Every dealer is looking to improve showroom closing ratios. Closing just 2% more deals will add major dollars to the bottom line.
How do you do that? Well, it means work, coupled with a consistently performed sales process. Add sales process technology and you've increased your odds.
“A sales process is a roadmap that has to be traveled through the dealership; if you put checks and balances along the way the process is repeatable,” says Skip Kinford, president of 5square.com. The company markets integrated sales process solutions for car dealerships.
“A sales process is the way we do things every day without fail,” says Alan Ram, president of Proactive Training Solutions in Scottsdale, AZ.
“Some dealerships always do well, regardless of market conditions, and those are the dealerships that have such a process in place that they follow every day, all day, with every customer,” he says.
A structured sales process that is performed consistently can generate more income for the dealership. For tips on building a sales process for your dealership, see the sidebar on page 54.
For Brook Buckmaster, general manager at San Leandro Honda, San Leandro, CA, the dealership's sales process delivers better results.
“We know the processes are working through tracking,” he says. “We're seeing a 10% increase in units sold, 15% in profits, 20% in accessory sales, 10% in CSI and a 25% in ‘be-backs.’”
The technology from 5square.com helps the Honda dealership better track traffic and what happens to that traffic, hold sales and their managers accountable for outcomes and streamlines the deal-making process so staff can focus on customer communications and relationships.
What are the numbers? Steve Emery, a NADA dealership management consultant, notes how a consistent sales process can deliver dollars. Consider an average closing rate of 20% for a dealership selling 100 new units a month at an average front and back gross of $1,750.
At this closing rate, the dealership would have had to seen 500 ups. That means 400 potential buyers walked. If an improved sales process can help close just 2% more of those lost ups, you'll put eight more sales per month on the board.
At our average front and back gross, that's another $168,000 in extra gross per year.
“The public companies and large dealer groups have figured this out,” says Kinford. “These dealerships do have process automation because the process in those organizations needs to be repeatable across many, many stores.
“Compare that experience with small group and single-point stores and the publics are getting the upper hand,” he says. “They're getting higher be-back rates with automated follow up and they're rolling those customers over to the back end were there is more money to be made than in the front of the store.”
Sales-process technology enables Buckmaster's store to be more creative in how it manages customers.
“For example, our newest process to enhance was to combine the Internet process with the retail process,” he says. “In the past we could never do this in an efficient way without loosing control of our retail department.
“An Internet salesperson has access to more information than a retail salesperson and this was a major roadblock. Too much information for most retail salespeople means a lower closing ratio, which is unacceptable.
“With 5square.com we have not only successfully combined the two processes, but also kept control of our retail department.
“Now instead of the retail department having down times and standing around waiting for a customer, they are efficiently and accurately working Internet leads and setting appointments in a structured environment.”
As a result, the store has doubled its Internet lead count per month.
Process also quantifies what too often is merely observed. Kinford explains: “We can't think showroom traffic is up just because we observe what appear to be more people through the showroom.
“We need quantifiable facts: x number of ups, this many Internet leads, these actual closing percentages. Quantifiable facts help you make measurable-based decisions, not gut-level ones.”
Yet processes and technology alone are not sufficient for improving sales results.
A sales process, however structured, requires the backing and support of a strong dealer or general manager who can overcome the resistance that naturally comes when new ideas are put forth.
“When we talk about processes, it boils down to the strength of the person implementing the process,” says Ram. “I ask, ‘Who runs this place?’ because so often middle managers and staff balk. “The person spearheading the process improvements needs to establish consequences for not sticking with the new game plan.”
The downside to not having a structured selling process means you lose, says Buckmaster. “Stores like ours will eat your lunch and take your customers, and you may not even know it.”
Jim Leman is a former dealership salesman and veteran auto writer.
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