#163 - Notes from 20 Group

Foreign.

Welcome to the Independent Dealer Podcast with hosts Luke Godwin and Jeff Watson. A podcast by dealers for dealers. Here we go.

Hello, everybody. Welcome to this episode of the Independent Dealer podcast. It is the end of March, end of the quarter. Yeah. We had a great, great couple of months. March is going to be absolute record for us. Our best month ever in 15 years. So pretty stoked about that. If you look out here at my sales lot, it is barren. I've started to bring in food trucks, U haul. We have parking lot sales now for Harbor Freight. I just got a lot of unused asphalt out here, so I'm trying to find out what to do with it.

Ridd it. Rid it out with you, man.

How are you guys doing?

Jeff, you know what you should do is go ahead and get another lot and that way that would be empty too.

Yeah. What's going to be awesome is today when I have to move 10 of my 20 cars to my second location, they will both look out of business. That's exciting.

Messing with you. You doing it today?

Yeah, yeah, yeah. We're open tomorrow. We got our license. Everything's in place. So I'm going to have to get some inflatable vehicles just to make it look like I have cars on the lot. I don't know if anyone has a connection.

Park them sideways and.

Yeah, yeah, they'll be gapped and we'll. I'll start bringing in stuff from the park and ride. Anyways, Luke, we just got back from 20 group, man. We've been back about three, four days. We promised this episode we would go over some of our top, top takeaways. Obviously, guys, we're not going to share with you all the secret sauce. As you know, it's quite expensive to be in a 20 group and so sure, there's some value there that you would need to join a 20 group in order to get access to. But some of our big takeaways we are going to go over today, Luke?

Yeah, I think so. Yeah. The secret sauce is not going to be revealed, but I think there's some general observations that can really help dealers that are struggling, even the ones that aren't struggling. I wouldn't classify either one of us as struggling, but, you know, there are definitely things we need to work on and ways to get better.

Right. It's absolutely true. And that's after Having gone to 20 groups for 10 years or something, I still come home with a couple page worth of notes. Most of the stuff that I do that are my big premonitions are the Things that I know I should be doing anyways. And they're just such large projects or large hurdles and they're not sexy and they're not fun and you don't want.

To take them all.

Yeah, yeah. And so they end up being on my notes again next time. And yeah, one of these days I'll dig in and actually take care of them. But, Luke, give us your number one or not your number one. What was your. One of your first takeaways you had that you can kind of help educate all of us on.

So we have been. Lex and I have been bouncing this back and forth and we lost. We lost a salesperson in December, and we decided to move someone who's already in our office, who we love and who has a great personality, great attitude, and move her to the sales department. And we approached her about it and just asked, right, hey, would you like to do this? And she said, you know, it took her a day or so. Yeah, I like this. Okay, so we did. Was not the right decision. Not that she. Not that she did a bad job. It's just not her personality. She's better at other things. And so when we saw that now it did great. It got us through the busiest part of the year. So it worked out. But what it made us see was that there's something deeper here. There's something maybe flawed with our sales process. So it's time to rethink the way we handle leads and the ability to handle leads promptly, thoroughly, and get them to the finish line. I mentioned this last week during, during our podcast. I said, and maybe I've mentioned it several times before, we don't need any more leads. We need to handle the leads we have better. I think we are missing. I think we're missing 10 deals a month because of that.

And more specifically, do you know why?

Because our volume of lead is too high for the amount of salespeople I have working them. So what will.

You're not working them in a timely manner more thoroughly.

Thoroughly and timely. So what will happen, Jeff, is, let's say, during this busy time of the year, let's say we get 15 leads a day. Okay? If we're selling cars at the dealership from walk ups and things like this, which there's not a huge amount of walk ups, they still happen, right? But if we're. If we're working walk ups, we're trying to work the leads we have, then we're trying to go back and work the leads from yesterday and the ones from last week and the ones from two weeks ago.

Your follow up.

Our follow up is garbage and our first point of contact is garbage. So we are just really behind the eight ball. We're missing deals, we're paying good money for those leads. We've got to revamp that sales process.

So you think you need a BDC agent to be available all the time to immediately respond to incoming leads via website, text message, phone call, and also follow up on yesterday's unsolds.

So if we just took. If we had one person that just. Or if we had a way to just take our approved applications and just take and work those harder, I think there's 2, 3, 4 deals a month from each salesperson that we're missing. So is it a bdc? It might be. I keep going back to that. It could be having three salespeople and defining the system a little better, or it could be having one assistant for two salespeople. So we don't know exactly how we're going to go yet because we hadn't found the person to maybe fill that role. We think that we're going to rebuild this sales process in our sales sales system to make it better.

