Through the Eyes Of the Bold, Part 18

Today I want to continue to look globally at the commercial truck operation within a dealership and offer some ideas to have it make more sense.

In the majority of the Through the Eyes of the Bold series this month, I have spent a lot of time on inventory, and for good reason. I have seen the inventory be the beginning and the end of many a commercial operation. It's those big white things, you know. I remember back when I was a commercial manager that the other managers used to say that the commercial trucks are too big and take up too many spaces. I said, "well, they take up one space, just like the other cars and trucks. They just fill that space up a bit more, but it is still only one space." But, that was a waste of time because it is just their perspective. The way that doesn't come up much is when they see how many get sold!

When I say that the inventory is the beginning and the end, I mean that at an auto dealership, inventory is a given. A dealer doesn't have much of a problem understanding having inventory on the lot to sell from. Based on that, it is a fairly easy sell to get the dealer to stock some upfitted trucks. That's the beginning. "If you build it, they will come." That's the mantra in the car business. The other mantra is "turn and earn." So, when they don't turn, the dealer gets sour about commercial rather quickly and begins to wind it down. So, the crucial part is what do you do once you have the inventory? The "if you build it, they will come" theory will have a very small amount of success, because display is only a small part of the story of the successful turning of inventory. You have to remember that this stuff is specialized inventory designed to be used by a specific group of users and based on that, there has to be a much better plan on how to "turn and earn." You turn them, you earn the right to keep doing it. You don't turn them, the dealer will come in with controls and may shut it down.

