Navigating your Dealership to the Next Normal

Now you know … things can change dramatically and with very little notice. So can you.

Moving forward there is a need to rethink your revenue sources, and how to remain agile while running a profitable business. You will need to redefine what your team and infrastructure (online and physical) look like. Truth is, many of you knew change was coming, simply by watching the evolving customer expectations and preferences. We all knew that digital retailing was gaining traction, otherwise upstarts like Carvana could not have gained a toehold in the marketplace. Companies like Tesla have been selling completely online from the outset, and bit by bit the need and desire for customers to grace your doorsteps has steadily declined. Profit centres have been shifting and it has become more expensive to attract and retain your customers.

Knowing this, you were going to make some changes … very soon. Then came COVID-19 and those changes happened quickly and perhaps without all the planning and thinking you would have preferred. Now the questions you face are: Did you make the right choices to thrive in the future? Did you set your teams up for success? Do you have the right skill set and teams? Did you do enough to respond to a new normal, driven entirely by your customers’ needs? Do you even know what the new normal is?

If you answered “Yes” to all those questions, great! Stop reading here.

If you have doubts, let us talk about what you need to do next and how can you ensure you are on the right path forward. It is a brand-new marketplace and you are in it. In fact, think of yourself as a start up, perhaps decades in the making. Frame your planning to address not only today’s needs, but the future as well.

Change is difficult, change at the pace and scope we are experiencing today is overwhelming. You have undoubtedly experienced this recently. To get our arms around this, let us introduce some mental models that can help guide us all. First the CIA model:

• Control – Identify the issues or challenges you can control.
• Influence – Identify the things you can’t control but can influence.
• Accept – Identify the things you can’t control or influence and adapt accordingly.

You have already been doing this, but you may not have named it. The closure of showrooms led to an immediate surge in the development of online shopping, home test drives and delivery … all things you could control. Understanding that customers were literally afraid to be in physical contact with you, or have their car handled by your teams, you implemented sanitization and communication protocols. You weren’t able to control your customers’ fears, but you were able to influence their perception of safety.

Being deliberate about the CIA approach can help you identify quickly where you should be focused and how best to react.

The second model is an adaptation from McKinsey & Company who feel that a gradual recovery as the crisis abates will be insufficient. Companies will need to do the heavy lifting of rethinking where they generate margin and plan long term to leapfrog their competition, in their word’s companies, will need to SHAPE up.

• Start-up mindset – Bias action over research and testing over analysis. Test new approaches, check in with employees and customers frequently to spot trends and opportunities.
• Human at the core - approaches that focus on customer and employee needs and expectations. Coach, train and enable your people to deliver with new skills and capabilities.
• Accelerate of Digital, Tech & Analytics– Great teams were already using digital to understand their customers and deliver sales and service offerings and experiences. The best teams will combine their insights with new data to make better, faster connections with their customers. So must you.
• Purpose-Driven Customer Playbook – Putting customers at the centre of your business isn’t new, but it is now critical. Does your sales process control the customer or react to their needs?
• Ecosystems and adaptability – How do you find and leverage customer-centric partners to deliver outstanding experiences. What exists that doesn’t need to be built just for you? What partnerships might make sense?

The path forward requires a combination of identifying the right things to focus on, the ability to deploy and test solutions quickly and to recreate your way of doing things in profitable and sustainable ways. The future of automotive retail will not be for the faint of heart. It never has been, you know this already from your years of experience. Introduce these mindset models to your teams and encourage them to frame their thoughts, questions and actions along these lines.

Taking Action

The Now:

Assess your circumstances and reflect on the opportunity.

You may have made substantial changes to react quickly to today’s realities. This is a moment to make sure those changes were the right ones, and that they are working. It is also a time to check in with your people (employees and customers) to understand their reactions to the changes. Capturing a list now of the things that have changed, the concerns identified, and a snapshot of what other marketplace or competitive actions are having on your business is critical. This allows you to work through the CIA methodology to prioritize where your energy is best spent. It’s also a time to consider what changes are permanent versus temporary.

We encourage you to secure your base, reach out and connect with all of your existing customers and provide them with confidence that you are prepared to support their renewals, service needs and new/vehicle shopping requirements. Acknowledge that much has changed and share the changes you have made to date to keep them safe, literally and figuratively. Tell them about new processes and how you have trained your teams and invested in infrastructure, and remind them that they are important to you.

Check in with your managers. How are they adapting to the amount of change? Do they have the tools and direction they need and are they prepared to support their teams? Remember, what made them great in the past may not have included some of the tools they need to be great in the future. Your job is to provide tools and coaching to keep them motivated and motivating. Help your people find comfort in the uncertainty they are facing; done well they can focus on moving forward together.

Finally, reinforce that start-up mentality. Continually look for opportunities to test and try new approaches. This will help set you up for the ongoing task of building your approach for the new normal. Perhaps just as importantly, it will help your team rethink their roles from just execution to creating solutions.

