Performance Lexus, of Cincinnati, Ohio, is an 18-time winner of the Elite of Lexus Award. The store is part of the Performance Automotive Network, a family-owned business operating for over 40 years. The network has enjoyed steady growth and is currently listed by Automotive News as one of the top 50 automotive dealership groups in the US.
Dan Kommeth, General Manager at Performance Lexus, a store with 68 employees, has been in retail automotive for twenty four years. For three consecutive years (2015-2018) Performance Lexus has won Dealer of the Year in Ohio, as selected by DealerRater. Dan initially started his career in automotive on the manufacturing side of the table, moved over to retail in 1999 and since then worked in every department. In the below interview, Dan talks about the importance of discipline and process, and shares his insights on customer service, including lessons learned while in Tokyo and his store’s game-changing Wow Fund.
Thank you for agreeing to be interviewed, Dan. To start, could you fill us in briefly on your background? In other words, what did you do before retail automotive and how did you end up where you are today, as general manager at Performance Lexus?
My original start in the car business dates back to when one of my uncles had a Chevrolet dealership in Traverse City, Michigan. During the summers when I was a kid, he bought one of those hot dog rollers, the kind you see at 7-Eleven. So, I was the Saturday hot dog cook. I was handing out hot dogs and cokes to the customers at the Chevy-Honda store, and I was probably about ten or eleven years old at the time.
After graduating from college, I went to work for General Motors on the factory side. I worked for about six years for Cadillac as a field rep and some other jobs. I had the chance in late 1999 to jump into the retail side of the business with Lexus in Albuquerque, New Mexico, and started selling cars there. I was fortunate enough to be mentored by a great guy who is still there today. He showed me the retail side of the car business. I worked in all the departments: used car manager, service manager, new car manager, finance manager.
Then, when they were awarded a companion store in Santa Fe, New Mexico, that became my first general manager job. I got to help with the launching of that store, which was a great experience.
My wife and I had a son, a little more than eight years ago, and we’re both from the Midwest. We wanted to get back here to the Midwest, and the job at Performance Lexus opened up in 2010. I flew here, interviewed for the job, and a few weeks later, in September of 2010, started at Performance Lexus and have been here ever since.
What do you like most about working in the industry?
From a young age, like a lot of little boys growing up, I liked cars. And I liked people. Seeing family members in the car business, those things marry themselves nicely in a retail automotive space.
In this job, every day, you don’t know who you’re going to meet or what situations you’re going to find yourself in. I find that fun and challenging, all at the same time. I like trying to solve that puzzle every day, where a customer needs help. It doesn’t matter if it’s Sales, Service, or Parts, they need help, and the challenge of trying to solve that is something that’s exciting to me every day. If it wasn’t still exciting, I’d go do something else. For almost twenty-five years, I’ve enjoyed trying to solve that puzzle.
Your store is part of what’s called the Performance Automotive Network. What is the group and what does it mean to you to be part of it?
First of all, it’s a very forward-thinking organization. Mike Dever is the owner, and he is a great car guy. He’s surrounded himself with people who really want to take care of customers. And my boss, Shane Dever, is always looking for new ways to make it easier for our customers to do business with us. Our company motto is, “Every Customer, Every Vehicle, Every Day.” When you’re looking to hire someone, you can ask, is this person going to find that way to really “wow” a customer. We started something called The Wow Fund, which is money available for our associates, either sales or service, to go out without having to go through seven layers of management to wow a customer.
For example, our store is across the street from a Costco. A customer remarked to her husband that when she brings her car here for free car washes, she can finally get that Costco membership she always wanted and have an excuse to go shopping there. When she came out of the Finance department, the salesperson presented her with the keys to the car and a one-year Costco membership. The customer broke into tears.
That’s what we mean by a Wow experience and it’s that kind of personalization she’ll always remember. The salesperson took the receipt up to the cashier and we reimbursed him. I like being part of an organization like that, that’s always looking for a new way to take care of our customers.
This company started back in the Seventies, and we have customers who will walk in and say, Dan, I’ve bought twenty-five or twenty-six or twenty-seven cars from this group, whether it’s one of our Toyota stores or Honda stores or the Lexus store. Customers really feel a connection to this group and that means a lot. When you are part of an organization like that you feel as if you’re part of something bigger than yourself, part of a bigger mission.
