Saleslynx

PRODUCT-DRIVEN CRM – THE KEY TO LONG-TERM PROFIT?

2013-03-24T05:16:00.000-07:00

Dealerships looking to increase their profits in their sales department have traditionally focused on two key areas – increasing the prospect conversion rate, and increasing gross profit per sale. But there is only so far you can go with that.

There is undoubtedly some potential to improve the prospect conversion ratio in most dealerships. The true industry average is probably no more than 10% or so. Many dealerships believe their figure to be higher, but they often fail to take account of selective logging in the showroom. The top performers are probably achieving 20%. But even with a tightly-controlled sales process in place it is hard to get beyond the 20% level – not least because of the quality of people employed in the industry, and the prevailing salary/commission structures.

Increasing the profit per sale is even tougher. In a mature, competitive market, raising your prices is often not an option. And raising your gross profit by a significant amount without raising prices is extremely hard work – even before you take into account the increasing costs of holding a franchise in the post-Block Exemption environment. You don’t just have to sell better, you have to buy better as well.

One alternative is to sell more accessories, or more finance. F&I has long been seen as a way to increase profits, but that too is under increasing pressure, not least from the legislative authorities. And if you look at the trends in the USA, with the controls they now have coming in such as the disclosure of finance commission that pressure seems certain to increase.

During the past ten years or so the industry has focused more on increasing the customer’s repurchasing frequency as a way of increasing profits. Ford set the ball rolling when it brought out the Options PCP. It was designed to increase the frequency with which customers change their cars, and to make sure they came back to the dealership they bought them from in the first place. When they saw how successful it was, the rest of the industry soon followed. But because PCPs are linked to residual values there is a risk involved, as the industry found to its cost on both sides of the Atlantic.

Now that residual values appear to have stabilised, the PCP is regaining popularity. But there’s a clear need for the industry to develop new products that lock customers in and drive them back to the dealership, which are not tied to residual value risks.

We’re seeing some of those products being developed in the USA today, in the form of tyres-for-life and engines-for-life programs. Dealers who have embraced them are achieving some success in terms of getting customers to come back to the dealership more often – or even at all!

The tyres-for-life guarantee is not sold as an add-on product, it is built into the selling price of the car and customers have to come back to the dealership every three months or 3,000 miles for a quick tyre inspection. The engine-for-life package requires customers to keep coming back to the dealership in line with the manufacturer’s service intervals.

With tyres for life, the warranty company that funds the program can buy the tyres in bulk, which keeps the cost down and makes the programs viable. It is based on the fact that the average customer changes car every 27 months, which typically equates to one set of tyres (it also helps the used car department, because every used car that goes out has a new set of tyres on it).

Customers who keep their cars for longer than that are more likely to come back to the dealership when their tyres need replacing – where else can they get them for free? And that gives the dealership an opportunity to sell other products and services if it is handled in the right way by the service advisor. If not, it may be perceived as a rip-off. The customer may feel you are simply loading as much as you can onto the invoice.

Increasingly, US dealerships are putting more of their marketing budget into activities like these, and reducing the amount they spend on traditional advertising. That represents something of a sea-change.

The motor trade is less good than some other industries – companies like Apple, Dell, EasyJet and Ryanair spring to mind – at marketing additional products to their customer base. On a regular basis these companies will come back to you offering additional products and services. If you buy a computer from Dell, for example, they will continue to offer you consumables, or a new laptop 12 months after you’ve bought one, or an upgrade to your home system 12 months after you’ve bought one. Easyjet and Ryanair sell travel insurance, hotel bookings and car hire, plus of course their in-flight services.

For the motor trade your used car stock offers you a considerable opportunity. A dealership database is perfect for marketing to. Who’s to say that of the 5,000 or so customers you have on your database, 200 aren’t going to be interested in a new used car right now? It is good CRM.

The key of course is a clean, up to date database. If you have that in place you can market additional service products, you can market to lapsed service customers, you can market to lost sales prospects….. the list goes on.

But the next generation of CRM strategies will encompass products that lock customers in to the dealership – because if you have got your customers locked in, once you start to tweak their repurchase frequency through your marketing activities you can start to see serious growth in your profits.

SALES DROUGHT, PRE-REGS AND THE €45 MILLION WINDFALL

2012-07-11T16:19:00.000-07:00

Last 10 days as a %

What benefit is there to a car market to register in excess of 50% of its monthly registrations in the last 10 days of the month? I have been trying to figure this out all year and it doesn't make any sense to me for the motor industry in Ireland to continue to do this. June 2012 saw 4178 units registered in the last 10 days, a massive 65% of the month’s units! Our year to date report is at this link INSIGHT JULY 2012

With the seasonally adjusted sales rate (SAR) at just 77,000 units for the year the market is suffering from a savage beating at the moment. Retail sales are falling, and with the availability of credit tightening the prospect of more sales through finance doesn’t look good. Nor does the prospect of another scrappage scheme look likely even though some manufacturers are calling for them across Europe Crisis in Europe.

Public consultation on adjusting the CO2 bands

In fact things could get much worse before there is any sign of them getting better. The government have called for a review of VRT in Ireland and whilst this shouldn’t bode badly for the industry it needs to be very carefully managed.

When it was last reviewed in 2008 the timing couldn’t have been worse with the new scheme coming in on the 1^st July that year. Effectively it killed sales in the first 6 months and the industry welcomed in the recession way before it should have done. This can’t be allowed to happen again.Click here for the VRT detail

IS THE DEALER’S VOICE BEING HEARD?

The reality is that the government needs to generate more revenue from the industry as their tax receipts are back 72% on 2007 from €1.4 billion to under €400 million last year. It’s highly likely that they will change the rates around the CO2 emission band and the rumour is that this will be in place for the budget. I don’t want to tread on any toes with this as I know that the livelihoods of a lot of people depend on the manufacturers, the industry bodies and the government getting it right this time.

However I do have concerns, concerns about the government not listening as well as it could do to what is happening at the coalface. To do that they need to listen to another voice, not as loud or as well represented as it could be for a myriad of reasons. That body is the dealerships, the people that own the dealerships, that run them and that work in them. They are seeing first-hand what is happening.

WHAT IS THE GOVERNMENT HEARING?

The most immediate issue and the most pressing is the one that I have started the article with, the pre-registrations that are happening at the end of the month. With the exception of cash rich dealerships (a declining species), which can avail of manufacturer incentives and buy pre-registrations at reduced prices, there is absolutely no benefit to these dealers to self-register. The pre-registered cars will be sold, however they will push down the price on used cars, cars in stock that the dealers are having to absorb (this reality is happening now).

4 year comparison

At the very same time the government must be hearing a very different message, a message that is confusing unless you have the full picture. This message is one that says we are getting our revenue at the end of each month as the new cars get registered so everything must be OK. Sure they would like new car sales to increase and therefore earn increased review from the tax. But they are not absorbing any pain, they are not absorbing direct losses for these cars and therefore these losses have no direct consequence to them.

BROKEN RIB

Pain is a funny thing. I broke my rib just 3 weeks ago and I have to say it’s really uncomfortable. For the first week it was awful pain and I couldn’t sleep, the second week a little less and this week a little less again. But the pain is still there and I’m taking pain killers daily. Everybody around me has forgotten I’m in pain of course; the reality is they don’t care and I get that, however it’s hurting me and I’m having to make a lot of changes to how I do things because of it.

