ADP Lightspeed: Cut Waste in Sales

Publish Date: 
Sep 30, 2009
By Arlo Redwine

ADP LIGHTSPEED continued its “Find Hidden Cash” webinar series today with a tutorial on cutting costs in the sales department.

Hal Ethington, a senior analyst with the firm, hosted the webinar. Below is a summary of his suggestions, most of which regard the LightspeedNXT dealer management system. Note that our summary is not complete, and our wording and presentation differ from Ethington’s. His own essay on the topic can be read here. Sign up here for a firsthand experience of the next webinar, which is on saving money through LightspeedNXT in your marketing efforts.

The main points brought up during today's webinar:

Use actual cash value (ACV) for trade-ins and sales commissions. When customers demand more money for their trade-in than it’s worth, dealers often comply, recouping the loss by inflating the price of the unit they’re selling. Problem is, some dealers do this but don’t account for it. Salespeople are paid their commissions based on a margin calculated using the inflated sales price. Ethington said he once discovered a dealer paying $60,000 extra per year in commissions. LightspeedNXT users can avoid this problem by entering into the system both the trade-in allowance and the ACV.

Calculating ACVs, Ethington said, can be complicated. Dealers must take into account repair costs, price-book values, auction values and what’s going on in their area’s market.

Ethington said another mistake dealers make is trying to recoup an unfair trade-in allowance by passing on the cost when pricing the unit to resell. This often just leads to units that are priced out of the market.

Make sure that all costs are in the deal prior to finalizing. Only parts employees, not technicians, should pull parts for units, and they must make sure that the costs are added to the deal. Repair order amounts should also usually be added before finalizing, though Ethington said that due to dealer requests, Lightspeed changed its software so that deals could be finalized with an outstanding RO. Dealers can then go back, build a report, and add in the labor-and-parts costs to calculate margins and commissions. But to save time, Ethington says this should be done sparingly.

Dealers that allow customers to prepay for parts by adding a “Parts Paid in Deal” line to the deal sometimes don’t track when the customer reaches his or her limit. Ethington once discovered a store that just lumped all such receivable accounts together. In doing so it didn’t realize that customers had gotten away with $100,000 in free parts. Each customer should have a monitored account.

Ethington stressed that dealers must have multiple people auditing their end-of-day reports, sales journals and sales-by-category summaries. Employees occasionally enter absurd numbers. (Continued)