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Analyzing a high-unit, low-profit dealership – July 3, 2006

July 3, 2006
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This latest series of articles recaps a portion of the opportunities that were uncovered by our GSA powersports specialists during actual consulting visits. The goal of this three-part series is to provide ideas to help you improve your dealership. The first part of the series looks at the dealer’s facility from the customer viewpoint.
Dealership Details
The subject dealership is located in an affluent suburb. They have recently moved into a well-designed, new facility. They are selling 1,100 units per year, but their overhead is high and profits are minimal. Their F&I department has low penetration rates on the few products they sell. The focus of our visit was to provide the dealer with a needs assessment of the facility and the sales and F&I departments. The goal for the recommended actions was to (a) increase unit sales, (b) create an effective F&I department and (c) increase overall profitability per vehicle sold (PVS).
The customer viewpoint
Signage for the dealership is fair. It is difficult to find the store because trees obscure the visibility of the main dealership sign. It is invisible less than a block from the dealership. Parking is adequate, but restrictive to larger trailers. The external appearance of the facility and landscaping is attractive and inviting. Much of the window area is covered by banners and painted graphics, which obscure the excellent window displays. There is no clearly visible “open” sign. The store hours sign is obscured by product decals on the front door.
This is a well-designed, new facility. The customer gets a “wow” feeling within the first 10 feet of entering the store. The customer’s eyes are drawn to the unit displays upon entry. There is an excellent traffic flow pattern created by the floor tile color pathway and the product displays. While the raised, spotlighted unit displays are visually stimulating, there are no related clothing and accessories displayed with the units. There are also no “lifestyle” displays to help customers visualize using the products.
Product videos run continuously on several large screens in the showroom area. However, the volume level and the type of music being played are not conducive to relaxed conversation.
There are three small sales offices located at the back of the showroom. They are constructed of cloth-covered divider panels, and do not afford a view of the showroom area for either the salesperson or the customer. They have a squeezed-in feeling. There is barely room for the salesperson, a desk and two chairs for customers.
There is one F&I office with desks for the two F&I people. Also constructed of cloth-covered panels, this area is not secure. Conversations can be overheard outside of the office, and customer records are visible on the desks.
No customer lounge area is available in the showroom area.
Recommended actions

  • Have the trees obscuring the signage trimmed to allow visibility for at least a quarter mile. This will stimulate walk-in traffic and improve the attitudes of customers looking for the dealership.
  • Removing the banners and signs that are covering the windows will reveal the excellent window displays. This will attract customer traffic.
  • Remove all decals that affect the view of the store or the signs unless you are being paid to display them. Install a brightly lit “open” sign in the front window area.
  • Clothing and accessories sales will improve if they are displayed near the related units. Displays should reflect current seasonality.
  • Creating lifestyle scenes, such as a touring bike with full-dressed mannequins and a highway backdrop, an ATV campsite or a snowmobile winter scene, helps customers visualize using the products.
  • Reducing the volume of the music to allow normal conversation will create a more relaxing purchasing atmosphere for your customer base.
  • Removing the showroom-side panels of the sales offices will create a much friendlier and less-restrictive sales environment and provide additional visual stimulation.
  • The F&I desks must be located in soundproof offices. Privacy and security of customer information is critical. Provide windows to the showroom to prevent a closed-in sensation.
  • There is an excellent area near the showroom that could be developed into a customer-waiting lounge. Provide a couch or comfortable chairs, vending machines and ensure a good view of the showroom and accessories areas. psb
    Author, speaker and educator, Gart Sutton has been retained by every major powersport manufacturer/distributor. Visit www.gartsutton.com.

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