It’s the same for the government but they just don’t know it. The dealers out there are really hurting and they are in a lot of pain, but its a pain that the government aren’t feeling which they need to. 34,493 cars have been registered in the last 10 days of six months to June this year so far, 50% of the total cars registered year to date. If I conservatively suggested that 33% of these cars were self-registrations then the government has taken around €45million in revenue this year over and above what they really should have done. THAT WOULD BE A PAINFUL HOLE IN REVENUE TO PLUG.

REAL MARKET

My belief is that the real retail market is sitting at around 60,000 units this year and as such the likely revenue from VRT should be around €240 million and not the €310 million that they will likely get paid. If that revenue was €240 million perhaps they would sit up and take notice, €70 million that’s a big hole in revenue to fill. Its a truer picture of what’s really happening in the market on which to gauge their decisions on the VRT review. AND IT DOESN’T INCLUDE ANY OF THE VAT REVENUE THAT WILL BE GENERATED.

Getting back to the dealerships pain though; 5 dealers have closed their doors within the last 3 weeks and it is rumoured that there are manufacturers who are actively shoring up others. The reality is that there are still too many dealers for the size of the current market and more will go. What can be done to avert this?

There are therefore only two things that can be done, either somehow the market has to see a lift in volumes or more dealers have to close their doors. Anything the government can do to lift sales will be a welcome boost for the dealers as with this option there is a chance for the government to earn more revenue in VRT, VAT, PRSI and Corporation Tax. The second option guarantees a drop in taxation revenue and will result in more dealers closing their doors. The dealers need this message to be heard loud and clear.

My belief is that this argument, that any increase in taxation will hurt the other side of the revenue coin is not being discussed as much as it could be. Whilst the government picks up VRT revenue from decisions made to pre-register cars not required, the true story will not be told.

My genuine concern is that unless it is discussed in more depth with dealers it will lead to a decision on VRT that, like a broken rib, will be really painful and will take much longer to heal that is avoidable.

If the government increases VRT in whatever way, in a depressed market, it will have major adverse consequences for car dealers, jobs and tax revenues. The industry needs to avoid a repeat of what happened in 2008 by getting this debate on the table now and getting their voice heard loud and clear.

Brian

IS IRELAND A MICROCOSM FOR AUTOMOTIVE SALES IN EUROPE

2012-06-13T10:41:00.000-07:00

A situation that is likely to be played out in other European markets is being played in Ireland. The numbers of vehicles registered in the last 10 days of the month to the end of May is increasing. Year to date 30,315 of the total cars registered have been registered in the last 10 days of the month, this is 50% of all the passenger car registrations.

As a comparison that percentage was 46% in 2011, 45% in 2010 and 37% in 2009.

It can’t be in the interests of the manufacturers to do this or in the interest of the dealers, so what’s causing it?

PRIMARY REASONS

Number one; there are as many dealers today faced with cash flow problems as there were in 2009. This is influencing the last ten-day figures in that dealers simply haven't got the money available in the earlier part of the month to register cars and pay for them.

Number two; the manufacturers have likely over ordered for the market and are using pre-registrations as a means to force vehicles onto the market. With the distributors forcing registrations to this level they are simply pushing bigger problems down the road.

Number three; consumers are simply not coming in to the showrooms. If they have money they are not spending it and if they don’t they can’t get it. There continues to be poor availability of credit for consumers which means that larger purchases cannot be funded (this isn’t true of all of the franchises represented in Ireland but it is true of many).

The competitive playing field is uneven. The cash flow situation faced by many is stifling those dealers ability to purchase pre-registered cars and pass those savings onto their customers. Dealers with funds available can maintain volumes and profits. It really stifles consumer choice and may compromise competition when the game plays out.

First 10 days in June 2012 by franchise

With numbers this low it means that down the road in 2015 there will continue to be a shortage of used cars trade-ins and a declining service parc.

The last time there was a case of real pre-registration madness identified in Ireland was in 2000, the difference between then and now is that then it was a market fuelled by credit and now it is a market being strangled by the lack of it.

CARLOS GHOSN WORDS

CEO of Nissan and Renault

Carlos Ghosn of Nissan Motor Co and Renault today stated that he expected "three to four more years of stagnation" in the European auto business. European consumers, facing tremendous uncertainty in their lives, are holding off from making large purchases like cars and companies need to be strong enough to make it through three or four tough years to outperform rivals, he said.

When a major player in the industry makes these statements they should be heeded. It’s going to be tough going for automotive sales in Europe and businesses need to be well prepared for it.

THE HUMAN PAIN IS A REALITY

Those franchises that recognise the new playing field, that don't expose their dealers to pre-registration madness, combined with good consumer offers and finance availability will be better placed for a toughening market. The networks with oversubscribed dealers, too many registered units and no access to consumer credit will suffer.

More dealerships will be forced into closure sooner than anticipated. Is this a good thing down the road? If you don’t consider that there are real people behind the closures then what is happening is simply the nature of business and the change is needed.

If you understand that people are really suffering, that business that have been established for years are failing and the human pain is a reality.

A BROKEN FRANCHISE MODEL?

A question needs asking about the franchise model. If it worked then why are the networks so oversubscribed? As new sales fall then down the line service parcs fall as well which influences aftersales. New sales and used sales are reliant on finance to support the sales (and to contribute to profit). If credit isn’t available it hits sales volumes and reduces 2 profit centres (chassis and F&I). Absorption levels are already at the lowest in years and customer retentions levels are falling.

If a dealership can’t make a profit then it can’t re-invest and serve its customers properly. If it doesn’t do this it will lose its CSI rebates and possibly the franchise. And if the uneven playing field continues then it’s more likely that only the larger groups, often supported by the manufacturer, will prevail.

I know that this is a simplistic view however it’s a big subject. 1-3% pre-tax returns are normal for the industry which really doesn’t leave a lot of profit reserve for tough times.

This can’t be good for customers. Protecting the customer is the purpose of the Block Exemption Regulation given to the industry.

A franchise model can’t be said to be working when so many dealerships are forced into foreclosure simply because they were operated to the rules of the franchise, who by the way are not retailers by their own admission.

IRELAND; A MICROCOSM FOR EUROPE

This makes me think that what’s happening in Ireland is a microcosm for what’s likely to come down the road in other markets in Europe. Given that a new block exemption is coming into place next year the changes needed by the networks will likely accelerate to accommodate the shrinking markets.

If Ireland is a microcosm for Europe then other markets need to take notice as to what’s happening there as dealers are facing a tough times ahead.

RIDING THE STORM

Short-term measures never solve a problem but they can help, here are 10 that dealers can take:

1. Actively reduce aged new and used car inventory as a matter of urgency, re-appraise, recondition further if necessary, price to sell and review website pricing of those units daily.

2. Focus on parts stock control analysing all lost sales; look at your stock orders in minute detail and only order when needed.

3. Chase in all monies due from the trade, from customers, from finance companies and from your franchise.

4. Review trade payment terms, try to keep all less than 30 days.

5. Quality control finance paperwork to ensure prompt payment

6. Review warranty claims for accuracy and recalls for revenue

7. Work every showroom customer, drive every trade-in, open up every finance opportunity early, demonstrate every customer and make sure that every customer through the showroom is managed to the best of your ability.

8. Make sure a Vehicle Health Check (VHC) is completed one very car through the workshop (sales, as well) and make sure that every lost service customer receives a phone call from you asking them to come back.

9. Source your used cars from your customer base; they have your prime stock.

10. Use the time that you will have available to you wisely. For example if you are not using social media as a marketing medium then learn about it, if you don’t have a health check program in place then consider one.

