What is a "Lost Sale"? Is it confined to the Parts Department? Can we put a value on it?
Now sales are lost due to missed opportunities all day long in all departments of the dealership, but who is paying attention? Some examples are outlined below:
- The receptionist leaves a potential buyer on hold too long and they hang up and dial the next dealer.
- The Service Advisor get a declination on recommended services due to poor word tracks and the value of the maintenance item was not explained in a manner comprehensive to the consumer.
- The Internet department did not follow up a lead, leaving it up to the automated response system and the potential client bought from the first dealership who personally responded.
- The salesperson on the lot is not aware of the various trades coming in this week and a prospective buyers leaves because we currently don't have on our lot what they are seeking.
- The closer on the floor irritates the prospect by not understanding and respecting their personality and their buying habits and his/her high-pressure tactics causes the prospective buyer to leave and buy elsewhere.
The above-mentioned examples are just some of the multiple acts committed each day by all dealership employees in all stores due to lack of proper training. The sad part is we don't always monitor these lost sales; hence, using it as an opportunity to evaluate and possibly revise the steps or processes taking place in all aspects of client relations in every department! If we could put a value on these lost sales based on missed opportunities and plug it in as an expense item on the financial statement, we definitely would be alarmed at how much lack of proper training is costing a dealership on a monthly, quarterly and annual basis!
Would love to hear your thoughts on this...What are some other hidden effects of a lost sale? Do lost sales affect Customer Satisfaction and Customer Loyalty? Employee Morale and Employee Retention? How do we fix this?
Replies to This Discussion
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Permalink Reply by Bobby Compton on
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Great points Nancy!
As some would say to focus on the 80% of be back business, I beg to differ and suggest to focus on the customer right in front of you at this very moment!
Of course the way to accomplish this is to stick to the basics, and for others to learn the basics....
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Permalink Reply by NANCY SIMMONS on
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Thanks Bobby for your comment... Sometimes I think there is not the same degree of attention placed on a lost sale in the sales department which could be potentially thousands of dollars in gross profit as there is in the parts department for a small dollar item! Just the way our brains are trained....
Bobby Compton said:Great points Nancy!
As some would say to focus on the 80% of be back business, I beg to differ and suggest to focus on the customer right in front of you at this very moment!
Of course the way to accomplish this is to stick to the basics, and for others to learn the basics....
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Permalink Reply by Rob Gehring on
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Very nice to hear your concern on lost sales in the parts department! I teach if a part is not in stock when a technician asks for it it has lost Technician time of at least 15 min. Value this at $150 per hour including parts and labor as the loss. A small dealership that tracks this well will have hundreds lost sales a month. Even with many OEM using inventory management tools Management must track this report often. Look for a real fill rate to Technicians over 90% as a best practice guide. Technician time cannot be stored so the loss to the dealership is well beyond the investment in tracking and stocking parts movement. Also be aggressive is getting rid of any inventory over 18 months with deep discounts to other dealerships. Stocking depth is also a factor to use inventory investment wisely. Stock wide not deep to increase results.
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Permalink Reply by Joe Clementi on
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This is an excellent post that makes us question our own habits. This is how I would answer your well thought out questions.
Lost sales are an everyday occurrence in our business. A dropped phone call, misplaced pressure by a salesperson or a simple failure to communicate, all creates lost sales. Tracking is only one component of a lost sale; the most critical ingredient is in the process of following up. Does a dealership have specific, measurable methods to determine what that lost sale equates to in "lost revenue" and more importantly, how that "lost revenue" affects the employee? Here are just a couple of tracking methods for lost sales and the process of follow up:
- Track all inbound sales calls and who took the call. Find out what the outcome was and listen to the call to use as an opportunity to train.
- Track all declined work through an "op" code in service. Make the advisors post that lost sale and what was declined. Follow up that op code utilizing phone calls and e-blasts.
- Track the lost sales in parts daily. Post all true lost sales in your DMS so that you can see the sales request for that part. It will allow you to determine if your depth or breadth should be greater.
- Track daily and weekly your inbound internet requests and what the response rate is.
