Recently, in my hometown of Kelowna, BC, there was a Canadian PGA Tour Event hosted at the Gallagher’s Canyon Golf & Country Club.  At this event, 16-year-old Matt Hopley, who qualified for the tournament as an Amateur, put his skills on display for us to see.  But what was more impressive than this accomplishment, was the way he carried himself on the course.

After leaving his birdie putt short on the first hole and getting a bogey on the second, he calmly carried himself from the second hole to the third, seemingly not losing an ounce of confidence.  What’s more, he noticed a family that had 2 young up and coming professional golfers following Matt’s every step.  He had the awareness to slow his walk down and acknowledge the boys with a genuine smile and wave.  As the tournament went on, Matt showed signs of brilliance but also struggled at times with bogeys and double bogeys.  At 16 years of age, he didn’t change his demeanor whether he had a birdie or a double bogey.

 

What does this have to do with sales?

What if we look at double bogeys as a lost sale or rejection and birdies as a sale well-earned?

We know sales is a roller-coaster of emotions but it doesn’t have to be that way if we know how to control them the way Matt does. Golfers never get too high on themselves, even when they have a string of birdies (sales) on the go.  And they never get too down on themselves when they go on a bogey (lost sale, rejection) run. Why? Because they are the most self-aware professionals on the planet in my opinion.  They know that the birdie streak will end, and the bogey run won’t last.  They prepare as well or as much as any other professional athlete.  Their paycheques are directly linked to their individual performance so they can’t chance to have their emotions get the best of them. 
 

There is much to learn from professional golfers and amateurs like Matt.  Imagine how much more success and fun you could have if you had full control over your emotions?!  I encourage you to read biographies and study professional golfers to get an understanding of how they are able to handle the pressure and stress that comes with their profession.  You have more in common with professional golfers than you may realize.

How clean is your vehicle right now on a scale of 1-10? Why does this matter when it comes to selling vehicles? Personal Branding.

Have you ever seen a Real Estate Agent’s vehicle with their business info on the windows? I’m sure you have, why do they do this? Marketing, advertising, and personal branding.  So why aren’t Sales Consultants in the automotive industry doing this as much as Real Estate Agents are? You're already paying for a mobile billboard (your vehicle), may as well leverage the opportunity!

It doesn’t matter if the Sales Consultant is commission based or not, they are running their own business and should take the same measures that business owners do to promote themselves and their brand.  When you promote yourself on your vehicle, it’s imperative to keep it clean and professional looking.  Why? Because when I see a dirty vehicle with someone’s business name on it, the impression I’m left with is the person is unprofessional, lazy, doesn’t care about their reputation, isn’t willing to do the little things, etc. If I see a vehicle that is constantly clean and well kept, it gives me the impression the person is professional, cares about the details, has a good work ethic, and understands that their reputation matters.

I rinse my truck every morning after dropping my son off at school.  $3 at the local car wash gets me 3 minutes and 40 seconds to give it a spot-free rinse.  A worth-while investment.  And because I’m doing this for my company, I can write it off at year-end.  As you can see, not a lot of time or money exchanged for my mobile billboard.  Talk to your dealership and see how much they are willing to contribute to have their dealership name put on your vehicle.  Include your own website as well if you have one, your social media handles, cell phone number, and all the other standard info.  But don’t go through the work if you aren’t willing to keep up with cleaning your vehicle.  If you have your name on your vehicle but it’s constantly at 8 on the dirty scale, you’re doing more harm than good.

I don’t hire people who walk slow and I wouldn’t hire a Sales Professional that can’t keep their vehicle clean.  These are the little details that matter so much, it’s all about personal branding and the impression you’re leaving on your potential clients.

Derrick Woolfson’s recent conversation starter on paid time off in dealerships is an intriguing discussion that as dealers, we should be talking about more.  We should be doing this so we can pull ideas from each other in an attempt to make our operations and culture even stronger.

Here is what we do at Woodworth Chrysler Dodge Jeep Ram Ltd.

