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Terry Wichmann

Car Dealers: Are you Paranoid Enough to Survive?


Andy Groves’ first business book was entitled, “Only the Paranoid Survive: How to Identify and Exploit the Crisis Points that Challenge Every Business.” The recent and relatively sudden decline in gasoline prices has me thinking about Mr. Groves’ theory, as what is great news for consumers and car dealers ironically often wreaks havoc on dealership profitability.

At NCM, our foundational service is peer-to-peer collaboration around dealership operating performance that results in profit improvement. We do this in our 20 Groups, our management training programs, and our in-dealership consulting programs where we can show how a dealer’s operation compares to his or her peers in the industry. But we also do this among our own internal retail experts using technologies that keep us connected, even though we are out in the “field” each and every day.

Last week, our internal teams here at NCM Associates were deliberating the impact of lower gas prices on the mix of cars and trucks the dealers will stock. Of course, the inventory mix almost always changes when gas prices decline noticeably and the demand for larger vehicles and trucks increases. At the same time, the manufacturers, who must keep their eye on their EPA numbers, are likely going to further incentivize small cars and pay for the additional incentives by increasing the price on SUVs and other so-called “gas-guzzlers.”  This is demand and supply economics complicated by regulation and it’s nothing new to car dealers.

But as a consultant to those same car dealers, my bigger concern is what happens in the used vehicle market when the price of gas declines noticeably.  Savvy dealers (maybe those who are a little more paranoid than the rest) know that they must pay close attention to their used vehicle inventories in light of this short-term reality by managing their trades and pricing with the more likely, long-term reality in mind.

So dealers, what will you do to ensure you don’t wake up to a used vehicle inventory of SUVs and full-size pickups if/when the next crisis hits and the price of gas zooms to $4/gallon or more? If you’re not keeping a close eye on your inventory mix now, you’d better get a handle it soon, or let the used vehicle “write-downs” begin.

About Terry Wichmann:

Master dealership financial management and learn proven variable and fixed operations processes and management best practices that will help you drive more strategic growth and profitability. Click here for details. 

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Kathryn Carlson

How Should You be Preparing for Year End?


As 2014 comes to a close, human resources also has year-end responsibilities. The most important year-end preparation revolves around compliance, benefits, and payroll administration. Ensuring that the following list is completed at the end of each year allows you to start off the new year with a clean slate and also allows you to keep track of when these tasks are completed so that you stay up-to-date:

Overall HR Compliance

In HR, compliance encompasses many things. To prepare for the new year your policies and procedures must be up-to-date. To stay compliant review the following:

  • Policies and procedures – Ensure that all policies and procedures still apply and comply with changes to regulations that changed throughout the year. If you are not sure about changes specific to your state KPA can provide you with a list of changes and necessary updates.
  • Complete an HR audit – Have a 3rd party conduct an HR audit to ensure that your record keeping systems are compliant.
  • Audit your records – Dispose of appropriate records before the new year.
  • Update your calendar – Review upcoming HR regulation and reporting deadlines for the coming year and add them to your calendar.
  • Prepare for updates – Note and prepare for regulatory updates that go into effect January 1st.

Benefit Plans

Benefits compliance and reporting can be complicated, so begin this process early to make sure that you and all dealership employees are properly covered. Make certain to:

  • Incorporate all new plans – Ensure that new disclosure requirements and summary plan descriptions for both retirement and health plans have been incorporated into your benefits package.
  • Review deferred compensation limitations – Once you have reviewed the limits check for excess contributions to qualified plans.
  • Report Taxable Imputed Income – For employees who have life insurance over $50,000, report taxable imputed income for taxable group term life insurance.
  • IRS Reporting – Review and prepare for new reporting requirements including:
    • You must withhold and report an additional 0.9 percent on employee wages or compensation that exceed $200,000.
    • You may be required to report the value of the health insurance coverage you provided to each employee on their Form W-2.
    • Effective for calendar year 2015, you must file an annual return reporting whether and what health insurance you offered your employees. This rule is optional for 2014.
    • Effective for calendar year 2015, if you provide self-insured health coverage to your employees, you must file an annual return reporting certain information for each employee you cover. This rule is optional for 2014.

Payroll and Salary Administration Assessment

Make certain that you have all of the paperwork you need and relevant employee information to conclude the year:

  • W4 review – Have employees review their W4s if they have changed their status during the year, or have made any other changes that would affect payroll withholding.
  • Update employee information – Update records for employee addresses, demographic, and emergency information.
  • Discuss salary changes – Discuss salary changes with each employee, and provide discussed compensation in writing.
  • Issue year-end paychecks – These paychecks should include year-end bonuses and holiday/overtime pay.
  • Adjust payroll – Any changes such as salary/wage adjustments, merit increases, and minimum wage increases must be reflected on payroll.

