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

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

I’m sure you do. And, I’m sure if one of your children was sick you would keep a close eye on that child until they recovered
from their sickness.

I’m appalled at how many used car managers don’t actually know where their sickest children (oldest old used cars) are.

Often when I’m reviewing inventory with a used car manager I’ll ask them to tell me about certain cars in their inventory.

On some of the cars I’ll ask them, “Where is it?” They will say, “It’s in the inventory.”

No,” I’ll say, “Where is it? Where is it parked?” Typical comments are, “I’m not sure”, “I think it’s out back”, “I think it’s in the service department”, “I think it’s in clean up”, “I think someone is driving it”, “I think it’s sold.”

You’re not being paid to think. You’re being paid to know. The great used car managers know where every car is at every moment of its life with their store.

The great used car managers know where all their children are, especially their sickest ones, regardless if they have a 40 car inventory or a 400 car inventory.

They just know. You wanna know why they know?

They know because they care. They know because they are great parents. They know because the more they know about where their children are, the more they can protect them.

They can protect them from the evils of the world such as becoming aged, poor ROI, and slow turn. Show some love. 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.

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. 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. Raising the bar means having the courage to throw “Legacy Thinking” out the window.

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
Defeat Legacy Thinking

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

I’ve come to realize that one of the greatest frustrations of dealers, general managers and sales management in general is average gross profit. The focus on average gross profit has its moments when it drives the management team nuts. I would suggest in some cases it caused the team to lose focus on what’s most important.

I’m not denying that we need to have a focus on average gross and I’m not denying that for a lot of dealers there’s room for improvement.

Having said that, I do believe many of you would be better served focusing on total gross and removing (Try it for the next 90 days) average gross from your vocabulary.

More often than not there’s an expectation of total gross for the used car department. The real goal should be how fast we can hit that number and beyond. The goal should be to pile up as much gross as you possibly can, as fast as you can.

Never forget you cannot spend average gross profit. You can spend total gross profit. That’s all I’m gonna say, Tommy Gibbs

Yep there is. And, you know who he/she happens to be. But, you keep them around because they are productive. Nobody wants to work with them. If anything people avoid working with them. Sales people don’t want to work with them. The office staff avoids them and the service department cringes when they show up.

But, you let them hang around. They have some skills you’ve found useful over the years. Skills that are no longer serving the team and the organization well today in today’s market.

You won’t get rid of them because you feel a sense of loyalty for all they’ve done for you over the years. You’re loyal to them. They aren’t loyal to you or they would have sense enough to know that their bullying creates a divide for the team.

The longer you let the bully stay in the room, the uglier the room will become. The uglier the room becomes, the more people will leave the room. The more people leave the room, the harder it is for you to build a winning team. The harder it is to build a winning team, the more your culture will erode.

Enjoy your bully in the room. That’s all I’m gonna say,Tommy Gibbs

1. 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.

2. 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.

3. Do more and better research. The more research you do on what’s hot and what’s not in your market, the better off you will be. Grosses go up when you are selling a product that’s high in demand and low in supply. Key components for you to utilize are vAuto Stocking Tool and Auto Trader Data.

4. Rethink “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 way 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 this must be done daily, not in 15 or 20 day windows. One of the biggest problems I observe is that cars don’t get re-priced soon enough. You might want to start to pay close attention to how often cars are re-priced. Some of your older inventory may have been ignored along the way.

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.” If you’re not familiar with Early Warning Radar, read this article. EWR will help you eliminate your problem cars. Even if you’ve read it before, read it again.

The used car department takes a lot of energy and effort to achieve the volume and gross you need to make big money. You can say that “gross is a state of mind” all you want, but what really creates gross is your mind getting in gear and fixing the things that impact gross, not sitting around thinking about it.

There’s no one big thing that’s going to improve your gross. It’s a lot of little things. That’s all I’m gonna say,Tommy Gibbs

I’m mainly talking to GMs, Dealers and Owner-Operators. I’m not saying you’re out of touch. I’m just asking if by chance you’re out of touch?

The view from a computer screen is very different than the view from the sales tower, the service write-up lane, the parts department back window, the technician’s work area and even the general office workspace.

Are you spending any real quality time in these areas? Do you really know what the team is up against?

I fully realize that when you visit these areas things are not always as they appear. Everyone is on good behavior when you are there. But, if you really pay attention you will soon see what they are up against minute by minute.

One of the things that will probably jump out at you is how much time your team members spend being unproductive. If nothing else, you will observe that you’ve turned your sales managers into clerks.

If they spent half as much time each day developing sales people and selling cars as they do chasing paper issues you’d sell a lot more cars and have a much better bottom line.

For gosh sakes, hire them a clerk. That’s all I’m gonna say, Tommy Gibbs

The more involved you can get your entire sales staff in your used car department, the more likely they are to sell a few more used cars for you.

Back in the ’80s, I stole the idea of Adopt-a-Car from my good friend Tim Deese, who’s been a used car guru for about the last 35 years.

It works very well when you have the discipline to work it. It has the potential to evaporate quickly so I suggest you consider trying it for 60 days. When I say try it, I mean announce that you’re only going to do it for 60 days so you don’t look stupid when the evaporation factor bites you in the butt. You can always renew it.

The fundamental adopt-a-car program is that each sales person has their own used car inventory and they get paid extra money if they sell their own units. If another sales person sells one of their cars they still get paid on it.

I’d recommend it be $100/$50. It’s easy extra money. If it would make you feel better, then add another $100 to the cost of each unit as it comes into your inventory so that when you finally pay it you’ve already expensed it.

If a sales person trades a car in, that car is part of his/her inventory. All other inventory is distributed on a rotating basis to the entire staff. When you first start the program you will have some orphan cars that you would do the same with.

In order to make this work you have to have the discipline to take cars away when a sales person doesn’t adhere to the program. The main reason we are going to pay them to sell their own inventory is to get them to help us make sure the car is standing tall at all times.

Here are some reasons to take a car away:

1. Cosmetic problems
2. Trash in the interior
3. Gas on empty
4. FTC and/or window stickers edgy
5. Hang tags not properly displayed

And now for the lot walk kicker. During the course of the lot walk, the sales people must be able to recite the following on their inventory:

1. Year, make and model of the car
2. Mileage of the car
3. How long we have owned it
4. The Internet Price and Last price change
5. Something they know about this car. It may be one owner or something they looked up about this model on the Internet.

You can come up with your own list, but if you are going to pay them to sell their own inventory then you need to require them to know something about it.

Make sure that when you do the lot walk you take a copy of the inventory with you and check them off as you go. “Voila,” there will be some missing cars and the used car manager and sales staff need to have an answer.

Adopt-a-Car is old school. Creating accountability is old school. Try some old school, that’s all I’m gonna say, Tommy Gibbs

1. Your oldest unit?
2. Where is it parked?
3. Your look-to-book?
4. Your most expensive unit?
5. What’s your wholesale to retail ratio?
6. Who owns your used car department?
7. How many turns are you getting a year?
8. What’s your average cost per unit in stock?
9. How many clicks does it take to get from A to B on your website?
10. How many days does it take to get a unit through recon and on the line?

There are lots of things you need to know. I’m just pointing out 10 of them. That’s all I’m gonna ask, Tommy Gibbs