Thriving in a new environment
After three years of unprecedented growth in the powersports industry, are we finally seeing the growth stop? I don’t think anyone can accurately predict what may or may not happen in the coming year but we can be proactive to ensure we see success this year no matter what. With rising inventory levels and a slow down in consumer demand, we need to be fully aware of the environment we are entering this year. In the last 2-3 months, I’ve seen that inventory supply in some dealerships is getting back to pre-pandemic levels. This is mostly due in part to rising interest rates, decreasing consumer confidence, rising cost of living due to massive inflation and the fact that people are starting to go back on vacations and travel more. During the pandemic the whole world was stuck inside and wanted a way out they could enjoy with friends and still feel like they were participating in “social distancing”. Luckily for us we were a part of the outdoor explosion we all benefited from it. Pre-pandemic inventory levels were outrageous and most dealers were paying more in flooring charges than ever before. The surge of sales came as a big relief to dealers that were bursting at the seams with inventory. Hopefully, the manufactures won’t participate in a big you know what contest to see who can outproduce who and shove inventory on the dealer’s floor. It would be beneficial for them to keep inventory a little short of consumer demand so we can keep prices up and keep all our employees on payroll and maintain healthy profit margins to ensure longevity of the dealership. If you’re like me and don’t want to rely on what the manufactures do, there is one thing you can guarantee that will keep your dealership ahead of the curve. That is focusing on salesmanship and follow up in the sales department and being aware of competitive pricing on certain models and brands.
Lets face it, we are no longer “shooting fish in a barrel”, there aren’t bidding wars on in stock models and you can’t just put a high price in front of people and expect them to say yes or else “someone else will buy it before the days out”. Now more than ever we must remember what it’s like to be a salesperson and what works in a sales department. The first part is purely a shift in mindset, just being aware that what has worked the last few years will not continue to work and being open to change. The second part is knowing that the gold is in the follow up. On average, 80% of sales takes 8-12 contacts with a customer to close the deal and most salespeople only follow up 1-2 times. This fact alone should show you the amount of business that could be gained (or lost) with effective follow up. The third part is being aware of competitive pricing in the marketplace on certain units or even brands. Speaking from experience, you can lose a lot of customers by being thousands of dollars above what someone can buy something someplace else. I’m not advocating for giving stuff away or being the cheapest in town, but I am advocating for being aware and being competitive to keep the customer coming to your store. On those models that are being price shopped hard (Polaris RZRs... hint hint) you must focus on selling accessories and back-end F&I items like extended warranties, theft, gap, and GPS to make up for lost front end profit. Its more important to keep a good customer and their circle of influence than it is to lose them over price.
So, how do we do this? Here are four things you can do now to make sure you stay ahead of the curve and remain competitive in the marketplace:
1- Start implementing some sort of sales training. Whether it’s done in house by the sales manager or done on a sales training platform. There are several different options out there from Grant Cardone’s Cardone University, Garage Composite and Tom O Connor Sales Academy. It doesn’t matter which one you do, just do one of them. This will keep your sales manager and your sales staff engaged, growing and continually sharpening their sales ability.
2- Follow up, follow up, follow up. The gold is in the follow up. Some dealers have a BDC department, some swap leads between salespeople, some have processes in place to ensure the salespeople are contacting the lead a certain number of times. Each of these are effective; it’s not important which one you do, just that you’re implementing something to make sure the customer is being contacted enough times to ensure your dealership gets the sale (8-12 times minimum).
3- Sales managers need to be more engaged in the sales process and processes need to be set up for the manger to contact as many hot leads as possible to ensure deals get closed. I have seen this tactic work better than almost anything. A salesperson gets a customer on the hook and the manager comes in with his authority and MAKES the deal happen. Sometimes the customer just wants to feel important and all it takes is that touch from the manager. As a GM, I have stepped in on a lot of deals just to show the customer we care that much that the GM would take time out of his day and walk in a sales persons office and help close a deal. As a manager, being engaged in the sales process is extremely important.
4- Open mindedness from the owner, GM, SM, and sales staff that any success you may or may not see in the future is determined by your ability to adapt to an ever-changing marketplace. Becoming complacent and believing what’s been working will continue to work has been the death of many businesses and sales departments. If there’s one thing you can count on, it’s that things are going to change. Being open to change and putting egos aside will prove to be one of the biggest benefactors in your business.
I hope this has been helpful and opened some eyes as not so much what to expect but what can be done in the face of uncertaintity. Adaptability has been the key to success in our businesses and given us the ability to determine our own outcomes. You can’t foresee the future but you sure as heck can do everything in your control to be proactive to ensure you stay ahead of the curve. These four things worked pre pandemic, during the pandemic and will continue to work post pandemic. If you have any questions or want to chat more about implementing these things in your dealership, please feel free to reach out to me. I’d love the opportunity to get to know you and your dealership and help achieve the goals you have for yourself.