The more I’m involved with the automobile business and the more I observe other businesses, the more I realize we in the business world have got it all wrong when it comes to management. Specifically the word manager.

In business, people are often given the title of "Manager." Sometimes it’s truly a gift because they were next "up," and sometimes they worked very hard to get it. Most people who are managers think of themselves as, well, uhh, managers. They’ve been told they are a manager so they go about their business of managing people, systems, and processes.

I looked the word manager up and here’s what I found: "Somebody who is responsible for directing and controlling the work and staff of a business, or of a department within it."

I can’t argue that is more or less the definition that most people work from. When working with and leading people I believe we would be much better served by replacing the word "manager" with the word "coach."

Like many of you reading this, my life has been impacted in one way or another by sports. Whether you played sports or if you are simply a sports fan, the odds are you can relate to the field of sports and the influence it has had on you one way or another.

When I first got out of college I was a head football coach at a private military academy, Frederick Military Academy in Portsmouth, VA. The reality is that all throughout my career I’ve always seen myself as a coach not a manager.

If you think about what we do, at least those who do it well, we are always coaching. It’s just like being a head football coach. As a head coach your focus is to coach the players and the assistant coaches.  It never ends. If you have a coaches meeting then you are reviewing the practice, schedule, game plan, etc.  When you’re on the field with the players you are coaching technique, disciplines, conditioning, teamwork, attitudes, and the importance of "getting it right." 

Coaching takes place on and off the field just as it does with you in the dealership. Coaching is nothing but "selling." If you’re a coach of an athletic team you are selling players and assistant coaches on why they need to buy into whatever it is you’re trying to get across. This is no different than the business you’re in. You’re constantly selling someone on your team as to how and why to do things a certain way.

So, how much better off would we be if we all really took it to heart that we are no longer managers but "coaches" and that every minute that we are in front of our team our number one focus is to coach, coach and coach some more?

Top coaches are always looking for that competitive edge. 
Getting a competitive edge means seeking information, testing the waters, trying a new play, attending a coaching workshop, and pushing yourself harder than you’re pushing the team.
Top coaches communicate with other top coaches. (20 Groups.) Top coaches hire other coaches who are smarter than they are with specific skills to help the team win. Top coaches know what they don’t know. Top coaches hire me.

Here’s a little sidebar that you may find interesting. I’ve been in the used car and leadership training business now going on 11 years. During those 11 years, of the thousands of dealers and managers who I’ve trained I can only think of a couple that were really struggling and in the end just didn’t make it.

It’s really strange that dealers who are unsuccessful don’t hire me and those who hire me are already successful. They are already making money. Like any good coach they know they can do better. They know there is more to be had. They know the team needs to hear it from an outside coach once in a while.

Great coaches are givers of information and they seek information to make them and their team better.

Coach, thanks for reading my material. That’s all I’m gonna say. Coach Gibbs

In my workshop I give dealers a lot of information fully realizing they can’t or won’t do it all. And no doubt, I give away a lot of free information in my newsletters, which I’m ok with, as I’m a believer it all comes back around.

Either my ego or my wisdom tells me that for each item I can convince a dealer to do, their business will improve by at least 10%. So, if a dealer does 10 things I put on the table then their business could actually double from their current production.

I’m going to share 10 relatively simple things I’ve picked from the many I present in my workshops for you to dwell on and for you to consider doing.

Let’s pretend you are now selling 100 used cars a month. Doing all 10 suggested processes will get you to 200. If you’re not selling 100 just make the adjustment based on 10% for each process you are willing to commit to on a consistent basis. Here you go:

1. Study The Data– Be a student of the game. Use Auto Count’s Reports each month to confirm what’s selling and what’s not. Use vAuto’s stocking tool to determine the fastest moving units to stock. Combine those reports with Auto Trader’s reports and you will have a competitive edge. Make sure you keep these lists at the tower/desk so when one comes to the door to be appraised you step up and make a deal on a car that you are going to be able to retail in short order. The more units you step up on the more cars you sell at retail. Take a hard look at Auction Genius to help you find the cars you need in the most efficient manner possible.

2. Press Your Cost Down-This is probably the simplest and most effective thing you can do to improve your business. Know what your average cost per unit is every day and do what you can to reduce it. If you are at $15,000 today, do what you can to get it to $14,500 and so on.  There is no magical number. It’s about keeping the less expensive units and making sure the more expensive ones turn fast. 

