Increasing Profit Ability In 2008

The December 24,2007 issue of Powersports Business displayed a ‘Dealer Financial Snapshot’ on page 8 that compared same store sales from January through October to the previous year period.  The data reflected over 130 metric and Harley-Davidson dealers across the nation and represented over $1 billion in sales.  The overall result was that 47% of dealers were up from last year, and 53% were down.

This information should leave many dealers asking this question: ‘What are the 47% of dealers whose sales are increasing doing that the 53% of dealers whose sales are decreasing aren’t doing?’  Some would say that the 47% of dealers have a better location and that they’re in a better market.  While your location is extremely important, there are dealers in depressed markets that consistently out-perform 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 that 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 didn’t purchase.  Also use it to keep track of customer information.

• The average closing ratio for a dealer is still 15% to 20%, so 80% to 85% 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 in 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% per day after they leave the dealership, so follow-up within 24 hours.

• According to the Motorcycle Industry Council (MIC), only 3% of people in America own a motorcycle.  This means that a very small percentage of the 80% to 85% of customers that leave your dealership without purchasing are going to another dealer.  The vast majority are spending billions of dollars outside of the Powersports Industry.  Our true competition is other industries, a new truck, house, flat screen TV, bedroom suit, 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 website updated, and follow-up promptly with internet leads.

• Finally, set goals, write them down and keep track of them.  The very 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.

Leave a Comment Cancel reply