April 24, 2006 – Measuring change’s impact

The ultimate payoff of a year-long project to modernize Jim Wilson Jr.’s Alabama dealership is, in the dealer’s mind, a more efficient operation that in turn will generate more sales.
But what if sales could be boosted even more by growing staff, creating more employee incentive plans and extending store hours?
Those are some of the proposals that Larry Koch has extended as part of the Turning Technology Into Sales & Profits project, a collaborative effort by five companies to introduce technology and best practices into S&W, an established dealership in Jasper, Ala.
Koch, president of Larry Koch Consulting and founder of the Minneapolis-based, $30 million Tousley Motorsports, is the consultant for the year-long project. “We could help Jim Jr. increase S&W’s sales by 30 percent in the next year,” Koch said.
But Wilson has candidly expressed doubts about growing his dealership, saying he’s content with the size of the business.
“If I’ve got to stay here hours at a time more and I’ve got to be jumping through a lot of hoops to get a few more sales, it’s probably not worth it to me,” he said in a recent phone interview. “But what I want to do is make S&W more efficient. And I know beyond a shadow of a doubt we’re not. I know we’re not efficient in our parts department, in our service department for sure. Even our sales department is lacking in certain areas. And that’s what I’m hoping this system is going to do for me.”
Wilson also said he has not ruled out any of Koch’s suggestions and, in fact, could see implementing some of them. Here are Koch’s suggestions:

  • Parts Department: Koch said S&W has to cut down on the number of old parts it has —some date back to 1961. Koch suggests a two-part plan. “First, create an incentive program for the parts manager to increase parts inventory turns,” he said. “Second, program into the BMS (business management system) all parts’ aging history. If the parts manager hasn’t gotten rid of them by their 18-month birthday, the BMS automatically puts them out on their new Web site or eBay.”
  • Service Department: Koch suggests creating a monthly incentive program for the service manager that would focus on a host of factors, including efficiency, customer satisfaction and revenue generation. “All three need to be balanced, otherwise you’ll have unhappy customers,” Koch said. “At Tousley, I put together a plan like this and ended up paying my people a significant increase. The accountant howled about it. My response to the bean counter was ‘don’t look at what we paid the service people, look at the revenue and customer satisfaction that they delivered for the dealership.’ ”
  • F&I Department: “This is an area that S&W absolutely must develop because most dealers find it to be their most profitable department,” Koch said. “Right now, S&W doesn’t really have in-house F&I expertise. If we develop it internally, we’ll lose time, revenue and profits that could be quickly generated.” Koch suggests S&W hire an outside F&I expert and bring them in on a 100 percent commission basis. “Then (Wilson) can sit back and reap the benefits without hiring a new person and training them,” he said.
  • Sales Department: S&W currently closes at 5 or 6 p.m. on weekdays. Koch suggests extending hours until 8 or 9 p.m. “I know Jim Jr. has reservations about this. Jasper, Ala., isn’t a major metro area with strong, nighttime downtown traffic,” Koch said. “But I do know that the Jasper Wal-Mart is open until late evenings. This tells me folks will come out to buy, if you give them a good reason.”
    Koch also suggests S&W increase its sales staff by three or four to handle the evening traffic. “Go out and hire local high school and college coaches,” he said. “I’ve found from experience that these people are natural salespeople, and usually well regarded in the community. And, they always need additional money to supplement their incomes.”
    Koch also believes S&W should act fast on these proposals during the crucial spring season.
    “And I know we’re asking him to change the way he’s done business for years,” he said. “But, if you want big results, you’re gonna feel some pain.”
    But Wilson is wary of such changes taking time away from his other business ventures — he also sells real estate — and from spending time with his family and friends.
    “I’m not interested in the growth and I’m not interested in the pain. I’ve been doing this 35 years,” Wilson said. “It’s not that I’m content. Lord knows when you feel like you’re standing still, you’re probably moving backwards. But then again, bigger’s not always better. More efficient is better and that’s what I want to do.”

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