Dealer Inspire
Are You Passing on Deals That You Shouldn't?
Here we are at the beginning of a new month. We are all employed for another 30 days. Whew!There is a myth in the autobusiness that the best car deals are at the end of the month. I know from personal experience as a sales manager for several years, this can be so true and the general public knows it. I got to thinking this past week in how are the deals from the first part of the month different from the last part of the month. Why do we as sales managers pass on a deal that we will take a the end of the month? One word comes to mind and that is goals. Should they be different? No. They should be worked the same 100% of the time. No matter how big or how small the profit is, move the metal and gain the customer no matter what part of the month it is.
In 2009 as a dealership, we missed getting the prestigeous Honda President's Award by a mere 18 units for the year. If we would not have passed on the few deals that we did early on in the month, we probably would have gotten our award. We as managers think to ourselves that we have a gem (whether new or used) on our lot and think, we can make more money than the customer is offering, so I will pass on this one and make it up on the next one. We have to change that mindset and even if it is a little shorter deal than we would like, take it now, make a customer, and hope that they keep coming back for service, repeat sales, and referrals from that customer. We can replace metal, but not a customer
My 2 cents is no matter how big or small the profit is, no matter what part of the month it is, move the unit and invest that money in something else and gain a customer now, earn their business in service and parts, and ask them for the referral. If you don't have a referral program in place, get one and give the customer some money for sending in prospects. The best form of advertising is word of mouth and if a customer in the beginning of the month doesn't get 'the deal' in the beginning of the month, they may tell all of their friends verbally and via social networking.
Dealer Inspire
New Car Intenders....Are You in the Game?
Kbb.com just released a study recently that they did on the online shoppers: New Car Intenders. There are a few things that really took me back and have to make sure that I was actually doing it right to fall in line with their results.
They found in their research that the average person will research for their next new vehicle for an average of 2.5 months. I then started thinking about some of the leads that come in that we think are "junk leads" just because they won't respond to us. This is an important number so that we don't just drop that prospect that isn't responding to us for some reason. People request for information to keep themselves anonymous. We need to keep our name in front of them in our ongoing marketing and sending them relevant information on the vehicle that they requested information on. Stay with them for 30, 60, and 90 days and beyond. How many times have you had a customer just show up out of the blue that you have emailed and called and just left messages for several months and ask for a certain salesperson?Just like your walk-in traffic, stick with them until they fly or die.
The next thing that took me back was that 70% of those shoppers see a dealerships's website as valuable. Take away on this one is to make sure that your site is customer friendly. We are car people and chances are the people that designed your website are car people. Look from the outside looking in and make sure that there is no car lingo on your website. Make sure that prospective customers can find things easy. Have your links clearly defined and any call to actions on your site to stand out.
Photos on new cars are beginning to become more valuable year after year. Prospective customers want to see the actual vehicle they are looking at on your website. They can see stock photos on any website. They want to see actual photos of the new car just like the used cars. KBB found that the shopper like to see an average of 18 photos. 76% of the shoppers were more likely to go to the dealership with actual photos of their vehicles. 61% were more apt to purchase from the dealer that had photos. 51% would email or call over a dealership that doesn't have photos of their new vehicles. The take away on this one is pretty obvious....get new car photos on your website and make sure that you push it out to your third party sites.
I had to conduct a survey with all of my Twitter followers that are in the automotive business. I was shocked at the results how many dealers were merchandising with real photos vs stock photos. I found that 63% of my automotive followers that completed the survey were using actual photos vs stock photos on new vehicle merchandising. (I was thinking it was going to be much lower or I have some top dealers following me.) What this tells me is that people in the automotive business are seeing the importance of what a consumer or future customer wants to see online. On a personal level, we have been taking photos of new vehicles for a year now. Have I seen an increase in leads? No, not really. Have I seen an increase of vehicle detail pages? Yes. Have we seen an increase in sales? Most definitely. 'Nuff said.
You can view and download the KBB report here.
No Comments
Dealer Inspire
How Are You Standing Out in Your Phone-ups?
