Article

Overlooked Profit Potential

August 2006, Auto Dealer Today - WebXclusive

by Kevin Day - Also by this author

I am constantly amazed at how much money is lost in dealerships nationwide. Yes, I am talking about lost profit potential in the finance office. If your dealership is not receiving at least an additional $1000 on the back-end, then I am addressing you. Why would anyone work so hard to get cars bought, cleaned, reconditioned, and sold to then walk away from an additional grand per copy? Success in the finance office is a choice.

Each and every dealership needs to realize that the money on the back-end is there; you just have to go get it. Let’s think about one fact for a moment. Some dealers are running nearly $1500 per copy on the back end and some are running $50 per copy. Why? Success is a choice; each and every dealer gets to decide how much money he wants to make on the back end.

Let’s move on and address the dealer that wants to push the needle to the upper echelons. First, you must decide where you want to be. What are you running per copy on the back end right now? In order to get over the $1,000 mark, YOU MUST TRAIN. I often hear excuses about why running high numbers on the back end cannot be done. While I may try to be polite and outwardly agree, in my mind I am thinking something very different. Lets always remember success is a choice. I am not saying that success is easy, because it’s not. What I am saying is that if you decide to make more money then you can! However, to make more money it will require more work and training.

When was the last time you sent your people to a training course or had a professional trainer come to your store? I would recommend an ongoing training program in place that utilizes the menu process. In today’s society our finance department must not only make money, but must also be ethical and legal. Believe me, you don’t want to be the highlight on the 10 o’clock news. Attorney Generals are cracking down like never before on paperwork at dealerships. The menu process will make you more money and with the disclosures the menu system provides, your dealership will also be more protected in the event of a lawsuit.

To properly sell products on the back-end you must understand the psychology of how to sell an intangible product. We all know that to sell a car we use a feature/ benefit technique. Service contracts, GAP, life and disability as well as etch, tire and wheel are all intangible items. To sell an intangible item, the assumptive sale should be done. This means you should assume every buyer is going to buy all of your back-end products every time. The way to get this job done is with a menu. The menu selling system will show 100 percent of your products to 100 percent of the people 100 percent of the time. The menu will also cut the time you spend in the finance office in half.

After knowing the benefits of a menu system, I for the life of me cannot comprehend why dealers would not make one mandatory in their dealerships. There are no downsides and plenty of upsides. Make the choice today to learn the menu system in the finance office. I don’t know too many car dealers that don’t want to make a lot of money, have less customer complaints and sleep better at night while knowing they are covered legally. Remember, success is a choice, especially success in the finance department.

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