• We’ve established a culture where holidays are rarely discussed in terms of our team members wanting to take more time off
• We are extremely flexible with our team having to leave early for their kids sporting activities or other personal events that they are wanting to attend
• We don’t track or monitor the hours that they leave early which leads to them respecting us more and inherently drives their productivity
• We cover for each other which enhances our personal relationships within the dealership
• Because we’ve established trust with our clientele, they are flexible with us when it comes to scheduling deliveries or test drives.  And we aren’t the least bit concerned about them shopping elsewhere if we have to put the delivery off a day because our Financial Services Manager had to leave early to go coach his girls baseball team
• We’ve never had an argument or made a big deal about our team members needing time off, it’s always paid either through their holidays or through us covering for them
• Our commissioned team members don’t have set schedules, they can come and go as they please.  What’s ironic is that they typically end up willingly working more with this structure
• We don’t have our salary only (about 10% of our team) team members punch in or out to track time
• If our team needs a day off for a legitimate reason, we don’t deduct their pay or take it off their holidays.  They get paid for it either way
• We’re intentionally understaffed.  We have 17 team members (18 if you include me but I live 1,000 miles from the dealership) and sell a little over 400 retail units per year, plus additional sales for Wholesale, Fleet, and Auction. This creates a culture where we are able to build stronger teamwork.  When we see that someone is overwhelmed, a team member steps in and helps them out.  If we were overstaffed, as many dealers are and as we have been in the past, it creates a situation where we are less productive because it’s too easy to visit and slack off

It’s funny, when you trust your team, they return the treatment through their productivity.  When our team is at the dealership for 8 hours, they are productive for 7 of them (factor in lunch and breaks).  When I was at the other dealership for the first part of my career, it was stressful to ask for a day off.  And if I did want one, I had to explain why I was taking it off.  They didn’t factor in the hours I put in on Saturday’s at all.  It was like it didn’t even matter that I worked 60 hours last week.

To further validate this works, we increased our retail sales volume 61% from 2013-2016 and have since sustained it.  I’d argue with any dealer that we have one of the largest Profit Per Employee numbers in the country.  And because of the trust and reputation we’ve earned over the years with our clientele, we’re able to keep our Client Acquisition Cost under $250 when the NADA average is $600.

We’re that small town dealership that clients drive out of their way to do business with and people want to work for.  But with that, comes a tremendous amount of responsibility, discipline and consistency. It's my responsibility as a leader and owner to have our team work in an environment that they don't need to escape from.

We’re a bit unconventional with our operations, but is that such a bad thing? Keep in mind that we have the luxury of being a smaller dealer and because I’m an open-minded owner, we can test and experiment as much as we like.  What I’ve mentioned in this post is a result of trial and error, as is everything that I talk about.

Create a culture where your team members don’t live for vacations and you’ll find more success!

Dale Pollak is a former Dealer, Author, and the Founder and CEO of vAuto.

Chapter 1: Margin Compression

• The automotive industry is in worse shape than anyone cares to admit
• The way OEM's are operating is harmful in many ways
• Our industry is plagued by lack of transparency
• Every dealer is out for themselves causing a lack of co-operation and growth
• The last 10 years has been easy in the automotive industry, skewed profits
• Inefficiency and lack of transparency from the top (OEM) 
• Margin Compression - Why selling more cars isn't the answer
• Sales are going to flatline at best, more likely to decline
• New Vehicle Stats according to NADA:
  •     In 2005 Dealers sold 852 units/year on average with a $1,420 front-end gross
  •     In 2009 Dealers sold 615 units/year on average with a $1,049 front-end gross (26% decline from 2005)
  •     In 2014 Dealers sold 1,003 units/year on average with a $808 front-end gross (43% decline from 2005)
  • During this time period, dealers had to pay 20% more for their new inventory due to increased invoices from factory
  • Dealers investing more money in new and used inventory and making less money, and it's getting worse
• Used Vehicle Stats:
  •     In 2005 the average used vehicle sold for $14,925 with an average profit of $1,791 (12% of retail)
  •     In 2014 the average used vehicle sold for $18,700 with an average profit of $1,608 (8.6% of retail)
• 5 Factors that will hold dealers back from profitability:
  •     1. Volume Limits - a coming downturn in the economy
  •     2. Interest Expense - odds are it will increase, floor plan will increase as well
  •     3. F&I Regulations - in 2005, F&I profit was 25%. In 2016 it was 40%. The Commercial Financial Protection Bureau is working on     putting strict limits on markup in the F&I departments
  •     4. Competition - 3 categories: Top 10%, Middle 20%, and Bottom 70%
  •     5. Ongoing Margin Compression - Internet making it harder to make money
• Those who operate with the "more sales more money" mindset (VCD, BCD) are in serious long-term trouble
• There's no guarantee that we will continue to receive VPA and stair-step support - Where would we be without it?
• I'd say were in the 20% category with room for improvement and potential to hit the top 10% in terms of operations effectiveness
• Don't structure goals or plan for year over year growth
• Make up the decline by selling more cars more efficiently
• 4 Assets for Dealers:
  •     1. Clients - use tech to our advantage, have them spend less time at dealership, be transparent
  •     2. Inventory - be smart when ordering, with dealer transfers, and turnover on how long our new inventory sits on ground
  •     3. People - strive for low turnover, hire slow but fire fast, higher turnover is costly
  •     4. Facilities - first impression, keep them clean and up to date
• In 2o16 the average dealer sat on a new vehicle for 100 days before selling it, the top 10% sold theirs in 70 days
• The best dealers retailed 55% of their used vehicles in 30 days (if they had 10 come in on trade, they sold 5.5 of them in a month)

