Leadership & ManagementBest Practices

Leadership & Management
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Auto Dealers: What’s Your Total Cost of Risk (TCOR)?

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Financial statements track how you are doing financially every month. Consider measuring and benchmarking TCOR as a part of your ongoing financial statement process.   What is TCOR and why should you care about your dealership’s Total Cost of Risk (TCOR)?  Business is about keeping the money you make. Your sales and gross profits could be at record highs, but your losses might be, as well. Unless you are tracking TCOR, your money may be walking out the back door because of losses or customer problems. Consider changing the way the dealership accounts for losses at the store (TCOR).    The only way to improve in any area is to measure it and benchmark it. TCOR is a metric used to evaluate your dealership’s internal risk process. Here is how it’s calculated: Insurance premiums + self-insured losses + losses associated with lower profits and productivity + risk administrative expenses (internal & external) = Total Cost of Risk (TCOR)  Tracking this metric will help you laser focus on which parts of the dealership cost you money. Consider customizing and defining each aspect of the formula to specify the guidelines for your dealership. These guidelines will be different for every owner-operator. It’s important to be consistent in how you establish and execute the accounting at your dealership based on those guidelines. Consistency will produce accurate data leading to meaningful answers.  Here’s an example: Let’s say you sell vehicles to people who have credit challenges (secondary customers). In my experience, if you “spot” them in their vehicles, and then cannot get them financed for whatever reason, they tend to write more negative online reviews. Hopefully, you have a process at the dealership to bring them back in and try to satisfy them in some way.   (If not, start today. Most lawsuits and regulatory problems start with upset customers. In fact, a dealership in Tennessee recently had its license revoked after multiple claims of deceptive acts. Now, the owner has been convicted of twenty-one (21) felony counts. His problems all started with customer complaints. Pro Tip: After you have satisfied the customers’ concerns, ask them to “update” their review. If you ask them to “change” their review, the customers will feel manipulated, Then, it will look like the only reason you helped them was to have them update the online review.) If you tracked the personnel time and all other expenses associated with these types of issues, you would be able to determine the actual cost of taking care of these customers. This is only one aspect of TCOR. (Please refer to the formula above.) If the dealership accounts for these costs accurately, it means you can no longer hide these losses in “Other Income.” In many dealerships, “Other Income” becomes the “garbage pail” of accounts, where you charge expenses, so the managers who are paid on gross won’t complain about chargebacks.    Using the secondary customer example above - whether or not TCOR is being tracked - we can discuss which policies and procedures can be put into place to stop these types of losses. There are plenty! We will not know the effectiveness of the procedures unless the numbers are tracked accurately. Recently, I have been hearing dealers espouse a case of the “yets.”   “I haven’t been sued yet.” “I have not heard from a regulator, yet” “We haven’t had any major problems, yet.” So, I don’t need to track TCOR…  Depending on the accounting controls at the store, the losses may be bigger than you realize. Unless you are measuring these costs, it is unknowable how much money is being poured into issues at your dealership. Do you really know your risk costs? Reputational losses? Customer satisfaction charges? Please consider tracking and measuring these numbers moving forward.  I’ll bet you’ll be glad you did. 
