RelationshipBest Practices

For this month, something new. I’ve written this article so you can copy it and have each employee at the dealership sign it. Having written employee acknowledgments of your policies is an important part of a robust GRC program at the dealership (Governance, Risk, and Compliance). If a regulator comes to visit, having this signed acknowledgment in every employee file would help you quell any claims of “willful non-compliance.” Here is it: Regulators are those governmental agencies that have oversight of our dealer operations.   When a regulator calls us or comes to visit, it is usually the result of an unhappy customer(s) – which we have not satisfied – who complains to them. Subsequently, the regulators will ask many questions about our business practices and how we operate. They have the authority to fine us and try to impose penalties to ensure our compliance with the myriad of laws we must follow. Here is a partial list of regulators:   The Attorney General The Consumer Financial Protection Bureau (CFPB) The Federal Trade Commission (FTC) A Member of the House of Representatives (Federal and State) A Member of the Senate (Federal and State) The State Police The Internal Revenue Service (IRS) The Treasury Department The United States Secret Service To understand the depth and breadth of what they look at, please see the attached page entitled “ CFPB Supervision and Examination Process .” (Page 12 of 1814.) While this is a specific page from the CFPB operating procedures, it is analogous to any regulatory agency’s daily operating procedures. We discuss this as our training this month to highlight the continuous cycle of supervision each of these agencies performs when it comes to businesses within their purview.  1. Pre-Examination/Scoping The CFPB is looking for “risks, areas of inquiry, and focus.” From their perspective, this means they are trying to examine those areas where businesses may take advantage of customers. Suppose the CFPB has reason to believe your dealership is not acting within the scope of accepted business practices. In that case, they will “Request and review documents and information needed to begin examination.” That means they will ask for your “internal policies, audit reports, training materials, recent data.”   It’s likely that if they come looking, they will find something. At a dealership and any business, for that matter, when a regulator examines a company, they find problems. Ultimately this will cost the dealership both time and money. One former dealer used to advise frequently, “When you shine a light on any one item at a dealership, you will find issues and uncover problems.” He is right.   2. Examination (offsite and onsite) This section talks about who the regulator(s) will interview and which operations they are going to examine. It further states they will “compare policies and procedures to actual practices by reviewing a sample of transactions.” Further, they will “compare the conduct to legal requirements.” No company wants a regulator to interview employees. With further examinations and this type of unwanted scrutiny, additional issues will be brought to the surface.   3. Communicate conclusions and required corrective action This is when the regulator tells you or mandates to you how you must run your company going forward. If you are not cooperative, they will “pursue supervisory agreement or formal enforcement action as needed.”   This means that the company would have to agree to a written understanding of how the company must operate on a go-forward basis. If a company declines to comply, the regulator will pursue “formal enforcement action,” which means costly court or administrative proceedings in which the company will have to spend a lot of money on attorneys to defend itself. Fines can be “nuclear” as recent dealers were tagged for more than $10 million, $3.380 million, and even a dealer in California who were fined $27 million.  4. Monitoring The regulator will periodically come back to the dealership and examine reports, transactions, and corrective actions which the company has performed in order to meet whatever agreement was reached. So, the regulators return to ensure compliance with all rules, laws, and regulations. If the dealership has not complied, they will bring the company back to court. This may subject the business to additional fines and penalties, and suspensions. This cycle may continue until the company is out of business or is compliant.  Compliance with any regulatory process is cumbersome, time-consuming, and costly, even if the inquiry is for one customer. An example of a written employee acknowledgement:   Our company is educating you as to these issues as we do our very best to run things in a professional manner while satisfying each and every customer. This also serves as a reminder that it is the company’s policy to follow the laws, rules, and regulations which have been communicated to you during your employment. If you find anything out of the ordinary, please report this to your supervisor or one of the owners. My signature below indicates that I: 1. Will comply with company policies and procedures 2. Will ensure that the company’s customers are satisfied with our dealership 3. Will communicate with my manager of one of the owners if I see items that are out of compliance with the company’s rules and regulations 4. I will immediately communicate with one of the owners if I receive a regulatory or media inquiry.  