While the main focus of preparing for year end focuses on compliance, payroll, and benefits, there are additional optional tasks that can also be tackled to help the new year begin smoothly:

Complete an I-9 Audit – The end of the year is an ideal time to review your I-9 folder. Confirm that all of your I-9s are separated from your personnel files and kept in one binder for easy access. Check that you do not have any missing I-9s and review each I-9 for errors.

Archive Terminated Employee Folders – Whether you file them in a separate file cabinet or box them all up, the end of the year is a good time to archive your terminated employee folders. You are required to maintain the folders for 7 years, but removing them from your current employee folders will help streamline your processes. No matter where you move them, make sure that they are easily accessible if you need them.

Update Labor Law Posters – Both Federal and State labor law posters need to be checked yearly. If any of the information on them has been updated, your posters must be replaced with the current versions.

Review Job Descriptions for Personnel Files – Throughout the year, many employees may have taken on new roles or responsibilities. Check that each employee has an up-to-date and signed job description in their file to ensure that you are protected in the event of a lawsuit.

Update Employee Forms –This is also a good time to complete an employee address review, so that you have the correct mailing address for W-2s.

Review the Employee Handbook – Have any of your company policies changed? They must be noted in the handbook. Make sure that each employee acknowledges receipt of the handbook too. Completing this task annually at year end will guarantee that this task doesn’t slip through the cracks.

Depending on the size of the dealership, the time it takes to complete year-end tasks may vary. Make sure to start as early as possible so that you have adequate time to fully prepare for the year end.

Do you have a question about preparing for the year end at your dealership? Contact your Human Resource Management advocate or email

About KPA

KPA is a business services provider for more than 5,100 automotive, truck and equipment dealerships, and service companies. KPA provides Environmental Health and Safety (EHS) and Human Resource (HR) Management software and consulting services. KPA’s solutions have been embraced by leading auto dealers, including eight of the 10 largest dealer groups in the United States, and endorsed by 26 dealer associations from around the country. KPA joined the Inc. 500/5000 list of fastest growing companies in 2012. To learn more, visit or call 866.356.1735.


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Brent Carmichael

It’s Beginning to Look a Lot Like Christmas for BHPH Dealers


It looks like Christmas is on again for this year. There were some who thought with the current state of the economy, that this might not be true. But I have it from a good source that it is indeed happening again this year. For those of us in the BHPH industry, this is definitely good news. Yes, I said good news. This gives us a golden opportunity to finish the year strong from both the sales and collections side of the business.

I know what you’re thinking. Obviously this guy travels so much he finally missed his flight back to reality. When I first got into this industry I was told there were only two absolutes in the BHPH world. You can’t sell cars or collect money in December. It’s a time to just hang on and wait for tax season. And I bought into that philosophy for my first couple of years.

What changed my philosophy, you ask? Call it ego. Call it ignorance. But more than anything else call it greed. I wanted the 12th month to be just as profitable as the other 11.

How to Make December Successful

The first thing you have to do to make December just as successful as the other months is get your mind right. Without accomplishing this first step, nothing else will matter. Believing it is a “hold on” month will always make it one. It’s like the Henry Ford quote: “Whether you think you can or can’t, you’re right.” 

Now that we have the “I can” mentality, where to start first? We all know this is a collections business. But if we don’t sell some vehicles, there won’t be a whole lot to collect at some point. So let’s start with sales.

The biggest obstacle to selling a vehicle in our industry is not the sale price; it’s not the features and benefits, or lack thereof, of the vehicles we are selling. It’s the down payment. Of course, this is the time of year customers have the least amount available for a down payment. So to make it a successful month, we have to be prepared to overcome that obstacle.

Now don’t think I’m saying this is the time to offer zero downs. What I’m saying is, this is the time of year to get creative in regards to downs. We all know that the amount of down payment received has no bearing on how the customer will perform. If that was the case, the best paper we put on the books would be February deals. Sorry to say, those deals have the worst performance from a static pooling standpoint than any other month.

By “creative” I mean focusing on customer trade-ins. And not just vehicles. I work with quite a few successful dealers who will trade for anything: TV’s, jewelry, video games — you name it, anything of value. They assign the “trade” a dollar value and give the customer the opportunity to buy the “trade” back within a certain number of days.

Another avenue to overcome the down payment obstacle would be to offer a portion of the down payment be deferred, until the customer receives their tax return. There are aggressive dealers out there not only doing this in December, but offering this as far back as late October and early November. There are tax services available that can estimate a prospective customer’s return based on their most recent pay stub.

