The Industry's Leading Source For F&I, Sales And Technology

Article

Reverse the Turnover Curse

Dave Kreuser has stemmed the tide of turnovers at Zimbrick Acura by making employees, rather than customers, his top priority.

September 2014, F&I and Showroom - Feature

by Paul Herr

Conventional wisdom says customers should be our No. 1 priority. At first glance, this makes perfect sense, because it’s the customer who pays the bills. Dave Kreuser, the sales manager at Zimbrick Acura in Madison, Wis., has a different approach: He puts his employees first and his customers second. Kreuser’s contrarian stance merits deeper analysis.

“The ‘employee-first’ idea is based on simple logic I learned from my mentor, Thor Gilbertson, who is currently the vice president of operations for Bergstrom Automotive,” Kreuser explains. “Thor said, ‘If you take care of your employees’ needs, and your employees take care of the customers’ needs, you will have a prosperous and successful business.’ In other words, a positive employee experience drives a positive customer experience and a growing business.”

Kreuser adds that angry, bored and disrespected employees are not likely to deliver the world-class customer service you expect. He believes that putting employees first starts by genuinely caring about them. He lives by the motto of “care, concern and respect” and applies it to both his external and “internal” customers — he believes the word “employee” has negative connotations.

“It implies someone of lower rank and status who serves the boss and obeys the rules. It’s hard to motivate someone who feels like they are the low man on the totem pole,” Kreuser says. “‘Internal customers’ elevates them and reminds me to treat them with the same dignity and respect as my external customers.”

Strategic Thinking
Kreuser and Gilbertson are not the only contrarians who put employees first. This is precisely what business management guru Gary Hamel recommends in his book, “The Future of Management.” Hamel doesn’t mince words. He compares modern corporations to ponderous dinosaurs that are desperately clinging to outmoded management ideas from the dawn of the Industrial Revolution. Hamel accuses corporations of coercing grudging compliance instead of inspiring passionate performance.

He then takes it one step further, predicting that the next 100 years of management science will be dedicated to undoing the damage from the past 100 years. People like Kreuser and Gilbertson should feel more confident knowing they are on the cutting edge of management science and that one of the planet’s top thinkers is squarely in their corner.

Kreuser says his employee-first approach translates into quantifiable data at his dealership. “If we spend $20,000 on a media campaign that attracts 200 customers, and we convert one-quarter of those leads into sales, then it costs us $400 in advertising for every car we sell. This takes a serious bite out of our margins and makes it hard to stay in business,” he notes. “The alternative to expensive media advertising is absolutely free.”

The free advertising to which Kreuser refers is, of course, the word-of-mouth advertising and repeat business the dealership earns when employees deliver exceptional customer service. As he explained, the goal is to turn customers into brand ambassadors who espouse the dealership via various interactions, including social media.

“When a customer’s child graduates from high school, we want to be the dealership that jumps to mind for that first car. Just as people have their preferred family dentists, doctors, accountants and attorneys, we strive for the same sort of family loyalty, and that’s only possible with dedicated and committed employees who go the extra mile for our customers,” Kreuser says. “This level of customer loyalty also translates into bigger margins, because people are less likely to travel to a megadealership in Chicago to save a few hundred bucks if they get world-class service delivered with a smile right here in Madison. Repeat customers and word-of-mouth advertising are just two of the many benefits of treating employees right.”

Reducing Turnover
Naturally, there are numerous other ways loyal and motivated employees translate into financial success, lower turnover not least among them. Employee turnover is a huge and expensive problem in the automotive industry. According to a 2013 report commissioned by the National Automobile Dealers Association (NADA), annual turnover among salespeople at dealerships is an astonishing 62%.

Many owners and general managers believe that some people are born salespeople. They hire large numbers of young people with the hope of sifting the wheat from the chaff. They hire too many people with too few background checks, then provide little or no training, mentoring and coaching. They also offer little or no base salary and expect people to work long hours. This structure makes it nearly impossible for inexperienced salespeople to make a decent living or strike a healthy balance between work and life. In simple terms, auto sales can degrade into a thankless grind that chews up young people and spits them out.

Dave Kreuser, the sales manager at Zimbrick Acura, uses an employee-first approach that translates into better customer service.
Dave Kreuser, the sales manager at Zimbrick Acura, uses an employee-first approach that translates into better customer service.

This revolving door for new hires creates enormous consequences. An earlier NADA report estimated that it costs $25,000 per position to replace a sales pro. This includes hiring and admin costs, training costs and the loss of repeat business. Customer satisfaction also takes a hit because the sales floor is flooded with inexperienced and anxious salespeople who are desperate to make a sale. Dealerships with high turnover also end up with plenty of unhappy “orphan owners” who don’t have someone to answer their questions or solve their problems.

Kreuser is fully convinced his store’s employee-first approach helps to resolve this challenge, noting that the average Zimbrick sales consultant has 15 years of seniority. “We treat people respectfully, care about them as people, rigorously coach and mentor them, staff appropriately, provide a good base salary with a competitive bonus plan and reasonable hours. This translates to improved customer service and an improved customer lifetime value,” he says, referring to the average value of a sale multiplied by the number of repeat transactions per year, multiplied by the average retention time in years for a typical customer.

