Greg Miller Breaks From F&I Tradition With New Venture
Neither the bothered looks nor the polarizing remarks he heard caused him to second guess his plan. Having shocked the business world last year when he stepped down as CEO of the Larry H. Miller (LHM) Group of Companies, which counts the NBA’s Utah Jazz and one of the nation’s largest dealer groups under its banner, Greg Miller is known for making tough decisions and sticking to them.
But this was different. Miller wasn’t facing the sports media world like he did in June 2013 to explain why his family green-lighted the trade of a franchise cornerstone, nor was he instituting $29 million in cost-saving measures like he did during his first year at the helm of the family business. He was addressing 100 or so employees of a dealership he had just acquired under his new enterprise: Greg Miller Automotive San Diego.
And Miller wasn’t there to make the typical new owner speech. He was there to tell his new employees it wouldn’t be business as usual, as his plan to transform the underperforming store called for the tear down of the store’s F&I offices and elimination of the F&I manager title. Also gone was the dealership’s sales and F&I process, which was replaced with a one-touch process Miller refers to as the “Power of One.”
“When I stood in front of these employees on April 20, I took the opportunity to reiterate to every one of them that we have a unique opportunity to be part of establishing a brand on Day One with the Greg Miller brand,” Miller says. “And it has a lot to do with this Power of One selling system.”
Deep Roots, Big Plan
Miller had been the CEO of the family business for seven years when he announced he was vacating the post in March of last year. The privately owned business employed about 10,000 individuals and counted more than 80 businesses in 46 states, including 56 dealerships, when he did.
His departure came just as the group was transitioning to a new corporate structure, Miller noting in a company press release issued at the time that the decision was “the right move for me personally, for my family and for the business.”
“Greg was successful in taking over for Larry while facing one of the toughest economic times in our country’s history,” read a quote from Gail Miller, Greg’s mother and current owner of the LHM Group, in the same press release. “He has done an outstanding job leading this organization and his accomplishments will have a profound, lasting effect on our family business and our communities for generations to come.”
Miller, who continues to maintain his duties with the Utah Jazz, said he stepped down for a multitude of reasons. And it wasn’t the first time he stepped away from the family business. “I went out on my own, started and ran my own business for a couple of years just to prove I could do it,” he says. “Then I came back to the family business.”
Owning a dealership, however, had been a dream of his for more than 18 years. He was just 13 when he went to work at his father’s Toyota store in Murray, Utah — the first dealership on which the Larry H. Miller empire was built. In fact, it was his dad who drove him to work on his first day.
Miller recalls his father handing him a list of duties he was to complete, jobs that ranged from making sure the trunks of every car on the lot had a dealer logo to sweeping down the parts department. When he was done, his father was ready with a new set of duties for him to complete.
Over the next 30 years, Miller would work in a variety of roles within the family’s dealer group. He sold cars, worked in the parts department, and served as general manager. He describes himself as a student of the car business, and is quick to credit the host of longtime car guys who took him under their wing. But he notes that his experience wasn’t limited to life in a dealership.
“The Larry Miller group is big enough that I was able to work in communications and sports, real estate, finance, and some other areas just to get exposure to them, but the things I’ve enjoyed the most are automotive related,” he says.
In June 2008, his father suffered a heart attack that hospitalized him for nearly two months. A month later, the younger Miller was named CEO of the LHM Group. His father passed away eight months later in February 2009.
Miller says his year away from the business allowed him to work on his house and travel to the North Pole. He also began cataloging some of his notes from his time at LHM.
Miller kept copious amounts of notes on his meetings and thoughts throughout his days, he says. He wanted to digitize his records in chronological order. While scanning stacks of his notes, he noticed multiple entries that mentioned buying his own dealership — the first of which dated back 18 years. He says there’s a good reason he never pursued that goal until this past April.
“A big reason I didn’t pursue my own dealership was because I had a job, and I wasn’t looking for another one,” he says. “I kind of likened it to marriage. I was happily married, so I wasn’t looking for a girlfriend.”
But that all changed when he stepped down as LHM’s CEO. “I put the word out to a number of brokers and a number of my friends who are dealers to make them aware of the fact that I wanted to buy a store. I also shared that sentiment with my contacts and associates with various manufacturers,” Miller says. “One day I get a call from one of my associates within Toyota Motors. They said, ‘The store you’re looking for just came on the market today, and you need to take a look at it.’”
The store was San Diego’s Bob Baker Toyota. After taking a look at the store and talking to the owner — longtime dealer and philanthropist Bob Baker — and his management team, Miller knew it was the right fit. What he didn’t know was how his new employees would take to his plans for the dealership’s future.
