It’s been a long time since we’ve heard the expression ’blue sky’ in the sale of automobile dealerships. At one time ’blue sky’ was the amount of money a buyer would pay for a combination of cash-flow multiples, dealership location, reputation, history and of course a direct correlation to the ’make’ being sold. Up until the ’80s, we would hear of ’blue sky’ amounts of $500,000 to several million…the ’pack-it-in’ consideration a dealer might hope to realize in exchange for future profitability of the new owner. Then, the public companies came on the scene and for a short time drove up the sale multiples to astronomical levels. Often, these amounts made no rational sense whatsoever. It was common to hear 10…20…$40-million and more bantered around in ’sale’ conversation. That was then. This is now. ’Blue sky’ has all but vanished. Dealerships that once sold for monumental multiples are being liquidated for assets and the point closed. The bloom is even off the rose for most of the coveted import franchises. ’Blue sky’ has pretty much left the room along with Elvis.
Almost 20 years ago, I wrote an essay on the future of ’blue sky’ value. At that time I contended that the biggest factor in the amount of profit a dealership might realize at time-of-sale would be the brand that dealer had built. Not the makes or models, but the perceived value of a dealership’s integrity, trustworthiness, honesty, consistency and dedication to customer service excellence. Not only do I believe my prediction was spot-on two decades ago, I’m even more convinced now that a dealer’s ’brand value’ is pretty much the only factor left in determining ’blue sky’ value.
Think about the biggest ’dealer brands’ today. What have these ’brand building masters’ done so well to preserve and enhance their trade name?
It’s never too late to start ’building YOUR brand’. In the May, 2008 edition of Dealer Magazine, I penned an article titled: “The Top Ten Tools For Building a Brand.” If you’d like a copy, please email me. But let me share a few of those tips now.
Several decades ago one of the most successful, innovative automobile dealers I’ve ever met made this statement:
“Sell the salespeople, and they’ll sell your customers.”
If you really want to build your brand, make sure every single person involved in your organization understands your brand U.M.P. (Unique Marketing Perception). Not just the salespeople, but everyone in the office…parts & service, every department. Distribute an internal newsletter several times a year or just send an occasional e-mail to everyone (and you do have the email addresses for all of your team members…right?) Never miss an opportunity to talk about your ’brand’ and what it means to everyone in the company. Ask your team members for ideas on building your brand. Then listen carefully and find ways to implement the best ideas and reward those who contributed.
Spirally integrate your communication media. Make sure you can easily upload a self-administration section or two on your website that can be changed every day…even multiple times a day if necessary. Use other media to bring your potential customers to the website. For instance, instead of trying to cut commercials every single day for new and used vehicle specials, why not sell the sizzle on radio and television of spectacular bargains, inviting those listening or viewing to visit your website right now for the most updated list of specials! Your website can be your own newspaper, radio station and television with easy-to-use streaming audio and video applications.
As enterprising dealers gathered more and more marques under their collective belts, we witnessed a diminishing loyalty to the individual makes. Despite the signage and non-competitive space demands of manufacturers, the smartest dealers held their ground over the past 30 years. Their names are the most prominent logo on the property. The typeface, logo and overall image of the dealer’s brand are all clear, memorable and always professionally designed.
They exhibit continuity and clarity in all advertising and marketing materials with the dealer’s brand showcased prominently. Phone numbers and web URLs are built around the dealer’s name. The best dealers in the nation have strived to always create a unique marketing perception of their brand in the marketplace, at least as dominant as the manufacturer’s brand claims.
This elite group of dealers takes the lead in preserving not only the good will of the brand name, but protects their name from any connection with illegal behavior or misleading advertising or press…recognizing the long-term devastating effects of such actions.
These ’brand-exceptional’ dealers spend time and resources to help make the communities in which they live and work better places for all.
These ’brand-excellence’ dealers know how critical it is to have every single person on the dealer’s team representing the organization with the highest standards, and they realize how important it is to screen for a cultural fit and adequately train in every department. These dealers don’t think of their team members as employees, but rather as ’internal customers’ whose satisfaction is as important as that of the dealership’s external customers.
Tell the Troops! Given our economic situation, could anything be more important than good internal communication? Make sure some of your advertising budget is dedicated to keeping your ’internal customers’ in the loop. Don’t bother sharing negativity. Your team gets plenty of that from the mainstream media. Talk about the wins, the successes, the achievements, the reasons YOUR brand is the best and why it will remain a powerful symbol in the automotive world long after the dust of the current times settles. Remind your troops about the incredible relationships you have built with the public over the years. These are your most important corporate assets!
Insist on Total Integration. All of your marketing/advertising/promotional themes in every medium should be coordinated to complement your brand-building goals. Imagine how much greater your next major sales event can be if you involve every department in your dealership. Have a contest for referrals. Hold a special breakfast prior to the sale to share your strategy. Make your financing partners part of your promotion. Send an invitation to your current customers for an opportunity to take advantage of specials before advertising to the general public.
Consistency. Consistency breeds confidence, comfort and loyalty to a brand. Consistency clarifies your business philosophy and builds value to every service and product you offer. Consistency is building a theme in your marketing and operational procedures. Simple elements combine to produce consistency…a voice, a tag line or a branding phrase, for example. Even the pace and style of your advertising messages should lend themselves to consistency. Several years ago, I asked a number of top dealers our company has worked with over the years to share the most important way our advertising agency benefited their respective dealerships. Overwhelmingly, the top response was consistency. And if you’re not concerned with ’building a brand’, you should know this: consistency is the key advertising element that increases gross profit.
The dealers who have done the best brand-building job never set out in the beginning to build ’blue sky’ in their enterprise. Yet their passion for excellence built a trust and recognition with customers in their respective marketplaces that, today, represents the only true ’blue sky’ value in the business.
What things have you done to build YOUR brand? Please email me me so I can include those thoughts in a future article.
2/19/09 Copyright © Jim Boldebook (for April 2009 Issue of Dealer Magazine)
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