The Puget Sound Dealer, 2013 Issue #3 by Blue Water Publishers, LLC

The Puget Sound Dealer Official Publication of the Puget Sound Automobile Dealers Association 16101 Greenwood Avenue N Bldg 2100 Seattle WA 98133 Phone: 206 542-3551 Fax: 206 542-7561 Email: jim@psada.com www.psada.com

BOARD OF DIRECTORS 2013 President Sara Carter Carter Subaru, Shoreline 1st Vice President Steve Klein Klein Honda, Everett 2nd Vice President Jim Walen Ford-Hyundai of Kirkland 3rd Vice President Dan Wilder, Jr. Wilder Auto Center, Port Angeles Trustee Position #1 Marc Ikegami Doug’s Lynnwood Mazda, Doug’s Lynnwood Hyundai, Doug’s Northwest Cadillac Trustee Position #2 Doug Byers Byers Volvo, Seattle Immediate Past President Jim Morino Acura of Lynnwood PSADA STAFF James R. Hammond Executive Director Linda Halverson Executive Assistant Susan Leonhardi Programs and Data Base Manager Michele Foley Office Assistant

Inside this Issue

For information on advertising in this publication contact Jim Aitkins Blue Water Publishers, LLC 360.805.6474 www.bluewaterpublishers.com

A Message from the Editor Perspective Has Everything To Do With “Getting It” As a new car dealer you have a perspective of how you want and expect your store to be. For your store to run efficiently, it is very important that your team share your perspective so they can work towards the same goal. But that is where it gets a bit cloudy, sticky, or unclear, so to speak. Have you ever explained something to your team where you felt you were crystal clear about what you shared or wanted them to do, but got the opposite results, partial results, or no results? Have you presented your ideas, which you know are needed for your company, and got push back from everyone? Well, we have all experienced that. It comes down to perspective. For good productivity to take place, everyone has to have the same perspective. If only that could happen, but, it doesn’t because people see things differently. Sometimes you must think that some people you work with are from another planet – and they just might be because of perspective. Why does this happen? Let me explain, which might help you navigate what you do with your team so you can benefit from the great ideas they can offer once they understand where you are really coming from. Have a person hold up a piece of copier paper so that it is completely level with your eyes – no waves. The sheet of paper needs to be totally in line with your vision so that you don’t see any of the top or bottom of the sheet. What do you see? It should be a straight line. When you take something literally you are looking at the straight line. To embrace and invest one’s mind into something you need to go one step further than literal – particularly when you are trying to share or explain a vision or perspective with another person. You need to tilt the paper so they see the entire side. We tend to see linearly. In the business world we need to take the reality of linear thinking into perspective. When we present something we need to tilt the page a little to help others understand the relevance and value of what we are telling them. So the next time you run into a mind-block, consider tilting the paper. This will help productivity prosper, help eliminate your frustration, and bring harmony to your dealership. James Hammond Executive Director

Message from the President - Sara Carter

New Seattle Law Limits Use of Criminal History in Hiring

Tax Savings Opportunities in Your Fixed Assets

Making Decisions

Ed McCarroll - A Lifetime of Customer Service

Sports in Seattle - Using TV Advertising to Score More Auto Buyers

Production, Capitalism, The American Way

Growing A Better Future And Being A Better Dealer

Cell Phone Frustrations

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Message from the President

Sara Carter Carter Subaru

Seattle Auto Show Brings Back The Grand Reception To Celebrate Its 90th Anniversary

This fall the Seattle Auto Show will celebrate its 90th Anniversary when it opens at the CenturyLink Field Event Center on October 16 for a five day event. The first show was held in 1923 in the Clarence S. “HEC” Edmundson Pavilion at the University of Washington. You can image that the mix of car brands was quite different than from today. Through the years the Show was held in many places, including the Seattle Armory (now part of Seattle Center) and the Seattle Center Coliseum after the 1962 Seattle World’s Fair. Through the Show’s first 60 years it was a small local show with only 15 to 20 dealers. But, in 1975 that all began to change very quickly. PSADA began. Three years later the show moved to the new Kingdome. Exhibit space increased from 75,000 square feet to over 160,000 square feet. With the new opportunities presented by the Kingdome, the newly formed PSADA Board (then the King County Auto Dealers Association) had the vision of bringing the entire Puget Sound dealer industry together to create a world class trade show. Today, the Seattle Auto Show, held at the CenturyLink Field Event Center, is recognized as one of America’s largest and most respected metropolitan auto shows. We have grown to over 400,000 square feet and represent more than 200 new car dealers. It all began with the vision of six Washington State automotive icons: Larry Norton,

Jr., Westlake Chevrolet; Wade Carter, Jr., Carter Volkswagen; Frank Kenney, Frank Kenney Toyota; Warren Westlund, Westlund Buick; Pat Goodfellow, Goodfellow Chrysler Plymouth; and Howard Anderson, University Chevrolet. Their dream came true, and all of these men saw it come true. We have a proud 90 year heritage to celebrate this year. To do that, the PSADA Board is bringing back the Grand Auto Show Reception opening night of the Seattle Auto Show, Wednesday, October 16, 2013, at CenturyLink Field, Root Sports Lounge, 6:00 p.m. until 7:30 p.m. The first Grand Reception was started by Frank Kenny more than 40 years ago. But, how times have changed! You will not get a printed invitation in the mail. You should have received an email from PSADA with a link that gives you access to the Grand Reception’s online invitation page so you can download your two barcoded invitations. If you haven’t ordered your invitations yet, check your email, or call PSADA at 206-542-3551 to request the link so you can download your invitations to this exclusive event for dealers and their guests. We have much to celebrate. We have a vibrant and healthy Auto Show that is going to usher in the 2014 model year with class, pizazz, excitement, great exhibits, and more. So, cheers! See you October 16 at the Grand Reception.

