The Parts Department, despite being a highly profitable area, is not fully exploited by many dealers.
If the Parts Department is managed as a reactive area (by only selling when a customer asks to buy), its potential profitability is squandered. It is important that dealers take into account that a Parts Department that generates a significant income flow can help improve important performance indicators, such as the Absorption Factor.
Transforming Parts Department into a profitable area depends on the implementation of some changes in day-to-day operations, and the use of features provided by a suitable dealer management system. The features and processes suggested in this article (included in Autologica DMS) will allow you to turn your Parts Departments into a more active area that takes actions towards the instead of merely reacting to demand.
How to make this area more proactive and profitable
Customers know what they want but, but do they know what they may need?
When a customer approaches the front desk to ask for a part, they already know what they want. They are looking for a certain part for their vehicle, and this is when the salesperson must find the opportunity to generate more than one sale.
If the customer buys an oil filter, the salesperson can offer them supplementary products (for example, an air filter). In this way, the salesperson can offer the customer something they need but were not looking to buy.
Key #1: Autologica has a specific “related parts” feature that allows the salesperson to see other parts they could offer the customer with just one click.
Why didn’t I make this sale?
A lost sale shouldn’t be just another event in the daily routine, but a key piece of date that will help us improve. After losing a sale, the salesperson should reflect on the reasons why the customer didn’t move forward with the purchase and record this in the DMS in a swift and simple manner. This information will help the Parts Manager implement improvements in the sales process.
Reasons for lost sales:
- Lack of availability: This is evidence that purchase management should be more efficient.
- Price: You should analyze the possibility of offering discounts, generate combos, etc.
- Customer service: Your employees need more training.
Key #2: The Lost Sales report is a key tool for managers, but it requires that salespeople register the reasons for each lost sale.
These are some practices that help the Parts Department become more profitable, while also serving as key tools that provide the Parts Manager with strategic management information.
Part 2 of this article will analyze key strategies and processes to make the Parts Department more profitable based on improvements in purchase management and inventory control.