By Sara Hey
If you’re like most dealers, the wholegoods sales in March, April and May were ones for the record books. Now, however, you can’t get inventory.
So, what do you do as a dealership? Should you just shut your doors until you get more inventory? That’s certainly not what I would do if I were in your shoes.
Instead, you should take the following three actions to ensure you can continue servicing your customers – while making certain your dealership remains hardy and profitable.
Communicate with your customers
Let’s say that you and your spouse had been saving, thinking and planning to do a kitchen renovation. You call the contractor, and he says that he is out of all the components that you need for the reno, and he has no idea when it will be back in stock. What would you feel? Frustrated because he hadn’t mentioned it before? Probably. Would it have changed your purchasing decision? Most likely.
This experience is the same thing your customers are going through right now. A little communication goes a long way in keeping them in the loop about the inventory situation so that when they come into your dealership, they have realistic expectations.
Here is what we know: It’s not just the OPE industry struggling with inventory right now. As we sit, cars can’t be manufactured because they can’t get chips; lumber inventory is short, so we are paying exorbitant prices; and do you even remember the toilet paper shortage of 2020?
Your customers are aware that there are inventory shortages in every other area. Still, you need to tell them about how that affects them at your dealership. At the end of the day, they want to know, “How does this affect me?” That’s what you should be communicating.
Manufacturers are not your enemy
In pain, we look for someone else to blame, and the easy blame in this situation would be the manufacturer. I get it – why didn’t they see this coming? Shouldn’t have they planned better? Sure, that makes sense if they have a hidden crystal ball at their offices, but to the best of my knowledge, they don’t. As someone who works with manufacturers in almost all dealer-facing industries, I can say with confidence that your manufacturers would love nothing more than to sell you more inventory.
If you knew this would happen, would you have ordered more inventory when your rep came around to take your order? Let’s pass on some of the grace that you want from your customers to your manufacturers.
It’s also important to keep in mind that your reps aren’t trying to ruin your day with inventory issues; they are just the messengers. No amount of frustration with your rep will change your inventory issues. So instead of ripping them a new one, find ways to partner with your manufacturers and your specific reps to be a solution to this problem.
Maximize revenue from parts and service
Now, more than ever, it’s clear that your parts and service departments need to generate substantial revenue to help keep the doors of your dealership open.
In fact, now is the time to do two specific things:
- First, make sure your parts margins are where they need to be. In outdoor power equipment, it’s preferable to see margins in the 48-53 percent range.
- Second, when it comes to service, focus on flat rating as much work as possible. I’ve found that dealers who implement flat rating on most of the work in their service department increase their service revenue by more than 20 percent. If you need a little more information on how to do this, I’ve set up a couple of free flat-rate resources just for OPE Business readers: Simply text “service” to 43506 for a “How to Flat Rate” video and a basic OPE Flat Rate Guide.
Now is not the time to overcomplicate anything you are doing in your dealership. Instead, your focus should be returning to the basics to take care of your customers and keep your dealership in a healthy and profitable position.
Sara Hey is vice president of business development and a speaker at Bob Clements International (www.bobclements.com); contact her at firstname.lastname@example.org or 800/480-0737. The company’s Parts Matrix Calculator, available as part of its Dealer Toolbox, is designed to help OPE dealers determine and adjust their parts margins.
This article initially appeared in the July/August 2021 issue of OPE Business.