Improving Gross Profit Part 3

1. Think in terms of improving gross in small increments. Try paying the managers a bonus for achieving nominal increases each month. Start by improving gross by $50 a unit. Do that over the next year and you will see a slow and effective way to increase your gross. You can only eat the elephant one bite at a time.

2. How could I talk about your grosses without mentioning “Life Cycle Management?” Life Cycle Management is designed to help you create a sense of urgency on those cars that are most likely to kill your grosses. The faster they go away the better your gross will become. My UpYourGross software tool puts you on the path to better grosses and more efficiency.

3. Track GAP and ROI. When you do, grosses go up. How much are you giving up once the customer shows up at your store with a price from the Internet? If you don’t know then you can’t fix it. (GAP-Give-Away-Profit)

4. Improve your look to book. You make the most money on units you trade. You will trade for more if you get serious about improving look to book. Review every appraisal from the previous day in your “save-a-deal” meeting every morning. Someone in management should be responsible for calling every customer that had a trade and up the ante.

5. Shoot the moon on the right stuff. Since the beginning of the car business, higher grosses are driven by some home run cars. You have to understand which ones are home runs, singles, doubles, and triples.

6. Try some old-school. If you’re not a true one-price dealer serve up an under-allowance on every trade. It should be part of your discipline each time you appraise a unit.

7. If you’re still struggling with gross maybe it’s time to let me train your entire management team? My message is powerful and long-lasting.

Fix what you can fix. That’s all I’m gonna say, Tommy Gibbs

Are You Worried Yet?

There are a lot of dealers concerned today about the lack of new car sales in January and February. Some dealers are blowing it off that the weather killed them. Maybe it did. Maybe it didn’t.

If you understand that this business runs in cycles and if you understand that a new vehicle is pushing $35,000 with payments of $550 or more then logically it’s not just a weather problem.

Many of us remember back in 2008 and 2009 that the world was coming to an end. Actually, for some new car dealers, their world of selling new cars did end.

I’ve often compared those tough years to the Great Depression.

My parents and grandparents went through the Great Depression. How they thought about money, debt and resources were very different than those of us who have come along over the last 50 years or so.

Just like during the Great Depression, I was convinced back in 2008 and 2009 that we had learned some valuable lessons that we would never forget. I’m starting to realize just how wrong my thinking was.

Our reliance on new car sales and what they bring to the table has never been greater. New car sales are a good thing, but when we rely too heavily on them for our bottom line, it can put us in a trick bag when things go south.

There were hundreds of dealers who lost their franchises in 2008-2009. Many of those dealers attempted to turn those nice buildings into used car operations.

A good number of them failed. The reason they failed was
because of their reliance on new car sales they had never taken the time to study and learn the used car business.

If you are the Dealer, General Manager or General Sales Manager, you’d be wise to amp up your thinking on used cars. If you have high dollar aged units you should be really concerned.

Sure, enjoy your new car business as much as you can for as long as you can, but never forget, the stronger you are in used cars the more new cars you will sell and the less likely you are to have your own Great Depression.

If you’re smart you should be asking yourself, “what if this isn’t a little weather blip on the map, but a tough couple years ahead of us?”

You may not always be able to sell new cars, but you can always sell used cars. That’s all I’m gonna say, Tommy Gibbs

Improving Gross Profit Part 3

1. Think in terms of improving gross in small increments. Try paying the managers a bonus for achieving nominal increases each month. Start by improving gross by $50 a unit. Do that over the next year and you will see a slow and effective way to increase your gross. You can only eat the elephant one bite at a time.

2. How could I talk about your grosses without mentioning “Life Cycle Management?” Life Cycle Management is designed to help you create a sense of urgency on those cars that are most likely to kill your grosses. The faster they go away the better your gross will become. My UpYourGross software tool puts you on the path to better grosses and more efficiency.