Phone ups are getting to be a key in the automotive business. The internet has changed our environment dramatically as customers used to visit at least 4-5 dealerships and that number has dwindled down to under 2 dealership visits before making a decision on a new vehicle. Also, call volume is trending down as dealers are being more transparent with options/equipment, carfaxes, and more photos of vehicles on the websites. We have to be sharp on the phone and also stand out.
I was walking through the showroom yesterday, and heard a salesman on the phone calling a customer that had inquired on a vehicle over the phone. He hadn't set the appointment, but he followed up with the customer the next day just to say thanks for the interest in the vehicle and he was there if they had any further questions. I have another salesman that will do a reverse look up on the phone number and not only follow up with them on the phone, but will also send them a postcard. I will guarantee there isn't any salesman in town that is doing that. This is all why he is as successful as he is in what he does.
Too many times, if a salesman doesn't set an appointment on the first incoming call, the customer goes to the side and is never followed up again. I have no idea of what that statistic is, but I am sure it is high.
To stand out, we have to ask the right questions and open that customer up to the whole inventory, not just that vehicle that they called in on. We have to listen to the customer in their needs and wants. If they call in on a 2 door smaller car and they said that they have 3 kids, that might not be the right vehicle for them if they are replacing a vehicle. We have to be there to be an advisor, not just a salesman.
Here are a few tips to make you better than the next guy the customer calls:
- Get a name. Too many calls are going without asking for the customer's name.
- Get their best contact info. Most dealers have caller id and use it. Mr. Customer, is this 555-555-5555 the best number to reach you at?
- Open them up to your whole inventory. How many times have you listened to a phone call and they ask if the 1999 Honda Civic is available and you say no and they hang up right away? Are you specifically looking for that car, or something that gets great gas mileage at a great price?
- Get their email. Make yourself stand out and do a quick 2 minute walk-around on the vehicle and send it to them. Make yourself stand out from the rest.
- ASK FOR THE APPOINTMENT! Too many salespeople are scared to ask for it.
- Give them your name and have them write it down. How many times did a customer that you didn't get logged in the CRM for some reason just come in and didn't ask for you and bought from your coworker?
- Log them in the CRM! Protect yourself. Put in good notes. If you didn't make an appointment, call them back the next day and put them in your normal follow up routine.
So what are you doing to make yourself stand out?
No Comments
Dealer Inspire
#TwitterPower
My trip Digital Dealer trip started out with an hour delay on my first flight to Detroit to make my way to Orlando. I only had an hour and ten minute layover and knew this would be close. As soon as I landed, I took my phone off plane mode and tweeted that it wasn't looking good to make my 12:11 flight when we had just landed at 12:05. Luckily, one of my "followers" was on the flight and they were waiting to back away from the gate. I confirmed with him that he was on my flight and that we would be deplaning in a matter of minutes and I tweeted him to cause a ruckus on the plane. He proceeded to let all of the staff know on the plane that myself and my coworker were deplaning our first flight and would be there and to hold the flight and would be there in the matter of minutes.
We were literally running through the terminal and and I was tweeting Cliff while running where we were. When we got to the gate after our mile and a half run through the terminals, they had just closed the plane to depart. They had held the plane for about 15 minutes. The gate attendant called one person and they said they couldn't open it back up. She called up to the tower to get clearance to reopen the plane for the guys that they were waiting for which they did. Thank you Delta.
Social media was one of the big themes at Digital Dealer this spring. Social media can be a powerful tool if used correctly for your business. Almost every dealer has a Facebook page and Twitter account, but are you blasting your "friends" that like you and follow you on Facebook and Twitter with promotions and just automotive articles or using it to your maximum potential?
So how can you social network the right way in the Automotive Business? Twitter can be a powerful tool. I am in the habit of doing localized searches of tweets for different words to see how we can help different local people out that may not be our customers as of yet. For example, I will search local tweets with oil change in the tweet nearby and see if anyone has tweeted about oil changes or is need of one. I had one person that the dealership wasn't following, but she had tweeted, "Time for an oil change, my baby is long over due." I tweeted from the company Twitter account that we had $12.95 oil changes and and a car wash at your request and she had called and scheduled an appointment and tweeted back thanks. I've heard other dealerships have some similar stories, but they are far and few between.
