BenchMarker Issue 4 2012 -- Indonesia Edition

A simply powerful conclusion emerges from the PROBE feature in this issue of BenchMarker: real business success in a retail automotive enterprise has to be underpinned by an infallible capacity to achieve exceptional customer satisfaction. Paddy O’Brien, who makes this particular observation, and Greg Strydom, offer this and other best practice insights which regularly emerge from the wide spread of performance group sessions held across Sewells Group markets in Asia Pacific and Africa, and some other countries alongside. Over 19 years, the Sewells performance group initiative has become a key element of heightening the business performance of motor retailers in whole countries. It’s nice to realise these improved returns stem from thousands of motorists who really like being so well looked after.

Indonesia heads for record salesWith media focus on the lingering EU ‘debt crunch’ and a looming ‘fiscal cliff’ in the United States, one tends to feel many things around us are threatening. In Indonesia our car market seems headed towards record levels – a predicted two million a year by the end of the decade. These ups and downs (and the changes that go with them) are continual in our business where nothing stays the same for very long. Contrast is part of the package; just as it is in other sectors of the economy. In our automotive retail though, one must constantly be impressed by the capacity of motor dealers to come up with the responses, every time. If you want to find ways to further push aside any gloom, take a look at some of the positives reflected in this issue: Derik Scorer, who is chairman of the national motor dealers’ association (NADA) in South Africa, describes some of the unusual pricing and cost trends which have emerged there. For instance: in that market’s new vehicle sector in 2012 real monthly costs of vehicle ownership have been reducing. He explains on page 11, how frenetic competitiveness in the market, lower lending rates, longer repayment periods, and many other factors have contributed to this anomaly. But, of course, it isn’t all good news: there is a negative impact on the used car sector, and the down-cost spiral in new cars there will not last - rising unit prices will become a major challenge in 2013 and beyond.

Look further and elsewhere in the world, at the phenomenon of our industry’s participation in social media where everything moves in mega-shifts. Now there are even conferences devoted to nothing else – our social media guru, Dimitri Kotov, attended a ‘digital dealer’ gathering in Las Vegas and brings us excerpts. His list of ‘take-aways’ is on page 5. Add to that our articles out of the United Kingdom which highlight how more and more budget is being apportioned to honing the Internet profile of the motor dealer down the road. Then, as prime proof of our capacity for finding solutions, spend some time on our PROBE feature on pages eight and nine, where close to 900 motor dealers across our part of the globe each attend between two and four performance group sessions each year doing just that: diligently scrutinising each group’s businesses to chase down the changes and the challenges and find the appropriate best practice responses to them.

M U S T R E A D SMeasure your performance: A specially compiled table of key industry indicators in eight countries ………………………………… 2Forecast: Indonesian market will reach two million by 2020……………………………………… 3Special contributor Dimitri Kotovlooks at ‘Five Mistakes to Avoid on Facebook’ …… 4Global motor dealers staged the 2012 Digital Dealer Conference in Las Vegas. Read some take-aways ………………………… 5Get in with the locals, urges Roger Whalley from the UK ………………………………………… 6Shoot and show for Audi customers ……… 7Sewells performance groups are targeted on improving business performances. Here’s how they do it …………………………… 8Seven steps to used car profits …………… 10Real motoring costs go down ……………… 11There is the vital importance of VISION in bringing a plan to fruition, says Paddy O’Brien ……………………………………………… 12

1

Roselle Pantastico, MD Sewells Group Indonesia.

BenchmarkerSharing beSt practice StrategieS with global motor dealerS

INDONESIA ISSuE 4 / 2012

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PrOBeA S P R E A D O F E S S E N T I A L R E A D I N G BENCHMARKER IS GLOBAL

Presently there are five different quarterly editions of BenchMarker focused on sharing best practice strategies in the numerous markets where Sewells Group operates. There are digital editions of issue 4/2012 for email and Web distribution to dealers and OEM executives in China, India, Thailand, Indonesia and the Philippines and a printed copy South African edition. Each of these different editions has a core of features and articles which are common to all, and some pages which are localised to suit the different areas of distribution.

Global Managing Editor - Dennis Anderson ([email protected])Edition Managing Editors:

Australia – David Lowrie ([email protected])China – Chee Tuck Yap ([email protected])India – Jayesh Jagasia ([email protected])

Thailand – Supakorn Sookpunya ([email protected]) Indonesia – Roselle Pantastico ([email protected])

South Africa – Tania Barlow ([email protected]) Edited by Robin Emslie ([email protected])

1sewellsgroup.com AUSTRALIA - NEW ZEALAND - SOUTH AFRICA - INDONESIA - THAILAND - CHINA - INDIA in

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sewellsgroup.com AUSTRALIA - NEW ZEALAND - SOUTH AFRICA - INDONESIA - THAILAND - CHINA - INDIA in

Key industry benchmarksKey industry indicatorsThis specially compiled table of key indicators published here are guidelines to franchised motor dealers of performance in the listed countries. These have been assembled by the Sewells Group operations in each of the countries and represent current ‘Best Practice’ norms in each of these countries. Each line item is an independent key indicator. Sewells believes in measurement as a critical business management practice – if you measure your performance and can compare it to an industry indicator you are in a position to evaluate and potentially improve that area of your business. To help

you towards achieving this we have provided a column to record your own performance numbers. You will then be able to create a collective discussion with your management team around why your performance should be better than the given indicator, and delve into the factors which might be restricting your business from achieving these levels of performance. Finally when conclusions are reached, the key points of these discussions can then be converted into actions for the management team with clearly defined targets to be achieved.

