Pre-registration. A motor trade term which strikes fear into the heart of every franchised sales manager in the land. Despite the stifling effect this process has on a dealer, the bonus payments are just too important to banks and budgets to be ignored.
With two weeks left of any quarter, a sales manager will know their registration projection, achievement and target better than the birthdays of their nearest and dearest.
It is no blessing to find yourself on or ahead of target with two weeks left. You then become a target of the manufacturer for over-achievement. The only positive aspect of pre-registration in this situation is that you do hold the cards in the negotiation. It is likely some hefty bonus payments will be offered, just how weighty will depend on your brand and product availability.
If you find yourself a little short, your next resource to be plundered is demonstrators and service loan cars. Three months feels like an eternity to wait when you know there are a dozen registrations waiting for you. However, whilst the new flock may be delivered with haste, the returning tribe are not as welcome - especially for those suffering meagre write down allowances.
The worst position is to find yourself a long way short. Through a combination of poor performance, over targeting and product availability, I have been in this position more times than I would like. Therefore I do have a few tips for those who find themselves in that sticky situation:
1/ Cheapest is not always best. You may have a lead in car at £6995 but at £5995 a customer will more often than not choose the new car option.
2/ Avoid the crowds. Don't pick models that the dealer twenty miles down the road will have. The internet savvy customer (pretty much everyone) will use this to beat you down on price.
3/Blow them out the door. Forget trying to hold on to every penny, the longer they lurk the bigger the problem.
4/Still sell new. Do not beat the salesman who could not convert a new car prospect, the easiest way to avoid the same problem next quarter is to complete the task early.
Saturday, 21 January 2012
Thursday, 22 September 2011
Autotrader Follow Up Piece for Car Dealer Magazine
'As a follow up to my stinging article in the July issue of the magazine, I recently had a meeting with a regional director of Autotrader.
The fact that senior figures within Autotrader were prepared to engage in anything other than rudimentary business calls is a credit to the company, but the meeting did nothing more than highlight why the majority of car dealers are so unhappy.
Our disagreement focused on the current pricing structure and the perception of value. Autotrader say that their figure of around £9 a week per car is excellent value compared to spending £100 a week on a regional press title or in my case the cost of a used car display area. They also argue that a number of pricing and analytical tools are available to me, they have the highest amount of unique visitors AND I have a 'trusted advisor' (tossy corporate speak for a rep) to visit me and talk through my needs.
The visit also involved the introduction of a 'customer charter'. 'We want to hear your feedback so that we can improve our service, very much like the Natwest initiative'.
During the last 18 months Autotrader have made significant steps in customer service. The portal is excellent, customer interface has become more efficient and the people are pleasant.
I used to fly with British Airways but rarely do today. I liked the fact that I had a seat, that the cabin crew were polite and professional and they had an excellent safety record. What budget airlines did was strip the offer down to the base level but the product remained the same. Now I find it very difficult to justify the difference.
'But BA had a good year last year' said the director when I used this analogy.
My prediction is not that Autotrader will cease to exist - I still have an account albeit reduced - but like BA they will lose their market position. It is not enough to assume that service and market dominance will ensure the success of any company. I am happy to pay more for Autotrader than I would a competitor as I accept their current position as market leader but not ten times as much.
The irony of the introduction of a customer charter should not be lost on anyone. Every dealer in the land is screaming for a reduction in price but will they listen?
The fact that senior figures within Autotrader were prepared to engage in anything other than rudimentary business calls is a credit to the company, but the meeting did nothing more than highlight why the majority of car dealers are so unhappy.
Our disagreement focused on the current pricing structure and the perception of value. Autotrader say that their figure of around £9 a week per car is excellent value compared to spending £100 a week on a regional press title or in my case the cost of a used car display area. They also argue that a number of pricing and analytical tools are available to me, they have the highest amount of unique visitors AND I have a 'trusted advisor' (tossy corporate speak for a rep) to visit me and talk through my needs.
The visit also involved the introduction of a 'customer charter'. 'We want to hear your feedback so that we can improve our service, very much like the Natwest initiative'.
