With the automotive retailing industry experiencing challenges such as shrinking margins and rising interest rates, dealers are being forced to innovate to survive, finding new ways to save money. Not sure where you should start? Follow the tips below to help your dealership maximize revenue.
Fine-Tune Wasteful Processes
Take a close look at your processes and see how much money you’re wasting on unnecessary tasks or resources (and then set a reminder to review those processes again at specific intervals). For example, do you have a recurring issue with sales reps losing key fobs? Depending on how many keys your employees lose per month, that could represent a cost of a few thousand dollars per year.
Once you’ve identified inefficiencies, consider implementing tools to help you address them. For example, having a documented key control process and using an electronic method for tracking keys can help cut down on the cost of replacing key fobs.
While it may seem counterintuitive to spend money when you’re trying to save it, you have to consider the long-term ROI. If you’re spending thousands of dollars a month replacing keys, how much is a solution for that problem worth to you?
Even seemingly inconsequential costs can add up. I recently heard about an Ohio dealership that was able to save $6,000 a year simply by switching from bottled water to paper cups that customers can use at dealership water fountains. Are there any seemingly minor expenses you can cut back on?
When making similar changes at your dealership, there is one caveat: Be aware of how any changes would affect the customer experience. If the change would make customers unhappy, it may not be worth the cost savings in the long run.
Keep Data Current
Poor data quality costs the U.S. economy approximately $3.1 trillion a year. Think about how much bad data could cost you. Are you following up with “prospects” who already bought a car from you? Are you sending direct mail to invalid addresses? Is there mismatched data between systems?
Minimize double data entry by integrating systems and holding sales reps and service advisors accountable for updating the CRM after every interaction with a prospect or customer.
Take Advantage of Manufacturer Reimbursements
Are you taking advantage of all dealer reimbursements available to you? Check to see if there are any you could be missing out on. For example, if your service department offers transportation to customers bringing their vehicles in for warranty work, some manufacturers will reimburse a few dollars each way for shuttle rides. GM, for example, will reimburse up to $7.50 each way. Even if your manufacturer only reimbursed $5 per ride, that would be $500 for 100 shuttle rides a month, or $6,000 a year.
While 2019 holds some challenges for dealerships, investing in the right solutions and coming up with creative ways to cut costs will help your business stay profitable.