When you’re in business you have a ton of issues to deal with. None are more important than communicating with staff and management to help them improve performance and profitability.

When you’re in a dealership day-to-day it’s like living with family members and therein lies the problem.

It’s difficult to hold family accountable.

There’s tons of data for you to sort through each day to help you create a roadmap of accountability. You often ignore it and look the other way because you don’t want to lose your family members.

Actually, sometimes it is family and that can be a whole other can of worms.

Let’s apply this to real life. Since you can’t fire or excommunicate your children, if your child isn’t doing what they need to do, don’t you at least try to point out a better direction for them? Don’t you try to coach them for greater and more positive results?

The problem is a lot of people see the word “accountable” as a negative word. When you’re holding people accountable you should be using it as a tool to coach them to the next level.

It’s about pointing out those things they may be missing that you’re able to spot because of your experience and all the data you have at hand.

People don’t do things because either:

A. They don’t know what to do.
B. They know what to do and refuse to do it.

As a leader you’re responsible for making sure they know. Once they know you’re responsible for making sure they do it.

When are you going to stand up? That’s all I’m gonna ask,

Anything you say before the word but is totally meaningless, a waste of time and energy. Here are some examples:

“I have a great used car manager, but I can’t get him to understand why ROI is important.”

“Sam is a really smart guy, but he just won’t get with the program.”

“Dave is a great buyer, but we never make money on the cars he buys at the auction.”

“Marsha is a great used car manager, but we have a lot of stuff over 60 days old.”

“I know we need a photo booth, but we don’t have enough space.”

“We have prices posted on our used cars, but they don’t match the prices we have on the Internet.”

“My used car manager is a great closer, but he doesn’t understand how to price used cars.”

“Curtis is a nice guy, but makes poor buying decisions by buying too many high dollar cars.”

“Bob is a hard worker, but he makes a lot of stupid decisions.”

“My used car manager is one of the best in the business, but we’re only getting 5 turns a year.”

“Carol is a great service manager, but I can’t get her to understand the importance of used cars to our overall profitability.”

“My general manager is super smart, but his people skills are horrible.”

“My used car manager is really tight with all the wholesalers, but I question why we sell them so many units.”

Using the word “but” is just a way of you making excuses for people and things you have failed to take action on.

That’s all I’m gonna say, Tommy Gibbs

Most dealers and managers have come to understand that speed is critical when it comes to making money on used cars.

If you are committed to 60 days or less (which you should be), then any days in the assigned life-cycle of a unit when it’s not available for sale is a killer.

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

The 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. There are certainly times when a needed part is delayed and/or a vehicle spends weeks in the body shop.

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.

If you want to trick yourself by assigning a different date once the car’s online then go ahead; it’s your store you can do what you want. But, what you can’t do is change the math.

It is what it is. It’s a depreciating asset. The clock starts ticking the minute you own it. Do the math. The ROI is going south.

It’s a ticking time bomb. That’s all I’m gonna say, Tommy Gibbs

One of the things I encourage dealers and managers to do in my workshops is to sort their used vehicle inventory by cost or investment, with the most expensive units at the top. Then I teach them 4 specific ways to attack their 10 most expensive units.

One of the more interesting but not surprising things we’ve observed over the years, is that if you lay your aged inventory side by side with your 10 most expensive, the two lists have a lot of the same units.

Another fact is that the longer a unit stays in your inventory, the less gross and the less ROI you make.

You would think the more money you have tied up in a unit, the more money you would make. If you actually think that, you would be wrong.

Adding to that problem is another well-known fact that the longer the more expensive units sit, the worse the ROI is going to be.

So go ahead and lay your two lists side by side and validate what you already know.

Here’s one final fact. We often know things, but look the other way. When you look the other way, you’re just being stupid. Don’t be stupid. That’s all I’m gonna say. Tommy Gibbs

I recently sent out a one-question survey asking if “price sells used cars.” The response was amazing and the results have been tabulated. Over 90% of the surveys said yes. Those that said no or checked “other” said things like:

Price generates interest, but you still have to sell the car.

You still have to show value.     

Only if the unit is standing tall.

A main component, but not the only factor.

Perceived value matters.

Price doesn’t necessarily sell the car but causes it to get viewed.

The talent of the salesperson matters once they get to the store.

A better question would have been, “Does price drive traffic to your store?”

However you want to slice and dice it, price either sells vehicles or it drives traffic to the store.

Since this is an undeniable truth, why would you have any units over 60 days old? Isn’t it also a fact that the longer you keep a unit, the less gross you make on it?

My conclusion is there’s a price that someone would have paid for the unit much earlier in the life-cycle if you had just priced it right. By going away faster, you make more money.

This isn’t rocket science. It’s part of the fundamental laws of nature. Study nature. That’s all I’m gonna say, Tommy Gibbs

How long does it take to know if they can do it? Do what?

Do whatever it is you’ve hired someone to do.

