Recovery And Growth: Chapter 35
Everything we’ve talked about up to this point was to get you ready to take action. We’ve talked about your market, the bad habits most dealers, managers and salespeople have developed, specific job descriptions and the specific skills your sales and management staff will need to grow in any market. We covered these areas, because you have to know where the weak spots are in your dealership.
Now it’s time to go over exactly what you have to do immediately to recover quickly and set yourself up for continued growth.
Whether you’re dying on the vine or if you just want to take sales to the next level — these steps aren’t suggestions and they aren’t options, they are requirements if you want to increase your sales quickly.
I’ll assume you’ve already gone through the dealership and cut all of your non-essential expenses and that you’ve cleaned house on any excess staff and any non-productive, resistant or destructive employees in every department. If you haven’t, do it now.
This section will be your step-by-step plan for recovery. Your assignment is for you and your management team to apply each step in the process — so slow down.
1. Find Your Vision
Before you can figure out how to recover or grow, you have to determine exactly what that means to you.
The directions to discovering your vision are easy…
A. Get a pen and pad of paper (or blank Word® document).
B. Go sit in a quiet room — no kids, no TV,
no distractions.
C. First … Take a few deep breaths and relax. This is not a timed event – you need to relax so you can think.
D. Let your mind wander and without worrying about the order of things, just start jotting down notes on your potential, your problems, your processes, your people and your long term (and short term) goals. What exactly do you want to see happen in every area? By what date?
Questions are the answer! If you ask the right questions, you’ll come up with the right answers.
Examples:
When I’m stuck on something, I just start asking every question I can think of on that problem. Don’t worry about the solutions at this point, we’ll figure those out later.
2. Set Your Goals
To set and reach your goals…
Tip: Along with your goals, write this on a card and read it a lot…If it is to be – it’s up to me!
You’d normally start with a one-year goal.
Find your current average (100 units), multiply by 12 to forecast what you’re on track to sell this year (1,200) … add 40 percent for growth, so in the next 12 months your goal would be 1,680 units.
If you’re selling 100 units, averaging only $1,500 per unit (instead of the $2,500 we’ve been using) and are losing $50,000 per month, I agree, you have to act fast. So if you’re just ‘hanging in there’ right now, let’s look at the short-term fix.
When all of this stuff in the market hit, we did exactly what you’ve done so far. We cut every expense possible and we laid off some of our staff.
We already trained every day, but when things got tighter, we really hunkered down and started training and cross training our 45 employees even more, every day. The extra training started months ago, and we’re still training more every day than at any time in the past.
Skills and attitude are our most critical tools in sales. You and your salespeople can all have a ‘gung ho’ attitude and you can all work bell-to-bell until you can’t see straight. But if you all don’t have the tools and skills you need, working longer and working harder will just wear you down physically and mentally – which puts you at even more risk of slipping further.
You cannot just work your way through tough times. If you just focus on work, even if it helped today, within weeks or months, at best, everyone is so worn down you lose even more production and you fall back further than where you were before.
Urgent Planning…
If you’re selling 100 units with $150,000 in gross profit, and losing $50,000 every month … you have to act fast. Question: How much longer can you keep going with your current loss? ___ months.
Let’s assume you just wrote in 3 months. That means we have to turn everything around 3 months from now. If you’re losing $50,000 per month, we actually have to figure out how to generate about $80,000 more in gross profit per month. Why? Because even if you don’t spend any more on advertising, you’ll still have about 40 percent going out in sales and management compensation.
So at $1,500 per unit, we have to generate 53 extra units per month, or raise the gross $800 per unit on 100 units, or a combination of both. In real life, if this is your dealership, you can’t afford to ‘buy’ enough sales through advertising and you can’t work people long enough and hard enough to get you there – so if we’re being realistic, training and daily sales activity management are your only hope.
Great news…
There are several ways to generate more units and more gross. Let’s look at them, in order of your fastest returns…
1) The Basics … If you train your salespeople on the Basics, stop selling price and start selling product, you can quickly increase units 20%–30%, and gross 30%–50%, too, especially if it’s only $1,500 now. And you can do both almost immediately because when you improve in the Basics, you sell more units because you’re building more value. When you build more value, people also pay you more.
Minimum Results: 20 more units + $500 more gross:
Now 100 units x $1,500 = $150,000
($50,000 loss)
In 30 days 120 units x $2,000 = $240,000 (= $5K to $10K profit)
2) Unsold Follow Up … If you’re not doing much follow up now and if you only hit the statistical average, you will also pick up an extra 30 or 40 units and another $45,000 to $60,000.
(Combine 1 & 2 and you’re very profitable, almost overnight.)