winning team
Cultivating a Winning Sales Team

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When your dealership hits its sales goals, profitability and morale run high. Life at your dealership is energized, employees are engaged and looking forward for the future. Success like this doesn’t just happen by accident. It occurs through intentionally hiring and developing a top-notch sales team. It happens when you have the right salespeople in the right roles with the aptitude and propensity to perform in the fast-paced retail environment in a thriving culture that supports their success. Let’s explore how to cultivate the sales team you need for your store to enjoy lasting prosperity. The Cost of an Ineffective Sales Team Before we dive into the strategy to assemble a winning sales team, we need to face a hard truth. An ineffective sales team will keep you from reaching revenue targets and could ultimately devastate the dealership financially. Failing to sell enough vehicles or RO’s obviously hurts the bottom line - and is, sadly, more common than you may think. According to HubSpot, two-thirds of sales associates miss the mark. But did you also know that your company will spend an average of $65,000 and six months on replacing each sales consultants or advisors that leaves the dealership? In general, most sales representatives wash out of your dealership because they lacked one (or more) of several things: motivation, connection, sales skills, training, recognition, guidance, or product knowledge. Here’s what you can do about it. Establish a Sales Culture There’s a lot of literature out there that supports the benefits of a good dealership culture. Your sales team should have its own. It doesn’t have to be fancy. A short statement of the values your team shares works just fine. Be sure it’s not just words on the training room wall. Engage your sales team in identifying and agreeing upon which values matter most to them and what behaviors support them. You’ll want to all agree and uphold the values with standards and expectations that differentiate your dealership’s brand, the client experience and ultimately support the vision of your future success. Your sales culture will help align everyone on the team and keep members motivated. The shared values and defined standards will ensure a more consistent experience for your customers. You and your team should do everything in accordance with the sales culture you establish, and members of the sales team should share openly and hold each other accountable to your established values. When stress piles up, and numbers are hard to hit, values are often pushed aside; especially if they’re viewed as just words on paper. As the leader, set the tone to make it OK for all to hold each other accountable for upholding these values and speaking up when things go off track. Hire Intentionally Using your sales culture, think about the ideal sales representative. Write your job description and advertisement based on that ideal. Of course, you may need to be flexible so that you’re not endlessly chasing unicorns, (you know the one – that twenty-car guy that is miraculously available). Hire with intention and with a plan, so there’s a greater chance of culture fit and sales success. As you consider what your next hires need to look like, take a close look at your existing sales team and your customers to determine what gaps you need to fill. What personality traits or specific skills will take your team to the next level? I encourage all my dealerships to use a hiring assessment to accurately gauge fit and get a look under the hood. I recommend The Omnia Group’s hiring assessment. They have a suite of automotive job profiles that assess candidate fit and help you avoid bad hires.  John F. Kennedy once said a rising tide lifts all boats. He was speaking about the economy. I believe this applies to sales teams too. Every person you hire should bring something new to your mix that takes the whole team up a notch, this may mean giving up on what I affectionately call the “Retreads” and the crazy flooding of the floor. Let’s all recall the famous Albert Einstein quote about the definition of insanity and stop doing it the way you’ve always done—it’s time for some innovative hiring strategies. Onboard Thoroughly Your new sales consultants will need lots of personal attention early on to set them up for success, especially in today’s market. Customers are coming to the dealership wielding a ton of knowledge, so don’t send your sales rep to the gunfight with a just butter knife. Equip them with the skills and confidence to best represent your store. Besides the typical HR steps, your onboarding should include: A review of the sales culture, values, and standards and how it impacts the sales process In-depth training on the brand, vehicles, CRM, DMS and processes A discussion about their individual goals and clarity around the proactive daily activities that will help them achieve results Introductions and personal connections to ensure they feel comfortable and part of the team A cadence of scheduled check-ins with their manager to provide on-going support once they are active on the floor A thorough onboarding helps new sales associates feel welcome and engaged. It also gets them familiar with what they’re selling and how they’re expected to sell it. Provide Ongoing Training and Mentorship All that time you spend onboarding your new hires can quickly go out the door if you don’t provide an on-going method for training, skill development and coaching.  84% of sales training is forgotten in the first 3 months . Robust onboarding lays a solid foundation, but it’s not enough. You must provide ongoing training and mentorship to keep your sales team growing. Your training and development plan should include: Group training to reiterate basic but essential sales skills - and introduce new ones.   Improve learning with DAILY simulation practice of inbound and outbound calls and sales situations to ensure the word tracks are natural and you are not losing any opportunities. (Bonus: Drastically increase conversions!) Private 1:1 coaching to work on specific sales situations and issues and provide feedback.  