CA ROL IN AS INDEPENDEN T AU T OMOBIL E DE A L ERS AS SOCI AT ION F E B R U A R Y / M A R C H 2 0 18
AUTO DEALER NEWS
THE OFFICIAL MAGAZINE OF CAROLINAS INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION
FEBRUARY/MARCH 2018
NEW RULE FOR SALES TO MILITARY SERVICE MEMBERS
DOD SAYS “CREDIT-RELATED” PRODUCTS ARE SUBJECT TO MLA REQUIREMENTS PAGE 08
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MANAGEMENT MATTERS | BY DAVE ANDERSON
HOW EFFECTIVE LEADERS HANDLE MISTAKES
Strategies to Help You Master this Important Skill I recently filmed a DVD program for my online training platform on the topic of handling mistakes, and the response was even more robust than normal. I believe that’s because handling mistakes – ours and others’ – is such an ongoing, realworld leadership responsibility that affects everyone, both at work and at home. How you handle mistakes also goes a long way in determining the level of trust, buy-in, connection, and positive impact you can have on your team. Here are some thoughts and strategies to help you master this important leadership skill.
HOW TO HANDLE YOUR OWN MISTAKES Admit a mistake as quickly as possible. Waiting to acknowledge a mistake gives the perception you’re either oblivious to what you’ve done, or you may be looking for a way out of taking responsibility. As a result, delayed confessions allow a hiccup to become a cover-up, and then a conspiracy. This perception will break trust and build disgust among the ranks. Don’t try talking yourself out of something you behaved yourself into. Own it. You don’t have to make a big deal out of it, just own it. The objective is to bring closure to a mistake quickly so you can focus on moving forward. As an aside, if you admit an error, don’t marginalize your effort by making an excuse for it. Own it. This models a positive leadership example your team will pick up on. Leaders with bloated egos or gross insecurities never manage to execute this first step. They wrongly believe admitting a mistake makes them look weak when the opposite is true. Admitting mistakes requires strength, and earns respect because others know how difficult it would be for them to do the same thing in your situation. Learn from the mistake, then don’t repeat it. This well-known quote sheds insight onto this point: “You can never make the same mistake twice because the second time you make it, it’s not a mistake, it’s a choice.” Coach Paul “Bear” Bryant offered sound advice along these lines when he said, “When you make a mistake admit it, learn from it, don’t repeat it.” The reality is anyone who tries new things, seizes the initiative, and makes decisions is going to make mistakes. We all do “stupid” things from time to time. But the key to growth is doing “new” stupid things, not the same old stupid things. Doing the same stupid things indicates you are unaware, unteachable, undisciplined, or worse. Doing new stupid things demonstrates you’ve left your comfort zone, tried something different, and now have an opportunity to learn what didn’t work so you can get it right next time. Teach others from your mistakes. This builds trust, connection, and bondedness with team members. John Maxwell put it well: “If you want to impress others, talk about your successes. But if you want to impact them, talk about your mistakes.” Get over it and move on. Continuing to rehearse, rehash, or blame yourself for the mistake is a mistake that compounds the original mistake. If you’ve admitted it, learned from it, and adjusted because of it, move on to gaining new ground.
HOW TO HANDLE THE MISTAKES OF OTHERS Don’t get personal. Focus on the issue without getting personal with the individual that caused the issue. There’s a big difference between calling an action idiotic and calling someone an idiot. Attack the performance. Coach the performer. Address a mistake in direct, professional terms, without unnecessary drama or exaggeration. Again, be direct and professional, but also be conversational. There’s no need to pile on by injecting unnecessary hype or drama with statements like, “I can’t believe you could do something so insipidly foolish and careless! If ignorance is bliss you must be the happiest man on earth!” Focus the person on solutions, not scapegoats. An employee mistake is an unparalleled coaching opportunity. Look at it as a teaching tool, not a battering ram. Help the person think for themselves and take ownership concerning what they could have done better and how they’ll improve next time. Asking questions like: “What should you have done better, or instead?”, “What do you recommend we do from here?”, and “What did you learn and how can you ensure you don’t repeat the error?”, are nonconfrontational, collaborative ways to help the person grow by causing them to think and commit to act. When confronting a mistake, don’t rattle off their rap sheet of past unrelated mistakes. Again, this is a coaching opportunity, not an indictment. You’re not proving a case in court – you’re addressing and correcting a behavior. Keep the main thing the main thing. Rehashing past, unrelated mistakes is debilitating and distracts from the matter at hand. Engaging in “rap sheet rehearsal” will also break trust and credibility if you do the same with family or friends. It’s a recipe for ending up miserable and alone in your life. Encourage the person to take another shot. Making mistakes can cause others to procrastinate, become passive and lose their killer instinct, especially when a mistake is handled improperly. It’s a shame when this happens, because mistakes are a part of the growth process. When someone stops trying, both they and the organization miss out and fail to cash in on the mistake’s benefits of learning from the errors, learning a better way, and growing as a person. In such cases all they, and we, pay is the price for the error and never get the payoff the price could have brought. Dave Anderson is president of LearnToLead.
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February/March 2018
AUTO DEALER NEWS
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INSIDE INSIDE
SAFETY WATCH
HONDA RECALLS MORE THAN 800,000 MINIVANS Seat May Not Latch Properly
06................................Annual Social Media Policy Review 08........... New Rule for Sales to Military Servicemembers 10................................ Dealer Spotlight: Frankie Bordeaux 12................................Combating Dealer Margin Declines 16................................... Crafting Your Auction Game Plan 24............................................................... Tax Cuts Finally 26............................................ NIADA Government Report 30............................ Designing a Superior Meet and Greet
WHAT’S NEW
NIADA ACQUIRES NABD
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NIADA has acquired the National Alliance of Buy Here-Pay Here Dealers. The acquisition was finalized in December. Look for details in upcoming NIADA publications. See you at the NIADA/NABD convention June 18-21 in Orlando!
American Honda Motor Co. is recalling 806,936 2011-17 Honda Odyssey vehicles. The second row outboard seats can slide sideways to one of two positions. If a seat is placed between either of the two positions when attaching the seat to the vehicle floor, the seat will not latch properly to the seat striker, allowing the seat to tip forward unexpectedly during braking. The remedy for this recall is still under development. Honda will notify owners of the safety risk in an interim notification and provide detailed instructions for installing/ positioning the second row outer seats and confirming they are securely latched. Once a final remedy is determined and the necessary parts are available, Honda will send a second letter to owners to have them visit a dealer to have the condition remedied, free of charge. Honda’s number for this recall is S0G.
