s Approach to Developing Sound Compensation Strategies for Dealership Managers and Sales People

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There are today, and there probably always will be, as many different compensation plans as there are dealerships. That is the nature of our business: to be individualistic; to have a unique dealership culture reflected in the way we treat our customers and our employees. And management and sales pay plans are certainly a part of that unique culture.

To be effective, any dealership compensation plan must primarily focus on those areas for which the management or sales employee is accountable. The plan should provide motivation for the employee to continually achieve higher levels of individual or departmental productivity and profitability. And the plan must be fair to both the employee and the dealership under varying levels of operating performance.

Even the best-designed compensation plans sometimes result in an excessive departmen­tal compensation expense or in the manager or salesperson being paid too little…or both. However, when this happens, it is normally not the fault of the compensation plan itself; it is because the dealer principal fails to step up to the fact that current business conditions do not justify the current head count of managers and/or salespeople.

Businesses that contract with experienced professionals to evaluate and help plan how they should pay their people usually have happier employees and lower personnel costs. The Retail Operations division of NCM Associates, Inc. is one of the few automotive consulting firms which specializes in compensation planning and implementation. The following is a description of the methods we use to assist client-dealers in developing sound, results-oriented compensation programs for management and sales personnel.

Preliminary

The consultant must first gain an understanding of the dealer’s cur­rent compensation methods. Copies of compensation plans, together with the employees’ earnings history must be provided to the consultant. Additionally, the consultant needs to know how the various compensation categories relate to the dealership gross profit and expense structure. This information is gained from an analysis of past and current finan­cial statements and, if available, from future planning documents. The underlying focus of this preliminary phase is to clarify the dealer’s objectives. (Why is a change in compensation strategy desired?)

Definition of Consulting Engagement

The consultant prepares and submits a detailed “letter of engagement,” which establishes the parameters of the consulting project. This document includes, but is not necessarily limited to, (1) a statement of the project objec­tive(s); (2) a description of both the consultant’s and client’s responsibilities to the project; and (3) an estimate (by project item) of the engagement time, the associated consulting fees and expenses, and the completion date. One of the key statements in this letter is that both the consultant and the dealer agree to individually attempt to maximize the efficiencies of the consulting engagement so that the project is com­pleted on time, at or below estimated budget, without sacrificing the quality of the end product.

Determining and Forecasting Key Results Areas (KRA’s)

The consultant and dealer must identify and quantify each element for which the management or sales employee is totally accountable, and also those for which he/she is only partially accountable. The consultant then prepares a computerized planning model, depicting various performance scenarios involving the KRA’s. Using a “What If?” approach, the consultant assists the dealer in finalizing a Planned Performance Level (PPL). Where feasible, the respective manager or salesperson should participate in the develop­ment and finalization of his own PPL.

The final step in this phase is for the consultant and client-dealer to agree on individual and overall compensation philosophies and budgets. (What should this position cost? As a percent of gross? Per retail unit? In annual dollars? And what does this specific person expect, need, or deserve? Based on past performance? Based on past and current earning levels? Based on the competitive local labor market?)

Plan Development and Testing

Based on the decisions made in the previous phase (and building from the existing computer planning model), the consultant designs a compen­sation plan that attempts to match the dealer’s objectives at the Planned Perform­ance Level. This plan is then tested at numerous variances from the PPL. If necessary, the consultant modifies the plan so that it closely matches the client’s objectives over all possible performance scenarios. The consultant then provides the preliminary plan and test documents to the dealer for review. Frequently, further minor modification is required, accompanied by retesting and review. In some cases, the dealer may even negotiate this preliminary plan with the involved employee. The final planning and test documents are provided to the dealer to use for communication, implementation, and the permanent record file.

Plan Documentation

Depending on the client’s wishes, the consultant will, as an option, prepare a “long-form” compensation document for signatures of the employee and a senior manager. This document explains the compensation plan and the accountability philosophy in detail. Even if the dealer elects not to have the consultant perform this phase, it is strongly recommended that similar plan documentation be prepared in-house, executed, and filed for future reference.

