An Overview of
BCI’s 7 Principles of a High Performing Dealership©
Over the years that my team and I have been working with dealers, one of the most common questions that we get asked is, “What makes a dealership successful?” We have had hundreds of conversations with both dealers and manufacturers about what we believe makes a dealer successful and the road map to get there. Through those conversations I have put together the 7 Principles of High Performance Dealership ©. These are the things that a dealership needs to embody to truly become a High Performing Dealership.
- Stop the bleeding. There are just a handful of things that cause your bleeding — identify them and stop the flow of cash. Nothing can succeed in your dealership if you do not have a strong cash flow. There are several “cash flow killers” with one being overtime pay. In almost every case, if you are having to pay overtime, there is a strong possibility that your processes are broken and efficiency is lacking. Focus on cleaning up your accounts receivables and bring that cash into the dealership quickly. Instead of carrying accounts, think of setting up credit through an option like “Yard Card”. Be sure to evaluate your insurance coverage to uncover cost savings and verify with a professional accountant to be sure you’re not overpaying taxes. Keep in mind that having the wrong employees on staff have a direct impact on cash flow because they can damage customer relationships. Ask yourself this question: “Are all of my employees having a positive impact on my bottom line every day?”
- Generate Instant Income. Start picking up cash that’s laying on the floor. A first step is to stop underpricing parts and service. “One dealer I talked with was 15% underpriced on parts and he was doing $700,000 a year in parts sales. That means he was leaving $75,000 a year on the floor because he wasn’t tweaking his margins,” Avoid “pooling ignorance” by setting service rates based on other dealerships in the area. If you move your prices up, everyone else will follow. Be sure to bundle service and parts packages and extended warranties into the original equipment purchase. Finally, don’t negotiate with cash. Instead, negotiate with service and parts packages, for example, or other items with margins. “You have zero margin with cash.”
- Build Your Culture. It’s up to you, as the owner or manager, to build a culture that encourages employees to grow both personally and professionally. “You have to create a culture where employees know what you expect of them and are passionate about what you’re doing — and you can only do that with weekly meetings.” Meetings don’t have to be time-consuming to be impactful. Another way for employees to better understand what you want from them is to get them involved in training opportunities. Today, there are many inexpensive and valuable opportunities online including including webinars. Then, when employees are doing a good job, find ways to reward them, such as with a gift card — but be sure those rewards are spontaneous. Your goal is to get employees thinking, ‘What can I do to make this dealership better?’
- Define and refine your processes. Repeat-ability creates profitability. The more you can repeat an action the better you become at performing it. You have to look at every department and every process. Ultimately, you want your customers to have a positive experience, so work backward from that point and say ‘What do I have to do to make that happen?’. And then, keep refining those processes. “Never, ever, stop refining the process.”
- Create a Plan. Do you know where you are going or how to get there? It’s important to remember that “Hope is not a plan. Hope is not a strategy,” You need to stop “chasing fires and chasing ghosts” and put together a detailed strategy if you hope to reach your goals.
- Incorporate the People. Hire the right people, give them direction and then empower them to achieve your goals. “I challenge you to look at your people. For instance, walk up to your parts counter and silently say to yourself, ‘Do I have the right people in place?’ Then, do this for your service department and your sales department. Do they know what you want them to do? Have your shared your vision? Every week, when you meet, you need to cast your vision. Your goal is to grow your people to the point where they don’t need you anymore.”
- Measure, Monitor and Adjust. This is the most important step toward becoming a high performing dealership. “Once you do the first 6 steps, your job as an owner or manager is to constantly go back and measure, monitor and adjust the process,” Weekly meetings are vital for this step as well. “Weekly meetings help us make adjustments. Let your managers know that next week you’ll be looking at the process again.”
By taking and applying these principles to your dealership, you will be able to move your dealership towards your ultimate goals.
Be watching for Bob’s new book, The 7 Principles of a High Performing Dealership© that will be released in 2017.