ADVERTISERS INDEX
Ace Motor Acceptance.................................................17 AmTrust Financial............................................................9 AutoZone.......................................................................13 Carolina Auto Auction..................................................IFC Charleston Auto Auction.................................Back Cover Greensboro Auto Auction................................................5 Manheim ......................................................................11 NextGear Capital...........................................................12 Protective........................................................................7 STARS GPS....................................................................15 VAuto.............................................................................IBC
OFFICE
5643 Harrisburg Industrial Park Dr. Harrisburg, NC 28075 Phone: 704-455-2117 or 1-800-432-4232 Fax: 704-454-5567 www.theciada.com CIADA is a non-profit 501(c)6
NIADA HEADQUARTERS NATIONAL INDEPENDENT AUTOMOBILE
DEALERS ASSOCIATION WWW.NIADA.COM • WWW.NIADA.TV 2521 BROWN BLVD. • ARLINGTON, TX 76006-5203 PHONE (817) 640-3838 The Carolinas Independent Automobile Dealers Association 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 CIADA 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 © 2018 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
Christopher Hanley • chris@niada.com
EXECUTIVE COMMITTEE Immediate Past Chairman Will Davis G & B Auto Sales of Louisburg Inc. Louisburg, NC 27549
Chairman
Executive Director
Steve Matthews Matthews Motors Inc. Clayton, NC 27520
John Brown 5643 Harrisburg Industrial Harrisburg, NC
SC Vice President
Controller
Darla Booher Deal Depot Inc. Greer, SC 29651
President
Treasurer
Kim Bradshaw 1st Nations Auto Sales Burlington, NC 27217
President-Elect
Darryl Jackson Crown Automotive Sales and Finance Charlotte, NC 28213
Nieman Printing
AUTO DEALER NEWS February/March 2018
NC Vice President
Kevin Pendergrass Carolina Auto Sales Myrtle Beach Myrtle Beach, SC 29577
PRINTING
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CIADA STAFF
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Steve Wetmore McAdenville Motors Gastonia, NC 28056
Secretary
Michael Threadgill Vans Auto Sales Florence, SC 29506
Debbie Braswell
Education & Membership Services Jenny Myrick
Education & Membership Services Jayne Harris
DRIS Insurance Martha Brown
SOCIAL MEDIA
| BY KATHI KRUSE
ANNUAL SOCIAL MEDIA POLICY REVIEW Why It Is a Best Practice It’s 2018 and you know what that means – it’s time to assess and realign things for the new year. Do you have a social media policy in place for your dealership? If so, how often do you review it?
PROTECTING COMPANY ASSETS It’s a good business practice to regularly assess company assets. Public or private, a dealership’s market value or equity is based directly on the assets it retains. Assets both tangible – such as cash, property and buildings – and intangible – such as your digital reputation, policies and procedures, and social media presence – are directly responsible for a store’s market value. Social media policy falls under the intangible asset category, and reviewing your policy on an annual basis is a best practice. Just as a regular review of expenses and operations results in many benefits, so does a social media policy review. WHY DO AN ANNUAL SOCIAL MEDIA POLICY REVIEW? There is often a lot of angst and fear around social media, and an annual review takes some of the sting out. You can’t control everything, but with a good policy in place and regular reviews, you’ll leave a lot less to chance. Reaffirm company guidelines for employee use of social media. When hired, each employee should have signed an acknowledgment of receipt of the company’s social media policy. A process to conduct annual reviews of company policy on everything is always a good idea but it’s crucial for social media. Why? Because social media changes often and a dealership’s social media policy should change along with it. It’s an insurance policy in the event of a social media crisis. We’ve seen enough social media debacles at Kruse Control in the past nine years to know it’s not a matter of if, but when it could happen.
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Are you prepared should it happen to you? First, it should be determined and documented what a social media crisis is. Having a company-wide plan in place will empower you to act quickly and effectively when a crisis begins. Instead of wasting time debating how to handle things on social media, you’ll be prepared to take action and prevent the crisis from growing out of control. It helps avoid legal trouble and exposed liabilities. There’s a lot of pressure for dealers to communicate online today. It’s easy to overlook that social media brings certain responsibilities to mitigate liability. Some of the places a dealer could get into trouble are: • Using work without permission. • Defaming competitors. • Promises not kept. • User privacy. • Contest violations. Pro Tip: The use of social media increases the risk of accidentally committing libel, slander, copyright infringement and privacy invasion. All those tweets and posts can lead to lawsuits, but a general liability insurance policy can help. It includes protection for “advertising injury,” meaning claims from your competitors that you badmouthed them in an ad. It safeguards against accidental leaks of confidential information. Social media is a growing security risk as a source of data leaks and misinformation. Vigilance and training are crucial to minimizing risks for individuals and the company. Employees using personal electronic devices discuss all sorts of work-related topics on social media – both during and outside of work hours and locations. As a result, confidential data can leak directly. Another security concern about social media – which continues to make headlines – is criminals can exploit social media to rapidly disseminate “fake news” and other forms of misinformation. Such devious tricks impact more than just politics. They can be used to manipulate stock prices, harm personal or business reputations, or even cause people to take actions that harm innocent parties while helping criminals. In Kruse Control’s clients’ customtailored social media policies, we
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spell out the consequences that come from accidental leaks of confidential information. We determine where risks lie and recommend actions to prevent them. It protects a company’s digital reputation. Businesses around the world ranked damage to their reputation or brand, magnified by social media, as their top risk management concern, according to Aon’s 2017 Global Risk Management Survey. Warren Buffet said, “It takes 20 years to build a reputation and five minutes to ruin it.” That is especially true today, as highprofile crises including cyber attacks, product recalls and damaging social media posts become more prevalent. In the current environment, protecting reputation and actively managing risk can take on strategic importance. Yet for many organizations, managing reputation presents challenges. Many dealers do not have a written process exclusively for reputation management. Truthfully, until social media showed up, you didn’t really need it. Reputation management was left to the marketing and PR people. Today, every employee is a marketer. A review of social media policy will support ongoing efforts to build and protect a company’s digital reputation by spotlighting internal practices and processes. It keeps HR in the loop on marketing. More and more, dealers are using social media as a recruiting tool. With the addition of “social selling” into the sales process, it’s easy to see that HR is fast becoming a necessary participant in the social media marketing process. There’s a trend toward hiring employees who already have a current social media following because they are influencers and are often seen as subject matter experts, especially if they’re in sales positions. A review of social media policies and procedures should include an update on how HR folds into social media and outlines its stake in decision-making around social media. 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.
