Remember the days of “stack high and watch em fly,” writing stocking orders by the square foot and making so much money that inventory management was a concept reserved for big box stores? Well, before I lose you to a stroll down memory lane of when you counted your piles of cash and lit your Cuban cigar with $100 bill, I need you back for a moment.
In order to be more profitable in today’s business environment we have to sweat the small stuff. There are many examples all around you of profit dollars tied up or on the table because we didn’t sweat the small stuff enough. Here are just a few examples:
Inventory — The backbone of our existence, but also one of the most difficult to manage. Even if you are a service-only shop, you still manage a small inventory. Let’s say your turns are good, you restock so you never have a hole, your floorplan does not devour your profit, you rotate stale inventory, etc. There will still be items that accumulate as damaged, non-returnable, errors, out of date and items we had to take the hit on to keep a good customer happy. So do we just absorb them into inventory and chalk it up to the cost of doing business? Heck no! Get rid of these items as soon as possible. They are no longer profit-generating good inventory, and you need to cut the cord. You are bleeding with these and your job is to stop the bleeding right away and focus on what can make you money. Putting them on the “never do” shelf is not the answer. You need to put these on eBay/Craigslist/Amazon on a closed-ended listing that will sell in a defined period and get back some of that cash you have tied up. Maybe a clearance table in the store with a “best offer” jar where customers can submit their best offer within a defined timeline? The idea is to move them, not just list them for sale.
Selling — Congratulations! You got the sale. But did you get all the residual sales that are in the water around it just waiting to be pulled on the boat too? Relative to the initial sale these may be small items, but most likely they have the best profit margins and, combined together, can add extra dollars to the bottom line. These are all profit dollars at this point. You have already paid on advertising to get this customer in the door, already spent time building trust and rapport, already sold them something…now is the time to stay focused while you have them in front of you and get those crucial add-on sales that will determine your level of profitability at the end of the year. I’ve heard the example of fast food workers always asking, “You want fries with that?” Always suggest additional relevant items to enhance your customers experience on that motorcycle. Add-on product placement is key to this step. Here are some examples:
- Parts counter — no fog cloths, mini-spray cleaner cans, fuel stabilizer, mini-chain lube
- Sales desk — exhausts, undertails, flush mount signals, seats, grips
- Service counter — full synthetic oils, tire pressure gauges, wheel cleaner
As a salesperson in the unit sales, parts or service departments, you are the frontline of the dealership and in the best role to execute this strategy. The important part is that you are aware. You will find areas for improvement and free up some of the low hanging dollars that are ripe for the picking. I would love to see some comments below of how you have found some additional profit dollars.
Napoleon Tetreault is a sales representative with Tucker Rocky, an aftermarket PG&A distributor in the powersports industry. He works with powersports retailers on merchandising, profitability and management of the parts department as well as the education of dealership personnel. His experience includes being the GM of the largest indoor motocross facility in the US, owner/operator of a regional distribution company and current role with Tucker Rocky. He can be reached at:
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