UnityWorks! Media // Industry Articles

Reading the Same Sheet Music
By Phil Sura, VP of Automotive Sales
As seen in Digital Dealer Magazine:
http://www.digitaldealer-magazine.com/index.asp?article=1468

In my previous life, I was responsible for recruiting and training finance managers for over 100 dealerships across a four-state area. I taught the dealers that if they wanted stronger results with finance income and product penetration, the finance position needed to be perceived as a key management position. Many of our dealerships would promote the top producers from finance to a desk position followed by used car management, general sales management, and finally the general management spot. This approach provided a career path and a strong foundation for the management team in understanding deal structure for maximizing gross and deal placement. In many dealerships, it is still mandatory that the key managers spend time working as a finance manager. When all of the key managers at a dealership understand finance, including the general manager, it is easier to implement a plan and get great results. When the team understands how to read the sheet music, the orchestra performs at a higher level. As I reflect back 20 years, I am reliving some of those earlier years with the next dealer frontier, the Internet/BDC office. The parallels are incredible. Here are some observations:

• Almost every dealer understands that the Internet department is a critical department since 80 percent of the customers use the Internet as a means of research. If you master the Internet, you will sell more cars. Dealers in the 1980s understood that a successful finance department would generate a significant amount of money that flowed to the bottom line.

• Since the Internet team is not on the financial statement, the key metrics are harder to measure and key Internet measurements are still being defined by some dealerships. Dealers in the 1980s primarily measured gross income per car. There wasn't the focus on penetrations, chargebacks as a percentage to gross, measurement of gross produced by product sales to finance gross. There wasn't as much awareness of how service contracts generated service and parts department income. Dealers were just starting to form the reinsurance companies.

• Some dealers have administrative people or technical types working as the manager of the Internet department. A question should be when recruiting an Internet manager can you imagine this person working as a general manager some day? Does the candidate have the skills to go beyond the Internet team? In the 1980s many finance managers came from the banking industry. The finance managers who have worked through the ranks and are now successful general managers and owners had strong sales backgrounds. Some of the former bankers did well but the odds were against them to go the distance.

• Many dealerships today don't see the Internet manager at the same level as a finance manager or new car manager. As an example, they are not included in the key management planning meetings and they are pushed off to the corner of the dealership. The Internet management spot is not part of the career path for senior management in many dealerships. In the 1980s the same pattern existed with the finance offices.

• Many Internet managers today have an advertising budget but the general manager really controls it. Some Internet managers have a small budget but the general manager manages it to the dollar. The Internet budget also represents in many cases less than 10 percent of the overall advertising budget. The more progressive dealers today are actually spending in excess of 60 percent of their total advertising budget on Internet initiatives. Many dealers target 90 percent of their advertising budget to drive Internet initiatives. This means that only 10 percent of their store budget is going to traditional advertising (print, radio, and television). Many finance offices in the 1980s didn't have a budget for sales spiffs, a percentage of the net income going to the sales managers, or a plan for marketing finance related products (ESC or accessories) after the sale of the car.

The next generation general managers are appearing in areas like California, Chicago and pockets of the northeast. This manager has spent time working in the traditional management seats but he has also managed a BDC or an Internet team. These general managers approach the market and run their dealerships with a different focus and flair and age is not consistent. An example is a very successful general manager in the Chicago market. He was formerly a dealer principle and was recruited by a group to run its BDC. The results were significant. The overall group advertising budget was cut and the primary marketing focus was changed to drive customers to the web site and then harvest those leads through the BDC. Historically this dealer group had used a traditional marketing approach; spend massive amounts of money in the paper to drive the customer into the showroom. The new strategy instituted by the BDC manager was a great success. The overall ad budget was cut tremendously and the sales volume increased. This next generation general manager was then promoted to run the flagship operation in the group. A different next generation general manager in San Francisco is selling 80 percent of his 450 monthly retail sales through his Internet department. He was formerly the Internet director for the dealership. This general manager seeks unconventional ways to drive Internet business and he avoids the traditional advertising approaches. I firmly believe that a rotation through the BDC will become a focus for dealer groups. As a former general manager myself, I appreciate those who have the ability to inspire and lead a team. It is a tough job to constantly juggle financial performance, CSI, ESI, relationships with the dealer principal, relationships with the factory reps, keeping on top of the changing market conditions and keeping in touch with your own family. I applaud those of you who sit in the general manager seat. You earn your money. As you shape your dealership team, consider placing your best and brightest in the BDC department. It will pay huge dividends to the dealership and to the employee.

http://www.digitaldealer-magazine.com/index.asp?article=1468