LEGAL MUSINGS | BY SHAUN PETERSEN
NEW RULE FOR SALES TO MILITARY SERVICE MEMBERS DoD Says “Credit-Related”
Products Are Subject to MLA Requirements In mid-December, the Department of Defense issued a new interpretation of the Military Lending Act, impacting sales to members of the military and their dependents. When Congress passed the Military Lending Act, it imposed a series of requirements for extending credit to members of the military and their dependents. However, Congress also created several exemptions to those limitations, including one for the extension of credit that is expressly intended to finance the purchase of a motor vehicle when the credit is secured by the motor vehicle purchased. Congress included a similar exemption related to credit extended for the purchase of personal property. The new interpretation drastically alters the scope of what the industry previously understood the motor vehicle exemption to include. Before, dealers and finance companies understood the motor vehicle exemption to include the extension of credit for all things included in a motor vehicle transaction, such as the purchase price of the car, taxes and other state fees, negative equity and voluntary protection products like service contracts, GAP, etc. Now, DoD has turned that on its head. At issue is whether financing above and beyond the actual purchase price of the vehicle takes the transaction out of the safety net of the exemption. DoD’s interpretation says it depends on what is being financed. “Generally, financing costs related to the object securing the credit will not disqualify the transaction from the exceptions,” it reads, “but financing credit-related costs will disqualify the transaction from the exceptions.” So what are “costs related to the object securing the credit”? DoD provided some examples of costs that fit firmly within the exemption. Items such as negative trade equity, extended warranties or service contracts, and “optional leather seats within that vehicle.” What about “financing credit-related costs”? DoD said financing items such as GAP, credit insurance and “additional ‘cashout’ financing” are not included within the exemption.
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D O D P R O V I D E D S O M E E X A M P L E S O F C O S T S T H AT F I T F I R M LY W I T H I N T H E E X E M P T I O N . I T E M S S U C H A S N E G AT I V E T R A D E E Q U I T Y, E X T E N D E D WA R R A N T I E S O R S E R V I C E C O N T R A C T S , A N D “ O P T I O N A L L E AT H E R S E AT S W I T H I N T H AT V E H I C L E .
According to DoD, any dealer who finances those credit-related costs is subject to the Military Lending Act regarding transactions as far back as Oct. 3, 2016 – even though the new interpretation is just weeks old. So what should you do? Dealers selling and financing credit-related products such as GAP and credit insurance should determine whether customers are members of the military or dependents of military servicemembers prior to offering F&I products for sale. Dealers can check by entering the customer’s social security number and birthdate into DoD’s MLA website at https:// mla.dmdc.osd.mil/mla/#/single-record. While other services might be available to provide that information, checking that website or subscribing to an MLA offering notated on a credit report from a credit reporting agency provides a safe harbor for determining covered persons. If customers are covered by the rule and you decide to sell credit-related products, specific disclosures must be provided in writing and orally. In addition, the transaction is subject to the military APR rate cap of 36 percent and other contractual limitations will be imposed, including a ban on arbitration provisions. One of the options many are considering to ensure compliance is simply not offering credit-related products to those covered by the rule. Many dealers, once they determine www.theciada.com
a consumer is covered by the MLA, are simply informing the covered customers that creditrelated products are not offered for sale. Regardless of which compliance option they choose, dealers should consult with their attorneys to determine which products are “credit-related” and thus potentially subject to the rule. Your individual lawyer can provide you with specific legal advice tailored to your business. In the meantime, rest assured NIADA is working with other interested industry partners, members of Congress and federal regulators to express our concerns with the new rule and the lack of process involved in issuing it. DoD did not provide notice of the interpretation nor an opportunity for interested parties to comment before it was issued, precluding NIADA and other stakeholders from pointing out the harm that will come to both the military servicemembers and the industry. One of our strategies in explaining our position is to illustrate the value of those credit-related products. So if you as dealers are aware of any of your military customers who have directly benefited from GAP, credit insurance or other similar products, please contact me at (817) 640-3838 or shaun@niada.com. Shaun Petersen is NIADA’s senior vice president of legal and government affairs.
DEALER SPOTLIGHT |
FRANKIE BORDEAUX A Call for Service You may not expect a former non-profit executive and college basketball referee to be running a car dealership, but maybe you haven’t met Frankie Bordeaux. For 25 years, Frankie worked for the Boys & Girls Club of America, positively impacting young lives. Twenty of those years he served as Chief Professional Officer. Frankie also served for over 10 years as Chief Operating Officer at a mental health company. While a physical education major at Elizabeth State University, Frankie began working as a college basketball referee. And he hasn’t stopped. Frankie has continuously refereed in various capacities throughout his career. He refereed recreational ball while pursuing a master’s degree in Business Administration from North Carolina Central University, and he continues to referee for Divisions I, II, and III college basketball. In 2011, the Bordeaux family gathered at the Bordeaux home for Thanksgiving. While discussing entrepreneurship with his family, Frankie decided to explore the idea of starting his own car dealership. After doing a great deal of processing the idea with his wife and family, and a considerable amount of research, Frankie opened L&H Used Cars of Wilmington in Wilmington, North Carolina, in January 2012. The car business has been quite different than Frankie expected. He has encountered challenges over the past five years, but he has also learned valuable lessons. He has learned you have to know your business inside and out and that status quo simply is not good enough – one must continually find new ways to re-invent oneself to stay in business. Frankie has found a great resource in CIADA. He has attended various CIADA trainings and seminars, and contacts the association regularly to stay abreast of the latest information, ideas and innovations. Frankie’s passion for entrepreneurship came from his father. As a young child growing up in Wilmington, his father owned and operated a trucking business. Frankie learned a great deal about business from him. He then perfected his craft in the non-profit world while he was involved in networking, recruiting, training and fundraising. That charitable background is evident in Frankie’s business philosophy and practice. He believes in service above self, and making quality of service and integrity his top priorities. Frankie is actively involved in his community. For the last eight years, he has
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served as the board president of the Central Collegiate Athletic Association and for the last two years has served as co-chairman of the annual fund committee for The Oakwood School. Frankie has also served as an instructor clinician at numerous basketball officiating summer camps. In addition, Frankie supports various local sports teams by volunteering his time and expertise. In short, he does whatever he can whenever he can to help.
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“Frankie is a caring individual, both for his family and surrounding communities,” said CIADA executive director John Brown. “He is a dealer who wants to do the right thing for his dealership, his industry and his customer. He is a class act who lives by the golden rule – do unto others as you would have them do unto you.” Frankie has been married to Faye for 19 years and has five children. In his leisure, Frankie enjoys traveling, golfing and fishing.
