Managing Dealer Change How OEMs Can Up Their Game

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The challenges of managing change for a dealer audience can be daunting. A dealer network frustrated by or unable to cope with change can have far-reaching impacts on customer experience, including damage to brand reputation. For this reason, effective dealer change management is becoming more and more important to Original Equipment Manufacturers (OEMs). In the coming years, Accenture believes that OEM industry leaders would be those who shift from seeking dealer change-management assistance on an initiative-by-initiative basis to building internal, cross business-unit change management capabilities. In this point-of-view, we examine the dynamics of dealer change management by answering the following questions:

• How can manufacturers effectively manage change for dealers for specific change initiatives? • How should manufacturers begin to build internal capabilities to manage dealer change more holistically?

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The Challenges of Dealer Change Management

When faced with managing change that impacts a dealer audience, manufacturers have to grapple with a number of unique challenges and limitations:

• Dealers are highly geographically distributed, making it challenging to connect with them on a personal level and deliver in-person training when required.

• Dealers (or licensees, as they are also called) are external entities. They may be captive, but they are independently owned and operated.

• Dealers tend to be well connected. They talk to each other and may channel their frustrations with change directly to brand executives.

• Dealers are inherently suspicious of manufacturers’ intentions and actions. They tend to view themselves as victims of change and assume change will only serve the interests of the manufacturer.

• Manufacturers are pushing multiple changes simultaneously to dealers from different business divisions (e.g. Sales, Parts & Service, Financial Services), and it can be difficult to keep these changes in sync or to plan them in a collaborative fashion across divisions. This level of change can lead to frustration and confusion among dealers.

• Dealers vary greatly in size, scale and brand loyalty, from “Mom-andPop” shops to multi-brand networks traded on public stock exchanges (“mega-dealers”). • Given the diversity of dealer entities and the different ways in which dealers are organized, it is difficult to deliver role-specific change interventions to dealers for a specific change initiative.

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Dealers in the Trust Equation When approaching dealer change management from a strategic perspective, and considering the nature of dealer-manufacturer relationships, the Trust Equation is a good place to start. Manufacturers often take dealers’ lack of receptiveness to change for granted.

The Trust Equation can help manufacturers to consider the underlying reasons that dealers generally do not accept change, and it can serve as a foundational question for the validation of all change activities.

T = trustworthiness

T = (C + R + I)

C = credibility R = reliability

S

I = intimacy S = self-orientation

Component

Realm

Increased Dealer Trust means…

Credibility

Words

The solution/product meets the dealers’ expectations

Reliability

Actions

What the OEM says is what they do

Intimacy

Emotions

The OEM is talking to dealers directly about the change

Self-orientation

Motives

It’s about the dealers and their customers, not the OEM

Source: The Trusted Advisor, Maister, Green & Galford, 2000

Too often, the OEM sends subtle messages that erode trust. If delivery dates are missed, reliability is compromised. If the solution addresses the OEMs specifications but does not help build the dealer’s business, then both credibility and self-orientation are impacted. If the vast majority of your communication with a dealer is by generic mass email, any sense of intimacy is lost.

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OEMs: reread your last 10 official dealer communications from the recipient’s perspective and identify where you have built (or eroded) trust. Effective change management builds trust by taking the dealer’s perspective into account and developing specific tools aimed at easing the burden of change for the dealer.

Direct Dealer Involvement Our experience has shown that dealer change management could help to succeed when dealers are involved in the shaping of a solution or change initiative. Engaging dealers directly has a positive impact on all variables in the Trust Equation. However, this in itself presents a challenge because dealer networks are usually comprised of hundreds or even thousands of dealers of varying size and complexity, with a high degree of geographic spread.

We can’t reasonably involve every dealer in the shaping of a solution, so how do we pick the right dealers? And once we have shaped the solution, how do we communicate it effectively to the rest of the dealer audience? Building a dealer-engagement model can help address these challenges.

Illustrative Dealer Engagement Model

Leverage Dealer Advisory Councils Project-Specific Dealer Advisory Council Dealer Change Network Broad Dealer Audience

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Leveraging Dealer Advisory Councils Many OEMs already have established Dealer Advisory Boards or Councils with which they engage on a regular basis. These groups will likely contain most of the influential dealers in a given network, so they should be leveraged throughout a project as a feedback loop. Obtaining the meeting schedules for these groups early on in

a project and incorporating them into the OEM’s communications plan can help promote awareness and buy-in amongst the most influential dealers.