Mentorship opportunities for seasoned players to share best practices with new members of the team, make this a part of the career path to management.  Encouragement to seek development opportunities outside of the dealership, either through your manufacturer, vendor partners, workshops, or many of the online courses available. Establish a cadence of daily sales huddles to share wins, discuss challenges, and set short term goals and focus points. Also, take the time to hold regular cross-functional meetings with sales, BDC and service advisors to discuss upcoming customer appointments, how to optimize the experience and acquired more trade-ins to support inventory deficits. Providing an environment of on-going communication and cross development gives everyone an opportunity to grow in their role, while building a team climate of shared goals and focus and eliminate our infamous department silos. Give Regular, Detailed Feedback Your sales associates need to know what they’re doing right so they can do more of it - and what they’re doing wrong so they change it. That insight comes from your regular, detailed feedback. Make it a point to speak to each sales representative on a set schedule of one-on-one's and build plenty of opportunity for sales call observation and review. Build out time in one-on-one's that goes beyond reviewing deals and pipeline health. Use these meetings to also establish and review development goals – both personal and professional. This is your time to get to know what inspires and motivates every sales rep and can also help uncover what’s getting in their way whether it be a skill or mindset gap. Recognize Accomplishments When an individual sales associate or the entire team does well, celebrate it. Show them that you're proud of them and appreciate their contribution. Recognition will make them feel good and motivate them to replicate that feeling by achieving more success. Be sure to understand what type of recognition motivates each individual. Some reps are motivated by group praise and all-company recognition while others would rather shrink under a rug if that happened to them. Sending a personal handwritten note can go just as far with one individual as a shout out during the morning meeting Final Thoughts Your sales team drives the financial success of your dealership. To have an effective selling machine, you must identify the right talent, put it where it will thrive, continue to develop it and engage their very best performance. The leader is the thermostat that sets the climate for the sales team, cultivates the growth of the team and the inspires the success of each sales rep. Commitment to establishing these practices creates the soil and foundation for your team to hit goals and thrive together now and far into the future.
team management
8 Management Techniques to Maximize Employee Engagement

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Is Your Team Engaged?  Employee engagement is a critical issue for most dealerships. Engagement is the level of involvement, enthusiasm and commitment and employee feels toward their job and workplace. Today’s atmosphere offers so many distractions that can keep your team from focusing on the works that is before them.  There are three types of employees – the engaged, the unengaged, and the discontented. According to our last poll of 130,000 dealership employees, about 24% of employees are engaged in their work, meaning that they’re emotionally committed to getting the job done well and putting in the full effort.  That same poll shows that about 38% of employees are unengaged, meaning that they are satisfied with their positions, but aren’t really invested in the dealership’s vision or goals. These employees do just enough to meet the minimum requirements of their job. The remaining 38% of the workforce is discontented and disengaged, meaning they may be sabotaging your success.   To ensure that their team is happy and challenged, my best advice is to keep an open mind, an empathetic ear, and clear channels of communication. The level of engagement that an individual exhibits is often tied to how much they feel empowered, trusted, inspired and valued by their leader.   Let’s look at eight techniques for maximizing engagement:  1) Set challenging but realistic goals Allowing people to work within their comfort zone leads to complacency that kills engagement. Get creative and inspire them to take on new projects, set new goals, or learn new skills. More importantly, get them to let go of “the way we always did it”.  Leaders must challenge individuals and teams to see a new vision and push them whenever possible to do and be better Employees who are challenged with new projects, new goals and new skills need more coaching and cheerleading to make them realize they are truly capable of achieving more! 2) Everyone wants to be recognized for what they bring to the table! Recognize good work and praise people in front of the rest of the team with a shoutout in a team meeting, text, email, or on your dealership Facebook or LinkedIn page. A pat on the back makes individuals feel good about themselves and encourages others to step up if they know they’ll be rewarded with social recognition. BONUS – It also promotes your employment brand, helping recruit new candidates.   3) Track productivity but empower employees and avoid micromanaging Empowering individuals tells them you trust them, which increases engagement and performance. It is a powerful thing when employees believe in their manager, it is even more powerful when a manager believes in their people. Trust is the core of all high-performance cultures.   4) Make it easy and comfortable for your team to communicate Keep lines of communication open and encourage team members to come to you with concerns or roadblocks. When team members don’t feel comfortable speaking openly and honestly with one another, issues don’t get resolved and tension can lead to problematic outcomes. A sobering discussion I have when coaching leaders is when they score poorly on our employee engagement question “Departments in this dealership communicate well and work together as a team”. Avoid all of this by checking in with your employees regularly and giving them an outlet to voice their issues. 