The document discusses challenges facing auto dealers in China's new "normal" economy. It outlines 6 main challenges: 1) inventory build-up will lead to fierce competition among dealers; 2) dealers need to adjust their business models due to declining profitability; 3) dedicated 4S stores face competition from multi-brand outlets and e-commerce; 4) declining demand and overcapacity will increase price wars; 5) changing consumer preferences require new retail models; and 6) talent shortage and high staff turnover create operational difficulties. The article provides supporting data on declining dealer group profits and the growth of online car sales in China.

1. PAGE 2 PAGE 4 PAGE 11 PAGE 15
EDITORIAL -
DISRUPTION
IS GOOD
At Sewells, we are excited about
the ‘disruptive’ context we find
ourselves in.
REDEFINING
THE CUSTOMER
EXPERIENCE
Delivering a consistent, defining
customer experience requires
dealers to lead from the front.
May 2016
Auto Retail Best Practices from Across the Globe
TIME OUT FOR
SERIOUS FUN
One of the areas of growing
interest in today’s business world,
is ‘gamified learning’
or ‘gamification’.
BUILDING YOUR
DEALERSHIP BRAND
A strong brand can have
a significant bearing on
organisational value.
INDEX
EDITORIAL .........................................................................2
KEY INDUSTRY INDICATORS............................................3
THE ROLE OF LEADERSHIP IN REDEFINING THE
CUSTOMER EXPERIENCE.................................................4
CHALLENGES FACING AUTO DEALERS IN CHINA’S
NEW ‘NORMAL’ ECONOMY ............................................6
FOUR THINGS TO KEEP IN MIND WHILE DRIVING
OPERATIONAL IMPROVEMENTS....................................9
BUILDING YOUR DEALERSHIP BRAND...........................11
NETWORK HEALTH OPPORTUNITIES IN ASIA..............13
TIME OUT FOR SERIOUS FUN.........................................15
DEALERSHIP INTERVIEWS...............................................18

2. EDITORIAL
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GLOBALEDITION BENCHMARKER02
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The term ‘disruptive’ is becoming an increasingly used descriptor when
it comes to the automotive retail industry. Whether it’s a reference to
organisations such as Tesla, Carvana and Uber, or a nod to continued
shifts in consumer behaviour, there is no doubt that it rings true. The
question is whether or not ‘disruption’ is a bad thing.
Formal definitions of ‘disruption’ point to words such as disturbance,
disorder, interference and confusion; it suggests a sense of negativity
and reason for pessimism. There is however an alternate perspective.
Industries such as ours are often targeted for disruption due to
inefficiency and latent opportunity, and the inevitable sense that
things could be done better. Outsiders are often the first to realise
it and incumbents often feel threated by it. It does, nevertheless,
present a significant opportunity to reshape and regenerate, to listen
to customers and add new dimensions of value.
In this edition of Benchmarker we reflect on disruption and on the
broader environment in which we operate. This includes articles by
Simon Weller regarding the role of leadership in shaping the customer
experience and Abhijit Joshi on driving operational improvements at
a dealership level. Chee Tuck Yap and Kyle Dickie explore China’s new
economy and network health opportunities across Asia, while Dave
Lowrie and Jillian Barrie consider the emerging world of Gamification
and the importance of brand building.
AT SEWELLS, WE ARE EXCITED ABOUT THE ‘DISRUPTIVE’ CONTEXT WE
FIND OURSELVES IN. WE VIEW IT AS AN OPPORTUNITY TO GENUINELY
SHAPE THE FUTURE OF AUTOMOTIVE RETAIL.
We trust that you share this anticipation and are challenged by what it
means for you professionally and for your organisation. We also hope
that you will enjoy and be challenged by the content that we have
included in this edition of Benchmarker, that it gets you thinking and
excited by the times we are living in.
DISRUPTION
IS GOOD
Dr. Greg Strydom
Group Head - Solutions and Innovation
Greg leads a global team of subject matter experts
developing solutions,approaches and technology to address
the opportunities and challenges in the auto retail domain.
Greg also leads the Performance Consulting Practice and
works closely with the company’s strategic clients.
He can be reached on gstrydom@sewellsgroup.com
MAY 2016

