horses and guys

Cornbread Thinks: Welcome to Retail

In the car business, from time to time, an individual who had successfully climbed the ladder to a highly compensated level retired with a sizable piece of money. Some wanted to become dealers. Having worked with dealers for 20 years, they knew how stupid and inept dealers were, so this would be a piece of cake. But, their experience was in selling to dealers, not people.

They would come with a plan to do things better, to change how cars were sold. By the way, it’s best to sell the way customers want to buy, not how you want to sell. To cut expenses, they cut payroll — 10-year veterans cost more than one-year friends. They planned to be lean, mean selling machines. Ideally, they bought franchises whose owner had run a good store with a solid base of customers, dealers with good service departments and good employees, respected in the community. They’re rarer than unicorns.

Most couldn’t pay what these stores command. They ended up with a project — optimistically, one that had market potential in a large, growing metro area with a multiplying population of potential customers. Sam Pack, of the Five Star franchises in the Dallas area, is one of these. He came from Ford Credit. He is the most successful of all that I know. He, too, is rare as a unicorn. 

Many others had hard lessons to the point of financial failures — forced to sell, some to bankruptcy. It was heartbreaking to watch. There were many comical (to us, anyway) incidents in their lessons. Invariably, when these dealers relayed their experiences at dealer meetings, our response was, “Welcome to retail.”

Retail business does not get to pick who walks in the door. Horse training is not true retail business; people do not have to have a horse. You absolutely must make every single person who walks in a customer, or at the very least, a future customer who will try again. Your existing customers are precious. These people are your best advertising. “Word of mouth” advertising can be the cheapest; it can also be the most expensive. How your customers talk about you can make you or break you. Your company is you.

Dealers are rarely more than one person. So, employees happen. This is the single biggest challenge for any business. Poaching from other dealers was a tactic, but rarely did that work. If they will quit them, they will quit you. I liked the people who quit first, then came looking. The best practice was to “grow” them by training them to a standard, which can be expensive. I spent millions on training.

Then you have to keep them. You have to create a team they want to be on, people who enjoy coming to work, people who work well with everyone, people who aren’t afraid to tell you what you don’t want to hear. Everyone is a customer to someone, and all customers need to feel appreciated. For instance, technicians are the parts department’s customers.

We had a psychological training program for all employees, probably the single most important thing we did. It taught the four basic types of people, how they made decisions and interacted with others, how you should respond to them, why you did what you did and how to put yourself in their shoes. It was fun and it worked.

We knew our customers intimately and there were tens of thousands of them. We did extensive surveys, along with “postmortems” on our failures. I did not depend on a manager to tell me what a customer thought. What we did wrong was important to me. If I hired a manager that failed, it meant I failed.

Just as every customer is precious, so are employees. “Turnover” in the people who you depend on has destroyed many businesses. Replacing customers or employees adds about 40 percent to the cost of acquiring them in the first place. It’s kind of like that $5,000 using horse you can’t replace for $20,000.

None of this works if you don’t care about your people. You must respect and empathize with every person in your world. You can’t afford to throw them away. They aren’t fresh cows. When the lean times come — and they will, they always do — these are the people that will keep doing business with you or won’t go find another job. They are precious.

These things apply to all business.

Cornbread Thinks: You can’t fake caring.