So I pose the question again; Are you just blasting your followers and likers with automotive articles and promotions or are you building relationships with socializing with them and engaging them? What stories do you have if any?
No Comments
Dealer Inspire
Sales 101: Back to Basics
Gas prices, inventory and parts shortages are going to take car sales back to the basics. We are already seeing a decrease in incentives from the manufacturers as we have started to see this month as most of the plants in the US are on limited schedules due to parts shortages coming in from Japan including some of the domestic manufacturer plants. Salespeople are going to have to get back to selling themselves, the dealership, and the product and not deep discounts and special A.P.R.'s.
Dealers won't be able to offer the discounts just due to Economics 101; the basics of supply and demand. A lot of the Honda, Toyota, and Nissan dealers are really starting to see the ripple effect that is showing in their inventory levels right now and in the coming months and will really see the effects of the earthquake in the coming months. Some of the domestic makes are starting to see it also as a result of the earthquakes. Dealers have to get creative in the coming months to stay afloat with new car inventory levels being as low as they will be. The salespeople will have to start selling out of stock more and more and not be able to rely on other dealers' inventories for dealer trades.
Fuel prices are also going to affect the used car market on used SUVs and some of the more fuel efficient vehicles. Most dealers are going to be conservative on their trade values on the 'gas guzzlers' just due to the fact that gas may be pushing $6 a gallon according to some reports. Everyone is going to want to be dumping their SUVs for something more fuel efficient to lower their outgoing cash flow. Auction acquisition costs are going to go up on all of the fuel efficient vehicles just due to the gas costs and new car inventory levels being lower than normal.
Back to sales 101. We as salespeople will have to hold our ground a little more than previous years. The supply won't be there to do dealer locates for the customer. If the customer wants a red one and all you have is pink, well, you will have to sell the benefits of the pink one that you have in stock. You wont have other dealers' inventory in your back pocket and we won't be able to offer the discounts that have been available since the factory won't be supporting us as much with factory incentives since the inventory levels will be lower than normal.
When a customer is wanting to trade their gas guzzler, they have to take everything into consideration; the total cost of ownership. I am guessing that the online trade-in tools like kbb, edmunds, and Autotrader Trade-in Market Place aren't caught up with the market with as fast as gas is going up. The customer has to realize that and take into consideration the gas savings that he or she will be getting with the new vehicle that they are looking at. Break out a spread sheet and show gas savings on paper their gas savings. Of course they know in their head they will save money, but put it on paper and it has a much stronger affect on people when they see the actual savings. In some cases, they may be able to save enough money with moving to something more efficient and keep their gas guzzler for when they need it.
If there is one thing that all of you must start doing and that is building up your used car inventory. We are not sure what 2011 will bring with regards to the production of new vehicle inventory, so in case, production is not what we will hope it is, and your used inventory will play a large part in your dealership's profitability. Be conservative on this gas guzzlers and be aggressive on the fuel efficient cars since you won't be able to buy them at auctions. Work your CRM and when you need a certain car, search your CRM and call those customers that have them and try to get them in something new that you have in stock and get that used car for your lot. Also, look at the newspaper just like the old days and also look at the online ads. Most of those people are just looking to sell their vehicle. Another option is to call other dealerships that are carrying something that you specialize in. A Ford dealer may not do well with Chrysler product and visa versa. You also may want to consider spiffing the salespeople for tracking vehicles down for your used car inventory.
I think the coming months with shortage of inventory is going to bring the cream to the top in sales professionals and dealerships. The salespeople that are mining their database and finding their customers that are ready to trade whether they know it or not and selling the trade to the customer in front of them are going to be the successful ones. There will still be the walk in traffic, but they will have to work hard through the inventory issues and get their selling shoes on. Sales Managers will have to count on the most successful salespeople to get the inventory they need. Now is the time to make it happen. Sell yourself, the dealership, and what you have in stock.
No Comments
Dealer Inspire
It's All About the Process
Thinking about last week and digesting everything that was presented at Digital Dealer is exhausting. I looked at a ton of products, and was a great week overall making connections on a vendor and dealership level. There were a lot of really good products there and caught not only my eye, but a lot of dealer's eyes in the sea of vendors in the exposition hall, but any solution is only how great you use that product.
