Pole 2 Pole: Retailing In A Cold Climate

08 January 2013

Let’s not beat about the bush: 2013 isn’t going to be easy for many retailers. Deferred spending will continue as consumer confidence remains weak, and resources will be scarcer than ever.

Pole 2 Pole: Retailing In A Cold Climate

But ask yourself this: why is there such a polarity of performance in the motor trade? The highest-performers continue to grow profits, while half the industry will post losses for 2012.

Meanwhile the industry average ROS remains depressingly close to one per cent – a return that for many will be unsustainable in 2013.

At Coachworks Consulting we have a proud track record of transforming performance for retailers by addressing cultures, leadership and processes. We know that business-changing growth is achievable whatever the economic climate – just ask our clients.

As the new year gets underway, we want to share our top 10 tips for 2013 across the Three Ps: Presentation, People and Processes. If this advice is implemented effectively, it will deliver growth regardless of a retailer’s current financial position.

1) On A Mission
Culture affects everyone and everything in the business – and it comes from you.

You should create a meaningful defining statement that sums up what you want to achieve, that encapsulates the firm’s ethos and that is more than just hot air or lip service.

The Coachworks Consulting defining statement is: “Credible, creative and effective business support that builds performance improvement.” Every touch point has to demonstrate this and every team member has to show how it has informed their work at regular Personal Growth Plan reviews.

Customer service must be enshrined in your company’s culture – not least because CSI scores are increasingly being used to determine manufacturer bonuses.

Communicated properly, a defining statement helps distribute company culture and helps all involved to become advocates and ambassadors for the business.

2) Presentation: Ditch the fictional marketing plan and go for growth

Too many motor retailers produce a marketing plan to appease manufacturers and then file it away, never to be seen again.

The marketing plan should be a central part of the business plan, just as the financial plan is. A meaningful marketing plan will identify the sales you need to hit your business plan, and the marketing activity required to deliver those sales.  With your thoughts confirmed in writing, it’s then a case of diligently implementing the marketing tactics to reach your goals.

3) Presentation: Go Mobile

As Eric Schmidt, the Executive Chairman of Google says: if you haven’t got a mobile strategy, you haven’t got a strategy.

A third of the UK population has made a purchase using a mobile phone, and almost a third of internet usage is through smart phones. That trend will increase.

Retailers must harness the power of the internet and social media to capture data and to reach existing and potential customers. And building a strong and credible presence on Facebook, Twitter, YouTube and LinkedIn is too important for responsibility to be passed to junior employees simply because they are younger.

Social media is about engagement as well as direct sales – and good, old-fashioned customer service is vital no matter how you communicate with clients and potential clients, so speed of response is particularly important.

Coachworks Consulting launched its digital strategy in 2012, revamping our website, optimising it for viewing with smartphones and tablets and embracing social media. Since then, hits on the website have increased by several hundred per cent.

Thanks to the internet, customers are making decisions before they even visit the showroom and they are arriving armed with more knowledge than ever before.

Retailers whose online presence is below par will miss out.

4) Presentation: Volume + Technique = Sales

The more times you pitch something, and the better you do it, the more you sell!

There is no excuse in 2013 for failing to tie in the most profitable customers with great service and retention products, so service plans should be sold in the used car and service departments, as well as with new cars.

It isn’t difficult to build a £200 service plan into the deal rather than reducing the screen price – and the used car team should be incentivised to do just that.  In service, every retail customer that pays their own bill should be quoted with a pre-prepared service plan, specific to their car and mileage.

5) People: Use Appraisals To Turn Handbrakes Into Accelerators

If your appraisals aren’t meaningful, why bother? In too many businesses, appraisals are an awkward box-ticking exercise carried out once a year to appease HR.

Coachworks Consulting tackled the appraisals process at Essex Group J Toomey. Managers were asked to consider the size of their wage bills and to assess team members using a traffic light system.

Barry Ives, Managing Director at J Toomey, said: “We considered whether we had teams of handbrakes or accelerators and then we came up with ways of turning them all into accelerators.

“Revisiting the appraisal process was part of that. Appraisals are now being used as a platform for change. They are more in-depth, more meaningful and they are a two-way dialogue.