Yeah, no, no, I think that's great. I mean, my only input for you on that and anyone else listening is, yes, obviously, look at the sales process first. You know, I know for you, Luke, sometimes your leads come in and then they end up in like some sort of a Google sheet which gets transferred to a carrier pigeon which gets sent across your office to the underwriting, and then it gets strapped to the back of a turtle and that turtle runs it back over to the sales guy. No, but seriously, look at your process. How are your leads coming in? Are you just asking for applications so that you can come in and sit in an inbox until a salesman decides to get to them? You know, are you trying to communicate via email or do they call you and then you email them back? Or they email you and then you try to call them? Like, are you respecting the communication channel that the customer wants to use? And then also, do you have time to get to it? I don't like the BDC situation. And no offense, I know we've had, you know, Sarah Hoagie on here before and the BDC thing's probably awesome for some of these guys. I just hear the horror stories of the BDC agent only motivated to set sales, set appointments, blah, blah, blah, blah. They don't really know what car's out there. They can't give any information other than just setting an appointment. So I like the sales situation. If your salesmen aren't getting to the leads in time, then you need more salesmen, in my opinion. Or you need a better follow up process so that they don't get distracted or bogged down or end up with unanswered, you know, leads at the end of the day or whatever. So I would. Look, just make sure they're either A, not lazy or B, not overwhelmed, or C, your process is so confusing that it just takes too much time.

Yeah. So one quick thing on that. So I brought in our top salesperson. She's been with us four years now. She's wonderful. I mean, she's just great. And I want to sit down with her to get her perspective on it. And she's earned that, right, Jeff. She's earned the chance to talk about it. She sold. She's gonna sell 35 cars this month, right?

Yeah.

And I said, hey, what is your. What is your thought? And I, I talked about the. Having the BDC work the leads first. And the one thing she said that just resonated to me was, Luke, I really like the relationship I build with the customer before they get to the dealership. And that would go away. So I think, I think that puts me back into hiring another salesperson is what that does. Yep.

It's so true. I mean, think about it. You have that first interaction with a, with a business, and when you start to build rapport with that salesman, you're more likely to go down there, you're more likely to send your stuff in. You're more likely to, you know, continue that communication. So we did a, we did a, an exercise in our 20 group about advertising costs and referral sources. And so one of my main, main takeaways is we don't spend enough time figuring out or at least doing our best to dig to the core of what really got that customer to take action towards our dealership. A lot of times the salesman's like, well, how'd you hear about us? And they're like, well, I just drove by your car lot. And you're like, okay. And they write it down as a drive by. And it's like, no, no, no, no, no, no. We're taking 10 seconds to try to figure out the crux of what sent this customer to our dealership. I think that, I think that getting to the core of that motivation and that attribution is more important than getting a full credit app. It's more important than verifying an address or an insurance, like, you know, we're spending what, Luke? $200, $150 or something. I don't want. Benchmark is an advertising dollar per sold car. But if you think about it, that's $150 decision that you're making. Train your salesman to just dig a little deeper. And so I'm working on some questions. I'm going to probably take like two to three questions that my salesmen are going to have to memorize that they say at that time, how'd you hear about us? What was the, you know, what motivated you to come in today? You know, do you have any friends and family that have bought from us in the past? Like, like, how do we really just narrow that down to be like, okay, sure they heard us on the radio, sure they have a friend that bought from us, sure they drove by, sure they saw us on Facebook. But how do we figure out what really made them pull the trigger, Jeff?

So Saturday I was closing deals so my salespeople could really work, you know, work their leads and things. So I took it upon myself to do that very thing. And interesting feedback. The first, the first one was, so how did you hear about us? You know, that would be. That was our opening question.

Yeah.

A friend of mine bought a car. Okay, so did they refer you? Nah, not really. I said, okay, so how'd you get here? Well, I saw your ad on tv and then I remembered that my friend had bought a car and loved it, and that's the reason I came here. So a salesperson would have just said, oh, it was a referral, right?

Yep.

Well, not really. Not really. The referral put it in the back of their head. Right. So then the second.

That wasn't even a referral. That was just I heard.

That's right, whatever.

Customer never technically referred them. Right? Never.

And so the second one, she was from a town that's 45 minutes away, and she bought a minivan. And I'm like, you've got a minivan anywhere, Right? So I said, how'd you hear about us? Well, I saw your ad on Facebook and I really liked what I saw in the ad. And so we run a 15 second video for Facebook. That's our digital marketing, right?

Yeah.