During the last 18 months Autotrader have made significant steps in customer service. The portal is excellent, customer interface has become more efficient and the people are pleasant.
I used to fly with British Airways but rarely do today. I liked the fact that I had a seat, that the cabin crew were polite and professional and they had an excellent safety record. What budget airlines did was strip the offer down to the base level but the product remained the same. Now I find it very difficult to justify the difference.
'But BA had a good year last year' said the director when I used this analogy.
My prediction is not that Autotrader will cease to exist - I still have an account albeit reduced - but like BA they will lose their market position. It is not enough to assume that service and market dominance will ensure the success of any company. I am happy to pay more for Autotrader than I would a competitor as I accept their current position as market leader but not ten times as much.
The irony of the introduction of a customer charter should not be lost on anyone. Every dealer in the land is screaming for a reduction in price but will they listen?
Thursday, 18 August 2011
False economy in this economy - Latest Car Dealer Magazine Piece
For the last year, more than half of my enquiries have been from people looking to swap their existing car for one of mine or have been looking for cash back.
There is no doubt that rises in insurance premiums and regular increases in road tax have forced many to look hard at the cars they own and seek a change. A recent RAC report claimed that over a third of all motorists had reduced the use of their car due to the price of petrol.
Whilst it is a natural step to want to change your car to reduce some of these costs, for many people the logic of this process is flawed. I am constantly hearing of deals where a low mileage user chops in a perfectly serviceable petrol car for a new diesel to save themselves £100 a year on tax and gain 15mpg. However, the actual outlay of five figures plus interest if financed seems to escape their attention.
Most of the swap deals I am offered are against my 'part exchange to clear' cars. Some customers think it is in their best interest to swap a 50k petrol family hatchback for a 120k small diesel car with no regard whatsoever to the actual cost of annual maintenance.
Maintenance too is an area where people try to cut corners. How many people have stopped the routine service of their vehicle? How many cambelts are being replaced in this climate and if so with how many water pumps? The ostrich approach is common yet consequences are financially catastrophic when something goes wrong. Many of these cars are seen limping their way into dealers with the idea of passing the problem.
So far the reduction in vehicle parc has managed to delay the reduction in residuals of less efficient cars but there are signs things are starting to change as evidenced by last months book drop. At what point the cost difference starts to encourage buyers back these cars in big numbers remains to be seen but there are some great buys out there for the canny individual...
There is no doubt that rises in insurance premiums and regular increases in road tax have forced many to look hard at the cars they own and seek a change. A recent RAC report claimed that over a third of all motorists had reduced the use of their car due to the price of petrol.
Whilst it is a natural step to want to change your car to reduce some of these costs, for many people the logic of this process is flawed. I am constantly hearing of deals where a low mileage user chops in a perfectly serviceable petrol car for a new diesel to save themselves £100 a year on tax and gain 15mpg. However, the actual outlay of five figures plus interest if financed seems to escape their attention.
Most of the swap deals I am offered are against my 'part exchange to clear' cars. Some customers think it is in their best interest to swap a 50k petrol family hatchback for a 120k small diesel car with no regard whatsoever to the actual cost of annual maintenance.
Maintenance too is an area where people try to cut corners. How many people have stopped the routine service of their vehicle? How many cambelts are being replaced in this climate and if so with how many water pumps? The ostrich approach is common yet consequences are financially catastrophic when something goes wrong. Many of these cars are seen limping their way into dealers with the idea of passing the problem.
So far the reduction in vehicle parc has managed to delay the reduction in residuals of less efficient cars but there are signs things are starting to change as evidenced by last months book drop. At what point the cost difference starts to encourage buyers back these cars in big numbers remains to be seen but there are some great buys out there for the canny individual...
Monday, 1 August 2011
Autotrader - The frustrations continue...
For the last fifteen months I have been in regular contact with Sharon Randall. Sharon is the sales director of Trader Media Group, the company that owns Autotrader.
I had become exasperated with continual rate rises and lack of regional representation. I have often felt that in order to achieve results from a complaint, talking to the most senior person possible in a constructive and fair manner is the most effective way.
