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Gross is a State of Mind

I recently visited a dealership on a Saturday morning and was lucky enough to sit in on their sales meeting. The manager was pumping the team up and began recapping the units and gross for each salesperson from the previous month. The manager began rattling off numbers like, 15 unit for $150k in gross, 12 units for $96k in gross, 8 units for $70k in gross, and so on. I was sitting there in shock as I added up the units and gross in my head. When all was said and done, they did 85 units for over $640k. Keep in mind, this is a non-luxury store, in Northern California during a pandemic and wrapped up their month at over $7500 per unit sold in gross profit. If I did not see it, I would not have believed it. I had to find out how they did it, so I asked the General Manager. He said, “the team just believes.” I said, “what do you mean?” He then went on to explain that everyone from the managers to the salespeople believe they deserve the gross, they believe the dealership deserves the gross, and they believe the product warrants the gross. Most importantly, they ask every customer for all the money every time.

This reminds me of “Cash for Clunkers,” when I was the GSM for a Nissan store. For those of you who were not around at the time Cash for Clunkers (C4C) was a government subsidized program that gave customers $4500 for any vehicle they traded in. Before C4C began Nissans, were selling well below invoice and there was plenty of inventory. Once C4C hit buyers came out from everywhere and we started selling a lot of new cars. After a week or so of this we realized two things:

  1. At our current pace we were going to run out of new cars in 4-5 weeks.
  2. We were selling a ton of new cars and we were not making any money.

This was ridiculous. Why should we do all of this work, have these customers get thousands of dollars more for their trades than what they were worth, and make no money doing it? So, we decided, that we were no longer going to sell vehicles below MSRP. We made this announcement to our sales staff in that mornings sales meeting. Now, like most dealerships, we had that one salesperson whose greeting practically included, “how far below invoice did you want to purchase today?” They sold lots of vehicles per month, non over them for any profit. You know who I am talking about. Anyways, immediately after our sales meeting they went out, got a customer, landed them on a car, and then wrote them up. They then brought in a committed write-up at thousands below invoice. We told him, it is either MSRP or the customer could leave. He did not believe us, he then begged we take the deal, which we didn’t, and the customer left. Soon after this all of the salespeople understood that we were no longer going to discount our vehicles. Amazingly enough, every write-up from then on came in at MSRP, we did not discount any of our vehicles and we had the highest volume month in the store’s history. Imagine that, highest volume at zero discount, with the flip of a mental switch. The managers and sales people believed MSRP was the only deal, so the built the value in that to the customer and it became the only deal.

The moral of these stories is that Gross is a State of Mind and you must do the following things to be in that state of mind!

“Whether you think you can, or you think you can’t – you’re right.” – Henry Ford

You must understand your FOUR whys:

  1. Why buy your product
  2. Why buy from your dealership
  3. Why buy from you
  4. Why buy now

“You cannot G-E-T if you don’t A-S-K!” – Unknown

You have to ask for all the money in order to get all of the money. This can be difficult to do only if:

  • You don’t believe your product is worth it
  • You don’t believe your dealership is worth it
  • You don’t believe you are worth it

If you TRULY BELIEVE in all of these things, then asking (and getting) all the money is easy, you just have to be in the right STATE OF MIND!

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    1. Thank you Michael. I am glad you liked the article. You make 100% accurate points. These weekly articles am to hit quick on point topics. Keep checking them out and let me know what you think.

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