Mike Martinez Blog | DrivingSales

Mike Martinez

Company: izmocars

Mike Martinez Blog

Total Posts: 3

Mike Martinez

izmocars

Sep 9, 2010

Acton Toyota and Falmouth Toyota: What they did to double accessory sales and put big bucks to the bottom line

Two Dealerships Crack the Elusive ‘Accessories Code’ To the Tune of Tens of Thousands in Sales Each Month

Breakthrough In-Store Sales Process - Revolving Around Accessories Visualization, Virtual Inventory and the Right Timing - Driving an Average of 200% Increases in Accessories Revenue, or an Incremental $50,000 a Month

Summary/The Issue:

Both Acton Toyota of Littleton and Falmouth Toyota of Massachusetts are very successful dealerships, always looking for smart ways to drive new revenue, and new profit centers to tackle. (Acton ranks #17 in the Ward’s e-Dealer 100 list, and is the #1 Prius and #2 Toyota Certified Used Retailer in the metro Boston area, while Falmouth is one of the premier dealerships in the Cape Cod area.)

Both dealers knew that vehicle accessories sales over the last decade had exploded, and that the vast majority of their new-vehicle buyers were spending $1,000-plus, but that independent chains and mail order/websites were the ones cleaning up – not them. Both Acton and Falmouth were so determined to grab a fairer share of the market that they had been trying to sell accessories for years, but the process was not working as well as they had hoped: the inventory-carrying, set-up and display costs were too high – they weren’t engaging/converting their customers (with an inefficient process and limited product choices) – and the parts and service department fulfillment was unsatisfactory. Falmouth was only generating $9,000/month in revenue!

Then, in the last year, both dealerships embraced a revolutionary new accessories strategy that near-immediately had an astounding impact on their business: driving $50,000 a month in incremental, monthly revenue for Acton, and $36,000 for Falmouth, and that consistently converts 1 in 2 customers to making accessories purchases (up from just 1 in 10 before).

This case study will detail the core, shared components of their strategies and the shared best practices responsible for each dealer’s phenomenal, eye-opening results.

Accessories: A Huge Opportunity Dealers Have Been Unable to Leverage

First, let’s consider a few cold, hard facts about the booming accessories market, and how the opportunities – and lost dealer opportunities – are only intensifying:

Auto accessories are a $32 billion annual market

New-vehicle sales have plummeted 62.5% over the last decade, while the accessories market has seen explosive 37% growth over the same period.

92% of consumers are willing to buy auto accessories and over 60% would spend more than $1,000.

70% of new-car buyers personalize their vehicle within 30 days of purchase.

Accessories represent an average $1 million/year dealership opportunity not being captured.

Dealerships account for a paltry 10-17% of total accessory sales.

Acton and Falmouth Toyota’s Four-Point Solution:

So, how have Acton and Falmouth Toyota managed to crack the elusive ‘accessories conundrum,’ and seize (on average) an extra $600,000 a year in sales that most dealers leave languishing on the showroom floor? While individual dealership processes vary slightly, their shared successes are overwhelmingly attributable to both dealerships implementing FOUR crucial strategies/processes/tools:

The Right Timing…

Customer Visualization/Personalization Tools

100% Virtual Inventory System

Systems Integrating All Accessories Work Flow/Fulfillment – from Sales, to F&I, to Parts and Service Departments

I. Rich Visualization & Personalization:

Knowing that trying to sell a customer something they can’t actually see/imagine is a deeply un-engaging, ineffective proposition, both Acton and Falmouth Toyota adopted an online tool that allowed their customers to configure their exact vehicle with thousands of accessories – on the fly. Both dealerships report that salespeople find it very easy to offer customers an actually fun, interactive online tool that allows them to richly visualize a customized, ‘dream’ version of their car and that, subsequently, 100% of sales staff presents accessories consistently.

While there are a number of online accessories configurators available, both dealerships use izmocars’ Add-on-Auto (AOA) tool, and suggest adopting one that configures vehicles down to year, make, model, trim, interior and exterior color, etc. – while providing a menu-based format making it easy for customers to choose between immediate and monthly payments. And both dealerships stress that because interior accessories (like DVD players, navigation, dash kits, etc.) are huge profit-drivers, to make sure the tool features interior configuration capabilities.

Both dealerships report that simply adding the visualization/configuration component has had direct, dramatic impact on likelihood to buy. As Shawnee Wandless, Accessories Manager of Acton put it: “The online configurator provides a really easy, engaging way for all dealer staff to present accessories to customers. You sell products that you would think would not sell and to customers you would normally think wouldn’t end up purchasing products.”

