Are You Missing Trades?

One of my favorite subjects is talking to management teams about not missing trades. I know this is hard for you to believe but without exception I’m always told, “We never miss trades.” Makes you go hmmm, doesn’t it?

Here’s another way to think about it. Have you ever made a deal because you put more money in a car than your competitor? I’m thinking the answer is yes. Therefore, your competitor missed a trade. I’m also thinking your competitor would say they never missed a trade.

I do believe most of my readers are smart enough to realize that yes, we all miss trades once in a while. Someone’s making those deals. And yes, they may have very well buried themselves in those units we “missed,” but they got to make a deal and we didn’t.

A common term in today’s business is “look to book.” If you’re not familiar with the term, it simply means; how many units did we appraise and how many did we get. If you appraised 100 units this month and you traded for 25, then your look to book is 25%.

I’m often asked, “What should my look to book be?” Most people would say your look to should be 50 to 60%.

Tommy says you should know every day what your look to book happens to be and think in terms of pressing the number up. The more you can press your look to book up, the less of a need you will have to go out and purchase units.

If you’re going to bury yourself in a unit, you are far better off to bury yourself in a trade.

If you raise your “look to book,” you’ll miss a lot fewer trades. Trading for more cars means you’re selling more cars. That’s all I’m gonna say. Tommy Gibbs

Give Them What They Want

I’ve always loved complaints. I’ve always viewed complaints as an opportunity to fix something. I love fixing stuff.

When dealing with customer complaints I like to ask the customers, “What is it you want us to do to make you happy?” I try not to tell them what I’m going to do unless I already know exactly what they want.

Regardless of what they say they want, a good leadership technique is either to give them all of what they want or nothing at all.

Let’s say you have a dispute about a service bill. Always repeat what the customer has said back to them before drawing a conclusion. It’s imperative that you do so in order to ensure you fully understand the complaint and what they want you to do.

If they say they don’t think they should be charged anything and you offer up 50/50 you have just wasted your 50%.

They may very well take it, but they are still mad, they hate you and they are going to say ugly things about you and your dealership to their friends and relatives.

Give the customer everything they want or give them nothing at all.

That’s all I’m gonna say, Tommy Gibbs

Are You Scared?

This is a scary time of the year. Ghosts, goblins and creepy things are everywhere.

Lots of things scare me. Here are a few:

It scares me when a dealer hires a buyer. It’s always done with good intentions, but more often than not it doesn’t have a happy ending. The buyer I’m talking about is the one the dealer is putting on the road to go off to wonderland to buy cars. Months down the road the dealer is stuck with a lot of aged units and wonders what happened?

It scares me when a dealer makes a wholesale profit. There are rare sets of circumstances when it can be done. Maybe the dealer cut his/her teeth in the wholesale business or maybe they run an in-house auction for the junker units. But other than that, there aren’t many legitimate reasons for making a wholesale profit.

It scares me when a dealer tells me, “We never miss a trade.” I understand the intent. It’s the right thinking no doubt, but never think for a minute that you don’t miss trades. Everybody misses trades. I’m thinking if you’re making that wholesale profit you might be missing more trades than you think.

It scares me when a dealer hires a new used car manager and turns ’em loose. They come on board with great stories of how much they have accomplished at their previous stores. (Notice, stores is plural.) So, the dealer says, “Go get ’em.” What should happen is the dealer or GM becomes Siamese twins with the new used car manager for the next 90 days. Every minute that the dealer can spare should be spent with this used car manager listening, teaching, learning, coaching and sorting out fact from fiction.

It scares me when a dealer doesn’t know what their oldest used car in stock is. Better yet, the used car manager doesn’t know. To add insult to injury, no one knows where it’s parked. These are your sickest children. How can you not know?

It scares me when a dealer tells me they get units through service and recon in 3 days. There are some that do. Most don’t and most don’t really know. The best and worst answer is the same. “I don’t know.”

It scares me when a dealer has a belief that it’s ok to keep used vehicles for 75 or 90 days. I might understand it if we were living in the 1970s. Back then maybe we just didn’t know any better. How can you not know better in today’s information society? How can you not understand the fact that you don’t make money when vehicles sit that long? How can you not know you’re working with a depreciating asset?

It scares me when a dealer isn’t tracking GAP, ROI and 30/30. You can’t fix what you don’t know.

I’m not easy to spook, but a lot of things scare me and they should scare you too. That’s all I’m gonna say. Tommy Gibbs

What You Believe

Creating new beliefs is a little bit like creating new habits. It takes 21 days to develop a new habit. An easy example to understand is diet and exercise. It can be very difficult to bust through those first 21 days. Tough, really tough to do.

What you currently believe is based on years of truth and/or propaganda. Not just propaganda from the outside, but inside your head. If you tell yourself something long enough and loud enough you will become a true believer, regardless if it’s based on facts or not.

Politicians will tell the same lie so long and loud that eventually they become convinced it’s the truth.

Having a strong belief system is very powerful on the road to success. Just keep in mind that just because you believe it doesn’t make it so.