And she said, so once I saw the ad, I went to Google, and when I got to Google, I Googled your website. So I looked at your website, look at your Google reviews, and then I made a decision. Come to your dealership. So, you know, Facebook brought her to my. To Google, right? Yeah, And Google brought her to our website. And our website brought her to the dealership. So what do you count there?

That's a good question.

What do you count?

That's interesting. And to that point, I almost look at Facebook now. Like radio. Yeah, Facebook has become radio. It's harder and harder to attribute a sale directly to a Facebook action. But what Facebook does is it creates top of mind awareness. You know, you're in their newsfeed, they're seeing your videos. I don't think a lot of people are taking direct action off of it. But like you said, it was that 30, 15 second clip on Facebook that triggered them to go research you. And then your great Google reviews triggered them to actually call you.

Yeah. And that's, and that's so important to the thing about Facebook being radio and tv. I think some dealers miss the opportunity to brand themselves properly on whatever medium they're using. And they just want to say, okay, here's inventory, buy it. If someone likes inventory well enough, they're going to click. And that's really just not how it works in subprime and buy here, pay here. That may work on the retail side. It doesn't work for most independent dealers, in my opinion.

Yeah, yeah. It's a branding play for the most part. I'm sure you probably have a lot of success with some direct inventory leads, source, you know, lead ads. But anyways, referral, referral, sourcing. So that's something I'm definitely digging into. I want to hone it every single month. I want to feel like I have a very, very accurate on how I acquired my customers and to the, and the salesman should be on board with that. It's an awkward conversation. They might feel like they're digging or that it's weird, but like it's only to their benefit. Guys, I want to spend my dollars better to get you more qualified leads. Please help me do that by asking better questions.

That's a great way to frame it too.

Okay, what else you got, Luke?

Mining our data. I brought this up last week. We don't do it enough. We don't do it the proper way. We have, we've sold 400 cars a year essentially for 30 years. You know, that's a lot of people and we've been keeping really good records of that for at least 10 years. When it comes to digital, digital records, of course, we always kept good records. But so you know, that's, that's 4,000 people we've sold cars to in 10 years. How can we better use that information to. Instead of spending money on Facebook or spending money somewhere else. Not really proper. Let's start calling those referrals. Trying to ask for people to buy cars again. We just haven't been doing a good job. I've got to mine the data better. I've got to come up with a process to mine the data better.

Yeah, you're talking like mailers, email, phone calls, those previous people. And probably you would include even people that you approved and didn't deliver or people even just your regular leads that didn't go anywhere. How are you remarketing to those folks?

Yeah, I mean, we leave, so. And it goes back to the first thing. I'm leaving so many qualified leads on the table or untouched leads on the table.

Yeah. What's this? How people buy a new car every three years or something, or swap out of their car. I don't know. I think used cars folks are probably even less than that.

Yeah. I think used cards, you could. You could say that it's every three years. They start to get it in the back of their mind that they want to do something.

So you've got a huge database. You need to get better at marketing. I agree with that. Especially from a standpoint of how are you getting in front of them? You know, are you using. Are you using that database to make custom audiences inside of Facebook? So then when you do run those Facebook ads, you are running them to that same demographic of the people that have already bought from you. One thing that hit me, this is another takeaway I had is, you know, right now I'm paying out the nose for cars, right? We bought.

Oh, you are. I'm stealing them. What are you talking about?

Right. So we. We've pretty much made the money we made on our Covid cars. The ones we bought during the downturn in, you know, April, May, June, July, whatever those are all go finally. So the ones we're replacing them with, I mean, I'm full book. So anyways, we're not making much money on the front end right now. Maybe I'm doing it wrong. Whatever. So it hit me that I need to have a. I need to be making money on the back end. Right. And so I have a renewed focus from my sales guys to be pushing my reinsurance products more than what they were. We give away a 33 warranty with every car we sell for free. But I'm restructuring the underwriting process and the desking process to make it very, very easy for a customer to choose to Upgrade to a 1212.

Did you take my. You take my advice yeah, yeah, yeah. My best idea.

Yeah. So, so Luke has a little six, I built it into little five square. So I have my five squares and the top one is basically your base payment with the three month 3,000. And then I have four other squares that you know are different upgrade options that increase their payment. But the first one, which is my 1212 basic, it's like a $10 a month increase. So it's nothing. I'm extending the term. I'm making it super affordable for them because what happens is now, I mean it's still a 1499 retail product.

Yeah.

So I can add 1499 and I profit is maybe 50% margin on that, something like that, I don't know. So it's a way for me to a, not only fund my reinsurance company but also make a couple dollars profit that I didn't make on the front end.

