In the span of 12 months, this dealership gained 22.5 points of market share and inventory turns went up half a point.
When Scott Weber, senior consultant and director with Spader Business Management, is contacted by a struggling dealership, he focuses on properly diagnosing the situation before prescribing a solution. “It’s called our 3-D process and the first step is discovery.”
Typically, Weber says the problems and solutions fall into one of four areas: culture, having the right people, key processes and an effective strategy. Spader will meet with the management and staff to assess organizational and individual performance in each of those four areas.
“What we find typically with farm equipment dealers is there’s a strong culture of more traditional family values, where business is done with a handshake,” Weber says. “From that perspective, things are a little loose in terms of accountability and it’s usually taken for granted. Most times, the owners assume who they have in place will do the right thing and get the job done. What we found, in some cases, was that dealerships are lacking that culture of high performance and accountability and in an era of compliance we simply can’t afford to manage the way we did 50, 20 or even 5 years ago.”
In this case study example, a multi-store dealership was in its third generation of family owners, with the founder’s grandson running the business and the fourth generation now working in the dealership. It was generating $100 million in sales.
“In this instance, the dealer was at risk of losing the dealership if they didn’t at least raise their market share to an acceptable level for their region,” Weber says, “Simply put, if they wanted to stay in the farm equipment business they had to perform and grow in the face of a declining market. That’s tough for folks to get their arms around when looking at what’s happening in the marketplace on a daily basis,” Weber says.
In this particular case, the dealership was given 12 months to improve their performance, so the pressure was on.
Diagnosing the Problem
After completing a discovery phase, Weber found the culture was a strong family oriented one but was lacking accountability. “What’s more, we had people managing locations who were neither capable nor motivated to do so and in some cases weren’t even interested in managing people,” he says.
This dealership was also lacking a few key processes that every dealership should have, including a well-documented sales process and a used equipment evaluation and trade-in process. Core processes were also missing in the parts and service departments. “With the decline in new wholegoods sales, the performance of your aftermarket department is more important than ever so we couldn’t just focus on sales,” Weber says.
“They were at risk of losing the dealership if they didn’t at least raise their market share to an acceptable level for their region. Simply put, if they wanted to stay in the farm equipment business they had to perform and grow in the face of a declining market…”
— Scott Weber
He goes on to say, “As you can imagine the performance at each location was different. One location was higher performing with a high performing location manager. They had the highest market share and the highest customer experience score. Their people were elated. They were getting feedback on a regular basis from their respective manager.
“And then we also saw the opposite. The lowest performing store hadn’t offered any formal performance feedback in a couple of years. They didn’t know what culture really meant, and what’s worse the employees had no idea how their customers were rating their performance.”
Although the pressure was on to dramatically grow its market share and overall performance this dealership did not have a clear strategy to accomplish the task. Enter Spader and Weber.
Prescribing a Solution
In step 2 of the 3-D process, Weber and/or qualified resources from Spader Business Management will sit down with management to review the findings from the discovery session. Once complete, they quickly formulate and decide on a comprehensive strategy based on the dealership’s competitive advantages and the resources they’d need to allocate to follow through on the strategy.
“We had to create a very targeted, very focused strategy. And we needed to have a clear, sustained commitment from ownership. As consultants, we are able to come in to an organization as an unbiased external resource. Meaning we have an ethical responsibility to tell them the way it is, there cannot be any sacred cows and sometimes that’s hard to swallow” Weber says.
The first step was to instill the concept of a high performing culture where everyone helps one another be accountable for performance, which ultimately leads to the performance of the organization as a whole. Then, Weber says you need to assess whether or not people are ready to do that. Are the location managers both capable and motivated to do that?
“In one specific example we had managers who had been waiting and yearning for that clear and effective work direction, while on the flip side, we’ve had others managers say, ‘You know what, I think I’d like to go back to service,’ or ‘I think I’d like to be in more of a bookkeeping type of environment. I don’t like dealing with people,” Weber says. “And in some cases this was the first time the owner or immediate supervisor had ever heard the manager say that. This valuable employee input allows an organization to ‘put the right people in the right seat on the bus.’
“To provide a consistent framework across the multi-location complex, we implemented three core processes for each department, starting with those that would provide the greatest impact.
