I’m not sure if you’re a football fan or not, but it really doesn’t matter. There are some real lessons to be learned with the recent loss by the Indianapolis Colts to the New York Jets. This past Sunday, December 27, 2009 the Colts lost to the New York Jets by a score of 29 to 15 and blew a chance for a perfect season.

Peyton Manning, the colts MVP quarterback had been told by head coach Jim Cardwell prior to the game that he might pull Peyton and some of the starters out. Let’s set the record straight, the Colts were on the verge of history. The history of overcoming the Miami Dolphins record of perfection in 1972 when the Dolphins achieved an undefeated season of 17 wins and 0 losses.

Cardwell’s logic is he wanted to rest his key players in order to be ready to make a run at the Super Bowl. You’ve got to be kidding! You have a chance to be the best ever and you’re going to rest your best players?  That would be like saying we have a chance to set an all time record in our sales department, but we want everyone to be rested for next month so let’s take a couple of days off to get ready. 

Please tell me who out there would do that? If you said you would then you should be booed out of the dealership just like the Colts fans booed the Colts on Sunday.

If you have a chance to win, why would you not do everything in your power to make it happen?

You’re sitting there agreeing with me on the Colts laying down this past Sunday, but yet you just kind of plod along thinking let’s take a few days off it will be better next month. Next month comes and you’ve still done nothing. Next year will soon be here and you’ve done nothing. You’re playing with second string players or a lousy game plan and think it’s going to get better.

Look Einstein it’s not. It’s really not. It’s not going to get better until you develop that killer instinct of take no prisoners, pay the price to win, study the game and kick some butt each and every day.

It’s really very simple. The New Year is upon us. It’s that time when we make resolutions to change and be better.  A small percentage of people will make resolutions and achieve their goals. They will see the finish line in front of them, go for it and make it.

Most will be like the Colts. They will start out with a goal, get off track and the next thing you know the chance for history (for a great bottom line) has escaped them. The only thing you have control over is what you do today. Today is the first day of your quest for historical greatness. You can choose to be a winner…or you can choose to be a loser. You can swim like a Dolphin or you can buck along like a Colt. If you take the Colt approach you’re going to get bucked off, hit your head and come this time next year wonder what happened. Enjoy the ride.

That’s all I’m gonna say. Tommy Gibbs

There are two ways to sell more cars.

The first is to crank up the advertising. TV, Radio, Print, Billboards, Internet and Social Media. There is no doubt that if you spend enough money, traffic will eventually show up. Even if you have a lousy sales department, you will still sell cars because the odds are that lots of potential customers will show up and some of those "ups" are going to make you sell them a car.

Another way to sell more cars is to invest money in developing your organization. Investing in your staff and the culture of your business has the potential to give you long term results. This is a slower process, but one that allows you to build a solid organization that will not only take you well into the future, but will make your daily life a lot easier to deal with.

If your advertising budget exceeds your sales then just because you sold a bunch of cars doesn’t mean you made any money. Loading up on advertising gives you short term results, which isn’t always a bad thing, but when you begin to rely on short term results you may be jeopardizing your long term successes.

Advertising is short term spending. Think about how many times in your career that you have started an advertising campaign only to pull the plug after a week or two because you didn’t see immediate results. You end up with a knee jerk mentality.

Why is it easier to spend short term money than long term money? The spending of long term money requires greater discipline and planning, which is much harder to do. Spending long term money requires strategic planning, which is something that most people do not have a lot of experience with.

Many successful people in the car business have succeeded in part because of their ability to make something happen right now. They are action people. It’s a big part of who they are and how they got to where they are today.

The automotive business, like all businesses, is becoming much more complex than it was 10, 15, or 20 years ago. Just because you’ve achieved success in the past doing it "your way" doesn’t guarantee you will be successful in the future.

Strategic planning is an organization’s process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy, including the allocation of capital and people.

Of course advertising is big part of any strategic plan, but when you allocate more of your resources to advertising than you are allocating toward developing your staff and the culture of your organization then you end up fighting with the same old problems from month to month, year to year.

Developing a strategic plan requires time and resources. Don’t wait until your December planning meeting to get it going. Do it now, start it today, right this minute, don’t hesitate. 

Confucius says "He who hesitates gets run over by a truck." I made that up, that’s all I’m gonna say. Tommy Gibbs

On January 5, 2010 there was an article in USA Today on University of Texas’s football coach Mack Brown. He’s had tremendous success since taking over there 12 years ago. In that article it talks about a young man who spoke to the team prior to their big game against Oklahoma. The young man was 16 year old Corey Borner who was paralyzed from the neck down after he was injured while making a tackle last spring in a scrimmage at Desoto High School.