3. Know Your ROI-Every deal should be tracked for ROI. As you are working a deal you not only need to know how much gross you have, but what the ROI is. Go to FixROI.com and plug in three numbers. Your cost, your gross, and the number of days the unit has been in stock. Bingo, you have your ROI. Shoot for 110 to 120 ROI. By knowing your ROI you will know what’s working and what’s not. 

4. Attack the 10 Most Expensive Units in Stock-Make a list each day of your 10 most expensive units in stock. With one exception make sure they are priced really, really right. The one exception is if you know you always make money on a unit that’s on the list then use some common sense, don’t give it away. Consider putting bonus money on those 10 units regardless of the number of days they have been in stock. Sooner rather than later. Most dealers bonus their sales staff when the units have aged. Do it early, you will be much better off. Lastly, make sure the service manager gets that list each day and if one of those units happens to be in the service department the service manager has to understand they must get it out of the shop in a hurry because it’s one of your 10 most expensive units. You have lots and lots at risk with these units.  

5. Life Cycle Management-Read this statement then read it again. There is nothing, absolutely nothing, you can do that will improve all aspects of your used car business more than understanding my process of "Life Cycle Management." Think Fast, Be Fast-You are working with a depreciating asset. Everything, including decisions on what to keep and not keep has to be done fast. Pull the trigger quickly on units that you are suspicious about. Don’t hang on to them hoping and wishing something good is going to happen. Early losses are far better than late losses. If you are paying attention and recognizing problem units early in the life cycle then you will have a lot less need to take units to the auction and lose money on them at 45
or 60 days. There are certain "Trigger Points" you need to focus on during your daily "Trade Walk." Knowing how to use EWR (Early Warning Radar) pays big dividends.

6. Lot Walk-Nothing new here. If you do a lot walk once a week with all the members of your sales and management team then without a doubt you will sell more units. And, you’re going to see a lot of things you’re not going to like. Do you remember doing "Phone POPS?" You know, it’s the deal where they place mystery phone calls to your sales department then play the results back to you. They are never, never, never very good. Makes you just want to scream. So, initially you will have the same feeling when you do the lot walk. But, the bottom line on the lot walk is it gets your entire team to know and understand your used car inventory. The more knowledge they have the more they sell. 

7. Daily Inventory Pricing-The market changes every day and so should your pricing. Sometimes you can ask more, sometimes you can ask less. You cannot and will not achieve maximum results by changing prices every 10 to 20 days. Pricing takes intense management. It’s not something you do when you get around to it. You would be far better off if someone priced the car who is not in charge of appraising and buying them. 

8. Analyze Your Wholesale Pieces-Look at the numbers. How many units are you wholesaling each month? Go over each unit. How many of them could you have retailed if you opened your mind a bit either relative to pricing and/or the type of product you’re willing to keep? Are they early wholesale units or late wholesale units? You need to know the difference between the two. If you have lots of units being wholesaled late (at the end of the cycle) the odds are you are either stocking the wrong stuff or pricing them wrong. If you are wholesaling a lot of units early in the cycle it’s probably because someone on your staff doesn’t want to "mess" with certain types of cars. The probability is there may be a problem getting them through service in a timely manner or the used car department feels ripped off by your service department. The good news in in either case it’s a fixable problem. You just have to want to fix it. 

9. Photo Booth-and 40 pictures per car. If there is one thing I would do if I opened a dealership today it would be to do whatever it takes to have a photo booth. If you haven’t accepted the fact that the Internet is your new showroom then you are doomed. You cannot and will not be able to remain competitive until you get with it. It’s the biggest no brainer since the invention of the wheel.

10. SETS & SUBSETS-simply put, SETS is an easy way to set up a price leader with several other vehicles for the customer to pick from when they show up. SETS & SUBSETS are designed to drive traffic and increase volume. You can do as few as two cars in a SET, but never more than five. It’s not as complicated as it first appears. Don’t over think this. 

Here’s a bonus one for you. It’s called Save-a Deal-It’s the basic of all basics. From the first day I got in the business we did a save-a-deal meeting every morning. Back it those days we didn’t call it that. I learned that term back in the 80s from my good friend Mike Casey with JM&A. Call it whatever you want, but it’s an easy way to increase your business another 10%. Simply put, you go through all your pending deals and ups from previous days. You will always find that two heads, three heads, etc. are better than one.