How do you define leadership?
We talk about that a lot. It’s not something you wake up and say today I’m going to lead. Every great leader has to be a great follower. You have to be following someone who is following someone else. I might be the head person at this store, but I’m also a follower, because I’m always looking to make a better version of myself.
I expect my associates to act the same way. Everybody in this store, they’re all leaders in their own right. They see that as a collective mass, from Mike Dever all the way down to the person doing the job that nobody can see.
Leadership is not just barking out orders, it’s also following the policies and procedures or doing something outside of what is considered your responsibility. That’s leadership because it’s part of the culture. I think you can feel that when you walk into any business, where you immediately feel welcomed. There’s an energy when you go into businesses like that. You can tell whoever is the head person there is leading by example, not just by an email or some other dictate.
Expanding on the previous question, what is your management philosophy?
My goal is to surround myself with people who are smarter than me. For example, every Monday morning at nine o’clock, we have what I call a “leadership meeting.” It’s all the department heads and myself. We sit down, I set the agenda for the week, we look at what’s going on in the store. We look at the numbers, obviously, to see if financially we’re on track. Then we go around the room, and the managers are encouraged to speak to one another about topics that are top of mind. If there’s a problem, we deal with it on a management level. So, when the meeting is over and we’re back with the other associates, we don’t have a situation where, say, the used car manager complains that the parts manager is trying to make too much money off of the used car business or that the used car manager never wants to spend any money on reconditioning and so on.
At the departmental level, you can have internal conflict. It’s not as if we sit around and everyone sings “Kumbaya.” It fosters a level of communication and professionalism, so that when conflict does arise, that one manager is comfortable going to the other manager in a private setting and agree to work things out. When associates see their managers are able to deal with a problem in a professional way, I think that bleeds over. Not only do the associates see it but the customers see it as well.
From a general management philosophy, if I surround myself with people who are absolutely whip-smart, I can come up with a collective mastermind group that’s greater than the sum of its parts. We can do really great, amazing things when we work in synergy.
By the same token, I also want to grow my managers. Because if they have career aspirations that exceed their current position, I want to be able to help them like I was helped. Sort of like a football coach and you see their coaching tree where they have assistants who go on to become head coaches. I take a lot of satisfaction to be able to train somebody up; because we do have 17 dealerships in our network, if there’s an opening at another store, I can help somebody who is interested in moving up and put them in a position where they can get that next-level job.
I’d like to turn to customer service. Performance Lexus is an 18-time winner of Lexus’ highest honor for customer satisfaction, the Elite of Lexus award. What steps do you follow to help create a positive customer experience?
For the last three years, we’ve also been the number one Lexus dealer in the state of Ohio, according to DealerRater.com. Fostering the environment and the culture to take care of our guests is what earned us this recognition. The principle that best exemplifies our approach is the Japanese word “Omotenashi.” It doesn’t literally translate into English but what it means, roughly, is the giving of oneself in a service manner without the expectation of anything in return. This really comes from a few years ago when we had the opportunity to hold the Lexus national dealer meeting in Tokyo. Some of us experienced Omotenashi in the Japanese culture.
We look to attract those people. Our interview process, which sometimes can be slow and laborious, from the outside looking in, it’s actually quite purposeful. We want to find people who really have that heart, that want to take care of customers. You can be a great salesperson or a great service advisor or a great technician, but at the end of the day if you don’t have the heart to want to take care of the customer, you’re not going to be successful in this culture and our store.
I can do a lot of things: I can teach you our processes and our policies and our procedures, but if you don’t have it in your heart, where you really want to take care of somebody, it’s going to make it awfully hard, because you can’t fake that. You can’t fake the authenticity of really taking care of somebody. You think of every great customer experience you’ve had, not necessarily automotive-related, it could be in a restaurant, a retail store, hospitality, those moments are genuine.
I’ve been fortunate enough as we grow to be able to find people who want to do that. They’re the ones – like the Wow Fund I was speaking about earlier – you set the ground rules, but I don’t tell the associates you can’t do this or you can’t do that. You figure out a way to wow the customer, to take care of the customer, and give them an experience the likes of which they’ve never had before. You can’t write that in a policy manual. You can give them examples of what other people have done with the Wow Fund and let them run wild with their imagination.
