Year: 2015

The Little Things

Posted on by Tommy Gibbs

When you stop doing the little things, they turn into big things. The little things are:

▪ Easy to ignore
▪ Easy to look the other way
▪ Easy to let slide

We all like easy.

Being easy causes you to say yes, when you should say no.

Being easy causes you to take your eye off the big picture. When you take your eye off the big picture, everything around you becomes a little fuzzier.

The fuzzier things get, the more confused you and your staff get.

The more confused you and the staff get, the more little things begin to slide.

Easy now becomes habit.

Habit becomes the norm.

The norm becomes easy.

That’s when rinse and repeat occurs. The problem is that the water you’re rinsing with is murky and dirty.

Expectations begin to drop. Lower expectations become the norm.

The little things can be hard to measure, so they are ignored.

When you focus on the little things, the performance of the team improves. That’s all the measurement you need. That’s all I’m gonna say, Tommy Gibbs

Do You Agree?

Posted on by Tommy Gibbs

I want to ask you about doing a trade walk every day. First, let’s make sure we’re on the same page as to what a trade walk happens to be:

1. All units traded or purchased are parked in a staging area as they come into the inventory.

2. Every morning, all the members of the management team, plus any available sales people, will hold a meeting in front of each unit, discussing how high or low we might be in it, its pros and cons and conclude a disposition and a unique strategy for that unit.

3. Disposition meaning, wholesale or retail.

4. Strategy meaning, using my life cycle management process to determine the allocated shelf life of each unit and how we intend to retail it within the assigned life cycle.

Do you agree that the trade walk is a good idea?

Why aren’t you doing it? That’s all I’m gonna ask, Tommy Gibbs

How Do You Score?

Posted on by Tommy Gibbs

Below are 40 fundamental traits of a good leader. These are traits that everyone should seek to emulate regardless of their position on the totem pole.

There are 3 ways you can use them:

1. Evaluate yourself. How’d you do?

2. Evaluate the person above you. Your supervisor, department head, team leader, dealer, GM, person in charge, etc. (You don’t have to tell them, just tell me.)

3. Have someone you work closely with or someone you supervise evaluate you.

If you do all three you’ll become a better leader.

My Top 40 Leadership Traits:

1. Leaders have pep in their step
2. Leaders are disciplined
3. Leaders arrive early, stay late
4. Leaders have a sense of humor
5. Leaders are consistent
6. Leaders follow the golden rule
7. Leaders don’t put themselves above others
8. Leaders don’t show favoritism by hanging out with subordinates
9. Leaders can be counted on
10. Leaders answer their own phone
11. Leaders return phone and email messages promptly
12. Leaders dress the part
13. Leaders show respect for others regardless of position or social status
14. Leaders say thank you…a lot
15. Leaders cut to the chase and get to the point
16. Leaders listen because they know others have great ideas too
17. Leaders use the word “We” vs. the word “I”
18. Leaders pull others up not put them down
19. Leaders don’t work in fear of their job; they coach people “up” to take their job
20. Leaders do what they say they are going to do when they say they are going to do it
21. Leaders pick up after themselves…and others
22. Leaders know what they know and they know what they don’t know
23. Leaders take the blame when something fails and they give others credit when it works
24. Leaders communicate then communicate some more
25. Leaders help establish vision and direction
26. Leaders remove obstacles to production, not create them
27. Leaders attack a problem now, rather than letting grow it into a cancer
28. Leaders seek ways to simplify not complicate
29. Leaders seek knowledge; they learn, then they coach others
30. Leaders make the tough decisions now, not later
31. Leaders don’t tolerate a fearful workplace
32. Leaders are enthusiastic
33. Leaders set the accountability standard
34. Leaders have controllable passion
35. Leader detest the statement “We’ve always done it that way”
36. Leaders accept mistakes as a part of progress
37. Leaders see a problem as an opportunity to “fix it”
38. Leaders guard the processes but recognize when they are not working
39. Leaders are optimistic realists
40. Leaders lead from the front and they push from the rear

How did you score? That’s all I’m gonna ask, Tommy Gibbs

Might Not Be A Problem Yet

Posted on by Tommy Gibbs

At this very moment you might not have an aging problem with your used car inventory. But, trust me on this; at some point you’re going to wake up one day and have a real mess on your hands.

