April 1, 2004
Filed under Archives
The ability of a parts counterperson to add sales to a ticket directly affects the annual gross margin yield for the parts department. The examples shown here indicate that for every line the average ticket is increased, the department bottom line will gain about $50,000 annually.
This study includes 96 dealers who produced 2,612,229 invoices which contained 6,004,870 lines during 2003 and January of 2004. Chart A shows the number of dealers who performed at each level (1.5 average lines to 3.6 average lines). The bar indicates how many dealers were at each level. It is obvious that the average of all dealers is in the 2.3 lines per invoice range.
Chart B breaks the dealers into 3 sub-groups, each of which contains 32 dealers. The low end dealers range from 1.5 lines to 1.9 lines per ticket. The top performing 1/3 of dealers start at 2.3 lines, and run to 3.6 lines average.
Chart C shows the overall effect of an increase in lines per ticket. On average, a line per ticket increase will yield about $50,000 per year in increased gross margin. In our example given here, the dealer who is at the low end with 1.5 lines per ticket, could take his annual gross margin from $342,000 to $820,000 (an increase of almost $500,000) without adding one additional customer, simply by more productive selling. These charts show that it can be done.
Average lines per ticket will determine the profitability of your parts department. Spiffs, contests, training, testing, and other management techniques designed to monitor and foster growth in this area is actually more efficient than using additional advertising dollars to increase counter traffic. These customers are already in your store, ready to hear about products that relate to what they are already buying.
Train your people. Report on how they do. Reward their progress, and watch your gross margin dollars grow.