3. Track GAP and ROI. When you do, grosses go up. How much are you giving up once the customer shows up at your store with a price from the Internet? If you don’t know then you can’t fix it. (GAP-Give-Away-Profit)

4. Improve your look to book. You make the most money on units you trade. You will trade for more if you get serious about improving look to book. Review every appraisal from the previous day in your “save-a-deal” meeting every morning. Someone in management should be responsible for calling every customer that had a trade and up the ante.

5. Shoot the moon on the right stuff. Since the beginning of the car business, higher grosses are driven by some home run cars. You have to understand which ones are home runs, singles, doubles, and triples.

6. Try some old-school. If you’re not a true one-price dealer serve up an under-allowance on every trade. It should be part of your discipline each time you appraise a unit.

7. If you’re still struggling with gross maybe it’s time to let me train your entire management team? My message is powerful and long-lasting.

Fix what you can fix. That’s all I’m gonna say, Tommy Gibbs

Improving Gross Profit Part 2

1. Can you reduce your recon cost? Are you being as efficient as you can possibly be? Does service have carte blanche? Is service still selling the used car department the same old same old?

2. Would you sell more units if you could keep more units? In other words, are you letting some of your less expensive units get wholesaled because they cost too much to recon?

Try using this coupon to encourage your used car manager to keep and retail some of that cheaper stuff. It’s found gross profit.

3. Can you speed up reconditioning? Very few of you really know how long it takes to get a car through service and clean up. Is your sales management team constantly crying about how slow service is? Might be some truth to it. Check it out. “It’s not the big that will eat the small, it’s the fast that will eat the slow.” Our Recon Tool will show where the pitfalls are. It’s easy to use and doesn’t create brain damage.

4. Re-evaluate your packs. Have they outlived their usefulness? Are packs ultimately affecting your average gross in a negative way? Are they giving you a false picture?

Dale Pollak refers to packs as taxing yourself. I think we are all taxed way too much. If you got rid of packs could you buy and trade for more units? If you bought and traded for more units, wouldn’t you sell more units? If you sold more units wouldn’t you have more gross going to the bottom line?

5. Have you made an all-out effort to convince your sales and management staff to sell the value of your company, your product and the fact that you have the best prices in the market? You’re becoming a one-price dealer whether you want to or not. Deal with it.

6. Re-think what you are stocking and the when, how and how often you tweak your pricing. Far too often prices are not massaged soon enough so you end up pricing your cars at the end of the cycle at crappy grosses.

It’s also important to know which units you can shoot the moon on. You don’t have to give everything away, but you have to know the difference between a unit that you can make gross on and a unit that needs to be moved quickly. Know when to hold ’em and know when to fold ’em.

It’s a safe bet that anything you have that’s 45 to 60 days old isn’t going to make you much money. Lord help you if you have units over 60. Retailing out of that hot mess alone will eventually improve your gross.

There are many parts to improving gross profit. Look for Part 3 next week.

That’s all I’m gonna say, Tommy Gibbs

You Can Average $3000 on Front Gross Profit

You can make an average of $3,000 per unit on front gross profit. Yep, you can do it.

Achieving $3,000 on the front is easy enough to do. It really is.

You can do it overnight. Yes, all of you can. I believe in you and I know you can do it.

When dealers are screaming about low grosses, they often point to the fact that their cars are priced too low on the internet and therefore the easiest solution is to increase the prices.

The fact is you can improve your grosses dramatically overnight by increasing your prices. I mean really, if you don’t ask for it how do you ever think you will get it? Remember you can always go down but it’s impossible to go up.

Yep, that works for me. Raise your prices, ask for more and you will get more. Gross has always been a state of mind. Whatever mindset you are in then you can achieve it.

So, right now, right this minute, right this second, all of you need to stop giving your cars away, raise your prices and the grosses will go up.

