It’s that time of the year when dealers start to think about increasing their used car inventory for the selling season. There are many sources for acquiring inventory and more often than not some of them are right under our nose and we either can’t see them or choose to ignore them.

I was at the CarMax store in Clearwater, FL recently and spoke with a very chatty sales person. He proceeded to tell me that 70% of the traffic they get at that CarMax store is from people who want to sell them a car. Do you think their campaign of “We will buy your car even if you don’t buy ours” is working?

If you have not put a big push on to buy cars in your market maybe it’s about time you did. You may not get instant results, but over time you will. You must remain consistent in your advertising and marketing of the concept.

You will be wasting your time and money doing so if you do not set up internal procedures to handle these sellers when they show up. It’s a combination of the paper work, the offer, the documentation of the offer and the way the sales person greets and handles the customers when they show up that makes it successful. What CarMax has figured out is that the person showing up to sell them a car is a “Customer.” They don’t treat them any differently than someone who comes in to buy a car. They all get the “full routine.”

One of the things we all know to be true is we get the nicest cars and trucks at the front door. Without exception almost every dealer and manager I work with will tell me “We never missed a trade at the door?” Really? Do you really believe that?

If you are not using the vAuto appraisal tool then you should. You should be tracking “Look to Book,” for your store and each manager who appraises used vehicles. You should always be looking to drive your “look to book” up. Don’t fool yourself by thinking a certain percentage is acceptable unless it’s 100%. Yes, that’s silly, but that should be your thinking. Until you get it to 100% you haven’t gotten it right. Duh, you never get it right.

You should demand that every vehicle that’s appraised is put in the system. Since I know you are holding a “Save-A-Deal” meeting every morning you should make sure that you review every appraised trade from the day before during the course of that meeting. You’re going to find some cars in that stack that you will now go back and put some extra money on. Voila, you make another deal and get another nice used car or truck for your inventory.

While I’m discussing trades I need to point out that any vehicle that you are attempting to trade that has the potential to be retailed for $15,000 or less is a vehicle you need to step up to. You have three great tools at your disposal to ensure you are stepping up on the right units. vAuto, Auto Trader and Auto Count USA. These tools are going to zero you in on the fastest movers in your market. When you combine those tools with the mindset of retailing cars under $15,000 you put yourself in the catbird seat.

Another great method of finding more used cars is to get some of your sales staff involved. I would suggest picking two sales people. Assign one trucks and one cars.  They need to be detail-oriented people with good communication skills. Have them work all the “for sale by owner” publications and websites they can come up with.

Another very popular technique these days is to have them contact all your customers who have appointments in the service department the next day to confirm the appointment. When doing so they should ask the customer if they would like to have their car appraised while it’s in for service. For any car they find for you that you decide to buy pay them a finder’s fee in the range of $200.

One of the greatest opportunities to find more cars and trucks is from your existing customer base. This list can be a powerful marketing tool for finding great cars and trucks to sell. You absolutely know which cars of your own brand you do well with. You should be contacting these customers via direct mail or email with an offer to purchase their vehicle.

You could make them an offer like this: “We have a need for your 2008 Toyota Camry. Print this coupon out for an extra $1000 trade allowance and present it after you make your best deal. If you’re not interested in buying a vehicle we are more than willing to buy yours and give you an additional $1000 over Kelly Blue book.”  You have a huge customer base that you need to go after and most of you are not doing so. 

I go after my customer base each week by staying in touch with you via this newsletter. It’s my way of asking for the business. One way you can stay in touch with your customer base is by letting them know you want to buy their car. It’s not rocket science, it’s just smart. That’s all I’m gonna say. Tommy Gibbs

There is no doubt that to achieve results you need to know "what you are trying to achieve" and then you need to know "how you are going to get there." For the sake of this article let’s refer to them as the "What" and "How."

Once you’ve established the "What" then the "How" becomes what’s important. The problem often occurs that as you start to go down the road of the "How" frustration starts to build when the "How" isn’t getting it done. The "How" begins to create doubt about whether the "What" is doable. Not long thereafter the whole thing begins to unravel.

So let’s talk first about the "What." The "What" comes about because of a need or desire to implement positive change and improvement. The "What" is the ultimate goal. Goals can certainly change, but you must stay focused on the "What" even though the "How" may change.

