vauto Educational Series: A Pricing and Process Blueprint For New Car Success
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1 vauto Educational Series: A Pricing and Process Blueprint For New Car Success 11 am Noon Pacific Noon 1 pm Mountain 1 pm 2 pm Central 2 pm - 3 pm Eastern Welcome! March 27, 2014 Moderator: Lori Dearman, Executive Webinar Producer, WebAttract Audio is available via landline or VoIP For VoIP: You will be connected to audio using your computer s speakers or headset. For Landline: Please select Use Audio Mode Use Telephone after joining the Webinar. US/Canada attendees dial +1 (646) Access Code: Need Technical Assistance? Submit a question via your Questions pane, or contact GoToWebinar at: Select options 2,1,1
2 A Pricing and Process Blueprint For New Car Success FEATURED PANEL Mark Rikess Founder and Principal The Rikess Group (TRG) John Griffin VP of Performance Management Software Division Autotrader Group, vauto Moderator: Lori Dearman, Executive Webinar Producer Sponsored by: vauto
3 Who s In the Audience? A diverse audience of over 200 professionals registered from 37 states.
4 A Word From the Sponsor John Griffin VP of Performance Management Software Division Autotrader Group, vauto
5 Poll #1 Do you post your transaction prices online for both new and used cars? (select all that apply) New cars Used cars Don t currently post either
6 Featured Presenter Mark Rikess Founder and Principal The Rikess Group (TRG)
7 Reengineering the Sales Process Road Map to a Limited Negotiations Sales Model *It s Time to be Nimble*
8 The Rikess Group Company Highlights Transitioned over 150 franchises to LNS or One Price Lexus best practice development Developed over 50 modules for Toyota regarding improving dealership profitability Training programs for American Honda Gen Y training for VW Developed new Sales and Management courses for Ford Partner Digital Air Strike, Green Dealer Support, SendMeAFriend Former partner vauto
9 The Business Case for Change Limited Negotiation Selling (LNS)
10 Recruiting Sales Consultants What Should Keep Dealers Up at Night Typical Dealership Showroom Floor Make-Up: Top third does well Middle third stops selling when comfortable Bottom third: -Churns every days -Sees over half of new prospects True SSI is nearly impossible
11 The Challenges of Today s Sales Model Dealers trying to improve last century s model rather than reengineer it Inability to attract high quality sales consultants Current model is too management-centric 1 manager per 2.5 Sales Consultant Limited supply, high demand High wages for narrow skill sets desking, F&I, Closing, Appraising The traditional model is very expensive
12 The Real Challenge Finding Qualified Sales Consultants People with natural sales skills haven t seen their peers successful in auto sales careers Women make up less than 7% of auto sales Don t like the way they are sold cars Old boys club Current managers don t have the right skill sets Hours
13 The Model Needs to Change Gen Y and women (housewives) won t consider a job in auto sales 50+ hour work weeks Command & control environment Commission-only selling A sales process where they aren t empowered Traditional sales model requires something our society doesn t produce - good negotiators! Unless we change the sales model & environment, we won t attract people with natural sales skills!
14 Auto Consumer Expectations are Driven by New Retail Experiences Apple Store Geniuses; ease of purchase; time sensitive; great online support Starbucks Baristas meet and greet; efficient traffic management; lots of choices Amazon wide selection; easy to order; easy to return
15 Why Should You Care About Gen Y? 2 out of 5 auto shoppers are Gen Y* 75% plan to buy/lease a car in the next 5 years Review driven under 4 stars little consideration Offer to allow them to transact from home competitive advantage and it is easy to get them on the phone 61% influence their parents buying decision Demand transparency Current dealership staff is aging Hiring Gen Y = competitive advantage
16 Summary: Traditional Sales Department The majority of variable compensation dollars flow up to middle management Sales Consultant turnover remains high Customer expectations are rising Auto industry isn t attracting women, college educated people with natural sales skills Gen Y is changing the world are you ready? Dealerships have lost a generation of Sales Management
17 Limited Negotiation Selling An Empowered Sales Consultant Model
18 LNS Mechanics Market-based posted pricing based on third party reference $200 of wiggle room Build value to the market based price Sales people can negotiate for $200 but lose about half their commission OPTION: Manager s negotiate one pencil but also lose some income due to negotiations
19 A Customer-Centered Sales Process Build your Sales Processes around what most customers want: 1. Competitive pricing 2. Pressure-free environment 3. Complete transparency 4. Simple 5. Fast 6. Delivered by empowered consultants When you add value to a transaction you can charge more
20 The Traditional Model vs.lns LNS Fast Simple Transparent Fair My Way Traditional Sales Long Process Complex Obscure Inequitable Desk control
21 Limited Negotiation Sales Process Reinforce LNS benefits throughout the shopping process: Meet & Greet - options Concept Statement - explanation Visual Aid overview/payments Needs Assessment - bonding Product presentation - pricing story Interactive Trade Evaluation Mgt T.O. - Confirmation Ask for the order shopper education
22 LNS Pricing Pricing becomes a core competency One person (GSM) sets grosses If you re posting NC s at MSRP you re trying to protect gross while losing leads Adjust pricing/grosses weekly based on market conditions and vehicle demand (age; color; equipment; etc.)
