WEST COAST
DEALER
T H E O F F I C I A L M A G A Z I N E O F I N D E P E N D E N T A U T O M O B I L E D E A L E R S A S S O C I AT I O N O F C A L I F O R N I A | F E B R U A R Y/ M A R C H 2 019
Pacific Auto
Helping Camp Fire Victims PAGE 12
BRENNA STANSBERRY BEGINS SECOND TERM AS IADAC PRESIDENT
DALLAS, TEXAS Permit No. 2079
PAID
PRSRT Standard U.S. Postage
PAGE 4
S TAT E A F F I L I AT E
VISIT US AT W W W.IADAC.ORG
WWW.IADAC.ORG
FEBRUARY/MARCH 2019 WEST COAST DEALER 1
FEBRUARY/MARCH
2019
INSIDE
06....... 4 VSC Features That Cool Post-Sale Heat 08..........................Upgrade Your Customer Base 10................................NIADA Government Report 12......................Dealer Extending a Helping Hand 15......................... Reconditioning Best Practices 16.................................Have Your Best Sales Year 18............................Foundation of Accountability
ADVERTISERS INDEX
ACV Auctions..................................... Back Cover AutoZone............................................................. 7 Lobel Financial.................................................... 3 Manheim..................................................... 11 & 17 NextGear Capital...........................................12-13 vAuto.................................................................IFC
WHAT’S NEW
NIADA HR SUPPORT CENTER NIADA is proud to announce the creation of our new HR Support Center. NIADAHR.com is designed to help dealers navigate today’s hazardous and litigious business environment. Need a form? Need a document? Need an employee handbook? Need advice? It is all at your fingertips! Welcome to NIADAHR.com, your complete HR Resource Center. And it is currently offered at a 25-33 percent discount! For more information or a tour of the services, contact our developmental partner at Robin@MyPayrollSite.com or 888-878-2101 Option 2.
OFFICE
For information on how to become a member please contact larry@IADAC.ORG or 916-893-3306.
NIADA HEADQUARTERS
NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION WWW.NIADA.COM • WWW.NIADA.TV 2521 BROWN BLVD. • ARLINGTON, TX 76006-5203 PHONE (817) 640-3838
For advertising information contact: Troy Graff (800) 682-3837 or troy@niada.com. West Coast Dealer is published bimonthly by the National Independent Automobile Dealers Association Services Corporation, 2521 Brown Blvd., Arlington, TX 76006-5203. Periodicals postage paid at Dallas, TX and at additional offices. POSTMASTER: Send address changes to NIADA State Publications, 2521 Brown Blvd., Arlington, TX 76006-5203. The statements and opinions expressed herein are those of the authors and do not necessarily represent the views of West Coast Dealer or NIADA. Likewise, the appearance of advertisers, or their identification as members of NIADA, does not constitute an endorsement of the products or services featured. Copyright © 2019 by NIADA Services, Inc.
STATE MAGAZINE MGR./SALES Troy Graff • troy@niada.com EDITORS Jacinda Timmerman • jacinda@niada.com Andy Friedlander • andy@niada.com MAGAZINE LAYOUT Christy Haynes • christyhaynes@live.com PRINTING Nieman Printing
4 WEST COAST DEALER FEBRUARY/MARCH 2019 WWW.IADAC.ORG
ASSOCIATION NEWS
| By Brenna Stansberry
PRESIDENT’S MESSAGE TAKE
A
LITTLE
TIME
TO
KEEP
UP
This year will mark my second term as IADAC president. I’m looking forward to trying new things to grow IADAC membership and provide even greater value to our members. I think most of us use the new year as an opportunity to change things up a bit. Many dealers evaluate last year’s productivity and decide if they want to make any changes that will hopefully yield greater profits. Will you shrink or grow your sales staff, or try different advertising? Will you invest in CRM? Or how about this question: “What new products are out there that I might be interested in and how do I find them?” Many dealers use the “monkey see, monkey do” program where you simply watch your competition to see what they do and hope if you do it also you can help yourself a little. But there are many things you can’t see unless you’re in the thick of it. Dealers in the know rely on getting information delivered to them to learn of events such as trade shows where vendors from all over the country display the industry’s newest solutions. If you are so busy you can’t take a little time out to identify ways to be more profitable, you may be a lost cause. This industry is changing rapidly and you must try to keep up or be satisfied to fall short of your objectives every month. So what should a dealer do? First, make sure you are an IADAC member. We have associate member vendors who provide the things you need to be successful. As an IADAC member you’ll also be a member of National Independent Automobile Dealers Association (NIADA), our national affiliate. IADAC membership benefits you enormously. If you’re afraid to spend $299 to find out if IADAC is a good fit, trust me when I say I will personally guarantee a full refund if you believe IADAC membership isn’t for you. Just return the VIP auction discount cards (unused) and you’ll get your money back. A guarantee doesn’t get any better than that! You can sign up at www.iadac.org by using the online portal or print an application and mail it in.