As good as that all sounds there are a number of little problems with raising your prices:

1. Your used car volume is going immediately in the tank.

2. Your total gross is also going so far south you will lose your butt.

3. Your profits are going to be pooh pooh because you have totally cut off the spigot of cars going through service.

4. Stealing trades will become the norm and new car volume will go into the tank because you are reluctant to step up.

Doing used car volume and achieving high used car average gross goes against the laws of nature.

I’m not saying you can’t improve your grosses, but the days of doing $3,000, $2,500, and in some cases $2,000 are history.

Your best opportunity to improve your overall business is to improve your volume. Improving volume improves business in all your departments.

You can’t spend average gross profit. You can spend total gross profit.

Stay tuned for part 2 next week when I’ll give you some realistic tips for actually improving gross profit.

That’s all I’m gonna say, Tommy Gibbs

How Fast Are You?

I’m not talking about turning your used cars faster. I’m talking about picking up how fast you walk. The tempo of your gait says a lot about you. If you want to energize your team you first have to energize yourself.

If you know me, you know I’m not a very patient person. One of the things that drives me nuts is when people waddle along on a moving sidewalk.

If you’ve ever traveled through the Atlanta airport, I’m sure you’ve seen the moving sidewalks that come to an end, you get off, walk about 25 feet and get onto another one.

I was recently on one with a group walking like a buffalo herd that had just eaten a massive meal. After the exit, I decided to see if I could out-walk them on the side while they walked on the moving sidewalk. Of course, I won.

When you pick up your speed, you energize yourself. When you energize yourself, you energize your team. Speed and energy go together.

Slow walkers tend to think slow and move slow. Not only are they slow, but they are also slowing down everyone around them. By and large, they aren’t going anywhere. It’s obvious that wherever they are going isn’t important or they’d be in more of a hurry to get there.

People who walk fast want to get somewhere fast. But more than that, fast walkers are people that have high energy and are go-getters. Fast walkers are confident, courageous and all about having a no-fuss in life. They expect other people to keep up with them and they have a low tolerance for those not in a hurry to get things done.

They often don’t tolerate a lot of words and if they do, they want you to spit it out fast and get on with it.

Think fast.
Talk fast.
Move fast.

That’s all I’m gonna say, Tommy Gibbs

Do You Want To Own Your Own Business?

Most of my messages are geared toward management, but today I want to talk to your sales staff. You should forward this to every salesperson on your team and suggest they sign up for my newsletters.

If you’re a salesperson, I want to help you re-frame what you do every day and what a great opportunity you might be missing. If you’re in management, this is a message you need to share with all.

Have you ever wanted to be in business for yourself?

Have you ever thought about going into business, to get someone else to invest the money and you reap the rewards?

Welcome to the amazing world of the automobile business:

You have free office space.

You get rewarded based on how hard you work.

You have opportunities for advancement.

You have healthcare, vacation and retirement opportunities and Christmas bonus programs.

You have a management team working to help you be productive.

You have a free computer system.

You have a CRM/DMS and other software provided free of charge.

You have staff and technicians available to handle customer problems.

You have free marketing, advertising, and a website developer.

You have an administrative staff to help process your deals, DMV work, etc.

You have millions of dollars of inventory to sell with zero personal investment.

You get special spiffs/incentives from the factory.

You get all the free training/coaching that you can stand.

You have a detail/clean up department that gets your vehicles ready for delivery.

You don’t have to pay a penny for phone, electricity and other utilities.

You can demand an assistant when you become productive enough.

You have an Internet/BDC department begging you to take leads.

You have free janitorial service.

You have free coffee.

You have your own personal financial officer (F&I) working to put your deals together.

You work out of a multi-million dollar facility located on prime real estate.

You have an opportunity of a lifetime with no personal financial investment.

You need to “own” your own business. That’s all I’m
gonna say, Tommy Gibbs

What Day Is It?

In sports, you often hear about how powerful momentum and intensity can be. The last two minutes of a football game will frequently determine the outcome.

