Driving Success: Greg Norton | Episode 7

Confluence Financial Partners — Driving Success: Greg Norton | Episode #7

Greg: One point six trillion dollars is lost by companies in the U.S. because of poor customer experience.

Imagine that.

SOURCE: According to Accenture, $1.6 trillion is lost by companies in the U.S. due to customers switching as a result of poor customer service.”

Welcome to the Imagine That Podcast. You should listen to today’s podcast if you are interested in any of the three following topics. One: how to excel in difficult times. Two: do you want to receive great service from automobile dealerships? Or three: you want to walk into the next car dealership, a little more educated so you can enjoy the experience.

Today we’re fortunate to have Greg Norton with us. Greg is the owner of South Hills Honda. So welcome, Greg.

Greg N.: Thank you, Greg.

Greg: Yeah, I’ve known Greg for a while and one of the things we were talking about actually before we started today is that sometimes owning a car dealership, or being in the car business, comes with a certain connotation that can be frustrating. I would argue that also in our industry, sometimes it’s the same connotation, and it’s frustrating. So, I’ve really enjoyed watching you grow. I’ve watched you setting a different standard in that business, and I’ve really enjoyed watching how you have helped people buy vehicles as more of a consultant than a salesperson. So, we’re delighted to hear from you today. We’re delighted to learn from you. And I think it’s interesting also that Greg came in from Philadelphia and started his business in Pittsburgh by starting South Hills, bought a previous dealership, changed the name of it, it’s now called South Hills Honda.

And he did that in December — correct me if I’m wrong— of 2007.

Greg N.: That’s correct.

Greg: Now, if anyone remembers — he bought the dealership and the next several years were very, very difficult. Right? We were hit by a recession. And Greg, I just want to share with you, I actually.

Went through and tried to determine and figure out, is it unusual that someone comes in and starts or buys a business in a difficult time and has success?

So, I’m going to share with you a couple of names. All of these organizations were started in difficult times, which leads us to the conclusion that in tough times, good companies make incredible headway. You may recognize a couple of these names. Apple, Chevron, Disney, Enterprise Car Rental, Exxon, FedEx, J&J, Microsoft, Southwest Airlines, and this little grocery store called Whole Foods. There’s something about starting in a difficult time. You did it in 2007 and in the first ten years, correct me if I’m wrong, you actually doubled the sales of the dealership.

Greg N.: That is correct. Even though in 2007, I didn’t realize that it was the first official month of the recession, but as ’08 became increasingly more difficult, and certainly in the early months, I started to wonder whether I had a just made a catastrophic mistake in leaving Philadelphia pretty decent a situation.

Greg: And you were COO of a couple of different dealerships.

Greg: N. Yeah. We were doing fantastic. Now I had an opportunity to go out on my own as a hundred percent. And while that was certainly the attraction, boy, I second-guessed myself for a few months until we got some traction.

Greg: Sleepless nights?

Greg N. Oh yeah. And it was making the commute either on a Friday night or a Saturday night back to Philly—

Greg: With then, a young family.

Greg, N.: Yeah. Yeah. So of course,

 Greg: When was that moment like, “Aha, I think we’re going to be okay.”

 Greg N.: I know exactly when it was. It was the middle of April.

 Greg: In ’08?

 Greg N.: Yes.

 Greg: That quick, you knew you were going be okay?

 Greg N.: Yes. Yes, absolutely.

 Greg: Okay. You didn’t suffer that much.

 Greg N. No, but each day, each day seemed like a week.

 Greg: Yeah. So, what happened in those, you know, those five months that caused you to be like, okay, we’re all right.

Greg N.: I’ve been involved in some turnarounds before, not as a part-owner, but not as a full owner. Complete. And the first thing you have to do is assess the talent that you currently have. It’s almost, I will say in every situation I’ve been in, this would be the third turnaround that I had been involved with — there was always someone that was overlooked. So, you come into a room like this, you have five people in the room, and one person has been overlooked, I guarantee it. And should be in a position of prominently prominence leadership helping you steer the ship, so to speak. And, sure enough, you know, you do your interviews, you talked to everybody, personally.

