“These are all things that may help you justify your results. But is your dealer any happier because of this?”

I just finished reading a powerful book titled “Extreme Ownership: How U.S. Navy SEALs Lead and Win” by Jocko Willink and Leif Babin, two highly decorated Navy SEALs who led key operations in Iraq. The book is all about how to drive and sustain superior performance in the military and the business world.

As I read through it, I could not help but think of how we in retail automotive make many of the same mistakes that are highlighted in this book. For example, how many times have we delegated ownership and blamed others for our results? How often do we point to vendors, the economy, leadership, weather, and a myriad of other factors to excuse our performance? I know I’ve made these mistakes hundreds of times so I started thinking of specific steps that we, as dealership managers or vendor partners, can take to improve.

An Example That May Sound Familiar…

As the month comes to an end, pressure starts building. We’re squeezing every lead in our CRM as hard as we can and we’re doing everything in our power to reach sales goals. As sales managers, we push our team as hard as we can. We call on prospects ourselves and do what is needed to get them into the store. Unfortunately, we know we’re unlikely to succeed so we start looking for an explanation as to why we couldn’t hit our targets.

We look at the performance of our team, the quality of our leads, or the way our conversion rate is calculated. These are all things that may help you justify your results. But is your dealer any happier because of this? Are your commissions any higher because you convinced your boss that this was not your fault? Wouldn’t it be more productive to focus on what we need to do to hit sales goals moving forward? Here’s where this book most resonated with me…It reminded me that there’s a better way to do this!

The Better Way

These two top-performing Navy SEALs propose that the three Laws of Combat are the path to success when it comes to managing the performance of a team in business. Here’s a brief explanation of the three laws and how you can apply to the example above.

Law #1 - Simple

As leaders, it is our duty to translate complex messages to simple terms. If we want your team to sell 100 cars per month, have we explained where this number came from and why we feel it is realistic? If we want them to improve their conversion rate by 3%, have we looked at our metrics and translated to specific areas they need to focus on to achieve that goal? Is our month end reporting process so complex and manual that it is impossible to identify what happened? The simpler your tracking process, the more effective your message will be!

Law #2 - Prioritize & Execute

Every leader deals with conflicting priorities. There’s always a thousand things going on and not enough time to take care of them. As such, it is critical for us to get our team focused on the one or two things that are most important to our long-term success. It is our duty and responsibility to prioritize objectives and communicate to our team in simple terms. Once we pinpoint those, it’s all about taking 10X action to go after our biggest opportunities! The next time you’re communicating a goal, instead of saying “I want you to increase conversion rate by 3%”, try focusing on the most important actions your team can take to achieve that goal (e.g. “Make sure clients are being called within 20 minutes of their Internet lead submission”). Tracking, inspecting, and holding our team accountable for prioritized objectives such as this one will ensure you’re moving the needle every time.

Law #3 - Delegate Command

Although every leader should take extreme ownership for outcomes and results, teams must be given the freedom to make decisions and operate within certain boundaries. Striking the right balance between freedom and direction is critical to achieving your goals. Your team must feel like they had a say in your objectives, this will create a sense of urgency and ownership in them as well. How are you empowering your managers to achieve their goals? Are you giving them all the information they need to make their message simple and prioritized? Are you giving them the tools needed to track their progress and execute?

Wrapping up…

Although these three laws of combat sound intuitive and simple, this book was a great reminder that we are constantly making these mistakes (many times without even noticing!) and that our businesses are suffering because of it. Taking these three steps can make an incredible difference!

What are your thoughts? How would you apply the principles of Extreme Ownership to your own work?

More than 60% of all Internet lead responses we scored in the last 30 days did NOT include a strong Call to Action....How many opportunities are you missing out on because of this?

For years, we’ve asked Internet Directors and BDC Managers one question: “How effectively are you handling your Internet leads?”. The answer is not surprising: “We respond quickly and typically beat our internal benchmark for Appointment Set Rate (Appointments / Contacts).”

