DealersEdge Professional Forums

Well it's a new year and again we are trying to focus on increasing our Accessory sales. We do a decent job but based on the units going out we could do a better job for sure. We have had numerous Spiff programs over the years and are in need of re doing our current plan , which is paying out a percent based on certain tiers. We (parts) pays the spiff and service has a reduced labor rate ......but going forward thinking maybe charge the normal door rate ,sell at msrp and load up the spiff $$$ , which both parts and service will split in paying. ie $250 sales(labor&parts)=$25, $500=$50, etc capping at $2000=$200......salespeople can really make some cash and it appears to me that all the thinking in the world just goes out the window in the salespeople don't buy in .....Number one rule , it has to be SIMPLE for them
But I post today looking for anyone who could share their thoughts /ideas on this ...Established programs or best practices ...etc..........I need to find a fool proof program as well as I don't have the time to take on another 3hr paper review as well .....I have to get a program that works and only needs a little spot checking here and there as I believe the $$$ paid out if lucrative will generate the sales ....we are a GM dealer
ideas folks ???

How heavy is your store into LPO's?

We do see Sales doing a fair bit of LPO'S , all trucks get Step bars , a few Mud Flaps and Mats etc ...but there still is an opportunity for us
Years ago when LPO'S came in , I really did not see it as a lost , as I was trying in vain to get the "OLD SalesMgr" at that time to consider Accessories with almost zero success , so that fact some were coming and although I got no Gross , we did receive return allowance .....But he is gone and DP is more active and sees the benefits of this business ,

Steps cost you a huge amount.I just figured out how much we lost letting them come in as LPO's....$43K.

When you work on your pricing, be fair, and make sure Service and Sales retain some of the income and profit- that is how you get everyone on board. The program I am working on for steps doubles what Sales makes, 30% increase for service, and of course 100% increase for parts. No more handling them for free!! 25% mark-up, and make sure the price comes out to what they would be as an LPO (Which is typically retail on just the steps)

Richard are you saying sales is basically paying retail for lpo's?

I think what Richard is saying is that he's convinced sales management, or whoever orders vehicles at his store, to have accessories bought and sold to new vehicles after the vehicle is received and OUTSIDE the LPO program. This way, parts actually gets to sell the items and doesn't get stuck handling a bunch of LPO crap for free. Am I right, Richard?

Bailo- i got what hes doing and I like it, but what I was asking is if sales is basically paying retail in the end for the parts when purchasing through the LPO program. I am trying to get my ducks in a row to approach my gm to tell him hes losing money purchasing through lpos and I we purchase driectly we all can get a cut.

pretty sure the parts on an LPO get charged to the truck at dealer cost but go on the sticker as retail. So sales makes all the profit on the parts that the parts department should be, but isn't selling.

And I'm sure after the wheeling and dealing sales departments do, those parts end up going out at cost (or less) a lot of the time.

Go pull your last LPO packing slip and see what GM is being charged and what your cost is. GM is getting a discount!!! Then go have your sales manager pull the invoice on that vehicle. Gm is making 30% markup and keeping us out of the loop.

OK, here is what I'm trying to do with steps. Currently, ordering steps as an LPO, the dealership is making about $44. That's $24 that GM pays to install the steps, and about $20 the NCD dept makes on the vehicle.

My ADI offers one free set of steps with every 6 I buy. The money from the free one goes into 687.

Now, your list price MUST be the same as GM sticker, which is basically the retail price of just the steps, without labor. So, you get $60 labor, 25% markup on parts, and whatever is left ($26~38, depending on steps) goes to sales.

Now, you've gone from the dealership making $50, to making about $160 or so, divided among all 3 departments. And now parts goes from making ZERO and having to handle the parts for free, to making at least break-even money.
Service goes from making about $10 profit, to about $50 profit. And sales at least gets to make up t0 25% more than the pittance they were making.

Last year we LPO'd 147 sets of steps. That came up to about $44k in lost profit, using the above plan vs LPO's. Do the math, I did.