It's a great idea. And that's how retail, that's how franchise stores make money. That's how high end retail stores make money. It's about back end, it's about back end profit. Just by implementing, and I've said this so many times on the podcast, sell 100% of the product, 100% of the time, your penetration will skyrocket. It will skyrocket. And your back end profit, you know, it might go up 10 to $20,000 a month. That's a huge number, something that everybody needs to work on.

Yeah. And so my, so my sales manager, he is part of his pay is based on those add on products, you know, so he gets paid a percentage of that profit. So he's motivated, which is good, and gets the salesman in line to make sure they're motivated to do it. And obviously, all in all, Luke, you know, we talk about funding your reinsurance program and those of you, I don't know that there's anyone left in our audience that hasn't set up their reinsurance. They should have.

Right, they should have. So we're going to roll right into a commercial right here, I guess. Jeff. So dealre. They're the guys. Reinsurance, we just talked about it, talked about ways to make more money. Not only can you make more money for your dealership, you know, on the, on the retail side or the buy here payer side, you can make it on the back end for yourself by building wealth through reinsurance, by lowering your tax burden. There's so many ways to do, to use your reinsurance company. If you're not, you got to get one today. Stop everything, do it Yep, yep, yep.

Start funding it. Tax deferred income, which is going to be good. I think we're going to need that in 2021.

You know, I think it's going to be huge. It's going to be.

Minimize your tax burden at the end of the year, so to speak. So get that penetration on your reinsurance, back end products.

Yep.

Luke, what else you got? Let's do one or two more.

Okay. Audit. Auditing. The best use of our current staff. The more I was. The more I was sitting there in Nashville, the more I was thinking about what, what can we do better? And I talked about our sales staff a little bit ago. How can we take the current good staff we have and maybe add a few more responsibilities here, take away a responsibility there and really optimize what they're doing? I have some really good staff, and then I have some really poor staff and my service department, the culture's not right because of that. I got two technicians that are a drag, and I've got to figure out what to do. I've tried to motivate them by making more money, by turning more hours. I've tried things that don't work. And, you know, at some point their attitude's got to change or my attitude's got to change about them. So, you know, I believe that culture is huge. We talked about it so many times here. I believe one person can sour the whole entire office, which I saw happen. We've got. We've got to audit the people we have, make sure the people we have are in the right places. They're not in the right places. Move them there. Because if you believe they're the right people, make sure they can go where they need to go. And that's what I'm going to spend. I'm going to spend some time figuring that out because it's really hurting my production in the service department.

Yeah. That's so interesting. So I hear two topics there that you say. One is, let's start with the culture. Um, how do you. You know, obviously, we all know service techs are impossible to find, so cutting two of them loose has got to be a really, really hard decision. When do you make that choice of when you have got to get someone out? And I remember in the Facebook group, someone had mentioned that. Who was that? Someone said that.

I saw that. Yeah.

Who? Dang it. Sorry, I'm not giving you credit. It must have been Matt or somebody that said, get, get. Get the sour grapes out. Get them out. Sorry, guys. If you're not going to play game and have a good attitude and be a team player. And if you want to come in here and just poo poo on everything that happens and be negative and you know, gossip, that's one thing. A year ago I sat everybody down in an all hands meeting and I said, guys, we will not tolerate gossip. Like, we just won't do it. I won't have you talking about the service writer behind his back to another technician or the general manager or the collections manager like you have an issue. We're going to sit everybody down and we're going to have a discussion about it. But I will not have bad mouthing of any employee. It just, just won't happen. And you'll be gone. It won't even be an ask. It won't even be a warning. Like you'll just be gone. And we fired one guy over it and it was nasty. But when do you decide that, man? Have you sat these guys down? Are you going to give them a warning or an ultimatum? Or do you just say, yeah, sorry man, that's who you are. It's in your DNA. You're just a negative person. I can't have you here.

I've said I've set them down. One of them and one of them, honestly, I love the guy to death and he don't want it. He doesn't want to be a tech. Right. Maybe both of them don't want to be a tech.

Right.

One of them. He just needs to make a change. Right. And I'm not sure that he is willing to take the chance to make a change. Okay.

Yeah.

So I'm going to sit him down and, and talk about it and figure a way for it to work well for him. The other guy's got a bad attitude. He is, he is talented. He doesn't want to get better at being a technician. He doesn't want to listen to anyone. You know, I've already had a discussion with him. I may have it again. But, you know, I just, I'm tired of it.

Yeah.

I think once I'm tired of it, I'm not going to invest much more in him.

