Because the focus in BHPH is on cash flow, I suggest identifying only those customers who make another purchase while the original account is active as “retained” customers. Let’s call them “rollover” accounts. A repeat sale to a customer who paid off some time ago is a wonderful thing. It yields gross profit in the same way that the rollover sale does—just at a later date. However, the dealership suffered an interruption in cash flow where this customer is concerned. This is where growth opportunities are most often missed. We also risked losing that customer to a competitor when they left the portfolio, believing that they would “be back” at a later date. An aggressive strategy that increases success in the area of rollover sales will build on the number of accounts and increase cash flow. Perhaps you are one of a lucky few that can generate enough new traffic that you can afford to replace customers that are paying off, rather than retain them. Most dealers cannot.
Inefficiency can lead to decreased sales production, which will contribute to a flat or declining A/R. Dealers who recognize that they are failing to capture business available in their market should examine their efficiency in these common problem areas: staff, marketing and inventory. Failing to properly staff the dealership will impact selling efficiency. This problem is magnified in operations where members of the sales staff also have clerical, collections, and/or inventory responsibilities. Perhaps your marketing efforts are uninspired or missing the mark. And last, but not least, the constant battle for inventory. The right inventory combined with the right inventory process can boost business quickly. When the right marketing campaign is executed and the dealership is staffed sufficiently with well-trained personnel, sales increase. Provided that inventory is replenished in a timely manner, the portfolio grows.
Growing beyond your current BHPH plateau is possible. Once the decision is made to climb higher, all areas of your business need to be examined. As corrective measures are taken, you will be able to punch the throttle with confidence and ascend to new heights.