Allen Harris: Slaughtering the sacred cow
If you're like most business owners, there is something in your company that needs to change, but you're not making that change because you're afraid to rock the boat. That's been a problem for Neil, the owner of a midsize car dealership, for a while now. I had a blunt talk with Neil, where I told him that he needed to let go of his longest-tenured salesperson, Rob. But Neil just couldn't do it. In Neil's mind, Rob was a "sacred cow." In business, a sacred cow is someone or something that is exempt from criticism, or even questioning. This "untouchable" can be a problem for your company as it's often something you have to "work around," making positive change difficult. Sometimes it's a do-nothing family member who drains company morale. Sometimes it's the "we do it that way because we've always done it that way" mentality. Most often, however, it's an employee who has been around a long time and is not willing to change, and the owner isn't willing to make waves. It's most dangerous when it's a top salesperson and the owner is scared to lose them and instead puts up with overlooked policies, bad habits and resentment from other staff.
Neil's dealership is well-known in Western Massachusetts, having started his company more than 30 years ago. Over the last decade in particular, as sales of light vehicles have rebounded, Neil's business has been very involved with sponsorship and charitable efforts, both because Neil wanted to give back to the community where he and his wife, Theresa, raised their three children, as well as because there was a tangible return on investment for their public relations. As a result, there has been a greater stream of potential buyers visiting the dealership whom had not previously bought a car from him.
At age 66, Rob is 12 years older than Neil. Rob was one of Neil's first employees. Since then, the dealership has grown and employs nearly 70 people, sold just over 700 cars last year, and has a profitable service department. Rob is seen as a senior employee, and a de facto "boss" or sales manager by the other salespeople. He has no official title in that regard, but he does take the time to show the "newbies" the Neil dealership way of sales, at least as Rob sees it.
Rob had been the dealership's rockstar salesperson for the first 20 years, and in the last decade continued to hold his own in terms of percentage of sales even though there were several more salespersons on the lot. As a result, Rob has continued to receive the most bankable hours and dates. Additionally, Rob was often immediately paired with the junior salespeople when the prospects in their rotation were seen looking at higher-end models, which helped keep Rob's sales volume up. Rob was among the top five salespeople in any given month on an absolute basis, however, when you adjusted for hours worked, premium dates, pairing and price concessions, he was not as impressive on a relative basis.
Rob was an O.G. at Neil's dealership, and a consummate salesman, at least for his time. Rob embodied the stereotypical, smooth-talking car salesman we've all seen in the movies. Although people don't respond as positively to those old sales tactics, Rob clung to his old skill set. Today's shoppers or more informed than ever and prefer to be consulted and expect immediate satisfaction. Instead of embracing a changing industry, Rob fought it. He ignored any sales training videos or articles Neil emailed to his sales team, and by his lack of participation in discussing the emails, made it seem acceptable for everyone else to ignore them. When Neil bought his sales staff iPads to engage with prospective clients on the showroom floor, Rob dismissed the need, and the training went to waste as the other salesmen followed Rob's lead and didn't adopt the iPad's usage. As a result, competitors to Neil's dealership were better informed, more prepared and better trained to deal with today's savvy, smartphone carrying car shopper.
It was becoming apparent to Neil that the money they were spending on marketing was going to waste because Rob's way of selling was for yesterday's car buyer. The salespeople taking Rob's advice were routinely finding themselves at the bottom of the list in terms of monthly volume, which led to a higher-than-average amount of turnover, making it harder to hire more salespeople who weren't attracted to a firm that was cycling through employees. The result was that more dealership concessions had to be made in order to make sales, which helped keep revenue up, but shrunk the profit margin. All because Neil was afraid to slaughter his sacred cow. Neil was prioritizing loyalty, and the avoidance of conflict, over productivity and profitability.
I wish I could end this story on a positive note. This is actually a four-year-old story. Neil is still selling about 700 cars per year today, which was the national average back then, but now is 30 percent below average. Neil should have offered Rob a nice severance package and replaced him with a true sales manager (or, at least, outsourced a sales development team). But Rob is still there, and while the salespeople aren't exactly like what you'd see in the 1990s flick "Cadillac Man," they aren't far off. That's just not how people want to shop nowadays. Neil's dealership is behind the times, all because of that one thing he felt they had to work around, instead of fix. Neil let his herd follow the sacred cow, and as a result, employees did not develop skills to adapt to a changing industry.
What, or who, are you working around that needs to be fixed? What's your sacred cow? Are you willing to let it continue to hold you back?
Allen Harris, the author of "Build It, Sell It, Profit — Taking Care of Business Today to Get Top Dollar When You Retire," is a certified business valuation specialist, certified value growth adviser and certified exit planning adviser for business owners. He is the owner of Berkshire Money Management in Dalton, managing investments of more than $500 million. Allen's forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquiries to Allen at AHarris@BerkshireMM.com.
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