Often, when I work with Dealer Principals and Managers looking to improve profit margins and grow their business, I’ll turn their Dealer Management System, first. There are specific reports that can uncover key metrics, such as performance metrics, that in turn can result in higher gross profit. But, sadly, when I return to the dealership to follow up, I’ll find that the staff has already moved on to a new issue or process challenge that is sometimes referred to as “the flavor of the month” issue. That’s normal. Things move quickly in our business. And roadblocks can make solving smaller problems seem overwhelming. Our good intentions get lost in the shuffle. But, in my experience, if you stick to a simple, five-step process to change management, utilizing your DMS to look at clear data and results, those “roadblocks” turn into tiny speedbumps.
Step 1: Identify a Challenge
This may sound simple, but first and foremost, you’ve got to identify what problem you’re trying to solve. And simply saying, “we need to become more profitable,” isn’t a simple challenge. Make sure the problem you want to solve answers the following questions:
- Is it specific?
- What are the consequences?
- What is the impact or gain?
- How easy/difficult is it to solve?
- Is this a sustainable or short-term fix?
Start with the data in your DMS—a Labor Profit Analysis report, for example—and look at the numbers. “I have an underperforming service advisor,” is an identifiable challenge.
Step 2: Determine the Root Cause
When it comes to mastering change management, we need to look at the contributing factors of the problem rather than focusing on blame. I encourage you to rank these by importance. Is this issue even solvable? Sometimes certain things are not, and that’s OK. Simply understanding if contributing factors can’t be fixed will free your team to focus on the things that can be. However, if, to use the example earlier of an underperforming service advisor, is due to an employee not understanding a policy, then you can fix it. Additional coaching, help from a manager, training, these root causes are solvable.
Step 3: Develop a Strategy
Now that you’ve identified a challenge and determined its root cause, you have the opportunity to form a plan of action. Identify who is responsible and what needs to be done to take the next steps. What resources are at your disposal (or lacking in the first place) in order to correct the issue? Set a timeline and determine how long it might take.
Step 4: Implement the Plan
It’s not enough to just manage a plan. Real leaders need to take ownership and ensure that processes are seen all the way through. Ultimately it’s our responsibility to make sure everyone moves towards positive change. Aligning implementation with goal and strategy means we have to make sure that the rollout fits the timeline and objective. Are we solving the right problem? Do the actions support the original goal? Make sure you’re coaching and driving the performance along the way. Offer positive reinforcement, encouragement, and progress reports.
Step 5: Analyze the Change
You did it! That’s great, but you’re not finished yet. Now it’s time to review, process, and accept feedback from everyone. That feedback should come from everyone—other managers, advisors, customers, etc. Don’t forget to pull that same DMS report (our example used the Labor Profit Analysis) and see how it has changed. Then continue or alter your plans. What else needs to be done or changed? Was it effective?
Strengthening your people should result in a stronger dealership. And a stronger dealership, with a well-supported team, will result in greater profit potential. Your DMS houses incredible information. It allows you to uncover and dissect what’s happening in your dealership. What’s your effective labor rate? How about your hours per RO? Do you know your gross percentage? The DMS helps you understand averages, set benchmarks, determine what’s good or poor. But most importantly, your DMS helps you understand what’s causing all of this. Because we don’t search for results, we search for actions to drive results. Our actions will determine the results we get.
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About the Author | Michael Panozzo
Michael Panozzo is a Dealertrack DMS Performance Manager who works with dealerships to maximize DMS utilization and drive process and profit improvement. Michael came to Cox Automotive in 2016 after a 15-year career working in and managing auto dealerships where he honed his skills in operational excellence.