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OPINION – Sifting through the priorities a successful dealer principal must remember

June 5, 2006
Filed under Columns

What makes a dealer successful and what, in my experience, has caused them to fail?
I can answer both in one sentence, or perhaps in one word: priorities (or the lack thereof).
The priorities of a retail motorcycle dealer are generally the same as for any other retailer. The difference is the extent of the relentless pressure powersport dealers are subjected to to alter the priorities, which are:

  • Is it in the best interest of the dealership?
  • Is it in the best interest of the customer?
  • Is it in the best interest of the staff?
  • Is it in the best interest of the OEM?
  • Is it in the best interest of racing or other nonessential pursuits?
    Any decision made by the dealer principal, or any department head, must first weigh the interests of the dealership. We have to take care of the customer. We must attract, develop and retain good people. A good relationship with our OEM and other suppliers is essential. And, we do need to make time to play. But nothing is more important than the welfare of the dealership.
    If there is a clear common denominator amongst the dealers who have been long-term successes, it is the ability to maintain the priorities that keep the dealership profitable. And, clearly if there is a common thread amongst those who have left us, it is the inability to do so.
    The customers will always press for discounts and accommodations. In the real world of retail, they are inevitable. Do what you have to do, when you have to do it, but always go back to priority No. 1.
    The staff will always want to be paid more for doing less, fair enough. After all, from the perspective of the staff, what is their No. 1 priority? The most obvious failure in this regard is the staffing level of the sales department. Having the right number of sales people to address the best interest of the dealership and the customers might not be in the best interest of the sales people.
    Of course the OEM will always be happy to establish your priorities for you. After all, there is their big picture to consider. A retailer buys at wholesale what can best be sold profitably at retail. Anyone in the dealership empowered to buy must again refer to No. 1 and buy, not be sold merchandise. No dealership in the history of our industry ever went broke for what he/she did not buy. You need to always be offering what your customers want to buy, not what you need to sell.
    Motorcycles (and all the other powersports stuff) are fun — that is always the first message we should convey to customers. The inventory is there for our customers to play with. You and your staff should be part of what we sell. Play and enjoy! But if you are in the business for the money, never let playtime get in the way of what is in the best interest of the dealership.
    The priorities are clearly obvious, and the distractions are evident. When times are really good, the rising tide floats all ships. Today the market is good, but the business is tough. There are lots of product in the pipeline and the good players who are focused on making money are relentless. Letting someone else dictate your priorities is now a ticket to oblivion.
    I recently had a banker, who was funding an acquisition, ask me what made the difference in the really successful dealerships and groups today. My answer was, “they have as much control of the sales department as they do the other departments.” The money is in the metal. Yet historically the department making us the most money has always had the least control. It is the toughest discipline.
    The sales department is the toughest discipline because no one else is driving the process. In the service, parts and accounting departments, others are demanding results. The problem is compounded by the fact that sales people will always take the path of least resistance and you cannot live on the “low hanging fruit” they are always looking for. Converting 10 percent more of the showroom traffic requires 100 percent more effort and control.
    I am currently touring the country talking about how you can use the resources available today to take a dealership to the next level. You do not have to let the forces of the marketplace, like the discounter down the street, dictate your success.
    Cheers, Ed. psb

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