Digital Dealer - March 2020 - 17

DEFY GRAVITY
APRIL 6 -8 20 2 0 | O RLA ND O , FL

FEATURED SESSION:
four or even ﬁve, while the aforementioned
where-the-moon-don't-shine factory MSRP
is usually 67%, not even one; you may
feel they are being somehow unfair - not
so when you compare our meager pricing
strategies versus other commerce.
Get this: I traveled with a tennis shoe
wholesaler a while back who said he paid
$18 per pair in quantity from Asia, no
matter the made-up retail price. I asked
about the higher-end $150 sneakers - "all
the same," he noted. Really!
Think about the so-called "Sales" other
businesses have: Half-price this weekend,
Save 70% now till the end of the world, etc.
My best guess is, they aren't losing money
on these deals; besides the idea is for you
to spend money on the x4 markup stuff
too lad.

Costly Cost
Another huge factor in margin management is the cost of goods and labor. I am
very aware of the need, wanted or not, to
be loyal to your franchise, which includes
paying the price for parts no matter what.
But every part going out the door isn't tied
to that franchise. Aggressive managers
ﬁnd they can do a nice volume in other
makes from loyal customers as well as the
used vehicle department. These smarties
negotiate with a local parts supplier to
get the lowest cost on tier one parts and
quality supplies, plus early pay and volume
discounts to boot up to at least 7%.
I have seen as many as ten levels of
discounting from some suppliers (in the
old days they ran out of paper colors), but
if you don't negotiate, you don't get -
why would you? This includes bodyshop
supplies and hardware, as well as pricey
chemicals. When you buy it right, a fatter
markup is in order, which sweetens the
gross proﬁt margin. I have personally
presented purchase loyalty options to suppliers for dealers, which ended up shocking
management regarding the substantial

March 2020

discounts we achieved. You can do this
too; it isn't rocket science.

Have a Clue
What really determines what we can
charge for what? Hey, how about the competition? Let's face it, we are generally lax
in our market studies, which we probably
should be doing about every six months.
Many times, I have my clients survey the
prevailing market pricing, and we discover that we are the cheapest around on
some common items. All that is accomplishing is driving down the meager GP
percent.
Cheap pricing isn't driving retention,
being fair-priced is all customers ask for
(except for the loser/whiners you don't
want). The overall experience is the real
driver of loyalty, not price. Don't give
away what isn't accomplishing anything
but a crummy margin. Hey, market a
$9.95 oil change and see what happens
- you likely won't do it twice. (Note: have
hazmat suits readily available if you do).

Juice Time
It's time Big Boss. Hopefully I have your
juices ﬂowing a bit concerning picking
up some additional GP margins here and
there. To that end, I made up a threepart Excel workbook to play with to get
you even more enthusiastic. I did all the
work, so all you have to do is plug in some
numbers to see what happens. Think out
of the "pricing box" dealer managers were
dropped into long ago - you know, the one
you inherited. For a copy of the workbook,
email Ed@NetProﬁtGroup.com with
"Parts-Labor-Sublet Price Matrix Testing" as the subject line. It'll be fun, but
caution, don't let your kid get a hold of it
- he or she will ask for a larger allowance
for sure.
To share feedback or submit questions/topic
suggestions, email magazine@digitaldealer.com

12 Fundamentals
That Drive
Customer
Retention in
Service
Next month, Ed Kovalchick
will present at Digital Dealer
Orlando, providing critical
insight on improving retention of
service customers, using no-cost
or little investment fundamental
strategies. Dealers are losing
up to 40% of the customers
and the potential service and
parts revenue the very first year
because simple, yet effective
retention steps are never
completed. This session will
reveal and review these steps
in detail and give you some
resource/support materials to
get the programs moving upon
return to the dealership.

After this session, you
will know how to:
 Set important customer

retention methods in place
effectively.

 Maintain the service retention

methods installed.

 Use numerous no-cost vital

methods to develop service
customer retention for those
now lost in the beginning.

PRESENTER:
Ed Kovalchick
CEO,
Net Profit, Inc.
View more of the 100+ sessions on
the 2.5-day Digital Dealer Orlando
agenda, and register now by
visiting digitaldealer.com.

[ d i g i t a l d e a l e r. c o m ]

17
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Digital Dealer - March 2020

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