Most of us have observed the volume/gross pendulum swinging far and wide during our careers.  Often wreaking havoc in its path leaving both managers and associates wondering; “What are we supposed to be going for this month? or even this week?”  …… “Oh yeah, both!”

I worked with a great leader once who was always exhorting us to “take share profitably.”  Easier said than done, apparently.  One year, after an exhaustive analysis of over 200 dealerships we found less than 20% able to achieve that feat for a modest 6 months in a row.  You might say “so what, who cares?”  “We’ll go for volume until the PVRs get too low then we’ll swing over to a gross mindset until we lose too many sales.”  Back and forth we go.  It’s an all too common reality in too many stores.

What are the consequences, both real and perceived, both intended and unintended?  Here’s just a few:

• People: Frustration, confusion, conflict.  Fighting against each other without even knowing it; because one manager is focused on gross while the other focused on volume.  You may think this is a good balance; they do not.
• Product: When you ordered what you have in stock now and in your pipeline you were thinking volume but now you’re going for gross and you need differently configured inventory. Or worse yet, you didn’t order with either specifically in mind.
• Process: You teach a high-touch relationship building sales process that is slow and not conducive to high productivity, speed and efficiency you need for high volume or vice versa.

Can’t we have both? – You can, if you and your team are in the top 20% of all dealerships and you have the right franchise and inventory pipeline.  Even then the questions should be;

• “Do we have the right people and culture established?”
• “Are we ordering inventory strategically to achieve both?”
• “Do we have the right flexibility in our process to achieve both consistently?”

Let’s face reality.  Not everyone is in the top 20%.  In fact, 80% of us are not.  For the rest of us, you would be better served primarily sticking with one or the other most of the time. 

Patrick Lencioni says; “If you can get everyone in an organization rowing in the same direction at the same time, you can dominate any industry, in any market, at any time.”  So pick one and stick to it.

• Volume-orientation
• Gross-orientation

Which is better?  There's no right or wrong answer.  Each one can produce highly profitable dealerships.  But each one takes an entirely different approach to maximize opportunities and optimizing results.  You may already think of your dealership as a volume-based store or a gross-based store.  But there are almost certainly things that are holding you back from executing that strategy to its greatest profitability.

• People
  • What are their core beliefs? Are you a volume store with a manager who thinks gross is the better way to go? Do you have the right or wrong people to help you execute your strategy?
  • What are their capabilities? Do you have mostly new hires with high turnover? Are you providing any advanced selling skills and influence training to your existing staff?

• Product
  • Are you ordering specifically to support one strategy or the other. To maximize either takes a completely different inventory model/trim/style/option/color mix.
  • Is your franchise pipeline enabling you to execute the strategy you prefer? How about the OEM brand image?  Or the way they do incentives?  Are you fighting an uphill battle trying to be a gross-oriented store while the OEM only cares about volume?

• Process
  • Volume-orientation;  does it focus on ... ?
    • Speed and efficiency
    • Eliminate time wasters
    • Flexible and responsive
  • Gross-orientation; is it ... ?
    • High-touch
    • Customizable
    • Relationship and Reputation-based
• Performance - The other sales departments have a profound impact on both which model is best for your store and on making that model successful.
• • F&I - How is the performance of your F&I department? Can the team support a high volume, low front-end gross flow?  How engaged are they with the sales desk?  What are the back-end PVRS currently?  How is their service contract and maintenance penetration?  Are there long delays during peak times?
  • Used Vehicles - What is your new: used ratio? Trade evaluation win percentage?  Retail price to transaction gap?  Do your appraisers try to “steal” trades when they can?  How often do your managers have to ask for trade bumps?
  • Fixed Operations - What is your current service absorption?  What about sales to service conversion? … and Service to Sales