3. GLOBALEDITION BENCHMARKER03
PROFITS AS A PERCENTAGE OF SALES
Total Dealership Gross Profit % of Sales / PBT % of Sales
NEW ZEALAND
ROA: 14.48%
AUSTRALIA
ROA:15.69%
ASEAN
ROA: 20.80%
CHINA
ROA: 9.30%
INDIA
ROA: 16.06%
SOUTH AFRICA
ROA: 22.00%
ASSET TURNS (ACTIVITY)
STH AFRICA INDIA CHINA ASEAN AUST NZ
7.20
6.07
7.08
6.13
5.77
5.95
10
8
6
4
2
SOUTH AFRICA
INDIA
CHINA
ASEAN
AUSTRALIA
NEW ZEALAND
KEY INDUSTRY INDICATORS
THIS EXCLUSIVELY COMPILED TABLE PRESENTS THE KEY PERFORMANCE
INDICATORS FOR FRANCHISED MOTOR DEALERS IN THE LISTED MARKETS.
STH AFRICA INDIA CHINA ASEAN AUST NZ
0
15
10
5
20
15.67%
11.43%
6.71%
10.60%
17.96%
13.24%
3.48%
2.71%
1.43%
3.47%
2.90% 2.88%
MAY 2016
75.19%
66.60%
72.54%
82.02%
74.89%
76.83%
TOTAL EXPENSES AS A PERCENTAGE
OF TOTAL DEALERSHIP GROSS PROFIT
PROFIT BEFORE TAX AS A PERCENTAGE OF
TOTAL DEALERSHIP GROSS PROFIT
24.81%
26.07%
25.11%
17.87%
22.62%
33.50%
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4. INSIGHT
GLOBALEDITION BENCHMARKER04
As mentioned in the editorial, ‘disruption’ is the big buzzword in
business right now, and while it sounds new and exciting, it is actually
being used to describe a phenomenon that isn’t new.
Enterprises and organisations are under continuous pressure to adapt
and respond to the threat of competition and innovation. Almost
always the trigger is technology – think forged metal, printing press,
steam engines, the motor car, air travel, personal computing, the
internet and smartphones. Disruption is actually a cycle which renews
the way we learn, work, access and experience products and services.
And once this renewal has occurred and the new model becomes
entrenched, the new model also becomes vulnerable to another cycle
of disruption.
The automotive industry hasn’t changed much since Henry Ford
opened the highways to humankind and profoundly changed the
mobility of the middle classes. Sure there have been improvements in
the engineering, design, safety, comfort and driving dynamics of cars.
However, the fundamental model of manufacture, wholesale, retail
and repair has been unchanged for 100 years.
The automotive industry ties two symbiotic organisations together –
manufacturing and retailing. Manufacturing is incredibly expensive
and high tech, making it reasonably safe against innovators and
potential disruptors. A huge amount of capital is required to design,
engineer and manufacture an automobile at a scale large enough to be
affordable to many and profitable to the organisation. Some challenges
are occurring: Tesla is one example, and the interest that technology
companies like Apple and Google are showing in autonomous cars is
also a threat to the entrenched model.
THEROLEOFLEADERSHIP
IN REDEFINING THE
CUSTOMER EXPERIENCE
Simon Weller
Key Account Manager
Simon is the head of the Ford Academy for
Australia and New Zealand. His responsibilities
include developing and implementing competence
development, process refinement and profitability
solutions across Ford’s retail network.
He can be reached on sweller@fordacademy.com
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MAY 2016

5. GLOBALEDITION BENCHMARKER05
Automotive retailing is arguably more vulnerable to disruption as it is
easy to sell vehicles online – and companies doing that for used cars
are getting very good at it. An example is Carvana, which facilitates all
aspects of selling used cars without requiring a customer to physically
visit a car yard to inspect and purchase a car. Customers go online,
select their vehicle, access financing and then pick up their vehicle at
a designated delivery location. Customers have the assurance of a ‘no
questions asked’ handback guarantee and the whole experience is
designed to be different from the traditional, more adversarial, dealer
experience.
The delivery experience is particularly important to Carvana. As the
only physical touchpoint with the company, they have designed a
range of delivery methods to suit customer needs. One method is
the vending machine – where a customer is given a token to redeem
their vehicle from an elaborate, car-sized vending machine device. This
experience is designed purely for the customer, creating a sense of fun
and wonder when they pick up their brand new used car.
The only thing stopping online used car sales companies like Carvana
from applying their model to new cars, is the exclusive franchise
agreement between a Manufacturer and a Dealership. However, if a
manufacturer decided to wholesale their vehicles to an organisation
likeCarvanaaswellastoaDealernetwork,howmanyconsumerswould
choose Carvana over their local Dealership? It comes down to price
and experience. The market will determine price, which is becoming
more transparent all the time, so I would argue that experience is the
most significant factor.
There is no doubt that when a Dealer gets it right and builds trust,
genuine relationships and excitement in what the customer is doing,
then they can compete. Nothing can replace the human-to-human
connection that a traditional retailer can offer, and if that connection is
positive, then Dealers stand a strong chance of seeing off an inevitable
challenge. However, this must be the rule and not the exception.
So while there is the protection of the exclusive franchise agreement,
Dealers need to be looking to change the way they facilitate and
deliver the experience they provide their customers. The key to this
is leadership.
So what are the facets of leadership that are so important to a Dealer
in delivering a consistent, defining customer experience?
1. LEVERAGE MANUFACTURER INVESTMENT
Manufacturers are very interested in branded customer experience
design, which defines how they want their brand to be represented to
their customers. It includes designing how a customer interacts with
Dealer staff, facilities and online presence, from the beginning to the
conclusion of an event. A lot of investment and research is going into
it and Dealers are the hotspot – it is in the retail environment where it
all comes together.
Take up everything that your manufacturer has to offer – why not use
the tools, training and collateral on offer and buy into a network-wide
branded experience? Also, seek a seat at the strategy table with the
manufacturer to contribute to the experience design.
2. CREATE A CUSTOMER CENTRIC CULTURE
Reward Behaviour, not just Outcomes
What sort of behaviour do we expect when so much of the
remuneration Dealers pay to staff is so heavily based on sales
outcomes? This approach to remuneration achieves a result – but
visionary leaders identify and reward behaviours as well as results,
to ensure their people are keenly focussed on facilitating a unique
experience, creating engaged customers who come back year after
year.
Hire for Attitude
Skills are much easier to train than behaviour is. When hiring, be
scrupulous in looking for people who are optimistic, positive, energised
by helping people, and who enjoy working with others. Then train to
give them the technical skills they need to do their job well. Don’t hire
the experienced person who can achieve the result but who isn’t a
good culture fit.
Walk the Talk
Employees in any organisation look to their leaders to model the right
behaviours. Make sure your leadership team are all demonstrably
customer focussed through their acts and words. Find ways to treat
your employees like you want your employees to treat your customers.
3. EVOLVE AND RENEW
What is new and different today may well be worn out in 12 months.
Always look for new ways to offer your customers an experience that
only real people working out of a physical retail facility can offer. Don’t
rely on your leadership team to come up with all the ideas either –
engage your staff (and their friends and family), your customers, your
OEM representatives, anyone who can give you an insight.
4. CROSS DEPARTMENTAL COMMITMENT
Customers aren’t just sales or service customers. They are both - and
they are also parts and finance customers. Make sure your whole
leadership team is committed to the customer experience and have
specificanddocumentedplansforimplementingitintheirdepartment.
Map the customer journey through the Dealership for each experience
and ensure every moment of truth is considered and executed well.
In your leadership meetings, ensure you raise and discuss cross-
departmental processes and how a customer transfers between
departments. This will ensure a customer feels as though the whole
Dealership is aligned and working for them. It will also ensure the
good work done by one department isn’t undone by another.
There are some real challenges ahead and disruption will come – be
ready for it by leading a customer revolution for your Dealership.
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MAY 2016