23 Structural Changes Attractive work schedules for Sales Consultants Hour work weeks Training salary Typically $2,500 or more for two months then Implement a minimum performance standard Eliminate gross profit compensation Most money for easiest cars to sell Half or more deals are minis lessens enthusiasm Difficult to explain gross comp plans to non-auto applicants Rewarding sales consultants to make as much money as possible off of all prospects
24 Sales Consultant Comp Plan Sales Consultant Compensation Worksheet Salary Units Comp Units Sold Last Qtr Amount Monthly salary for next quarter based on last quarter s sales Sales- Month Units Comp Per unit Delivered ,450 Volume Bonus - Month Units Comp Target Units Target Bonus Finance and Insurance Units Comp Category Per Unit Finance / Lease Warranty Other F&I Products $175 per car plus volume bonus $20 per contract or product TOTAL $ 4,500 $ 321 Per Car
25 Poll #2 Are your sales people being paid on commissionable gross profit?? (Please select all that apply) Yes No Considering changing
26 SC Recruiting Looking for customer service representatives. Women and men; college preferred: hospitality industry experience ideal: hr work week Stable family owned business Medical / Dental Benefits 401k Paid training Compensation: Salary + Bonuses - Avg. annual salary $40-50k Use online services such as Craigslist to advertise for a Customer Service Representative as opposed to defining it as an auto sales position.
27 Recruiting Gen Y Now hiring on your Facebook page Linkedin Career Builders Video on website Placard E-blast owner base Employee referrals including Facebook Service department mirror hanger
28 Competing Against Deep Discounters Differentiate your sales process Sales staff looks like customers base Allow customers to transact from home Explain business philosophy everywhere Complete money-back guarantee Have a pricing story Mystery shop the competition Shopper training Separate the used vehicle transaction
29 Why LNS Fails Lack of leadership commitment Sales management not bought in or inability to do the new job Not becoming a learning organization Skipping key steps of the sale
30 The Market Has Changed The Transparent Purchaser Great pre-owned dealers typically don t negotiate more than $100 to $200 Women make up 50%+ of purchasers They dislike negotiating Gen Y make up 20-25% of purchasers They dislike negotiating Are you trying to perfect your current sales process for a shrinking owner base??
31 Final Questions to Ponder Are your dealership s Sales Processes significantly different than your competitors? Do you have competitive advantages that create incremental sales? Does your negotiating model attract a diverse, educated sales force with natural sales skills? Is your sales process built around what the majority of customers want? Would you want your mother, wife or daughter to buy a car from your store without your help?
32 Contact Information Mark Rikess P) E)
33 John Griffin John Griffin VP of Performance Management Software Division Autotrader Group, vauto
34 The Conquest Philosophy The proper pricing and promotion of the right new vehicles for your market will help you stock and sell more vehicles in less time, and make better margins.
35 New And Used Vehicle Parallels Inventory Strategy Pricing Strategy Promotion Strategy Sales Strategy
36 Poll #3 Based on what you heard today, what will be your top challenge moving ahead? (Please select one) Sales process strategy Sales person recruiting Sales person compensation New car market based pricing Sales management culture change
37 Next Steps Contact Info: Mark Rikess P) E) Resources: vauto.com (Dealer Resources) Stay tuned for the next vauto educational series webinar
38 A Pricing and Process Blueprint For New Car Success ASK THE EXPERTS Mark Rikess Founder and Principal The Rikess Group (TRG) P) E) John Griffin VP of Performance Management Software Division Autotrader Group, vauto Moderator: Lori Dearman, Executive Webinar Producer
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