Category: Trends & Insights

Disruption Today: Drive Profitability with Emerging Technology

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Based on the workshop presented at NADA 2019 by Mike Barrington, Senior VP of Retail Solutions Group Sales, Digital Retailing & Dealertrack F&I Solutions at Cox Automotive

The rate of technology change today is astounding – and the adoption rate is matching its pace. Not long ago, some of the technology we take for granted today sounded like science fiction. Today, we all carry powerful pocket computers that also happen to be phones, many of us have digital assistants that respond to spoken commands to do things like order groceries, and cars can talk and nearly drive themselves.

Consumers are already using the latest technology in every aspect of their lives. What you might think of as the “cutting edge” of technology is fast becoming the new normal.

Consumers expect their car-buying experience to be as convenient as the rest of their tech-enabled buying experiences. Unfortunately, dealers are already falling behind.

As an industry, we need to create the better, more transparent experience that consumers demand. Here are two major emerging disruptors that will impact the way dealers do business in the near future.

  1. Digital tools to enhance the consumer’s buying journey

Consumers want to be able to choose the points in which they interact with you online or in your store. Having an online presence is a given, but today you must enable the consumer to do a significant portion of their research and buying process online.

This doesn’t mean that the consumer will stop coming to your dealership.  In fact, we know that the majority of shoppers prefer to finish their transaction in the dealership.

However, we know consumers demand more digital tools than ever before. Providing those tools gives you the competitive advantage.

For example, 83% of consumers want to learn about F&I before they visit the dealer, and they are more likely to purchase products that they’ve learned about in advance.

This is a big area where dealerships are falling behind the technology curve. If you don’t have a strategy to provide digital retailing tools, you’re already at a disadvantage.

  1. Proactively communicating with customers on their devices.

Just a few years ago, consumers thought that personalization and online targeting were “creepy.” Now it’s just an expected part of business interactions.

Think about retailers like Starbucks or Amazon that not only connect online experiences to the in-store/in-person experience, but also use their consumers’ data—backed by machine learning and AI—to continually build on their previous shopping behaviors. This helps them connect shoppers with what they want, when they want it.

Essentially, marketing is now a service that efficiently helps consumers find the things they need and want. Dealers who are ahead of the curve are leveraging this technology to deliver messages to consumers with the right context:

  • The product or service that matches their needs,
  • At the time they are looking,
  • With the right information to help them make a decision about taking the next step.

They are delivering a value add, by helping the shopper find the product they need – and they will be rewarded with more traffic and sales.

What dealers can do to stay ahead

Now that you have a better understanding of some of the disrupters in our industry, let’s take another look at the some of the ways in which consumers are interacting with technology today:

  • They use an app to order their coffee.
  • They use another app to order their weekly groceries.
  • They join monthly subscription services so they can have someone shop for their clothing, makeup, pet treats, razors and more.

The trend is that consumers are using technology to save them time and get them exactly what they want. That means dealerships need to think about how they can make the current car-buying process more digital and efficient.

Here are some things we know about what your customers expect:

The role of technology

When you’re examining the technology you use in your dealership, the goal should be to make each customer’s visit shorter, more efficient and more enjoyable. Increasing internal efficiency is one way to do this, but it should be done with a focus on enabling customer relationships at each stage of the deal.

To deliver against consumer demands, you must be willing to shift your current operations, become forward-thinking about your technology stack, and build the right foundation.

You can use this period of disruption to your advantage—and remain competitive and profitable.

 

Technology Alone Won’t Drive Profits

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Automotive dealerships do more than sell fast, shiny cars to eager customers. When it comes to adopting technologies to improve workflows, reach new customers, and do just about anything and everything, dealers are pretty “tech savvy.” But, at what point are your systems and programmable platforms doing less to help, and more to hinder, your business?

It turns out, dealers’ are using nearly 7 software technologies to run their businesses. When it comes to the technology within your auto dealership—who’s really in control? Before you add another system to the mix, consider the following tips:

First, who owns the management of your technology systems?
Does your dealership have an IT Operations team? Are you paying a staff member to monitor a server on your premises, or does all of your important information and data (you know, like customer credit cards, contact information, forms for financing, etc.) get stored in the cloud? Would you like to take on this responsibility—because it is a full-time job—or would you like to continue to focus on meeting the needs of your customers?

