Dealership Development, LLC Blog

You know how dynamic the automotive industry is, and you thrive in that environment. You love talking to customers, explaining options, and helping them choose products and services that will give them a great ownership experience. If you have automotive experience and this describes you, we want to talk to you. Your exceptional skills are in demand and we can guide you to multiple high-paying opportunities.

Customer retention is crucial to the success of any business. This is even more true in the automotive industry, where dealerships rely heavily on the constant revenue created by service plan subscriptions to supplement the somewhat unforeseeable revenue generated by auto sales.

Consider these facts. Marketing metrics show that it is 6-7 times more expensive to sell to a new customer than an existing one.  It is 50% easier to sell to an existing customer than to convince a prospective customer to choose your dealership. Marketing research proves that it is just as import to invest in customer retention as it is to invest in customer attraction.

Having a robust aftermarket program is critical to automobile dealerships. In 2016, the National Automobile Dealers Association (NADA) found that aftermarket income represented almost half of the new and used vehicle department’s gross profit. Finance and insurance (F&I) were 25% of the profit while service contracts and other amounted to 24.4%. However, organizations such as Consumer Reports warn consumers against aftermarket sales. Therefore, it is important that aftermarket programs supply a win for both the buyer and the dealership.

Vehicle service contracts or VSCs give car owners peace of mind. These contracts are valuable commodities that protect used vehicle owners against the inevitable cost of repairs that life and the road will throw their way. So what are the specific benefits of signing a VSC?

Federal regulation compliance in 2012 cost the average franchised auto dealership their earnings from a sale of 106 vehicles, representing more than 21% of the dealership’s before-tax net profits. 

According to a report by the non-profit Center for Automotive Research (CAR), the major portion of this cost is due to regulations related to vehicle loans, employment, and bookkeeping. Compliance with repair, marketing, sales, and business operations regulations was responsible for the remainder of this enormous cost. Given the increase in regulations since 2012 and the additional price of meeting state and local regulations, it’s clear that a significant difference to dealership’s earnings will result from improving compliance efforts. Automotive compliance is a complicated and time-consuming effort requiring ongoing research, training, and auditing.

Making the Sale for Car Dealerships:

Little else is more important to a car dealership than training their employees to provide the customers the information they need when selling a vehicle. Car salesmen have a tough pitch to make considering a car is one asset people are buying that depreciates in value as soon as it is driven off the lot. People want to make their investments wisely, buy a car that is going to last well, is going to have few problems, and is going to hold as much value as possible if they ever want to resell their car in the future.

As a car dealership that's succeeded with record sales this year, are you sure you can retain those customers for the future? With car sales being one of the most competitive industries, how can you be sure they'll keep coming back to buy cars from you, or refer their friends?

A customer retention program is a typical procedure all car dealerships use to assure that their customers keep coming back.

Any F&I department understands that a lot of pressure comes with the territory due to sales expectations, but are you helping your team succeed to the best of their ability? Are you offering the best F&I products available for your target market and are you taking the time to train your team for all the changing demands?

If your F&I department keeps missing the mark on the latest trends, it's time to get some help.

Are you reviewing your monthly numbers only to discover that your contracts in transit are in the upper six figures? Contracts in transit-or CIT-are when a contract to fulfill a car loan isn't paid in full due to various circumstances. Either the person who bought the car can't make payments immediately, or there's a hang-up in the transit of money.

All of this can signifcantly affect your cash flow and place you in financial jeopardy.

The world of sales is never easy, though it becomes a lot easier when a sales team knows what it's doing.

Have you observed your sales team's techniques lately? They could be missing some very important details in their sales approach and you don't even know it. As the owner or manager of an automotive dealership it is your job to make sure your sales team stays up to date, to be performing up to expectations. So are they?