Dennis Anderson [email protected]

Australia New Zealand China India South

Africa Indonesia Phillipines Thailand Your Figures

Dealership Overall Total Dealership Gross Profit % of SalesTotal Expenses % of TDGPPBT % of SalesAsset Activity

Return on Average Operational Assets

New Vehicle Department Total New Gross Profit % of Sales PBT % of SalesTotal Expenses % of TNGPInventory Days Supply

Used Vehicle Department Total Used Gross Profit % TUVSPBT % of TUVSTotal Expenses % of TUGPInventory Days Supply

Parts Department Total Parts Gross Profit % of TPSPBT % of TPSTotal Expenses % of TPGPParts Inventory days

Service Department Total Labour Gross Profit % of TLSTotal Service G.P. as a % of TSSPBT % of TSSTotal Expenses % of TSGP

Body Shop Department Total Labour Gross Profit % of TBSTotal Bodyshop G.P. as a % of TBSPBT % of TBSTotal Expenses % of TBGP

SewellS groUp KeY indicatorS – JUlY 2012

14.8% 14.3% 8.7% 10.5% 15.6% 12.5% 12.3% 7.5%76.3% 81.3% 77.6% 71.0% 74.0% 72.8% 79.5% 62.0%3.5% 2.8% 1.9% 3.0% 3.7% 3.18% 2.6% 3.9%6.5 5.6 4.4 5.2 7.8 4.8 4.5 6.8

21.2% 15.2% 8.6% 14.0% 23.6% 11.5% 26.7%

8.5% 7.8% 4.8% 4.8% 8.5% 8.5% 4.5% 5.8%0.8% 0.4% 0.1% 0.5% 0.8% 0.9% 0.9% 2.8%87.5% 94.5% 99.1% 87.2% 89.4% 89.0% 82.3% 59.0%55 48 58 34 31 45 28 21

10.5% 10.8% 7.6% 10.2% 8.7% 0.9% 0.8% 0.8% 1.1% 0.8% 86.3% 86.5% 88.1% 71.5% 87.0% 65 40 45 37 31

25% 26.5% 26.9% 17.3% 28.6% 21.0% 32.2% 21.5%13.2% 11.3% 15.3% 9.2% 10.7% 9.8% 18.6% 13.8%60.5% 76.8% 63.4% 49.4% 59.6% 47.0% 43.6% 36.0%50 47 63 45 21 63 65 69

77.5% 70.3% 79.5% 88.3% 84.1% 80.2% 82.3% 68.0%65% 58.0% 77.5% 83.9% 75.3% 72.3% 65.6% 53.8%12.5% 12.4% 11.6% 30.7% 15.0% 21.3% 4.3% 3.1%79.3% 79.3% 83.5% 60.9% 79.1% 68.4% 92.5% 94.0%

77.4% 86.1% 75.6% 82.5% 30.6% 44.4% 11.7% 26.3%

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Selling 2m a year by 2020

This October the Indonesian car market showed yet another increase – for the ninth consecutive month. Year-to-date sales were up 22.8% on 2011 and the country moved passed Mexico to become the 15th largest world car market and has the 2nd biggest car market in the ASEAN countries, according to a Focus2move report. The Indonesian economy ‘… continues its dizzying ascent but in spite of these record setting sales only 4% of the population has a car, a relatively low figure, considering the total population of 240 million people. By the end of this decade the industry minister forecasts annual sales of two million cars.’

Focus2move and other observers however also point to a looming challenge: providing an improved road system. In August this year the Indonesian President Susilo Bambang Yudhoyono signed into law a Land Acquisition Bill which has spent years going though the legislative process. With it the government could more easily compel landowners to sell up, so it would be possible to build more highways across the main islands of Java and Sumatra.A local newspaper drew a parallel between the traffic and the market saying: ‘The traffic delays may be irksome, but they are symptoms of a boom. Indonesians now buy more cars than any other south-

east Asian nation, having overtaken Thailand last year. They also bought 8m motorcycles in 2011, a number that could rise to 9m this year. Small wonder carmakers are moving in. Suzuki, Toyota, Nissan, Honda, GM, Daihatsu and BMW are all either expanding operations in Indonesia or starting new ones. Since the beginning of 2011 these seven companies have announced investments in Indonesia totalling $2.2 billion, a record. The report quotes Michael Dunne, author of “American Wheels, Chinese Roads: The Story of General Motors in China” as saying: “China and Indonesia are the two hottest markets in Asia right now.”

