An “Efficient” Market meets an “Inefficient” Sales Process.
The traditional method of selling used vehicles is out of step with today’s “efficient” Internet market based approach that ties vehicle research, acquisition, pricing, retailing, and even wholesaling decisions to real market data from Live Market.
Economists describe a market as “Efficient” when there is roughly equal knowledge between buyers and sellers and as a result the retail prices are largely governed by supply demand and price sensitivity.
Is there roughly equal knowledge between buyers (dealers) and sellers (guests) in today’s Internet dominated used vehicle marketplace? YES!
The Internet is the “great equalizer” that arms potential guests with more information about vehicle prices, options, trim levels, vehicle history, values and dealers’ reputations than they’ve ever had before.
It’s not uncommon for guests to bring printouts of competing vehicles when they come to dealerships. But they don’t usually tell you!
It’s not uncommon for guests to be comparing your stock with the market using their smart phones, even when they are in your dealership used car yard, after hours and even during the negotiation process.
The longer a vehicle stays in a stock, the lower the gross profit, the less likely it is to sell. The best Internet dealerships reporting their Managing by Numbers statistics to us, are reporting that 46-85% of total selling opportunities originate from an Internet lead.
More importantly 30% of those leads come from their own website generating local business with zero costs and a better ROI. With the massive cost of third party unqualified leads, many dealers are looking for more cost effective selling solutions.
Brian's top achieving dealers are reporting a “real” 25% plus Internet lead closing ratio.
This may sound very high when we examine the percentage of e-leads received from various Internet providers, 46-68% of total selling opportunities into a used car operation are from e-leads.
The reality is, that most customers who either phone in or attend in person, will on the yard prior to or after the personal visit, compare your vehicles to others offered for sale on the Internet.
Press advertising is almost redundant!
A customer may appear to respond to an advertisement but in reality they read the advertisement, then compare the price on the Internet and providing your vehicle is proceed realistically, they will be a walk in or phone up. So what percentage of your total monthly sales are currently sold by an e-mail inquiry? How many leads arrive from Carsalesconnect?
What percentage of sales occur after the customer has checked the price of your vehicle on the Internet and also checked the price of their trade in on the Internet then contacted the dealership?
Buyers are well informed and it is the dealers that are having trouble coming to terms with this Efficient Market.
The name “Velocity” is a US based used car philosophy to address the “one philosophy in the past, one philosophy in the future” of today’s Australian used vehicle Internet based marketplace.
“Velocity” meanwhile, represents the new skills that dealers and used vehicle managers must understand, develop, and deploy to have a realistic opportunity at capturing today’s Internet-enabled buyers.
Today’s customers start their used vehicle shopping online and what they find online defines who they contact and where they might drive to look!
The reason the Internet has become such a transformative force in our business is because it has leveled the playing fields between dealers and consumers. It has also opened the door to a wealth of new sales opportunities.
‘A lot of dealers think if they’re on the Internet, they’re in the Internet game. That’s simply not true!
Economists describe a market as “efficient” when there is roughly equal knowledge (between buyers and sellers) of choices and alternatives and, as a result the prices are largely governed by supply demand and price sensitivity.
Is there equal knowledge between buyers at sellers in today’s used vehicle marketplace? Pretty much, in fact some customers know more than dealers when researching their purchase. The Internet is the “great equaliser” that provides consumers with more information about vehicle prices, specifications, colours, options/trim levels, owner histories, wholesale values, and dealers’ reputations than they’ve ever had before.
The key in an Internet-driven marketplace is to make sure your pricing is competitive and, if it’s above market averages….justify why.
”Given these dynamics, demonstrating online value for today’s Internet consumers is absolutely critical to gaining their attention.
In an efficient market with its volatility, creates greater risks for dealers and used car managers.
The longer a vehicle stays in a stock, the greater the chance that wholesale value changes, margins reduce and there can be shifts in consumer preference. In fact research indicates that after 32 days in stock a used vehicle sale is unprofitable due to holding costs exceeding gross profit.
The longer a vehicle remains in stock, the longer a dealer’s investment is tied up in a unit that may not be a retail proposition compared to another.
In our recent visits to various clients’ dealerships, our focus is as always, on sales management performance and accountability utilising the Managing by Numbers sales managers support processes.
