So you’ve decided to enter the certified pre-owned business. Now how do you get your staff involved in order to make sure the project actually makes a difference to your bottom line?
Fact is, most programs started by dealerships turn out to be stop-and-start affairs. The initiatives work fine when they are new, but once the spotlight is off they fade away into the darkness.
There’s an old saying in golf that you can’t win a tournament on Thursday, but you can lose it that day. Another golf adage says on that first day you set yourself up for success on Sunday.
That’s how it is with any program started in a dealership.
The watchers and waiters predict the demise of the program and then watch it die because no one participated – specifically, them. Then they brag about how they knew this program would never work.
But an effort from everyone could have made the vision a reality. That’s why it is essential to get buy-in from everybody in the store at the beginning and reinforce that commitment throughout the entire process.
Everyone must understand the mission, because anyone who is not engaged can be the clog that causes the program to fail.
Getting buy-in starts way before opening day.
It is important in the acquisition of buy-in that essential people are made to feel like part of the initial decision-making process. The earlier they feel part of the process, the harder they will work to make the program a success.
That starts with a clear enunciation of the problem we are trying to solve. If there is no problem to solve, then why start a new endeavor?
Usually the problem is the need for more sales, more profit or a combination of both, which translates into the continued success of the store.
The different departments will look at new programs in a much different manner. But they all must be brought in, because unless they see a process that has benefits to them and their department, they will not be part of its success.
In the sales model of Harold C. Cash and W.J.E. Crissy, two college professors who wrote an often-cited work on sales psychology, the findings showed while it is important to have a proper introduction, the need awareness module is the most important part of the sale, because it opens the door to a solution.
Unless there is an awareness of the need for a product or service, the call to action – which is sales – will go unheeded.
Clearly laying out the need will help the department heads arrive at the conclusion you want them to.
The old car guys always defined sales as “giving the customer enough information to allow them to arrive at the conclusion you want them to.” Once they buy into that conclusion, they will be sold and it will become their program.
So how do you accomplish that?
As renowned leadership authority Stephen Covey said, you need to begin with the end in mind.
In a speech to the graduating class of the Harvard Graduate School of Education, dean James Ryan claimed that there were five essential questions that must be asked of any enterprise to find the motivation for long-term success.
The first of those questions is: Wait, what? That’s about slowing down the flow of information coming in and gaining clarity about the project.
The employee team must understand the idea before they can advocate for the program. Or, as Harvard sociology professor Rakesh Khurana said, “You must emphasize inquiry before there can be advocacy.”
The team may say they are behind a program to make the owner happy, but until they can think like the owner and understand how certified pre-owned can create a different outcome for the future of the business, there will be no dedication.
“Wait, what?” is the question that must be asked once you arrive at the conclusion that you need a certified pre-owned program to be competitive in the marketplace and create a long-term commitment with your customers. The reason is that a long-term commitment is what millennials are looking for when they buy cars.
So the answer to, “Wait, what?” is, “We are going to sell the same vehicles, purchased from the same locations – so there is no change in your vehicles – but with a guarantee from you that the customer is going to have a worry-free ownership experience. We establish that worry-free experience by providing a warranty on our vehicles, even the vehicles with 140,000 miles on them, if they pass inspection.”
What happens with your staff when you’re explaining your desire to change your relationship with your customers? They hear Charlie Brown’s teacher: “Wah-wah-wah-wah.” Then you hit on something important. Suddenly, it’s, “Wait, what?”
That’s right. This is how we are going to compete with new car franchises for customers and dominate the local competition – by giving our customers more and elevating our reputation in the community. In other words, we are going to unlevel the playing field.
As your salespeople settle back into reality, the next question is, “Who is going to pay for this relationship?”
Certainly, creating an environment that will allow customers to feel comfortable with the purchase of cars from your lot will create repeat business in the long run. But who pays in the short term is what salespeople fear the most.
The quick answer is, like everything in the car business, it is paid for by the customers. Salespeople sell from invoice – since the warranty cannot be charged for, certification becomes an invoice item.