Second, are there any expensive technologies you’re currently paying for that aren’t being used?
Ask yourself if you’re paying for specific licenses or user-access fees for roles and positions within the dealership that no longer exist. Or, are there any that could be easily outsourced? Did you have to sign an expensive contract for a service that is currently collecting dust? If so, you might not need another tool.

Third, do any of your systems have impossible learning curves?
If this is the case, consider this: it’s probably costing you more than you think. Hard-to-learn tools and systems drive away potential candidates and keep current employees from reaching their full potential.

Fourth, have you read the fine print on your contracts?
If you need a complicated turnover plan to shift roles, logins, legacy contract information, and more to the next-in-line, you might be in for a surprise. Not everyone can access a system that was purchased by a previous team member without complications.

The biggest lesson frequent technology adoption should teach everyone is that teamwork is key to driving higher ROI. To learn more, and discover greater insights—in detail—get your copy of the guide, The Auto Dealers’ Technology ROI Guide.

Get the Guide here.

Get Leadership’s Support For A Smooth DMS Switch

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Switching your Dealer Management System (DMS)  is the first step toward updating your technology strategy. Adding intuitive and easy-to-integrate solutions that better fit your overall business objectives will enable your team to fully focus on what’s most important—customer interactions. There’s just one problem: How will your staff react?

Disrupting the status quo can be difficult. A technology change impacts everyone at the dealership, so it’s important to remember there may be employee concerns around the switch and how it will affect their day-to-day work. That’s why it’s crucial to get leadership on board with the change first.

According to a Prosci study of 575 change leaders, 84 percent of participants rated manager and supervisor involvement in change initiatives as “extremely important” or “very important” to the success of a project. Managers and supervisors are critical to the outcome of a change initiative because of the unique relationship they have with the organization’s staff members, effectively positioning them as an influential force during a time of transition.

So, how exactly do you get your leadership team’s buy-in? It’s important to listen to them and include them in the change management discussion. Providing this open conversation and truly hearing their ideas will help get them on board with the transition. They know the details of how they get their jobs done. You want them to feel comfortable that they will also be able to do their jobs in the new system.

This is essential, as you will need to look to management to help relay the key change messaging to the rest of the staff, act as an advocate for their departments and manage any resistance. Having your management team be part of the messaging distribution will enable them to take greater ownership in the decision to adopt a new system, ultimately helping them to more confidently communicate the ‘why’ of the transition to their respective teams.

Management can also provide invaluable insight into each department and its inner-workings. A service manager or sales manager, for example, might have a valid concern that you need to share with your chosen DMS vendor so that it can be addressed as part of the switch. A smooth transition can only occur once any and all concerns or problems are out on the table.

Even with a leadership team that is on board with the switch, there can still be risks in trickle-down communication. If you can, take the reigns and control the narrative being passed around from employee to employee by communicating directly with the entire staff upfront. Share your vision of how this new technology will help boost the dealership’s bottom line and increase efficiency for everyone and every department. Once the pace has been set, you can train management on how to continue driving the messaging moving forward.

Understanding the importance of getting buy-in and involvement from management, one of our dealer partners created a video series detailing the reasons for making the switch and the benefits to the dealership. The videos were shown to management and employees at each of the dealership’s rooftops and went as far as to detail how work life would improve with a new DMS system in place. The videos were received positively and helped secure both leadership and employee buy-in, enabling a smoother transition process overall.

Another dealership shared a written narrative around why they were making the switch. This was a dealership that had been on the prior DMS for 30+ years. But the written word spoke to both their storied past and their exciting future. That future, the owner believed, was only going to happen with a new, modern and flexible DMS.

Let’s face it, change can be scary. That’s why it’s imperative that you disseminate change messaging early on. This is a task no one can carry on their own. Having your full management team on board will be essential. Work with your team and new DMS provider to address fear of change head on and explain why the switch is necessary to ensure 100 percent employee buy-in.

A version of this article originally appeared on DigitalDealer here.

