Telling the Emperor He Has No Clothes
Telling the Emperor He Has No Clothes

“The Emperor’s New Clothes” is a fairy tale by Hans Christian Andersen about an emperor who pays a lot of money to a scam artist for some new, “magic” clothes which he is told can only be seen by wise people. The clothes do not really exist, but the emperor does not admit he cannot see them, because he does not want to seem stupid. Everyone else pretends to see the clothes too, until a child shouts, “The emperor has no clothes!”

The title is often used to describe a situation in which people are afraid to criticize something because the person in power believes it. As an agent, you know that automobile dealers often live in a bubble. They have only the people under them to listen to, and they can be mired in believing things that are not true and certainly not productive.

And sometimes the agent or product provider is the only person who can give them the proper perspective.

Rich Dealer, Poor Dealer

I have been in hundreds of dealerships all over the U.S. and Canada over the last 25 years, and I have extensive experience working directly with dealer principals. One thing I have viewed, firsthand, is that successful dealers view the industry differently than those who seem to struggle.

One difference I have observed is the overall attitude and mindset that separates the two. While we constantly hear about things like “positive mental attitude” and “the power of positive thinking,” the reality is that changes in the industry require more than just saying the words. A while back, I experienced the perfect example.

I often speak to dealer 20 Groups. After one of those meetings, a dealer principal who had attended asked me to visit his dealership because I mentioned I was coming to his city for another function. This happened to be a Ford dealership in a medium-sized city in the Midwest. One of the top F&I performers in his 20 Group used our process and suggested he call us. His dealership ranked near the bottom of his group’s F&I performance ranking. I made the commitment to visit when I was in town.

Before I went, I gathered some performance information about dealers in his area that we had trained and also had him send me his F&I performance numbers.

When I arrived at the dealership, I was greeted by a rather uninterested salesman who asked, “Can I help you?” Since I was not injured or in medical peril, I said I’d just like to see the dealer. Let’s call that the first clue this store was in trouble.

The dealer took me to his office and began explaining their F&I process, how it was not working, and wanted to know what they could do to improve. As I started asking specific questions about their process and methods, the dealer quickly started enlightening me as to the real problem: his customers. You see, his customers were “different” (second clue).

His customers were smarter than average and didn’t fall for F&I products. They all look up the invoice price of their vehicles on the internet, read all the articles about F&I rip-offs, and some are even insulted when they are asked to give credit information. Most of his customers had bought from him in the past and he didn’t want to offend them by trying to sell them stuff they didn’t need (clues continue).

His F&I managers had been with him for years. His sales staff had all been there a long time as well, and they didn’t really like turning their customers over to anyone else. He also had a new crop of customers moving into the area that didn’t speak English. His F&I income, per retail unit delivered, was at around $700. But given all of the above, didn’t I think his F&I guy was doing a pretty good job? I mean, with all of that, what could he do?

As I sat there listening, I leafed through the information our research team had given me and noticed that we had trained a Chevrolet dealer in the same city for one of our authorized agencies. They were at about $1,500 per retail unit delivered, had top customer satisfaction scores, and they were achieving outstanding penetration percentages across a range of different products. And that’s with two F&I managers who had a combined experience in the business of four years. When I asked the dealer how far away that store was, he stood up, took me out the front door, and pointed to the Chevy sign about a block and a half away, and across the street.

Here’s the Thing …

Now this is where I get into trouble. I can’t help myself. You see, we don’t sell any F&I products so I don’t have to worry about bruising the dealer’s ego or losing his business. I tell them the truth.

I told the dealer what the Chevy store was doing, (with their permission, of course), compared the demographic profile of Chevrolet and Ford buyers (very similar), and asked him if there was some kind of Bermuda Triangle-type vortex that customers passed through going that block and a half away and crossing the street that made them so different.

He immediately became defensive. He told me I didn’t understand and, in no uncertain terms, that, “We don’t do that to our customers!” When I told him that maybe his buying into that mindset was part of the problem, he honored me with a 15-minute lecture on what’s wrong with the car business and gave me his philosophy on F&I and the business in general.

After that meeting, I assumed that I would never hear from him again. It’s funny how things work, though. Two months later he called and said, “We’re ready to fix F&I. When can you come?”

They had hired a sales trainer I had mentioned to him on my visit to help their sales force. He couldn’t believe how much their closing ratios and grosses had improved. He was promoting two new F&I managers he wanted me to train and he promised they didn’t know anything so they would probably do whatever I trained them to do.

It’s now been a few years since I trained those F&I newcomers and they are consistently within $100 per retail unit of that Chevy dealer down the street. 100% of customers are turned over to F&I at the time of sale. Even though they have pretty much the same floor traffic as in previous years, they are closing a much higher percentage of that traffic and sales are up almost 60%. They are maximizing the F&I income on every unit they sell.

And results breed confidence.

One of the F&I managers I trained called me recently to ask what they had to do to make our “F&I Masters” list. (They’re getting a little cocky. Good.) And the dealer principal now looks forward to bragging at his next 20 Group meeting.

I guess it’s true. Sometimes success is just in the attitude of the dealer principal. But sometimes you have to be willing to tell the Emperor he has no clothes.

About the author
George Angus

George Angus

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George Angus heads the Team One Group, a research and training company that specializes in scientific, research-based program development and training programs for the automobile industry. George has trained thousands of F&I managers and his popular "Saturday Morning Messages to F&I Masters™" has over 8,000 subscribers.

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