6. INSIGHT
GLOBALEDITION BENCHMARKER06
Since the global financial crisis in 2008, China’s economy has
entered into a ‘new normal’ stage marked by a single digit low-
to-medium growth rate of less than 10%. In 2015, the year-on-
year GDP growth for the first three-quarters hit a record low of
below 7%. Similarly, the auto industry also saw a plunge with
the commercial vehicle market suffering negative growth for
two consecutive years.
The year 2015 has delivered a ‘cold winter’ for all the car brands
in China. To cope with the downturn, the auto manufacturers
started to reduce production, revise down sales targets and
wage price wars amongst themselves. These were evidenced by
the data from China Association of Industry and Commerce that
about 90% dealers were losing money in the first half year of
2015. However, this was just the beginning. As the economic
slow-down continues, China auto dealers are still facing 6 main
challenges.
CHALLENGES FACING
AUTO DEALERS IN CHINA’S
NEW ‘NORMAL’ ECONOMY
Chee Tuck Yap
CEO - Sewells Group China
Chee Tuck is responsible for managing the overall
operations of Sewells Group in Greater China including
Hong Kong, Taiwan and Macau. He has extensive retail
operations experience and he works closely with OEMs
and dealers in the area of retail performance.
He can be reached on cheetuck@sewellsgroup.com
Data source: China National Bureau of Statistics & China Association of Automobile Manufactures
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MAY 2016

7. GLOBALEDITION BENCHMARKER07
1. INVENTORY BUILD-UP WILL MAKE
THE COMPETITION AMONG DEALERS
OVERWHELMINGLY FIERCE
China’s auto market will be set to grow at a low-to-medium speed in
the future under the influence of the overall business climate of China;
global macro-economy and the increase in urban cities restriction on
vehicle’s running on the roads to tackle the hazy weather. Furthermore,
comparing the 90,000 dealers (data unveiled by China’s Ministry of
Commerce) with a market size of over 40 million units, the industry is
suffering a serious imbalance.
2. THE BUSINESS MODEL NEEDS TO BE
ADJUSTED/OPTIMISED DUE TO THE DECLINE IN
PROFITABILITY
The new vehicle sales and year-end manufacturers’ incentives
have been the main income sources for most Chinese auto dealers.
However, with this current market situation and the manufacturers’
frequent ‘price war’ strategies, the listed dealer groups’ profit margins
have dramatically shrunk in the first half year of 2015, an average drop
of 21.77% for the 14 dealer groups below.
Data source: financial reports published by dealers
3. DEDICATED 4S STORES ARE FACING
COMPETITION FROM MULTI-BRAND OUTLETS
AND E-COMMERCE
The single-branded 4S stores will face challenges as more multi-brands
auto outlets join the competition. The policy issued by China’s State
Administration for Industry and Commerce on 1st Oct. 2014 terminates
the requirements of registration for all general automobile dealers and
authorised brand dealers. In other words, this provides legal assurance
and comfort for the operations of multi-brand auto stores. Meanwhile,
more car supermarkets or shopping malls are joining this competition too.
Electronic suppliers turn out to be a new arch-rival to 4S stores.
During China’s Single’s Day (identical with the cyber day sales) on 11th
Nov. 2015, over 150 000 units have been sold through the internet,
amounting to sales of RMB 30 billion. E-commerce is booming for
its relatively competitive price and transparent sales process, which
is matching the behavior pattern of modern vehicle consumers — to
experience offline and purchase online.
-6.34%Sunfonda Auto
Meidong Auto
Rundong Auto
Harmony Auto
Yuantong Auto
Baoxin Auto
Zhongshen Auto
Yaxia Auto
Zhengtong Auto
Grand Auto
Guoji Auto
Yongda Auto
Pangda Auto
-6.30%
-5.60%
-4.26%
-3.89%
-3.74%
-3.01%
-2.17%
-2.17%
-1.83%
-0.61%
-0.28%
-0.13%
TABLE 7.1 REDUCTION IN CHINESE DEALER
GROUP PROFIT MARGINS - 2015.
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MAY 2016
FiveMainModelsofE-Commercein
China’sAutomotiveMarket
Main Players Model Features
Alibaba, Jingdong
Coverage expansion of traditional
e-commerce platform
Expansion of business area from
normal media scope
Sales channel built and supported
by auto brand itself
Model built by dealer groups or
co-built with IT enterprises
New competitors
Autohome, Yiche
SAIC
Pangda, Yongda
Ichefeng, Emao
4. PROFOUND CHANGES ARE TAKING PLACE
THROUGHOUT THE AFTERMARKET, PUTTING
DEALERS ON THE LINE
Monopoly is likely to be eradicated by the new provisions. With the
Provisions on the Administration of Motor Vehicle Maintenance
coming into force on 8th Aug. 2015, car owners can repair their
vehicles wherever they prefer and the monopoly on parts sales will be
eradicated, aggravating customer loss.
The aftermarket transformation is intensified by China’s strategy of
‘Internet Plus’. In addition to the traditional quick repair and service
chain stores, some emerging operations of ‘Internet Plus’ model have
also emerged to seize a foothold in this aftermarket space.
Data source: Reports by China Passenger Car Association and Forecast Analysis by Sewells Group
5. CUSTOMER LOYALTY
As the ratio of repeated purchases is estimated to reach 67.9% in 2020,
how to enhance customer loyalty and win them over from competitors
will represent a huge challenge for the dealer.
Main Players Platform Features
Tmall
Online trading platform of engine oils, tyres
products, parts & accessories, etc. ‘Purchased
online and installed offline’ alternative solution
O2O platform for used car sales
Car sharing platform for car rental
On-site car service and beauty platform
Xin, Guazi
UBER, Didi
Kalading
TypicalInternetPlus
PlatformsinAftermarket

