14 Dealership Best Practices to Boost Car Sales

You know the feeling: you get to work and realize that your dealership is moving slowly. Cars are sitting on your lot instead of being sold. Your service department isn’t generating much revenue, and your team seems unmotivated. You’re not sure why things have stalled or how to fix them. Then, you discover that your dealership has been falling short of industry best practices. Suddenly, you have a goal to work toward and feel hopeful that things will improve. Learning about dealership best practices can help your dealership get back on track, boost sales, and increase profitability. This article will highlight several industry best practices that can help your dealership boost car sales, improve performance, and increase profitability.

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Role of Car Dealerships And Their Impact

Car dealerships play a critical part in both the local economy and community life. Today’s dealerships may not resemble the small mom-and-pop shops of the past, but most are family-owned small businesses rooted in their neighborhoods.

They support local jobs, contribute significantly to state tax revenues, and often give back through sponsorships, donations, and community initiatives. Far from being purely transactional, dealerships offer a personal, community-based approach to buying and servicing vehicles, something the direct-to-consumer model often lacks.

The Enduring Value of the Local Car Dealership Franchise Model

The franchise model keeps competition local, ensures service access across towns and cities, and gives customers real choice. It also creates opportunities for employees to build long-term, well-paying careers without a university degree.

Car dealerships remain one of the last strongholds of Main Street business. They support communities, invest locally, and adapt to change while keeping people at the centre of the process.

What Makes Car Dealerships Successful?

Profit margins on new car sales are low. For pre-owned vehicles, the numbers can be a wide range but tend to be higher. Even though this is the reason dealerships exist, the actual transaction of selling cars isn’t always the biggest moneymaker. The more extended the inventory sits, the more it can plunge margins.

Operational Costs

Operational costs eat into auto dealer profitability. They encompass everything required to keep the business running:

• Labor
• Rent
• Utilities
• Inventory
• Advertising
• Insurance
• Taxes and more

These fall into this category. Finding ways to cut these costs and optimize spending is critical to ensuring they don’t overrun revenue.

Inventory Management

Inventory management can also negatively impact profitability. It’s a balance of supply and demand. You want to have the desired vehicles on your lot and sell them fast so you can continue to bring in new inventory. Without careful and data-driven management, you may not really “know” your inventory, leading to waste and risk.

Customer Satisfaction

If you have happy customers, they’ll contribute more to your revenue. After the sale, you can still expand their value with service and parts to ensure loyalty thrives. Automotive has the highest brand loyalty in the U.S., with a score of 14.31. However, you can’t depend on a consumer’s love for the brand to keep them as your customer. Competition is everywhere, which means you need concerted efforts to ensure they buy their next car from you for many years to come.

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• Future of Car Sales
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• Lead Generation for Car Dealers

14 Dealership Best Practices to Boost Car Sales

1. Develop Your Marketing Strategy

Your dealership won’t survive if you only sell to the same customers yearly. To grow your business, you need new customers daily. Car dealerships must market smartly to get new buyers in the door regularly. Successful marketing depends on your strategy, which is often devised by answering crucial questions, such as:

• Where will you spend your advertising dollars?
• How will you market your dealership to new customers?
• What is your target audience?
• Who buys your cars, and where do I find them?

A robust marketing strategy includes multi-channel marketing. For auto dealer marketing, find what brings you the best success, including television ads, billboards, and online marketing, including social media. Moreover, analyze the budget dollars spent on each campaign and channel. Focus more money where you see the most people buying cars from your lot.

2. Build Your Reputation

Nothing sells better than a stellar reputation for reasonable prices and excellent services. You want your new or used car business to be the go-to place for anyone purchasing a car. You build a reputation that sells more cars when you serve your customers well.

Cultivating your reputation requires a strategic effort. Taking your in-person reputation online is critical to generating new customers.

Building Your Dealership's Online Reputation Through Customer Reviews

Most consumers research purchases online before deciding to buy or sell in person. They look for reviews and recommendations before allowing you to sell them a car in person.

Gather reviews and ratings from happy customers to build your online reputation. Whether online or in person, your reputation as a worthwhile dealership precedes you.

3. Be Efficient

Creating processes and efficiencies is one of the best ways to improve your business and increase your bottom line. For many buyers, the car-buying experience is frustrating. They can feel it takes too long to make a good deal and iron out the details. Speeding up the buying process helps customers feel like they’re working with a well-oiled machine.

When your sales staff and other employees work efficiently, they feel valued and productive. As your dealership business grows, a well-managed, efficient process becomes more critical. Processes help new employees ramp up faster. Productive employees help your dealership sell and service more cars.

4. Know Your Cars

You can’t sell cars if you don’t know what you sell. Ensure your sales and service staff see every detail about your lot's current and used vehicles. Your sales team needs to know every detail about the latest models.

A buyer working with a salesperson who doesn’t know a car's selling points or information can quickly become frustrated. Ensure your team is also familiar with the latest incentives or financing details. A salesperson can encourage an unsure buyer into a sale with the right incentive offered at the right time.

5. Know Your Buyers

Buyers are a significant part of making your dealership a success. Know who they are and what they buy,and research trends in the area. The growth of your business is not about the car models you want to sell the most. You can have plenty of the latest models you love on your lot, but if the public doesn’t want that model, those cars won’t sell.

Cars that sit on the lot too long become an expense. You and your staff must know what models your buyers purchase most often. Offer what’s in demand to become the best source of what buyers in your area want to drive.

6. Provide the Best Customer Service

Can you do more to serve your customers better? In most cases, the answer is yes. Customer service goes a long way when growing your dealership. Your customers can find the car they want at another dealership. However, your outstanding customer service can set you apart from other dealerships and earn you the sale. Commit to offering the best service to potential buyers, current customers, and through your service department.