He told the Longhorns he was going to find a way to walk again, just like they were going to find a way to beat Oklahoma. After trailing at halftime, Texas won 16-13. Borner gave Coach Brown a black wrist band that reads “find a way.”  Brown wears it during all games and states, “You hear our kids say all the time ‘find a way’. Corey’s moving his arms now.  He has some feeling in his legs. We got it pretty good, and if he’s finding a way, we can find a way.”

You have to find a way to improve your bottom line and improve your business for 2010. There is a way. It doesn’t matter if you’re in a big market or a small market. It doesn’t matter if your economy is more depressed than other areas of the country. There is a way. Maybe the pie has gotten smaller, but you have to figure a way to get a bigger piece of the pie.

You won’t find a way by looking at the four walls in your office. You will find a way by seeking information on how to make it happen from those who are making it happen. I can’t think of any business where owners are so willing to share their success stories with others like they do in the automobile business; be it from a phone call, a 20 Group or from dealers at the NADA convention. There is a ton of information available that will help you if you would only seek it.

The most successful dealers in the country are always looking for a way to improve what they are doing. They are never satisfied. So if their motto is always “Let’s Find a Better Way” then why don’t all dealers do the same? It’s simple. They’ve lost their way because they are convinced there is no way…and that’s all I’m gonna say.  Tommy Gibbs

I wasn’t a very good history student. I couldn’t rationalize why I needed to know what had happened a hundred years ago. I could not have cared less. Actually, I hated history.

As an adult I have come to appreciate history and wish I had paid more attention in my history classes as I now find it amazingly interesting.

George Santayana, a Spanish-born philosopher wrote in his book, The Life of Reason, "Those who cannot remember the past are condemned to repeat it."

Why are those 11 words so hard for us to get our heads around in the car business? Many in the car business keep repeating the same mistakes and don’t understand why they are always fighting with the same issues. If you are not willing to change, what else can you expect?

The two things I hear dealers complain about the most are the mistakes in their used car inventory and how difficult it is to hire people.

The reason you can’t hire people is because of the type of people you keep going after. You’re trying to hire the same type of people that you did back in the 70s and 80s. If you keep going after people who are motivated by being paid on gross profit, how can you expect anything but who you are getting? Paying on gross profit has very little appeal to generation X and Y.

Your selling system and pay plan is fundamentally the same as it has always been. Get an offer, work the customer, make as much gross as you can and repeat the process. Sales people and managers are programmed that the more gross they hold the more they get paid. Yes, we need lots of gross profit, but the historical approach to achieving it is not working.

By and large the way many dealers manage their used car inventory is the same as it was 20 years ago. Dealers buy cars based on a combination of gut instinct and a little pretending that they are using some software to guide them. Their emotions still control what they buy and what they keep.

I often hear comments like "Why should I get rid of that car when I can’t replace it?" I love it when dealers make that statement to me. Really, really…you want some more of that? If it hasn’t sold in 45 days why would you want to go out and buy some more cars that you haven’t been able to sell?

Many dealers want to stay with the "old way of doing things." They price cars at a certain amount of gross and then want to hold the line on those prices as long as possible. History tells us that you are working with a depreciating asset. If the value is going south on a daily basis how can you think that your pricing shouldn’t follow the same formula? But, because you don’t adjust the pricing fast enough (and you’re not using my Life Cycle Management Program) you wake up one day, take those aged units to the auction and lose your shirt. History keeps on repeating itself and you wonder why?

So back to our little history lesson. If through your history you keep finding yourself struggling with these same problems over and over again what’s it going to take for you to change? Yes, change is hard; it’s never easy to go down a different path. To do so you have to clear out a lot of old debris. It takes time, patience and commitment. The alternative is for you to keep repeating history.

You cannot control the past, but you can control your future and you can make your own history by having the guts and courage to change those things you know you need to do. That’s all I’m gonna say. Tommy Gibbs 

What a great quote by Mark Twain. Ask yourself, are you in denial? Are you in denial about what’s really going on in your dealership? Is it really the economy or is it partly you? Are you not looking in the mirror?

I’m probably one of the luckiest people in the world because I get to travel and spend time with some very successful automobile dealers, and some who are not so successful. One thing that separates them is that successful people don’t lie to themselves. They know they have faults and they seek to fix them. In other words they are not in denial. The not so successful ones are usually in total denial. The denial starts with having all the excuses they can come up with as opposed to taking an honest look at themselves and their organization.