And of course there are always giveaway promotions. Since the money you want for their down payment would be the money they use for gifts, offering TV’s, video games, and gift cards could be a way of prying those last needed down-dollars free.

Now the same can be said for trying to keep our customers in good standing from their payment standpoint. You have to have the right mindset and be creative.

Giveaways can work here as well. Typically I see gift cards, TV’s, and video games given away on an arbitrary basis or after some sort of registration process. It gives the customer something to give as a gift and still be able to make their payment. Gift cards seem to work best for this type of promotion as the customer can spend it how they see fit.

Deferring of payments during the holidays is something that all the major finance companies have offered to their customers for years. And also as a benefit they offer to their good paying customers to help at this time of year. A word of caution, though: This will definitely establish goodwill with your customers, but can be detrimental from a cash flow standpoint.

The point to all of this is there is no reason for the holiday season to be a time of just hanging on. It should be no different than the other months of the year. The keys are to make this time of year a priority from both a sales and collections standpoint.

There are customers in the market that need transportation. And those same customers will need the financing to obtain it and have the money available to not only purchase it but pay for it as well. The question is, are you willing to be creative enough to capture and collect from those customers — or are you just willing to hang on?


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Dave Anderson

Building a High Performance Culture (Part 14)


This article is part of a multi-part series titled “Building a High Performance Culture” by Up To Speed Guest Expert, Dave Anderson, of LearnToLead®.

Words that Hurt: Maintain

In this fourteenth post on building a high performance culture I want to put in the “words that hurt” column a word that stifles the potential of both individuals and organizations: maintain.

More about maintain in a moment, but to bring yourself up to date with this series, please review the following words that work from past posts. These must be consistently woven into your culture to strengthen it. The words that hurt, and their ensuing mindsets, must be just as diligently weeded out of a culture. These two categories are designed to build an evolving portrait of what a high performance culture looks like so you can evaluate your own, and strive towards the ideal.

Words that work:

Earn: to acquire through merit.

Deserve: to be worthy of; to qualify for.

Consistent: constantly adhering to the same principles.

Hope: grounds for believing something in the future will happen.

Catalyst: a person or thing that makes something happen.

Responsible: to be the primary cause of something.

Tough-minded: strong willed, vigorous, not easily swayed.

Loyal: faithfulness to one’s duties or obligations.

Passion: a strong feeling or enthusiasm about something, or about doing something. 

Words that hurt:

Fault: responsibility for failure.

Blame: to assign responsibility for failure.

Excuse: a plea offered to explain away a fault or failure.

Mediocre: average, ordinary, not outstanding.

Wish: to want something that cannot, or probably will not happen.

Entitle: a claim to something you feel you are owed.

Sloth: reluctance to work or exert effort; laziness.

Complacent: calmly content, smugly self-satisfied.

Maintain is defined as: to cause (something) to exist or continue without changing.

Managers who maintain create a culture where:

  1. The goals set for the organization are incredibly safe.
  2. People are conditioned to think incrementally.
  3. The status quo is defended, rather than attacked.
  4. Those who question the status quo are seen as trouble makers, or as being negative.
  5. Nothing is changed until something bad happens.
  6. People aren’t held accountable.
  7. People aren’t stretched and don’t grow.
  8. Tenure becomes a substitute for performance.
  9. There is a play-not-to-lose mentality that pervades the culture.
  10. There is a strong aversion to risk or anything new.
  11. Meetings are held where much is debated, but little is decided.
  12. People expect to be rewarded or promoted more for showing up than for stepping up.
  13. There is a large mass of average or below average people, but very few, if any, superstars.
  14. People are prone to pace themselves, and very little urgency is seen until there’s a crisis, or time is running out on a month.
  15. Doing what’s in a job description is seen as acceptable; even heroic, rather than as baseline.

Frankly, in any industry, maintainers in leadership positions are common; they’re easy to find and cheap to keep. But leaders who can stretch others and their organization, but who understand the importance of stretching themselves first are worth their weight in gold.


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Robin Cunningham

Unrealized Opportunities in the Used Vehicle Department


Forgive me for saying this, but from where I now stand, it is quite apparent to me that there is way more opportunity for improving profitability than most dealership managers are aware of. I certainly know looking back on my career (and I thought I was very pro-active) that there was so much more opportunity to be realized than I was able to completely grasp at the time.

Most people agree that there is more upside potential left on the table, they are just not aware how much there is or how to attain it. Today I’d like to share some of the upside potential that we see in relation to the used vehicle department. One of the primary opportunity areas in the used car department is in increasing the average ratio of used to new vehicle sales.

