Dealer groups often act as “frenemies” instead of allies. It’s costing you money.
One of the significant advantages of a dealer group versus a single-point dealership is the ability of the group to centralize many of its resources and initiatives to work together to dominate a given geographic marketplace. Or is it?
The truth of the matter is that many dealerships within a given dealer group compete with each other as much as they compete with dealerships outside of the group — often to the detriment of the group.
Hence, many dealer groups are really just a bunch of dealerships that happen to be owned by the same guy; they do NOT work together, and are often in a battle of internal egos, sending customers directly into the arms of competitors.
Managing Partners and General Managers within a group do need to have a level of autonomy to allow their entrepreneurial spirit to flourish; this also has overarching benefits for the group as the cream rises to the top.
However, the creation of chieftains that smile and shake hands with each other at group meetings but hold their winning ideas close to the vest does not help the group to achieve its potential. The following are areas where dealer groups could and should collaborate more:
USED CARS: Appraisals
Why do we let buyers from all across Canada bid on customer trade-ins during the appraisal process (with technology such as TradeRev), but we don’t allow the Used Vehicle Managers within the same dealer group to bid on trade-in appraisals?
The creation of chieftains that smile and shake hands with each other at group meetings but hold their winning ideas close to the vest does not help the group to achieve its potential.
It is certainly a known anomaly that a used Toyota RAV4 (for example) will sell within hours on the front line of a dealer group’s Honda dealership, but will sit for weeks just a block away at the same dealer group’s KIA dealership. Why? No one knows.
What we do know is that the RAV4 is worth more to the Honda Used Vehicle Manager versus the KIA Used Vehicle Manager within the same dealer group.
Hence, why doesn’t the Honda Used Vehicle Manager have an opportunity to bid? Why are we selling it to a Honda or Toyota dealer outside of our group instead? Why are we allowing competing dealerships and groups to bid ahead of our own group?
Why not have 20 Used Vehicle Managers (within our own group) bidding on every vehicle instead of just one?
At the very least, why not establish a two-round bid system; all Used Vehicle Managers within a dealer group bid on all appraisals via a closed internal auction, then the appraising dealership allows a second round of bidding to the open market.
If an outside buyer bids higher, then the Used Vehicle Managers within the group have a final opportunity to match or beat the outside bid. Companies such as TradeRev and CarTradeGo can set dealerships up with their own internal appraisal auctions. If need be, it can also be done free with group chat.
USED CARS: Inventory Sharing
One of the biggest advantages of a dealer group versus a single-point dealership is the ability to share the used vehicle inventory across the group.
In theory, this occurs at many dealer groups. In reality it occurs (successfully) at very few. Inevitably, managers play games with each other within the group.
When a Sales Consultant contacts a sister dealership with a customer wanting to buy one of their used cars, the car is still in reconditioning or a customer has taken it for an overnight test drive or (all of a sudden) the vehicle has a deal written on it, etc.
Used Vehicle Managers sometimes fiddle with the internal price and want to charge a sister dealership a “retail” gross profit to release the vehicle.
In the meantime, the Sales Consultant is frustrated with the games and logistical roadblocks and worse, the customer buys a used vehicle from a dealership outside of the group while managers don’t answer each other’s texts and phone calls.
When a Sales Consultant has a customer wanting to buy a used vehicle from a sister dealership, both the Sales Consultant and the customer should be treated as honoured guests by the dealership stocking the vehicle.
Managers from sister dealerships should work together to ensure that used vehicles move seamlessly (and seemingly effortlessly) between the physical locations.
In some dealer groups, if a Sales Consultant sells a used vehicle from a sister dealership, the Sales Manager at the sister dealership works the deal with the Sales Consultant — and if the vehicle is sold, the stocking dealership retains all of the gross profit and pays the guest Sales Consultant the commission (based on their home dealership’s commission plan). The selling dealership retains the Financial Services gross profit.
Other dealer groups do the reverse; the stocking dealership retains the Financial Services gross profit and the selling dealerships retains the vehicle gross profit. Other dealer groups will simply sell the used vehicle to a sister dealership for the cost of the vehicle + reconditioning cost + a stocking/marketing fee (e.g.: $300-$500).
One Canadian dealer group (with just under 20 dealerships) shared with me that in 2021 they sold an additional 1,700+ vehicles as a result of sharing inventories!
USED CARS: Unique Value Proposition
A Unique Value Proposition is a clear statement that describes the benefit of your offer, how you solve your customer’s needs and what distinguishes you from the competition.
