Running the Business
Back End or Backbone?
Reviewing your parts and accessory department’s procedures can strengthen your entire dealership and your bottom line.
BY MEL SELWAY
New Africa - stock.adobe.com
Many coaches are manufactured with a rear-looking camera. Some of these cameras cannot be used except when the transmission is shifted into reverse gear. This makes sense given that most of the time the driver should be viewing the roadway in front of the coach. But when it is necessary to check out the back end of the coach, those cameras are very useful.
Many of those same coaches that have rear-looking, closed-circuit camera systems sell for more than $25,000. Most likely a lot more than $25,000! And these same coaches cost the dealership a lot of money — floorplanning, advertising, upkeep while on the lot and other holding costs. So it makes sense that most RV dealership decision-makers would pay a lot of attention to this front-end investment.
Just like the driver of the RV with the closed-circuit, rear-looking camera, RV dealership decision-makers need to occasionally look at the back end of the dealership. This is especially important in times when those coaches are still sitting on the lot because customers may not have the money to justify the purchase of those motorhomes and towables. However, customers might be coming into the dealership to have their existing RV serviced or to purchase parts or accessories for that RV.
Have you considered that the back end of the dealership could be the backbone of the dealership? Let’s take a look at your dealership’s backbone and make certain that it is strong. This checkup is important, so we will devote several articles to it.
The Right Stuff
Whether a customer requires parts, accessories and supplies for a do-it-yourself project, or if the customer has requested that your service department perform the service or repair, it is important that your dealership have the right stuff in the required quantities when these items are needed.
How do you know what is the right stuff? Listening to your customers and recording their requests is the most effective method for determining if your inventory has the appropriate breadth and depth of goods. If a customer requests an item and you have it in stock, that request is probably recorded. And, if you special order something for a customer, that request also is recorded.
But what if you don’t have what the customer needs? Do you always record those requests? If you (and your associates) are not recording those lost sales, then you are not really listening to your customers.
How many lost sales are recorded each week in your parts and accessories department? And how do you know? What is the procedure for recording lost sales in your dealership management system (DMS)?
Ask one of your parts associates to demonstrate the procedure. What should you do if the parts associate cannot demonstrate the lost sales recording process? In my career, I have developed a simple, eight-word definition of lost sales, and this is: Demand, not filled from stock, and not ordered.
It is important to have a definition of lost sales in your business so that your parts associates can easily decide if they should record a lost sale.
How else could you determine if you have the right stuff for your customers? Ensuring that your inventory is accurate is another method. When was the last time that you randomly checked the accuracy of any of your parts and accessory inventory?
As part of that random spot-check, did you also verify the accuracy of the bin location? What was the condition of the packaging? Was the item attractively displayed? And was there any dust/dirt on the packaging or on the display fixture?
What else could you do to ensure that the right stuff is available for your customers? If the demand has been tracked and your parts manager has ordered the item and ensured that it has been placed in the correct location, then that is a good thing.
However, have you checked to determine if the appropriate quantity of those items has been established? This will require investigation involving several factors for each part number that you decide to test. These inventory factors could be:
- Demand history
- Desired gross turn level
- Quantity in the on-hand field
- Quantity in the on-order field (and possibly the on-backorder field)
- Seasonality and the current date
- Order calculation method that is being applied
- Stock status that has been assigned
Does all this seem like a lot to investigate for each part number, especially when you consider how many unique items exist in your parts and accessory inventory? Well, it is a lot, and this is just a portion of the evaluation aspect of your parts manager’s responsibility.
Maybe you should be looking in that rear-looking, closed-circuit camera more frequently.
In the next installment of this series, we will look at some additional inventory performance factors that you might want to investigate. For now, let’s assume that you have the right stuff. What is being done to get that stuff into and onto your customers’ RVs?
Selling the Right Stuff — in the Right Way
How recently did you offer selling skills training for your parts associates? How many transactions does the average parts associate process in a day? When was the last time one of your service advisers attended a selling skills training class? And how many customers are they working with each day?
Most dealerships that I visit have never offered selling skills training to their parts associates or to their service advisers. However, these same dealerships frequently provide selling skills training to their major unit sales associates. Yet the average parts associate and service adviser often interacts with more customers in one day than the average major unit sales associate interacts with in a week or more.
Perhaps it is because only one of the three operating departments in the dealership is called the sales department. Don’t the parts department and service department sell anything? Of course they do!
And in most instances, they sell their stuff at a higher gross profit percentage than the major unit sales department receives for their transactions.
The gross profit dollars may not be as high in the parts and service departments as they are in the major unit department. However, the business generated by the backbone departments just might help with the net profit of your RV business.
When you observed a transaction in the parts department, did the parts associate fill a request or determine what the customer needed? Were any open-ended questions asked to determine the customer’s needs? Or did the parts associate sell the customer only what was requested?
You might ask: “Why is it important that the parts associate asks those open-ended questions to determine the actual needs of the customer?”
It is because the customer may not know what is actually required to meet their needs. If the customer walks out of your dealership with exactly what was requested and that item doesn’t resolve their problem, then have you met the customer’s needs?
If you are fortunate, the customer will complain and you will have the opportunity to correct the situation to the customer’s satisfaction.
However, many dissatisfied customers don’t tell you they have not been served professionally — but they will tell others and most likely will take their business elsewhere.
Are your parts and service associates reactive or proactive in their selling efforts?
If they are reactive, most of their dealings with customers are the result of the customer contacting the dealership and requesting parts and/or service for their RV. If your parts and service sales associates are proactive, they are calling or emailing customers to advise them of new accessories that have arrived or to remind them of maintenance service that might be required.
How do you get your parts and service associates to become proactive in their dealings with your customers?
One method would be to initiate a selling skills training program. This could be as simple as having your best major unit sales associate work with your parts and service associates to share some customer relationship management tips. Or you could contract with a training provider to schedule on-site training for your staff.
Doing the Right Stuff
What could you do to strengthen the backbone of your dealership? Here is a starter list:
- Determine if lost sales are recorded and evaluated (by the way, you can experience lost sales in the service and major unit departments also).
- Schedule spot checks of the parts and accessory inventory (at least once per week).
- Meet with the parts and accessory manager to review the order criteria for several items.
- Establish a selling skills training program for each of your sales departments (major unit, parts and accessories, service).
- Observe your associates as they interact with customers — commend or critique them as needed.
In the next installment of this series, we will work on your dealership backbone and on your management “pect exercises,” which could strengthen your business’ backbone!
Mel Selway is the president of P.A.R.T.S. Inc., a Sahuarita, Arizona-based firm providing business management analysis and training to retailers. He can be reached at 520-336-8606 or melselway@aol.com.
TABLE OF CONTENTS
Back Issues
