When the doors of franchised dealerships open again there are going to be some pretty hefty challenges facing owners and those responsible for running these businesses, and for many it will be a time for reflection on the decisions made in the past, those that may well leave some franchised dealerships struggling to survive.
Regardless of any financial support packages being offered by parent manufacturers, eventually all franchised dealerships must return to profitable retailing and unfortunately, the decisions made in the past to not employ or develop genuinely successful sales professionals, could come back to haunt many of you because the way you were running sales departments and sales programmes is unlikely to be fit for purpose in the new trading landscape.
When we return to work I think we will all be faced with a new and used car market awash with stock and a consumer for whom, changing their car is unlikely to be at the top of their priority list. We saw a ridiculous post recently suggesting that the consumer will be wanting to reward themselves for their period of isolation so therefore be rushing out en masse to purchase a new car; now no one knows what will happen but really?
Despite the generous support of government many people have lost businesses and levels of income that will take years to replace and/or build back up, and many face an uncertain future when returning to work, so our prediction is that buyers will be pretty thin on the ground for quite a while.
Now this leaves 95% of franchised dealerships with a major operational and survival challenge because the way most used car and new car sales departments were being run, should it continue when businesses open again, will more than likely take them under. Now we don’t say this to be dramatic, just as an observation of how under prepared the majority of franchised dealers are going to be for what is likely to be the new trading landscape.
We had been warning about this for the last 2 years; the rush to invest everything on technological solutions and not people. In our experience every manufacturer in the UK gave up on developing sales professionals, especially used car professionals, over a decade ago, having been left trance-like by the “Emperor’s New Clothes” that is technology. In fact we covered this in great detail during February, in our article; The Secret To Used Car Success?,,,, Going Back To The Future!
Rather than explore these points again, anyone wishing to read our justification for these comments need only follow the link above to the article on our Used Car Business Development Blog. But to shine a very bright light on why the decisions made by manufacturers and their franchise partners over the last decade and more, is going to leave you woefully underprepared for the new world, let us advise you on how 95% of the new and used car sales departments based at franchised dealers were operating, the ramifications of which is covered in our article; You Start Negotiating When You’ve F@#ked Up The Sales Process! but for brevity, if you had ever audited your sales operations, especially your used car operations, this is more than likely what you would have found.
- You have a sales department staffed by people who have attended the manufacturers 2 day sales course, they have their “Certificate Of Attendance,” (sorry “Certificate Of Accreditation”), so they fully believe that they are now a sales professional, which of course they are not! Please refer to the article above for clarification on this point; but in the interests of brevity;
- You Can’t Become A Good Sales Professional In 2 Days! A New Suit, A “Certificate of Attendance” And A Demo You Could Be Leasing Yourself, (If You Were Any Good), Does NOT Make You A Sales Professional!
- At the foundation of this error is in convincing these people that customers buy from people they “Like,” unfortunately this is complete “Boll@cks;” customers buy from people they “Trust!”
- Unfortunately every person attending the manufacturers training academy to get their “Certificate Of Attendance” now thinks this, because manufacturers became obsessed with being “Liked” and not “Trusted!” Now, if they had employed a successful sales professional to run these courses they wouldn’t have made this mistake but the person who, in all likelihood made the decision at the manufacturer, had never been a successful sales professional themselves and neither had the person running the course.
- So you had a sales team that came in to work waiting for the phone to ring or a lead to come in via the internet, because this was when they had been taught that a new or used car enquiry started. When they did receive and enquiry their first two priorities were to contact the customer within a certain lead time and to be “Liked!” Now sadly this led to the “No,,, I didn’t Get The Sale But They “Liked” Me” culture; what happens when you employ and develop people to be lazy order takers instead of sales professionals.
Now the above is many things but it is not “Selling;” and listen, if you feel this is the sales and operational dynamism required to ensure your business survives the challenges that are coming, who are we to argue? But in the world where everyone operates as above, only those with the cheapest car, the business prepared to lose the most money, will be retailing cars; but neither them nor you will be making the highest return and therefore limiting your losses.
And be in no doubt, the first 3 months of trading will not be about profit, it will all be about losing as little money as possible when it comes to used car retailing, but the importance of being ahead of the market curve will be critical to your survival. But if you think you can rely on the sales operational model listed above to ensure you survive, well we think that is “For The Birds!”
When the ramifications of the Coronavirus started to become clear we made a pledge to offer our advice, knowledge and expertise for free, including the delivery of free business development consultancy calls to anyone running or owning a franchise dealership or independent used car business; this also included the information contained within my articles, which we wanted to serve as an operations manual for used car retailing, to help prepare for when the doors of businesses open again.
Unfortunately, when it comes to the used car sales operating procedures and the campaigns required to see you through what is coming, 95% of you don’t have the sales professionals with the skills and experience required to succeed and the lessons to be learnt here are very important, in terms of shaping the future of your business.
Never again must technology be expected to sell cars; in isolation all technology can do is ensure that you are giving cars away and you don’t need any skills to do that. Now it is not to say that technology doesn’t have a role to play in the generation of and managing of new and used car enquiries, but the only way you can sell new and used cars profitably is via a team of Sales Professionals and what is going to be required when you open your business again is the skills of “Selling!” Sadly the inconvenient truth is that sales professionals haven’t been developed by the Automotive Sector for over a decade.