PLAN FOR THE STORM

The most important thing to do is to complete a three to four year business plan based on a worst case scenario, a flat 70000 to 75000 market for the next 4 years. If the company can survive then it may need to eat into cash reserves. If it hasn’t got cash then the flat market will need to sustain the business, if it does all well and good and the business plan will show it. If the market can’t sustain the business with profit over a flat four years then the sooner the big decision is made the better.

And if you don’t crunch the numbers you will not be in the driving seat to navigate the storm.

FRANCHISE MODEL AT WORST NEEDS AN OVERHAUL

Is the franchise dealership model broken? I think the situation being faced by Irish dealers proves the case that the model there needs an overhaul.

Can the same be said for the rest of Europe? I think the manufacturers probably know a complete overhaul is needed and this really is the time to start making the changes. The playing field will further change again down the road for sure; an urgent overhaul is needed now.

KING CANUTE; A CAUTIONARY TALE

King Canute is famous for the tale of the incoming tide. According to legend, Canute’s courtiers flattered him into believing that his word was so powerful that even the tide would recede at his command. Canute is said to have taken this compliment literally and had his throne placed by the shore and vainly attempted to command the waves to recede until he almost drowned.

With all the data in Ireland pointing towards a sub 75000 real market in 2012, I was amazed to discover that one manufacturer is talking about an 84000 this year and is advising their dealers to plan for the same. The dealers know that this will not happen. If they ordered to the 84000 market they would get caught with inventory, tying up cash and getting caught with pre-registrations. It’s happened before and the bones of those businesses lie crumbling in the grave.

With some franchises continuing to make basic market mistakes on a grand scale then the immediate victims will be the dealers; and further down the road it’s likely to be the franchise model and consumers too.

And the practise of pre-registering cars will never stop whilst courtiers within the franchises continue to flatter and mislead their masters.

Our May Newsletter, Twitter and Symco TV

2012-05-31T05:44:00.001-07:00

This is my best attempt at a short line to deliver the May edition of our Saleslynx e-newsletter, 8 years on and going strong. It’s a monthly digest of the latest web marketing, social networking, leadership, strategy and global auto industry news written and produced by Steve Hamilton.

In this month’s edition Steve covers stories on; the list of America’s top 100 dealer groups, the latest data from ASE PLC showing a 1.7% net profit in the 1^st QTR and he reports on US auto sales, with the best showing since 2007, whilst sales in Europe struggle -7.5% down on last year. There is a lot more too, including the key numbers for the markets we cover. To download the newsletter just click on the link Issue 103

A little extra as well; if you are thinking of using Twitter then this guide will prove useful Twitter Guide for Business Speaking of Twitter if you want your newsletter delivered as soon as its published then follow us on twitter http://twitter.com/#/saleslynx and we will follow you back, I promise!

The second extra bit for our Irish followers; we have just completed our 6 month analysis of the used vehicles for sale on Carzone, to download a copy go to Ireland Used Car Snapshot May 2012.pdf

And to finish up I have two bits of up to the minute industry news; first of all the sad news of the passing of Ron Sewell. I worked for Ron back in 1989 and I have very fond memories of that time Thank you to Ron Sewell

And I want to wish Skip all the best with his new TV channel symco.tv, he is offering free credits to try out the service and please don’t tell him this but he really is very good at online training!

All the best

Brian

A THANK YOU TO RON SEWELL

2012-05-29T17:26:00.001-07:00

I heard today the sad news that Ron Sewell had passed away aged 83 on Monday. I heard the news on Twitter, which is probably appropriate given that he was a real media innovator in his day. He used his media, the Sewell’s Digest, to communicate and to educate so many people in the Motor industry and not just in the UK. His reach extended much further afield, South Africa to Australia, to China and India to name just a few of the countries his company touched.

I was lucky enough to work for Ron and his wife Joan for 18 months. Working at Ron’s Sewell’s was a genuine education in the motor trade and I was taught business skills that serve me well to this day (including forcing me to write which I still attempt to do). I met so many people including Steve Hamilton, who produces our newsletter, through Sewell’s, started work on the same day, on a Tuesday, the 3^rd January in 1989.

1 Queens Square Bath, Sewell's Head Office. Ron's office was at the front of the building on the left hand side. I have such very fond memories of that time and of working at Sewell’s.

You know thinking about the people employed at Ron's Sewell's and the businesses spawned from that single consultancy, there were arguably a lot more people touched by his influence than the trade today might recognize.

To name just a few; MITAC, Alison Associates, Guy Allman’s BTC and AutoVHC, Chris Oakham’s TrendTracker and Richard Well’s RTS Group. He brought Martec to Europe, started the Automotive Fellowship in the UK, he touched Ireland through Bill Cullen, Bills Europa Academy has some roots that go back to Ron Sewell, and of course Sewell’s still lives on to this day under the steerage of Will Holden.

I was one of the younger consultants on his team. I remember being so happy to get a job with Sewell’s, because they really were the very best automotive consultancy at the time (I still have the job offer on file today).

To be honest, at first I was in awe around him because he really was an influential man in the trade. Over time I really warmed to him, he was a quiet man as I remember him, always deep in thought. I think he probably communicated better through his writing, however, whenever I directly asked him for him for help he gave it freely and he took time with me. I liked Ron and I liked his wife Joan (I think she had more to do with my employment as I was a joint Aquarius).

A toast to Ron Sewell

If I hadn’t joined Sewell’s I very much doubt I would be doing what I’m doing and sat where I’m sitting today.

So this is my little thank you to Ron Sewell; I was privileged to work for him and to know him. I’m glad he he touched my life and tonight I’ll be raising my glass to him. Thanks Ron, the industry has lost a true gentleman.

20 DAYS IN MAY; A MARKET 39% DOWN

2012-05-22T11:19:00.000-07:00

I have been crunching some numbers around the registrations in the last 10 days of the month in Ireland. The following are the numbers to the 21st May 2012 (the May month end estimate is 5630 in the table below)

The 20 day figures in 2012 are 2682. This is down 39.15% on 2011 (4408) and the lowest since 2009 which were 2690. If the month tracks at the same as last year (by the end of May 2011, 73% of the total registrations for the full year were complete) the end of month figures for May 2012 should be around 5630, this would be 40% down on May 2011 (with the last 10 days coming in at around 2900) and would bring the likely year end numbers to 79779 (SARS rate, seasonally adjusted annualised sales rate).

The actual last 10 day figures for 2011 were 5068 of a total 9476 for the month of May 2011 (53%). If the 53% remains the same this year it would bring the likely number of the last 10 day registrations to 2960; therefore any registrations over and above this number will most likely be the number of “distressed or panic ” pre-registrations over and above any actual pre-registrations last year.

