Deciding how much discounting should happen in the parts department is like trying to decide who’s going to win the next World Series. There are a dozen different possibilities and all of them sound somewhat reasonable in theory.
So let’s stick to the absolutes: Regardless of whether we discount or how much we discount, we need to make it easy for the shopper to buy and easy for us to discern the price they paid.
Easy buying and easy reporting of discounts should be our ultimate goals. Unfortunately, that’s not always the case.
Certainly the buying part can be challenging. When’s the last time you walked into a store, selected something, took it to the register with a 20 percent coupon in hand, and then waited 10 minutes for the parts person to find somebody who could approve the coupon in their system?
Why did you wait? It’s not uncommon for discounts to be approved only by the parts manager or the general manager. As it happened, the former was at lunch and the latter was on the phone. So you waited. And waited.
This scenario wouldn’t happen in some of your dealerships because you let everybody in your parts department discount items. Everybody – including the gal who just started last week and the guy who treats discounts like candy at Halloween.
This is precisely why some dealer management platforms are now letting dealerships customize an employee’s discount limit based on that employee. The guy who treats discounts like Halloween candy may be extremely popular with your customers, so we’ll allow him up to 10 percent discounting. We’ll still make it easy for the customer to buy – no waiting on the parts manager or general manager – but let’s reel in Mr. Scary Discounts Parts Guy. At the same time, allow the No. 2 person in the parts department greater leeway – perhaps discounts up to 15 percent – to ensure our best customers and riding group members are handled swiftly and accurately.
More importantly, let’s ensure we can identify how much discounting has occurred at the parts counter.
There are a number of us who only look at the parts department budget as a whole. If they’re meeting weekly or monthly profit goals, we bypass the closer inspection of the discounting level that’s occurring. Why stick our noses into something that’s working, right?
Wrong!
A goal should be obtainable but not viewed as an economic peak. You don’t reach the summit, then hope you can hang on. Keep climbing! Keeping a sharp eye on discounting will certainly help that ascent.
The good news is there is now a dealer management platform called DX1 that allows you to set up discount reporting once, and then have it delivered to your in-box as often as you would like. Want to check out the extent of parts department discounting every week? No problem. Daily? It will be in your in-box by closing time each and every day.
Just don’t make the mistake a dealer friend of ours made and assume discounting is not happening. If you allow it, it will happen – and probably more than you think.
Our dealer friend failed to examine the level of discounting in the parts department, believing a prior discussion on discounting had solved what had been a problem.
“I told these guys not to discount,” he told me.
“Mind if we check to see if they’re following through?” I asked.
We checked.
Eighty percent of the parts department invoices had discounts. Eighty percent!
That’s $2,500 in discounts in a few weeks’ time, and they were on pace to hit $50,000 for a year.
An expensive lesson, but an important one. Make it easy for your customers to buy, but make sure you’re constantly checking to see what they paid.
CJ Pedler is director of customer support for Dominion Powersports Solutions, the provider of DX1, the industry’s only end-to-end business management platform. Pedler has spent more than 15 years setting up
and providing training for dealer management systems. He can be reached at: [email protected].
