Feb. 9, 2009 – Swingin’ for a better ’09 starts with parts
February 12, 2009
Filed under Features
By Neil Pascale
ATLANTA — The number of powersports franchise points in the United States has decreased by close to a double-digit percentage each of the past two years while the number of independent/aftermarket points has increased during that time span.
That trend represents not only a seemingly missed opportunity for the franchise dealer but an opportunity to grow in a down market, Sam Dantzler, president of Assurant Solutions’ 20 Clubs division, said to a group of more than 200 dealership managers.
Dantzler provided this industry trend and others Jan. 25 in Atlanta during Update 2009, an annual, three-day training event that is geared toward department managers. The event, hosted by Assurant Solutions, included more than 40 seminars on key revenue centers and management techniques as well as Dantzler’s presentation on industry trends.
Dantzler not only highlighted the opportunities
of the parts and service departments in a down economy, but also touched on the importance of keeping an
optimistic outlook, maximizing sales in all departments to drive net profit and paying less attention to driving more traffic in the store and paying more attention
to the traffic that is already there.
Dantzler pointed out unit sales decreased but door swings increased in 2008, according to data from the approximately 350 dealers that belong to Assurant 20 groups, formerly called the RPM Group. Metric dealers belonging to the 20 groups were down 17 percent in new unit sales in 2008 but their swing counts were up 13 percent over the prior-year priod. On the V-twin side, Harley dealers saw a 13 percent decrease in unit sales but a 1 percent rise in door swings.
“So don’t think for a second that people don’t want the product just as much as they ever have,” Dantzler told the Atlanta audience. “They’re still in your stores. What are you doing to create an incredible customer experience and make sure they go home with something in their hands?”
Dantzler again raised the importance of the parts and service departments in an economic downturn, noting Auto Zone, the auto aftermarket chain, had a huge quarter this winter when much of the retail world reported significant losses.
“If they’re not buying a new (unit), what are we going to do capture business?” Dantzler asked of consumers. “Well, we need to put some additional attention to our parts and service business. I truly believe parts and service is going to stabilize the dealerships in 2009 while (new unit) sales remain stagnant.”
For that to happen, dealership managers will have to ensure their staff focus on being a salesperson first, regardless of what part of the store they work in.
“I don’t want a parts guy who happens to make sales,” Dantzler said. “I want a sales guy who happens to sell parts. There is a huge difference in that.”
Even small gains in sales can make a huge difference on a dealership’s bottom line.
“The fastest way to increase the net is to increase your gross profit by 1.5 percent. One and a half percent will move the needle one point on the net,” Dantzler said. “All things stay the same, that is the quickest way to drive the net.”
Cutting costs is another key, Dantzler says, focusing especially on advertising. On average, metric dealers in the Assurant Solutions’ 20 groups spent $101,000 on advertising in 2008, or 1.1 percent of their overall sales. V-twin dealers on average spent $200,000 or 1.5 percent of their total sales. Dantzler said those numbers are “radically lower than last year.”
“That’s good,” he said. “They need to be.”
The emphasis, Dantzler says, referring to the increased door swings in most dealerships in 2008, should be on in-store traffic.
Similar interest should be directed at prior new unit buyers, many of which are considered to be part of an “orphan owner base.” This is a group of consumers whose biggest tie to the dealership was likely the salesperson who sold them their new unit. With the high turnover associated in dealerships, these new unit owners likely have little connection to the dealership when they start looking at a new purchase two or three years later.
Ensuring current dealership staff contact these “orphan owners” is one best practice that should not only be acknowledged this year, but also implemented. “We are at a critical point in this industry,” Dantzler said. “We have to put the best processes that we know to work, the processes that statistically are proven to work over and over and over again.”
Part of ensuring that happens starts with an optimistic viewpoint from the top down regarding business opportunities in 2009.
“People still love what we have,” Dantzler said. “They’re still on the road. People want what you have. It starts with getting your head right.”