Written by Sara Hey, Bob Clements International
As I take a step back and look at 2018, I view it as the year of the “healthy” dealer. We have seen a major shift over the last 12 months for both dealers and manufacturers on understanding that the best way for a dealership to be healthy is not through quantity of unit, but from the quality of the experience that they are offering to their customers.
As we have worked with dealers, we have encouraged them to make sure the mix of revenue was one that would sustain them regardless of what the economy would generate for them. For a trailer dealer to have a healthy mix, they need to typically generate 60% of their gross revenue through whole-goods, 25% from parts, and 15% from service.
While health for some dealers may mean getting their revenue mix right, health for other dealers we have worked with looks like taking a step back from their dealership and not letting their business consume their lives. Being a healthy dealer may look a little different for each individual, but I want to share a few specific examples of dealers for our NATDA Dealer Success Groups who have embraced this mentality in 2018.
We believe that service is the back bone of the dealership. We have worked with one dealership who began to understand their service department’s value not only to their business, but also to the community. This year, they raised their posted labor rate by $10 per billable hour. This dealership has two technicians and they were able to net an additional $32,000 and implement a compensation plan for their technicians. This has not only allowed them to end up in a healthier place as they approach the end of the year, but has also created a situation where their technicians are excited and motivated to be part of their dealership.
One dealership has had an increased focus on the importance of upselling and cross-selling in their parts department. They, like many other dealers, have embraced the concept of having their parts team upsell (offering a better-quality item) and cross-sell (suggesting another item that will complement what they are purchasing) at every parts transaction. They have found that this has increased their parts sales by 30% over last year and has created a better experience for customers.
For most dealers, whole-goods sales have been strong this year. With the improving economy, sales have followed. While there are a few things that have been thrown into the whole-goods game, such as tariffs and increased delivery costs, it doesn’t seem like it has had a dramatic impact on the customers. We have one trailer dealer who has simply sent a hand written thank you note for anyone who bought from his dealership over the last year. It cost him very little and he received a lot of customers who were blown away by the small act. His one small act of writing a thank you note has continued to put him in a healthy place with a group of loyal customers.
Most dealers we work with who have a desire to move to a place of health in their dealership aren’t doing anything big. They are making some minor changes in one department at a time. They have found that these minor changes continue to compound, creating a dealership they can run and not a dealership that runs them.