Last month I wrote a column on measurements, and we discussed how important they were especially when treading through difficult times. Good times cover a multitude of sins, and in the intoxication of success we can, many times, find ourselves unhitching from the guideposts that got us there in the first place. There is nothing sexy about forecasting and planning. Many of us are high spirited horses and would rather adopt the “damn the torpedoes, full speed ahead” mentality, than to slog through the tedious duty of crunching the numbers, setting a hard target, and strategizing a way to get there.
As discussed last month, there are three steps to measuring and managing your departments to optimum performance. The first is assessment. You have to know what is, if you want to know what can be. Now that we have discussed the tools and methods to ascertain your position on the map, we can move on to the second step, which consists of proper goal setting. The third step is to develop action plans and initiatives to move you toward those goals.
Using these three steps to chart the course answers the three questions that all of your managers and most of your employees instinctively want to know:
Where are we? (Addressed)
Where are we going? (Goalsetting)
How are we going to get there? (Action plans and initiatives)
How do you set goals in your dealership? Do you have a repeatable proven formula? Does the formula change when the marketplace changes? Does it address your competitors? Does it address your staffing? Is it based on mathematics, or on gut feelings? Who decides if it’s right? What adjustments can you make if you are not going to achieve the goals?
English aphorist Ashleigh Brilliant once said:
“To be sure of hitting the target, shoot first, and call whatever you hit the target.”
This quote is certainly meant to be a tongue in cheek assessment of the goalsetting process, but I have observed that in the absence of a well-defined strategic plan, dealers many times move the target in front of the results, instead of moving the results to meet the target.
Let’s talk about starting the goalsetting process by first assessing the environment and infrastructure in which you operate. Everyone would love to double their sales! But before you can forecast such a lofty goal, you have to answer two important questions. The first is: Do we have the marketplace to meet that goal? Is there enough business available to meet that goal, and what is the likelihood that we will be successful in garnering enough of it to meet the objective? The second question is: Do we have the infrastructure to meet that goal? The best laid war plan falls flat without adequate ammunition, boots on the ground, and support mechanisms in place that can handle the extra load.
I always recommend to everyone that is developing any type of meaningful goal setting endeavor, that they start the process by doing a SWOT analysis. For the uninitiated….SWOT, is the acronym for the following:
Why is this important? Simply because the process tends to draw you and your team from “theory” to “reality.” A SWOT analysis demands detail. Policies, data and actions need to be specified.
Strengths – This defines your dealerships value proposition to the marketplace. As your dealership evolves, this value will evolve. It’s vitally important to do this at least every year (if not semi-annually). Did you add a new line? Are there warranty opportunities you may have this year that you did not have last year? What is the status of your training, and knowledge base of your road crew? Have you entered new markets? Did you invest in new tools? Do you have access to new parts? These are all questions that help build your profile of strength. Understanding your strengths will help you identify the right opportunities later in the process.
Weaknesses – What are we doing now that we need to stop doing? These items may be easier to ascertain, because they are normally accompanied by pain! It’s amazing however how dealers tend to not want to recognize where they are failing. Some of this is driven by long standing (and inefficient) practices. Other times it’s a matter of pride, not wanting to rock the boat, or trying to be “all things to all people”. If you set aside time however to have an honest chat with your people; and allow every operation, department and process to be put on the table (without reprisal), you will be amazed at how much of the closet you can clean out. This is painful…but it’s liberating!
Opportunities – Now that you have identified your value proposition, and have decided what markets, or policies that you want to eliminate, you are ready to assess your opportunities. I think of assessing opportunities in three ways: Markets, targets and competitive advantages
Markets - These are industries or groups of customers for which you have identified strengths that match well with customer needs. Make a hierarchy of customer markets to attack, based on your newly revised profile of strengths, and use this list to develop your plan to bring on new business.
Targets – The problem I see with most target customer lists is that they are too long. You cannot target 25 customers. Customer targeting is not a shotgun proposition. On the contrary it takes a sniper rifle mentality. I will speak more about target customers when I cover strategic planning next month. Let me say for now, however, that your target list (per territory) should consist of no more than two entries.
Competitive advantages – Sometimes your greatest opportunities is coming in behind one of your competitor’s failures. It’s important to have a sense of market intelligence within the dealership. Whether the competitive failure is on time delivery, parts pricing, parts stock or unreliable repairs, we need to be ready to illustrate how our strengths can better service the customer, and draft a plan to purposefully target these opportunities.
Threats - Threats come in many forms, some are controllable and others are not. The one thing that threats have in common is this: They are not reality! They could happen, but it’s not inevitable that they will happen! This needs to be the guiding posture to this conversation. How can talking about existential threats help our cause? Simple. It addresses the 900 lb. gorilla in the room. It’s impossible to prepare for a threat that is not defined. Once defined, it’s easier to mitigate. The action plans we will talk about next month can and should be influenced by these threats. To give you one small example:
Our dealership operates in the once parched Central Valley of California. Starting in 2012, a shortfall of precipitation left our state in the tenuous position of not having enough water. Between the environmental lobby, and our notorious governor, water resources in our state have been the subject of much conversation and consternation since this time. Farming interest were being sidelined by stronger and more politically powerful operatives. It’s rumored that Mark Twain famously said “Whiskey is for drinking; water is for fighting over.” Whether properly attributed to Mr. Twain or not, truer words were never spoken.
Since our inception, our business future, customer base and growth potential had always been tied to a strong agricultural marketplace. If water was not allocated to farmers, crops would go unplanted and orchards and vineyards across our valley would wither and die. Our fate was tethered to the success or failure of our farming customers.
As a dealership, could we affect the water outcome? Unlikely. We could however hedge this threat by changing tactics. If orchards die, their only remaining value is in the standing wood. Prior to this time we had always focused our activities on selling and servicing “rolling” equipment. Power equipment was a business and market that we chose not to participate it. The threat of dying orchards, however, had a hand in changing that plan. We became power equipment dealers for two major brands that year. Adding chainsaws to our equipment lineup not only added an appropriate accoutrement to our farm equipment offering, it also put us in a position to address an eminent threat with the equipment needed to meet the possible challenge at hand.
In the final analysis, a SWOT assessment helps you lay the groundwork for setting your final goals and strategic plans. It helps identify your tools, your talents and how they can both be applied to the marketplace. It pinpoints specific accounts that are important in meeting your revenue and profitability objectives. It addresses both competitive and environmental threats and allows you to do some provisional planning.
Now you are ready to enter the final phase of goalsetting: Strategic planning.
I’ll be back next month to finish off this series and leave you with some fresh ideas for your future forecast.
Dave Baiocchi is the president of Resonant Dealer Services LLC. He has spent 33 years in the equipment business as a sales manager, aftermarket director and dealer principal. Dave now consults with dealerships nationwide to establish and enhance best practices, especially in the area of aftermarket development and performance. E-mail email@example.com to contact Dave.