Chapter 2: The Quiet Killer of the Automotive Industry

• Don't become dependent on factory incentives
• OEM's are promoting a negative culture in dealers with bonus money
• Dealers used to get paid on every unit, now it's a pyramid where it's all or nothing for dealers now
• The VPA has become operationally necessary for a lot of dealers (67%)
• Dealers make money by pleasing the OEM more than the client
• VPA and other forms of incentives make dealers do stupid things due to its all or nothing structure
• Month-end is the worst because one dealer needs VPA more than the other, forcing our hands to make a tough decision.  Match their price when we aren't in the same situation, or let the client walk.  The client doesn't understand why the other dealer can beat us by $3,000 which can have a negative impact on our reputation
• Dealers are now saying this is a no-win situation where the tail always wags the dog
• New vehicle buyers don't trust dealers, they become dependent on Edmunds and TrueCars for confirmation of what they should be paying.  But those prices are skewed because of the month-end aggressiveness dealers have to operate by in order to get their VPA bonus, so they are selling cars at a loss which misleads the consumer who's researching online
• It's ironic that the OEM incentive is meant to help dealers but actually it hurts the profit on the front-end
• Higher volume dealers have an advantage because they get higher bonus money, essentially lowering the invoice prices on new vehicles when they hit and exceed their VPA.  They are getting paid on 40 new vehicles compared to us at 20.  They get double the money to work with to buy down trades

Chapter 3: Today's Transparency Challenge - Dealers, Factories, and Fuzzy Math

• Let's face it, consumers don't like to buy cars from Dealers
• Only 17 out of 4,000 buyers enjoy the current buying process from dealerships according to AutoTrader
• 99% of Consumers expect to negotiate or haggle on price according to Driving Sales
• Why is this so bad, and how do we fix it?
• We have inherited a poor historical reputation for various reasons
• There was no regulation on advertised prices so dealers could charge whatever they wanted for a new vehicle
• Dealers manipulate their prices in marketing due to VPA and Fast-Start programs, making it confusing to buyers

Chapter 4: From the Upper Hand to the Giving Hand

• It used to be less transparent so consumers were easily taken advantage of and they were none the wiser
• Perhaps if today's consumer understood the old way of selling, they would appreciate how it's done today.  At the very least, it's a little transparent
• Traditional selling isn't meeting today's consumer expectations
• It's imperative to keep pricing consistent across all channels
• Buyers want transparency yet dealers are reluctant to provide it. Those who do, have an advantage
• Information from AutoTrader for BidzAuto:
  • 72% of Consumers want to spend less time at the dealership
  • 56% want to start the process online
  • 45% want to remain anonymous until completely necessary
• Trust and responsiveness trump price according to Driving Sales
• 56% of consumers would buy from the same dealership again if this preferred way of dealing was met
• Consumers want dealers to give the price first, they want us to make the first move
• 3 Steps to lend a helping hand:
  • 1. Engage
  • 2. Communicate
  • 3. Automate
• What's the goal with your website? To get an appointment, sell a vehicle, start a conversation? How is your website aligned with your goal now?
• Let the consumer structure the deal without providing personal information for optimal success (payments, price, term, finance rates, etc. available without providing info)
• 85% of consumers want the F&I information before getting a quote
• 66% of consumers say they would purchase if they had the appropriate information ahead of time
• At some dealers in the States now, they are making more per transaction and closing at a higher rate online for F&I than they are at the dealership

Chapter 5: Buying a car in the not so distant future

• Client in and out of the dealership within 45 minutes total, start to finish
• Consumers can make up majority of deal through dealer tools
• One price model coming on strong in the industry
• Lexus has a "No Haggle Price" Program, Cadillac does as well "Platinum"
• Autonation and Sonic Automotive are major supporters of change 
• In 15 years we'll be a glorified delivery service
• Online sales gross more than in-house
• Traditional beliefs will increasingly become barriers to future success

