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Customer Profitability

PFW's Products Help Determine Your Moneymakers

PFW Password - Spring 2005 Having a system in place that provides Business Intelligence is a key element of improving customer profitability. The data is there, readily available, and it now needs to be organized and analyzed in order to make better, more informed business decisions. So now dealers may be wondering: What information do I need? Where do I find it? How do I use it?

A good place to start is with existing customers. Many dealers are aware of the importance of putting customers at the center of their business -- strong customer relationships are a major focus in today's business management climate. But understanding and knowing customers can go beyond developing a good rapport in order to maintain customer loyalty. Truly understanding customers means knowing which customers are making the dealership the most money -- and which customers are costing money.

Financial Reporting
A good customizable financial reporting system is an important element of a revenue-increasing plan. It is not enough to look just at the big picture -- how much money was made last year. To develop a plan for increasing profitability, the dealership should be analyzing specific customer information to see what areas can be improved upon.

PFW IntelliDealer Financial Management [Fig. 1] contains reporting capabilities that allow the user to analyze customer information. The dealership has the freedom to create financial reports based on its individual needs:

• Columns and rows can be customized
• The date range can be taken from the current or previous fiscal or calendar year
• Reports can be saved and copied for other system users
• Results are returned the way the user chooses to see them, and are presented in the browser as a spreadsheet-styled report

IntelliDealer's reporting makes information more usable by giving the user the power to choose what and how financial information is displayed. Often businesses find themselves drowning in data, but by allowing the user to look at specific data, displayed in a specific manner, Financial Reporting transforms large amounts of data into information. The organization of data into information is a key to Business Intelligence.

Reduce Revenue Loss
Making and losing money doesn't just occur at the time of sale. One of the many areas that dealerships can use to gauge customer profitability is with a customer's payment history. Lost money doesn't just occur with a lost sale—late-paying customers will cost money. According to industry analyst Bruce Merrifield, it shouldn't be assumed that slow-paying customers are paying off late charges—most of the time these charges get written off and dealerships end up absorbing the administrative costs associated with tracking down money owed.

With this in mind, it may be a good idea to keep track of the month-end total receivables and days outstanding for each account. This information should be stored and an Aged Trial Balance report should be periodically run, ranking the accounts from the greatest number of outstanding days on average to the fewest.

In IntelliDealer, viewing A/R aging information is easy. Simply go to the Outstanding feature of Accounts Receivable to access clearly-presented information. The user has the ability to drill down by aging period and see a customer listing from highest to lowest dollars outstanding. Once a clear picture is achieved, the dealership is in a better position to evaluate the extent of the problem that may exist with regard to slow-paying customers.

Understanding Departmental Sales
A key starting point to determining how to increase revenue is understanding where the current revenue is coming from. A dealership needs easy access to logically organized data. Area Sales [Fig. 2] in IntelliDealer's General Ledger Account History provides the user with a detailed picture of month-to-date and year-to-date sales.

The user can initially look at a general, color-coded pie chart of revenue based on the parameters entered, then drill down to see a distribution breakdown by the types of sales that contributed to that figure. The user can even optionally view the actual invoices, sorted by date, that were entered. The ability to easily drill down from general to specific data and have sales data clearly displayed provides dealerships with a starting point for a discussion regarding missed opportunities with respect to increasing revenue. A dealership may know what their objectives are, but how can goals be reached without specific revenue information? Area Sales will help answer that question.

Gauging External Sales
IntelliDealer's Geographic and Business Analysis can provide knowledge of where revenue is coming from. With this functionality, users can analyze parts, equipment and total purchasers, service sales, and rental revenue. As well, see by geographical area, salesperson, business class, size, type, owner, equipment, or Dun & Bradstreet rating the customers that are producing the top revenues—which makes customer segmentation easier to achieve.

With Geographic and Business Analysis, users can see customer details, and drill down to outstanding details, specifically the "average payment days". This helps a collection clerk determine what kind of customer they are dealing with, and which customers with outstanding accounts need to be contacted.

Reporting Choices
In order to complement the reporting capability of IntelliDealer, the Members Only Extended Service Site at www.pfw.com/members contains a library of Crystal Reports® queries created by PFW and its customers. Users can search for reports by group or look up reports by file name, description, or author. Each report entry contains a description of the report, the report itself, a PDF version of the output and a PDF file that describes the structure of the report. The reports are provided "as is", and for reports created by PFW customers, their e-mail address is provided.

For those dealerships interested in measuring profit margin, the following reports are currently available:

The "Aged Accounts Payable Outstanding" report is a listing of Aged A/P outstanding vouchers, broken down by week. With the "Top 100 Customers Listing" report, see the sales, Cost of Sales Margin and Margin % for Total Sales, Equipment, Parts, Service and Rental -- the full rental costing information will be available in R6V03. The user is prompted for a date range, branch number, and which area they would like to base their top 100 calculation. Want to create a listing of customer purchases broken down by equipment, parts, service or rental? Then use the "Customer Segmentation" report, where a margin is calculated, based on a fixed percentage for each purchase type. A calculation for customer ranking is also included.

Alternatively, PFW offers Crystal Reports consulting services that provide companies of all sizes with powerful, customized data gathering. Crystal Reports development is a PFW speciality, and our experienced report writers are familiar with dealers' reporting needs.

Virtually any major, current database product can be accessed from any mainframe, server, or local location. PFW's data integration capabilities allow for the creation of reports from multiple data sources -- wherever the data is stored. To start the process, submit a report outline to PFW and receive a description of the report framework, the delivery time, and a price quote.

Armed with this critical mass of Business Intelligence, dealers can consequently revisit their marketing initiatives in order to target the appropriate niches. To assist with this effort, PFW IntelliDealer contains a comprehensive CRM tool, designed to help improve a customer contact program, market segmentation and coverage.