I’m going to make it crystal clear. Your net profit is sitting right in front of you, and it walks right past you (and out the door) every day! Let’s get it back.
During my years in business, I’ve observed that 80% of the dynamics that impact a business or industry originate outside its four walls; however, 80% of the forces that impact the dealership’s profitability originate inside them. It’s my opinion that your increased profitability walks in and out of your dealership every day, and right in front of your eyes.
Five case studies: regain lost profits with simple changes
Your opportunities for increased net profit are in every step of your customer transaction management process. The gap or disconnect is that some dealers and managers can’t see it, even though it’s right in front of them. Here are some specific examples from some of my NCM 20 Group and consulting clients who have discovered big profits from small changes.
1. The BDC conversation turnaround
A used vehicle manager observed his business development center (BDC) customer-contact phone calls. The business development representatives (BDRs) were making their 100 calls per day; however, the tone of the calls was flat and lacked sincerity. The calls could have been made by a computer; they were so impersonal.
Once he brought it to the attention of the business development manager (BDM) and they did some training, his appointment show ratio began to climb. Just imagine how many deals the dealership had already lost before this simple change!
2. Lead with the winner
During a pre-owned digital merchandising review, our NCM 20 Group noticed a photo of a clean 2013 Silverado crew cab pickup truck with 9,000 miles on it. It was a great vehicle, but at over $36,000, it was priced exceptionally high for the market.
Three or four photos later—buried in the vehicle description—the dealership showed that the Silverado was a handicap/wheelchair accessible vehicle! Not only that, but a little research revealed to us that a new one would cost between $67,000 – $69,000. The vehicle was priced under market for an accessible truck, but it couldn’t find buyers because of the poor photo choices and lack of relevant keywords in its description.
Take a look at your digital merchandising. How many of your vehicles are overlooked because of simple mistakes?
3. Walk around for more profits
During a training session with service managers, I asked how many of them do walk-arounds on customer vehicles in the service lane? All nine raised their hands. Then, I asked how many do walk-arounds on 100% of customer cars, 100% of the time? Only three out of nine said yes!
Insist that each and every vehicle get a walk-around. Every time your team skips one, you’ve missed flat rate hours and parts sales that are just waiting for you in the service lane.
4. The difficult customer hand-off
In a general sales manager meeting, we were discussing the customer handling process in the BDC and the sales desk’s involvement. One sales manager discovered that when the BDR got stuck with a customer, they just chalked it up as a difficult customer and moved on to the next one, missing out on opportunities to set the appointment.
The sales manager changed the system straightaway. Now, when a BDR gets a difficult customer, he or she turns them over to a sales manager. Their show rate and close rate increased immediately.
Think about your BDC and sales deck system: How many deals have you lost over the last six months because your BDC and sales desk weren’t well connected?
5. The sales hot spot
A used car manager began paying close attention to his vehicle details page (VDP) activity and the sale of the related cars. Every day, he shared the top five VDP activity vehicles with his salesforce, requiring each salesperson to select one of the top performing VDP vehicles. They were required to make sure it was clean, ready to demo, and parked in a “hot spot” on the used car lot.
The UV team quickly upped their closing ratio on these cars by 25%. It makes me wonder just how many used vehicle customers we “unsold” because we didn’t have the car ready for the customer to demo.
Awareness improves profits
I think these five mini case studies demonstrate how small changes in your dealership can quickly result in improved profits. Take a good long look at your customer transaction management process and discover your own plentiful opportunities to make the most of the customer traffic flow you already have!
Discover how Joe and his NCM colleagues can help your dealership through 20 Groups and in-dealership consulting.