These things, I promise. _________________________ ________________________ Employee Print Name Employee Signature   January _____, 2023 *If you’d like a Word copy of this document, please reach out to me at tomk@bettervantagepoint.com, and I will be happy to send it along to you.  Thanks for seeing things from a Better Vantage Point. For more information:  Phone Number: 757-434-7656  Email Address: tomk@bettervantagepoint.com Website:  https://bettervantagepoint.com Website:  https://alwaysdobetter.com/howwehelp YouTube Channel:  https://www.youtube.com/channel/UC-ytHE0-c5lUJbzm0H4drog LinkedIn Profile:  https://www.linkedin.com/in/tompkline/

Creating connections with customers is vital for any business to thrive, whether you are trying to acquire new customers or sell to existing ones. By selling parts online, the dealership can connect to a wider customer base that expands across the country. This can provide additional revenue and help it build loyalty for the dealership and the OEM brand. The sales department often comes to mind first when we think of establishing connections with customers and building relationships. If a dealership wants to drive new opportunities, it will need to seek new ways to make connections with a broader customer base.  The parts department is often one of the most underutilized departments in the dealership when it comes to making connections with new customers. The dealership can expand its reach to customers nationwide through the parts department, breaking through localization barriers. It can do this most effectively by becoming the center for online sales.  The online parts market is thriving. In fact, it’s expected to reach  22 billion dollars by the end of 2023 , according to Hedges & Company. Despite the high demand for online OEM auto parts, most dealerships do not have an online parts business. As a result, many of these dealerships have difficulty establishing a strong network of customers. Connect Nationally by Selling Parts Online Adding online selling channels helps your parts department connect to more customers outside of your local market. Creating an online parts business also opens up new revenue opportunities and helps future-proof your department against local and national economic challenges. Dealerships may also find it valuable to sell through today’s biggest online marketplaces, like Amazon and eBay. Dealers that relied solely on brick-and-mortar sales took a major hit during the start of the COVID-19 pandemic in 2020. According to NADA,  parts departments across the United States lost 6 billion dollars in 2020 . The business that came through their typical in-person buyers had plummeted.  However, dealers who sold parts online with RevolutionParts saw a  27% increase in online parts sales . When most parts departments were experiencing layoffs, dealers partnered with RevolutionParts were hiring more staff to support their additional sales growth. The flexibility of selling online allowed them to grow their customer base at a low cost. These dealers were able to increase their business because they were able to make convenient connections with a wide scale of customers. They were also able to provide a safe shopping experience for their customers, helping them establish a trusting customer base that would continue to grow long after COVID restrictions were lifted. Build Strong Local Connections for the Entire Dealership Aside from establishing a parts web store or uploading inventory to online marketplaces, dealers should sell parts through their dealership website. This is valuable for local retail and wholesale customers.  Local consumers can go online to evaluate prices, see availability, and order OEM parts without needing to call or visit the parts department. Offering convenient pickup or delivery options can help further secure business from your local customers.  This can be especially effective for growing your wholesale customer base. Make it easy for them to view your online inventory and more, help them get quotes on prices instantly, and check for part availability without having to pick up the phone. By providing a convenient shopping experience, you help both your department and your customers save time.   Giving local customers a positive online experience can build loyalty for the entire dealership. Those that purchase parts online will be more likely to return to the dealership for parts installations and other services. Getting that customer to the dealership increases the likelihood that they will return to purchase their next vehicle, leading to more revenue and a higher absorption rate for the dealership.  Don’t Overcomplicate Online Connections It’s expected that over  274 million Americans  will make online purchases in 2023. If your dealership is not selling parts online yet, you should make it part of your overall strategy to grow revenue, build brand loyalty, and expand your business. It’s time for dealerships to invest in parts eCommerce to drive connections for their local and national parts buyers. 

