It’s Just Good Business
Gordon Ramsay of the television show Kitchen Nightmares exposes some of the worst restaurant practices, leadership skills and building conditions. Unfortunately, many dealerships are cooking up and serving as many unproductive activities and images as those seen on Kitchen Nightmares.
When we started in the consulting industry, our mentors warned we would discover a large number of substandard dealership practices, management policies and building images. In 10 years, we have not been disappointed.
In the same 10 years, we have seen some of the best looking and organized operations. They have openly shared their sensible policies and best practices. The employees are excited and engaged in the company. When employees care, customers can feel it.
Coming from a forward thinking, well-run organization, a type of dealership that made decisions based on business reasons and not emotion, you believe every dealership is operating under the same guidelines.
We liken this to being raised in a conservative family in a small town. With a move to the urban area, there are things going on most of us would never imagine. We thought Hollywood made up crazy things just to sell television shows and movies. Turns out, not everything is fiction, that some of what we see is real. In dealerships throughout North America, we also see some crazy things and the unusual occurs somewhere nearly every day.
What makes a dealership shine brighter than the rest? Based on findings of WEDA’s Dealer Institute consultants and trainers, the following list separates high-performing organizations from average or underperforming dealerships.
1. Building and Yard
A new shiny building is nice but not required. A building with the square footage to handle the business volume is required. A building needs to look like the dealership is serious about being in business and supporting the customer.
Hopefully, you are not the dealer who plans to sell a ton of iron, make some money and disappear in the night. Yes, new dealers have informed manufacturers of their intentions to be in a more suitable building in a few short years. The new dealers always say, “After the business gets going, we will move or build.”
In reality, the owner has no plans to invest money in a building that will represent the brand or accommodate the business. The dealer is simply in the line to sell as much iron as possible, maintain low expenses and when the pressure builds from customer expectations, the plan is to grab the cash and run. Yes, this really happens.
A dealer with a building that is too big or too fancy is sometimes perceived as being a showoff. Customers feel the owner is rubbing it in their faces. Customers become suspicious they have overpaid on their past deals.
There is a struggle with how big to build now and how big you will need to be in the future. Estimating required building size is tough as the machinery gets larger.
The yard is as important as the building. It is said first impressions are everything. A well-organized yard, tidy, mowed, and with units ready for sale will catch the eyes of passersby. A poor yard will get the coffee shop gossip going. Everyone notices a junk yard.
A website is your building’s appearance while people are surfing and shopping online. Some will say website appearance is more important than your building. The jury is out on which is more important but the top dealerships keep their websites current.
Many dealers say they are too busy with the business coming in the door to make their websites a priority. We have challenged a number of dealers about this thinking. If they had their operational processes in order, they could handle more business. In a downturn, every little marketing edge will allow a dealership to survive and even prosper. In this industry, a big marketing edge is a great website.
It goes without saying that a good website with all units uploaded, good pics, good descriptions will get hits and interest. This is how a buyer from 500 miles away gets interested in your unit. When they come from 500 miles away, they are serious. Often, high gross margin can be earned.
Recently, we were on a dealership’s site. Units that had been sold three years ago were still listed. There is a strategy to leave a sold unit listed for two or three weeks. This is to generate other calls, possibly getting customers interested in different units. Three years is negligence.
Customers notice when a unit is online after it sold. Not removing or not adding listings speaks volumes to customers about your lack of urgency, attention to detail, professionalism, and not looking like the dealership has joined the modern world. Play around on an auto dealerships website. We can learn a lot from auto dealers.
3. Aftermarket Abilities
Someone once said wholegoods sell the first unit but aftermarket is what sells the second. Often, no truer words are spoken, especially in an industry where customers rely on your parts and service to the extent they do.
We bought a TV from a big box store. When we opened the box, it had a cracked screen. We expected no service from the big box store except to exchange it. There was no service technician, no warranty or any parts issues to deal with. We do not have a replacement policy in the equipment industry.
Aftermarket departments need to jump when called to action. For years, customers will share stories about a great or terrible service experience. Customers make lifelong decisions on where they will spend their money based on one aftermarket experience.
When a dealership starts selling farther and farther from home, it is an indication that its aftermarket service is poor. The dealership needs to find customers farther away who have not heard or experienced its poor service.
We still work with dealerships where the owner believes that in order for his problems to go away, they should just sell more wholegoods. If the owner would focus on parts and service, the two highest grossing margin departments, the dealership might reduce its problems.
In discussions with auto salespeople who are now selling tractors, they notice that customers expect auto salespeople to wear a suit/tie. In a tractor dealership, the same customer expects salespeople to be in less formal clothes.
We have always wondered if blue jeans are considered appropriate. It seems like a tractor salesperson needs to look the part. We often hear customer comments regarding employees not wearing a company shirt.
This is not any different than a food truck vendor wearing an apron or a technician wearing coveralls. Our attire is reflective of our role. It lets customers know you are going to work for them. Years ago at our dealership, my Dad would sporadically wear a tie. He knew everyone assumed he would be attending a funeral later in the day.
What salespeople wear does not mean the level of professionalism needs to be any less. At an equipment dealership, we can still be professional.
I was talking to a young salesman about foul language. He said if the customer starts using foul language then he starts using foul language. I challenged him that because lemmings jump off cliffs does not mean you have to follow.
Where is his practice in being a professional if he is going to follow the lead of others who are not professional? If an employee develops a behavior of never using foul language, there is less chance of salespeople using words that a customer finds offensive.
This dealership behavior was a first for me. A salesman wanted a suntan. Every time he walked a customer out to the yard, he flipped off his shirt. To top it off, he had a nipple ring. Unbelievably, no one in the store would talk to him about this behavior. He could not figure out why he could not sell.
How does this action reflect on the entire dealership? The dealership allowed it go on all summer without addressing it. Among the other employees, it was a running joke. They would watch out the window, making bets on how many steps the salesman would take until the shirt came off.
A great culture is defined as having employees who are excited to go to work, like to be around each other and enjoy what they do. This feeling spills over to customers. Everyone likes to do business in a good atmosphere. A laugh and a smile go a long way in developing a great customer experience.
We have all been in stores where two employees exchange harsh words with each other in front of a customer. In customer focus groups, attendees will speak in great detail of arguments they witness between employees. They will share how it made them feel even though they were only spectators.
Owners and senior managers primarily determine culture. They are, of course, accountable for everything and everyone who works in the dealership. Many dealership owners do not know how they can improve culture.
This is a sad state when owners or senior employees are lost in their understanding or knowledge of what can be done to develop a great culture. For starters, the only action needed is solid leadership.
With all the outside influences challenging dealerships, it is comforting to know there are actions owners can take to have a positive influence in their organizations… and it’s just good business.
Article Written By Trent Hummel
TRENT HUMMEL is a lead management consultant and trainer for the Western Equipment Dealers Association’s Dealer Institute. He provides onsite dealership training and conducts courses to improve inventory management and business operations.
Hummel’s strategies about inventory turns, aging, and margin have resulted in rejuvenating struggling wholegoods’ departments. His commitment to operational excellence in the management of wholegoods has earned him a reputation as one of the industry’s foremost experts on sales growth and inventory control. Hummel may be reached by writing to email@example.com.