With boat and motor sales down due to the Great Recession, more and more dealer emphasis has been put on parts sales and service work. It has certainly kept many dealerships alive over the past couple of years. When I owned a new car dealership, the parts and service departments were significant profit centers for my business. I learned early in the car business, about a term, “Service absorption rate.” It might still be used today. Service absorption rate is the percentage of the total dealership’s overhead that can be absorbed by profits from the parts and service departments. Top car dealers in my day could absorb as much as 70 to 90% of their total overhead from profits generated by these departments.
Certainly, dealers in this seasonal boat business can’t expect the same “Service absorption rate” as new car dealers. But there is no question parts sales have been, and will continue to be, significant profit centers for marine dealers. And maintaining a good parts inventory affects not only parts sales and profits, but also the productivity of the service department. A major repair can be delayed simply by not having the right part or parts on hand.
A good, well-managed parts department is an integral and vital part of any marine or auto dealership. And how well a parts department and its staff perform greatly determines how customers will perceive a marine dealer. Over-the-counter customers expect parts department personnel to know or to be able to quickly determine which parts are needed for specific DIY repairs. Equally as important is how the parts department staff handles customers. How they greet customers, their overall appearance, attitudes and basic communication skills are essential elements in keeping customers satisfied and coming back.
Soon after becoming a Chevy dealer, I quickly learned the following tips on boosting my parts department sales and profits.
Tip # 1: Allow only parts department personnel to have access to parts inventory.
Shortly after taking over my Chevy dealership, it appeared that there was some shrinkage in the parts inventory. Some parts that our records showed to be on hand were not there in the bins when needed for a repair or an over the counter sale. With a little investigation, I learned that the parts manager and service manager were letting technicians pick their own parts for repairs they were doing when the parts personnel were busy. We then tracked the slippage in inventory to one technician who was moonlighting at his home by doing some service work. He was caught stealing parts for those repairs. We immediately stopped allowing anyone except parts department personnel to have access to the parts inventory. And needless to say, the technician involved had to start moonlighting full time, as he no longer worked for my dealership. And no other dealer in the area wanted to hire him.
Tip # 2: Consider selling parts to independent repair shops.
I also quickly learned that frequent customers of my parts department were some independent repair shops in the area. So we started promoting parts sales to them and offered them a 15% discount on their parts purchases. The sales to most of them were on a cash basis. We soon were getting a considerable increase in business from the independent repair shops. Some car dealers have delivery trucks to supply parts ordered by independent service ships. This is something for marine dealers to consider.
Tip # 3: Personal appearance.
Customers can get a first and lasting impression about a dealership based on the appearance of the employees. This holds true in the parts department also. All of my parts staff had shirts with the dealership logo and “parts department” on them. Their clothing should always be neat and clean. And to further create a good impression on customers, personnel should be well groomed, with trimmed hair and clean-shaven (beards or mustaches appropriately trimmed).
Tip # 4: Attitude with customers.
Emphasize to your team that attitude is key in dealing with customers. No matter if they had a fight with the wife the night before, have a headache, or whatever, when that customer comes to the parts counter, they need to smile and be friendly and cordial. They should not group with other staff and chitchat. Nothing is more annoying than seeing two or more employees of a business talking while customers are waiting. Do not let them ignore customers when they come to the parts counter. Even if they are busy with another customer, they should look at any customers who just came to the parts counter, acknowledge them, and tell them they will be with them shortly. Being ignored, even for a short time, can be a major irritant to customers.
Tip # 5: Ask questions and listen.
Often a customer will need a part or parts but not know the part numbers. Train your parts personnel to ask questions and find out the model number of the engine, the horsepower, year made, etc., and what the customer’s problem is with the engine. Insist they be friendly, positive and helpful and make each customer feel respected. Emphasize that they are not doing the customer a favor when they come to the parts counter…customers are doing the dealership a favor when they come in.
These are some of the things that helped my parts department increase parts sales. Look for Tips on boosting parts sales – part 2. Coming soon.