Industry: Automotive
Location: Midwest United States
Company Overview: Family-Owned Group of Auto Dealerships
Succession Matrix® Issues: Business Performance, Management Synergy & Teamwork
Challenge: While the owner’s measure of success for each store was based on net return, the store managers were solely focused on gross sales. This misalignment was causing the stores to perform below the planned level of net to sales. Dealerships were also under-performing when it came to gross sales and were receiving only 60% of the manufacturer incentive opportunities.
Actions Taken:
- Explicitly communicated with store managers that the planned levels of net sales were not guidelines but requirements which must be met.
- Reviewed SERP system to remind GMs how it promoted profitability over volume.
- Created a JobModel (an outline of the ideal traits of a person for a certain position within a specific organization) that reflected a salesperson that sold value (which meant they wouldn’t be solely focused on volume) and used this as a guideline for all new sales hires.
- Motivated managers to achieve manufacturer incentive levels by giving them a part of the incentive reward.
Results:
- Net profit goals are not only being met, but exceeded in 90% of the departments.
- Salespeople are all focused on value and Dealerships are now meeting both gross and net goals.
- The rate of receiving manufacturer incentives has jumped from 60% to 90%.
- GMs are maximizing their SERP benefits while at the same time the Dealer is achieving higher profitability.
Interview with the Succession Planner
1. Do you have any idea what caused this focus on gross sales and not gross profit?
Unfortunately, in the auto industry the prevalent way of thinking is in relation to gross sales and doing whatever it takes to make the sale—even when that means cutting profit.
2. What else needed to be done to fix this situation?
The GMs and their respective management teams were provided coaching on how to set realistic expectations of performance for their people and how to emphasize the dual goal of gross AND net.
3. What was done in regards to the salespeople who were already with the organization?
All salespeople completed a ProScan survey that identified their strengths and motivators. The salesperson JobModel was compared to these ProScans, and for those that didn’t fit the job description, development programs were created to help them shift their thinking from volume to profitability and increase their success within the organization. The few salespeople that didn’t utilize the development program ended up leaving the dealerships on their own accord.