5) Prove that employees have a voice   It’s one thing to talk the talk, but when claiming that their feedback is important, you have to walk the walk, too! Send out anonymous surveys and polls. To get a better idea of how your team is responding to company culture, workload, and the direction that you’re headed. This allow employees to voice concerns without fear of retribution.  I also encourage you to ask for feedback from small groups or one-on-one. I provide my managers with a list of questions that we use for “Coffee and Convos” to start meaningful conversations and uncover new solutions and ideas to improve both culture and processes. 6) Respect that different people have different learning styles Not everyone can sit through online manufacturer training and get the information they need to work with our customers with confidence. Some people need one-on-one instruction; others need visuals; others need to just jump in and get started. Provide a hybrid of learning opportunities and upgrade your skills at coaching and teaching. 7) Take time to really check-in Workdays get hectic in the dealership and everyone has a tight schedule. It’s critical that teams make time to catch up and check-in with one another. Even if it’s just a quick five-minute huddle to share progress, learn a new skill or tip, or review a company value. Communication fuels connectivity and fosters a sense of togetherness, so don’t let it slip! 8) Embrace change If this last year has taught us anything, you must foster a team culture prepared to roll with the punches by being open to change. If someone leaves your team, how will you move forward? If a customer wants to take delivery at home, how will you make that happen? If anyone is too invested in how things should be, you might be missing out on how great things could be! Employee engagement is built on growth, communication, purpose, relationships, integrity, two-way commitment and trust. When done well, it improves the dealership and individual performance, increases the chance of success for managers, drives retention, and dramatically increases productivity. 
Four Steps to Banishing Burn Out

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We're currently in a culture that celebrates working ourselves to exhaustion. According to a study by the Center for Creative Leadership, professionals and business leaders who carry smartphones tend to work more than 70 hours a week. And the pandemic has not helped us with this little problem at all! A recent survey by FlexJobs found that 75% of people have experienced work-related burnout, with 40% saying they have specifically felt these effects since the pandemic began.  With all of this focus on overworking and exhaustion, now is a good time to recognize the signs of burnout, not just for your own well-being but for the health of your employees too. I recently sat down with Rebecca O'Brien, an executive burnout coach, to discover the four steps she suggests in order to step into your own power and banish the blahs!  1. Self Mastery This stage is really all about identifying and observing your thoughts, emotions and behaviors. Rebecca suggests when you feel overwhelmed, it's important to look at your stressors, triggers, and emotions, and assess how you're behaving due to these factors. Much in the same way that you'll have a different reaction to a problem when you're well-rested versus when you're tired, self-mastery is what allows us to know ourselves fully and in that moment act in our best interest. The best way to come back to center? Step off of the roller coaster and reconnect with nature, take a walk, call a friend, or even just step away from your laptop for a five-minute reset.  2. Powerful Mind The second step is what Rebecca calls having a powerful mind and this is where mindfulness comes into play. Often it is said that depression is a way of living in the past and anxiety is looking too far into the future. So the idea of a powerful mind is all about knowing what keeps you grounded and connected to the present. Think of it in terms of looking at thoughts that aren't true around the situation (for instance, the idea that you have to work 10-12 hours a day because you'll never get through all of the work) and determining where the pressure is occurring. This step also goes hand in hand with positive thinking and gratitude. Next time you find yourself feeling overwhelmed, stop and list five things you're grateful for that happened that day. This helps bring you back into the present and gets your mind off of the negative hamster wheel.  3. Strong Habits Habits are the best way to support you and clarify your energy. One easy example of a non-helpful habit is hitting your phone the moment you wake up. Many of the most high-performing executives I know have a rule of not touching their phones for the first half-hour of their day. They use this time to read, be inspired, journal and if nothing else, just enjoy a hot cup of coffee with no distractions. Take time every day with notifications turned off. Set specific times to return emails. Focus on one thing at a time. These are the habits that will help bring order to your chaotic day.  4. Unbreakable Boundaries  Rebecca credits this step with being the most impactful, both for your relationship with yourself and all of the relationships that surround you. While this step is often the most difficult, Rebecca says it is directly tied to creating more freedom so you can then do the work that is most impactful to you. My favorite question for executives is, what sets your soul on fire? And unbreakable boundaries is one of the fastest ways to get to the thing that sets your soul on fire. Think about your week and determine what you're saying yes to; that really should be a no. Is there a way to carve out some time for something you're passionate about? My favorite quote from a guest on my podcast this last year was, "If it's not a Hell yes, then it needs to be a no." How much simpler would our lives become if we all lived by this principle?  We've all experienced a difficult year and by all accounts, the hits seem to be continuing into 2021. By creating healthy ways to cope with stress now, we'll be doing ourselves and our teams a huge favor and will reap the rewards in the months to come. While burnout is real, it doesn't have to be our reality. 
