We had the pleasure to speak with Dale Pollak for the latest episode of the Dealers Compressed podcast. As expected, he had numerous insights on the state of the automotive industry, customer experience, addressing compressed margins, and much more.

All automotive specific points aside, it was touching to hear Dale's "why". When asked what he wanted his legacy to be in the industry, the answer is something I think we can all identify with. It doesn't come from a success or financial position, it comes from the heart.

In an era where we're all asking "how do I make more money?", it's important to remember to ask "how does this fit my customer?"

We all want to make more money. Even if we aren't money-driven people, we recognize the necessity of money in facilitating opportunity and growth. But we have to remember that there's no "get rich quick" solution or "magic" tool that will net us long-term solutions to making more money.

The reality is, making more money comes with pivoting our business back to our "why". Focusing on your position in the community and how you fit in to the community you serve will position your dealership for long-term growth and success.

What do you want your legacy to be?

Three household names. Three brands with opportunities to innovate. Three bankruptcy filings.

It might not be common knowledge, but Kodak actually invented digital photography in 1975. However, when the bulk of their profits came from film, what logical reason was there to advance the technology that would diminish the lion's share of their business?

The same can be said for Blockbuster. Blockbuster rented movies and charged late fees. After interest in a particular movie started to die down, they supplemented their business by selling the previously rented movies at a lower price than new DVDs. In 2000, Netflix offered Blockbuster the opportunity to acquire them for $50 million. Today, Netflix nears a $150 BILLION market cap while Blockbuster continues to operate a handful of stores in Alaska.

What could have these industry giants done differently? They could have paid attention to their customers; identifying and assessing how they would be served best. The "deafening and scary silence", as Dale Pollak puts it, in the lack of dealership conversation about self-driving cars, ride-sharing-services, online and direct-to-consumer retailing, and a list of other things is truly terrifying.

Opponents of any change to the current dealership model cite stats that most consumers wouldn't buy a new car with a 100% process, but they ignore all the data that says the majority of shoppers are frustrated with how long the process is, over half of shoppers feel anxious in dealerships, and that in the average of 24 touchpoints before a car is purchase, 19 of those touches are online.

Yes, people still want to kick the tires before signing the paperwork. That doesn't mean they enjoy shopping in a dealership.

This is a call for change. Stop ignoring the data that disagrees with you and start paying attention. Our friend, Gary Vaynerchuk, put it best in saying that people will push back saying "Well it's 2019 and I'm not dead yet", but they're dead in 2022. Are those 3 years that important? Dying sucks either way.

Let's take a note from the industries that have failed before us and work together for the success of this industry. How can we collectively serve our customers better?

It's evident that a level of change is needed in the dealership model. We've discussed hiring better, branding better, and countless other things to make a dealership a customer-first business that empathizes with their community. But, many dealers still hide behind feelings that these changes are too big to execute to right now.

I have two things to say to that: 1) It's not going to be easy, but nothing worth doing is ever easy. 2) It isn't expected to happen overnight. This is a long game. If there was a tool that could reinvent business overnight, it'd be groundbreaking. But success is one step at a time. So let's start with a step you can implement today.

Thanks to all the advancements in technology, we have more data than ever. People are tracking their steps, sleep patterns, and a bunch of other stuff that they probably aren't going to actually analyze or fix.

But in business, there's still data that matters. Your used inventory manager should be able to tell you how long you generally hold on to a vehicle, which vehicles are selling best, and what they're usually selling for. Use this information to educate whoever is buying your used inventory. Dale Pollak uses the guiding principle to not buy anything for more than 84% of what you expect to sell it for.

For example, if you're selling a lot of family oriented sedans and you see a blue Toyota Camry come up at auction, you should know that your average used Camry is selling around $13k, you should know that (packs and reconditioning aside) you shouldn't spend more that $11k to ensure you turn the car around quickly and for a profit.

In the same mindset, if you see a red Mustang come up to auction, you should know that those are lasting 180-210 days on your lot and retailing around $22k. So once the auction gets past $18,500, stop bidding.

I know, you don't have any Mustangs on the lot. I know, it'll be cool to share on social media. I know, "someone" will want it. But is it really worth a spot on your lot when you could be better investing your finances into inventory you can sell?