During our initial conversation I questioned whether multiple rate increases were justified given the current economic climate, particularly in the retail motor trade. I explained that to me as a dealer, Autotrader were just the means in which I broadcast my current stock to the country and that in essence all they had was a great domain, some servers and patented search system. Couple this with the fact that major competitors were offering to display the same number of cars for around 90% less.
I also explained that having spoken to many of my friends who had independent dealerships, I was not alone in my frustration. Another important factor I discovered in my conversations with fellow dealers was the reverence in which Autotrader was held. With the development of internet enquiries, many felt that despite continual lack of service and price rises, to leave Autotrader was too risky.
Naturally Sharon was defensive citing recent technical developments, strong user numbers and brand credibility.
During the same period I received a letter from another TMG company Auto-trade Mail outlining a 10% increase in their monthly subscription. When I called their sales manager to ask why given a huge increase in subscriber numbers and lack of product development, I was told 'because we have not put the price up for a few years'.
Six months later and the only thing that had changed for the positive was the regular contact from a very capable regional sales person. Another rate increase was looming, business was still slow and those feelings of angst that had temporarily disappeared under the surface began to rear their ugly head yet again.
So I put another call in to some dealers, to my regional representative and to Sharon.
This time some of the dealers were starting to act. Only a handful were doing nothing, many were reducing spend and a couple were leaving altogether.
I decided to reduce my spend from 35 cars to 10 which was is the minimum number allowed in order to gain full account facilities. My rep was disappointed but not surprised. She told me how she was having difficult conversations on a daily basis with dealers who were fed up with the continued arrogance of Autotrader. She told me that whilst she was unable to effect any kind of offer to change my mind, a special team had been employed at head office to try and recover lost dealers with reductions. I could not believe that a regional sales person had been given no ability to try and negotiate a better package.
I spoke to Sharon, we had another very similar conversation where her defensive weapons of technical development, user numbers and brand were employed but this time with little effect.
Sharon maintained that the development of mobile platforms (iPhone apps and the like) were the future and these developments had to be paid for. I argued that most dealers only view Autotrader as a search portal, no different to countless others. Customers are aware that many popular listings companies do not have mobile apps so whilst it maybe convenient for someone to find a car on an iPhone, the search does not end there.
She told me that the user numbers of both mobile and traditional platforms were much stronger than those of competitors. I argued that web statistics can be engineered for any purpose and that the only thing that mattered to me were deals not internet views.
She remonstrated that the Autotrader brand was by far the strongest and that dealers were paying for quality. I argued that a company who believes they have the strongest brand and that their pricing structure is value, do then not employ a team of telesales people to undermine the position of their regional counterparts with offers and discounts.
In February this year a dealer from Bath started the Motor Traders Advertising Union. I had absolutely nothing to do with the organisation but I welcomed it. Whatever their motive and regardless of their success, it provided evidence given the overwhelming support they garnered that dealers were taking action. MTAU galvanised negative opinion and forced Autotrader to act.
I had a phone call from my rep shortly afterward telling me there was a 50% reduction on all additional stock until July. This brought the average cost per vehicle back to a level which I felt comfortable with.
I spoke to Sharon again. I told her I was pleased that Autotrader were taking action and that in July I was hoping to see a revised pricing structure that would allow dealers to either come back or at least maintain higher stock levels.
I had a phone call from my rep this week. There is to be no revised structure. The deal has finished and that is that. She sounded desperate on the phone, she told me if she found another job tomorrow she would be gone. Having eighteen months of dealers lambasting would test anyone.
I read in June that the owners of TMG had refinanced the company to raise £280m for a special dividend. It means the company has taken on more debt and is more dangerously leveraged. When I read this my heart sank. Sharon is just a puppet, when private equity groups run companies they look for nothing more than a return. Years of customer relationships, staff morale and shared visions mean nothing when interest and dividends have to be paid
I had become exasperated with continual rate rises and lack of regional representation. I have often felt that in order to achieve results from a complaint, talking to the most senior person possible in a constructive and fair manner is the most effective way.
During our initial conversation I questioned whether multiple rate increases were justified given the current economic climate, particularly in the retail motor trade. I explained that to me as a dealer, Autotrader were just the means in which I broadcast my current stock to the country and that in essence all they had was a great domain, some servers and patented search system. Couple this with the fact that major competitors were offering to display the same number of cars for around 90% less.