Year	Jan	Feb	Mar	Apr	May
2012	21305	11488	13046	6770	5630
First 20 days 2012	14329	5770	4309	2905	2682
First 20 days as a % 2012	67.26%	50.23%	33.03%	42.91%	47.64%
Last 10 days 2012	6976	5718	8737	3865	2948
last 10 days % 2012	32.74%	49.77%	66.97%	57.09%	52.36%
2011	20998	12570	14395	8685	9476
First 20 days 2011	12623	7204	6275	5133	4408
First 20 days as a % 2011	60.12%	57.31%	43.59%	59.10%	46.52%
last 10 days 2011	8375	5366	8120	3552	5068
last 10 days % 2011	39.88%	42.69%	56.41%	40.90%	53.48%
2010	16595	12306	13813	8544	8580
First 20 days 2010	9915	7976	6248	3931	4243
First 20 days as a % 2010	59.75%	64.81%	45.23%	46.01%	49.45%
last 10 days 2010	6680	4330	7565	4613	4337
last 10 days % 2010	40.25%	35.19%	54.77%	53.99%	50.55%
2009	15799	8883	7764	4373	5129
First 20 days 2009	11231	5967	4245	2168	2690
First 20 days as a % 2009	71.09%	67.17%	54.68%	49.58%	52.45%
last 10 days 2009	4568	2916	3519	2205	2439
last 10 days % 2009	28.91%	32.83%	45.32%	50.42%	47.55%

My thoughts are that the pre-registrations in the last 10 days will be high and probably around the 3000-4000 mark. I have double-checked my figures and if you took an average of the years 2009 through 2011 to the end of June as a % of the total market it would be 81.5% (2009 was 81%, 2010 was 77% and 2011 was 85% as scappage came to an end) then 2012 would still come in at between 77800 and 79600. If this year the market to the end of June was 85% of the years total with registrations in month of June being around 6650 then the passenger car registrations for the full year will be around that 76000.

Whichever way you skin it there will be a lot more casualties as new and used car throughputs of around 160 units per dealer is not sustainable when most dealers have overheads geared to double that number.

It’s this question of sustainability that is the real issue for me. In 2009 through 2011 there was some sort of government support alongside a lower vat rate. The 23% VAT rate is slowly nibbling into profits, as is the increasing cost of doing business. There are hidden losses (the cost of pre-regs on the reducing values on late plate cars) and dealers are operating with a much smaller vehicle park for aftersales work that has not been replaced.

Look at the whole and the market really needs around 270-300 dealers to support the annual sales volumes which means that the dealer networks are over subscribed by 150 dealers or so.

I hope the numbers make some sort of sense because the market in Ireland is certainly getting tougher and its likely that more dealerships will fail in the short to medium term without some breaks.

Dealers and consumers need credit lines

A key issue that is limiting sales is the availability of business and consumer finance. Its an area that the government could help with. Ireland might be the austerity poster-boy for the Euro-zone but whats needed for the industry is the exact opposite.

The starting point is to encourage the banks to lend again, this alone could be the lifeline the industry needs because if the lines of credit are not opened up then the numbers of dealers that survive the next 18 months will continue to fall.

For me 2012 is going to be as tough a year as 2009; that year the government stepped up to the plate, its time to do so again.

THE LAST 10 DAYS TELL THE REAL STORY

2012-05-02T16:07:00.001-07:00

The volume of registrations in the last 10 days of the month (in any market) provokes a lot of conversation and discussion among dealers and manufacturers alike.

The reasons for this are very different; from the manufacturers perspective it is important that they move any sitting inventory. Aged inventory costs money. Normally end of consumer campaign periods can influence some sales directly to the consumer.

The other way is to pre-register. These units once registered will find a way to the market and the end user as used cars. Most manufacturers have trade disposal lines in place to move pre-registered stock quickly and efficiently, be it through their dealer networks or through the trade.

The units are required in Ireland to feed the declining service parc (set to fall through to the end of 2014) and the subsequent supply of parts required as part of the vehicle service. From the dealerships perspective pre-registered inventory can represent either a profit opportunity or a profit nightmare.

2012 is a different shape to previous years

In a market that is struggling with sourcing quality used vehicle stock pre-registered units, priced correctly can prove to be an efficient bridge. The opportunity is best afforded to those dealers that can purchase stock without additional financing. Those dealers tend to be low geared, long established businesses with efficient sales operations.

Highly geared dealerships do not have access to funds to purchase registered units. This can negatively influence profitability in two ways; current inventory values are reduced as the new registered units enter the market at lower prices. Sales volumes suffer as these dealers cannot compete on price and if volumes suffer trade-in supply will reduce.

Long washout dealers look set to suffer the most as profits tied into used vehicle stock will erode.

Whatever your stance and point of view it should be recognized that in 2012 the units registered in the last 10 days of the month as a % of the total months sales have exceeded those in any of the previous four year (February through April).

Its possible that the real SAR's rate is 75000

The seasonally adjusted sales rate (SAR) for the Ireland based on the last 4 years suggests that in 2012 the passenger car market will achieve between 75,000 and 80000 registrations. What's hidden in the SAR’s rate is the real level of pre-registered units.

If the number of units pre-registered was reported the immediate future for dealers would be better understood and they could plan accordingly.

The immediate future for dealerships moving into the second half of the year suggests a landscape tough than the previous four years with no immediate governmental support or silver lining on the horizon.

The numbers don't lie

To ride the storm on the horizon will require steadfast leadership, resilient sales processes, focused marketing and genuine implementation of CRM.

The best source of trade-ins and quality used car supply will come from the dealers own customer base.

For a free copy of the market update report email brian@saleslynx.co.uk

For more Irish market information our newsletter 102 is out at Newsletter 102 and don't forget to follow us on Twitter for automotive industry news as it happens Follow us on Twitter.

Brian

Automotive Insight Ireland

2012-03-12T17:12:00.073-07:00

It seems I have stimulated some debate with our Automotive Insight Ireland report published last week, covered in both the Independent and the Examiner.

A question asked about the report “is it all doom and gloom or does the report highlight any opportunities for growth”. The straight answer is no, it’s not about doom and gloom and it does highlight opportunities (what one person sees as doom and gloom another sees as light and hope).

If you know me you will know that I’m not a spreader of negativity, I actively look for opportunities so that they can be utilized for an advantage, be it a profit opportunity or a more efficient way of working.

The report was produced to help my clients in the car industry in Ireland to see what is likely coming down the road. That way they will be better placed to capture those opportunities to help them succeed.

The views in the report are based on dedicated research and 20 years working knowledge of the Irish market. We have used historical sales data from the SIMI and the Central Statistics Office (CSO), along with recognised projections for Ireland from both the IMF and European Commission’s paper from the European Adjustment Programme for Ireland (which was reported upon in the news a couple of weeks ago).

I have huge respect for the automotive industry in Ireland. Of the markets I work in Ireland is, at the same time, my favourite and on occasion my most frustrating country. It has gone through massive change in the last 5 years, some of which was avoidable had people acted sooner, and some of which was inevitable because of economic situation the country was put in (or had found itself in). Poor governmental decisions along the way haven’t helped the industry much either.

Click on the picture to see the full size version

The way the industry has adjusted to the change is commendable. The government changed vehicle taxation in 2008 around emissions and overnight some cars that were selling stopped selling; dealers got them sold because they had to. Cars that were newly in demand had limited supply; the trade sourced the cars from elsewhere importing 60,000 cars in 2008. When new vehicles crashed in 2009, the dealers cut their cost bases and they turned their attention to Aftersales. Dealers embraced and adjusted to the changes forced upon them because they had no choice.

These changes are graphically chronicled so you can clearly see what happened to the new vehicle market through that period for both passenger cars and LCV’s. We have looked at the performance of the brands, the manufacturers, the distributors and the private importers. The findings are eye opening when you look at them in the cold light of day. How you interpret the messages in the data is down to you.

Some of our findings

In 2006, 56% of the Passenger Cars and LCVs sold in Ireland were distributed through private importers whereas last year it was just 33% - that’s a big change. Some manufacturers have really taken advantage of the market and it’s reflected in their numbers and market share.