Ford Motor Indonesia had high impact on the recent Indonesia

International Motor Show (IIMS) with the highly successful launch of the

all-new Ford Focus, and by winning the Miss Motor Show competition

(see line-up and inset pictures on this page).


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Mistake #1 – Too Wordy

Facebook users prefer to consume information from the friends and businesses they’ve subscribed to on Facebook through succinct messages. By keeping posts between 100 and 200

characters (less than three lines of text) dealers will see about 60% more likes, comments and shares compared to posts greater than 250 characters. Posts including a photo album, a picture or a video generate 180%, 120% and 100% more engagement than the average post, so include them as often as possible in your posts as well.

Mistake #2 – No Consistency

Consistency is the key to success on Facebook. Post at least five times a week, and create a schedule and a regular rhythm for your postings and consider posting at specific times when engagement is highest (evenings in most regions).

Mistake #3 – Irrelevant

ContentIf you’re going to publish every car you have in your showroom on your Facebook Page, you’re doing it wrong. Instead, post content that shows you know your audience by making reference to

community events, such as local sporting clubs you may sponsor. When posting to your page, your message will reach people who are familiar with your dealership, so insider content can make them feel in the know. When you do post cars for sale, use the ‘Facebook Offers’ feature and provide your Facebook community with exclusive offers.

Mistake #4 – Lack of Value

Members subscribed to your Facebook Page are two times more likely to purchase a car from your dealership than non-subscribers, so reward them for their loyalty by posting maintenance tips and answers to frequently asked questions.

Mistake #5 – No Interaction

Let your subscribers know how to engage with your content by including a ‘call to action’. Should they ‘like’ the post? Share with friends? Comment? You tell them. Additionally, a great way to encourage more engagement is to ask open-ended questions and make use of Facebook’s ‘Questions’ feature.

*Dimitri Kotov* Better Use Of Social Media

5MISTAKES

Social media manager Dimitri Kotov in Melbourne works closely with motor dealerships around Australia and elsewhere showing

them better uses of social media to increase their brand awareness, customer loyalty and sales. He is now a regular columnist contributor to all editions of Sewells Group’s BenchMarker publication. In this submission he gives the Five Mistakes to Avoid on Facebook, and news from a recent digital dealer gathering in Las Vegas.

Follow Sewells Group on social media:Facebook: www.facebook.com/sewellsgroupTwitter: www.twitter.com/sewellsgroupLinkein: www.linkedin.com/company/sewells-group

to avoid on FacebookDealers certainly know what Facebook is; after all, in most regions including South Africa, Australia and India, Facebook is the second most visited site after Google. There are lots of things that dealers can publish on their Facebook Page, and there are no strict rules. Ultimately, one of my favourite ways to learn is from other people’s mistakes. So here I’ve compiled the five most common mistakes I see dealerships making when it comes to publishing on their Facebook page. Hopefully, you’ll learn from them:


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Takeaways from DD in Las VegasIn October Dimitri Kotov attended the action-packed Digital Dealer 2012 Conference in Las Vegas, United States, and submitted this list of takeaway highlights for BenchMarker readers:

n The customer lifecycle has shifted, car buyers are now spending more time researching online before making initial contact with dealership (11 hours spent researching and reading reviews on average).

n Dealerships are outsourcing to vendors who are using automated software to re-target in-market buyers at various stages of the life cycle.

n Dealers are acutely aware of how online reputation affects sales and are outsourcing to vendors to help with reputation management (positive review generation, monitoring and negative review notifications).

n Websites such as DealerRater, Yelp and Google Reviews are forcing better service and offerings from dealers.

n Advances in digital advertising now allow for more targeted forms of advertising throughout the life cycle for higher ROI.

n Use of customer data is becoming more sophisticated, with dealers using automated software to help with retention.

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Get in with the locals

Local business people are often overlooked as serious prospects because they are not exactly retail and they’re not fleet customers either. But even in large cities there will be pockets of private business people and in the rural towns there are many folk on the High Street who would welcome regular contact from a friendly local dealership.One clearly can’t expect to walk straight in and get an order. It can be a long job and sales execs can become demotivated if they don’t get an instant ‘yes’. It helps if you allocate a group of prospects to each retail sales exec, and make sure they are the main (perhaps the only) point of contact with the dealership. Allocate a specific day for your sales execs to visit their prospects. Once a month might be too frequent for some potential customers in some areas. It depends on how they react at your initial meeting. The intuitive sales exec should be able to pick up the vibes from the prospect and schedule them in to a regular pattern of calls.