New Seattle Law Limits Use of Criminal History in Hiring

Last June, the City of Seattle passed a law limiting employers’ ability to use criminal history information in hiring and employment decisions. Proponents hailed the law as giving a second chance to people with criminal records and preventing discrimination against racial minorities, who make up a disproportionate number of those incarcerated. Opponents criticized the law as imposing undue restrictions on employers. The law’s protections apply to all job applicants, employees, and independent contractors who perform at least 50% of their services within Seattle city limits. It takes effect on November 1, 2013, so dealers should act quickly to make sure they are in compliance with these key points: Initial screening: “Ban the box” During the initial screening process, dealers cannot perform a criminal background check or even ask about an applicant’s criminal history (e.g., by asking applicants to check a box on their application indicating whether they have a criminal history). After initial screening: limited use of criminal history After an initial screening has been completed, dealers can perform criminal background checks, but their ability to use the information in these reports is subject to certain requirements.

By Shannon J. Lawless Ryan, Swanson & Cleveland, PLLC

Dealers cannot take any adverse employment action based solely on an arrest record. “An arrest is not proof that a person has engaged in unlawful conduct,” the law cautions. Dealers can take action based on the underlying conduct that led to an arrest, but only if they have a “legitimate business reason.” Similarly, before taking any adverse employment action based on criminal history, dealers must have a legitimate business reason. “Legitimate business reason” has a detailed legal definition. Essentially, the person’s arrest record must either negatively impact the employee’s ability to perform their job or threaten harm to people, property, business reputation, or business assets. In deciding whether a legitimate business reason exists, dealers must consider a number of factors, including seriousness of crime, time elapsed since it occurred, any evidence of rehabilitation, and details of job sought. If the dealer determines it has a legitimate business reason for taking an adverse action based on arrest record or criminal history, it must inform the employee or applicant about the relevant information and give the applicant a reasonable opportunity to explain or correct it. If the dealer decides to go ahead, the position must be held open for two business days after notifying the employee about the adverse action.

Enforcement by investigation and fines The Seattle Office of Civil Rights has sole enforcement authority over the new law. A dealer will receive a warning for the first violation. Subsequent violations will lead to fines between $750 to $1000 per offense, plus attorney fees. The Seattle Office of Civil Rights can investigate a dealer regardless of whether or not a complaint has been filed. Seattle is part of a nationwide trend The Seattle law is not the only opportunity for dealers to run into legal trouble by using criminal history when making employment decisions. The Equal Employment Opportunity Commission (EEOC) currently has a strong focus on the use of criminal background checks and history. EEOC guidelines caution that any criminal background checks or questions about criminal history should be related to the position sought. When an employer acts on this criminal information, the employer should individually assess the details of the conviction and how it will affect the employer and employee’s performance (similar to the “legitimate business reason” requirement in Seattle). In June, the EEOC filed suit against two major employers alleged to have violated these principles. Additionally, dealers using criminal background checks should be careful to comply with the Fair Credit Reporting Act. This federal law requires employers to provide a special disclosure when they will use a criminal background check and obtain the employee’s written authorization to do so. Another disclosure is required if the employer decides to use the information in a criminal background check to take adverse action against the applicant or employee. The Fair Credit Reporting Act provides for damages of $100 to $1000 for each willful violation, so failure to comply can be costly. Conclusion The most straightforward action that dealers can take to follow the new Seattle law is not to inquire about criminal history or use criminal background checks during the initial application phase when hiring. Dealers who plan to use criminal history information later in the hiring process or to make decisions about current employees should consider contacting an attorney. Important points to discuss are (1) when and how to use this information, (2) what disclosures to make when using it, and (3) what records to keep to protect the employer in the case of a lawsuit or investigation. Shannon Lawless is an associate practicing in Ryan, Swanson & Cleveland, PLLC’s Litigation and Employment Rights, Benefits & Labor groups. She can be reached at 206.654.2211 or lawless@ryanlaw.com 10

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TAX SAVINGS OPPORTUNITIES

IN YOUR FIXED ASSETS

By Kevin Allison, Partner Peterson Sullivan LLP

Over the past several years, a number of dealers have spent substantial amounts upgrading their facilities, and this trend is continuing. With these large amounts being expended, it is even more important to consider your options as to how to account for the dealership’s fixed assets for tax purposes. An option that is most advantageous for one dealer may not be the most beneficial option for another dealer because individual tax situations differ. There were also new regulations issued by the Internal Revenue Service (“IRS”) which became effective in 2013 that must be considered before making a final decision and which afford some opportunity for someone looking to increase deductions for 2013. Following are a few areas to consider when setting up your fixed assets. Cost segregation analysis A cost segregation analysis can accelerate much of the depreciation deduction you can take on building or upgrading your facility. This analysis will identify costs that can be classified into shorter life categories; thereby, allowing you to take more deduction in the earlier years of the facility’s life. The tax regulations dictate what life must be used when depreciating an item depending on the type of fixed asset. In most cases, a commercial building is depreciable over 39 years using the straightline method. By identifying certain components of the building through a cost segregation analysis, some of the cost can be depreciated over shorter lives such as five, seven, or fifteen years. The depreciation methods which can be used on these shorter-lived assets will further accelerate the deduction, often times allowing for very large deductions in the initial years after the project is complete. Election to expense (Section 179 deduction) For 2013, the IRS regulations allow a taxpayer to expense up to $500,000 of personal property put into use during the year as long as the total personal property acquisitions do not exceed $2,000,000. The amount that can be expensed begins