II) The Right Timing:

In many ways “timing” is always on a dealership’s side with accessories, because psychologically, consumers are far more prone to spend at that exciting “sweet spot” moment of purchase. And independent surveys show that consumers would actually rather buy accessories in-dealership, than in the aftermarket. And as Wandless of Acton puts it: “because the financing can often be rolled into the new-vehicle financing, it makes it easier on the budget.”

Both dealerships report that it’s critical to adopt a process that shows the consumer how easily accessories can be added into their overall vehicle financing package, and that instantly pre-calculates that lower monthly payment for them – as well as providing the accessories’ upfront price. Acton reports that by using this menu-based financing model, “they can work $3,000 to $4,000 in accessories sales into one customer.”

And other aspects of accessories’ “timing” are key: both dealerships have found that the very best (and highest-converting) window to present accessories (by, ideally, letting the customer digitally configure their new vehicle), is the wait time just after the deal has been negotiated and they’re waiting for the F&I contracts.

III) Eliminate Physical Inventory – Go 100% Virtual:

Dealerships used to have two (unprofitable) choices: carry cumbersome, expensive, and, by nature, extremely limited physical inventory, or contract with 3rd-party resellers/installers. But as both Acton and Falmouth Toyota will attest, new 100%-Web-based inventory systems mean no more expensive accessories set-up costs, kiosks or showrooms – making it very easy for dealerships like Acton and Falmouth to finally succeed at accessories sales.

Providers like izmocars’ AOA, DealerTrack or GM’s Insignia all provide dealers with access to tens of thousands of accessories from large, updated OEM and aftermarket vendor databases. This provides unprecedented consumer choice at the dealership (that they used to be only able to get elsewhere). And because these systems instantly provide all the necessary information on accessories consumers have purchased (including SKU numbers), it’s made the parts departments very efficient in fulfilling the orders and selecting accessories.

And it’s only new Web-based systems (with visualization/configuration tools) that have made it possible to establish accessories in the Sales department, when it’s been confined to Fixed Ops.

“Accessories sales have been oddly ‘stuck’ in the Fixed Ops department,” noted Matt Murphy, General Manager of Falmouth Toyota. “Which makes little sense when you consider when they’re most likely to be bought: at the time of vehicle purchase. The AOA system has powerfully expanded the accessories opportunity throughout the store.”

IV) Relentlessly Integrate Workflow/All Departments:

Both Acton and Falmouth caution that a key reason dealerships have failed so spectacularly with accessories is they haven’t put in place cohesive, comprehensive processes and systems to ensure that the accessories sales, financing, parts ordering and installation process is seamlessly coordinated across all departments of the dealership - from front- to back-end. As Matt Murphy of Falmouth Toyota notes: “All your accessories efforts will quickly crash and burn if any player in the chain has a bad experience – whether it’s the customer, the sales department, management, parts, finance, or the service department.”

Putting in place such a system can ensure the accessories purchase doesn’t kink the financing (the customer only had $3,000 to spend without exceeding their credit limit, but bought $5,000) – that the parts manager can easily fulfill the order (and with online ordering there can be millions of pricing variables, so they need precise info down to SKU number) – and that the as-sold pricing of the accessory includes the proper installation hours and pricing to protect the service department. And when that customer calls about when their hood cover will be ready, any department (from sales to service) can see comments in the system and say with confidence exactly when installation will be ready.

When systems are fully coordinated, getting buy-in from each department is easy, because with this new process, sales, parts and service departments are all driving incremental business. And, as Wandless of Acton notes, “the best part of the system is it doesn’t affect the price of the car or F &I sales.” Salespeople like to sell, it’s money in their pocket, and they don’t have to be hassled again. And for the first time ever, Fixed Ops benefits from front-end selling: the front-end is working on behalf of the back-end, channeling high-gross parts and installation business their way as part of the new car sale. And accessories installation directly after the vehicle purchase makes it far more likely the customer will set their first service appointment at the dealership and become a repeat service customer. A big deal, considering dealership service traffic volumes are expected to decline 20% between 2009 and 2013, resulting in a 25% decrease in dealership service dollars.

“This new process really spreads the wealth, so it creates storewide buy-in,” noted Matt Murphy of Falmouth Toyota. “At our dealership, we see about 40% of profits go to parts, 20% to service and 40% to sales.”

