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Welcome to NCM's Up to Speed Blog

6 Things to Consider While Prioritizing Change

Tom Richards
Written By: Tom Richards
Posted on October 01, 2020

Every dealer out there with any sense knows that our industry will never be the same. I’m not talking about unit sales volume, front-end gross, back-end gross, or even profit margins. Many dealers have maintained all these things throughout this current pandemic, and some have even reported record months! I’m talking about all the processes, procedures, rules, guidelines, policies, expectations, benchmarks, CIT, employees, job descriptions, security, customer satisfaction, compensation, marketing, inventory levels, inventory turn, pricing, etc., etc., etc. that can impact unit sales and profits.

Some of these things have already changed! Some are changing even as we speak, and some of these things will never change. And to complicate matters even more, not every dealership will experience the same kind of changes to the same extent.

The real question you must answer is: “What changes do you need to make in your dealership, and to what extent?”

Although this seems like a daunting task, and it certainly is, there are 6 things that will help ensure that the changes you are making are the best for your business.

1. Trust Your Data

To see true variance and trending in your dealership analytics, you have to compare apples to apples. Make sure the metrics and calculations you are looking at today are the exact same by definition and calculation as those historic metrics you are comparing them to. If you have been using a reporting/analytics software prior to the pandemic that your team is engaged with, now is not the time to make the change. There is a very high risk that any comparisons you make to historical performance may be inaccurate based on different calculations or definitions in a new system. 

It is also important to compare your current data to not only the previous month but to the same month last year. The comparison to the previous month will do great at showing how your performance is trending as you deploy changes and adjust processes. Comparisons to the same month of the previous year is where you will identify needed changes based on the monumental impact of the COVID-19 pandemic. 

Be sure to take note of all variances, both good and bad. It is likely that each dramatic change to our industry may have impacted some of your metrics positively and other metrics negatively. Once you have identified variances that you think you want to address, make sure you run down the root cause of the variance. In other words, move past your general ledger and run down the specific performance metrics that are impacting it. Address the real issues you find, and make sure that adjustments you make to processes do not negatively impact other metrics.

2. Peer Insights and Innovation

Keep in mind that you are not in this alone. Every dealership is having to go through this process of adapting to these changes. With so many brilliant dealers in our industry and some of the world’s most creative thinkers, there is likely someone you know in our industry who has worked through the same changes you are considering. You can avoid hidden bumps in the road by looking to your trusted peers for ideas that have worked for them, and those that did not. It is more critical than ever to keep educating your staff on the latest advances in our industry. Use reputable institutes and training programs that have proven themselves in the auto industry. Seek peer interactions in 20 Groups, virtual 20 Groups and available webinars. And read every trade publication you can get your hands on. 

Be open to new ideas and outside-the-box thinking. Also be careful not to judge ideas based on your own historical attempts that may or may not have been successful. Today’s market is gravely different than it was when you tried it last time.

Do not make the mistake of just assuming that because something worked for another dealer it will work for you. Be critical and use your current data/metrics to pressure-test and forecast the impact of changes you are considering.

3. Adjust Your Perspective

Many times failure to evolve is caused by a lack of recognition and understanding of the extent of the changes in the environment. In other words, we don’t dig deep enough into our understanding of all that is changing to formulate a strategy that will truly win in the “new” world. We need to adjust our perspective the best we can to think of every decision and possible outcome from the perspective of the “new” world we are trying to adapt to.

Example:

COVID-19 creates the need to quickly adjust to “Virtual” selling vs. “Showroom” selling, as well as cut as much expense as possible to improve margins. You hear that many of your peers are thinning their sales teams in an effort to run lean and mean. Seems like a good idea, and after looking at your metrics, you feel like the strategy will work for you. Your next question is, “Which salespeople stay, and which salespeople go?” At first, the answer might seem obvious. You pick those that sell the most to stay. But hold on! That was likely the right answer before COVID-19. But adjust your perspective and you quickly realize that it’s a different game now, and just looking at sales volume isn’t enough. You may want to consider other factors about your salespeople’s performance now. Are they capable of selling virtually? Are they self-motivated enough to work internet leads and prospect on social media? How are their average front-end grosses? Back-end grosses? On their deals with trades, are you in a good equity position in those trades? How are their CSI scores? Can they really do an adequate virtual delivery? If you aren’t looking at all these factors in making your decision, those you keep may not be set up for success and that could cost you.

4. Get Involved in the Deployment of the Changes

As a leader in your dealership, you are the catalyst for change. Your people and culture will change as they see you driving those changes and being engaged with them and your customers on the front lines as new processes are deployed. Get in the thick of it. Be an active participant/observer when new processes and procedures are first put into action. See for yourself how it goes with the customer and your people. Get real-time feedback from both to ensure that the adjustment is having the impact you desired, and that it is being done the way you had envisioned. Your front-line involvement will demonstrate to your people your commitment to the changes and to them. In other words, lead by example! 

5. Measure Adoption & Impact

What gets measured gets results! Decide before the deployment of any change what success looks like for you. This sounds simple, but it is often overlooked. Choose the metrics you will keep an eye on to determine how well your team is adjusting to the change. Have meaningful and current benchmarks that you can compare your performance to. If they are struggling to change, ask yourself this, “Is it a commitment issue or a capabilities issue?” If it is capabilities, then training and coaching can fix it. If it is commitment, then accountability and clearer expectations should be applied.

Also, monitor the metrics that you had hoped to impact from this specific change. Create automated reports in your system to keep you informed of the impact, good or bad. The sooner you can see the impact the quicker you can adjust accordingly. In most cases a monthly review of the metrics and trends around these changes is not adequate. Consider the complexity of the change when determining how often to evaluate impact. You will find that most should be viewed weekly. Once you are satisfied with the adoption and outcome of a specific change, less frequent check-ins are needed. 

6. Be Flexible

Being too rigid around “Old Procedures” and “Dated Processes” will almost guarantee a break or fracture in your strategy and/or team. At the same time, you need to be flexible with the changes you deploy. That is not to say that you shouldn’t enforce them. YOU HAVE TO! But understand that there is a big difference between the “Battle” and the “Battle Plan.” Rarely will anyone create the perfect solution that doesn’t require at least some adjustment here and there down the road. Even after you have one of your changes in place and doing what you wanted it to do, decide on a sensible cadence to check in on things. 

You should also be flexible as you prioritize the changes you want to make. Some changes are more difficult and require more time to successfully implement than others. Consider the complexity and impact of your desired changes as you prioritize. Biting off too many changes at one time is taxing on your people and can hurt morale at an already worrisome time. Each of us has a lot of work to do. Keep this in mind as you build your strategy, and eliminate unnecessary changes to your processes that are already working. 

We all have chosen to work in an extremely dynamic industry. We cannot afford to remain static and expect to evolve our dealerships. Change is truly the only constant we can plan on. The “6 Things to Consider” that we addressed in this blog are not easy, but neither is being a successful car dealer. You’ve Got This! 

There are also people out there who can help you through some of these things. NCM has been helping dealers succeed through both good and bad times for over 75 years now, and we keep at it because it’s what we love to do! NCM has a robust variety of services and tools we can use to assist dealers.

Know that we are here should you need us.

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