I looked at just one store, but it’s a big one in a large metro area pushing out more than 100,000 parts invoices per year. That’s lots of folks walking in that front door, and I wanted to see just how many of them ever came back.

So I isolated customers that appeared for the first time ever in each January of the past three years. And then I tracked them, month by month, to see just how many of them returned. Overall, about 50 to 60 percent of them returned at least once during the year. I thought that was pretty good, but the real story emerged as I spread it out over the 12 months. Check out the chart below, and you will see just how bad it really is.

We see that in 2009, about 10.6 percent of new January customers return in February. In March, it falls to 8 percent, and in May 5 percent. So by Summer we are seeing only five or six out of each hundred customers that were new to the store back in January.

Bad? Just wait. It gets worst.

By Adam Shiflett
ADP Lightspeed Marketing Manager

It was a slow day on the lake. Our lines were sitting in the water while the trolling motor gave background to my grandfather’s tall tales.

Then I got a bite.

There was a flurry of action as my grandfather gave instructions. I was only a kid, still learning to fish and fumbled over my fishing pole. “Reel him in. Don’t go too fast. Keep your line tight. Don’t let him go under the motor,” he told me.

The fish had gotten close enough to net when my grandfather gave the instruction “bring him up.” So I did just that. I yanked on the pole and sent the fish into the air sailing to the opposite side of the boat. The fish started swinging back like a pendulum and hit my grandfather in the back of the head. The impact loosened the fish from the line and sent it somersaulting into the water.

A few choice words were spoken under his breath then my grandfather told me there are three steps to catch a fish. First get the fish hooked, second keep the fish hooked and third get the fish in the boat.

So how exactly does the lesson from the lake transfer to the dealership sales floor?

So what are your customers hearing?

You make sure the windows, parking lot and all other customer facing areas are spotless. You hire the right people and make sure they are trained. You do everything to make sure customers feel welcome at your dealership and comfortable enough to spend money.

What about outside your brick walls and asphalt?

Today your store has expanding walls. With websites, social networks and online advertising your dealership has the ability to break out of geographic restraints. You don't have to wait for customers to drive up to visit, now they just click.

So here you are. We have been looking for hidden cash for months now, and have found a bundle. Inefficiencies, waste, theft, math errors, lack of understanding-all of these things have clearly sapped dealerships of their strength and vitality. And, when times get tough-really tough, like right now -- the weak fail, the distracted struggle, and only the strong survive.

So it's time to add it all up -- Parts, Sales and Service -- to summarize it all from 40,000 feet, and see if we can make sense of it.

To do that, I surveyed six hundred dealers and divided them into three groups based on their performance in just four key areas: New margins, Used margins, Average Parts Counter Ticket, and Hours per Repair Order. Bottom third were the guys on the low end, and the good performers were on the top.

Then, I threw out volume and said, "Hey, what would those guys on the low end have done with the same customers if they had just sold at the same rate as the guys on the top end?" Same exact customer count. What would be the difference in revenue?

Add it all up and we see that because of more effective selling in each customer-facing opportunity, the top group, with the same number of customers as the low group people -- in this one month picked up $140,000 more in sales dollars.

You’re not stocking parts to fill empty shelves. Make sure your parts are turning and making you money. Here are 5 ideas how:

It’s time to stop letting customers slip through your fingers. Get to know them. Ask for their contact information. Follow up. Give them opportunities to get involved and reasons to come back to your store.

Once you have customer information what do you do with it? Most people view marketing as spewing out endless stacks of postcards focused on discounts. This approach does two things: First, your customers stop reading your marketing, because it’s boring, second, it trains your customers to focus on price, and more specifically discounts.

Instead of promoting price, use marketing to reinforce yourself as an expert. Your customers want to have fun, show them how. With the right marketing approach you can become their resource for both equipment and experiences. The more you tie your store to the fun of owning a RV, the more loyal your customers will be.

A dealer asked me for a new report that would calculate salesman's commissions. I sat with the office manager to learn the method used, and was shown a report that had been in use for years, but was hard to read and run.

I looked carefully at the old report, and found that it was based on Gross Margin in the deal, multiplied by a certain percentage. I didn't think too much about it until I looked carefully at the way Gross Margin was calculated. It was simply Selling Price less simple Cost of the unit. I asked the office manager how over-allowances were handled. When he responded with a blank stare and, "What is an over-allowance?" I knew we were in trouble.

A little work soon revealed the extent of the problem. The trades were being booked at the proper values, because Lightspeed did that automatically, but the report that the office manager created had ignored this adjusting entry, paying salesmen instead on the inflated sales price of many units. Total cost to the dealership? About $60,000 in excess pay per year.

In a shop I looked at recently I found 1,300 ROs open and unpaid in the system. One thousand three hundred! I looked for the units, and found 98. In other words, over 1,200 ROs with no unit to be found, and never paid. Total revenue involved? About $300,000.

Further study found that about 1/3 of these missing units were customer pay, 1/3 were internal, and 1/3 were warranty.

Tthere was a substantial group that were simple theft (customer got the keys and drove away). Poor control over the delivery process had cost this shop $70,000.

So why did this loss of $300,000 happen? Mostly because of poor controls. You, the service manager, must be constantly checking to see that you get paid for every piece of work you do. And that fork-lift time for the sales department? Bill it.

It was the same problem ever year. The December P&L would show a nice little profit for my store, but there was no money in the bank. Three years in a row, same thing: Nice profit, no cash.

So I started digging, and the cash flow statement finally revealed the culprit. Good margins, good volume, expenses under control, AR steady and profit solid, but the parts inventory was growing each month. And that growth was about equal to each month’s profit. Result? End of the year I showed nice profit, but every dollar of it was sitting on the parts shelves. My parts manager was spending all my profit !

So I called a young programming friend, told him I needed control over the Parts Monster, and he went to work. The result was the Lightspeed program, now in its 26th year, and for those who use it properly, controlling millions of parts in thousands of shops, just fine, thank you very much.

Now, if cash moved into parts, it certainly can move back out. Here’s how.