Marketing, customer-dealer interaction, and even your website are more than just the sales process, it is engagement with your community. Are you engaging in your language or your community’s language? For your dealership, engaging your community is the best way to grow your business and gain new customers.  There is a great deal of focus on engagement and experience, without covering how you need to engage with your community. If you are like most dealerships, you are focusing on the sales process itself, your reviews, and driving traffic, not thinking about how your website, marketing materials, and even customer interactions can help you grow your business. The car business must go beyond the goal of selling cars—you must connect with people. And when you do so in their own language, they will feel more comfortable buying from you. Brands across the board have been pushed to recreate their marketing strategies and focus efforts on building relationships that are driven by two-way communication.  One of the big questions is how to keep consumers engaged so that when they need your products or services, you are their first thought. To accomplish this, we need a shift in thinking to “Whose interests are being served?” For example, when you are posting on social media, are you posting content that drives butterfly effect engagement from your audience, or are you posting about the product only? By butterfly effect engagement, I am referring to the type of engagement that draws in people your audience is connected to and drives them to engage as well, allowing you to create a brand community. Consider that many potential customers will visit your social media pages before initiating the purchase process, reviews and content can impact the decision process in your favor. Putting out content that is of interest to your community is paramount, an example is Meta marketing content that is solely based on product and deliveries versus what interests your community. If you can scroll through your feed and cannot find anything that supports your local community regularly, you are not building your brand community. Remember, you are recruiting volunteers to champion your business, inundating consumers with sales purchases, and product places hoping to see results is simply disruptive marketing that desensitizes consumers and does not promote conversation. Unlike traditional advertising, which is primarily focused on getting new customers, a community marketing strategy is about connecting and engaging with people to build long-term relationships. It is about making customers feel seen, heard, and important. This type of strategy bridges the gap between the people driving your business, your team, and your customers. A vehicle purchase is no small thing, growing a sense of connection, support, and service within your community allows you to start building relationships before the sales process even begins. Providing value to your community is a great place to start What questions do customers most commonly have during the car buying process, what are some challenges you have helped others overcome, and what do people on your team specialize in? Sharing the details of how you serve and how it benefits the community paves the way for conversations. Participate Your community marketing strategy should take you outside of the virtual world of social engagement and participation in your community. Can you help educate young consumers on how they qualify for their first auto loan, how credit affects a large bandwidth of life or the ins and outs of the buying process? Getting involved early and giving young consumers the tools, they need as they move forward in life is a wonderful way to expand your value in your community. Consistency and accessibility are key Consistency is the foundation for trust, accessibility allows that trust to grow. How easy are consumers able to reach and converse with your team, do your internal processes allow for ease of communication or is there a backlog of calls to be returned and messages to answer? One large component of customer satisfaction is communication, the ability to reach contacts at the dealership amid the sales process, or even worse after delivery, is beyond frustrating to customers. This is a big part of the experience customers will remember when it becomes time to purchase another vehicle or service their current vehicle. Creating ways to engage with your audience in a way that works for them is crucial, whether by phone, text, email or messaging services - being accessible builds trust and impacts customer retention. Tell a story and use images Interaction on your social media posts gets on average 160% more interaction when you use relatable images, take this a step further and focus on telling the story behind the image. Consumers trust and value other consumers' opinions and experiences, share those success stories! Share other sides of your dealership, service, parts, community outreach, and team members - give your content an individualized touch. Consumers want to know who they are working with and look for connections and common interests on which to build relationships.  Over and above long-term benefits in customer loyalty and retention, executing a community marketing strategy can help to reduce your dependency on traditional advertising, often a large chunk of the dealership budget. While not necessarily immediate, this type of strategy will snowball as you continue to grow your audience and engagement. The use of social platform engagement isn’t going away, what you begin building now will impact your future sales and retention. Over the last few years, we have experienced a shift in consumer value, a shift that focuses on people and the community. Building value and creating relationships within your community is a powerful way to engage your customer base and community, create loyalty and trust, and grow your sales and retention - that is if you choose to accept the challenge before you.