The New Normal:

Create your plan.

For the time being you will need to consider more than one normal and this will include both your employees and customers. Think in terms of:

Sales

• No change (some online research, onsite test drive, purchase and delivery actions)
• Moderate change (online research, digital, video or home-based test drives, onsite delivery)
• Dramatic change (exclusive online research, completely digital retail process and home delivery)

Service

• No change (phone-based appointment, physical drop off, physical pick up)
• Moderate change (online appointment booking, digital, video consultation, kiosk options, some pick up and drop off)
• Dramatic change (exclusively no touch, at-home service, exclusively pick up and drop off)

The good news is that you and your team already have the skills and toolkits to serve customers who expect no change beyond new safety and sanitation protocols. It is also fair to suggest that many have begun, particularly in recent weeks, to address the moderate-change customers, and very few have prepared for those with dramatically different expectations. Those who move quickly into that void will have a huge advantage moving forward. This is the genesis of the New Normal and your opportunity to thrive in this, and future realities.

This is where the bulk of the SHAPE model we outlined above can support. You have already begun understanding the human-centric requirements like sanitization and hands-free services of your new normal process. Now is the time to focus on accelerating digital, creating a purpose-driven customer playbook and identifying an ecosystem to deliver holistic solutions to your audience.

Before we dive in, we haven’t addressed the elephant in the dealership … profitability. We are all in business to generate a profit and some of the traditional profit centres have changed. You know this best, the cost of doing the same tasks you completed last year has risen dramatically. There are some difficult, and deeply personal decisions ahead about how you run, support and staff your business.

Bottom line, without change, the way you do business today will be more expensive than in the past. Customers with more reach and access will not likely pay more for your services. Some thoughts:

• You must create a value proposition for customers that goes beyond a transaction and meaningfully makes their lives better.
• Your digital showroom is as important as the physical
• The skillsets (and toolkits) required to attract and retain customers have shifted
• Your team may not achieve the same output they had before
• You have added process and procedures to their work, adding complexity
• You have trained and coached on new safety protocols to keep everyone safe, adding time
• You have eliminated some of the time-tested process hand-offs, reducing efficiency.

As you think about the way forward, it is critical that you consider every person, every touchpoint and every dollar that enters your store through the lens of profitability in a new marketplace.

Accelerate Digital, Tech, Analytics: What do you currently use digital for? Seriously … make a list. Think about how digital is used to streamline workflows and make your team more efficient and profitable. Think about how you use digital to enhance customer experience in sales and service interactions to conquest and retain business. Think about how tech is used to cascade a virtual footprint into your marketplace and how that creates returns for you. Finally, think about how analytics are used to enhance the way you operationalize your business and people.

This is heavy lifting. The gut reaction to the COVID-19 crisis was most likely some version of “how do we get a digital retailing process in place?” That may have been the right move, but it may have masked some of the work you needed to do to better understand how your existing resources are being used for growth and retention. Do your teams use the tools they have? Do your customers need or want those solutions? How can your existing tools be applied to maximize cash flow and profitability as you stabilize your business and make long-term plans for growth?

Without question, you will need to enhance your digital toolkit but in the spirit of the CIA model do your homework first and insure you are investing wisely.

Purpose-Driven Customer Playbook: Your customer went and changed … or maybe they didn’t. Regardless, you need to do the work of creating a playbook that resonates with them and can be delivered by your people. One of the competencies your people will need most is adaptability, as you react in real time to changing customer expectations. For many, the challenge will be that their people have been trained to deliver customer experience through the lens of “control” and “process.” We think about this in terms of Moments of Trust vs. The Road to a Sale.

Connect: How do your customers want to connect with you? What are the things that matter most? What homework have they done, what have they heard and what are their concerns? Shifting your team’s mindset to making connections first, will reframe the way they approach every interaction. This old adage becomes very relevant “people don’t care how much you know, until they know how much you care.” Understanding how your customers want to connect with you, knowing that you will have no change, moderate change and dramatic change customers to consider and also … no change, moderate change and dramatic change employees to work with you need more than ever to understand your customers’ needs. They will want to connect with brands and companies that share similar values, you can’t discover that with process, it must be uncovered with curiosity.

Experience: Almost every touchpoint prior to this has been exploration. Customers are now ready to experience your brand, to test drive your store, your people, your products, and services. Get your basics nailed down and do it in today’s context. Ensure they feel safe, and that everything they experience is transparent. Ask them about their experiences to date and build on those effectively. Respect the time and energy they have invested to this point and be sure your people know the difference between a test drive and a bespoke experience.

