A little over a year ago, the founder of a credit card payment processing company made an unorthodox move that resulted in some very mixed reactions and a whole lot of media attention. Dan Price, founder of Gravity Payments, cut his own salary by 93% (from $1 million to $70,000 per year). He did this so he could pay every single employee the exact same amount – $70,000, regardless of if they were the janitor or the receptionist, or how long they had worked there.
The story is not completely perfect and does come with some bumps in the road – his brother (and co-founder) sued him and there was also much speculation in the media about how successful this move would be.
However, it seems to have been a good decision in the long run. According to this story on HumanResourcesOnline, revenue and profits have doubled; new customer inquiries jumped from 30 per month to 2,000 per month; customer retention rose from 91% to 95%; and only two employees quit. Add to that the 4,500 resumes the company has received since this initiative and it would seem that the company is thriving with sales, happy customers and very happy employees. In fact, the employees are so happy that in July 2016, they collectively bought their boss a $70,000 Tesla!
I am pretty sure that any business would love to enjoy similar demand, growth and employee engagement to that of Gravity Payments. However, few businesses are in a position to pay every employee an annual salary of $70,000.
However, the point of this story is really that this particular leader’s personal sacrifice was the ultimate act of appreciation. One that immediately showed his employees that he valued them. In response, the employees increased productivity and worked even harder to ensure their customers were happy. The Telsa, while a grand and generous gesture, was simply a small part of this story. The message here in essence is that engaged employees who feel valued and trusted are the cornerstone to your business’s success.
While many people assume that money motivates everyone, several studies in fact prove that simply showing an employee they are valued and appreciated motivates them more than any amount of money ever could.
Another great example is Doug Conant, the previous CEO of Campbell’s soup. When he took charge he did a tremendous amount to change company culture, including making a commitment to celebrate employees at all levels for their individual contributions and achievements.
During his tenure, he wrote over 30,000 handwritten thank-you notes to individuals that worked for the company. Past employees still contact him to this day and express how much that gesture meant to them. A single, handwritten note showed that employee that he appreciated them and their individual achievements. In so doing, he made these employees want to work harder, better and achieve more.
In our industry, where with each passing month sales staff are on a continuous roller coaster of hero-to-zero, it’s more important than ever to ensure that employees feel appreciated, valued and recognized, not just because of their sales numbers, but also for showing up and working hard. Even something as simple as personally handing out paychecks and thanking each employee can instill a sense of worth and show employees how much they are appreciated.
In doing so, perhaps… just perhaps, they’ll become more engaged, more productive and you won’t have to have a continuously running “Help Wanted” ad.
The retail automotive world demands a lot, including long hours, working holidays and little flexibility in schedule. Most dealerships require 1 or 2 “bells” per week, (working open to close) and don’t include many weekends off, as Saturday and Sunday are typically busy days, when consumers have time to shop for a vehicle.
A recent blog post on the AskTheManager blog tells a very interesting story about a manager that questioned their decision regarding an employee who asked if she could come in a couple hours late so she could attend her college graduation ceremony. The employer had a policy of granting requests based on seniority. The employee couldn’t find someone to cover for her so, according to the article, this is what the manager did:
“I told this team member that she could not start two hours late and that she would have to skip the ceremony. An hour later, she handed me her work ID and a list of all the times she had worked late/come in early/worked overtime for each and every one of her coworkers. Then she quit on the spot.”
The manager felt this action by the employee was unacceptable, stating:
“I’m a bit upset because she was my best employee by far. Her work was excellent, she never missed a day of work in the six years she worked here, and she was my go-to person for weekends and holidays.”
The manager also mentioned that, during the same time, they adjusted another employee’s end time because that employee had purchase concert tickets. The cost of those tickets was considered in making the decision to grant that employee time off.
The blog went on to paint a very interesting background about this employee who asked for a couple of hours to attend her graduation, and why it was so important to her. She had bounced from foster home to foster home as a child, and was even homeless at one point. Despite all this, she had risen above her past; was their best employee; covered for multiple employees when needed; and had not missed a day of work in six years. She was the “go-to” person at the company and still had somehow managed to attend night school and earn her college degree.
But sadly, because the manager was blinded by a rigid set of rules and considered that the cost of concert tickets trumped a graduation ceremony for someone who was the most loyal, faithful and trustworthy employee; that company ended up losing their best employee.
The saddest part is that this manager didn’t write in to ask whether they had done the right thing. But rather, they wanted advice on how to educate this ex-employee that it was unprofessional to quit with no notice. And that, because the manager cared, they wanted to ensure that this employee understood how this could affect her professional career.
Over 1,200 comments were left on this blog post – the vast majority of which support the employee.
Managers have the responsibility to be fair and human in their interactions. Sometimes, having compassion and being human trumps any rigid rules and cost calculations.