Working in a dealership last week, an experience crystalised our thinking on this topic and we want to share our thoughts with you.
Clearly each departmental manager operates a DOC so that they know exactly where they are operating compared to sales and income targets at any time of the working month.
Also, most of the great sales managers then break down the targets into weekly targets.
All of the high performing sales managers carry out weekly performance assessments (52 critical analysis points very 12) to ensure that their sales team members achieve their individual targets as the departments collective performance relies on each sales consultant and Business Manager and Car Care consultant achieving their individual sales and income targets.
Our observation is that most sales managers don't view their sales team members as resources that are paid and empowered to achieve or exceed specific results and maximise their income.
What concerns us more is that when those resources fail to achieve the agreed targets, those people are allowed to continue to produce poor results, well below the agreed performance levels, for extended periods of time.
Every business is in fact a workplace and certain workplace rules apply.
If sales managers are doing weekly and EOM performance assessments, then a trend appears in the performance of all sales consultants.
If the trend is poor and not corrected with weekly counseling and training applied as required, then the sales manager will fail resulting in the dealership failing to achieve maximum ROI and profitability and manufacturer sales and CS targets.
A customised sales training program will do both of these.
The importance of a customised approach is paramount to the effectiveness of your organisation.
Brian Phillis customises training programs for each individual client.
Use a drip methodology to serve up skills content to your sales teams, as they are all at different skills levels.
There are tools that we have developed that allow us to increase skills quickly, then test and drip content. There are still ways to get sales training content into sales’ hands.
Brian makes sure you have a consistent cadence.
Brian’s take away is, a one and done approach doesn’t work.
Tailor the testing to the initiative and group. New hires should be tested more frequently than tenured sales consultants. Continue to educate incrementally.
It’s incumbent upon us to share with you and the sales management team how to identify gaps in the sales consultants skills and abilities.
We need to then customise content to fills those gaps. Identify the modalities that best resonate and drive adoption and roll them out.
This is the true determinant of a successful sales training program. Using Managing by Numbers dealers and having the ability to see gaps in learning in "real time." Close the gaps in real time and achieve a higher performance.
All of these dimensions are customisable.
Here's my view on how we can really redefine the sales processes.
Selling is first a science, and for more reasons other than the math.
Everything we do as professional sales consultants is about skills and knowledge?
The objective of every true professional sales consultant is to become a trusted advisor to their guests.
The only way one can be an advisor, is to be an expert, and the only way to be considered an expert, is to possess an over abundance of knowledge in your chosen field and break the information clutter.
Science is “Knowledge attained through study or practice” according to Webster’s Dictionary.
Selling is an applied science in that it involves the application of research and scientific data to solve practical problems and human needs. Yet, selling is also a pure science; a social science, in that it entails the systematic study of human behaviour and social performance.
In addition, selling also demands an understanding, if not, the full utilisation, of the sales process KPI numbers; the laws of selling.
A professional Sales Consultant works to achieve a high KPI closing ratio and other KPI’s, demo ratio, prop ratio and sales to prop ratio. For phones and Internet; appointment ratios, show ratios and sales to show ratios plus other factors to predict and control future outcomes.
Selling is indeed, first a science.
Once the true professional and modern–day sales consultant understands the science, it is time to practice that science. Like the scientist, it is time to turn practical theory into actionable results.
Like a medical doctor, it is time to use science to maximise sales (and your income) by assisting your guests in a more professional manner.
Knowing the numbers, knowing the science is not enough; nor is the rudimentary or inconsistent application of the science.
Now, the sales professional must practice the craft; practice the science until it becomes perfect and reflective examination of the outcome KPI's.
Definitely not an American based sales training programme.
A uniquely developed Australian sales training programme based on current Australian sales culture, personalised guest service and awareness of the digital influence.
With the advent of the Internet and in particular the cultural use of Google as a search engine, (e.g. Carsales, Gumtree, Carsguide and other third party car sales sites), today’s guests are better educated than ever before and demand a new level of professionalism from auto sales consultants.
Buying a new or used vehicle today is an efficient and transparent process between the dealer sales team and their guests.
Guests have generally researched the purchase on the Internet thoroughly prior to contacting any dealer.
Guests have the power and the knowledge!
