Growing Profits with Accessories
One topic that we’ve been hearing a lot about lately is accessories and aftermarket parts. The next time you’re stuck at a stop light, take a look around and count how many chrome wheels, brush guards, and body side moldings you see, and those are just exterior parts; many of the other cars will have aftermarket entertainment systems, upholstery, and a host of other accessories you can’t see from the outside. This should be great news for auto dealers; customers are clearly willing to pay extra to customize their vehicle. However, despite the fact that the vast majority of people driving those accessorized cars bought their car at a dealership (maybe even yours) 80 percent of them purchased their aftermarket accessories from a third-party shop or restyler. Dealerships are only getting a meager 20 percent of accessories sales despite the fact that they’re the ones selling the cars to those customers in the first place—and we want to help change that.
To help us understand more about the accessories industry and how dealers can get a larger share of the billions of dollars of accessories sold every year, we spoke with industry experts Sidney Haider, president of the Add.On.Auto division and vice president of izmocars and David Copp Stringer, president and founder of Insignia Group, and to get an on-the-ground perspective of dealers finding success with accessories sales we spoke with Larry Branche, corporate manager for Fitzgerald Auto Malls.
Selling the right accessories
We discussed a wide range of topics, including the best time to present accessories to the customer, how to train your sales staff to sell accessories, and how to convince your customers to purchase from you instead of a third-party, but we started with an essential question: What are the most popular and profitable accessories with customers?
David Copp Stringer began by explaining that, in general, “Across the broad categories SEMA tells us that sunroofs, wheels and leather are typically the most popular, however, what Insignia Group has seen over the course of 10 years, serving 22 OEs is that popular accessories are more regionalized based upon season and dealer preference. For example; remote starts are popular in the Northeast while bed protection and cargo management tend to be popular in the Southeast and South-central.”
Larry Branche’s agreed that which accessories are best for your dealership depends on where that dealership is located. “We have 15 stores and of the 15 stores; I’m not so certain that you can say that the best product at this store will be the same as another store. We have a store up in rural Pennsylvania, not really a rural rural part of Pennsylvania, but an area that is really growing and was at one time fairly rural and they do a lot accessories on their trucks to dress them up. That’s an opportunity up there, but at our store here in the metropolis part of Montgomery county, in the center of Maryland, we’re doing more show accessories and what we like to call safety and security items.”
While regional differences are certainly important, Sidney Haider advised us about some interesting results from the 2012 AOA Auto Accessories Midyear Trend Report. “According to the 2012 AOA Auto Accessories Midyear Trend Report, auto protection products continue to outsell most other accessories in dealerships across the country. The report, which analyzes accessories sales data from dealerships across the country, found that floor mats and body side moldings are most popular, while paint protection is most profitable,” he explained. Fortunately he also sent us a chart showing the top accessories, by volume, profit, and revenue:
Top 10 Products* (January 2012 – June 2012)
|By Volume||By Revenue||By Profit|
|1||Floor Mats||Paint Protection||Paint Protection|
|2||Factory Exterior||Upholstery||Alarms, Remote Starts & Recovery|
|3||Body Side Moldings||Alarms, Remote Starts & Recovery||Upholstery|
|4||Window Tint||Step Bars||Body Side Moldings|
|5||Alarms, Remote Starts & Recovery||Body Side Moldings||Step Bars|
*izmocars 2012 AOA Auto Accessories Midyear Trend Report
Selling accessories at the right time
There is a right time for everything, including selling accessories to your customers. The tricky part is determining when that moment is, so we put this question to our experts.
“Accessories and aftermarket items should be talked about early in the process,” Larry Branche began. “What you shouldn’t do is wait until the customer’s made it all the way pre-F&I or F&I to try to throw accessories or aftermarket items on them…I don’t mean when the customer first shows up at the dealership…But maybe during your walk arounds you might mention, ‘Hey this car happens to have, body side moldings on it and that really does a lot for saving you on door damage.’ And then you wait for the opportunity. In our particular case, there is some time between the point when the customer has decided to buy the car and pre-going into the business office, that’s the point where most sales consultants in our company, or in some of our stores an aftermarket and accessory person, would come over and show the [accessories] website to the customer and offer some of the things to them that might make their vehicle more unique or a bit safer or other items.”