IADAC PAST PRESIDENTS LIST GUS CAMACHO, 2015-2017 ROCCO DELAPA, 2013-2015 ROD DAVIS, 2010-2013 DAVID AAHL, 2009-2010 TERRY DEGMETICH, 2007-2009 LUIS ESTRADA, 2006-2007,
2001-2002, 1989-1990 ROGER HANKE, 2004-2006 PEANUT RENFROW, 2003-2004, 1996-1997 FRANK GROMAK, 2002-2003 MIKE MACAULAY, 2000-2001 BOB HENRY, 1998-2000 RAY FOREST, 1997-1998 REX RODEN, 1995-1996
DOUG ROBERTS, 1994-1995 ED DOHNT, 1993-1994 OPIE HENDRICKS, 1992-1993 MANNY PADILLA, 1991-1992 GREG HODGES, 1990-1991 JERRY COWGILL, 1988-1989 DON HEAD, 1987-1988 JOHN BRAUN, 1986-1987 RAY GLOVER, 1984-1986 PAT MATLACH, 1983-1984 LARRY BRASHER, 1982-1983 TOM FIELD, 1981-1982 JIM MCCABE, 1980-1981 ROY WILHITE, 1979-1980 LEONARD BOYD, 1978-1979 JORDAN SUGARMAN, 1977-1978 BOB DUTTON, 1976-1977 TOM KENT, 1975-1976
JIM MITCHELL, 1974-1975 VIC SNYDER, 1973-1974 FRANK HAMMER, 1972-1973 MANUEL ROGERS, 1971-1972 JOHN HIATT, 1970-1971 DOUG ALMAN, 1969-1970 BOB SCORDINO, 1968-1969 LUCKY SKYRME, 1966-1968 LEONARD CRAVENS, 1964-1966, 1960-1961
WALT HOWEY, 1962-1964 TRAVIS GODBOLD, 1961-1962 WENDALL ANDERSON, 1959-1960 DICK RAFFERTY, 1957-1959
HONORARY PRESIDENTS
FRANK MURRAY RICK GOMEZ
EXECUTIVE COMMITTEE CHAIRMAN OF THE BOARD
VICE PRESIDENT
Gus Camacho Camacho Auto Sales, Inc. Lancaster, CA
Guy Strohmeier Auto Center 87 Soda Bay Rd Lakeport, CA
PRESIDENT
VICE PRESIDENT
SR. VICE PRESIDENT
VICE PRESIDENT
Brenna Stansberry Park Marina Motors Redding, CA Bruce LaVergne Pacific Auto
Brittany Hibdon Hibdon Auto Center Orland, CA Mehdi Chitgari Classic Chariots, Inc. Vista, CA
TREASURER
Beto Beas Beas Auto Sales Stockton, CA
SECRETARY
Tony Harb JustBetterCars.com
MAGAZINE CHAIRMAN
Mike Macaulay Car Systems carsystems40@yahoo.com
ASSOCIATION NEWS
| By Larry Laskowski
IN GRATITUDE
THANK
YOU,
ROD
DAVIS
Recently, ADESA installed new general managers in a number of their western US auctions. One of those was Rod Davis, past president of IADAC. Rod was the AGM at ADESA Brasher’s near Sacramento and accepted a position as GM of the ADESA Phoenix auction. The abrupt move to another state happened quickly, and before I knew it I was saying goodbye to a dear friend. A fixture at ADESA Brasher’s auto auction for many years, Rod was very involved in IADAC. He served in nearly every position on the executive committee, including three terms as president. To say Rod will be missed is an understatement. He always brought solid thinking to any discussion and his organizational skills helped create efficient problem solving. As a past president, Rod will remain on the board of directors no matter what state he lives in. Rod was with IADAC during good times and bad. In rocky times IADAC’s leaders pulled together to keep the association solvent. Never did you hear from Rod that something couldn’t be done. His cup was always half full. That mindset is one of his greatest assets. The industry owes thanks to Rod and all those who made sure IADAC would be able to continue serving the California independent dealers. At the IADAC annual convention a scholarship auction takes place to help replenish funds that support IADAC dealers’ children as they begin college. As an auctioneer for that event, Rod would team up with North Bay Auto Auction GM David Aahl, each poking fun at the other’s auction. Due to his move to Arizona, this was the first time Rod missed the convention in over 20 years. IADAC’s leaders often travelled the state to support events in various locales. Rod would always commit to those events, lending help as needed. Dealers should note how much time and expense has been donated by Rod and many others for the betterment of this industry. On behalf of all those in the industry and IADAC, we say, “Thank you, Rod!”
5 Rod with his family
5 Rod with North Bay Auto Auction GM David Aahl preparing for a scholarship fundraiser. 5 Rod with Beto Beas, IADAC Treasurer
5 IADAC officers (left to right) Guy Strohmeier, Putu Blanco, Brenna Stansberry, Gus Camacho, Mike Macaulay and Rod Davis
5 Rod Davis, Larry Laskowski, Rocco Delapa and Terry Degmetich
5 Rod with his wife Ruth
WWW.IADAC.ORG
FEBRUARY/MARCH 2019 WEST COAST DEALER 5
ACCELERATE
INDUSTRY NEWS
| By GWC Warranty
4 VSC FEATURES THAT COOL POST-SALE HEAT YOU DON’T HAVE BREAK A SWEAT
TO
Customer buys a car. Customer leaves your lot. Customer has a breakdown. Now your reputation is on the line. If you informed your customers of the VSC features that can help following a breakdown, this potential for post-sale heat won’t even make you break a sweat. The moments following a breakdown are undoubtedly a stressful time for your customer. They’re worried about getting a tow, how much it will cost, whether their service contract covers the repairs and what they will do in the interim while their vehicle is being repaired. These questions, coupled with emotions running high, can be a recipe for post-sale heat you and your reputation can live without. Thankfully, if you’ve informed your customers about key features of their service contracts, you can avoid any potential blow-back from angry customers navigating a vehicle breakdown.
Find a Service Facility If you don’t have your own service bay, highlighting where your customers can find repair facilities that have an existing relationship with your VSC provider will help them quickly find a place to take their vehicle. Perhaps even more importantly, showing your customers where they can find repair facility information can bail them out of a difficult situation when traveling. Coverage Lookup These days it’s all about self-service. Most customers today would prefer to find answers to simple questions on their own. Following a breakdown, a customer may want to know if their service contract is still active and what components are covered. In these instances, if they know where to look up their coverage online, they can quickly find this information on their own, even outside of business hours. Instructional Content When customers need repairs quickly, there’s no time to go back and forth over claims procedures. With content readily available online that outlines proper claims procedures, customers can navigate the claims process with as few roadblocks as possible, ensuring a quick and painless claims experience. Multiple Contact Options Customers have different communication preferences. Some might want to make a phone call while others prefer email or live chat online. A VSC provider with all of these options at your customer’s disposal helps them get the answers they need quickly so they can get their car back on the road as soon as possible.
6 WEST COAST DEALER FEBRUARY/MARCH 2019 WWW.IADAC.ORG
NATIONAL INVENTORS HALL OF FAME MUSEUM EXHIBIT HITS THE ROAD
CUSTOM SPLIT-MODEL FORD MUSTANG
A custom-built, split-model Ford Mustang journeyed through 13 states to reach its final destination – the Consumer Electronics Show. The National Inventors Hall of Fame (NIHF) and Ford Motor Co. unveiled the one-of-a-kind 1965 and 2015 Ford Mustang split-model car in 2016 as part of the Intellectual Property Power exhibition at the NIHF Museum. The split-model car hit the road this year with a stop at CES in Las Vegas in January. The vehicle was on loan to the United States Patent and Trademark Office. The interactive exhibit showcased the differences in features between the two models, how the design has evolved to fit changing consumer tastes and technologies, and how intellectual property affects the design of an automobile. “Our split-model Ford Mustang is taking a road trip to CES,” NIHF CEO Michael J. Oister said. “As one of our most popular exhibits in the NIHF Museum at the USPTO, we are excited to have it displayed at the largest and most influential marketplace of technological innovation.” The split-model car was the brainchild of NIHF, USPTO and Ford, demonstrating 50 years of automotive design and technology protected by patents and trademarks. The 2015 Mustang has 36 patents unique to its production year. The 1965 model used more than 100 of Ford’s existing patents in addition to production yearspecific patents. The Ford Mustang has been in production continuously for more than 50 years and has become an icon of the American muscle car. The split-model car’s journey can be followed on the NIHF social media accounts using #FordMustang. For more information regarding NIHF Museum exhibits visit invent.org/museum. The National Inventors Hall of Fame is the premier nonprofit organization in America dedicated to recognizing inventors and invention, promoting creativity, and advancing the spirit of innovation and entrepreneurship. The National Inventors Hall of Fame Museum is a Smithsonian Affiliate. For more information, visit www.invent.org.