to phase out once total personal property acquisitions exceed this $2,000,000 amount. This election is commonly referred to as the Section 179 deduction (this is the Internal Revenue code section that addresses the requirements for electing to expense capital improvements). If a cost segregation analysis has identified certain shorter-lived personal property included in your project, you can increase your depreciation deduction further by taking advantage of this election. There are other limitations you need to consider here (for instance, the entity taking the deduction must have taxable income to qualify for this election) so make sure to consult your tax advisor. Bonus depreciation Bonus depreciation continues to be available in 2013 for new tangible personal property with a class life of 20 years or less. If the acquired property does qualify for bonus depreciation, 50% of the property cost may be deducted in the year you place it into service. The remaining 50% is depreciated over the class life of the asset. Used property does not qualify for bonus depreciation. Unlike the Section 179 deduction, taxable income is not required to be eligible for bonus depreciation. Again, one can see the advantage of doing a cost segregation analysis here. A commercial building (with a class life of 39 years) would not qualify for this deduction. If part of the cost is classified into a shorter category life, that portion of the cost may then qualify. Qualified retail improvement When classifying fixed assets, there are a few categories that are often overlooked that can have a tremendous affect on the depreciation deduction. One such category is qualified retail improvement property (“QRIP”). Briefly, this is any improvement to an interior portion of a building that is nonresidential real property if: 1. That portion is open to the general public and is used in the retail trade or business of selling tangible personal property to the general public, and 2. The improvement is placed in service more than three years after the date the building was first placed in service. As one can see, there could be a substantial portion of a remodel that would qualify as QRIP. If it does qualify, the property can be depreciated over 15 years (as compared with 39 years for commercial property). Abandoned or discarded property It is a good policy to review your fixed asset schedule at least annually to identify those assets that have been discarded or abandoned. This has two benefits. One, you can deduct any undepreciated portion of any fixed asset no longer in service. 14

Two, the fixed asset can be removed from your personal property tax affidavit which will also save taxes each year when the personal property tax is paid. Timing of deduction Since both bonus and Section 179 deduction are optional, you should consider whether it is advisable to take the deduction. Just because a taxpayer can take the deduction doesn’t necessarily mean that he or she should take it. There are a number of tax situations which might make it a better idea not to accelerate the depreciation deduction. For instance, the maximum federal tax rate increased for 2013. If you anticipate that you will be in the top tax bracket for 2013, and you haven’t filed your 2012 income tax return, it might be better not to accelerate your depreciation deductions into 2012 (especially if the fixed asset has a shorter tax life). This would make a larger part of the deduction available in 2013 and future years when the tax rate will be higher. Since there are many variables that affect this decision, you should consult your tax advisor before deciding. Financial statement and tax depreciation differences Sometimes taxpayers can be reluctant to accelerate their depreciation deductions because they don’t want this increased expense to reflect on their financial statements, making their financial results appear less attractive to an outside party such as a potential lender or buyer. This shouldn’t deter you from electing to accelerate your deduction because you are not required to use the same depreciation life for financial statement purposes as you use for tax purposes. Financial statement depreciation lives should be determined by estimating the useful lives of the assets put into service and should have nothing to do with any election to accelerate your depreciation deduction for tax purposes. While this probably means you will need to keep at least two different depreciation schedules, the time and expense to do this is usually well worth the benefit derived from showing a healthier financial statement. Conclusion These are just a few of the considerations that should be made annually before finalizing your tax return. Since there are several things to consider before deciding which way to go, you should consult someone that can assess your tax situation and who is familiar with all the options that are available. For more information, please contact Kevin Allison at 206382-7703 or kallison@pscpa.com

Making Decisions

The title of this article seems simple enough. Yet, making decisions – good decisions – is really a complicated process. As a leader/ manager, it’s important to make decisions the right way as the cost of wrong decisions can be very expensive. And the benefits of the right decisions are equally impactful in a positive way! How decisions are typically made Most decisions in the retail car business are made quickly, without a lot of thought. Managers can “see what needs to be done” and are quick to “just do it.” This works – most of the time. Unfortunately, too often these “quick decisions” yield some results that aren’t really the best. This is often seen as the decision plays out over time. There is a better way. Making better decisions The decision-making process is just that – a process. By that I mean there are some “steps” to take that will result in better decisions. These steps include fully understanding all the elements involved in the decision, gathering relevant information, considering all the ramifications of the decision once it’s made and then effectively implementing the decision. Let’s consider each of these steps:

By John Strom

Understanding all the elements involved As a first step, to make the best decision, it’s necessary to fully understand all the elements involved in the decision. For example, decisions in the Sales Department often have impact on Service and Parts, yet too often these impacts are not fully considered. For example, the decision to wholesale vehicles without any servicing can reduce both Service and Parts profits. A number of dealerships “improve” their wholesale vehicles prior to selling them and benefit from the increased profits this yields (in fact, they usually get quite a bit more than simply a one-to-one return on their servicing investment). Out-sourcing any work that can be profitably done in-house is another area where the “whole picture” just isn’t being considered. Other examples include not fully considering the impact of decisions on the customer experience, as well as team member effectiveness, efficiency and morale. Then there’s the long-term impact of the decision on repeat and referral business. Making/saving money today can cost a lot of money later on. Gathering relevant information The second step in making good decisions is to gather relevant information about the situation. There are three good sources for this information:

1. Your People – those who work the job everyday know it best. What’s happening now? What elements need to be considered? What do they think should be done? Take a few minutes before deciding and talk to them. 2. Customers – how would the various decision options affect them? Most dealerships have some very knowledgeable, loyal customers they can ask for insight on what’s the best road to take. 3. Observations – take a few minutes to observe what’s currently happening relative to your decision. This will often lead to some “adjustments” to the decision that can be very important in the long run. Observation is very important, particularly if you haven’t done the job yourself in a while. For example, you observe that there was a decision to change the demonstration drive process to make it more customer-focused, rather than dealershipfocused. Then you realize the decision was the result of a sales manager riding along with a few customers and his sales consultant on a demonstration drive. This is an eye-opener! Considering all the ramifications of the decision This third step is as important as the first two, because without taking time to do this you can easily make decisions that have positive impacts in one area of the business while negatively impacting others in most undesirable ways. “Run the potential decision” by knowledgeable others in the dealership to get their thoughts on its impact. They will often see ramifications that you don’t see. Ask for both the “up sides” of the decision and “potential downsides.” Ask how they see the decision impacting both in the short run and the long run. And if there are others outside your organization whose input you value, ask them the same questions. Of course, if you know of others who have made the same or a similar decision as you’re making, ask they how it’s working out. (Be sure to consider the differences between their situation and yours.) A decision to “get a handle” on policy expense resulted in many decisions by staff that may have saved money in the short run, but cost customer loyalty and the resulting repeat and referral business in the long run. It proved very costly indeed – over time! Does the decision meet the three criteria for good decisions? All good decisions must meet three important criteria: 1) Is it good for the customer – does it make their experience better? Will they like it? Will your action(s) encourage them to repeat 18

and refer others? 2) Is it good for the dealership – will it make things easier, more efficient, more effective? Will your people like it? 3) Is it a good business decision – consider both the short- and long-term implications? Will it save money? Will it make you money? The answer to all three must be “yes!” Don’t be afraid to change your decision Lastly, don’t be afraid to change your mind later. Things change, often quickly, and you need to be ready to change quickly too. As the decision is implemented, monitor how things are going following the process above to be sure the benefits are there and that there aren’t unexpected downsides. Make adjustments, even make radical changes if necessary. In the face of things not working as they should…

It’s not a weakness to change your mind; it’s a good management decision! When it’s clear the decision wasn’t [completely] the right one, if you don’t change things up, you aren’t doing your job as a manager. I’ve seen far too many retail managers “stick to their decision” when it’s clearly a bad decision to do so! When you follow a good decision-making process, you end up with good decisions. When you don’t, it will cost you. And in today’s real-world of minimal profit margins, you really can’t afford that, can you? John Strom has been helping retail automotive managers improve their performance for over 25 years. He has held a number of management positions in both single-point and multiple franchise operations, including General Manager. His company, Strom & Associates, is a member of the Performance Development Group. To learn more about their services, visit www.perdevgrp.com

Photo by Adam Buchanan

By Craig Chastain

Ed McCarroll

At 87, a Lifetime of Customer Service

America didn’t know much about the Honda brand when Ed McCarroll signed on for one of their first franchises in 1971. An avid motorcyclist, Ed knew one thing for sure. “If their cars were as good as their motorcycles,” he says, “we were both going to be successful.” His forecast proved solid, exemplified by the 40-year Honda plaque now posted proudly at his dealership – Capitol City Honda – in the Olympia Auto Mall. Energetic and vibrant at 87, he keeps an office in the Olympia store operated day-to-day by his daughter Kelly and son-in-law Chris Levesque. Up the Interstate, he has partnered with veteran dealer Ron Loper at their South Tacoma Honda location for 25 years. After more than 65 years in the car business, it’s fortunate that Ed never wanted to do anything else. Born in Canada, he enlisted at 17 and served in the Royal Canadian Navy during World War II. After the war he migrated south to eastern Washington where he landed a job as a lot attendant in a Spokane dealership. Before long, he had moved again to southern California, and, in 1953, he became a U.S. citizen. After working as salesman, manager and partner in several California dealerships, Ed moved to Seattle in 1962 to be the general manager of a new Chevrolet dealership. In 1965, he purchased Capitol Chevrolet and permanently settled in Olympia. Later he played a key role in the creation of the ground-breaking Olympia Auto Mall where he built five of the original 10 dealerships. Along the way, he has owned various dealer-

ships in Washington and Nevada representing Nissan, Chrysler, Honda, Toyota, Mercedes Benz, Acura and, for 45 years, Chevrolet. “My dad has spent his whole life in the car business – he’s a self-made entrepreneur,” says Kelly Levesque, the Dealer Principal who grew up working in the store during breaks from school. With a Masters in Business Administration and certification from the National Automotive Dealer Academy, she still looks to her dad for advice and counsel. “Chris and I have the greatest teacher – the greatest example,” says Kelly. “He’s shown us all the importance of service to our customers and our community.” General Manager Chris Levesque, Kelly’s husband for 11 years and a 17-year veteran of the car business, agrees. “Ed has more experience and knows more about the car business than anybody I know,” says Chris. “He’s shown us that building relationships and reputation is more important than the quick sell.” Indeed, Ed and Patti (his wife of 42 years) have made a priority of giving back to their community. Over the years, they have supported such organizations as the Boys and Girls Club, the South Sound YMCA, the University of Washington, Seattle Children’s Hospital and Olympia’s Hands On Children’s Museum. During the cold winter months, the dealership team distributes blankets to the homeless through the Union Gospel Mission. 21