Fully-Tracked Dealership Results:

Four simple processes/tools…but consider the jaw-dropping impact on both Acton and Falmouth Toyota’s bottom line:

Acton Toyota:

Accessories Revenue Gains: From less than $50,000 to over $100,000 monthly – a gain of 100%

Average accessories revenue-per-vehicle: $445

1 in 2 new-vehicle buyers now purchasing accessories

Falmouth Toyota:

Accessories Revenue Gains: From $9,000 to $45,000 in incremental business monthly – a gain of 400%

Average accessories revenue-per-vehicle: $395

1 in 2 new-vehicle buyers now purchasing accessories

Summary:

Dealers have been so discouraged by the obstacles accessories sales have presented in the past, that even though they are an absurdly logical fulfiller/provider for car buyers and owners, it’s as if this $32 billion opportunity can’t be properly visualized or digested. But the results dealers like Acton Toyota of Littleton and Falmouth are clocking - empowered by new, online tools and consistent, logical processes - reveal this could be a very profitable new Accessories Era for Dealerships…and getting into the game is simpler than ever.

Matt Murphy of Falmouth summed it up: “This new process has been an absolute breakthrough for us and has quickly made accessories one of our highest-margin profit center(s).”

Mike Martinez

izmocars

Chief Marketing Officer

3228

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Mike Martinez

izmocars

Jul 7, 2010

These guys just don’t seem to get it. It’s an unseemly fight that Insignia is picking with Dealer Track (see below), to be caught in a war for a difference of less than $30 PNUR. They’re missing the point because in this economy where every dollar counts, technology and tools are important but there’s much more money to be made with the right process in place.

Dealer’s using izmocars Add.On.Auto product, supported by our iConsult team of in-store consultants and process experts, realized an average PNUR of $455 in June, almost 3x that of Insignia, and more than 3x that of Dealer Track/Chrome.

But regardless whether or not you opt to use our tool, there are some key best practices that can really help:

Top Five Simple Tips to Rev Up Accessories Sales

Take advantage of any “wait time” after the purchase has been negotiated and financing is being arranged to let the customer digitally configure their new vehicle with accessories.
Find an online tool that can literally configure the exact vehicle (including the year, make, model, interior and exterior color) with accessories - on the fly - so the customer can immediately visual the enhancements.
Interior accessories (like DVD players, navigation, dash kits, etc…) are critical to accessories profitability, so make sure the tool you choose has interior as well as exterior visualization and configuration capabilities. 
Ease the financial pain by calculating the enhancements into the overall financing and monthly payment as well as providing the upfront price.

5. Ensure that the accessories sales, financing, and installation process is coordinated across the entire dealership, facilitating the efforts of everyone involved (customer, sales, F&I, service, parts, management). Your accessories sales efforts will crash and burn quickly if any one member of the value chain has a bad experience.

=====================================================================

From: Insignia [mailto:igmail@insigniagroup.com]
Sent: Wednesday, July 14, 2010 3:42 PM
Subject: [Spam] PNUR Higher with Insignia

<http://www.insigniagroup.com/marketing/email/2010Temp2/Rework/headerbar.png>
GM DEALERS USING INSIGNIA - AVG. PNUR $165 vs $137
July 14, 2010:

Analysis of 2010 PNUR data reveal higher accessories sales from GM Dealers using Insignia.

<http://www.insigniagroup.com/marketing/email/2010Temp2/Rework/Illustration7.jpg>

Bottom line: dealers using Insignia sell more GM Accessories. Despite nearly a year of GM forcing the use of Chrome, 14 of the 20 highest volume accessories dealers still use Insignia - including the highest volume and PNUR dealer.

The PNUR data from January to May 2010 reflects the realities that dealers using Insignia have a higher PNUR ($165 average) than dealers not using Insignia ($137 average).

No other system offers the features, service, value and track record of success like Insignia.

"Pay for what you get - get what you pay for," says David Perry, parts manager of Suttle Motors, (PNUR $241). "From what I have seen, the Chrome product leaves a lot to be desired. GM should concentrate on building vehicles and producing parts - not pushing software."

According to Steve Meadows, parts manager of Serra Buick-Pontiac-GMC-Cadillac (PNUR $166): “We signed up for Chrome and kept our Insignia site to compare them. After using the Chrome system, we decided to stay with Insignia because it offers more and is easier to use.”

In fact, dealers like Jon Hall Chevrolet - highest car volume dealer in Florida (PNUR $173) - stayed with Insignia. Parts manager, Scott Bowser, says: "Our accessories sales are up 37% for the year with a 45% increase in May."