Trust, Your Employees, and Lady Gaga

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Positive relations with employees start with trust. If you break the trust, you have a long journey ahead. You may be in one of four scenarios: You have trust with your staff and want to ensure you maintain it. You had trust with the employees, made a mistake, and are working on building back trust. You do not have trust with your team and you need to climb out of a hole. You do not have trust and do not even realize you have a problem. Once you identify which of these situations you may be in, you are on the road to building a culture of trust within your organization. Simply realizing where you are is the first step.   Next, stop these nine toxic practices right now: Treating the employee like an enemy  even if they are the messenger of not-so-great news. This is belittling to the messenger. Discouraging the disclosure of bad news.   You need that bad news to operate the business. If you lack an "open door" policy on this, employees will do everything possible to avoid communicating. Making policy exceptions to benefit you only.   Employees see right through it. You may be the owner or dealer, but this smacks of inequality and erodes morale. Lying. Even partial truths will be perceived as a lie.  Employees are much smarter than you think. Failing to listen.   In a call or Zoom or meeting, if you are interrupting because you are in a hurry, not understanding, or not finding the facts by asking questions to the employee, then you are making a mistake. You are not only frustrating the employee, you are not collecting all the important information. Your decisions will be based on a lack of accurate information, so you may be building a house of cards. Simultaneously, you are frustrating the employee and getting poor information. That's a double-whammy.   Being discriminatory against certain employees.   Stop harping and picking on certain employees (i.e. showing blatant favoritism). This creates resentment and animus. Endeavor to treat everyone equally. Practicing nepotism.  If you treat your children in the business differently than the other employees, you will create deep-seated resentment — another punch to the gut to your employees' morale. Duplicity.  Talking to employees about other employees. You may think you are confiding, but it will come across as gossip. Piling on.   Bosses tend to pile too much work on top of those who are pulling their weight, plus some. Piling excessive work on to those workers will create resentment. This is not where you want to go. That person will be miserable. If you have an employee who is highly productive, you build around them. Give them a few employees of their own to support the increased workload. Too much is simply too much. To rebuild employee relations, implement these positive five (5) habits: Build genuine rapport.   Trust starts with rapport and an understanding that rapport is a person-to-person interaction. Reach out and establish rapport with those team members with whom you feel trust issues exist.   Have an open door policy for all employees.   Make it clear an employee can come to see you when their direct report manager is not handling their issues.  Return phone calls and respond to emails.   When employees need guidance and you don't return their calls or respond to emails, it builds animosity because sometimes they cannot complete assignments (or move forward in their work). Without getting answers from you, things pile up on their desks and that doesn't feel good as it creates stress. Follow chain of command.   While employees should follow the chain of command, so should the boss(es). When you, as the boss, break the chain of command, you erode the confidence of the managers and those employees who report to the managers. This creates feelings of mistrust and wariness.  Monitor websites like Glassdoor.   Often, current employees will review you online while they are still employed. You should respond to the online complaints in the same non-defensive manner as you do with customer complaints. It is usually very obvious who posted the review. Invite that person (not summon them) to your office so you can try to diagnose where the friction lies. To implement a culture of trust, make these four (4) changes: Equivalent pay.   Ensure an employee's pay is (at least) commensurate with their responsibilities.   Promises.   If you make a promise to an employee, put it in writing. Then, follow-up to guarantee the item is brought to a conclusion. Written policies.   Have an Employee Handbook or Guidebook communicating clear expectations about vacations, paid holidays, sick days, and days off. When you meddle with time away from work and pay, you erode trust and create anger.   Assets.  Treat your employees as valuable assets. They are the heart and soul of your business. A culture of trust within your dealership creates satisfied employees. Ultimately, this will reduce turnover, create efficiencies and will make you more money.   To conclude, Lady Gaga also opined, "You have to stop crying, and you have to go kick some ass." So off to work you go!