Finding your prospectsThe first few visits should be purely qualification and getting to know them. What cars or vans do they run, how often do they change, what is their annual mileage, what goods do they carry, what sort of journeys, and so on. Once you have started to build a rapport you begin to increase the selling activity. It could start with the

simple offer of a loan vehicle for a couple of days, or a ‘special’ service offer – e.g. priority bookings for service visits, special discounted rates or arranging for collection and delivery.Start by building a dossier on local business prospects. Find out who owns or manages

the business, how many people they employ and, if it’s not immediately obvious, what exactly do they do. A simple walk around town is a good way to start. Create an up-to-date prospect list with details of the business owner and decision maker, who may be two different people. I have found a very useful source of small business user details is often the local church or village magazine. In fact I have always tried to make sure my company has a substantial presence in these magazines. They are usually low cost and do influence local people. If your ad appears alongside the butcher and baker then your initial contact with them will be that much easier.They won’t all be useful to you, and you can discard the ones who don’t have local ownership initially. They might be of use in the future, but for the first part of the project you need the real locals.Don’t though, just make initial contact with your newfound prospects and then ask them to give you their business. You need to give them something first, so that they then become interested in you. What tends to interest business people is the opportunity to meet colleagues and competitors in a relaxed and friendly way, with no apparent pressure on them to give something back. Recently there has been a trend for thinking that breakfast meetings are the answer. I’m not sure they are. For many executives, the mornings are an important time for getting things done.

Evening eventI have found that a casual evening event with low-key catering works well, and can build strong bridges. The best time is early evening, before they have gone home and put their feet up. It’s very hard to get folk out after that. Midday is the hardest time, but I have had a lot of success with meetings starting at about 18.30 and ending no later than 20.00. With the offer of light refreshments and an interesting reason for the meeting, many of your prospects will attend.It won’t be the prospect of viewing your latest models that tempts them, however. Model launches rarely work. It needs to be more of a business seminar, from which your guests can glean some help or advice. Maybe one of your local lawyers,

accountants, bankers or the Chamber of Commerce could help. I held an event recently where we invited the local council Road Safety Officer to give a presentation. Another one for example, used the local police for a talk on security of premises andprotection against theft.

All of these experts would, I am sure, give their time for free, so your only cost would be refreshments. People are not expecting a lavish spread at this time of day, and a few sandwiches and snacks will do. All your staff should attend as it’s not just a car sales opportunity. And don’t forget to send your guests away with a goodie bag, not just a sales brochure. Maybe a car care kit and a discount voucher for a service. It’s surprising what people will appreciate, if they think it’s free.

Doesn’t end thereIf the event is a success, it needs to be continued at fairly regular intervals, maybe every three months so that it becomes something that people look forward to. And finally, following the first event, one of your sales staff should contact each person who attended to thank them for their time. Maybe this is when your staff could start actively selling, but don’t push the hard sell too soon.The approach to the sale has also got to be tailored. Most small business owners and traders will have cash flow very high on their agenda right now and would probably welcome a sales proposal that takes the utilisation of their cash into account. Leases and low start-up financial packages should be the first consideration.

Roger Whalley has more than 20 years experience of running dealerships in the UK. Writing in Auto Retail Manager magazine, he gives some sage advice on getting to know the business people in your area.

‘… once you have started to build a rapport you

begin to increase the selling activity…’

‘… all your staff

should attend;

it’s not just a car

sales opportunity.

And don’t forget

the “goodie bag”…’

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Shoot and show for Audi customers

Audi technicians in the UK are now equipped with ‘Audi Cams’ which enable them to take a video of any potential problems to their customers, according to a report in the magazine, Auto Retail Manager.They use the hand-held video cameras to film any problem they may identify during a vehicle inspection. These could include things like brake pad wear or worn tyre tread depth. The video can then be sent to the customer’s computer or smartphone. The

video is incorporated into the customer’s dedicated web page, and a secure link to that page is then emailed to the customer.The page contains the relevant clips and grades each problem as ‘urgent’, ‘advisory’ or ‘for info’. It then gives a VAT-inclusive quote for each job, along with action buttons to either authorise the centre to proceed, to reject the work, to request a call to discuss it. Once the customer has put all the jobs he or she wants the retailer to go ahead

with into the ‘shopping basket’, they can authorise them to proceed with the work.Another innovation of the ‘Audi Cam’ is that it gives customers audio-visual access to their cars from the reception area as they are being worked on by technicians who are equipped with head-mounted cameras and audio links.The Audi Cam is one of the outcomes of the Direct Reception technology which Audi rolled out across its network last year.

Action points Ask yourself some questions: Look at all your social media initiatives: Do they all tie together? If you yourself don’t have the expertise in-house, consider hiring someone who knows what that should look like and harmonise your digital channels. Do you (yes, you) know what social media is all about? Have you set some goals? It all boils down to being bothered about this new way of doing business. Buy some training and learn some simple tricks to stir up interest. To be really effective, you need ideas. You need to plan when they’ll appear and how you will share them.Finally: Social media is not rocket science. Set time aside. Set cash aside. Set some goals and have fun!