MANAGEMENT MATTERS
| BY DALE POLLAK
COMBATING DEALER MARGIN DECLINES Selling and Servicing with Greater Efficiency
How many dealers figured they’d make up for ever-smaller margins in new and used vehicles by selling more cars in 2017? If you asked the question in a room full of dealers, I suspect most, if not all, hands would be in the air. “You make up your gross in volume” is the age-old rule of thumb in the car business. But what if the thumb is broken and the rule doesn’t fit anymore? That’s the situation in today’s retail automotive market. In June, the National Automobile Dealers Association reported dealers are seeing declines in two important places – on the gross and net profits they realize when they retail new and used vehicles, and in the overall number of vehicles they actually retail. Gross/net profits: NADA reported gross profit as a percentage of new vehicle selling price dropped to 5.9 percent in the first half of 2017 compared to the same period in 2016. For used vehicles, the gross as a percentage of the sales price dropped to 12 percent. Meanwhile, the net profit per new vehicle retailed fell 74 percent to minus-$396 and the net profit for each used vehicle retailed fell nearly 50 percent to $112. Retail sales: In the first half of 2017, dealers averaged 449 new vehicle retail sales, up just two vehicles from the same period a year prior. Used vehicles had a slight drop, averaging 358 retail sales, down from 362. Those dealership data points suggest dealers who believe they can retail their way to improved profits are probably kidding themselves in the current market. If that strategy worked, shouldn’t we see decidedly different numbers from NADA? The data amounts to a call to action. Dealers need a better way forward that doesn’t rely simply on selling more cars to make more money. Similarly, cutting expenses won’t provide dealers sufficient relief from the combined pressures of margin compression and a softer sales environment. The best way forward rests with increased operational efficiencies. Dealers simply have to find a way to sell and service customers with greater efficiency and lower costs. The good news here is that most dealers have three areas of longstanding inefficiency that, if addressed, can
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help them achieve the higher levels of operational efficiency, productivity and profitability they need to thrive in the years ahead. Human capital: Dealers continue to suffer from an average annual turnover of 67 percent in sales and 40 percent across their operations. Those figures suggest a high level of dissatisfaction. You can only wonder how many deals are lost or bad decisions made on any given day because the hearts and minds of dealership employees aren’t in the game. Dealers who have tackled this inefficiency have formalized their hiring processes around key personality traits and cultural fit and have moved away from the traditional practices of commissionbased pay and uncertain work hours. Inventory: I see signs of inventory inefficiency every day. If I had to summarize the problem, I think it’s fair to say up to a third of dealers’ vehicle inventory is effectively dead capital. Those are over-age vehicles that haven’t sold, and they’re preventing dealers from reinvesting that capital in more profitproductive units. Of course, there are a multitude of reasons behind such inventory inefficiencies but they all point to the same underlying need for more investmentminded inventory decisions. Dealers need to do a better job of assessing each vehicle’s retail prospects before they own it, then work more diligently to retail every unit more quickly, before its ROI and front-end gross effectively disappear. Technology: Dealers have invested sizable sums in technologies that should help their sales associates and service technicians work more productively and profitably. Yet sales associates still average about 10 retail sales per month and technicians about 40 hours per week – averages that haven’t changed in nearly 40 years. The statistics suggest solutions providers can and should do a better job of helping dealers achieve greater use of their tools, which would help dealers realize the promise of increased efficiency and profitability the technology and tools are intended to produce. Those three areas of opportunity don’t represent an end-all, be-all list. But they do offer starting points for dealers to push back against margin compression and a softer market, and gain back some of the profitability that seems to dissipate with each passing year. Dale Pollak is the founder of vAuto and an executive with Cox Automotive. This column originally ran on his blog. For this story and all his posts, visit www.dalepollak.com.originally ran on his blog. For this story and all his posts, visit www.dalepollak.com.
2018 CLASS SCHEDULE
INDUSTRY NEWS
| BY USED CAR NEWS
SPIREON WINS AWARD Enterprise Service of the Year
Spireon Inc. announced the company’s FleetLocate solution earned the silver award for Enterprise Service of the Year in the 2017 Best in Biz Awards. Spireon’s FleetLocate solution provides real-time visibility to the location, activity and status of remote vehicles, assets and drivers to improve utilization and operational efficiency. The solution is used by thousands of companies of all types and sizes, from local plumbing and HVAC businesses to the largest transportation companies in the U.S. FleetLocate has garnered mass appeal due to its simple, yet powerful, user interface that supports mixed fleets of vans, trucks, trailers, containers, and more, all within the same web dashboard or mobile app.
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February/March 2018
AUTO DEALER NEWS
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ACCELERATE
| BY GWC WARRANTY
5 INDUSTRY TRENDS TO WATCH IN 2018 Breakdown of Industry Outlook It’s a new year, which means a fresh start and new look at the automotive industry. We’ve read all the latest analysts’ reports and have a breakdown of where the industry is heading in what many believe is a promising year for the automotive industry. Used Car Sales Year-over-year statistics don’t tell the entire story when looking at December of 2017 – because December 2016 was an industry record – but looking at the year as a whole, the numbers look great. At year’s end, Edmunds estimated used car sales totaled 38.8 million, a number the entire industry can certainly live with. Dealer Sentiment Cox Automotive regularly releases its dealer sentiment index, which gauges how independent dealers are feeling about the current market. Independents scored 52 in the fourth quarter, which continues a trend of promising scores. Most encouraging is that fewer independents are now reporting “limited inventory” as a factor holding back
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their businesses. Used Car Pricing Year-over-year used car prices at the end of 2017 almost broke even with the previous year – a positive sign that economic, regulatory and environmental factors haven’t impacted the industry too much in either direction. In fact, about half of all used car segments saw gains at the end of the year, meaning smart inventory selection will pay off in early 2018. Late-Model Supply Through November, J.D. Power Valuation Services reported a 4.4 percent
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year-over-year volume increase for latemodel vehicles. Combine that with the fact 22.9 percent of new vehicle sales were leases, and it shows an availability boom that can stick around through 2019. CPO Sales For the seventh straight year, Certified Pre-Owned sales set record marks. And while this figure only encompasses manufacturer CPO programs, that doesn’t mean independents can’t reap the rewards. Offering an after-market CPO program will help you level the playing field and cash in on the trust customers place in CPO vehicles.
AUCTION NEWS
| BY USED CAR NEWS
NAAA NAMES AUCTION OF THE YEAR Charleston Auto Auction Charleston Auto Auction, a member of the XLerate Group, has been named the National Auto Auction Association’s 2017 Auto Auction of the Year for Excellence in Community Service. The Moncks Corner, S.C., business was chosen for its depth of commitment in going beyond financial support to an active role in making a local high school principal’s dream of a residence for homeless students a reality. Presented during the association’s 69th annual convention, the award includes a $20,000 check payable to a charity of the auction’s choice along with a large crystal loving cup. The auction will also be featured in NAAA’s On The Block magazine and the 2018 membership directory. Charleston Auto Auction previously won a $5,000 check for charity as one of four regional finalists chosen earlier this year to receive the NAAA Chapter Auction of the Year Award, which recognizes outstanding public service of the Eastern, Midwest, Southern, and Western chapters. NAAA established the annual awards in 2016 to recognize the many charitable acts auctions already perform and to encourage even greater volunteer involvement.