Dealers have different definitions for what they consider to be an aged unit. For me, it’s anything around the 45 day mark.

Some things to keep in mind:

1. If you have aging problems, one of the causes is that you haven’t previously been pricing your inventory competitively.

Once you start pricing your cars “to market,” you’re going to see your grosses go down. Do not blame your vAuto pricing tool for the lack of average gross. Do not blame Auto Trader. Blame yourself for not taking action sooner.

2. If you have aged inventory, it’s choking you to death. You will never maximize your new car and used car sales potential as long as you have aged inventory.

Sure, you will get lucky once in a while and have a good month, but you will never be consistently great until you fix the problem.

3. Asking your management team to work you out of your aged inventory isn’t the fix. Some of your managers may have helped put you in this problem, but the reality is your lack of discipline and enforcing a 60 day turn is the root of the issue at hand.

Asking your managers to retail you out of your current mess is only prolonging the agony and hampering your ability to “do business” today.

A Strategy To Consider:

Re-appraise all units. Put them dead on the money. Once you do that then you have to decide how you’re going to eat the excess. There are a number of accounting tricks you can use, but in one way or another you’re going to eat some big bucks.

You could absorb some of it each month in wholesale losses or take the hit on your end of year statement. You’ve been hiding the losses way too long. Time to get on with it.

What you don’t want to do is to take your aged stuff to the auction, dump it and start over.

Let me give you a little math to think about. Let’s say you have $100,000 worth of water on your lot right now. If you take those units to the auction you will lose the $100,000.

If you write them down, they are now on the money and when you retail them you might generate $70,000 in used car gross. In the big picture you lose $30,000 vs. $100,000.

But here’s the problem. You cannot and should not do such a write down and keep running your used car department the old fashioned way or however you’ve been running it. You have got to make some disciplined changes and fix what got you so screwed up in the first place.

Remember the part where I talked about writing your inventory down and putting it on the money? What you need to do at that point is use my “Life Cycle Management” process.

As you re-appraise each unit, you need to assign them the number of days you are going to allow each unit to stay in your inventory. I recommend 20 to 60 days max. As you get better at this you should be shooting for 45 days max.

A 20 day car might be a car you are buried in; bad color, bad miles, bad equipment or a high dollar unit. You and your staff ought to know which units give you the most problems and tend to age.

A 60 day car might be a nice trade-in or something you purchased from one of your customers. You have to set your own criteria.

Remember, when you assign life cycle management, the goal is to price the units attractive enough that you find a retail buyer within the assigned life cycle. If you don’t sell it within the assigned days then the unit has to be wholesaled at the auction.

As you clean your inventory up your average gross profit will improve even though you are retailing some of these units faster at lower grosses. The reason it improves is because the units that you have determined to be problematic and have given a short life cycle, are the very units that in the past have been aging on you and destroying your gross profit.

I realize this is painful and difficult to do, but once you get on a 60 day turn you will never want to go back. Your challenge will be to have the discipline not to let anyone talk you into keeping units past 60 days.

There are always excuses. Your motto should be “talk to the hand.” That’s all I’m gonna say, Tommy Gibbs

When The Crowd Is Cheering

Posted on by Tommy Gibbs

You may have seen the New York Mets lose game 5 to the Kansas City Royals in the World Series. Even if you didn’t see it, you’ve probably heard what happened. Kansas City won the game in the 12th inning by a score of 7 to 2.

Matt Harvey had pitched a brilliant game for the Mets through the first 8 innings. At the end of 8, the Mets led 2-0. Three more outs and they live to see another day.

When the Mets were at bat in the bottom of the 8th, Terry Collins, the Mets’ manager, had the Mets pitching coach tell Matt Harvey they were going to put their ace reliever, Jeurys Familia in the game to close out the 9th.

Harvey approaches Collins in the dugout, has a very heated conversation and is adamant that he wants to pitch the 9th. The crowd is chanting “We want Har-vey!” they roared. “We want Har-vey!” The fans are going crazy.

Harvey had already thrown 102 pitches, but rather than go with his smarts, Terry Collins allows Harvey to start the 9th.