Denial is an unrealistic hope that a problem is not really happening, and will go away by itself. It is an attempt to put distance between ourselves and our experience, and protect ourselves from the threat of danger. In its many forms, denial acts like a pain reliever. If we keep pretending it’s not there then eventually it will go away. Not!

Denial can become your worst enemy. It diverts your attention, and decreases your mental efficiency.  As long as you refuse to accept the truth of your situation, you must, of necessity, refuse to give it your attention. Instead you will pay attention to every possible manner of distraction you can employ to support your denial. You keep reading the paper and watching CNN to reinforce your personal denial.

Successful businesses always get down to people and/or processes. Yes, you know these things to be true on the inside but you lie to yourself and your staff on the outside…you zip right into denial mode. I have an old friend by the name of Marvin Barnes. Marvin had a saying, “You can justify anything you want to justify.” Denial allows you to justify how bad the economy is and that’s why your business is so bad rather than face the fact that you either have the wrong people or wrong processes.

That’s all I’m gonna say, Tommy Gibbs

Let’s pretend that you have a million dollars lying around and wanted to invest it in the stock market. Also, let’s pretend you decide you want to be a day trader and manage your own portfolio.

If you were a day trader how close would you watch the market? How hard would you study the various stocks to determine the ones you wanted to risk all or part of your million dollars on?

The odds are pretty good it would be minute by minute. I’m also thinking you would unload those stocks that appeared to be heading south with no real chance of making you any money.

It would stand to reason you would cut out those stocks that are losers, study the market really hard to find the winners, and invest your money in stocks that gave you the greatest edge toward making a profit.

Being a day trader requires that you have access to multiple real-time news sources and can make split second decisions. News and rumors can provide large amounts of volatility and high emotion creating great opportunities if traded properly.

To be really successful as a day trader probably will get down to how hard you are willing to study the market and to what degree you will exercise strong discipline.

Let’s say you have a stock heading south and all the research says the company’s earnings are not going to get any better. Why would you keep it? The only reason to keep it would be somewhere back there in the deepest, darkest corner of your brain something keeps telling you, "Hang on to it, don’t you remember 10 years ago, you had that one stock that you kept against your better judgment and it bounced back and made you money." You still believe in miracles.

Day trading can be extremely profitable. The downside is that if done incorrectly, it can also be extremely unprofitable. Due to the high volatility of day trading, some people have labeled Day Traders as gamblers or adrenaline junkies.

It’s probably simpler than you might think. If you buy smart, unload the losers as quickly as possible and reinvest that money into stocks that give you the greatest chance of making a return on your money, then the million dollars you started out with can grow substantially.

Since most of you reading this are in the car business you have probably figured out where this is going.

It is not uncommon at all for dealers to have over a million dollars tied up in their used car inventory. If that’s you, then you must take the same approach with your used car inventory as you would take if you were a day trader.

It’s not about losing money at 60 days. It’s all about turning the right inventory (stocks) as fast as possible. Finding a retail buyer early in the "Life Cycle" is what creates a high return on your investment. A low return on your investment automatically occurs when you hold a car for 60 days. 

It’s not called a "60 Day Trader." It’s called a Day Trader for good reason. That’s all I’m gonna say. Tommy Gibbs

What’s the number one thing that separates your dealership or business from your competitors? Silly question, huh? It’s obviously the people. The leadership of an organization sets the tempo of what the expectations are even if they “state” them or not. If you never announce what your expectations are you have actually done so by remaining silent.

I was thinking this morning when going into my local dry cleaners, why do I go there? Other dry cleaners are just as close and I know for a fact that one of them does a better job. The difference is the people who work there. They know me by name and they are friendly. Pretty simple, huh? As I think about other businesses I frequent it’s the same thing. Be it the post office, restaurant, Office Depot…they all offer the same items and/or services. I select which one I will give my business to based on the attitude of the people who work there.

Attitude does not happen by happenstance. It happens because someone has led that attitude. Attitude is not developed by having a meeting and stating what the new policy is on attitude. It’s done by example and continuous training/coaching of the entire team.

Most people would point to Ritz Carlton Hotels as having the best employees and customer service concepts. Do you think that happens just by hiring nice people, paying them well and having a new employee orientation program? You and I both know that cannot be true. First they are in the same talent pool that you are. They want to hire nice, well spoken, talented people. Second, I doubt very seriously that they pay the most money and third we all know that there is no way to maintain the level of service they do by doing an employee orientation and saying “go get ‘em.”

Most businesses do just that. They hire people and say “go get em” and they wonder why they can never achieve the level of success they would like. It’s really about developing a culture within your organization. In order to do that you need to retrain all the members of your team at least once a quarter in order to coach them on what the “Cultural Expectations” are. This needs to be in a formalized session with the Owner/Operator/GM actually doing the presentation. Do not delegate this to your HR department or other management to handle. It has to come from the top because it is so important to your survival and success.

