When you want to level up in your industry–any industry–take a look at other companies who are growing and see what they’re doing well and, maybe more importantly, what they could be doing even better. Take Peloton for example. Peloton is a fantastic company and one that I have been following since it was started by John Foley back in 2012. I think he is an absolute genius, which is why I talked about him, his business, and how it applies to the auto service industry on Service Drive Revolution.
John Foley built Peloton as an in-home answer to the fitness phenomenon, SoulCycle. If you’re not familiar with the company, John Foley and his team designed high-performance stationary bikes equipped with large touch screens so you can stream live classes in the comfort of your living room, home gym or office space. It was a brilliant invention and one that has really taken off. And one of the reasons he’s been so successful is that the business model he uses is continuity – its based on a subscription service which means even if you’re not using the bike or the work out he still gets paid – similar to how a gym membership works. The company was valued at $4 billion in 2018 and after revealing plans to file for an IPO later this year; it looks like it’s going to be worth closer to $8 billion. This is all good and well for John Foley and the future of in-home fitness but what does this have to do with the automotive industry? And why am I such a huge fan?
Well, one of the reasons John Foley got Peloton up and running so quickly was his sales strategy. I recently listened to a podcast that interviewed John about how he’s managed to create not only a multi-billion dollar company but a whole movement and I was pleasantly surprised to find out that a lot of the psychology he uses to make a sale happen mirrors a lot of the training and sales strategy we provide to our clients. So here’s how he made it happen…
When John started selling the bikes, he tried to do it all online. But no one got it. He couldn’t find people to finance his business and customers weren’t buying the bikes because they couldn’t really understand why they needed them. Can’t they just go to a SoulCycle class for a fraction of the price? Or do spin at the local gym?
So instead of throwing in the towel, he hit the pavement and brought his bikes to the people. But he didn’t stop there, he really understood the psychology of getting someone to make a big purchase. For John, it starts when the customer walks through the door. According to John, no one walks into a Peloton store without getting on a bike. This is the test drive. He sizes up the customer, picks out what he thinks the right work out is, makes the settings on the bike easy to ride and blasts the music. He started doing this as a pop up in affluent malls across New York and his genius move was that he would turn up the music so loud in the headphones that whoever was on the bike would shout “this is amazing!” or “honey, we have to get one of these!” which would draw in even more customers. Not only did the customers get a taste of what the work out is like but it raised their endorphin levels and put them in a positive mood, which as anyone who has tried to sell anybody anything knows is important! By using this system of “test driving” the bikes, he was able to bring in a closing ratio of 50%.
Now I recently went into a Peloton store and did not have this experience. I actually never even touched a bike or heard any sort of sales pitch from anyone working there and ended up leaving the store empty-handed. (I know some of you might be saying that the salesperson was just having a bad day or its just a bad manager at that one store but I guarantee this is not a one-off experience. If you ever hear about a customer having a bad experience at your shop, take it seriously, it most definitely was not a one time deal.) This is where a lot of managers and companies get stuck. They have a great understanding of sales psychology at the corporate level but don’t have the training or infrastructure to create a consistent environment to bring in customers and make sure they don’t leave without selling them something.
If John Foley is out there reading this right now, I guarantee I can double your sales if you follow my training program.
The thing about sales, especially car sales, is it is all about psychology. I had a fantastic mentor, Don Crevier, who truly understood the psychology of sales and I got an invaluable education working on his salesroom floor at Crevier BMW. For Don, much like John Foley, it started when the customer walked onto the showroom floor. The first cars they would see would be the base model BMWs, the ones that start right around $30,000 so your customer is already in the mindset of “Oh, I CAN afford a BMW.” Then we had the demo row right out in front of every model only these cars were fully loaded. So you would be driving a $55,000 BMW but you would still be in the mindset of “I can afford this.” And to focus on the car and to really help you fall in love with it, we would take the price off the table for the first half of the sales pitch. It was all about getting you the car that you really love. Once a client loves a car, it is so much easier to negotiate the financing. So by using this system, we not only sold more cars but it produced higher gross per sales because we got them driving the car and falling in love with the car of their dreams.
This is what is supposed to happen at every Peloton store. These bikes are expensive, about $2500 and you have to get a monthly subscription to the classes on top of that. So in order to get you willing to hand over that much cash, they get you on the bike. Much like a BMW, these bikes sell themselves. You have to get your clients in the car! Now, I understand that the sales approach is different if you’re selling Toyotas or Fords but the basic psychology is the same. Before you even mention the price of the car, get your customers behind the wheel. So if John Foley has a great system in place and understands the psychology of the sale, what happened when I walked into the shop in LA?
The problem was the company grew too fast. All of the pieces are there but when you are growing at that rate, it becomes nearly impossible to look after every store and every salesperson. Now, this can be a great problem to have if you know how to solve it and if you use my system of gamification, I guarantee you’ll see more consistent sales. In the car industry, the thing we would do with salespeople is we would play games with them on how many demos they could get because demos sell cars. And so I would do the same thing in a Peloton location – I would have confirmed demos for everybody that walked in and the more demos you get, the more commission you get or however they would decide to compensate them. I also think they could be selling more accessories. When I was in the store, there were dozens of accessories all over the place and no one ever mentioned what they were for or how I might need them. That is another thing they could gamify. And you can do all of these at your dealership or in your service drive. Create a system where your employees are rewarded (either on commission or with a prize they would love) for selling more. Here’s a little refresher on the system of gamification that we have created:
Goals – Without goals, we have no rudder, no idea where to go or how to get there. Just having goals isn’t enough though; they have to be the right goals, chosen to both motivate and guide your employees as well as support the business’s core needs.
Milestones – Goals tend to be far away and hard to achieve. Consequently, it’s challenging to stay motivated toward goals, day after day, week after week. Milestones in between the goals you set will help employees stay engaged and motivated, and provide a roadmap for how to get where you want them to go.
Visual Feedback – As your sales team members progress through their milestones toward their goals, they need feedback to make them proud if they’re performing well, or to let them know if they need to work harder and smarter to get there. Visual feedback is fast, efficient, effective and inherently motivational, showing each sales associate, at a glance, how they’re doing individually and in relation to their peers.
Smooth Difficulty Curve – If your initial goals and milestones are too hard, some of your less-accomplished team members might be discouraged instead of motivated. On the other hand, if they’re too easy, your veterans and top performers might grow complacent and bored. Gradually ramping up the difficulty of the goals and milestones you choose can help alleviate both problems and keep your staff motivated and engaged for years to come.
Social Interaction – Some sales teams are inherently competitive. Others are more collaborative. Both are okay, but it’s important to learn which style your team gravitates toward. Social interaction built into your training games, customized to their communication styles, will further boost morale, motivation and team cohesion.
Rewards – Even the simplest of games include rewards for good performance and desired behaviors, whether it’s bragging rights or simply the right to keep playing the game. You, however, can provide much more powerful rewards in the form of cash. You can wave cash around and count it out in front of them. These are perks that keep them coming back for more and give you many creative options. Ultimately, just like you’re in business to make money, your employees come to work to get rewarded for their efforts – mainly in the form of compensation.
The lesson here is system, system, system. It’s the same in the service drive. It’s the same in a Peloton store. It’s the same in a car dealership. It’s the same in a coffee shop, there’s a system and if you focus on the system you can create more sales.