Ade Smith concedes that Porsche Retail Group has an advantage over other dealer groups.

4 Porsche Retail Group director Ade Smith

It’s not that it is manufacturer-owned, he says, it is in its five locations serving greater London and the Home Counties.

It’s a valid point. The top 20% of London’s 7.75 million population have disposable income of more than £821 a week after their housing costs, according to 2013 research by the Greater London Authority. In outer London, 28% of households have a gross weekly income of more than £1,000, the highest proportion in the UK. Of all London households, 12.5% have at least £967,000 total wealth, second only to the South East’s 15%. The latest data reported that 4,363 individuals in London have more than £20 million wealth each.

So as Porsche has launched its limited production £625,000+ hybrid-powered 918 supercar, there will be enough prospective customers to find.

Smith took the job as director of Porsche Retail Group in February 2015, his 35th year in motor retail. Having started as an apprentice technician, his CV shows a wealth of experience in prestige dealerships, including spells at Beechwood Audi in the Midlands, which was acquired by Jardine Motors Group, several years as Jardine’s BMW and Mini brand director, and the managing director’s chair at Bentley and Aston Martin dealer Broughtons until its sale to HR Owen. Most recently, he was Mercedes-Benz Retail Group’s market area director, running seven sites across East London, an experience which he believes prepared him to lead Porsche Retail Group through a sustained period of growth.

Smith said Porsche stands out among the prestige car brands in that it is focused on luxury and sporting motoring, yet delivers a much more exciting volume of sales for the business to keep a grip of than the likes of Aston Martin or Bentley.

This year, he expects Porsche Retail Group’s five outlets in Reading, Hatfield, Mayfair, Guildford and West London to sell about 4,000 new and used cars (a third of Porsche GB’s annual volume). By comparison, Bentley’s entire 18-site UK network generated fewer than 1,500 registrations last year.

“With Porsche, and the demographics of the Greater London area, I can see the true potential of what we have here. I’d consider there is a lot of opportunity in terms of our performance, greater diversification within our business, and the timing of new technology and products coming through over the next few years,” he said.

“Porsche at the moment is very much about the customer experience across the whole diversity of the business. When you come in new to the business and take a close look, you can see where those opportunities are in facilities, people and culture. I’m not talking about huge leaps, but measures which will enable us to move the business forward in delivering an improved customer journey and an improved financial return as well.”

“We have people with 964s worth perhaps £9,000 and others who’ve just bought a 918 Spyder that’s worth a million euros. Whoever the customer is, we treat them with complete equality”Ade Smith, director, Porsche Retail Group

Smith said Porsche Retail  Group has an ethos of being “inclusively exclusive” when it comes to interacting with customers. A motorist interested in spending £25,000 on a six-year-old Cayman or Boxster needs the experience to feel as special and exciting as one putting a deposit down for a £130,000 911 Turbo Cabriolet.

“If you look at our database, we have people with 30-year-old 924s worth perhaps £9,000 at best that get them serviced here, and we’ve others who’ve just bought a 918 Spyder that’s worth a million euros. The cross-section of our customers is unbelievable. So the first thing we want to make sure is that whoever the customer is we treat them with complete equality, and the minute they walk through the door they are a Porsche customer.

“The facilities should always be very well maintained with a high level of attention to detail and, across all our businesses in London, I’m looking to get 100% consistency. That’s something we’re working on as a 2015-16 challenge. It comes down to the quality of people.

“Process is a part of it, but customers don’t like to be processed. So the quality of people means they can deliver the process in a way that the customer can’t possibly know they’re in a process.”

The foundation of this is recruitment. Overseen by Porsche Retail Group’s internal training and process manager, Chris Warwick, the group uses a defined and detailed assessment programme, requiring excellent references and an evident passion for the brand. All candidates for customer-facing roles, including managers, go through an assessment centre with Warwick, in which he looks for the attitudes and abilities that make up an ideal Porsche sales executive or receptionist.

An aspect of this is identifying what Smith terms “the Porsche DNA”. He describes this as first of all a love of sports cars, then a love of attention to detail and a desire for perfection, and finally the will to serve customers to an exceptional standard.

Smith said the group is still on a journey towards the standards he desires, but that it is 70% there. Training and coaching are in place for a variety of job roles – one example is a training plan the group has just implemented for reception desk staff. Under the plan, these employees are receiving basic non-technical training on the model lines, so that they can help customers in a more credible way.

“If a customer wants to come in at the start of their journey to perhaps ask about a derivative colour or get some soft information, they can deal with that and start to put them onto the database before we actually get the sales team involved. Both in sales and service, the Porsche way is a soft approach, so the journey starts once the customer is actually into the transaction,” he said.

In another pilot programme, Porsche Retail Group is working towards providing one consistent point of contact for an aftersales customer. The aim is that the service adviser who took a customer’s booking would then welcome that customer on site, confirm the job required, and walk them through to the workshop to outline the technical aspects of the work to be done, and subsequently provide a full explanation of what has been done to the car and the justification for the bill.

Such changes are necessary because Porsche itself has changed. It is no longer purely about sports cars. With the Panamera grand tourer and Cayenne and Macan SUVs it has broadened its appeal to consumers who are attracted to the brand and its illustrious heritage, but aren’t necessarily sports car enthusiasts. It also offers PCP and contract hire financing.