Yeah, yeah. You kind of have to decide you've gotten to the end of your rope and make hard decisions, but you got to make them. And that's one thing we always talk about, is no decision is the worst decision and any decision is a right decision and you'll figure it out and defend it. But one thing I do say every, we have our monthly meeting with everyone and I Say, hey, if you're not happy doing what you're doing, come talk to me. We'll either. We'll either have you do something else at the dealership, or I'll give you a great referral to another company. We'll find you another job. But if you're not happy here, don't be here. Because we spend more time with each other than we do our own family. And if we're not enjoying each other, then, you know, we got to find a place to make it happen.

Yeah. It doesn't just hurt. It doesn't hurt our. It just doesn't hurt our dealership. It hurts their family life, you know? So think, think. Think more than just about yourself here. Figure out a way to help them get better at life and get better and make themselves happy. Because you don't want to. You don't want to watch anybody day after day not be happy. It's. It stinks. It's doing nobody any good.

Right, Right. Right. So the other thing you touched on, and let's talk about it with just the last couple of minutes we have, is when you talk about productivity and you say having the best use of your staff, you know, we continually kind of debate that, what is a productivity level? Do you expect your staff to be, I mean, 100% productive 100% of the time? Do you have a process for making sure that they have a list of due items to turn to when they are done with their normal day to day or when they have some downtime?

You know, everybody, everybody we have has a list of their to dos. Right. They know what their job description is, but some are just unwilling to go past that to do list. And that, man, that's frustrating. Do I expect my staff to be 100% productive 100% of the time? No, I think that's an impossible. Ask my technicians. I'm only asking 80% production, 90%, you know, 90%. I would do a backflip, but yeah, I mean, technicians, I think you should require 100% production because, you know, they. Detailers, I think you should too. But office staff, you know, how can you prove that they're 100% productive 100% of the time? You can't. And they're gonna, you know, they're gonna talk, they're gonna do this, but. But as long as they're getting their ultimate job done, then they're doing their job, because some of them will go home and do their job.

Interesting. You know, it makes me think about. I think we've talked about this in the past, but I mean, if you work at McDonald's, you get paid minimum wage, whatever that is for your state. And guess what, your cell phone is in your car the entire shift. You're not checking it while you're clocked in. And that's a McDonald's worker that gets paid minimum wage. So should we hold our staff to a higher standard? You know, our office staff even like, should they, should they have their cell phones with them? Should they be checking them for non work related items? Should they be on Facebook or Instagram or YouTube or, you know, I don't.

Think they should be, but I don't know how to stop that.

Jeff, if you're off, you know, I think we had One of our 20 group members mention that she had saw that one of her staff members had posted to his personal Facebook page, personal things like four times that morning. And she's like, I know he's at the office and I know he's clocked in. And yet look at these posts that he's made on Facebook. It's like, what? Yeah, that's probably an issue. Yeah, so you're right. Productivity and the percentage of productivity is super interesting. And I think it comes from a lot of us dealers. We are always running around like chickens with our heads cut off and we know or think that we can do everything better than everyone else. So we're just going to do it. You know, it's very hard for us to delegate and it's very hard for us to sit down and be like, you know what? Instead of me doing this menial task, I'm going to teach my office manager how to do it this time and she's going to do it next time, you know, so that I can stop doing it because it's something stupid that I don't need to be doing. I'm going to be delegating this, that or the other and start getting these things off my plate so that they can be just as busy as I am. You know, it's so hard to do.

But you got to take the step, you got to train someone, you got to help them for a couple weeks, maybe a couple months, and then they're off and running. So that, that's probably if anybody takes anything away from this. If you have staff and you're still holding on to so many, so many things, take the least hard thing you do today and train someone in your dealership to do it for you. Once you figure out that process, you can replicate that process and next thing you know you know, handing buying over to someone you know is doable. Now, that might take years to do, but it's the same process replicated.

Yeah. You have steps for it. You'll put together a process and standards and accountability and metrics, all that stuff. So, Luke, a lot of great stuff, man. Super excited. I've got another list of things that I still need to put into place. You know, I've got my really, really hard ones down at the bottom and I'll probably just end up pushing off till next 20 year meeting, too. Anything else? Parting words?

No, I just, you know, it was great to see you last week, Jeff.

We're.

We're getting excited. I'm getting excited. I believe we're going to get to see some of our listeners very soon in different conferences. I know that we've been asked, and we're probably not going to say where we're going to be yet, but we've been asked to do a virtual podcast or not a live podcast at a convention coming up soon. And I'll be speaking in the Carolinas. I've also been in contact with another convention that I'll probably be speaking at and hopefully we'll all make it to national and, and do something there. So I'm excited. It was great to be at 20 group. It's great to start seeing people again. So, yeah, let's buy cars, let's sell cars. And I guess that's about it.

Okay, talk to you next week.

See ya.

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