8. GLOBALEDITION BENCHMARKER08
6. NEW INNOVATIONS IN THE AUTOMOTIVE INDUSTRY
Theinnovationofelectricalandsmarttechnologiesalsogivesrisetonewmarketdynamics,especiallywhenChinesePresidentXiJinpingclearlyhighlights
that new energy vehicle will be Chinese auto industry’s only way to become the world leader in this industry. Following the launch of the Internet Plus
initiative, many players, including traditional carmakers and IT enterprises inside and outside China have started to invest heavily in Smart Cars.
Technological innovation poses new challenges to marketing. Tesla, for instance, establishes its own direct sales channels, which means dealers
will no longer be an indispensable part of the equation.
A crisis, on the other hand, can represent a good turning point. It is good, as opportunities always co-exist with challenges. Certainly, some
under-performing dealers will be eliminated in the competition while for the rest, they will need to refresh their thinking to positively tackle the
challenges posed by this new ‘normal’.
Based on my observation of China’s automotive market, I would like to recommend some tips for dealers:
1. To shift from high investment models to light investment models
2. To optimise/adjust the business model/focus – aftersales Parts and Service opportunities
3. To make good use of the ‘Internet Plus’ strategy
4. To focus on the Customer Loyalty strategies
5. To improve the overall customer service level
6. To enhance communications with the manufacturers so as to overcome the difficulties together
Data source: Reports by China Passenger Car Association and Forecast Analysis by Sewells Group
ANNUAL GROWTH IN VEHICLE PURCHASES (2009-2020)
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MAY 2016

9. GLOBALEDITION BENCHMARKER09
FOUR THINGS TO KEEP IN MIND
WHILE DRIVING OPERATIONAL
IMPROVEMENTS
INSIGHT
Abhijit Joshi
Group Head - Process Solutions
Abhijit leads the Process Solutions Practice for
Sewells Group. A dealer development expert with extensive
industry experience, Abhijit is responsible for developing
solutions to address process efficacy opportunities
and challenges in automotive retail.
He can be reached on ajoshi@sewellsgroup.com
In today’s challenging retail environment, achieving and sustaining
business excellence at a dealer level is becoming increasingly
important. Margin pressure, changing customer expectations and
aggressive competition combine to put tremendous strain on
operational capabilities, and factors such as skill shortages and other
market-related disruptions require dealer managers to constantly be
on their toes. The ability to thrive in this environment requires focus
and commitment, and the ability to lead from the front.
In our work with automotive dealers and OEMs across Asia-Pacific, Sub-
Saharan Africa and the Middle East we have come across a number of
dealers who manage to excel despite the obvious challenges. Detailed
analysis of what has worked in each of these cases has helped us
identify four important success factors.
1. THE ABILITY TO BUILD A CULTURE OF
EXCELLENCE
Culture has long been held out as a key determinant of business
success, and it is no different in automotive retail. The ability of
dealer management to establish and maintain a culture of excellence,
around its people, processes and customers is crucial to the ongoing
achievement of business goals. Management must ensure that
the team knows what they are doing, why they are doing it and are
supported by clear goals and measures that drive improvement. This
goes a long way to ensuring the acceptance and commitment of all
team members.
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MAY 2016

10. GLOBALEDITION BENCHMARKER10
1. CONTINUED
In practice, establishing a culture of excellence requires a multi-
faceted and sustained approach. One particular dealer implemented
a complete dealership-wide operational excellence initiative, aimed
at focusing attention on best practices and what was required to take
their performance to the next level. The project included complete
program branding and communication to ensure all team members
were fully engaged. This was, in turn, supported by team sessions and
activities driven by management to ensure all eyes and minds were on
the task at hand, and everyone knew what was expected.
2. THE CLEAR DEFINITION OF GOALS AND
TRACKING OF CLEARLY UNDERSTOOD METRICS
It is important to define improvement expectations through well-
understood metrics. This involves starting with the end in mind
and then working back to identify the lead and lag indicators that
will indicate progress and success. By way of example, a dealership
targeting an improvement in Return on Sales should translate that
goal into tangible measures for its frontline staff. That might mean
holding out metrics such as gross profit per unit, finance penetration
and target achievement. Having specific measures for specific roles
ensures ‘on-the-ground’ buy-in and engagement, and demonstrates to
employees the linkages between performance metrics at each level in
the dealership organisation.
In a recent intervention with a leading OEM in India, a project to
improvethecustomersatisfactionscoresofbottomquartiledealerships
provided clear evidence of how an outcomes-based approach can
work. The creation of performance cascades, linking individual actions
to intermediate performance metrics, showed clearly the impact of
frontline actions on customer perceptions. The isolation of specific
measures around new vehicle delivery and customer follow-up further
reinforced this message.
3. ENSURING THAT CORNERS ARE NOT
CUT WHEN IT COMES TO TRAINING THE
DEALERSHIP TEAM
Focus on training, or lack of it, is one of the important determinants of
success or failure at a dealership level. Training should focus on skills
development and the reinforcement of business processes, two pillars
which are crucial to sustainable operational improvement. Time and
again, the Sewells team have seen department managers either failing
to pay attention to the competence of their team or concentrating on
one pillar at the cost of another.
Our research shows that dealers who are willing to invest time
and effort in training their team on an ongoing basis, and who are
committed to improving the overall capability of their dealership,
benefit in a number of ways. This includes outperforming competitors
and other dealers who do not put in the same effort, achieving greater
levels of customer feedback and reduced levels of staff turnover.
4. A RUTHLESS COMMITMENT TO MEASURING
PERFORMANCE
Interventions designed to improve operational excellence typically
require ongoing measurement and tracking of metrics from two
categories, namely input/effort metrics and output/result metrics.
Measurement of both metric categories provides a highly effective way
of ensuring success. While a sound operational excellence intervention
design will provide the necessary framework to measure and track
these metrics, it is often difficult to sustain these efforts. Dealers who
do succeed in driving performance improvement typically embrace
measurement as an integral part of their culture, not as a flavour-of-
the-day action.
The evidence clearly supports this point of view, with a recent analysis
of dealerships participating in a factory-led performance improvement
program highlighting that more than 70% of dealerships failed to
follow through and slackened their measurement controls, post the
project completion.
While these four factors are all important, they are not a definitive list.
They are however a good starting point and given the stakes and benefits
associated with success, they are certainly worth taking note of.
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MAY 2016

