Staying Up In Down Times
By Dave Anderson
I hesitate to write concerning "down times" since there are numerous dealerships having their best year ever in spite of a nationwide slowdown in automotive sales. In fact, I heard from two clients on "best ever" just last week - one a Lincoln Mercury dealer expressing how they had the best month in their history. However, it cannot be disputed that sales are down overall, so I offer these thoughts and strategies for staying up in down times.
1. Focus hard on your core. Rein in investment in peripheral profit centers and invest in the strengths of your business. Assume your core is underperforming and you'll be right most of the time. Aggressively market to your current sales and service customers. In down times one of the best ways to gain market share is to retain the customers you already have and gain their referrals.
2. Don't panic spend on advertising. Resist the temptation to panic spend on advertising to conjure up more traffic. When the fish aren't biting, throwing twice as many lines into the water brings a diminished return. Focus on doing a better job with the customers already coming on the lot and you can close the same, and oftentimes more sales with lower traffic counts. In fact, one reason dealers overspend on advertising is to buy fresh blood to replace the prospects abused by incompetent salespeople and managers. Become brilliant in the basics. With fewer ups comes an opportunity to build more rapport, give better presentations, take more T.O.s and follow-up more thoroughly. This is also a chance to hold more gross profit.
3. Don't kill your capacity to produce. Improve the bottom line by maintaining a tighter inventory, scaling back ad dollars, putting vendor products/services up for bid, improving receivables and other cash flow factors. But you must resist the foolish and shortsighted strategy of cutting out costs that contribute to developing your most valuable asset and only sustainable competitive edge-your people. Improving your people increases your production capacity, and by reducing it, you shoot yourself in the foot. Training your people is not a luxury; it's a priority. Training is an investment, not a cost. Dealers who don't get this are hopeless.
4. Reduce entitlements. Reward performance. Terminate the weakest links. If you make personnel cuts, remember that tenure and credentials don't substitute for results. Reward and support those who perform. This means you'll have to resist the temptation to bond with yesterday's heroes for old time's sake. Do this and you send a corrupt message about standards and blow a ripe opportunity to create urgency and focus. The weak links in your organization determine the speed of the rest of the team. They are a restrictive force. Just as a chain can't pull more than the weakest link allows, regardless of the strength of the other links, your overall production will be compromised as well. Weak links lower the collective self-esteem of the whole team. They compromise your standards and impair your credibility. They are a distraction; they sap morale and break momentum. The team attitude toward weak links normally starts out with "let's help him or her" and when no improvement is discerned, the attitude changes to one of resentment. Top performers feel cheapened and diminished working in an environment where others don't contribute and can't pull their weight. Along these lines, monthly spiffs and contests where everyone normally has equal participation just because they happen to show up each day should be changed so people must qualify with a minimum performance standard to participate. This puts the privilege into your spiffs and contests and reduces the entitlement culture where mediocrity flourishes. Give everyone everything they earn and deserve-nothing more and nothing less. Run a meritocracy, not a welfare state. When you give someone something for nothing, you make them good for nothing.
5. Cut once and for all. If you reduce expenses this month by cutting out free cokes and bottled water, then two weeks later eliminate demo privileges, then next month fire the cleaning service, then take away donuts in the service waiting area, it's like Chinese water torture that continues to distract, demoralize and disrupt. Figure out what you want to cut and get it over with at once. This includes personnel. Then bring everyone together, explain what you've done and why, put it behind you, let them know everyone and everything remaining has been strengthened by these cuts, and now that they're done, everyone can focus on getting back to work.
6. Don't develop a loser's limp. Don't blame so much on outside conditions that you fail to accept responsibility for your current ills. A downturn always exposes the sins of the good times. These past record years in our business made many dealers and dealership personnel fat, arrogant, complacent and turned them into know-it-alls. They stopped training, making tough decisions and changes, became averse to risk, stopped stretching and started maintaining, and turned a blind eye to poor performers because business, overall, was good. Until you and the other managers accept that the biggest threat to your dealership comes from the inside and not the outside, you will continue to misdiagnose and mistreat your most serious problems. Lack of leadership, hiring standards, performance expectations, accountability, a cohesive leadership team at the top, vision, strategy, urgency, people-development and a growth environment are the inside threats you must go to work to eliminate day-in and day-out.
7. Remain a positive force. Management will multiply the damage and compound morale problems if they begin terrorizing people with threats, excessive criticism and lousy attitudes during slow times. Remember what good coaching is: leading from the front with plenty of speedy, positive reinforcement for worthy performance, encouragement and motivation, listening and directing, honest communication, as well as fast feedback and consequences for performances which are lacking. Keep it balanced. Stay focused on the big picture. And most important of all, remember that the best time to fix the roof is when the sun is shining. So when better times return for you, it is not a license to coast, become complacent and think you've arrived. Instead, it's the best time to train, coach, clean up your roster, set standards that create urgency, make the tough decisions, implement necessary changes, take risks and lead from the front. Do these things when things are rolling to keep people sharp and focused, and to let them know there's still room to improve. Develop a mindset to run up the score rather than sit on the ball and the next downturn will find you bulletproof rather than wearing a bullseye.
Dave Anderson conducts sales & leadership workshops worldwide. Dave will, again, be a featured speaker at NADA in 2002. He hosts the radio talk show, "Dave Anderson's Learn To Lead Hour" and his new book, "No-Nonsense Leadership" will be published this fall. Dave's Web site, www.learntolead.com offers hundreds of free sales, management and leadership training articles, as well as products/services and his event schedule. If you have specific questions or require more information about this subject, please check the appropriate box on the writer response form on page 3. danderson@dealeronline.com