Does it take a week?
Does it take a month?
Does it take 90 days?
Does it take 6 months?
Does it take 6 years?

How long does it take you to figure out if you’ve got the right person or the wrong person in the job?

Part of that decision-making process might depend on:

1. How much have you invested in the selection process of putting the right person in the right job?

2. Did you put someone in the job because they were the “next up?”

3. How much have you invested in their training and development?

4. How much have you invested of your own time coaching and teaching the person?

5. Does your organization give people the tools they need in order to be successful?

6. Do you make the effort to get legitimate feedback from those around you that “know” about how this person is performing?

How long does it take for you to figure out if they can or they can’t? That’s all I’m gonna ask. Tommy Gibbs

For the last couple of months, we’ve been testing my soon-to-be-released software, UpYourGross. I cannot tell you how exciting this product is. It’s simple; it improves turn, gross, and ROI; it reduces wholesales losses; it creates accountability, and it will be priced very inexpensively.

One of the things I’ve noticed with some of the testing dealers is that once in a while they will actually make a little bit of gross on a unit that’s over 60 days old. Maybe you’ve experienced that same thing.

Even though a little gross was made, the ROI went deep into the tank. But it’s important for naysayers like myself to remember that bills get paid by accumulating gross profit regardless of when it’s generated. It’s not a good business plan or a great bet to think it’s going to happen very often, but I get it.

Since I’m in the question-asking mood, what if that same unit had been priced the same way on day 30 rather than after 60?

Would you have sold it faster?

Would you have had a better ROI?

Better yet, could you have sold it and reinvested the money and doubled the gross on two units vs. one?

Used cars don’t age on day 61. They age on day one because someone isn’t paying attention. All of a sudden, day 61 rolls around and panic sets in.

One of the drills I like to do in my workshop is to ask managers to describe their oldest unit in stock.

After they tell me all about it, I ask them, “In your professional opinion, why do you think you haven’t sold that unit?” With very few exceptions, whatever they say was there on day one. The one undeniable fact about the automobile business is that price sells cars.

If you priced your most problematic cars more aggressively in the first 30 days, then you would increase your odds of making a lot more money.

Stop betting on lucky. Start betting on smart. That’s all I’m gonna say, Tommy Gibbs

As Starbucks CEO Howard Schultz reminds us, “Seek to renew yourself, even when you’re hitting home runs.” How appropriate is that in today’s market?

A lot of dealers had a record-breaking month in March. Some of them have already spent too much time gawking at their financial statements, poking their chest out and patting themselves on the back. And guess what? For some of them April is off to a slow start.

Let me caution you; you cannot be satisfied. You can never be satisfied. Those sounds you hear behind you are the competition coming to gobble you up. If you take just one little break, one little hiccup, it could be the very thing that puts you into a downward spiral.

People are successful for a variety of reasons, one of them being “fear.”

The fear of failure.
The fear of falling back.
The fear of giving up all they have worked so hard for.

It’s that fear that causes the successful ones to keep pushing and to keep looking for new and better ways of doing things.

Scott McNealy, CEO of Sun Microsystems, once said “You either eat someone for lunch, or you can be lunch.” No truer statement has ever been made.

Being a hard-charging competitor can be craziness at its best. Competing is fun. Trying to get better is the lifeblood of competing, leading and winning.

Study it. Embrace it. Love it. Use it as success fuel. Use it to take you to the top of your mental game.

Develop an unstoppable competitive mindset, and it will push you so far ahead of the competition that you won’t have to worry about looking over your shoulder.

What you have to realize is that most people are just lazy and because they are lazy they can become complacent very easily. Ultimately their lazy streak will show its head; that’s when you can “own” them.

There are times when you can have a good month in spite of yourself because the market lets you win.

No easy wins this month. Time to go to work. That’s all I’m gonna say, Tommy Gibbs

Salespeople are trying to make a living. You’re paying them on gross. What else would you expect?

My first management position was as a used car manager a very long time ago. I had a sales person working for me that was about as one-way of a person as you can ever imagine. He also wasn’t very good at telling the truth.

Let me tell you what he was really good at; he was really good at selling the freshest pieces that came into our inventory. Talk about doing a trade walk. Every morning he scouted the units that came in the night before. He knew what he could sell that would make him the most money.

During his tenure, I don’t recall him ever selling an older unit. He wasn’t there to help us. He was there to earn a living and feed his family.

It stands to reason why you have salespeople walking around your inventory. They can’t make any gross on those older units. They aren’t stupid, and though they may be team players, the team they are really playing for is the “home team.”

I’ve asked this question before and I’m going to continue to ask it. Does it make any sense in today’s market to keep paying salespeople on gross profit? They certainly don’t have as much control over it as they once did. You’re already setting the bar with the price you’ve put on the Internet.

The only way moving to a volume-based pay plan works is to be a one-price dealer or have a “well-disciplined management team” that’s not going to let them give the unit away.

And now you know why the management team walks around the pay plan issue. That’s all I’m gonna say, Tommy Gibbs