Chapter 6: Making your people a higher priority

• Dealers invest high in people but manage poorly
• Human Capital Management is the largest inefficiency in the industry today
• Employee pay is the highest expense but still have a 37% turnover rate due to poor management
• It's an industry embarrassment
• Hire slow, fire fast
• Depend too much on intuition in the hiring process instead of a system
• Dealers are becoming more flexible with hours, wage, and improving culture to keep turnover down
• The Top 10% have happy employees which translates to happy clients
• The Top 10%: 1) Assess themselves - where can we improve? 2) Be consistent - structure to everything 3) Investment - ongoing training, defined career paths for employees
• Need to have a people first organization

Chapter 7: Automotive Retail Regulation

• CFPB is out to lower markup on F&I profits but NADA is pushing back
• Want flat fees instead of markup
• Public views CFPB as a noble business so not likely to go away
• Compares current dealer F&I situation as the housing bubble (long-term loans, easy approvals) and CFPB is here to protect the people
• $2,000 average back-end profit for dealers
• Autonation doesn't sell used (retail) vehicles with open recalls without a window sticker notifying the client
• Look for open recalls on potential trade-ins before providing a value because it can lower the value of the unit and take longer to sell if you are waiting on parts

Chapter 8: Dream Homes and Dealership Data Streams

• Dream home developer metaphor: you pay more for a reputable contractor but you find out later that you have to buy fixtures, faucets, etc. through them. They control the price so you pay more.  This is what dealers face with DMS providers.  They charge you unnecessary fees but you have no choice to pay them. 
• The data that flows through the dealership is being surcharged unnecessarily
• The bulk of data in our system hackers don't want, so security backup is irrelevant, yet we pay for it
• We are being taken advantage of by solution providers
• "Pay to play" data access isn't sustainable

Chapter 9: A kindly call for OEM efficiency on the production

• OEM's could pay more attention to consumer demand when it comes to producing vehicles
• Dealers are ones who suffer due to interest, changes in incentives, slow moving cars, used vehicle prices
• Out of a 200 unit inventory, 1/2 are dead stock (3 months or older)
• Used vehicle inventories are higher in price because they are only a few years old. This trend also has a negative effect on parts and service (lower safeties)
• 45% of inventory is less than 3 years old
• Near new vehicles are more difficult to sell
• Just as dealers have to become more operationally efficient, the same goes for OEM's
• OEM's are after short-term profits, no long-term thinking

Chapter 10: Do it yourself or pay someone else?

• Metaphor: Change own oil, cut own grass.  Could do it yourself better than the hire could. But what's the value on productivity in another area and your time?
• Used Vehicle Reconditioning:
  • Takes 7+ days to get vehicle reconditioned
  • $85/day in holding costs = $600 per week in lost profit
  • Measure delays in service and tech efficiency - how is this negatively affecting our profit
  • Look into outsourcing for quicker turnaround, saves money in the end (safety and detail)
  • 1st impression is crucial, have detail department keep current inventory clean at all times

Chapter 11: A taxing problem that goes unaddressed

• Packing used is no longer relevant
• High packs are high taxes on used inventory
• Charge added to good or service that can't be recuperated is a tax.  If you pack $500 to a unit but don't make up that revenue, it's essentially a tax
• Packs were put into place to lower commission to managers and salespeople, cover unexpected costs on used, customer loyalty programs, etc.
• Be more effective in trade values to lower risk of surprises
• If you have a $1,000 pack and take $300 to apply for customer loyalty program, you're taxing $700
• Higher packs are nothing but problematic
• What's your true inventory cost on used after taking out pack and retail reconditioning costs (versus internal)
• Near impossible to make a good profit on used between pack and retail safety/reconditioning work
• 2 Dealer Scenario: Dealer #1 has a $1,000 pack plus charges retail for reconditioning.  Dealer #2 has a $250 pack and charges internal for reconditioning. Dealer #2 ended up with an average of $500 more on the front-end profit and sold 2x as much inventory as dealer #1
• Dealers with $1,000 pack and retail charged more for their inventory to make up profit which became counterproductive, resulting in lower sales. They were selling from the bottom up
• "I contend that for a dealership to tax itself into prosperity is like a man standing in a bucket and trying to lift himself by the handle"