Unfortunately, as soon as we start reviewing Internet lead responses, we see a much different story. While it’s great that you’re responding quickly and beating internal benchmarks, you must be aware that you’re almost certainly throwing away numerous opportunities! Why?

The five mistakes below are the ones we most commonly see in Internet lead responses. Avoiding these is a great first step towards maximizing the value of your Internet department.

Mistake #1 – Taking Too Long to Respond

Research has shown time and time again that prospects contacted within 60 minutes of their first lead submission are up to 10X more likely to engage with you! Yet our study shows that 8-10% of all inbound Internet leads are NOT being contacted within 60 minutes.

If you average 1,000 Internet leads a month, this means you are potentially missing out on 100 opportunities! If you closed those at a 15% rate, you would be selling 15 more cars a month. How’s that for leaving money on the table?

Mistake #2 – Not Calling the Prospect Within 60 Minutes of Submission

“Why would we call the customer if they submitted an online form? They probably prefer to be contacted via e-mail”. We hear this all the time. In fact, our data shows that 35% of Internet leads who provide their phone number are NOT called within 60 minutes of their form submission.

If we already know that contacting within 60 minutes is critical to engaging the prospect – shouldn’t we try to contact them over email AND phone? And let’s be honest, would a prospect give you their phone number if he or she did NOT want to be contacted? The answer is a big fat NO, yet you’re missing on opportunities by not calling them!

Mistake #3 – Not Including a Strong Call to Action

“Hi Customer, thank you for your inquiry. When would you be available to come in for a test drive?” This is by far the most common “Call to Action” we see in the lead responses we score. In fact, we see a soft CTA like this one in 70% of them!

Do you think this is strong enough that it would get a prospect to come into your dealership TODAY? No, you’re not giving them a reason to move fast. In fact, this gives them an excuse to stall! They know you want them to test drive because that improves your chances of closing the deal, but what’s in it for THEM? Will their price be significantly better if they show up TODAY? Any major specials that they could take advantage of if they move quickly? You MUST create urgency in your response!

Mistake #4 – Not Addressing the Customer’s Questions

This is a personal favorite. You’re so efficient in your process that you respond quickly with a templated email but completely ignore the customer’s questions! We see this in over 20% of the lead responses we score. How would you feel as a prospect if you were treated like this?

More importantly, a question is a clear indication of the customer’s buying criteria – it tells you EXACTLY what they care about (that’s why they asked you about it!). How will you earn this prospect’s business if you don’t even understand his/her priorities? Remember your lead process MUST be focused on the prospect’s needs, NOT your own.

Mistake #5 – You’ve got a Great Process…That Nobody Follows!

By now, you may be saying “Interesting information, but these steps are already covered in my Internet lead response process, so this really doesn’t apply to us!” If this was your reaction, join the club. Most managers we work with feel the same way...until they see the data! Remember, the strongest process in the world will mean nothing if you don’t execute. Are you consistently training, coaching, and holding your team accountable for strong Internet lead responses?

So…What Should You Do About This?

• Define the problem. Which of these mistakes are you making? Identify the specific areas that you need to focus on. Start by routinely inspecting a representative sample of your lead responses or getting somebody to help you with this.

• Develop an improvement plan. How will you coach? Who will lead the charge? What will you focus on? How will you inspect to ensure you’re making progress?

• Execute. You must be consistent and disciplined. Improving your Internet lead responses will not happen in a day. It will take time, but those who stick to the plan and act day in and day out are sure to see the results!

I hope this can help you improve your Internet lead Appointment Set, Show, and Sold Rates. I would love to hear from you – What problems are you seeing with Internet lead responses? What have you done to improve? Any other ideas?  

As a Service Engineer with Cummins, I spent years working with dealers to help them solve their biggest challenges. From improving customer satisfaction to aggressively reducing cost, every new assignment came down to one goal – developing and implementing a repeatable process to improve performance.