We work with a Nissan dealer, in a single city market, that three years ago was selling close to a 1:1 used to new ratio. They realized there were only so many new Nissans they could sell no matter how aggressive they got with pricing and marketing. So, they got very clear on what does and does not work in today’s used vehicle market. They made steady progress in the quality of their processes and accountability management, and today are selling a 3:1 used to new ratio.

One of their managers was in class a month or so ago made a comment during a discussion. He said that as a variable department, they “freak out if and when any used vehicle hits 21 days in stock.”  They so highly value the processes in place from each vehicle’s first day in stock, that at 21 days, they know something is going terribly wrong. That comment raised a lot of eyes in class, especially from the managers of stores with huge aging issues. To get to that 3:1 ratio took a lot of trial and error, and a high degree of trust in their processes. It was all made easier by beginning to see it adding up in more total used vehicle gross profit.

To realize that opportunity, especially if one is still struggling in the used vehicle department, a pretty systematic overhaul of everything is often needed. That would include such processes as:

  • Acquisition
  • Appraising
  • Stocking
  • Reconditioning
  • Initial Pricing
  • Internet Marketing
  • Re-pricing
  • Desking policy
  • Pay plans
  • Aging

For sure, the change in focus from the amount of gross per vehicle retail to total department gross is required. To clarify, we are not against getting as much gross per vehicle as you can; but you just need to know which market segment each vehicle you are stocking is in, so your pricing policy is not getting you into aging problems.

I have been saying of late that our initial pricing policy is our turn policy. If you are pricing above market average right out of the box, we rarely see the pricing come back in line before the vehicle has aging issues, because the above market price has kept it largely invisible to the shopping public on the Internet… where, of course, most shoppers are today.

I just referred to what “market segment” each vehicle is in. We break those segments into: A, B, C and W categories. CPO, of course, is another category and I am going to come back to that separately.

A Vehicles

An “A” vehicle is a one of a kind, mostly irreplaceable vehicle. It is generally easier to replace the customer than it is the car. These almost always come from a trade, either rare in the first place, with very low miles, or both. At most, this makes up 10% of inventory. These vehicles should have a much higher than average gross profit, so the opportunity there is for a higher PVR.

B Vehicles

The “B” car is usually our own brand and is still under factory warranty. These are the most available cars to us, through trade, auction or our service drive. This is the case for all dealers, so the day’s supply is high, relatively speaking. These cars have the highest potential for wholesale loss, largely due to over-pricing on the Internet. Because these are very nice cars with lower miles on them, it can be tempting to try to get “above market” prices for them. Without a doubt, most vehicles with aging issues come from this segment, especially the ones bought at auction.

Because this segment makes up 60+% of inventory dollars, it can have devastating effects when these dollars become aged. The strategy for this segment is to aggressively price them to market immediately, get the F&I turn and the gross profit from reconditioning, and then go get more just like it. These will have slightly less than an average gross profit per vehicle. But again, since this is where the largest dollar amount of inventory is, a faster turn will equate to more total departmental gross. Again, the focus and opportunity for total departmental gross profit has to be primary here.

C Vehicles

The next segment is the “C” car. These are cars that are out of factory warranty, though a warranty could still be sold. They have higher miles and don’t have to be in perfect condition. These are the vehicles everyone seems to be wanting and almost always come from trades. The opportunity is a gross per vehicle that can be at or slightly higher than average. The return on investment is higher because they have a lower average cost of sale. Fortunately, most dealers are keeping more of these vehicles for retail these days, because in the past many got wholesaled and were the key source of inventory for the independent dealers. I know I wholesaled a lot of those in my past, and I now realize how we were missing out on possibly the richest segment of the business.

CPO Vehicles

The other retail segment that gets uneven attention is the certified pre-owned category, or CPO as we all call it. The luxury brands are all strong in this segment, and those manufacturers play a key role in helping make sure it is viable by actively supporting the strategy. For most of the other brands we see a very spotty consistency of dealers taking full advantage of this opportunity. It truly is like a separate franchise and has to be treated that way.

I have seen dealers of almost any brand take full advantage of it and other dealers from those same brands try to play both sides off the middle. Those dealers end up not having many CPO vehicles and that likely leads to less total volume, less gross per vehicle, less reconditioning gross, less future service and parts gross — and ultimately less customer retention. The other thing I see happen with CPO vehicles is when a dealer trades or acquires vehicles other than their own brands that have a strong CPO compliance; it makes it harder for competing dealers to retail those vehicles successfully. One thing we see that can offset this are some of the third-party, certified pre-owned programs that are available in the market place, like the Motor Trend Certified Program.

