Digital Dealer
By Peter Brandow
There's so much going on in the auto biz these days that it's hard to keep any consistent game plan without being accused of knuckle-headedness. Flexibility and adaptation are the attributes of today's winners. I just hope that flex does not become the excuse for no real plan. If my article is similarly "flexible," it is intended. These are the ramblings of a slightly confused dealer who thinks that anyone out there who believes they are on top of what is going on this month is probably out of touch with just how volatile the automotive marketplace is today. Here are some ramblings that are keeping me awake at night.
The Internet would be the perfect place for a manufacturer and a dealer to partner for the benefit of wooing a customer. It may take half a decade and the cooperation of hundreds of people to design and produce a better car, but it takes a nanosecond (or just a few clicks between two people) to create a new relationship with a customer – half a nanosecond when the customer is surfing for change.
I woke up this morning at 3:30 a.m. No, I'm not one of those creatures of the night. On this occasion, I woke up in the middle of the night as a result of all the puzzles my brain couldn't solve before dozing off. On previous nights, my list of mid-night challenges included Chrysler losing its final battle for American leadership. This signals the demise of volume sales programs from my volume franchise, swollen inventory levels of new cars and water in the aged used cars, a bunch of techs out with the flu, a precipitous drop in my retirement account, Chrysler's DRAC program falling apart for my needs, and my health care provider's looking to bump rates by over 25%. The declining accuracy of my tennis serve was also on the list, but not really.
But on this particular night, the big thing that went bump in the middle of the night was the potential consequences of manufacturers GM, Ford and Toyota that are strategizing to sell on the Internet.
At 3:30 a.m. such things do not often get solved, but some nights they seem to be more manageable when I'm sitting up watching my wife sleep than they do while I'm sleeping along side of her. Go figure.
Last month I worked on a certain manufacturer's Internet strategies while on four flights to and from Detroit. The meetings that follow such flights could be divided into "downloads," "discussions," and "lobbying." My first meeting, a posh dinner hosted for some serious players, was mostly download. The recipe of a fine meal and some informal glad handing with the brass often wins the hearts, minds, and votes of enough dealers to move forward without a clear solution of what to do if the program du jour eats up a few dealers' opportunities. On such occasions, I wonder how often the brass wakes up even earlier than I do.
History has shown that if you put the right group of dealers in a room with smiling big wigs, a "go forward" vote can just about be assured. GMRH and Blue Oval are great examples of how a select group of dealers can break bread over a plan that has no strong constituency in the bigger world. Go figure.
So how is it that dealer/manufacturer partnerships should be created? How do manufacturers "get real" so as to avoid rolling out Blue Oval and GMRH again and again? Or worse yet, how do they avoid rolling out such diluted and ineffectual programs that no one is offended because nothing is changed?
It's simple and not so simple. A manufacturer simply has to embrace two fundamentals. First, a consumer-centric perspective and second, the reality that the dealer is their customer. Until recently, manufacturers have operated with the belief that the dealer was a hybrid of outsider customer, insider staff, non-equity partner, interest-free banker, rent-free landlord, enemy, and advisor. The difficulty is that with all of these possibilities to chose from and the decentralized leadership that exists in most manufacturers' ranks, there is no consistency of relationship with the dealer. What's more, anyone can select which dealer definition fits the "go forward" vote he (or she) is looking for and easily lose sight of the rest of the dealers out there.
If you doubt this possibility, consider the inconsistency reported in our weekly industry news. One article quotes a manufacturer's pro-dealer czar pledging an unqualified oath of dealer/manufacturer partnership governed by consensus and unanimity of judgment. Three pages later there is a report of a new project authored by the same manufacturer that launched last week in competition with or overlapping the strategies that have been referenced by the previously quoted czar. Somewhere in between there are whisperings of different goals sought after by the global versus domestic folks, different again from the objectives of the captive financial folks, which seem to be in conflict with the latest marketing programs on the same products. And all of this flies in the face of another division that clings steadfastly to independence regardless of the wisdom of a particular program or the need for solidarity as a building block. Where do I find this inconsistent news you ask? Where don't I?
And all the while there is that guy on top, witnessing and in charge of it all, still pledging an unqualified oath of partnership governed by consensus and unanimity of belief. Go figure.
So where's it all going? What characteristics will the winners possess? Leadership and trustworthiness at a minimum.
Waiting doesn't work. Self-serving programs don't work. Leadership toward a mutually beneficial goal does work. Sharing the risk and the reward does work. Demanding a variable investment by the dealer, while capping the investment of the manufacturer, creates an unlikely partnership.
Many dealers and manufacturer staffers have asked me how I determine whether a program is likely to improve the partnership of dealer and manufacturer. The following five question test is my yardstick of success.
- 1. Will the partnership venture likely create a permanent change in the margin of one but not both of the partners?
- 2. Is one or the other partner gaining greater control of future opportunities?
- 3. Is one partner retaining control of a key asset of the venture?
- 4. Is the mind and management of the partnership venture conflicted by outside interests that are not equally beneficial to both partners?
- 5. Can both partners equally afford the failure of the partnership venture?
Now some folks may read this and take exception because it seems that the test is too negative. I have a simple response. I have rarely seen a financially successful venture kill a partnership for lack of parity in benefits. Said another way, given enough profit, partners often find that their differences are bridgeable. This does not suggest that an unequal division of profits will not fuel argument among partners. This only highlights that a partnership owning the golden goose is less inclined to give up the fertile goose than the barren goose.
So in conclusion, the measure of your faith in the success of the joint venture is inverse to your need for equality in management and benefit. Of equal import is that you study the unintended possibilities. Are there outside interests and influences that will impact the consequence of the venture? And what will the world look like if both or either partner attempts to undo the venture? Which parts of the venture will have gone beyond the control of either partner? Which will work to the benefit of one but the detriment of the other?
Needless to say, after such an analysis many will be frozen to inaction. Why risk the change? Because if you're thinking about this stuff, so are your toughest and brightest competitors and their solutions offer nothing to you, win or lose. And worse yet, their answer may come to them in the middle of the night while you're at home asleep. Maybe tonight.
Peter Brandow, nationally known for C.A.R.S. (Cyber Auto Retailer' s Success) e-Commerce seminars, is one of the top five Internet new car dealers in the country. He is the dealer of the Brandow dealerships, the national dealer technology chair of e-GM, a board member of NADA's IT committee, and an attorney in Pennsylvania. pbrandow@dealeronline.com
