Five Steps for Managing Problem Dealers

Five Steps for Managing Problem Dealers

Let’s talk about managing problem dealers.

We’ve mentioned them before. Several times. Because if you’re a typical brand you’re spending as much or more than 20 percent of your time managing them, and it’s critical that you get this under control and focus your energy on the rising dealers and brand heroes within your network.

So really, instead of just talking about problem dealers, let’s do something about them. Here’s the prescription for managing problem dealers, in five steps.

Step One: Dig Into the Details

You can’t solve a problem without first understanding if there truly is a problem, and then digging into the underlying causes. Start by looking at the data and objectively assessing the situation. Your objective should be to answer this question: Is there a performance problem or a personality conflict?

Individual or group perceptions can cause brands to brand dealers as poor performers. There may be conflict between the brand and dealer – conflict that can be exacerbated by both parties to the point that hostility takes root and makes a working relationship challenging. If the data suggests that your relationship with a dealer is trending this way, it’s time to deescalate the situation. I’ll address this fully in the future, but the simplest technique is to listen calmly and then restate your dealer’s concerns so that they know you’re listening.

Let’s assume that the problem isn’t personality-driven. Ask your organization these questions:

  • Are we answering our dealer’s questions in a timely manner?
  • Are they getting answers at all?
  • Are we adequately supporting them?
  • Are there product problems?
  • Are we surprising our dealer?

Or to ask in another way, brands should consider whether the dealer is really the problem.

Finally, consider how long the dealer has been a problem. Can you pinpoint a time when the dealer began having issues? And are the issues chronic or an aberration? The answers will determine how you proceed. A dealer that has developed bad habits that have been ignored for years is likely to be a little confused—and maybe defensive—if they see this as coming out of the blue. On the other hand, dealers that have had a sudden decline in performance are likely aware of it and may be more open.

There can be any number of triggers for this decline. They could be dealing with personal issues, particularly if they are a small operation. Maybe they have lost a key employee and they’re having difficulty finding a replacement.

These are among the issues that the brand cannot fix for the dealer.

However, if a brand is not communicating with and training their dealer, they are setting up the dealer to fail. That’s on the brand–it isn’t the dealer’s fault. Frequently, many problem dealers can be improved greatly by just looking into the details.

Step Two: Open a Dialog

This starts by telling the dealer politely but candidly that you have identified specific problems, and that you want to resolve them together. There are three key messages the dealer needs to hear: You’re the dealer’s friend. You are not their adversary. You want them to succeed.

Share what you discovered in step one with the dealer, and give them an opportunity to respond and ask questions. Once you’ve made your case, listen and don’t allow the discussion to turn into an argument.  Offer support and encouragement, not judgment.

When you share your findings, you may want to give your dealer time to do their own discovery and respond. The person leading your dealer may be unaware of the problems you’ve identified. Keep it casual at this phase and set up a time to reconvene in the near future.

Set the date to reconvene while you’re having the first conversation. You don’t want to be confrontational, but you need to communicate the urgency of addressing these problems.

The follow up discussion should be more formal. Confirm the call in advance. Prepare an agenda and share it when you confirm. Use the agenda to recap the topics that were mentioned on the first talk. This is an important step for two reasons. The first is clarity. There should be no misunderstandings about the issues to be resolved. Dealers are people, and people tend to hear what they want to hear. The second reason you need an agenda is it is the first step toward documenting the issues in writing. Although you hope you won’t need it, documentation will be critical if the problem is unsolvable. More about this in step five.

Assuming you have a dealer agreement in place, you may wish to tie performance issues to that document to add gravity to the conversation. Depending on the nature of the performance problem, this may be premature. There is a risk of pouring gasoline on a smoldering fire. Let the severity of the problem determine the severity of the discussion. But always move with urgency. Anything less signals that some problems are more acceptable than others.

Step Three: Offer Support

You know the exact nature of the problem. You and your dealer are engaged in a productive dialogue. Now it’s time to ensure that you provide your dealer with the right kind of support. This can include training, marketing, service and warranty support, or administrative support. The exact formula will vary for each dealer.

Start by making sure the dealer understands the existing support and tools provided by your brand. There are times when a dealer just needs one-on-one training.

Depending on the time investment you’re willing to make, the severity of the problem and the willingness of the dealer you may offer a problem dealer more training and marketing support than are made available to other dealers.

Many dealer problems are associated with the dealer’s lack of understanding in two areas:

  • Proper communication channels
  • Proper service and support channels

As with many strained relationships, a communication breakdown is often at the core. When dealers aren’t aware of where to direct inquiries, how to go about filing warranty claims or how to get service questions answered, chaos follows.

The symptoms of a breakdown in communications are clear: Phone tag, unreturned emails, or multiple brand departments interacting with a dealer over one issue.

Conflicting information makes the problem worse. Unfortunately, this is a relatively common occurrence when a brand’s communication channels are poorly defined. And it’s complicated even more if your brand uses third-party representatives to manage dealers.

In our experience, manufacturer’s reps are spread really thin and have a laser focus on sales. That’s their job, but the relationship building that turns a dealer into a brand hero suffers from a lack of attention.

Under normal circumstances, clearing and defining the lines of communication will resolve most problems related to training, marketing and service. This leaves administrative support. There are dozens of things that may hurt dealer performance and that are relevant to specific dealer personas. It could be as simple as directing them to an accountant to help them sort out their books, or a staffing firm to assist with an employee search. There could be a simple boost you can give a dealer to improve their performance. It’s an informal step that solves a problem and builds good will with your dealer.

Step Four: Define An Action Plan

You know the problem and are working with your dealer to resolve it. Now it’s time to put that plan in writing. An action plan should be specific and define action items for both the brand and dealer. No plan will be the same for any two dealers, because the specifics of the problem aren’t going to be identical. But, an action plan can follow a template. Here’s an example:

DEALER RESPONSIBILITIES

The dealer will use proper communication channels

The dealer will resolve customer complaints in 24 hours

The dealer will follow brand guidelines for installation

BRAND RESPONSIBILITIES

The brand will provide documented communication channels

The brand will answer dealer questions in under 24 hours

The brand will provide easy access to installation training

Step Five: Drastic Measures

I hope that you’ve reached the point with your problem dealer that you’re only reading this out of curiosity to see what’s left. But if your investment in identifying and solving the issues that plague your problem dealer hasn’t worked, it’s time for drastic measures.

This is the step you take with dealers that deliver poor customer experiences and eat up your time, resources and energy without offering a commensurate return on that investment. It’s the step you take with the dealers who can’t be fixed.

It’s time to send them packing.

Consult with your legal department and make sure you are honoring your end of the agreement you have with your dealer.  This agreement will have some form of a termination clause that you’ll invoke. If it doesn’t then you likely have larger needs, like the need for better legal representation.

Remember that documentation you started in step two? This is where it will come in handy. The entire process will have a paper trail and should there be any issue you can refer to the documentation and the termination clause and send the dealer off to work for your competition.

This, of course, is a stressful process and every effort needs to be made to make the separation amicable. This is business, not personal.

One Final Piece of Advice

Your goal should be to use your resources to further your brand. Problem dealers drag the bottom line down and limit what you can do to support your brand heroes. And that’s where your energy should go: To brand heroes and the dealers who have what it takes to get there.

Brands can be averse to conflict, and often equate managing problem dealers with conflict. That’s a mistake. Repairing dealers and your relationships with them is an essential part of building an effective dealer network. It won’t happen on its own. You have to do it. So don’t wait. Get to work.