I would be remiss if I did not mention the very big opportunities that often get untapped in F&I. The public groups, who are under the most scrutiny of all, are at about $1,100 per vehicle retailed net after chargebacks. Many dealers are well above that, but most are way off that number and it really seems to be a focus issue. Selling more financial products and less focus on rate has been the trend, and it really seems to be working. Many of the financial service vendors provide the training as well.

W Vehicles

The last used vehicle segment is the “W” car or wholesale. There are two levels of wholesale: The ones we decide not to keep at the time of acquisition for various reasons (too many miles,  poor mechanical condition, or too expensive to keep). This level of W vehicles is actually a profit center.

Then, there are the vehicles we got for retail and for some reason have not sold. Maybe we have kept them for too long and now believe we have to get rid of them, often at a loss. Our friend Dale Pollak says there are only two reasons that could possibly happen: We somehow could not find the right price that others were selling the same vehicle during that time frame or we were unwilling to put the vehicle on that price. Knowing this is a possible unrealized opportunity can allow you take advantage of this.

This of course was just a very brief discussion of some of the most BASIC OPPORTUNITIES available in the used vehicle department that are very often not taken advantage of.

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Jeff Cowan

Six Tips to Having Your Best Service Year Ever


As the tide rolls out on 2014 and we look ahead to the new incoming tide of 2015, it is time we sit down and start to plan for what I believe will be a record year for service department sales.

Since the recession began back in 2008, I have witnessed many service departments experiencing their best years, year after year. Although the number of service departments having their best years has not increased much with each passing year, those who are having record years understand that it is not happening because of luck. It is happening because they are identifying their roadblocks, developing plans to navigate around those roadblocks, setting minimum acceptable standards, and executing.

Having worked with literally hundreds of these successful service departments, I will share with you their secrets of how and why they are so successful.

Tip #1:

They have processes that have created a sales culture throughout their entire service department — processes that guarantee no matter who a customer speaks with in the service department, they will be spoken to and handled in the exact same way. The managers in these successful stores understand that just like in selling, you have to take control of a customer, and they understand that you must do the same with your staff. Take control of them, train them, require the memorization of word tracks and processes, and then make sure your staff executes. They fully realize that if they are not in control of their staff and their customers, their staff and customers will control them.

Tip #2:

They have all the latest tools needed (including multi point inspection processes) which are utilized to their fullest by both their technicians and their service advisors. They have tablets to make the check in process cleaner and quicker. They have up to date displays which are inviting and easy to work from. They have processes in place to maximize the technologies of email, texting, telephones and video to communicate to their customers in the most efficient ways possible; ways that today’s customer welcomes with open arms.

Tip #3:

They have some type of rewards system that remunerates their best customers for repeat business. Think airline mileage programs. They know that these types of programs are what truly accelerates customer retention, and they never rely on cheap prices and coupons. That said, they will use coupons, but with an advertised “value price” and not necessarily the cheapest price.

Tip #4:

They have processes to guarantee that every declined service and every missed check in time is followed up within 24 to 48 hours, maximizing every opportunity and showing their customers how serious their shop is when it comes to maintenance, repair, and providing great service.

Tip #5:

They approach training from the stand point that training is not something you did. It is something you do – forever. They have a basic training course that every service employee must attend when first hired, where they earn a certificate. This is followed by weekly fifteen minute sales meetings, capped with a monthly hour long sales meeting, where strengths and weaknesses are examined and corrected as needed. They typically have a recertification meeting once a year, because they believe all training certificates should come with an expiration date. They also look outside their own business for training, to make sure that they do not become stagnant and that their message does not grow tired.

Tip #6:

They schedule annual meetings with each employee to discuss goals, each individual’s role, and what they are being held accountable for. They have a briefer quarterly meeting to make sure that their goals are on track and stay on track. Their mantra tends to be, “It is not about any single employee; it is about every single employee.”

In addition to all of these major items, there are minor things they do as well to ensure their success. They take this seriously and execute it with great enthusiasm, because they clearly understand that if the customer is not “wowed” every single time, there may not be a next time. They get that they are there for the customer and if there is no customer, there is no job security.

As many of you know, I am out in the field on a consistent basis and have been for over 29 years. I may not know everything, but I see a lot. I receive telephone calls all the time from dealers and managers asking exactly what these dealerships do to have these record years. That question arises in nearly every meeting I am in. When I spell out what I have spelled out here, a few heed the advice and steer their ships toward newer and greater horizons. However, many more write it off as too much work or unrealistic and remain on the same ship in the same rough waters, never seeming to realize that it is they who need to simply plot a new course and guide their ship to discover these newer, bigger horizons that await all who are willing to navigate the waters.


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NCM Marketing

What Are You Thankful For?