VW GROUP IRELAND 21000 CARS IN 2011 OUTPERFORMING THE MARKET

In the last 5 years more manufacturers have moved towards manufacturer-owned dealerships and manufacturer-supported dealerships – another big change. The winners in this change being the management that have spotted the opportunities to work with the manufacturers, to learn from them and to grow with them.

400 DEALERS? MAYBE, MAYBE NOT

The sales throughput per dealer is lower than the average in Europe of *270 per dealer, the UK average of 388 and the USA average of 720.

*European new vehicle sales per dealer are difficult to establish as there are 2 measurements, one for EU16 and one for EU27.

Throughput per dealer has to increase in Ireland and there are only two ways to do it, increase vehicles sales or cut dealers. It’s not nice to say but it needs saying. The positive dealers will work on getting their numbers up, attracting more prospects to their businesses, marketing more effectively using the channels available today that did not exist before. These will be the winners. The losers will fall by the wayside and the winners will grow, it’s as simple as that.

Service work is declining (by 2014 the number of cars aged up to five years old in Ireland is forecast to be at half the level of 2008). There is so much work slipping through dealer’s hands, if dealers worked smarter it would good for the customer and good for the dealer.

GARDX

The winners will be the ones that sell warranties, sell service plans, sell paint and fabric protection, capture more work through vehicle heath checks and offer better customer service. If you don’t get involved in these activities you will lose ground for sure.

The supply of used cars for dealers to retail is on the decline and the supply lines are already drying up. The manufacturers can do something about this by incentivising and pushing up volumes. It’s unlikely to be the government. So when your manufacturer says that they are getting behind leasing you will understand why they are doing it, to supply the used car market.

As supply dries up the best place to source cars will be your own customer base, start working it!

Your customers own your future used cars, help them look after them and help them sell them back to you. In the long run this will be your most reliable source of used car supply.

Finance income, once a core component of the revenue model for a dealership is now mainly controlled by manufacturer supported banks (with a couple of exceptions). It has to be because there is no other access to money in Ireland. A consequence of this is that the manufacturers can assert more control over dealer profitability. Is this a good thing for the overall market and does it ensure competition? These two questions need answering. Looking on the bright side dealers will learn to sell new insurance products such as Return to Invoice (RTI) and Vehicle Replacement Insurance (VRI). They will need to increase sales of ancillary products and get better at qualifying the finance and insurance opportunity. If you don’t open the opportunity you won't be able to sell it!

The change of the last 5 years will continue as the industry modifies its shape and colour

The report is designed to help those working in the industry to forecast better, to see more clearly the direction the trade is going. You shouldn’t just look forward without looking back and learning from the past. That’s why we look at the performance of the brands in the market over a 20 year period. That said the past is just part of the conundrum. What influences the market in the future will not necessarily be what influenced it in the past.

The use of social media is one example, there are 2 brands in Ireland working social media better than their competitors and it’s reflected in their sales volumes.

So to accurately forecast depends on a number of factors, the market being just one of them. Another key factor is the brand and the importer. The manufacturer owned distributors are in the majority of cases doing better than the private importers. If you know this you can forecast more accurately.

WINNERS AND LOSERS

Other critical factors that influence any forecast will include the performance of the economy, the unemployment rate, the general performance of the Eurozone and the banks. As part of our forecasting we used the IMF predictions for the country. Are these likely to be accurate? Who knows? The data is useful and with that in mind one of our forecasts is based on the IMF projections.

CURRENT IMF PROJECTION DATA

We have produced three forecasts for the market through to 2016, the same timeline as the IMF predictions.

The first projection is a bullish forecast recently mooted by the industry, the second being the IMF based forecast which is a bit more pessimistic and third something down the middle. All three forecasts suggest fewer dealers are required to service the market and I want people to understand this. If you are going to be one of the ones that go its best to know sooner rather than later, that way you will have options.

And for those that stay you’ll need to put in those practises that set you up for the future, spot the opportunities and the threats now, be prepared for them and get to work on them now.Putting in place systems that capture more service work for example will be time well invested as the service parc is falling .

Whichever way you cut up the market some dealers will leave the industry voluntarily or through business failures. Some of these business failures are avoidable if dealers act sooner rather than later. I don’t want to see another business go under, I know the hurt it causes, not just to the staff employed but the owners of the businesses as well. This is the primary motivation for the production of the report, to help those businesses see the future market more clearly. That way they can plan accordingly.

BER IS JUST AROUND THE CORNER 31ST MAY 2013

And finally a new Block Exemption Regulation (BER) is just around the corner. How prepared are individual dealers for the new landscape? And are they as prepared as the manufacturers?

My view is that dealers will be ‘culled’ as vehicle manufacturers use new BER European Block Exemption regulations, to restructure and realign their retailers. What those dealers do next will determine whether they survive or not and that’s where the report comes in. The historical performance data of the brand and the importer is useful data if you want to hang your hat on another brand in the future (or add another brand to your portfolio).

In a nutshell our belief is that there is not going to be enough business to go round for all of the dealers in Ireland today.

There are two key reasons for this. The primary reason is that the country doesn’t look set to recover quickly enough. This means that new vehicles sales will not recover to pre-recession levels in the near future. The second reason is that the costs of running a franchised dealership continue to increase.

THE COSTS OF OPERATING A FRANCHISE ARE SIGNIFICANT

New volumes are down, revenues are down and the costs have increased at a time when the amount of available service work is also declining (by 2014 the number of cars aged up to five years old in Ireland is forecast to be at half the level of 2008), and the supply of used cars for dealers to retail is constrained by weak new car sales volume.

The combination of all of these factors means that the number of dealerships will have to fall. The question is, by how much? That’s what our report sets out to answer. Our findings suggest that there will be around 375 dealers remaining in 2016 albeit one projection shows a higher number, which I hope is the case.

That’s why we think Automotive Insight Ireland is a unique analysis of the vehicle sales business in Ireland. It draws on 22 years’ worth of car and LCV sales data and the most up to date economic forecasts available to provide forecasts through to 2016 for new vehicle sales, used vehicle supply, the size of the five-year service parc, overall dealership numbers and more. It also includes detailed analyses of the sales performance of the leading manufacturers and distributors, and identifies the clear winners and losers.

If you want a copy then drop me a line back. There is a charge for the report and if you want the data tables as well they are available. Finally if you are an industry executive and you are tasked with business planning the report will be money very well spent.

For more information, contact Saleslynx on +44 1276 479 999 or +1 415 639 3766

Alternatively you can email me at brian@saleslynx.co.uk

KEEP CALM AND CARRY ON

2012-02-15T11:07:00.000-08:00

A lot of the news coming out of Europe is about governmental austerity cuts and reduced spending set against a backdrop, which for the automotive industry, really should be reporting a different story.

The North American USA market is on the up, with 2 years of consecutive growth and global car manufacturing output is hitting all-time highs. This has been supported by a massive increase in manufacturer spending at this year’s Detroit Motor Show in January and at the NADA convention in Las Vegas a few weeks ago.

A closer look at the USA market shows that it is 3 million units below the average units sold annually from 1990 through 2011 (15.27 Million units), so whilst the growth of the last 2 years is welcomed, businesses really do need to KEEP CALM AND FOCUSED to best exploit the slow growth.

Which is my segue into a monologue on my favourite set of motivational posters today.

1939

I love the message that the KEEP CALM AND CARRY ON poster delivers (touted as the greatest motivational poster of all time). It sort of says to me to hold steady, keep doing what you are doing and things will work out.