A good manager should also be a good leader, able to identify when the right thing to do is to bend the rules for an employee. People have lives outside of work. Yes, even car dealerships. The ability to understand other people’s feelings and to weigh the importance of a personnel-related decision, versus the impact it has on the business, is paramount to employee retention and happiness. Think about this employee that was denied 2 hours to attend her college graduation. She was incredibly engaged with the business, a hard worker and valued her position at the company. She was well worth a small bending of the rules in order to maintain her as a happy, industrious employee.
It is a real shame that the manager didn’t even realize that a wrong decision was made. But one thing is for sure, no matter what business you’re in, finding an employee with the qualities of this one that quit is rare — they should be treasured.
Keep that in mind the next time an employee comes to you with a special request. Don’t be so rigid that you can’t factor humanity into the rules. Chances are that simply allowing that employee the 2 hours off could result in years of hard work and loyalty. Or, you will have to find another person willing to commit like that. And in retail automotive, that might be a challenge.
Performance Loyalty Group is privileged to have been included in not one, but two recent Automotive News articles outlining the success our auto dealer clients experienced using our products to gain and retain customers, build stronger relationships and drive more revenue.
The first was in May 2016, and highlights the spectacular results H&H Chevrolet experienced with our UltraCare Prepaid Maintenance Program.
The second was in July 2016, and illustrates the innovative way Howdy Honda leveraged our LoyaltyTrac loyalty and retention platform – along with some great creativity – to engage with their customers on social media.
Thanks to Automotive News, Hannah Lutz, Alex Kwanten, as well as H&H Chevrolet and Howdy Honda, for all of your efforts.
Read the following articles to find out what makes our tools so powerful that TWO or our auto dealer clients were recently featured in Automotive News due to their outstanding success:
- May 16, 2016 – “Charging for Prepaid Maintenance Trumps Giving it Away”
“Some dealers think freebies such as complimentary maintenance plans are good ways to boost customer retention. But the efforts are wasted if the free services go unused.
One Nebraska dealership has found success by charging for what it had been giving away. The idea: Make sure customers have “some skin in the game” when it comes to maintaining their vehicles.
H&H Chevrolet in Omaha began experimenting with complimentary maintenance in 2010, but committed to it seriously in 2013 by offering complimentary UltraCare prepaid maintenance plans from third-party provider Performance Loyalty Group.
“We saw our retention go way up” with the free plans, CEO Steve Hinchcliff says. Indeed, 88 percent of customers returned for service at some point. But, he says, “a large number of people weren’t actively using the plans, or forgot about them after the first visit.”
Customers who visited regularly often spent little. “Some customers would only want the free items,” Hinchcliff says, even if more work was needed. “That was discouraging,” he says. The average service upsell was little more than $65.
GM began offering a complimentary maintenance plan in 2013 to owners of most new 2014 Chevrolet, GMC and Buick vehicles. But in early 2015, after finding that customers didn’t use the program as often as expected, GM cut the number of free annual service visits in half to just two in 24 months.
The dealership’s experience parallels that of General Motors.
With that in mind, and after surveying its customers, H&H in August 2015 began selling the UltraCare plans. H&H charges an average of $255 per plan.
“We thought that it might make a difference if the customer had some skin in the game,” says Hinchcliff.
- July 4, 2016 – “Honda Store Finds Recipe for Success: Cookbooks Help Stir up Service Traffic”
“For Howdy Honda’s customers, creativity in the kitchen can lead to discounts in the service drive.
Five years ago, the Austin, Texas, dealership began using social media to gather customers’ favorite holiday recipes while boosting service traffic.
Howdy Honda uses a tool through Performance Loyalty Group’s LoyaltyTrac program to engage customers on social media. The dealership has 63,251 LoyaltyTrac club members and adds 400 to 450 members each month. The dealership retailed 4,470 new and used vehicles in 2015.
LoyaltyTrac integrates into the store’s dealership management system to increase customer retention by giving customers loyalty rewards based on their engagement and awarding them with discounts or coupons as they build up points for having their vehicles serviced at the dealership.
Howdy Honda offered 10,000 bonus service rewards points to customers who posted holiday cookie recipes on its Facebook page during the last two weeks of November 2011.
The dealership put all the recipes together and offered them to customers in a free e-book.
Since then, Howdy Honda has published cookbooks every year. In 2014, service advisers handed out holiday cookbooks printed by Performance Loyalty Group in the service lane.
Last year, the dealership changed course, putting together a summer picnic grilling cookbook. Customers could purchase it for $2, with proceeds going to a local food bank.
But submissions slipped, so Tina Fajardo, the dealership’s marketing coordinator, said she plans to launch another holiday cookie campaign, with a printed and digital cookbook, in November.
“We’re always trying to find different ways to connect to the community,” Fajardo said. “In Texas, homestyle cooking is a big deal. [We thought] how much fun would it be to gather those [recipes] and bring the community a little bit closer while advertising Howdy Honda?”
For more information about UltraCare, LoyaltyTrac or any of the other products Performance Loyalty Group offers to help auto dealers gain and retain customers, build stronger relationships and drive more revenue please click here or call us at (866) 744-5525.