Published with permission from RV News / November 2019
Pleasureland RV CFO Brad Bacon was justifiably proud of the work he and his colleagues at the St. Cloud, Minnesota-based dealership were doing. Going into 2007, Bacon had thrived in his position for six years. Pleasureland RV, which opened in 1971, had multiple locations and had long since secured its status as Minnesota’s biggest RV dealership.
“Being a larger dealership and having the longevity we’ve had,” Bacon says, “you get to a feeling where you think you’re doing it all the right way and you’re at the top of your class.” His feeling of confidence was tempered by a dose of reality, however, when Pleasureland RV joined a 20 group a dozen years ago.
A 20 group is a collection of RV dealerships from non-competing markets that share financial information to give each other benchmark data to gauge performance. Typical groups have 12 to 15 member dealerships, voted in by existing members, with membership usually capped at 20. An independent facilitator compiles data and moderates several face-to-face meetings per year.
Immediately upon joining a 20 group under facilitator Chuck Marzahn of Marzahn & King, Bacon got his first glimpse at how Pleasureland RV’s numbers compared against those from like-sized dealerships in similar markets.
“In service and parts, and even in sales, our margins were… not the lowest in the group, but we were in the lower-middle of the pack,” Bacon says. “Without the 20 group, we wouldn’t have known how we were doing. We wouldn’t have that scorecard.”
The 20 group gave Bacon more than a scorecard; it gave him a road map to improve his dealership’s performance.
He befriended and drew inspiration from his group’s more profitable dealers and returned to Pleasureland RV armed with fresh ideas. One 20 Group-inspired change he pitched to his management was a plan to boost the bottom line by increasing overhead.
Historically, Pleasureland RV ran a lean service and parts department, Bacon said. The dealership had one service manager overseeing all service technicians in the back of the shop, as well as the service advisors in the front. In his 20 group, Bacon saw that dealerships that hired three separate managers—one for parts, one for technicians and one for service advisors—as well as additional employees dedicated to RV walkthroughs improved their efficiency so much that profits grew despite the added payroll expenses. Bacon wanted to do likewise at Pleasureland RV—and could cite specific numbers to prove the plan’s viability.
“I could point back to what we saw in our 20 group,” Bacon says. “I could say, ‘I know we can do it this way and, in the end, be more successful, because I’ve got other dealers in the 20 group doing it this way. I’ve seen it with my own eyes.’”
Management gave it a shot. Sure enough, Pleasureland RV duplicated the success of the other 20 group dealerships. Bacon remains a faithful 20 group participant and even joined another 20 group dedicated to RV rentals.
“Even if you think you have one of the best-run dealerships out there, I’d encourage you to get into a 20 group, because you will undoubtedly find some things you’re not doing as well as you think you’re doing,” Bacon says. “You will end up prospering from it. The dividend and payback are so much greater than the membership dues you have to pay.”
Bacon is a true believer in 20 groups, and he is far from the only one. Leaders at many dealerships across the country fear they would be flying blind if not for the insight and foresight they gain from their 20 groups, which fill the roles of a professional network, industry consultant, support group and unofficial board of directors.
Inner Workings
The concept of 20 groups began in the post-World War II auto industry and eventually spread to RV dealerships. The original purpose was to share information to better understand best practices in managing RV retail businesses, but the groups also caught on because they gave RV dealers a rare opportunity to speak candidly about their hopes and fears with people confronting the same issues.
Dealerships provide monthly financial statements to an outside facilitator, who compiles the data into monthly composite reports made available to group members. Statistics include data on sales, personnel, F&I, revenues and expenses. Member dealerships pay monthly dues to the facilitator ranging from $200 to $800, with costs varying by depth of analysis provided. Members also pay a share of travel and venue fees for an average of three in-person meetings each year.
Facilitators, who can be individual consultants or members of a larger 20 group firm assign dealers to groups comprising similar-size dealerships for a more apples-to-apples comparison of financial data. To foster openness and mutual assistance, dealers do not compete in the same geographical markets.
Shared financial data is the absolute prerequisite for 20 groups to exist. Having the combined expertise of fellow dealers and the facilitator, who usually has experience as a dealership owner or general manager, helps group members make the best use of the data.
Little Dealer Little Prices President Debbie Brunoforte says her Phoenix-area based dealerships have been in business for 53 years. “Financials are very important for benchmarking,” she says. “When you compare financial data side by side on a spreadsheet, it’s quick and easy to identify areas for improvement, and you have experts on hand to tell you how to improve.”
