The Only Three Ways to Grow Your Business

Written for AutoSuccess Magazine
May 2002

By Scott Joseph

There are three primary factors to consider when you are looking to grow your business- customer base, dollars, and number of sales. I realize that this isn’t brain surgery. If you want to make more money, you can sell to more people; get more money out of the sales you do make, or convince your customers to buy from you more often. Often, dealerships choose one of these criteria and concentrate every effort on improving it. They blitz the market in order to increase their customer base, educate and encourage their salespeople to increase dollars per sale, or have an advertising push to their previous customers to increase lifetime sales.

But why not work on all three at once? Improve in all three of these categories and you will increase your yearly sales at a much greater rate! You see, the vitality of one factor positively affects the vitality of the others. In other words, improving one factor will improve the abilities of the other factors to grow. Don’t just focus your attention on one goal to the detriment of the others. This is one case in which distributing your forces will serve you better. Let’s take a look.

First, our goals:

1. Increase your number of customers. This is a war that we will fight on two fronts. We must turn prospects into customers through leads and inquiries, and grow our base. Then, we must fight attrition, and make sure that we retain the customers that we have worked so hard for.

2. Increase your average dollars per sale. This goal also has a two-pronged approach. First, we must work on closing the deals that we have working, and ensure that those dollars are claimed. Then, we work to improve the amount of that sale through upselling and other techniques.

3. Increase your repurchase frequency. Finally, we must look at how often our customers purchase from us, and investigate ways of increasing their number of purchases, to profit more throughout the lifetime of the customer.

Imagine if your dealership sold 3,000 customers annually, and you were able to grow that number by 10%. That sounds achievable; it is only 300 more customers this year. Then imagine you increased your average dollars per sale by 10%. Once again, this sounds completely achievable. It means turning a $15,000 sale (front and back end) into a $16,500 sale. You can do that. Finally, imagine increasing your repurchase frequency by the same amount, just 10%. If ten customers have only purchased one vehicle from you this year, you would sell one of them another car. That’s it- sell eleven cars to ten customers per year.

The results of this growth will astound you, because each of these categories improves the others! More customers mean more opportunity to increase your average dollars per sale, and it means another opportunity to increase your repurchase frequency. Just look at this example of the improvement in yearly sales at a dealership that achieved a 10% increase in these three goals:




An achievable 10% increase in each of the three areas equals a 33% increase in revenue for your dealership.

So, let’s look at specific points that will help increase each of these areas, and profit your dealership.

1. To increase your number of customers:
Increase your leads or inquiries through:

• Referral systems
  
• Acquiring customers at breakeven up front and make a profit on the back end
• Advertising
• Using direct mail
• Running special events
• Using public relations
  

Increase your customer retention rate by:

• Delivering higher than expected levels of service
• Communicating frequently with your customers to nurture them
• Using public relations

2. To increase your average dollars per sale:

Increase your closing percentage by:

• Increasing sales skill levels of your staff
  
• Making irresistible offers
• Educating your customers by giving reasons why
• Gain control of your direction and destiny. Stop blaming people and circumstances and take total responsibility for your numbers.

Increase your average dollars per sale by:

• Improving your team's selling techniques to up-sell and cross-sell
  
• Packaging complementary products and services together
• Increasing your pricing and hence your margins
• Offering greater/larger units of purchase

3. To increase your repurchase frequency:

Increase your repurchase frequency by:

• Advertising your service department, so your customers come back to you again and again
  
• Communicating personally with your customers (by telephone, letters, or e-mail) to maintain a positive relationship, and keep your dealership at the top of the customer’s mind
• Running special events such as “VIP days” “closed door sales” “limited pre-showings” and so on
• Offering greater/larger units of purchase
• Advertising your service department, so your customers come back to you again and again
• Communicating personally with your customers (by telephone, letters, or e-mail) to maintain a positive relationship, and keep your dealership at the top of the customer’s mind
• Running special events such as “VIP days” “closed door sales” “limited pre-showings” and so on
  Increase your number of customers, average dollars per sale, and repurchase history. By focusing on trying to improve each of these goals by a small percentage, it will have a huge impact at the end of the year!
  
  Next month: Your Customers are Speaking to You. Do You Hear Them?
  
  
  Read another AutoSuccess article:
  

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October 2001:
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November 2001:
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January 2002:
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February 2002:
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March 2002:
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