In the opinion of Jim Counts, the “automotive recyclers answer man,” the foundation on which to build successful parts sales is found in having the right parts and the right attitude. Everything else is in the training.
If you have ever heard Jim Counts speak at an industry event, you know you won’t hear much fluff. He cuts straight through to the facts. So if you are a lackadaisical business owner, he may step on your toes a bit. “I tell people the truth, what I believe. I am not always right, but I will tell you what I believe is the correct way to solve the issue at hand, and the owner can then decide if they want to follow my advice,” says Counts. As a longtime industry insider for 31 years, he has been helping automotive recycling business owners sort out all kinds of problems through his company, Counts Business Consulting, LLC.
Counts began in the industry as the owner of three automotive recycling facilities in the first ten years of his career before selling them to his former managers to focus on consulting. “I like fixing businesses, but discovered I get bored once they are fixed,” he says. Since then he has made a career of fixing other people’s businesses and even their family dynamics.
“One unique thing to our industry is that these are family businesses,” says Counts, “which adds extra challenges.” But Counts says of his experiences, “I have made a lot of wonderful friends in this industry.”
Always on the go, we caught up with Counts long enough to get his insights into successful recycled auto parts sales. Warning: This article should not be read by the faint of heart. Only those serious about improving sales should read on …
According to Jim
“Hiring another salesperson will not automatically increase sales,” says Counts. So what will, we asked?
In the world of parts sales, according to Counts, increasing parts sales is found in three little words: “Buy more inventory.
“We tend to sell everything we buy. The problem is we don’t measure how many sales we make from each vehicle, so we don’t realize when we have sold it all. When people call us for a part, they call us to find what they need, not necessarily for what we have. It’s our job to have what they are looking for or get it for them.”
We know that it’s normal to be out of stock about half the time, but for Counts that should not hinder making a sale. That’s where a can-do attitude and proper sales training on how to close the deal comes into play. But let’s not jump ahead of ourselves; buying is where it all starts.
“Salespeople don’t have near as much control over sales as most owners think. They sell what they have in stock, so it is important to have what the customer’s need,” says Counts. Inventory is our most critical business asset, yet Counts finds that owners often spend very little time evaluating what to buy and what to pay for each vehicle. “Yes, I realize that buying is difficult, but buying correctly has always been time-consuming. It is the most important job in our company – so why do many owners do it when they get a minute?” asks Counts. He says, “You can’t fix a bad buy; and you never made a dime on a car you didn’t buy.
“Having the right inventory at the right price is so important that I have written 25 pages of math that is used by many for buying, what to pull for stock, and when to hold and fold on the price. The best way to buy is to take the emotion out of it and buy smarter by the numbers.”
Estimating the total value of a car is extremely important, he emphasizes. Too often, there are parts the recycler regularly sells that don’t get included in the estimated sales value when they bid. This means the car was undervalued when they bid on it. This and not knowing how much it costs to process a car is a major reason recyclers have trouble buying needed inventory.
Overall, the buyer should estimate what a car will do in total sales – including crush, scrap, cores, and parts sales – and then subtract what it will cost to process that car. This leaves the car’s bid value. With this method, you can limit the number of vehicles that lose money and often find that you can spend more for the car than you thought.
“Why would I process a car and not make money on it?” says Counts. “However, if I don’t know what it costs to process vehicles in my business how do I know if the vehicle will be profitable? Some owners have very little idea what the car will do in overall sales. “They may buy a vehicle based on 3-4 parts or what one part is worth, when they really average selling 20-25 parts per car.” So, Counts says if you want to increase sales you have to buy more vehicles. “If they average buying $100,000 worth of sellable parts each month, that is all the salespeople can sell. Again, this means that salespeople don’t have as much control over sales as most owners think. The buyer actually controls the amount we can sell from our inventory.”