Automated Plan Calculation and Presentation

The consultant will convert the computerized planning model into a “Plan Calculation and Presentation” tool using a pre-formatted Excel worksheet. With minimal operator input, this worksheet will (1) automatically calculate and present (for compensation communication purposes) current and prior performance and earnings by line item for a three month period; (2) project annualized earnings, assuming current month performance represents the monthly average; and (3) project annualized earnings pace, based on actual year-to-date earnings.

Implementation

This phase involves assisting the dealer, as necessary and/or as requested, in communicating and validating departmental objectives and individual com­pensation plans. The consultant also has the responsibility to “load the lips” of the dealer, prior to “selling” the plan to the involved employee. Each dealer has his own attitude about the consultant’s role in implementation. Some like to keep the consultant “invisible” during the entire engagement period; these dealers are prepared to take full responsibility for the authorship of any new compensation plans, and thereby accept full credit (or criticism) if the change is well-accepted (or cursed). Other dealers prefer to feature the consultant as the catalyst of any change, making him very visible from the beginning of the engagement; this allows the dealer to always take, or negotiate, a fall-back position. (“The consultant did it. It’s not my fault, but I’ll fix it!”) And some dealers elect to make the consultant visible only on a selective basis, par­ticularly in critical situations.

NCM Retail Operations believes that, where feasible, compensation planning engagements should be conducted on an off-site basis, strictly by phone, FAX, Fed­eral Express and U.S. Postal Service. On-site consultations relating to compensation planning are normally expensive and inefficient. On-site consultations are justified only when third-party credibility is necessary to make a smoother transition from one com­pensation plan to another.

Follow-up and Fine-Tuning

“The best laid plans of mice and men…”

No, life doesn’t always (or maybe ever) work out the way we expect it to. The same is true with the best-designed compensation plans, once they are exposed to the dynamics of the real world retail automotive business. If the basic parameters are sound to begin with, they will remain sound. But the details of the plan may need to altered to accommodate unforeseen, and uncontrollable, circumstances.

The consultant acknowledges an ongoing responsibility to ensure that each compensation plan he recommends fulfills the needs of the employee, as perceived by the dealer, and provides operational and financial results compatible with the defined client-dealer objectives.

To get in touch with an NCM Retail Operations consultant about this topic, or to learn more about NCM’s consulting services for auto dealers, call 877.497.2363 or email consulting@ncm20.com.

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Permanent link to this article: http://blog.ncm20.com/2014/02/compensation-philosophy/

David Ciambella

360° Slam Dunk – Preparing Your Successor for Business Succession

hoopsAs a sports enthusiast, when I hear the term “360° slam dunk,” images of Michael Jordan soaring through the air high above the rim in a Chicago Bulls jersey flash through my mind, which I assume is the case for some of you as well. Unfortunately, this article is not about how to do a 360° dunk a la Michael Jordan but rather the benefit of utilizing a 360° Assessment as a successor preparation tool. The utilization of a 360° Assessment to help identify leadership gaps and coaching opportunities for prospective successors can be an invaluable tool.

Testing your successor in management and leadership situations can provide you confidence in your successor’s ability prior to your departure. Additionally, it can provide employees, lenders and other stakeholders an added sense of confidence that your business will be in good hands when you eventually exit. Properly preparing the next leader of a family business is critical and should not be underestimated. In addition to on the job experience, there are tools available that can assist you in preparing your successor. One such tool is a 360° Assessment.

A 360° Assessment is a developmental tool designed to obtain honest, anonymous feedback from a leader’s peers, superiors, and subordinates on the leader’s capabilities as well as their strengths and weaknesses in a variety of areas. By gathering a well-rounded perspective from those that work with the leader, the 360° Assessment will reveal how the leader sees him or herself versus how those participating in the assessment view the leader being evaluated. At times there are stark contrasts between these two perceptions. By conducting a 360° Assessment, you can:

  • Establish a perception regarding senior leadership effectiveness
  • Identify personal and group leadership strengths and under-utilized leadership assets to leverage for the achievement of organizational goals
  • Identify personal and group leadership development opportunities
  • Identify opportunities to ensure development of clarity, consistency, commitment, and culture so that leadership speaks collectively with one voice

Of significance, the insight and information provided by the assessment tool positions you to develop a specific developmental plan to coach and help your successor leader reach their full potential.