I also explained that having spoken to many of my friends who had independent dealerships, I was not alone in my frustration. Another important factor I discovered in my conversations with fellow dealers was the reverence in which Autotrader was held. With the development of internet enquiries, many felt that despite continual lack of service and price rises, to leave Autotrader was too risky.
Naturally Sharon was defensive citing recent technical developments, strong user numbers and brand credibility.
During the same period I received a letter from another TMG company Auto-trade Mail outlining a 10% increase in their monthly subscription. When I called their sales manager to ask why given a huge increase in subscriber numbers and lack of product development, I was told 'because we have not put the price up for a few years'.
Six months later and the only thing that had changed for the positive was the regular contact from a very capable regional sales person. Another rate increase was looming, business was still slow and those feelings of angst that had temporarily disappeared under the surface began to rear their ugly head yet again.
So I put another call in to some dealers, to my regional representative and to Sharon.
This time some of the dealers were starting to act. Only a handful were doing nothing, many were reducing spend and a couple were leaving altogether.
I decided to reduce my spend from 35 cars to 10 which was is the minimum number allowed in order to gain full account facilities. My rep was disappointed but not surprised. She told me how she was having difficult conversations on a daily basis with dealers who were fed up with the continued arrogance of Autotrader. She told me that whilst she was unable to effect any kind of offer to change my mind, a special team had been employed at head office to try and recover lost dealers with reductions. I could not believe that a regional sales person had been given no ability to try and negotiate a better package.
I spoke to Sharon, we had another very similar conversation where her defensive weapons of technical development, user numbers and brand were employed but this time with little effect.
Sharon maintained that the development of mobile platforms (iPhone apps and the like) were the future and these developments had to be paid for. I argued that most dealers only view Autotrader as a search portal, no different to countless others. Customers are aware that many popular listings companies do not have mobile apps so whilst it maybe convenient for someone to find a car on an iPhone, the search does not end there.
She told me that the user numbers of both mobile and traditional platforms were much stronger than those of competitors. I argued that web statistics can be engineered for any purpose and that the only thing that mattered to me were deals not internet views.
She remonstrated that the Autotrader brand was by far the strongest and that dealers were paying for quality. I argued that a company who believes they have the strongest brand and that their pricing structure is value, do then not employ a team of telesales people to undermine the position of their regional counterparts with offers and discounts.
In February this year a dealer from Bath started the Motor Traders Advertising Union. I had absolutely nothing to do with the organisation but I welcomed it. Whatever their motive and regardless of their success, it provided evidence given the overwhelming support they garnered that dealers were taking action. MTAU galvanised negative opinion and forced Autotrader to act.
I had a phone call from my rep shortly afterward telling me there was a 50% reduction on all additional stock until July. This brought the average cost per vehicle back to a level which I felt comfortable with.
I spoke to Sharon again. I told her I was pleased that Autotrader were taking action and that in July I was hoping to see a revised pricing structure that would allow dealers to either come back or at least maintain higher stock levels.
I had a phone call from my rep this week. There is to be no revised structure. The deal has finished and that is that. She sounded desperate on the phone, she told me if she found another job tomorrow she would be gone. Having eighteen months of dealers lambasting would test anyone.
I read in June that the owners of TMG had refinanced the company to raise £280m for a special dividend. It means the company has taken on more debt and is more dangerously leveraged. When I read this my heart sank. Sharon is just a puppet, when private equity groups run companies they look for nothing more than a return. Years of customer relationships, staff morale and shared visions mean nothing when interest and dividends have to be paid
Survival of the fittest...
We are now in the second half of 2011 and what can I tell you? Well, the market is tough but you already knew that. At no point have I seen a market with so many variables out of dealer control to adversely affect the market. Exchange rates, natural disasters, low consumer confidence, dwindling used car parc, increased raw material prices and many others conspire to make these the most challenging trading conditions I have seen in my thirteen year motor trade life.
Being brutally honest over Christmas I almost threw in the towel. I spent two months over the winter looking hard at what I want out of life and came to the conclusion that I love this job, I love my business and it will not beat me.