That’s all I’m gonna say, Tommy Gibbs

When Does The Clock Start?

By and large most dealers and managers have come to understand it’s not the big that will eat the small but the fast that will eat the slow. We all know the faster we can get a car on the lot and online the more we increase our odds of making a respectable profit.

If you are committed to 60 days or less (which you should be) then any days in the cycle in which the unit is not available for sale is a killer.

The question often comes up, “When does the clock start ticking?” Does it start with the acquisition, the day you own it, or does it start when the car goes on the lot/online?

Let me make this as clear as I possibly can. It starts the moment you own it. Period. No exceptions, no ifs, ands, or buts.

The two issues that often come up are the delay in getting vehicles from auction sites and those units we can’t sell for legal reasons such as we don’t have the title as required by law in some states.

10 Things To Help You Win The Clock Ticking Game:

1. If you are in a state where there are title issues there has to be a clear line of communication with the office on a minute by minute basis to alert you when the title arrives. Any breakdown in communication is costing you money. Staying after these title issues cannot be left up to chance. Somebody has to take ownership of chasing after the titles.

2. It’s a fact that you are having to go further out of your area to buy cars at auctions, but you have to be selective and know what the timeline is that you are dealing with. Anything you can do to reduce transportation days, the better. You might even want to consider paying the trucker a bonus for fast delivery.

3. How hard are you trying to buy cars in your own market? Do you have a procedure set up so that when someone comes in and wants to sell you a car that you give them the full routine with a written appraisal? Does your website have a self-appraisal link so the customer can get real numbers from you quickly.

4. Mine your customer base. For sure, you know which cars you always do well with. Often they are right under your nose hiding within your CRM. Vin Solutions has some great tools for finding those vehicles and giving you a chance to buy the car, trade the car or ultimately sell the owner a new car.

5. How about a unique and separate website that drives the customer to your website to sell you their car? I saw this one in the Tampa market a few months ago: “SellYourCarToUs.Com.” It belongs to a very nice used car operation over in Orlando, FL. It’s imperative that when they land on your site that there be an easy, one click button to get them to a self-appraisal. Check it out. You will be impressed.

6. If you’re in a market with CarMax consider promoting that if the customer brings their CarMax appraisal to you within 7 days of the appraisal, that you will give them more for their car than CarMax or give them $100 cash if you can’t beat CarMax’s offer. What do you have to lose? Suppose you buy 10 extra cars this month and also pay out $1000 in loser fees. Do ‘da math, what did you make on the 10 extra cars?

7. Increase your odds of success and efficiency when buying online by using Stockwave. This may well be one of the biggest game changers in the history of the car business. Take a look at this short video. CLICK HERE

8. Fix your service and recon issues. I know it sounds like I’m picking on service a lot and that’s not my intent. I just know in most dealerships it’s the same old, same old. How many total days are being wasted from the time the car is acquired until the time it gets on the lot and online? In today’s age of speed you have to find every day that you can if you’re gonna win the “meter game.”

9. Make sure you include in your “save-a-deal” meeting every morning a list of all vehicles that are either in transit or tied up due to title issues. The more you pick up the intensity on these units the faster things will happen.

10. Pick up the intensity level. Not just you, but the entire team has to understand that any day that a vehicle is not on the lot/online it’s costing the dealership big money.

Pop Quiz:

When does the clock start? When you own it.
What can you do to improve it? Re-read 1 thru 10.

Control what you can control. That’s all I’m gonna say, Tommy Gibbs

The Problem With Management

The problem with management is they pit one department against another and then they wonder why the team doesn’t work together. You might be saying nah, but the reality is it’s more of an “oh yeah.”

Depending on how you want to count, most dealerships have 5 departments, maybe even 6 if you want to count F&I as a department. With the exception of F&I they all operate as a separate business on the statement.

Therefore they are all expected to generate a profit. In most cases, the pay plans for those that work in each department are designed to create the maximum performance of each of those profit centers. You know, the old adage of “you get the results you pay for.”

It’s not just pay plans that create this somewhat hostile environment that many dealerships operate in. It’s a lack of leadership at the top. Leadership will often allow stupid stuff to go on that most of us would recognize as power struggles.

Frequently it is management that’s been entrenched in their positions for years and years and they aren’t about to let go of the “power.” Having power becomes more important than the team winning.

But, I have good news for you. These issues aren’t just prevalent in the automobile business. They exist in just about every business you can think of, including the government.

They don’t exist, or at least exist very long, when you have real leaders at the top.

Hope it’s not a problem for you. That’s all I’m gonna say, Tommy Gibbs

Seven Mistakes We Make

Dealers all over the country have a big push on buying cars from the public.

Many are spending thousands of dollars on advertising, marketing and software in an effort to find more and better cars at their front door.

Some have even hired an “Equity Specialist” who has a full time presence in the service department and customer lounge in order to solicit customers with an offer of, “Would you like us to appraise your car for you?”

Some dealers have even started an “exchange program” offering the customer a new or newer car for the same payment that they currently have.

