I come before you today to state a simple truth, a truth that is so obvious that it doesn’t even need to be said, yet it has never been properly addressed. The car franchise dealership, as we know it, is broken.
It’s too bloated. It doesn’t live in the now. It spends far too much to acquire its customers. It doesn’t focus on the things that matter. Some OEMs wish that they could eliminate it. In most cases, it’s owned by a guy whose only achievement in life is having been born to the owner of a car dealership.
It’s also the only business in America that intentionally operates in a way that is frustrating and oppressive to its customers. You could never run any other business in America the way that a car dealership is run. The posted price means nothing. Virtually no two people will pay the same price for a car. Even once the price is finally negotiated, surprises keep coming to the point where virtually nobody is entirely sure if he or she got a fair deal on his car.
But it doesn’t have to be this way. If I owned my own dealership (and, honestly, could I really be any worse at it than 90 percent of the guys who own dealerships?) here’s what I’d do to help my dealership make more money, sell more cars, be more ethical, increase customer satisfaction and loyalty, and even have more fun doing it.
Fire Everybody in the Building
Do you know why all car dealerships appear to be run nearly exactly the same? Because they’re all run by “Car Guys.” Car guys act like there is some mythical, deep magic involved with running a car dealership. Twenty years ago, maybe there was. But today? There isn’t.
Any process that needed a “Car Guy” can be done now, and done better, by software. Need to evaluate a trade-in? There’s software for that. Need to price your new or used car inventory? Yep, there’s software for that. Need to put together a “four square?” You guessed it. There’s software to calculate shop hours and rates. There’s inventory software for your parts department. Anybody who can read a software manual can run a dealership.
If we are going to change the culture at Bark Motors, we have to start by getting rid of the people who established the culture, and that includes all the Car Guys. Sorry, fellas, you’re out. Don’t worry, there are always dealers looking for F&I guys and Used Car Managers. You’ll be fine. But who are we going to replace you with?
Hire a Young, Diverse Staff and Pay Them Appropriately
The average dealership staff can be described with three words: stale, male and pale. Most dealerships are run entirely by older, white men. There’s no reason that this has to continue — we all know that the average customer is far more informed than the average salesperson is about the cars on the lot. The Lot Lifers don’t add any value to the dealership. So why do we need to keep them around?
My classified ad for hiring salespeople would look like this:
Young Professionals Wanted For a CAREER in Automotive Sales!
NO Dealership Experience Required OR Desired.
Work a 40-hour work week, and earn a base pay that will cover all of your bills PLUS a highly competitive commission plan.
Full Medical, Dental, and Vision coverage.
We LOVE College Graduates! Women Are Encouraged To Apply!
And then I’d watch the applications roll in. Young people can’t shut up about how terrible the job market is, and yet, you virtually never see young people working at car lots — or, if you do, they’re the overweight, khaki-wearing, GED-recipient type. Bark Motors would focus on removing the stigma that college graduates have about working in Automotive Retail. We’d pay more to college graduates— I’d love to see diplomas framed at every desk.
We would have a 50-50 male-to-female ratio on our sales staff. We’d do away with the misogynistic culture of the car dealership and make Bark Motors a friendly and safe place for women to work. We might even set the tone by hiring a female GM — most of the female GMs I have encountered are sharp as tacks and tougher than leather.
Not only would I hire a great, diverse team, I’d keep it by doing exactly what my ad promised. By getting rid of the 20-year, gold-watch wearing boat anchors in the management offices, I’d be able to pay my salespeople real wages AND provide them with opportunities to move up the ladder quickly. I’d appeal to the Millennials’ careabouts by getting the dealership involved in the local community by encouraging them to seek out ways that we could give back. I’d give them rotating weekends off, and I’d mandate a maximum of a 40-hour work week. Working at a car dealership doesn’t have to be a death march, and it doesn’t have to be a place where society’s castoffs work. Not doable, you say, Mr. Car Guy? Like Hell. Enterprise Rent-a-Car can do it. So can we.
In my opinion, this would be the most revolutionary and the most impactful change we could make. But, there’s a lot more that would need to be done.
The $4,000 Dollar Fantasy Is Dead, and We’d Drive the Stake Into Its Heart
We would do everything necessary to turn inventory quickly at Bark Motors. We’d buy an inventory pricing software suite, and we’d live by it. We’d quickly learn what our average front-end retail gross on a car was, and that’s where we’d start our used car pricing — no more trying to load up a car with profit when it’s fresh on the lot. The goal would be 12 inventory turns a year (meaning we’d sell our entire lot every month), and we’d have a hard 60-day turn policy. If a car is on the lot for more than sixty days, it would be sold at auction. We wouldn’t fear wholesale losses.
