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*Eyeroll* Another OEM Co-Op Program

Chris Vitale

Full Sticker
Jul 7, 2016
61
81
First Name
Chris
Eyeroll. Another OEM Co-Op Program?

Agh, the word Co-Op. The word that usually means you're having to spend money for another OEM program. Or you're going to have to complete another mandated program - investing money - without having a say. That or because you're doing your own training or advertising that the Co-Op just isn't necessary. Hear me out. Have you ever been cruising down the road and see a billboard for a brand that seems out of place? Or been in an airport and see advertising for another franchised brand? Have you ever noticed that when it comes to franchised brands that the customer service is relatively consistent? Chances are you have. Chances are that these advertisements were created using market data. Data most dealers (or franchisees) do not have access to. Data that uses several, if not hundreds, of resources to better understand true market potential. Hence why you find billboards and other media advertising creatives in what seems to be peculiar places. It gets your attention. More importantly, when advertising is done through the OEM to then be distributed to its franchisees, it ensures continuity with the brand's goals.

Customer service is no different. In fact, when we go to a franchised store and do not have the "typical" experience, or an experience we've come to expect, we're disappointed, no? Well, the same is to be said for our customers whose experiences fall short of what they expect on the dealer level. Consistency in customer service - achieved through quality training - is critical in having success. So, when it comes to OEM Co-Ops for training, the same philosophy is in play. The OEM uses data to understand which dealers and respective markets have an opportunity to increase sales. Sales that cannot always be done through the current dealer efforts. This isn't saying that what the dealer is or isn't doing is wrong. It's just that there is more opportunity out there. Not to mention, the OEM is absorbing a decent amount of the cost. The fact is that OEMs - when done right - have the means and leverage to negotiate pricing and program details. It's those details - at that price point - that offer the dealer an opportunity to be a part of a program or training that affords success. More importantly, the OEM Co-Op programs are designed to be a long-haul effort. There was and is a tremendous amount of thought put into these programs. And for a good reason.

Think about it, one tendency in our industry is to "cancel" a training company or advertising vendor (or cut back spending) when we are doing well, but also when we’re not.... Why is that? One doesn’t get divorced at each disagreement on where to go for dinner. If things aren’t going so well, that’s when training is needed most! Conversely, the idea that, “well, we're doing well now, so what's the point of continuing to spend additional money?” is a misnomer. You're doing well because of the investments made through training and strong advertising campaigns. But make no mistake, once you stop training or cut ad-spend, the train will derail. How many times have we stopped training when things were gravy to then "get back to basics of blocking and tackling" and rush back to training as the hail mary save in the 4th quarter? More times than we'd like to admit. Imagine how much easier it would be to manage your teams if they followed consistent processes with training that the OEM is assisting in paying for?
 
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Dan Sayer

Boss
Dec 4, 2009
344
328
Awards
1
First Name
Dan
Eyeroll. Another OEM Co-Op Program?

Agh, the word Co-Op. The word that usually means you're having to spend money for another OEM program. Or you're going to have to complete another mandated program - investing money - without having a say. That or because you're doing your own training or advertising that the Co-Op just isn't necessary. Hear me out. Have you ever been cruising down the road and see a billboard for a brand that seems out of place? Or been in an airport and see advertising for another franchised brand? Have you ever noticed that when it comes to franchised brands that the customer service is relatively consistent? Chances are you have. Chances are that these advertisements were created using market data. Data most dealers (or franchisees) do not have access to. Data that uses several, if not hundreds, of resources to better understand true market potential. Hence why you find billboards and other media advertising creatives in what seems to be peculiar places. It gets your attention. More importantly, when advertising is done through the OEM to then be distributed to its franchisees, it ensures continuity with the brand's goals.

Customer service is no different. In fact, when we go to a franchised store and do not have the "typical" experience, or an experience we've come to expect, we're disappointed, no? Well, the same is to be said for our customers whose experiences fall short of what they expect on the dealer level. Consistency in customer service - achieved through quality training - is critical in having success. So, when it comes to OEM Co-Ops for training, the same philosophy is in play. The OEM uses data to understand which dealers and respective markets have an opportunity to increase sales. Sales that cannot always be done through the current dealer efforts. This isn't saying that what the dealer is or isn't doing is wrong. It's just that there is more opportunity out there. Not to mention, the OEM is absorbing a decent amount of the cost. The fact is that OEMs - when done right - have the means and leverage to negotiate pricing and program details. It's those details - at that price point - that offer the dealer an opportunity to be a part of a program or training that affords success. More importantly, the OEM Co-Op programs are designed to be a long-haul effort. There was and is a tremendous amount of thought put into these programs. And for a good reason.

Think about it, one tendency in our industry is to "cancel" a training company or advertising vendor (or cut back spending) when we are doing well, but also when we’re not.... Why is that? One doesn’t get divorced at each disagreement on where to go for dinner. If things aren’t going so well, that’s when training is needed most! Conversely, the idea that, “well, we're doing well now, so what's the point of continuing to spend additional money?” is a misnomer. You're doing well because of the investments made through training and strong advertising campaigns. But make no mistake, once you stop training or cut ad-spend, the train will derail. How many times have we stopped training when things were gravy to then "get back to basics of blocking and tackling" and rush back to training as the hail mary save in the 4th quarter? More times than we'd like to admit. Imagine how much easier it would be to manage your teams if they followed consistent processes with training that the OEM is assisting in paying for?
As always, well written @Chris Vitale. I can't think of a time in the last 24 months that we've even had additional co-op funds available to offset expense of an additional program. Now, there are cases of "heavy-up" programs where an OEM will add additional co-op funds but that seems rare these days.