Chapter 12: A call for investment minded inventory management

• If I needed investment advice, the last person I'd talk to is a Used Vehicle Manager
• Aged units are bad investments that get worse with time
• Look at your used inventory as an "Investment Portfolio"
• Hope indicates lack of control. "I hope someone comes along that doesn't know any better and pays too much for this unit" You don't want to hear "hope" from your investment advisor, you want a sure thing
• Take the 1st opportunity to get out of a bad investment
• Manage investment quality not age
• Age is the wrong metric to manage.  It's the money or quality of vehicle that matters. If it's bad at Day 1, it will only get worse as time goes on
• Vehicle Assessment:
  • Is it wholesale, auction, or retail
• • What's the investment number versus sure to get money gap (ROI)
  • What's the current supply and demand of the trade
• Set a hard cap on your used inventory investment portfolio
• Here's $800,000 to work with, can't go over. Have a budget
• Used vehicle managers are like "trust babies", they can make financial mistakes but the trust is there from the dealer to always bail them out, giving the impression there's an endless supply of money and it forms terrible habits/thinking
• Maximize ROI on every used vehicle

Chapter 13: Operational Efficiency Imperative for Dealers

• Dealer groups are getting bigger through more acquisitions
• Used - sell 55% of their inventory in less than 30 days, 45% in 45 days
• New - sell 50% of their inventory in less than 30 days, 40% in 90 days
• * Less than 10% past the 90 day mark - How much of our inventory new and used is past 90 days?
• Dealers must meet client expectations through full transparency and convenience
• $600 is the average acquisition cost for new vehicles according to NADA
• Have to get the most out of our tech.  Like a smartphone, we're probably only using 20% of its true capability
• Have to track KPI's (Key Performance Indicators) to maximize operations
• Small dealers have a "David" (david and goliath) advantage over larger dealers
• Dealers who are most open-minded and willing to adapt to change will be the ones who succeed regardless of size

Chapter 14: A Kodak moment for our industry

• Ride-sharing companies are on the rise
• Operation costs are on the rise
• People are headed to urban areas where cheap public transportation is available
• Self-driving vehicles are the future, they can act as a personal chauffeur
• Pay as you go services for vehicles will become more common
• The auto industry could be the next Kodak

Chapter 15: Farmer Todd finds his Blue Ocean

• He bought more land, specialized in certain crops, and cut expenses
• He specialized in christmas trees
• What is our Blue Ocean strategy at Woodworth?
• How are we making the competition irrelevant?
• Blue ocean strategy generally refers to the creation by a company of a new, uncontested market space that makes competitors irrelevant and that creates new consumer value often while decreasing costs

As I was getting ready to play my 54th hockey game of the season, I bent over to tie my skates and I could feel a pain in my lower back that I had never felt before.  It was subtle at first, so I never thought much of it and kept going.  Over the next few days, the pain progressively got worse.  What started out as a minor 3 out of 10 on the pain scale turned into a 10 out of 10 where I was almost in tears getting in and out of my truck.  This began in February 2017.

I’m writing this from my couch with an ice-pack on my back and pillows under my legs to relieve the pressure on my lower back.  The bulged disc between my L4-L5 and the herniated disc between my L5-S1 is causing constant pressure on my sciatic nerve.  At 33 and someone who’s always looked after his body, this is frustrating and typically not supposed to happen.  In addition to the frustration, I’ve invested over $10,000 in treatment (personal trainer, ozone injections, prolotherapy, PRP treatment, etc.) and yet to have found relief.  For Canadians reading this, you can relate that this is a lot of money considering we have free health care.  There is a minimum 6-month wait to see a surgeon and it usually takes the same amount of time to get in for an MRI.  Free healthcare is great, but not always convenient.  There are times where I’d rather pay for convenience. I’m still waiting to see the surgeon and there is no indication of when that will be or when I will get in for surgery.

But there are far worse things to go through in life. If it wasn’t for countless hours developing my mindset, I’d be in an unhealthy mental state considering we’re 16 months from when the pain first occurred.  I’ve had times of relief but also a time where I went 7 weeks without being able to get off the couch or leave my bed, the pain was that excruciating. 