In honor of the Thanksgiving holiday, a few of us would like to take a moment to share what we’re thankful for:

“I am thankful for becoming a grandma this year and having a sweet little baby to love. I am having the time of my life!”  Penny Correa,Sr. Executive Administrative Assistant

“I am thankful for my family, especially my precious baby girl. I’m thankful for my friends and coworkers. I’m thankful for my job at an employee-owned company. And I’m thankful for sleep…”  Ashley Halloran, Meeting Contract Coordinator

“I am thankful for the Lord giving me such a wonderful and healthy life. Bless those less fortunate.”  Kim Mishmash, Retail Operations Coordinator

“I am most thankful this year that my mom is no longer suffering and is finally at peace. I’m thankful that I have a job that I love with a wonderful company. I’m thankful that my daughter is happy and healthy.”  Susy Campbell, NCM Travel Solutions Manager

“I am grateful to be working in an environment where peers come to fulfill their commitment of being the resource our clients are looking for and need. I am grateful for a work environment where peers work to be better and work to make me better.”  Kevin Cunningham, Director of Corporate Growth & Development

“I am thankful to have both a wife and a workplace that I enjoy being around.”  Matt Wilson, Marketing Creative Specialist

“I am thankful for the health of my family this Thanksgiving.”  Paul Faletti, CEO

“I’m so thankful for family and friends who show unconditional love and support through all of life’s challenges. I’m thankful for God’s blessings and that I’m given an opportunity each day to try and make a small difference.”  Travis Coffey, Salesforce Administratior

“I am thankful for the places and experiences I’ve had in my past. Where I am today, having a wonderful family, newborn, and career. Along with excitement as to what the future holds knowing it will be wonderful.”  Jaime Servaes, Integrated Marketing Specialist

“I am most thankful for all the blessings that God has given to my family and myself, especially our health!  I’m also very thankful for my position here at NCM!”  Angie M. Harper,Executive Administrative Assistant

“I am thankful to be part of this country which enables the freedom to love, work, worship, and play as we desire.”  Steven Banks,axcessa Operations Manager

“I am so incredibly thankful for the many blessings in my life: the health and happiness of my family and friends, and of course, an exciting and fun career at NCM!” – Skye Nguyen, Marketing & Communications Director

What are you thankful for? Let us know in the comments below.

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Tom Hopkins

Arouse Emotions, Don’t Sell Logic


What is the emotional process that leads to the purchase of a new vehicle? It begins with a new development in the buyer’s self-image. That is, the buyers see themselves in a new way — as the owners of that new car, truck, van, or SUV and all the status it affords them.

If the projected vehicle purchase is small in relation to the buyer’s income, the self-image change need only be small. But if the purchase is a large one, the change in self-image that makes the purchase possible will be large. Such a change can come about very quickly. It can take place within a few minutes, or even within a few seconds.

Champion automotive salespeople are adept at spotting these changes in self-image as they occur during sales presentations. They are quick to reinforce the buyers’ realization that they can have, enjoy, deserve, need, and are worthy of the marvelous new vehicle they like. Do that, and they won’t just like it; they’ll want it, need it, and realize they can’t get along without it — then, they’ll buy it.

To begin with, you must be genuinely interested in doing your best for them. Once they see that you’re on their side — wanting them to have what they want and to feel great about it — they’ll begin to like you and trust you. Then, they will tell you what they’re seeking to accomplish.

It’s critical to your success that you first go beyond the limitations of your own tastes and preferences. Recognize that what’s right for you isn’t right for everyone, and make an intense effort to see the world through your buyer’s eyes. Stop saying, “What I like about this vehicle…” They don’t care what you like. They want to hear what they’ll like about it.

Second, use your expertise to guide your buyers to the best solution your inventory provides them.

Third, wait for positive stimulus from your buyers. If you believe they’ve found something that helps them satisfy their needs, reinforce their image about that purchase. Avoid worn out phrases they’ve heard a thousand times. Stay away from the words clients stopped believing years ago.

The key is to be disciplined to wait for positive input. Unless you do that, you’ll find yourself going on and on about something they don’t like, and before you know it, you’re caught in a web of obvious insincerity. Stick to the facts.

The mere fact that you’re a salesperson will arouse their negative emotions and they’ll want to emotionally fight you. You need to get their emotions focused on their own needs and desires in relation to the vehicle they’re interested in. Then, you’ll build their emotions to where they will have convinced themselves of the decision to own.

Logic in sales is a gun without a trigger. You can twirl it all you care to, but you can’t fire it. Emotion is the trigger. You can hit the target with it. Every time you generate another positive emotion, you’re pulling the trigger on another accurate shot at closing the sale.