The background to it is interesting. The poster was initially produced by the British Ministry of Information in 1939, at the beginning of the Second World War in Britain. The intent of the poster was to strengthen the morale of the British public in the event of a wartime disaster at a time when the country was ill prepared (which could also be said for a lot of countries and businesses faced with the continuing economic crisis of today).

The poster was from a set of three, the second being: FREEDOM IS IN PERIL DEFEND IT WITH ALL YOUR MIGHT

And the third:YOUR COURAGE, YOUR CHEERFULNESS, YOUR RESOLUTION WILL BRING US VICTORY

All three posters are great messages for businesses in this new world of continual change, when the future is more difficult to read than it has been before.

The message that the second poster delivers to me is more of a timely warning; that you need to work really hard now, today, to protect the investment you and your people have put into your business and into your customers in the past. It will be you and your staffs combined and unified efforts that will protect and nurture the business in the future.

My personal favourite is the sentiment delivered in the third poster. I think the message sums up what is really needed to succeed in business today in one sentence.

YOUR COURAGE; Have the courage to keep on doing what you are doing, have the courage to change and evolve, have the courage to do something different and have the courage and conviction to carry on.

YOUR CHEERFULNESS; the automotive business world has a lot to be cheerful for. The US manufacturing base could have been wiped out in 2008, it wasn’t and today it’s growing with some fantastic products coming out of Detroit. Germany has had a record manufacturing year and China is continuing to devour cars.

READING HALF 2011, HAPPY JUST TO FINISH!

HAPPY PEOPLE; I like dealing with cheerful happy people, which is the image of our industry that we should be promoting.

The word CHEERFULNESS is all about optimism, and joy and FUN. We should show it, demonstrate it, live it and work it because happy employees make happy customers. That’s how excellent service is delivered.

Steve Jobs summed business up by saying “All you need to be successful is a great product and then deliver it through excellent service”. The automotive industry has some fantastic products; it’s the excellent service bit that we can work on.

YOUR RESOLUTION; this word is about focus, determination, tenacity and persistence. Keep focused on your serving your customers as best you can, be determined to give a level of service that is second to none, have the tenacity to do every job to the best of your ability and the persistence to follow things through, every lead, every opportunity and every sale.

The challenge that Britain faced on the eve of the Second World War was an enormous one. The challenges faced by businesses, in the age of austerity, pale into insignificance in comparison.

That the messages of 1939 still resonate so strongly today is more than just a timely coincidence. It’s direction from the past about how to move forward in the future, a message that is worth listening to.

A STORY ABOUT SAINSBURYS PROMPTED BY A CONVERSATION ON SATURDAY NIGHT

2012-01-16T09:11:00.000-08:00

After leaving school my first encounter with the world of the employed was joining J.Sainsbury Ltd (A UK supermarket retailer for our American readers) in the high and mighty position of trainee manager (another term for a general dogsbody). Well 5 years later having climbed the management tree, I had been totally indoctrinated in the organisation and truly believed them to be the best retailer out there.

Their management training and mentoring was second to none, and I a lot of what I learned in that time I still carry with me today. Up until about 5 years ago I still shopped with Sainsbury’s believing their food to be the best and freshest. Then one day I happened on the Tesco website and tried out their internet shopping service. 12 months down that road I was hooked on it (as I am with Internet banking, flights and accommodation today).

The point to this little journey into my past is that about 3 years ago I caught the news and was saddened to see that the company I once held in such high regard was on the floor issuing a profits warning, with its 6 months profits running at just over a third of same period of the previous year (at the time they were down £241 million sterling!). On top of this they had lost many of their top managers and staff because they couldn’t afford to keep them. Companies go by the wayside when customers change and they don’t (and the pain is on the bottom line).

One of the key reasons for Tesco's phenomenal performance at the time was that they had been first to market with a full loyalty card programme; Sainsbury’s had followed but forgot one small thing, asking the customer if they can communicate with them! They didn’t and couldn’t. They had missed the boat on internet shopping too. They simply didn’t change quickly enough when all was changing around them.

Well there is good news to this story. Sainsbury’s re-invented the way they did things. They took the lead in the UK supermarket social media battle by being first to market with a Facebook page full of offers and useful advice http://www.facebook.com/sainsburys. They opened new convenience stores going back to their roots. They put in place a new pricing scheme. They piggy backed onto the largest loyalty card scheme (Nectar), they invested in training their staff and they rewarded their staff for their hard work with big bonus’s of £620 each.

And what has this resulted in? Sainsbury’s have just reported Christmas trading growth whilst Tesco reported a fall. How did Sainsbury’s do it? There was nothing complicated, they got back to basics. They started selling great products again, they started giving excellent service again, they focused on attracting new customers by marketing well and they focused on retaining their customers (go to http://online.wsj.com/article/BT-CO-20120112-703569.html)

All in all, a great turnaround (and I’m back to shopping with them as well when I’m back in the UK).Our industry is changing rapidly (just as the world of supermarkets has). The fact is that if you don’t change but your customers do, then what happened to Sainsbury’s before they turned it around could happen to you.

Our customers are changing, the products are changing, they are using new mediums for pricing like Truecar.com (whether you like this company or not it’s getting a lot of press and traffic), they are using Facebook and Twitter for offers, they are using and embracing technology and they are voting with their custom too.

A cautionary tale to conclude this story; I was at a friend’s house on Saturday evening for a party. Don and Donna were the hosts and as I work in the car business it’s pretty normal for somebody to bring up a car story with me. This time it was Donna and she mentioned that she had used a local dealership for service as she had purchased her car from them but would never use them again.

I was interested to hear her story. Between the jigs and the reels, the dealer had quoted her $1100 to repair her car and suggested to her that she traded-in her car instead, it might save her money. Donna liking a second opinion took her car elsewhere before even considering trading her car; the issue was resolved quickly at the second dealer and the car cost just $250 to repair and service.

Donna has never received a contact from the dealer she purchased her car through, never. She swears that she will never go back to them because in her mind they tried to rip her off (this may or may not be the case).

I know the owner of the business and I know he would be mortified if he was made aware of this (this dealer has an underperforming service operation and the whole business is overly reliant upon sales). The dealer has a BDC to stay in touch, he has systems and process employed that should have followed her up after her service quote. The systems obviously are not working because if they were then Donna would have received a call or a contact from them and they would have had an opportunity to turn things around. This is 2012 in the USA.

This means that the business has got to change the way they are doing things otherwise it’s likely that they will suffer as they lose they will lose customers. They are going to need to make some changes to address their weaknesses. The Sainsbury plan will work for them if they embrace it. As the dealer is selling great products they have a simple 3 step plan to implement to turn things around;

1. They just need to start giving excellent service again by focusing on customer service
2. They need to focus on attracting new customers by marketing well and embracing new mediums whilst continuing their current activities
3. They need to stay in contact with their current customers to retain them by making their BDC work more effectively and making sure that all of their customers and prospects are kept in touch with.

Nothing complicated, just doing things better than they currently do and raising the customer service bar a tad higher.

Ford aftersales UK pilot program

2010-06-01T07:48:00.000-07:00

I came across this news from AM ONline which is worth a repost

Ford dealers are preparing for a new programme that could potentially drive tens of thousands of existing Ford drivers back through their doors.

Motorists with Ford cars up to 12 years old are now being offered a new service that, according to the Blue Oval manufacturer, could cut their fuel bills by a quarter.