The most successful companies in the world perfectly understand this. Toyota may call it “Just-In-Time” and Cummins “6 Sigma” but fundamentally these systems are addressing the same challenge - you need a reliable process for tackling business problems and improving your Key Performance Indicators (KPIs).

Here is a 5-Step process based on the proven 6-Sigma methodology that auto dealerships can use to embrace continuous improvement. I have provided an example of how this framework can be used to address a real-life challenge well known to dealership managers: 

1. Define your objective and target metric. Two questions that will help:
   • What is the problem that you are trying to solve?
   • What is the operational metric or KPI that you want to improve?

      

2. Measure your starting point. If you want to improve a metric from X to Y, this step is about defining X and Y.  Three questions that will help:
   • What’s the current value of the metric that you want to improve?
   • How does that compare to historical values for your dealership?
   • Are your objectives realistic?

      

3. Analyze your existing process and define what are the specific steps / metrics that you want to focus on.  
   • What are the current processes that impact this metric?
   • What are the “leading indicators” and “activity-level metrics” that we should focus on? (i.e. you don’t want to focus on a “post-mortem” metric that you cannot directly control)
   • What can we do to improve those leading indicators?

      

4. Take Action. This step is all about execution. Remember, all your analysis will be wasted if you don’t follow through with consistent action!

    

5. Control. You must continuously follow up to ensure you are holding your team (and yourself) accountable to the agreed plan. It is imperative to consistently monitor your progress and make adjustments as needed to maintain your course.

    

Auto Dealership Example:

Step 1 – Define your objectives:

My objective is to improve the Total Gross per month of my used car department.

Step 2 – Measure the starting point:

Right now, the Total Gross is at $100k per month for this department. This number had been growing for the last three years but it has flattened out over the last few months. As such, I am looking for a way to re-ignite growth.

Step 3 – Analyze your process and identify key metrics:

We start by highlighting the two main elements that are included in any gross profit calculation:

Total Gross Profit for Used Car Department = (# of Used Cars Sold) x (Average Gross Profit)

Our initial reaction would be to laser-focus on used car volumes and average gross profit. But these are “post-mortem” indicators, the point of this step is precisely to shift our focus to activity level metrics that we can directly influence and control.

We start digging deeper by drawing a process map like the one below. This shows a high-level summary of the steps that are involved in selling a used vehicle. This starts to reveal the potential levers we could pull to improve our top-level metric (i.e. total gross for used car department).

We then take this analysis one level further by identifying the potential activity-level metrics that we can directly influence and could have the highest impact on our Total Gross Profit.

In future articles, we will go further into this topic and show you how analytics can help you determine which activity-level metrics have the most impact on the top-level metric.

We are now ready for Step 4, where we can develop our action plan to track and improve the activity-level metrics that will most significantly impact our leading indicators and in turn the top-level metric in scope.

Step 4 – Take action:

The focus of this step is to implement the processes that will enable you to track and improve your activity-level metrics. In this specific example, a few actions could include:

• Analyze your historical data to determine which cars you have had the most trouble selling in the past. Steer away from these as you add cars to your inventory.
• Ensure every VDP includes detailed descriptions and pictures.
• Develop a “No more than 60-day rule”. If a car has been in your lot for more than 60 days, then auction it. You must have a system that quickly allows you to identify “problem vehicles”.
• Automate the process of tracking all your metrics so you can have one source of truth. 
• Do not buy any cars if the total cost to market (purchase plus reconditioning) will be higher than 90%.
• Develop an automated process to track transactional discounts and hold your sales team accountable for maintaining the last Internet price.
• Develop a re-pricing process that includes checking your CRM data for active leads or appointments on a specific vehicle.

Step 5 – Control and monitor progress:

The focus of this step should be to develop an accountability-focused process to ensure you’re making progress as expected. This could include a weekly-meeting between the GM and the inventory manager to review the activity-level metrics that you have decided to focus on. Whatever your desired process for accountability may be, the key is to maintain your focus on these seemingly little things that are sure to yield long-term positive results.