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Business Management

Easy Street’s Still Closed

The new economy will chew you up if you’re not ready

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In recent days I’ve heard an excessive media buzz about the end of the recession. This "escape from the recession" and "recovery in 2010" message is one that has been grossly exaggerated. Speaking of exaggeration, I was one of the fortunate dealers who owned and operated multiple stores during the boom years, and it wasn’t always peaches and cream back then, as the picture is now often painted.

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We certainly had our fair share of challenges during those thriving times as well. Challenges included aggressive OEM programs leading to excessive inventory levels, which created extreme price cutting from competitors, all of which formed significant troubles in holding adequate margins. We regularly dealt with sales managers who couldn’t implement a traffic log and follow up with unsold customers to save their life. Salesperson turnover was always a pain. We had parts managers who didn’t control OBS inventory and office managers who conveniently happen to get sick every time the floor checker showed up. We, of course, had primadonna technicians whining every time the wind blew a different direction. We had to watch warranty, co-op claims, and other receivables like a hawk so thousands of dollars weren’t squandered. And, yes, we still had that small percentage of pesky unreasonable customers that suck loads of time and are impossible to satisfy. Oh yeah, and I can’t forget (no matter how hard I try) how cash flow would get tighter than Dick’s hatband in the off season. Ahhh, the good ole days …

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Although the opportunity of the boom era was significant, there were still very few dealers stock piling cash under the mattress in their off-shore yacht, as evident by the industry’s recent loss of thousands of dealerships. The fact is, retail is damn tough in good times and bad, thus furthering the need for vigilant improvement regardless of the market. Certainly, more waste and sloppiness can be afforded during a strong economy, but now to successfully transition into the emerging economy will require more savings and precision.

I’ve been following a brilliant economist, trend spotter and New York Times bestselling author Harry Dent Jr., to get his take on the financial forecast for the months and years ahead. My impression of what I’ve studied so far is that easy street is indefinitely closed for repairs, and picking the right detours will be crucial to reach your final destination. I’m not trying to throw a wet blanket on the New Year — far from it. The basis of Dent’s "How to Prosper in a Downturn" philosophy is that by understanding the fundamental trends that drive our economy, one can gain leverage, success and financial gain in the coming months and years.

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Now, let’s go back to the less waste and more precision point mentioned earlier. I often refer to this waste as hidden marketing assets. These are assets that are already being paid for, yet often underutilized, such as your employees, facility merchandising, DMS system, customer database, telephone systems, CRM, website, etc. There’s still a lot of meat left on those bones.

Additional waste often comes in the form of negligent advertising and marketing decisions. Old marketing tactics such as TV, radio and newspaper must be replaced with more precision by a direct ad to your specific target audience. Although it’s been repeatedly proven that it costs 14 times more to get a new customer than to get a past or present customer into the door, the "gotta get fresh customers" mindset is still prevalent in most dealers.

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I recently had a client contact me who participated in our "12 Days of Christmas" marketing campaign to tell me about a letter he had received from a previous customer. Unfortunately, she notified the dealer to remove her from their mailing list as her husband had been killed on a bike that was purchased from the dealer back in 1999. As I began to console this dealer, he stopped me.

"No, Rod, do you know what this means? It means that I’ve gone 10 years without ever reaching out to my past and present customers. For 10 years I’ve been spending hundreds of thousands of dollars looking for new customers while ignoring those who have been most loyal to me and are most likely to come back and spend more!" This was a very keen observation by my client.

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Regardless if the media and politicians say the recession is over and recovery has begun, we’re moving forward and you must actively invest by strengthening your skills. By cutting waste and increasing precision you can get a GPS signal pointing right to easy street.

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