In my workshop I give dealers a lot of information fully realizing they can’t or won’t do it all. And no doubt, I give away a lot of free information in my newsletters, which I’m ok with, as I’m a believer it all comes back around.
Either my ego or my wisdom tells me that for each item I can convince a dealer to do, their business will improve by at least 10%. So, if a dealer does 10 things I put on the table then their business could actually double from their current production.
I’m going to share 10 relatively simple things I’ve picked from the many I present in my workshops for you to dwell on and for you to consider doing.
Let’s pretend you are now selling 100 used cars a month. Doing all 10 suggested processes will get you to 200. If you’re not selling 100 just make the adjustment based on 10% for each process you are willing to commit to on a consistent basis. Here you go:
1. Study The Data– Be a student of the game. Use Auto Count’s Reports each month to confirm what’s selling and what’s not. Use vAuto’s stocking tool to determine the fastest moving units to stock. Combine those reports with Auto Trader’s reports and you will have a competitive edge. Make sure you keep these lists at the tower/desk so when one comes to the door to be appraised you step up and make a deal on a car that you are going to be able to retail in short order. The more units you step up on the more cars you sell at retail. Take a hard look at Auction Genius to help you find the cars you need in the most efficient manner possible.
2. Press Your Cost Down-This is probably the simplest and most effective thing you can do to improve your business. Know what your average cost per unit is every day and do what you can to reduce it. If you are at $15,000 today, do what you can to get it to $14,500 and so on. There is no magical number. It’s about keeping the less expensive units and making sure the more expensive ones turn fast.
3. Know Your ROI-Every deal should be tracked for ROI. As you are working a deal you not only need to know how much gross you have, but what the ROI is. Go to FixROI.com and plug in three numbers. Your cost, your gross, and the number of days the unit has been in stock. Bingo, you have your ROI. Shoot for 110 to 120 ROI. By knowing your ROI you will know what’s working and what’s not.
4. Attack the 10 Most Expensive Units in Stock-Make a list each day of your 10 most expensive units in stock. With one exception make sure they are priced really, really right. The one exception is if you know you always make money on a unit that’s on the list then use some common sense, don’t give it away. Consider putting bonus money on those 10 units regardless of the number of days they have been in stock. Sooner rather than later. Most dealers bonus their sales staff when the units have aged. Do it early, you will be much better off. Lastly, make sure the service manager gets that list each day and if one of those units happens to be in the service department the service manager has to understand they must get it out of the shop in a hurry because it’s one of your 10 most expensive units. You have lots and lots at risk with these units.
5. Life Cycle Management-Read this statement then read it again. There is nothing, absolutely nothing, you can do that will improve all aspects of your used car business more than understanding my process of "Life Cycle Management." Think Fast, Be Fast-You are working with a depreciating asset. Everything, including decisions on what to keep and not keep has to be done fast. Pull the trigger quickly on units that you are suspicious about. Don’t hang on to them hoping and wishing something good is going to happen. Early losses are far better than late losses. If you are paying attention and recognizing problem units early in the life cycle then you will have a lot less need to take units to the auction and lose money on them at 45
or 60 days. There are certain "Trigger Points" you need to focus on during your daily "Trade Walk." Knowing how to use EWR (Early Warning Radar) pays big dividends.
6. Lot Walk-Nothing new here. If you do a lot walk once a week with all the members of your sales and management team then without a doubt you will sell more units. And, you’re going to see a lot of things you’re not going to like. Do you remember doing "Phone POPS?" You know, it’s the deal where they place mystery phone calls to your sales department then play the results back to you. They are never, never, never very good. Makes you just want to scream. So, initially you will have the same feeling when you do the lot walk. But, the bottom line on the lot walk is it gets your entire team to know and understand your used car inventory. The more knowledge they have the more they sell.
7. Daily Inventory Pricing-The market changes every day and so should your pricing. Sometimes you can ask more, sometimes you can ask less. You cannot and will not achieve maximum results by changing prices every 10 to 20 days. Pricing takes intense management. It’s not something you do when you get around to it. You would be far better off if someone priced the car who is not in charge of appraising and buying them.
8. Analyze Your Wholesale Pieces-Look at the numbers. How many units are you wholesaling each month? Go over each unit. How many of them could you have retailed if you opened your mind a bit either relative to pricing and/or the type of product you’re willing to keep? Are they early wholesale units or late wholesale units? You need to know the difference between the two. If you have lots of units being wholesaled late (at the end of the cycle) the odds are you are either stocking the wrong stuff or pricing them wrong. If you are wholesaling a lot of units early in the cycle it’s probably because someone on your staff doesn’t want to "mess" with certain types of cars. The probability is there may be a problem getting them through service in a timely manner or the used car department feels ripped off by your service department. The good news in in either case it’s a fixable problem. You just have to want to fix it.
9. Photo Booth-and 40 pictures per car. If there is one thing I would do if I opened a dealership today it would be to do whatever it takes to have a photo booth. If you haven’t accepted the fact that the Internet is your new showroom then you are doomed. You cannot and will not be able to remain competitive until you get with it. It’s the biggest no brainer since the invention of the wheel.
10. SETS & SUBSETS-simply put, SETS is an easy way to set up a price leader with several other vehicles for the customer to pick from when they show up. SETS & SUBSETS are designed to drive traffic and increase volume. You can do as few as two cars in a SET, but never more than five. It’s not as complicated as it first appears. Don’t over think this.
Here’s a bonus one for you. It’s called Save-a Deal-It’s the basic of all basics. From the first day I got in the business we did a save-a-deal meeting every morning. Back it those days we didn’t call it that. I learned that term back in the 80s from my good friend Mike Casey with JM&A. Call it whatever you want, but it’s an easy way to increase your business another 10%. Simply put, you go through all your pending deals and ups from previous days. You will always find that two heads, three heads, etc. are better than one.
Suppose I’m wrong? Maybe you won’t hit 110% increase in sales. Maybe you will only get half that? Not so bad! It takes 21 days to create a new habit. How many of these are you willing to focus on for the next 21 days? Today is day one. Go do it.
That’s all I’m going to say. Tommy Gibbs