AUCTION NEWS
SAFETY WATCH
| BY USED CAR NEWS
HYUNDAI RECALLS ALMOST 400,000 ELANTRAS Possible Brake Pad Deterioration Hyundai Motor Co. is recalling 390,467 2013-2014 Elantra sedan, coupe and GT vehicles. The brake pedal stopper pad can deteriorate allowing the brake light switch plunger to remain extended when the brake pedal is released. This will allow the brake lights to remain illuminated continuously. It can also allow the shift lever to be moved
without depressing the brake pedal, or activate the engine management brake pedal override feature. Hyundai will notify owners, and dealers will replace the brake pedal stopper pad, free of charge. The recall is expected to begin Feb. 8. Hyundai’s number for this recall is 170. This campaign expands recall 16V574.
| BY USED CAR NEWS
CAROLINA AUCTIONS FOOTBALLS FOR CHARITY Money Benefits Cancer Research
Carolina Auto Auction recently hosted a live charity auction with autographed footballs from each of the four college football playoff teams (Alabama, Georgia, Clemson and Oklahoma), an event that raised over $3,500 toward cancer research at the Winship Cancer Institute. An additional $1,500 was raised from employees who held an Ugliest Christmas Attire contest during the four weeks of December, bringing the total to $5,000 raised in December. This comes on the heels of a $100,000 donation CAA and industry partners put together in November. The auction is continuing to march toward another major donation in May as it hosts its annual charity golf tournament and Legacy VIP dinner. www.theciada.com
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AUTO DEALER NEWS
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ACCELERATE
| BY GWC WARRANTY
CRAFTING YOUR AUCTION GAME PLAN Be Ready for Game Day The auction is every independent dealer’s game day. The adrenaline. The sounds of anxious buyers pacing and analyzing every vehicle before it heads down the lane. But just like the best athletes prepare for each contest, the best dealers never head to auction without a game plan. Know where to go. Don’t be afraid to stray from your home field.
Trying an online auction or one that’s a bit farther from you can help you score a deal. In each of these instances be sure to consider the cost of travel, transportation and delivery when deciding on a car’s overall value. Don’t go it alone. Your vehicle acquisition is only as good as the team you’re on. If you have a great eye for what to look for in a vehicle, bring along someone who can keep an eye on the budget. Conversely, if you have a grasp on the finances, bring along someone who can give an honest opinion about what it would take to get a vehicle lot-ready.
YOUR VEHICLE ACQUISITION IS O N LY A S G O O D A S T H E T E A M Y O U ’ R E O N . I F Y O U H AV E A G R E AT E Y E F O R W H AT T O L O O K FOR IN A VEHICLE, BRING ALONG SOMEONE WHO CAN K E E P A N E Y E O N T H E B U D G E T.
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Never show your hand. It’s important to hide your emotions and never tip your pitches when it comes to winning at auction. Don’t get too excited when bidding for a vehicle and don’t get too disappointed if you miss out on one. Both reactions can tip off savvy buyers who can use that emotion against you. Have an eye for the odometer. The National Highway Traffic Safety Administration estimates upwards of 450,000 vehicles have altered odometers. Keep an eye on a vehicle’s mileage and look for red flags. If a car has low tire tread and bad brakes with under 20,000 miles, it might be a sign something’s afoot. Don’t discount repo cars. When a driver unwillingly gives up a car, it might still be in great shape. Bank-owned repo vehicles could be a solid opportunity for a home run of a deal since banks are usually motivated to get the vehicle off their books. Stick to your game plan. Treat your auction budget like a salary cap. Set a spending target and don’t stray from it. There’s always another auction and another chance to find the right purchase for your lot.
PRODUCTS AND SERVICES |
BLACK BOOK UNVEILS HISTORY-ADJUSTED VEHICLE VALUES Analytics-Driven Values Based on VIN-Specific History Black Book recently announced what the company called its most precise valuation yet – VIN-specific history-adjusted valuations, an analytics-driven process for determining the impact a vehicle’s history has on its value. Previously when valuing a vehicle, automotive industry professionals checked the vehicle’s history report and made an unscientific, educated guess as to its impact on the vehicle’s value. This is subjective and problematic, as it often leads to mistakes in valuation. Making an inaccurate estimation on appraisal values can decrease margins for a dealer, as well as increase losses for auto lenders. A recent survey of automotive professionals indicated 96 percent feel a vehicle’s history has a moderate to significant impact on value of a used vehicle. Black Book has leveraged its advanced analytics capabilities and deep editorial expertise to bring insight into precisely how a vehicle’s historical events impact its value. Black Book’s creation of history-adjusted
valuations analyzes multiple factors and events in a vehicle’s history such as number of owners, vehicle usage, accident and accident severity, title issues, flood/hail/fire damage, CPO history, and other variables not obvious when physically inspecting a vehicle. Black Book’s customer promise is to deliver ever more precise valuations. On average, history-adjusted values are 31 percent more precise when compared to the auction transaction price than valuations without a history adjustment included. “We are providing our customers a competitive advantage by precisely valuing a vehicle based on its VINspecific history, said Black Book executive vice president Jared Kalfus. “Whether appraising a trade-in, bidding at auction or valuing a vehicle portfolio, precision drives profit, growth and customer satisfaction.” “The evolution of data and analytics
continues to have a profound impact on the overall auto industry, from dealers and remarketers, to manufacturers and lenders,” said operations executive vice president Anil Goyal. “Our analytics play a significant role in recognizing the patterns in a vehicle’s history and determining their impact on each vehicle’s value, enabling our customers to make better decisions.” To learn more call 800.554.1026 or visit BlackBook.com.
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12/21/16 11:53 AM
MANAGEMENT MATTERS
| BY JOHN CHAPIN
BUILDING RELATIONSHIPS Client Relationships aren’t the only Important Ones
We all know relationships are important with clients. If you own the relationship with a client account, you most likely own the business. Just as important as client relationships are the relationships within your organization and with vendors who help your business run smoothly. Problems in these relationships usually lead to problems in client accounts, which could result in lost business. You spend a good amount of time with vendors and coworkers, so the better your relationships with them, the more pleasant your work life will be. That said, how do you ensure good, solid relationships within your organization and with vendors? STEPS TO BUILDING STRONG RELATIONSHIPS Step 1: Follow Stephen Covey’s Habit #5: Seek first to understand. To build a relationship with someone you have to get into their world. Here are some ways to do that with vendors and people you
work with. Ask them: What can I do to make your job easier? During my first week at Diebold Banking Equipment, I approached each individual in installation and service and asked this question. When they realized I was willing to work with and help them, they in turn were willing to work with me and help me. Ask vendors this question too. You want to make their lives as easy as possible. An example of this is with insurance agencies I work with. They ask their carriers what a perfect submission looks like and then do their best to achieve that. Also keep in mind your objective is to be a great customer for your vendors. Be easy to work with, make sure your interactions with them are good ones, and thank them when possible. Talk about their favorite subject. Talk about them, their family, kids, pets, and related subjects. Try to keep the conversation positive and upbeat. While you may have to talk about someone’s
cancer treatment or illness, you want to keep most conversations focused on good things going on in the person’s life. Be careful not to one-up people. If someone is talking about their daughter playing soccer, you can mention your daughter plays soccer too, letting them know you have something in common. Just don’t talk about your daughter being a superstar or shift the conversation from their daughter to yours. Ask about activities they’re involved in such as bowling leagues, softball, or golf. Make sure to listen more than you talk. You have two ears and one mouth. Use them at least in that proportion. Drop in some of your own personal information so they have something they can connect with you on but make sure they are talking most of the time and be careful not to outshine them. Remember everyone’s favorite radio station: WIIFM: what’s in it for me. Focus on that when you talk to people. What do CONTINUED ON PAGE 22
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they want and what are they interested in? Let others be right, let them go first, and make them feel important. Everyone’s number one need, provided they have food, shelter and the basics, is to be recognized and feel important. Most people are mirrors. When you let other people be right and let them be first, they’ll do the same for you. They’ll also be much more willing to work with you. Use Dr. Tony Alessandra’s Platinum Rule. The Golden Rule is, of course, treat others the way you want to be treated. It’s effective more than 90 percent of the time. To get closer to 100 percent, use the Platinum Rule: Treat others the way they want to be treated. Ask for preferences regarding communication and other business protocols. Don’t assume your preference is everyone else’s preference. Step 2: What gets rewarded, gets repeated. When I worked for Diebold, I used to give $5 and $10 gift cards to people in the installation and service departments. I also gave them baseball tickets and other gifts. On special occasions, during the holidays, or when they really went above and beyond, I used to give more expensive gifts such as jewelry or alcohol. Based upon rules and regulations you may or may not be able to do some of these.