For Brunoforte and other longtime participants, 20 group membership is not a “nice to have”—it is a “must have.”
“Every recession we’ve ever been in,” she says, “and every point where we have cut back on expenses, I’ve never dropped out of our 20 group.”
In fact, she says 20 groups are key to survive economic downturns.
“When you look at what other dealers do, you understand that even if your business shrinks substantially, you see other profitable dealers with that same level of business,” Brunoforte says. “You know what can be done and what to do.”
Brunoforte had no idea how important her 20 group would be to her business when she first joined 30 years ago. She was just starting to take part in the RV dealership. While attending her first RVDA convention, her father left a message in her hotel room: “Call Duane Spader and tell him you want to join his 20 group.”
Duane Spader was the founder of the largest RV industry 20 group providers, but Brunoforte had never heard of him, she says. For that matter, she had never even heard of 20 groups at the time. Nevertheless, she called and joined. When she attended her first meeting in Chicago, Brunoforte says she got a whole new perspective on what a successful RV dealership looked like.
“I thought we did a pretty good job until I opened the book and saw what the other dealers were doing,” she says.
Her family’s dealership was near the bottom of the list in most data points, she says. She made a goal of pushing Little Dealer Little Prices’ business metrics up to meet the average of the 20 group before setting sights on taking the top position. To accomplish this, she chose to learn from the best.
“I would pick an area we needed to improve and see who did it best,” Brunoforte says. “At lunch or dinner, I would always make sure I was seated next to that person.” She soon made friends and mentors of the most successful group members, including the late Jim Shields of California-based Pan Pacific RV. Some of Shields’ advice came in the form of tough love.
“I remember he used to say, ‘Debbie, you’re not going to want to hear this, but…,’” Brunoforte says. “Whatever would follow was always great—painful, but good.” With help from her 20 group, Brunoforte’s Little Dealer Little Prices has outgrown its name, becoming one of the largest dealerships in the RV hotbed of Arizona.
Spader Pioneers 20 Groups
Brunoforte is still in a Spader Business Management 20 group three decades later. Spader Business Management has been providing facilitation, training and consulting for hundreds of RV dealerships for the past 40 years, says President John Spader, who took the reins from his father, Duane, in 2003.
More than 100 RV dealerships have been in Spader 20 groups for more than 20 years, John Spader says, including four that were in the company’s inaugural group of eight in 1976.
Spader now has more than 40 full- time employees, including more than a dozen 20 group facilitators, trainers and consultants who work with RV clients, he says. However, the company started with just two people: Duane Spader and Noel Lais, who still serves as vice president of operations.
The company itself was born in a 20 group. In the 1970s, Lais was the bookkeeper for Duane Spader’s Sioux Falls, South Dakota, RV dealership, which belonged to an early 20 group run by an outside company.
“When dealers go off to a 20 group meeting, they come back with all these ideas they can’t wait to tell everyone about,” Lais says.
After one meeting in 1975, Lais says, Spader came back with his biggest idea yet: He intended to start his own 20 group management company. He and fellow members loved their group but were dismayed when the firm that ran it announced it was leaving the 20 group business. Spader asked the other dealers if they’d be interested in continuing with himself as the organizer, Lais says. They did, and Spader Business Management had its first 20 group.
“We didn’t think we were going to have more than one,” Lais says, “Before long that group was filled with 20, and we had people on the waiting list, so we started a second RV group.”
As more RV dealers joined, dealers in other industries sought out Spader’s help, starting with boat dealers.
“We didn’t know the bow from the stern,” Lais says, “but we did understand the concept of what it took to make a business successful.”
The idea of getting together with peers in the same industry facing the same challenges has remained the same from day one, he says.
“Dealers, especially the smaller ones, don’t have anyone they can share some of these problems with intimately—including their spouse,” Lais says. “That they can come and unload at these 20 groups is powerful.”
The accessibility and level of detail in business metrics, however, has grown tremendously. Spader now offers dealers monthly online reports showing long-term trendlines for individual dealers, members of individual 20 groups and aggregate industry data from Spader’s RV clients.
The fundamental principles and processes that make an RV dealer successful remain the same, John Spader says, but his work with 20 groups has shown him that the most effective systems and techniques can change with the times.