Over the past few years, I have had the privilege and opportunity to work with the General Manager of a family business who happens to be the successor nominee. This individual has been instrumental in driving profitability since joining the organization; however, increased profitability has come at a price. This gentleman is a dedicated, intelligent, tireless worker who loves to compete. He is also a direct communicator who demands results and has a tendency to utilize a positional leadership style to obtain those results.

A “positional” leadership style as described by John Maxwell in the book Developing The Leader Within You, is an individual who uses his or her position to get people to do things. In other words, “I am your boss and therefore you need to do this.” This leadership style often times is accompanied by threats and intimidation to get desired results. As you can imagine, there is a small percentage of the population that responds positively to this type of leader. These leaders typically get compliance from their employees but rarely do they get commitment. And there is a big difference! Results are often short lived before employees depart for greener pastures in hopes of being treated with more dignity, respect and trust. Surely some of you reading this article know exactly what I am referring to and have a vivid picture in your mind of a current or past boss.

Despite the potentially harsh caricature depicted above, since conducting a 360° Assessment on this General Manager he has become more aware of his tendency to exhibit positional leadership. By increasing his awareness and providing a development plan to include follow up coaching, this individual is making positive adjustments and is on the path to maximizing his true potential.

Perhaps your successor could benefit from a 360° Assessment like the individual referenced above. Business executives are similar to athletes like Michael Jordan in that in order to get to the next level, they must constantly be looking to improve and hone their skills. It took Michael Jordan years of working on his game before he could do a 360° slam dunk. Properly preparing your successor takes years as well, and there is no better time to begin than today!

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Permanent link to this article: http://blog.ncm20.com/2014/01/360-slam-dunk/

Hugh Roberts

Succeeding the Old Fashioned Way

father-and-sonThe look on my face when the 54 year old dealer told me that he was promoting his 28 year old son to be the GM was a dead giveaway. “Why is that a problem? – I was a GM at that age!,” he said. “And obviously it worked out great for this dealer,” so why was I questioning his decision to promote his son? The issue, I told him, is that he grew up in an entirely different set of circumstances than the world his son experienced and the maturity levels created by such are hard to replicate.

I explained: when you started out you didn’t have two extra nickels. “Yes,” he said, “I sold my house and invested every dollar I had in getting my first store.”

That’s my point, you had to succeed, you didn’t have a choice – there was no safety net if you failed! As a result, you were handling your finances with mirrors, hoping the receivables could keep up with the payables. You worked in every part of the dealership, with your hands on everything. You didn’t question staying late, working extra hours, doing whatever it took to find a way to sell one more car, so that you could make payroll. You trained all your people to watch expenses and to complete the paperwork correctly the first time so that banks responded quickly. Everyone knew that there was no sugar daddy to rely on if times got tough and sales began to slide.

Over time, due to hard work, some luck, the development of solid business practices and more hard work, your store began to make money. Being conservative, you plowed most of your profits back into your company, knowing that this was the only way to grow and to build financial strength so that you could survive adversity. Over time, your capital accounts began to grow and one day, your accountant even remarked that you are definitely over-capitalized!

One day, along comes your son, eager to follow in your footsteps. You are immensely proud and excited that your dream of working together appears to be fulfilled. You want him to learn the business, but there is a part of you that is conflicted. On the one hand, you know that most learning is caught, not taught and that he will have to pay his dues. But, you don’t necessarily want him to have to struggle as much as you did. He wants more family time and that makes sense to you since you have some guilt about the long hours you put in when he was growing up. You rationalize that he is a bright guy and can learn the business faster than you did. As a result you tend to short circuit the training process, moving him through the departments over months, not years. You even send him to the NADA Dealer Academy, because you have heard how effective this training is for potential dealers. So the next thing you know, he moves through the ranks as a manager – three months in used cars, six months in F&I, then the GSM quits so you decide to let your son have a shot at it – he’s energetic and full of confidence! Before too long you have convinced yourself that he can run his own store – at age 28!

