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by Mike Esposito

Do you want to grow your business? Perhaps you are a ‘next generation’ owner about to take over your family’s dealership. Or perhaps you want to retire soon, so you are thinking about selling. Or maybe you just want a challenge.

Whatever the reason, growth requires strategy. The recent trend toward shrinking profit margins in new vehicle sales makes this more difficult. If you want to grow, you’re going to have to reduce operating costs, attract new customers and retain more customers. To accomplish this, start by answering these four questions.


1) Where can I find efficiencies in our current processes?

Lower operating costs don’t have to involve making painful cuts. Instead, use your DMS reporting tools to drill down into your processes. How long does it take your trade-ins to get out on the lot? If it’s more than three days, there’s a problem. How productive are your technicians? What’s your shop capacity?

I believe that when times are good many dealers fall into a pattern where they don’t pay as much attention to expenses. As long as everyone’s making money, processes aren’t enforced and employees are not held accountable.

To grow, you’ll need to sell more cars. This requires scrutinizing your sales process. Monitor CRM usage and examine every salesperson’s KPIs. “Sell more cars” doesn’t mean anything to a salesperson. Unless they are given very specific guidelines to follow, they will end up where they end up.

A salesperson is never going to sell 20 cars a month sitting around waiting for the next ‘up.’ But you can figure out the math using reporting tools. If that salesperson has a 50 percent closing ratio and a 30 percent lead-to-negotiation ratio, they should be talking to about 120 prospects per month. That means they have to connect with six prospects per day, assuming they work 20 days per month.

Don’t be afraid to set sales and service goals high; but don’t expect those goals to be reached without breaking down the steps of how to get there. Every employee needs to know what they should be doing on a daily basis, and be held accountable for doing it.


2) How do I market to more people for less money?

Marketing is a huge expense for most dealerships. Many of the most successful dealerships rely almost exclusively on digital marketing. But you have to be careful. The purpose of marketing is to get more leads. At the end of the day, if you aren’t getting the amount of leads you want, then something’s not working.

At some point, throwing more dollars into a search campaign or buying more third-party leads isn’t going to result in more or better leads.

Again, use your DMS reporting tools to drill down into your marketing KPIs for examination. Instead of looking at total leads, find out which lead source closes at the highest percentage. If it’s your website, focus on how you can improve your website. Maybe adding videos would be more effective at drawing new visitors than another digital ad campaign.


3) How are we going to find good talent?

To help your dealership grow, you will need good people. Too many dealers still use the mirror test, i.e. if the person’s breathing they’ll hire them to try them out. This is not a sound hiring practice. Employee turnover is very expensive.

If your dealership doesn’t have a formal recruiting strategy and hiring process, you will probably make the same mistake of hiring mediocre employees over and over again. Between 50 to 80 percent of people admit to lying during the interview process, and more than 70 percent of college students say they would lie on their resumes to get a job. Do you know how to spot these liars? Do you properly vet every potential candidate by checking backgrounds and references? If not, chances are very good that you are hiring dishonest employees.

I guarantee that any dollars and time invested into developing a recruiting, hiring and onboarding process will be returned in spades.


4) How are we going to keep our current employees happy?

Once you go through the time and expense of hiring good talent, you’ll want to make sure they’re happy. This requires focusing on workplace culture.

The fastest way to find out how happy your employees are is to ask them. Not directly of course, but with an anonymous survey. One of the easiest ways to do this is to enter your dealership into a local “Best Places to Work” or “Top Workplaces” competition, or the Automotive News “Best Dealership to Work For.” You will get to see anonymous responses from your employees and also benchmarks of where your culture is compared to your competitors.

You may not believe or like the results the first time you do this. Put your ego aside and don’t take it personally. Instead, use the survey results as a guide to improve your culture.

The best people want to work for the best companies. When your employees are happy they take great care of your customers. When your customers are taken care of, they will become loyal customers.

Growing your dealership requires a multi-pronged approach. Reduce expenses, reach more customers, sell more cars and keep more customers. Sounds simple, but we all know it isn’t. Use your DMS reporting tools to become more efficient, market smarter, focus on workplace culture and attract talent. It will take time but growth will be the inevitable reward.

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