Pay special attention to your service department. Serving customers well through repairs and scheduled maintenance keeps them returning each time their car needs service. Building a relationship through your service department can keep your dealership at the forefront of my mind when it’s time for them to buy their next vehicle.

7. Recruit Well

Your dealership will only rise as high as your staff can soar. Recruit the kind of talent that can help you accomplish the tips we’ve mentioned above. Make sure every hire follows your commitment to knowledge and excellent customer service. When your team executes with excellence, your dealership’s reputation will stand out from the rest.

8. Get very clear on your current sales goals

You may say, “My car dealership business does have goals! We want to make more money and sell more cars!” That’s not sufficient. Your goals should be S.M.A.R.T:

• Specific
• Measurable
• Attainable
• Realistic
• Time-based

For example, a S.M.A.R.T. goal could be, “Between May 1 to May 31, increase the number of up sheets completed in April by 5%.”

9. Be able to name the most popular makes and models you sell

You should always know what makes and models your customer base is buying because it will influence the cars you decide to place on your lot. If you want to move all your vehicles within 60 days, you'd better have what people want.

10. Know who is buying from your dealership

It’s one thing to understand the broader demographics of your dealership’s market, but you must also grasp who most of your customers are.

• Are my customers more often blue-collar or white-collar?
• Single people or families?
• Younger buyers or older?

The people currently buying from you can clue you into the types of vehicles you should sell, the services my dealership should offer, and how I should target these groups in your marketing efforts.

11. Learn which forms of advertising work for you

Advertising is essential, but don’t keep doing what you’ve always done just because it’s easy. Look at any and all current advertising efforts you have going on:

• TV
• Radio
• Print ads
• Pay-per-click advertising
• Facebook ads

See if you’re getting a decent return on your investment. Do you spend thousands of dollars on monthly print ads, but no one comes in to redeem your coupons or ask about offers you’ve advertised? It may be time to redirect your dollars to other forms of advertising.

12. Monitor sales rep performance

Pull numbers from your CRM monthly to get the complete picture of how my sales reps perform. If you notice that one of your consistent performers had a bad month, you can use the opportunity to meet with them and nip any problems in the bud quickly. If I have someone who is consistently underperforming, that may be your cue to boost my training program.

13. Implement formal talent management practices

McKinsey & Company looked closely at top auto dealerships in the U.S. and what separated them from the rest of the pack. Consistent talent management practices, like:

• Structured recruiting
• Multiple interviews for each candidate
• Formal training
• Long-term incentives

Were significant differentiators in an industry where high turnover rates are standard. The dealerships with better talent management had turnover rates that were 17 percent lower than those of dealers in the bottom quarter.

14. Prioritize service and customer loyalty

Don't let people go once you work hard to win them in your market. You keep your customers engaged with e-newsletters and coupons, and even offer tours of my service department to make them more comfortable.

The most important thing to remember is that conquering the market in which your car dealership business is located isn’t a one-off thing. To stay on top, you must constantly integrate all the steps above and change your strategy or approach as the market dictates.

Related Reading

• Car Sales Tips
• Automotive Digital Transformation
• Future of Automotive Retail
• Predictive Analytics Automotive Industry
• Auto Dealership Customer Experience
• Auto Attendant Phone System

4 Mistakes Dealerships Make With Their Marketing

1. The Dangers of Not Having a Target Audience

One of the biggest mistakes car dealerships make is not having a target audience or not knowing their target audience. You want to try to sell to anyone who walks into your dealership. But that’s not the best idea.

If you don’t have a target audience, marketing to anyone will be much more challenging. By narrowing your audience, you can determine what will make people in that group come to your dealership and buy a car.

Defining Your Target Audience for Enhanced Marketing and Competitive Advantage

Having an audience can also help you stand out from your competitors. If you know your audience better, you’ll be able to get in their heads and easily convince them to hire you. Your target audience may include a specific age range or income bracket. Whatever it is, determine it now to focus your marketing efforts better.

2. The Risks of Ignoring Social Media

Another one of the biggest mistakes by car dealerships is not focusing on social media. Some dealerships either don’t have social media accounts or never post to the accounts they have.

Using your target audience, consider what social platforms are best for your business. For example, LinkedIn could be a good option for business owners, while Instagram is great for a younger audience.

Leveraging Regular Social Media Engagement for Dealership-Customer Communication

Once you set up your account on one or two platforms, post to it regularly. Create a posting schedule, and create your posts ahead of time so that you don’t have to spend time throughout the week doing that.

Social media is an excellent tool for customer communication for car dealerships. With active accounts, you can use private messages to contact people and get them to visit you.

3. Understanding the Importance of Local Optimization

When deciding which keywords to use, focus on local SEO. Of course, people won’t buy from your dealership if they don’t live in the area, so local optimization can help you attract the right customers. You can also use a Google My Business profile to help display your location and website in search results.

People don’t have to click on your site to learn the basics of your business. The profile can show up when someone searches for a dealership in your area or if they search for your business. Either way, local optimization can help you get more clicks, which may increase conversions.

4. The Importance of Follow-Up Communication

You should follow up once you capture a lead or make a sale. Handwritten notes for car dealerships can be a great way to add a personal touch. After you sell a car, you could send that customer a note thanking them for their business and wishing them a good experience with the vehicle.

You may also want to note if someone looks at vehicles but doesn’t buy. The note can include a thank you for coming in, but you can also use it to promote your dealership. Perhaps you have an upcoming sale, and they can go in and buy a car then.

Related Reading

• DMS vs CRM
• Automotive Digital Retailing
• Dealership Service Department Best Practices
• Best CRM for Auto Dealerships
• Automotive Chatbots

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