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Creating a Dealership Network for the long haul.
Categories: Point of View, Transformations
aka: How to explain what you do for a living without putting someone to sleep!
While most of my personal connections know that I changed jobs with Ford Motor Company in 2005/2006 to heal from a terrible accident and to accommodate a number of reconstructive ankle surgeries, I am often asked to explain what it is that I do. Given that several of the jobs I’ve enjoyed the most were in Network Development, it was only natural to accept the role of the U.S. Dealer Contracts Manager (a desk job) during the last major restructuring of Ford’s Marketing & Sales organization. However, for many outside the Company, this requires explanation.
In a nutshell, market representation (aka Franchising, Network Development, Dealer Development, Dealer Contracts, etc) can be boiled down into a simple description of four key components. In my present capacity, I have the luxury of participating in the development of each step and I have used the following outline on several occasions to explain the process. It’s not quite a 2 minute elevator pitch, but it is succinct nevertheless. In fact, I have used this description in training employees in various regions and the general office who are new to the area as well as to newly appointed dealers when I have addressed them during my tenure as a Regional Manager. The very foundation of a successful distribution network depends on getting each of these pieces aligned.
People – Places – Power – Promise
1st – People
- First and foremost, the network plan must start with enrolling the right people. Sales and Service of any product is based on relationships and the interaction with customers and the selection of the right partners to represent these products is the critical first step. There are no shortcuts to establishing a solid network of individuals that are aligned in every critical facet with the vision for the brand. The tools of Market Representation 101 which we call the Four C’s are universally applied to every evaluation of any ownership transaction for a point in the network:
Character. Standard background checks are the price of entry. Understanding the nature and history of each candidate is essential to preventing surprises that can be costly. In many cases, an appointment is a long term relationship protected by State laws, so the first decision is often the most important.
Capital. Where is the money coming from? What is the financial history that supports the unencumbered investment? Is this venture going to have more equity than debt (1:1 debt to equity is our minimum standard)? Will this entity be cross-collateralized or will it stand alone? Knowing that the entity of every single outlet in your distribution chain is based on a solid financial footing is essential.
Capacity. Does this Manager/Dealer/Team have the proven capacity to do the job? This is a bias towards appointing proven dealers with other franchises in their history but also places an emphasis on dedicated resources. Therefore, this is also a standard for the size and function of each facility. Each point must have the physical and personal sales & service capacity to achieve the goals and sales expectancy of the franchise. What are the resources that are applied to this entity and are they dedicated or shared with other brands?Customer Satisfaction. Again, this must have quantifiable support to demonstrate above average customer satisfaction. One of the biggest mistakes a manufacturer can make is willingly sacrifice customer satisfaction for volume.
- These people/candidates need to provide a level of transparency in their business plans and aspirations that set a standard worthy of partnering with for the long term. The best time to reject a partnership is before it actually starts. History has proven that any rush to judgment will result in sub-optimal marriages in most cases.
- There is also a growing concern (given the cost of entry), about the “share of mind” that the franchiser will have in ongoing relationships. The fact that the majority of dealers have multiple facilities/franchises means that the days of family owned and operated points (often for multiple generations) has dwindled and brands often have to compete for owner/operator attention. Do you have the right person for this particular point…for the long haul?
2nd – Places
- Location, Location, Location.
There is nothing more important to a successful business than location. Proximity for both Sales and Service operations is a fundamental consideration for consumers and is especially important with larger purchases like automobiles. This requires planning and thorough analysis of the market over time. Representation Planning is a unique discipline that analyzes purchase and registration data to determine the proper number and location of individual franchises (rooftops) to maximize sales, service and satisfaction levels. Proximity to traffic patterns, competitive offerings, population densities and demographic patterns are critical to appropriately representing a brand over time. As fundamentals of a market shift, it also calls for a change in representation (relocation, added points, consolidations, etc).
- Facility (Standards) – Face of the brand. This is also a serious consideration with representation planning. The capacity of a given facility can often make or break the success of the entity as well as achieve the proper share of industry volumes/profits. Equally important is the look and feel of the facility. Is it commensurate with the brand or does the facility need improvements or modification?
3rd – Power
- Network Strength (Profitability). The power of your network starts with profitability. Customers deserve a level of treatment that requires personal attention beyond the sales process. The cost of this relationship is embedded in the pricing of the product, but can easily be jeopardized when a dealer is in a loss position. A healthy and profitable dealership operation can fulfill customer expectations with ease.

- Throughput is the key driver of success. It goes without saying that volume is the lifeblood of a business. To some extent, every store has a certain threshold they must achieve to cover their fixed expenses and operate efficiently and profitably. During that last significant industry downturn, many business seriously lowered their operating costs and found a new lower threshold which should bode well for the future. Having the appropriate network footprint (number AND proximity of rooftops) helps drive the sales expectancy and therefore throughput volumes in the majority of their stores. When dealerships have the throughput volume to operate profitably they are more likely to reinvest in those operations and continue to exceed their customer expectations.
- Customer network (social media, UIO, community relations). The power of each dealership’s network of relationships is also worthy of investigation. How strong is their advertising presence in their own market? How large is their network of shoppers (website traffic, friends of social media sites, units in operation for sales OR service customers) and how close are those relationships? Do they have engaged and enthusiastic customers that are willing to recommend them to their friends or are they simply chasing preconceived benchmarks of performance? The Power of a given dealer (or salesperson, point, candidate) can be supported with real data and is reflective of how successful the partnership will be in the long run.
4th – Promise
- Brand Centric. Finally, we must ask ourselves if the candidate, location or point is the right match to the brand promise we must fulfill. While difficult to articulate and measure, everyone will agree that some ideals simply don’t go together. Volume & Prestige while nice to contemplate can certainly work against each other. Aligning the business plans, capabilities, capacity and investments of every point in the distribution chain is critical to delivering a consistent brand promise to customers.
- Customer Experience. The brand is defined by the experience…or vice-versa. The culmination of all of the above criteria (dedicated people, resources, proximity, capacity, look & feel) result in a process that either mirrors and therefore reinforces the brand or it works to destroy it. It is nearly impossible to separate the local dealership brand from the original manufacturer brand, so it is critical to align the network with the proper expectations and standards for delivering on the promise of the brand.
- Employee Training/Certification. This leads us to the critical component of continuous education for the entire network. As customer behavior and expectations evolve, personnel turnover and new product introductions mandate continuously training to mirror the portfolio. This is also supported with historic training levels for each operation.
Despite the fact that as I’ve regained full mobility I have been eager to solicit other roles & projects at Ford, I believe market representation is at the core of any franchise/brand that utilizes a distribution channel and there is no better place to hold a position. While state franchise laws dictate certain aspects of the relationship, the cycle and process of working with dealers is paramount to long term success. Having played a role in the consolidation of the Ford-Lincoln-Mercury dealer network (and now the sunset of Mercury) has been rewarding and has shown that improving the throughput of the network and focus on core products and processes can deliver superior results.
Creating the vision for a network built to sustain cyclical industry pressures and maximize customer satisfaction, engagement and loyalty will result in profitable growth for all.

I was pleasantly surprised this past week upon learning of the fact that “customer engagement” has risen to our management radar screen. As a part of a huge company, who has been accused of being mired in bureaucracy (even paralysis by analysis), I am pleased to hear we want to move beyond measuring customer satisfaction and getting closer to understanding what true customer engagement is and how we might encourage/facilitate greater loyalty and passion. I will have more to share about customer engagement in future posts.