Thinking on all of the sessions that I attended, they all had a similar underlying theme. The bottom line theme comes down to processes. There's a process for social media, a process for online marketing, a process for first responses and follow up, and a process for reputation management. Everything has a process. If your processes aren't there and not being executed, you won't see the success that you were promised by the vendor and you will fail. But it doesn't end there. Have them in writing so you can watch the flow of things over time and make sure that all of the tasks are being completed according to plan. No matter how great the product is, even if it is the best thing since sliced bread, it may be horrible with your dealership because of your process that is in place or lack there of.
Every dealer has different processes, but you have to find the sweet spot and find the processes that works for you. It will take some trial and error time, but in the long run, it will all be worth it. You have to come up with a good Internet process, good follow up process for unsold showroom traffic, unsold I-leads, unreachable customers that have submitted for info over the Internet. Not one process will work for every dealership. It may have the same concept or be similar, but they will be different in every store.
The process has to be unique to the customer to make you stand out from others. It will make the experience for the consumer great if you have the right processes in place. I heard in the last week that it's not the best price that matters, it is the best experience that will get you the business. It all comes down to how you handle the Internet lead or incoming phone call. It's all your process. People will travel over 30 miles when the process is flawless and be executed correctly.
If you don't have a process in a certain area, get one. Collaborate with managers within the dealership that are involved in that area of focus and talk about it. Let that process work for 30-60 days and reevaluate it and make sure things are happening correctly and is being executed correctly. If the process that was decided on isn't working as planned, steer the ship back onto course and make changes on the fly as needed. Once you have all of the processes in place, you will have the success you are looking for.
What products did you see that can take your dealership to the next level and have a clean process with it?
No Comments
Dealer Inspire
ResponseLogix New Quote Template
I had the opportunity to demo the new product that ResponseLogix released yesterday. They have made some major improvements to the quote templates that they have had in place. The email quotes that were being sent were in HTML format and are now going to what I would consider a micro site just for the customer. It is also in a format where it is more user-friendly and has some more trackable capabilities to it. There are 5 sections to the email quote that is sent.
In the first section of the email that is sent is a personalized message from thedealership. Along with the message, on the side, are links back to the dealership website for service appointment, credit application, online trade appraisal, specials, request another quote, and visit our website.
In the second section, which has the quote itself on the particular vehicle that was requested, you can incorporate the window sticker itself along with the EPA portion of the window sticker.
The third portion incorporates the Truecar Price Report. It is like being on the site itselfand looking at where the dealer is priced at according to it. This feature can be turned on and off if you are priced above the market on any particular vehicle, which is a great option for dealers.
The forth section includes other options. You can choose one level up and one level down for a new car. For used cars, you can add up to four other comparable vehicles that you have in stock.
In the fifth section is the signature of the representative from the dealership. They do put a tracking number that is assigned to that particular lead to track analytics to make sure that there is dialogue with the customer and the salesperson.
The other portion is tracking. When the lead comes in, ResponseLogix will scrub the customer's phone number and assign a toll free number with an extension to track the phone calls. It will allow for tracking of the customer contact and falls in an analytics tool that managers have access to.
There is another component to the system where it will do certain emails to the customer if there is no contact in 72 hours or however you want to set it up. It will also send out an email after 14 days or however you want to set it up and it is like a survey type email. Are you still in the market, do you want to set up a test drive, etc.
There is one last portion and that is if the customer opens the lead and goes away from the email and goes to a site that has banner ads or tower ads, they somehow cookie the user. When they hit say CNN.com, there will be the car on the side of the page, click here to schedule your test drive. It then links back to your site.
I really feel this is a product that will take things to the next level for dealerships across the nation.
No Comments
Dealer Inspire
50 Creative Ways You Can Increase Your Sales
Are you looking to increase your sales for the 2nd-4th quarter this year? We are all looking to increase our sales year over year. Here are 50 creative things you can add to your to-do list to bring in customers to your auto dealership and make that happen.
- Send hand written thank-you notes to ALL the people who visit the dealership and follow them up.
- Work EVERYONE-in or out of the market.
- Be more of a doer. Make things happen. Concentrate on the activities that will get results.