In preparation for our meeting with Sarah Vantine of Quantum5 , we spent time researching the company and reviewing her profile. Anything but ordinary comes to mind. Clear messaging about who she is, what she does, and most importantly, why she does it, sets the tone for a very people-centric conversation; the synergy between Sarah and Quantum5 exceeded our expectations. As Sarah sits in front of an elegant bookshelf, decorated in accolades, she boldly smiles and tells me that she assembled it herself when she was eight months pregnant. What would follow would be two people interacting, truly engaged. By the end of our conversation, I would understand the power of forward-thinking approaches to the BDC, vision boards, and how a dolphin toy on the desk of an employee was the game changer that made it all connect. Balance, Success, Courage and Seeking The word balance, to me, has always kind of been misleading because it implies that you always hold everything in equal measure. The reality of it is that at different points in time, you need to let go of one thing in order to focus on another. You can't physically hold on to all of your work and personal responsibilities equally and at the same time. What allows you to achieve your goals, personal and professional, is having the courage to seek out opportunities in which you can build a support network. There are companies out there where the mission statement is cookie-cutter and may not actually be reflective of the core culture, something you will notice when you consider things like retention of employees. I have sought opportunities that have allowed me to have a level of support and understanding, which has really been the secret to my success. “This was the best thing to happen to me so far in my career.” I am so thankful to be a part of the team that I am with now. Finding Your True North “It's not personal, it's just business.” Ken Herfurth sums it up really well, "it's always personal." In every business, there are always people. There is a person at every single interaction. It is never just business, there are always elements of personal experience woven into the very core of business. When Dave O’Brien and Ken Herfurth, the Founders of Quantum5, approached me, I had, up till this point, really made an effort to create a future within the BDC departments. We really focused on the individuals within the BDC itself. The term BDC is such a loose term for a variety of departments. You may find a dealership that says that they have a BDC department and in reality, they have two people answering calls and transferring them to somebody else; they have no authority, there is no empowerment and their job is quite limited. This leads to people within the dealership viewing them as an expense and someone who will never have the opportunity to move up in the organization. And so, one of the challenges that I always encountered throughout my career was challenging the perception that existed in terms of the BDC and what the BDC was capable of. I focused on putting the human aspect first and by focusing on how I developed my people allowed for the development of better customer relationship and management skills. When Quantum5 came along and I asked them about their reason for building the company, some of the pain points that they highlighted were things I had experienced in my own career and their values really impacted me because my heart was fully aligned. I had the opportunity to do something I really believed in on a larger scale, impacting hundreds of dealers, based on values that really represented my true north. Oftentimes in automotive, training is an event and it is done in a vacuum. And so what often happens is you go to a training seminar or a trainer comes in and you're pulled off the sales floor, you're pulled off the phones, and you're stuck in a room with this person. And then at the end of the training session, you go back to reality. Whatever was covered in that session slowly fades away. So, having the opportunity to take what I was doing in the BDC, like daily check-ins with all of my staff, is also really important to me. Although incredibly time-consuming and at times quite difficult when you're talking COVID and some of the restrictions that happened with face-to-face interactions, we still made an effort to have those one-on-one conversations. We used those sessions to understand what the challenges were and what we needed to adapt and adjust. How could we better serve our clients and build on that culture of creating and nurturing mutual trust? One on one human development directly impacts culture, skills development, and creates a better learning environment. What can we expect at CXAUTO2022? There are three strategies that we are going to unpack in the work session. We are going to talk about enabling multi-channel communication strategies within the BDC and what that really means at the end of the day. There is a lot of technology out there, and there are a lot of conversations around removing the human element by introducing chatbots or a predetermined response menu where the customer selects buttons and that becomes the full engagement experience. The reality is that people want the best of both, a combination of human interaction and technological implements. The customer does not want technology in a vacuum; they want a personal touch and they want to feel like they matter as an individual to the business. One of the biggest opportunities is including the BDC in developing communication skills to deal with a variety of clients. For the client, it feels familiar when a business really takes time to listen to them and facilitate human communication, allowing for their receptiveness to be elevated. The conversation becomes something of value for the client as well as the business. It is important that the BDC is equipped with the skills necessary to understand strategies that are going to lead to success. The second component of our work session will be focused on step-by-step instructions for a dealership to adjust their processes to best suit their customers' needs. An example that I can share comes from one of our case studies. Noises in vehicles are often one of the hardest things for a technician to diagnose. If you don’t have a good strategy