 

John Grace is associate vice president of operations for Dealertrack DMS, Cox Automotive. Grace brings nearly 20 years of high-tech operations and support experience to this position.Grace joined Xtime in 2011 from Tastingroom.com where he was vice president of operations. Prior to Tastingroom.com he spent nearly eight years as a member of the executive staff of the Location Services Division of Autodesk. At Autodesk, he played a critical role in the growth and expansion of the division, delivering middleware and application solutions to wireless telecommunications companies. He was responsible for managing SaaS solutions, customer premises equipment, and customer support for domestic and international customers. Grace has extensive experience with pre-IPO start-ups, as well as more established companies in all phases of technical and business management.

5 Steps to Reduce Turnover at Your Dealership

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Turnover in the automotive industry is not only a huge problem—it’s a growing problem. According to a study conducted in 2016, turnover increased in 2016 by 3%, reaching 43% annually for dealerships. That means most dealerships lost around 23 employees every year. And turnover is expensive. The cost of replacing a single lost employee can reach $45,000 each year. This type of issue should be top-of-mind for every single General Manager (GM) and Dealer Principal Owner (DPO) working today. To combat this issue, Dealertrack DMS hosted a live session with industry expert John Grace and Tom Stocco, Chief Financial Officer at Van Horn Automotive Group—a 16-store dealership group with a great retention track record—for advice.

Improve Training with Better Technology Tools
Van Horn Auto Group doesn’t cut corners when it comes to training and part of that commitment includes investing in easy-to-use technology. The investment goes further as the dealership employs two,full-time learning professionals and trainers who travel from store to store to ensure proper onboarding and continued education efforts are aligned with the company’s objectives.

“When people feel empowered that they can affect change and reach their goals, I think that has such a positive effect on culture overall.” – Tom Stocco, Chief Financial Officer at Van Horn Automotive Group

Empowerment is the Key to Great Culture
“Culture” can be accused of being a buzzword if you don’t take it seriously. For Van Horn, allowing each department the autonomy to set their own goals, meeting as a team, and sharing wins and losses, together, helps drive the overall culture across multiple stores. According to Tom Stocco, “When people feel empowered that they can affect change and reach their goals, I think that has such a positive effect on culture overall.”

Adjust Your Hiring Techniques
No one gets hiring right, every time. But, patience is key. You’ve spent time and money on building your dealership’s culture, so don’t rush it. Be sure to tell the story of your dealership to each and every candidate who walks into your door. And, when you do, be open and transparent about it. Otherwise you won’t find the right fit.

Tie Your Hiring Strategy to Business Strategy
If you’re willing to invest in your employees, it will benefit your dealership in the long run. Van Horn hires employees with the expectation that they’ll stick around, and they’re willing to incentivize them as such. The dealership will help cover half the fees of a college tuition for employees going to school. This type of long-term investment keeps Van Horn’s turnover low, helps improve the career trajectory of their team, and goes a long way towards the strategic improvement of their hiring plan.

Think Differently
Van Horn’s management training includes two-day courses that include hiring best-practices and compliance strategies. But beyond that, Van Horn also takes its managers through training to grow and develop as better and stronger leaders. The investment is aimed to help each manager discover how to better motivate their teams and discover ways to improve each staff member’s career in the automotive industry. It’s this “next level” of leadership training that strategically impacts the tenure of employees.

The people side of the automotive business faces the challenges of hiring and retaining talent greater than many other industries. But, DPOs and GMs have faced many challenges before. It will be the creative innovators whose dedication to the development of their employees and the transparency of their business who come out on top.

See the entire interview between John Grace and Tom Stocco of Van Horn Auto Group here.

A Dealership’s Digital Ecosystem

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Today’s modern dealerships are adopting technology at a rapid pace. This new shift is changing the way consumers buy and use cars, as well as the way businesses sell them. But, does adding more tools, software platforms and services add value to the process? Sometimes it’s hard to see the forest through the trees. Dealertrack partnered with an independent market research firm to conduct a comprehensive study about dealers’ most used technology systems. Take a look at the data displayed below from 229 respondents and discover a new insight into the role technology plays for the modern franchise dealer.

 

When a Fear of Change holds you back

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“Time, training, resistance, nightmare, contracts and confusing.” These are some of the first words that come to mind when a dealership considers making a DMS switch. These words are also often at the root of the ultimate decision to forgo the switch.