That moment when the customer is waiting to go to the F&I department is also key to David Copp Stringer’s strategy for accessories sales. “During the typical car buying process there is a lag time after the sale, just before the customer enters F&I. This is detrimental to the deal, because the customer is sitting idle. It’s a time they could second guess their decision. Presenting accessories right before F&I leverages that time, secures the deal and excites the customer through personalization. The customer feels actively engaged throughout the entire car buying process,” he pointed out. “We’ve seen it serve as good process management for dealer groups, parts, sales and service. Typically this is the point where the customer request certain we-owes items like, ‘I want a full tank of gas’ or ‘Could you buff the scratch in the driver side door.’ Presenting accessories at this point gives you a place where you can add those requests and trust that the information is electronically delivered directly to the respective departments. No fuss over lost paper we-owes. Also, the customer is now introduced to all three key departments: parts, sales and service.”
Taking advantage of that time customers spend waiting to go to F&I was also where Sidney Haider told us was the best time to sell accessories. “Dealers should take advantage of any ‘wait time’ to present accessories to the customer. Consumers are far more likely to spend money on accessories at that exciting ‘sweet spot’ during the purchase,” he said. “Dealerships who are successful with accessories sales find that the very best window is the wait time just after the sale has been negotiated, and while the customer is waiting for contracts to be processed, before the F&I presentation.”
Online tools to sell accessories
One of the things our experts agreed on was the value of online tools to help sell accessories. Sidney Haider said that when looking for an online accessories tool, “Dealers should identify and adopt an online tool that can quickly configure the exact vehicle (down to year, make, model, interior and exterior color) with any requested accessories, allowing customers to see their vehicle with desired additions. The right online accessories sales tool will provide an interactive experience to consumers, and can also cut costs for dealers by offering virtual systems which allow dealers to order accessories on demand, thereby eliminating the need to store accessories in the showroom, not to mention the manpower required to maintain accessory inventory control, showroom mock ups, and more. Sophisticated sales tools can also calculate the cost of accessories into the overall financing of the vehicle and monthly payment, along with providing the upfront price. We, of course, recommend AddOnAuto, which has proved to generate an average of over $475 in accessory sales per vehicle sold.”
David Copp Stringer also believes that allowing customers to see what their vehicles will look like with the accessories is key to a successful online tool, “Insignia Group places a link to the accessories catalog right on the dealer’s website. By doing this many dealers have found that customers will accessorize vehicles before they come in to actually purchase. The accessories catalog generates a lot of interest. So, by the time the customer comes in they already know what accessories they want. The dealer doesn’t have to try and sell it.”
Larry Branche also affirms the power of online tools to help interest customers in accessories before they buy, but he reminded us that these tools can also help sell accessories even if the customer declines at first. After the customer has turned their information over to the dealership, he has his sales staff, “put the customer’s information in the [accessories] website, so it has their email and their information and then they give the customer a username and password.” Oftentimes customers will add the accessories to their purchase right then and there. Even if they don’t buy any accessories at the time they purchase the vehicle, however, they still have the website log in and password if they change their mind. “So, two months later or two weeks later, they [the customer] decides they want something, [and thinks] ‘Hey I remember they gave me that username and password and showed me where all these accessories and aftermarket are from that place, from that dealership.’ It gives them the opportunity to still get back to us.”
Compensating salespeople for selling accessories
Compensation can be a tricky subject, but if you want to sell accessories, your salespeople need to feel that they are benefiting too. The difficulty lies in determining exactly how to do that.
“The dealer groups that we see are the most successful are the ones that share profits equally across parts, sales and service,” advised David Copp Stringer. “Many pay cash to their sales consultants and they make it a team building event to pass out cash rewards from accessory sales on a weekly basis. Parts and service are motivated, because they are making money too.”
Sidney Haider added that, “In terms of compensation, paying 10 percent of the retail value of accessories sold and paying it separately from vehicle commission creates a great incentive structure for accessories sales. Finally, ensure that the accessories sales, financing, and installation process is seamlessly coordinated across the entire dealership, facilitating the efforts of everyone involved (the customer, the sales, F&I, service and parts departments, management).” He cautioned us on the importance of getting this right, because, “Your accessories sales efforts will crash and burn quickly if any member of the value chain has a bad experience.”
As a successful auto dealer, Larry Branche knows the importance of keeping dealership profits, customer satisfaction, and the compensation levels fair for everyone. “We want it to be a fair value on profit and we want the items that we sell to have a very high value to the customer. We’re not into some of these schemes where you sell a product that has a so-so value and you make a huge profit,” he told us. In addition to customer value and dealer profits, however, “You have to be able to compensate the sales consultant for the sale and we’re always trying to improve our sales. So, every time someone buys an accessory or aftermarket item, the sales person gets a certain amount of money. We don’t do percentages of profit, because we don’t want our sales consultants or our people going out there focusing only on a high profit item, just so they can make more money. We want them to focus on the value to the customer, so we give the same amount of money regardless of the item.”
I guess no matter what part of the dealership you’re talking about, it all comes down to focusing on the customer—some things never change.