to help the customer communicate the issue, it becomes very difficult for the technician to replicate the problem and without the information, they are unable to diagnose it. This creates frustration as the customer ends up having to return multiple times, a clear indication of a pain point within the dealership which is reflective of an existing process not being beneficial to the customer experience. The case study that we will be sharing is that of the Scott Clark Auto Group, who is a brilliant example of what can happen when you truly understand and adjust your process to the customer's needs. Lastly, we will be talking about strategies that really engage and retain the best professionals for your organization. Everyone talks about employee retention. We will be focusing on the human element and understanding what drives employee attrition. The BDC Representative oftentimes feels unappreciated and undervalued, and this is sometimes linked to a lack of training and development, essentially a lack of opportunity to grow within the organization. People are seeking companies that put people first and invest in them individually through teaching them how to interact with people, and how to become a successful person not just at work, but in life. We have some amazing strategies that we will be sharing with dealerships that focus on how to truly gauge employee satisfaction and how to adjust processes in order to retain talent. We dig deep into figuring out and understanding the people on your team. What makes them unique, what are their challenges? How do we best integrate this alongside the department and dealership goals? In BDC specifically, oftentimes we get hyper-focused on how many phone calls are being made. How many customers we are talking to, and how many appointments we are booking. But really, at the end of the day the person behind the scenes has a very complex life and they have their own goals and challenges that may not be obvious or mirror the same as the department’s. And so, the key strategy is to understand and then align the goals to the business. Sarah will be joined by Elizabeth Martin, the Service BDC Manager at the Scott Clarke Auto Group , as they discuss The New BDC: Best Practices to Capture and Upsell Service Business at the upcoming CXAUTO2022 . You can expect great insights based on case studies that illustrate concrete steps implemented to improve retention and continue to build value for customers. The new BDC is driven by innovative management and leadership practices that focus on honoring the individual through training and development and, ultimately, aligning the complexity within people, teams, and departments to achieve business goals. We would highly recommend that you see Sarah live! You can read more about her here

Disruption. One of the buzz words lately over-used and misunderstood. The standard business definition is “radical change to an existing industry or market due to technological innovation.”  I would argue is not always technological. And is that radical change good or bad? Is disruption good or bad?   The fact of the matter is,  DISRUPTION IS THE NEW NORMAL.   Whether we like it or not, as business owners, as consumers, as social citizens, we better embrace it. It is the new norm and will only continually cycle and accelerate.   If it is self-disruption, or at least a state of managed or accepted disruption, it can benefit our enterprise.  This agility and flexibility to take on disruption and capitalize through it and because of it, should even be a capability or culture that is driven in an organization. It will change the way customers expect products/services and experiences, it will change the way workers produce, and it will change the way we must manage our business models. In automotive, we could highlight a lot of major and recent disruptions. There is the pandemic effect amplified by home delivery and mobile service. There is the new mobility ecosystem accelerating around access to transportation on-demand. There is the new wave of EVs coming on due to many factors including gas and oil prices and a drive to a sustainable economy. Many technologies are disruptive to our previous industry and business models such as Cloud computing, Artificial Intelligence, Augmented and Virtual Reality, 5G and more. These technologies enable new experiences, real-time information, constant connectivity, and an overall overhaul of traditional, sequential, and transactional engagements. The customer experience with a brand is now always on, anywhere, anytime, and anyhow they choose. An illustrative landscape of some of the disruptive forces, effects and outcomes is pictured below. In the automotive retailer world, what have we seen in terms of disruption, again not just technological impacts but all kinds of disruptions or “disturbances”. There are quite a few, including but not limited to: Supply chain issues and inventory shortages Even more demanding customer expectations  New EV models and companies with direct-to-consumer models Ever increasing technology in vehicles including over-the-air updates Uncertain future of the “as is “dealer profit model  Ability to work with customers in a multi-channel format Some brands and vehicles getting more flexible financial access and even subscription models …and much more. The real question is, what do we do about it?  How do we handle these disruptions?  How do we survive and capitalize on disruption and build our business into future-proof models? The hard part, even though I asked the questions, is that there is no easy answer. There is no one solution, one technology, or even one way to ensure that your business can survive and thrive in the future.  I have heard before, “we cannot predict the future, but we must plan for multiple futures.” Good advice.  Meaning nobody knows what exactly the world, our industry or our business may look like in 5 years, 10 years and certainly not beyond. Anybody see the supply chain shortage coming 3 years ago? Anybody think Tesla would be on of the Top 10 market cap companies 10 years ago?   52% of the Fortune 500 companies from 2000 are extinct. That is not a typo. Read that again. So, there is no 100% prediction, and there is no one easy answer. But the recipe for success in an ongoing continuous cycle through any disruption must include some basic core operating principles and capabilities.   