NEW ORLEANS -- It’s frightening to consider how much time is being wasted on the typical car sale.
It’s a wonder sales personnel -- or even the dealership, for that matter -- manage to make any money, says retail consultant Mark Rikess.
Rikess’ firm, the Rikess Group was hired to conduct an efficiency study of more than 100 dealerships not long ago. Consider his findings:
The average new-car sale took four hours. It didn’t matter if it was a luxury car or a mass-market car.
Two of those four hours were simply wasted on downtime. The salesman stands at the copier making photocopies of a drivers license. The salesman disappears into a back office to find the ignition key for a test drive. The customer waits while somebody finds a temporary plate to put on the car for the test drive. The sales manager wants to come close the deal -- but he’s got two other deals ahead of yours. So you wait.
70 percent of sales occur during just 30 percent of the time the dealership is open. According to the Rikess study, that means that a showroom is spending 70 percent of its business operations to process less than a third of its volume.
On average, 70 percent of sales occur on two evenings of the week, plus the weekend, plus the last two days of the month.
“Imagine this,” Rikess says, stopping outside of a meeting room during the NADA convention Friday afternoon: “If a sales person takes four hours to handle one sale, and the dealership’s busiest day is Saturday, then all you’re really going to get from the sales person working an eight-hour Saturday, on average, is two sales.”
Rikess makes his money consulting with manufacturers and dealerships. But when asked what a dealer can do about all this, he offers three tips for free:
Schedule sales personnel to work when the customer traffic is there -- not when somebody decided at some point in the past that the showroom ought to be open.
Determine what the bottlenecks are in the sales process. Does it take forever to get the financing paperwork in order? Does the store policy require a manager to talk to customers who have already decided to buy? Find the problem and fix it, Rikess advises.
Limit the number of people involved with the transaction. Fewer people equals less moving from person to person, less waiting for Frank when Frank is currently waiting for Harry, who’s helping Bob.
But dealers know all this, Rikess is reminded. Why haven’t dealers changed things up to improve their own showroom work flow? Why do they really have the sales staff on duty at 10 a.m. when there’s never any business then?
Rikess cracks a wry smile. “Because that’s the way it’s always been done,” he says. “Change is frightening.”