If guests don’t achieve the level of service they expect, they simply leave and make contact with other dealers. They have the choices!
Over the years we have seen examples of dealerships relying more on the “gut feeling art form? of selling used cars rather than applying clear business strategies and modern sales practices to the management of this key department.
In the last two years “used cars” has been under change attack from the pressure of the Internet, pressure from falling prices, reduced grosses and a potential for excess stock.
As these pressures evolve, used car opportunities will evolve for the proactive dealers.
To remain profitable dealers need to “unravel the art form? and go “back to 2015 basics?
The used car department has two basic keys to success.
The used car gross is in the buying – not the selling.
The more current the stock the greater the margin.
Dealers who hold to these two key disciplines produced greater gross profit per unit reduce their wholesale losses carry better stock and do not suffer “tear ups? from aged stock.
Used car selling is now a science.
One of the things that we have discovered is that it is critical to educate all of the sales team members including sales managers to the new state of the art selling plan.
We have all learners sign a confidentiality agreement prior to learning, so if anyone leaves the team they can’t legally share the information learned. It is that valuable!
Call Brian now and take advantage of a FREE 30 minute consultation.
My process includes visits to your location(s) to meet with leaders and staff, as well as observation and data collection to gain a complete understanding of your current state and desired future state.
It's the combination of hard data and personal interviews that reveals the true approach needed to help you thrive.
I focus on “Managing by Numbers” and having a structured sales process that maximises “Global Income.”
When I have introduced these processes to my clients, it has changed the way they do business and how they assess what is best for their business.
I believe that most management techniques are about common sense having regard to the market and guest expectations, but quite often I hear from Dealers, GM’s, Sales Managers and sales consultants who clearly don’t understand how Managing by Numbers, a Structured Sales Process and a Global Income focus changes the way to do business in this Efficient and Volatile market.
Based on feedback, my techniques are state of the art. Applying my techniques that are not challenging, as they are common sense. I am experienced and understand how to do that in your sales organisation in a practical and non-disruptive sense.
My style is about working with you to analyse your individual under performance issues and identify and implement well-proven sales solutions based on my experience of what has worked best in the past.
The common thread, in which I am an expert, is an emphasis on structured methods for performance measurement and improvement.
The challenges described here will sound familiar to you and I can help you achieve results that will repay my fee costs many times each year for the life of the business.
Regardless of how you currently rate yourself against the competition, I will ensure that you will achieve the sales success and the profits you desire and deserve.
I am a niche consultant, coach and sales trainer and my business model is based on me solving your under-performance issues quickly, with a minimum of fuss and effort.
Step 1 of any new relationship is an informal and non-binding chat about your issues and challenges. To facilitate moving to that position, I offer a free 1-hour informal chat so that we can identify the common ground and mutual understandings and have total agreement for moving forward.
I am very happy to offer suggestions and solutions, but if the problem is more complex I might suggest a formal diagnosis process to come up with an action plan.
That might involve:
• Talking to your people:
• Looking at your historic sales, P/L numbers and processes
• Benchmarking against best practice and competitors
• Assessing your market.
I will tailor the scope to your current situation, in order to arrive at (fully costed) recommendations for any future actions.
The truth is that there are good and bad ways to use numbers and whether any particular approach generates positive or negative outcomes depends on how people react and how numbers are used.
In all cases I recommend that you install my ManagingbyNumbers.com sales performance analysis system which is critically important to creating and utilising historic data compared to current KPI’s and utilising that data to create better performance in the future. What is almost universally true is that examining the correct KPI numbers helps managers understand what is happening in their business and then make better unemotional business decisions. Not just any numbers - the right ones.
Clearly, there is a small set of headline KPI’s that indicate if you have been successful in achieving your organisation’s vision. Those metrics, however, are about history and achievement. What is much more interesting and important to effective management, is using historic data for predictive analysis.
Looking at any sales organisation through its sales KPI’s is at the very heart of my philosophy, alongside a focus on communicating with, motivating and rewarding people effectively.
I am an experienced auto trade sales professional who understand the value of structured and quantitative methods in business. Training, Coaching, Communications and Capability Assessment – I offer a proven formal sales skills training programme, coaching and change-management methods.
As is said, a problem shared is sometimes a problem solved and just having someone to bounce sales related issues with, can be invaluable.