That goes back to what I was talking about before where it becomes fun. The job is stressful enough, so why not inject an element of fun into it while taking care of the customers. The net effect of that is winning the Elite of Lexus Award. I know we have the team here that can achieve that award every single year. It’s not as if we sit there and stare at the metrics and run the dealership based off of the Elite metrics. No, we run the dealership based on taking care of the customer and those types of things happen. Take care of the customer and the customer will take care of you.
How can dealerships add more value to consumers?
The value proposition is more important now than ever. Disruptors are disrupting industries everywhere, and car dealers are no different. It’s important for a dealership to be more than just a place where customers go to buy a car and get an oil change. If that is the only way a customer is thinking of you, I think you’re going to be out of business.
But if you think of yourself as part of a customer’s life, you’re more than just the person who’s changing their oil. You’re the person who remembers what their kids’ names are or who does something extra special for them. I think those customers will come back to you.
From a value perspective, I think they might even be willing to pay a little more money. They won’t certainly overpay for it. But when you make it more about the relationship than the transaction, I think you’re going to find yourself financially better off.
How do you ensure your employees are up-to-date on products and processes?
First and foremost, Lexus Corporate deserves kudos because they do a great job of training our associates on a constant basis. Training is not a one-time deal. For example, right now we have trainers from Lexus in our conference room training associates from sales, service and parts on Service Connect, which is a product in our vehicles.
We also have training where we have to travel, which we’re always doing, with our technicians going to technical school, our sales people going to sales classes, etc. That’s the first level.
Then on the internal level, sales training, once again, is not something that happens one time. The opportunity for training not only happens in a classroom setting, every week for the sales people, but, as Mike Dever likes to say, every time a sales associate interacts with a manager it’s a training opportunity. My sales managers and my finance managers work with sales associates on a daily basis, where they’re talking to the customers and determining what each customer is looking for. My service managers not only have weekly shop meetings, but when the one-on-one meetings between the service advisor and the manager take place they go over different metrics. We’re looking for the outliers. We set up performance standards and know what they’re capable of doing.
It’s a lot of discipline, and I see it as another one of my responsibilities, to ensure that we follow through on that. If you hire somebody and go through an on-boarding program and after that you send them out on their own, you’re doing yourself a disservice. Training is a constant thing you have to be doing.
Could you discuss your use of dealerships tools, such as CRM, DMS, inventory management?
Sure. Our DMS is DealerBuilt. We have found them to be a tremendous partner, because they are willing to work with us to develop reporting we need from a financial standpoint. Along with that we use NCM’s axcessa tool, which takes the data out of the DMS and puts it into customized reports. NCM’s 20 Group helps us establish internal benchmarks and then measure toward those, and that’s a big help.
For a CRM, we use VIN Solutions. We’re looking at CRM through not only the eyes of the sales person but also the customer. If it’s something that just benefits the dealership and not the customer, I think those types of providers are going to go out of business. The vendors we partner with have to be focused on what we’re doing at a dealership level; this focus also has to make sense to the consumer.
For our trade-in appraisals, we use Kelley Blue Book℠ Instant Cash Offer. Ask your customers, and you’ll find nine out of ten of them before they came into your showroom put their car into KBB to see how much it’s worth. We like to work with the same vendor the customer is working with, so we can come to agreement on a price for their current car faster.
On the inventory side, to price our new cars we use vAuto’s Conquest tool, which we use for our used car pricing as well. It gives my managers the data they need, in a quick and easy-to-understand format that we can then translate for the customer. We can show them in the marketplace a price for the car they’re interested in buying; we’re not just pulling a number out of thin air. I think that transparency helps build a level of trust, so people want to do business with you. I don’t have to worry about saying a customer’s car is worth ten-thousand dollars because my used car manager said so. No. We put it into KBB and appraise it and come to an agreement and everybody’s happy. When it comes time for them to do business with you again, they’ll remember they had a pretty good experience the last time.
What is your marketing strategy?
We do a ton of digital, because it’s so measurable and cost effective and it’s changing every day. Lexus does a great job on a tier 1 level to nationally advertise the brand.
When we get down to the store level and people who are willing to do business, we have to find where they are, try to engage with them and pull them into the eco-system we have here.
On our website we have market-based pricing for new cars, not just for used cars. We’ve been posting used car pricing for a long time, but it wasn’t until fairly recently we began to display new car pricing, when we started using vAuto’s Conquest tool.