- Concentrate on getting more owners from prospects and bird-dogs.
- Treat every customer as a buyer for today.
- Do outside prospecting-‘I must get 3 sales a month from outside sources.’
- Come in and work the service lane once a week.
- Catch showroom overflow whenever possible.
- Do service follow up a day or two after your customer was in for service.
- Prospect the body shop weekly-get with your body shop manager for leads.
- Get EVERY customer in the CRM and follow up!
- Concentrate on following the ‘Road to a Sale.’ Always give a complete feature and benefit presentation 100% of the time.
- Know what cars are coming in on trade and on ordered cars. Have or find a prospect for all trades.
- Work to keep a Positive Mental Attitude at all times (Leave stuff at home).
- Seek people out, go to their business. Do whatever it takes to get face-to-face with all prospects.
- Close everyone you get in front of-stop the shopper. Now, while they are ‘Hot’, sell…sell…sell.
- Sell from stock-“Mr./Mrs. ____, I can save you money if you buy from stock, because we can give you a better buy and no price increase on cars in stock.’
- Work an extra hour on you shift one night a week.
- Have planned appointments every Saturday.
- Pick out another salesperson and try to be responsible for keeping each other’s attitudes up. Remember, Iron sharpens iron.
- Adjust your attitude to ‘positive/upbeat’ every morning while you are getting ready for work.
- Make 5 cold phone calls, without fail, EVERY day.
- Write letters to selected business people.
- Work owners effectively (bird dog programs).
- Follow-up on personnel promotions listed in the newspaper.
- Take a CPO vehicle when following up on owners and prospects.
- Read and study (through training tests, research on automotive sites)
- Relax. Work toward developing a better physical condition and, therefore, being more alert mentally.
- Have a better knowledge of inventory. Know what’s coming in and the approximate time and date and walk the inventory EVERY day.
- During scheduled floor time, be on the floor with a positive attitude at all times.
- To start the day with a positive mental attitude, get up 30 minutes earlier and play an inspirational CD.
- On days off the floor, do at 2 hours of face-to-face prospecting.
- Plan and mail more cold letters.
- Plan and do more cold prospecting.
- Review weak points with team captains.
- Review product knowledge.
- Walk the inventory more often.
- Follow-up an owner’s neighbors’ automotive needs.
- Walk the used car lot and your CPO inventory every day.
- Sell 75% of the people in the first closes. (Sell completely before you go for the close.)
- Check family, friends, and neighbors.
- Don’t forget about your owners-Keep close contact.
- Review old buyer’s orders and your upcoming lease expirations for prospects (renewals).
- Mail out-Follow-up with a phone call in 2 days.
- Effectively use floor time and hawk the lot.
- Be sure that you don’t shortcut. Follow the ‘Road to the Sale’ every single time. Turn over to manager 100% of time.
- Keep smiling. It improves your face value.
- Always look for the positive. Be a ‘good finder.’
- Social Network – Let everyone on your facebook and twitter know that you are in the business and let them know of specials or cream-puff trades that are coming in.
- Last but not least, HAVE FUN!
6 Comments
Southtowne Volkswagen
Jim, What a great post. So many great ideas. I guess the ONE thing I would add is #51- Be Consistent. Great results come from mastering simple processes and repeating them with a fresh attitude daily. If anyone were to choose just 10 of these and do them every workweek for 1 Month (2 a Day) it would have a dramatic impact on their success. Thanks for sharing! BA
Auffenberg of Herrin
I am a greenie and I'm having trouble closing. Do you have any advice?
Saint John Nissan
Bryan I totally agree with you. Any sales consultant should have over half come natural to them. Jennifer the best advice is Ask for the sale. Sounds simple but so many people over look it, as long as you are able to take NO and spin it to a positive. It will become easier for you, when asking read this list - Smile -Think positive (they can sense) And my biggest Build excitement.
@Jennifer, you need to have MANY closes don't rely on the few that have been around for years, "If I could, would ya?" "What will it take to do business today?" and stuff like that is worn out. Closing now is more of a conversation and being able to layer many closes over each other to "Close" a deal. Check out 'The Closer's Survival Guide" written by Grant Cardone for a lot of creative closes you can use and make your own. There are other great resources out there, take initiative to become a great closer.