A fear of change and the potential roadblocks linked to switching technology has locked many dealerships into complacency, with many choosing to stick to their legacy DMS even if it means they are unable to integrate with new tools or keep up with the changing needs of the modern consumer. While concerns of losing finances, employment records or customer data — not to mention the potential for staff resistance — may understandably discourage dealership managers from modernizing their DMS systems, if they are willing to open themselves up to change, a seamless transition is achievable.

To stay competitive in today’s environment, dealerships need to meet consumers on their terms, and that means dramatically upgrading their technology systems. When purchasing a vehicle, consumers are now looking for a connected experience. They want to find a dealership where they can begin the car shopping and buying process online and complete it in-store. Keeping up with the changing needs of the customer is vital. In fact, according to the 2016 Salesforce State of the Connected Customer report, half of consumers report they are likely to change brands if a company doesn’t anticipate their needs.

The comfort that comes with keeping to the status quo, and the time and money that has been invested in training employees on the legacy system, make it easy to stand still. However, in a time where adapting to the changing industry is vital to a dealership’s long-term success, stagnation is no longer viable. With the right planning, open communication, ample and ongoing training, and invested partner in place, a DMS switch can give dealerships the opportunity to propel themselves forward and overall grow their business. It’s time for dealerships to take on fear of change head-on and implement modernized technology that can help tighten operations and increase efficiency across departments.

A version of this article originally appeared in AutoSuccess Magazine here.

About the author:

John Grace is associate vice president, operations, for Dealertrack DMS, Cox Automotive. Grace brings nearly 20 years of high-tech operations and support experience to this position. Grace joined Xtime in 2011 from Tastingroom.com where he was vice president of operations. Prior to Tastingroom.com he spent nearly eight years as a member of the executive staff of the Location Services Division of Autodesk. At Autodesk, he played a critical role in the growth and expansion of the division, delivering middleware and application solutions to wireless telecommunications companies. He was responsible for managing SaaS solutions, customer premises equipment, and customer support for domestic and international customers. Grace has a master’s degree from Purdue University and a bachelor’s degree from the California State University.

Data-driven Dealerships: 5 Metrics for Improving Retention

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You’ve heard it before: You can’t manage what you don’t measure. And this is true…mostly. Human Resources, Controllers, and People Ops often struggle to capture meaningful data around high turnover. Employee satisfaction on the job, training expenses per employee, and the unforeseen costs of replacing key team members can go untracked. When it all adds up, the total cost of employee turnover can reach $439,000 per year. What if you could measure the “unmeasurable” canary in the coal mine, so to speak, that indicating a positive work environment?

Measuring ‘People Ops’ can be difficult. What’s the retention rate per department? What’s the cost of training? Answering these questions should not fall to HR professionals alone. The answers paint a picture of the overall health of your dealership—which is important not just to your turnover rate, but your customers as well. When it comes down to it, unhappy employees and an knowledgeable staff lead to poor reviews. Simply put: people impact profits. Here are five metrics you can start evaluating, today, to make sure you’re hiring and retaining top talent:

1.Employee Satisfaction
Your dealership’s Employee Net Promoter Score (eNPS) is a tool that organizations use to track employee loyalty across time. It was originally designed to gauge customer satisfaction, and it works the same way. As you track it over time you’ll set a benchmark and watch your score either dip or rise.

2. Voluntary Turnover
Are you seeing your best sales people move on at a regular rate? Some churn is natural, so use this as an opportunity to conduct professional exit interviews and unlock the root cause of your employee turnover. What did your staff learn during their time onboard? Did they have any suggestions for improvement? Be open and honest—assure them they aren’t jeopardizing a key employment reference—and use their feedback for future team members.

3. Involuntary Turnover
Make sure you track this number separate from base turnover. Plus, you should keep track of any improvement plans or violations reported to management. Is this number increasing every year? How about every quarter? Do you see a troubling trend? Compare these figures year over year.

4. Managers
Do the previous figures align to your managers evenly across the board? Why, or why not? Are you promoting your managers from within with a clear career trajectory? You may not be able to measure how skilled each manager is at conflict resolution or rely on a metric that can predict which manager is better at delivering bad news, but you can (and should) track how often your managers hire and fire your staff, how long their team members stay on board on average, and which managers have the highest rate of complaints.