Suppose I’m wrong? Maybe you won’t hit 110% increase in sales. Maybe you will only get half that? Not so bad! It takes 21 days to create a new habit. How many of these are you willing to focus on for the next 21 days? Today is day one. Go do it.

That’s all I’m going to say. Tommy Gibbs

The number one reason you can’t buy used cars is that you can’t and won’t pay the price. It’s that simple. You and your used car manager can spin it anyway you want, but the bottom line is when you or they see a car that you would like to have on your lot you will not step up and pay the price. There are logical reasons for this, most of which need to go away.

For many of you the reasons may go away in six months, a year, two years or three years but it’s going to happen and for the sake of your operation I hope it’s sooner rather than later.

Let me dissect this deal for you. The odds are pretty good that your internal labor rate is $75 to $125 depending on what part of the country you are in. Your average reconditioning costs are running $800 to $1400 depending on a couple of things.

One of those things would be that you are in the "Newscar" business as opposed to being in the "Used Car Business." Oh, I know you think you are in the used car business, but you aren’t. "Newscars" is when you carry a lot of late model stuff. 

Sure your recon cost is lower because you’re not spending a lot of money on these cars as they still have factory warranty. (Bad strategy that happens when your used car manager gets tired of getting killed every time he/she sends an older car into service.)

Or, if you are a big time "Certified Dealer" then your cost per unit would be higher because of the factory requirements.

So let’s round the reconditioning number off to a nice $1000 per copy. (Do your own math if you don’t like mine.)

The next part of this dissection is those wonderful little packs you add on to protect yourself from paying too much in salesman’s compensation and other little safeguards you feel you have a need for. I come from the "Pack Generation." Always loved them. The business has changed. I’ve changed and you should change too.

On average, hard and soft packs combined run $500 to $1000. So let’s round that number off to $800. When you add my little rounded off numbers from the reconditioning and packs you have a total of $1800. (The problem with the pack and recon "drug," is that it still sorta works and you can shake ‘da habit.)

So as I often say, "Here’s the deal." You are starting off from "jump street" with an $1800 cost disadvantage against those dealers who aren’t doing it the old fashioned way. (CarMax and Texas Direct to name just two of them.)

We can debate the way you charge the sales department in service all day long. But your theory of if we don’t charge them full retail (or close to full retail) that they will just give it away in the sales department is "old, tired and a worn out" theory. (I know, I know, it’s still sorta working.)

You cannot continue to rely on the sales department to prop up the service department. Sooner or later the folks in service are going to have to get better with how they sell and develop your customer base.

Propping up service is much like the unemployment checks people have been getting the last few years. As long as the government keeps handing them checks then there isn’t much sense in them getting out and looking for a job.

What compounds the problem is your pay plan. As long as you keep paying sales people and sales managers on gross you are going to fight a losing battle. Yes, this is a hard one for you to get your head around, but sooner or later you gotta "get real." 

Just think about it for a minute. You put killer used car prices on the Internet and now you’re starting to put killer new car prices on the Internet. Aside from doing the right things when the customer shows up, how much control do the sales people and sales managers really have on gross profit? Ok, they have some, but not as much as they used to have.

What if you changed the pay plan and took gross out of the equation? Under that scenario what you charged in service and the need for packs would be irrelevant.

What if you thought of reconditioning as simply another line item expense on your statement just like you think of advertising or supplies? Keep in mind this article is all about "Why you can’t buy more cars."

If reconditioning and packs were not screwing up your "cost basis" then you could absolutely buy more cars and no doubt you would sell more because you would be in them right and have a pricing advantage over the competition. When I say you can buy more cars, I’m also talking about buying more "trade ins," which obviously allows you to make both more new and used car retail deals.

There is no doubt this is a difficult cultural shift for your business just like what’s happening to you with the Internet moving you towards "One Price." You’ve been successful doing it the "Old Fashioned Way," but you are going to find it harder and harder to do so.

I’ve asked this question a lot lately: What if you had a clean sheet of paper and started over from scratch; how would you do it in today’s world?   That’s all I’m gonna say, Tommy Gibbs