“We’ve tried to focus on our own backyard,” says Ed. “We have second and third generations of families coming in to buy a car from us. A big reason for that, of course, is the quality of our people and the vehicles we sell, but we believe it’s also because we’re visible and active in the community.” The environment at both the Olympia and Tacoma dealerships is bright, welcoming and friendly, a reflection of an approach to sales that Ed McCarroll has fine-tuned for more than six decades. “I’m a salesman,” he states with obvious pride for his profession. “I’m happy when our customers are happy.” With technology rapidly changing how vehicles operate and how they are marketed, today’s dealerships must continually adapt and grow. Chris and Kelly have been aggressive in bringing 21st century tools to their dealership.

Photo by Adam Buchanan

“Ninety percent of our customers have done their homework before they come into the store,” says Chris. “Our sales and service teams go through a lot of training and retraining so they’re prepared for any question or concern from the customer.” Not to say that Ed has become totally immersed in modern gadgetry. “I read three newspapers every day and all the trade publications,” he says. “We have great people to handle the website and the Internet. I don’t even have a computer in my office.” While on-line marketing is an important tool for the dealership, the team still utilizes more traditional methods like radio and direct mail. They have customers who travel from throughout the Northwest, but their primary focus is a 20-mile radius from Olympia that includes Joint Base Lewis-McChord. “The military community is close to our hearts and a very important customer base for us,” says Ed. “We advertise consistently in the Northwest Guardian and give special consideration to enlisted folks and their families wherever we can.” The McCarroll approach has helped to put the Olympia and Tacoma stores among dealership elite. In May, Ed was awarded the Robert P. Mallon Dealer of the Year award by the Washington State Auto Dealers Association for his contributions to the auto industry, quality dealership operations and outstanding community service.

Ed McCarroll and his wife, Patti

The support of his family, partners and colleagues has allowed Ed to downshift his pace, if only a couple of gears. While he spends less time these days on a motorcycle, he’s an avid boater and outdoorsman and has been an active member of the Olympia Yacht Club for more than 40 years. He and Patti cherish the time spent with granddaughters Genevieve, Adriana and Lola, and look forward to annual getaways at their winter home in Scottsdale. When he’s home in Olympia Ed is likely to be in one of two places – either of his two dealerships that reflect a lifetime of customer and community service. “My advice is always to pick the thing you love, do it the best you can, and the rest will take care of itself.” The auto industry is a little better place because Ed McCarroll took his own advice.

REV UP YOUR

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Sports i Usin Scor By Jeff Kent Business Development Manager Comcast Spotlight – NW Region

What’s the last big game you watched on TV? That’s a question almost everyone can answer. Sports programming consistently draws huge television audiences, especially when fans are rooting for their local professional or college teams. Nowhere is this more apparent than on cable TV, where entire networks are committed to sports programming – all day, every day. As an auto dealer, these legions of sports fans are a prime target for your advertising message. What Sports Fans Are Watching Sports programming consistently plays well in the Seattle television market, which makes it a popular place to advertise. Nearly 2.9 million Seattleites have watched sports on TV in the last year1, and more than 60 of the top 100 cable TV programs each year are sporting events. In fact, the most-watched cable program thus far in 2013 was the Rose Bowl on ESPN on New Year’s Day between Stanford and Wisconsin. BCS Bowl Games on ESPN, Mariner Baseball on Root Sports and March Madness on TBS all drew enormous viewership to put them at the top of the rankings2, while the 2013 season of Monday Night Football promises to have plenty of games at the top as well. Keep in mind, this popularity contest stacks these programs up against all other shows on cable TV, not just athletic events. Sports are not only popular, they are also unique – because they are one of the last forms of appointment TV. Viewers, including auto buyers, still schedule their time to sit in front of the television and watch these events live, rather than using a DVR to delay viewing. That means your ads are far more likely to be watched in real-time, within the framework of your advertising strategy and inside the promotional incentive periods you chose. Auto buyers see your commercials live, along with the event itself.

in Seattle: ng TV Advertising to re More Auto Buyers

What Sports Fans Are Buying Sports viewers are not just fans – they’re car shoppers. There is a very close relationship between watching sports and buying automobiles. Sports viewers are consistently more likely to purchase cars, especially higher-end models. This trend can be seen nationally, and it’s even more prevalent in the Puget Sound region. Here, 88% of new vehicle buyers watch sports, which is 15% higher than the national market average3. When you break down those numbers by sports genre, you can see not only the impulse to buy, but also a willingness to spend top dollar. In Seattle, college sports TV viewers are 7% more likely to be purchasing a new vehicle in the next year, and 25% more likely to spend more than $30,000 on that new car or truck. Likewise, professional sports TV viewers are 15% more likely to buy in the next year, and 15% more likely to pay over $30,0004. For auto dealers, advertising in cable television sports programming just makes sense. It’s like having a courtside seat – you put yourself there because that’s where all the action takes place. Cable is the New Playing Field Cable is consistently growing, and this is especially true of sports programming. In recent years a number of major national sporting events have moved from broadcast to cable. Some of these were huge losses for broadcast and unprecedented wins for cable. These programs are now more readily available and useful to you as an advertiser – especially when you consider cable’s ability to target your message to a specific local geography. You have the ability to reach sports fans all across the Seattle DMA, or just in the specific geographic zones where most of your fans live – and where most of your new vehicle registrations originate. Here’s a lineup of the top sports programs that have shifted from broadcast TV to cable TV recently, and how they can fit into your advertising strategy: • Monday Night Football – This is consistently one of the top sporting events on television. It moved from ABC to ESPN in 2006 and has been a top-rated cable program ever since. Monday Night Football viewers tend to be the consumers you want to reach. They are predominantly upscale married homeowners, and nearly half of them – 45% – have a household income over $75,0005. • Pac-12 Football – With the power of multiple networks ESPN, ESPN2, ESPNU, Pac-12 Network and the new national sports network, Fox Sports 1, EVERY Pac12 Football game is available to football fans. The Championship Game alternates each year between ESPN and broadcast. As anyone living in Washington can tell you, Husky and Cougar fans are very serious about their 26