ASSOCIATION NEWS
| By Larry Laskowski
EXECUTIVE DIRECTOR’S MESSAGE STOP
CHARGING
A
DOC
I often speak with non-member dealers and ask them to join IADAC in support of the industry. Many of the things IADAC does benefit all dealers, members and nonmembers alike. Amended bills, or bills we have successfully opposed, were achieved using the resources available to IADAC. These resources are available as a result of dues paid by IADAC members. IADAC was born when the California auto industry’s first controversial bill was introduced. Dealers united to fight that bill and realized their voice was louder and more effective with more members. Over the years, IADAC has fought to increase the doc fee when legislative mandates required dealers to complete additional tasks. It is currently $65 for most dealers and $80 for dealers using electronic titling. As of January 1, 2019, with the implementation of the Temp Tag bill, dealers will realize an increase of $5 for having to perform that task. Yes, IADAC is responsible for that also. When I mention to non-members the benefit they have in the doc fee, many brush it off as insignificant. So I ask of non-members, please stop charging a doc fee now!
FEE!
You don’t pay for IADAC to represent you. The doc fee we earned was paid for by IADAC members. Take a stand and refuse to charge the doc fee! Show your lack of support for the industry by not charging any fees for document processing. While you’re at it, non-members, I would also suggest you call your bond company and tell them you want to raise your bond to $100,000. Because that is what it would have been if IADAC had not fought SB 95 in 2009. Yes, Senator Ellen Corbett proposed raising the bond to $100,000. IADAC negotiated a small increase in dealer license fees to go to DMV investigations instead of an increase in the bond amount. So pay for the higher bond and stand in solidarity with other non-members. Your conviction will earn you respect with others who have also made their careers in the auto industry but choose to leach off industry supporters. How is your math? IADAC’s paying members number approximately 430. There are around 7,000 independent dealers in California. That is a very poor saturation. Membership is only $299 annually. The doc fee you charge probably pays for that in
less than two weeks. I haven’t even mentioned the VIP auction card discounts, which add up to a huge monetary benefit. That benefit is a no-brainer also. It doesn’t take a math whiz to know that trading $5 for $20 is good deal. To all you members, I say, “Thank you!” We all appreciate your support. You are the true core of this association. For you non-members, you can start doing your part and sign up now as members of IADAC. Go to iadac.org and print an application or use the online portal. You’ll be glad you did!
WWW.IADAC.ORG
FEBRUARY/MARCH 2019 WEST COAST DEALER 7
NEW CUSTOMERS Vs REPEAT CUSTOMERS SALES MATTERS | By Kenny Atcheson
UPGRADE
YOUR
CUSTOMER
When speaking at 20 groups, conventions, conferences or during private consultations, I typically ask what a dealer needs most. Usually the answer is one of the following, or both: • “More new customers.” • “Better customers.” The answer I rarely hear is: “More repeat and referral business.” Some dealers do a good job of earning more repeat and referral business, but many others haven’t put as much thought into it. The latter group thinks that simply offering a referral fee is enough. A Word on New Customers New customer acquisition is one of the most expensive investments business owners can make. You have not yet earned the trust of new customers. They go through a longer process than do repeat and referral customers. New customers typically require more advertising to get them to take action. They may have to be followed up with more, which requires more labor cost from employees. Even when you earn the business of a new customer, their one-time experience has not earned you the right to be referred – just yet. The threshold for someone to refer business to your dealership is higher than simply buying for themselves. All business owners need a steady flow of new customers, but don’t forget about repeat and referral business. Retention – Repeat Purchases Getting an existing customer to buy from you again is much easier than acquiring new customers. When you take the necessary steps, your existing customer will most likely skip straight to the last step – purchase. You already have their trust. They don’t need to spend time researching your dealership. They are familiar with your company, so they already know where you are and what it takes to do business with you. If they enjoyed their experience, interest and desire is already directed toward your business when the time comes to upgrade to another vehicle. Repeat customers are generally easier and more pleasant to deal with. Repeat customers are more likely to refer business. Repeat customers are harder for the competition to steal due to loyalty. Repeat customers put up less price resistance.
8 WEST COAST DEALER FEBRUARY/MARCH 2019 WWW.IADAC.ORG
BASE
Going back to the second thing dealers always say they want (better customers), a repeat customer should be a “better customer.” You can upgrade your customer base by choosing those you prefer and expend more effort to get them to buy again. In addition, birds of a feather flock together, so the referrals you get from your upgraded customer base may have friends you would consider better customers. H OW TO I M P ROV E C U STO M E R RETENTION How you treat the customer during and after the sale is the most obvious answer to the question of improving retention. Perhaps you are friendly when they purchase, service their vehicle or make their payments. Do you contact your customer or put your business/people/personalities in front of them any time outside of when they give you their hard-earned money? If not, you should. Host Large Customer Appreciation Events Yearly We recommended and helped a client promote and organize an event last year. Two of the best sales weeks of the year were the week immediately before and after the party. There is a right and a wrong way to host a customer appreciation party. If you focus on sales, it’s not a party, it’s a sales event. If you don’t promote the event enough to get a group to show up, it looks terrible. It looks like your dealership doesn’t have any happy customers. You must promote the appreciation party as hard as you would a sales event. It should be fun and it should be all about the customer. Host Small Customer Appreciation Events Quarterly Small events include a free lunch or a car wash certificate designated for a specific day. These are inexpensive events to connect your customers with your team. Although these are small, they require face time. Don’t just send an appreciation gift. Have customers come in so your team can get human interaction. Send a Purchase Anniversary and Birthday Card Some CRMs have this as an automated feature. This is not good enough. If you think it is, send an eCard to your mom for Mother’s Day and see how that works.