Rising social media marketing in US Just a year ago, a survey found that only 12% of US small and medium businesses considered social media marketing a must, with half of respondents not using it at all. The same survey a year later, has found social media accounting for at least 25% of marketing budgets at 77% of these same companies.Regular Auto Retail Manager columnist John Glynn writing in the latest issue points out that with these huge changes taking place quickly, social media is what businesses say they need most help with. He goes on to dispel some social media myths: ‘If you’re spending money on social media while uncertain of its value or purpose, here are my top three myths:

1. Social media is freeNo chance. In my experience, many social media customers invest a minimum of £400

a month in online marketing, not including advertising. Typically, this buys daily Facebook and Twitter interaction, and up to five bespoke news stories, generated by at least one dealership visit in the month. If you want more news than this, you need more budget.

2. Youngsters are the best at working these channelsWould you send a teenager or recent graduate to chair a critical business meeting at manufacturer level? It’s the same as handing social media to a youngster. I speak from experience when advising against teenagers to max out social potential: it’s a lot of pressure they are not equipped to deal with.Social media is business positioning to win a bigger audience, so how will prospective customers respond to a string of mis-spelled X-Factor posts?

Use someone who knows how to write, who understands your existing customers and where to find new ones.

3. It is solely digitalList every medium your business uses to communicate with customers. Websites, email lists and social media pages are obvious linkable strands, but what about the rest? Online is the digital incarnation of your physical dealership, so tie the two together.n Put a Facebook check-in logo by the door.n Put ‘like’ thumbs in the windscreens of cars

for sale.n Put your Facebook and Twitter addresses

on business cards, sales contracts, service receipts, etc.

Anything and everything that happens in your dealership can inform your social media, but listen to what your business is saying it before it goes online.

Benchmarker


For more than 19 years – first in South Africa and now across a wide spread of countries from Australia and New Zealand through the Asia Pacific region to Africa and the Middle East – Sewells has facilitated its performance groups with targeted objectives primarily focused on improving the business performance of automotive retail dealers. It is a remarkably successful concept with participation now of the top management people from close to 900 motor dealer operations. For this issue, BenchMarker’s PROBE delves into some of the outcomes which emerge from the two to four annual performance group gatherings of those motor retail executives finding best practice solutions to the challenges on the path to success.

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PrOBeSewells Performance Groups

How many; how they work

One of the key areas of the ongoing stretch by Sewells Group towards continually improving the business performance of motor dealers throughout the areas of its operation, is it’s facilitation on a wide scale of its world class performance group concept. Currently there are active performance groups in each of the six different countries where Sewells Group has hub operations, as well as in the countries making up the ASEAN grouping including the Middle East. A total of 885 dealerships participate in between two and four performance group sessions each year. Growth of the concept remains an indicative factor of its success: last year’s PG count of 809 dealerships grew by nine percent to this year’s 885. A pointer to the attraction of the performance groups for dealers in the dynamically growing newer markets is that in China the PG dealership count moved up 25 percent – from 234 to 292 - and now heads the full 2012 list, which is (with 2011 in brackets):

China 292 (234)South Africa 275 (255)Australia 207 (207)India 57 (54)Thailand 23 (23)ASEAN 31 (36)Total 885 (809)

Making this phenomenon real, is a group of 15 to 20 facilitators, each with practised and precise skills in driving the discussions and looking for maximum outputs for all participators at each sitting. The overall objective always is to get the group to identify the financial drivers, processes and practices which lead to superior business results. Always using the relevant Sewells-produced benchmarks, leading best practices are identified; dealership processes are assessed and analysed in an action-learning environment in order to understand and relate to the high levels of workplace performance required for superior outcomes. The group sessions themselves are designed to be engaging and interactive and mostly centre round the real problems, challenges and rewards being encountered by member

dealers. Participants are encouraged to openly exchange and articulate ideas which then assist in enhancing performance and identifying as yet untapped sources of additional profit. Dealers emerge from the sessions and return to their businesses with ready-made solutions and innovations which are immediately applicable. One of Sewells Group’s often quoted core beliefs is that successful dealers are those who consistently apply a proven management model. The Sewells MRA™ model is used as the key for this in the performance group sessions as a high level financial and performance analysis discipline which is used to bring the applicable and sometimes quite detailed factors to the table for discussion and then embark on the probe for corrections and broader solutions.Sewells MRA™ promotes improved retail management through the ‘Mix’, the ‘Retained’, and the ‘Activity’ and through these the facilitators and the group members are accurately able to define the processes and competencies which might require improvement, and offer support to address these gaps.