No, what the Automotive Sector has is franchised dealer networks being run and owned by professionals from non-selling backgrounds; professionals from aftersales and accountancy backgrounds, those who were experts in their role but who have just about as much chance of finding and/or developing genuinely successful sales professionals as I have of carrying out a major service on a customer’s car, or of completing the year end accounts. Absolute no chance and something explored in great detail in this article; Why Won’t The Automotive Sector Embrace Entrepreneurial Operators?
And in the past the sector thought this didn’t matter because you bought the lie from the manufacturer, the lie that was; “Don’t worry, we don’t need sales professionals anymore, technology, the internet and building our brand will drive customers to your business and we can train the professionals required to handle these leads!”
In reality this “Status Quo” wasn’t working before we all shut our doors and it wasn’t because of one major reason; within the entire decision making chain for the manufacturer and within the majority of franchised dealerships, there wasn’t 1 genuinely successful sales professional; and the key word here in “Genuinely” i.e. a sales professional who had ripped up trees, won awards and had lived and breathed the role.
So with this in mind we thought the most valuable information we could impart in todays’ Sunday Briefing Article is how to identify a genuinely successful sales professional and what this process is likely to involve, because there are not many around and the process of entering into discussions with these professionals is likely to take you by surprise. So we thought we had better warn you before you potentially make a mistake and lose an opportunity to secure the services of the professionals you need right now.
Genuinely successful sales professionals are supremely confident, so don’t be surprised if an “Ego” you don’t particularly like walks into your office; this is not a process of making friends or finding the next member of your golf society, this is about pragmatism and getting the skills on board that you require.
Prepare to be interviewed yourself and asked some challenging questions about your business! Try not to be incredulous at this point, a sales professional will want to know that the conditions required for them to be successful are going to be present and don’t get negative or frustrated when you realise that you don’t know the answers to many of these questions; after all if you did, you would more than likely be a successful sales professional yourself and your business would not be so underprepared for the challenges it has right now.
Be prepared to be flexible in your approach towards daily operating procedures and the working environment this professional will want to create for themselves. A successful sales professional will more than likely want to utilise their own outsourced resource team to support their efforts because they will know that you are not set up for how they will operate; you will not recognise this way of working but don’t resist this because you don’t understand it, because in all likelihood this will be a way of working you have never seen.
You are going to have your CRM systems in both sales and aftersales departments ripped apart by this individual so they will want to know how your system operates, what initiatives are currently in place to generate inbound sales opportunities and most importantly, after what point in time does a customer of the business become an opportunity they can be working with. WARNING: This will rock the boat with your current sales team but the genuinely successful sales professional will push you on this because they will want you to give them clarification of the rules; so think long and hard about how often you would want your current sales team to be speaking to their customers.
Now this is important because the genuine sales professional will know that the dirtiest word in “Selling” is “Prospecting” but that “Prospecting” lies at the foundations of their success; why? Well because it is designed to give you choice and an ability to increase profits, by ensuring that the most critical ratio effecting profitability is in their favour; “Supply and Demand!”
Get over your prejudices about remuneration and be prepared to be flexible; now this is not to say that you should be paying over the odds for lacklustre performance, not at all, you will have been doing this already. If I was sitting with you discussing this and had qualified that the business had the things I required for success in place, I would look to clarify your previous packages in order to come up with a package that rewards increased levels of success, (in terms of volume and profit), in an infinitely more challenging market; you cannot go into these negotiations with the prejudices of the past.
But in finishing, my real fear for many franchise dealer networks is going to be the ability to attract the top sales professionals required, who will have their choice of opportunities when the world begins to get back to normal. The trading landscape of the future will be light on those who “Can,” those who know how to walk into a business, leverage the data along with their own systems of successful behaviour and drive sales campaigns to success via excellence in execution, something 95% of people reading this article gave up on years ago.
To reward excellence in execution you need good margins, something that the successful sales professional knows how to deliver, but there will be many other sectors looking for these professionals, all of whom will have the same challenges as yourselves, some capable of generating far higher margins, (and therefore commissions), than the vast majority of franchised dealerships and independent used car businesses. It should not be lost on anyone reading this article that there has probably been more margin in retailing pre-owned Rolexes than there is in new and used cars; just reflect on that for a moment!
In the future this change in demand for essential “Selling” skills will change even our services offering, back to what we do best, “Doing,” but that is for another article when the opportunity and demand has taken shape. Rest assured though that we will be building the teams and programmes required to come to your business and drive sales success; more on that soon.
However, anyone wishing to explore any of the issues raised in this article, especially the subject of sales professionals, how they operate and what they can offer your business, please feel free to contact me to arrange an exploratory conference call; either on my mobile, 07796 260261, or at ajb@autoformance.com
Although current events are driving the content of my articles at the moment, as they should, in my next “Sunday Briefing Article" I will lay bare and discuss the likely used car retailing challenges to be faced during the first 3 months of trading. This will include the genuine threat to used car profitability and the losses to be taken on used car stock holdings, that your parent manufacturer represents; not for the faint hearted this one!
Regards.
Andrew.
Andrew Banning.
Used Car Business Development Director.
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