Recessions are part of the natural ebb and flow of finance and experts believe we may be in for a slowdown soon. Taking preventative measures now can help shield your dealership from future fluctuations in the market. Stay a step ahead of your competitors and utilize the following strategies to get closer to a recession-proof dealership.
1. Leverage Your CRM to Retain Service and Sales Customers
Generating consistent business from the customers you already have will keep revenue up during slow times. Plus, loyal customers are more likely to refer your dealership to their friends and family.
So, how do you nurture loyal customers? By delivering a personalized, exceptional experience at every touchpoint.
Audit your floor and phones to ensure customers receive warm, welcoming and competent help. Give your employees the time to build long-lasting customer relationships by delegating routine calls to your BDC.
Utilize your CRM to segment customers and send targeted, relationship-based communications that add value without pushing a sale. You will build more trust with your customers by sending them, for example, some helpful winter driving tips versus approaching them with a hard sell.
Focus on creating personal relationships and delivering exceptional service to keep customers coming back again and again.
2. Shift Your Focus to Pre-Owned Inventory
With an average sticker price of nearly $40,000, new vehicles are out of reach for many of today’s consumers. As a result, pre-owned sales are on the rise. Your dealership can capitalize on this shift by boosting your pre-owned inventory. Not only are they less expensive to acquire, pre-owned vehicles also sell faster, saving you money on holding, floor and marketing costs.
When you use the equity mining tool in your CRM, you can acquire clean and well-maintained pre-owned inventory without paying costly auction fees. How?
Search your database to identify owners in an equity position with a vehicle your dealership needs. Then, suggest they upgrade to a new vehicle with a full-warranty and all the latest safety features and technology. With this strategy, you can make a new vehicle sale while stocking your pre-owned lot.
3. Uncover More Service Lane Opportunities
Parts and service are the bread-and-butter that will keep you in the black through market slow-downs. Keep your bays full with online appointment setting and a service BDC that can fill time slots that service advisors may not — like 4 p.m. on a Friday.
Implement a multi-point inspection tool with photo and video capabilities so service advisors can show customers what needs to be done, not just tell them. Providing visuals helps alleviate customer resistance, builds trust and increases upsells.
Service advisors who change their words to focus on the safety aspect of recommended services can change their results. Emphasizing how a service will keep customers safe on the road will likely increase upsells and dollars per repair order.
4. Eliminate Waste
In a constricting market, resource allocation is more important than ever. Take the time to examine every expense, especially your lead providers. Run CRM reports to break down cost-per-lead and cost-per-sale per lead provider. The closing ratio for any lead provider should be above 10%.
Look at your employee allocation and refigure if necessary. As new sales decline, you may find it helpful to shift more sales associates to your pre-owned department.
Assign a manager or your accountant to get in the weeds with your expenses. This person will probably find a lot of areas you can trim without affecting day-to-day operations. Common areas to cut back include overtime pay, office and shop supplies and aging inventory.
5. Examine Compensation Structures
More and more, dealerships are implementing performance pay plans across departments. Financial incentives increase retention and job satisfaction while motivating employees to do better work. When you have lower employee turnover, you save on onboarding costs and can create a better customer experience. Identify where you can introduce bonuses and incentives to get better results from your current employees.
Many dealerships are also examining the role of F&I manager and have begun to combine the work with that of a sales associate. As a former F&I guy, it pains me to say this, but as dealerships continue to streamline the buying process, the position most likely to be eliminated is the highly compensated F&I manager.
6. Build Your Brand
A strong brand holds its value even when the market drops. Identify what makes doing business with your dealership unique and include that brand message in all of your marketing and advertising. Make it relevant and specific. Attributes like a family-friendly showroom, the convenience of delivering a vehicle in under an hour or luxury loaner vehicles can help you stand out in a crowded market.
Are you worried about a slowdown in the market? Don’t panic. Take preventative steps now to shield your dealership from fluctuations in the market and stay a step ahead of your competitors.