- Track and measure your SEO/SEM by reviewing your SRP vs. VDP. If you’re consistently fewer than 3% return you may have a placement issue.
Lastly, I believe it’s important to review the value of a lost sale. We often talk about being “fired” by a non-returning guest. Once that customer fires you – no amount of money will buy them back. Why spend advertising dollars trying to capture new sales when you could just as easily spend that money on keeping the ones you have?
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Permalink Reply by Richard Rikess on
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Nancy, such a great point! In addition to what you mentioned above, how about phone ups? I listen to mismanaged calls everyday. EVERY manager should go through the due diligence of having to listen to their own dealerships calls. This is why my hair is turning gray so fast! If every dealership could just implement a process that ensures every call is handled in a professional way, and that we give the prospect good information and reasons to come in, every store would sell a whole lot more vehicles! Process sells cars, not price!
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I have a very soft spot in my heart for the parts department! I was given a break and offered a job in Parts, 33 years ago, as a 17 year old college student! I was going to school for business/accounting and working in parts gave me a hands on education simultaneously! Love your points regarding tech's labor! "A waste of my time" is probably the most said phrase in a flat-rate shop and these techs are right! Car is on the lift, wheels off, and they are told to put it back together and roll it out because we don't have the parts! Breaks down momentum, focus, morale and more! Thanks so much Rob for you expert commentary!
Rob Gehring said:Very nice to hear your concern on lost sales in the parts department! I teach if a part is not in stock when a technician asks for it it has lost Technician time of at least 15 min. Value this at $150 per hour including parts and labor as the loss. A small dealership that tracks this well will have hundreds lost sales a month. Even with many OEM using inventory management tools Management must track this report often. Look for a real fill rate to Technicians over 90% as a best practice guide. Technician time cannot be stored so the loss to the dealership is well beyond the investment in tracking and stocking parts movement. Also be aggressive is getting rid of any inventory over 18 months with deep discounts to other dealerships. Stocking depth is also a factor to use inventory investment wisely. Stock wide not deep to increase results.
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Spot on, Richard! I am making phone calls to dealers all day long now in my new role with AutoMax! I have to say about 2% of the call are handled what I would call, "properly"... very sad! Sometimes I want to intervene and train the receptionist when he/she gets back on the phone and point out the faults! (Obviously, I can't do that)... But phones are being answered poorly by all levels of personnel!
Richard Rikess said:Nancy, such a great point! In addition to what you mentioned above, how about phone ups? I listen to mismanaged calls everyday. EVERY manager should go through the due diligence of having to listen to their own dealerships calls. This is why my hair is turning gray so fast! If every dealership could just implement a process that ensures every call is handled in a professional way, and that we give the prospect good information and reasons to come in, every store would sell a whole lot more vehicles! Process sells cars, not price!
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Absolutely informative and educational input, Joe! Thank you so much for your well though out comments! We cannot manage what we cannot monitor! This is a problem across the board...failure to track!!!! We have all the software and hardware to make this happen, but it is the old saying...garbage in, garbage out...If the desk manager is logging the department "ups" and their pay plan includes a percentage on closing ratio, you can bet that bottom quotient is not going to be accurate!
Thanks for your contribution to this discussion!
Joe Clementi said:This is an excellent post that makes us question our own habits. This is how I would answer your well thought out questions.
Lost sales are an everyday occurrence in our business. A dropped phone call, misplaced pressure by a salesperson or a simple failure to communicate, all creates lost sales. Tracking is only one component of a lost sale; the most critical ingredient is in the process of following up. Does a dealership have specific, measurable methods to determine what that lost sale equates to in "lost revenue" and more importantly, how that "lost revenue" affects the employee? Here are just a couple of tracking methods for lost sales and the process of follow up:
- Track all inbound sales calls and who took the call. Find out what the outcome was and listen to the call to use as an opportunity to train.
- Track all declined work through an "op" code in service. Make the advisors post that lost sale and what was declined. Follow up that op code utilizing phone calls and e-blasts.
- Track the lost sales in parts daily. Post all true lost sales in your DMS so that you can see the sales request for that part. It will allow you to determine if your depth or breadth should be greater.
- Track daily and weekly your inbound internet requests and what the response rate is.