I’m talking everyone from the porters to, at the time, I had a general manager, and see if everybody is in the right position. And then you realign, of course, that comes with some stress. But you realign, and then you start building your culture from there. The first thing you have to do though is make sure that everyone is in the right spot. And then you build from there.

Greg: I’m sitting with my mouth open. It’s so, so, so true. Doesn’t matter if it’s a car dealership, an investment firm, a football or baseball team, right? You have to have the right players, and then you absolutely need to put them in the right position.

Is there any assessment that you guys do, and I know any assessment that you do to try to understand people’s strengths and weaknesses?

Greg N.: It was more just me personally interviewing. I know there’s a lot of personality profile stuff out there, but—

Greg: Not as effective as good conversation and looking people in the eyeballs.

Greg N.: Right. But of course, that takes a lot of time. I mean, you imagine we took over, I think we’re at in the low sixties for people now, took over, now we’re in the high thirties for personnel.

But talked to, can you imagine how long it takes? And I know you can talk to 30 or 40 people, nonstop. I mean, it’s exhausting, but yet there is no shortcut. You can’t shortcut that process and expect to get good results. And once you do that, I mean I had two people that were beacons that should be in positions that they were not, there was a lower position, somehow overlooked or whatever. And ironically enough, one is now my general manager, and one is my general sales manager.

Greg: For people that are listening. If you’re coaching kids, if you’re starting a business or you’re trying to grow a business, spend time with your people. Because the greatest thing you could do for your customers is have the right people, in the right chairs and then you’ll go on to get a result.

Let’s go-to service because I love it. Building that trust of knowing that if I come in to your business or we have a client coming into our business, we are going to do our very best and make sure people are buying the right things for the right reasons, and they’re not overpaying. Right? So, then you service people really well and build that trust over time.

So how do you get people to be more consultative in the in the service process than, “Hey, you just need another set of tires” or whatever the service du jour item is, how do you get them to the point where they’re more consultative?

Greg N.: That’s a very, very good question. And I like to believe that it starts with your mom and your dad and your coaches and teachers and clergy or all the people that have influenced you along the way. But we are okay; in fact, we like to hire people that don’t have a lot of technical experience in our business. Therefore, less bad, fewer bad habits.

Greg: Yeah.

Greg N.: So, if you hire the nicest people and teach them, try and train them the way of your culture. A lot of it sticks. Most of it sticks.

Greg: It’s odd how similar we bring, we are okay bringing people in from a different industry that we think have the right fiber, the right fabric too, and then training them. Because we want to be like, you guys do a different type of organization than the industry and set a new standard, whether it’s on vehicles or helping people maximize their life and legacy. The challenge is, you can’t hire everybody from your competitors. We can’t hire everybody from our competitors, and then try to be different than the competitors.

Greg N.: You can’t. You absolutely cannot.

Greg: Right? You have to bring people in and then grow them in the Greg Norton way of doing business.

Fair?

Greg N.: Spot on.

Greg: One of those, as you are explaining to me, and this is just to help people when you’re sitting in the dealership, and you’re in the service department, or the service manager calls you and says you need tires in 2,000 miles, you might as well get them today. You would say?

Greg N.: You need them in 2,000 miles. We’d rather see you in 2,000 miles. We actually try not to sell. All we want to do is, is help you make the right decision. We’d rather we don’t want to have you overspend on anything, and we’d rather build your trust by you knowing that we’re not trying to sell. All we want to do is help you make good, good decisions. A very consultative approach.

Greg: I said that at lunch in preparation for this to this podcast. So, I sit in with a group for lunch, and they all looked at me and said, (we are sitting around the table, I think are like five or six of us), and they said, we’ve all heard that.

If this is going to need to be done anytime, sometime in the next six months, you might as well do it now. And one person said, yeah, you’re sitting in the service, you know, waiting room. And they come in and said, “by the way, you’re going to need — you might as well do it now.” And you’re like, okay. But when you think about it, if you make that decision ten times in a row, you’ve just wasted a set of tires. Right? So, something just little like that builds the trust.

