June 4, 2007 – Creating healthy competition

By Steve Bauer
Managing Editor
As the old saying goes, competition brings out the best in people. But as is sometimes the case, what starts out as a friendly contest can quickly turn into an all-out war. Maintaining a healthy balance of competition between stores is an issue multi-point dealers face on a daily basis, trying to find the perfect niche between motivating employees without placing sales numbers above customer care and overall company morale.
Be prepared from the start
As most multi-point dealer principals will tell you, competition between stores begins the minute you acquire the second one. Although there will be problems, the key is to stay on top of your staff and make sure they understand that no individual or store accomplishment is more important than the company as a whole.
“The competition between stores will start immediately, and one store is always going to perceive itself as the red-headed stepchild,” said Kurt Finley, president of Colorado Powersports, which currently has two stores, but at one time had five. “Whatever the reason why it happened, you’ll always have one that feels like it’s the least important, and that will continue as you obtain more stores. Someone will always feel like the odd one out, so to speak. The farther apart they are from each other, the less acute the problem is.”
Finley says the most important thing to have in place from the start is a principal or other leader who employees know won’t favor one store over another.
“Even though I manage one of our stores, I try to make everybody see that I’m the president of the company, and even though my office is at the one in Boulder, I care just as much about the stuff that happens in Denver,” he said. “And I have to demonstrate that, not just talk about it, that I don’t take sides.”
Greg Mackey, president of Cycle Central, which includes more than 10 stores in Florida and Georgia, says the second store is typically the hardest when it comes to maintaining a sense of fairness amongst employees.
“The hardest step is the second dealership because that can create some ugly competition, especially if the one dealership is much larger in volume than the other,” he said. “It’s hard to level the playing field and the only numbers you can really compare are per unit sold numbers, and we ran into that with our second store. Once you get more dealerships, it becomes easier because there’s a much wider array of people and dealerships. We have some dealerships that sell only sport bikes, and some that sell mainly ATVs. So now it’s easier because we can compare like stores to one another.”

Money as a motivator?
So if competition between stores is a given, what can a dealer do to turn a potential negative situation into a positive?
“The biggest mistake any dealer can make is to not keep score at all, to not create some sort of competition, or to create a competition but not tell them why,” Mackey said. “If I walked into a room and said, ‘Hey, your dealership sucks. Our other dealership is more profitable than you. We want you to be like them.’ That’s a recipe for disaster. What we’ve done that’s worked really well is created an intranet Web site where our stores can post their numbers every night that measure profitability, that measure per unit sales numbers, so they can look at them and say, ‘OK, this is where the ball’s moving, this is what we’ve got and this is where another store is doing better than me and I need to improve on that.’ If I walk into a dealership and go to the parts department, I’ll have a manager come up and point out the numbers to me, so they all do it and they know what the other stores’ numbers are without any prodding at all. That way you’re not singling anybody out in a negative way.”
Chris Watts, owner of America’s Motor Sports in Tennessee, which encompasses three stores, says tracking sales numbers and using them as a friendly way of gaining bragging rights over other stores can be extremely effective, and that using money as a motivator can sour things quickly.
“We track weekly the parts department and each individual person in the parts department. We send out every Monday a recap of the previous week and where everybody stands,” he said. “That creates some good, friendly competition between the three stores and some of the individuals, because everybody knows everybody, so they like to fight for the bragging rights of who sold the most or who had the highest margin. And then on a twice-monthly basis we do one for all the technicians and we do the same thing for the F&I and sales managers and we also send out a report twice monthly ranking all the salespeople in the three stores. I have a unique situation where two of my F&I managers at different stores are brothers, so the competition between them is quite fierce.
“It’s truly more of a bragging rights thing, because I don’t compensate additionally for the top parts person or salesperson. If I did that there would be some disadvantages because not all three stores are identical in size and market area. Because of certain circumstances, I have one salesman who would pretty much win hands down week after week, and it would be a disservice and not a very good motivator if everyone else is constantly fighting for second place.”
Finley says money can be a great tool for motivating your staff, but his success has come from competition within each store, not between them.
“When it comes time for the bonuses for salesperson of the month, it’s for each store,” he said, noting “even when we had five stores we did it that way.”

Store-to-store communication
Another common problem that can create negative feelings between stores is having a savvy customer price shop sister stores against each other, where one store will unknowingly undercut another on price, which can create an ugly environment of uncooperative sales staffs that don’t trust each other.
Watts says that communication between each store is crucial.
“We try to have all three of our sales departments working as a team. If a customer brings up that they’ve been to one of our other stores, the policy is the sales manager needs to call that store to find out what’s going on because we don’t want to be undercutting our own sister stores,” he said. “It happens, customers don’t always tell us. In fact, it happened last week for instance where we had a customer who had shopped two different stores unbeknownst to us and one store undercut another by a few hundred dollars on a boat. It upset a sales manager and a salesman because they worked hard, so our policy and our procedures are the same at all three stores — the way we price, the way we work our deals and through our sales process — so if someone goes to one store and then goes across town to another, the chances of them getting much of a different deal is going to be very remote.”
Finley agrees that building a solid relationship between sales teams goes a long way toward preventing problems.
“The best way to prevent one store from undercutting another when it comes to a customer sale is communication,” he said. “I think if you make an effort — and familiarity is the key — if you have opportunities for employees to get to know one another then this is relatively easier. But that’s how you do it. If the sales manager at store A cares about the sales manager at store B and they’re friends, then communication isn’t too difficult.”

Consistency is key
As stores mature and each dealership’s staff become more familiar with policies and procedures over time, problems with unhealthy competition will eventually lessen, although the issue will never disappear completely. The key is to stay consistent with your policies and your staff will eventually follow.
“You’ve got to instill in your employees that the one thing that comes first is taking care of the customer,” Watts said. “We’ll sort out who sold it later, but having that stuff get addressed in a retail environment isn’t healthy, and anytime it does happen we take care of it immediately and make sure they understand that their expectations from us are to sell the product, take care of the customer and not be so focused on their individual statistics. You can’t have it get to the point where you have employees arguing at the parts counter over whose customer is whose. That’s not healthy.”
Finley agrees, but does admit that there are still surprises every now and then.
“I think it’s true that as our stores have matured and policies have been in place longer, less problems have occurred,” he said. “Having those policies in place helps us avoid those superficial and less important problems. We do occasionally have a passionate disagreement, so the fact that we have had policies and procedures in place for a long time doesn’t eliminate all issues, but it does get rid of the silly ones. And we’ve been doing this for more than nine years now, and occasionally you run into one that you’ve never seen before.”
Finley also insists that the sooner you rid your dealerships of office politics, the healthier your business will be. And it all comes down to strong and fair leadership at the top.
“I don’t think that stores can have bad blood with each other, only people can have it, and that’s important to remember,” he said. “That’s why the person at the top has to be a fair arbitrator, that’s the most important thing. Because it’s an issue between people you have to be fair and insist that the people you’re dealing with act fairly. You can’t tolerate politics. You have to see what’s happening and make a decision that’s fair, and people will figure out if you’re fair or not over time.
“Keep in mind that the whole is greater than the sum of the parts. And that gets back to the fact that at the top, the focus has to be on the company, not the individual locations.”