December 2014, Auto Dealer Today - Feature
Your instructions are: Go sit in a quiet, darkened room. Shut the door. Tell everyone to leave you alone until you come out.
Now that you have peace and quiet, clear your mind and just think. Think about what you would do if you had the chance to start over. What if you just bought your dealership or auto group this week? What if today was Day One?
Think of the most optimum things you would do to make your store the best dealership. A great dealership is profitable, friendly, a destination for people who want to buy cars, and a great place for your employees to work and retire. What would you improve? What would you change cosmetically? Who needs training, and who will perform it? What personnel changes do you need to make? What expense structure would you set up? What would your sales budget look like?
Think outside the box. You need to explore other dealers with the same franchises, similar inventory, demographics and customer base do to show a better profit than you. Schedule a meeting with your lenders. Find out what kind of cars, credit scores, etc. they will loan money on today. Then make sure you have those cars available for sale on your lot. Next, advertise to your customers, as economically as possible, that you have lenders lined up and the cars in stock they will lend money on.
You may not be able to control the new- or used-vehicle market, the economy in general or the lenders who don’t seem to have money for your customers to borrow unless their credit score is just right. But you need to take another hard look at your business and figure out what is working the best for you. Meet with your managers weekly to review what happened last week and what you can do increase your sales and gross profits.
Review not only what advertising other dealers are doing in your selling area, but also look at dealership advertising across the country. Look at other retail industries to find out what may be working for them. Even though business may be down in some areas of the country, retail businesses are still selling products each and every day. Some just do it better than others and always will. They have figured it out.
The Chick-fil-A Model
What amazes me is one company, which stands out among others I visit as I travel across the country. That company is Chick-fil-A. Their commercials are very creative. Every time I visit these restaurants anywhere, which I try to do frequently, I am impressed. They always seem to be busy but handle the lunch and dinner rushes very easily. Their service is excellent, the employees are always well dressed, clean cut and exceptionally polite and friendly. Everyone has a smile on their face, you are served fresh and very tasty food and they even have clean bathrooms and tables. Even the drive-thrus are clean and efficient. It doesn’t take long to go through the drive-up, even during their busiest times, and your food is normally always ready to be handed to you the instant you stop. These places are a model of efficiency but you do not feel rushed.
So what is Chick-fil-A’s secret? It has to be training, hiring good personnel with the right attitudes, scheduling people and operations for peak times. And you can be sure they employ very well-trained owners and managers who maintain the overall operations and work their gameplan consistently.
What if your dealership ran this well? We could all learn some things from these types of businesses. Maybe it makes sense to introduce yourself to one of their managers or owners and bend their ear a little to get some pointers. I have talked to many people around the country about this franchise. Many, if not all, would drive and have driven extra miles to go there rather than anywhere else for their lunch or dinner. How many of your customers would say and do that?
Take a look at your service and parts departments. Review your sales over the past three to four years. What type of service has increased and what has decreased? Review each one in detail with your managers and discuss ways to increase all areas of your sales. If there are independent repair shops and oil change facilities in your area and they still have business, then you still have room to increase your sales. Review their advertising, their pricing, etc. and construct a way to market to their customers.
Next, find out why your sold customers have gone elsewhere for service after buying their car from you. Call up all those customers and offer them a coupon to visit your dealership for their next service needs. … Yes, I said call them. There should be time to make some phone calls to say hello, thank them for their past business, and ask them for their future business. What have you got to lose? Sales you haven’t had? You can only increase your sales by doing this.
Have a salesperson visit constantly with your customers in the service lanes to say hi, thank them for visiting your dealership and ask them if there is anything you can help them with. There is and always has been more traffic in the service department than in the front end of the store. Your chances of selling a vehicle are just as great in the service department as they are in the showroom.
Take the Offensive
To obtain better profitability, you will need to sell your way there. You can’t just sit around hoping to wait out the next downturn. The car industry has always had its ups and downs, and it will continue to do so. It is inevitable. You just need to be able to lead the race rather than follow everyone else around the track.
If you don’t have a sales and expense budget, then take time to put one down on paper with the help of all your managers. Arrive at the number of units and minimum gross profit it will take to cover all your expenses and break even. Once you know this break-even number of units and gross profit, plan how you are going to increase your sales and with what type of product. It should consist of increases in new, used, service, parts orders and body shop visits.
I know I have rambled on, but try to go back to the basics of just good operational business procedures and policies. Work hard to provide friendly, consistent service and excellent products.
Start today as if you are walking into the dealership for the first time on Day One and are so anxious to get started you can’t wait to get there. Get all of your dealership personnel involved in your project to gear your operations for increased profits and fun in 2015. Sell more cars!
David Keller is principal of CliftonLarsonAllen, an accounting firm with expertise in new- and used-car operations and heavy truck and utility trailer outlets.