“And from a strategy standpoint, obviously we had no choice but to be in a growth mode and therefore had to determine where we were going to grow,” he says. “That means by location as well as by segment. Once those opportunities were identified, it was then a matter of developing our tactical plan and assigning responsibilities. Said differently, who was going to do what and by when?”
This information was fed into a performance management process, one Weber says is paramount to the success of any organization, regardless of size, scale or industry. “By following a performance management process, we ensured employees were receiving effective feedback,” he says. “In turn, they became more aware of their performance and could learn from what worked, what didn’t work, and more importantly how they might change their approach in order for us to achieve those goals.
“And from a management perspective the approach wasn’t much different. We simply address how we are doing vs. what we planned. Again, in our case study example, we were faced with a very short window to get this dealer’s market share and performance up to an acceptable level. We couldn’t afford to miss a single month, especially with the ‘sell forward’ model that’s prevalent in the farm equipment industry today.”
Executing the Plan
It’s no secret that organizations are typically good at defining a strategy and charting a course for what they believe will be success, yet many don’t succeed, according to Weber.
“They fall short when it comes to executing a plan,” he says. “Spader recognizes this disturbing trend and has decided to serve as a ‘virtual’ general manager to assist clients in this area.”
“The dealership gained 22.5 points of market share in an industry that was down 17%. Inventory turns went up half a point as well. Revenue grew by $24 million that year and the dealership’s customer experience score was up 10.2 points…”
Weber, and other consultants, continue to serve that role in multiple situations where they monitor the client’s progress on a weekly and monthly basis, which has, often times, been a big change for locations managers, who up until that point may have never had store manager meetings.
“Then, it’s just a matter of executing,” he says. “Each employee knows what is expected of them and knows how their individual, location and organizational success is going to be measured. Gone are the secrets and excuses. In our example, each individual was held accountable and was evaluated on their performance on a monthly basis. It’s here where we offered deliberate, two-way, effective feedback along with the proper coaching for each specific situation.
“Data suggests a majority of managers today are ill-equipped to truly manage, lead, develop and effectively coach their direct reports. In fact, nearly 6 in 10 managers we’ve surveyed are ‘over-managing’ some people and situations. This is one major reason managers often complain about managing performance; they are simply spending too much time with employees who are already getting the job done, on-time and at or above expectation.”
Weber adds that if, at a minimum, all employees are simply receiving feedback that says they are either meeting the expected result, or worse, not meeting the expected result, it’s more feedback than many of them are receiving today.
This is a change for many organizations and, as Weber says, not everyone looks forward to change.
“We often see a employee pool split like this: 20% of the people will support an initiative; 20% will try to block it; and 60% will sit on the fence and wait to see if this is just the ‘flavor of the day,’” he says. “For those who aren’t onboard with supporting the change we have to figure out why. Is it that something different is being asked of them that they aren’t capable of doing? Or is it that they just aren’t motivated and don’t ‘feel’ like they want to support the new direction?
“In this particular case study example we did have people who weren’t motivated, so we had to quickly determine how they could best support the change or help them find something they might enjoy doing more. After all, if we were going to have a chance at meeting our aggressive goals we needed all hands on deck and that meant we needed people motivated about turning things around, and it has to start with management.
“This case study example was undoubtedly one of the greatest success stories we have had in helping a client in such a short period of time,” he says.
The dealership gained 22.5 points of market share in an industry that was down 17%. Inventory turns actually went up half a point as well. Revenue grew by $24 million that year and the dealership’s customer experience score was up 10.2 points.
“In 12 months, we went from being an acquisition target to now being in a position where we could be a more significant piece of the pie in a merger,” says Weber.
Staying on Track
The new strategy helped bring the dealership back, but the work doesn’t stop once your numbers and organizational performance improves.
This case study dealership did well and went through another merger, which doubled its size. The growth posed some challenges for the dealership, as not everyone was on board with the business strategy. However, today they are once again working toward maintaining the strategy the goals Weber and Spader Business Management helped them put in place.
– See more at: https://www.farm-equipment.com/articles/13536-case-study-bringing-a-dealership-back-from-the-brink-deu#sthash.aDM6bW3z.dpuf