Improving Bottom Line In Competitive Marketplace
Our fiercely competitive marketplace makes holding a desirable profit margin on the front of any deal difficult at best. Margins have dwindled due to “employee pricing” campaigns from the manufacturer, the Internet and the dealership down the block that is willing to roll any vehicle at cost.
While competition promotes our highest efforts, it also lowers prices, resulting in reduced profit.
Think about your current sales process. How much time does it take for the customer to get into the F&I office — 10 minutes? 15 minutes? Longer? Are the customers left alone? (Yes, I know customers should never be left alone; the question on deck is are they?)
The typical sales process in the typical dealership finds sales personnel busy getting the vehicle ready for delivery and the F&I manager occupied with data entry, leaving the customer all alone to reconsider the buying decision. The longer it takes to complete the F&I process, the more anxious the customer becomes and the less they are likely to purchase. And there goes the profit.
Remember When? Retro Fit Your Vision
Once upon a time, vehicles were delivered without heaters or radios. Tinted windows, stripes, and mag wheels were added in ways that meant additional gross profit for the dealership. In other words, the sales department provided customizing service.
The sales personnel demonstrated options and asked what the customer wanted to add to the vehicle to make it special, to give it their personal signature. The customer’s eyes lit up at the phrase “customize their new vehicle”.
In these “once upon a times,” dealerships were every bit as competitive as they are today. The difference is that the sales department viewed “add-on’s” as opportunities rather than “adds-to” the cost of sales.
Little changes can yield big gains. Using the critical minutes between the sale and the F&I process to introduce items to customize the product selection can generate huge profits for the dealership by giving customers one-stop shopping for items they will most likely buy somewhere at sometime for their vehicle. Pin-striping, door-edge guards and exterior protective coatings can protect the exterior of the vehicle while adding about $600 profit to the transaction.
Center on Customization
A major motorcycle brand features a Chrome Customization Department in its stores. Do you have a Customizing Center in your dealership?
Customers like to make their vehicles different. They like to place a personal touch on their stuff. Young customers like “bling.” A local tire shop displays a “Wall of Bling,” with photos of vehicles sporting special tires and wheels. The photos showcase chrome, which makes the green in the cash drawers grow as store personnel invest time to demonstrate the chrome effect on wheels.
While the term “bling” may not be your cup of tea, it is popular with young adults, many of whom have money to purchase vehicles and accessories. Do you have your fair share of the future?
It pays to have the wheels located where your customers can reach out and touch them. Touch is a powerful tool in creating value. Customers like the smooth feel of chrome, they want to handle the remotes and see the results when they press touch screens for directional programs and climate-control technology.
Before your customers enter the F&I process, give them a tour of the customizing center. Let them play with the different entertainment media available. Put a “Save the Parents” sign on DVD players, and point it out to your customers who have children.
Encourage them to press buttons, feel surfaces and visualize ownership of something special to them. If they can “see” it, they will say yes to it. They will find the funds for the extras. They are purchasing these extras from someone, why not from you?
Aftermarket Makeover
Many dealerships have an Aftermarket Desk, which typically presents the factory warranty, security systems and protective coatings, while the F&I manager is loading the deal into the computer. A fundamental change in the aftermarket function can bring the change you need to bottom-line production.
1. Change the name and create a Customizing Center. When the deal is secured, the sales department introduces the customer to the Customizing Center. A Chrome Specialist/Customizing Specialist will present a list of items available for that particular vehicle and show the display of special wheels.
2. Make customization lists — one for automobiles, one for SUVs and another for trucks. List the different accessories that can be added to each type of vehicle and use different colored paper for each type of vehicle.
If you utilize this technique, be sure to take advantage of the “power to ask.” For example:
“Congratulations on the purchase of your new pick-up truck! Many of our customers wish to customize their new purchase. Here is a list of factory-approved accessories that will enhance your ownership and increase the resale value. Please select the items you would like to add your vehicle. As always, you can rest assured installation will be completed by a factory-trained and authorized technician. Quality is our No. 1 mission. How do you wish to handle the balance? Cash, check, credit card or in the finance balance?”
Remember, though, how you say what you say is paramount in asking for the business. Rather than asking a closed question: Do you want to?, instead ask questions that provide choices: How do you wish to customize your purchase?; Which wheels would you like to change to?; Which bed liner would you like to have?
3. Present accessory catalogs. Enthusiasm counts here. Don’t just hand the customer a picture book. Build the picture and a sense of urgency to “own” it with a price break for orders placed now.
4. Offer options in payment plans, but it’s imperative that you verify the ability to secure funding of each item with your lenders.
When you present various options, always make sure you answer this question: What does the customization add to the customer’s monthly payments? For example, there is a motor-sport dealership that features a mannequin dressed in leathers. An accompanying sign indicates the cost of $1,000 for the leather protection, as well as how much that $1,000 would add to the monthly payment, with all the APR and term information on the tag.
Implement the same thinking with wheels and rims. Identify the selling price and the amount per month in the payments for the vehicle. And again, help the customer identify how they want to handle the balance, whether cash, check, credit card or in the balance.
5. Extend credit card choices. Offer 90 days same-as-cash. Utilize the parts and service department’s on-the-spot credit card application process. Upon approval, a credit card number is issued, along with the amount of extended credit. This opportunity exists for the promotion of parts and service work. Why not utilize it for accessory sales? Opportunity is knocking, so welcome it.
Prospect Past Customers
Sometimes, adding to the bottom line requires just simple creativity. One way is to send announcements to previous customers to generate interest in the new customizing center.
Utilize “Water Closet” Advertising
Boldness can also work! Upscale hotels and restaurants utilize the power of suggestion with “water closet” advertising. It’s all about turning the restroom into a money-making department for the business with well-designed picture ads in attractive frames at eye level. Those blank walls and backs of doors are filled with opportunities.
If “water closet” ads for leather handbags and furs can increase sales, why not also for customized tires and rims, DVDs or bed liners? But make sure you keep your ads in good repair and up-to-date. Change them