More importantly, offering a warranty creates value in the upsell. Most of the dealerships in the NIADA Certified Pre-Owned program report upsell numbers of 65 percent or better.
“With 65 to 75 percent of the customers buying the upsell service contract, it isn’t hard to see how quickly this becomes a profit center,” said Natalie Suarez, national director of the NIADA program for administrator Warrantech. “Keep in mind that with NIADA if the customer buys the upsell, the dealer does not pay for the certification warranty.”
That means that with a concentration on selling extended service contracts, the customers pay for this program along with providing a new source of gross profit.
The service department’s concerns come from their fear of the unknown. Those guys know about programs that pay 80 percent or limit repair charges, making every repair a fight with customers and the claims department.
To get service buy-in, find a program that pays retail parts and labor.
Surveys show customers currently using the dealership’s repair facility will repeat their purchase with that dealer almost 65 percent of the time when they’re ready to purchase a different vehicle. If your certified program allows a disappearing deductible – which brings customers back to your facility – it has the dual benefit of creating more profit in service and selling more cars.
The “Wait, what?” answer for service is, “We are going to cover people for a longer time, giving them a better car-buying experience and creating at least two new profit opportunities.”
Getting your team together early and laying out the need awareness with “I wonder” starts a collective discussion that leads to the conclusion you desire.
For example: I wonder what would be the result if we developed a reputation for giving used car customers a new car experience. I wonder how we could accomplish that.
When the staff is involved all the way from “I wonder” to program inception, it is hard for them not to be engaged.
The next question in Ryan’s process is: “Couldn’t we at least…?” Couldn’t we at least look into a program? Couldn’t we at least lay out the parameters of what this would look like?
Once that is opened, you get past the original disagreements and dissenters and move on to mapping out a process, even if your staff is not entirely sure where you are going to finish with it.
Next is: How can I help?
John Kennedy stirred the country by saying, “Ask not what your country can do for you. Ask what you can do for your country. Not what America will do for you, but what together we can do.”
In this case, everybody needs to ask, “How can I help?”
It’s instinctive in humans to help out. There is a human function called the rule of psychological reciprocity, which means we treat others as they treat us. Asking the staff for help creates a desire for them to put an effort into the final decision. It gives them a feeling of importance and empowers them by recognizing their expertise.
The dealer asking how he or she can help and the staff asking themselves about their path to success and how can they play a vital part in it can lead those who buy-in to do extraordinary things to ensure the continued success and viability of the program.
The final question is, “What truly matters?”
“This is the question,” Ryan explained, “that gets to the heart of your own beliefs and convictions.”
Allowing the staff to participate in the certified pre-owned journey to its conclusion is the way to capture the future of your market – because CPO is the future of the used automobile market.
Your staff is likely to adopt the program as theirs and as imperative to their future. When your staff shares what truly matters and what is your heart’s desire, your ideologically synchronized management team becomes a powerful force in the market place.
So how do you set yourself up to win on Sunday by the way you play on Thursday?
First, get the right program – one that pays retail parts and labor, and has an unremitting drive for customer service as shown by Better Business Bureau and other monitoring agencies.
Quite simply, you have to have a program to compete with factory certification programs. The strength of the factory programs is name association with the manufacturer of the automobiles being purchased. That is tough to overcome.
But by using a nationally known entity backed by the same organization that operates the OEM’s programs, you can give your program credibility.
Once you have the right program, set your dealership up to succeed by assembling your key people – managers, finance, service, used vehicle buyers and the person who will be doing the certified vehicle inspections – and spending quality time together debating and analyzing the five questions: “Wait, what?,” “I wonder,” “Couldn’t we at least…?,” “How can I help?,” and, “What truly matters?”
When you arrive at the conclusion that the success of everyone and the dealership is tied to capturing the future, and the CPO program you’ve picked will help in accomplishing that goal, you’ll have developed a program that will continue paying dividends well into the future – and a team dedicated to keeping the process going.
Warrantech 