One last point, sometimes when you're new to sales and you're having trouble with closing it's actually not closing but something along the way in the sales process that might have been missed. Happy Selling!
BMW
Love the idea about the body shop, I get the appointment list from service but did not think about the body shop for some reason. Might check out detail as well. Following up with that now. Thank you!
Dealer Inspire
What's Your Website Call to Action?
What is your call to action on your website? Hopefully, there are a few of them on your home page and also on your inner pages within your website. I have looked at hundreds of websites and thousands of pages in the automotive industry, and there are a few things that are common among all of them. But there are some that stand out more than others just because of the dealerships' call to action on the site. It made me want to click more and more, and even give some of my information, well, some of my mystery shopping information.
Trade In Apprasal Tool
About every dealership had some type of appraisal tool within their website. The most common ones seemed to be Blackbook, KBB, and Autotrader Trade-In Market Place. There are some pros and cons to all of them. Of course, you will always have the customer say that the figure is too low.
With Autotrader TIM, the one drawback that I saw was the number that was given. Yes, it is great that the figure is guaranteed by Autotrader, but if it is too low, the customer won't even respond to a phone call or an email wanting to acquire their vehicle. Autotrader says that it is a way to acquire inventory, but it is difficult to get a customer on the phone or via email because the number may be too low for them and they may feel offended by the offer made by Autotrader, not the dealership. Another con is that it can be time consuming for the customer with all of the information that they have to put in the computer just to get the figure. The pro is obviously that the price is guaranteed by them. If you as the dealer don't want the vehicle, take it to the designated auction and get your money back. Also, customer service is great with the Trade-in market place. They are fast on making any adjustments if needed on the phone with you as the dealership.
With KBB, it is a well known name and is where everyone has been trained to go in the past 10 plus years to get a trade in value. Their reputation has been good in the industry and according to KBB, they have 14-16 million hits to their site a month. I have no idea how many trade values are made, but I would guess that a large portion of the 14-16 million do a trade evaluation. The cons is that the customer always thinks that their vehicle is in excellent condition when they need 4 tires, and all of their services up to speed. It is easy to overcome with a customer just by going to their website and going to the condition examples.
Blackbook is the last common tool. When doing a trade appraisal with that tool, it will give you a $1000-$2500 range on the vehicle depending on how you have it set up. The one thing that I like about that is that it gives a range. That give the customer an idea on their trade, but to get a really firm number, they have to come in and have the used car manager look at it to put a firm number on it. You can also set the values to be from rough to average, average to clean, etc. I haven't really found any cons with Blackbook. Their numbers are generally pretty accurate.
Social Network Buttons
Social networking is here and now and it is here to stay so you better get with the program. There are some things that you have to watch when putting buttons to your Facebook, Twitter, YouTube, and blog on your homepage. Yes, it is great to have them there so your customer can connect with you on another level. The thing that you have to be careful about is taking them off your website by click of the mouse. You spend all kinds of money in your digital marketing to get them to your website and they click on your Facebook button, it takes you your facebook page, then they can start playing on Farmville, Mafia Wars, etc. and not make it back to your website to do what they originally were there for. The same thing can happen with your Twitter, YouTube and your blog. They may never make it back to your site.
Prominent Specials
Make sure that your specials are prominent. If you don't have them on your website, get them there. That should be the second most visited page within your website. Also, be sure that they are current and coincide with any Manufacturer incentives so you don't confuse the public. If you have something special, put it on there and differentiate yourself from the other dealers. (Consult your advertising guidelines with the Manufacturer.) Make sure that you have not only Sales, but specials for your Fixed Operations.
Credit Application
Your online credit application should be easy to navigate and easy to put the information in. Also, make sure that you are abiding by all of the new Red Flag rules so you aren't in violation with the laws that were put in place the end of last year. Also, when the lead comes into the CRM, make sure that they right people within the dealership have access to the information.
Phone Numbers
Most website traffic to your site is just to get a phone number to contact the dealership. Make sure that it is in a prominent location on the page. Generally in the upper banner portion of the page is the best place. There have been sites that didn't have a phone number on the front page at all. I would have to dig into the different pages to find it. Also, if possible, put different tracking numbers when coming from different sources (consult your website provider).