Greg N.: At least we believe it does. And, and you know, one of the things that I say a lot and I’ve got a lot of clichés: treat this customer as if it was your mother. What would you tell your mother? Would you say, “Hey mom, you need tires in 5,000 miles, let’s do them right now? No, I’ll find a way to help you maximize the life, bring you back in, you know, three or four months, and then we’ll do it then. Let me help you save some money. And you do that enough times. I mean, we, you know, we serve as 2,000 plus cars a month. You know, you hope that that permeates in the community, and people get a real good feeling, and the trust level goes way up.

Greg: At the end of the day. It doesn’t matter the business, car, investments, pictures, real estate — people buy trust.

Greg N.: I think so.

Greg: I think so also. So that other car dealership may get the new set of tires. I’d rather sell trust.

Greg N.: I would too.

Greg: Because in 10 years, they sold one set of tires. You have a whole community that trust you and comes in and wants to do business with you.

Greg N.: Well, that’s exactly right. “Do unto others,” you know, again, all of those sorts of clichés. But you know, I’ll tell everybody, look, I sleep like a baby. Yeah. I mean, I sleep like an absolute baby, every night.

Greg: I know you guys spent a lot of time on transparency and education for the listeners, you know, so we all become a little bit better buying a car. I know it’s like a major purchase for so many people. And when you accumulate all the purchases of vehicles you make, it’s a gigantic part of expenses for people. So how would you educate them? So, when you walk into a dealership trade-in, you know, car price, list price, how would you educate someone to make sense of all of those numbers, and are there any tips you can give our listeners?

Greg N.: I would. And I thought a lot about this because I thought we’d talk about this.

Greg: Yes.

Greg N.: The first thing I would do is use the internet for your research. Do a little homework on — that is, if you know exactly what you want, I’m talking the brand, the model, the trim level of the model. If you know exactly what you want, do a little research online and find out what they’re transacting for.

Greg: So, so any specific websites that you would recommend?

Greg N.: Kelly Blue Book, kbb.com, edmunds.com. Those are the two premier sites. They’ll tell you what we own the car for our invoice price, which is okay.

Greg: Is that for use new and used?

Greg N.: You can do both. But let’s, let’s stay new. New is a little simpler to explain.

Kelly Blue Book, for instance. Well, both of them will tell you what the average trends at transaction price is in your zip code. So, if it’s a $20,000 invoice, they’ll say the average transaction price maybe 20,500. So, if you know that, you can go into South Hills Honda or whatever other dealership and know that if you pay somewhere around there, I’m talking no trade-in, no anything, because they factor in incentives. They’re very up to date, within 24 hours of when a manufacturer’s incentives are posted. But if you were to write a check, you would know if you paid somewhere in the neighborhood of 20,500, be it 20,000 or 20,500 or 21,000; you’re going to do okay.

Greg: You’re in the range.

Greg N.: And you’re going to take a lot of stress out of your life.

Greg: To know that I, I just came out of that dealership and I, as one car dealer that sounds like they do business, very different than you. He said we were playing golf, and he said, “Never forget, Greg, you could’ve got it cheaper.” It’s horrible, right? It’s a horrible feeling. If you know, going in that 20,500 is the right number, 20,000, 700, 300, it’s, it’s close enough that it’s like, okay, there’s reasons for that.

Greg N.: Well, I can’t speak for every brand out there because the more expensive the car, even if the markup percentage was exactly the same from say, a Honda to a Bentley, that margin, that dollar

Margin is going to be higher. Right? But for mainstream automobile sales, the average markup is somewhere, or transaction is somewhere in the neighborhood of 1 to 2%.

Greg: That’s not what people think.

Greg N.: I know, they think if I bought a car for 20,000, you just made 5,000. Well, it couldn’t be further from the truth. And, and I’m hoping that our listeners will heed this advice, because the first thing I wrote down when I talked about, you know — the best, easiest way to buy a car? Try and have fun with it. Most people think that it’s like the worst experience in the world.

Greg: The exhaustion thing costs you money. You end up exhausted, and you end up getting a poorer deal because you just accept some deal that you could’ve had a better one earlier on if you’d have done a little research sitting at your home having coffee on the internet. Instead of running from dealer to dealership, like the Flintstones used to, right? Forty years ago, right? Just running around all over the place.

