How to improve Business Office profitability:

A lay of the land can quickly identify the overwhelming need to improve Business Office profitability. The Internet has made used vehicle pricing transparent today and with the need to turn inventory quicker before aging and depreciating sets in, many dealers are forced to price their vehicles more aggressively. Large independent used vehicle operators in some areas of the country with massive inventories and minimal reconditioning have also forced dealers in these areas to price their vehicles lower to remain competitive. Many manufacturers restructured their pricing over the past several years reducing available profit margins for their dealers. Many new and lower-priced models that make up a significant percentage of new vehicle deliveries have also curbed departmental profitability. These factors and possibly more have placed a negative impact on front-end gross profits forcing dealers to more heavily rely on Business Office profits to make up the difference. Some dealers have recognized these factors and adopted a “turn & earn” business model – they move their vehicles as quickly as possible so they can get their customers into their Business Offices where the “real” profits are made. The days of accepting mediocrity in the Business Office are long gone for any dealer today.

Most pro-active dealers who have felt these competitive pressures have placed a new focus and commitment to improving their Business Office performance. All of the successful dealerships that we work with today have a documented sales process that their sales teams follow to ensure high closing ratios and gross profits. When it comes to some Business Offices however, we often find no process whatsoever. Another common observation amongst poorer performing Business Managers is limited product knowledge; some do not even know what is covered and what is not covered under the manufacturer’s warranties. This is a result of a lack of formal training or no support or maintenance training during their career. The following are some examples of some success strategies used to improve performance:

Success Strategies:

1.     The first step to improving performance is to remove a customer’s perception that they are being sold products. Top performing Business Managers provide customers with protection plans and solutions that their customers are “eligible to register.” Employing this strategy yields amazing results. Poorer performing Business Managers use a disclosure method informing customers what they can purchase maintaining the perception that they are being sold.

2.     Just as with any vehicle sales process, Business Managers need to adopt an effective sales process that suits their personality, is customer friendly and produces results. There are currently at least 5 distinct sales processes being used today: “step-selling,” “menu selling,” “staggered selling,” “sandwich selling” and a “load, lock and fire” strategy. I have found that any of these sales processes can produce outstanding results for a Business Manager when properly executed – it’s a question of personal taste. Many poorer performing Business Managers do not know how to even describe their sales process or if they do follow a strategy, it’s poorly done because they were never shown how to properly execute it. The needed solution here is to adopt a sales process or get the current one tuned-up.

3.     Often times, Business Managers’ presentations are at the root of poor performance. Most customers do not come into a Business Office wanting or needing vehicle and loan/lease protection products. Presentations need to be comprised with the following objectives:

  • Create a need or curiosity
  • Provide a solution
  • Detail features and benefits
  • Close with options

Over-hauling a Business Manager’s presentations to execute these objectives may be warranted.

4.     Securing buy-in from the sales staff and management by educating them about the need and value of Business Office protection plans and products is also a critical part of a solution. If your Business Managers are not performing at an optimum level of performance, it is unlikely that they will be able to properly train the staff so you should seek out a professional training solution.

5.     Many dealers accept the natural handicaps associated with their brand or the clientele that their dealership attracts. (for example: longer comprehensive or powertrain warranties, no reserve on sub-vented interest rates, no vehicle protection products like rust proofing, unusually high lease penetration rates on their new vehicle sales or an extraordinary high percentage of cash deals.) Some of these factors legitimately curb Business Office performance but top-flight Business Managers have learned to overcome these hurdles – there are solutions available. In many cases, re-visiting the product line-up that your Business Office provides your customers is warranted. For example, there are still many dealers who do not offer Guaranteed Auto Protection for their customers’ finance contracts; ethically, they should be. Research the products and services that other dealerships offer and select ones that will be valuable for your customers.

6.     Many dealerships and Business Managers have taken the inconsistency out of Business Office presentations by utilizing slide shows, audio slide shows or video to present vehicle and loan/lease protection plans and products to their customers; some have even had them translated into different languages accommodating their multi-cultural clientele.

7.     Sending a Business Manager to a one or two day workshop can produce the results that you are seeking but often and due to limited staffing or travel, an in-house coaching solution may be more practical. Newly hired Business Managers should complete a comprehensive training program.

 Following these suggestions is perhaps a better strategy than just replacing a good and loyal employee. Reconditioning a used vehicle is an investment and not a cost of sale that allows the vehicle to sell quicker and for a higher price; training is also an item that shows up as an expense just as reconditioning does on a financial statement but investing at improving your Business Office will yield improved profits on all of your transactions moving forward. Another perspective to consider is that your Business Office produces the highest gross profit per square foot in your dealership. Take care of this prime piece of real estate and it will reward you! 

Hector Bosotti is a National Trainer and Consultant for Wye Management and President of www.f-iresource.com. He has over 29 years of retail automotive experience whose success has been founded on 3 key elements:  People, Process & Training. 

Please send your thoughts or requests to hbosotti@wyemanagement.com or contact him directly at 647.292.4503. Wye Management offers in-dealership training & consulting and hosts workshops from coast to coast. For more information, visit wyemanagement.com

About The Business Office

President of F-I Resource and a National Trainer and Consultant for Wye Management:
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