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Either way, you must acknowledge and thank them for helping you and doing a good job. Stop by their office, thank them for what they just did for you, give them a small token of your appreciation, and ask about their favorite subject. Here are some other ideas for rewarding people that don’t cost anything: • Send an email telling the boss what an asset they are to the company. Make sure you copy them in. • Send a handwritten thank you note. • Call them on the phone and thank them or stop by in person. • Build them up with sincere compliments. • Praise them in front of their peers or higher-ups. Step 3: Treat co-workers and vendors like one of your top accounts. A great way to build relationships internally and with vendors is to give them the same extra-special treatment you give your top accounts. Here are some ideas: • Send them birthday cards and holiday cards. • Give them holiday and birthday gifts. • Study their areas of interest so you can have intelligent conversations with them. • Give them books, articles, and other items related to their areas of interest.
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• Pass on articles and other information about their high school, college, and hometown. • Pass on good articles and information you come across about their kids, spouse, relatives, or their related interests. • Find articles and other stories written about your vendors’ companies and industries, and occasionally discuss some of this information with them. • Pass on items of religious and political interest. • Give gift certificates to restaurants and stores. • Give tickets to sporting events, shows, dinner events. • Contribute to one of their favorite charities. • Make a small investment in their business or something else they are involved in. • Give vacations or trips to trade shows and other industry events. • Get creative and come up with other great ideas to turn coworkers and vendors into loyal partners and great friends. John Chapin is a sales and motivational speaker and trainer. He has over 27 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
REGULATORY MATTERS
| BY WILL BROWN
TAX CUTS FINALLY
Summary of Tax Reform
The final tax reform plan was signed into law by President Trump just before Christmas. President Trump cheered the massive overhaul of U.S. tax law and ceremoniously signed the largest tax cuts in over 30 years. In the previous edition of CIADA Auto Dealer News we provided information about the respective House and Senate plans. To help alleviate any confusion, this update will focus on what is in or out of the final bill, without comparison to previous versions. Here is how some of CIADA’s priorities came out. Items noted with “win” were items specifically fought for or against. • Lower tax rates for both individuals and businesses – win. • Royalty income will remain exempt for non-profits – win. • Estate Tax: The exemption for estate and gift taxes is doubled to $10 million and is indexed to inflation – win. • Businesses will be allowed to immediately write off 100 percent of the cost of new equipment – win. • Reform raises the small business expensing cap to $1 million and marks the beginning of the phase-out to $2.5 million – win. • Cash accounting will now be allowed for businesses with up to $25 million in income – win. • Elimination of the Affordable Care Act’s individual mandate – win. • A 20 percent deduction for pass-through income for small businesses and job creators – win. • The standard deduction is increased to $12,000 for individuals, $24,000 for married joint filers and the deduction is indexed for inflation to the Chained Consumer Price Index (C-CPI) beginning in 2018 (C-CPI generally grows more slowly than the CPI). Individuals: The tax rate brackets for individuals are listed. Married Individuals filing joint returns should double the dollar amount to find their rate (Exception: the top bracket at 37 percent will begin at income over $600,000 for married joint filers). These brackets revert back to current rates after 2025. Not over $9,525 10 percent of the taxable income Over $9,525 but not over $38,700
$952.50 plus 12 percent of the excess over $9,525
Over $38,700 but not over $82,500 $4,453.50 plus 22 percent of the excess over $38,700 Over $82,500 but not over $157,500 $14,089.50 plus 24 percent of the excess over $82,500 Over $157,500 but not over $200,000 $32,089.50 plus 32 percent of the excess over $157,500 Over $200,000 but not over $500,000 $45,689.50 plus 35 percent of the excess over $200,000 Over $500,000 $150,689.50 plus 37 percent of the excess over $500,000
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• The Child Tax Credit is doubled to $2,000. • The deduction for personal exemptions (sometimes called withholding exemptions from paychecks) is suspended. • The plan caps the deductibility of state and local taxes at $10,000. • The plan preserves the mortgage interest deduction for homes valued up to $750,000, the charitable giving deduction, the student debt interest deduction, and the 401k and IRA tax exemptions. • Reform eliminates the individual mandate for individuals to purchase health insurance. Businesses: • Beginning Jan. 1, 2018, the corporate tax rate will drop to 21 percent. • S-Corps, partnerships, LLCs, and sole proprietorships will receive a 20 percent deduction on the first $315,000 in income, then a limitation phased in based on W-2 earnings. • The plan raises the small business expensing cap to $1 million and marks the beginning of the phase-out to $2.5 million. • The plan caps net interest deduction at 30 percent of EBITA for 4 years and 30 percent EBIT thereafter. • Reform eliminates net operating loss carrybacks but allows indefinite net loss carry forwards, limited to 80 percent of taxable income. • The plan eliminates the corporate Alternative Minimum Tax (AMT). • Cash accounting will now be allowed for businesses with up to $25 million in income. International: • The plan creates a territorial international tax system. It staggers the standard rate of taxation of income over the regular tax liability at 5 percent for 2018, 10 percent through 2025, and 12.5 percent thereafter. Banks will be taxed at higher rates. • The plan enacts deemed repatriation on deferred foreign profits: 15.5 percent for liquid assets and 8 percent for non-liquid assets. A number of the tax rate and deduction-related provisions will expire in 2025 under the final bill. This is a result of the requirement under reconciliation, the process that allows Republicans in the Senate to pass legislation with a simple majority, which requires the bill not increase the debt more than budget authority over the 10-year window. The budget authority authorizes no more than $1.5 trillion over 10 years. The Tax Policy Center, a private nonpartisan group, found individual taxes would be reduced on average by $1,600, across all income brackets, and approximately 80 percent will see a tax cut.