I also offer free 24/7-phone support providing in-depth management experience to support mentoring and coaching across the full gamut of sales management and sales training competencies.
I can develop a high performance sales programme to suit your organisation and with regular ROI reviews, professional advice and structured or flexible plans, I will provide a sound return on investment.
“You can’t manage what you don’t measure” is often attributed to business guru Peter Drucker.
When I discuss the Managing by Numbers programme, I often hear dealers and sales managers comment, “That’s the way we’ve always done it.”
From senior leaders to front line sales managers, dealers have grown accustomed to managing sales teams by some numbers, such as sales numbers, market share and Customer Satisfaction.
Do those numbers drill down and allow Senior Managers to evaluate the effectiveness of Sales Managers, Sales Consultants, Business Managers and Car Care consultants? NO!
Sales team members are required to follow a sales process! However do the normal numbers tell you if they are all following the same processes? And if not, who has chosen to follow process and who has chosen not to follow process?
Like most things in life, running a sales organisation has become more challenging.
Brian Phillis witnesses how the high performing dealerships utilise his metrics to better manage their sales departments. However we understand that it is more complex than that.
Numbers-Driven-Metrics based management is about keeping a focused eye on the Key Performance indicators (KPIs) that drive your sales organisation.
Performance Based Management is about picking the right metrics, agreeing on the actions that drive those metrics, reviewing them continuously, re-training and holding people accountable.
An example comes from sport. Great coaches don’t focus on the score.
Instead they focus on leading indicators. Leading indicators in sports are recruitment, skills training, skills KPI’s, player health and the ability to read the game. The lagging indicator is actually the score.
Both Leading and Lagging indicators drive behaviour. So we need to be aware of the behaviours that you are seeking, because you get what you measure.
Knowledge of leading and lagging indicators reinforces deadlines, gets sales team members engaged and creates a High Performance sales environment.
Managing by Numbers informs sales managers of what has occurred and if sales consultants are operating effectively.
Managing by Numbers can be used to predict future actions, if the actual results are not meeting the desired results KPI’s.
“Every DP, GM and sales manager really would like to anticipate what problems or opportunities may occur over the next weeks or months so they can plan to create a high performance outcome.”
Managing to Numbers produces many metrics including actuals to targets that allow good sales managers to predict what will continue to occur unless a change in attitude or process takes place.
It even predicts precisely what to do to correct the trend.
Managing by Numbers de-personalises any productivity and efficiency discussions as the numbers being discussed are based on the information provided and entered by the various sales managers based on actual performance.
Managing by Numbers is a positive performance motivator if the numbers are viewed as data and not used and interpreted as a personal criticism of any individual or collective group.
Managing by Numbers is an efficiency tool to examine performance and apply management logic that will be used to create more effective operational performance and cultural improvement.
Managing by Numbers de-personalises any productivity and efficiency discussions as the numbers being discussed are based on the information provided and entered by the various sales manager, based on actual performance.
Managing by Numbers is an efficiency tool to examine performance and apply management logic that will be used to create more effective operational performance and cultural improvement.
If you have the current Managing by Numbers information, you can easily identify best practices and KPI’s within your sales team that increases not just one person’s productivity and efficiency but every team members?
Imagine having the insight, flexibility and capability to micro manage individual team member’s processes as needed and still completely track productivity and efficiency across your sales team?
The 3 W's - Managing by Numbers provides unprecedented visibility and insight but with the ability to drill down into the 3W’s.
The “Which, Why and What” of the numbers to drive better sales force efficiency.
It also provides predictive analytics to help you forecast actions required to change process and sales outcomes for superior sales results.
Armed with this actionable intelligence, you can make more informed decisions about how to create a more nimble, productive and multi-talented sales force while simultaneously increasing efficiency, sales numbers and increasing ROI.
Auto dealerships sales organisations must be aware of the key metrics.
Those metrics are the score of the sales process!
The Numbers Can Predict Danger
Our Managing by Numbers system will detail the leading metrics which drive lagging metrics.
As senior leaders, we need to focus on the “leading indicators” because that is what we can control day to day. They influence the “lagging indicators.”
We can provide the solutions, as The Metrics are Gospel.
We have the best metrics and are improving them continuously!
Call Brian now and take advantage of a FREE 30 minute consultation.