One dealer created an appropriate acronym for these programs: “BOHICA” (bend over, here it comes again).
“You cannot solve a problem with the same consciousness that created it.” — Albert Einstein
A friend of mine, my factory rep, just presented (pushed is more accurate) this month's most important program in the world. Today's offering included a manager's contest, cost $2,000, prize $2,000 (don't ask), followed up with an MBA style spreadsheet analysis indicating that a 90-day minimum stocking level of vehicles would optimize my franchise potential.
Most manufacturers and their dealers have never walked in each other's shoes long enough to understand a win-win strategy. It's not simply the difference between retailing and manufacturing. The disconnect is deeper.
Two anti-dealer beliefs plague manufacturers.
First, the better mousetrap theory, i.e., if they built a better product, customers would beat a path to their door. Hence, since better mousetraps are sold direct (at the door so to speak), then dealers only are necessary to market the inferior ones, presumably because customers don't beat a path to them.
Second, manufacturers believe they've given dealers the lifeblood of product thereby making them wealthy beyond all other opportunity providers. Hence, the dealer owes its franchiser an eternal debt of devotion for which the manufacturer has paid in advance.
Sadly, dealers have been haunted by a similarly selfish salvo. Firstly, that their profit margins are so thin that a living is only possible by skating on the thinnest edge of honesty and fair play. Secondly, that customers are foolish and easily worn out. Therefore, obfuscation and delay are necessary marketing tools.
These views undermine trust. Manufacturers mistrust the dealer who, in turn, mistrusts the consumer. No wonder suspicion fogs the lens through which we view information technologies and their centerpiece, the World Wide Web. Our paranoia pushes us to use the Net for self-centric schemes masquerading as “a little for you, a little for me and something on the side for the consumer.” Mostly, however, we have camouflaged a sucker punch with the rhetoric of digital friendship.
So far, only a few dealers are brave enough to offer firm price information or the kind of complete and relevant data that would inspire a cyber buyer. Most dealers believe that by offering online inventory and a telemarketing salesperson (usually christened “the Internet manager”) they have done all they should.
“If I publish real numbers, then customers will compare my honest prices with the lies of other retailers. Unsuspecting shoppers will be baited and switched with the false hope of a better deal elsewhere. By the time the customer knows how fair I've been, they will have been lured in for the kill by my competitors.”
This is the common dealer's eye view of the Net. At the same time, manufacturers fearing dealer revolt, and hesitant to change anything of their franchise business model, have circled the cyber marketplace rather than take it on directly as consumers would have them do. So, dealers are pushing back, OEMs are waffling and consumers are as frustrated as ever. No wonder dot-coms are dead and dying.
Why? As for dealers, it's because decades of margin compression have so reduced the retail opportunity that a straightforward offer no longer seems attractive. Most marketing has moved to the dark side by quoting prices in ranges rather than exact numbers so that customers are propped up for a price bump somewhere along the negotiation road to a sale.
What's worse, much of the dealer's margin erosion is the result of factory programs disguised as customer relations, training or co-op marketing. Dealers have endured so many cost shifts without anything to show for them that words like “partnership” and “sharing” have become codes for “let's check your pain tolerance.” One dealer created an appropriate acronym for these programs: “BOHICA” (bend over, here it comes again).
The extent to which dealer trust has been poisoned is most evident in their resistance to cyber sales. Rather than accept what might be the first dealer friendly tool to come along in decades, most dealers resist out of a fear that the customers and manufacturers might some way align to side step them or to eliminate the rest of their profit margin.
The fallacies of dealer resistance are that the Internet is not about price, it's about service and convenience; that customers will not be stopped by a local dealer's refusal to serve them on the Net, they'll reach around him for those who will; and that state politicians who have protected dealers against overreaching manufacturers also will protect them against the interest of consumers; they won't.
But perhaps the greatest disservice that resisters are doing to themselves is enabling a few cyber savvy dealers to harvest all the cyber customers; the hoards of resisters have given away sweeping territories to the rest of us.
Unfortunately for our industry, but happily for the few dealers who “get it,” consumers are building a case wherein the dealers are the bad guys and the manufacturers aren't. Quietly beneath the radar of the fist-pounders, a few dealers are catering to those cyber customers.
Simply stated, a few of us are enjoying more marketplace per pound of bricks. Not only are we achieving volume from our broader geographic reach, we are reducing operating costs as well.
But the most dramatic evolution in this arena is the tighter relationship between cyber dealers and their manufacturers. We are debunking myths by adopting a standard of honesty to support the relationship we promise customers. This is growing out of the connection between net shoppers, Web dealers and cyber-enabled manufacturers.
That intimacy demands more candor because it strips naked the manufacturer that might distance itself from customer concerns by using the dealer as a shield. Cyber-direct manufacturers feel consumer's concerns directly, immediately and publicly “online.”
Exposed in this way, dealers and manufacturers are not joined simply by carefully worded contracts, auditing swat teams and last-minute marketing information. They share the risks and rewards of just-in-time suppliers, build- and locate-to-order selling systems and digitally fast transfers of funds.
Gone finally are the zone personnel who spit venom as they speak in hushed voices about the financial successes of their dealers. Gone are the cost shifted programs whose only salient feature is the back door favor that might go along with a costly sign up. And gone are sales commissions based solely on gross profit first plucked from the wallet of customers and then wrestled from salespeople by secret deals and questionable chargebacks.
If you are nodding agreement, you are not among those folks who are guilty of listening least and punishing most while braying loudest about customers for life. If, on the other hand you think this is “nice” but that pigs will fly before it comes to pass, I suggest that you look skyward because it's already in motion.
Think about all the money we've wasted on hollow marketing and programs that added nothing but cost to the long-term value of cars and customers.
Think about all the jostling and abuse that we've heaped upon each other and our customers in pursuit of a few hundred bucks of gross profit to pay for those programs.
Think of the potential for the couple of dealers and manufacturers who align over a strategy that eliminates all that. No rabbit from the hat, no magic pill. Just a couple of dealers, some honest partnership and a real customer for life process. It won't require that all of the dealers play. It only requires a few dealers and manufacturers in each market to “get it together.”
I could tell you about my successes, but I rarely learned anything from them, so let me tell you about my failures because they taught me everything.
Peter Brandow is a 25-year veteran dealer with stores in Pennsylvania and New Jersey. Mr. Brandow is president and CEO of the family-owned Brandow Companies which include rental stores, repair shops and an Internet sales and training firm.