One would think that more dealerships would be adopting the employee-first approach. Unfortunately, that is not the case.

“There is tremendous pressure in the auto industry for short-term results. Automakers are large, publicly held corporations with Wall Street analysts and investors pushing for short-term results. They also have huge fixed costs that need to get paid. These pressures get passed down to the dealerships,” Kreuser says. “They are under intense pressure to hit their numbers and can earn sizable financial rewards from the manufacturers when they do. The knee-jerk reaction under these conditions is to hire more salespeople, even if it harms employee satisfaction and customer retention in the long term.

“I fully believe that if we commit to our employees growth and development, and they commit to the customer and their employer, we will all end up light years ahead.”

Paul Herr is a partner at motormindz, a consortium of thought leaders from multiple automotive industry segments. Email him at [email protected]

Comment

  1. 1. Brent Abdulla [ September 25, 2014 @ 12:36PM ]

    So spot on! Internal customer satisfaction always leads to external customer satisfaction. When your personal life thrives the odds are your professional life thrives.

    Redirect some marketing dollars to internal customer satisfaction initiatives and watch the cash register ring! The automotive retail industry must start looking at this with active intent and follow through.

    People like to do business with successful people! Make sure your people are successful and the customers will follow!

    Now go rework that schedule that had four bell to bells on it and make sure it includes two complete weekends off a month!

  2. 2. Paul Herr [ September 29, 2014 @ 03:47PM ]

    Hi Brent...I'm glad that we are on the same wavelength, and thanks for your insights. Treating employee's well should be common sense. Unfortunately common sense is pretty uncommon in modern business.

  3. 3. Homero Becerra [ October 01, 2014 @ 06:26AM ]

    Great article. I'm fully convinced that happy and motivated employees inspire customers to buy the product. I´m also happy to see that a car dealer is having this philosofy; in this industry, we are not selling articles, we are selling experiences, and is people (our employees) the ones that create a pleasant experience.

  4. 4. DS Nathanson [ October 04, 2014 @ 08:01AM ]

    Dealers will benefit from gauging the "share of minds" that they actually have with their employees, not forgetting management, Same goes for the OEMs, How easy are you to do business with? A stable workforce buys a lot of time for all, especially management to focus on productivity.

  5. 5. bmovegas [ October 18, 2014 @ 02:01PM ]

    I'm sending my resume; what's the address?

  6. 6. Paul Herr [ November 04, 2014 @ 07:58AM ]

    Another benefit of putting employees first is that the "word gets around." You become the employer of choice in your market, and attract the best talent. With that introduction, and assuming that bmovegas is serious, here is the address for Zimbrick Acura in Madison, Wi.

    Dave Kreuser
    Zimbrick Acura
    7525 Century Ave
    Middleton,
    WI, 53562

  7. 7. D. Nathanson [ December 17, 2014 @ 08:53PM ]

    While I see many dealers "learning" about building a "retention" culture, it is a process and requires total commitment for the top chair down, and the results can be $$$ amazing.

 

Your Comment

Please note that comments may be moderated. 
Leave this field empty:
Your Name:  
Your Email:  

Blog

So Here's the Deal

Ronald J. Reahard
Combating CUs

By Ronald J. Reahard
Top trainer tells an F&I pro from San Antonio to stop fighting credit unions and join them. He also reveals three reasons most CU members should choose dealership financing.

Trading Rate for Product

By Ronald J. Reahard
A reader wonders if a scenario exists where trading rate for product doesn’t cross that invisible legal line. The magazine’s resident F&I pro weighs in.

(Video) Discussing the Risk-Based Pricing Rule

By Ronald J. Reahard

(Video) Timing F&I

By Ronald J. Reahard

Done Deal

Gregory Arroyo
Don’t Tune Out

By Gregory Arroyo
The editor takes you inside a conference that had digital retailing makers wooing auto finance execs.

Generationally Speaking

By Gregory Arroyo
What was supposed to be a listen-and-learn assignment turns into fodder for the editor’s monthly page, and he thinks you’ll understand why.

Credit Crisis or Market Rationalization?

By Gregory Arroyo

How to Lose a Customer

By Gregory Arroyo

Mad Marv

Marv Eleazer
There’s No ‘I’ in Team

By Marv Eleazer
His Madness shares a story of how good, old-fashioned customer care will always trump some algorithm or digital retailing tool.

What’s the Rush?

By Marv Eleazer
When you’re having fun, the hours go by like minutes. His Madness shares advice for improving the car-buying experience.

Debating the Chargeback

By Marv Eleazer

Simple Is as Simple Does

By Marv Eleazer

On the Point

Jim Ziegler
Sales Rock Stars Still Exist

By Jim Ziegler
Da Man says $40,000-a-month sales rock stars still exist. He says you’ll find them on YouTube and Facebook Live.

The New Stooges

By Jim Ziegler
The Alpha Dawg predicts that the latest round of technology disrupters will deliver more missed opportunities than closed deals.

Is Your Quick Lube Driving Away Business?

By Jim Ziegler

Who Shot the Dealer?

By Jim Ziegler