“Measurable performance improvements are identified and they are reviewed after three months. Employees now understand the business more and the challenges their managers are facing. That makes them more eager participants in change.”

6) People: Kick-start Campaigns With Fast-start Bonuses

Make sure you bring in a fast-start bonus for your top 5 sales and aftersales campaigns.

Creating focus from the very start of a period is a tactic that works for manufacturers and it can work for retailers too.

Vauxhall, Chevrolet and Mazda retailer FRF Swansea and Bridgend have recognised the benefit of fast start bonuses.  Managing Director Harry Gummer has now introduced this across his service departments, and incentivised Advisors with an additional £250 of reward available for making a fast start across the top five up sell campaigns.

7) People: Build Commitment With Upfront Bonuses

Make sure your performance related pay structure aligns with business priorities. As part of this, consider treating colleagues in the same way manufacturers treat you by offering a percentage of certain bonuses up front.

The possibility of having cash clawed back doesn’t half help focus minds on achieving targets, and would work well to drive service plan sales for example.

8)Processes: Make Your VHC Process Fit For Purpose

Firstly, every car in the workshop should receive a VHC – that should be a given, although when appraised, we find that there are still far too many instances where it doesn’t happen.

Secondly, make no mistake that failure to convert red and amber work is draining profits and harming absorption.  Make 75% conversion of red work and 25% conversion of amber your benchmark for up sell on the day.

When one of the leading suppliers of eVHC software estimates that the franchised network is losing out on £1.5 billion of revenue a year in service work and parts, you know there is an issue.

The biggest reason for deferred red work is lethargy of process, so use the 45-minute rule to overcome this. Complete the VHC within the first 15 minutes of a vehicle entering the workshop, parts availability and pricing should be completed in the next 15 minutes and then presentation to the customer within the final 15 minutes. It’s simple and it works.

Vauxhall and Chevrolet retailer J Davy brought in Coachworks to take its aftersales to the next level, and the VHC process was a key part of that.

The firm didn’t regret it. Chris Clarkson, Managing Director of parent CSM Motor Group, said: “The results at J Davy have been excellent and the team there is buzzing.”

Over a three month period September to November 2012, J Davy Basingstoke VHC up sell was 26.9% or £47,652 ahead of the same period in 2011, representing a massive return on investment for their participation in the Coachworks Race for Growth programme.

9) Processes: Get Those Difficult Part-exchanges Off The Forecourt In Days, Not Months

Give used car salespeople a reason to sell the difficult car before the easy car by incentivising it attractively.

You know when you agree the buy the part exchange that it is going to be tough to shift, so there’s no point ignoring the potential problem.

Why tie up space and cash delaying the inevitable?  Most sales people are “coin operated” and will respond accordingly to a car incentivised with double commission or such like.  Vision Stafford Managing Director Tim Pickering took this advice, and returned £25,000 from two over-age cars back into his bank account within a few days.

10) Processes: Ask For Referrals

It’s as old as the hills, but it works. Don’t be shy – we don’t know of a single customer that has been offended by being asked to share their good experiences.

Southern motor group NOW were referred to Coachworks around three years ago by another of our clients.  Since then they have become an important and prestigious account for us and they themselves are advocating our support to others!

And finally...

If you’re serious about delivering serious growth in 2013, you should join us for one of the two Pole 2 Pole Directors Workshops being held next month.  Pole 2 Pole will help delegates retail their way to growth at a time when cash and reserves are at a premium. It will also show the top performers how to optimise resources to improve cash flow and fund expansion.

When cash is tight or you have ambitious plans, you have to turn stock quicker and sweat your assets more. Pole 2 Pole will reveal the guerrilla tactics you can adopt and the actions you can take to more effectively manage working capital, people, performance-related pay and relationships with banks. These tactics will deliver immediate gains and form the basis of world-class habits in the long-term.

At the end of this one-day Directors Workshop, delegates will be able to act as internal consultants for the business and they will take with them a quantified action plan which will allow them to move the business forward to the next level of performance.

Together, we can start to address the polarity of performance in the UK automotive sector – and have a very happy and prosperous 2013.

For more information on Pole 2 Pole, visit www.coachworks-consulting.com or call 01335 324325.

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