Parts Leadership Finance Operations

How Firing a Customer Can Benefit Your Business

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FOB_Parts Case Study_0917

It’s to be expected that in any industry, a number of irritations exist. Last year, however, featured several headaches for Rob Felicetta.

Those frustrations stemmed from the fact that Felicetta, the parts manager at Reno Dodge in Reno, Nev., was having endless difficulty securing payments from a major wholesale account. A national car rental company was going months―even longer, on occasion― without settling its bills with Felicetta’s parts department.

“The bills were getting strung out―bills that dated back a year-plus,” explains Felicetta, who oversees a department of nine, with an inventory of nearly $700,000.

Eventually, management at Reno Dodge instructed Felicetta to put the car rental company on cash on delivery. While he knew such a move would almost certainly cost his employer a wholesale account that added up to roughly $12,000–$25,000 per month in total sales, he did as instructed. As expected, the move resulted in a discontinued business relationship between the two sides.

“A lot of times, that’s how big companies get bigger―they string their vendors out as far as they can,” Felicetta says. “It took us about eight months to finally get caught up on payment.”

Dropping a major wholesale account can no doubt be scary, but such a move can be liberating too, and even beneficial in the long run, if handled wisely. Felicetta’s employer is proof of that, judging by the steady growth the parts department has experienced in recent months. Since 2016, Reno Dodge has seen, on average, a 30 percent increase in total revenue per month.

 

The Firing Process

In 2016, when Felicetta’s employer essentially fired the rental company as a customer, the process was two-fold.

First, Reno Dodge acted swiftly. Then, the dealership moved forward, decisively.

Here’s a closer look at the two-part process:

1. Be straightforward. When his bosses instructed Felicetta to deliver harsh news to the rental company, the parts manager attempted to communicate in a professional manner.

“I said, ‘I’m sorry, but the bills aren’t getting paid, and we aren’t in a position to carry for the time frame that you need to be carried,’” Felicetta recalls telling the rental company. “And I was threatened, [and told] ‘Do you realize we’re a nationwide company?’”

The parts manager replied thusly: “‘If you’re a nationwide company―and as big as you’re saying―then paying your bills shouldn’t be an issue.’”

While the Nevada dealership soon found itself without a sizeable wholesale account, it was also breaking free from an unreliable customer.

 

2. Don’t look back. Dropping a major wholesale account in 2016 stung Reno Dodge. But that pain subsided before long, as the parts department launched an initiative to expand its business reach.

Felicetta’s staff made a concerted effort to pound the pavement, visiting prospective customers. As a result, after just a couple weeks, new clients began calling the dealership. Felicetta estimates that 10–15 new customers were added by his department in the wake of dropping their car rental account.

While many of the dealership’s current parts clients represent smaller businesses than a national rental chain, those smaller customers have proven to be interested in forging a strong, symbiotic business relationship. Felicetta says his store’s newer, smaller business partners have tended to be “more reliable, and more consistent,” than that national rental car company ever was.

 

The Results

As of late 2017, Reno Dodge is doing close to $300,000 per month in wholesale work, Felicetta says. And, since dropping the national rental car account, the parts department has seen a 30 percent increase in total revenue per month. In short, the parts manager feels his department’s business is on the upswing, overall.

While it took Felicetta’s parts crew a few months to fully recover from dropping that large wholesale account, he says things are going well enough that his department is on the verge of adding employees.

If 2016 taught Felicetta anything, it’s the importance of being unafraid to voice concerns to wholesale customers. While parting ways with that major rental car company was unnerving at first, it proved to be necessary.

“You’re thinking, ‘Wow, this is a big account; this is going to hurt,’” the parts manager notes. “At first, it was a little bit of fear.”

Before too long, though, that fear turned to excitement around Reno Dodge. Because, as Felicetta says, “things were turning around, business was growing, and new stones were being unturned.”

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