Three things to avoid in a flat market.

It’s clear that the automotive industry is seeing a flattening in the current market, and that’s a cause of much stress to those leadership teams charged with the task of steering their businesses through it. Historically when the market flattens the usual tactics take place: reduction in staff, reductions in vendor contracts or software, and blind ad spending in the hopes of bringing more people through the door.

Here’s what I’d like to suggest dealerships try NOT to do during a flat market:

Cancelling software contracts

Stop cutting software contracts because “no one is using it.” It’s all too familiar in markets like this. Sales slow down, and management quickly looks for ways to save money in other areas. Cue the task to the Operations Manager to go audit all software contracts and assess what to cut.

The Operations Manager then does the quickest assessment possible. Much of the time he or she just pulls a usage audit and reports back. Management then contacts the vendors where they can quickly get out of their contracts, usually within 30 days.

Here’s what I challenge leadership teams to do: Instead of just auditing based on usage, base your decisions on which software will keep you profitable through a down market. The irony here is someone in management (or ownership) signed a contract for the software in the first place based on perceived value for the store. Now, due to a lack of adoption and accountability, no one is using it.

The other side of this is that there is a chance a manager who brought in a system is no longer in the dealership. Easier to rip all their work out and start over, right? Wrong. Sit down with each system and be truthful to how it can help. There was a reason you signed a contract in the first place. Those providers you feel can still help will be happy to regroup with you to help get you and your team re-familiarized with the software.

Don’t feed the sharks

Sweating out a quiet showroom isn’t fun for anyone. With less traffic coming through the door, stress mounts for both management and staff. Some managers, seeing the team having a tougher time reaching targets, will fall back into old habits and start favouring and leaning on the top salespeople— the sharks, rockstars (I don’t care what you call them) to get to target each month.

I get it, these folks have proven all along they can get vehicles off your lot, but at what cost? Most “sharks” don’t have to keep to the processes that the rest of the staff are tasked to uphold. They don’t have to spend time logging things into your CRM, which by the way you’ve invested a lot of money and time in. They can burn through walk-in customers, creating an unpleasant customer experience in the showroom. They are basically given a free pass to do things their way so you reach a target.

This will hit your staff culture hard, and in turn, cause bad habits to run rampant throughout your teams. “If she doesn’t have to log customers, why should I?” It’ll happen faster than you think. So, use this time as a management team to mentor your staff more. It is your job to ensure that each person on your team is armed with enough information and guidance to produce the best results for the dealership. Get on the floor, ensure that manager intros are happening early and often for all customers walking into the store. That exercise alone will increase closing ratios by 10 to 15%.

Learning & education

During slower times you may be tempted to reduce the amount you spend on staff education. Although you may choose not to send people away for training or conferences, there are ways to ensure that you are giving your team the opportunity to learn something new, or refresh prior training, at lower costs.

Look at what your vendor pool offers in the way of webinars or free downloadable content. What podcasts are available? Ask for re-trains from your software providers. Ensure that everyone understands how to get the most out of a platform that could keep you profitable when other stores aren’t.

I’ll let you in on a little secret. Only a very small percentage of the people who read this article will take this information to heart. Most will decide to just “wait it out” and hope the damage isn’t too bad once things start to improve. So, if you do decide to take the steps to optimize through a flat market, instead of doing nothing, your dealership will be leaner, more efficient and more profitable, regardless of market conditions.