4 Ways Dealers Are Leaving Money on the Table
To be successful in the months ahead, it will be crucial for dealerships to reflect on what the pandemic has taught them. If dealers revert to “the way it was” and don’t embrace the new normal, they will see money left on the table, and long-term profitability will continue to elude them.
Making smart decisions now will help you reach your goals for whatever the future brings.
Below are a few critical areas of opportunity that will be paramount to maximizing profitability as well as employee and customer retention, in the post-COVID dealership environment.
1. Not Having the Right Sales Process in Place
Consumers were already spending less and less time at the dealership — with an average of 2.3 visits per purchase pre-pandemic. In a COVID-19 world, consumers are taking their online shopping behaviors even further down the sales funnel, forcing more dealers to the realization that they need to meet the customer where they want to shop: online, in-person, or both. A dealership that offers an omnichannel customer experience, will provide the buyer with the flexibility, convenience, and safety they desire.
In response, dealerships should consider fast-tracking an approach that blends traditional sales methods with digital retailing and online education, allowing for their employees to transition from “salesperson” to “trusted advisor.” Enabling and optimizing talent with technology will allow dealers to establish and cultivate a winning culture and be ahead of the curve during this transformative decade.
2. Neglecting to Train and Support Your Team
Even before the pandemic closed dealerships nationwide, the role of the dealership employee was evolving. Shoppers were beginning the buying process more informed than ever before. Dealerships neglecting to train tenured and new talent alike are risking not only bottom-line growth, but even potentially seeing star talent leave for greener pastures — a double blow.
Dealers can mitigate this risk by enrolling their employees in career-enhancing learning programs. Like success, training is a journey, not an event. While in-person training provides a solid foundation, there needs to be ongoing learning once class is dismissed. Utilizing in-dealership resources alongside virtual learning platforms can provide not just F&I employees, but all dealer team members with product knowledge and “soft skill” training to improve their time management, persuasive communication techniques, conflict management skills, and more. We’ve seen F&I managers that go through in-person training to help their dealerships increase PVR VSC penetration by double digits.
3. Not Understanding All Your Reinsurance Options
As we have seen with this pandemic — times change, goals change — and there may be a need for dealers to change their reinsurance model to match their goals. Unfortunately, many dealers may not fully appreciate the benefits of changing reinsurance options to be in sync with their current goals.
This is where having a reinsurance partner that is well versed and can help you navigate various options is critical. Take this time to review your reinsurance plan with an experienced participation consultant that is well versed in all the plans, not just the ones they offer to make sure it aligns with your needs today.
4. Using Underperforming F&I Products
As every dealer knows, performance within the F&I office is critical to the survival of the business. Though many of the key benefits of vehicle service contracts (VSCs) may appear to be similar on the surface, VSCs have different features that may make it harder to tailor the product to a specific customer need. And when options are limited, revenue potential is limited, too.
Use this time to discuss the performance of your VSCs and other F&I products with your provider to see how any variations in the products themselves could improve performance or if there are specific client segments that are underperforming. An in-depth F&I product check-up can help you determine if your products are meeting expectations and identify ways that you can provide more value to your customers and drive dealership loyalty.
Not having the right sales process in place, failing to train your staff, not understanding your reinsurance options, and not offering optimized F&I products are just a few of the ways dealers are leaving money on the table that is critical to their survival. Making smart decisions now will help you reach your goals for whatever the future brings.
Ash Bauer is executive vice president of Assurant Dealer Services. With three decades of industry experience, he leads the day-to-day operations of Assurant Dealer Services and is responsible for driving the growth and expansion of the division.