For example, Spader’s father stressed gross profit margin percentage as the absolute key indicator of success, he says, but the 20 group data that emerged during the Great Recession revealed three or four different models that also worked.
In one 20 group, he noticed that the dealer with the highest units margin and the dealer with the lowest units margin were ranked 1 and 2 on the list of most profitable dealerships. Numbers from other groups showed a similar trend. The apparent inconsistency illustrated there are several different models, he says. If a dealer is going to sell units at lower margins, there are other key things that must happen to retain good profitability. Pros and cons exist for each model, and Spader has highly successful dealers using several different models.
Meeting the Challenge
As much as numbers can teach dealers, in-person meetings are the social glue that binds together 20 groups’ dealer members. Most groups rotate meeting locations between the home cities of their members, meeting an average of three times each year, with one annual meeting at minimum.
Technology can reduce physical travel. For instance, Marzahn & King’s Virtual 20 group members attend two face-to-face meetings annually but also meet via remote conferencing monthly.
Most facilitators are available for advice anytime between meetings, and members who have formed strong relationships frequently use each other as sounding boards whenever they need an expert opinion.
Meetings generally last two to three days. A typical agenda might start with a look at dealers’ year-over-year numbers, with many facilitators providing forecasts for the next year. Dealers will then do a round-robin to provide more anecdotes on their dealership’s financial state.
A 20 group might then take a deep dive into data from each department, such as service, F&I and rentals. Department managers might join their owners or general managers for these specific portions, and outside experts might give presentations examining department-specific trends and issues. Many facilitators also offer a broad look at numbers across the industry and provide insight into what they mean for the dealers in the group.
A usual feature of meetings is a visit to the 20 group member dealership in the host city. The visiting dealers painstakingly evaluate daily operations, and their findings can be humbling but incredibly valuable, says Pleasureland RV RV’s Brad Bacon.
“Everybody would like to have a rave review and come away feeling good,” Bacon says, “but everyone knows that the whole basis of these visits is to find ways a dealer can improve, not to tell them everything they’re doing right.”
Members typically write out goals for their dealership before each meeting. They use a buddy system to hold each other accountable for reaching those goals, or at least working on them.
Dealers in each 20 group are of similar size; some groups concentrate on multiple location dealerships with annual revenue in the hundreds of millions, while others focus on smaller dealerships with annual revenue below $5 million.
Though outwardly similar, each member’s circumstances vary widely, Spader says. Most dealers are in one of four stages of growth, he says: survive, stabilize, thrive or maximize. A good facilitator will direct members to the resources they need for their situation.
“A dealer might join in survival mode,” Spader says. “It’s their last hope. They’re trying to dig themselves out or find a silver bullet. A lot of today’s leaders are the dealers who were on the verge of going out of business 10 years ago.”
Other dealers who are in thrive or maximize mode may join a group in search of those last few tweaks to take their dealership to the top of the performance scales.
Customizing the Experience
Sometimes dealerships need extra attention for particular aspects of their business beyond the department-by-department breakdowns the 20 group provides. Facilitators frequently offer secondary 20 groups for specific topics. There are also subject-matter-expert facilitators who lead narrowly focused 20 groups.
Since 2002, Jan Kelly of Kelly Enterprises in Vancouver, Washington, has moderated a specialized F&I 20 group. The 12 current members touch base on monthly conference calls and meet in person for two days each December.
In addition to crunching numbers for each dealership, Kelly and her clients swap wisdom on the best calculators to use for cash conversions, how to tweak the “word tracks” they follow when talking to buyers and general-purpose moral support.
“Finance is typically a department of one that manages no one and reports to everyone,” Kelly says. “When a finance manager has a question, they really don’t have someone to turn to.”
The F&I 20 group gives finance managers a place to turn to, whether they seek advice from Kelly, who has direct experience working in dealership F&I offices or from fellow members.
“The willingness of each member to help the others is phenomenal,” she says. “It’s something I’m grateful for and that I love watching.”
Kelly concurs with 20 group members who stress the importance of a group’s “post-meeting meetings.”
“I am with them at dinner,” she says. “I’m with them from the time they wake up to the time they go to bed for two days, and they talk business all their waking minutes.”
As enjoyable as the collegiality is, members would not stay in these groups if they didn’t get results. A finance manager might enter her group sitting at a 30 percent finance rate, Kelly says, and use the lessons learned to boost it to 56 percent.
