This month, I will delve into the state of affairs in new unit sales operations. The focus will be on key performance indicators and best industry practices.
First, let’s look at some of the overall sales department numbers through July. Obviously, these figures would include new and pre-owned sales data:
As you can see from the change in door swings, floor traffic has been improving for our dealers. Although the national norm is only up 4 percent, the top members of this particular group (TBOC) reported an impressive 22 percent increase over last YTD.
An inexpensive door swing counter can provide a multitude of information about your business. It allows you to track the response to your traffic-building advertising. It also allows you to track the effects of seasonality and weather situations. Cost per door swing not only helps you visualize what it takes to get customers in the door, it can help guide advertising and promotion decisions. If you don’t have them already, install a door swing counter at every entrance. Yes, you will have a lot of kids who run in and out, and your staff goes in and out of the store all day. This averages out over time. Don’t fret about it — just install the counters and start tracking the numbers.
From the sales department’s perspective, these devices enable you to measure the sales staff’s use of the traffic log as a percent of door swings. Write-ups and closes can also be measured as a percent of door swings. This can tell you something about the seriousness of the shoppers you are getting. For example, you may start seeing less lookers and more buyers per door swing. This may affect some of your sales staff incentives or promotion strategies.
While we saw door swings going up, the Group Norm and the National Norm both showed less working contacts from their log entries — except for the TBOC (top 5 percent of this group). They reported a much higher incidence of working contacts. I would suspect that they are working harder to improve this with their sales teams. It shows that it is not only important to log your contacts, it is vital to follow-up with them. This is how you increase sales — especially during slow periods. A salesperson who is not face-to-face with a customer should be on the phone talking to a prospect.
The PVS comparisons are very useful as they can be applied to any dealership of any size — the same holds true for the gross profit per employee data. Make good use of this valuable information!
New Sales Dept. Performance
Let’s look at some of the specific New Sales Department information:
This is very interesting. The group and national norm numbers show that new unit sales contributes over 30 percent to the overall store gross profit. However, The TBOC number is under 14 percent. Why is that? While it could be that the TBOC dealers are deeply discounting their new units, the gross profit margin numbers don’t show that. In fact, they are getting higher margins than their group average or the dealers making up the national norm. They are also getting more turns out of their new unit inventory. The conclusion is that they must be focusing their efforts on other areas. Although not shown here, numbers from the other departments actually prove that they are much stronger in pre-owned, F&I and P&A. Why? It is because these areas offer larger potential margins than new sales. TBOC dealers see things differently. While new sales are important to every dealer, we can certainly learn something from this.
Sorry for the cliché, but unit sales are not rocket science. The basics of powersports sales have been around for many years. Of late, it has become much more important to apply them properly. In doing on-site assessments with struggling dealers, I find the same issues over and over. Even many of the larger dealers I have visited are not implementing or enforcing the “101” processes that they know they should be using. These are the basics. They should not be considered optional.
Utilize a traffic log system: electronic or manual. Your sales manager has to be held accountable to enforce its use with your sales team.
Develop and implement a prospecting system. Follow-up on log entries and seek additional prospects from various sources (this would be an article in itself).
Require the use of a structured, customer-satisfaction sales process. Your sales manager has to be on the floor reinforcing, coaching and training on this process every day.
Require a completed worksheet for every potential sales deal. Implement a desking process where someone is held accountable for holding profit margins and approving every deal.
Create a “customer path” process where the customer has the opportunity to experience the offerings of every department.
Ensure that 100 percent of the purchasers are turned over to F&I.
Develop and implement a delivery process. Your customer should feel like this was a special occasion. They should leave with essential riding gear and basic information about safety, unit operation, maintenance, accessories and options.
Implement a satisfaction follow-up process with every customer. Contact them within 72 hours of the delivery. This is the best time to ask them for referrals.
Monitor and measure the basic stats – log entries, write-ups percentages, closing percentages, delivery percentages. Hold the sales manager accountable.
Consider whole-store training on the structured selling process. If an employee is going to talk to a customer, they should be able to establish rapport, uncover wants and needs and help fulfill those wants and needs – even if it is just guiding them to another department.
I hope this article has been useful to you. If you are not applying the basic sales procedures, I strongly encourage you to develop and implement them. As always, I am available should you need assistance.
The goal for these articles is to get you thinking about the performance you could be achieving in your dealership. If you have questions, or would like to discuss the help we can provide, please contact me.
Steve Jones, GSA senior projects manager, outlines dealership best business practices to boost margins, increase profitability and retain employees. His monthly column recaps critical measurements used by the leading 20-group dealers. GSA is recognized as the industry’s #1 authority on dealer profitability.
Access to the new Voyager 5 data reporting and analysis system is available for any dealership for nominal fee.