An Open Letter To Dealers

Jeff Williams

It’s Spring Training Season for Dealers in Canada

Hello Canadian Dealers, and welcome to Spring Training Season

Since mid 2020, Canadian dealers have experienced 2 years of unprecedented profitability. Despite sales volumes dropping by as much as 30 per cent, many dealers have managed to more than double their profits by lowering costs, managing inventory, and maintaining margins. The ongoing inventory shortage combined with a booming economy has created a market situation with at least two buyers for every available vehicle. (SEE ALTERNATIVE AT THE END)

But this profit boom is not going to last, and good dealers know it. 

In the last 45 days, I have met and talked with more than two dozen CEOs of dealer groups and distributors in North America, Asia Pacific, and Europe. They’re all asking the following four questions: 

  1. How do we prepare for inventory bouncing back and forcing us to attack the market with sales teams who have developed bad habits from two years of taking orders?
  2. How do we prepare for the potential recession that would cause marketing costs to skyrocket?
  3. How do we prepare for OEMs increasing volume targets while reducing our floorplan and marketing allowance because they think we’ve made too much money?
  4. How do we prepare for the used car market cooling off? 

And here’s a fifth question most dealers AREN’T asking but should be:

5. What happened to the hundreds of customers in my database who I didn’t sell to the last two years when our volume dropped?

Why is this important? Because each of you has hundreds of customers who have defected—buying vehicles from other brands over the last two years. Plus, I bet that most of you have hundreds more customers in your databases who have placed orders on a Tesla, Lucid, Rivian, VINFAST, Fisker, etc. These customers have already mentally and financially defected. It’s just a matter of time.

The dealers who know they need to prepare—and NOW—are right, because:

  1. Inventory levels are starting to bounce back.
  2. Marketing costs will skyrocket because of the faltering economy.
  3. OEMs are talking about increasing dealers’ sales targets.
  4. Used vehicle prices have already dropped.
  5. Dealers’ databases are shrinking.

On top of this, legacy dealers will really begin to feel the squeeze from new EV brands in 2023. While your sales decrease, Tesla’s sales continue to grow every year. This year, Elon Musk’s brand is on track to outsell BMW in North America, and his company’s sales are expected to grow another 50 per cent in 2023. 

And Tesla is just the tip of the iceberg, because 2023 will bring an onslaught of new product from startups such Rivian, Lucid, Polestar, Fisker, and VINFAST. These brands will be showcased in auto magazines, in shopping malls, on social media, and on the streets. Meanwhile, because these startups have embraced the direct-to-consumer sales model and because they don’t report their sales numbers monthly, it will be hard for dealers to determine just how big a share of the market is being stolen from them. Instead of seeing big showrooms pop up next door, they’ll just see former customers driving by in someone else’s product. 

Dealers, that’s why Spring Training Season starts now, and that’s why it’s imperative for you to do two things to get your teams in shape for the 18 months ahead.

First, you need to develop an Appointment Culture. Each member of your sales team needs to come to work with two appointments every day: one with a new customer and one with a past customer. Those of you who can do this will become financially bulletproof.

Second, you need to develop a comprehensive retention plan for your customer portfolios. Your sales teams need to communicate with EVERY customer in your databases, not just those they think are ready to buy. Most importantly, they need to pay attention to customers coming into your service drive EVERY day, because half of them bought from the competition. With the right retention plan, you can secure your portfolio customers.

While both of these strategies may sound common sense, less than 10% of dealers have even one appointment per sales team member per day, and only 10% of Canadian dealers generate more than 30% of their monthly sales from past customers. Sales from service customers are even lower – less than 4% of the average Canadian dealers monthly sales come from these brand loyal service customers.

Yes, it will take a disciplined focus by your sales team on daily appointments, and by dealership leadership on portfolio management to continue the success and profit of the last 2 years. But the time to prepare is NOW, before inventory comes back, sales targets rise, the economy falters and the used car market drops…and before the new direct to consumer EV brands hit the market in force. 

If each member of your sales team comes to work with TWO appointments, you’re financially bulletproof

One more thought. 

Think of the sales potential when each member of your sales team comes to work with 2 appointments each day. Think of the sales potential when you have a renewal plan for every customer in your portfolio, including the customers coming into the service drive each day – you will be financially bulletproof, you will secure your customer portfolio and your team will be prepared for the future.

Don’t waste your sales team’s potential and don’t waste the potential of your customer portfolio…instead Unleash your Potential.

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Jeff Williams
Author

ABOUT

Jeff Williams is the CEO of Absolute Results and has dedicated the last 20+ years to helping dealerships, OEM’s, and sales people across the globe rethink how they sell cars. His three greatest passions are his family, his business, and his charity work.