Greg N.: Well, one of the myths that exists also, I mean now that the internet is a full-fledged force, so in most businesses, you do enough research, you could literally say— my best advice is to try and do business locally. If you think that your local dealer, be at Honda, whomever is a fairly solid entity, by reputation, either online or referrals, try and do business with them. But it’s okay to send an email to that person’s, that dealership’s competitor, local competitor, might be up the road, down the road, whatever, send an email to them saying, “I’m interested in whatever down to the trim level, what would you sell the car for?” So now you have what you can buy it for through KBB or Edmund’s. You’ve got a quote from that other dealer’s competitor, and you’d have to say, I’m writing a check, I’m paying cash. What would you sell that car for?

And then you take that to your local competitor. And I mean to tell you, it can be the easiest transaction you’d ever want to do. But a lot of people, unfortunately, and I think as time goes on, they’ll realize that there’s not these gigantic margins. They’re not, really never were, but they’re certainly not now. It’s all volume. You could make this such an easy, fun process — because it should be fun. It should be very exciting. My God, how often do you do it? Three years. Every three years, five years, ten years? It should be more fun than a lot of people make it. And it’s fun when you see that people have figured it out and know, okay, you’re going to make a couple bucks? Great because you’re a business, you’re a local business. I’m patronizing the community. I want to do the right thing locally. And my gosh, we don’t ever forget those people!

Greg: What you’re saying it’s so refreshing. I’m looking at the people in the room, and it’s just so refreshing that, you know, do more research. Call a competitor. It’s transparency. It builds that trust that allows you to have the fun because you — What was that men’s — there was a store that sold suits or something like that?

Greg N.: Men’s Warehouse.

Greg: Was it? What did they used to say? “An educated consumer is our best customer.”

Greg N.: Yes, yes, yes.

Greg: That’s what I’m hearing, you say. We feel the same way, by the way. The more our clients learn, the better chance we have of doing business with them. So, the more, the more educated your car buyer becomes, the more likely they will be comfortable. And unlike that person that you were talking about this morning with this whole adversarial relationship.

I also, though said, embedded in your comments, you said a couple of times — if you’re buying cash. That leads me to believe that some people are, some dealerships may give you a different price that may be lower if you finance. Is that because there’s some money in the financing?

Greg N.: Yes. A lot of this can be a little confusing to people because there’s so many things, so many variables. So, say the selling price is one variable; the trade-in is another variable; the interest rate is another variable. So, you have to isolate certain things, and we help people isolate and educate so that they so that when they have gotten quotes from other dealers, we can compare apples to apples. Because a lot of people, say if we’re talking in your trade-in (and not to go off on a tangent), whenever you have a trade-in, and this is a very important tip for our listeners. If you have a trade-in, which say, 70% of our customers will have, maybe 80. It’s critical that you find out: “What can I buy your car for, mister dealer, and what will you pay me for my trade-in?” Not commingled. Two separate transactions.

Greg: So, I want to know what my trade-in will be, and I want to know what the price on buying will be and don’t put them together.

Greg N.: Don’t put them together.

Greg: So, let me ask this. If you say, I’ll take the trade-in for $10,000, but then, I decided not to buy the car from you. Would you still take the trade-in?

Greg N.: At South Hills Honda, 100% of the time, we will.

Greg: Wow. Is that normal?

Greg N.: Absolutely not.

Greg: So, okay, one more — ready? Buy or lease?

Greg N.: Lifestyle decision. It really is. I happen to be a huge fan of leasing. For Honda, Honda does most of their incentives by way of either lowering the interest rate or lowering the lease rate. It’s very subtle, very quiet, but it’s very meaningful. Most people are payment buyers, and it has zero effect on the resale value. So, if you’re, you know, rebates or incentives of a thousand, $2,000, $3,000, it will have a detrimental effect on a vehicle’s resale value. So, the interest rate discount or the leasing discount is real, and it’s tangible.

Greg: Okay. So, who shouldn’t lease?