•

sport, fiercely loyal to their favorite team, and committed to watching every game. Seattle residents who have attended or enjoy following other Pac-12 schools watch their teams with the same dedication and enthusiasm. Bowl Championship Series – The BCS moved away from ABC and FOX and began airing exclusively on ESPN in 2010. It consistently draws large numbers of viewers, and, in 2010, the ratings spiked as Northwest favorite University of Oregon played for the national championship. The BCS Series is a consistently valuable advertising resource that becomes even more valuable when local teams land a spot at or near the top. NCAA Basketball Tournament – The big change came in March, 2011, when a whopping 41 of the 67 tournament games aired on cable networks TNT, TBS and TruTV. For now the Championship Game remains on CBS, but beginning in 2014, TBS will share coverage of the Elite 8 and will have exclusive coverage of the National SemiFinals (the Final Four) during the 2014 Tournament. This, too, is an example of a sporting event where local teams consistently shine. Gonzaga and UW often make it into March Madness, so watch for these golden advertising opportunities. Major League Baseball – For the past six years, TBS has been the exclusive home for the MLB Division Series. The network alternates hosting the American League and National League Championship Series every other year. In 2014, it will be the AL Championship Series. The Seattle Mariners consistently deliver strong local ratings continued on page 34

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Production... Capitalism... THE AMERICAN WAY

Over the years, I have developed a fairly well seasoned opinion of what truly makes this country great. Societies, even civilizations for that matter, have always been driven and grown by some form of production. As humankind has evolved, it has been driven to figure out ways to improve life. As early man got better at producing something, (fire, food, shelter, clothing, etc.) word spread and barter was established so one person could exchange what he or she produced for something another person had or produced. Eventually forms of money were developed to improve the production /exchange cycle. Capitalism was born. For capitalism to prosper it has to have an uninterrupted production cycle supported by the free exchange of goods and services. Capitalism created a foundation for the growth of America. The early American pioneers forged westward in the early 1800â&#x20AC;&#x2122;s not knowing what might lie over the next rise, across the next river, or through the next mountain range. They were seeking a better life. Every step of their epic journey was driven by some sort of quest for a better life through production. Food, water and shelter were just a few of the basics that had to be produced every day. Eventually, settlements developed, and

By Scott Dreisbach

civilized society began learning how to fit into a new emerging economy that required them to produce something of value that others were interested in buying. Farming, manufacturing, and a host of other goods and services were quickly impacted by supply and demand. Supply and demand not only fed the production cycle, but it also created the need to create special new tools to enhance production. To do well in the new emerging market, producers had to make a better product quicker. This is the basic principle of supply and demand. Every single leading company today still follows these principles. To survive, companies have to continually enhance their individual and corporate product. Supply and demand equals price. This is the overriding principle of the American Free Enterprise system. Is all this history relevant to auto dealers? Absolutely! As car guys, it is our job to continually try to enhance our production. This means, we must be continuously looking for ways to sell and deliver more vehicles at reasonable returns on the investment. In the summer edition of The Puget Sound Dealer, I talked about managing

your business with one indicator – return on investment. In this article I want to focus on the best known methods of enhancing production for your store using the basic economic principle of supply and demand. Precise vehicle inventory management measures both these important indicators. The overall objective of any precise used or new vehicle inventory management system is to phase into inventory more of what your customers are looking for while at the same time phasing out the investments that are identified as poor performers. Your parts manager does this every day with over 100,000 part numbers to manage. You can bet your last dollar that your parts manager has some sort of “shelf or stocking guide” from which to make informed, intelligent, fact based, decisions. Your vehicle inventories are no different. The vehicle inventories also need to be managed with a “stocking guide.” The daily use of a vehicle inventory stocking guide (whether for new or used) is a production enhancing tool. All you need to do is to try and acquire the “shorts” and phase out the “longs.” As you see individual segments or models or model year’s performance – indicating that more would do better, wouldn’t you try and acquire more? Conversely, when you see definitive data that clearly shows that a particular investment has always hurt you, would you voluntarily want to do more of that? The secret to managing a vehicle inventory management stocking guide is to definitively determine the point of diminishing returns. That is the point where more does not equate to better. Most of my competitors are focused on marketing or pricing strategies in their “inventory management systems.” When the vehicle is right for your store, you do not need to worry about special pricing. When the vehicle is wrong for your store on day one, it is almost always wrong for your store on day 21, and especially on day 61. Phase in and phase out suggestions are crucial. Our system is performance driven – true turn and earn, if you will. The stocking guide matrix will help you produce greater results than you can imagine. Like any production enhancement tool, people must use it to achieve the expected results. The most difficult obstacle to overcome when installing an inventory management system is managing the transition from emotion-based decisions to making objective decisions using data. The inventory management business is far too complex 30

to grow your production without effective special tools. The final piece of the inventory management puzzle is the ongoing system management meetings that involve your team so you can analyze the facts and come to a consensus that makes the most sense for the current situation. I hold dozens of these meetings each week and find that 30 minutes of focus each week, via online team management meetings, produce the best, most long lasting production growth pattern. If you would like me to send you a very effective used vehicle inventory management stocking guide that you can use in your store, just drop me an email and I will send it to you at no charge. The bottom line – there are vehicle inventory management tools available to you that will help you increase your production. If you would like to see some in action or learn more, simply contact me. Remember, new results only come after new behavior. You can contact Scott Dreisbach at Valuinsight, Inc., sdrize@ valuinsight.com, 561-368-7810 x108.