Simply put, it represents what’s included in the price of a used vehicle (e.g.: a safety standards certificate, a vehicle inspection, mechanical reconditioning, a warranty, detailing, exchange privilege, etc.).
Over a three-year period, our Sales Trainers and Consultants have asked every single dealership we’ve visited a simple question; “What’s included in the price of your used vehicles?” (we research the answer in advance).
We have asked Sales Consultants, Sales Managers, General Managers and even Dealer Principals. Not one has got the answer right so far. Moreover, there is often a completely different, fragmented, misunderstood used vehicle program at each dealership within a given dealer group; different vehicle inspection and reconditioning requirements, varying cosmetic reconditioning, some with 30-day warranties, some with 3-month warranties, some with exchanges privileges, some with money-back guarantees and even some with fixed “one pricing”, but never all the same.
Is there an opportunity for dealer groups to create, leverage and market a simple, well-crafted Unique Value Proposition; Platinum, Advantage, Certified Plus, Secure, SAFEcar, BESTcar, NEXTcar, VALU-car, AUTOselect, MYcar, etc. – a program that is branded and exactly the same at each dealership within the group?
SALES PROCESS: New and Used Vehicles
Whenever we begin a training relationship with a dealer group, we ask the question, “Does the dealer group have a documented, trained, coached and enforced sales process?”
Our query is often met with eye rolls at the simplicity and naivety of our question. “Of course!” is the normal response.
At our first meeting with the Managing Partners/General Managers we will ask everyone to jot down the steps of their group-wide, documented, trained, coached and enforced sales process. Rarely does every piece of paper collected from the group read the same.
There are various training influences and incredible experience with respect to the senior leadership of most dealer groups. The sales process of any given dealership, however, is often the sales process and philosophy brought in by the most recently hired General Sales Manager or General Manager from outside the group.
Dealer groups have an incredible opportunity to bring together the experience of their leadership team in a post-pandemic era to re-imagine and recreate three necessary sales processes:
- NEW Vehicle Sales Process
- USED Vehicle Sales Process
- DIGITAL Sales Process
Moreover, dealer groups have an opportunity to create their own automotive universities; ongoing training facilitated by Sales Managers, group Sales Trainers and outside Sales/Leadership Trainers that continually train, coach and evaluate the dealer group’s values, culture, customer experience, sales process and leadership skills.
As a training and consulting firm, we have built several dealer group universities. Some eleven years ago, we partnered with The Trotman Auto Group (Vancouver area) and created TAG-U.
Because the values, culture and sales process are aligned at each of its 12 dealerships, Sales Consultants and Sales Managers are easily interchangeable and deliver a consistent customer experience.
Because the training and coaching is continuous and effective, it also draws talent from competitors, even people from across Canada clamour to join the group.
MARKETING
This is certainly not a new concept. Many dealer groups do indeed have a centralized Marketing Department.
Many General Managers, however, are extremely frustrated; “The head office Marketing Department is too busy, too slow, understaffed, bureaucratic out of touch with the market, etc.”.
Hence individual dealerships within groups are starting to hire their “own marketing guy.”
As a result, the dealer group’s brand slowly erodes and the marketing becomes sporadic and disjointed with last minute campaigns and events that have little or no continuity and limp from month to month.
Part of the challenge is that traditional marketing (long term branding, community involvement/events, radio, TV, website, etc.) bears almost no resemblance to the light speed and ever-changing world of social media.
Should dealer groups be growing their internal Marketing Departments instead of letting individual dealerships go rogue with “their guy”?
Is it time for a traditional Marketing Manager (with big group or corporate experience) to work hand in hand with an expert Social Media Manager with both reporting to a Marketing Director or V.P.?
Is it time to bring on more Social Media Content Creators and Videographers? And if so, should the entire marketing team not spend as much time outside of the head office as they do within — visiting each and every dealership within the group, establishing relationships with General Managers, Sales Managers, Service Managers, and (how about) Sales and Service Department customers?
Maybe it’s time for dealer groups to dispense with the harmful internal competition that makes enemies of sister dealerships, the secrecy and lack of sharing with respect to winning concepts and ideas, the inflated egos of so-called leaders and the Machiavellian politics to win the favour of the Dealer Principal/CEO.
Instead, have leaders come to the table and collaborate and truly leverage the incredible experience, knowledge, intelligence, and entrepreneurial spirit within the group. Reward the contributions to the group at large as well as their individual dealership successes.
