The two hot topics of conversation of late, actually all of the time, have been how to find more cars and how to hire more and better people. That same conversation occurred 20 years ago and will occur 20 years from now. The reality is that there is no simple fix to either of these problems.

If you think hiring a rock star buyer will solve your inventory problems in the end you will probably make them worse. If you think hiring a full time trainer/recruiter will be the fix-it for your need for sales people then it’s probably not going to work out all that well. But of the two, hiring the recruiter/trainer will probably work out better than the buyer. These are the two toughest problems facing all automobile dealers and there is no one fix and voila it’s done.

Finding great players is a fulltime, never ending job. It’s just like being in the coaching field. Great coaches are always scouting and recruiting. If you are looking for a magical ad to put in the paper that’s going to attract your next superstar you may be waiting quite a while.

If you are looking toward the next great job fair and think you’re going find 10 college graduates for your sales team that will carry you to the promised land you are in for a very long day. It doesn’t happen. It doesn’t work that way. If you wait to hire people when “you need” them you are never going to find the people you need.

You and your assistant coaches have to be recruiting every minute of every day. You should be recruiting your customers, the sales clerk at the shoe store, your next-door neighbor, the waiter or waitress you meet at lunch or the enthusiastic hostess you met at Applebee’s. One of the most successful General Managers I know was working at Wendy’s when he started selling cars.

I love college graduates. It’s not so much what they actually learn, but it does show they can stick to something. However, the odds of them sticking with you are not very good. Most college graduates don’t see selling cars as a “step up” in their life.

What you should be looking for is someone who feels they missed the boat and this is their big chance. Someone with a year or two of college is a great selection. They think they screwed up by not finishing school and they see what you offer as a super opportunity. And of course it they have a sports background all the better. They are used to getting knocked down and getting up.

As for finding more inventory…Hey coach it’s the same thing. It’s a constant thing. There is no one answer. If you are going to succeed in finding used car inventory you cannot leave any stone unturned. Trades, mining your customer base, online auctions, auctions, for sale by owner and any other brilliant idea you can come up with. But, none of them in and of themselves will give you the inventory you need. If you are only looking for cars when you need them you are going to end up with a lot of cars you don’t need.

When it comes to finding people and finding inventory they both require an ongoing effort by the entire management team. When you dabble in finding people and cars when you most need them, it’s like plowing a field uphill with a mule.

When you can convince your management team that we all have to look for inventory and people in multiple ways then you will at least have some control over your destiny.

It still won’t be easy, but the alternative is far more frustrating and a lot less rewarding. That’s all I’m gonna say, Tommy Gibbs

We have no doubt become enamored by the numbers. We track this and that and a little bit of everything. There was a time many moons ago when the two most important things we tracked were how many ups we had and how many we sold. In some ways we may have over complicated things and in other ways not so much.

I would strongly argue the point that it is the simpler things we need to pay the most attention to. There are some people in this business who make it much more complicated than it needs to be.

There is a number, a very important number, yet a simple number, that I find the most ignored in my travels and that’s “look-to-book.”

Before I go any further, let’s make sure we all agree on what “look-to-book” actually is. It is: How many cars did you appraise (look at) and how many did you get. It doesn’t get any simpler than that.

I cannot tell you the number of times I ask the question, “What is your look-to-book?” And most people don’t have a clue. At best they state a guessed number because they have heard that’s what it should be.

Maybe it’s ignored for the same reason the number of ups and the number closed is often ignored…because it’s not always accurate. If you don’t get all your ups logged then you are misleading yourself with an amazing closing ratio. If you log all your ups, then you get upset that your closing ratio is too low. Oh, whatever. Get it right. Demand that it be done correctly.

And maybe it’s the same for look-to-book. Or is it? Is it that you really don’t understand the importance of look-to-book? Look-to-book is a powerful tool to help you make more deals. The more units you can capture at the front door the more gross per unit you end up making.

The question often comes up as to what your look-to-book percentage should be. Most would answer the question by saying in the 40 to 50% range. (It means nothing if you don’t put them all in the system.) My answer to the question is there is no specific number it should be. What it should be is better than you were yesterday.

You should always be thinking press it up:

The more you press it up, the more deals you are making.
The more you press it up, the more your average gross will go up. (You always make more on trade-ins.)
The more you press it up, the less of a need you have to go out and purchase cars.

Do you remember the Art Linkletter program, “Kids Say The Darndest Things?”

That happens in the car business too. Managers often say the darndest things, such as “We Never Miss a Trade.”

