The good news is that there are tons of profitable car dealerships all over the country that you can learn from—no need to re-invent the wheel. You already know the basics of running a car dealership business, but the most successful businesses drill down to the nitty gritty to truly understand their markets.
1. Dig into your market
Running a car dealership in Fairfield, Connecticut is not the same as owning one in Detroit, Michigan. They are completely different markets, so if you don’t know anything about your market, it’s time to find out. Research the demographics in your area and learn the car-buying seasons in your region. If you live in a cold area, for instance, right before winter could be your prime time to stock up on trucks and sturdy 4-wheel-drive vehicles for a big sale.
2. Get very clear on your current sales goals
You may say, “My car dealership business does have goals! We want to make more money and sell more cars!” That’s not sufficient. Your goals should be S.M.A.R.T: specific, measurable, attainable, realistic, and time-based. For example, a S.M.A.R.T. goal could be, “Between May 1 to May 31, increase the number of up sheets completed in April by 5%.”
3. Be able to name the most popular makes and models you sell
You should always know what makes and models your customer base is buying because it will influence the cars you decide to place on your lot. If you want to move all your cars within 60 days, you better have what people want.
4. Know who is buying from your dealership
It’s one thing to understand the broader demographics of the market your dealership is operating in, but you also need to fully grasp who the majority of your customers are. Are your customers more often blue collar or white collar? Single people or families? Younger buyers or older?
The people who are currently buying from you can clue you into the types of vehicles you should sell, the services your dealership should offer, and how you should target these groups in your marketing efforts.
5. Learn which forms of advertising work for you
Advertising is essential, but don’t keep doing what you’ve always done just because it’s easy. Look at any and all current advertising efforts you have going on—TV, radio, print ads, pay-per-click advertising, Facebook ads—and see if you’re getting a decent return on your investment. Do you spend thousands of dollars on print ads every month, but no one comes in to redeem your coupons or ask about offers you’ve advertised? It may be time to redirect your dollars to other forms of advertising.
6. Monitor sales rep performance
Pull numbers from your CRM every month to get the full picture on how your sales reps are performing. If you notice that one of your consistent performers had a bad month, you can use the opportunity to meet with them and nip any problems in the bud quickly. On the flipside, if you have someone who is consistently underperforming, that may be your cue to boost your training program.
7. Implement formal talent management practices
McKinsey & Company took a close look at top auto dealerships in the U.S. and what was separating them from the rest of the pack. It turns out that consistent talent management practices, like structured recruiting, multiple interviews for each candidate, formal training, and long-term incentives, were significant differentiators in an industry where high turnover rates are common. The dealerships with better talent management had turnover rates that were 17 percent lower than dealers in the bottom quarter.
8. Prioritize service and customer loyalty
Once you work hard to win people over in your market, don’t let them go. Keep your customers engaged with e-newsletters, coupons, and even offer tours of your service department to make them more comfortable.
The most important thing to remember is that conquering the market in which your car dealership business is located isn’t a one-off thing. If you want to stay on top, you must constantly integrate all of the steps above and change your strategy or approach as the market dictates.