Are your sales numbers up? You can do more. We will show you how.

Dealers that want to sell accessories and make it a part of their overall dealership success use Insignia. CALL US 888-579-4458 ext. 3.

THE STANDARD IN ACCESSORIES SALES

In 2008, Insignia launched the only accessories selling guarantee. It was simple: use our product with our process and we would guarantee accessories profits.

Since that time, Insignia has trained countless dealerships and dealer groups to achieve success and profits.

Insignia offers the "whole" package:

*    Fully researched, accurate and timely GM Accessory data - Let us prove it.
*    Easy to use and understand interface for customers and sales/service staff.
*    Complete process support through our system that set the standard and is still unmatched by the competition.
*    REAL people; REAL experienced Customer Support with nearly a DECADE of working with GM dealers.
*    REAL in-store accessories sales process training - stop trying to learn a new program. Use what is easiest and proven to work.
*    Dealership web site integration and support - perfect with your Cobalt site!
*    360-degree vehicle configurator views - soon to include interiors!
*    Feature-rich fixed operations support and order processing - since 2005.
*    DMS integration to ADP Systems.
*    Kiosk and flat screen offerings for merchandising and presentation.

Mike Martinez

izmocars

Chief Marketing Officer

1858

No Comments

Mike Martinez

izmocars

Jun 6, 2010

It’s hard to believe, but true: dealerships are leaving almost a million dollars per store, on average, per year in accessories sales literally on the showroom floor. At a time when dealership profits are being squeezed like never before, one of the highest margin opportunities available – vehicle accessories sales - simply isn’t being leveraged in most dealerships.

The data shows that the accessories market has grown dramatically over the past years and it appears that even with (or perhaps because of) the current economic environment consumers are more receptive than ever to enhancing their vehicle both inside and out with aftermarket accessory products. Furthermore the data shows that consumers would prefer to purchase accessories from their dealership. So why are dealerships only capturing about 10 – 17% of the market, while aftermarket chains and web sites are cleaning up?

We think it truly is a case of timing (and that little thing called process) being everything: In a recent national study of 120-plus dealerships, we found that one in two new vehicle buyers will purchase accessories if they are properly presented at the time of purchase with a rich visualization of the potential enhancements to the car they are purchasing. What did this mean in terms of revenue for these dealers? The average dealership in the study generated $400-$600 in accessory-revenue-per-vehicle-sold, up from $80-$120 per vehicle sold before the new process was implemented.

It’s right there in the numbers: With the right tools and process, dealerships can literally increase their accessories revenue per vehicle sold by 500%.

The fact is that dealerships actually have powerful, built-in advantages to ‘own’ far more of the accessories market than they do today. Psychologically, consumers are far more likely to spend on accessories at that exciting “sweet spot” moment of purchase. And with consumers being much more careful with their dollars, using a process that shows the consumer how easily the cost of the accessories can be added into their monthly payment makes for a much more consumer-friendly environment. But, with dealership resources strained and so much energy spent on the actual sale and the ongoing challenges of financing in today’s market – not to mention the literally millions of accessory variables and pricing combinations – it’s no wonder that the accessories opportunity slips through the cracks. But with online tools like our AOA product available on the market making the process easier, we believe that dealerships are well-positioned to ramp up their aftermarket profits.

In our study, dealerships used our AOA product to generate the $500-$1,000 in additional revenue, per vehicle sold. But whether or not you opt to use our tool there are some key best practices that can really help you cut a bigger slice of that pie:

Key best practices?

Take advantage of any “wait time” after the purchase has been negotiated and financing is being arranged to let the customer digitally configure their new vehicle with accessories.

Find an online tool that can literally configure the exact vehicle (including the year, make, model, interior and exterior color) with the accessories on the fly so the customer can immediately visual the enhancements.

Interior accessories (like DVD players, navigation, dash kits, etc…) are critical to your accessories profitability, so make sure the tool you choose has interior as well as exterior visualization capabilities.
Ease the financial pain by calculating the enhancements into the overall financing and monthly payment as well as providing the upfront price.

Ensure that the accessories sales, financing, and installation process is coordinated across the entire dealership, facilitating the efforts of everyone involved (customer, sales, F&I, service, parts, management). Your accessories sales efforts will crash and burn quickly if any one member of the value chain has a bad experience.

Mike Martinez

izmocars

Chief Marketing Officer

1735

No Comments

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