11. GLOBALEDITION BENCHMARKER11
It is a well-known fact that a strong brand can have a significant bearing
on organisational value. This is a concept that holds true across all
industries, specifically in retail automotive.
At a dealership level, there are two levels of brand that need to be taken
into account, namely the parent or manufacturer brand – primarily
associated with the vehicles sold; and the dealership brand – the franchise
brand promoted in the local area.
1. THE MANUFACTURER BRAND
In mass-markets the ability to command strong pricing relies heavily on
the brand name and reputation of the product being sold. In this regard,
the price consumers expect to pay for otherwise identical products can
vary dramatically, depending on the brand. For example, consider the
Ford Ranger and Mazda B-series built off the same platform, commanding
different margins depending on consumer perception. For mass-market
vehicles, brand plays a key role in the consumer decision-making process
and OEMs invest significant time and energy ensuring that brand integrity
is maintained and that the brand is positioned appropriately.
2. THE DEALERSHIP BRAND
While the impact of the manufacturer brand is obvious, the impact of the
dealership brand should not be underestimated. Research also shows that
there is a direct correlation between the strength of the dealership brand
and its profitability and sustainability. What’s more, a strong dealership
brand also helps the dealer establish itself as an employer of choice,
thereby attracting and retaining high performing employees.
For dealers looking to build their dealership brand, there are three major
strategic areas which should be focused on.
BUILDING YOUR
DEALERSHIP BRAND
INSIGHT
Jillian Barrie
Associate
Jillian is an auto retail expert and experienced
facilitator. Her areas of interest include strategic
planning, digital marketing, customer experience
management and marketing management.
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MAY 2016
Customer
Experience
Staff
Engagement
Brand Reputation
Management

12. Consistent
Not Differentiated
Intentional
Not Valued
Consistent
Differentiated
Intentional
Valued
Inconsistent
Unintentional
GLOBALEDITION BENCHMARKER12
The sequence of these 3 strategies is not accidental. A dealership must
ensure it has its own house in order first before focusing externally. It
must ensure that its processes are designed to consistently deliver an
outstanding experience for its customers. It must also ensure it has
a strong, performance-orientated culture in which all employees are
engaged. If these two strategies are working well, then the dealership can
manage its brand and reputation more effectively.
Strategic Focus Area # 1 - the Customer Experience
Bain & Company show that companies that deliver superior customer
experiences grow revenues 4%–8% above their market peers. From a
brand perspective, organisations who deliver great customer experiences
drive positive associations. The delivery of an outstanding customer
experience in turn drives loyalty, increases transactional value, promotes
advocacy and ultimately helps the business generate greater returns.
So how does a dealership ensure it provides the ultimate customer
experience?
The first step is for a dealership to assess its current levels of customer
experience. The Forum Corporation developed a simple definition of
what they called a ‘branded service experience.’ As per the model below,
the dealership must provide a consistent, intentional (well-designed),
differentiated and valued customer experience.
This ‘branded service experience’ must be designed to maximise the
value of all customer touch points along the purchasing and servicing
journey. And these touch points should be tracked and managed across
all departments, from marketing, to sales, to finance, to service and
subsequent follow-up.
Strategic Focus Area # 2 – Staff Engagement
It is often said that there are three key elements to successful dealerships,
People, Process and Profit. Whilst great attention is given to profit outcomes
and process management, people strategies are frequently neglected. It
almost goes without saying that the staff of a dealership shape customer
perceptions and deliver on the brand promise – both for the manufacturer
and for the dealership. It is also staff who provide the ultimate customer
experience,createbrandadvocatesanddrivebrandvalue.
Dealership’s looking to drive brand value through the implementation of a
strong people-led strategy should be working on driving engagement. This
is best done by focusing on talent management, performance planning
and engaging them in the business planning process.
Strategic Focus Area # 3 – Brand and Reputation Management
Finally, one of the most important strategic considerations for dealers
seeking to build their brand is the one of brand and reputation
management.Inthisdayandagebrandreputationforthemostpart,needs
to be managed in real-time, more often than not in the online domain.
Rapidly shifting consumer behaviour and the increasing importance of
customer opinion has created an environment where information is
democratised and every voice can be heard. In this environment, social
proof has become a critical determinant of consumer perception and,
in turn, brand value. Social proof or the collective voice of the customer,
powered via social networks and platforms such as blogs, forums and 3rd
party customer review sites, has emerged as a force which dealers and
manufacturers cannot ignore. The way in which this is managed plays a
significant role in building and protecting brand integrity.
Social proof as a determinant of consumer perception has become critical.
So what questions should dealers be asking themselves?
• Is our house in order?
• Do we have the best customer-facing staff?
• Do we have an effective digital strategy that enables consumers to
find us?
• Are we aware of all the reviews on our social media?
• Do we have a strategy to manage our reviews in order to protect our
reputation and brand?
At the end of the day, in order to build a dealership brand, management
teams need to create and deliver a branded service experience, have
the best people who can manage their relationships with customers and
build the value of the brand; and finally, have a reputation management
strategy that will define and monitor customer perception on-the-ground.
After all – the customer is the reason the brand exists in the first place!
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MAY 2016
RANDOM
EXPERIENCE
PREDICTABLE
EXPERIENCE
LOYAL CLIENT
BRANDED
EXPERIENCE

