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July 11, 2011 – Tracking customers also important after the sale

July 22, 2011
Filed under Uncategorized

These articles recap some of the opportunities uncovered by our GSA Powersports Consultants during actual consulting visits. These are followed by recommended actions that address these opportunities. Our goal is to provide you with ideas to help improve your dealership.

Part 2: Our GSA Consultants report on their analysis of the sales and F&I departments.

Dealership Details
After working in this dealership, the current owner purchased the operation in the late 1980s. He has three major product lines. He is an enthusiast with a powersports technical background who had worked in other dealerships prior to buying this one.

The population drawing area is around 70,000. There is a wide variety of economic support in this area, providing stability through economic downturns. The dealership sells less than 500 units per year.

The dealership is visible from a major highway. The older facility could stand some renovation. There is minimal parking available. The service department is in a separate building and another building is used for cold storage and some unit assembly.

Sales Department
The designated sales manager is the primary salesperson, along with the owner. He is energetic, personable and appears to possess the aptitude for a sales position. He has completed several OE sales training courses. He has an enthusiast background with a work history in other industries.

The dealership is lacking essential sales best practices. There is no showroom log or prospecting process. The showroom log is an essential part of the sales department that provides customer tracking and follow-up opportunities. Prospecting builds floor traffic and sales during slow periods.

New purchasers do not receive any follow-up from the dealership. This would provide an opportunity to address issues and ask for referrals.

No worksheet is used during the sales process and there is no tracking of write-ups or closes. Margins appear to be quite low. It is hard to tell because the numbers we got are not accurate. Observation showed the dealership tends to take the path of least resistance and does not build value to overcome price. No one is accountable to desk the deals to assure profitability.

The dealership was encouraged to add a door counter to track floor traffic and measure response to ads and promotions. They take trades and were encouraged to pursue growth in this area. They do not use an appraisal form. This form helps provide protection for the consumer and the dealership. It is a primary tool for verifying reconditioning and justifying the trade price to the customer.

Currently, the dealership has more new major units on flooring than they sold last year. Almost one-third of their flooring is non-current units. They need to clean these out and seek alternative flooring sources to reduce the monthly overhead.

F&I Department
The sales manager is also the F&I manager. The dealership sells virtually no F&I products besides OE extended service contracts.
They do not try to convert cash and bank customers to dealership financing. Adding a trained F&I person could really help the profitability of this sales department.

They were encouraged to acquire all F&I products and simply offer them to the customers with no sales pressure. For every F&I product, there is a customer who wants or needs that product.
They will send customers to the bank to get their own financing. This removes the opportunity for the dealership to sell F&I products. Besides offering financing in house, they should attempt bank and cash conversions to dealership financing. It is important to acquire and maintain relationships with multiple lenders.

Action Items

  • Make a phone follow-up contact with each unit purchaser within 48 hours of the sale.
  • Use worksheets for every deal to protect the customer and the dealership; review them for profitability.
  • Ensure that 100 percent of the purchasers are provided an opportunity to purchase F&I products.
  • Utilize market value rather than book value to determine trade values.
  • Apply over-allowances on trades to the new unit. It is a discount off the new unit.
  • Utilize an appraisal form to protect the dealership, note reconditioning and justify trade-in prices.
  • Implement a customer log for tracking phone, Web and walk-in customers.
  • Install an electronic door counter to track traffic flow and monitor response to advertising and promotions.
  • Track write-ups, closes and deliveries. Develop metrics and set performance goals.
  • Educate all customers on the F&I products you offer. Utilize the provided menu system.
  • Offer every F&I product that is available and provide training for the sales staff.
  • Seek local financing sources such as banks and credit unions.
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