I recently read a quote from an unknown source that said, “don’t cling to a mistake just because you spent a lot of time making it.” Great advice! The mistake is in the past and is sunk, so move on. Great leaders get-it and don’t sink their future by holding on to what doesn’t work.
The best leaders are more vested in the outcome than they are in the methods. They can let go of methods that don’t work and redirect resources to methods that will.
Imagine where our industry would be if we did not learn from the past nor try new things. The good news is that great leaders avail themselves of the best possible information and adjust their course as necessary. To this end science has been shaping the automobile industry ever since the invention of the first wheel in 3500 BC.
Most of the scientific discoveries have been product related and leaders have used it to transform the automobile into the marvel we have today. For some reason, however, science relating to human behavior, and what creates customer and employee engagement, continues to be largely ignored.
Since customer engagement translates into retention and employee engagement translates into productivity how a dealer responds to the science has huge implications for the growth, profitability, and sustainability of the dealership.
Research shows that the best dealers achieve 50% better customer retention and double the employee productivity of average stores. Why then don’t more dealers adjust their course when faced with this reality?
I believe the answer is found in one or more of the following paradigms:
- A belief that the car business is more art than science. The same was true of baseball until the concept we now know as Moneyball was proven to produce better results than talent alone.
- The manner in which this industry attracts strong personalities who often see control as strength and vulnerability as weakness. These are people who say they don’t have time for, or see value in, the ‘soft stuff’. But as you will read below, it is actually the soft stuff that makes the bigger difference.
- A view that the current model is not broken, so why fix it. This mindset is also reinforced [inaccurately] by the amount of money an average dealer can make even when using an inferior model. All you have to do is look at the wake of consumer distrust and employee turnover to know that something isn’t right.
- Not being aware of a better approach or how to implement it.
My objective with this article is to spark a conversation that will inspire a paradigm shift for many dealers, if not for the whole industry.
Current State of Affairs
Major advances in science and technology over the past 20 years, especially as it relates to the Internet and ease of access to information, has resulted in significantly greater competition, forcing most Dealers to rethink their strategies and approaches.
Gone are the days when you could simply advertise a deal to drive sales—every Dealer is offering low prices and people can now shop the Nation within minutes. Gone are the days when you could boast superior quality—every Manufacturer has excellent quality and extensive warranties to shore up their offering. So what sets you apart? What causes people to choose your store and ‘be back’? What causes people to keep coming back for additional purchases? What causes people to refer family and friends? Further, what causes employees to be more engaged allowing you to build an outstanding and remarkable brand? Answers to these questions are found in neuroscience, the study of the brain, and are available at no cost to those with an open mind (pun intended) and a willingness to try a different way.
While the “car deal” remains a thing of art—no two deals are ultimately the same—science shows that there is a better way to deal with customers than the current “up-selling” approach. Neuroscience has revealed that “up-selling” connects only with part of a buyer’s brain, the part that only influences 25% of behaviors and decisions. An approach I call “up-caring”, on the other hand, connects with a different part of the brain, which happens to influence 75% of behaviors and decisions. Read that last sentence again and let it sink in. In effect, the science is suggesting that our current methods are only 25% effective and that there are better methods that would be three times more effective.
Dealers That Get-it
Those dealers who represent the top 10% of the industry get it. They may not have labeled their methods as “Up-Care”, because it is a term that I have coined, but their practices reflect an “Up-Care” model.
If the top 10% get it, why don’t so many others? I believe it has to do with the second perspective above. It is a control thing. So much of the road to the sale has to do with controlling the process and most managers are not willing to surrender control to the customer. I’m not suggesting we need to discard the road to the sale, but I am suggesting that elements of it need to be tweaked.
If the Internet has taught us anything it is that consumers will take control regardless of whether we are willing to give it. And consumers will continue to take more control and those dealers unwilling to surrender it will be become increasingly irrelevant.
As I understand it a Dealer’s goal should be to sell more units, generate more gross, and increase retention. The reality is that those dealers that provide the best customer experience also have the highest profits and retain the most customers. It’s time for automotive leaders to humbly let go of an antiquated model [up-selling] and embrace the future [up-caring].
The Science of the Brain
Human behavior research shows that only 25% of human behavior and decision making is driven by the rational brain (Neocortex), while 75% is driven by the emotional brain (Limbic). This means that emotional factors are three times more effective in driving behaviors and decisions than rational ones.
The rational brain is logical and analytical and connects with things like: price, quality, time, features, etc.—if it can be measured it is rational. Our ability to speak is also made possible by the rational brain and we can easily speak about rational things like sports and the various plays in yesterday’s game. The rational brain functions well with black/white, yes/no, on/off, and more absolute constructs.
The emotional brain, however, processes all kinds of subtle information and generates feelings, but does not have the ability to speak. Instead, this is where our gut feel comes from. This also explains why it is so difficult to put our feelings into words. The emotional brain is not black/white, but gray scale. It does not provide answers in absolute terms, but more on a sliding scale (1-10).
For example, somebody might ask, “did you buy a new car?” Our typical response, generated by the rational brain, especially for people we don’t know very well is a simple “yes” or “no.” If that same person were to ask about our car buying experience they would not ask, “did you have an experience.” Rather, they would want to know our feelings and ask, “How was your experience?” Two very different questions appealing to different parts of our brain. Again, and especially with people we do not know very well, the rational brain provides generic answers, like, “it was ok,” which don’t really provide much insight. If we are in a trust position with the individual, or if the experience produced strong feelings the answers will be more like: “it was good,” or “it was great,” or “I loved it!” You can see the increase in the amount of emotional being expressed, which provides much greater insight into how the person is actually feeling.