More importantly for dealers it will target current Ford owners who are unlikely to still be in dealer databases, encouraging them to visit their dealer to have a new Econo Check.

Ford is just completing a series of national meetings designed to prepare dealers for the new project, which will be backed by a major cross-media marketing campaign aimed at both corporate and retail customers.

“The reaction from our dealers has been very positive,” said Andy Barratt, Ford customer service director. “Some even want to put their own fleet through the programme.”

The programme will see Ford dealers offer an Econo Check service for £30, which will come with a £15 voucher refundable against the next scheduled service.

Technicians will carry out a 15-minute check on the car or van (LCVs will generally only qualify if they are four years old or younger) including tyre pressure and condition and oil and air filter cleanliness.

They will also fit a data logger to the vehicle’s diagnostic port, which remains in the cabin for seven days.

Either the dealer or the customer will detach the logger after the week and return it by post to Ford.

Data on the logger will reveal enough information on driving speed, anticipation, braking and gear change to create a personalised report, which will be emailed to the customer.

The emailed Econo Check report will recommend driving style adjustments that could reduce fuel consumption and emissions by up to 25%.

Recommendations could also include eco driver training, which could be provided through Ford’s driver training partner, the AA.

They could also include a recommendation to upgrade to a new Ford Econetic car.

“The primary function of this is to what it says on the tin – to help change driving styles so drivers can become greener and save money,” says Barrett.

“There is a huge parc of vehicles out there that can have the Econo Check – we are the only manufacturer to offer this service to so many owners, almost regardless of their vehicles'' age.”

The programme will be pilot tested in the UK before being rolled out across Europe.

Cutting up the sales cake, St Patricks and Ford

2010-03-17T03:39:00.000-07:00

I hope that you are enjoying a good St Patricks day and that life is treating you well. There’s been a fair bit of stuff that has been happening at this end and loads of stuff happening in the auto world so I felt that it’s time for a decent catch up.

Onto our news; We have our Irish newsletter to bring you up to date with the trade there Issue 78 we’re onto issue 6 of our Pit Stop which is worth a quick visit for the lighter view and we have a complete set of New downloads to pick up. We are also now on Twitter, Facebook and our Blog is now out there and bang up to date.

thats enough news from me; what i find interesting when you compare the news from different countries is the general mood of the news that is covered; Ireland still somewhat downbeat and negative, the UK motor industry more positive and the US just getting on with business (albeit they have a few problems with a fair few recalls at the moment).

It’s the way the news is delivered that makes the difference, look at how Toyota dealt with their problem at the beginning and how they are dealing with it now with full page adverts in the press globally, using the social media websites really effectively and really getting behind their dealers. They are not out of the woods yet but they are working on it.

Sales figures

The true picture of the drop in car sales over the last 5 years (updated January 2012) shows the impact of the economic downturn in the west on the automotive industry.

Year	Ireland	UK	USA
	New car sales	New car sales	New vehicle sales

2007	186,540	2,403,376	16,460,000
2008	151,722	2,131,795	13,493,000
2009 2010 2011	57,460 88,373 89,896	1,994,999 2,030846 1,941,253	10,601,000 11,588,783 12777939

Fall since 2007	-51.8%	-15.5%%	-22.36%

The reality of this economic downturn is that it’s a bit like a an earthquake, the initial shock has resulted in factory stoppages, sales diving off of the cliff, dealers, manufacturers and their supply chains suffering and some going bust in a realtively short period of time.

That was the first wave, like an earthquake there have been and there will continue to be aftershocks. The US for example has dropped nearly 10 million units in just 3 years; that’s a lot of cars out of the system. The impact of this drop is only just starting to be felt in dealerships as the aftersales market slows down and is unlikely to recover quickly (aftersales always lags behind sales and is suffering a double whammy as customers will put off critical servicing to the last minute when times are tight). Recovering this lost business is going to prove an interesting challenge. As with most challenges in life it’s the way that you see them, as you deal with them, that will make the difference.

A lot of the news at the front line is still about cutting back, reducing spending and cost bases. Whilst it’s very prudent to keep a really close eye on all business expense lines in your accounts in an economic downturn, it’s just as important to make sure that you are exploiting every single sales and aftersales profit opportunity that you have. It is still important to get your pricing right, it is imperative that you market your cars and your aftersales services in the correct mediums (internet, press, promotions and CRM) and it is critical that you give you customers a level of service that is second to none.

Ford

It is also important to make sure this is not just directed at sales customers. If you look on our Facebook page you will see some pictures of a Ford initiative in the US to help their dealers improve aftersales profitability. Ford are getting behind a Vehicle Health Check and customer loyalty program across the country because they have to; it’s not a like to, if they don’t help their dealers recapture their aftersales business it will be lost and more of their dealers will disappear from the landscape.

The same thing is happening in the UK with most franchises recommending or requiring their dealers to install a vehicle heath check program. Ford Ireland have recently recommended to their dealers to get behind a vehicle health check program called AutoVHC as a key component in Ford’s initiative to help their dealers increase profitability.

AutoVHC is a computerised vehicle health that has been installed in Ireland for the last 7 months showing an increase in dealer profitability there of €33 per repair order within 2 months of being installed (go to our friends page for more information on it). Ford has to get behind initiatives like this because if it doesn’t more of its dealers will fail which will ultimately mean that their customers will suffer. That’s the bigger picture.

This is my third recession in the motor trade and there will be more casualties to come, absolutely guaranteed. There will also be winners though; and my belief is that those dealers will be the ones that make sure that all of basics are all in place, the ones that really focus on their customers and those that work with each customer to ensure that they have given the customer their very best. This does not mean focusing solely on price (although there will be consumer pressure to drop prices which you will need to react to) but focusing on every profit opportunity (to maximise the opportunity and exploit the potential of each profit centre in their dealership with more focus than ever on aftersales).

I have uploaded an interesting report from Ogilvy North America on marketing in a recession which is well worth downloading and reading around this very area.

And perhaps now will also be a good time to revisit your approach to customers. Pure sales processes work, they serve their customers and they serve the businesses that employ them well. Pure sales process is about ensuring that your customers are genuinely welcomed into your business. It’s about finding suitable products that match your customer’s needs, it’s about making sure the car fits the customer (through a test drive) and it’s about giving the customer all the information they need to make an informed decision. Trade-ins I believe should be pro-actively encouraged from customers (by calling them) as they supply us with the used cars to sell and you are going to have to work harder to find good used car stock as well (one of my clients has a dedicated used car buyer employed in a different country to source supply).

And if the customer doesn’t buy on the day then I believe that it is simply good manners to follow them up with a simple call to say thank you for the opportunity to help them (another core of the AutoVHC product).

That’s pure sales process and the ingredients don’t change much, but the way you deliver them does (like baking a cake, the ingredients will all be pretty much the same, the way the cook prepares the ingredients, cooks and presents the cake is what makes the difference).

There are opportunities to exploit in a slowing market and perhaps the positive spin on the downturn is that it will help you really tweak the performance of your company and the tweaks will not only help you sustain the profitability now but will also help you grow in the future; and at the very least your business will be better prepared to capitalise when things start to really improve.

That’s my monologue done and dusted for this week and I hope that I have drivelled on too much.

Have a great start to the end of the week! and hopefully see you soon.

Brian

The value of a checklist

2010-03-10T12:26:00.000-08:00

Value of lists (a cautionary tale)

I listen to public radio when I work in the office and I heard an interesting interview with a surgeon this morning as I was doing some analytical work that I think is worth relaying to you.