Counts warns that doing business the way you did in the past is a sure way to fail. “Change to the new marketplace! The economic experts say that any industry that is not based in technology is doomed to fail. We can’t have the attitude that I will buy ‘when I get a minute,’ or based on old habits. The current marketplace is too competitive.”
Getting the right data is easier now than ever before. There are industry vendors that provide advanced tools and technology for buying, inventorying, calculating, and so much more. For some recyclers, the growth in technology has outgrown their willingness to use it. “I find that some auto recyclers have not stayed in sync with their software,” says Counts. “They don’t fully use the reports available or don’t understand what the reports are telling them.”
“Bottom line: buying inventory has changed. Yes, there are more buyers, but there is greater access to more auctions and more vehicles are being wrecked every day. Vehicle prices are more justifiable when the full inventory value of a car is calculated. Auto recyclers have to bid more cars now to get the same number of vehicles as they have in the past, but for those who buy smarter, more inventory is attainable.”
So now it’s time to make some sales. Many business owners and managers complain that they don’t know where to find good salespeople, to which Counts says, “I found them.” He notes that we talk to successful salespeople almost daily in our regular activities. When you have a good sales experience, take note of it.
“When you go anywhere to buy something, professional sales people will come up to help,” says Counts. “They make me, as the customer, feel that I am important. A good salesperson will generally call me two weeks later to see how we like the car or appliance we bought and ask if we have a friend who might be interested in their products.
“I went out to lunch late one day to a restaurant that has daily specials. Because I was late they had sold out of many of the specials. As the waitress made her introductions, she told us about all the specials they did have, not stating what they were out of. In ordering I asked for a specific cola product and she said ‘What we have is...’ again emphasizing the positive. Then I said, ‘Have you ever thought about selling parts?” laughs Counts.
This story illustrates his belief that attitude sells. “To sell recycled auto parts, a salesperson must overcome damage issues. How do you sell damage as a positive?
The successful salesperson might say to the repairer calling for the part, ‘This door normally sells for $650. It has a credit card dent, and I will pay you $250 to fix it.’ This takes the risk out of what you sell. Add a parts and labor warranty to mechanical parts that have some mileage on them. Then we can replace it for free or pay for the labor to replace it, at a profit.” says Counts. “Remember, if you don’t sell it, you will crush it, and that’s what I call a big price cut.”
In Counts’ opinion, the basic quality for a successful salesperson is a really positive attitude, not necessarily talent. “My best salesperson started out as a driver. Who would have known?” he says.
“The good salespeople are always trying to figure out how to overcome objections … they have a can-do attitude.” Counts believes that you can teach someone to sell parts, but you can’t teach them to be positive.
Train Them Up in the Way They Should Go
“To have good employees you have to work at it,” says Counts. “Good employees require good training. If you can’t find them, you’ll have to make them. That takes work and is something we often don’t want to do.
“Personality tests have not been much help here. There seems to be too many variables. Instead, work with them for 90 days. If you see improvement every month then who knows how good they might be someday. If they aren’t getting it by then, they probably won’t ever have it. It’s time to get someone else.
“Selling is about closing the deal,” Counts continues. “Unfortunately, most salespeople don’t get a whole lot of training on how to accomplish this. They do the best they can or do what they see others do.
“One major problem is that owners or managers get nervous if salespeople don’t jump on the ringing phones. What they don’t understand is that you can’t expect your salesperson to put someone on hold to answer another call when the call they are on might be for a $1,000 part. Yet, they do. Have you ever noticed that when you buy a car or an appliance, no one interrupts the salesperson when they are talking to you or expects them to answer another call?”
In general, owners are not sure about what salespeople should do, and they don’t recognize bad sales habits because they have not been trained either. This situation can lead to a lack of training throughout the company. Yet in any other sales-driven business, there is an ongoing training program. Most recyclers have the new salesperson sit with someone for a day or two and hope they teach them how to write an order. No actual selling is taught.