Harvey walks the first man he faces. It gets worse. Collins allows him to pitch to a second batter, Eric Hosmer, who rips a run-scoring double to leftfield that silenced Citi Field and cut the Mets’ lead in half. Familia replaces Harvey and Hosmer scores after a bad throw from first baseman Lucas Duda. Game tied in the 9th.

As many of you know, I refereed NCAA college basketball for 17 years. I’ve had calls booed and cheered that I’ve made. They weren’t exactly booing or cheering me, but it certainly can feel that way. (Ok, they were booing me.)

Here’s the point. Booing or cheering, it was my job to get it right based on what I’m seeing, my knowledge of the game and my knowledge of the play in front of me.

It was Terry Collins job to get it right based on his expertise and all the factors he knows about managing the game of baseball. He let the cheering crowd affect his decision making.

There’s a real lesson here. Never let the cheering, good or bad, affect your decision making.

Sometimes dealers let people cheer them into making bad decisions when they know better. They know they shouldn’t keep units past 60 days, but they get cheered into doing so.

I wrote an article this past week about paying on volume VS paying on gross profit. When the dealer tosses out a trial balloon about paying on volume the crowd boos. The dealer doesn’t want to hear the boos, so he says ok, let’s stay with paying on gross. The crowd cheers.

Don’t let the cheering crowd push you into bad decisions. That’s all I’m gonna say, Tommy Gibbs

Does It Still Make Sense?

Posted on by Tommy Gibbs

I sold my first car off my dad’s clunker lot on Broad St. in Richmond, VA when I was 12 years old. The summer of my junior year in high school I sold cars at Manchester Mercury on Semmes Ave.

Back in those days the customer signed 3 or 4 blank contracts and got roughed up by the dealership personnel. The keys to their trades were thrown on the roof, trades often hidden, and they were told they had to buy a car because their car had already been wholesaled.

Back in 1972, after a couple years of teaching and coaching I, like many of you, got in the car business until something better came along. Obviously nothing better came along.

In those early days, selling systems were the latest and greatest thing to hit since man landed on the moon. Turning the customer over multiple times was the norm and “if I could, would you,” became the closing tool of the day.

The business has changed a lot over the years.

Back them we didn’t have the Internet. We didn’t have third party leads. We didn’t have Google. We didn’t have vAuto. We didn’t have Vin Solutions. We didn’t have Auto Trader. We didn’t have Manheim online auctions. We didn’t have social media.

We didn’t have millennials as customers and employees. We didn’t have customers in their 50s, 60s, 70s and 80s who would rather shop online than spend 3 to 4 hours in a dealership negotiating a deal. We didn’t have 7 year old kids that could figure out your iPhone in a New York second.

What we did have were people in the business who had street savvy and a desire to make a lot of money. They had a strong work ethic and a willingness to grind it out 12 hours a day. And, we still had some questionable business practices. Truth in lending was right around the corner.

For many years, managers have worked deals from cost up and have been able to achieve a desired gross profit regardless of paying full retail in parts and service and/or having packs added to the cost of the cars. The skill level of those passing through the business back then was extraordinary.

No doubt a lot of things have changed over my many years in this business.

But, guess what hasn’t changed? Pay plans!

Most dealers are still paying sales people and sales management on gross profit with volume bonuses thrown in here and there.

With so many customers shopping the Internet, does it still make sense to pay on gross profit?

With a different breed of team members coming into the business, does it still make sense to pay on gross profit?

With prices being established well before the customer gets to the dealership, does it still make sense to pay on gross profit?

With customer’s expectations changing so much, does it still make sense to pay on gross profit?

With 90% of the dealerships using a pricing tool, does it still make sense to pay on gross profit?

With 90% of the public walking around with a personal device that can pull up pricing in a heartbeat, does it still make sense to pay on gross profit?

With the factory having so much control on how you price your cars and such low margins, does it still make sense to pay on gross profit?

With you paying so many flats and minimums, does it still make sense to pay on gross profit?

I’m just asking, does it still make sense? That’s all I’m gonna ask. Tommy Gibbs

Everybody Raises Their Hands

Posted on by Tommy Gibbs

Frequently in my training sessions I’ll ask the question, “How many of you agree that we do a lousy job of holding people accountable in the automobile business?” Without exception, they will all raise their hands.

