3 Tactics to Improve Your Inventory Turn Rate
One of the most valuable metrics for a dealership to track is inventory turn rate.
Unlike lagging indicators of success like revenue and profit, inventory turn rate tells you every day if you are on track to reach your goals. Most dealers dream about having such insight– inventory turn rate makes it possible.
Increased online competition has made it harder than ever for dealers to maintain the ideal 30-day turn rate. The key is for dealers to stand out online and win the battle for attention.
Doing this is not as difficult or expensive as you might think. After reviewing sales data from over 40,000 dealerships, we have uncovered three easy-to-use tactics that will boost your listings to the top of search results.
The best part? These tactics cost nothing to implement. By committing and consistently using these methods we describe below, you can make sure each vehicle is seen by the right audience, at the right time. Let’s get into it.
1. Choose a niche for your dealership
Prior to the internet revolution, dealerships were the first stop on the customer journey. Today they are the last, and the role of dealerships has changed. It’s not the job of the dealership to show a customer what is available; their job is to deliver the perfect vehicle to the customer.
That means, instead of having a broad selection, dealerships need to go deep into a vehicle segment. You need a niche.
A niche is simply deciding what type of dealership you are going to be. It is your brand – the thing you are known for. Instead of attracting all car-buyers, your goal is to only attract those with interest in your niche.
Your niche can be based on make, model, price, or origin. For example, your dealership could focus on:
- European imports
- Trucks and SUVs
- Hondas and Acuras only
- Vehicles under $10,000
Or, your niche can be based on a specific type of customer. You can offer an extended warranty to appeal to the cautious buyer, or an extensive vehicle inspection for the safety-conscious driver. Become the “family vehicle” dealership, with a mix of minivans, SUVs, and well-maintained used vehicles for a teenager’s first car.
Choosing a niche is not as difficult as it might sound. There are a few things to consider:
- What types of vehicles do we sell the most?
- Which vehicles have the highest volume and profit margins?
- What gaps are missing in the local market?
But won’t choosing a niche lead to the loss of potential customer? Think of it this way: You cannot be everything to every customer. Instead of trying to appeal to every type of car buyer, be the best at servicing just one.
2. Update your prices regularly
Dealerships today rely heavily on vehicle marketplace websites like Cars.com and AutoTrader. Large franchise dealers and OEMs spend tens of thousands of dollars a month to advertise on vehicle marketplaces. The majority of dealerships cannot afford to compete with this ad spend, but there are other ways to get found.
One surefire way to increase the visibility of your listings is to update your prices regularly.
Our study of over 40,000 dealership sites has found that this simple tactic can increase your turn rates by up to 33%. Dealerships have successfully reduced their turn rates from 45 days to 30 days on average just by updating their prices on a regular basis.
Vehicle marketplaces cater to those shoppers who come back to the site daily to check out new vehicles. They are in hot pursuit of a new vehicle and are eager to see the latest listings. The marketplaces prioritize updated listings over old ones to feed the shopper’s need for newness.
Here’s the kicker: You don’t have to only decrease your prices to get more traffic. These sites value updated listings so much that you can even increase your price and still get more eyeballs on your vehicle. As long as you keep your listing fresh, you will stay at the top of search results.
We recommend changing your prices every 3-7 days.
3. Don’t hide the price of your vehicles
Dealerships with a well-defined niche, and who updated their prices regularly, are going to see more website traffic than their counterparts. Still, they are far from closing the sale. Your website layout is just as critical as the previous two steps.
One of the takeaways from the NADA 2017 review is that dealerships should, “Make it as easy for the customer as possible. This will only increase retention and profitability.”
Many dealers get this wrong with the most important piece of information on your site: Your vehicle prices.
Price is the number one question on a potential customer’s mind, yet some dealers choose to hide their prices behind an “email wall,” forcing customers to give up their contact info to see it.
The idea is that dealers will collect more leads by forcing customers to share their email. Here’s why it backfires:
According to the Cox Automotive Car Buyer Journey Report 2017, 46% of used vehicle customers make first contact with a dealership by simply walking in. Another 28% will phone the dealership. Only 18% of used car buyers are willing to use email to make first contact with a dealership, and the numbers are even worse for online chat, text, and social media.
By asking for an email to see the price, you are eliminating a whopping 74% of buyers who might have otherwise contacted you about the vehicle by walking in or calling.
Could customers call or walk in to see the price? Maybe, but customers only visit 1.2 dealerships before making a purchase. They only contact a dealership when they’re ready to buy. How can they be ready to buy if they don’t know the price?
Car buyers visit on average 21 websites while doing vehicle research. If you don’t give them the pricing information they’re looking for, they will move onto the next site without a second thought.
Make the car-buying journey as easy as possible for customers and you will sell more vehicles.
Is Inventory Turn Rate Key to Sales Success?
In an oversaturated market and facing increasing scrutiny of consumers, dealers have to work smarter and harder than ever before to rise above the noise and sell vehicles.
By implementing these tactics into your everyday operations, you are going to see your inventory turn rate plummet into the ideal range of 30 days or less. Over the course of a year, this improvement could add up to 2-3 times more profit.
Every dealership is capable of taking control of their sales. By focusing on inventory turn rate, you will have a better metric to measure your progress and meet your goals. You don’t need money to accomplish this feat; all you need is a commitment to these tactics and a desire to succeed.