Rafi Hamid Blog

Trips to the dealership are not high on the average American’s list at present. People are beginning to view buying a new car as a luxury that can be put off. Here is a perfect opportunity to show potential customers how painless a purchase might actually be.
The beauty of online advertising is that you can advertise immediately to people who are looking for a car – as they’re looking. Now, when fewer consumers are looking, find new and creative ways to meet them where they’re at.

Create search engine marketing campaigns around popular searches that may not have a lot to do with buying a new car. If someone is online looking for ways to save gas or find public transportation, hit them with an ad that comments on those concerns. Mention that the cars on your lot all get at least 25 miles per gallon. Point out that particular specials at your dealership will keep consumers off of a crowded bus and still within their budget.
A little strategy can go a long way. Using a consumer perspective may well be the key to staying busy in a slow spell.

Technorati Tags: consumer perspective, dealership marketing, public transportation, search engine marketing

Part of the nature of an investment is that investment’s return. Avoid wasteful spending (and wasteful cutbacks) by recognizing what parts of your spending are true investments.

During times like these, cuts are inevitable. The important thing is to make sure you cut where you can afford to cut. Removing employee incentives, and other opportunities to encourage your dealership’s growth and bolster sales, can be like sealing the leaky dam with your thumb. It may work for a minute, but that dam is going to explode and guess who gets the first face full of cold water?

So before you start laying off good employees or cutting back on benefits and incentives, take a step back and look at the big picture. Your employees are an investment. Take the time to measure the results on all or your investments. Are you confident that your TV spot is bringing in the bulk of your sales? How about that full page, full color newspaper ad? As we’ve all heard before, “measure twice, cut once.”

Technorati Tags: dealer hr, dealership human resources, dealership measurement

Car buyers will be back. We don’t know when, but they will. The simple fact is that people will still need vehicles in the future. In the mean time, are you doing anything to prepare? An old operations truism is: Do the right things and do things right. Is this happening at your dealership? Are you sure? Now might be the perfect time to take inventory of all the dealership’s activities. Are you measuring the performance of employees and other investments including marketing? If not, then start. These days scarcely a penny should be spent if you don’t have an idea of the return that you’re getting from it. If you are using metrics to measure performance, are you sure you’re using the right ones? It’s very easy to measure the wrong thing. If what you’re measuring doesn’t tie directly into the larger dealership goals, then you probably shouldn’t be measuring it. No person’s goals or activities should even be set until the overall goals and strategy of the dealership are set. If everything doesn’t tie together, then you’re much less like to achieve major goals or strategic efforts.

This might be a great time to re-access what you’re measuring and why, or start measuring performance if you haven’t been. It’s entirely possible to be doing something right, that is not the right thing to be doing. Think about it…

Technorati Tags: automotive operations, dealership goals, performance measurement

Times are tough and we all know it. Along with other cuts, some jobs are being lost. For the employees that you do have, make sure you don’t do anything to create perverse incentives during an already challenging period. By definition, perverse incentives create undesirable, unintended consequences. If you stop giving any real raises, for example, make sure to think through the possible consequences. You may think what you’re doing is improving the bottom line, and it might in the short term, just make sure it’s not going to hurt you in the longer term.

A client recently shared a cautionary tale about the unintended consequences of the elimination of any significant merit raises. The management at a large dealership decided to help combat declining sales by not allowing anyone, under any circumstances, to receive more than a 3% annual raise. They didn’t communicate the policy to employees ahead of time and it wasn’t clear if this policy would be applied to management. When the annual reviews began taking place, employees started talking. They quickly figured out that no one received a raise of any significance– including the super stars. And still, there was no discussion from management about it.

Well, guess what started happening? Almost immediately, most people started performing at a lower level, not low enough to lose their jobs, but just doing what needed to be done and no more. And most of the dealership’s rock stars started looking for jobs elsewhere. Instead of saving the dealership money, it cost them a fortune in lower productivity and job turn over. Within six months new management was brought in and the unspoken, unwritten policy was reversed.

A temporary tightening of the belt that is clearly articulated to everyone affected is one thing. “We’re all in this together and the decrease has nothing to do with your overall performance and management is under the same policy as staff members.” Most people can understand and accept a temporary policy in tough times, especially if it applies to management, too. And, be sure to let employees know about it ahead of time. This just goes back to eliminating “surprises” in performance reviews. Give people the time to understand and accept what’s going to happen before it actually happens. Someone who did exceptional work and produced for the dealership should know that they will be rewarded in some other way for now, and also how you will reward them in the future when times are better.