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Project-Specific Dealer Advisory Council

The project team can engage with this group from the very early stages of the project to validate solution blueprinting, understand what the key

change impacts are likely to be and seek advice on their preferences on how to communicate and manage the specific change with the wider dealer network.

Sample Dealer Analysis to guide selection in the Dealer Engagement Model

Average MS Value $

Tier IV

Tier III

$100,000

A project-specific Dealer Advisory Council should be established expressly for the change that is being implemented. For example, let us assume a manufacturer is deploying a new system that dealers will use to order wholesale parts. In this example, the selection of members of the project-specific Dealer Advisory Council should be based on the volume and dynamics of their parts business and on their usage of the current parts order-entry system in order to create a highly representative sample of the larger dealer audience.

Tier II

Tier I 50 Settlements

Total Number of Settlements

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Dealer Change Network A dealer change network can help bridge the gap between the projectspecific Dealer Advisory Council and the rest of the dealer network. A segmentation analysis of the dealer network helps to ensure the most appropriate selection of this group.

For example, if 20 percent of the dealer network represents 80 percent of the business being impacted by the change, that 20 percent would be a good starting point for changenetwork selection.

Dealer-Engagement Model-Communication Guidance

Change Project Phases

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Level

Size

Primary Vehicles

Established Dealer Advisory Councils

10 – 15 dealers

Face-to-face meetings, conference calls

Project-Specific Dealer Advisory Council

10 – 15 dealers

Face-to-face meetings, conference calls

Dealer Change Network

100 – 250 dealers

Conference calls, email, newsletters

Broad Dealer Network

All dealers

Email, newsletters

Blueprint

Build

Test

Deploy

Post Launch

Leverage Existing Field Relationships It is important to leverage the existing relationships that field sales representatives have with dealers as a part of the change-management strategy. Field sales reps can help to: • Discuss the change and requirements with dealer leadership early in the project lifecycle. • Deliver in-person training and coaching to dealer personnel closer to launch.

To guide the path to success, OEMs should equip their salesforces with the right tools to help drive the change and track activities: • Change-discussion guide • Monthly key-message plan • Training-facilitator guide • Change-readiness checklist • Behavioral changeobservation checklist

• Confirm dealers are exhibiting the right behaviors associated with the new ways of working after the launch. • Report issues back to the project team for corrective action throughout the project lifecycle.

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Too Big to Fail – Managing “Mega-Dealers” For many manufacturers, there are specific dealer entities that are significantly larger than the rest of their audience and therefore warrant special attention. As a general rule, if any one dealer accounts for more than five percent of the total business impacted, OEMs should consider tailoring the change management strategy specifically for that dealer. Some options to consider for addressing “mega-dealers”: • Conduct a changeleadership assessment of relevant mega-dealer personnel. Address any gaps through training and coaching geared towards how to lead in times of change. • Partner with the megadealer to establish a change network (one change agent per location). • Complete a Train-theTrainer program with a small number of mega-dealer users and then get those users to train the wider mega-dealer population (in cases where training is a key component of the change plan).

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Review of Key Dealer Challenges and Approaches to Addressing Them When managing change for a dealer audience, the challenges - and potential approaches to addressing those challenges – are recalled below:

Challenge

Approach

Dealers (or licensees, as they are also called) are external entities. They may be captive, but they are independently owned and operated.

Understand the “What’s In It for Me” (WIIFM) factors for dealers. They are interested in increasing their sales, customer service and overall performance as independent businesses. Build out benefit messaging on these factors for dealers (see the motives factor in the Trust Equation).

Dealers are inherently suspicious of manufacturers’ intentions and actions. They tend to view themselves as victims of change and assume change will only serve the interests of the manufacturer.

Leverage the Trust Equation to guide decision making. Anything that impacts dealers (solution, communications, training) should be developed through the voice of the dealer.

Dealers vary greatly in size, scale and brand loyalty, from “Mom-and-Pop” shops to multibrand networks traded on public stock exchanges (“mega-dealers”).

