Auto Dealer Monthly Magazine is the daily operations publication serving the retail automotive industry. This automotive publication serves dealer principals, officers and general managers with the latest best practices.
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dealership operations / sales training Does Traffic Really Go Up the Last Week of the Month? Richard F. Libin is is the author of the book, "Who Stopped the Sale?" (www.whostoppedthesale.com) and president of APB-Automotive Profit Builders, Inc., a firm with more than 44 years experience working with both sales and service on customer satisfaction and maximizing gross profits through personnel development and technology. He can be reached at 508-626-9200. rlibin@apb.cc creates the perception that sales are higher in the last week as well. However, statistics show this is not true. Traffic, when accurately counted, remains about the same all month long, whether the first or last day of the month or any day in between. If there is a spike at any time during the month, it is typically because salespeople are working the phones harder and creating be-backs. I We track daily statistics for dealerships across North America to provide accurate feedback on sales performance. These statistics start with the traffic count, looking at the number of sales made and the percent of sales versus customers. Without fail, these statistics prove the number of customers coming to dealerships each day during the month varies only slightly perhaps by 1 to 2 percent. Yet, the percent of sales closed always increases by 10 to 15 percent in the last week of the month. It's the same for every month, every year, anywhere in North America. The numbers don't lie. This widely-held misperception leads sales managers to adopt an all-hands-on- deck mindset. Specials and promotions are rampant, extraordinary deals are made and a sense of urgency hangs in the dealership. It's a mindset, however, not an increase in traffic which actually drives sales higher, often resulting in a closing 38 n business, most salespeople and managers believe that traffic spikes in the last week of the month. This percentage that is 10 to 15 percent higher than the first three weeks of the month. What happens in a dealership when this is the prevalent mindset? 1. The sense of urgency to close each day is almost non-existent, so sales are lost in the first three weeks of the month. 2. Revenue and commissions plateau at best and decline at worst until the month's end. 3. In the last week of the month: • Salespeople work harder, urgently trying to make their projections. • Managers take deals they wouldn't normally take to "close the month." • The F&I; department has an inordinate amount of rush work that can lead to inaccuracies and delays in month-end closing. 4. Some managers opt to "keep the month open for an extra few days" or change the calendar by adding days to the current month and stealing days from coming months. Who's fooling whom? The year still only has 365 days, except in a leap year. 5. The numbers indicate a higher number of vehicles sold at month's end (a self-fulfilling prophecy), yet with lower 1. Establish a process to accurately count traffic. Every person entering the dealer- ship is an opportunity and should be counted, no exceptions. 2. Set and communicate measurable daily goals based on the goal for monthly gross revenue. As an example, if the monthly goal is $300,000 and the dealership is open 26 days, then the salespeople are chasing $11,539 gross per day. 3. Eliminate employee incentives. Compensate salespeople only for the cars they've delivered. Pay them weekly. This motivates them to perform at their highest levels daily. In addition, paperwork is completed without delay, vehicles are delivered sooner and you get paid sooner as well. Closing the month everyday has per-vehicle gross profits. The truth is, customer traffic doesn't spike at the end of the month; the mindset in the dealership changes, driving a sense of urgency and increased effort. This begs the question, why don't sales- people and managers work each day with the same mindset? Why shouldn't they "close the month" daily? If they did, they would sell more vehicles. Period. If sales increase 10 to 15 percent in the last week of the month, how many more vehicles could you sell if sales increased 10 to 15 percent every week of the month? If you sold at least 15 percent more all month long, what would the in- crease in gross be? Think about this a minute, and then do the math using your most recent numbers. To "close the month" every day requires changes in mindset that start with three straightforward steps: