Leaving Money On The Table: 5 Ways Your Dealership Is Missing Revenue
With the economy continuing to thrive and car sales doing well, many dealerships are riding high and focusing on moving cars. Unfortunately, many dealership managers have an overfocus on simply selling cars, and are missing important opportunities to maximize revenue per vehicle and generate real competitive advantage with advanced selling, bundling, and positioning strategies.
Frankly, new car dealerships will not survive much longer only selling cars. The market is becoming too competitive and outside pressure from online car sales companies, OEM subscription services, and other disruptive factors will continue to depress margins. To stay competitive and see continued growth, dealerships must find ways to stand out from the pack and make more money per car sale. In this post, you’ll find 5 powerful techniques for doing just that.
#1) Offer F&I Products Online. In today’s digital-first world, practically all retail sales are moving online and this includes automotive F&I products. Your dealership’s website should be equipped to sell popular F&I products online, including useful information about each product, the ability to contact a salesperson, and the ability to pay online. Keep in mind that mobile compatibility for all the above features is also key.
#2) Have a Post-Sale Unsold F&I Product Follow-Up. Customers will often decline F&I products during the sales process as a knee-jerk reaction. These same customers may in fact actually want some of these products once they own the car, experience a pride of ownership and are no longer in a high-pressure sales environment. Following up after the sale to offer added products can be a powerful source of added profit for each new car sold and is a very efficient business process to develop for your dealership. If you’re not following up, you’re leaving money on the table!
#3) Preloading Low-Cost Items in Order to Stand Out from Competition. Realistically, new car dealers are all basically selling the same core product, and as such must work hard to develop a persuasive “Why buy from us?” story to tell customers. One great addition to this story is preloading inexpensive features such as dealer-owned prepaid maintenance and engine for life programs. Offering these added items helps to make the sale initially and helps to increase service retention and make more money in the long term as well.
#4) Selling Parts Online. Too many dealerships focus their online marketing efforts just on selling cars. Your dealership’s website should also have useful content and information about your parts and services department and should actually sell common parts online through an ecommerce feature. Modern website software makes adding ecommerce much easier than it has been in the past and starting with selling online for parts will help your dealership adopt a long-term ecommerce mentality, in addition to generating short-term revenue from online sales.
#5) Service Advisor Training to Increase Upsell and Reduce One Line-Item Repair Orders. Effective managers must treat the service department as a profit center and must train service advisors to also be salesmen! Many dealerships today are allowing customers to walk away with just a one-line repair order, without even offering the customer added services. Training your team to build rapport with customers and perform a multi-point inspection and active walkaround on every car that comes in should be a mandatory management strategy to make more money from your parts and service department.
With these 5 strategies in place, your dealership should be better positioned to make more profit and generate growth and competitive advantage with every customer that walks through the door. Failing to capitalize on these profit opportunities will ultimately leave your dealership struggling to keep the doors open, even if you’re moving cars, because you’re just not making enough profit per vehicle.