The second practice to start your path to success is to set a cap on your inventory. Don't go to auction with the intent of filling your lot at whatever cost. Go with a budget. If your goal is to fill the lot, you'll make more thoughtful spending decisions. If you sent a kid to a candy store and said "what do you want?", they'll want it all. If you send them with $2, they'll start to decide if they really want more candy or better candy.

So I ask...do you want more inventory or better inventory? Either way, an educated look at your inventory purchasing will lead to better purchasing decisions.

When I first joined the DrivingSales community, I posted about how the dealership model could become obsolete thanks to Amazon. Everyone pushed back saying that "Amazon won't sell cars", "Everyone wants to sell cars online, but they don't understand how hard it is", and "It's impossible to eliminate every point of friction online."

You're all right. Selling such a large asset online isn't perfect. But that wasn't the point.

Your dealership can still fail and it can still be Amazon's fault even if they never sell a single car.

Have you shopped on Amazon? It's awesome. You order something, it's cheaper than in most stores, and it's in your hands two days later. Add in their consistency and exceptional customer service and you've got a winning formula.

Point being: Amazon has completely changed consumer culture.

With a few keystrokes and a click, you can find exactly what you want at a price you're willing to pay. Retail giants tried to combat this with price matching, but Toys'R'Us still paid the price. Kindle opened the door into the tech space that eventually became Alexa; a device that tech giants like Apple and Google find themselves chasing. Amazon keeps pushing the bar and household names find themselves fighting to compete. 

If dealerships are not ready to match this level of service, customers are going to find someone who will. Those resistant to change generally jump in arguing how Beepi and Vroom failed and Carvana reported losses last year. Well, good news...no one has figured out the formula yet. But let's stop acting like they won't.

The video above features a skit envisioning a car sale in the near-future. I think it's the most realistic option to online retailing. A customer starts a transaction online so once they show up on the lot, they have their trade appraised, conduct a test-drive, and they're done. It's not frictionless, but it's a lot more customer friendly than the current model.

It's time we start serving customers the way they want to be served. The current model of forcing them to do business our way has built the stigma of expecting a hassle at a dealership. Our friends over at DealerSuccess have a tool called VirtualDeal that is already bringing the bulk of the sales process online and their customers love it. Even better, the customers of their customers love it.

So...to summarize...why do customers hate giving up their information to get basic information? Because Amazon. Why do customers do so much research before they buy a product? Because Amazon. Why do customer reviews hold so much weight? Because Amazon.

They might not be selling cars, but they've certainly changed our culture. It's time we get ahead and figure out the formula for OUR industry before they do.

Time is an often overlooked, and costly, asset in business operations. A company will often try to save a few bucks by bringing a service in house. (We'll stick to reconditioning for this example.)

Sometimes, it works great. The service team and the used inventory manager work hand-in-hand to make used vehicles frontline ready while ensuring that paying customers don't wait days for their repairs. But I'm sure many can identify with the times it didn't work so well...

Have you ever felt the tension in the air while the service director argues with the used car manager about the value of taking care of customer services over reconditioning a vehicle no one has purchased yet? It's a very valid concern. If customers are waiting days for repairs, they'll stop coming back and the dealer will lose repeatable revenue. But, studies show that a dealer loses an average of $85 per day in holding costs and potential front-end gross for each day that a vehicle isn't retail ready. If it takes a week, the dealer loses nearly $600 to make the same amount in service gross profit.

Does that change the way you value your time? This is the point you should be asking if the effort is really worth the return; if the juice is worth the squeeze.

The Pareto Principle states that 80% of your business will come from 20% of your efforts. Imagine your success if you took your team's valuable time and had them only focusing on the 20% while vendors service the tedious work that often put your team behind.

There isn't necessarily a right or wrong answer. Some dealers feel a personal connection to the work because it's their name on the line, while other groups, like Sonic Automotive, feel like they work best by letting someone else handle reconditioning while they focus on the 20% yielding the biggest ROI. It's all about what works best for YOU!

In short, it's important to address the bigger picture when looking at analyzing your internal efforts. You might be asking why you'd pay someone else to do something you can easily do, but you could be overlooking major inefficiencies that cost you a LOT of time and money.

What works best for you? Have you figured out the efficiency to reap the benefits of internal work or do you let someone else handle it to free up your schedule for the big returns?