Process and the Road to Dealership Profits with Marcus Lemonis


The Profit’s Marcus Lemonis and the Importance of Process

In business, process is essential for aligning business objectives with customer experience, employee productivity and job satisfaction. Every time business processes change, employees have to adapt.  So “the way we’ve always done it” will often end up winning. One of the first examples of failed process on “The Profit” was the Planet Popcorn show.  Planet Popcorn sells a premium popcorn product to corporate clients like Disney in addition to selling at various fairs and venues.

Marcus’s first impression of the processes at Planet Popcorn were not so great.  He found bank deposits, packaging materials and piles of cash laying around the office.  Without a clear process to manage basic business tasks it was no surprise when Marcus discovered $400,000 in cash deposits that never made it to the bank. Nearly half a million dollars had just gone missing. Now this may seem like an extreme example of broken process, but what if a lack of process are costing your dealership profits?

Change of any kind is hard to adopt. Just think of how you feel when road repairs force you to take a different route to work than the one you have taken for 10 years?  If our human tendency is to resist change, no wonder we struggle with making changes in our businesses, even when we know it’s the right thing to do!

“I don’t know if people consciously get in the way of their own success…? In fairness, people have a lot of pride, and they fall back on what they know to be safe and correct. Anybody, including me, struggles with change.” -Marcus Lemonis

Like it or not, the automotive buying process has forever changed and continues to evolve.  Yes, consumers are more informed; they have easier access to information about you and your competitors, and they visit fewer dealerships.  Shoppers can view vehicles on a hundred different websites with their phone while they wait in line at Starbucks!

And though you don’t likely have piles of cash laying around your dealership like the folks at Planet Popcorn, your profit loss potential is just as great if you don’t adapt your processes to reflect the changes in the market. So this begs the question, what processes do you need to evaluate at your dealership to be sure your store is ready for today’s car buyer? Are you open to embracing the pain of change for increased profits? Unfortunately for most of us, ‘The Profit’ isn’t going to walk into our business, plop down a check and fix what’s broken…so where do you start? And how do you get everyone else excited about changing your process?

Getting Buy-In On Change

Change is no less painful when you understand the why, but when you can envision a more profitable future where you exceed sales goals and increase your marketshare it does help. One of the ways Lemonis addresses this with businesses he invests in on ‘The Profit’ is to hold a meeting with employees and explain what is broken, what needs to change, and how the change will be addressed.  This is leadership.

The first thing you will need to do if you want to change a process is your dealership is to be convinced yourself.  Seek out others who have adapted to the changes in your industry and stay open to any and all suggestions. I’ve previously held leadership positions in an automotive dealership, so I understand the challenges to implementing changes in process.

Approaching Process with Confidence

It can feel a little like playing the block game Jenga, and there’s always the worry that changing one thing will have an undesirable or unexpected ripple effect. Choosing the right vendor partners, training employees and getting everyone excited about making changes in process is no small task. I talk to dealers every day who are not convinced of the need for change, in spite of overwhelming evidence it’s needed. I can show them how just making one or two small tweaks to their process would make a big difference, but the urge to resist is strong. And I get it, I do. But the benefits of a data-based strategy change far outweigh the short term discomfort…more on that in a minute.

marcus-lemonis-quoteCorrecting Thought Processes

Watching ‘The Profit’ communicate with employees about process you will notice a couple of things.  One you notice right away is how he listens.  He listens to employees’ thought processes and concerns. His approach helps them uncover the motivation to change. He says it this way, “Usually, you can figure out where a person’s mistakes came from if you ask them the genesis of their thought process: ‘Why did you do it this way?’ (As opposed to telling them they did it the wrong way.) Understanding their thought process will ultimately help you be able to communicate with them and navigate around them.”

Digital first means you have to know your numbers; the cars moving in your market & market price. Click To Tweet

Customers Change the Market, Now It’s Your Turn

We have entered a digital first era where information about consumer demands and behaviors is abundant.  It is possible to know with certainty the vehicles customers in your market are shopping for, what they want to buy and how much they are willing to pay.  Digital first means you don’t have to rely on a bank book to price a trade-in or vehicle at auction and you don’t need a book, even an online version, to price it. Those tools are great for benchmarks, but the market…the customer…has the final word on price and product. 

Since 95% of consumers have been online to look at vehicle pricing before they even set foot on the lot, digital first means you won’t know the deals you’re missing without some form of market intelligence.  When we talk to dealers and pull up their inventory in our product, we often see they have aged pricing or are a few dollars away from their competitor on essentially the same vehicle.  In a digital first market, appearing on page two or three in search means one thing: shoppers will find the car they want, but they won’t find it with you.

Get Ready to Love Your Data

So here are a couple of merchandising tips to move you toward being a data first dealership:

1. Make sure to change prices on your inventory at least every ten days.

2. Compare your prices to your competitors daily. Yes, daily. This has to become the new normal for every dealer. 

Start there; and once you achieve consistency, you are ready to move to a strategic, data-driven approach to pricing your vehicles online.

Hardcore Profit Process

Next, address your process for stocking the cars customers are looking to buy. The old way of stocking..choosing the vehicles you like or the one you remember selling last month…is costing you profits. Seriously, stop buying them. You can’t force them on your customers when they wander on your lot like the good old days.  Your process needs to change and it must include market data. Digital first means last month’s sales data is not a reliable predictor of the market.  The technology is available to help you understand what consumers are buying.  Focus your process goals toward turning inventory every 30 days.  

In another episode of The Profit, Lemonis evaluates a restaurant franchise called My Big Fat Greek Gyro. (Later renamed The Simple Greek.) This was an explosive episode, but clearly demonstrates the impact a lack of leadership and processes impacts profits. The Simple Greek had inconsistencies in nearly every area of their business. There was top-down resistance to unifying processes to a brand standard.  In spite of this, Marcus made the investment and led toward change using data to uncover everything from the best menu items to serve, to the look and feel of the menu.  As a result, The Simple Greek is thriving and the franchise owners have a clear path to a profitable business. As of August 2016 the chain has plans to open 20 more stores.

We Want to Earn Your Business

So often our customers tell us they don’t remember how they managed pricing and inventory without our help. We’re able to help them answer questions and eliminate mistakes, and we can help you. Taking control of pricing and inventory and nailing down data driven processes will grow profits.  Please feel free to contact me at 816-588-2955 if you’d like to talk through your processes. I’d be happy to help you at no charge.  If you’d like to see your inventory from a data first perspective, click here to schedule a 15 minute demo. 

Adam Tobias

Adam Tobias

Co-Owner and COO at DealerCue
Adam is an experienced automotive professional with a thorough understanding of the challenges facing car dealers in a rapidly changing marketplace. His experiences led him to the vendor side of the business with the goal of providing dealerships of all sizes with affordable and meaningful tools for leveraging live market data.
Adam Tobias

Adam is an experienced automotive professional with a thorough understanding of the challenges facing car dealers in a rapidly changing marketplace. His experiences led him to the vendor side of the business with the goal of providing dealerships of all sizes with affordable and meaningful tools for leveraging live market data.