You will often see players and coach’s greatness shine through in the most helter-skelter moments. There’s a good chance the last two minutes of the Super Bowl this weekend will determine the outcome.

In the automobile business, the last day of the month is like the two-minute drill of a football game.

I have some what ifs for you:

What if you approached the 15th of the month as if it were the last day of the month?

What if you approached every Friday and Saturday as if they were the last two days of the month?

What if you approached every Wednesday and Thursday as if they were the last two days of the month?

What if you approached every Monday and Tuesday as if they were the last two days of the month?

What if you approached every day as if it were the last day of the month?

What day is it? It’s the last day of the month. It’s always the last day of the month.

The clock is ticking. You’re running out of time-outs. Pick it up. Let’s go. That’s all I’m gonna say. Tommy Gibbs

Are You Running?

It’s January and we’re off and running. Actually, some of you are running, some of you are walking. The runners have been training hard for the last few months. The walkers have been talking about training hard.

The runners were getting into shape back in November and December by laying down “the plan” for 2019. The walkers were thinking they needed to get in shape and get a plan for 2019.

Runners are never happy. I’ve never seen a runner smile. Walkers are well, walkers. They often smile because they are dreaming of the things they would like to do. Whatever they are dreaming stays in their dreams.

The runners have a firm plan going into 2019. The walkers have a “kind-a-sort-a” plan going into 2019. Walkers talk about a plan, runners actually execute the plan.

Walkers are afraid if they make a plan they might have to change it. Runners know there are mud puddles and they just have to jump over a few to get where they want to go.

Runners like challenging their leadership skills by changing the plan. Walkers are afraid of change and would rather go with the flow than rock the ship.

Runners love Dave Anderson’s book “If You Don’t Make Waves You Will Drown.” Walkers would rather read “Winnie the Pooh” and dream about Pooh Bear.

When I do a workshop, I recommend, suggest, and urge those in attendance to write out an action plan for the next 90 days using the top 3 or 4 processes from the workshop. At the end of 90 days re-write the action plan adding 3 or 4 more processes to it.

Any time you’re planning, there should be 30 day, 90 day, 180 day and 365-day action plans. The weather and the terrain are going to change and you need to be ready for a change.

Walking along whistling a happy tune will make you feel good for that one little moment in time. Running hard with a flexible plan will exhilarate your soul and brain and will allow your team to leap tall buildings with a single bound for a long time to come.

Runners take money to the bank. Walkers go to the bank to borrow money so they don’t go out of business…yet.

Becoming a runner means harder training, greater commitment, and disciplines that most people don’t have and will never have. That’s why there is so much room at the top. Some will, most won’t.

It’s very simple to go from being a walker to a runner. Just do it. That’s all I’m gonna say, Tommy Gibbs

Recruiting & Training Problem?

While I realize you don’t care all that much about my history, I want you to know I’ve tried it all when it comes to recruiting and training. In the early 80s we had an off-campus training facility with two full-time recruiters and trainers for our three-store group.

I wish I had a perfect fix for you. I can get you close but, in the end, you have to deal with the issues surrounding a major cultural shift.

That’s what it is, a major cultural shift when it comes to today’s recruiting and training of salespeople.

If you’re building a new store from the ground up, you have a much better chance of making it happen. You can write the new rules, hire the right people and change the game.

You can lay out an achievable game plan that will carry you through the next 20 years. I didn’t say it’s not going to change over the next 20 years, just that it will put you in a position to build on as you move forward.

Since you’re probably not building a new store it’s going to be a little more difficult, but if you have some discipline you can do it. It’s going to be expensive but if you think about what you might be investing in a new store given the chance, then it’s probably a bargain.

And, if you think about the cost of turnover, you’re going to win big time. Nothing you can do will eliminate turnover, but how you deal with it and how you restock your shelves can make a big difference.

The size of your store certainly can change the equation, but at some level all of this is doable.

