The Dec. 24, 2007, issue of Powersports Business displayed a “Dealer Financial Snapshot” on page 8 that compared same store sales data from January-October to the previous year period.
The data came from metric and Harley-Davidson dealers across the nation and represented more than $1 billion in sales. The overall result was that 47 percent of dealers were up from last year, and 53 percent were down.
This information should leave many dealers asking this question: “What are the 47 percent of dealers whose sales are increasing doing that the 53 percent of dealers whose sales are decreasing not doing?”
Some would say the 47 percent of dealers have a better location, and they’re in a better market. While your location is extremely important, there are dealers in depressed markets that consistently outperform dealers with five-star locations in a premium market.
Here are a few tips to increase your profit ability for 2008:
Have timely and accurate financial statements every month. You can’t improve what you’re not tracking, so keep your eyes on the key numbers that drive your dealership’s sales.
Utilize a traffic log. Just having a traffic log isn’t enough, it must be utilized. Make sure every potential customer is being logged accurately. Later you can sit down with each of your salespeople to discuss what could have been done differently to get to the next step in the sales process with customers that did not purchase. Also use the traffic log to keep track of customer information.
The average closing ratio for a dealer is still 15-20 percent, so 80-85 percent of your potential customers are walking out the door without purchasing. These customers are hot leads that we cannot just let go.
In previous years, many dealers have not enforced follow-up with unsold customers. In 2008 this could be the difference of you being in the red or the black. Track each of your salespeople’s out-bound dials to unsold customers. Keep in mind that a potential customer’s interest in your product drops 25 percent per day after they leave the dealership, so follow-up within 24 hours.
According to the Motorcycle Industry Council, only 3 percent of people in the United States own a motorcycle. This means that a very small percentage of the 80-85 percent of customers that leave your dealership without purchasing are going to another dealer. The vast majority are spending billions of dollars outside the powersports industry. Our true competition is other industries: a new truck, house, flat-screen TV, new furniture or even college funds, investments and vacations … the list goes on and on.
Implement a training system. Often times, the front and face of a dealership is a new hire that lacks experience. Invest in training your team and increasing their selling skills, product knowledge and telephone handling skills, so they can do more with the customers you already have. You will receive a generous return on your investment.
The Internet is becoming increasingly important. More and more customers turn to the Web for information before coming in to the dealership. Keep your Web site updated, and follow-up promptly with Internet leads.
Finally, set goals, write them down and keep track of them. The act of setting goals and writing them down has been proven to help attain those goals. What is your goal for total sales and gross profit? What is the goal for how many customers your salespeople should log each day? Make sure your goals are realistic and achievable. Make a plan that will get you there and follow your plan.
When Powersports Business displays the “Dealer Financial Snapshot” that compares this year’s sales to last year’s sales, will your sales have increased or decreased?
Your dealership’s profit ability isn’t entirely dependent upon the market; your ability to adapt and change also affects your financial snapshot for 2008.
About this column
Series goal: Each Profit Ability column will focus on one key dealership measurable and offer tips on improving that measurable.
This edition: Overall profitability
National average: Overall same store sales were down nearly 4 percent in 2007, according to data provided by ADP Lightspeed.
Tory Hornsby, general manager of Dealership University, was drawn to the powersports industry more than 10 years ago when he turned his passion for motorcycles into a career. Hornsby worked in nearly every position in the dealership before becoming a general manager. He welcomes your e-mail: thornsby@dealershipuniversity.com.
