Times are challenging in the motor industry and could get tougher.
We’ve already seen some of the larger groups post very mixed results this year and if yours is a smaller group or independent dealer lower down the chain, you may be feeling the pinch even more.

It’s not all bad news though. With the correct strategy there is a way not only to protect your business against significant changes in the market which are squeezing profits, but to prosper in a way that you may not have expected.

There are three areas that all automotive businesses can focus on, to maximise their profits and optimise their performance.

Let’s talk about your business’s culture
At the foundation of your performance strategy is culture, with a direct impact on customer experience. Put simply, your culture is your values, behaviour and the way you communicate with each other and with your customers. It’s all about your standards, reputation, and your do’s and don’ts. It’s what you stand for and the way you do things and is the biggest single indicator of your morals and ethics.

Today’s buyers naturally gravitate towards people and companies who share their values, so if you can get your culture right it can become your most powerful sales tool. With the declining footfall across retailers, and stiff competition in the motor trade in general, it’s more important than ever to make that connection between your people and your brand; there is a significant commercial value attached to your culture.

We know of many motoring businesses which thrive because they understand culture is at the basis of everything they do. They communicate, live and breathe their values, and the trust and loyalty they have built is remarkable. Price simply isn’t the most important factor for their customers.

Focus on giving a great customer experience
To offer a great customer experience, you first have to offer a great employee experience. If your staff think it’s a great place to work, the chances are your customers will think it’s a great place to shop.

This starts with effective recruitment; attracting people with high levels of emotional intelligence rather than a sales and negotiation mentality. It also means rewarding them properly, so you attract people who care about engaging with others, who have a genuine desire to deliver excellence and have a real empathy with customers. It means creating an atmosphere where you retain the best staff and as a result you will start to retain more customers.

To make your organisation a great place to work you have to involve the team and ask them for their feedback. What would they like to change and improve? Many businesses avoid this because they are fearful of opening a can of worms – but it works.

You should find out how to make your staff give their utmost for the cause. Once you’ve established this, you need to create a fantastic customer experience. Offer buyers something very different to what they experience with your competitors. This doesn’t have to cost a lot of money – it’s about being creative, not handing out free gifts.

Often, the experience is a bit generic, a bit vanilla from business to business, but this isn’t good enough anymore. People’s expectations are higher, and they are better informed thanks to the web, review sites and online ratings. Your customers are more choosy and want to pick the best.

How’s your commercial awareness?
This is an area where many automotive businesses lack knowledge and knowhow. Many senior managers struggle to calculate and influence the main KPIs correctly. The effect is businesses are missing out on potentially huge profits because their managers don’t know how to finetune performance.

One example is in used car sales. We know of retailers where the managing director insists sales managers focus on profit per unit. This is a fundamental error as they should be focusing on return on investment; here, success and profits are based on how fast you turn your stock around, reducing average stock days to a minimum.

Not only do business managers need to understand the metrics but so do all the staff. We’ve seen businesses where labour hours are discounted purely out of habit of trying to please customers. In their minds, what was a tenner here and there? Except when you are selling 14,000 hours a year!

Remember, these three steps are interconnected. For example, you can build the most amazing culture in your dealership and offer an exceptional customer experience, but if the commercial awareness isn’t embedded throughout your team then you will never fully maximise your profits. Equally, the commercial awareness of your staff could be exceptional but if the culture of your business is all wrong and the customer experience is poor then most buyers won’t come within a mile of you.

Five tips for improving performance
1. Create your culture – Hold an informal social event where you involve staff in defining your culture and ask them to paint the picture of what “great” looks like. That way they will buy into it, take ownership and live by those values.
2. Recruit smarter – Take time to identify people who will embrace and enhance your culture. rather than just attracting the same old faces on the industry merry-go-round.
3. Mystery shop with a difference – Send staff out to research the competition and see what you can do differently to create a unique customer experience. It doesn’t take much to be special in the retail motor industry, but it does require focus and effort.
4. Metrics matter – Invest time in ensuring the leadership team and staff understand how to influence the business metrics. Make sure everyone knows how to positively influence profit but also understands the implications of making the wrong decisions.
5. Ask the experts – you might think you have a fantastic business and culture, but that means nothing if your customers don’t agree. CSI surveys focus only on people who have bought – it’s the people who don’t buy and just quietly walk away that you also need to pay attention to. Be visible as a business leader and take time to approach all visitors to the dealership in person and ask them how you can improve. Show them that you genuinely care.

At RTS Retail we’re dedicated to helping improve the performance of dealers. Just a few simple tweaks could bring a business a far healthier balance sheet. To talk to the team, call 01249 445622, or email enquire@rtsgroup.com.


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