The Internet is an environment inhabited largely by companies that are testing the limits of self-service because corporations are horribly inefficient at rendering assistance.
A year ago my inventory debt was about $50 million, today it's down to $35 million. Yes, sales are down a notch, but I'm making significantly more money. What's more, my customers are happier, my bankers are happier, my staff is happier and, hell yes, I'm happier.
But sadly, my manufacturer is pressed for sales and can be described as anything but happier. It seems that just as I was figuring out all the ways that excess inventory chewed up profitability, my manufacturer was conjuring up ways to increase my days' supply in order to reduce their expenses. The strategy included shrinking vehicle margins, reducing interest support and increasing the lead time to order a vehicle. When my rep came calling to encourage me to stock more units, we had an interesting give and take.
“But I've never been more profitable,” I explained. “I've finally gotten a handle on my inventory needs; I've got a mathematical equation that predicts, very well, how many vehicles I should stock and which ones they should be. I've reduced my interest expense and I'm satisfying my customers by stocking what they want.
“What's more, I am not forced to offer huge incentives to the salespeople to motivate the sale of slow-moving cars, and I never have to run misleading (and costly) full page ads to bait the public into unwanted sales. Everyone is happier.”
As the words passed my lips, I knew my rep was not a bit happier. After all, they didn't pay him to thank me for taking fewer cars, no matter how profitable my new equation was and no matter how satisfied it made my customers.
“You're reading the past as if it were the blueprint of the future,” he said with disgust. “You're never going to break out of the rut you're in if you can't see beyond your past troubles. I'm starting to question whether you are qualified for the opportunity that's out there.” Now I was starting to get hot. At some point in this discussion my colleague had taken to questioning my capability. He never questioned my fitness when I was overstocked and losing my shirt, and certainly not when I was selling a bunch of cars at what turned out to be a loss. But, now that I was making a few bucks and he was drowning in self-pity, I've become the bad guy.
“You've got to trust your gut,” he spat. “We're just asking you to take your fair share.”
The discussion had taken a decidedly bad turn, and it was now my job to get back on safe ground. But how?
The odd thing is that nowhere else are consumers as well informed as in the pursuit of a car deal and nowhere are they less pleased about their prospects of negotiating well or of being fairly treated.
Whenever the contest pits dealers against manufacturers, the trump card is always “the customer.” Bedrock of good retailing in America is in the adage “the customer comes first,” and try, as some may, to argue the need for profits, volume or even survival, at a very core level, everyone concedes that the customer must win if anyone else in the game is to thrive.
What makes today's customers so difficult is that they are consumed with paranoia. Even when they purchase our wares below our cost, they go away uncertain of where, but not whether, they've been cheated. Every time they step up to the service counter they're filled with uncertainty about when, not if, we will perform some inappropriate repair.
This is why, when offered the alternative of cyber shopping, every red-blooded American mouthed a silent “hurrah” in hopes that the Internet might unseat the demon that surely presided over the automotive marketplace. They all hoped that the ultimate consumer weapon had arrived, but had it?
For all its speed, connectivity and vast data links, the 'Net is, at the same time, safe and treacherous. Ultimately, there are no people in the cold digital cyberverse. No people to size you up, to locate your weak point and to cheat you, but neither are there people to hold your hand, to guide you and to save you if you stumble.
The Internet is an environment inhabited largely by corporations who are testing the limits of self-service. Self-service is the corporate ethos because corporations are horribly inefficient at rendering assistance.
A corporation is bank accounts and computers belching out paper resolutions and financial documents. A corporation is stock certificates, contracts, real estate holdings and board rooms. True, a corporation may stamp out an assembly line of products, but customers are looking for service to accompany those products, and service comes in human form.
Service is dolled out by people. The place where people interact with patrons is in the realm of the retailer. Service is the human tailoring that fits the stiff “one-size-fits-all” product of a corporation to the unique hopes and dreams of the consumer.
Service is the lubricant that keeps the goods flowing without which products snag on the rough edge of features that do not convey, intuitively, their benefits.
Service is the helping hand that repairs the product that fails in the field. In the ultimate analysis, human service is the bridge between the cold unknown of product specs and the warm comfort of feature benefits. Remove the human relationships that bridge our fears and only deep discounts are left with which we may conquer new markets.
You have only to study the predicament of some domestic manufacturers to see what becomes of those who would rather employ rebates and discounts than strategies for improved dealer/customer relationships.
Yet, the manufacturer's advocate in me is passionately opposed to the whining of customers and retailers who want ever increasing product content at ever lowering price points.
“Yes, I want that with all-wheel-drive, the Rolls Royce Platinum Grille and the three-continent Global Positioning System, plus the six-seat individual full-color stereo DVD entertainment centers with individual climate controls, plus the Autobahn 400-hp drive-train.
“And did I mention that the competition is offering this at $205 per month for 22 months with nothing down and that theirs gets 72 miles to the gallon, which doesn't matter much because it comes with a lifetime of gasoline and a full maintenance warranty thrown in? I expect you'll beat that, won't you? Hurry up already, I'm meeting friends in a few minutes and I'm late.”
It's not bad enough that your product is $600 per month with $3,000 down, but to add insult to injury you can't tell whether the customer is lying, confused or both. Invariably the retailer engages his OEM with a challenge to produce one just like those whining, ungrateful customers are demanding.
And along the way, he needs deeper discounts on the stodgy old stuff now in stock to make room for the new improved stuff that better start arriving soon. Such is the food chain of retail in America.
The $64,000 question is how does one break out of that rut? How do certain brands push to the top while others seem always to lag behind?
The answer is surprisingly simple. In any competitive market the distinguishing characteristic of successful businesses is not some matchless strong point in its product but rather the strength of its commitment to the success of its staff, and through them, real commitment to servicing its customers.
Expecting the tools of the trade or the patents in its products to edge out the competition is a short-lived strategy; this will more likely spawn arrogance than strength. Expecting roadblocks on the Internet or restrictive covenants on dealers is equally foolhardy; these strategies just build resentment and frustration.
Ultimately, doing the right thing for staff and customer is what puts down the roots of success.
Step one might be to provide the best information highways that technology will allow. Place the right information in the hands of decision-makers at the right time and the odds are greatly improved that good decisions will follow.
A second step might be empowering decision-makers by granting them authority and confidence that only comes from knowing that doing the right thing is even more important than the immediate result, because positive results will surely follow.
Finally, there is true commitment to the customer above all else; a hole in this step is the hole through which better companies rise above their competition.
Problems cannot be extinguished by dumping cash on them. But every time we victimize an innocent, dealer or staffer, we kill a large chunk of our potential.
So, there you have it. The top retailers are top retailers because they are linked to their manufacturers in a mission of providing service to their mutual customers. Together they are zealous in the pursuit of better products, reasonable offers and all the tools available with which to connect to customers.
Great products will be in the cards from time to time, but the truly great companies don't lose out even during the periodic drought of great products. Great retail is about great relationships stemming from the great service that transcends all else and only grows from a company of people who are invested from the bottom up.
Peter Brandow is a 25-year veteran dealer with stores in Pennsylvania and New Jersey. He is president and CEO of Brandow Companies.
