The recent COVID-19 crisis has left consumers feeling apprehensive about how the future is unfolding.
Automotive dealerships have not cultivated reputations with consumers that lessen their apprehension about buying. Continuing business as usual and refusing to break free of the status quo is only heightening their worries. The best opportunity for adopting a brand differentiator was 20 years ago. The second-best time is now. The current economic situation is forcing many of us to change, adapt, or face a permanent downturn.
In the past, when asked to consider changing their business model, many dealers responded rigidly:
- “Our gross is too good to change our business model right now.”
- “If it ain’t broke, don’t fix it.”
- “We can’t afford to lose our finance department.”
- “We’ve been doing business this way for decades.”
Now more than ever, dealers need to embrace flexibility and new ideas. The time has come to stop having confidence that past successes will continue and start fueling the innovative ideas and practices that will drive the trajectory of our future.
Four key performance indicators will define the progressive dealers of tomorrow:
- Experience: Customers’ buying preferences are changing rapidly and we must be able to identify what they want and adapt accordingly. Commonly referred to as “omnichannel,” we need to meet our customers and transact business wherever they prefer; whether it be at home, at the office, or at the dealership. More than 90% of consumers still prefer to make their purchase inside the dealership, but that may change. It’s critical we transform the in-store buying experience.
- Time Savings: The average in-dealership car-buying transaction time is between 3-6 hours. Our customers consider their time valuable, so it’s no wonder their interest in buying from home is increasing. We need to eliminate the finance office bottleneck and streamline the entire sales process. Among other steps, we should reduce the number of employees a customer interacts with during the buying process.
- Employee Engagement: Investing in the well-being and future of your team is more important now than ever. Providing intrinsic value for our people working in our dealerships and including a well-delineated career path that fosters the individual’s growth is how we will reduce attrition. The days of reactive spiff throwing towards the lowest metric are over. You need to provide a roadmap through training, coaching, and goal setting to motivate your people.
- Reduce variable compensation expense: It’s no secret the highest-paid employees in the dealership are finance managers. While finance managers provide a service that usually translates to higher gross profit margins, hanging on to the traditional finance model can kill the rest of the KPI’s on this list.
What’s the solution? Transform your business model to one that fosters a customer-centric sales process, embraces employee growth, reduces employee compensation, and cuts transaction time in half.
Dealers all over the country have adopted an A2Z selling model to tackle this dramatic need to change management practices.
As we are compelled to hunker down during the immediate crisis, we have the opportunity to be more forward-thinking. By realizing now that things will change, we can take the necessary steps that will determine our future. Our relevance when the cloud of uncertainty is lifted will depend on trying new things.
Neither our legacy nor the future of our businesses will be defined by COVID-19, economic recession, or natural disasters – but by good old-fashioned grit and determination.
As the saying goes, “Necessity is the mother of invention.” We need to pull together today in order to create solutions that will ensure future success.