Straight commission roles are easier: you sell, you make money. Positions that are a mix of salary and commission, or just salary can be trickier and you can more easily motivate people to behave undesirably. Just think seriously and critically about the consequences of financial policies changes before you enact them. Will they really save the dealership money, or are they merely a quick fix that will cost you in the end?

Technorati Tags: employee reviews, perverse incentives, unintended consequences

To accomplish organizational goals, three main steps are required: 1.) Process, 2.) Measurement and 3.) Accountability. (Of course these three steps must be attached to the right goals, but we will discuss that in other blogs). Using this method, any organization, especially a dealership, can achieve success. I know this because I’ve used these steps to accomplish success at numerous dealerships and dealer groups for years. And today in my consulting, I use these steps to help other dealerships be successful, even in today’s economic environment. The process is the actions and specific steps individuals and groups take; what they do make things happen. The measurements are the agreed upon metrics, both quantitative and qualitative, that let you know what’s (and who) working what’s (and who) not. And that measurement must be tied to accountability with real consequences for success and for failure.

And in the absence of process, measurement and accountability, the larger the dealer group, the bigger the problems can be because nobody’s “checking the checker” and there is so much going on that it’s easy for items to get brushed aside or ignored. Management often doesn’t understand and/or isn’t directly involved in what line workers are doing, and this certainly applies in Internet departments across the country. And if you don’t understand what the process is or should be, then you can’t possibly know what to measure. And without measurement, accountability is impossible.

Use process, measurement and accountability to get systematic, get everyone involved, and get your dealership in the black! Please share your thoughts and other similar methods you have used for success.

Technorati Tags: accountability, measurement, process

Have you ever been on the receiving end of an annual review where there were lots of “surprises” and subjective comments about your past year’s performance? (Have you ever given this type of review?) If you have, then you know what a confusing, frustrating, painful experience this can be. Rather than being constructive, as reviews should be, they are destructive and can lead to irreparable damage. Feedback should be continuous and immediate, not “saved up” for up to a year after something has happened. Poor management is the only reason for ever having any real surprises in a review, and subjective evaluations are unprofessional, non-constructive and detrimental to both individuals and organizations.

A very sharp, hard-working, successful Internet director I work with recently related an experience she had with this type of review earlier in her career. She came into her annual review meeting sure that she’d done a great job and that she would be rewarded. She had successfully accomplished everything that she and her director had discussed, often at the sacrifice of her personal and family life. But she didn’t mind, because she had been assured when she was hired that this was a dealership where hard work and loyalty were rewarded and she wanted to build a career in this type of environment.

Her manager began by thanking her for her time and saying, “We still think you have potential here, but your performance last year was less than we had hoped for.” She said she could immediately feel her face turning bright red, her ears burning and a giant knot forming in her stomach. And, most importantly, she was totally confused.

There had been almost nothing but praise from her director about her performance over the past year and she had accomplished all the “goals” they had discussed (verbally, not in writing). He went on to say that she had “dragged her feet” sometimes and that she need to “better understand our customers,” with no specific examples or future actions to take for improvement. When she mentioned her accomplishments and the subjectivity of his comments, he told her that the review was supposed to be “subjective.” After that, she didn’t really hear what else he said. She said it was all she could do at that point to keep from walking out on the spot. By then end, she was already thinking about her next job– at another dealership.

After the review, she didn’t do or say anything rash, and she stuck it out and gave proper notice when she left for her next job, less than two months later. But the experience made a lasting impression on her, both as an employee and a manager.

All humanity and kindness aside, this type of employee review is damaging to the dealership (or any other organization) because it means that you are not accurately measuring what an employee is contributing to the organization. They may be your top performer, or dead weight, but you won’t know it because you’re basing everything on your gut, one or two specific incidents, hear-say, whether you personally like them or not, etc. It is simply impossible to measure an employee’s value to the dealership without tying their performance to pre-established agreed upon measures. And, the measures don’t necessarily all have to be quantitative. Pre-established agreed upon qualitative standards can be just as useful. But, they can’t be, “I don’t like the looks of the newspaper ads you’ve been running.” or “I think you could try harder.” or “I don’t think you’re committed.” Who does this help, your ego?

Has this ever happened to you? Do have experiences in turning around this type of management? We would love to see your comments.