It does not have the same effect. There is all kinds of research to support the importance of holding something physical in your hands versus digital. It is proven to be a lot more powerful. Send a Print Newsletter Every Other Month to Communicate, Update and Appreciate Regular communication breeds familiarity and trust to form a stronger bond and loyalty. It puts your dealership brand in front of your customer so you are “top of mind.” Newsletters are a relationship tool. When you regularly offer value, updates and occasional personal information, it “humanizes” your business. Humanize Your Business Be less logo and cars. Be more faces, humans, and interaction. Talk and type human-to-human, not business-to-prospect. Check in on your customers once in a while. Let them see your human side. Have a face and personality to the business. When you are known as a person and not just a business, people are less likely to tear into you after a disappointment. The bond you create with your customer is much stronger human-to-human than by using a logo and a catchy jingle. Listen – Everyone Wants to be Heard No real relationship is one person doing all the talking. Give your customers a voice. Give your customers an opportunity to provide feedback without a ridiculously long survey. By doing so, you may find things you didn’t know are wrong. There will always be challenges. No one is perfect. Many of your customers will forgive mess-ups, but only if the problem is fixed in a timely fashion. The White House Office of Consumer Affairs revealed one out of 26 unhappy customers bothers to complain. What are the chances the other 25 purchase again? Use a customer feedback system to give your customers a voice, keep most complaints internal, build a vault of testimonials to use in all of your marketing and keep your employees on their toes. Kenny Atcheson is the founder of Dealer Profit Pros and author of Marketing Battleground: How to Deploy Under-the-Radar Strategies to Explode Your Profits. Kenny teaches workshops and speaks at conventions and 20 Groups. His company offers several marketing and advertising programs found at www. DealerProfitPros.com.
MARKET WATCH
2019
IIHS TOP SAFETY PICKS MORE
MODELS
RANK
Nearly five dozen 2019 models meet stricter criteria to qualify for a 2019 Top Safety Pick award from the Insurance Institute for Highway Safety. The 30 first-tier “plus” award winners earn the highest rating for passenger-side protection in a small overlap front crash and have good-rated available headlights, while the 27 winners of the second-tier award qualify with an acceptable or higher rating in the newest IIHS crash test and the nighttime headlight evaluation. All 57 vehicles in this group earn good ratings in the institute’s five other crashworthiness evaluations and have an available automatic emergency braking system that rates advanced or superior for front crash prevention. IIHS now requires a good rating in the passenger-side small overlap front test to earn a Top Safety Pick versus the acceptable or good rating required for the 2018 award. This marks the sixth time IIHS has raised the bar to earn the Top Safety Pick+ award since introducing it in the 2013 model year to recognize vehicles that offer a superior level of safety. The Top Safety Pick award launched in
FOR
SAFETY
the 2006 model year to help consumers identify vehicles with the highest ratings. Over the years, IIHS has added to and strengthened criteria for both awards to encourage manufacturers to speed up safety advances. “We challenged manufacturers to provide the best possible protection in a range of crash scenarios and equip vehicles with an automatic emergency braking system to avoid crashes, as well as offer headlights that give drivers confidence when traveling at night,” IIHS president David Harkey said. “Fifteen brands hit all the marks to give consumers shopping for a new car a wide variety of 2019 models to consider.” Models that earn Top Safety Pick+ or Top Safety Pick are the best vehicle choices for safety within size categories. Size and weight influence occupant protection in serious crashes. Larger, heavier vehicles generally afford more protection than smaller, lighter ones. Thus, a small car that’s a Top Safety Pick+ or Top Safety Pick doesn’t necessarily afford more protection than a bigger car that doesn’t earn the award. For the complete listing of vehicles, visit www.iihs.org/iihs.
ACCELERATE | By GWC Warranty
EDUCATING THE EDUCATED CUSTOMER
TEACH
THEM
SOMETHING
Today, more than ever before, customers are walking through your doors with a plan and a price in mind. It’s a dangerous situation that can cut into your margins if you aren’t prepared to teach them something they don’t already know. A recently released report from Jumpstart Automotive Media and Ipsos reported 86 percent of consumers show up to a dealership with a price in mind for the vehicle they want. This price, despite your best efforts, will likely be lower than sticker since the report showed that 81 percent of consumers don’t believe a dealer’s lowest price is available prior to negotiation. So how do you combat this type of consumer approach when you’re priced competitively and you can’t sacrifice any more off your margins?
THEY
DON’T
Certify Your Lot Certified Pre-Owned programs aren’t just for franchise dealers, but you can thank them for the cachet behind the name. Explaining to your customers your price includes shortterm coverage from expensive repairs shows them you’re providing an assurance of a quality vehicle – something they can’t deny demands a higher-than-normal premium. Explain Reconditioning Continuing to build on the fact that higher quality vehicles demand a higher price, you can go into detail with your customer about the work you’ve done to get that vehicle ready for them. Showing you’ve inspected the vehicle for common problems with brakes or replaced tires and fixed cosmetic problems explains value that no third-party website can account for.
ALREADY
KNOW
Back-End Products If a customer is surprised by a monthly payment that includes vehicle service contract coverage, you can explain how the tools they used to come up with a monthly payment don’t include the price of a service contract. If a customer sitting across from you is sensitive enough about a monthly budget to do all these calculations ahead of time, they’ll also be sensitive to what a major repair could do to that same monthly budget. Educating customers on the cost of common repairs and how damaging that can be to a tight budget will help demonstrate just how valuable that relatively minor added monthly cost for a VSC can be. WWW.IADAC.ORG
FEBRUARY/MARCH 2019 WEST COAST DEALER 9
WASHINGTON UPDATE | By Shaun Petersen
GOVERNMENT REPORT
LATEST GOVERNMENT ISSUES AND ACTIVITY NIADA is your voice in Washington D.C., advocating for independent dealers, the used vehicle industry and small business. Here’s a look at the latest news and NIADA efforts regarding legislative, regulatory, PAC and grass roots activities. LEGISLATIVE The 116th Congress is now in session, and with significant changes among the members – most notably, the Democrats now hold a 36-seat majority in the House of Representatives – committee assignments and leadership have changed considerably. Rep. Nancy Pelosi (D-Calif.) was again elected Speaker of the House, returning to the job she held 2007-11, when her party last held the majority. The 78-year-old agreed to limit her term as speaker to at most four years in order to gain support from a vocal group of opponents that included many of the young Democrats who won election in November. Pelosi’s longtime lieutenants, Rep. Steny Hoyer (D-Md.) and Rep. James Clyburn (D-S.C.), will serve as majority leader and majority whip. Rep. Kevin McCarthy (R-Calif.) remains in place as minority leader, as does Rep. Steve Scalise (R-La.) as minority whip. Committee leadership also switches to the new majority party. That includes new chairmen for the committees with jurisdiction over areas of interest to the auto sales industry. Those committees include: Transportation and Infrastructure: Chair, Peter DeFazio (D-Ore.); ranking Republican, Sam Graves (R-Mo.). Energy and Commerce: Chair, Frank Pallone (D-N.J.); ranking Republican, Greg Walden (R-Ore.). Financial Services: Chair, Maxine Waters (D-Calif.); ranking Republican, Patrick McHenry (R-N.C.). Ways and Means: Chair, Richard Neal (D-Mass.); ranking Republican, Kevin Brady (R-Texas). With the Republicans increasing their majority in the Senate to 53-47, overall leadership remained the same, with majority leader Mitch McConnell (R-Ky.) heading the chamber. The new majority whip is John Thune (R-N.D.), as Texas’ John Cornyn ran up against a term limit. Minority leader Chuck Schumer (D-N.Y.) and minority whip Dick Durbin (D-Ill.) lead the Democrats. Nevertheless, there were some changes on relevant committees, including Sen. Chuck Grassley (R-Iowa), replacing retired Orrin Hatch as chairman of the Finance Committee, with Ron Wyden (D-Ore.) as the ranking Democrat, and Roger Wicker (R-Miss.) replacing Thune as head of the Commerce Committee with Maria Cantwell (D-Wash.) as ranking Democrat. Other committees of interest include: Banking: Chair, Mike Crapo (R-Idaho); ranking Democrat, Sherrod Brown (D-Ohio). Environment and Public Works: Chair, John Barasso (R-Wyo.); ranking Democrat, Tom Carper (D-Del.).