LEARN MORE. EARN MORE. Looking for research, insights about online marketing or merchandising best practices? Find all this information and more at DealerLearningCenter.com. 31

Growing

A Better Future And Being A Better Dealer

The most powerful gift at your disposal, but least used by many people, is attentiveness. Attentiveness is paying particular notice of your surroundings and having good observation. Attentiveness describes the concentration we apply to our five senses – sight, smell, taste, touch, and hearing. It is the key to all informational gathering. If you are going to be an affective dealer that voluntarily is supported by employers and business associates, you need to embrace your gift of attentiveness. Now, if you embrace your attentiveness, you need to also sharpen your skills to know what to pay attention to. Famed poet Henry David Thoreau points out that “our inventions are wont to be pretty toys, which distract our attention from serious things. They are improved means to an unimproved end.” So we have to consciously focus on what is important. Steve Jobs recognized this with his success with Apple. He said, “You know, my main reaction to this money thing is that it’s humorous – all the attention to it – because it’s hardly the most insightful or valuable thing that’s happened to me.” So, you have to purposely make a choice to how you’re going to be attentive. W. H. Auden, a 20th Century American poet, emphatically stated that the “choice of attention (which is the ability) to pay attention to this and ignore that, is to the inner life what choice of action is to the outer.” So how do you chose attentiveness and do it right? And, how, exactly, does this all apply to being a better new car dealer and improving your life? Stay with me. That’s easy. Choose to be attentive to the people who are work-

By Jim Hammond

ing with you and for you. Johann Wolfgang von Goethe, the 19th Century German writer and politician, wrote, “If you wish to know the mind of a man, listen to his words.” Listening to those around you and attentively noticing what everyone is doing, gives you better insight, and that will help you plan the “other” important things that are important in a dealership like selling cars, selling service and making money. But it all starts with your people, your noticeable attention to what they do, and your expressed appreciation to each of them, directly, for being a part of your team. Stanley O. McNaughton, the former President of Pemco Insurance, a good friend of mine who passed away in 1998, was a recognized national philanthropist and visionary in business. His hundreds of employees loved him, and he knew each by name and something important about them. I will never forget my visits with him at Pemco as he walked through his building addressing dozens of people by name and introducing some to me along with a story about them. He didn’t do this to manipulate his people. He loved his people and did what he did because it was right. He invested in his people and his people invested in him. But, this story doesn’t end here. It just begins. The first blessing that comes from sincere attentiveness to your employees is empathy. Empathy is the ability to understand and share the feelings of another. When your employees feel and understand who you are and what your goals are and that you recognize and understand their importance to your company, what can be accomplished is often limitless. Brian Eno, the British born producer, musician, and song writer,

states best why it is important to immerse yourself into those you are working with, or more appropriately, serving. Eno says, “When you sing with a group of people, you learn how to subsume yourself into a group consciousness because a capella singing is all about the immersion of the self into a community. That’s one of the great feelings – to stop being me for a little while and to become us. That way lies empathy, the great social virtue.” And, the story doesn’t stop here, either. Empathy creates one of the greatest gifts in the business place – rapport. Rapport is a close and harmonious relationship in which the people or groups concerned understand each other’s feelings or ideas and communicate well. Isn’t that what you want? Sure you do! It’s a tragic error not to build rapport with your employees. If you don’t, they may not understand you. Raymond Arroyo, the New York Times bestselling author reminds us that the most effective way to build a rapport with someone is to look them right in the eye. This, he says, creates a solid connection and foundational trust. And finally, once you have rapport, then you have earned influence. What you say matters to everyone, because they all know that you take them, their jobs, and their lives into 33

Growing continued from page 33

account when you make decisions. And, they know that their feedback to you is important and that you will seriously take it under consideration. So it’s not so hard to build a great team if you are attentive to your people and frequently acknowledge their value to you. Attentiveness builds empathy, and empathy creates rapport, and rapport blesses you with earned influence. Stay self-energized. You will find that your enthusiastic energy will come from seeing what you need to do and its purpose. And you get that from your people. When you give them attentiveness you give them the opportunity to experience positive self-discovery. Positive discovery has to do with state of mind and well-being. It is scientifically proven that giving people full attention causes a chemical change in the brain referred to as positive self-discovery. Sincere and positive attentiveness and affirmation helps a person to discover who they are and makes them feel good. And the door swings both ways. This will make you feel good, too. Mahatma Gandhi wrote, “The best way to find yourself is to lose yourself in the service of others.” It’s very true. And, it all starts with focused, disciplined attentiveness – observing and understanding what is around you and recognizing that what you say and do is intricately connected to everyone around you.