WASHINGTON UPDATE | BY SHAUN PETERSEN
NIADA GOVERNMENT UPDATE
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 President Trump discussed his legislative priorities for 2018 during a weekend retreat with Republican congressional leaders early last month at Camp David, and among the top items on that agenda is a bill addressing the nation’s infrastructure. While the focus of that bill will be improving America’s roads, bridges and airports – with a price tag in the hundreds of millions of federal dollars – it could also serve as an opportunity for some lawmakers to bring up an issue that would have a huge effect on independent vehicle dealers: recalls. On several occasions in the past, Sen. Richard Blumenthal (D-Conn.) has attempted to attach his proposal to ban the sale of all vehicles subject to an open recall to a “must-pass” bill. While none of those attempts have been successful, thanks in large part to the efforts of NIADA and our members, the infrastructure bill provides another likely opportunity for Senate Democrats to attempt to introduce the socalled “Blumenthal amendment” – especially after more than 3 million more cars were recently added to the massive recall for faulty Takata airbags. NIADA and other auto industry stakeholders will stay on top of the situation. NIADA supports the goal of having all recalled vehicles repaired, but opposes Blumenthal’s overbroad proposal, which does not help achieve that goal
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but instead sharply decreases the trade-in value of consumers’ vehicles. REGULATORY The White House won another key battle for control of the Consumer Financial Protection Bureau last month when U.S. District Judge Timothy J. Kelly rejected CFPB deputy director Leandra English’s request for an injunction that would have installed her as the bureau’s acting director. The ruling leaves White House budget director Mick Mulvaney – President Trump’s choice – in place as acting CFPB director until Trump names a permanent successor to Richard Cordray, who left the CFPB in November to run for governor of Ohio. In his decision, Kelly wrote English’s lawsuit to win control of the CFPB is “not likely to succeed.” English is expected to appeal the decision to the U.S. Court of Appeals for the D.C. Circuit. Kelly had previously denied a request by English for a restraining order to block Mulvaney’s appointment. English’s suit claims she is the rightful acting director because the Dodd-Frank Act, which created the CFPB, says the deputy director assumes that position in the director’s absence. The President cites his authority through the Federal Vacancies Reform Act to appoint an official already confirmed by the Senate in another capacity to also serve as the bureau’s acting director. While that’s being sorted out, Mulvaney
AUTO DEALER NEWS February/March 2018
moved forward by naming House Financial Services Committee staff director Kirsten Sutton Mork the CFPB’s new chief of staff, a position English held when Cordray named her deputy director hours before his resignation in an effort to install her as his temporary successor. Mork’s previous boss, Financial Services Committee chairman Jeb Hensarling (R-Texas), is reportedly one of the candidates Trump is considering as permanent CFPB director. GRASS ROOTS With the beginning of the new year, state legislatures throughout the nation are opening their sessions for 2018. This year, 46 of the 50 states will hold regular legislative sessions. As always, NIADA is keeping a close eye on key proposed legislation at the state level that affects independent dealers and the used vehicle industry. One issue to watch this year is simmering in California, where state Sen. Hannah Beth Jackson is reportedly considering introducing a bill to ban arbitration agreements in vehicle sales contracts. The IADA of California, with support from NIADA, is working with the state’s new car dealers association to oppose that potential legislation. Others include bills addressing debt and collections issues, which are expected to pop up in a number of states after several state legislatures proposed
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rate caps in 2017, as well as attempts to ban the sale of used vehicles under an open recall and unworkable restrictions on the use of GPS and starter-interrupt devices. NIADA has a record of recent success in fighting harmful legislation at the state level, including the defeat of an overreaching Buy Here-Pay Here bill in Oregon and the removal of severely restrictive provisions of a New Jersey GPS bill. PAC NIADA treasurer Scott Allen and I represented the association at a luncheon held by Rep. Kay Granger (R-Texas) to thank supporters who have contributed to her congressional campaign. Granger’s campaign has been the recipient of past contributions from the NIADA-PAC fund, earning the association’s support for her efforts to reform the CFPB – she cosponsored a bill to repeal the bureau’s 2013 indirect auto lending guidance. She is a member of the influential House Appropriations Committee. Invitations such as those are a direct result of the PAC’s activities and offer NIADA leadership unfiltered access to legislators, advancing NIADA’s advocacy efforts by allowing us to educate members of Congress about the issues important to our members and to continue to build relationships with Washington’s key decision-makers. Shaun Petersen is NIADA’s senior vice president of legal and government affairs.
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MANAGEMENT GAMEPLAN | BY SCOTT BERGERON
BURNING TRACKS TO INSUFFICIENT SALES PERFORMANCE DATA How to Successfully Integrate a KPI Tracking System
As your flight prepares to take off, how would you feel if you knew the pilots were only handling some of the items on their pre-flight checklist? While not a literal matter of life and death as it could be on an airliner, dealerships crash and burn every year because they fail to track critical sales performance data on every salesperson. Many focus on the number of done deals without tracking how many sales may have been left on the table. Insufficient daily tracking of such key performance indicators as number of clients contacted, number of test drives, and number of callbacks can make a vast difference in a dealership’s annual revenues. KPIs are the critical information needed to maximize time and make course corrections before molehills turn into mountains. It also can make a major difference to someone’s career and a dealership’s employee retention. If not held to a high accountability protocol, a salesperson can fail to make the grade and move on. Much like a football team without high performance standards that are constantly reviewed and improved, an entire sales team can flounder. There’s nothing worse than getting to the end of the month and realizing someone isn’t getting a paycheck, or is getting one they can’t live on. It’s bad for the rep, management, and the dealership as a whole. You need to know right away when someone is missing their numbers. Despite all these reasons to develop comprehensive KPIs and require each sales team member to be accountable to them, it often doesn’t happen. Why not? Reasons – or excuses – include the following: • Lack of time. Most of us feel overwhelmed much of the time. “One more thing,” even if it can make the difference between dealer success and failure, can feel like too much. • Lack of willingness. Particularly in smaller, independent dealerships, “seat of the pants” is the prevailing sales philosophy. Freewheeling sales teams exhibiting typical instinctive entrepreneurial traits succeed or fail based mostly on personality, charm, and intuition. While these are all important strengths, it’s vital to complement them with reliable adherence to objective tracking standards. Using the football analogy again,
