CFO Studio Magazine - Curt Allen, CFO, Subaru

incentives for salespeople and retailers. For buyers the stimulants can feature low-rate financing or a form of subsidized interest called a subvented lease. Disciplined analysis goes into the creation of incentive programs, which Allen says “can be a very bad thing because once you start increasing incentives, it’s almost like a drug, you can’t stop.” Subaru created a salesperson’s cash program years ago to hold onto retailer personnel. But then it evolved. Now it’s one of the more lucrative types of incentives in the car industry, a stair-step program, offering bonuses retroactive to the first sale with multiple increased payout levels. Back in 2008 when Subaru’s national sales had plateaued at around 187,000 units a year, Allen and others were sitting around wondering how to get each of the retailers to sell one extra car a month. Just one. Then they changed the question: What if each salesperson sold one extra car per month? The stair-steps were the solution that spurred salespeople’s just-one-more sale — and the beginning of Subaru’s seven straight year-over-year sales leaps. Asked how he figured out what it was worth to the company to motivate those sales, Allen says, “Some of it was just rearranging the money that we were spending. Instead of spending a flat amount per car, you’re creating incrementality.” There may be zero incentive on the first three cars, he explains, but selling a fourth car might pay $50 a car, retroactive to car No. 1, making it worth $200. “And then maybe they get $50 for car No. 5 and $50 for car No. 6, and the next car is worth $75 retroactive back to car No. 1, making it worth $225.” Now, it sounds simple, he says, but “it was trying to create something easy out of a difficult, complex scenario.” On the consumer side, Allen contends, Subaru incentives are very low— around $800 versus $2,700 industry-wide — because the Subaru customer is looking not so much at the deal as at the brand. To his point, repeat buyers are a big part of Subaru’s following, with about 40 percent of buyers being previous owners. An article in Fortune in November 2012 bolsters Allen’s statement. “[Subaru] can dodge expensive incentives because its cars are in short supply and its relatively affluent buyers are less sensitive to promotions.” Playing His Strongest Game Here’s a sketch of Curt Allen at about five years from retirement: He’s been married for 33 years to his wife, Cindy, whom he met at Subaru. They have two married children and one grandchild, with another due in March. And for all the diversity of his areas of responsibility—and Allen clearly relishes the variety—preparing financial statements and financial projections are “still the most important part of the CFO job,” he says. Working for a Japanese parent company might appear to introduce complexities. Allen says on the financial side, however, there are few differences between Japanese and American expectations. He says that the Japanese are more into accuracy than estimates, and that suits a CFO personality well. “It gives me great pride if I can give our parent company financial projections that are very accurate.” He describes himself as an aggressive, Phil Mickelson-style golfer (“go for broke”), but a patient, steady, focused finance executive. “Maybe in golf my second personality comes out,” he says. Allen is in the sports hall of fame at Pitman High School, a school so small its teams shouldn’t register in sports annals, but with Allen on board its golf team won the New Jersey state championship. The sweet spot of his golf game is being a strong fairway player. “Generally if I can get the ball on the fairway, I can put the ball on the green from anywhere,” he says. Allen’s career success rests in part on creating an environment where his team members enjoy coming to work each day. No worries there. He has eight direct reports with an average length of service of about 25 years and overall low turnover in his department. Soon he’ll be looking to replace those who are starting to retire, including himself. He will reach out to public accounting firms for the prospects — and most likely will tap an internal candidate for his own replacement. The role he will take beyond that is to make sure these new hires understand not just their jobs and dotted-line responsibilities, but also “where this company has been and what we need to do to go the next step.” With Allen guiding them, their careers and Subaru’s future, will be in good, strong hands. C 1st QUARTER 2015 WWW.CFOSTUDIO.COM 11 “WHAT IF EACH SALESPERSON SOLD ONE EXTRA CAR PER MONTH?” Allen’s next assignment is to prepare the company for a move to new headquarters in Camden, NJ