Continuing to provide answers to our Frequently Asked Questions, Bob Clements took some time to answer two popular questions. If you have a question you would like to submit, send it to [email protected]. We are always happy to help!
Is there a percentage of markup considered for lot rash or self-inflicted dealer damage to products? While there is no industry standard number you can use to calculate things like scratches, dents or broken lenses – damage that requires repair prior to selling a product – it’s important for you to keep track of those repairs. You do this on a separate PDI (Predelivery Inspection) work order or job code. Your technicians should use that code as they clock in to do those repairs & small fixes. At the end of each month, close that job code or workorder, charge the cost of the repairs off to the sales department and evaluate the percent those repairs are relative to your gross profit. Your goal is to consistently reduce those costs. Encourage employees who move the equipment around on your lot to work to reduce damage by building a bonus plan that rewards them as the costs of repair decreases.
Do you recommend selling more than one manufacturer? The more lines you carry, the more it costs you to do business. In a perfect world, where one specific manufacturer has everything a potential customer might need, then working with one manufacturer is better than 2, or even 10. The most important question you have to ask yourself as you are evaluating lines is, ‘Can you meet the needs of your customers with your primary vendor’?
Your customers are going to be varied in both their needs and their financial ability to purchase. As a dealer you want to have products that will work for both the first-time customer who is just starting out and doesn’t have a lot of money as well as an established customer that understands money buys quality. If one manufacturer can provide a product mix that fits the range of your customer’s needs, then just stay with one. If you need a couple of manufacturers to cover your customer base and a comprehensive product mix, then go with two. The thing I find too many dealers doing is carrying products from different manufacturers that are similar and end up just simply cannibalizing sales that would have happened anyway.