Personalize: This is the moment to create their “my.” Everything is more connected when it is mine … my car, my test drive, my house my family … and so on. The faster your people can help your customers attach “my” to their experience, the more effectively your customers will connect to you. This creates momentum, it is easier to do business with someone you know and trust, there is less risk in sharing recommendations and there is a powerful payback when someone knows you well enough to make the right recommendations for you.

Agree: Is a powerful continuation, it is every moment that moves the transaction forward. Beginning with how you meet, the vehicle selection, the finance agreements, etc. Every moment of agreement aggregates to a mutually beneficial outcome. Creating moments to agree throughout every interaction becomes the basis for a long term and profitable relationship.

Build your customer journey around the Connect, Experience, Personalize and Agree model. Work with your teams to gather their insights and experiences and help them create and foster connections that endure. Empower them with digital and competency-based toolkits and watch them thrive.

Ecosystem: Create one. The rise of customer expectations, rapidly expanding competition from known and unknown retailers and the creation of touch-free and online experiences means you may need to leverage the skills and experience of others. Find partners in your community that can add value to your customer journey. Look to the best in your marketplace and seek to understand how and why they run their businesses they way that they do. Look for opportunities to create mutually beneficial partnerships that leverage each of your collective strengths. The time may have passed when you were the one-stop shop for every imaginable customer need. Create an ecosystem.

The Next Normal:

We are curious as well … what will the next normal be?

We know now that outside forces can create a dramatic change in our business and that from one day to the next, we can’t be certain how we will need to run our businesses. We also know that the ability to anticipate, react and shift will become a key skillset of successful stores in the future. We think bravery will be critical, not the “get into the ring” type but the kind that understands ambiguity as an opportunity, that can support teams through flux and change. We won’t ask you to attempt a guess at the next normal, we recommend that you get really good at creating a culture of anticipation, creativity and action at your stores. Here is our approach:

1. Create Urgency: Foster the mindset that change is a constant, and that future success depends on your team’s ability to quickly react and respond. Have everyone on board and everyone contributing.
2. Identify a Team: Pull together a cross-functional team to collect, share and communicate changing market conditions and influencers. Help them create a culture of insights from across the business.
3. Develop & Share a Vision: What does your business stand for today, what will it stand for in the future? How does everyone contribute to that? How does that inform the path forward?
4. Empower your People: Encourage and reward action taken that reinforces the nature of a nimble, forward-thinking customer and employee-centric business. Create a habit of service.
5. Celebrate Wins: When something goes right, when a challenge is solved, or a crisis averted … celebrate it.
6. Accelerate: As the team becomes better at identifying and solving for changes, go faster. Reach out farther, make bigger plans, entrust your teams with bigger projects. Create a future-focused team that delivers in the moment. The next time there is a monumental shift … they will be ready, and so will you.

We know … simple, not easy

Here are some questions and/or points to ponder as you assess your readiness to embark on this journey:

Culture Questions:

Does your culture:

• Support challenging the status quo?
• Encourage taking initiative?
• Help people feel safe to demonstrate vulnerability?
• Help people feel safe to voice their opinions even if it is not in agreement with the boss?
• Support listening for opinions and ideas?
• Foster Trust, Respect, Care, Love and Relationship pillars?

Competency Questions:

Teamwork Competencies:

Does your team:

• Know how to resolve conflicts effectively and positively?
• Manage confrontation to make it positive and productive?
• Have the curiosity to explore new ways of thinking and doing things?

Management Competencies:

Do your managers:

• Have the personal confidence to distribute authority among their people?
• Know to focus more on support and facilitation versus managing and directing?
• Know how to listen to understand first, and then to be understood?

Performance Indicators:

Digital:

• Do you know your key KPIs? (digital, people, experience, etc.)
• Do you measure and assess your metrics?
• Do you have objectives and action plans set to achieve them?
• Do you use this information to find development opportunities?

Variable and Fixed Operations

• You know the difference between leading and lagging indicators?
• You know what should be the leading indicators for these departments?
• How often are they used to monitor business performance?
• Is this information used to find development opportunities or to apply “performance” pressure on staff?
• Are your people involved in defining new and emerging leading indicators?

Competitive Threats

Local Market Threats:

• Do uou understand who your competitors are?
• Do you know how they approach sales and service with their customers?
• Do you understand what your differentiators are and how that attracts and retains your customers?
• Do you have a strategy in place to transform some of your “weaknesses” into strengths?
• Do you have a strategy in place to minimize the risk cause by some of your “weaknesses”?

Macro Threats:

• Are you aware of shifting marketplace solutions and approaches?
• Do you understand how these will impact your customers/business/team?
• Do you stay abreast of how the regulatory environment is shifting?
• Are you equipped to rapidly adapt as required?

The future of automotive retail is agile … you must be as well. For our part, we love the journey. We would love to create a way forward with you, to help ask some of the right questions for your circumstances, and perhaps create some answers.

All the best,

Paul & Jean Guy

[email protected]

[email protected]