Chat
Chat is an up and coming product in the automotive industry. More and more dealerships are starting to utilize it. If you don't feel comfortable in doing the chat yourself, you can have it outsourced to a company and they will do what they are best at. I have seen conversion rates go up 1%-3% as a result of having chat. If someone is in their cubicle at work and can't make personal calls, they have another option of connecting with the dealership through chat to ask questions.
If you have all or just a majority of these item on your homepage, you will be at the conversion rates that you need to be at to be successful. The benchmark that each dealer should be at is between 7%-10% for fixed operations and 2%-4% for sales. This includes all leads submitted, appointments, chats, and trackable phone calls. If you have these items in place, you should be in that percentage range and it will make you successful.
No Comments
Dealer Inspire
Do You Have the 'Velocity'?
Pricing vehicles effectively in the market place can be a challenge at times. However, when you do, you can have some serious velocity for the business; not only sales, but fixed operations also. There are a few different pricing softwares out in the marketplace that you can use. The bottom line is you have to use them effectively. I remember several years ago while I was a sales manager, there weren't pricing tools available that would scan all the different websites. I would have to go to autotrader and cars.com to make sure that I wasn't pricing myself out of the market. I would also do a KBB on the vehicle to go along with what I found and just shoot from the hip on the pricing with what I found online. Now, those pricing tools have everything that you need with a few clicks of the mouse.
Here is a scenario for you. Would you rather have a gross of $2200 per vehicle sold or would you rather have things priced effectively within the market and make $1400 per vehicle, but sell more cars at the lower gross? Here is a dose of reality that sales managers have a hard time grasping. If you carry a 75 unit inventory and make $2200 per vehicle, but your average inventory age is 50, you would make about $1,642,500 in a year. This includes Finance income of $500 per vehicle and fixed operations making $300 profit on the sales department.
Used Vehicles Gross Based on Current Inventory( Average Days/Turn) | |||
Annual Gross Revenue | |||
Units in Stock | 75 | ||
Average Age in Inventory | 50 | ||
Average Turn | 7.30 | ||
Annual Unit Sales (Units in Stock x Turn) | 548 | ||
Current Front GPU | $2,200 | ||
Total Front Gross(GPU x Units Sold) | $1,204,500 | ||
Current F&I GPU | $500 | ||
Total F&I Gross (GPU x Units Sold) | $273,750 | ||
Fixed Ops (70/30) GPU | $300 | ||
Total Fixed Ops Gross (GPU x Units Sold) | $164,250 | ||
Total Gross Generated by Used Vehicle Operations | $1,642,500 |
Now, if you carry the same inventory and bring your front gross down to $1400 and your average days in inventory down to 30 days, that will bring the bottom line to $2,007,000, a net gain of $365,000 with the same amount of vehicles in inventory.
Used Vehicles Gross Based on Current Inventory( Average Days/Turn) | |||
Annual Gross Revenue | |||
Units in Stock | 75 | ||
Average Age in Inventory | 30 | ||
Average Turn | 12.17 | ||
Annual Unit Sales (Units in Stock x Turn) | 913 | ||
Current Front GPU | $1,400 | ||
Total Front Gross(GPU x Units Sold) | $1,277,500 | ||
Current F&I GPU | $500 | ||
Total F&I Gross (GPU x Units Sold) | $456,250 | ||
Fixed Ops (70/30) GPU | $300 | ||
Total Fixed Ops Gross (GPU x Units Sold) | $273,750 | ||
Total Gross Generated by Used Vehicle Operations | $2,007,500 |
To me, going with the second scenario would make more sense. However, there are a lot of Sales Managers that don't see it that way. They go for the gusto and want to be the hero in making the most money for the department on bigger deals when they would be doing justice for the company to go for a little lower gross and turn the inventory faster. The second scenario, you would be selling 365 more vehicles (30 per month) at a lower gross per vehicle, but making more money for the company in the long run. The more effectively you price your vehicles, the more clicks you will have on those third party websites, therefore, more floor traffic, and more sales. Cheers to good selling!
No Comments
No Comments