I recently gave a series of seminars in different cities for both experienced commercial dealers and dealers whom were interested in knowing more about the commercial and fleet side of the business. My first PowerPoint slide consisted of a series of company logos: Cars.com, Truecars.com, Carvana, CarsDirect, and Carlypso. My question to each group was “What do all these websites have in common?” The answer came quickly, “They cut into retail profits.” These web portals sign up dealers to gain web presence but in order to compete with other dealers, price becomes the main point of attraction for web prospects. My second question was “What web portals exist on the commercial and fleet side of the business that are comparable?” I got blank stares! You could say that Commercial Truck Trader or Work Truck Solutions are portals on the commercial side of automotive but that would not be accurate. Due to the uniqueness of various “upfits” on vehicles, price is not normally the key factor in making the sale, it is availability.
A few other things are occurring on the retail side of automotive. The last few years retail automotive sales have hit record numbers. A second situation also exists, a record amount of “subprime” auto loans have been made and delinquencies are starting to climb. Throw in one more factor, retail auto sales have dropped for the last four months which is pointing toward a slowdown in retail auto sales. This makes commercial and fleet a very attractive alternative. Now comes the main point of this article, understanding the commitment it takes when starting a commercial/fleet department or if you are struggling, how to get past the obstacles.
That brings us to the main point of this article, being fully committed when a dealership is involved in the commercial/fleet side of the business. You cannot “dip your toe in the water.” Think of commercial/fleet as a new franchise. If you tried to buy a dealership it would cost millions. Starting a “commercial/fleet franchise” can be done at a fraction of the cost. This side of the automotive business is very different than retail and if you don’t understand these differences, it will be a rough road. Think about the following 10 considerations:
- Advertising and Marketing- Dealerships spend from $300 to $800 per unit sold in advertising and marketing in retail and a fraction of that cost on commercial and fleet. You have to be willing to invest but with far less dollars and very strategically. Business owners do not buy on emotion, but based on need. The advertising and marketing efforts are far more targeted and strategic and can include joining trade associations, sponsoring events and “multi-staged direct mail.” Any publication marketing and advertising is focused on specialty publications such as trade magazines and customer newsletters.
- The now mentality- Based on the high dollars spent to drive traffic in the store on the retail side of the business, quick results are expected and a “now sale” is expected. If a prospect steps onto the lot, the expectation is to make the sale during that first visit. On the commercial side of the business, the sales person in many cases goes to the prospect and seldom does a business prospect buy during that first contact. In fact sales statistics from the Huthwaite Corporation shows that 81% of all outside sales are made after the 5th contact. It is going to take your new sales consultant time to grow the business, at least 9 months to a year. Be patient and you will be rewarded.
- Inventory is king- Could you imagine only having a dozen or so pieces of inventory on the retail lot? Business owners buy based on two systems, 1) A replacement schedule when the vehicle reaches a certain mileage or for the small business owner the “it just broke down and I need a new one” system which is no system. If you don’t have it and can’t find it you lose. At a minimum, you should have three times the commercial inventory of what you plan to sell in one month. 10-unit sales equal 30 units minimum in stock with a third of that number being upfitted. The great thing about commercial sales is you can target prospects based on matching what you have in stock with what your prospects are currently driving!
- Business Development Center support- BDC reps are taught to get a caller in for an appointment. Very few business owners want to come to the dealership and they certainly don’ want to talk with someone who knows nothing about commercial vehicles. Unfortunately, the BDC or Internet department has not been educated on the needs and wants of business owners. Creating a partnership between the commercial department and the BDC is essential. If the BDC rep gets paid on a per appointment basis, it is wise to reward them even if the call is transferred to the commercial department. Asking a simple question on an incoming call will solve 95% of the steps necessary to help the business owner. All the BDC rep has to do is ask, “Will the vehicle be for business or personal use?” If the replay is “business” we want to take some basic information and then transfer the call to the commercial sales consultant.
- Pay plans- Due to the facts that outside sales involve a long process, the pay plan must match the sales process. A 90 day draw against commission will guarantee one thing, failure. In most cases it will take 9 months to a year to reach a productive level (a systematic sales approach can shorten that timeframe). A pay plan that has a longer guarantee (9 months to a year), and is not a negative draw.
- Group involvement- Putting marketing dollars toward trade association memberships and business networking groups can dramatically shorten the time it takes to produce sales. It takes more than just joining these groups, you have to be a full participant by going to meetings, getting on key committees and sponsoring events to make these groups work for you and produce new opportunities.
- Creating a strong referral based selling network- I call this “creating your unpaid sales force.” Here is a simple fact; the more to give in the way of referrals and recommendations the more you receive. If there is a “secret” to successful outside sales, referral based selling is that secret! In our Ultimate Boot Camp, participants leave with over a dozen ways to create what we call “endless referrals.”
- Appointment based sales system- Detailed research by the University of North Carolina covering thousands or telephone and face to face sales calls determined that a sales person has less than a 5% chance of reaching a decision maker when calling a business. If a sales consultant follows the referral based selling system, getting an appointment becomes easier, in fact our statistics show over a 70% success rate in getting an appointment when you have a referral source. Love cold calling? Have fun getting rejected on 19 out of 20 calls!
- Stay organized- This is critical! Often it requires a business based software program rather than the dealership’s retail program such as ACT, SalesForce or Maximizer. A sales consultant gets overwhelmed quickly without a strong organizational system.
- Most important! Leadership support and involvement. You can’t have a successful commercial/fleet department without 100% leadership support from the top. If management does not understand the outside sales process you will struggle.
Summary- There are more things to consider but all of the above is necessary and critical to long term success. Follow these ten key areas and you will be well rewarded.
About Ken Taylor:
Ken Taylor’s training, consulting, and coaching have been used on individual, regional, and national business levels to achieve ultimate success! Known as an industry leader and as “America’s Corporate & Personal Coach,” Ken has consulted for companies like General Electric, General Motors, FCA, Ford, Commercial Truck Trader, and Equipment Trader.