We’re not a one-price store but I want shoppers to see this is what Performance Lexus is doing: here’s the MSRP for the car, here’s what we’re selling it for, here are all the rebates, we’re going to appraise your car using Kelly Blue Book and so on. We can make this process better for the consumer, and I think that plays into our long-term strategy.
My strategy is not to sell somebody one car, but to sell that person twenty cars over the course of many years. I don’t want you to come in for service one time, I want you coming in twenty times.
The other part of our marketing strategy is we do a lot of charitable work. We partner with civic and charitable organizations in Cincinnati, because we believe it’s important to give back to the community. That value was instilled in me from a very young age by my parents. When you give back, not only is it the right thing to do, it shows the community you are more than a car dealership; you are part of the fabric of the community.
We go way beyond just sponsoring Little League teams and are involved in a broad spectrum of charities. There’s a diverse group of people here in the Cincinnati area, and I might not be sponsoring an event at the exact time they’re ready to buy their next car, but I want them to remember us the next time they get in the mood to buy a car.
How do you utilize data analytics in your decision-making?
NCM’s tool axcessa helps. It doesn’t make the decisions for us, but we benefit from the data it gives us. Going back to the sports analogy, you don’t stare at the scoreboard and wonder why the scoreboard is showing that number. You want to see how that number got there. Whether it’s the website or the financial statement or the CRM tool or the DMS, the numbers are the end-result of the process.
I’m a process guy and like processes that are measurable, because you can then change the process and see a different result. You kind of reverse-engineer it until you get the result you want. You implement a process to see if you’re right or not—and most of the time you’re wrong. That’s okay, as long as you’re willing to stick with it and go back to it. The data is important, but it’s not more important than the process.
How important is social media to your dealership’s business model?
As another great part of Performance Automotive Network, we have a digital marketing team. We have a staff of people who are way smarter than I am, and they speak in languages to each other in something I hope to one day understand in terms of a lot of the metrics. They are not only watching what’s being said out there on social media, but also promoting what the dealership is doing across platforms and then they’re measuring. Whether it’s Facebook, Yelp, DealerRater, the Better Business Bureau, whatever… all these different places where we are not reactive. We’re trying to stay ahead of it.
The best part about it from a financial standpoint is that you can leverage that technology at what I consider to be reasonable rates and do some cool things. We’ve run paid ad campaigns in Facebook for both sales and service. You can target those campaigns to certain customers and see if it worked or not. Social media is not just for the social aspects, it’s become part of our marketing, and a bigger and bigger part of it, as well.
What single piece of technology makes the greatest difference to your dealership?
I would say the cellphone. It’s not merely a phone. There’s so much you can do with a cell phone, and, as we know, there’s an app for everything. It’s the most vital piece of technology, not just from our standpoint, but also from the consumer’s standpoint. That’s how they search you out. That’s how they interact with you. That’s how they chat with you and set a service appointment. A cell phone would be the one piece of technology that would be hard for us to do without.
What are the biggest challenges facing retail automotive in, say, the next ten years?
I really think it goes back to your statement about value for consumers. An automobile dealership that cannot provide value is going to be a dinosaur. I’m a big reader, and one of the books that really affected me was Simon Sinek’s book Start with Why. He has one of the most famous TED Talks on YouTube.
Sinek introduced the business leadership concept of three concentric circles. The largest circle is what you do. In the case of Performance Lexus, what we do is sell and service automobiles. That’s a fairly replaceable skill. We’re in King’s AutoMall here in Cincinnati, with 17 or 18 other dealerships that sell and service automobiles.
The second circle that’s inside of that and is just a little smaller is how you do it. That can be your policies, procedures and processes; it’s the first way in which you differentiate yourself from the competition.
The smallest circle in the center is why. In our case, why does Performance Lexus or any business exist? The dealerships that can’t figure out their “why” are not going to be relevant in ten years. They’re either going to get bought and sold to somebody who does know the why or they’re going to go away.
The why behind Performance Lexus is we’re in business to provide the greatest sales and service ownership experience that the customer has ever had in his or her life. It’s rather audacious, perhaps, but that’s why we’re here.
Final question: what one word or phrase best describes you?
Discipline. Over time, I’ve cultivated a tremendous level of discipline. I wake up the same time every day, go through my work out every day, and so on. I’m very disciplined.