You can do this — you can eliminate your losses quickly and get back on track and making money right away.
3. Write Your Plans
Example…
Goal: Improve units from a rolling 90 day average of 100 units per month today, to 120 units three months from now. You hit 120 in the last example, now you need to average 120.
Your Plan: Train your management on ‘how to’, and then…
Focus training, coaching and spiffs on the Basics and Closing
When you track everything accurately, figuring out your training needs is easy. Then just bullet point your plans like I did (above) and start training.
4. Assemble Your Team
Does working together mean everyone cooperating and everyone pitching in equally? Does a common goal mean they have to know exactly what they’re working to achieve? Yes, of course.
The catch: Even if everyone in your dealership is a team player, it still won’t work, unless the team has a goal and every person on the team is qualified and has the ability to do their job effectively.
Question: We all know you’ve been kind of lax when it comes to hiring qualified salespeople. Assume you’re coaching a baseball team, you have a big game coming up soon, and you need a few more players. Instead of recruiting the right players, if you settle for a couple of laid off basketball players, a tennis player with a bum knee and one guy who really likes baseball, but has never played before, how far can you realistically expect to get in your big game coming up?
I suppose it’s great you gave your cousin, the van driver and the kid at the hardware store a job in sales. But you won’t get any farther in your recovery with the wrong players on your sales team than you would in that baseball game — and you may not even survive if you don’t develop your managers and salespeople quickly.
Based on the definition, do you have teamwork?
Yes No
Do you have all of the right players on your team?
Yes No
5. Track Every Opportunity – Every Activity – Every Result
You know the benefits, so stop defending why you don’t do it, and just start tracking everything that happens. If you will, you can start improving your production in almost every area, just by targeting your training and efforts on your ‘obvious’ problems.
Tracking is more than knowing how many ‘Ups’ were on the lot, how many sales you made and how much gross hit the books. Remember the 5 types of customers we covered? The walk-in prospect closes at about 10%, while the repeat customer is seven (7) times easier to close … and generates 40% more gross per unit.
Do you remember the advantage we talked about of knowing exactly how many of your 100 units each month come from walk-in traffic, versus the repeat, referral, outside prospects and even your own Service customers who buy each month? Exactly, so come up with a goal and a plan to increase your easiest and most profitable sales.
No doubt sales have dropped the last few months, but once sales have settled, the amount of walk-in and ‘other’ sales you generate will be somewhat consistent every month, based on the market.
You need extra sales and it’s impractical to increase advertising enough to bring in extra traffic. So instead, set a clear daily prospecting goal, teach your salespeople to prospect and then manage and track their daily activities to make sure they’re doing their prospecting. With just a small number of extra daily contacts per salesperson, you can easily generate 10 extra sales – that are not from walk-in traffic.
From your prospecting and follow up efforts…
Sell 10 extra units to repeat, referrals, etc. (only 2.25 per week) x $3,500 gross ($2,500 + 40% more because they’re repeat, referrals or outside prospects who ‘like’ you) = $35,000 additional gross profit (with 60% to net)
Again, the 70 sales to walk-ins and your 30 to ‘other’ customers will stay pretty consistent, and with these new sales you’re at 110. Now just keep focusing on building your repeat, referral and prospecting sales and keep adding 5 or 10 extra units per month, and in six months you’ll be up to 130 – 150 units with an extra $100,000 – $150,000 in gross per month.
6. Initial Training On ‘Core’ Selling and Management Skills
You just can’t get this initial training in your dealership and it would take you months or years to create it yourself. That doesn’t make sense either, because you have hard working salespeople and managers with great intentions, who don’t even know what they don’t know. Worse, they’re never going to learn it just going to work everyday — they can’t.
We’ll teach your managers and salespeople more in our two 2-day core skills classes than good, hard working 20-year veteran dealers and managers tell us they’ve learned anywhere else in their entire 20 years.
7. Train Your Managers And Salespeople Daily
Steps to effective daily training in your dealership:
How long should a training meeting last? Not less than 20 minutes, not more than an hour. 50%–75% of the time should be spent in practice.
Note: Sales meetings are not training meetings. Talk about ‘stuff’ or ‘grind’ them in a different meeting. Training meetings are to teach your salespeople how to do something and to practice what they’ve learned, so they’re prepared to talk to a prospect and make a sale.
Who should hold training in the dealership? Every manager should be involved in the training. If that doesn’t happen, you’ll never develop the skills or the teamwork you need to realize your full potential.
8. Coach Your Salespeople
Does a tennis coach show you how to hold the racket and swing the way they said you should? Sure. How about golf, baseball, or soccer; does the coach show the players how to do it better?