13. GLOBALEDITION BENCHMARKER13
In thirteen years working in greater Asia, including during the boom times
of 2007 to 2015, there are a number of common opportunities observed
that Dealers and OEM’s across Asia could, and should, be focussing on
irrespective of their share, and share aspirations.
OPPORTUNITY # 1:
SALES STAFF PRODUCTIVITY
The first and most glaring issue when comparing Asia to long-established
markets, is sales staff productivity. It is not unusual for dealers in Asian
markets to have sales productivity as low as 1 to 3 vehicles per sales
consultant per month. This creates a destructive cycle. Sales consultants
can’t live on what they earn, so they leave. Managers, in turn, subscribe
to the fact that sales staff don’t stay, so treat them as commodities. The
situation is often exacerbated by OEM sales teams who, when looking at
monthly or quarterly sales plans, take a dealer’s current productivity rate,
overlay it against the aggressive target, and tell them to employ more staff.
Buildingalean,productiveandstablesalesteamisinthebestinterestsofall
stakeholders,butrequiresDealersandOEMstafftobebrave.Focusshould
be on employing quality people, and then inducting, training, supporting
and incentivising them so that they can succeed. The net result will be
higher levels of compensation for individuals and an increased likelihood
of the business achieving its sales targets. By not addressing this issue,
OEM’s and Dealers are perpetuating a cycle that is bad for consumers, bad
for profit and bad for employees. There are shining examples of Dealers
achieving this in markets from China to India to Indonesia.
NETWORK HEALTH
OPPORTUNITIES IN ASIA
INSIGHT
Kyle Dickie
Global Account Director
Kyle engages with strategic clients of Sewells Group in the area
of dealer development and integrated network performance.
He is a noted industry expert, with vast experience across Asia
Pacific, and is also a member of the Sewells Group Board.
He can be reached on kdickie@sewellsgroup.com
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MAY 2016

14. GLOBALEDITION BENCHMARKER14
OPPORTUNITY # 2:
THE DEVELOPMENT OF A ‘RETURNS-BASED’
MINDSET
Second,dealersinAsiahavetraditionallyviewedthebusinessasonewhose
primary purpose is to generate cash. This has created a situation where
the ‘health’ of the business, as measured from an investment perspective,
has largely been ignored. OEM’s have a significant opportunity to work
with their networks, to create a ‘value of franchise’ mindset measured
by Return on Operating Assets. This shift from cash to P&L, to Balance
Sheet management, not only future-proofs the franchise, but also drives
a far deeper understanding of the relationship between the ‘profit-
process-people-consumers’ continuum. There is, of course, the significant
additional benefit of current and future investors being emotionally
connected to the business because of the returns it can generate, relative
to other investment opportunities.
OPPORTUNITY # 3:
FIXED OVERHEAD ABSORPTION
Finally, there are a number of OEM’s and retailers who have failed to
capitaliseonthesizeofthecarparkstheyarebuilding.Thislackoffocuson
the back-end of the business has been exacerbated by market-led growth
in sales volumes and the ongoing push for market share. Retailers who
have been in business for a long time know intuitively that the secret to
sustainable profitability and performance is the generation of solid gross
profit contributions from fixed operations (Service, Parts, Bodyshop).
The aim should be for these contributions to offset the fixed costs of the
business, leaving the profit from vehicle sales as ‘cream on top’. Further
benefits of this include reduced exposure to the cyclical nature of sales
and product performance. The focus on costs absorption through fixed
operations is a significant opportunity which should not be ignored.
MAKING A CHANGE
Ifonetakesamacroviewofwhytheseseeminglyobvious,andinterrelated
opportunities are not capitalised on, there appear to be three primary
causal factors at OEM level:
1. There is seldom an articulated vision of what ‘network health’ is and
a gap in comprehension regarding the key drivers of performance
across the business.
2. Within the OEM environment, the ‘health of the network’ is not seen
as a strategic priority and does not get sufficient senior management
attention.
3. Too many OEM’s present themselves to their Dealers as independent
silos of sales and after-sales. This fragmentation diverts the attention
and resources of all stakeholders and means that a single, integrated
view of network performance improvement is hard to achieve.
Thefailuretoaddresstheseunderlyingissuesmeansthatthedevelopment
oftheretailers’businessisoftenlimitedtolow-leveltraininginterventions,
with budgets inevitably soaked up by product training. This has little to
no impact on improving the way a dealership functions, and certainly no
sustainable impact on becoming a franchise of choice.
In my experience while there are some clear differences between
emerging and developed markets, improving the health of the dealer
network, particularly from an Asian market perspective, is a choice. The
question, however, remains whether it’s a choice that the stakeholders
are willing to take.
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MAY 2016

15. GLOBALEDITION BENCHMARKER15
TIME OUT FOR
SERIOUS FUN!
One of the areas of growing interest in today’s business world, is
‘gamified learning’ or ‘gamification’. This isn’t new, and has been
used to great effect in the past, but the use of technology and better
connectivity has brought it to the forefront as people look for new
ways to drive employee engagement and learning. There are a lot
of businesses out there (OEMs included), that have already invested
heavily in what they believe to be gamified learning. There are some
who have achieved success, but quite a few who have missed the mark
or simple got it wrong. Like online learning, when it goes wrong, it goes
seriously wrong, costing organisations a lot in terms of money, time,
support and promises. So how has this happened?
Perhapsit’sbesttostartbyclarifyingwhatgamificationisbasicallyallabout.
Gamification is the application of gaming mechanics and gaming
metaphors to non-gaming scenarios to make difficult tasks and learning
more palatable. Basically when we add gamification to learning – or to
any situation – we make the entire experience more enjoyable and fun.
Gamified systems can achieve increased focus, deeper engagement
and many other behavioural results simply by tapping into the human
need for achievement and success. Forrester analyst Elizabeth Shaw
described the tactic as “The insertion of game dynamics and mechanics
into non game activities to drive a desired behaviour”.
DISCUSSION
David Lowrie
CEO – Sewells Group Australia & New Zealand.
David is responsible for managing the overall operations
of Sewells Group in Australia and New Zealand.
He is an international expert in product education
and technology in training.
He can be reached on dlowrie@sewellsgroup.com
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MAY 2016