So, what’s wrong with this picture? Maybe nothing, as anyone in the car business can point to many success stories that started out this way. But what was different between dad’s situation and his son’s? As stated above, dad had to be successful because there was no safety net. But his son knows that dad is right behind him and isn’t going to let him fail. The store that junior is running is well capitalized so there is a lot of money and some strong managers to prop him up when needed. Based on this he may seem to succeed at least while times are good and the money is plentiful. But the car business is tough and sooner or later junior is going to face tough times – when that happens, will he be ready? Will he have the emotional toughness to be able to make the hard decisions, to watch the expenses closely, to be creative and work extra hours and do whatever it takes to succeed in a tough economy or with a less than stellar brand.

So, in promoting junior to be the GM before he has been thoroughly trained, all too often I see the children of dealers who think they know what they are doing, but obviously lack the maturity created by learning the old fashion way – by earning their position. When looking at the training necessary to be effective as a dealer for the long haul, don’t short circuit your children by promoting too quickly. Some very important lessons are learned in the trenches, getting their hands dirty, paying their dues. Especially with employees, they respect hard work and knowing that their boss knows what he is talking about because he’s been where they are. It’s easy to give in and bend our rules when dealing with issues regarding your children working in your business. But in the end, if your legacy is going to continue successfully through the next generation, your children are going to have to EARN it.

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Permanent link to this article: http://blog.ncm20.com/2013/10/succeeding-the-old-fashioned-way/

Russell Grant

How to Motivate Your Customers: It’s a Gift

travel-incentivesAs I travel the country speaking to dealers, there are several questions that have come up consistently in the 20 years I have been in this business.

One of them is: “Why do I need to give something away to get people into my dealership, especially if they’re already my customers? I don’t want a bunch of gift seekers at my dealership.”

While there are a number of reasons why gifts are a strategic part of a successful marketing campaign, I want to share with you the three most important:

  1. Law of Reciprocation. We all know that if we do something for somebody they will feel obligated to do something in return. This doesn’t mean someone will buy a car out of obligation, but it does mean if you get that customer to your showroom they may take a test drive—or be more generous with the time they give you at the dealership.
  2. Motivation. Just because someone is interested in purchasing a vehicle doesn’t mean they’re coming to your dealership any time soon. By offering them a gift, it motivates your customer to take action now. This way, your marketing gives customers a reason to respond when you want them to, which is often much earlier than they would have without your offer.
  3. Proven Results. At J&L Marketing, we have been tracking marketing results for 22 years and the results are overwhelmingly stronger for campaigns that use a gift versus those that do not. Also, dealerships that highlight their gift in marketing materials receive a better response rate and experience the high quality traffic they’re looking for. The best approach is to make your offer first and then motivate the customer to take action with a gift.

Be Strategic With Your Offers

Premiums/Gifts should have a higher perceived value than their actual cost. However, be careful. They should not be a gimmick.

Trip incentives are a great way to motivate the customer with something they may not be willing to give themselves. This fits the description of high perceived value. Would you be willing to visit a dealership for a chance to win a trip to the Super Bowl? Most people would if they were also in the market for a vehicle. The best part is you can insure the cost of this once-in-a-lifetime trip so that your dealership only pays a fraction of the cost and can guarantee there will be a person who wins—if they show up at the dealership with the winning number.

Maximize Your Incentives

Utilize microsites and give your customers a gift if they RSVP for an appointment. Wouldn’t it be worth the $500 to gather valuable information from customers on the RSVP microsite; information you can use to help sell vehicles before your promotion even starts? Plus, that same information can be used for your future campaigns.

So don’t worry about gift seekers. If your campaign is done properly and creatively, a gift is a strong tool that will motivate customers and drive high quality traffic directly to your dealership.

Permanent link to this article: http://blog.ncm20.com/2013/07/how-to-motivate-your-customer/