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0 to 20 in 90 it worth it?



0 to 20 in 90 days... is it worth it?

Let's play with some math, a retail dealership averaging $2,500.00 gross profit per sale wants to achieve more sales in a given month (let's just use 20 for the number). Okay 20 sales per month at $2,500.00 gross profit per sale will realize $50,000.00 in gross profit or an additional $600,000.00 every 12 months. You would think that would get their attention right and it does, but how to get these 20 additional sales?

Usually the answer we get from many managers and directors is; get more leads, crank up the social media, prospect more, or maybe even hire more sales people. What we usually do not hear is ‘fine tune our current process and improve the customer experience'.  After interviewing many customers from several well-known dealer groups, my team discovered that the dealership that won the customer over was not, in most cases, the first dealership the customer contacted. In many cases the customer had been semi actively looking for a vehicle for 60 to 90 days and their first point of contact just got bored in waiting and failed to follow up.

The top 5 reasons the customer sought out another dealership were as follows:

  • The dealership in question did not provide answers to my questions
  • The sales person only reached out to me to lock down an appointment and did not provide any useful information, so it started to feel like I was being stalked.
  • I could not get confirmation on a price on my trade-in, confirmation on financing options, and was informed I would have to be in the dealership to get this information
  • They just stopped checking in with me after a few days
  • Would not return my phone call or email if I was not interested in setting an appointment

Now we have all have heard this before and are told by the experts how important it is to follow up with the prospect / customer  and provide information to them in a interesting format such video messages and the like. So the above responses should not come as a surprise and yet it does to the many owners and general managers we talk with. So when the first time we offered a challenge to increase a dealership's sales volume by 20 additional sales using the same number of leads and traffic the dealership was currently getting, you can image the look of our team received. Now of course 20 additional sales per month for a dealership that is already producing 300 to 400 sales per month is not a big deal, but for a dealership averaging 80 to 100 sales per month; now that is a different story.

So how do we do it and is it worth it? To answer that question, let's first look at what we are discussing. This is not just a linear process such as setting more appointments or closing more customers.  There are many factors such as the quality of the lead, the prospect's / customer's placement in their buying cycle, a dealership's current status within the community, its overall current market share, and of course the dealership's management team's ability to work a sales process.

If we are to do a deep dive into all of these factors and revamp a sales process the next question would be; is it worth it?  Because, increasing a dealership's volume by 20% to 25% does not work in a vacuum and will affect other aspects of the sales and marketing. We can rationalize that done correctly we will witness a higher return due to the various steps in the sale that are positively changed and in turn, this will result in an increase in production across the board.  Below is just one example of this change that has recently taken place with a dealership averaging 80 sales per month:


Previous Numbers:
Acquired additional 100 Internet leads into the system
45 are qualified sales leads (45% average)
45 qualified sales leads with a 30% closing ratio
13.5 sales, let's say 13 sales or again a 30% closing ratio
13 sales x $2,500.00 (average sales profit) = $32,500.00


Current Numbers:
Acquired additional 100 more Internet leads into the system
65 area qualified sales leads, an 65% average (a 20% increase
65 qualified sales leads with a 50% closing ratio
32.5 sales, let's say 32 sales or again a 50% closing ratio
32 sales x $2,500.00 (average sales profit) = $80,000.000


Play with the math and as you do, notice something that may be missing.  It's the number of days it takes to close a customer. Currently our industry states the average timeline is 2 to 3 months from research to the final purchase. This is an average of 60 to 90 day buying cycle. What if we can convert this to 30 to 45 days? If we can do this, the numbers of potential increased sales is even more impressive. We have discovered the more transparent, the more helpful we are in assisting the consumer in their research, the faster we can get them to pull the trigger or shorten the buying cycle.

So let's wrap this up. The challenge made was to take a dealership that was averaging 80 sales per month and fine tune their processes so they would start to realize 20 additional sales per month within 90 days. Moving forward, if the dealership stayed faithful to the process that dealership would realize 20 additional sales every month turning them into a 100 sales per month dealership.

I wonder if this is a challenge worth experiencing the pain it takes when you are making a change to a process or a culture within a dealership?

26 apr 18 @ 9:19 am edt          Comments

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