Perform a segmentation analysis on the full dealer network and focus efforts on larger dealers or those with a high degree of influence over the network, regardless of size. Consider a separate change strategy and delivery approach for “megadealers.”

Given the diversity of dealer entities and the different ways in which dealers are organized, it is difficult to deliver role-specific change interventions to dealers for a specific change initiative.

Leverage the segmentation analysis to arrive at a manageable number of dealer groupings to address specific change approaches.

Dealers are highly geographically distributed, making it challenging to connect with them on a personal level and deliver in-person training when required.

Leverage existing field relationships to deliver inperson messaging and other change-management interventions to dealers. Equip field personnel with a change toolkit to assist them in helping drive the change activities.

Dealers tend to be well connected. They talk to each other and may channel their frustrations with change directly to brand executives.

Ensure that internal stakeholders such as brand or business-unit leadership are included in the change strategy and communication approach. The rule of thumb for these groups should be “no surprises.” Deliver awareness communications prior to each key project milestone so they are not caught off guard.

Manufacturers are pushing multiple changes simultaneously to dealers from different business divisions (e.g. Sales, Parts & Service, Financial Services), and it can be difficult to keep these changes in sync or to plan them in a collaborative fashion across divisions. This level of change can lead to frustration and confusion among dealers.

Create a dealer change-management office that will address dealer change holistically.

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Building a Dealer Change Management Capability Manufacturers typically have several dealer-facing business divisions (such as Sales, After Sales, Financial Services, Brand Relations and Training). One of the biggest challenges associated with managing change for dealer networks is the fact that different business divisions are often pushing multiple changes to dealers from different directions…and all at the same time. In order to proceed to the next level of dealer change management, OEMs need to think about adopting an

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increasingly holistic approach to how they position their change initiatives. If different business divisions are implementing changes with similar themes and objectives, can they somehow be packaged together? If multiple changes are impacting dealers at the same time, should one of the changes be pushed forward or back on the calendar so that dealers can give each change due attention? What if a dealer-change initiative benefits all business divisions within the OEM - how should the funding be split between the divisions? These are

the types of questions manufactures need to be answering in order to improve the effectiveness of their change-management efforts with dealers. There are three actions that manufacturers can execute to “think bigger” when it comes to managing dealer change:

Action

Value

Establish a cross businessunit Dealer Change Committee to maintain a dealer roadmap. Communicate results to business unit leadership and dealer advisory boards.

Create visibility across all business units of dealerchange initiatives. Proactively identify risks and opportunities for improved project delivery. Demonstrate to key dealers an understanding of the holisticchange impact they are experiencing.

Monitor the level of dealer involvement in change initiatives. Establish projectspecific dealer forums. Leverage a single-dealer forum for multiple projects as needed to warrant faceto-face interaction.

Proactively identify dealer concerns and resistance points. Discuss both the solution and the change-management strategies. Gain the ability to sell “dealer-shaped” solutions.

Execute periodic, broadbased dealer-change surveys with a mix of holistic vs. project-specific questions.

Measure the effectiveness of dealer change-management efforts and address gaps in an agile manner.

In Summary Dealer change management can be difficult but there are some very practical steps that OEMs can take to improve their change-management efforts, both on a project-by-project basis as well as more holistically across the organization. If they do nothing else, manufacturers must be mindful of the Trust Equation and involve dealers in shaping solutions and change initiatives as much as possible. If they really want to take dealer change management to the next level, they need to make it a specific function – with representation from all dealer-facing business units – within their organizations. The prize to be won means making those changes can no longer be ignored.

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Authors: Paul O’Keeffe Industrial Managing Director [email protected] Paul has twenty years of experience leading change programs for OEMs with the majority having a large dealer impact. Paul leads the Change Management Practice for Accenture’s North American Industrial business.

Mark Wrobleski Change Management Manager [email protected] Mark is a Change Management Manager in Accenture’s North American Industrial Practice. He has broad experience in large change programs that impact dealers.

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This document is produced by consultants at Accenture as general guidance. It is not intended to provide specific advice on your circumstances. If you require advice or further details on any matters referred to, please contact your Accenture representative.