The second half of 2009 is unlikely to be better than the first for motor retailers, Vauxhall dealer and former management consultant Chris Roberts warned delegates at Autoretailing.
Roberts, managing director of Thurlby Motors, believes dealers should be forecasting their business performance in the very short term and identifying which changes will have the greatest impact and what aspects need addressing urgently.
His business uses key performance indicators to track how well it is doing in critical areas. Staff incentives are linked to net profitability rather than gross to encourage them to consider costs.
Minimum performance objectives are set, which with tracking the selling rate on the group’s intranet and in a sales league, Roberts creates competition that will motivate them. The sales team is also required to prospect at least five people daily and individuals have monthly reviews with their managers.
Thurlby launched an eBay shop which sells £400-£500 per month of over-age parts and it participates in autojumbles at Vauxhall owner club meetings.
Cost savings have been achieved by reducing stockholding, putting its insurance contract out to tender and changing its phone system to phone-over-internet at lower rates.
Staff absenteeism, previously a problem, has been addressed, and Roberts is involved in all recruitment of new personnel.
An ability to adapt to rapid changes in car markets will get dealers through the recession.
Stocking, personnel and funding must be addressed to stabilise motor retail businesses as consumer confidence and demands change quickly.
Earl Hesterberg, president of US dealer Group 1 Automotive, told how it reduced advertising spend, inventory liabilities and payroll costs when fuel costs wiped out America’s demand for trucks and SUVs and dealer profitability also plummeted.
The situation demonstrated how difficult the market was to predict. Demand appeared to have switched for small, frugal cars. However, when fuel prices fell, it switched back, leaving some dealers facing a $4,000 loss on fuel-efficient hybrids.
“The memory span of US consumers is exactly 60 days. When fuel prices dropped that’s how long it took for them to start buying trucks and SUVs again,” said Hesterberg.
However, the business has become leaner.
Fewer sales, fewer transactions and fewer part-exchanges led to cuts in headcount, pay and benefits. Stock was reduced by 25%, and marketing switched to targeting the 1.4 million email addresses on the group’s database. When used car stocks ran short, the group emailed customers asking them to sell their car to it.
“Part of our corporate culture is to collect email addresses, if our people don’t they don’t work for us for very long,” he said.
Workshop: Successful strategies for a flexible employment environment
The way to manage in a recession is to think long term and strengthen management competency.
This was the advice of Malcolm Boswell, area director for ACAS* West Midlands, who advised businesses which make
redundancies, it was good practice to support the health and well-being of those who remain.
He said it was important to choose employees carefully, be wary of a greater demand for customer service, review policy and procedures to ensure they do not hamper efficiency and assess your approach to diversity.
Businesses could save money by scrapping any bonus schemes, although it would be astute of any employee to check their contract before accepting this. Some contracts say an employer does not have the right to unilaterally vary contracts of employment.
Boswell said: “You have to make sure when you reach this stage you talk to the employee.”
He said a lot of companies think they can just lay people off, but this is not always the case, so a business must check it has a contractual right to do so. The same attitude must also be applied before putting workers on short time.
When shedding staff, employers must also be aware of age, race or disability discrimination.
Boswell said employer’s can fall foul of employment legislation if they fail to forewarn of impending redundancies.
Companies must also consult the workforce, both individually and collectively, consider alternatives and have an objection and selection procedure so the right people are made redundant.
If an industrial tribunal can prove any of these points have been breached an employee can claim for unfair dismissal.
Boswell said: “A lot of people do not ask the individual if they want to take on another position to save them being made redundant.”
Care must also be taken when one company takes over another. The Transfer of Undertakings (Protection of Employment) Regulations preserve employees’ terms and conditions when a business, or part of one, is transferred to a new employer.
*ACAS stands for Advisory, Conciliation and Arbitration Service.
What are they thinking? Winning sales through the psychology of consumer behaviour
Tapping into a customer’s sub-conscious mind is a key part of closing a sale.
Through a series of practical exercises, Simon Bowkett, managing director of Symco Training, showed how people do many things in life without thinking.
He said a lot of this was due to conditioning of the brain so everyday tasks become second nature.
He said it was important for sales staff to remember people think consciously – focusing on what they are doing – and sub-consciously – doing something without thinking.
Sales staff can use this technique to tailor their questions to get the customer into a ‘yes’ frame of mind.
Bowkett said “How many times can you sense a just-looking customer and the salesman says can I help you? What the salesman should be saying ‘is there anything else I can do for you?’
“People buy cars on logic and emotion. If people just bought on logic, we would all be driving 10-year-old Skodas. They buy on emotion because they want the latest gadgets.”
Bowkett also talked about subliminal advertising.
An example was fast-food restaurants which initially started off asking customers if they wanted a large or small drink.
This changed to simply asking people if they wanted to go large so the last word people heard was large, tapping into their conscious mind. The chances are they will buy the bigger drink. It works in a dealership too.
Bowkett, who used to work in car sales, said: “For six years I used to ask customers what do you think, how does that sound, what are your thoughts, when in actual fact I’m saying I don’t think it is a good deal either.
Open the frame of mind. If people want more money for their part-exchange, ask them what realistically they were hoping to get for it. Don’t give the impression you have room to move.”
Bowkett said a key technique for sales executives when negotiating over part-exchanges was to use the words feasible and flexible.
Rather than saying you can’t meet their price and risking losing the deal, try “Sorry but that’s not feasible, how flexible can you be?”