Greg N.: I would say people that like to keep their cars for a long, long, long, long time. A good explanation for leasing, if somebody was to come in and say I think I’m going to trade every three or five years. Okay, if you trade in three years say, we’ll use a Civic for example, if you were to lease, if you were to buy your Civic out at the end of your lease, you’ll pay probably $1,000 more than the car is worth at the end of three years. Now is that thousand dollars, paying that thousand dollars more, is that worth it to you to have the option to not want to keep it? I’ve had a bad experience. Maybe with the car, it’s had, you know, lots of issues.

One of the other big, huge things on late model cars is this vehicle history report phenomenon. I don’t know if you, I’m sure everyone’s heard of Carfax. The two biggies are Carfax and AutoCheck. But a late model car, talking three to five years, or zero to five years old that has had some sort of an accident that’s been documented, could be perfect. I mean, like the most perfect repair you’ve ever seen, will be worth less.

Greg: I couldn’t believe it. So, I did that with my car. So, someone ran into me and, and we had to have the car fixed. And when we, and I went to trade it in, they said minus like five thousand dollars because it was an accident. And I’m like, “Whoa, what do you mean?” It wasn’t even my fault, and it went down $5,000 on the trade-in.

Greg N.: And it’s a real, real thing. And leasing, at least with Honda, I can’t speak for every manufacturer, but Honda, the bad auto or the bad vehicle history report, has no bearing.

Greg: All things being equal, there’s no incentive for you if they lease or buy — all things being equal. It’s just a lifestyle thing and the benefit of them leasing, you know, someone that holds your car forever, I think is probably less advantageous to you than someone that not, right?

Greg N.: It’s just another way of acquiring the car, and then we consult with them on, well, what’s your lifestyle look like? Does it make sense to either pay cash or finance or lease? And to your point, it makes no difference to us.

Greg: So, it’s just a consultative thing based on their lifestyle.

Greg N.: Exactly. Right. Yeah. I mean you get— your payment is less, typically, the payment on the lease.

And this is a good tip. A payment on a lease, a three-year, 12,000 mile a year lease normally equates to a zero down, 72-month payment on what you’re buying. Typically. It’s pretty close.

Greg: And if someone says, well, I drive 20,000 miles a year?

Greg N.: We can build it in and show you both ways. Because again—

Greg: Education.

Greg, N.: Yeah.

Greg: Yeah. All right, Greg. So, here’s the question. If I’m a great researcher or a great negotiator, who gets the better deal?

Greg N.: Well, there’s not much room to negotiate. Only because the margins are so small, in our business, we lead with our best foot right out of the gate. Which comes with some risk, because if we’ve

Done a poor job of educating that the margins are what the margins are, the trade-in values are, your trading value is in this range. And if we’ve done a, not a very good job of really showing you, not just telling you, but showing you how logical our proposal is to, you know, to do business with us. And you still think that there is a lot of room, well, we’re probably not going to do business.

Greg: For the listeners, they just need to be a little bit careful, right. Your offer, you lead with your best offer.

Greg N.: Correct.

Greg: That’s not true at all dealerships.

Greg N.: That is correct.

Greg: So, I just want to be clear for the listeners, like, not every dealership like that. So, let’s not do the, “Hey, I listened to the Imagine That podcast and so, no matter what number you give me, it’s good because it’s your best offer. And that’s not true everywhere.

Greg N.: But negotiating, it means something different, I think to almost everyone. I mean, some folks I think things believe that you have to be really rough and tough in order to negotiate.

Greg: I don’t expect you to remember this, but, so Elizabeth is 25. When she was 16, we came in, and I don’t think we knew each other very well back then. I may have known your name. I don’t know. But that’s it. And so, I came in and came in, because we knew someone in the dealership, and we sat down nine years ago. And when I was talking to the salesperson, you actually came in, and you sat down. And I don’t know if it was negotiating or not; I just remember having a conversation around the facts that led us to a conclusion that it was fair. If that’s negotiating, I’m not sure, but I remember you sitting down, and that was the first time I met you face to face. And I thought, “Hmm, that thought, you know, that felt different than, than the typical experience.” We’d looked at the facts. We understood the facts. You make sure we did. And we actually bought the Honda Civic for Elizabeth.

Greg N.: I don’t remember. I feel bad that I don’t know it as good, but maybe one of the best explanations of negotiating, at least in my world, that I’ve ever heard. And I, and I mean that. That is spot on.