I’m thinking you do. Actually I know you do. We all miss trades. If you aren’t paying attention to look-to-book you have no idea what you might be missing and I’m thinking you’re missing a lot. That’s all I’m gonna say, Tommy Gibbs

I continue to be amazed and flabbergasted by what some people are thinking when they finally decide to clean up their problem cars by dumping them at the auction. I’m not talking about the onesies or twoesies that you dump at the end of the cycle. Nor am I talking about the clunkers with no life left in them that you sell at the local auction.

I’m talking about those that surfaced when you changed used car managers. Sorta like finally finding all the dead bodies. More often than not it’s in the $100,000 range of water going over the dam.

The dealer’s famous last words are “Oh crap, all these problem cars have been hidden by the previous used car manager. I’m gonna fix this once and for all. We’re gonna dump all these problem cars and start over.”

Really, really, really…why would you do that? Why would you want to lose $100,000 in an instant?

Let me give you some basic math. Let’s suppose you have 50 cars and you’re $2000 high in each car for a total of $100,000. In your brilliant thinking and with a mindset of starting over you take them to the auction and lose $100,000.

As much as none of us like writing inventory down, let’s pretend you decide to re-appraise those aged units and take the $100,000 worth of water and eat a bit of it each month, at the end of the year or whatever.

You now own the cars for the “real money.” The best part is that prior to taking this drastic step you developed some solid strategies and put into use Tommy Gibbs’ world famous “Life Cycle Management Process.”

You take each of these re-appraised units that are now on the money and give them a new birthdate, along with a life cycle exit strategy.

Since you are now “on the money” we can safely assume that the sales people are less likely to walk around them. Also, we can safely assume that we have a much better chance of retailing them now that we can price them right using the vAuto pricing tool.

I think it’s a safe bet that on these “on the money” units you will generate $70,000 or so in front gross profit.

Ok Einstein, how much money did you really lose versus taking them to the auction? $30,000. Would you rather lose $30,000 or $100,000? But wait there’s more! You didn’t have to truck 50 units to the auction and you didn’t have to pay auction fees on 50 units. Yes, you did have to pay commission on the 50 units you retailed. Tell me how retailing more cars and paying a commission is a bad thing!

Oh shucks, I failed to mention you might have some F&I income from those units. Oh darn, I also failed to mention that you might have a trade in on some of those 50 units. More darn, I almost forgot to mention the retail parts and service work that might come your way from having a retail customer. Oh, pooh, I also forgot to mention you have just captured a retail customer who might re-buy from you down the road, or they might even tell a relative or friend how awesome you are.

Yeah, go ahead and dump those 50 units at the auction. It’s faster, easier, and more fun…and you send a powerful message that you have finally gotten serious about the used car business. Works for me. That’s all I’m gonna say, Tommy Gibbs

I often hear dealers complain about the quality of the people coming into the business. They complain that it’s hard to find people willing to work and who want to make some real money. Could it be that dealers are trying to hire the same type of person they were trying to hire 20 years ago?

I’m betting that many of you have experienced sales people selling less than 8 units a month. How can someone come to work every day, and only sell 8 cars a month? You have to ask yourself how is that possible? Are you making excuses for their lack of performance? Have you accepted mediocrity?

There’s a difference between showing up for work and actually coming to work. I’ve told this story before but it’s worth telling again. Many years ago I had an outstanding salesman who worked for me by the name of Sam Newsome. One of the things I always said about Sam was that when he came to work each day, he “came to work.

You never saw Sam when he wasn’t busy. He was always doing something to create business. If he didn’t have a customer he was either on the phone trying to find one, walking through the service department looking for one or he was busy in the inventory making sure he knew exactly what we had in stock and where it was parked.

I don’t think there are many Sam Newsomes out there and the problem is many dealers are still looking for Sam. And the reason you continue to look for Sam is that you’re not willing to change the way you view and want to run this business.

The best way for you to start to raise the bar is to raise your standards for the type of people you hire and the type of processes you demand that your organization embraces.

Raising the bar is exhausting and hard work. Raising the bar means being committed to the hiring and training of a different type of sales person.

Raising the bar goes against the grain. Raising the bar requires one to be a student of the game and have the willingness to change the game knowing there will be serious opposition from the masses. Raising the bar means developing new and innovative pay plans. Raising the bar means changing the selling system to fit today’s buyer.

Today’s buyer is just like you. They would much rather do the majority of their shopping online. You cannot sell cars to the online shopper the same way you sold cars 20 years ago.

Changing the game means changing the rules. Changing the rules means holding more people accountable for raising the bar. The bar does not get raised and left in that position. The bar has to be raised every day if you are going to continue to play the game and be successful.

Realize that raising the bar even just a little bit gives you an edge. It’s easy to do because so many of your competitors are locked into lowering the bar and accepting the business as it is, not as it could be.

