During meetings with manufacturers we are often asked about the statement we make most often; “That for most businesses within your franchised dealer network, next years’ growth is already within the 4 walls of the businesses concerned, it is just going unnoticed.” This statement normally grabs people’s attention, more so now that we are entering such a challenging period for new car sales, and of course invariably it will lead to another question; “Where does the growth in new and used car sales volume come from?”
Now the answer to this second question is difficult to discuss in finite terms, and more so in a blog post; why? Well it depends entirely on where the businesses concerned are in their growth cycle and to add to the complexities, the answer to this question will change for individual businesses year on year, as growth is achieved and the individual focus for further growth changes and evolves.
So as you can already see, the answer to this question is not a “One Size Fits All” solution for every business contained within your franchised dealer network, or indeed the same answer for the businesses concerned, on a year by year basis. But one thing does remain the same; the operational and managerial disciplines required in order to ensure that sales opportunities that already exist are being maximised.
Without the disciplines and the focus required we will continue down the path of panic that I have been noticing recently; the distress marketing messages on radio stations talking about “Great Deals” and “Special Offers” and what’s worse, some of these advertising campaigns are actually manufacturer marketing campaigns. I don’t wish to alienate my manufacturer based contact base here, but this will be adding to the problems and reducing margins, not solving any long term problems, and let me explain why.
Although I would never advocate distress marketing messages based solely on price, I think we can all agree that there is no doubt that effective marketing and advertising campaigns are paramount to the successful manufacturer and the sales operations contained within their franchised dealer networks, but there is folly in expecting to throw more money at marketing campaigns and expect that to redress the shortfalls you may be experiencing in new or used car sales volumes.
Thus we return to the importance of my original statement; that in the majority of cases, the growth in new and/or used car sales volume required, is already within the four walls of the businesses contained within your franchised dealer network; you just need to understand where to find it and how to maximise the opportunities you are already generating.
In order to demonstrate the point of why throwing more good money after bad money on continually increasing marketing levels, (in order to increase sales volumes), is never the answer, let’s look at the process of growing your new and/or used car sales volumes as being like walking; only one leg is labelled “Generating Opportunities To Do Business” and the other leg is labelled “Maximising Opportunities To Do Business”.
Now I think we would all agree that you are only walking and moving forward when you are putting one leg in front of the other; if you are doing the same thing again and again, whether it be relying solely on increased advertising/marketing initiatives or continuing to solely focus on closing ratios and maximising opportunities to do business; well think of the walking analogy again and your legs.
If you are trying to grow and move forward using just one leg? Well that’s not walking, that’s hopping, and as much as you can move forward for a while by hopping, it is exhausting and eventually the process collapses. So my question to manufacturers and every business owner is thus; “If you have two perfectly good legs available to you, why would you not use them both?”
Now I know this sounds simple and in reality of course, the complexities of any business, especially new and used car sales operations, mean that finding the answers and implementing them can often be the challenge. But once the correct procedures and measurement processes are in place, combined with an understanding of when it is the right time to change the focus, growing your new and used car sales volumes year on year should become second nature for your franchise partners, just like walking!
Let’s look at the 2 legs and why it is critical to understand which leg to put forward first, in order to keep forward momentum and thus new and used car sales volumes growing. Let’s look at the leg labelled Maximising Opportunities To Do Business because this is the best place to start. Start by thinking of your closing ratio to enquiries received and what you think is acceptable?
If you think that a 25% closing ratio is acceptable, (and I won’t comment either way in this article), that means you as the manufacturer will sleep soundly at night, happy in the knowledge that for every 100 customers you attract to the businesses of your franchise partners, 75 of them will be lost!
So think first about the closing ratio that you are happy with and then decide whether or not you feel that your franchise partners actually have an accurate measurement of this? Without this both you as the manufacturer and your franchise partners will be unable to act effectively and shift your growth focus to the other leg, (Generating Opportunities To Do Business), at the right time.