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the greatest players possess a healthy dose of talent coupled with strict adherence to objective measurements and observations. Dealer sales reps are no different. • Lack of follow through. Sometimes a dealership – and its employees – will become enamored with a “shiny new technology toy” to set up and track KPIs that may be bundled into a CRM. However, much like a young child getting a new toy, after the initial glow fades so does the follow through. The KPI tracking system gets relegated to the shelf, where it gathers dust instead of valuable information. • Lack of decisiveness. In other cases, the problem is inability to decide what KPI system to use because there are so many choices that decision-makers have a “deer in the headlights” type reaction trying to assess the best solution for them. They default to making no decision at all. • Lack of patience. Some KPI systems can be unwieldy to set up and implement. They can disrupt normal routines, require a lot of handholding, and generally be a pain to use. This is not the recipe for success. • Lack of budget. This is often the biggest challenge. While some KPI solutions are extremely cost-effective, others – particularly the largest and most well-known – require a substantial money commitment. Often, it’s just easier to justify not using the system because of cost. What is the best way to find and integrate a KPI tracking system, and use it consistently? • Research options. Unlike some technologies that are very complex and costly, KPI tracking solutions can be very economical, easy to use, and simple to complete on a daily basis. This isn’t rocket science. Look for the key criteria you need, then marry those criteria to a system that meets your needs. • Make it a habit. High-producing leaders promote success by making sure everyone on the sales team knows what is expected of them. Regular inspection processes ensure the sales machine is firing on all cylinders. Tracking and reviewing everyone’s KPIs every day, then making changes as needed to improve numbers, must be a commitment made both by management and individual team members. • Use it as a teaching and coaching tool. With this objective data, sales managers can help individuals improve their performance. If a salesperson isn’t entering the data, a manager can go directly to the person and find out why, then provide direction to make sure it happens. It can be a case of forgetting, a cry for help, or even defiance of the whole system. Top performers especially may avoid completing their daily tracking because they believe they’re above it and the rules don’t apply to them. But they should. • Make it fun, as much as possible. KPI tracking can be done as salespeople go www.theciada.com
T O P P E R F O R M E R S E S P E C I A L LY M AY AV O I D C O M P L E T I N G T H E I R D A I LY TRACKING BECAUSE THEY BELIEVE THEY’RE ABOVE IT AND THE RULES D O N ’ T A P P LY T O T H E M . B U T T H E Y SHOULD. through the day on their smartphones, tablets, laptops, or desktops, in real time. The entire process can take as few as five minutes to finish – so it’s not like completing mounds of paperwork for a homicide investigation. • Make it a regular monthly appointment. In addition to daily tracking and adjusting, schedule an end-of-month session to review KPI statistics, goals, and desired changes based on the results. To make it even more compelling for individuals to comply, sales managers can review each salesperson’s results with the entire team present. This “peer pressure” can help make sure everyone is accountable, and allows top achievers a showcase for their good work. Remember, it’s about way more than the number of done deals. Former dealer executive Scott Bergeron is the founder and principal at Daily Gameplan (www.dailygameplan.com), a sales team performance company. Daily Gameplan’s “Red Book,” cloud-based CRM, and direct consulting have been used in thousands of dealerships throughout the United States. Bergeron can be reached at 303.918.3169 or scott@dailygameplan.com.
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RETAIL READY | BY JUSTIN M. OSBURN
DESIGNING A SUPERIOR MEET AND GREET Crafting and Reviewing the Play Recently I was on an airplane and the lady next to me struck up a conversation. She asked what I did for a living and I told her I consulted independent auto dealers. She became very inquisitive about the car business. She quickly offered her fear of car shopping and told me about her recent experience that turned into a nightmare. I asked her what emotions she felt when thinking about driving onto a car lot to purchase a vehicle. She said, “Fear of being screwed.” This information is nothing new. However it is the building block of how critical an effective meet and greet can be to our prospects. An additional BHPH fear from the prospect is fear of getting turned down. Our first impressions and ability to gain trust set the sales process up for success or failure. While there are certainly dealerships full of sales professionals who open with a competitive meet and greet, there are some that struggle to offer a consistent and superior greeting to prospective buyers. Why? Why do some nail it time and time again while others struggle to get even one sales professional on the team to conduct a first-class meet and greet? Here are a few steps your dealership can take to improve the overall execution of the meet and greet on the lot, right now! Leadership must decide the expectations of the meet and greet. Team members do not usually wake up each morning and say, “Self, today I am going to have a horrible day and do everything I can to be disruptive and not follow my manager’s instruction.” Actually, most team members come to work each day willing to follow great leaders and the tactics that produce results. A pitfall easy to overlook is no structured script or direction for the sales team to learn, practice and perfect their meet and greet. A critical step to improvement is the leadership deciding, with clarity, how the meet and greet should be conducted and then teaching and coaching the team members to replicate that vision with repetition and practice. Consider regular, short sales meetings each morning. This gives the leadership an opportunity to see who is at work, who is not, who is late and who came dressed for success as well as get a pulse of the team’s attitude for the day and offer some quick and structured practice. Coach the sales department on how to run “the play” of meet and greet. When team members are confused or
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A PIT FA L L E ASY T O OV ERLOOK IS NO S T RUC T URED SCRIP T OR DIRECTION FOR THE SALES TEAM TO LEARN, PRACTICE A N D P E R F E C T T H E I R M E E T A N D G R E E T. don’t know what to do, it’s human nature to do nothing, to stand still in the confusion. This is very apparent when a sales team member demonstrates hesitance to take an “up.” They are not sure what to do. You could fire them, or yell, or, worse, quietly remain bitter toward them as you both drown in failure. An alternative approach is to coach them how to run “the play” of meet and greet laid out in the first step. Then, rehearse it with them until they demonstrate perfect practice. If a mystery shopper walked on to your lot today and was greeted by the sales team, what would it sound like? Evaluate what works and does not work. If there is a well-crafted meet and greet plan and the team is demonstrating perfect practice, leadership should consistently encourage feedback on what parts of the play work and which parts could be improved. In football, a coach draws up a play and shows it to the team, then they practice all week and run the play in the next game. Certainly it doesn’t end there. The coach and the team are interested if the play resulted in big yardage, short yardage or even a loss of yards. They watch film after the game to review how the opponent responded to the play and what parts worked or did not work. If the play lost yards, it is not necessarily
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scrapped. Perhaps the blocking assignments need tweaking, a different player needs to touch the ball or the play needs to be run in a different situation. Once leadership at the dealership has drawn up a meet and greet, shown it to the team and rehearsed it, there should be a review with the team after it is has been used to see if it needs to be tweaked, changed up and/or improved. What are the results? What is the goal of a meet and greet and how do leadership and the team know if it was a successful play or not? The goal of a meet and greet should be to offer a great first impression, open up the ability to build rapport and ultimately move the prospect to the next step in the sales process. What is the next step? Can your leadership and team answer that question, consistently? Tip: A great opening question: “Hi, my name is Justin. Have you been to our dealership before or is this your first time?” I’d love to hear creative plays your team is running on the meet and greet. Typically a sincere and prepared opening has great results. For a few more opening questions that work, email me at justin@niada.com. Justin Osburn is a moderator, consultant and trainer for NIADA Dealer 20 Groups, offering more than a decade of experience in retail and Buy Here-Pay Here executive management.
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