How’s business? No, seriously. What’s keeping you up at night?
At NCM Associates, we want to know. What do you see as the biggest challenges for 2012? What are the biggest opportunities? How will you benchmark success today and for years to come?
Let’s talk about what is and isn’t working in your business. Come to Booth 1288 at the 2012 NADA Convention & Expo, February 4-6, at the Las Vegas Convention Center to get the conversation rolling. We’ll use that information to look for ways to empower your business, enhance profitability and sustain growth.
And maybe, we’ll find a way to help you sleep better.
Rodgers Chevrolet Boosts Fixed Ops Profits 59 Percent by Implementing NCM® Profit Correction Meetings and 20 Group Best Practices
No one would argue that these days running an auto dealership is a lot more challenging than it was a decade ago. In today’s environment it takes precise multi-tasking skills and a multi-prong business approach. That is the path Pamela Rodgers, owner of Rodgers Chevrolet in Michigan, has chosen. By using this business approach, along with the implementation of best practices and by holding staff accountable for results, the dealership has seen a 59% increase in service department profitability and a 116% increase in the store’s overall net profit.
Pamela Rodgers has been a General Motors dealer in Michigan since 1993. Her first Chevrolet dealership was in Flat Rock and her current location is in Woodhaven. With an MBA in Finance from Duke University, she knows firsthand how important fiscal discipline is in running any successful business. When the industry hit the wall in 2009 Pamela went looking for resources to help improve efficiencies and build her network. The solution was to join an NCM® Associates 20 Group.
“Attending 20 Group meetings provides incredible insights on managing the business process and helps keep me at the top of my game,” Pamela said. This has proven out in her results; as of June 2011 the store’s net profit was up 116% year over year (YOY) and in the new car department profit was up 214.8% with new unit sales up 19.5% YOY.
These numbers become even more impressive when you realize the dealership is located among a number of Ford manufacturing facilities and a good portion of the area population have family members who work at one of the Detroit Three.
Knowing the retail landscape and understanding the competition has kept Rodgers Chevrolet ahead of the curve and out of fiscal straits. “We have implemented the NCM Profit Correction Meeting Program and the management team enthusiastically bought into the program once they saw how it can improve their departmental profits. I personally am excited about this initiative and can see great benefits for our store,” Rodgers said.
As part of the program an NCM retail coach meets regularly with the entire management team and thoroughly goes through the P&L for every department. There are specific goals and targets to achieve and those are also reviewed at the meetings. Coaching is offered to improve performance, identify issues and to keep everyone on track.
Managing expenses is also critical. During the downturn the store learned how important it was to watch their expenses. They examined closely their costs for uniforms, telephone, software, and even what they were spending on coffee in the dealership. While they made the cuts necessary to reduce expenses, when it came to customer touch points they maintained a top tier level of service. They also examined technology, marketing and advertising costs, and developed a more strategic approach to business development. Not surprisingly they focused on retaining existing customers and reached out to orphan customers from areas where GM dealers closed their doors.
Rodgers’ NCM® retail coach is Terry Wichmann, who shared, “After working with Rodgers Chevrolet, I am very impressed by the great handle they have on their expense structure. From my experience and observations this is a critical component in the profitability equation. When I see net profit, service business and new vehicle units up YOY it tells me they have strong processes in place.”
New car sales may be the focus of dealership advertising, but the Fixed Operations area is the engine driving profitability. In this area Rodgers Chevrolet has turned in a stellar performance and is showing a profit increase of almost 60% since the beginning of the year in Service and a 97% increase in Parts and Accessories. Training plays a critical role and Service Advisors participate in regular training classes and have a solid process they follow for each transaction. It begins with greeting the customer by name, putting the customer’s vehicle on an alignment machine which instantly indicates if any of the wheels are out of alignment, and doing a thorough walk-around of the vehicle in the service lane. Customers really appreciate this approach and as a result customer pay repair orders are an integral part of Fixed Ops profits.
The focus on process and the details carries over into the sales area too. The pre-owned department is selective in the units they acquire, and once a unit hits 60 days on the lot it gets an “all eyes on” look to determine the course of action to move the unit via wholesale or other channels. And, with an average new vehicle inventory of 220 units at any given time, management keeps a close watch on which units move quickly, where they need some additional marketing promotions, and what options they have when ordering new units. Watching these metrics and using NCM Benchmark® data from comparable dealers in similar markets helped the new car department profit increase 214.8% with new unit sales up 19.5% YOY.
