Continuing the subject of partnering and promotions. I've talked about partnering with your body companies and other suppliers and even other dealers. Having your favorite suppliers kicking in to help you market your product is a good idea and one that they should be open to. Let me expand a bit on the idea of promotions.
A short story from my early days in the car business. As a young sales manager wanting to try exciting things, my first bold move was in late 1978 as I recall. I worked at a Chevy dealership where we averaged about 60 new cars & trucks plus used. The LUV small import truck made by Isuzu for Chevrolet was a good product and we stocked about 5 or 6 at a time and sold about 4 per month approximately. LUV came out with a trip to Japan if we hit a certain objective in about 120 days. Our objective seemed unreasonable the first time I looked at it. Our goal was set at 50 units. Do the math--4 units times 4 months equals 16 units which was our average. Seems unrealistic to do 50, but I wanted to go and got excited about the possibility and put together a promotion. I ordered 50 LUV trucks and I wanted them delivered all at once and create a stir seeing all those trucks being unloaded. The dealer was getting in his car and saw them unloading and said to me, "I sure hope you know what you're doing!" Confidence, right? Bottom line: We missed the goal--by only 2 units. We sold 48 LUV trucks during the program and that was 3 times our average! And guess what? It was fun! That is the power of promotion, having a vision and making a bold move. This was not an isolated case, just the first and it taught me the value of promotion.
Since then, I have done so many of those kind of promotions. I found that you can create enough excitement to spike your sales for a relatively short period. This helps increase your overall customer base and can help you raise your overall average as well. It is typical that if you are promoting one kind of unit that the sales of that may go back where it was after the promotion. No worries. The spike has done its job. So, go have some more fun. You know, business should be fun! Doing the same old things all the time is boring stuff. Live on the edge, at least just a little.
So, how can you do this in commercial trucks? I've helped dealers do this with service bodies, for example. They would buy about 20 or so service bodies in one order to be delivered right away--not in one delivery, but all landing within about 20-30 days. We need the initial order to land together, say about 5 or 6 of the order. We would focus on single rear wheel gas rigs and add a few other pieces. We would have some price leaders. These would be 3/4-ton gas like the Ford F20 with Air and not much else and it would have a service body with zero options. No rack, no hitch, just the body. Out of the whole number of 20 units, we would have 25% price leaders, so in this case it is 5 units.
Then we have some switch pieces. These were usually 1-ton single rear wheel like the Ford F30 and F34 with a little more equipment like tilt and cruise and CD player and more GVWR. These units usually have discount option packages. On these, we would put racks, hitches and a few would have some other options so that we show some unique things they don't find down the street like drawers, vise brackets, cargo bed enclosures, etc. This group will be about 50% of the mix, or 10 units. The remaining 25% will be a mixture of other size bodies on dual rear wheel trucks like 9' and 11' units with options.
The price leaders are the draw, but with a twist. I want to work a deal with the body company so that I can get free racks on the 1-ton single rear units. The body company gets a 20 unit immediate production order, I get 10 racks free for the promotional event. If I can't get them free, I want to get as close to this as possible. So, the price leader 3/4-ton is advertised on the truck and in ads for a certain very low price and I want the 1-ton to be priced at about $1,000 more in round numbers. Let's say the 3/4-ton comes in after incentives at $22,995, then I want the 1-ton as near $23,995 as I can get in $500 increments. Even if we need to have them $2,000 apart it will work just fine.
The idea is that the somewhat better truck with rack and hitch is so little more because a rack and hitch alone are usually around $1500, so if we added a rack and a hitch to the 3/4-ton, it would make the lesser truck more than the better truck. Simple logic says buy the better truck. But because of my deal and bold order, that is where the gross profit is. In addition, the customer will see all these other valuable options that they never see on lots, and pretty soon, they have to have the cargo bed enclosure, the master locking system, etc. More gross profit and happier customers! This promo would typically run for 60 days from first landing to finish and it has proven to be successful.
In order to make this work, you will give the entire order to one company, otherwise you are unlikely to get the support I am suggesting. In the process, you are creating a strong partnership with the body company that will have great benefit in the future because from here on, you are a promotional genius!
More tomorrow!
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