However, that broader appeal has generated other challenges. Sales staff needed retraining in appraisals, because the group was predominantly taking Porsche part-exchanges, but the new Macan in particular is conquesting buyers out of brands such as Land Rover, BMW and Audi. Supported by the BCA Dealer Pro appraisal system, staff have to ensure part-exchanges are priced to facilitate the sale yet not pose a financial risk to the business when it remarkets them – it doesn’t retail other marques.

In addition, it is now dealing with consumers used to waiting four months for their previous brand’s car to be delivered, yet for some Porsches it could be an 18-month wait after placing the order. Smith’s team has to manage their expectations, and uses a contact programme to immerse them in the brand and sustain their patience.

The group has also increased its sales teams by 20%, an average of two more sales executives per dealership, because of its growth expectations. Rather than increase the sales volume required from each existing executive to the level of volume premium brands at 120-125 units, Smith decided the investment was worth it to maintain average throughput per executive at about 80 to 85 units “in order that we can give ourselves and our customers the very best level of service”.

Investment is also being made into aftersales to ensure capacity for the future. Porsche’s car parc over the next three years is predicted to increase by 18-20%.

Smith expects the changes under way to be reflected in the customer satisfaction results. Currently, Porsche is moving away from using Net Promoter Score to a new CSI programme branded Porsche Passion, which gathers much more detailed information from the customer. The results from this, and related mystery shops, will be used by Smith and his management team to identify training needs and to refine any elements of the customer journey that are deemed unsatisfactory.

“For me, coming new into the brand, it’s quite right to see the willingness of our shareholders to invest to protect the Porsche brand. You could take the opposite view, that we’ve substantial growth in volume, so let’s sweat the existing assets and take some incremental profit.

“That could be done, but you also have to ensure you don't lose people at any juncture. You sweat the asset based on the belief of incremental volume from Macan, Cayenne, the hybrids and Panamera, but you could actually alienate the very core of our customer base that wants to come in and spend three hours configuring a 911. We don’t want to do that.”

That appeal of poring over Porsches in the metal is still very much alive. Smith said coming from Mercedes-Benz, it has struck him that the development of Porsche’s digital side is not as advanced as other volume prestige brands, but the flipside is that those volume premium brands attract nowhere near as many customers to their showroom events.

“The difference is, in Porsche we can’t keep people away.”

“Both in sales and service, the Porsche way is a soft approach, so the journey starts once the customer is actually into the transaction”Ade Smith, director, Porsche Retail Group

Hatfield Porsche has recently become one of four centres nationwide to be designated a Porsche Classic Centre. Some 70% of all Porsches registered in the UK are still on the road today, and Porsche Retail Group invited its customers who own any model over 10 years old to attend a launch evening. Almost 500 people came.

The Hatfield site gets to display a classic Porsche in the showroom and two of its technicians have been trained comprehensively in the history of the brand and its technology.

It also has access to technical information and parts on a much broader scale than other dealerships, and will support any owner of an older Porsche with repairs and maintenance up to a full restoration. In some cases, parts will be sourced from Germany or even made to order.

To demonstrate the team’s skills, it has already restored a 1973 911 Targa and the group has just bought a 928 for Hatfield and a ‘barn-find’ 968 Club Sport for Guildford as new projects. Apprentices also get to work on the restorations.

 “I think it’s really important that we offer the knowledge and support to our customers around the ‘inclusively exclusive’ cue that we use. It wouldn’t help the customer relationship if one of our wealthy customers came in with a 30- to 35-year-old 911 and we didn’t understand it.”

The group’s Reading dealership handles sales and aftersales for the ultimate Porsches, the 918 and Carrera GT. The materials used in these bespoke supercars, such as carbon fibre and titanium, means that the staff require specific knowledge.

 

 

 

‘Porsche treats us just like any other franchise’

Although Porsche Retail Group is owned by the sports car manufacturer, and Smith joins Porsche GB managing director Chris Craft on the board, the business is regarded the same as any franchisee, with the same investment and standards requirements and the same pressures to perform.

“I think it’s tougher on us, because we do operate an arm’s length policy. There are no operating synergies between ourselves as the retailer and the manufacturer. I would be having the same dialogue with it if I were at Pendragon or Jardine or whoever, and I think that’s the professional way to do it.”

Porsche Retail Group ranked 8th in the UK in the latest AM100 listings for profitability per outlet.

Smith again put its strength down to the geography and a scale of economy that comes with a small regional group focused on one brand. Except for the Mayfair site, the group operates from freehold properties, with each dealership selling between 900 and 1,000 new and used cars, so each asset is made to work hard. Retailing Porsches means there is significant profit in the new car sale, particularly with its opportunities to sell high-specification, personalised, big ticket models to its Mayfair customer base.

He said the business can improve its used car sales and aftersales, but finding suitable used stock is a challenge. The biggest source is part-exchanges from its own customers, and it also buys cars back from Porsche Financial Services and management cars from Porsche GB. Smith also expects his group used car manager to network with other prestige dealer groups who don’t have Porsche representation to source sub-six-year-old cars taken as trade-ins.

The group retails one used Porsche for every two new. That could improve, Smith said, providing the stock is there. He would also like the business to increase its used car aftersales retention. Porsche already provides fixed-price servicing, and buyers are introduced to the service department during the handover and engaged with by its SAP-based CRM programme. Its Forever Porsche loyalty programme provides discounted parts and labour rates for customers with cars aged 4+.

Smith said 40% of all Porsche Retail Group’s service work was on cars aged 7+.

The nature of used Porsche buyers means some come from far away to find their ideal car and the prospects of retaining them are nil. Nevertheless, they are identified by the CRM system and targeted with a relevant offer or data update form.