5. Training Budgets
This should be a no brainer since you’re likely tracking how much money is spent on several key areas. However, you should also pay attention to which types of training you’re paying for, what your staff thinks of the training, and what the adoption rate of these learning tools is. If you’re throwing money into a budgeted item that no one uses, you might as well use that money on something everyone enjoys…like donuts.

Every dealership is unique and has its own story to tell–and your staff is a crucial part of that story. Pay attention to your employees and the five people metrics that signal a warning that your dealership culture–and turnover–might be in trouble. Retention is a better business strategy in both the short- and long-run.

 

7 Tips For a Stronger Dealership Human Resources Team

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Partnering with People Ops at your auto dealership has to happen now. And it’s time to get creative because a strong labor market—with an unprecedented unemployment rate of 3.9%—means the pressure is on you to hire and retain the staff you need to run your dealership. If that worries you, then you’re probably paying attention. You’re probably realizing the your HR strategy needs to align with your business strategy–HR is no longer a silo or department DPOs and GMs can ignore. Now that we have your attention, here are 7 ways to improve your hiring strategy:

1. Filling The Seat Quickly
Don’t make the mistake of hiring the first candidate whose resume uses the correct form of “they’re, their, and there” simply to take the pressure off your overworked sales team. It’s tempting to move through the hiring process quickly, but a bad hire could end up costing your dealership even more in training, turnover, and replacement costs.

2. Making the Decision Solo
Make sure to have any candidate you’re seriously considering meet with several key team members. Get a “gut check” from everyone they’ll be interacting with and don’t make the mistake of putting this very important decision entirely on one person.

3. Failing to Offer a List of Why’s
Every candidate will be asked “why” they want to work with you. But things have changed; remember the 3.9% statistic? Your candidate is evaluating the position as much as you’re evaluating them. What unique benefits does your company offer? What tools and technology will they get to work with? What does your corporate culture look like? Does your dealership offer flexible time off or work schedules that fit with the candidate’s schedule? If you don’t, have you considered why not?

4. Overselling The Job
Make sure you’re honest about the position and everything being offered. If you’re transparent and upfront about your compensation structure now, without over promising unrealistic commission goals, you’re more likely to keep that new hire around longer once they accept the position. Don’t worry, not everyone is looking for an easy job, either. Be honest about what your team does, be proud of what you’ve accomplished, and share what you hope to do in the future. The right candidate will appreciate it.

5. Not Doing Your Homework
Job applicants put a lot of time and effort into building crafted resumes, networking, and fostering great references. If you’re not doing your research and looking into their work history, contacting former colleagues, and doing important background checks, you’re wasting both your time and theirs. Save time, money, and hours of frustration if you build this process into your standard operating procedures now, so you don’t have to worry about it later. Bonus: a little creeping on social media is to be expected on both sides these days. Everything that’s put out in the public sphere is fair game.

6. Taking Too Long
Yes, you should take your time and be thorough, but keep in mind your applicants may have other offers on the table. Don’t be surprised if they’re suddenly unavailable to take your offer if something of better or equal value came along while you kept them waiting. Top talent may also weigh your offer against another if you failed to show up at a scheduled interview time and date. Consider this: many job seekers take time off from current positions to meet with you, at a personal cost. Were you ready and willing to meet them on time?

7. Failing to Develop New Hires
According to a survey of 1,000 dealer professionals, 36% were motivated largely by personal development and career progress. If you onboard a new hire and then fail to train them, develop their skills, or simply leave them alone to figure out the nuances of your dealership’s unique expectations, don’t be surprised when they bail.

If it sounds like hiring and retaining top talent has gotten more difficult, it has. But establishing a long-term relationship with team members who drive sales at your dealership, grow your business, and who remain loyal to your company over time is valuable. Taking the time to find the right people to build that trust is an investment in your dealership’s future. Good luck!