The message should be very clear. Here is who we are and this is the way you will need to conduct yourself if you expect to continue working here. This is not about threatening them but it’s about making sure there is not an ounce of doubt as to what we expect of our team members. Part of the message for those who “get it” is that they need to make those who don’t “get it” very uncomfortable to the point that they leave on their own accord.

Daily life is very much like the military. When I was in the Marine Corps they often referred to “that 10%.” Meaning there are always 10% of the people who just can’t do “it,” whatever “it” might be. Just as in the Marine Corps, you need to run the misfits off. This doesn’t have to be mean or cruel. Just factual and to the point.

Never forget, you can train and re-train all you want, but you must set the example each and every day. You cannot operate under the theory of “do what I say not what I do.” That’s all I’m gonna say. Tommy Gibbs

Let’s talk about cars. Not the kind you drive and sell, but a report you should be doing once a week called a CAR Report. Which stands for "Cars At Risk."

If you will follow this simple little discipline I can guarantee a lot of your problem children will go away. If you’re the dealer or GM I’m thinking it’s a pretty good bet that from time to time you sit down with your used car manager and go over your aged list.

In that discussion you talk about this car and that car and what the plans are to get it sold. Often the used car manager is able to hold you off from demanding that they dump the car or whatever.

They tell you they have a deal pending or they have plans to take it to the auction by the end of the week. You know the drill. It becomes a very nice conversation with no real demands on your part as you don’t want to upset your manager because if you do, you know nothing’s going to get done today.

Stop this insanity and use my CAR process. Once a week you should meet with the used car manager to review the CAR report. It’s a list of ten cars based on whatever formula you might want to use. Just be consistent. It could be your 10 oldest, it could be your 10 most expensive, or it could be the 10 with the lowest vAuto scores. (The form is at the bottom of this article.)

Go over each car on each line. As you do so, ask your used car manager "Do you agree this car is at risk?" There will be some cars on the list that your manager will say something like "No we are ok on this car, etc." But, every time your manager says "Yes I think we are at risk on this car" have them turn the form over on the back. 

The back of the form requires the used car manager to give you one of two plans. Either a plan, (a real plan!) to retail the unit or a plan (a real plan!) to wholesale the unit.

Now, here’s what really makes this process work. Each week when your manager brings in a new CAR report for you to go over, they must also bring in the previous week’s report. You will notice on the right hand side a column that says "Did You Lie?"

In other words Mr. or Ms. Used Car Manager, when we had the meeting last week you said "You had a plan to make this car go away. So you lied to me because it’s still here. You did not follow through and do what you said you were going to do with this car."

This simple weekly process avoids these ongoing conversations about what you are going to do with a car. Yes, it takes discipline to do this every week. I will guarantee you that by taking 15 minutes of your busy schedule to do this every week that your inventory is going to shape up, your volume will get better and your grosses will improve.

Almost everything we do in this business, or any business for that matter, gets down to "the pain of discipline or the pain of regret." You will have one or the other. And the best part is you get to choose. That’s all I’m gonna say. Tommy Gibbs

 (CLICK HERE FOR THE FORM)  

It is not unusual for dealers to struggle with either the lack of volume or the lack of a high average gross profit per car sold. In either case that can lead to a decline in total gross which is how we pay the bills and pay ourselves. There are very few cases when you will achieve both high volume and high average gross profit. It goes against the laws of nature or something like that.

Either way has challenges. If you have decided to be a high average gross dealer then it’s a pretty sure bet you will see decline in your traffic. If you go after volume, which means aggressively pricing your inventory on the Internet, then it’s likely you will see traffic go up and average grosses go down.

It’s also very easy to convince yourself that there are no cars to be bought. I want to remind all of you once again that CarMax, Texas Direct and Drivers Select are still buying lots of cars. (Drivers Select is cool, CLICK HERE to check them out.)

Going after volume means you have to up the ante when it comes to finding replacement cars. There is a lot more to acquiring inventory than just running out and buying more cars for the sake of a larger inventory. It requires a strategic plan of staffing and research or you will find yourself with a lot of aging purchased cars.

Assuming you get a solid plan in place to find more cars is there anything you can do to actually improve gross? Yes. Can you do $3000 a copy on the front? No.