The RV industry’s increasing focus on improving repair event cycle times has drawn clients to fi
20 group facilitator Brett Coker of Coker Automotive Consultants in Birmingham, Alabama. Coker mod- erates four 20 groups. Two are in the automotive industry and two in RV fixed-operations 20 group Brett Coker of Coker Automotive Consultants in Birmingham, Alabama. Coker moderates four 20 groups. Two are in the automotive industry and two in RV fixed-operations – one 20 group focuses on parts and one on service. focuses on parts and one on service.
Although Coker’s background is primarily in auto dealerships, he says RV fixed-operations managers value that industry’s perspective.
“Automotive is probably 30 years ahead of RVs in fixed operations,” Coker says. “We’ve got to apply the best practices of what’s working in other industries.”
He recognizes the importance of RV parts and service managers sharing what works for them with 20 group members, but Coker also tries to use his expertise to suggest solutions RV dealerships may not have tried.
“We have to avoid only relying on the tribal knowledge: ‘This is how the guy before us did it, which he learned from the guy before him, and so on,’” Coker says. “When I hear, ‘That’s the way we’ve always done it,’ that’s a warning sign, because things are changing so fast.”
In his 20 groups, he has helped RV clients find ways to streamline their repair processes, he says. Solutions can be as simple as changing which employee moves RVs into the repair bay.
“The technician is the brain surgeon,” Coker says. “He shouldn’t be the one moving the patient around. Let him use his knowledge.”
Building Relationships
Lee Berryman, owner and sole facilitator at RV ProfiT Group in Daytona Beach, Florida, moderates two 20 groups, including one whose members average nearly $100 million in annual revenue. His two groups also have several subgroups devoted to special topics, from F&I to the challenges of dealers seeking to pass ownership to their children or other next-generation successor.
Because they have been meeting together for more than 30 years, many group members can remember when the other members’ adult children were born.
“The social bond among the groups is really strong,” Berryman says. “This is their board of directors. They can talk about personal things and nothing leaves the room. It’s like sitting around in their underwear—everyone has all their numbers; they know all the problems.”
While Berryman has learned a lot about business management and the RV industry over the past three decades, he finds dealers respond best when the advice comes from fellow dealers.
“My goal is to draw out the ideas from the best guys in the group,” Berryman says. “When it comes from peers they know and respect, and it’s worked for them, that’s when you get the pencils moving.”
Still, change can be slow, he says, and it takes follow-up within the group at each meeting—sometimes over the span of five or more years—to get everyone to adopt even the most promising ideas.
Facilitating 20 groups requires a special skill set, he says. At a previous 20 group company, where Berryman was in charge of hiring and training facilitators, he says two out of three facilitators failed. However, when a facilitator and group members all click, the results can be special.
“They’re clients, sort of,” Berryman says, “but these are some of the best friends I’ve got – and I get to boss them around. They’re all leaders, but even a group of leaders needs someone to lead them.”
The relationships forged in 20 groups – between facilitator and members, but even more so between dealer members – are perhaps what keep dealers coming back.
“The value of the meetings themselves might be a 7 out of 10,” says Hemlock Hill RV General Manager Chris Andro, a Spader 20 group member since 2001. “But the value of the camaraderie and ability to call someone is a 10 out of 10.”
Andro, who started working for his family’s Southington, Connecticut, dealership in 1991, joined his 20 group a decade later. At his first meeting, he realized how much more efficient and profitable his dealership could be. Some fixes were simple, like upgrading outdated computer software. Other changes took time and nuance, but his group members were always ready to help, no matter how embarrassing the issue. “There truly are no stupid questions,” Andro says. “People usually think they should know the answer, but guess what? There’s always a better answer.”
Helping others can also be a way to help oneself, he says. Recently, he emailed a group member to point out some anomalies he saw in the numbers from one of the other dealership’s departments. Soon after hitting send, Andro made sure his own department did not have the same problem. Thought he highly prizes the relationships he has formed, Andro cannot deny the value of the competitive intelligence his 20 group’s reports give him.
“The numbers give me the power to be able to make a choice about something: personnel, advertising, margins,” Andro says. “I can go online right now and pull up a report to see how many personnel a dealership of my size has that is more or less profitable. I know what my ad expense ratio should be, and it’s derived from hundreds of other dealerships across the years.
“Numbers don’t lie.”