Because to negotiate implies I think that there is all this room, and back and forth, and, you know,

smoke-filled, you know cigar smoke, and you know, we’re really going to struggle with trying to get to a common ground. And I still think that there are some businesses to do that. Like start high, and then let’s see where things shake out. Well, I hate that. Yeah, and I think most people don’t like that. And I think that’s one of the things that is perpetuating this feeling of anxiety every time you walk in. I mean, you can, you can see people, I feel so bad for them. They’ll come in and they’ll, there’ll be happy go lucky outside. And the moment they walk through the showroom, they’re as rigid as a board. Oh, I feel so bad for them. And you know, they don’t want to lighten up because that may be a sign of weakness and somebody’s going to take advantage of them.

Greg: They can’t say they liked the color and, my goodness, they can’t say they’re like the car because that means that you think they’re going to buy it, right?

Greg N.: I feel so bad for them. And then you know, we try and help as best we can. And you know, most of the time we’re more successful than not. But you still see how knotted up people get over all this. And I think, you talked about this, and to circle back, the best customer, the best client for us, is an educated client.

Greg: So, I guess the other “aha moment” or takeaway for our listeners, whether you’re buying a vehicle or you’re investing your money — work with someone that’ll help you learn the truth. And if we could get to the truth, it’s a lot easier to process.

Greg N.: Totally agree.

Greg: Okay. So now we talked to, we talked about a lot of different things, but let’s talk about, I can’t help drive up and down 19 or route 79, and I see that big bubble gum machine that distributes called cars called Carvana and I can’t figure it out. I’m sure it’s awesome. I don’t understand. But you know, all industries change. Our industry evolves also. In 10 years, is everybody going over to Carvana or carbuyers.com? Or how does that work? Where do you see the future going?

Greg N.: It’s a great question. It’s a lot of dinner conversation with your colleagues, right? I’ll be honest with you, all of all the research I’ve done, and I’ve looked into it just because I’m curious. I mean, it’s what we do for a living. I’m having a difficult time figuring out it as a business.

I don’t really believe our business will ever become truly an online business. I think it’s a component. I think you even talked about technology aiding, you know, technology for technology’s

Sake. I think we’re naive if we think that’s a solution. But if you use it to enhance some of your operations, some of the things you do, I think that’s a winner.

Greg: So, we look at it as, we don’t think in our industry, because there’s roboadvisors and all those things and there’s some advantages to them. But when, if you’re having someone to care for your family and something happens to you, the roboadvisors not showing up to be with your family or figuring out what you really care about and really managing your wealth to maximize your life legacy.

So, there’s a lot of technology out there. So, it’s sort of similar in the way we look at it. And I hear you saying the same thing, is we don’t think technology will replace great relationships and people. But we think that people that use technology and great businesses that use technology appropriately to enhance the customer experience as you are, and as we are, will replace those entities that do not.

So, an entity that does not, I don’t think we need to be a roboadvisor or Carvana or whatever, but we do need to stay up with the times, use technology to enhance the experience with our clients. And I hear you saying the same thing.

Greg N.: I agree completely, 100%.

Greg: Well, Greg, I don’t know how long we spoke, but I learned a whole bunch with a bunch of “ahas,” and hopefully, the listeners are going to go into car dealerships across America. And in your case, I hope you get some Honda clients also. And I hope they enjoy it. And when they leave there, they’re more educated walking in. So, when they leave there, they had more fun walking out.

Greg N.: Well, I hope so. Also, I mean, I feel bad when people are not having as much fun as they should doing this because I know they just, the majority of people dread it.

Greg: Yes.

Greg N.: And it doesn’t need to be that.

Greg: Yeah, you’ve really helped people think about, you know, if they’re starting a business, even if it’s a tough time, if you stay focused on your people and training and experience, it works.

And you help people think about buying cars differently and more educated. So, thank you so much. That was very valuable, and we appreciate your time.

Greg N.: Thank you for the time.

Greg: You bet. Thanks.

Greg: Thanks for listening. If you’d like to hear other subject matters that may be of interest to you, please check us out at ConfluenceFP.com/podcasts.