When it comes to training, you have to get committed to something more than “Johnny the new car manager/GSM will handle it whenever we hire someone.” Johnny can close deals, but he ain’t no trainer. As a matter of fact, it’s a burden and pain in Johnny’s butt to have to deal with it. His lesson plan consists of making sure they know the selling process.

Hiring outside companies to come in and do your recruiting and hiring is a short-term fix at best. It makes you feel warm and fuzzy, but the end result doesn’t change much of anything.

If you have 10 salespeople or more, you need to give
serious consideration to having a full-time trainer and you need to invest in their teaching skills and not just base it on “they know what to do.” You have to continue to educate the trainer.

Here’s the secret sauce:

1. Hire a trainer. Give him/her the tools they need to be successful, as in equipment and training for them. (Why do this? Because the way you’ve been doing it isn’t working.)

2. Pick a specific week each month that you are committed to a new recruiting or training class. (Why do this? Because it shows you are committed to building a different and powerful organization. When you only recruit and hire when you need someone, you end up hiring people you shouldn’t. There’s always a need to upgrade and improve your sales team. Stop protecting non-producers and hang-ons.)

3. Require other managers to sit in on various phases of the training. Be flexible but do it. With the supervision of your trainer, you can assign them parts of the training to lead. (Why do this? Because they need to know what you are teaching and what to expect when the salespeople hit the floor. And, they might learn something.)

4. Every manager in the front part of the store will be required to personally recruit a person for class each month. They cannot run ads. They have to find them in the wild. If the person they recruit makes it 90 days, pay them a $500 bonus. If I was doing it, I’d fine them $500 if they didn’t have a butt in the class each month. (Why do this? Because when someone personally recruits someone else, they will take a personal interest in their success. You’ve seen it happen over the years where a sales manager takes a liking to a salesperson and helps them succeed. Same deal magnified a bunch.)

5. Change your pay plan to salary and volume based. Do not pay on gross. You can hire a lot of quality people who are happy making $40,000 to $60,000 a year. (Why do this? People today don’t want to be paid on gross. And, the sales people today have very little control over gross. The deal is already a mess because of the prices you’re putting on the Internet for both new and used.)

6. Don’t hire anyone that’s ever sold a car before. (Why do this? If I have to explain this, you’re in a lot more trouble than I can help you with.)

7. Hire some part-time salespeople to help out at peak times. (Why do this? To give you the coverage you need and so your full-time people don’t have to work 12 hour days.)

8. Commit to a 40-hour work-week. (Why do this? People think differently than we did in generations gone by. They don’t want to work 12 hours a day regardless of what the income potential might be. They are willing to earn less if they can have more time off. Their value system is far different than what we have seen in the past. Deal with it.)

9. Incorporate an up-system into your selling process. (Why do this? So, you don’t have the mob standing at the front door waiting on an expensive up. One of the reasons you lose quality people is they hate standing around doing nothing. Keeping them busy should be part of your daily mission. You need to lead the charge for them to be productive and generate their own customers.)

10. For at least 30 days all new salespeople’s deals will be desked by the trainer. (Why do this? Because they can’t say to the trainer “that wasn’t taught to me in class.” Your trainer and your salespeople will become better and better.)

Understand that people are going to come and go. It’s the nature of any sales business. One of your goals is to give them the tools to be successful with your organization or whatever they end up doing in life. When you help others to be better, you become better.

Be aware of your current staff saying they are all in on the outside and sabotaging your new direction on the inside.

There will be current salespeople and sales management that want to see your new direction fail. They will undermine you and point out all the reasons these are bad ideas. Some of them are simply protecting their own turf and will try to make you believe they are looking out for you.

They aren’t.

You have choices to make. Stick with what you’re doing or make major changes. The longer you wait, the more pain you will have and at some point, the pain will be so great that you have to change. That’s all I’m gonna say, Tommy Gibbs