In 2007, the U.S. had roughly 7,500 franchised dealers in the country. That number decreased to just above 4,700 according to the most recent count from Motorcycle Industry Council. We can speculate all day about what happened to those 2,300 rooftops, but one thing is certain: be it through discounting, staffing or inventory, they simply didn’t do what was necessary to keep their doors open.
In 2001, I was having breakfast with Ed Lemco while we were training at one of our Management Development Programs. A dealer came up and asked us how to run a successful dealership. I’ll never forget Ed’s response: “That’s a three-year answer, son, but I can tell you how to make it unsuccessful in a hurry. Get your priorities out of order, and you’re done.”
Ed was referring to the top four priorities (of hundreds) that need attention in a dealership. He was adamant about the proper order of decision-making: dealership, customer, staff and then OEM. In the years that followed, Ed would frequently hold up four fingers sideways and flip them as to indicate the dealer was getting its priorities out of order. He often did this in a fit of frustration, spitting and gritting his teeth, as only Ed could.
Ultimately, after years of watching dealers get these four priorities out of order, I built a training module around it. I’ve always taken training topics out of the industry by using analogies to allow dealers to see the comparison more openly. So for this topic, I compared Ed’s four priorities to those that a ship’s captain would consider:
1. Ship = Dealership
2. Passengers = Customers
3. Crew = Staff
4. Cargo = OEM
All four of these things are important of course, but what’s the first thing to go over the side if the ship starts sinking? That’s right, it’s the cargo. If the ship isn’t seaworthy, the cargo is soon to be a sunken treasure.
So, you’d better tend to the worthiness of your ship. Think about it on this level as well: a captain wouldn’t need a crew if he didn’t have passengers who paid to keep the ship out of dry dock. I realize they’re all intertwined, but facts are facts — neither the cargo, the crew nor the passengers matter if the ship can’t sail. As the captain, you have an obligation to keep the ship in good repair, so that you can make it to shore and deliver your cargo, passengers and crew safely. Decisions must be made in a particular order, as life and death depend on it.
In the dealership, you have an obligation to keep your doors open, as it’s the death of the others that come a-knocking if you don’t. The biggest disservice you can do for your staff, customers and OEM is to go out of business. Your staff and their families, as well as your customers, depend on you for life’s gravy — the good stuff, the money, the freedom to do what they want. OEMs need you as an outlet for their product. The daily decisions need to be made in a particular order. Get that order wrong, and you’re done.
Customer: The customer is always right, right? Not always. Just because a customer walks away with a grin because he just purchased a new UTV at wholesale price, doesn’t make it the right decision for the dealership. If it were up to customers, you’d be open 24/7, fully staffed and everything would be free. Let’s be serious: customers need rules, boundaries and people they can depend on. They want to know that you’ll be open when they’re off work, someone will help them find what they don’t even know they’re looking for, and they’ll be free to enjoy themselves engulfed in the escape of powersports. You did not get into business as a not-for-profit organization. Return policies can’t be, “Whatever you want, Mr. Customer.” Yes, occasionally, taking a hit is doing the right thing for the long-term health of the dealership, but making the buying process an escape — making it fun and easy — earns you the right to sell wares and services for a profit. Your customers will embrace that attitude, respect it and return.
Staff: If one of four commissioned salespeople quit, the other three will often tell the boss not to hire a new person. In their world, the commission pie is now split three ways instead of four. What they don’t recognize is that with four salespeople, the store commissions are simply bigger and more profitable, because four bodies can address and capture more customers than three.
Oftentimes, the most profitable customers are just looking. If you run understaffed, a chronic issue in our industry, some customers won’t be greeted. When customers don’t feel the love, they won’t buy as a result. Everyone loses in this scenario: the dealership doesn’t make the sale, the customer doesn’t get the toy, the salesperson doesn’t receive commission and the OEM doesn’t offload one more unit. Hug your salespeople, love them through it and tell them how awesome they are. However, don’t listen to them when they tell you not to hire staff.
OEM: The OEMs are wholesalers, and we’re best to never forget that. Yes, several have made great attempts to understand the retail side, knowing their success depends on the dealer’s success. But allowing the OEM to make carte blanche decisions about your inventory can put you in a world of hurt. So only take on inventory you can sell. You’d rather be looking for it than looking at it, and nobody ever went broke based on what he didn’t buy.
There are too many spinning plates in our industry, and only the best can keep them all in the air. The dealership must come first and decisions must be made with the health and future of the store in mind. Some customers, staff and OEMs won’t like that decision, but they’ll learn to respect your decisions when they’re reaping the rewards of your successful dealership down the road.
Sam was brought on board to Lemco as a sales & F&I trainer in 2001, where he quickly became the director of training and ultimately became a partner in the buyout of 2005. He went solo in early 2009 and now moderates seven 20-Clubs, and also consults and conducts in-dealership training. He continues to do contract work with Harley-Davidson, Triumph, Polaris, Club Car and Arctic Cat as well. For more information, visit www.samspowersportsgarage.com.