Leaders that have figured out how to hold people accountable are the most successful when it comes to developing a culture of leaders and achieving high results.

Holding people accountable doesn’t have to be a negative experience. When people understand the expectations, they will seek to achieve those expectations, goals, objectives, culture or however you might want to frame it.

People tend to do the right thing when they know it’s in their best interest, not when you have to hit them over the head with a baseball bat.

Your job as a leader is to sell the team the idea that the things the organization deems to be in the best interest of the organization is actually in their best interest too. Achieving expectations means they win, we win and we all have more success.

Easy tips:

1. Make sure everyone is reminded of the expectations. Yes, that seems elementary, but the evaporation factor is always in play. Either as a direct message or subliminally leaders must constantly remind the troops of what’s expected and what’s important.

2. Get on it right now. Far too often when there’s a lapse in achievement, leaders let things drag on and on. The more things are allowed to slip, the more those things become habit, and the more the expectations are lowered.

3. You don’t have to be mean to enforce expectations. People like to work in a well-run, well-disciplined organization. This isn’t about screaming and hollering at someone about their failures. It is about letting them know quickly we’re not on track; you and your team are not getting it done, whatever “getting it done” might mean to you.

At some point there must be consequences for those who cannot live up to reasonable expectations. The ultimate consequence is they get to go to work someplace else.

4. Be consistent in your actions and statements. The easiest way for expectations to fall apart is that you are all over the place. You let some things slide for some people and not for others. You cannot be Dr. Jekyll and Mr. Hyde. Selective enforcement with just a few people will destroy the morale and productivity of the team.

5. There are times when you need to figure out the real root of why expectations aren’t being met. What’s the real problem? Leadership sometimes will set the wrong expectations. Setting the wrong expectations is just as bad as not having any.

6. In order to hold others accountable we too have to hold ourselves accountable. We should make it a daily practice of looking in the mirror and being honest with ourselves.

A part of holding yourself accountable is never to forget, “Familiarity breeds contempt.” The closer you become with people the more difficult you make your responsibility of holding them accountable.

I’m holding you accountable. That’s all I’m gonna say, Tommy Gibbs

When You Have Aged Inventory

Posted on by Tommy Gibbs

The reason you are reading this is probably because you have some aging problems. And even if you don’t, it’s still good information to keep at the forefront of your mind.

Some things to keep in mind:

1. If you have aging problems, one of the causes is that you haven’t previously been pricing your inventory competitively. Once you start pricing your cars “to market,” you’re going to see your grosses go down. Do not blame your vAuto pricing tool for the lack of average gross. Do not blame Auto Trader. Blame yourself for not taking action sooner.

2. If you have aged inventory, it’s choking you to death. You will never maximize your new car and used car sales potential as long as you have aged inventory. Sure, you will get lucky once in a while and have a good month, but you will never be consistently great until you fix the problem.

3. Asking your management team to work you out of your aged inventory isn’t the fix. Some of your managers may have helped put you in this problem, but the reality is your lack of discipline and enforcing a 60 day turn is the root of the issue at hand. Asking your managers to retail you out of your current mess is only prolonging the agony and hampering your ability to “do business” today.

A Strategy To Consider:

Re-appraise all units. Put them dead on the money. Once you do that then you have to decide how you’re going to eat the excess. There are a number of accounting tricks you can use, but in one way or another you’re going to eat some big bucks.

You could absorb some of it each month in wholesale losses or take the hit on your end of year statement. You’ve been hiding the losses way too long. Time to get on with it.

What you don’t want to do is to take your aged stuff to the auction, dump it and start over.

Let me give you a little math to think about. Let’s say you have $100,000 worth of water on your lot right now. If you take those units to the auction you will lose the $100,000.

If you write them down, they are now on the money and when you retail them you might generate $70,000 in used car gross. In the big picture you lose $30,000 vs. $100,000.

But here’s the problem. You cannot and should not do such a write down and keep running your used car department the old fashioned way or however you’ve been running it. You have got to make some disciplined changes and fix what got you so screwed up in the first place.

Remember the part where I talked about writing your inventory down and putting it on the money? What you need to do at that point is use my “Life Cycle Management” process.