Here’s why gratitude matters and how it has helped me get through a difficult 16 months:

• I can’t move now but I will soon, in the meantime I can still provide for my family
• I can’t move now but I will soon, in the meantime I can still watch my kids play
• I can’t move now but I will soon, in the meantime I can still hear my kids laugh
• I can’t move now but I will soon, in the meantime I can still operate my businesses
• I can’t move now but I will soon, in the meantime I can still read and write
• I can’t move now but I will soon, in the meantime I can still eat healthily and drink clean water
• I can’t move now but I will soon, in the meantime I can still pay my bills

The point I’m making is that no matter the situation, it can always be worse.  I’m incredibly fortunate that I can work from home and still contribute to Woodworth Chrysler Dodge Jeep Ram Ltd. where we had our 2 best months in its 33-year history in April and May of 2018.  I can still contribute to our startup BidzAuto where we are still on target to launching this fall.  I was still able to write my first book and have it be released on time at the start of July.  I was still able to expand my coaching business and gain clients, and I am now coaching General Manager’s to help them improve their overall operations.  And I have incredible support from my family which made this situation much easier to get through.

There are few who have this opportunity and I don’t take it for granted.  If you’re in a situation similar to mine, remember that it can always be worse so be grateful every day for what you have.  You can’t be grateful and depressed at the same time, it’s impossible. Start your day with gratitude!

Countless hours of listening and note-taking has led me to believe that the following list is the most valuable for Automotive Professionals that I could possibly put together at this point. 

I’m open to hearing more suggestions and recommendations!

PODCASTS

Impact Theory – Tom Bilyeu

Tom is the co-founder of Quest Nutrition and he puts more work into researching his interviewee than anyone else that I’m aware of.  This leads to deep and riveting questions.  There are no real scripted questions which make his interviews fun and unpredictable.  His interviews are based on developing the mindset and challenging the status quo.  They have a YouTube Channel for the interviews as well for those who are more interested in videos than audio.

Dealers Compressed Podcast – Paul J Daly

Paul is a forward-thinking person who interviews like-minded guests.  He’s extremely relatable, humble, and genuinely cares about the future of the automotive industry.  He and his team put together an incredible video series based on Dale Pollak’s must-read book “Like I See It.”

The Ultimate Entrepreneur – Jay Abraham

A brilliant and arguably the best-ever Marketing genius, Jay provides invaluable strategies not only for marketing but for business operations as well.  This is where I began to understand the value in tracking Customer Acquisition Costs and Profit Per Employee.  What’s great about Jay’s Podcast is that he shares live audio from his seminars, something that you’d have to pay thousands of dollars to attend live.  Jays the master marketer and $9 Billion Dollar Man for a reason!

Auto Dealer Live – David Villa and Crew

Humorous and unscripted, the team does a great job of keeping you engaged throughout their weekly sessions.  You can watch their videos and/or listen to their podcast. With over 300 episodes, there is no shortage of content to learn from.  You’ll be hard-pressed to find another platform that’s as informative and fun to listen to than this one. 

AUDIOBOOKS

The Perfect Close – James Muir

I was never comfortable with closing the sale. Probably because I never had the right strategy where it didn’t feel like I was pressuring the client into buying on the spot. James does a brilliant job of simplifying the close and provides a no pressure, genuine approach to asking for the clients business.  There are 2 questions in particular that were a light bulb moment for me.  He also provides a track for how the client replies to these 2 questions. It’s a best-seller and has a 5-Star Rating on Amazon.  I’ve communicated back and forth with James on a few different occasions and I can tell you that he’s the real deal.  First class all the way!

Shoe Dog – Phil Knight

It’s my belief that as a Sales Professional, you’re an Entrepreneur.  Or if you’re paid off the bottom line in any way, you’re an entrepreneur because you’re in control of your income. You’re taking a financial risk by accepting a lower guarantee in exchange for potentially higher income depending on your performance.  In Shoe Dog, Phil Knight who is the founder of Nike, tells in detail his epic story of how Nike came to be and the challenges it faced along the way.  This is one of those rare stories that you could listen to in one sitting.  A great book for any entrepreneur.

Relentless – Tim Grover

A hard-nosed approach to work and business, Tim takes the no excuse approach to life.  He was Michael Jordan’s Trainer for nearly his entire career and classifies athletes into 3 categories: Coolers, Closers, and Cleaners.  He considers Michael Jordan as a Cleaner.  What I appreciate about Tim’s book is that there are no excuses for a weak work ethic.  We know lack of strong work-ethic and entitlement is a common theme with Millennials, this is their wake-up call.  You can’t help but be fired up while listening to Tim’s book.  There are lessons in here that we can all learn from and a reminder that hard work can take you a long way, especially in today’s society.

