What are ‘Additional Sales”?

I would like to attempt to quantify and clarify what the term ‘Additional Sales’ actually means in the real world in a quantifiable way.  This is not about additional marketing or additional traffic.  On the contrary, it is about something that can be scientifically measured.

A very quantifiable and mathematically sound way to do this would be to start with buy rates in term of a measurable quantity such as phone-ins or ups on the floor.  A dealership should be keeping track of these numbers so that they can determine what the actual buy rate (or closing rate) is.  If a dealership counts 1,000 sales calls incoming in a month and then tracks the number of sales that were associated with those phone calls, they should find that about 40 sales are directly attributable to those phones.  In other words, the original origin of the sale was a phone-in.  That’s a 4% conversion rate, which is not uncommon.

The same could be done with other sources.  People who show up on the floor, or showroom ups are also countable and therefore can be used to determine the buy rate from that particular avenue.  Here, obviously, the buy rate is going to be much higher that 4%.  Let’s just say it’s 30%.  So, if 400 people come on the floor every month, you should sell 120 cars.

Quantifiable ‘Additional Sales’ would therefore be any sales beyond the buy rate.  If the dealership had their normal 1,000 sales call ins for the month, but 50 cars were sold with that origin, than there is a 10 car ‘Additional Sales’ that can be quantified.  This can be attributed to a better handling of the phone calls either by technique or efficient handling.  The same could be said for increase in buy rate from floor ups.  If there were 400 floor ups and 150 cars were sold with that origin, than the dealership had 20 additional sales.

This particular accounting for ‘Additional Sales’ is based on no abnormal increase in traffic, but since it is based on a buy rate, it doesn’t matter what the traffic numbers are, the rate should be consistent.  Therefore, I contend, the only way to actually quantify ‘Additional Sales’ is to look to the buy rate.  And, since the greatest number of people actually make their first contact with the store by means of the phone, it would stand to reason that the phone is where improvements should be made to increase the buy rate and therefore produce “Additional Sales”.

So, any marketing company that claims to give you ‘Additional Sales’ by means of increasing traffic or ‘opportunities’ should also be held to this standard:  If the dealer’s buy rate stays the same with additional traffic from marketing, they will sell more cars than if they didn’t do any marketing, but they are also paying for the additional opportunities to sell.  this dollar amount can range from $600 to $1100 per vehicle over what you would have sold without marketing.

My point is, don’t be fooled by claims.  Don’t drink the Kool Aid.  Marketing can be good and effective, but don’t believe it is increasing your buy rate unless it actually is.  Establish your ‘buy rate’ and you will have a good measuring tool to determine the value of any money you spend on marketing.  This also goes for training.  You should be able to measure training buy the increase or decrease in buy rate.

 

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About dealerite

National affiliations of professionals who are engaged in changing the culture of the automobile retail business. Key focuses currently include Compliance, Behavioral Marketing and Phone Skills.
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