This accurate measurement of sales enquiries, (and then closing ratios), in the new and used car operations of your franchise partners is of paramount importance in building the foundations of both effective sales enquiry management and operational processes. If your franchise partners are not achieving your desired closing ratio, let’s say at 25% of enquiries received, why would invest more money into advertising and marketing at this stage, only to generate more enquiries that your franchise partners continue to close at a ratio that you are not happy with? This is not the way to achieve your sales objectives.
Only with accurate measurement of enquiry levels and closing ratios, will you then be able to assess when you reach your desired closing ratio; and until you do, our advice would be that your franchise partners continue to focus their attention on the operational procedures required within their businesses, in order to achieve your desired closing ratio, not on investing more and more funds into marketing and advertising; and this is where our statement about the next year’s growth already being within the businesses of your franchise partners comes into play.
The reality is that we have not walked into a franchised dealer yet and not found growth potential for the new and used cars sales operations being lost. As an industry we have, on the whole, been caught out by the pace of evolution in the sales enquiry process; the days of the showroom and telephone logs being enough are well and truly over, the majority of our customers enquire electronically for large periods of time before they would ever contemplate making contact with the businesses of your franchise partners.
If your franchise partners don’t have the sales management processes and procedures in place to measure and develop these enquiries, then they will be lost; and that’s before we start looking at how finance packages, (including existing customers with cars supplied on finance agreements), can be utilised in order to bring new car sales business forward and maximise opportunities to do business, as well as customers contacting other departments within the business on a daily basis.
However, and as previously stated, this is not to dismiss the importance of advertising and marketing to the successful business. Once your franchise partners have achieved your desired closing ratio and implemented the management controls required within their businesses, in order to maintain the desired closing ratio for 3 months, you will then have to look at the other leg, (Generating Opportunities To Do Business), because if you don’t, you are in danger of hopping once again!
This is when your focus for growth, and that of your franchise partners, must shift back to advertising, marketing and the generation of opportunities to do business. What you have done so far and the initiatives you have in place have got you where you are, so don’t rush to change this. Look at what is required to build on what has been achieved; if some initiatives have not worked, divert that money elsewhere and into new initiatives.
The skill lies in knowing what to do and when to do it, and this goes straight to the heart of the sales operational procedures and enquiry management processes currently in place within the businesses of your franchise partners. Without the correct and effective operational procedures, alongside the ability to manage and utilise the data provided, you will never have the operational foundations in place to ensure your continual success, via the on-going achievement of your new and used car sales objectives.
A good place to start, in terms of assessing the current capabilities of your franchise dealer network, is our New & Used Car Business Development Health Check, the nature of which was explained in our last article and can be found by following the direct link in the title above.
In fact we are that confident that we can utilise our New & Used Car Business Development Health Check process to identify immediate growth opportunities and build on your current level of new and used car sales success, that we will be running an initiative for Automotive Manufacturers during the challenging 2nd quarter new car trading period. Via prior arrangement we will commit to make ourselves available to you for a complimentary conference call, in order to review your current new and used car sales performance and to explore the solutions required, in order to redress areas of underperformance.
So why are we running this initiative? Well with the 1st quarter registration figures now published by the SMMT and other reporting institutions, there can be no hiding from just how challenging the trading landscape has become for the Automotive Sector, and many of our contacts have already identified an immediate and urgent requirement to redress the declines in new car registrations that some have experienced, thus we have been approached to help.
If this initiative is of interest or you would like to know more about our new and used car business development consultancy programmes, because you would like to partner with an organisation of professionals who have faced the challenges of fast paced evolutionary markets and know how to develop a successful and profitable new and used car franchise dealer network on your behalf, (in order to keep your new car and total business objectives growing and on track), then we would very much like to hear from you.
The owners of Autoformance have owned and run successful new and used car businesses and been at the forefront of the development of both new car training programmes and approved used car programmes for a host of manufacturers. For an exploratory conversation regarding our services and/or to book your exploratory conference call, please do not hesitate to contact one of our Founding Directors; Andrew Banning at ajb@autoformance.com or Malcolm Thomas at mgt@autoformance.com
Alternatively please feel free to call us on 0044 345 057 3177.
For more information about our services please visit our website at www.autoformance.com
Andrew Banning.
Used Car Business Development Director.
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