- Track and measure your SEO/SEM by reviewing your SRP vs. VDP. If you’re consistently fewer than 3% return you may have a placement issue.
Lastly, I believe it’s important to review the value of a lost sale. We often talk about being “fired” by a non-returning guest. Once that customer fires you – no amount of money will buy them back. Why spend advertising dollars trying to capture new sales when you could just as easily spend that money on keeping the ones you have?
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Permalink Reply by Tyler Robbins on
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Nancy,
Great questions, but I will respond only to that of the Service Departments' LOST SALES. As someone who works with dealer's Service Departments everyday, Lost Sales or Left on the Table dollars goes WAY, WAY beyond that of declined operations, which, as Joe indicated are easily measured with Declined Op Code Usage.
Unfortunately, and fortunately there are SO many more areas of lost opportunities, lost sales and left on the table dollars in various areas of a Service Department, it can become almost staggering.One example is Missed Menu Sales - If a customer is "due" for a maintenance service that is $299, but the customer only purchases "some" of that service, ie. Oil Change and Tire Rotation for $60 - $239 has been LEFT-ON-THE-TABLE.
Very few dealers measure that at all, and it is likely never counted or written up as "declined" because it has only been partially declined. Consider how many customers arrive for any Service (Warranty, CP or anything) and then multiply every maintenance "due" by the dealers Maintenance recommendation at those mileages and I assure you that there are tens of thousands, maybe hundreds of thousands in lost maintenance sales for all dealers in maintenance sales alone!
Consider the complimentary vehicle inspections that dealers perform on virtually every vehicle that come in for service every day. Sure we measure recommendations not performed through declined operations, but who measures the quality of the inspection itself. I cannot tell you how many Inspections Ive come across (and every Service Manager would see it too) where a vehicle with 100,000+ Miles gets an "All Green" inspection report. The real measurement that would baffle the mind is not what a service department recommended and was declined, but even more tragically, what was NOT recommended that should have been! This represents, to an average size dealer, 50-100K per month in missed opportunities, but it is not measured by 98% of the nations dealers.
Consider also, something as simple as correct pricing. Many dealers utilize Grid Labor Pricing which then results in the Service Advisor being responsible for quoting and then billing the correct labor amount for each flat rate interval. Very few dealers actually "check" whether or not the correct labor sale amount was used, they simply look at the Overall Effective Labor Rate and if it is not "low" then they assume the correct rates are being used. Without an effective tool to measure this, someone would actually have to manually review every single RO, every single day and compare that to their Labor Grid/Matrix. This represents $10,000 per month in lost net, in most dealerships every single month, and again, 99% of the dealers in the nation dont measure it.
I have long questioned - Do you measure RESULTS or do you Measure Opportunities VS Results and the short answer unfortunately is - Dealers spend far too much time focusing only the results, and as long as this month's results are better than last months and/or better than Prior Year Same Month's results they dont look any further, and this tragic oversight (or ignorance) is costing dealers hundreds of thousands in lost sales just out of their service departments repair orders ALONE!
Not that I want to downplay the significance of SEO/SEM, Internet Leads or Phone Ups, but in reality they are insignificant in comparison to the hundreds of thousands of dollars missed every single month in the Service Department due to lack of management of these key performance indicators alone!
What is even more tragic is that even as I complete typing this post - I know that because it didnt address anything in the showroom, only Fixed Ops people read it, and even more tragic is that for those limited few dealers or GM's who did read it, most, will unfortunately be more concerned with gaining one more or two more vehicle sales per month by implementing a new SEO/SEM measurement tool than to even reach out and find out how to measure and then realize some of the missed opportunities listed above.
With vehicle sales rebounding, fixed operations will again return to its status as the "back" of the dealership, but I do very much look forward to those few progressive dealers, GMs etc who will reach out to learn more, as they truly realize that Fixed is not the "back", but it is in fact the "BACKBONE" of the dealership!
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Permalink Reply by Pat Kirley on
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Hi Nancy,
Very good points and if all your points were put into practice, it would make the dealership a lot more profitable and a great place to work. Everybody gains and the customers will love dealing with happy staff. It's a win win policy.
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