10 WEST COAST DEALER FEBRUARY/MARCH 2019 WWW.IADAC.ORG
REGULATORY Department of Labor: NIADA submitted comments supporting the Department of Labor’s proposed rule to help small businesses strengthen retirement security. The proposed rule would make it easier for small businesses to offer retirement savings plans to their workers through an Association Retirement Plan – a mechanism that allows small businesses to band together to offer 401(k) plans to their employees. DOL proposed the new rule in response to an executive order signed by President Trump on Aug. 31 in a ceremony in Charlotte, N.C. that was attended by NIADA past presidents Chris Martin and Billy Threadgill, Region II vice president Michael Darrow and Carolinas IADA president Darryl Jackson. Under the proposed rule, Association Retirement Plans could be offered by associations of employers in a city, county, state or multi-state metropolitan area, or in a particular industry nationwide. Sole proprietors and their families would also be able to join. DOL said the rule would enable small businesses to offer benefit packages comparable to those offered by large employers by reducing administrative costs through economies of scale and increase their negotiating leverage with financial institutions and other service providers. CFPB’s name game: Kathy Kraninger’s first official act as the new director of the Bureau of Consumer Financial Protection was to change its name back to Consumer Financial Protection Bureau. Kraninger’s predecessor, acting director Mick Mulvaney, initiated the move to call the bureau by the name given it in the 2010 legislation that mandated its creation. Kraninger reversed that decision, noting that the bureau is well known by the CFPB acronym and changing that would only confuse matters. In addition, the name change would have cost an estimated $19 million.
GRASS ROOTS Michigan: Michigan IADA’s efforts pushing for legislation to require pre-licensing and continuing education for the state’s used vehicle dealers paid off when Gov. Rick Snyder signed Senate Bill 1023 into law Dec. 19. The bill, which passed by votes of 96-13 in the House and 36-1 in the Senate, makes Michigan the 20th state with an education requirement for licensed dealers. MIADA president Otto Hahne said the association will work with the Michigan secretary of state’s office to develop the curriculum and will seek to become a state-approved provider of the dealer training program for both pre-license and continuing education. Ohio: On Dec. 19, Gov. John Kasich signed legislation creating a committee to study the use of information from National Motor Vehicle Title Information System reports to brand vehicles as salvage – a brand that would prohibit them from being driven or sold legally in the state. That became an issue last year, when the Ohio Bureau of Motor Vehicles began to brand vehicles that have been driven on Ohio roads safely for years based only on a scrap, crush, sold, salvage or null or blank indication on a NMVTIS report. Ohio IADA filed a lawsuit to fight that policy, which would have left thousands of vehicles inoperable and valueless in the state. Meanwhile, a bill was introduced in the state legislature to form a study committee to look into the issue – and prohibit BMV from placing a salvage brand on a title based solely on information from a NMVTIS report until Jan. 1, 2021, to allow the committee to complete its study. The new law, which took effect Jan. 10, names OIADA as one of the organizations to be represented on the committee. Shaun Petersen is NIADA’s senior vice president of legal and government affairs.
ASSOCIATION NEWS
DEALER EXTENDING A HELPING HAND PACIFIC
AUTO
RESPONDS
Bruce LaVergne and Nader Zaker, owners of Pacific Auto, helped out survivors of the recent “camp fire� in Paradise, California. A dealership policy is to put aside a certain amount of money for every vehicle sold. This money is then used for charitable works. Last year Pacific Auto set up a school in Africa to train young people in auto repair. 2017 IADAC Quality Dealer of the Year, Pacific Auto consistently donates and personally helps where needed. The recent camp fire was a tragedy that caused unprecedented loss of life and property damage. Before the smoke even cleared, Bruce and Nader were there to help. They loaded up trucks full of supplies, toys and much needed cash for survivors. They started east of the East Avenue Church in Chico and went all the way to the FEMA camp. They brought their families to help distribute items to folks most in peril. They chose mostly elderly individuals and families with small children. Pacific Auto allocated over $5,000 to help the needy. It is noble to see a need and take a step forward. West Coast Dealer would like to congratulate Bruce and Nader of Pacific Auto for a job well done.
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TO
FIRE
VICTIMS
PRODUCTS & SERVICES
ASSOCIATION NEWS
By Mike Macaulay – West Coast Dealer Editor/Chair
TAKATA AIRBAG SOLUTION
COURTESY OF THE SAFETY COUNCIL IADAC recently became aware of a pilot program we hope gains traction for the benefit of independent dealers. It is called Check To Protect (www. CheckToProtect.org). The program is currently limited to Southern California but will hopefully grow quickly as user demand increases. Tom Musick with the National Safety Council explained dealers in the program can arrange to have a mobile repair service (AER) visit their dealership and repair vehicles with Takata airbag issues in bulk at no
NATIONAL
cost to the dealer. This would save an enormous amount of time and provide a valuable public service. NSC also has a batch VIN lookup tool so dealers can quickly identify vehicles under recall. NIADA and NAAA, along with others, have endorsed this program. Information is available at www.iadac.org. Southern California dealers should reach out to program manager Tom Musick to become involved. His contact information is tom.musick@nsc.org and (630) 775-2381.
EDITORIAL COMMENT LOOKING
AHEAD
Our 2018 IADAC Convention was a success. There were many dealers in attendance concerned about new legislation and current issues. We are still looking for input on how future conventions should happen. The recent wildfires in California have created much misery. Many concerned vehicle dealers have extended a helping hand to folks affected by this terrible tragedy. For example, John Mayer of Mayer Equipment directly donated over $1,000 to two deserving survivors. Many gave to the Red Cross and other helping agencies. There is still need for help – do what you can! Our industry is changing rapidly. There are many articles in this and previous issues of West Coast Dealer that look to the future. Continuing success in our industry requires planning for change. We have a mentor program for member dealers that can answer questions about the nuts and bolts of running a dealership. All questions can be forwarded to me at carsystems40@yahoo.com. I wish you all a happy and successful 2019!