16. GLOBALEDITION BENCHMARKER16
At Sewells we have taken the methodology of Shaw and other notable
gamification experts and used the four I’s in the following way:
• Involvement: Gamification allows the organisation to increase
participation among players, leading to a much greater level of
engagement than can be achieved through traditional learning,
including online learning. This in turn leads to increased learning
and practice, which is particularly advantageous as some require
practice to learn, and some require practice to become engaged
• Interaction: Gamification incentivises players to interact with
activities, leading to increased learning outcomes. For example,
businesses can leverage an action/reward dynamic for specific
activities and behaviours they want to increase or improve.
Physical interaction time can be greatly reduced while still
achieving great results. In fact, in some of the most successful
Sewells gamification activities we focus strongly on a short term
play and long term engagement approach for best results
• Incentive: Gamification allows incentives of many and varying
types to be combined to shine focus on participation, this sparks
real time, intimate connection with players, leading to long-lasting
interest in the activity
• Influence: Incentives such as tokens, badges (these act as a virtual
pat on the back) and visible competition leader boards encourage
players to share with their social group. Encouraging “social
bragging rights“ helps boost word of mouth and encourages peers
to join and better themselves within the game
WHY GO FOR GAMIFICATION?
Gamification, if done correctly, has significantly higher levels of
engagement compared to any other form of learning. It does this
by engaging learners and making the learning process much more
enjoyable (or in some cases they are learning without even realising)
with the addition of fun features, competition and recognition.
It has been proven that engaged learners are far more likely to log onto
a game or their LMS, work their way through games and modules and
complete assignments. They also pay attention, participate, respond to
challenges, interact with others more and take control of the process.
So we all know that it works, but what else can it do for an organisation?
It’s been found that gamification significantly boosts knowledge
retention, engagement and enjoyment in many different ways.
There are a lot of well researched and known cognitive benefits.
Apps like ‘Elevate’ and ‘Lumosity feature a really unique range of
mind training games. On top of this, research has shown that people
who play games recognise the value of extended practice and aside
from the obvious problem solving and decision making skills, develop
qualities like persistence, creativity and resilience.
As a player is guided through a game, the player learns through what
is known as the ‘mastery’ process, where their self-perception changes
from passive to active, from novice (noob) to expert and onto master,
or, in some cases, ‘visionary’ status.
All of this motivates the player to participate more deeply and strive to
become master of their own destiny and act accordingly. Add to this a
leader board arrangement that lets them see where they are ranked in
regard to their peers and this increases dramatically - the player starts
to aggressively consume content. Their motivation and engagement
increases accordingly.
Aside from the cognitive benefits, gamification is useful in business
for its emotional bonuses as well. Games evoke a variety of powerful
emotions in us, from curiosity, frustration and joy, to optimism and
pride.
Gamification can help players to progress through negative emotions
(likeboredom,frustrationorfear,especiallywhentheydon’tunderstand
the task) and transform these feelings into positive emotions such as a
great feeling of accomplishment at having succeeded.
Gamification, if done well, also enhances the feedback loop. This can
be done in many ways but the two main ones are through informal and
peer feedback (other players), which also incorporates peer learning
and idea sharing. The second, and most important benefit is the
ability to obtain player gaming results and analyse these to provide
really powerful business reports around capability, knowledge and
competence.
The other unique part of Gamification is that it can be used for so many
differing types of education and interventions from product education
to process, customer engagement, self-assessment, decision-making
and cultural change. In fact there are a huge range of areas where this
can be applied. While technology has been a key part in the recent
growth, other non-technology based alternatives are alive and well.
Perhaps one of the most notable is Lego Serious Play which has been
utilised by a range of larger companies with great effect.
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MAY 2016
N
O VI C E
VI
SIONAR
Y
THIS IS
HOW I ROLL
MASTER
Top contributor
EXPERT
Go ask Rob, he’ll know the answer
PROBLEM SOLVER
I can help you with that problem
WHAT’S THIS THEN?

