5 Key Strategies for Improving

Your Sales, Profits and Performance

We’ve been getting a lot of calls and emails from dealers and managers lately to discuss the economy.  Many ask “how bad is it, really?”  Others ask how long will this nightmare continue, while some just seem to want to debate that this is the worst it’s ever been, like it’s the end of the world as we know it.  Tom, c’mon!  You can’t tell me that it’s NOT different this time.  Well actually, I can.  It’s not different.  We have seen this before.

This is the fourth recession since I first started in the car business wholesaling to dealers and retailing on a small corner lot to pay for college.  During my first recession the headlines read “The Nation has entered the most severe recession since the Great Depression,” “Investors are running scared from stocks…waiting for the bloodbath to end.”  “The tightening of the money supply has resulted in sky high interest rates (20%) and 11% unemployment…”  Sound familiar?  Well, that was then, not now.  The year was 1982, the beginning of the Reagan era, and since I had no real basis for comparison, it was all I knew about the business and it was when I first learned about Automotive Special Finance.  However, back then we referred to it as Buy-Here-Pay-Here.

We have amazingly short memories in this country and that’s probably why history tends to repeat itself.  A recession is a naturally occurring event in a capitalistic society, regardless of the debatable causes.  It is an event whereby the weak and inefficient are weeded out.  And, in reality, there is always a tremendous recovery period that has followed every recession, including the Great Depression.  The challenge is to evolve quickly enough to survive the down turn and then be in a position to take full advantage of the prosperity during the economic recovery.

Yes, we are losing businesses at an alarming rate.  There are manufacturers, dealers, lenders, and vendors who may not make it.  And if you only listen to the doomsday headlines and recurring hyperbole, you might as well close up shop and quit too.  But, if you focus on the fundamentals of your business and work smartly and tenaciously to become one of the majorities who do survive, you can poise yourself to be ready for recovery.  And, people get rich during an economic recovery. 

Below are 5 key strategies for improving your sales, profits and performance that can help you position your business to expand, capture market share and truly benefit when the economy turns.

Strategy #1:  Planning

The first and most basic strategy is to build a sound plan.  A business plan is your roadmap.  It is how you drive the future of your business. It focuses the joint actions and thoughts of the team toward a realistic and achievable goal in which all of the forces affecting your business model are taken into consideration.  The plan lays out targets in all major areas of your business: sales, expense items, hiring positions and financing goals.

So whenever you write, “We expect 500 customers and 100 sales per month by the end of year one”, it’s not just a passive prediction where you open the doors and wait for customers to show up.  It is an educated, well thought out and factual prediction based on the current and future market conditions that challenges your sales force to reach a specific, targeted goal with allocated resources. 

 The basic purpose of any business plan is to identify and evaluate the external opportunities and threats to the business, it forces you to review everything at once: your “value proposition” (why people should pay you money), marketing assumptions, advertising, operations, financial planning and staffing and ties together all the disciplines of business – Operations, Management, Accounting, Finance, Marketing and Economics. 

Strategy #2:  Teamwork

Once you’ve written your plan, even if it’s handwritten, you’ve laid the groundwork for what your team needs to accomplish in order to achieve the stated goals and be successful.  You have your game plan, now you have to develop your team and execute the plan.

I have highlighted a few of the fundamentals for effective teamwork you can use as a foundation:

• Common Focus and Purpose – Every team needs a purpose!  Even if the purpose is obvious, it needs to be clearly defined and progress toward it needs to be measured daily.  Without clarity in your company’s vision, your team can easily become lost, lose their focus and discipline, and become victims of the weapons of mass distraction.
• Define the Team and the Positions – Just as the team has a purpose, each member has a role.  Everyone must know how the team functions, who does what and when they are to do it.  Every military unit and sports team practices their game plan with a clear understanding of the purpose of the team, their mission to accomplish, as well as the functionality of each position.  They understand the “bigger picture” and their role within it.
• Clearly Written Job Descriptions –  Members of a team must know exactly what is expected of them.  They must know what to do, how to do it, and why it is done this way.  A clearly written job description that is free of ambiguity is the first step to effective training.
• Performance Standards and Periodic Reviews – The second step to effective training is the unbiased, objective report card.  Imagine what the academic performance of teenagers would be if we eliminated report cards in school.  The same holds true for employees, athletes, and soldiers who are not graded objectively.  You should establish and maintain minimum performance standards and conduct periodic and routine performance reviews.  Remember, these are minimum standards so don’t be weak.  Hold your position and eliminate any and all excuses.
• Communication – One of the common pitfalls of any relationship between people is a failure to communicate.  The same holds true for teams; it is a pillar for the success of any team.  Although the tone must remain respectful and constructive, effective communication is not always nice.  Team members must be willing to speak candidly and be brutally honest with one another in order to improve performance.
• Trust – Trust is the fiber that holds any team together and each member must freely give and receive the following types:
  • Communication Trust – There is no room for the “I’ve got a secret” games and a team is no place for liars.
  • Capability Trust – Every member must trust in each other’s abilities to perform their jobs and they must trust you and your abilities to perform yours.  
  • Contractual Trust – Just like a written contract, the “word” among team members is their common bond.  This is the enactment of the ole “say what you mean and mean what you say” mantra.  Team members keep their word, especially to one another.
• Core Values – Every team must have core values.  They are the standards of behavior that all members must adhere to remain a member.  They are the only elements of a team that never change.

Strategy #3:  Processes

Special finance is about attracting customers, understanding their vehicle needs, effectively pre-screening the prospect’s buying power (ie: their credit), and presenting a selection of vehicles you can sell and finance for a profit.  It involves a very specific process and your success will be determined by the collective talent and efficiency of your team to do so with every customer, with every deal and without exception. 

A clearly defined sales process is your “road to the sale” and a strict adherence to it is the best way to avoid the common pitfalls of inexperienced dealers across the country.  If you implement a detailed and consistent “Road to the Sale” and execute it every time, you will find that your team will understand your sales processes and improve their execution with every sale.  Your sales ratios will increase along with the gross profit of every deal.  We are all creatures of habit and the more we do something, the better we become at doing it; the more we understand, and the more confident we become as a team.

Strategy #4:  Metrics

Numbers never lie!  They always tell a story.  And, if you can understand the language in which they are written you will have a wealth of information about your business, how it’s performing, and you will know exactly what you need to improve sales and/or profits.  Knowing the metrics for your dealership is a critical fundamental for success.

If you don’t effectively manage the metrics of your business and follow a set process for executing operations, prospective customers and sales leads are easily wasted and the returns on your investments will be squandered.  The difference between a 10:1 return on investment and a 3:1 return is most often due to process. But if you’re not effectively tracking and managing the metrics, you have no real awareness of your inefficiencies and no idea of what is needed in order to improve sales or profitability.

Strategy #5:  Leadership

I believe that the key future trend for producing world-class standards in sales depends on our ability to effectively develop and lead a team.  True sales leadership is achieved when sales managers are equipped with the resources, competence and motivation to accept the responsibility for developing, training, and leading their own sales teams.  Without sales leadership fundamentals, sales training is likely to be off course group frustration sessions born out of desperation to ‘hit that monthly target’ using spiffs and bonuses rather than a sustainable planned approach that actually generates results. 

The primary responsibility of a sales leader is to develop the power to achieve high performance from a trained, focused, and unified team.   A high performance team requires high performance leadership that elicits the active involvement of everyone - no matter what role a person plays in the overall process; every team member knows and believes they are important to the success of the overall mission.  The primary goal is always to get everyone working to their highest level of ability, because “the power of the team rests within its members.  The power of the members rests within the team.”

Mr. Tom Herald is a Professional Consultant and National Trainer and with Benjamin Herald Associates.  He has over twenty years of experience in the automobile business and ten years as a dealer principal.  He is a former Air Force Commander with extensive training as a leader and instructor.  He is one of the top experts on Special Finance and can be reached at tom@heraldassociates.com or by phone 859.816.7990