Pinch yourself; you aren’t their boss, you’re their coach, and it’s time to be a good one so your team can start winning more often.
There are three stages to skill development…
9. Manage Their Daily Activities
We have the longest running online survey in the car business. It’s been up for over 5 years and one of the questions for salespeople is, “How many hours do you actually work each day?” After thousands of responses, the answer is always the same as what we hear in all of our classes — about 3 hours of a 9-hour shift.
As a manager, most of us spend our days complaining about what salespeople don’t or won’t do, instead of tracking to find out what they should be doing. If we tracked, we’d spend our day training and coaching to make sure they can do it, then manage their daily activities to make sure they are doing it.
Until you manage their activities — what you see is all you get.
How long does a 5-minute prospecting call take? Exactly, about 5 minutes. So if salespeople are wasting 6 hours of a 9-hour shift each day, they have time to make five, 5-minute calls, right? (25 minutes.)
OK, so if you taught them to prospect correctly, role played with them so they were confident, and then managed their prospecting activities each day … with 10 salespeople, they’d be making 50 extra calls per day, 250 per week and over 1,000 calls per month.
Is it safe to say that by training them and then managing that activity that you’d sell some extra units from those 1,000 calls? Of course. Is there any extra cost involved? Not a penny.
Now take them to Service and teach them to prospect there, too. You have 500 people on the drive every month, 30% have a family member who’ll trade in 90 days (150), so get them to meet a total of just 10 people each day in Service and they’ll find 3 buyers there accidentally.
How about more demos, more follow up calls, more mail outs and more responses to Web leads? All of those activities = more sales.
Our job as managers is to make our employees better than they would have ever been on their own. Take pride in that responsibility!
10. Plan This Month, This Week and Tomorrow
1) Identify your results goals for the month.
Example: Write out how many units or how much gross you want.
2) Break your monthly results goals down by week.
Example: You deliver 100 now — your unit goal this month is 120.
You know that if you get about the same floor traffic, and if you just keep giving the same number of presentations, demonstrations and write-ups you do now, you’ll hit 100 (+ / – a couple) each month.
You normally sell 25 units from Monday through Saturday. This week, you want to add an extra 5 units. Don’t call the paper to run another ad, that’s a crap-shoot at best. Instead, use activity goals to generate 5 more units.
3) Set your daily activity goals to achieve your results goals.
Your results goal is 5 more units per week. You’ll reach that goal by managing sales activities. So what activities can you manage?
Working backwards, we know when an appointment shows on the lot, it will close at about 50 percent, depending on the type of prospect.
That means…
A. To sell one unit, we need two appointments that show.
B. With a 60% show ratio, to get 2 appointments that will show, we’ll need to average 3.5 confirmed appointments each day.
C. If we want 5 extra sales this week, then the math says we need 17 confirmed appointments on the board (about 3 per day).
Tip: Go for 20, just in case.
Two ways to sell more with write ups…
A. To sell 5 more units each week, you’ll need to see 10 more write ups per week.
This one is easy to pull off … just cheat. Start paying BIG write up spiffs in the $25 to $50 range. BUT – and this is a big but; do not pay for the write ups you already get.
What do I mean? Back to ‘tracking’ … if you track and know that Bill usually writes up 20 people to sell his 10 units, you’d be throwing away money if you just paid Bill $50 for every write up. If you paid for his current write ups, he’d make an extra $1,000 without doing anything different. You want more.
Using his current 90-day average,
pay Bill $50 for every write up above his current average. If he averages 20 now, at 22, he makes $100 bucks and if he writes 30, he’ll make $500 in spiffs. The good news: if you have to pay him $500, you’ll sell 5 more units, just from Bill writing up 10 more deals this month.
B. Teach salespeople to stay off price, stop pre-qualifying, close at least 5 times and handle objections.
Tip: Set very clear guidelines for what counts as a write up; commitment, down payment, completed forms, etc. And don’t let any manager make any exception.
11. Write your training plan for tomorrow.
Daily training, like goal setting, starts with a long-term plan. If you’re having a tough time right now, the ‘Basics’ is always the subject that offers the fastest return on your training time and money.
Plus, skill development comes from practice (role playing). With the extra distractions in-house, if you aren’t practicing twice as long as you’re teaching in your meetings, you aren’t developing their skills.
Plan your training in advance, hold training daily, keep it interesting, informative, valuable, make it fun and have them practice everything you teach. You’ll recover quickly, start making money, you’ll eliminate turnover in your sales department and grow, year after year.
12. Hold Yourself Accountable
For over 200 pages, we’ve been talking about…
Most important in everything we’ve covered, is to believe that you can do anything you want in sales, even in this market.
