May 15, 2006 – Taking aim at discounters

A year-long effort to modernize an Alabama powersports dealer has turned its focus on ways to combat area discounters, mainly through finance and insurance practices.
“As long as discounters are knocking on your customer’s door, offering low, low prices, they have to be confronted,” said Larry Koch, a consultant involved in 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 advising S&W owner Jim Wilson Jr. to use an online finance and insurance system.
“Jim Jr. wasn’t enthusiastic about some of our short-term suggestions, like staying open in the evening to catch more traffic. But it’s really critical that he build up his F&I department — quickly,” Koch said.
“This is just too important of a profit area to pass on.”
Companies working on the year-long project said Wilson did not want to hire or train a full-time, dedicated finance person. Attempts at reaching Wilson were unsuccessful.
Koch is advising Wilson to work with Julia McCarthy, president of Motorcycle Management Consulting Services, to improve his F&I offerings.
“With our service, we put a kiosk on the dealer’s floor,” McCarthy said. “The kiosk has a computer hookup linked to our off-site, California-based staff of experienced F&I professionals. These people are trained to walk the customer through the finance process.”
The consulting services’ staff work on loan approvals, introduce customers to a range of F&I products and handle all the necessary paperwork. The entire process takes 30 minutes or less.
“The benefits to Jim Jr. are that he won’t have to hire and train an F&I professional,” McCarthy said. “It will let his salespeople spend more time selling.”
McCarthy said their kiosk beta tests show that a dealer like S&W can increase its F&I penetration better than 50 percent, with target profits of $400 to $900 per loan, and an average increase in sales of 25 percent.
A complete breakdown of the potential costs of the program were not available, but typically its $6,000 to set up a kiosk.
On another technology front, Neil Frame from MIC Systems continues to work with S&W employees on the new business management system.
“My people are calling S&W’s people every day, just to make sure that any questions or problems they may have, get answered and resolved,” Frame said.
MIC Systems also is setting up a daily operating control system (DOC) that is designed to give Wilson a handle on daily sales and profit activity.
Every day, S&W’s whole goods, parts and service activity will be broken out by brand and vehicle type, measured against a percentage of monthly top and bottom line forecast.
“This simple, basic function in our software will let Jim Jr. have a daily snapshot of how well his dealership is running,” Frame said.
It also could help the dealership reach monthly objectives. For example, if it’s the middle of the month and the DOC shows S&W is running at 30 percent of forecasted ATV sales, Wilson can create incentives to boost sales activity in this area to help them hit their selling objectives.

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