Digital Dealer - October 2019 - 14
D E A L E R OP S & M ANAGEM ENT: Sp e n d M anagement
By Doug Austin
Founder & President,
StrategicSource, Inc.
Could You Use
Another 1% in Net
Profit This Year
My team and I just
returned from a
dealer-related trade show
this week.The amount of
companies offering new
tools, solutions, and
strategies designed to
generate leads, increase
loyalty of existing customers,
track customers, and
increase website visibility is
simply mindboggling.
Dealers are certainly interested in the newest digital
solutions, and anything to
give them a leg up on their
competition to drive new-top
line revenue. What's often
challenging is determining
which ones work and which
do not. The one thing everyone agrees on, is that all of
these new digital marketing
solutions add expense to
the operation and challenge
profitability.
It is fair to say that many
dealers are facing flat sales,
declining profits, and increased expense pressures.
According to NADA statistics, most new car dealers
are earning between 2.5
and 3.0 percent net profits
on their business. This a far
cry from the profitability of
years past, and according to
dealers I have talked to, as
well as industry news, it is
increasingly difficult to generate the profit they earned
just a few years ago.
IS IT POSSIBLE
TO INCREASE
PROFITABILITY
BY ONE PERCENT?
The answer to the question
above is yes. If management
is willing to establish a cost
reduction, centralization
strategy and then hold their
various locations accountable, they can see significant
cost reductions and new
profit. This fact alone does
not include the new efficiencies that will occur across the
organization from managing
fewer suppliers.
We have modeled slight
changes to expense categories across an organization
for dealers over the years.
Keep in mind the following:
Dealers will spend five
percent of sales on supplies
and services. $100MM in
sales = $5MM in expense.
Dealers will spend that
$5MM across up to 130
expense categories.
Centralization, quoting,
and renegotiation will generate up to 25 percent of that
$5MM in new profits.
What would an additional $1.250MM do to your
bottom-line net profits?
Would that move your
net profit from 2.5 to 3.5 percent net profit or more?
Of course it would; The
math works. Centralization
works. That is why most
companies across the U.S.
landscape have centralized
purchasing functions for
years. For dealerships willing
to take steps to manage more
effectively, there are countless opportunities to reduce
costs, improve profits, and
recover supplier overcharges.
EXPENSE CATEGORY
COST REDUCTION - NEW
PROFIT OPPORTUNITIES
Dealers source over 130
14
OCTOBER 2019
D I G I TA L D E A L E R . C O M
http://www.DIGITALDEALER.COM
Digital Dealer - October 2019
Table of Contents for the Digital Edition of Digital Dealer - October 2019
Digital Dealer - October 2019
A Message from the Show Director
Stop This Leadership Foolishness
Build & Develop the Right Team — Your Success Depends on It
Evolution Revolution: A Word to Successors
Could You Use Another 1 percent in Net Profits This Year?
Budget – We Don’t Need No Stinkin’ Budget
DMS Conversion: Careful Planning & Management Are Essential
Interview with Monument Chevrolet
Digital Retailing Online Experience Versus In-Store Experience
10 Social Media Tips for Salespeople
Defining Your Advertising Target Is Your Best Brand Strategy
4 Secrets for Google My Business Success
How to Know if Your SEO Investment Is Paying Off
“Look, it’s not Rocket Science” By Anthony J. TaCito
A Balanced Approach to Customer Experience
The Power of Words
Value Is Important… So Are You Charging Too Much?
Digital Dealer - October 2019 - CT1
Digital Dealer - October 2019 - CT2
Digital Dealer - October 2019 - Digital Dealer - October 2019
Digital Dealer - October 2019 - Cover2
Digital Dealer - October 2019 - 1
Digital Dealer - October 2019 - A Message from the Show Director
Digital Dealer - October 2019 - 3
Digital Dealer - October 2019 - Stop This Leadership Foolishness
Digital Dealer - October 2019 - 5
Digital Dealer - October 2019 - Build & Develop the Right Team — Your Success Depends on It
Digital Dealer - October 2019 - 7
Digital Dealer - October 2019 - 8
Digital Dealer - October 2019 - 9
Digital Dealer - October 2019 - Evolution Revolution: A Word to Successors
Digital Dealer - October 2019 - 11
Digital Dealer - October 2019 - 12
Digital Dealer - October 2019 - 13
Digital Dealer - October 2019 - Could You Use Another 1 percent in Net Profits This Year?
Digital Dealer - October 2019 - 15
Digital Dealer - October 2019 - 16
Digital Dealer - October 2019 - 17
Digital Dealer - October 2019 - Budget – We Don’t Need No Stinkin’ Budget
Digital Dealer - October 2019 - 19
Digital Dealer - October 2019 - DMS Conversion: Careful Planning & Management Are Essential
Digital Dealer - October 2019 - 21
Digital Dealer - October 2019 - 22
Digital Dealer - October 2019 - 23
Digital Dealer - October 2019 - Interview with Monument Chevrolet
Digital Dealer - October 2019 - 25
Digital Dealer - October 2019 - 26
Digital Dealer - October 2019 - 27
Digital Dealer - October 2019 - 28
Digital Dealer - October 2019 - 29
Digital Dealer - October 2019 - 30
Digital Dealer - October 2019 - Digital Retailing Online Experience Versus In-Store Experience
Digital Dealer - October 2019 - 10 Social Media Tips for Salespeople
Digital Dealer - October 2019 - 33
Digital Dealer - October 2019 - Defining Your Advertising Target Is Your Best Brand Strategy
Digital Dealer - October 2019 - 35
Digital Dealer - October 2019 - 4 Secrets for Google My Business Success
Digital Dealer - October 2019 - How to Know if Your SEO Investment Is Paying Off
Digital Dealer - October 2019 - 38
Digital Dealer - October 2019 - 39
Digital Dealer - October 2019 - “Look, it’s not Rocket Science” By Anthony J. TaCito
Digital Dealer - October 2019 - 41
Digital Dealer - October 2019 - A Balanced Approach to Customer Experience
Digital Dealer - October 2019 - 43
Digital Dealer - October 2019 - The Power of Words
Digital Dealer - October 2019 - 45
Digital Dealer - October 2019 - Value Is Important… So Are You Charging Too Much?
Digital Dealer - October 2019 - 47
Digital Dealer - October 2019 - 48
Digital Dealer - October 2019 - Cover3
Digital Dealer - October 2019 - Cover4
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