Digital Retail: 4 Steps for Setting Your Dealership up for Success

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Chances are, your dealership has been leaning into digital and contactless services more than ever in order to sell more cars during the ongoing Covid crisis. Online financing, virtual walkarounds, home delivery, and more — resilient dealers have adopted many of these digital retail tactics in order to keep business going. It makes sense because the majority of buyers are used to leveraging online resources:  78% of car shoppers say online tools and resources make them a smarter shopper .  Ultimately, digital retail is about giving shoppers the transparency and control they want, when they want it. So, how do you build a successful strategy? Use these steps as a guide.  #1 Get buy-in from your entire staff The idea might start with you, but your digital retail efforts won't be successful without buy-in from your entire team. From the sales staff working the leads to the marketing team advertising your services, to the GM signing the contract, everyone at your dealership needs to be on board. A bit of self-interest is key to getting people on board, so focus on:   Educating your team . Don't assume a few nods from staff members mean they understand exactly how digital retail works and what's expected. Offer information, answer questions, and provide real-life examples of success at other dealerships. Emphasizing how it will make their jobs easier . There might be some growing pains as you get started, but a little extra effort and training upfront will make things easier in the long run. A streamlined buying process for shoppers will lead to customer loyalty and repeat buyers down the road.  Recognizing wins . Whether it's a shoutout at your next team meeting or a small financial incentive, highlighting successful digital retail efforts, such as a salesperson's first virtual appointment or home delivery, is a great way to gain buy-in and drive adoption.  #2 Map out what success looks like for your dealership Once your team is committed, map out your dealership's path to digital retail success. This includes everything from setting priorities and assessing existing processes to creating goals and establishing benchmarks. But don't stop there: make sure you provide a clear picture of what specific actions and behaviors are needed to achieve success. Once your roadmap is defined, you'll be ready to start your dealership's journey into digital retail.  #3 Start by mastering one digital retail component first Digital retail is about giving shoppers the transparency and control they want. (Image source: Automotive Ventures) Digital retail isn't an all-or-nothing proposition that means a shopper can click a buy button on your website and have a car show up in their driveway. In fact, it's best to start small, then expand your offerings as your comfort increases. According to our recent Consumer Sentiment study,  shoppers are more likely to prefer online financing  (52%) than completing the full transaction online (41%), so enabling online financing might be a good starting point. This could be as simple as providing a calculator for those who just want to know what their payments will be before going to the dealership, or it could mean letting buyers complete all of the financing paperwork online before they come into the dealership to complete the sale.   Enabling online financing is relatively easy to implement with the help of your existing lenders and third-party sites, and you can do it without giving up any of your backend profits. Additional benefits for your dealership include:  Ready-to-buy shoppers . Shoppers who go through the pre-qualification process are further down the buying cycle and more ready to buy.  Close with confidence . Your team will know more about shoppers' buying power and can close the sale quickly and with confidence. Better customer experience . It brings transparency to the process, which ultimately creates a smoother, faster, and more enjoyable experience for your shoppers.  #4 Take your digital retail efforts to the next level with external partners There are many vendors, including us at CarGurus as well as AutoFi, DealerSocket, Modal, and more, that can help you expand your digital retail offerings and take your efforts to the next level. Not only will using a vendor allow you to add digital sales components more quickly – for example, instant trade valuations or home delivery – but it will also provide a partner to help you with processes. As you try vendors out, look for one that offers things like training for sales staff or reporting and tracking tools to see how digital retail is impacting your bottom line. Keep in mind, you don't have to do everything at once. Your digital retail strategy will probably look different from another dealership's — and that's okay.   It's the connected dealer who will win the sale Doing what you've always done is no longer enough. By laying the groundwork now, you'll avoid future disruption down the road and set your dealership up for success. If you enjoyed this article, take some time to listen to the latest podcast episode on Experimarketing  with  Colin Carrasquillo