If you’re the dealer, this starts with you and trickles down. Without the discipline and personal accountability to make sure your managers are properly trained and managed effectively (by you or the GM) and then to hold each of your managers accountable for production … not much will change – it can’t.
If you’re the manager, same thing. If you don’t have the discipline and personal accountability to train your salespeople properly, coach them in every area, manage their daily activities, and hold each of your salespeople accountable – again, nothing changes.
If you’re a salesperson reading this – you’re going to need that same discipline and personal accountability as well. Sorry, but saying, “My dealership doesn’t train me,” doesn’t get you off the hook, either. This is your career and everyone would be very foolish to use that as a lifetime excuse for not developing your own skills and income.
Everyone just needs to remember that you can’t wait for someone else to come along and save you, today or next year.
It sure helps if you have teamwork. But even then, you still need to assume your step in the process is the make it or break it step, so one more time; write this on a card, carry it with you and read it often…
13. Get Out Of Their Way — Make It Easy For Them To Grow
We’re still letting the brightest and the best slip through our fingers in sales and management with ineffective processes, procedures, not enough good training and just plain dumb stuff we do in dealerships.
When you have a good salesperson, instead of figuring out how to control everything they do – do the opposite and figure out how to let them grow. You put a control system in place to get average results from below average salespeople – not to develop winners.
Almost everything that affects the sales department, in almost every dealership, is set up to run with average and below average salespeople. Almost none of the systems, processes, pay, scheduling or management styles are set up to develop high achievers, or to keep them.
Go back and read about that dealer who eliminated the barriers in his dealership so his 15-car guy could finally get to 40 units.
Can you imagine the true value of having 25, 35 and 40-unit guys on your selling team? Here’s one key point; If you had just those three salespeople, they’d sell the same 100 units that the 10 to 12 you have now are producing. You’d have all repeat business, no advertising, high gross, easier management and super customer loyalty.
Making these changes we’ve talked about in here are your first steps to developing your management staff and creating the environment to build that kind of winning sales team.
Almost all of us were taught to play defense, yet it’s offense that runs with the ball and scores the points. You’ve been playing defense, now it’s time to build a strong offensive team too. Hire them, train them, coach them, manage them – and you’ll win BIG!
B.I. Book Club: A Dealer’s Guide To Recovery And Growth In Today’s Market
The title of Joe Verde’s new book sums up its purpose quite nicely: “A Dealer’s Guide To Recovery and Growth In Today’s Market.”
Verde — the popular sales and management trainer/consultant — has written a 248-page book for auto, boat and powersports dealers that he says will help struggling dealerships begin to grow again immediately, and well-off dealers have their best years ever.
“Whether your dealership sells 50 or 350 units a month, I will show you how to double your sales within three to six months,” Verde writes.
Although the book primarily uses examples and statistics drawn from Verde’s experience working in and with the automotive industry, his lessons can be applied across the spectrum of marine and powersports dealers. The book is arranged in eight sections that total 37 chapters. The sections each end with summaries that recap the lessons learned, and there are several exercises throughout to help readers identify the strengths and weaknesses particular to their businesses.
Verde wants the dealership principals and managers — who the book is intended for — to use the publication as a workbook. He includes boxes to answer the “True or False” questions he asks, and blanks where information can be entered when, for example, he asks dealers to rate each of their salespeople and managers in areas such as “Knows our inventory” or “Is a goal setter.”
The book covers a lot of ground, and Verde isn’t able to get in-depth in every area. He often tells readers they need to attend one of the many training classes offered by Joe Verde Sales and Manager Training, Inc. in order to really drill down into the topics he’s touching on. But there are also plenty of specific tips and good information to make time spent with the book worthwhile.
And, given Verde’s limited-time offer of one free book for any new or used boat, RV, motorcycle or automobile dealership, it couldn’t hurt to get yourself a copy and see if he can help provide you with some recovery and growth. You can visit www.joeverde.com/BI to get your free copy.
Joe Verde Sales & Management Training is the largest sales and management training company in the Automobile, RV and Marine industries teaching their exclusive formula for success. Joe Verde Sales & Management Training has a 24 year, verifiable track record of success and over half the top 500 dealerships are their customers. Additional information is available at www.joeverde.com/rg.
Copyright © 2009 Joe Verde Sales & Management Training, Inc. This edited article is from Joe Verde’s Book For Dealers And Managers A DEALER’S GUIDE TO RECOVERY AND GROWTH IN TODAY’S MARKET™ and was reprinted by permission of the Joe Verde Group. For more information about the training they offer, call 1-800-445-6217, go to their website “joeverde.com” or email them at info@joeverde.com.
