Fostering sales growth at your dealership is an ongoing endeavor. There are many strategies to increase sales and improve profits in your sales department. Most of these strategies focus around new and used retail sales. With competition continuing to heighten between dealerships, how can you differentiate and improve your sales?
The most obvious answer is an aggressive commercial sales strategy.
The percentage of dealers that aggressively target commercial buyers is very low as compared to the overall pool of dealerships. Developing an aggressive commercial vehicle sales strategy is the quickest way to profitably differentiate your dealership from others around you.
Even in a situation where other dealers are already heavily involved in commercial sales, there is still a lot of potential. Many dealerships only dabble, and others do not fully satisfy the demands of this market. Commercial sales account for around 20% of all new vehicle sales. Do commercial sales account for 20% of your dealership sales?
If the answer is no, then you have some work to do. If you’re still not convinced, let’s examine some of the ways commercial sales can expand your dealership’s profit center.
Commercial sales provides a new business opportunity. Many successful commercial dealers describe it as a franchise within a franchise. By chasing commercial sales, you are adding a whole new vein of business for your dealership.
Accelerated Buying Cycle
The average retail buying cycle is 3-5 years. That means you spend time getting to know your customer, sale them a car, and then you won’t see them again for 3-5 years. With commercial customers, however, you can expect to see them once or more per year.
Most commercial buyers own multiple vehicles for business use. These vehicles are driven more miles every year, and are likely to get replaced sooner than a typical retail vehicle.
Furthermore, with more vehicles in the fleet, it means they will replace them at regular intervals. For example, a local construction company that owns 20 trucks will need to replace 2-3 of them every year in order to keep the fleet fresh and reduce maintenance costs.
In comparison to the retail buying cycle, building a relationship with a commercial buyer can mean you get to sell them a lot more vehicles in much less time. It only takes a handful of these accounts to form the foundation of a successful commercial business.
There is a misconception in our business that there is no profit in commercial sales. While it may be true that commercial customers demand better pricing, it is not true that gross profits need to suffer.
If you ask the right questions and are familiar with some of the F&I products specially designed for commercial customers, you will find great profit opportunities.
Commercial credit lines are available through many lenders and create an open checkbook situation for your buyer. Once approved for a line of credit, your buyer need only call you up and tell you what vehicle they want. You print up the paperwork and bring it to them to sign along with the new vehicle. It’s the easiest sale you will ever make.
New Service Business
When planning your commercial business, don’t forget about service. Catering to commercial customers in your service drive is an integral part to commercial sale success. Commercial customers rely on their vehicles for their livelihood. Every moment that a vehicle is down means lost revenue to the business.
Just as with the accelerated buying cycle discussed above, commercial customers will use your service department more regularly and they will spend more. You just need to give them what they want: fast and reliable service.