You don’t get results like these without a solid team behind each area of the dealership. Rodgers attributes much of their performance to a structured sales training regimen. They focus on rapport building exercises and techniques, listening skills, and product knowledge. Knowing more about the product being sold than the customer walking in the door is paramount.
Rodgers Chevrolet works hard to find and hire the right people. Each candidate goes through a number of interviews with various managers and team members. They ask themselves, “Does the candidate appear to respect him or herself?”; “Do they exhibit traits that indicate they would respect our customers?” If not, they aren’t hired at Rodgers Chevrolet. According to Rodgers, people are the key to the operation. “We can teach them abilities, we can’t teach them willingness,” Rodgers said.
And since women influence over 70% of vehicle purchases, Rodgers Chevrolet makes sure women are part of their team. The F&I Manager, one of the Sales Managers and two sales team members are women. And, with women holding such a strong influence over the purchasing and servicing of vehicles it only made sense to Pamela Rodgers to make sure their female clientele feel comfortable, and have the option of dealing with a woman during the sales and finance transaction.
The NCM Benchmark® data is critical, “You can’t manage what you can’t measure. We constantly look at the numbers,” Rodgers said.
Improved Teamwork and Structured Guidance from NCM® Associates Drives Performance & Profits at Western Motor Company
They say the only constant is change, and that is exactly what automotive dealer principal Troy Nanninga was looking for at his dealership, Western Motor Company, in Garden City, Kansas (population 32,000). The family dealership has a 72 year history in the community, but after eight years on the job, Troy knew his team was capable of improving the operation and generating better financial results. The question now was where to begin?
Troy’s father is a big fan of 20 Groups and when Troy took a leadership role, he participated in 20 Groups on a regular basis. The information gleaned from these meetings was invaluable. The challenge came when Troy brought that information back to the dealership and wanted to share the ideas and processes with the management team.
It seemed he had eight different entities working in their own areas of the dealership, each often oblivious to the issues facing their peers in the other departments. Those entities included the Sales, Parts, Service and Accounting Departments, a Buy Here, Pay Here operation, a finance company, a rental car fleet, and a body shop. From Troy’s perspective it seemed an auto dealership was the most complex business you could ever imagine.
With all these silos, implementing any broad-based policy and getting “buy-in” from all the managers was extremely difficult. While it was not feasible to bring all his managers to a 20 Group, Troy wanted his team to have the benefit of those insights and to hear from a broad range of auto retail experts. So he pursued resources to find a way to bring this experience to Western Motor Company.
Troy found the perfect solution by reaching out to NCM Associates, the leading automotive dealer 20 Group provider in the industry, and a leader in automotive retail operations consulting. After just six months of working with a coach from the NCM Retail Operations Consulting division, Western Motor Company has grown its departmental net profit by $160,000 year over year, despite the challenges of a small market. Troy shared, “Hiring NCM was like bringing a reverse 20 Group to my dealership. Having an industry expert with hands-on experience come to our location and share his insights, best practices and NCM Benchmark® targets was exactly what we needed.”
Taking this step and initiating the meetings with David Wolfe, the NCM retail coach, was a bold move and one that would prove beneficial for the dealership. Managers had to come to grips with the reality that issues within their departments weren’t always addressed in a direct or candid fashion, and that activities in their areas weren’t always beneficial holistically for the dealership.
Troy continued, “These meetings made it clear that the managers were responsible for themselves, and that we were going to talk about what we really needed to talk about. They quickly realized that we needed to dismantle the silos and work together as a team. The end game was to create a more inclusive culture in the dealership, communicate more frequently, take responsibility for our actions, and focus on achieving our financial and performance goals.”
The meetings take the form of what NCM calls a Profit Correction Meeting, where the store’s detailed operating performance is shared with all the managers and compares the store’s performance to NCM’s top-performing dealership Benchmark® averages. Then they discuss strengths and weaknesses, identify opportunities for improvement department by department, and develop commitment plans.
It quickly became apparent that personnel expenses were much too high for their operation and action needed to be taken. For Troy, it was personally very difficult to make some of these decisions, as many employees had been with the dealership for years. In the end, cuts were made in the clerical area, the detail shop, and especially tough was the decision to close the body shop. As difficult as these changes were to implement, the management team knew it was the right course of action to take. Recent reports show that in the six months they have been working with NCM Associates, their Gross per Employee results have gone up 31.2%.