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– Paddy O’Brien

‘Superb customer service = a robust platform for exceptional business performance’

The sturdiest and most robust platform for exceptional retail motor dealer performance is its capacity to consistently deliver superb customer service at all levels of the business, says Paddy O’Brien, chairman of the globally operating Sewells Group.‘There is no doubt that delivering exemplary service to your customers should always be a prime business objective for those wanting to succeed in motor retail anywhere in the world. Those thoroughly satisfied customers are ecstatic and – more importantly – they become the disciples of the business going forward.’This was one of a number of insights to emerge from our discussions with Paddy O’Brien and Greg Strydom for this special BenchMarker PROBE feature looking at the way in which Sewells successfully facilitates its Performance Group initiative throughout its operational areas (Asia Pacific and Africa region), and even in some instances beyond them. (See drop in panel below)Both men referred to the distinctive and interesting market-related variations inside the group sessions taking place in the different countries. Paddy talks about the scale of varying evolutions taking place in meetings where the dealers come from markets which are more developed and those where retail automotive is on an earlier part of a maturation curve: Paddy: ‘In the more developed countries it’s always a case of eking out every extra bit of wisdom from the best practice experiences being brought to the table and sharing these out among the rest of the group as you stretch for better balance in the businesses.‘In the developing countries it’s really a continual learning experience for all as each dealer starts to realise more and more about what can be achieved in a better balanced modern motor dealership business. There’s an atmosphere of a cheer about to break out as each one puts a foot on the next step of the discovery curve.’ Across the spectrum, he says, the performance group atmosphere – the experience of each meeting – has its rewards for all participators, including the facilitators.Greg emphasised the importance of good financial reporting as an essential input for the groups and the variances of the methods of reporting from country to country.‘You also work around the differences of

single- and multiple-franchise structures, and different kinds of business empires involved. In some countries motor retail is just one part of a substantial business group with a spread of interest across a number of other consumer and industrial sectors. In other countries you have major groups which operate large numbers of dealerships across a full spectrum of automotive brands, all in the motor industry. The quality of discussion and focus on the basics doesn’t change much however: there’s a commitment to business performance improvement throughout.’Both spent time talking about the rewards of participation in the concept: Paddy: ‘When you sit in and witness a muscular and fit dealership growing still further to the point where it is firing dynamically and in perfect balance on all cylinders – that’s when there is real payback for the healthy and vigorous intellect and effort which has contributed to that outcome. ‘Also in a developing market where the dealers are perhaps skinnier and have less muscle the reward comes when you see them disciplining themselves not to succumb to the pressure of making each and every sale and sometimes denying themselves (or being blinded) to the other opportunities of gaining absorption

options for F&I and used cars.’Greg enjoys each group’s excitement when a solution is first glimpsed, and then moves through to a successful outcome: ‘Our MRA™ model has the discipline of getting everyone (in the group) onto the same page and drives a lot of the discussion and then everyone starts to see a business starting to move in the right direction. There is an important PG dynamic which is to see new people and new business join a group and then watch them start to mature and grow into their roles.’Another aspect is how the Group activities highlight and bring focus to the key challenges in the business.Greg: ‘There are cyclical tensions at the interface between dealers and their manufacturers; the differing expectations from franchise to franchise; and the concerns about stocking levels whatever the different sizes of the businesses may be. ‘Also, the route to success is not necessarily a simple, straight line. In the different groups we come across different levels of investment, different size and number of facilities, different volumes… but the issues usually get well identified and resolved as more and more best practice examples get brought to the table. When everyone joins the same learning curve, the excitement and satisfaction is palpable.’

Paddy O’Brien, chairman of Sewells Group, and Greg Strydom, Sewells Group Head of Client Solutions, gave their inputs for this feature in the midst of busy schedules. Paddy was speaking from Abu Dhabi airport whilst in transit to Australia after facilitating performance and development groups in South Africa late in November. Greg Strydom was back in Melbourne, having returned from a business visit to Japan as well as participating in a facilitators’ workshop in Johannesburg. Paddy was scheduled to return to South Africa (via New Delhi and Beirut) where he was to host a party of 10 leading India dealers on a four-day study tour in mid-December. Since he introduced the Sewells format Performance Group concept in South Africa 19 years ago, Paddy has facilitated groups in at least 12 different countries – Australia, New Zealand, Philippines, China, India, Vietnam, Malaysia, Singapore, Saudi Arabia, Lebanon, Jordan and South Africa.Greg has held his Performance Group oversight position for the past five years after moving to Australia from South Africa 11 years ago.

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Seven steps to used-car profitsAdrian Lewis, used car director in the UK’s Marshall Motor Group outlined his seven ‘Ps for used car profitability’ at an industry presentation, reported in a recent issue of Auto Retail Manager magazine.