WWW.IADAC.ORG
FEBRUARY/MARCH 2019 WEST COAST DEALER 13
SOCIAL MEDIA | By Kathi Kruse
6 OUTDATED SOCIAL MEDIA TACTICS GIVE
THEM
UP
NOW
Social media is 10 years old. In that time, auto retail has evolved. Consumers have evolved. Social media has evolved and matured into a valuable marketing platform. So why are so many dealerships acting like it’s 2013 and using outdated social media tactics? Given that we’re in an accelerated environment with nearly every industry discovering the status quo isn’t effective, it’s prudent to make timely assessments of what social media tactics are working and not working. But determining which social media tactics are least effective isn’t always easy. Time is a valuable asset. Spinning your wheels with outdated social media tactics can drive you crazy, and drain precious resources. Here are six outdated social media tactics to give up right now. Publishing content that everyone has already seen a hundred times. There are “social media providers” out there who are ready to take your money, but provide no real strategy and deliver the barest minimum solutions. I have news for you: that is not social media marketing. Customers want to know more about your store and how it operates. Posting benign content that’s been seen elsewhere isn’t going to bring results. Stories are what attract and engage consumers. What stories can you tell about your business? Chasing Facebook likes. Even though many dealers believe otherwise, it’s never been important to judge a dealership by the amount of likes on their Facebook page. Is it good to have more likes? Yes, but only if those likes are people who are your current/repeat customers or people who will someday want to buy from you. Now that Facebook is “pay-to-play” and all content needs to be promoted with Facebook ads, there may be less of an urgency to grow your page likes (depending on various factors at your particular store). I’m not saying to entirely stop growing likes. I’m simply saying that if you have an ads budget and you’re spending a lot to grow your likes, reduce your page like ads budget to 30 percent or less of your total spend. Allocate the balance to promoting your inventory and your services.
Blog posts/website content written solely for SEO. In a buyer’s eyes, nothing is more valuable than content that educates, tells stories and informs. Done the right way, this type of content can be a deciding factor in their purchase. Content written solely for search engines is typically not fit for human consumption. Google has given us many clues over the last few years that this tactic is discouraged. Pro tip: Publish content that is written or produced for humans. Then, optimize it for SEO. Is it important to optimize your content for search? Of course. One of the goals for your content is to attract search engine traffic, but it’s not the only goal. It’s best to find the balance between engaging content and search engine optimization. For my blog, I typically write out my posts freestyle with keywords in mind (but not solely focused on them). When I’m happy with the finished product, I then optimize my post for search. Trying things once and giving up. Have you tried Facebook ads before? How about video or images of the happenings at your store? A lot of people try things once, fail, and then never give them another chance. It takes time and experimentation to figure out what does and doesn’t work on social media. If you tried Facebook ads once and didn’t like the results, try them again and carefully track your process so you can review it later to see how things can be improved. If you’re outsourcing your Facebook ads, pay attention to your vendor’s strategy. Ask what the goals are and set some metrics to make sure you’re getting your money’s worth. Relying on organic reach to get through to your audience. If you’ve been managing a Facebook Business page over the past few years, you’ve likely noticed a drop in how many of your fans have been viewing and interacting with the organic (not paid to promote) posts you publish to that page. The days of organic reach are pretty much over. Social platforms – Facebook especially – are constantly updating their algorithms to favor paid content.
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What’s the answer? Appreciate Facebook for what it is and accept the fact that after 10-plus years, everyone must pay for people to see their posts. Your budget doesn’t need to be huge – sometimes a few hundred well-placed dollars will get good results. Trying to be everywhere, all the time. Don’t waste time worrying about every social network available in the universe. It will cause you a lot of undue suffering. Do this instead: · Identify your target customers. · Define the places where they spend their time. · Pick one network to start with. · Set a clear path by setting goals and objectives. · Measure your results and tie your results back to your goals. Quick note: It’s very important to claim your social and online ratings profiles, even if you’re not utilizing them right now. If you haven’t yet, make sure you claim them before your competitor does. When you’re ready to leverage other networks, you don’t want to be surprised to find usernames are already taken. Evolving is necessary with today’s social media. Set yourself and your store up for success by following through on your social media strategy and the right social media tactics for your business. Kathi Kruse is an automotive social media marketing expert, blogger, consultant, author, speaker and founder of Kruse Control Inc., which coaches, trains and delivers webinars focused on integrating social media and online reputation management into dealership operations. She can be reached at kathi@krusecontrolinc.com.
MANAGEMENT MATTERS | By Adam Tobias
RECONDITIONING USED CARS Audi 2.0 Premium
BEST
Audi 2.0 Premium
PRACTICES
To earn top dollar in the automotive industry, you have to offer top products. And when you deal with used cars, most of the inventory you stock will need some love before you can present it to a customer. Auto reconditioning is what transforms banged up trade-ins into cars that customers will love. The used car market is booming, which is pushing the price of used vehicles higher than ever. To compete with these rising prices and customer expectations, dealers need to invest in better reconditioning practices. Doing so will not only improve a dealer’s profits, but provide the long-term benefit of happy customers. WHAT IS AUTO RECONDITIONING? No used car, whether bought at auction or through a trade-in, will be immediately ready for retail. Investing a small amount of time and money to fix minor issues can significantly boost a vehicle’s retail value. This is the purpose of reconditioning. Reconditioning includes, but is not limited to: · Engine repairs. · Oil and filter changes. · Maintenance on the drivetrain and suspension. · Equipping new brake pads or tires. · Fixing dents, chipped paint, and cracked windows. · Buffing out scratches. Auto reconditioning attempts to restore a vehicle to its optimal condition so it can be sold at the maximum price the market will allow. THE BENEFITS OF AUTO RECONDITIONING Reconditioning ensures buyers leave the lot happy and return with a smile when it’s time to purchase another vehicle. The benefits of reconditioning far outweigh the cost in time and money when done correctly: · Higher retail prices. Reconditioned vehicles can be sold for a higher retail price. There is usually a several thousand dollar variance between vehicles in average condition and those in clean condition. In the image above, you will see how the same exact type of vehicle is appraised differently based on its condition. The condition of a vehicle can have a big impact on the market retail value. · Faster turn rates. Humans like things that look nice, and the market for fixer-uppers
is much smaller than for vehicles ready to drive off the lot. This is why reconditioned vehicles are more likely to find a buyer quickly. · Warranties and certifications. Reconditioning allows your dealership to issue certifications and warranties, which increase consumer trust and satisfaction.
