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Aug. 11, 2008: Steps to increase a rural store’s profitability

August 11, 2008
Filed under Archives

These articles recap some of the opportunities uncovered by Gart Sutton & Associates’ powersports specialists during consulting visits.
These are followed by recommended actions that address the issues. Our goal is to provide ideas to help improve your dealership.
Dealership Details
This multi-line dealership has been a family owned business for more than 30 years. The owner is not involved in the business on a regular basis. His son and general manager took over the daily operations of the dealership several years ago. The dealership has a history of involvement in motorcycle racing, and still avidly supports the sport. The owner and his son were both successful motorcycle racers.
The dealership is located in a rural market with a population of 4,000. They have used discount pricing to attract customers from a metro market of more than 400,000 less than an hour away. Their annual unit sales are 700-800 units. They have operated on very small margins. They are hoping to find ways to increase floor traffic and sales while holding better margins. They are open to improving the structure and processes of their business.
The first part of this series looked at the store’s sales department. This second part describes the action items for the overall dealership as well as the sales and F&I departments.
Overall store

  • Put all processes in writing and include in a P&P manual. Hold managers accountable for department performance. Provide performance incentives.
  • Develop a written organization chart and discuss it.
  • Convert all internal billing to a retail price basis to allow comparisons with industry benchmarks.
  • Conduct weekly 30-60-minute manager meetings. Introduce policies, request updates on action items and use round-table discussion to uncover and address issues.
  • Implement daily 5-10 minute manager huddles. These should address what happened yesterday, what is happening today and what to expect tomorrow.
  • Develop a phone answering script for all staff to follow. Include dealership name, employee name and department.
  • Create a customer-friendly waiting lounge for sales and service customers. Provide refreshments, product information and accessory displays.
    Sales Department

  • Bring up the margins in the sales department. Set goals and standards for margins. Consider paying the sales manager on base plus percentage of profitability.
  • The sales manager must be on the floor 80 percent of the time providing sales support, coaching and training.
  • Implement weekly 30-60 minute sales and F&I staff meetings. Include recognition, motivation, goal status and training.
  • Require completed prospect sheets or sales logs. Review them daily with salespeople. Require at least four prospect calls every day — more when it is slow.
  • Implement daily one-on-one meetings with the sales staff. Look at prospect activity. Review what happened yesterday, what’s happening today, what to expect tomorrow.
  • Train the sales staff on the use of structured sales process. Provide ongoing coaching and training as needed to ensure they follow the process with every contact.
  • Utilize worksheets to ensure clarification for sales commitments and obtain customer commitment. Desk and approve every deal.
  • Increase used unit volume by promoting trades and outright purchases. Increase margins to 18 percent-plus. Used units can’t be compared with other dealers, attract new customers and you have control over the margins.
  • Utilize the 48-hour follow-up log to ensure every new unit purchaser is contacted.
  • Turn over ordering accessories and creating accessory displays to the P&A department. Provide appropriate input and suggestions for stocking.
    F&I Department

  • Hire an F&I specialist. Provide F&I training for them and a back-up person (typically the sales manager). This can improve sales department profits dramatically.
  • Cultivate additional lending sources to increase finance penetration and profitability.
  • Create secure, customer-friendly F&I office with windows to ensure privacy and comfort leading to increased F&I sales.
  • Offer 100 percent of the F&I products to 100 percent of the customers, 100 percent of the time to ensure maximum F&I product penetration.
  • Implement and maintain an F&I log. Use the log to follow-up on missed sales of F&I products, such as ESC.
  • Develop a store privacy policy and present it to every sales customer.

    Gart Sutton has been a leading provider of on-site dealer consulting, dealer 20-groups, online financial composites, accounting rescue services, and OEM and dealership training solutions for nearly 30 years. For additional information on these services, visit www.gartsutton.com.

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