The results of the 2010 federal census are finally making their way into some manufacturers’ relevant market area descriptions for dealers. This could impact the measurement of your sales efficiency.
The make-up of your RMA (or PMA, AOR, AGSSA, or other term depending on the franchisor involved) can be the key factor in how your sales efficiency is measured. Generally, sales efficiency is based on what the franchisor expects that a dealer will sell in its RMA based on sales of all same make dealers in a state or region. If the sales by dealers of your make are 10% of all new car sales in your region, manufacturer statisticians assume that you should sell at that rate in your RMA. Exceed that, and you are a star. Fall short of that, and you are not.
Generally, if your RMA is too large, that will make your job more difficult since you will be responsible for sales in areas in which you probably do not have a competitive advantage. The same is true if you are assigned areas that are separated from you by mountains or rivers that make it difficult for customers to get to you.
On the other hand, you do not want an RMA that is too small. If areas where you should have an advantage are assigned to others, customers in those areas may be directed to competing dealers by manufacturer locaters on the internet, you may not receive manufacturer leads from those areas, and you may not be able to engage in offsite sales or displays in those areas.
So what does the census have to do with this, you ask? If your franchisor defines your relevant market area based on census tracts, the recent census results could have a significant impact. Census tracts are adjusted based on census results. Now that the manufacturers’ consultants are processing the new census tract information, you may receive a letter advising you of an RMA change. It is important that you review that notice, just as you should carefully review any RMA notice that you receive.
Take a hard look at the manufacturer description of your new RMA. Based on how the new census tracts lay out, your manufacturer may take the opportunity to do some adjustments to your RMA that are contrary to your interests.
So what should you do? First, compare the new RMA to your old one. Also, if you have a manufacturer report on where your customers live, or you prepare your own, compare that to the area you have been assigned. Here is what you should look for:
Are there areas in your new RMA that are too distant geographically to give you an advantage? Manufacturers generally assign all geographic areas to someone under the assumption that customers will go somewhere to buy the make you sell. However, if it is too far to go, they simply may buy a competitive make from a closer dealer.
- Are there areas in your RMA that are closer to other dealers? If so, those dealers will have an advantage.
- Are there areas that are separated by geographic obstacles, such as a mountain or a river, that make it more difficult for customers to travel to your store?
- Are there areas that, because of the flow of traffic, will make other dealers more convenient to customers in those areas? You may be closer geographically, but a dealer located on a major interstate if you are not will have an advantage.
- Based on where your present customers live, are there areas that should be yours that are not assigned to you thus preventing you being identified as the most convenient dealer on the franchisor’s internet locater and from getting manufacturer leads for potential buyers who live in those areas?
If you receive a notice about your RMA, carefully analyze the new assigned area. If it is contrary to your interests, contact your manufacturer and challenge it.