 

Unlock Root Causes of Employee Turnover

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In 2016, the turnover at dealerships in the U.S. was 43%. If you calculate the average number of employees at every dealership, that equals more than 23 team members giving notice in one year alone! That’s a lot of churn. With figures like that, if you don’t think your dealership has a turnover problem, you might want to think again. So what’s the big deal? Take a look at the root causes of employee turnover you may have overlooked:

A Lack of Diversity
There’s a general need for change in the auto sales industry. A quick look at the numbers shows that only 19% of traditional new-car dealership employees are women. And, while dealerships are aiming to bring in more millennials to the workforce, the ability to keep this group around long-term is failing. Broadening your search to be more inclusive, working with more flexible hours, and trying creative compensation structures are a few ways to start the process of change.

Hiring to Fill Niche Technology Needs
If your technology is out-of-date, hard to use, or even just oddly specific, you may be limiting your pool of candidates. Employees are already required to learn and adapt to everyday changes to industry regulations. If you refuse to consider a candidate based on their experience with the technology you currently have (when you know it will likely change), you aren’t planning for the future.

Failing to Compete with the Competition
Demand for qualified employees is growing. This is good news for anyone working in the industry, but it does mean managers and Dealer Principal Owners need to build a solid strategy for attracting top talent. As the market for employees becomes more and more competitive, your staff has the flexibility to move on to competitors who may offer better compensation, more flexible hours, better paid time off policies, or company perks and benefits. A similar story played out in the technology industry in the last ten years, and managers were forced to get creative when it came to attracting talent.

Poor, or Inadequate, Training
No one enjoys feeling lost on the job. Employees today realize that every position they fill is a stepping-stone on a career path that needs to offer skill development and training to promote growth and success in their future. Does your dealership offer e-learning or a career trajectory plan aimed at improving their development? Is there a position in their future available for promotion or advancement? Your employees have plans for their own future—do they include you?

Highly Selective Employees
Dealerships already must compete to overcome a negative reputation. Today’s employees aren’t afraid of hard work, but they’re also more agile and tech-savvy. They know how to network and will use their skills to consider better options, whether a position is in a brand new industry, or not. What does your opportunity offer that they can’t find elsewhere?

It’s not too late to uncover these often overlooked issues to retention. You can develop strong employee relationships and attract quality team players. Discover more ways to attract and retain talent in our new eBook: 8 Ways to Reduce Turnover & Improve Retention: A Dealer Principal’s Guide to Hiring and Retaining Talent.

Frozen with fear: why dealers stay put

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Ever feel stuck? When faced with a tough decision that could improve the dealership greatly, but could also (potentially) be a difficult transition, Dealer Principal Owners (DPOs) can feel frozen.

And so the story goes for many dealerships working through the day-to-day issues of an out-of-date Dealer Management System (DMS). Sure, it’s a struggle now. But, it’s a familiar struggle. So, what are DPOs most afraid of? What could be holding them back? It turns out there are actually five common fears holding most dealerships back from technology transitions:

The (completely real) fear of data loss
Data drives your dealership. Losing it (or open access to it) would be costly. Pulling the lever on a DMS switch with the potential of data loss is a big factor holding many dealerships back.

Lost familiarity
So your current DMS doesn’t work very well. But, at least everyone on the team knows how to use it. The hours spent learning workarounds and memorizing the functionality of your systems was a big investment. Giving that up—even for an easy-to-use DMS that everyone can use—might hold you back.

Flipping the switch
If only it were as easy as turning on a new machine, right? The big installation process of a new DMS is a lot of work to do on your own. If you had to do this without a trusted partner who was with you every step of the way, it would be a nightmare.

Change Management
Your dealership operates with varied integrated systems. And the DMS can feel like the central nervous system keeping everything going. If your DMS suddenly changed, and worse—wasn’t an open platform, ready to integrate with all of your systems—you might be ready to panic.

Culture impacts profit
Your employees’ ability to do their jobs well impacts morale. It impacts the bottom line and the overall culture of your dealership. It would be really scary if your DMS wasn’t easy to use. Today’s workforce demands point-and-click user interfaces with a modern look. If it looks outdated, it probably isn’t operating like a modern DMS either.

Change is scary. But, change is constant in the automotive industry. Dealerships face it every day, successfully. The ones who brave technology transitions and implement new, faster, and more efficient DMS platforms (like the real-life success stories in this guide) know that facing your fears is the best way to conquer them.

Overcome your fears. Get the guide: Overcoming the Fear of Technology Transition