The Power of One
A customer enters the showroom and is immediately greeted by a salesperson, who then explains how the dealership’s Power of One process works. The associate then offers the customer a business card containing explanations of each step. Once the card is accepted, the salesperson asks the customer which step he or she would like to start with, whether it’s completing a trade appraisal, performing a credit check, or simply walking the lot to look at cars.
“There’s no turn to an F&I manager, there’s no turn to a closer or ‘let me check with my sales manager,’” Miller explains. “The salesperson is empowered to take the entire deal from cradle to grave.”
The lack of F&I offices and traditional F&I managers might seem like Miller is willing to sacrifice F&I profits, but he says that’s not the case. In his Power of One process, he says, F&I performance is of utmost importance. In fact, he says he wouldn’t have even entertained the idea if he wasn’t sure it was a viable business strategy.
Miller says he studied other dealerships that have implemented the no-haggle, one-touch process. It was through those observations that he came up with a strategy to ensure F&I performance remained a key focus, one that included a pay plan that paid his hybrid salespeople more for selling a service contract than selling a vehicle.
Salespeople are paid an escalating flat for vehicles sold, with the pay plan containing six tiers they can qualify for based on volume sold the previous month. New cars, used cars, service contracts and other F&I products each have their own tiers with different qualifications.
Vehicle prices, Miller adds, are nonnegotiable. “Let’s say you have a transactional attorney who negotiates every day for a living and then you have a 75-year-old elderly woman who’s buying her first car in 15 years, they have an equal opportunity and are going to be treated equal at the store. One’s not going to get preferential treatment because of their negotiating skills; it’s all done for them,” Miller says.
The strategy, however, didn’t sit well with every employee, with all but one of his store’s veteran F&I managers and three sales managers parting ways with the dealership. The loss of that experience dealt a heavy blow to his F&I-focused plan, but Miller says he’s been able to hire individuals he knows will work out well.
“I’m comfortable that our F&I performance will be just fine,” Miller says, revealing that his sales team is already averaging 3.5 products per deal. “We have trainers here every day that are experts in selling F&I products, and those trainers are training the salespeople in their presentations. It’s been very effective.”
On His Own
Miller knows, however, you can’t talk about F&I success without discussing compliance. And he’s keenly aware of California’s reputation for being a highly regulated state, especially since the LHM Group operates a Toyota dealership in nearby Corona, Calif. What he’s done is added a document specialist who audits deals for compliance and to ensure all forms are complete and accurate before they’re sent to accounting.
Miller is also keenly aware of how a no-haggle, one-touch process is viewed in the industry. In fact, some of his most trusted friends think he’s crazy for implementing his Power of One process. But he remains unfazed and committed to his plan. And the more he defends his plan, the more his real reason for stepping down as LHM’s CEO becomes clear.
“For me, it’s about freedom and control. I am one that has always been a free spirit and has always liked to be the one to have the final say in how something is done. That’s not to say that I rule with an iron fist,” Miller says. “But I like to say, ‘My instincts are telling me that this is the right thing to do,’ and then move in that direction and not have to justify my decision to a board or other people who may have contrary points of view.
“It’s about wanting to be able to run and spread my wings and fly or die based on the qualities of the decisions I made, how hard I work, and the quality of the people I surround myself with,” he adds.
The Right Criteria
It seems almost serendipitous that the Toyota brand has delivered Miller his first dealership given that he started in the business at a Toyota store. But he admits he didn’t limit himself to Toyota when he began his search for a store. He was open to any manufacturer, as long as the dealership met a set criterion.
The store needed to be a Tier 1 manufacturer and be image compliant. The dealership also needed to be averaging at least 2,000 retail units a year — new and used combined — but also be underperforming relative to the manufacturer’s potential. He admits an underperforming store was appealing from a pricing standpoint. And like his father, who loved turnaround projects, Miller wanted a challenge.
Miller’s final requirement was the dealership needed to be within a two-hour flight of Salt Lake City, which would allow him to fulfill his duties as a member of the LHM Group’s board of directors and remain committed to his Utah community. Gate to gate, a flight from San Diego to Salt Lake City is about an hour and 50 minutes.
With his requirements met, Miller agreed to buy. He also purchased a small condo just a few minutes from the dealership and close to the airport to help with his hectic schedule, which has him in the air multiple times per week.
Miller says his main objective for the dealership is to retail 250 vehicles per month. As for F&I, he has his sights on a per-copy average of $1,300, service contract penetration above 50%, and a product per deal average of four. And he wants to accomplish all that while keeping customers happy.
“Six months from now I hope we have some cadence built up with our sales process. I’d like to think we’ve rounded out our staff with high-caliber individuals start to finish, and that we’ve rejuvenated our fixed operations,” Miller says. “Also that we’re sales efficient and that we’ve hit our sales quota for used cars as well as new cars, and that we’re having fun and making money while taking care of the customer.”
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