As you re-appraise each unit, you need to assign them the number of days you are going to allow each unit to stay in your inventory. I recommend 20 to 60 days max. As you get better at this you should be shooting for 45 days max.

A 20 day car might be a car you are buried in; bad color, bad miles, bad equipment or a high dollar unit. You and your staff ought to know which units give you the most problems and tend to age.

A 60 day car might be a nice trade-in or something you purchased from one of your customers. You have to set your own criteria.

Remember, when you assign life cycle management, the goal is to price the units attractive enough that you find a retail buyer within the assigned life cycle. If you don’t sell it within the assigned days then the unit has to be wholesaled at the auction.

As you clean your inventory up your average gross profit will improve even though you are retailing some of these units faster at lower grosses. The reason it improves is because the units that you have determined to be problematic and have given a short life cycle, are the very units that in the past have been aging on you and destroying your gross profit.

I realize this is painful and difficult to do, but once you get on a 60 day turn you will never want to go back. Your challenge will be to have the discipline not to let anyone talk you into keeping units past 60 days. There are always excuses. Your motto should be “talk to the hand.” That’s all I’m gonna say.

Get Ready

Posted on by Tommy Gibbs

Yep, here we are again. October is almost over. October is the perfect month. “Perfect for what?” you say. Perfect for figuring out where you’ve been and where you want to go.

I can’t say that math was one of my best subjects, but I can divide by 10 real easy. At a glance I know what the averages are for any line item expenses, sales volume and gross profit.

What also makes October a perfect time is it sets the stage for the next year. Now is the time to start planning for 2016. Waiting until the last week in December to get your plan together is a really bad strategy.

This is the perfect time to dig in and firm up your fundamentals in all departments. This is the time to get back to basics. This is not the time to cut back on your training.

This is when you need to amp up your thinking, stretch your organization and stretch your imagination. If you don’t have a solid foundation of basic processes you will never maximize your success.

This is the time to take control of the “evaporation factor” that’s been occurring all year long. This is the time to stop the “process bleeding.”

Your long term plan should include joining a Twenty Group and attending the NADA convention. Look, we all get lazy, and get caught up in our daily routines. Attending these meetings gets you revitalized. It gets you outside of your daily box and opens your eyes up to what the possibilities might be. Seems like a no brainer.

This is the time to make those plans. Teamwork is critical if you’re going to maximize your bottom line. To keep your team on the same page you have to constantly communicate to them what the expectations are and what processes they are expected to follow.

There is no “shake ‘n bake” solution. You don’t fix it and walk away. You fix it and re-fix it.

What to do?

1. Ask yourself if you can improve your processes? If you focus on revamping your processes, what effect do you think it will have on your business? It is an absolute fact that regardless of how well disciplined you are, over time your processes are going to evaporate. The best piece of advice I can give you is to lock yourself and your management team in a room and review every detail of your selling processes. Be brutally honest with yourself. Then take the necessary action to get you back on track.

2. Can you improve your team? Got the wrong players? Now is the time to make the changes. If you already have the right team in place then it’s time to let them know what your expectations are and show them the plan and the path to achieve those expectations.

3. Don’t think of your planning as “you now having a plan.” Think of it as a “mission.” Plans can fall apart. When you’re on a mission you stay after it until you succeed and then you stay after it some more.

I’m on a mission to get you to re-think what you’re doing. I’m on a mission to get you ready. That’s all I’m gonna say, Tommy Gibbs

Fire Someone

Posted on by Tommy Gibbs

Not a happy thought is it? Firing someone is never easy. If you’ve done your job, the someone that needs firing will often fire himself.

But, there are times when you have to say goodbye and it should never be a surprise. Not to you. Not to the firee, not to the rest of the team.

I’m not talking about an incident based firing. I’m talking about the firing that you should have done a long time ago.

Sometimes it’s the lead bull that I wrote about a few weeks ago. There comes a point in time when enough is enough.

Often the fear is that you will lose a lot of production when you say goodbye.

The reality is there will be a massive cheer from the troops that you finally did the right thing. And, they will pick up the numbers you think you would be losing.

It’s not easy having your job. It’s not easy being a leader. It’s not easy firing someone. That’s why we picked you.

Now, go do your job and do the right thing. Fire someone that needs firing. That’s all I’m gonna say, Tommy Gibbs

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