Condition:
Condition:
Odometer: 41,000
Odometer: 41,000
Market Price: $13,650
Market Price: $15,180
· Fast turnaround. Complete reconditioning should be within 3-4 days of acquiring the vehicle. More days in reconditioning means longer turn rates and less gross profit. The optimum period to sell the vehicle is 30 days. · Buy better vehicles. Sometimes the best way to reduce reconditioning costs is to buy vehicles that need less work. Look for vehicles virtually ready to roll off the lot to offset the cars that need extra work. · Have a reconditioning team. Don’t make your services team decide between reconditioning a vehicle and working on a customer order. Eliminate this conflict by having a dedicated reconditioning team. · Recondition for wholesale. Some dealers overlook reconditioning for wholesale, but this is a mistake. Dealers are human too, and everyone is more likely to buy a vehicle that is in good shape. Reconditioning a vehicle before auction could help you net a few hundred, even a few thousand, dollars more.
THE COST OF RECONDITIONING Reconditioning is an investment, but it does not have unlimited returns. The money spent on reconditioning needs to be monitored and compared to the margin you make on each vehicle. It’s essential to accurately appraise a vehicle and factor in reconditioning costs before approving the work. A good ballpark for reconditioning costs is $1,000. If you designated the vehicle as a retail unit, anything higher than $1,000 should be subject to review: · Is the vehicle in high demand? · Does it have high mileage? · Can you sell it quickly enough? The goal for reconditioning is to restore a vehicle to its maximum retail price while spending the least amount possible. However, this should never come at the cost of quality. BEST PRACTICES FOR AUTO RECONDITIONING Cost and speed are the two major considerations when reconditioning vehicles to sell. Time is money, and every day your vehicle goes unlisted is money lost. Remember the saying: “20 percent of the effort is responsible for 80 percent of the result.” Here are some reconditioning best practices to make sure you put in the right 20 percent in every vehicle. · Optimize reconditioning costs. Dealers should constantly root out inefficiencies and excess costs in their reconditioning process. One way to reduce costs is by using quality, non-OEM parts. However, dealers should make sure this doesn’t disqualify them from any certification programs.
INVESTING IN RECONDITIONING Can you afford the investment in reconditioning? The real question is, can you afford not to invest? Reconditioning used vehicles is an investment that can reap huge dividends for your dealership. When done right, reconditioning can add thousands of dollars to the final selling price, netting you higher profits and happy customers. The benefit is multiplied with every extra vehicle you sell thanks to faster inventory turn rates. Doing reconditioning the right way takes its own investment of time, education, and tools. Dealers who commit wholeheartedly to improving their reconditioning practices are setting themselves up for success for a long time.
WWW.IADAC.ORG
Adam Tobias is the co-founder and COO of Dealercue, which provides dealerships with real-time, intelligent, market-driven vehicle appraisal, pricing, inventory management, and sourcing solutions. He can be reached at adam@dealercue.com.
FEBRUARY/MARCH 2019 WEST COAST DEALER 15
HAVE YOUR BEST SALE$ YEAR IN 2019
TWO
IMPORTANT
TIPS
Warning: if you’re looking for a shortcut or easy way to your best year, you probably won’t like this article. What I have to say is not what the majority of the population wants to hear. That said, it is what you need to hear if you want to have your best year in 2019. Here are two tips. Work Harder This is the tip most people won’t like. Here’s the thing about hard work: the harder you work by making more sales calls, the more your sales will increase. Want to increase sales by 20 percent? Simple – increase your sales calls by 20 percent. If everything stays the same – your contact rate, your closing ratio, the quality of prospects you’re calling on, your sales skills, etc. – and you simply call on more people, you will automatically increase sales by the percentage of increase in the number of calls you make. So whatever percentage increase it will take to have your best year, simply increase your calls by that number and you’re guaranteed the result. The most successful people on the planet, in any walk of life, are the hardest workers. No exceptions. The top athletes, top musicians, top actors and actresses and top ditch diggers all work harder than everyone else. Are there exceptions to the rule? Yes, and they are just that – the exceptions. Follow the rule, not the exception. The exception is the person who got rich winning the lottery. You don’t want to rely on those odds. Stop looking for the shortcut – the easy, carefree, painless way. In the long term, those are the longer ways. They are more expensive mentally, physically and financially, and ultimately the shortcuts are a waste of time. Follow the tried-and-true path and work hard. It is also a good idea to increase the effectiveness of your sales calls. If you get better at all aspects of selling – getting to
FOR
SUCCESS
the decision maker, getting their attention, differentiating yourself, finding their pain, creating a solution, building rapport and long-term relationships, etc. – now an increase in sales calls will grow sales exponentially. Even if you only get better in one or two areas, your sales will increase at a higher rate than if you simply increase the number of calls. Be Disciplined The most important activities of a salesperson are prospecting, presenting and closing. The most important thing you do during the sales day is talk to people who can give you business. It takes lots of discipline to stick to these activities during prime calling hours. You’ve got to make hitting your numbers every day your number one priority. This means you’ve got to guard your time closely against your biggest enemy – distractions. Distractions come in many forms – phone calls from friends and family, text messages, email chimes, social media, chasing a fly around your office for five minutes, paperwork you should be doing off-hours, and other urgent/unimportant tasks that steal your attention during the day. While most of these distractions simply pop up, many of us are also guilty of intentionally placing distractions smack in the middle of our day. Don’t do that. Don’t schedule doctor appointments, dentist appointments, appointments with your financial planner or CPA, or anything else at these times. Obviously there are times when you can’t avoid that, but you want to stick to this rule as much as possible. Also, again, don’t do paperwork and other non-time sensitive activities during prime calling time. You also want to look for other time wasters. I had one insurance agent who was going to every Chamber of Commerce, BNI, and networking event for years, all while getting very little business. When we got her to go out and knock on 50 new prospect doors a week
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and follow up with phone calls, her efforts over the next 12 months produced more than 40 times the results she got from attending all those events. It’s simple – she was no longer hoping the same people she saw every week for three years, who were at the networking events primarily to “get” as opposed to “give” business, would have a new lead for her. She was now proactive with in-person visits and phone calls to prospects. Was it harder to knock on the doors and ring the phones and face rejection from strangers? Yes. And as your parents told you growing up, the most difficult thing to do is usually the right thing to do. In-person visits and phone calls are also still the fastest ways I know to grow a business quickly. That said, if you still want to go to the networking events you can, but only after you’ve gotten all the prospects you need from phone calls and visits. In addition to the above, put up two signs – one in your office and one in your car – that say, “Am I working on my most important sales activities right now?” If it’s 5 a.m. and the answer is “no,” that’s fine. If it’s 11 a.m. on a Wednesday, and most of your prospects are on a standard work schedule, that’s an issue. Finally, part of being more disciplined is also delegating activities and finding faster, better, more effective ways to do current tasks. This will free up more time for more sales activities. Ultimately there is only one question you must answer to determine whether you’ll have your best year in 2019: Are you willing to put in the time, effort and energy, and endure the pain, to do the things that must be done, when they must be done, to make it happen? Yes? Great! Then get out of your own way and go make 2019 your best year ever! John Chapin is a sales and motivational speaker and trainer. He has over 31 years of sales experience as a number one sales rep and is the author of the 2010 sales book of the year: Sales Encyclopedia. For more information, visit www. completeselling.com or email johnchapin@ completeselling.com.
