4 Strategies for Protecting the Bottom Line in a Downturn Market
As of Q4 2019, RV wholesale shipments were down nearly 17 percent year-over-year, according to RV RoadSigns. The good news is that this decline is expected to ease up and gradually diminish to a decline of 3.9 percent by the end of 2020, thanks to low inflation and an expanding economy.
You can still post strong revenue and meet sales goals as the industry recovers from a soft market. But you can’t use the same old strategies that cost you money, like buying more leads or increasing your ad spend.
Instead, ride-out lower consumer demand for RVs by tightening-up back-end operations. The following four strategies will increase your operational efficiency, so you come out strong through the slow years and beyond.
Reduce your accounts payable costs.
The old adage “time is money” applies to your accounts payable department. It’s labor-intensive and inefficient for your staff to manually process invoices and pay hundreds of suppliers every month. Add to that the cost of postage to mail checks.
A better way is to streamline and automate payments by submitting payment batches to a third-party vendor that cuts checks or pays suppliers with a virtual card. Automating your process eliminates manual data entry and postage costs and gives you more visibility into your bottom-line. In seconds you can type in a vendor’s name and know who approved an invoice and when it was paid.
Even better, you can earn cashback every time you pay with a virtual card. This turns a traditional cost-intensive department into a revenue-generator. Virtual cards are highly secure because they use a unique account number for every payment. Once the payment is made, the number no longer works.
Optimize your cash flow.
You automate your accounts payable and suddenly your accounting staff has time on their hands. That’s a great problem! Put them to work optimizing cash flow by finding hidden revenue and uncovering and cutting unnecessary costs.
Areas to focus on include following-up on outstanding customer receipts to close-out invoices. Also, analyzing spending and finding ways to reduce costs by negotiating with suppliers.
Staff can also spend more time on up-to-date profitability and financial metrics reporting for your executive team. This includes getting into the details of variable expenses and areas you can trim without affecting day-to-day operations. Common expenses to analyze include overtime pay and office supplies.
Update your customer communications.
In our industry, there are still many ways of doing business that have not changed much over the years. One area is customer communications. Too many dealers still haven’t embraced texting with customers. Yet, it’s an incredibly efficient way to communicate for both your sales and service staff.
Consider that the open rate for texts is an astounding 98 percent. In comparison, email open rates hover around only 20 percent.
The average person looks at his or her mobile phone 150 times a day, so it’s no wonder 90 percent of texts are read within 3 minutes of being sent. Who can ignore that ping in their pocket?
Texting is so powerful because it’s immediate and allows your staff to do more in less time. Sales and service staff can answer multiple questions and give status updates simultaneously. This creates a better experience, happier customers, and more profit opportunities.
It’s crucial to make sure a texting service is tied into your business phone and your CRM. Don’t let sales use their own mobile phones. There’s no way to capture, monitor, or measure those conversations and aggregate that information with a customer’s overall profile. And in an industry known for high turnover, you risk losing customer contacts when employees change jobs.
Streamline operations with one integrated platform.
Injecting efficiency into your operations is much easier if all of your systems speak the same language. When systems are built to integrate, employees spend less time trying to manually navigate through processes that have been stitched together and more time growing, retaining, and acquiring customers.
When you trust every function of your business to the same platform you improve business analytics, customer communications, and employee efficiency. This translates to more informed business decisions, happier customers, and more productive employees.
Are you worried about keeping revenue strong as the RV market recovers from a slow year? Now’s the time to act. Follow these four strategies to tighten back-end operations so you can continue to post strong revenue through the slow years and beyond.