I have some ideas for you:

1. Goal setting. If you are now at $1000 a unit on the front, it’s a real stretch to set a goal of $1500. You would be far better off to bonus the management team for bumping the average up by $50 a unit for this month and then repeat the process the following month. To say to them you want a $500 bump in one month is unrealistic and if you do bump it up the $500 you can bet your volume will take a hit. You can ultimately get to the $1500, but you need to eat the elephant one small bite at a time.

2. 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. The Team needs to learn to say "no" and to convince the customer that you have the best deal going.

3. 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.

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. If you need the GAP/ROI spreadsheet, send me an email and I’ll get it right to you. (It’s Free!)

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. Install EWR into your "Trade Walk." Have you read my article on EWR and Life Cycle Management? Early Warning Radar Here it is. Even if you’ve read it, read it again.

I’m thinking you can increase your volume and average gross profit, and "That’s all I’m gonna say." Tommy Gibbs

You have opinions, I have opinions, We all have opinions. My opinion today centers around the "Turn Over" or commonly referred to as a "TO," which may be one of the most misunderstood aspects of the car business. For those readers not familiar with the process it’s generally a salesman turning over their customer to a manager to "close the deal."

In theory, managers have better closing skills than the average sales person so managers are often times expected to go in for the close. Bear in mind I said "in theory," which doesn’t always hold true.

Many dealers are still running the business with what they believe to be a tried and proven method of negotiating the deal. Dealers who negotiate the transaction most often employ the concept of a "TO" to management.  If you’ve read much of my material you know I believe the best business model today is that of CarMax and non-negotiation.

Since so many dealers have not yet, and may never move towards the CarMax model I want to address the "TO" concept.  Even if you have moved to the "one price," non-negotiating model, you still may be utilizing a "TO" at some point in the transaction.

There are many things changing in the automobile business these days, but one of the core principles that should not change is a sales person should never let a customer leave without checking with a manager first. That fundamental principle is critical to the success of the business. There is no argument that can be presented that will lean in favor of the sales person having the latitude to decide when to let a customer walk.

The customer belongs to the dealership, not the sales person. Maybe, just maybe the sales person created the lead from friendship, prospecting or whatever, but the dealership has far more invested in the generating of that customer than the sales person will ever have. Thus, management should be allowed to determine when and how the customer goes out the door.

Whenever I hear dealers talk about the type of sales manager they have or want to have one of the things that they seem to want is a "good closer." They want someone who will get off their duff and go in and close the deal.

I’m not sure we are going to agree on all or any part of this, but one of the things God blessed me with is common sense, and to me this is all about common sense and human nature.

I believe the TO can and should take place at any point in the sale, not just during the negotiating process. Managers have to have a keen sense of what’s going on around them. Call it peripheral vision if you may. Far too often they have their head stuck in a computer or better yet stuck in the sand. They just don’t see what’s going on around them.

So, the TO could take place immediately after the sales person greets the customer. No, really I’m not kidding. If you sense there is bad chemistry between the customer and the sales person from jump street then do it right away before the deal gets all screwed up and you never have a chance for the sale. In Tommy’s little world the "TO" could occur from that moment up until the customer is "put out the door." (Getting a little old school talk here.)

So, let’s fast-forward to a "TO" being utilized to "close" the customer. Many dealerships operate on the theory of the sales manager going in to close the customer. Let me say this as nice as I can. As long as you continue to follow that practice you will never develop a strong sales force. You just won’t.

I’m sorry to report that the average sales person is lazy. (Don’t get testy, I said average.) As long as you keep closing their deals for them they will continue to let you do so, and all that does is make them weaker and in your mind makes you stronger. And of course in the dealer’s mind you are a strong sales manager because you close deals.  (Kind of like the Government giving handouts, the more they hand out the stronger the Government. Yikes, I don’t believe I stuck that in here.).

I believe the first "TO" should be handed to another sales person not the sales manager. Of course the manager makes that decision as to who, when and how. The manager decides who they are going to send in on the "TO" and that person is introduced as the Assistant Sales Manager.

If you’re a sales person, doesn’t it stand to reason that if you know you’re going to have to give up a half a deal that you are going to work that much harder to close the customer as opposed to running to the desk asking the manager to do your job for you? The more you do for them the more they want you to do for them. (More political message here.)

Sales people will never get any better at their job as long as you keep doing it for them. Is there still a time and place for the manager to go in on a "TO?" Of course there is, but the first point of attack should be to send another sales person in, not the manager.

If the manager is running around closing all the deals who’s running the desk and managing people and processes? Don’t take this to mean that the manager shouldn’t have good selling skills. They should, because they are always selling something, cars, concepts, ideas, processes, etc. just like I’m doing right now. I’m trying to sell you on my way of thinking. That’s all I’m gonna say.   Tommy Gibbs