Richard Wise

0 to 20 in 90 Days

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 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?

After interviewing many customers who purchased from several well-known dealer groups, my team discovered that the dealerships 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 with them. Below are the top 5 responses to why the customer actively sought out another dealership. 

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 calls or emails if I was not interested in setting an appointment

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% close 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 prospect into the system
65 are qualified sales leads, an 65% average (a 20% increase)
65 qualifited sales leads with a 50% close ratio
32.5 sales, let's say 32 sales or again a 50% closing ratio
32 sales x $2,500.00 (average sales profit) = $80,000.00 

Take a moment and play with the math and as you do, notice something that is missing.  It's the number of days it takes to close a customer. Currently our industry states a prospect / customer starts the average timeline from research to purchase is around 2 to 3 months. This is an average of 60 to 90 days. 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.

Okay 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 they stayed faithful to the process they 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 one makes a change to a process? Hopefully it is and if so, let's talk.