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.
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:
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: