One of the pleasures I receive from writing this column and speaking with readers is sharing personal experiences of best practices I've seen. I want to share one such experience this month.
I'm in Las Vegas meeting and celebrating with a group of managers from a single dealership. The managers earned this trip based on established performance criteria during 2001. Is a managers' incentive trip unique? Certainly not, but this high-performance group is in limited company in the manner in which they have arrived at this level.
Three years ago, during a 20-group open discussion, this dealer said that he was “stuck” at a certain level, and unable to get his organization to the next. After a few minutes of discussion, the group moved on to another subject.
A few days later, I received a call from the dealer again wanting to discuss methods of moving the organization forward. He subsequently used such a method. Following is how he increased his net profit by more than 60% and his net-to-gross from high 20s to low 40s percent.
What's even more remarkable about this performance: he has the same management team and he is a domestic single-line dealer in a mid-size market.
This dealership probably spends more on a percentage basis developing its personnel through continuous training than any other I am familiar with.
How can a group of managers be held totally accountable if they are not provided the tools, i.e. training and knowledge, to accomplish their individual and collective goals?
They can't, so this was the dealer's first step, teaching the managers and then sharing all information concerning the dealership's sales, gross and financial performance on a daily, weekly and monthly basis.
Once this basic knowledge was in place, the dealer met with his managers to set a dealership net profit goal.
Once this goal was established, monthly performance standards were set for each department. These performance standards included a series of critical elements or, in other words, what it will take to achieve this level of net profit.
Once the critical elements were identified and agreed on, additional items, which required daily and weekly monitoring, were identified and listed. At the end of each month, each critical element is measured according to actual results, the performance standard established for that month and the variance. The management team knows that it is impossible to manage what they can't monitor.
In the new and used vehicle departments the chosen critical elements include the dealerships traffic count broken down to three subcategories: general traffic ups, self-generated (sales personnel) ups, telephone ups.
In addition to what most dealers monitor, items such as the number of sales personnel, sales personnel training schedule and subject are gauged.
From an asset management standpoint, the numbers of new vehicles in inventory for more than 60 days are identified by car and truck, and in the used-vehicle department, the number of inventory units over 45 days.
The F&I office performance is also monitored daily in detail, as a department and by individual producer.
In the service department, items such as the work mix, i.e. customer pay, warranty, internal and pre-delivery, as a percentage of the total is monitored as well as productivity information by tech and by service advisor and individual labor type gross profit percentages.
Again, a personnel training schedule is part of their performance schedule. In the collision repair center and the parts department, productivity, asset management and training are an integral part of their daily lives.
I mentioned that we are in a Las Vegas meeting and celebrating. Celebrating and establishing new goals and objectives. Because, as the managers will tell you, 2001 is history, and, “We are better than this.”
Tony Noland (firstname.lastname@example.org) is the president and CEO of NCM Associates, Inc. He has over 30 years of automotive retail experience.
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