After the Beijing Olympics I heard the team manager of Britain's dominant cycling team talk about how they had achieved success in a sport which does not have huge media exposure, has relatively small participation and limited investment. The essence of his reply was that they looked at every single process and aspect of what the team did. From diet to the material of their uniforms. They found that if they could improve by just one percent in every area, the collective result would be enough to be the best
in February I examined every aspect of everything I do. From where I source my cars to how I use Twitter. From where I get my fuel to how I interact with my local community. What I found was there were many areas which required improvement and I set about setting goals to try and measure the impact of my actions.
Whilst this has not suddenly meant I am challenging Lakshmi Mittal as the country's richest man, it does give me the confidence that I can steer a course through choppy seas until things improve.
I would urge you to do the same. Simply reducing costs is not enough. Analyse everything and I mean everything. Also bear in mind that for every positive action there will be a negative reaction. For example, deciding to stop your branded number plates will mean a lack of advertising and awareness which these can provide. Starting a Facebook group which is poorly managed can be detrimental to your image.
I cannot predict what will happen in the next twelve months but I do know that Charles Darwin might have been on to something...
Being brutally honest over Christmas I almost threw in the towel. I spent two months over the winter looking hard at what I want out of life and came to the conclusion that I love this job, I love my business and it will not beat me.
After the Beijing Olympics I heard the team manager of Britain's dominant cycling team talk about how they had achieved success in a sport which does not have huge media exposure, has relatively small participation and limited investment. The essence of his reply was that they looked at every single process and aspect of what the team did. From diet to the material of their uniforms. They found that if they could improve by just one percent in every area, the collective result would be enough to be the best
in February I examined every aspect of everything I do. From where I source my cars to how I use Twitter. From where I get my fuel to how I interact with my local community. What I found was there were many areas which required improvement and I set about setting goals to try and measure the impact of my actions.
Whilst this has not suddenly meant I am challenging Lakshmi Mittal as the country's richest man, it does give me the confidence that I can steer a course through choppy seas until things improve.
I would urge you to do the same. Simply reducing costs is not enough. Analyse everything and I mean everything. Also bear in mind that for every positive action there will be a negative reaction. For example, deciding to stop your branded number plates will mean a lack of advertising and awareness which these can provide. Starting a Facebook group which is poorly managed can be detrimental to your image.
I cannot predict what will happen in the next twelve months but I do know that Charles Darwin might have been on to something...
Tuesday, 21 June 2011
Training is not draining...
There is no doubt in my mind that one of the biggest weaknesses affecting the retail motor trade is a lack of training and coaching.
Most dealers rely solely on the mandatory training enforced upon them by their respective manufacturers. Whilst this source of knowledge is often useful - particularly in product terms - it does little to develop individuals and encourage personal development.
There are some dealers who are over dependent on the use of external consultants. There are some excellent external trainers available, many of whom add value to a business when employed in the right areas at the right times but to diminish the training and coaching responsibilities of dealer management employees demonstrates a lack of faith in their ability to develop people.
To me it starts from the board level down. Directors and dealer principles must work with their managers to achieve budgets. I have seen senior managers who can hardly read a set of financial reports, let alone deduce the impact in a management context. Many senior managers who come from a sales background do not understand the after sales side of the business and vice versa. It is no sign of weakness to want to improve in these areas.
Many department managers are employed due to being very proficient as sales managers, workshop controllers or parts salespeople. However when it comes to heading up a team of other individuals, they can often enforce the style that saw their own success even though this may not work for other people in the team. Greater consideration has to be given and individual training and processes developed.
Good operational employees often know what to do to be successful but they do not understand how or why they are doing it. I have seen sales people insist on a customer taking a test drive even when it is clear the customer has been through the process somewhere else and just wants to deal. Of course experience teaches you these things but good management can hasten the development.
The best advice I can give anyone who has to manage, train or coach people is watch, listen and act. Clear objectives and individual attention to the training needs of each member of your team will result in better performance and greater workplace morale.
