Popular clothing retailer Gap announced the planned closing of 189 U.S. locations by the end of 2013, primarily due to the cut back on consumer spending during the down economy. It’s no secret the downturn in the market has created a significant thinning of the herd with powersports dealers as well. It seems like just yesterday our industry experienced 14 years of straight growth, 13 of which were double-digit. In those times, many dealers could afford sloppiness, casualness, and even downright wastefulness in their marketing and training initiatives.
This sloth never was smart, but was once affordable. Those days are long gone.
Renowned economic forecaster and bestselling author Harry Dent Jr. just rolled out his latest book, “The Great Crash Ahead.” In this release, Dent predicts that, although Black Friday 2011 showed an increase over last year, a forthcoming second dip in the market is probable with greater severity than the first. The basis of his prediction combines multiple factors, including the current state of real estate, banking, demographics, and psychographics, which all build a logical basis to substantiate his prediction.
Why would I share this seemingly negative perspective at the beginning of a new year? To force you to take a detailed look at your dealership’s marketing and training for 2012. I want to encourage you to be resourceful this year. I challenge you to turn over every rock in search of the answers to how the most successful dealers in the nation are making real profit — despite the market, the weather or the economy.
With the potential for a continued reduction in consumer demand, the ongoing attrition of some dealers is inevitable. But those with a granular attention to detail, and heavy focus on training and marketing, will have the opportunity for a record-setting year due to reduced competition and increased performance.
There are really only four ways to grow your dealership’s business.
1. Increase the number of new prospects generated.
2. Improve the frequency of visits from existing customers.
3. Boost the conversion rate of prospects to customers.
4. Raise the average value of each customer.
Now let’s look at each of these a little closer. No. 1: How can you increase your new prospects generated? There are two great ways to generate more prospects.
I’ll give you a hint on the first one: It’s online.
Google Adwords (SEM), Google Places Optimization (GPO), Search Engine Optimization (SEO), Online Reputation Management (ORM), and Social Media Marketing (SMM) are all requirements for optimal performance in the new economy, and are all key components of your strategy for driving online traffic. If you don’t already have a clear understanding on each of these topics, you must attend Dealer Expo in February.
The second great strategy to acquire new prospects is to rent sourced lists. These lists can be targeted to go after people in your market area, who ride what you sell, but have never been in your dealership before. You can also source lists of your competitor’s customers, thereby turning them into your customers.
No. 2. One way, if not the best way, to improve the frequency of visits from existing customers is to host events. Monthly events are a great excuse to market to your customers on a consistent basis, which increases traffic, creates loyalty, and makes your customers immune to offers from would-be competitors.
Have you created your evergreen monthly marketing calendar for 2012? Each month there is a holiday you can hitch your wagon to so your message is interesting, relevant, and compelling. “What Santa Forgot,” “New Year,” “Mardi Gras,” “Bike Week,” and “Spring Has Sprung” are all great themes to consider for priming your pump.
No. 3 is conversion rate, also known as closing ratio. If you have 400 showroom guests in a month with a 10 percent closing ratio, you’ve sold 40 bikes. With the same 400 customers, if you have a professionally trained staff and you boost your ratio to 20 percent, you’ve sold 80 bikes with no additional overhead (except commission). Multiply that by 12 months and it equals real money. Are you consistently training each of your staff members? Does everyone on your sales team know how to properly greet customers, develop rapport, interview and investigate wants and needs, conduct value-building demonstrations, ask for the sale, handle objections, close the sale and follow up? Remember, training is a journey, not a destination.
No. 4: raise the value of each customer. If you process 2,000 parts tickets per month, and can raise the value by $10 per ticket, that equals $20,000 per month or $240,000 per year in additional revenue. Does your P&A team have the right seasonal inventory mix in stock? Do they come out from behind the counter and suggest related add-ons? Are they merchandising your store so every day looks like a Grand Opening?
While big dealership-operating breakthroughs are desirable and hot new products are exciting, they’re also scarce and elusive. However, finding lots of little screws, each just a tiny bit loose, to tighten can be done in just about any dealership. It’s this granular attention to detail that builds a recession-proof dealership. If you consider yourself one of the resourceful dealers, and you’re looking for answers to help you turn every day into a profit opportunity, you’ll find what you’re looking for at Dealer Expo this year. I look forward to seeing you there!
This story originally appeared in the January 2012 issue of Dealernews.