How many Signals do you need???

[Gasser]

~~ The One
Could you expand your thoughts/opines on the statement " Maximize your return on your existing customer base while making plans to recover your service business from the independents".


~Take as Directed

[TheOne]

Gasser I will start a new thread on the topic of maximizing the return on current customer base.

In response to calgm988

No the bigger picture is NOT about taking care of your customers and your staff!

I have heard that comment over and over for twenty five years. A simplistic analogy is mistaking a sack of flour for a cake! The flour is needed to make the cake, but is in fact not the cake. In this example profit is the cake and CSI/ESI is the flour.CSI and ESI are ingredients not the bigger picture. The only picture is profitability.

The ONLY purpose, and I mean ONLY purpose of ANY business is to make profit. Say it out loud, write it on your mirror, learn to say it in your sleep. The comment you made substitutes two necessary and important ingredients to good business for the ONLY purpose of even being in business.

Business works based on numbers. Specifically numbers of dollars. The level of detail and the timeliness of financial information in the dealership environment today, combined with the myriad of available measurement criteria provide a more than adequate opportunity to diagnose, repair, and/or enhance a dealerships profitability. These measurements include CSI/ESI. They should be used for the intended purpose instead of being focused on as the be all end all.

The dealerships going out of business today ARE NOT going out of business because of tarnished reputations. They are going out of business because of tarnished financial statements. It could very well be true that they did not use the ESI/CSI measurement tools, or even ignored them. Probably true, but neither did they properly use the rest of the available measurement tools and adjust their business model to meet the needs of the changing market....

[calgm988]

The One
It's apparant that overstating the obvious regarding profitability is at the core of your argument. However, the fact still remains...profitability comes from hiring qualified people who in turn, produce gross profit! It also goes without saying that the finacial stability of ones' franchise and/or dealership is based on the core of taking care of customers. You can say all you want with regards to CSE/CSI. It's not about chasing a score. It's not about satisfaction but rather loyalty.

And yes, I beg to differ with you about dealrs faulting because of that simple fact. You say, you've been hearing this for twenty years...where? No NADA statemenst, no group, no consultant has ever cared to talk about or put emphasis on taking care of your employees. Look at the hours we keep, look at the inconsistency in pay, look at the quality or lack of in the core force at most dealerships. Not making enough money? Put in more hours! Not hitting your goals? Your fired!

Look, profitability is the "bottom line" and that's obvious. My point is if you hire the right people, you coach, counsel and condition for the results you want and you get them.

Lastly, do as I asked. Ask about those "tarnished statement" dealers and look at their turn-over rates, CSI/CSE scores and talk to their current staff. I'd be willing to bet that not all mind you, but most failed because they failed at doing the right things. They failed because they cared about the bottom line only and not the people who spend it and make it. The bottom line is a result of...and not an answer to!

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"focus on the purpose, not the outcome."

[TheOne]

calgm988 lets refocus the discussion:

You commented rather strongly that "the bigger picture" is abot taking care of your customers and staff. My objection tothe comment is quite simply that these are important elements of a larger landscape simply titled "profit". Although important for sure, they are useless without cashflow, inventory, facility, equipment, etc, and therefore by definition they cannot be "the bigger picture".

Your signature line "focus on the purpose, not the outcome", is interesting and I think valuable. I maintain "the purpose" of any business is sustainable profits. "The outcome" in my opinion suggests a shorter view. For example, "July was a money loser, but we made costly changes to position us better for future profits. Julys' financial statement would in this case be the outcome.

You also commented "hire good people, train those people, and regardless of circumstances those dealers will still have growth". Simply not true. If it was every dealership would have a senior management position for HR and training, and the most powerful manager in the dealership would be the CSI manager. I think you would agree it takes far more than that to run any department in the store.

You also commented that I was overstating the obvious regarding profitability. Our business has been and is under ever increasing attack from external and internal sources. Look at the overall profit margins for ANY store and it becomes very apparent that the urgency to focus on profitability cannot possibly be overstated.

A couple comments regarding your last post:
1. Profitability comes from good people operating a good business PLAN.
2. Financial stability comes from the quality of the plan and the successful execution of the plan by the employees, of which taking care of customers is an important component not to be under OR overvalued.
3. I've been hearing it from employees who work for Dealers hired by me to teach their people how to run Dealerships Profitably. Most often (although maybe not by you) it has been used as a worn out excuse for losing money.
4. "tarnished statements". I do my best to keep my opinions based on conclusions drawn from objective information. Bill Heard went out of business because GM pulled his flooring. He certainly had CSI issues, but the flooring was pulled because the bottomline wasn't there to sustain the business, Simply put the potential reward was not great enough to stomach the increased risk. Apparently it wasn't for any other lenders or he would have been able to secure new lines of credit. Had he been able to he would still be in business today, despite his CSI problems.

[This message has been edited by TheOne (edited 10-23-2008).]

[calgm988]

It's fair to say we share the same goal with two completely different views. The PLAN to operate your business is based on specific, measurable models designed to produce the results needed. That being said; it's fair to say "work your plan and plan your work". Isn't it true that you can have the best plan...not excecute it and fail? Doesn't it then come down to the people executing the plan?

Profitability - is and should be the goal for every dealer and his/her staff. The "purpose" is to create an environment that allows quality people to produce gross. The profit is the "outcome" of teaching quality people to do their jobs the right way...therefore producing net income. In my twenty plus years in this business I've heard plenty of "consultants" teach dealers how to be profitable. The answer is following a plan. Some do...but most don't. Those that don't- fail!