The Power of Habit – Charles Duhigg

Charles provides a clear understanding of why we do what we do. The decisions that we make on a daily basis are made up of the habits that we’ve developed over the years.  What’s encouraging, however, is that bad habits can easily be turned into healthy habits, and Charles shows us how it’s done.  There’s no question in my mind that bad habits have led to lost sales and poor management and leadership decisions.  Now with Charles help and guidance, we can improve our closing percentages and have stronger leadership which will lead to an increase in morale and a stronger culture.  This was an eye-opening read for me and I’m confident it will be for you as well.

HONORABLE MENTIONS

(Podcast), EntreLeadership (Podcast), The Dealer Playbook (Podcast), Mindset by Carol Dweck, Finding Ultra by Rich Roll, Drive by Daniel H. Pink

Are you as frustrated by traditional classifieds and auction sites as I am? 

Some problems I see with classifieds sites: monopolized pricing structure, drives the used prices down, difficult to get on first page to be effectively seen, is a glorified catalog. 

Some problems I see with Auction sites: high fees, paying a middle man to sell your vehicle to your competitor, monopolized pricing structure, break even can often be classified as a win. 

What if you had a platform that increased profits on pre-owned vehicles and the consumer actually wants to pay more? What if you had an alternative to sell and promote pre-owned vehicles online that was founded by the Owner of a Franchised Dealership? What if you could cut out the expensive middle man and still move inventory fast and effectively?

How would solving these problems affect the profitability, relationship with your clients, and success of your dealership?

I’m going to put you in my shoes as a 28 year old on April 15th, 2013:

I’m recently fired (long story), lost 6 years of client data so I’m essentially starting from scratch, and looking for work, it’s 8:30am on a Monday.

I get 2 phone calls and needed to make a decision.

Option #1

Go to a dealership that is 30 miles further away from my clients, not that well-known, sells 12 new vehicles per month, is in a community of 180 people, has had the same owner for 30 years, has a $20,000 annual advertising budget, in a building that has no air conditioning, no cell phone service, no water cooler, no coffee machine, no customer waiting area, no cell phone service, no wifi, graveled lot, and no real office (would have to make shift one with a desk from the 70’s and it would be located on the other side of a paper-thin wall where the pressure washer is for detailing). And yes this is really 2013.  I’d learn from someone who is essentially self-taught and I would have the potential to buy into the company at some point but no guarantee because I have to work for 6-months first to see if I’m a good fit or not.  And if I would even be considered a viable owner not only to the dealership but to the OEM as well.  Oh and my wage would drop 25% which would be difficult to handle with 4 mouths to feed, plus a dog, on that single income.

Option #2

Go to a dealership that is in the heart of where my clients are, is a household name and extremely well-known and highly reputable, sells 70 new vehicles per month, is in a community of 60,000 people, is one of the largest dealer groups in Canada, has a near unlimited budget for advertising, would set me up with the proper training that would nearly guarantee success, and is in a brand new $15 million dollar facility, including its own restaurant! The added bonus is that I’d be able to sell the same product which is all I knew at this point in my career. I’d get to learn from a family that has been and dominated the industry for over 60 years, has 30 dealerships, and the potential to buy into one or run my own dealership at some point.  Same as Option #1 where I’d have to work for 6-months to see if we’re a good fit together and if I’d be considered a viable owner or not by the dealer group and its OEM. 

Decision time….

Which option would you choose, Option #1 or Option #2?

By the time you’ve determined your answer, I’ve already made mine.  For those who know me already know my answer, and for those of you who don’t, I went with Option #1.  There is no right or wrong answer.  There was no guarantee of success or failure either way.  I was being pulled towards Option #1 for reasons I can’t explain. 

Since 2013, I’m happy to report that Woodworth Dodge now has air conditioning, more offices (added on to the dealership), a water cooler, comfortable client lounge with leather couches and a tv, wifi, cell phone service, a paved lot, we’ve 5x our advertising budget, and the last 2 months we’ve sold 29 new retail vehicles in each month for a total of 58. We grew our new sales volume 61% while keeping our customer acquisition cost (total advertising dollars/retail units sold) under $250, and I’ve bought the majority shares (80%) of the company.  I live in beautiful Kelowna, BC with my wife, 2 kids and black lab, while the dealership runs as good as it ever has back in Manitoba without me there.

