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State Your Purpose

July 2012, F&I and Showroom - Feature

by Mike Esposito

Regardless of what industry you’re in, there is often a divide between what’s good for a business and what’s good for the employees of that business. And in automotive retail, what’s good for the dealer is not always perceived as being good for employees.

The big wedge issue these days is the need for change, or the need to accept technology to bring about the change industry insiders say is required to operate in today’s market. American statistician W. Edwards Deming, famous for teaching top management about improving design, product quality, testing and sales, said this about change: "It’s not necessary to change. Survival is not mandatory." In other words, change is difficult, but it is required to survive.

Take vehicle sales. Volume has picked up this year, but the Internet has made pricing so transparent that dealers are being forced into bidding wars. Continued, downward pressure on pricing means lower margins, and, unfortunately for dealers, this trend is here to stay. So, in order to remain profitable today and into the future, dealers must look for ways to stay lean and improve processes. That means testing new technologies that can help you save or even make money.

Oftentimes, management or a brave general manager is met with stone-cold resistance from employees when introducing a new process or technology. As a DMS provider, I can’t tell you how many times I have heard a dealer say how they’d love to implement a new system but won’t because of the expected uproar from employees.

I don’t blame employees, however. Implementing a new process or learning a new technology can be difficult. Most employees are tuned into the old "What’s-in-it-for-me?" station. If you want to win them over, that’s the question you’ll have to answer.

Take the service manager. Switching to a new DMS would definitely be a pain for him. He probably gets paid a bonus based on the amount of gross profit he generates in the service department. If a new system is implemented, it’s going to take time for him and his team to learn it, which takes time away from other activities that generate profits.

Office managers are notorious for objecting to a DMS switch. Their lives can be pretty miserable throughout the entire process, and their pay is probably not going to reflect the extra work. So, again, what’s the incentive to accept the change and learn a new system?

Before you answer, think about how other employees manning other departments will be impacted. How will your parts manager feel about changing inventory systems? How will your salespeople feel about changing the CRM system they’re used to and like? You want to do what’s best for you and your bottom line, but you have to be sure you don’t lose anybody in the process.

The trick is to find and offer something unique to each team member that will get them onboard. For service managers, the extra savings or revenue could be used to purchase more lifts and hire more technicians. For parts, it could be extra cash to stock more inventory. For sales, it could be more money spent on advertising. For your office manager, a small bonus to reward his or her patience should suffice.

One thing is for sure: By changing nothing, nothing changes. In today’s increasingly transparent world, dealers must be proactive at finding ways to increase profit margins. More efficient processes and new technologies are the way to do it, but getting buy-in from the team is necessary to make them and your dealership successful.

Mike Esposito is president and CEO of Auto/Mate, a Clifton Park, N.Y.-based dealer management system provider. E-mail him at mike.esposito@bobit.com.

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