A good way to discern the difference between something rational and something emotional is by adjusting the structure of the question. If a question can be answered with a yes or no response the subject if probably rational. Closed ended questions tend to get a rational response and don’t reveal much insight. On the other hand, open-ended questions require more detail and usually provide insights into how a person feels. I have found great value in asking questions which involve the person answering with a number between 0-10. For example, “how would you rate your experience on a scale of 1-10 where 1 is poor and 10 is outstanding.” The number given in response provides some of the best insights into how they feel and provides context for a follow-up question, which may be structured, like, “What one thing could have been done differently to increase your answer from a 7 to an 8?”
We tend to be more open with people we trust and have a relationship with and closed with people we don’t know or don’t trust. A good indicator as to whether somebody trusts you is whether they answer questions in a closed and rational manner [suggesting low trust], or open and with emotion [suggesting higher trust].
The Emotional Brain Builds Greater Trust
The first thing to understand is that trust is actually made up of two components: Rational trust, which is built with competency (having the ability to do something) and reliability (actually doing the things we say we will do); and emotional trust, which is built with authenticity (being real) and care (putting another person’s best interests ahead of ours).
We all have relationships with people who we [emotionally] trust who are total screw-ups. We give them grace and make allowances because we have a relationship with them. On the flipside, nobody wants to deal with a liar and cheat regardless of how much they know. And to do business we need more than rational trust so that people will divulge their true feelings and not just be “nice.” This is also true for leadership and teamwork. People need more than just rational trust to engage with each other and to follow another’s lead.
This does not mean that we can disregard the rational elements while turning all of our attention to the emotional side. Incompetence and unreliability have a way of destroying even the best of relationships.
The key to building relationships is to be real, care and serve. Simple elements that demonstrate this, are: calling a person by name, following through on commitments, showing courtesy and respect, telling the truth, etc. The good news is that none of these elements adds expense or reduces gross. Rather these elements actually lead to higher gross, greater retention, and better productivity. The catch is that living this way requires humility and selflessness.
Applying the Science for Greater Effectiveness
Obviously, we have only scratched the surface with this article. Many more materials are available if you desire further insights. To help you start benefiting from the science, here are three simple approaches you can adopt immediately:
- Up-care versus up-sell.
If you knew that somebody would be your customer for life and that they would purchase all of their vehicles from you, and bring them only to you for service, would you still feel a need to sell them? In other words, if you could eliminate the fear of losing their business would you, or could you, change your approach?
Instead of trying to get all you can out of them each time, fearing they might not come back again, why not just focus on authentically fulfilling their desires and needs. Provide them with what they want or need, not what you want. This is what Up-care is all about—being authentic and caring about their best interests. The interaction becomes “others-focused” and is structured from a win-win perspective.
In contrast up-sell is typically “us-focused” and a rational approach, which rarely produces as good a result, especially in the long term.
I realize that this is easier said than done and will require adjustments in process. Whatever you do, however, don’t try to fake it until you make it, because that would not be authentic. Just be real and look after the needs of the customer. It is all about focusing on the feeling instead of the transaction. And, when that happens the transaction is more likely to take place.
- More gas, less brake.
With all the insights provided by neuroscience around the benefits of a positive working environment it’s surprising how many Dealers and managers still use power, pressure, coercion, manipulation, micro-management, negativity, and yelling to get their people to perform. As a case in point, and it is sadly humorous, I visited with a Sales Manager recently who was wearing a boot on his foot. I asked what happened and he told me how he kicked a table in a sales meeting while trying to make a point and broke a couple bones in his foot.
The science shows that sustained high performance requires a positive environment. Research shows that the highest performance happens when there are five times as many “atta-boys” than “what-were-you-thinkings.”
Positivity is like pressing on the accelerator, while negativity is like applying the brake. Scientifically positivity has been shown to produce “performance enhancing chemicals” (dopamine, oxytocin, serotonins, and endorphins), while negativity produces a hormone (cortisol), which shuts down the brain. Imagine trying to win a race with one foot on the brake.
So, the advice is simple. Reduce negativity and increase positivity to increase engagement and effectiveness.
- Connect the dots.
Neuroscience has revealed that the brain needs three things to function properly: oxygen, glucose, and connectedness. In other words, eating and breathing is not enough for people to perform at their best. They need to be connected with each other (teamwork) and they need to be connected to the ultimate purpose behind their efforts (vision).
There are many ways to build connectedness, but one of the quickest and easiest is the least understood of the tools we have at our disposal—meetings! Yes, meetings. Not the kinds of meetings we hate to attend, but the kind of meetings that are collaborative, engaging, and which keep people aligned and accountable. A good meeting cadence not only cascades necessary information quickly and effectively, but helps to keep a team focused, headed in the right direction, free of distractions, and with the kind of motivation and support required to sustain high performance.
To take your store to the next level, try tweaking your processes to align with the science. That is what the Top 10% stores have done and look where it got them!
Learn more about the power of up-care by attending Herb Mast’s session at Digital Dealer 24 this April 10-12th in Orlando, FL.
Author: Herb K. Mast
Herb Mast is CEO of HealthyDEALER. As an executive coach he enables Dealers to achieve more of their potential through greater intentionality in the areas of leadership, culture, communication, teamwork, and organizational health. Additional insights, articles, and practical solutions are available at www.HealthyDEALER.com