The Seven P’s he listed were:PropositionProfilePurchasingPreparationPromotionPresentationProcess

n PropositionWhat is your current proposition in the used car marketplace? How does your current stock profile, pricing and promotion match that proposition? And do your used car sales people understand it?By identify the USPs of your business you can play to your own strengths – not those of your competitors.

n ProfileIdentify where to buy the stock that fits your proposition. Be single minded and only buy cars that fit your proposition. Stock the cars that cover the range of your proposition, to

widen your appeal to the marketplace, and research current stock profile trends to make sure you are staying in the right area.

n PurchasingRemember profit is made when you buy the car, not when you sell it. Inspect all purchases and appraise them accurately. Price your cars with online customers in mind and check your prices daily. You don’t have to be the cheapest, but you do have to be competitive.

n PreparationDo your preparation fast and do it well. Prepare all cars within three days and to exacting standards. Good quality preparation will maximise the profit opportunity and build your reputation.

n PromotionCreate a strong advertising campaign that represents your used car proposition and reflects your value message.Promote your campaign across online and offline channels, continuously. Don’t use just one or the other - use both. In traditional media, advertise the cars that you know customers want to buy at a price that is competitive, not cars that you need to sell at a price that isn’t!

Stick with it, don’t change your used car advertising every week! Promote the same campaign message clearly on your forecourt, to build credibility of your brand message with the consumer. Ensure sales teams fully understand the campaign promotion, so that they can also continue to build credibility.

n PresentationWalk the forecourt every day, and take your sales teams with you – get to know your stock like you know your family. All cars should be ready to demo. If a car isn’t prepared to a standard that means you wouldn’t sell it to your family, it shouldn’t be on display. Also insert sales sheets in every car – for customers who want to view more details about a car while they are in your dealership, without speaking to a salesperson.

n ProcessYou must have the processes in place to deal with all footfall enquiries. Have you got a process in place to deal with Internet enquiries as well? Make sure your proposition and the promotion are crystal clear to your sales teams. Perhaps most importantly: Make sure your sales teams know how to make profit from your used car strategy.

There are real paybacks from follow-ups

One way of achieving this all-important follow-up is by pre-programmed emails, which are distributed via highly effective eCRM systems such as SmartMail. And our intro panel is based on analysis of dealership sales stats over a three-year period.Data captureBut it will only happen if the sales staff dealing with enquiries from potential customers are vigilant with their data capture. Good basic sales training will tell you that maintaining contact with the customer – especially through those few early interactions – is critical if you’re to make the sale. The team at Marketing Delivery have developed an automated process for customer contact that’s been refined over the years to deliver outstanding results for

dealerships.Communications generated by SmartMail are timely, relevant and carefully constructed to encourage a response by delivering the right message at the right time. Emails and SMS messages sent the morning after the original enquiry, with others sent a few days later, give prospects the opportunity to reply with their thoughts – without the perceived ‘hard sell’ of a phone call from the salesperson.They often reply with very detailed thoughts and requirements, providing invaluable further information for the sales team to enable deals to be changed and cars sourced – and salespeople are coached to improve conversion.Everyday technologySmartMail and other similar systems also use

the technology that your customers are using every day. Email messages are compatible with smartphones and tablet devices, and the content is designed in such a way that it is visually engaging and intuitive. Text messages include links to enable instant clicks through to more detailed information.We know that prospects today are generally much further down the line with their buying decision by the time they visit a dealership, so you have a shorter window within which to engage and convert them than ever before. SmartMail and similar systems can’t replace face-to-face contact and the personal relationships you can build up with customers, but they do become very effective tools to aid the process.

A prospect is seven times more likely to buy from a dealership if they have been followed up within 72 hours of their first visit says Jeremy Evans, the MD of Marketing Delivery, a UK based dealer marketing specialist, writing in Auto Retail Manager.

Benchmarker


Affordability is key says NADA Chairman

Derik Scorer:‘… it will be

a determining factor in buying decisions over the next few

years…’

NATIONAL AUTOMOBILE DEALERS’ ASSOCIATION

The proliferation of brands, models and derivatives available in the RSA market is concerning and unsustainable, Derik Scorer told BenchMarker as he entered his second term as chairman of the National Automobile Dealers’ Association (NADA) of South Africa. ‘Ultimately there is the possibility of the sales throughput per outlet falling in a flat market and this could threaten ongoing dealer viability,’ says Derik.He also pointed to the high levels of personal debt currently afflicting consumers in South Africa as a further cause for concern.‘Affordability of vehicle purchases is going to become a determining factor in buying decisions over the next few years.’

Healthy modelHowever on the other side of the coin the way in which OEM importers and automotive retailers remained positive and innovative in their approach to the market and the diversity of client needs, supports a healthy model for the industry and consumers:‘Forecasting in our market as far ahead as a decade – especially amidst the present economic and political uncertainties – is a risky science. However it’s my personal belief that South Africa will continue to see moderate growth in new vehicle sales

subdued only by affordability concerns as new vehicle prices will tend to rise on a weaker rand currency.’Earlier Derik said that new vehicle sales by the end of 2012 would show growth of at least 10% over 2011.

Real costs going downOne of the characteristics of 2012 was the fact that real monthly costs of vehicle ownership had been reducing. ‘There has been further negative real growth in new car pricing this year as increases have remained at levels below the South African inflation rate.‘If you combine this negative real pricing

growth trend with the record low prime lending rate; the longer financing periods; extended servicing intervals; and the widening application of service and/or maintenance plans as standard benefits, you can see this reduction in monthly ownership costs.’

