May 25, 2009: Analyzing a dealership’s suspect sales practice

These articles recap some of the opportunities uncovered by Gart Sutton & Associates’ powersports specialists during consulting visits.
These are followed by recommended actions that address the issues. Our goal is to provide ideas to help improve your dealership.
Dealership details
This dealership was a new start-up for Yamaha in 2005. The store recently added a second major product line. They have a new facility with freeway exposure and reasonable access. They have a good reputation for customer service and maintain good CSI scores.
They are located in a “bedroom community” less than 20 miles from a major population center with a market area of more than
1.5 million. Their particular county is considered one of the most affluent counties in the state. By all accounts, this area should easily support good growth for a dealership that carries name-brand metric product lines.
In the first part of the series on this dealership, GSA consultants provided an analysis of the overall dealership. This second part examines the dealership’s sales and F&I departments.
Analysis
Jim, the sales manager, says he has more than 10 years of experience with a major auto dealer as a salesperson and sales manager. He also says he has received a lot of management training. He worked a year for another motorcycle dealer, and came to this dealership two years ago.
I am skeptical of his automotive sales manager experience. While he is applying most of the common sales department processes, he is not setting vital sales and prospecting goals and driving the prospecting process. His technique of closing all sales personally is unusual and would be impossible in a dealership with significant volume.
He does not do a good job of building value and holding good margins. The commission-based salespeople are not happy that they do not control the final negotiation process. In addition, the customer does not get the opportunity to form a lasting relationship with the salesperson. The salespeople need to be trained and coached on closing techniques and provided with acceptable negotiation guidelines.
The sales manager is not turning all sales to F&I. He should be provided with F&I training so he fully understands the process and can act as a back-up for this position.
He appears to possess some skills for this position. However, he does not consider the overall success of the business ahead of his own department. The owner will have to counsel him to develop this vision.
Deliveries have been handled by the service manager, preventing him from handling some of his manager duties. The sales department was supplied with a delivery checklist so salespeople could deliver their own units. Service will provide walk-around training until they are up to speed.
Marie, the F&I manager, worked in auto dealerships in F&I for 12 years. She was working 70-80 hours a week and wanted to change the workload and stress. She has been with this dealership for eight months and loves her job.
Marie appears to possess all the necessary skills for this position. She is a good find, and should bring the PVS numbers up quickly. This should become a very profitable part of this business. Her relationship with the sales manager needs to be monitored closely. The lack of sales turnovers to F&I has to cease.
Sales Action Items
Salespeople should structure and close their own deals. Continue to desk every deal to ensure profitability.
Provide ongoing coaching, counseling and training to ensure compliance with the structured selling process.
Provide the salespeople with written goals for sales, prospect calls and appointments.
Ensure 100 percent of the customers are turned over to the F&I office.
Require salespeople to use the delivery checklist. Work with service to provide delivery training.
Ensure all customers are contacted within 72 hours of purchasing a unit. Ask for referrals.
Ensure all accessories included or discounted with the unit sale are properly billed to sales at retail.
Work with P&A to develop theme and lifestyle displays on the showroom floor.
Work with all departments to establish a customer path process where unit purchasers visit P&A and service prior to final F&I.
F&I Action Items
Implement an electronic menu presentation system for F&I.
Acquire all possible F&I products.
Present 100 percent of the F&I products to 100 percent of the customers.
Set up Outlook to trigger reminders to contact unit purchasers who did not buy service contracts prior to expiration of their OE warranties. Try to sell them service contracts.