Bottom Line Profits From Online Parts Sales – Pt. 2
This is the second of two articles that explores several best practices, such as performance-based incentives and improving quote processes, recommended to dealers looking to boost their fixed operations profitability. This article is adapted from the November/December 2019 Fixed Ops Magazine.
Reward the Right Outcomes
Nothing drives personal behavior and dealership success better than a compelling pay plan. So, it’s not surprising that more than 90% of dealers offer some type of performance-based manager incentives.
By far, the most common plan noted in the survey is based on department profitability. This is likely because other store departments are paid in the same way. But, dealers with this plan only experience average win rates. Other less popular incentive plans like payment on sales growth or payment on sales volume have slightly better win rates. These may also be combined with short term bonus programs and other performance-based incentives.
Best Practice: Explore variety in pay plans or offering special performance-based incentives because what works in other dealership departments may not be the best option for selling more parts.
Embrace New Technologies
Almost all dealers are satisfied with the current process of quoting prices manually. But Jay Mahoney, Parts Manager at DARCARS, says, “We take a blended approach, entering enough data to help customers by verifying order accuracy and we use tools like Auto PartsBridge to stay competitive.” There is growing industry awareness of new technologies and the opportunity to improve quote processes and performance-based incentives. Technology that would improve parts inventory match and pricing, including pull through on rebates, would reduce workload and improve platform engagement.
In the survey, 38% of managers indicated they would consider using software programs that improved quote response rates. Interestingly, these dealers also had win rates slightly below average and might benefit from an improved quote process and incentives. “We are quoting on several systems at the same time,” says Wilcox. “It would be great to improve some of the pricing and inventory match.”
Software services and incentives continue to evolve. Programs like CollisionLink, Auto PartsBridge, DMS Link and other OEM recommended programs offer some dealers a way to match parts and price among separate databases. On the horizon, systems like OnPart may someday offer automated quoting solutions that are fully integrated with online platforms.
New technology and processes needs to work with the existing systems, platforms, and operations to integrate data, improve efficiency, and implement performance-based incentives. “Online platforms bring greater transparency and have become essential to dealers who want to expand their territory” says Dustin Whitehead, National Sales Director at PartsTrader. Their platform already integrates seamlessly with many third-party software providers. This makes it possible for dealers to quote more accurately and leverage every rebate or incentive.
Best Practice: Explore new software tools that work with existing systems to drive new sales opportunities while increasing worker productivity
Winning more quotes through online platforms comes down to a mix of techniques that need to be customized for each situation. Be sure pricing is adjusted to meet dynamic conditions. Set prices to achieve business goals. Compensate managers based on measurable objectives and offer performance-based incentives, and explore new technology to reduce friction and improve quote processes and efficiency.
Article By: Mike McFall, President, JDJS Consulting
Mike McFall is the President of JDJS Consulting. He has over 25 years of experience in the automotive industry, having served on the board of Fenix Parts and worked with dealers at General Motors, AutoNation and Black Book before establishing JDJS Consulting.