the newer generations of dealers accept the online purchase concept much more easily than the “old school” folks who want to “kick the tires.” The new condition reports are truly amazing – listing every flaw and usually providing pricing for repairs. I interviewed representatives from many auctions over the last couple months. It seems the percentage of online buyers logged in for each sale has gone up substantially. The last two years have seen a rise of over 150 percent. To qualify this statement, the online attending numbers started low, so a little jump in numbers makes a big percentage increase. The number of dealers attending in person is still much more than online. I spoke to several franchise dealers who
purchase “program cars” from factory sales. A large percentage of them attend auctions only online. They trust the factory to stand behind their condition report. Granted, these vehicles are mainly current or year old with low miles. The actual numbers of online attendance are low, but looking at a 150 percent increase in two years makes me wonder what the auction industry will be like in five or seven years. In five years it might be a rare occurrence to physically attend an auto auction. Our industry is always changing. We need to stay abreast of the path our industry takes. We old “tire kickers” may go the way of the dinosaurs. A successful business person makes plans five years into the future. Are you ready?
INDUSTRY PERSPECTIVE
By Mike Macaulay – West Coast Dealer Chair/Editor
ONLINE AUCTION ATTENDANCE
SIGNIFICANT INCREASE
Auto auctions nationwide are experiencing major growth in online attendance. Though vehicle inventory has been available to view online for many years, just recently buyers and sellers have begun trusting online commerce. About 15 years ago, I wrote an article concerning the viability of online sales. The pictures and condition reports were and are the major factors for buyers to trust Internet commerce. Back then, condition reports were not as accurate and trustworthy as they are today. Different auction companies had their own idea of what made a quality report. There were many examples of not showing problems, just the old “TV side” pictures avoiding the damage. Problems like smells, tire wear, interior flaws, and minor dings were not made apparent. Things have changed. The major auction companies now have standardized condition reports. The technology has been available for “real time” Internet auctions for some time, but WWW.IADAC.ORG
FEBRUARY/MARCH 2019 WEST COAST DEALER 17
MANAGEMENT MATTERS | By Dave Anderson
THE FOUNDATION OF ACCOUNTABILITY TWO
NON-NEGOTIABLE
I’ve written and spoken extensively about accountability in the 20 years since we started Learn To Lead – how to do it, why it’s important, the consequences for not doing so, and more. In my recent How to Master the Art of Accountability seminar I identified and outlined the two non-negotiable pillars of accountability, and how to develop both. Essentially, holding people accountable requires both the right skill set and the right mindset. Knowing how to hold people accountable but not doing it reflects the wrong mindset. Wanting to hold people accountable but not knowing how to do it indicates a deficient skill set. In this piece I’ll go over the fine points of each of the two non-negotiable pillars for holding people accountable. Three Quick Openers on the Importance of Accountability ·A ccountability protects the culture, morale, momentum, brand, employee experience, customer experience and credibility of leadership. ·W hile the cost of holding someone accountable may seem high or uncomfortable, the cost for not holding someone accountable is staggering and creates more cultural discomfort. The cost is also enduring, rather than a one-time penalty. In essence, the consequences for failing to hold others accountable create a form of misery on the installment plan. ·A ccountability isn’t an option for someone in a leadership position. It’s a duty. If you can’t do it or won’t do it, you’re unfit for leadership. It’s that big a deal. The First Pillar of Accountability Holding people accountable requires you have the right skill set. This includes setting clear expectations for outcomes, essential daily activities and core values. Without clarity there can be no accountability because the question becomes, “Accountable for what?” It also takes skill to effectively give feedback on performance, establish and enforce appropriate consequences, and
PILLARS
know what to say when you confront a poor performer. These are not tools that come to you in a dream one night after you’re promoted from advisor to service manager, or from salesperson to sales manager. They must be taught, learned, and applied to perform one’s duty as an effective leader. Because of this need for accountability “how to’s,” the accountability categories of our virtual training library are always the most used by managers from all departments in an organization. I should emphasize that part of the skill set for holding others accountable mandates you develop a skillful style as well, and it should be more conversational than confrontational. Holding people accountable isn’t a license to be a jerk, become profane, shout, or get personal. In fact, those tactics make you look like a leadership amateur. Your approach should be direct, respectful, firm, and attack the performance rather than the performer. The Second Pillar of Accountability Holding people accountable requires the right mindset. Mindset is defined as “the established attitudes held by someone.” If you don’t have the right attitude concerning holding people accountable you’re unlikely to do it with urgency or consistency. The right accountability mindset is established when you realize and believe that holding someone accountable isn’t something you do to them, but for them. Frankly, if you believe you’re doing something “to” someone you’ll be reluctant to do it, and will likely apologize for doing your job – making you the “bad guy” and the nonperformer “the victim.” However, when you believe you’re holding someone accountable to help them, to correct their course, to facilitate their growth, and to make them more successful, you’ll execute this vital duty without hesitation or apology. In an age dedicated to political correctness and not doing something that would offend someone else, holding people accountable has increasingly become seen
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as harsh or unfair. But is it really harsh to let someone know what is expected, how to improve, where they stand, where they need to be and by when, or what the consequence is for failing to do their job? If you think about it, it doesn’t really get any fairer than that. In reality, what’s truly harsh is letting people live in a gray area, allowing them to fail, fall further off track, and permit things to get so bad for so long you have no choice but to remove them, and they never see it coming or have a chance to correct their course because you failed to tell them. While it’s true that holding an accountability conversation can make both you and the other person uncomfortable, that very discomfort is what’s necessary for you both to grow and get better at what you do. What’s more uncomfortable is failing to do your job and having nonproducers, or toxic achievers, remain on your team, which is unfair to the rest of the team and jeopardizes your own job. The bottom line is that the best time to start holding people accountable would have been several years ago. The next best time is now. Where holding people accountable is concerned, if you know what to do, why it’s important, and what’s at stake if you don’t do it, and yet still fail to do it, you are the one that should be held more accountable for subordinating what’s best for the person and team to your own comfort level. When you think about it, holding others accountable is a cornerstone of any leader’s job description, so expecting you to do your job and hold others accountable seems like a reasonable expectation. Developing the right skill set and mindset – the two non-negotiable pillars of accountability – offers you a road map to get the job done. Dave Anderson, “Mr. Accountability,” is a leading international speaker on personal and corporate performance improvement. He is also the author of 14 books and host of the podcast, The Game Changer Life.