To raise the bar:

Do It With Enthusiasm
Have No Fear
Change The Expectations
Don’t Make Exceptions
Create Accountability
Penalize Non-compliance

So, the choices are easy, you can continue to lower the bar, you can raise the bar or you can head to the bar. That’s all I’m gonna say, Tommy Gibbs

When I’m in dealerships one of the first things I ask a dealer and the members of his/her management team is how many used cars are they selling each month. Then I ask them based on the “market” and based on what they know about their organization what they think their real potential might be.

For instance, it’s not unusual for a dealership selling 75 used a month to tell me they think their potential is 90 to 100. This same dealer tells me his competitor two blocks up the street is selling 200 units a month. And of course I’m scratching my head wondering if they can sell 200 why do you think your potential maxes out at 100?

As the conversation develops the dealer implies that I don’t understand his/her market. Really? Here’s a serious piece of reality for you; what makes your market different is your thinking, not so much your market.

When I further press the question about the dealer up the street selling 200 units a month these are some of the comments I frequently get:

1. The dealer up the street has a lot of Inventory. Answer: Go get more inventory. (What I’m really being told is we’re not committed to the used car business.)

2. The dealer up the street focuses on AutoTrader. Answer: Focus more on Auto Trader. (What I’m really being told is we’re not committed to the used car business.)

3. The dealer up the street has the right inventory. Answer: Buy the right inventory. (What I’m really being told is we’re not committed to the used car business.)

4. The dealer up the street pays more money for his/her cars. Answer: Start paying more for your cars. (What I’m really being told is we’re not committed to the used car business.)

5. The dealer up the street has better trained sales people. Answer: Do a better job of training your sales people. (What I’m really being told is we’re not committed to the used car business.)

6. The dealer up the street has better processes and gets his/her cars through service faster than we do. Answer: Fix the issues in your service department. (What I’m really being told is we’re not committed to the used car business.)

7. The dealer up the street has an awesome website and great looking photos. Answer: Get a better website and take some better photos. (What I’m really being told is we’re not committed to the used car business.)

8. The dealer up the street is a big vAuto Dealer. Answer: Become better at using vAuto. (What I’m really being told is we’re not committed to the used car business.)

Making a commitment to selling more used cars isn’t rocket science. No doubt there are a lot of little pieces to the equation, but the real deal is for you to be passionate about the commitment of doing so.

I know what it takes to be successful and that’s why I’m constantly stirring up your thinking. That’s all I’m gonna say. Tommy Gibbs

Pay plans are a very touchy subject. I’m always being asked about pay plans. It’s one of those subjects like religion and politics. I’m brave so I’m jumping in.

There are as many different pay plans as there are dealerships. It’s fair to say that how much and how a manager is paid depends totally on the dealer’s philosophy of the business. More often than not the dealer’s philosophy was developed early based on what “worked” when the dealer himself (or herself) was actually a manager.

We tend to think that everyone thinks like we do, and so if the way we were paid when we started made us successful, then it will work for others along the way. Or we think it’s worked so well for the dealership over the years…so why change? Nothing could be further from the truth.

Let me point out that as a new car dealer for 20 plus years, I was always searching for the “right plan.” I’ve always felt there had to be a better way. I fully understood that just because it worked for me, or let me say I made it work for me, that did not in any way mean it was the perfect plan.

I believe that every manager in the front of the dealership should be paid based on the same bottom line. My definition of the same bottom line means to add up the used car gross, the new car gross and the net F&I and pay them all on the same number. To do anything else is counter productive in producing the maximum gross, teamwork and future growth.

However, the actual percentage they get paid is totally dependent on them achieving monthly performance levels which are adjusted each month based on a number of factors such as inventory availability, previous performance, forecasts, and staffing levels.

If you want to include a small salary, the salary levels for each manager might be different depending on a number of factors, such as responsibility, years on the job, etc.

To keep it simple, assign each manager no more than three or four levels of achievement to shoot for. This concept is designed to put maximum gross on the books and at the same time push each manager to make sure they are achieving maximum performance in their individual department.

It’s simple enough to figure out by sitting down and determining how you feel about what levels of performance you find acceptable and backing into some highs and lows. If you feel 60 units a month is acceptable for your new car manager then maybe that job is worth X dollars a year. Maybe 75 units puts your thinking at XYZ dollars per year and so on. You can think about it in terms of gross or units.

A pay plan like this requires the GM to adjust the levels each month based on inventory, time of year, number of sales people on the staff, etc. It’s really not that hard. You sit down at the end of the month, review a few numbers, plug the new standards in and review them with each manager. Getting them to agree they are achievable is half the battle.

Here’s a sample. CLICK HERE

I need to go work on my own pay plan. That’s all I’m gonna say, Tommy Gibbs