This senior surgeon has implemented simple check lists into his operating theatres. He is responsible for 8 hospitals and every surgeon that works for him has to use the checklist before they operate to help them diagnose and then deal with the patient properly (and to ensure that mistakes don’t happen). The checklist takes 2 minutes to complete.

His surgeons hated them when they were introduced. They said that they didn’t need them, they already did everything right and that it was important to follow their instincts; the lists wouldn’t help or add any value.

The surgeon that first implemented the checklist went on in the interview to tell a story about a patient who attended casualty with a small stab wound.

His blood pressure was normal and the wound was not visibly bleeding much. 10 minutes later the patient collapsed and when they opened him up they found that an internal organ had been severely damaged. The width of the wound was small; the depth was 10 inches which they had overlooked completely. The checklist would have helped the surgeon diagnose more effectively because it asks the question about the instrument that caused the stab wound (in the event of penetrating wounds). The patient survived but only after a very dangerous operation, intensive care that cost a small fortune and a longer recovery than needed (had he been diagnosed properly in the first place).

6 months down the line the fatalities in the 8 operating theatres that use the checklist have dropped 35%; 80% of the surgeons say that the lists have helped and most interestingly 94% say that if they were to have an operation themselves that they would want it in a hospital that uses the checklist!

Hero’s and lists

"Sully" Sullenberger is called a hero for saving 155 lives when he successfully ditched a plane into the water in New York City. Airline pilots use lists as a crucial component for normal job tasks and also critical parts such as emergencies. Sully says he wasn’t a hero he simply put the landing down to great team work and adherence by the team to the protocols that they followed (the checklists).

So the message

The message to me is a simple one. If you want to ensure that your systems and processes are followed and adhered then simply install a check list to help your staff (and give them a tool to support and drive your process). Your people might not like them at first however check lists are proven to work in just about in situation that is critical to customer, patient or client care. Make sure that they are used, understood and followed and the outcome might pleasantly surprise you.

Cheers

Brian

brian@saleslynx.co.uk

A rather riduculous thing, running and sales

2010-03-08T04:42:00.000-08:00

Hi

This is going to be one of my longer introductions to our monthly Irish newsletter (we're into our 8th year now) so if you are just after a round up of the Irish Auto News then go straight to the link below; however if you want to indulge me a little read on as I’ve got a rather ridiculous story to tell.

To pick up your newsletter click on http://www.saleslynx.co.uk/newsletters/irish/SaleslynxIrishAuto78.htm

It’s too easy to get caught in all the negative stuff out there and it’s even easier in bad times to point the finger of blame at others, forgetting that we all have a part to play and that we can influence our destiny through what we do, how we do it, how we see things and by how we approach them.

In January I wrote about the importance of staying focused on the good stuff, the low interest rates, low inflation, falling new car prices, on communicating the positives to the customers and focusing on doing the basics right.

Well back in May last year I got an email, the content of which I’m going to reprint for you again. It’s inspirational, it’s genuine and I recommend that you share it with your sales people as a reminder on how their attitude can influence their sales.

An inspirational email

I want to give you a little background to the email. It’s from a salesman that I have worked with for a number of years. He’s in his mid 20’s and He lives and works in Dublin. He’s been one the best delegates that I have trained, he’s enthusiastic about training, he likes to learn and he’s not afraid to try.

This is his email exactly as he wrote it last May (I asked his permission to print it).

Hi Brian,

How the hell are you? I had to email you as I did something that is rather ridiculous in the current economic climate and if anyone would appreciate it, its you.

As you know, I've had a difficult year; in fact about a month and a half ago I lost my Grandmother too which was like rubbing salt in the wound after losing my mother. Basically I hit a all time low and didn't think I could pick myself up again, I had no interest in selling cars because it all seemed so insignificant.................so I made a decision, to try beat the sales record in the middle of this recession, I though that setting such a crazy goal would keep me focused and make me get back into selling again, I also knew that I can do anything if I put my mind to it.

So I gave up drink, I worked everyday and every hour I could, I answered every phone first, got to every customer first and I started to get back in the groove very quickly and before I knew it I had delivered 60 retail cars in 26 days; breaking my old record of 58 set back in January 2007.

Maybe in these depressing times when your training around the world this story could be worth telling other sales people who are struggling and think that you can't make money in this recession.

From the 9th of April until the 7th of May: 61 Hours a week, 244 hours in the month, 2.3 sales a day over 26 days - Record broken by 2 units.

Hope your well,

Regards

Ian

Postscript

I know that some people will think this is not real, that it’s an imaginary tale! Well it’s not and if you are a salesperson or manager then you need to take on board the message.

Ian has focused on what he can do, he’s set himself a goal and he’s worked his hard to achieve it. He’s focused on his activity and he’s taken every customer enquiry seriously. Perhaps that’s why he’s breaking sales records when others are not.

I love the line that he soon got back into the groove, because that’s exactly what we all need to do. There will be an end to this recession sometime and we need to stay focused on that. Lift yourself up, challenge yourself, rev your motivation and point yourself in the right direction, that’s what Ian did and look what he achieved.

Running and sales targets

If you know me well you know that I get off on running. I completed my first half marathon last year coming in at 2.00.52 on the main clock. I'm doing my second on the 21st march (the Reading Half Marathon) and I'm aiming to beat my 2 hours this time (I'm hoping for a 1hour 50 minutes).

So what’s running got to do with sales? Well targets for most things in life fall into the categories of quality, quantity, cost, profit and time. Running is said to be simple to measure; you have a distance and then complete the distance in a time (the 100 metres for example). It’s not that simple though; what if the distance is all uphill, what impact will that have on the time? What if the temperature is going to be high or the humidity high?

The conditions will have an influence over the result and you will have to work harder in tougher conditions (and smarter) to achieve similar results to the race before. It will have an impact on your time as well unless you train differently for the different conditions.

Well that’s the same in sales in my mind, the market conditions are tougher so we need to work harder and train differently. There are fewer prospects around so we really need push the boat out with every customer, give them the best demonstration we can, present the deal in the most enthusiastic way, communicate all of the positives and really do our best for every customer. The market today needs us to treat every customer like they are gold (because they really are) and treat them to the very best of our ability.

I also believe that we need to train harder for the current economic conditions, something that is easy to overlook when there are negative people all around you. I train 5 days a week for the reward that my running gives me. I train to make sure I’m prepared. I do it because I love it not because I’m forced to do it. I make time for it because if I didn’t then I might either injury myself or fail to meet my goal. Now there are people around me that say I’m mad (which is probably true), why bother, what’s the point in running. The point is that I’m doing it for me, the point is that enjoy it and the point is that it is rewarding for me.

And that’s exactly the sale in sales, if your salespeople don’t enjoy it, don’t find it rewarding, if they don’t want to work harder in a tougher environment and they are not prepared to train (or you to train them) then don’t be surprised if things don’t improve.

I think that Ian’s email says it better than I do. Nobody forced him to work so hard, he did it because he wanted to, to challenge himself and to see what he could really achieve. He achieved his goal and I know that he got his reward as well.

And finally

That’s it for this month, I hope that Ian’s story has touched you, it did me. I love the spring because there is a feeling of light about it, of new birth and summers on its way. The evenings will get longer, the temperature warmer, the flowers will be out and cars will be sold. If you haven’t picked up your newsletter then click on http://www.saleslynx.co.uk/newsletters/irish/SaleslynxIrishAuto78.htm.

Have a great March

Regards

Brian

www.saleslynx.co.uk