It’s all a waste of time. Yes, it’s a waste of time if you haven’t put meaningful processes in place that are customer friendly and effective for you and your team.

Seven Mistakes:

Mistake #1: The tendency when someone says, “Yes I’d like my car appraised,” is to drop them off at the used car manager’s desk and leave. The person making contact with the customer needs to remain the contact. Though somewhat modified, there needs to be a “full routine” presentation by the contact person to each and every customer that says yes.

Mistake #2: Most dealerships only want to buy what they know they can retail. If the program is going to be effective you have to be willing to buy anything from a stone piece of junk to a very expensive luxury car. CarMax has built the reputation that they will buy anything. Bring it to us and get a number. That should be your mantra.

Mistake #3: You try to steal it. What are you thinking? Get real. Get the unit. You will pay far more for it at the auction than you will at your own front door. Step up. Don’t be stupid. You need to own that unit.

Mistake #4: Giving verbal or handwritten appraisal quotes. Whatever you hand the customer needs to be computer generated in the most professional manner possible. The quote should be good for a minimum of 7 days.

Mistake #5: Not paying the sales person or contact person based on the acquisition. If you want staff members to give the “full routine” then you need to pay them just as if they sold a car. The full routine might actually inspire the seller to buy a car from you today or months down the road. Think about how much more efficient and cost effective it is when you can buy a car at the front door. The savings on the auction fees and transportation cost alone make it more than worthwhile for you to pay a reasonable commission.

Mistake #6: Someone hands the customer the appraisal and says, “Just let us know what you want to do.” The manager and the contact person need to do a complete review/presentation of the appraisal, answer questions and ask for the business.

Mistake #7: No one follows up with the customer. There should be a system in place to follow up within 24 hours, 1 week, etc. even if it means upping the ante $500 or so to acquire the car. There’s an old and very useful saying in the car business, “Follow them till they buy or die.” That saying applies to you buying their car as well.

Eliminate these 7 mistakes and you won’t be wasting your time, energy and money. That’s all I’m gonna say, Tommy Gibbs

Are You a Catcher?

No I don’t mean that in the sense that you are always “catching it.” Though that may sometimes be the case. I mean do you think like a baseball catcher?

Did you know that at any given time that almost 50% of all the baseball managers in Major League Baseball formerly played the catcher’s position?

Here are just a few that have had recent success. Joe Torre and Joe Girardi both captured World Series victories as Yankee managers. Bruce Bochy has won two World Series titles with the Giants, Mike Scioscia has one with the Angels, and managers Joe Madden, Fredi Gonzales, Clint Hurdle and Bob Melvin have had good success as they have brought their respective teams to the playoffs.

There’s a reason why catchers make great managers (leaders.) It’s because as a player they were always “in the game,” and they “see” the entire game.

As a leader in your business you need to see and think like a catcher. If you’re going to see the entire field you have to be on the field.

You are catching the ball. You are throwing the ball. You are hitting the ball and mostly importantly you’re making quick decisions that impact the results of the game.

As a catcher/leader you tie the entire team together. It’s your job to back up the bad plays and make them right. It’s your job to call the pitches and to help position the players on the field in positions that give them the best chance to succeed.

You are the putty that holds the team together. Your position is not in the locker room. If you’re going to do these things you have to assume your position behind the plate. That’s all I’m gonna say, Tommy Gibbs

25 Questions

The summer is over. It has been a pretty good year for most of you. It’s easy to become complacent when times are good.

Dealers make the most money when they are coming off tough times. When things are tough, dealers get back to the basics and grinding it out. As business gets better they are in a great position to make a lot of money because they have cut out all the fat.

But as business gets better, dealers tend to get lax with spending, processes and their daily disciplines.

Ask these questions of yourself:

1. Have you dissected every expense on the expense page?
2. Do you have too many people in the wrong places and not enough in the right places?
3. Is your selling system the selling system you think you have?
4. Are you evaluating every trade that you don’t make?
5. Are you holding a daily “save-a-deal meeting?”
6. Are you doing a trade walk?
7. Are you utilizing my “life cycle management process?”
8. Are you evaluating all the wholesale pieces to see if they have life in them?
9. Do you have a photo booth and is your website the best it can be?
10. Have you shopped your own dealership? Have you shopped CarMax?
11. Do you hold your staff accountable?
12. Can you shorten your selling process?
13. Are you using vAuto to buy and price your units correctly?
14. Does your current inventory level match your seasonal selling rate?
15. Are you still doing business the same way you did 10 years ago?
16. What’s the turnaround time for a used car from the time you own it until the time it’s ready for the line?
17. Are you leading the way or are you talking the way?
18. Are you mining your customer base for nice used cars?
19. Are you relying on packs to save your gross profit?
20. Are your pay plans old, outdated and not in tune with today’s market?
21. Is your volume and gross going up or down?
22. How many turns a year are you getting with your used inventory?
23. Are you tracking ROI/GAP?
24. Are you forecasting or “hopecasting?”
25. When was the last time you let Tommy Gibbs coach you?

These are great questions you should be asking yourself. That’s all I’m gonna say, Tommy Gibbs