No skill that you can acquire in sales will enhance your earning power more than learning how to arouse emotions in your buyers in ways that are positive to the sale. The exact words that you use will depend on your offering, personality, buyers, and market conditions.

Some clients will see a new feature such as the self-parking option and find no reason to have it other than the fact that suddenly they want it. It’s the latest and greatest. None of their friends have it. They start to feel excited, important, and “rich” in thinking that they’ll be ahead of the crowd by being the first in their group of friends to own it. Or, they might be feeling the pull to get it because their friends already have it and can’t stop talking about how cool it is.

As you work at developing the skills to evoke emotions in your buyers, always keep that concept in mind. You can destroy sales as rapidly as you can create them through the clumsy use of, or the lack of control over, the emotional setting. Also remember that your actions, manners, words (how you say them), grooming, and clothes are all things that trigger emotions in your future clients — whether you want them to or not.

There’s no way around it. People will react emotionally to you. It is important not to have them react with fear, anger, or apathy. To see some salespeople approach clients as though they had just fallen off the garbage truck, you’d swear that they don’t realize that future clients have feelings, too. Clients suffer the effects of fear when a salesperson comes on too strong; clients get angry when a salesperson patronizes them; clients feel apathy when a salesperson is non-professional. Play the odds. Always be professional and keep their emotions in mind. Do that and you’ll close more sales.

FO Roadshow 4

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Dave Anderson

Building a High Performance Culture (Part 13)

This article is part of a multi-part series titled “Building a High Performance Culture” by Up To Speed Guest Expert, Dave Anderson, of LearnToLead®. thumbs up

Words that Work: Passion

In this thirteenth post on building a high performance culture I want to put in the “words that work” column a word that is found within high achievers in any endeavor: passion.

More about passion in a moment, but to bring yourself up to date with this series, please review the following words that work from past posts; these must consistently be woven into your culture to strengthen it. The words that hurt, and their ensuing mindsets, must be just as diligently weeded out of a culture. These two categories are designed to build an evolving portrait of what a high performance culture looks like so you can evaluate your own, and strive towards the ideal.

Words that work:

Earn: to acquire through merit.

Deserve: to be worthy of; to qualify for.

Consistent: constantly adhering to the same principles.

Hope: grounds for believing something in the future will happen.

Catalyst: a person or thing that makes something happen.

Responsible: to be the primary cause of something.

Tough-minded: strong willed, vigorous, not easily swayed.

Loyal: faithfulness to one’s duties or obligations.

Words that hurt:

Fault: responsibility for failure.

Blame: to assign responsibility for failure.

Excuse: a plea offered to explain away a fault or failure.

Mediocre: average, ordinary, not outstanding.

Wish: to want something that cannot, or probably will not happen.

Entitle: a claim to something you feel you are owed.

Sloth: reluctance to work or exert effort; laziness.

Complacent: calmly content, smugly self-satisfied.

Passion is defined as: a strong feeling or enthusiasm about something, or about doing something.

The following are five thoughts on passion:

1. High performing cultures have passionate people, driven to excel by a meaningful mission, compelling vision and the desire to make a difference.

2. Passion is different than both drive and energy. One can have both these essential traits, but without an enthusiasm for the work at hand, see their drive and energy go largely wasted. The quality of the culture plays a big part in drawing passion out.

3. Passionate people aren’t necessarily loud or giddy; their enthusiasm is more likely to show up in their attitude, work ethic, team play and results.

4. Passionate people are normally lower maintenance employees as they don’t require the coddling or continual pep talks the indifferent demand just to get moving. This reduces distractions within your culture, and helps preserve morale.

5. Customers feel an employee’s passion, and it greatly elevates the customer’s experience and earns their loyalty.

6. A poor leader can temper or extinguish a passionate person’s zeal with micromanagement, by surrounding him or her with laggards, or by failing to give the recognition one has earned and deserves. This demonstrates again the importance of a leader taking his or her role as chief architect and primary influencer of the culture very seriously.


See Dave Anderson’s presentation at the Best Training Day Ever. Click here for details.

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Alan Ram

To be or not to BDC? That is the question.


Here’s a question for you:
Is your BDC the result of a failure in training?

That should have your attention.  If I’ve ever written an article that will be misconstrued, this will be the one! Let’s get this straight; your people don’t suck on the phones because you don’t have a BDC! They suck because you haven’t properly trained them! As I’ve talked to dealers over the years, I’ve seen many BDC’s spring up out of knee-jerk frustration. While there are obviously exceptions to the rule, this is something I’ve seen repeated in the industry over the past several years.  A dealer says, “We tried training our salespeople, but they’re still terrible at handling phones, so we’ve hired three people and all they’re going to do now is handle our inbound sales calls, as well as Internet leads.” I have a number of different problems with this thought process, and I’m happy to tell you about them:

1) So you’re telling me that the people that you’ve hired to sell Lexus in Chicago are capable of talking to a customer that walks into the dealership, but for some reason, it blows their flipping minds to talk to that same customer on the telephone or communicate via email? I’m not willing to accept that.

