Gears of Profitability
I learned to drive at 14 years old in a manual-shift Isuzu truck.
I recall sitting at a stop sign atop a hill with the clutch and the brake mashed to the floor. Sweat began to bead on my forehead as I watched a vehicle pull up behind me in the rearview mirror and stop.
I was worried once I released the clutch my truck would roll backward and hit it. Fortunately, I didn’t. Over the next few weeks I mastered the art of driving a manual transmission. In a manual vehicle, there is a progression to reach the top gear and top speed. Choosing the wrong gear or sequence results in driving failure. If you put the vehicle in a higher gear prematurely it can kill the engine. Moving to a higher gear requires you to use the clutch, accelerator and stick in harmonious balance. There are also sequences to growing a profitable dealership. A stable, long- term yet growing operation must transition through various gears to successfully reach its desired speed.
GEARS OF PROFITABILITY
First gear – Interior condition: The operation’s interior condition is everything a dealer institutes to create an environment that brings out the best in current and future employees. Does your culture breed positive, productive team members who don’t want to leave? Ideally, your interior condition will catalyze happy employees. Recognizing efforts and achievements, using innovative ways to improve working conditions and making team members feel like VIPs is the start of great interior condition.
First gear is about providing clear job descriptions and expectations, empowering staff to be included in the evolution of processes,
hiring and attracting the right people for the right jobs – then offering them the support they need to excel.
When interior condition is improved, it bolsters team happiness. Strong interior condition provides opportunities to recruit higher-level performers.
More capable performers find interest in an environment that supports and empowers them to flourish. They thrive because they know what their job is, how to do it and what the expectations are. They are encouraged to improve the dealership and trust their ideas are always welcome and matter.
When employees are satisfied, they stay. The primary reason people leave the car business is the interior condition does not harness, create and maintain happy employees. So they leave and the dealership just sits on the road, never even reaching first gear.
Second gear – Employee MPG: High employee MPG simply means the dealership is maximizing the cost of great people with real results from their labor.
They are efficient and optimal. Team members become invaluable resources for business growth when they know their job, their customers and their product.
Time on the job creates individuals familiar with the macro and micro of your dealership and the industry. Ultimately, they are on the path to becoming experts.
How many long-term, happy experts would you employ?
Third gear – Exterior condition:
Once a team member has high employee MPG, a very special thing happens. His or her work begins to evolve your dealership’s exterior condition.
That refers to how your team creates an experience for your customers. Every customer has an experience at your dealership, but making it a great one
is difficult for those stuck in first gear with unhappy, short-term, unproductive staff members. Many small dealers engage directly with customers in the beginning and experience rapid growth. They offer a strong exterior condition because they are the happy, long-term, productive staff. They start in third gear. Then they hire a few employees and the owner no longer touches the customer experience. Frustration and confusion sets in as growth stalls out. It’s like a car traveling in third gear, then downshifting to second. The business jerks, shudders and slows down. An optimal exterior condition results in happy customers. A happy team and happy customers allow us to maximize our customer relationships.
Fourth gear – Customer loyalty:
Once there, we shift into fourth. Customers are so satisfied and receive so much value from doing business with your dealership, they want to come back and tell others. There is strong trust and respect between the dealership and the customer base, which ultimately leads to what we were after in the first place.
Fifth gear – Maximized profitability.
Understanding the gear progression can help dealers design a workflow with priorities and a strategy that identifies which gear the dealership is in and exactly where it needs to improve to get to the next one. Not knowing the gears can lead to confusion. Too often, business operators work hard in every area of the progression, wearing all the hats and getting frustrated because they are spread so thin and feel they are making little progress.
Start with first gear and get great at the interior condition, then grow from there.