Allow me to share some things I've learned about turning the inventory, even in times like today. These will help you start right and keep growing.
  • Database, database, database. If you don't have a database of potential customers to contact and stay in touch with, I don't know how you will succeed except in a market where there is more demand than there is product. Buy one. Upload it to a customer relation management program. ACT! is a good one, and there are many others on the market. You might even have a good one in house at the dealership, but you need to be able to control the fields specifically for commercial trucks. For example, you need to be able to put in SIC codes and descriptions of different users, like cement contractor, electrical contractor, landscaper, engineering contractor, plumber, and so on. This allows you to target specific audiences with specific offers that are specifically designed to be attractive to them. We have a whole plan on what to do with a database, but you see that it is number one on my list. It is number one. I had a 10,000 name, six county database that I used and massaged for years. It made all the difference through good times and less good times. Get a good database.
  • Use an Inventory Management System that is also a database of statistics. This is number two. If you don't manage your inventory, it will manage you. I cannot even imagine running a commercial operation without this. Through this program, I print inventory lists with all the information a salesperson needs to close the sale. Out of this, I build a database of information that helps me make better and better inventory decisions in the future. I will be able to know how much I made on flatbed dumps versus steel dumps versus empty chassis. I will know how long I had them in stock and I can have averages and totals. I started using this in 1989 and never stopped and you would be flat amazed the valuable information I gleaned from it. It's how I figured out that stocking empty chassis made no sense from a profit, flooring and turn time point of view. At the last operation, I had about 80 upfits on the ground and only about 2 or 3 were empty. I see dealerships today that have 50 and 22 of them are empty. That's a flooring bill going skyward. You might as well stock Mustang GT's with no engine. Hey, you can buy this GT, but it will take about 4-6 weeks to get the engine of your choice. . . sure. Get an inventory management system. We have one that you can get that is easy to use.
  • Know what you want to achieve. Write a plan. I started writing plans in 1989 at my first commercial operation and I would write one before the start of each new year with goals, plans, changes and in as much detail as I could. I got better and better at them as time went on. At first I thought it was silly, but it is not the least bit silly. Keeping it in you head is not good. I started it mainly because I had to keep re-selling the dealer on the value of keeping the department alive. It worked. It not only stayed alive, it began to thrive. At first, I couldn't show sales, so I showed activity. Here's how many we talked to and here's deals we're working and here's relationships we're building and so on and so on broken down by salesperson. In the first six months, I probably did about 30 reports although they were short and were just a list of our activities. We needed his support and we had almost no sales at the start, so we had to show him value another way. Get good at reports so you can demonstrate value and communication with the dealer and/or general manager. Then, write a full blown report for the next year, but don't do it in January, do it in November. Be the first to produce your report for the coming year. State what has happened, achievements, sales, statistics, what you see in the coming year and how that will flow and most important after all of that--what you need from the dealer to help make that a reality. You will get the support. Dealers aren't used to that kind of business planning, so they will respond to you because they see that you are keeping their interests at the forefront. Get a plan and keep planning.
  • Now, at number four is get your inventory coming and have it make sense to the market. We talked a great deal about the mix and expanded on each category, so you should have that down pretty well. If you are going to sell F150's, you need more than one. You need a regular cab, a super cab, a super crew cab, a 4x4 as an absolute minimum. Then you need some F250's and F350's and Rangers and so on. I've seen dealers that stock two or three different kinds of bodies and that is it. That wouldn't fly on the retail side, so how could it fly on the commercial side? Get smart about your stock. Next, when something sells, replace it yesterday. Don't wait six weeks. Have a better plan. You need to encourage success. If something is not turning, figure out why as best you can. Don't give up on it, but adjust as you think you need to.
  • Get some partners. One of the things that will help you the most is to not think about other dealers as competitors, but as partners. Whatever make you are selling, it is common for salespeople to think of the same make dealers closest to them as competitors. I even hear many complaints that they steal their deals, undercut the market, don't trade with them, and much less kind thoughts. That thinking will keep your income very small. Get over it. How can you develop a partner relationship with them, so that they help you when you need it and you help them when they need it? We all need help. I remember many, many years ago, there was a Chevy dealer in Fresno that was very large. They typically had over 500+ units on the ground. They thought of themselves as an island and that the inventory was their "value." They stopped dealer trading. They went out of business. That kind of thinking will not grow your business--it will keep it small or kill it. Give value. It comes back ten fold. These new partners will help you turn your inventory by making it available to them so they know what you have in commercial. We're doing this in regions through Ford Truck Clubs right now, but I started it back when I was doing commercial with another large dealer which essentially doubled my inventory at the time. In addition, we would trade two or three of our oldest pieces at the end of each month to keep some movement. Our agreement was that we would just take whatever and not be concerned about it because we get too focused on our own thinking sometimes and don't let better ideas in. It was amazing how their 90 day old or older piece sold in a week off our lot because it was fresh to us. That is a partnership. You could also take that partnership to several other levels if you had a mind to.
  • Have a work plan. How will you get the work done and how will you know it is getting done? You need some kind of system that is simple and yet has accountability. I've heard many, many times how a commercial director will hire an outside guy and he didn't sell hardly anything and four to six months later, we had to let him go. You know what? This is very straightforward, but here it is: That is your fault, not theirs. Of all those that complain of that scenario, not one of them had a plan, other than, hey you go out and call on businesses and let me know how its going. In the meantime, they use up the guarantee (if they didn't have that, they would have been gone sooner) and you get nothing because you had nothing--you had no plan. With our plan, you will know within two to three weeks if it is working, and sometimes sooner. No more long term failures. Get a plan. Frankly, most dealers as the one I just described, don't hire outside salespeople any more. That didn't work, so they quit the idea. Bad plan. Get a new manager! That's a much better plan! Get one with a plan, or better yet, give the plan to the new manager and guide them to success.
  • Keep your eyes on the future. Keep looking for better ideas and better methods and better plans. Filter that through your own intelligent mind and use what works for you and discard the rest. Borrow from anyone and everyone. I've accumulated a lot of great ideas from lots of different places, books, videos, experiences, trial and error and other peoples experience. Use whatever I'm giving that makes sense and keep looking while you do the best you can with what you have available to you today. Think growth. To me a business is either growing or it is dying. It is always a work in progress. How big can it get? I don't know. What's the limit of your thinking? Be open to learning from whoever can teach you. There is always something to learn. The information in the world is currently doubling about every 10 years now. New ideas, new ways, there's always something worth looking at. Stay out of that rut. That's one reason I love trying new bodies. Go to truck shows and see what's new. Subscribe to magazines, blogs, newsletters. Keep your eyes on the future and what you can do to grow.

That wasn't nearly as focused on inventory as you thought it was going to be, was it? The truth is that turning inventory is less about the inventory and more about your thinking about your operation--how you see it and how you keep it working or not. The first two are so important that I feel confident in predicting your success on whether or not you have those and use them. It is how the inventory is the beginning and the end. Of course, through the eyes of the bold, there is no end and there are continuous beginnings.

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