A recent study of over 30,000 retail transactions at several hundred Canadian dealerships confirms the existence of this opportunity gap. On average, 49 per cent of a dealer’s entire portfolio consists of these service-only customers (who previously purchased from a competitor). Yet the conversion rate of these service customers is so low that in any given month they represent less than eight per cent of a dealer’s total sales volume.
The solution isn’t a new program or another marketing campaign; it’s a different mindset. It’s about shifting from transactional to portfolio thinking. Portfolio thinkers look at each customer and each vehicle’s future sales potential, with the goal of selling each customer three vehicles, and selling each vehicle three times.
A “two-car deal” happens every time a dealer takes a trade, and the second deal—the sale of the trade—is often the more profitable of the two.
Here’s why: First, the dealer can usually buy the trade for a favourable price. Unlike when dealers compete with each other to buy cars at auctions, dealers only have to justify a price to the consumer when acquiring a trade. Second, they create the opportunity of additional high-margin service revenue when they recondition the vehicle in-house to be sold on the used-car lot. Third, a used car taken on trade with a story (about the previous owner, the service history, etc.) typically sells faster and at a greater profit than a used car secured from an auction or a third party.
Before the pandemic, most dealers would define an appointment as a planned showroom visit customers made to view a specific product with a sales professional they had already met, either in the showroom, over the phone, or digitally.
Traditionally, sales teams have engaged their customers with a service promise, giving them just enough information to entice them into making an appointment at the showroom.
Trainers, being a good person in any service industry, but especially professional automotive sales, has at its foundation the goal of adding real value to those we serve. This applies first to adding real value to the sales teams we lead, and then of course, to their customers, who are ultimately our customers.
Working Hard isn’t about how many hours we work. We are in the retail car business, of course we’re going to work long hours. It’s what we are going to work hard at doing. How we’ll prioritize and spend our time, that’s what differentiates a Sales Leader.
For our Sales Leadership discussions on Working Hard, we are going to focus on Four Operational Priorities. We’ll review and reflect on each one so we are clear on the what and the why.