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Business Management

Maximize Dealership Performance

The only way to make the most of your business is to have very good people complimenting a very good, pre-existing process.

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At 212 degrees, water boils. Boiling water creates steam, and steam can move a train across the country. The average steam-powered passenger locomotive runs between 65 and 80 mph. Question: How fast can it go at 211 degrees? Answer: 0 mph. It doesn’t just go a little slower, it simply doesn’t go at all. This may be my favorite concept in business.

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In a 20-club about 10 years ago, we had a member who was consistently putting up big numbers in F&I. Her dealership had PUS (per unit sold — this is all units, not just per vehicle financed) that ran north of $2,300 on a regular basis. This was attained when the nation’s average was just above $1,000 PUS. For a variety of reasons, she had three different F&I managers in the seat in the same year. It was a high-volume dealership, and all three people were brand-new to F&I. During that time, her F&I numbers never dipped below $1,800 PUS. When I asked her how she maintained such a high PUS with that kind of turnover, her response was, “A freakin’ monkey can get $1,800!” You can imagine the response in the room particularly when some of the other attendees had average numbers at best.

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She had figured out a way to get $1,800 PUS from every contract that went across the desk, no matter the talent level in the chair. It was 100 percent process-driven, to which we had a significant conversation about talent versus process. Her process started with the planting of seeds for F&I products on the floor, long before an offer had come in. The deal was then penciled to set up F&I for success. Prior to signing the papers, the customer was taken to the service department, where a technician, not a typical salesperson, was plugging the priority maintenance plan. By the time the customer got back to the F&I office, the system had taken that deal to a $1,800 PUS average, and the employee never said one word. The talent of the individual could escalate that number a few hundred bucks, taking it up to the store’s comfortable average of $2,300 PUS.

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We’ve watched many stores get to 211 degrees with talent alone. We’ve also seen plenty of them get to 211 solely with process, lacking a single dynamic individual in the entire store. If you’re dependent on the person to get the store to 211, what happens when the person leaves? Profits are lost, inventories pile up, and departments crumble until that next person comes to pick up the pieces. A store running at 211 with process and the right person; however, is prime to explode in a good way. That right person outperforms the benchmarks with profits and inventory turns. When that person leaves — and they ultimately will — the department then returns to a very good process, running comfortably at 211 degrees until the next talent is found.

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Examples of good process include:

  • Compliance with a traffic log
  • Customer contact and follow-up in sales
  • Tracking of traffic log to transaction ratios
  • Turnover from sales to F&I
  • Menu selling in F&I
  • Customer path or “ticket to ride” coming out of F&I
  • Tracking upsells and add-ons in PG&A
  • Open to buy systems tracking inventory turns
  • Green lane work in service
  • Inspect and report in service
  • Filing warranty claims
  • Pre-delivery inspections
  • Customer follow-up from service work

The only way to perform at 212 degrees is to have very good people complimenting a very good, pre-existing process. Remember that it’s much easier to put a person into an existing process than to attempt to drive a process into a person.  

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Sam was brought on board to Lemco as a sales and F&I trainer in 2001, where he quickly became the director of training and ultimately became a partner in the buyout of 2005. He went solo in early 2009 and now moderates seven 20-Clubs, and also consults and conducts in-dealership training. He continues to do contract work with Harley-Davidson, Triumph, Polaris, Club Car and Arctic Cat as well.

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