Had I gone with Option #2, I wouldn’t have had the freedom I do now or the new opportunities that have presented themselves since moving to Kelowna that are proving to be life changing.  On the surface, Option #2 was certainly more attractive and looked like a clear cut winner but I knew Woodworth was the place to go. All I needed was an opportunity to prove myself and this was it.  Sure it was going to be a lot more work than Option #2, but the easy way isn’t necessarily the best way. Self-belief and intuition have played a major role in our families life and quite honestly, how the dealership operates and continues to thrive without me there.  It took a lot of hard work, long hours, courage, and belief, but Woodworth is a place now where people know who we are, in a good way. 

Trust your instincts and let them guide you, after all, they are the highest form of intelligence.

This is a follow-up article to one that I wrote last week.  I go deeper into why I think there is an epidemic in Dealers Marketing Allocation.  There are 4 marketing questions to ask yourself, I show how I would allocate a marketing budget for the average sized dealer, what we do at Woodworth Dodge for effective word of mouth advertising, how much our sales volume has increased over the last 5 years, and a breakdown of our customer acquisition costs.  

Marketing allocation is costing dealers an unnecessary amount of money, and in my opinion, even has a negative effect on company morale which I explain in the article.

There's a better way:

The Epidemic of Marketing Misallocation

Let’s have a look at a hypothetical yet realistic situation:

You’re a dealer and 85% of your advertising budget is geared towards attracting new clients, and 15% towards retaining your clientele. Yet your new clients make up 30% of your business.  So you're spending 85% of your budget on the 30% and only 15% on the 70%.  To top it off, of that 85%, you allocate 75% to traditional marketing and only 25% to digital marketing.

By the way, digital marketing is extremely affordable right now and it’s where the attention of your consumers is.  It’s only going to get more expensive as time goes on.  The automotive industry is known for being slow to change and digital marketing is case in point.

I can’t honestly say that this is how the majority of dealers operate, but I can say with confidence that there are dealers who are still investing in this ineffective approach to marketing.

Here are 4 Marketing Questions that you must ask yourself;

1. How much of your advertising budget is targeted towards drawing in new clients?
2. How much of your advertising budget is targeted towards retaining clients?
3. Which client is more financially valuable to the company?
4. Would you agree that you could lower your advertising budget and maintain your sales volume by targeting repeat/referral clients?

Traditionally, we focus our advertising on the price of our vehicles which influences buyers to think price first when they contact us.  Then, our Managers and Sales Trainers tell us to stay off the price as much as possible.  Not all dealers market this way anymore, but some do, and it’s part of the reason why we have a lack of trust between consumers and dealers.  Price still has to be a part of advertising but we must incorporate our unique value proposition.  Why should they choose you?

This is how I would allocate a marketing budget for the average dealership:

• 15% Traditional
• 35% Digital
• 50% Word of Mouth

Here are some things that we do for word of mouth marketing at our dealership:

- We have random giveaways to thank our previous clients for their business.  We'll announce it on a Tuesday and give it away on Friday.  It's important to know that we do not bribe our clients by saying "If you come in and buy and/or test drive, then we'll enter you in." It's only for those who have already bought from us, a genuine thank you.  Those are the only ones who are entered.

- We send a personalized gift to our client 30 days after they've purchased with a hand-written thank you card.  We note their hobbies and specialize a gift for them based on that information, our budget is $100 per deal.

- We give our Fixed Operations a weekly "allowance" where they can give away an oil change for example at their discretion.  The catch is they have to tell the client why they are getting a free oil change that day.  If we have a client who is always respectful, kind, and courteous, we have our Service Manager tell the client that when they come up to pay their bill, and at that point let them know that we have them covered for today. 

To me, marketing plays an underrated role when it comes to the morale of the dealership.  If you're focused on repeat/referral business, your morale will increase dramatically.  This becomes more challenging when you're focused heavily on attracting new clients.

Our customer acquisition cost for 2017 (total advertising dollars spent / total retail sold, new and used) was $247.  From 2013-2016 we grew our retail sales volume 61% and have since sustained that volume. It is my hope that this will help you invest your marketing dollars more effectively.

If you’re income is tied to the bottom line in any way, consider yourself a business owner or an entrepreneur. When you take this seriously, your perspective and performance improves drastically. 

Personal branding and development, marketing, reading on entrepreneurship and business, networking, and goal-setting all become priorities. 

Sunday’s are great for reflection and planning. I’ve found that short-term goals are more impactful than long-term goals because they allow you to stay hyper focused.

What are your goals for this week and for the month of June? You got this!