Lastly, with response to Bill Heard (keeping my opinions to myself, but stating facts) " He certainly had CSI issues". Look to the turn-over, the managment style, and the like. You'll find your answers in the quality of people AND the quality of the plan.

Thanks for the debate it's been good conversation (for at least two of us).


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"focus on the purpose, not the outcome."

[TheOne]

Seems we are down to a difference of definition of terms, and some small but important structural issues.

If you modify your comments about "The Plan" slightly you will have it. I suggest,"The plan to operate your business is based on specific, measurable models designed to fulfill the purpose of the business". Example of purpose, similar to a mission statement: "The purpose of this business is to sell new and used cars and trucks, financial product, service and parts for a profit.

The balance of your first paragraph could say, "work your plan to satisfy your purpose, and plan your work to satisfy your purpose. You can have the best plan, not execute it and fail. Yes it does come down to the people executing the plan. I hold no issue with that comment. It does seem to imply that "good people" will find a way outside of "plan" to get the job done. The only issue I hold with that is, if the plan was good why were they unable to execute? If they could not execute a good plan I don't know that I would want to put my business in their hands! No doubt good people are essential. Good people working in concert towards satisfying the purpose of the business is a very powerful thing.

In answer to your second paragraph. The purpose is nothing more than and never will be anything other than profit. The environment is created to give those charged with executing the plan the highest likelihood of satisfying the purpose. Profit or lack of profit is satisfaction of the purpose, or failure to satisfy the purpose. It is also a measurement of success or failure of teaching good people to do their jobs right among many other things. You are right the answer is following a plan, but it must also be THE RIGHT plan. You are also right most dont, most just do what they did yesterday and hope for something better tomorrow.

Bill Heard had some very good people working for him. I'm sure he had more than a few who weren't so good as well. Simply put he didn't satisfy his purpose. He failed to continue to turn a profit. I've met many people over the years who had a track record of poor results who were in fact "good people". Many of these are people that today I can respect and admire. In all of the stores I have been associated I have met some, but few truly bad people. I have however worked with countless good people, many of them Dealer Principles who did not put the due diligence in to truly learn their businesses. Some of them have become great people, some are still treading water, and some are out of business.

calgm988 you are an articulate intelligent person. I truly hope that you are successful! A book that I have found value in for years is The E-Myth Revisited by Micheal Gerber. I think you might find it valuable.

[calgm988]

TheOne

Thank you for the debate as I have enjoyed the different views. I have taken the liberty to order The E-Myth Revisited just today.

As you know, I have no agenda. I am simply a hard-working dedicated professional who loves this business and for the most part the difficulties that come with it. I've dedicated myself to excellence in learning the craft. My opinions are based on the simle premise that we must move our business forward, to evolve if you will; with the changes being forced by this economy. The passion is genuine and in spite of the faults we have, my heart goes out to those whose livelyhood has been affected.

In my humble opinion the NADA has the burden to turn this thing around. We have to encourage hiring more professional people and get out of the cycle of repetitive failures. If I could get out and shout to all the owners, managers and yes, consultatnts; I would shout-train your people! Invest in them instead of getting less than 1-2% return on a stupid mailer you'll get 25-50% ROI.

Lastly, I agree with you about the fact that there are very small sums of "bad eggs" in our business. It's not about bad people but rather average people following bad plans...with no direction. What's the old saying? "If you wanna keep getting what it is your getting, then keep giving what it is your giving".

{my book reccomendation: Leading at a Higher Level. by Ken Blanchard.}



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"focus on the purpose, not the outcome."

[Toyotaguy]

sallen,

Might be to late here but do you know they title of that book you were talking about. Always looking for a good book

[sallen1]

It was a photo copy of a type-writer written document. When I find it, I will let you know to see where to fax it.

s

[CARServices]

Since 1979, when I started in this game, one thing hasn't changed - Blame! Whether I was selling cars one at a time, or running a management meeting a sa GM later on, blame was the one thing there was never a shortage of.

"The One" has some very valid points and some blame. Consider this, he said that dealers must really focus on fixed ops. That's correct. However, it should never be at the expense of any other department. Sales should be held just as accountable. Every person in the store should be labled. They are either a producer or a reducer. They are either making the dealer money or costing money.

But, ultimatley the dealer has to make decisions. That's the problem. Many of the dealers I work with have been in the business less than 15 years. Their people are even less experienced. Now, 15 years should teach people a lot. However, the last time we had a turn down like this was between 1988 -1992, 17 years ago. The real problem is, many people in the business have absolutley no experience in this type of market.

I went to a dealer to suggest a way to cut costs, reduce turnover and increase productivity in his service department. IT would be at no net cost to them. Their techs would actually increase their take home pay, and the dealer's payroll cost would be reduced. It's called "Employee Tool Pay" and it's adminsitered outside the dealership. So, there is no net cost to the dealer, no administrative responsibilities, and great benefits. The dealer was presented this program seven months ago and still hasn't decided one way or the other.

That's the problem.

Any plan will work if it's committed to and worked. Not deciding is a decision. As a business person I have to respect that. However, if someone "decides" to do nothing and wait this out, they really have no right to complain about how bad things are.

This is the best time ever to implement change. With less traffic in the showroom, there is plenty of time for training. So Train!

If the ideas I've read on this forum were actually shared with dealers, I think the business would already be on the way back.

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John Fuhrman
Senior Trainer
Carolina Automotive Resource Services

[This message has been edited by Forum Admin (edited 01-06-2009).]