The "What" might be that you need to generate $500,000 in gross profit a month in order to pay the expenses and make a tidy profit. "How" you get there is not all that important. You just have to get there. 

It may be that you rely mostly on your fixed operations to generate the greatest portion of the gross and that’s fine. Certainly you need sales to carry its share, but with fixed being so strong you can make it happen with a clear focus on an area you do well in.

Here’s another example of the "What" and the "How." The "What" is you need $200,000 a month in used car gross. It may be that you can sell 100 cars at $2,000 a car or you can sell 200 cars at $1000 a car.

Different sets of circumstances and market conditions may cause you to focus more one way than the other. The "What" has not changed. You need $200,000 in gross. What changes is the "How" you get there. 

There are so many factors that go into play; staffing, inventory availability, lending conditions, competition and the market you live in.

If you are having great success today in your dealership with a certain type of "How" that doesn’t mean if you buy another dealership 200 miles away that your "How" is going to remain the same. It’s pretty easy to establish the "What"; the hard part is figuring out the "How."

There is no 10 step process and/or concept that’s going to work all the time. You must stay flexible and keep scrambling to figure out the "How." 

The "How" is always changing. If you get a certain "How" implanted in your mind and it’s not working then you end up having great doubts as to whether or not the "What" can be done.

I often remind dealers and managers that you never get this business right. There is always something to fix and whether you want to admit it or not that’s one of the intrigues of being in the business in the first place. If you weren’t being challenged it wouldn’t be half as much fun.

If the "What" was worth identifying then it’s worth chasing the "How" to get it done. Far too often we don’t want to identify the "What" because of the bad experience of the failure of the previous "Hows." The "Hows" are nothing but little bumps in the road on the way to achieving the "What."

When a realistic "What" is decided upon don’t let the changing of the "How" get you off track. You just have to keep digging.

My "What" is to keep stirring your thinking up as to the "How." That’s all I’m gonna say. Tommy Gibbs 

Two months gone and I’m thinking you’re either not happy with your volume or your average gross profit. It’s always one or the other. Trying to find the happy middle ground remains the question. I wanna see you be happy.

It’s a fact that you can make $3,000 a copy. It’s also a fact that if you do, the odds are pretty much against you when it comes to volume. Another fact is that in most cases your overall bottom line is impacted a lot more by doing high volume than high gross per unit.

Dealers by and large have figured out that if they use technology to price their used cars then customers will show up, especially when they price the cars in the top five in the market. Some dealers are starting to push back on the "turn the inventory as fast you can" concept and are moving to "let’s hold ’em longer" and make more money per car.

I understand it. I get it. Those dealers have become convinced that they can’t replace their inventory so why worry about turning it? If that becomes your long term strategy there’s a good chance you will wake up one day with lots of old stuff on your lot that you are stuck in.

Do I need to remind you about how fast the market can turn? Gas prices go up or gas prices go down and the market goes sideways. If you keep hanging onto inventory, there could be a very sad day at the "OK Corral."

Here are some tips to improving both average gross profit and volume which will ultimately make you a lot happier.

1. Do a better job of training the sales people (and sales managers) to sell the value of your company and the value of the vehicle, and your grosses would be a lot better. You begin to sell from strength not weakness when your team is educated.

2. Provide more information. The more information your sales people have about your inventory and how it’s priced to market the more likely they are to do a better job of convincing the customers you’ve got the best car at the best price. You have to sell the sales staff before you sell the customer.

3. Do more and better research. The more research you do on what’s hot and what’s not in your market the better off you will be. Grosses go up when you are selling a product that’s high in demand and low in supply. Key components for you to utilize are vAuto Stocking Tool, Auto Trader Data and data from Auto Count USA (Experian.)  If you’re still making decisions on what to buy based on gut instinct you may want to rethink that. Research will also help you stock those units that are the most in demand, so you sell more and sell them faster.

4. Rethink "Buckets." Many dealers have become sold on buckets. Buckets are a solid discipline process, but you can’t take a position that all cars in the first 20 days are priced a certain way and at day 21 another and so on. There are some that need to be over market and some under market regardless of age. All cars have to be evaluated on their own merits and must be done daily, not in 15 or 20 day windows.

