Having spent 37 years of my life in various roles within a dealership setting, I often realized as a manager that there was just not enough of me to go around with the number of responsibilities that I was responsible for, or, maybe better stated, the duties I assumed I was responsible for.
Today, sales managers are responsible for managing both physical and online dealerships. Too often, those dealerships are managed differently, and that is where the strategy and process take a turn. The devil is found in the details, or in this case, in the lack of attention to them.
Suppose you are a manager in any capacity in a dealership today. In that case, your absolute number one responsibility is to compound your owner's money or, as stated, to manage your owner's inventory investment to the highest possible return.
As managers, we often get too wrapped up in areas that would be better delegated to allow us to focus on the areas of the operation that will generate the highest return on the money our owners have invested in the different departments within the dealership. If you manage used cars for your dealership, the fastest way to create the highest turn on your owner's inventory investment is by stocking and selling 65% of his investment dollars in and out of the 0–30-day inventory bucket. I have never heard an argument that stood up to the fact that turning your inventory faster yields a higher return on investment.
Focusing your attention on the following areas will ensure a lift in your speed to market and time to sell, increase your percentage of the first 30 sales, and increase your return on investment.
Merchandising: How long can we get our inventory from the trade or purchase through service and detail, full photos (15 or more photos) with a high-quality description, good meta-tagging, and a walk-around video? 3-5 days should be your average; remember the first 30 days.
Do we understand how our dealership, with the people in our market and customers, sells our used inventory? Are we selling what we are stocking each month at a minimum? Are we pricing our inventory from day 1 to attract our in-market customers to our inventory to sell in the first 30 days based on our sold data over the last 15 days? The dealer example below is selling compact sport utilities at a 32-day average of 96% at a $22,595 selling price. They have 32 in stock and have sold 21 in the last 15 days. If I know my used car department is performing like this with compact SUVs, how would I manage this segment to improve my return on investment?
If we have inventory that is not selling and aging, typically, the first action we take as a used car manager is to lower the price. How does lowering the price help our return on investment? It doesn't.
Try this: instead of lowering the price as your first move, look at how you are launching your inventory from day 1. If I knew that in the last 15 days, the inventory my store is selling is leaving at an average price to market of 97%, then why would I set a launch price of 110% with a set-it-and-forget-it strategy?
Once I have dialed in my day-one pricing strategy, that strategy will consistently need to be reviewed based on shopper counts in the market and total inventory counts in the market. I will review the merchandising on my website based on quality photos, photo alignment, and description meta-tagging to get my inventory in front of more eyes online and attract more customers who will send my team leads. Before the internet, these were the things we would do on our brick-and-mortar lot, and some are still doing. We would make sure our inventory was standing tall by making sure it was clean inside and out, lined up, and marketed in a way that would attract the public driving by to pull them onto our lot. Now, we have a physical and online lot, and we need to do the same thing by merchandising it with as much attention to detail as possible. The average consumer has a short attention span due to how much information we consume daily. As a result, we need to help our customers find what they want to look at as easily as possible so they will stay on your site and not bounce to another site looking at multiple vehicles.
As leads come in, is my team talking to my customers? Think about this as a manager. You are sitting at the sales desk, and you watch a customer drive on your lot, stop, get out of their vehicle, and start looking at a vehicle in your inventory that you need to sell. How long is an acceptable amount of time you will wait for a salesperson to greet that customer? I typically hear 1-2 minutes from dealers I speak with. Most of them say they would be furious if it took longer than that, and I agree. Now compare your physical lot to your digital or online lot. How many customers visit your online lot daily compared to your physical lot? How many of them are asking questions that don't get answered or may get answered in a way that has nothing to do with the customer's question? If 1-2 minutes on your physical lot is unacceptable, then why are we tolerating 15, 20, 30 days, etc., between contacts with our customers that sent us a lead on a vehicle in stock and the vehicle is still in stock? We have an aging problem, and the first thing we do is drop the price rather than talk to our customers. Then we get on forums and blame "the race to the bottom" instead of working with our team to understand that the days of sitting around and waiting on customers to line up to buy our inventory like they were two years ago have long since passed. We need to get back to serving our customers and building the value they want so they can reach into their pockets and give you their money. Below are some examples of vehicles in stock on dealers' lots with customers not being contacted.
The above sample from our lead management software shows four leads on three different vehicles currently in stock on this dealer's lot. The customers have not been contacted in 15, 14, and 13 days, and on 2 of the vehicles, the manager performed a price change on a vehicle that we have working leads on but have yet to talk to them. Folks, that is the most accurate definition of race to the bottom, and you are performing this race on yourselves. For the sake of your owners and their money, please stop the insanity!
Your inventory investment performance is your responsibility as a manager, and it can only be the money, the machine, or me. Have I entered the market right? Have I merchandised my inventory right? Am I holding my team accountable to speak with and build value with our customers, whom we pay dearly to get to our website? The responsibility is yours; it's what you signed up for. Are you up to the challenge?
I will use a phrase from my friend Tommy Gibbs with some alterations: That is all I am going to say about that!
Executive Vice President
Lotpop Inc.