2) I have trained tens (if not hundreds) of thousands of salespeople and BDC reps over the years. In that period of time, I have found that it takes every minute as long to PROPERLY train a BDC rep as it does a salesperson. The operative word in the previous sentence is “properly.” As a matter of fact, it takes longer to train a BDC rep. Why? Because while the sales staff already knows the product, the BDC staff is starting from scratch. I’ve asked BDC reps specific product questions before, and you may as well be asking some of them the gross domestic product of Bolivia. So while you think you’re solving one problem, you’re really creating another. Most of the calls I listen to that are made into BDC’s do not represent an improvement over the sales staff. At most, it’s the “get the customer’s name and number” department while trying to set up an appointment without giving the customer an actual reason to come in. I’m not trying to be harsh here. This is fact. We are creating an unnecessary level of specialization at many dealerships.

3) In this day and age, where the number one thing I hear when I do dealer 20 group meetings is “expense, expense, expense!”, shouldn’t the number one expense be hiring a second group of people to do the job the first group should have been doing? We’re talking about communicating with customers on the telephone and Internet here! This stuff isn’t quantum physics. It amazes me that the same dealers who throw up in a trash can when they get a $1000 invoice for training have absolutely no problem adding as much as 20-40k of expense per month in creating a BDC.

4) With that model, no one will want to work for you! Your dealership will compound one of the biggest challenges we already have in this industry, which is the struggle to find good salespeople.  Put yourself in the position of a good sales-person looking for a place to work. You walk into a dealership to interview; it’s a beautiful facility and a great brand. Then the person interviewing you drops the bomb, “by the way, our BDC takes all sales calls as well as handles our Internet leads”. At that point, I would imagine you would stand up, thank the interviewer for their time, and walk out the door to the dealership that lets you handle phone-ups and Internet leads. Do not kid yourself! That is a huge challenge that many dealers hadn’t considered but are now facing. Good salespeople avoid working at those dealerships that severely restrict their opportunities, and those dealerships tend to become a culture of telemarketers and greeters.

Here’s the solution:
Train your people to do the jobs you hired them to do.

If I’m hired to sell cars at your dealership, I should be capable of communicating with customers in person, on the telephone, and online. That would be part of being a well-rounded salesperson. Unfortunately, salespeople don’t necessarily arrive on your doorstep well-rounded. It’s your job to train them. The sad fact is that much of what dealers have bought over the years in the name of training, hasn’t been anything close to training at all. Going to the Marriott and listening to myself or anyone else talk for eight hours is as much training as going to a baseball game is training for baseball. You might get educated, but you’re not necessarily going to get trained. For something to be considered training, three elements need to be present: 1) Education 2) Simulation 3) Accountability. If any of those three elements is missing, whatever you’re trying to accomplish probably isn’t going to happen.

Now I’m not trying to convince anyone to dismantle their BDC. What I’m telling you to do is make sure that you’re not replacing one group of people that you didn’t train properly, with another layer of expense that you’re not training properly either.

BDC’s ARE GREAT and provide a wonderful return on investment when you have them doing the right things the right way. For example, following up unsold customers. 39% of people surveyed say that the reason they would not come back to a dealership is because they didn’t like the salesperson for whatever reason. Too tall, too short, reminded them of their ex-brother-in-law or smelled like smoke. What this is saying is that your sales staff does not have a shot with 39% of what you think are their be-back opportunities. When the customer doesn’t like the salesperson they won’t tell him or her “we didn’t like you”. What will they say? “We’ve decided to hold off” or “We’re not going to do anything right now.” They won’t tell the salesperson, but they will tell someone else. That’s why it is critical that every dealership have someone in ADDITION to salespeople following up on each and every customer that visits the store. That is a great function for your BDC.

Another thing you can do is shift their focus to your service department. I have worked with many dealerships that have amazing success in having BDC representatives schedule both repair as well as recommended maintenance. They can actively be following up on recall notices and generating service revenue.  This is a huge opportunity.  Your service advisors are on the drive talking to customers. They’re in the shop checking on vehicles. Call your dealership. Try to get a hold of the service advisor sometime and see how often you get voicemail or get put on hold for a period of time.

So again, I’m not telling you to dismantle your BDC. Business Development Centers are great when they are actually developing business. Let’s just make sure you have yours focused on the proper opportunities.


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