Bearing the bruntThere has been a downside to this ‘affordability phenomenon’, says Derik – the used car side of the business was bearing the brunt:‘Used vehicle retail sales have been put under pressure both by the affordability factor and the intense competition in the new car market at the lower end, especially models priced below R150 000.’And next year, says Derik, the new car pricing policies themselves would come under new pressures:‘The inflationary effect of the RSA currency weakness will make new vehicle price increases unavoidable in the first quarter of 2013. This factor and other cost pressures being felt by consumers will slow the growth of new vehicle sales in 2013 and it is my expectation that the industry can look forward to new vehicle sales being no more than five percent ahead of 2012 at best.’

More bullishSome OEMs and vehicle importers were being more bullish in their forecasts for 2013, says Derik. Most dealers would be thankful for a stable economy supporting moderate growth:‘Traditionally used vehicle sales take some benefit and are buoyed upwards by new vehicle price increases – and this could well be the case in 2013.’

Benchmarker


Vision holds the key to customer retentionMy recent endeavors in the area of customer retention have served to highlight – more than ever – the vital importance of VISION in bringing a plan to fruition. Whilst most dealers show a willingness to admit to the importance of retaining their customers, and whilst many also claim to have a vision for this – the reality is that very few dealers have any idea of how they will achieve this important objective; which means at best the vision is vague. Whatever vision the dealer may claim to have anyway, it gets down to the explanation given to key personnel of exactly what that vision will achieve that seems to make the most significant difference. In a recent Forbes Magazine article on the topic, business thinker and author, Erika Andersen explains as follows:n ‘People want leaders who look beyond today. They want to have the sense that there is a master plan to carry them through whatever short-term trials and tribulations arise. They look to the leader to articulate, in a compelling way, a clear and positive future state toward which they can direct their efforts. When leaders focus only on the current crisis or this quarter’s numbers, it seems to us that they’re more interested in maintaining the status quo or protecting

themselves than in creating a successful future. People also want to see that the leader’s farsightedness is based on a deep sense of what’s necessary, right, and good for the business and the team rather than what’s simply expeditious, popular, or self-serving.’It shouldn’t then surprise that when asked to explain their dealership’s vision for customer retention, 85 percent of the 200 front-liners surveyed, commented that beyond monthly Gross and Unit targets, only CSI took on any importance for the dealer principal…and CSI is not customer retention.Now we all know that what is being measured is what gets done and so many have inadequate Dealer Management Systems that fail to provide a ‘single-view’ of the customer, let alone an accurate account of customer defections by the second and third paid services. At the same time, so few of you are acknowledging loyal customers or rewarding ‘repeat sales’ with that little extra for sales executives that ‘truly work their data bases’. No wonder customers quietly slip between brands. The lost opportunity costs if quantified would make most sit up and take notice. I know from the work we are presently doing in this area that VISION statements only flow

from the lips of those that have counted the cost of remaining with the status quo – those that have carefully decided precisely what they would like to measure and improve. Only then it seems, does Erika Andersen’s compelling reason for change emerge with clarity and purpose, particularly when supported by a measurable turnaround plan.

Paddy O’Brienfrom down Under

Stay in touch with your buyers A UK survey of the 2012 used car market show that many auto retailers are letting sales opportunities slip through their fingers because they are not keeping in touch with buyers after the sale.A report in the UK magazine, Auto Retail Manager, says the survey (of 4 000 motorists) asked used car owners if the dealerships they bought their car from keeps in touch. n This year’s results show that only 52% of used car owners had heard from their retailer since buying their car – that’s four points lower than last year’s figure of 56%. The survey also showed that customers ‘satisfaction’ rates had fallen – all in a period when business is difficult to come by.

Overall, the percentage of used car customers contacted by dealerships to find out if they were ‘satisfied with their car’ or were interested in ‘having it serviced’ both fell to their lowest point in the survey’s history. ‘Satisfaction’ calls dropped 3% to 27% while ‘servicing’ was 4% lower at 31%.

Customers know Franchised retailers selling their own makes had a much better record on customer contact than their non-franchised counterparts. Some 73% of them kept in touch with buyers compared to only 40% of independents, 57% versus 18% on servicing and 13% versus 4% to see if the owner might

be interested in ‘buying another car’.Used car buyers were quite clear what they want from franchised retailers selling the same make of car – 40% of them expect a ‘good deal on the car’, with others wanting the ‘right car at the best possible price’ and a good trade in on their old car.In addition some car owners prefer a franchised site because of their ‘friendly, helpful and professional’ staff, or because they have bought from them before.For the first time a new trend emerged – the most important factor when choosing a car was the ‘influence of family and friends’ overtaking the previous favourite of ‘personal experience’.

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