INDY LIVE 2012: Keynote speaker warns dealers: Innovate or perish

Publish Date: 
Feb 17, 2012
By Holly J. Wagner

Keynote speaker Kevin Freiberg wasted no time giving dealers at the opening session of the 44th annual Dealer Expo his message: “Innovate or perish.”

Dealers accustomed to competing on price or product are in for a rude awakening if they think they can keep doing business the same way in the next decade as they have in the past. In fact, Freiberg predicted, the industry is due for radical change, and it will happen within the next two years.

“This industry is ripe for a revolution. Somebody is going to disrupt this space. Why can’t it be you?” he challenged dealers. “Somebody somewhere is building a product or a service model that is designed to kick your butt. If it’s you, then you get to choose the rules of the game. If it’s not, then you have to play by the rules that somebody else makes.”

Radical change was the theme for the morning as Freiberg offered multiple examples of businesses that reaped the benefits of taking risks.

Auto dealer Planet Honda, for example, gives customers plenty of elbow room to shop without the pressure of the hard sell: “They slap a badge on you that says ’JL’ for ‘Just looking,’” Freiberg said. Until the customer removes the badge, no salesperson is allowed to approach. “What have they done? They’ve put the consumer in control.”

Powersports dealers who compete on selection and price must be prepared to build relationships with wired consumers who’ve grown used to the benefits of technology.

Planet Honda, which has staff who speak 15 languages, offers a WOW (Women on Wheels) program that teaches women things like how to avoid getting ripped off when car shopping and how to safely change a tire on a busy freeway, and can enter a customer’s license plate into its computers and pull up a record of every visit or call that customer has ever made to the dealership.

Not only has the New Jersey dealership cut its advertising cost – which averaged $450 for every new car sold – by two-thirds, it also gets an average of $500 more for the same car than other dealers in its area; has less than 1 percent employee turnover; and 70 percent of its customers are repeat business. Those are numbers that could give any dealer whiplash.

The key to success is building relationships that make customers want to come back. In a connected world, businesses must learn everything they can about their customers and use that information to anticipate their needs.

Whether it’s through a salesperson, the dealership website or a mobile application, “You’d better be learning something new about me every time you touch me.

“I don’t care if you are a small shop and you can’t afford a gazillion-dollar CRM system. But how many of you can afford a shoebox? How many of you can afford index cards for the shoebox?” he asked. “Every time I come in, train your staff to write something on my card.”

Keep customer records that include information like what the customer rides, how much they ride, what kind of riding they do and how many miles a year they put on their bikes. That lets the next employee in the service chain, for example a service manager, can get not only a service history on the vehicle, but more personal information that lets them suggest more products or services.

“People are not looking for best practices, they are looking for next practices…and they are looking for people who can provide it,” he said. “You’ve got to be able to leverage technology and connectivity to get better.”

Facing the fear. “Some of you in this room have generated a lot of wealth. You scare the hell out of me,” Freiberg said. “Crisis-driven organizations are usually loaded with people who resist change, and it starts at the top,” Freiberg said. Dealers must face their fear of change, try new things and above all, be willing to fail on the road to success.

“You have to get comfortable being uncomfortable. Innovation is uncomfortable” because it’s a process of trial and error. “The world isn’t changed and your business isn’t going to be changed by people who are afraid of risk.

“What would risking more and failing faster look like in your business? I don’t know. I am not an industry expert. Maybe it’s adding a radically new kind of merchandise to bring different people into your store,” he said, When he toured a big box automotive store in Japan, he was surprised to see it sold not only automotive goods, but designer handbags and high-end sunglasses.

“It amazed me to see a lot of these men shopping with their spouses,” he said, but adding unexpected products to the mix meant that couples could shop in the same store, which kept both of them there longer – and spending more. “They stay longer because mom is willing to hang with dad.

“I don’t know what it is for you guys, but what I do know is that this industry is in need of some radical change. What are you going to do to risk more and shake it up?” he asked. “Get outside your comfort zone.”

The fruit is usually out on a limb. “ If you are going to accelerate innovation you are going to have to question the unquestionable,” Freiberg advised, challenging dealers to think like innovators in digital age. Examples?

  • Ted Turner asking why he could only get broadcast news in specific time blocks. Turner invented the 24-hour news cycle.

  • Jeff Bezos asking why customers should be limited to a physical store and now-paltry selection of 250,000 book titles. Amazon.com was born.

  • Steve Jobs asked why people could only buy music on discs and tape, and had to buy whole albums instead of individual songs. Is there anyone who questions the success of iTunes now?

What those innovators have in common is that they took a risk that challenged the existing business model, and disrupted entire industries in the process. Embedded knowledge is the mortal enemy of innovation.

Look at Kodak, which dominated the film photography industry for nearly a century. The company filed bankruptcy just weeks ago. “Kodak had a problem. Kodak saw itself as a film company. If you are a film company in a digital age, you are dead, and Kodak is.“

The takeaway for dealers is to leverage technology to create a more appealing service environment that will bring in new customers and make customers existing customers want to come back again and again.

“People come to trade show and get juiced up, then we go back to our business and it’s business as usual,” Freiberg said. “If you go back to wherever you go back to and it’s business as usual, it’s business as usual because you chose to let it be business as usual. Is your business going to be a better business because you go back on Monday morning and choose to do something different?”

To succeed, he told dealers, “You’re going to have to trade ‘Yeah but’ for ‘What if?’ and Why not?’ ”

For those who missed the presentation, slides are available online at http://www.Friebergs.com/slides . Enter the code “dealernews” to access the presentation.