5. Track GAP and ROI. Dealers who are tracking GAP and ROI are seeing a big difference in their average grosses.  If you’ve not bought into this process then maybe it’s something you should take a hard look at. 

6. Fix your reconditioning timeline. If your most profitable car is a 20-day car (and it really is) how can you allow the service department to bog you down with it spending 7 to 10 days in the shop? This is one of those things that’s fixable, but it has to be done by the dealer. If the dealer wants to fix it then it gets fixed. Speed wins; the lack of speed kills. It’s as simple as that.

7. Re-do your website. How does your website look? Your website is the "New Showroom." Do your pictures tell a good story? Do you have 12 to 20 photos? If that’s all you have then you are not in the game. You need at least 40 and they need to be done in a photo booth. If you don’t have a photo booth you need to make a commitment to get one. Saying you don’t have the space is a poor excuse. You can make it happen if you want to. Kind of like the issue in service. You can fix it. You just need to do it.

8. Drive your average cost per unit down. The biggest no brainer since the invention of the wheel. If you want more volume, drive your cost down. If you want a better ROI, drive your cost down. If you really want to be in the used car business, drive your cost down. What is it you don’t understand about driving your cost down?

9. Install EWR into your "Trade Walk." Utilizing Early Warning Radar is essential if you are going to improve both gross profit and volume.

The used car department takes a lot of energy and effort to achieve the volume and gross you need to make big money. There is no one simple answer that will fix it for you. The key is to keep digging until you figure it out.

You can probably pinpoint some obvious issues that you know are holding you back. The faster you attack them the better. Spring is almost here. Summer is not far behind. The longer you wait to make some important decisions the more money you are leaving on the table and the less likely you are to be happy and clapping your hands.

I’m happy and I’m clapping because I’ve given you some more free information to help you improve your business. That’s all I’m gonna say. Tommy Gibbs

If you checked into a Ritz Carlton today I would suspect you would have high expectations of what your experience is going to be like. I would also suspect that if you checked into a Holiday Inn Express that immediately your expectations would be lower.

Let’s pretend you decided to get out of the business you are in today and go to work at a Ritz Carlton or a Holiday Inn Express. The expectations you would have going to work at the Ritz are going to be a lot higher than at the Express.

Even though you’re the same person and you would like to think you are always going to perform at your top capacity it is very likely that in short order your performance at Express is going to a be lot lower than at the Ritz.

I heard a great quote recently and it goes like this, "You should go to work for a company that has high expectations." I like that, I like that a lot. So, let’s turn it around. You should hire people who you have high expectations of and you should reinforce your expectations on a daily basis.

Most of my readers are in the business of selling something, be it cars, real estate, insurance, software, advertising or whatever. Tangible or intangible, everybody’s selling something. If nothing else, you are always selling yourself and/or your ideas to someone.

As a leader in your organization you are responsible for helping to raise the expectations of yourself and those around you. 

If you accept a sales person selling 6 cars a month I’m thinking you’re gonna get a lot of 6 car sales people. What you are willing to accept has now become the standard expectation.

If you accept the used car department selling 75 cars a month then that’s what you’re gonna get. You might be wishing for 100 but everyone in the store knows your real expectation is 75 so you hover around 72 to 77 and that’s it. Everyone goes away happy. Sorta.

There is a direct relationship between expectations and the way people are treated. If they are treated well they generally will perform well. Why do the workers at Chick-fil-A perform better than those at Burger King? Because management treats them better. They go to work at Chick-fil-A knowing full well what the expectations are. 

The same at the Ritz, the same at Apple, the same at Starbucks, and as I often say, the list goes on and on.
Management’s fault is that it often takes an approach of "It is what it is; we are a victim of the market so let’s just do the best we can." Never let doing the best you can be your rev limiter.

People will stretch themselves to achieve the level of expectations that have been set. Every leader should seek to create and build high expectations to improve the performance of everyone in an organization.

People will respond when challenged in a positive way and rewarded with positive reinforcement. Positive reinforcement includes training, praise, celebrating results and acknowledging individual and company successes. 

Raising expectations starts with "Walking the walk, not talking the talk." That’s all I’m gonna say. Tommy Gibbs