Sports continued from page 26

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Get in the Game to Reach Auto Buyers Given the quantity and variety of sports programming available on cable, auto dealers have many options for reaching local customers. As we’ve seen, Seattleites are watching sports religiously, so they will see your advertisement. They are ready and willing to buy a new vehicle, so they will pay attention to your commercial. Most importantly, they are motivated, so they will act on your message. Use the power of television, and particularly cable TV sports programming, to score your next sale. Scarborough Seattle-Tacoma DMA Mar12-Feb13. Target: Sports watched on broadcast or cable in past year: Any 2 Source: Nielsen Overnights Live+3 eDMA based on current season actuals (1/1-8/15/13) 3 Scarborough Seattle-Tacoma DMA Mar12-Feb13. Target: Vehicle HH plans to purchase in the next year: new. Sports watched on broadcast or cable in past year: Any. 4 Scarborough Seattle-Tacoma DMA Mar12-Feb13. Target: Sports watched on broadcast or cable in past year: All minus college sports. Vehicle HH plans on purchasing new in next year 5 Scarborough Data Seattle DMA Mar12-Feb13 Adults 18+ cable subscribers: Sports View Cable TV Networks PsYr: Monday Night Football 6 Scarborough Seattle-Tacoma DMA Mar12-Feb13. Target: Cable subscribers, Sports watched on cable in past year: Seattle Mariners, Major League Baseball playoffs or regular season, Monday Night Football, PGA Tour, NASCAR 7 Scarborough Seattle-Tacoma DMA Mar12-Feb13. Target: Cable subscribers, Cable networks watched past 7 days: NFL Network, ESPN 1

It’s not so hard to build a great team if you are attentive to your people and frequently acknowledge their value to you. Attentiveness builds empathy, and empathy creates rapport, and rapport blesses you with earned influence.

each and every year, and the local loyal fan base continues to tune in with passion and interest. These M’s viewers have money to spend, too, with half of them earning an annual household income that tops $75,0006. NASCAR Sprint Cup – The majority of the Sprint Cup series, about 20 races, air on TNT and ESPN. NASCAR fans are notoriously serious about their sport, and have an obvious affinity for all things auto, which makes them a good target audience for your dealership. FL Network – Each week Thursday Night Football kicks off the weekend for thousands of local viewers, offering eight live games each season in November and December. These matchups are another way to reach eager and affluent fans much like those who watch Monday Night Football. In fact, 67% of Puget Sound area NFL Network viewers have a household income over $50,000, 46% are married and 56% own their home7. You can also target these desirable viewers through the NFL Network’s other programming: NFC /AFC Playbook, NFL Gameday, NFL Replay, NFL Total Access and live coverage of the NFL Draft.

TO LEARN ABOUT ADVERTISING OPPORTUNITIES VISIT COMCASTSPOTLIGHT.COM Contact Jeff Kent to advertise in America’s New National Sports Network! 206.858. 6582 Jeffrey_Kent@cable.comcast.com

Committed to SeAttLe. ConneCted to you. At u.S. trust, our advisors bring dedication, resourcefulness and a unique global perspective to wealth management. they take the time to listen and learn about your individual needs before creating customized strategies and solutions that help you achieve your goals and build your legacy. We invite you to connect with one of our advisors today to learn more. tReVoR CoBB, CFP® Senior Vice President and Private Client Advisor 206.358.8936 trevor.cobb@ustrust.com 800 Fifth Avenue, Floor 32 Seattle, Washington 98104 ustrust.com

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s n o i t a r t s Frustrations F rustrations

Cell Phone

ell phone frustrations remain high even with the enormous use of them around the world. In a recent Telephone Doctor survey, we received the following cell phone ‘frustrations’ from all over the country. Is yours on this list? •

Talking on a cell phone while conducting business.

•

Answering a cell phone while talking to someone else in person.

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Talking loudly in a store/restaurant.

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Not using the vibrate feature when at work or in a public place.

By Nancy Friedman The Telephone Doctor

So then what are the five voice mail frustrations which are probably on your cell phone voice mail right now? 1. Hi, I’m not here/ or not available right now. (DUH. That’s a hot lot of news. We know that. That’s why your voice mail answered.) 2. Your call is very important to me. (Right, then why aren’t you there?) 3. I’m sorry I missed your call. (Well sometimes we’re not. Besides that’s a pretty useless statement.)

•

Talking on your cell phone when you’re in the car with others.

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Using your speakerphone in public.

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Initiating a cell phone call when others are present.

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Talking on your cell phone and landline at the same time.

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Using call waiting. What? I’m not important enough to finish our conversation?

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People with ‘awful’ voice mail messages.

•

Not answering when called when we know you’re there.

When was the last time you checked your own message? Probably time to do that.

•

When the first thing a person asks is, “Where are you?”

•

Having to listen to the chirps and weird rings and tones some cell phones make.

Nancy Friedman, president of Telephone Doctor, is a featured speaker at association, Franchise, and corporate meetings. For a Demo & packet on Nancy, please email Donna.Bryan@ telephonedoctor.com Or call 314.291.1012.

4. I’ll call you back as soon as possible. (Now what’s wrong with that? Well... Your ASAP may be different from my ASAP and we’ll never exceed anyone’s expectation with ASAP. Simply state “And I will return the call.” 5. Not giving caller an ‘out’ or another way to reach the party; i.e. Another phone number, a person, or an email to locate them.

The righT advice may be closer Than iT appears.

Shifting markets require a dependable ally, and when every financial decision is an important one, having a trusted advisor is crucial.

We work with hundreds of dealerships, helping them tackle challenges and identify opportunities. Discover how we can help you move your business in the right direction.

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