Three Steps to Maximizing Dealer Profitability

Post-recession Americans are drastically different than they were in 2008.

People not only have tightened their belts, but they also have changed their retail relationships. And today’s consumers are focused on keeping their savings intact.

Companies are concerned with fortifying their business to survive future economic challenges. Apple and Google achieved economic success by providing more value through enhanced service offerings, such as cloud computing.

These services make it easier for customers to upgrade mobile technology that, in turn, make back-ups and syncing more efficient. 

Let’s stop and think about the retail automotive industry for a second.

Whether the economy is good or bad, many consumers still will be in the market for a car. However, their needs may change.

For example, during the last recession, we saw the trend of consumers purchasing cars that last longer and offer better gas mileage. Those consumers didn’t stop buying. But they changed what they bought and how often they bought it. They also became less brand-loyal.

The search for more value now extends beyond the car itself and to the dealership experience. With so many dealerships to choose from and less brand loyalty, dealers have a greater chance of increasing store traffic by focusing on value propositions.

The first step to fortify value proposition is to go back to the basics.

Hire top performers that consistently deliver results on the sales floor and in the finance and insurance office.

Place those top performers in roles where they will thrive and train them to maximize their strengths.

Focus on customer service, not just the sale. The best salespeople see themselves as advisers. They listen to the customer and respectfully address their needs.

Position the dealership as providing value beyond low interest rates. This ties into customer service and the F&I office. Consumers are paying more attention to their return on investment just like businesses.

Provide products and service that reflect their need to keep their savings intact.

Elementary, right? Don’t kid yourself. You might be surprised at how little time gets spent on the basics of right people, right position and right training.

Next, re-evaluate the value you provide in the F&I office. Regularly review how many deals your sales team closes in a month, product penetration and web traffic. Strong F&I products do much more than sell. They also differentiate your dealership in the market, build customer relationships and are designed with the customer experience in mind.

In evaluating your mix of F&I products, think beyond mere product penetration to how products enhance gross dealership profit by creating a customer experience that fosters long-term relationships and repeat sales.

Lastly, pay attention to your online presence. A DealerTrack study says the average consumer now physically visits 1.2 dealerships before buying. This represents a paradigm shift in how car consumers shop.

Gone are the days of spending weekends visiting one dealership after another before a final decision is reached. Now, the bulk of research is conducted online.

With most customers browsing dealership websites and customer review sites before walking into a showroom, it’s vital that your dealership maintains a healthy reputation.

A good online reputation relies on the active management of customer review sites. While gaining positive reviews is the immediate goal, the second most-important aspect is responding to negative reviews.

Negative reviews don’t necessarily have to give dealerships a negative image. By addressing the customer’s concern and taking the conversation offline, dealerships can turn a negative review into a positive experience.

People expect to see occasional negative online reviews, but they pay the most attention to how the dealership handles them.

It also is important to optimize your social media assets. Facebook and Twitter are the biggest platforms for direct consumer interaction.

Big and small companies from all industries utilize these sites to inform the public about new products, receive feedback and promote products.

A well-developed social-media presence is much more than creating a page and posting content. It involves engaging the audience with relevant content, encouraging discussions and responding to inquiries and concerns.

Your online presence, F&I product mix and commitment to customer service demonstrate how your dealership provides value.

Online, you have the chance to provide excellent customer service, develop lasting relationships and increase long-term profit.

With strategic F&I products, you maximize sales and profitability while offering customers valuable vehicle protection.

By hiring and cultivating top performers, you close more sales and increase customer retention.

John Stephens is senior vice president-Dealer Services at EFG Companies. He is a former dealership general sales manager. He is at 972-445-8910 and [email protected].