Leading a dealership through a recession is nothing new to the veterans in the industry. Because the economy is cyclical, every so many years the market contracts and dealers have to manage the scaling back of their business to meet the realities of new market conditions. Fortunately recessions don’t last forever, so the market always rebounds, and as it does dealers reinvest and grow.
We are currently seeing signs of positive growth in many dealerships signaling the time to reinvest and grow is upon is. However, rebuilding from this recession will be different than any other and its not just because this was one of the worst downturns on record.
Typically, if you are cutting expenses to match market conditions you focus on variable expenses, as they tend to be the most manageable. When you reduce costs you start by cutting those items that are the least important to the store first and cutting the more important items later, only if necessary. Then, when it’s time to rebuild, you would normally reinvest in the exact opposite order that you cut, meaning you would add back the most important items first and the least important items last. Eventually you would have built the store back to the investment/expense structure you had before the recession.
That process will not work today.
Dealers must rebuild from this downturn differently because while we were hunkering down, fighting the storm, the media world dramatically changed. The markets that we used to connect with our customers are now very different places. If you try to rebuild back to where you were before, you would be optimized for a market that largely is different and you will hit an expansive plateau of diminishing profits and loss in market share.
Consumer behavior changed over the last few years and new media outlets such as search and social media are now the predominant media sources for consumers. The new markets require that you shift your focus to different areas as if you want to dominate in the years ahead.
Here are a few tips to focus on:
1. Employee Skills: As you hire more people consider new skills that are critical in today’s world. Computer skills, especially online communication and social networking, are essentials for everyone, not just your Internet manager. You do also need more Internet sales people than you had previously. There is no difference between the retail and Internet customer, thus everyone on your team should be capable of handling an “Internet” customer. Hire those with the skills to handle Internet business.
2. New job roles: The new media markets have created the need for whole new positions inside dealerships. Search and Social Media is all about content. Do you have a content writer on staff? You should. Who is the brand voice for your dealership that manages your social media activity? Many stores are wrongly trying to outsource all of their social media. This is not good unless you believe you should outsource your relations with your customer. Hire or promote someone in your organization to be your voice online. These are just two of maybe a half dozen different positions I see cropping up at progressive stores that are proving to make a big difference.
3. Marketing: Don’t just jump into the same spends with traditional media because it’s what you were doing before the recession. Traditional media is not bad; in fact it can be very effective. But today, traditional media is in the supporting role, and is best used to support your online efforts. Two or three years ago this was reversed and traditional media was the leading media opportunity. Online marketing yields a cost-per-sale much less than traditional media so be sure to buy as many $200 deals before you go buy the $700 deals from TV and radio. Play in today’s reality, don’t live in the past.
The bottom line is that the economy is rebuilding and there are huge opportunities for the progressive dealers right now. Look at things through a slightly different lens and you will see huge areas to do things slightly differently and achieve for immediate growth.Write your post here