I would add that if a dealer's decision comes down to whether it's co-opable when looking at the right solution, that is flawed because it reveals their decisions are focused on "expense" vs "return". I'm kinda sick of vendors closing with, "we're co-op eligible so it's free money" (because I think most vendors don't know how co-op actually works). If their, the vendor, close is they're "free" or "discounted" then they kinda sweep their own leg on whether they bring value. We also know what happens to the implementation and accountability of "free" products. Cue 30-day notice or perpetual mediocrity and no one wins. With that said, there's a good chunk of this entire issue that points back at a culture issue within a store. Do you have best practices or ideas how to shift this? Is it a role at the dealership? Is there a self audit for the GM/Owner that helps them look at a pattern of their decisions that create ups and downs in this area? Is there a checklist to evaluate a vendor before canning them? e.g. 1. Did we hold up our end of the partnership? 2. Are we cancelling because of price or performance? etc.
 
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Chris Vitale

Full Sticker
Jul 7, 2016
61
81
First Name
Chris
As always, well written @Chris Vitale. I can't think of a time in the last 24 months that we've even had additional co-op funds available to offset expense of an additional program. Now, there are cases of "heavy-up" programs where an OEM will add additional co-op funds but that seems rare these days.

I would add that if a dealer's decision comes down to whether it's co-opable when looking at the right solution, that is flawed because it reveals their decisions are focused on "expense" vs "return". I'm kinda sick of vendors closing with, "we're co-op eligible so it's free money" (because I think most vendors don't know how co-op actually works). If their, the vendor, close is they're "free" or "discounted" then they kinda sweep their own leg on whether they bring value. We also know what happens to the implementation and accountability of "free" products. Cue 30-day notice or perpetual mediocrity and no one wins. With that said, there's a good chunk of this entire issue that points back at a culture issue within a store. Do you have best practices or ideas how to shift this? Is it a role at the dealership? Is there a self audit for the GM/Owner that helps them look at a pattern of their decisions that create ups and downs in this area? Is there a checklist to evaluate a vendor before canning them? e.g. 1. Did we hold up our end of the partnership? 2. Are we cancelling because of price or performance? etc.
I couldn't agree more! If the "only" reason is "it's co-opable" then it's a horrible, horrible decision. However, I agree with the co-op funds as a positive during the presentation, just not how so many vendors use it. They truly don't understand the program and they also haven't the slightest idea what it takes to earn those dollars. Not to mention most aren't "free" money but qualified dollars with a certain portion matched and that's not the majority in a lot of circumstances.

However, setting vendor stupidity aside, just as many retailers don't fully grasp the programs either. As a franchisee, the franchisor is guiding spend/investment for a lot of reasons and the mentality "that's my money" (well no $h!t it's your money) but it's really not; it's the OE's money and you have to invest it "here" or "there" and it's no different than the Golden Arches vs. the Golden Arcs.... MacDowell's of Zamunda or McDonalds from America and worldwide! There's no perfect answer and definitely no all-winning solution but you hit the nail on the head on how the majority of vendors simply do NOT understand the first thing about co-op.

And, if you really want to blow someone's mind, remember the General Motors EBE, MOE and SOE programs ALL AT THE SAME TIME? Now add in what iMR qualifications were! Then, add in 3 captives, Ally, US Bank and GM Financial and it's enough to make your head spin! Any GM desk guys were essentially Navy SEALS because you had to be elite baby!
 
Mar 21, 2012
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Ryan
Now, there are cases of "heavy-up" programs where an OEM will add additional co-op funds but that seems rare these days.
"Heavy-up" campaigns themselves are another prime example of OEM waste.

How do OEM's expect one or two vendors to onboard hundreds or thousands of dealerships at the last minute that they don't have existing relationships with and then to make matters worse, only have the campaign run for 1 month!

That's a recipe for mediocrity and advertising waste.
 
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Dan Sayer

Boss
Dec 4, 2009
344
328
Awards
1
First Name
Dan
"Heavy-up" campaigns themselves are another prime example of OEM waste.

How do OEM's expect one or two vendors to onboard hundreds or thousands of dealerships at the last minute that they don't have existing relationships with and then to make matters worse, only have the campaign run for 1 month!

That's a recipe for mediocrity and advertising waste.
@Ryan Everson, OEM directed heavy-up campaigns have been the best channel we have ever seen. In fact, the last time we opted in for one at our Grand Island CDJR store we sold an additional 45% New that month. We had so many customers one Saturday that a couple were fighting over the same car. There was a lady, while she was screaming "Mine, mine, mine!", trying to pull another shopper out of a Dodge Journey by his leg. Literally pulling his leg! Like I'm doing to you now.

I'm with you, seriously the worst idea in the history of OEM programs.