Some critical components and general principles include: Do not have a rigid business model, be willing to change Build a business model enabled by flexible business processes and enabling technologies aimed at delivering experiences and fulfilling needs (not transactional simple mundane tasks) Equip your people with training, knowledge, culture, and power to deliver customer experience (no barriers) Data and Insight. Understand what shifts and movements there are in your customers and your business.   You may think you are in the car business, but you are I the customer experience business. Focus on needs management over leads management. Take Action. Early, often and always. Do not wait for change to come to you, change what needs to be ahead of the curve. Consider your business as a platform (not a static and rigid set of transactional processes), with dynamic capabilities that can flex and pivot to meet demands and needs. These may sound high-level and unachievable for a dealership. But they are not, and they can’t be. They must be driven into the culture of your business .   In more tactical terms, your business must consider, deal with and optimize the ability to: Sell and service different (online, offline, omni-channel, mobile, and anyway the customer wants it.) Assess and determine new business models that can be viable for your customers and market: Subscription models Rental / car sharing models Other access and financial models to enable customers to access mobility Charging stations  The dealership as an experience center not as an inventory hub or “sales office” EV versus ICE customers service and overall needs More personalized build-to-order to overcome shortages Service as a service (more of a Geek Squad model) than a service bay model Be flexible to accommodate all different kinds of customers and their needs A tall order indeed. But if we think of and build our dealership business model more as a dynamic platform of capabilities and assets to accomplish the above and more, we can succeed in multiple paths of revenue streams.   It is not easy to accept that our business must be under a constant state of transformation.   But in order to continually survive, thrive and innovate we must always be in that continuous state of transformation. Be comfortable with being uncomfortable. Because one thing is certain, the future is exactly what we think it will be. The key take-away again, DISRUPTION IS THE NEW NORMAL.   Get used to it and realize we have to deal with it continuously and forever. Capitalize on the fact that if done right, we can enable our business to dynamically flex in new directions and new models to support and thrive in multiple paths. Put focus and effort on the notion that are business is a platform of capabilities, not a rigid set of workflows.   With the focus on the North Star of customer experience driving your business, the capabilities can be dynamically developed to withstand all change and disruption.

Disruption is about change. In the automotive industry we usually connect the word disruption to some up-and-coming vendor program, product, or new technology. When really disruption comes from how these things introduce new habits, adjust how you communicate, and/or change your approach. You may not need new products, services, or technology to create a disruption in your market, all you may need is to reflect and change. Technology is not the disruption; it is a confirmation of needs which are waiting to be filled. With technology having affected the way people consume and engage, becoming a force of positive disruption in your market is well within your grasp. Retail automotive has a never-before-seen opportunity to show with clarity how it has evolved to rise to the consumer challenge to “do better.” No longer is the showroom a place with fancy-suited strangers and cold metal, the most competitive dealerships are bringing the showroom, and their people, to their customers, creating more open and sustainable relationships. Social media has given us a spyglass into the lives of others, making people realize their own humanness is not so abnormal. Consumers are driven to engage with individuals and business they feel they know, trust, and relate to. Further reenforcing that people buy from people, and relationships matter. The key to disruption is not missing the point of disruption. Stop doing what you have always done. Consumers are clear about their needs, how to meet their needs and expectations, are we listening? They do not necessarily need more technology; they need more communication with clarity. Your customers expect their in-dealership experience and online experience to be cohesive. They want a process that is mindful of the buyer, a business that is community-aware and, believe it or not, a long-term relationship with you. Disruption is a mindset; it is when you genuinely care as much for the people you employ and the people you are selling to as you do your sales. Disruption mindset starts with leadership, it is creating the culture for employees that mirrors the experience you want for your customers. It is building long term relationships with your customers by fostering long term tenure with your employees. You’re thinking, all that’s great, how do I achieve disruption? Here are a few areas you can easily check yourself in and create positive disruptive change within your dealership: 1.      Does your employee culture reflect the experience you desire for your customers? 2.      Do your customer’s in-dealership experiences and online experiences feel cohesive and transition smoothly? Does it feel like a singular purchase experience? 3.      Do you have a social presence sharing outside of what you earn a profit from? Is it a place your customers return to after the sale? 4.      Is your dealership website a virtual showroom only for vehicles, or is it also a meet and greet for your staff? 5.      Are you actively listening to your customers' needs and expectations? “But tackling some of those would be like opening a can of worms.” Open that can of worms, friend. Without conquering these things, none of the disruption you achieve in your market will be sustainable.