The next step was to build interdepartmental relationships. They identified an issue in the service lane, where, for about an hour each morning starting around 7:30, there was often chaos. They never knew how many people would show up, and customers waited in line for a ride to their office or home. The team came up with the idea of having a salesman work in the service lane giving rides to customers. He would give them a ride to work or to their homes and during the ride they would chat about neighborly topics and then inevitably the conversation would come back to new vehicle models, safety features and maintenance needed to keep a vehicle running smoothly. Frequently these conversations led to test drives of new vehicles and more vehicle sales. Sales and Service working together solved a problem and they both walked away winners. This effort contributed to the new car gross going up 8% PVR (per vehicle retail) and used car gross going up over 19% PVR.
In the Used Car Department management is getting involved earlier in the transaction, which makes customers feel more comfortable throughout the sales process. Managers also present the trade value to the customer rather than just giving the value to the salesman to present to the customer. Again, this builds rapport and trust and helps the sales staff understand more of the sales process. The results: overall used car gross is up 44%.
Troy would soon hear that some managers were embarrassed about the upcoming NCM meetings, as they had not hit their goals for that month. This not only signaled recognition of accountability, but often the team would offer suggestions and help analyze what could be done to improve the next month. The collaborative nature and dynamic of the management team was changing right before their eyes.
The results: sales are up 8% YTD, which might not seem too remarkable until you consider this includes their Honda dealership. Honda dealerships overall have taken profitability hits due to the tsunami in Japan, and Western Motor Company has seen an 11.4% improvement in overall gross profit.
Because NCM® works with thousands of dealers, they have Benchmark® statistics that Western Motor Company finds invaluable. It helps them focus on targets achieved by comparable dealers and lets them know how they stack up against their peers in similar markets. So far they are stacking up very well. They went from a negative net to gross situation and have since achieved a 12% net to gross result for the last 3 months. And in Fixed Operations, they achieved a 15.1% net to gross for the recent three months.
Troy shared his thoughts on why the Profit Correction Meetings have worked so well in his dealership, “When David shows up for our meetings not only does he bring the knowledgebase of NCM with him, but his 18 years as a general manager in dealerships gives him real street credibility with our team. He has earned the respect of our management team and because he was in three or four other dealerships the previous weeks, he is able to share in real-time what other dealers are doing to succeed. His information is current and relevant.”
After six months of working with NCM Associates, Western Motor Company has clearly turned around many of their processes. You have to remember there are only about 32,000 people in their market, so for their store to have departmental net profit up $160,000 year over year clearly shows their store is focusing on gross profits, improved process and their overall business.
They continue to work with NCM Associates, stay focused on their goals and build on their improved communications strategy.
What Could an NCM Profit Correction Meeting Do For Your Dealership?
Listen to Farrar Schaeffer of Bluff City Jaguar Land Rover
explain why she is sold on the NCM Profit Correction
Meeting program!
The Profit Correction Meeting program has helped Rodgers Chevrolet and Western Motor Company improve the profitability of their dealerships and we are certain it will work for yours, too. In fact, hundreds of dealers across the U.S. are currently engaged in the NCM Profit Correction Meeting program, with participating dealers enjoying, on average, a 57.7% increase in year-over-year profitability. A structured, highly-focused approach to assess, identify and capitalize on profit opportunities in your operation, the Profit Correction Meeting program involves the dealer principal and department managers working in concert with an experienced NCM® Retail Coach at the dealership to analyze current operating performance, gain insights on profit opportunities and execute corrective action plans—all with the goal of achieving 30% net to gross.
How can the PCM program benefit your operation?
Reveals specific areas of profit opportunity for focused attention
Profit Trend Analysis details 90 day performance trends as compared to NCM franchise-specific Benchmark® averages
Lays out specific, agreed-upon action plans for immediate bottom-line impact
Establishes a consistent level of total management education and awareness
Provides accountability to ensure each department achieves optimum levels of profitability
Meets the demands of your dealership with structured monthly, bi-monthly or quarterly meetings as you desire
The experts of NCM Retail Operations Consulting conduct hundreds of Profit Correction Meetings each and every year, assisting our clients in capturing millions in additional profits. We are so certain of our program, we offer a 100 percent satisfaction guarantee!
These numbers become even more impressive when you realize the dealership is located among a number of Ford manufacturing facilities and a good portion of the area population have family members who work at one of the Detroit Three.
New car sales may be the focus of dealership advertising, but the Fixed Operations area is the engine driving profitability. In this area Rodgers Chevrolet has turned in a stellar performance and is showing a profit increase of almost 60% since the beginning of the year in Service and a 97% increase in Parts and Accessories. 
Troy’s father is a big fan of