17. GLOBALEDITION BENCHMARKER17
SO WHY HAVE SOME GOT IT WRONG AND
WHAT ARE THE MOST COMMON MISTAKES
MADE WHEN ADOPTING GAMIFICATION?
What are the top 5 most common mistakes when adopting a gamified
approach?
1. Games for the sake of games
When we speak to a lot of OEMs, they tend to dismiss the concept but
assure us that they are already doing this. The problem is in most cases
they have simply developed some form of online quiz or simplified
game that has no real impact, feedback mechanism or business
outcome tied to it. Or they have taken an existing online learning
module and tried to adapt points, badges and leader boards to it.
2. Games designed by people who don’t play games
This one is very common. People who are regular players of multiple
games understand what makes a game enjoyable, and the things that
make a player come back and play. This is why the people who make
games like ‘Plants vs Zombies’ are now in such high demand, as they
understand how to take a simple format and get a player back and
motivated time after time. All too often in the interest of just getting
something out there (see above point), the development is given to
someone without taking this crucial point into account.
3. Thinking that gamification is just about technology
As previously mentioned, gamification is not new and has been used
to great effect in the past and in fact still is. I have personally as part
of a Six Sigma program, been a part of a gamified session on process
improvement which was great. Sewells has actively been developing a
board game for use in dealership business modules. More recently we
have looked at Lego Serious Play, which is a really unique way of taking
something that we may have all played with at some time in our life
and creating games which produce really powerful outcomes from a
business perspective. The levels of interaction and engagement with
this program are incredibly high, if run correctly. The only challenge
with these is the need to have people together in a facilitated
environment.
4. No clear desired outcome
In much the same way as people have games for games sake there is
a tendency to also not have a clear desired outcome for some of the
games currently in use. Establishing a clear outcome not only helps
with the design of the actual game but can also dictate the type of
game that is needed (i.e. if it is best done as a facilitated game or is
it something that can be run online or on a personal device). There
are a raft of outcomes for example the game could be built around
industry-specific decision-making, process and process improvement,
customer engagement, change and change management. It could be a
game which prompts them to access information and supports an in-
house information repository. Or it could be a skill-based game used to
effectively allow them to self-assess, but which could be also used to
assess skill levels and competency across a business with an incredibly
high level of accuracy. The possibilities are endless, however these
things only add value if they are done correctly. One of the things that
we get particularly from technology based games is a lot of useful data,
but all too often there is no thought given to how that data could be
used to further enhance a business.
5. `Underestimating the development investment
Developing a gamified learning model requires a significant amount of
time and expertise. Most importantly it takes a lot of user acceptance
testing which quite simply means people have to play it a lot to iron
out the bugs and ensure that it’s the best it can be. Unlike some
other learning and development projects this can take a considerable
amount of time which can lead to a lot of project scope creep.
There are many other considerations to be taken into account when
looking into Gamification. For more information on the Sewells Group
approach, please feel free to contact us.
TECHNOLOGY
(Ease of access,
feasibility)
The area where
creativity &
innovation add
creative value
BUSINESS
(Visability, has a
useable business
application)
HUMAN
VALUES
(Usability,
desirability)
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MAY 2016

18. GLOBALEDITION BENCHMARKER18
Etheridge Ford have been a family owned and operated, dedicated
Ford Dealer in Melbourne since 1983. For the last 30 years they have
been committed to delivering a high level of Customer Satisfaction and
Service. The company is currently one of the only three Ford Dealers in
Australia to receive the Ford Gold Master award for excellence in Sales
and Vehicle Servicing, an award which are extremely proud of.
Sales Consultants are sometimes accused of forgetting
their customers after the deal has been done. How
important is the vehicle delivery to the whole car
sales process?
Very important. At Etheridge Ford, we believe that it is critical to build
a ‘driving life’ relationship with our customers. A new vehicle purchase
is still a big financial and emotional decision for most customers. The
stress of affordability, Which vehicle to buy? Who to trust? Customers
seek dealerships that respect them, make them feel they are in control
and who celebrate with them.
While first impressions count, last impressions LAST. By creating the
theatre at the vehicle delivery a lasting impression is created with
customers and they feel they have received value for money and made
the right choice. By introducing the Service Department as a part of
the process, the customers know they can trust us with the care and
servicing of their vehicle until they are ready for their next purchase.
Vehicle deliveries at Etheridge Ford are a big occasion
for customers, their families and also the dealership.
Who is involved in the vehicle delivery process?
Everyone is involved. From the Receptionist who greets the customer
with flowers, all of our Sales staff, our Managers and even other
customers and dealership visitors. The theatre we create, is very
attractive and you can’t help but be involved.
The mood starts with the flowers and then when customers realise it’s
their vehicle under the silk, the excitement increases. When they pull
back the silk to see their new vehicle for the first time, even the most
‘blokie’ tradesmen melt with pride.
It confirms that all the stress and pain was worth it, they have made
the right decision to purchase this vehicle and they have also chosen
the right dealership to buy it from. We have found that this process
consolidates our relationship with the customer.
How do you share the vehicle delivery process with
other customers?
All sales staff have an iPad readily available. We always ask customers
permission to share their photo on our social media. We click one
photo before the unveiling, a video of the silk being removed by the
customer and then another photo of their beaming smile. All of this
is sent to the customer and posted on our Facebook page, which in
turn is shared and liked by their family and friends. We show them
[as rolling screen shots] on the showroom TV screens where other
customers can see and love them.
Do any referrals or additional sales happen as a
result of the excitement generated at delivery?
Definitely, I’m sure if you asked each of our sales staff, they would all
have stories about a referral from family and friends. Our delivery
process creates a positive lasting impression that fosters customer
engagement and promotes advocates. Our customers share their
experiences and photos with family and friends, which they click in
their own phones and share with others. Their friends ‘LIKE’ their
photos and it’s shared again. Kids also are seen being actively involved
in the excitement of sharing. They share their experiences at school,
sports etc. and so it goes, the joy of social media.
Our customer experience, our dealership and our brand is being spread
willingly by our customers. Recently, we had a new customer asking if
they will get flowers and the silk treatment that they saw on Facebook.
The word is spreading!
What advice would you give other Dealer Principals
or Sales Managers in relation to vehicle delivery?
It is important to lead by example, our Dealer Principal, Ron Logan,
introduced the concept of theatre to vehicle delivery about 5 years ago
and recently Ford has enhanced the process by adding the branded
silks. Ron made sure everyone in Sales knew what was expected and
was involved. He relied on me as the General Manager and the Sales
Manager to embed the process.
It has become a core part of our culture and carries through a lot of
what we do. The delivery schedule is circulated to all Sales staff and
Senior Managers which helps assure they are on the floor near delivery
times so we can continue to role model this standard. Besides that, we
love it, it’s a great buzz to share in the experience of picking up a new
car! The customer engagement and referrals are there, the investment
is minimal, what are you waiting for!
Q
Q
Q
Q
Q
Simon Logan
General Manager
Etheridge Ford, Melbourne Australia
DRIVING RELATIONSHIPS
FOR SUCCESS
DEALER INTERVIEW
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MAY 2016

19. LET’S CONNECT:
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welcome to join the expanding list of email recipients of the quarterly editions of BenchMarker Global by sending their name, position and
business details to benchmarker@sewellsgroup.com
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