Used car inventory would be value-priced, meaning that while we wouldn’t necessarily be a one-price, non-negotiating store, we’d price the cars correctly from the outset and discourage discounting unless absolutely necessary. I picture a Progressive Insurance type of scenario, where we would show the customer a list of similar vehicles at other dealerships, and show the customer how our car compared to the competition. Sometimes we’d be lowest, and sometimes we wouldn’t.
New car pricing would start at invoice, minus any factory rebates or incentives. The sole purpose of our new car inventory would be to feed our Service and Parts departments, as well provide trade-ins to our used car department. Trade-ins would be valued fairly, but we wouldn’t overspend on trades to make deals happen, unless we needed to do so to hit our OEM bonuses.
Bark Motors Would Be a Digital Dealership, First and Foremost
According to the National Auto Dealers Association, around 80 percent of customers are doing research online before they visit a dealership. So Bark Motors would assume that every customer is an online customer. We’d have the same pricing on all of our third-party websites (we’d advertise on all of the major players), our website, and on the window stickers.
We would be diligent in using our customer relationship management tools to track our customer interactions, and we’d never assume that a customer was just a “walk-in.” While we would value phone calls and emails, we would also understand that, also according to NADA, most customers do not contact the dealership before arriving on the lot. For those customers who do contact us, we would attempt to conduct as much of the transaction online as possible and reduce the amount of time that they spent in the dealership, but we would not engage in self-negotiation — the pricing on the website would remain the sale price.
Not only would we ask where customers saw our cars, we’d ask where they did all of their research, including those customers who don’t buy. This would help us understand customer buying behavior and focus our efforts in the places where our customers prefer to study up.
Bark Motors wouldn’t spend a single dime on traditional, expensive forms of advertising, such as television or radio, unless it was funded by manufacturer co-op dollars (which are earned by selling new cars). We’d focus on the advertising media that targets in-market shoppers, rather than large swaths of the public who may or may not be interested in buying a car. We’d take our savings from eliminating that advertising and use it to cut the margins on our cars.
The Sale Would Revolve Around the Experience
I would implement an “up system,” so that customers wouldn’t be treated like chum in a shark tank — customers would be treated as guests, not enemies. We’d do our best to get the entire process completed in less than 90 minutes, including finance and delivery and we’d incentivize our sales reps for making that happen. We’d invest real money into a children’s play area, and we’d update the videos, games, toys and furniture semi-annually.
Salespeople wouldn’t specialize in new or used cars, they’d work the entire dealership. We’d focus on having our salespeople build relationships with customers, and we’d be as transparent as possible throughout the process. The computer screen on the desk would never face the salesperson — it would be placed where the customer and the salesperson could see all the numbers.
Since CSI scores are so incredibly important to franchise stores, I would ensure that no customer ever had a reason to ever give us less than a perfect score. While we’d focus on an expedient process, we’d also focus on providing outstanding customer service. If a customer chose not to buy from us, a manager would be sure to follow up with the customer to see what we could have done better to gain that customer’s trust and, ultimately, his business.
The Finance Office Would Stop Being Mysterious
Lastly, the customer would have one ambassador throughout the whole process, rather than turning them over to managers. The sales rep would walk the customer through their trade-in, their financing, and their delivery. No more “going to the manager” to discuss a deal — we’d have an open sales floor with no closed doors. No more long, awkward silences for customers. They’d have a friend throughout.
In the financing process, customers would be provided a copy of their credit score and a list of financing options. No more burying customers in order to make back-end profits. While we’d still want to make the F&I office profitable, it would no longer be a place to confuse and mystify customers. We’d ensure that the payments were within the customer’s stated comfort zone, and we’d offer only the best and most reputable insurance and warranty products.
So … is this Fantasy?
I don’t think so. Most dealers around the country are doing some of these things, but none that I’ve encountered are doing all of them. As long as the retail car business continues to be the incestuous mess that it is, with the majority of dealer groups owned by second- and third-generation car dealer families, it will be tough to break the mold.
However, I truly believe that the first dealership to fully embrace the new, customer-focused model I’ve described here will have an opportunity to break free from the pack. There are other items to address (inventory mix, lot size, the building itself, service and parts departments), but the customer experience is the one thing that dealers can nearly completely control, and yet, it appears to be the one thing that they focus on the least. Everything else is secondary until we fix the way our customers feels when they walk out of those doors.
So, tell me; would you shop at Bark Motors?
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