Technorati Tags: annual reviews, feedback, management

Are you familiar with O.M.I.T., the strategic method for focus and unification? I spend a lot of talk discussing tools for pay plans that align employee performance and incentives with the goals of the dealership, and it’s true that you should have quantitative measures in place to make sure incentives are aligned. But, we should also always remember that there are important qualitative steps that should be taken to make sure all employees have the proper motivation. Okay, everyone wants to make money. That’s a given for both employees and management, but let’s move beyond that.

One incredibly powerful (and simple) method to make sure that everyone’s motivation and focus matches is the “One Most Important Thing” (O.M.I.T.): “In any collective endeavor, the prospect for success is directly proportional to the degree everyone agrees on what constitutes the One Most Important Thing.”

Let’s break it down:
One- What is the single focus that will achieve the desired long-term outcome (goals), for the dealership as a whole (not just individual departments)?

Most- What direction of focus automatically means that we will have the highest number of desired results, if achieved?

Important- Here we really mean something beyond money. What is the most important focus that will make everyone at the dealership feel “useful and necessary in the world?”

Thing- In this case “thing” is not an object, but an “aspirational objective,” that is larger than a specific business goal. What “thing” will engender the kind of loyalty and commitment that money just doesn’t motivate most people to give over the long-term?

While the specifics of an O.M.I.T. plan will vary depending on the individual dealership’s goals, as you might guess, plans that have the customer as the center tend to be most successful. It’s up to your dealership, as a team including both employees and managers, to determine what will work best for you. Effectively determined, communicated and applied to throughout the dealership, the real power of O.M.I.T. is that it creates a unified culture where everyone always understands what the one most important thing is, even during times when people feel overwhelmed. If employees or managers feel pulled in different directions, everyone knows what the default is. And it’s a focus that everyone can get behind and feel good about personally and professionally. O.M.I.T. helps eliminate mixed messages and the frustration they cause. It is a discipline and focus that can help ensure proper motivation, and dealership profit.

Thoughts? Has your dealership ever implanted such a strategy for unification and focus?

This week’s post is the third and final component of the SAM tool, the BDC Department Performance and Projection measurement.  This really brings everything home.  Now there is no excuse for not tying all dollars spent on marketing initiatives and staff member pay.  You can now project how many leads you need to have coming in to make the desired number of sales, based on industry averages and your own store’s numbers.  Using these tools is more important than ever in today’s economic environment.  I don’t know anyone who can afford to waste a penny these days!       

Access the complete Sales Activity Management Tool at the following link:
http://spreadsheets.google.com/ccc?key=pXHR0EqhMEb03uOYX6nZHYg&hl=en

Be sure to click on the “BDC Proj.” tab in the spreadsheet!  And you should have a Google account to access the documents.  In-put cells are highlighted in yellow as with the other parts of the tool.   

Share you experiences with these tools and post others that you have used successfully! 

In our ongoing quest to measure what’s working and what’s not, I have added another simple yet powerful to tool to help monitor important metrics. This BDC sales activity management (SAM) tool lets you tie your leads and lead sources directly to projected sales activities and results. Using industry averages and your own dealership’s data, you can tie all your activities together and measure their effectiveness. Again, the input fields in these spreadsheets are highlighted in yellow. Do not enter data into any of the other cells.

Visit the following link for the next section:

http://spreadsheets.google.com/ccc?key=pXHR0EqhMEb2sWCZtXXRnDw&hl=en

Again, you need a Google account to view the link.

Let me know if you’re using these tools and/or post similar tools you find useful.

Are you tracking your sales directly back to your leads? And do you also track the cost of the leads and how much you generate in sales from them? In the past this may have been difficult to do, but today there is no excuse for not measuring this. And as more marketing is done online, tracking just gets easier and more reliable. If you’re not consistently tracking these metrics, how do manage the pay plan for your ISM and other Internet staff members? If their compensation is not directly tied to Internet leads and subsequent sales, how do you determine their pay plan? How do you know what’s working and what’s not?

I developed a powerful, yet easy to use tool to help make these measurements, make sales forecasts and much more. Access the first section of the tool at: http://spreadsheets.google.com/ccc?key=pXHR0EqhMEb3XkrmF2AWkCg&hl=en.
(You must have a Google account to access it.)

VERY IMPORTANT: The yellow cells are the only input cells. If you change anything in any cells that are not colored yellow, the spreadsheet will not work as it is intended.

Enjoy! Please let me know if you have any questions and share your experiences. More tools will come in this series.