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Add processes, incentives to bolster sales department

Gart Sutton
October 31, 2011
Filed under Columns

These articles recap some of the opportunities uncovered by our GSA Powersports Consultants during actual consulting visits.

DEALERSHIP DETAILS

More than 20 years ago, this family-owned dealership started as a used motorcycle business. Within a few years, the owners began acquiring additional dealerships in surrounding cities. They bought the current location about 15 years ago and consolidated the other stores into this one dealership a few years later. In addition to the multi-line powersports dealership, they have a large online sales division.
Part 2: Our GSA Consultants report on their analysis of the sales and F&I departments.

SALES DEPARTMENT

The new unit profitability is a bit low, but the sales volume is solid. A large percentage of sales comes from outside the dealership’s primary market area. They have capitalized on their acquisition and maintenance of websites that previously belonged to dealers that failed in other larger markets. This online presence provides a high level of exposure to these outside markets.

The dealership has not been tracking write-ups and closing ratios, so they have no baseline for performance measurements in this area. They sell almost as many pre-owned units as new. They understand market value and buy them right, resulting in an average pre-owned gross profit of more than 20 percent. This helps absorb the low gross profit in new sales and the lack of F&I back-end and accessory sales per new unit sold.

Their top salesperson is also the sales manager. They use four-square worksheets and they have a showroom log. Due to the sales workload, many of the sales management functions cannot be implemented. There are no individual sales goals with performance tracking and rewards. There are no daily huddles, daily one-on-ones or weekly sales meetings. There is no prospecting process. There is no follow-up contact process with regular purchasers. It didn’t appear that they were following a structured selling process.

When they are busy, the salespeople tend to go to the bottom price rather than fighting for the profits because they are often short-staffed during these periods. In these situations there is little time to follow the sales process correctly even if they wanted to. In addition, it is difficult to apply the important sit-on step of the process because the units are so tightly packed in the showroom.

The delivery process also suffers when they are busy. Staff indicated that customers are sometimes wandering around trying to find out if their unit is ready. Other customers are dropped off in the service department by the salesperson. In either case, the customers are not being properly informed about the operation or maintenance of their unit. There is no “special day” feeling to the delivery process. They do not use a delivery checklist.

This department could improve profitability in new sales by adding a dedicated sales manager and implementing essential management processes with performance tracking and targeted incentive programs.

F&I DEPARTMENT

F&I has a lot of potential for increased sales and profits for the dealership. They have a lot of cash customers. If the business manager were to focus on converting them to dealer financing, they could pick up a lot of additional F&I product sales that are not available otherwise. They currently are not tracking finance penetration, so they don’t have a baseline for comparison.

The turnover rate from sales is high and ESC penetration is strong, but overall gross profit dollars per unit sold is very low. They have no GAP sales other than the OE offerings, and they no longer offer a PPM program. They don’t offer many of the products that are available, but they are working with one of the providers to acquire more products and training.

One person is not adequate to handle the F&I workload when they are busy. They will have to add some additional help — perhaps a “prep” person or two in order for the entire F&I process to be followed correctly and successfully. Acquiring an insurance license would enable them to sell additional products and become a “one-stop shop” for F&I services.

SALES ACTION ITEMS

Be on the showroom floor most of the day providing coaching, counseling, training, saving deals, desking deals, enforcing the sales process.

Implement daily huddles (15 minutes max) to discuss what happened yesterday, what’s happening today, what will happen tomorrow.

Conduct daily one-on-ones with the sales staff. What appointments do they have? Who are their prospect calls? What is their performance-to-goal status?

Conduct a weekly, one-hour motivational sales meeting with agenda. Include training and celebrate successes.

Provide goals for sales and prospect calls to sales staff. Develop incentives/rewards to drive performance. Provide frequent performance-to-goal status updates.

Provide support for F&I so there is more time to attempt conversions and present all products.

F&I ACTION ITEMS

Attempt conversions whenever possible.

Use the F&I log to follow up on unsold service contracts, PPM, etc.

Acquire and present all F&I products.

Ensure all customers have the opportunity to review all appropriate product offerings.

Consider acquiring an insurance license to increase F&I product offerings.

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 more than 30 years. For additional information on these services, visit www.gartsutton.com.

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