Vendor, Partner, or Friend?

I recently made my first visit to a dealership that wanted to set up a commercial department.  The owner and general manager wanted to know what it was going to take to get started. They were surprised by what I told them.

  • You will need more than one sales person to start your program. (They had moved one sales person from the new car department).
  • You will need at least three times more inventory than you plan to sell in one month with 30% of the vehicles upfitted. The minimum I recommend is 30 units. (They had eight vehicles that could be considered commercial and wanted to start by doing dealer trades)
  • You will need to have each of your sales team join at least two trade groups each. (They were more concerned with the cost of membership and wanted to wait until they had some sales)
  • You will have to commit to a long-term process. It will take months to see your first results. (they were surprised with expectations that each time a sales person went on a sales call they were expecting a sale!)
  • Your sales person’s focus should be on appointment based sales calls. (They had sent their converted retail sales person out to make cold calls with the advice to “just knock on doors.”)

I could go on but I think you get the picture, the dealership sincerely wanted to start a commercial department but had no understanding of how different the commercial side of the business is from retail, after all “sales are sales,” right? Wrong! In the 16 years I have been working with commercial departments and the manufacturers the most important single thing I have learned is this side of the business is not about selling vehicles.  If you believe it is about vehicles first, you will struggle.  It is about two things, relationships, and value. If your goal is to sell a truck you will struggle, if your goal is to make a difference in the life of a business owner, it will take time but you will sell a lot of trucks!  Think about this:

  • If your focus is to sell trucks early on, you will be competing on price, you are nothing more than a vendor and vendors are a dime a dozen. Also, if you are not committed to the commercial requirements you must find the right vehicle through a dealer trade.  Forget making very much profit on until sales if any.
  • If you take the time to understand a prospects business and spend time understanding the problems and obstacles he or she faces you have a better opportunity to add value and provide solutions to their problems many of which have little to do with their vehicles. This may take weeks or months. In some cases, you match the prospect with a business that can meet a specific need (Yes, it’s called networking). At this point you cease being a vendor and you become a partner.
  • When you adapt an attitude of truly caring about your prospects and going the extra mile, the relationship moves to a level of trust and gratitude. What becomes as important as the vehicle is a total involvement with their business. The importance of price diminishes and total value takes over. At this point you go beyond vendor and even partner, you become a trusted friend. At this point your business begins to grow rapidly.

To reach the point of partner and friend takes time and resources. It is difficult for most dealerships whom are new to the outside sales process to understand the time and resource commitment. If you hire an exceptional sales person who has the right skills and past clients it still takes at least six months to get started and that still depends upon having the right inventory, the right pay plan to give your sales team time to succeed and total support from the entire dealership including parts and service.

In 2017, I anticipate more dealerships wanting to start commercial departments that at any time during the last 16 years.  Why?  TrueCar.com, cars.com, carvana.com and many other online “aggregate sites” where retail dealerships get into the “commodity business” of selling on price.  As this continues profits on the retail side are squeezed to nothing. Ten years ago, my company did a detailed survey for General Motors regarding the net profit per unit sold.  The results of researching 50 dealerships that had both commercial and retail were eye opening!  One commercial unit sale was worth three times more net profit to the dealerships than one retail sale.  I think in today’s market it could be as high as five times the profit level.

Commercial vehicle sales can mean incredible profit levels for the dealerships but it takes a long term, 100 percent commitment.  Think of it as starting a new dealership. Next issues article will be the steps you need to take to grow a profitable commercial department. It is not an easy process but if you will follow the guidelines I will give you, success will be yours!


About Ken Taylor:

ken-taylor-a
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, Fiat Chrysler, Wells Fargo, Ford, Commercial Truck Trader, and Equipment Trader.

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