“Train, train, train,” says Counts. “Teach them the difference between selling a part and selling value. Train your people how to solve the customer’s needs. Most of our salespeople are just order takers. They tell the customer they have the part and then allow the customer to beat them down on the price.”
There is more to sales than just having the part. The larger companies put a lot of effort into motivating and training their sales staff, and they don’t always have the part in stock either. “We have to broker a lot,” Counts said, “yet we don’t teach salespeople how to broker. You don’t need to tell the customer you don’t have the part, you just get it for them. You don’t say, ‘I have one but… or all I have is…’ You can’t sell those parts. You just told the customer they don’t want it by describing the negative.”
The key to increasing sales is to solve the customer’s problems. “You have to have a solution; save or make them money. A shop always wants to save money. Shops want to take your part and make money on it. You need to know what to say when that potential customer calls,” says Counts.
One way to gain the customer’s trust is with extended warranties. “This is much undersold,” says Counts. “Parts and labor warranties give the customer peace of mind with the part. We tell them; ‘We will take care it. We will pay you to correct the problem.’”
Two things you should never say to a customer: “Don’t ever say anything is ‘company policy,’ or say ‘we can’t do that,’” says Counts. He suggests instead that a salesperson develop different, more positive, ways to negotiate the sale. “Come at it from many angles to sell it. I try to teach people to put the same amount of effort in selling parts as they did as a kid trying to talk their parents into letting them do something.” Then when you find something that works, you can use that technique over and over again.”
The Price is Right?
With people generally keeping cars longer, there are more opportunities for recycled parts sales today than ever before. The key is having a persistent sales team and correctly priced parts.
The average salesperson closes the deal 25-35 percent of the time, with $50,000-$60,000 in sales per month. Larger facilities have salespeople who can sell over $100,000 in a month. The top producers have salespeople who produce around $250,000 in sales a month, but there are very few in this category.
One way to increase profits from sales is to get a new perspective on pricing. “If you can’t keep a particular part in stock,” Counts says, “then it is too cheap. Priced correctly, the supply should meet demand. If you don’t mark it up, you may not be able keep buying it. Yet many yards only mark down their prices, they never mark up anything. I wrote software that tells recyclers if parts are over- or under-priced.”
“The salespeople are the highest paid employees in the company,” says Counts. “Yet salespeople often say they have no control if sales are down and phones are not ringing. But they can call the people they quoted yesterday or the ones you delivered to last week. See if they got the repair or if they needed anything else. Call the customers that have not contacted us lately to see if something is wrong. If phones are not ringing on our end, make them ring on the customer’s end,” advises Counts.
When Your Salesperson is Family
A large majority of auto recycling facilities are family operated businesses. Counts ultimate advice here is, “Hire the best qualified person for the job.
“The bottom line is that the owner is responsible to employees and to his family, to make the best decisions for both. This is not always fun, but we signed up for the job and that means we have to make the hard decisions. Sometimes that means letting people go. And yes, it may mess up other important things for awhile – like family holidays,” advises Counts.
Counts’ firm suggests that if a family member is interested in being in the business, especially children, they need to work for someone else for at least two years. “They need to learn to be respectful, show up on time, work as a team, do a good job, etc. It also changes the connection between parent and child. They come to the business with their own life, bills, car, etc. I suggest you let them apply for the job along with others, then hire the best qualified candidate.”
The Future of Sales
“We don’t know what we don’t know,” says Counts. “Why don’t people learn more? There are many resources available to us that are automotive recycler specific, like ARA University and the conventions. You can’t afford not to keep learning and improving your business practices and staff.
“I am excited by what I call ‘the 35-year-olds’ generation in the industry. There is such a wonderful energy in these young people. They want to know why computers can’t do more, whereas their elders have trouble accepting that computers can help advise us what to buy, what to pull and stock, what price to sell a part for, and when to hold or fold on the price.”
For Counts, it all comes down to this: “There is a saying that whether you believe you can or can’t, you are right.”
Caryn Smith is the editor of Automotive Recycling magazine.