Most dealers rely solely on the mandatory training enforced upon them by their respective manufacturers. Whilst this source of knowledge is often useful - particularly in product terms - it does little to develop individuals and encourage personal development.
There are some dealers who are over dependent on the use of external consultants. There are some excellent external trainers available, many of whom add value to a business when employed in the right areas at the right times but to diminish the training and coaching responsibilities of dealer management employees demonstrates a lack of faith in their ability to develop people.
To me it starts from the board level down. Directors and dealer principles must work with their managers to achieve budgets. I have seen senior managers who can hardly read a set of financial reports, let alone deduce the impact in a management context. Many senior managers who come from a sales background do not understand the after sales side of the business and vice versa. It is no sign of weakness to want to improve in these areas.
Many department managers are employed due to being very proficient as sales managers, workshop controllers or parts salespeople. However when it comes to heading up a team of other individuals, they can often enforce the style that saw their own success even though this may not work for other people in the team. Greater consideration has to be given and individual training and processes developed.
Good operational employees often know what to do to be successful but they do not understand how or why they are doing it. I have seen sales people insist on a customer taking a test drive even when it is clear the customer has been through the process somewhere else and just wants to deal. Of course experience teaches you these things but good management can hasten the development.
The best advice I can give anyone who has to manage, train or coach people is watch, listen and act. Clear objectives and individual attention to the training needs of each member of your team will result in better performance and greater workplace morale.
Thursday, 19 May 2011
Pioneering for profit...
I like to think of myself as something of a pioneer. Back in 2001 I was the sales manager for a start up Saab dealer. Saab had a very sharp used car manager who awoke me to the possibilities of used cars on the internet. He had developed a basic excel spreadsheet which imported data from Saab's used car management system and it allowed you to monitor your prices for similar vehicles against other dealers in the network. 'If I were you' he said 'I would be £100 cheaper than your nearest rival and you will get incremental business'.
So that is precisely what I did. In my first two years before I left for BMW we had it away. There were very few people embracing the technology in this fashion, instead preferring to opt for what appeared to be more lucrative and a a less price sensitive local market. The benefit I had was I worked for a sizeable group in a middling brand so I was lucky to have a powerful cheque book at my disposal. Saab was a brand (probably still is to some degree) where sellers are happy to get a bid on late plate cars so I was able to buy effectively and still maintain my budgeted margin.
However, like all good things it came to an end. I left for BMW and there I found a group of similarly plugged in operators who were exercising a similar strategy. Gradually more and more people saw this process as the route for success which naturally undermined the whole concept as prices were forced down in an attempt to control the market. I modified my approach and instead focused my purchases on very odd cars, 6er and 5er manual derivatives for example.
Life is nothing if not cyclical and I can see a return to those good old fashioned values. Customers are now wary of buying a car just because it is the cheapest, having travelled long distances only to find a car that has been mis-described or on VCAR. The price of fuel means customers are less likely to drive 100 miles to be disappointed. Dealers are equally wary of distance selling regulations so they too find the lure of being cheap for the sake of it not as strong as it once was.
So that is precisely what I did. In my first two years before I left for BMW we had it away. There were very few people embracing the technology in this fashion, instead preferring to opt for what appeared to be more lucrative and a a less price sensitive local market. The benefit I had was I worked for a sizeable group in a middling brand so I was lucky to have a powerful cheque book at my disposal. Saab was a brand (probably still is to some degree) where sellers are happy to get a bid on late plate cars so I was able to buy effectively and still maintain my budgeted margin.
However, like all good things it came to an end. I left for BMW and there I found a group of similarly plugged in operators who were exercising a similar strategy. Gradually more and more people saw this process as the route for success which naturally undermined the whole concept as prices were forced down in an attempt to control the market. I modified my approach and instead focused my purchases on very odd cars, 6er and 5er manual derivatives for example.
Life is nothing if not cyclical and I can see a return to those good old fashioned values. Customers are now wary of buying a car just because it is the cheapest, having travelled long distances only to find a car that has been mis-described or on VCAR. The price of fuel means customers are less likely to drive 100 miles to be disappointed. Dealers are equally wary of distance selling regulations so they too find the lure of being cheap for the sake of it not as strong as it once was.
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