Issue link: http://read.dmtmag.com/i/511164
www.PowersportsBusiness.com SOLUTIONS Powersports Business • May 25, 2015 • 23 Twice a year we at Gart Sut- ton & Associates conduct a two-day workshop for dealer principals and general managers titled "Dealership Manage- ment." This class covers current performance benchmarks and best business practices for facets of dealership operations. When we get into discussing the best prac- tices, one comment keeps popping up: "We used to do that." Sometimes that's followed by: "It worked — I don't know why we stopped." Many of the best practices or processes being discussed have been around for a long time, sinply because they work. Most of these are essential business procedures that improve dealership profitability and customer satisfac- tion, which increases customer retention. Another is the management failure that led to the demise of this important process. One of our favorite sayings in teaching depart- ment managers is: "It will only be important to them as long as it is important to you." What does that mean exactly? Well, it means that any process that you want to implement and maintain must have two things: 1) continual reinforcement, and 2) ongoing monitoring to ensure compliance. What typically happens is that managers get tired of the repetitious prod- ding and training that it takes to keep the pro- cedure working, or they get caught up in the daily "swirl," and reinforcement keeps falling down the priority list and then just fades away. So what are some of these "Essential Proce- dures?" Let's look at a few by department: SALES DEPARTMENT Traffic or customer log — Most dealers use electronic versions, but paper logs still work. This is the most important tool you have for tracking sales department performance. Among other things, it's used to measure greets (discussed a unit with a salesperson), write-ups and closing ratios, so you can deter- mine who's performing and who needs train- ing. It provides the information you need to follow-up with prospects — a critical source of future buyers. Add door swing counters, and you can compare traffic log measurements against cus- tomer traffic: What percentage became a greet? How many purchased a major unit? PARTS DEPARTMENT Cycle counting — This simple, but vital process consists of counting a small portion of your PG&A inventory every day. This results in significantly improved inventory accuracy and reduced shrinkage. Months with No Sales reports — These monthly reports track slow-turning inven- tory. The target for overall inventory turns is four per year. At six months with no sales, you should be looking to see if this part number needs to be eliminated from your inventory. At 12 months it is considered obsolescence (OBS). This hurts cash flow and costs you money. Eliminate OBS and replace it with higher turn products that improves your profitability. SERVICE DEPARTMENT Reception checklist — This tool ensures the service writer checks the unit over thor- oughly, so he or she can capture all the service work necessary during the walkaround. This not only increases parts and labor sales; it is a major customer satisfaction tool. Surveys show that every time your service team has to call a customer because they found additional repairs, customer satisfaction decreases. Since service has a major influence on customer retention and repeat sales, you want to make as few of these calls as possible. Daily/weekly performance measure- ments using a time clock — You should be aware that some data systems don't track RO labor unless the RO has been closed. This cre- ates measurement issues, since not every RO can be completed on the day (or even week) that it is opened. As a result, many service managers use a spreadsheet for this. The three NADA-standard measurements we track are: tech efficiency (billed hours/actual time-clock hours on the RO — measures the speed of the tech), productivity (actual hours/avail- able hours — measures the flow of the work through the department) and proficiency (billed hours/available hours — overall pic- ture of the profitability). Although I have tried and tracked many methods, the punch card time clock seems to consistently provide the best accuracy for most dealers. In addition, time stamps on hard-copy ROs can be very important in liability cases. These are by no means the only essential pro- cesses, just some of the key ones that seem to elicit the "We used to do that …" statements during GSA training sessions. Implement the right processes, monitor them and make the effort to continuously rein- force them, so you can steadily improve and grow your business. PSB Steve Jones is senior projects manager at Gart Sutton & Associates. He has worked in the powersports industry for more than 30 years, for dealerships and manufacturers, and as a consultant and trainer. Contact him at steve@gartsutton.com. Are you able to answer why 'We used to do that' STEVE JONES RETAIL REMEDIES "The target for overall inventory turns is four per year. At six months with no sales, you should be looking to see if this part number needs to be eliminated. ..."