Insolvencies, economic cycles and buyer behaviour – these and various other factors are responsible for fluctuations in the performance of dealership networks. But an efficient network of dealerships is needed to keep the costs of selling low and to ensure stable sales volumes. In a joint project with BMW Motorrad, Cirquent successfully tested out its multiple-stage method for optimising dealership networks.

Task: Innovative approach to optimise dealership networks

In Germany, the overall market for motorcycles has been in decline for several years. This applies also to the segment above 500 cubic centimetres, which is the focus of BMW Motorrad’s activities. Buying motives, brand loyalty and customer preferences change very dynamically – there are vast differences within the buyer groups, the dealerships and the regions.

If you want to keep your dealership network optimised in this environment, you must be proactive and use an enormous bandwidth of data to make decisions. Many traditional approaches to optimise dealership networks are based purely on planning the ideal network, which makes them one-sided and model-driven and they can lead to the wrong decisions being made. Therefore, in a joint project, BMW Motorrad and Cirquent developed a completely new approach to optimise dealership networks.

Solution: Success in seven steps

1. Draft scenarios for planning the ideal network

2. Record the motorcycle dealerships throughout the country and evaluate them according to sales performance

3. Evaluate regional motorcycle markets

4. Develop the ideal network with a “greenfield” approach

5. Survey customers’ wishes and requirements

6. Take trends and developments for the coming ten years into account

7. Evaluate dealership types and sales formats

Benefit: More than simply an ideal sales network

Cirquent presented the optimised sales network determined in this manner on a map of Germany – differentiated according to three scenarios for market development. The current dealership network was also shown on a map, to visualise the overlaps with and differences to the ideal network.

The assumptions and results were explained and the consequences for sales network development were discussed at several meetings with the BMW sales team. Soft facts and personal experience values from the sales staff were discussed so that the newly developed sales network could be implemented. As a result of several discussions, the 130 locations throughout Germany calculated in the ideal concept were extended to about 140 locations. They will form the future target sales network for 2012. With the current 160 locations, this means a reduction of roughly 20 locations.

In other words, instead of presenting just an ideal network and leaving the sales unit “on its own” as regards implementation, by involving the sales team in the final decision, Cirquent’s recommendations were accepted. Also: In spite of the extensive analysis and market research, the project with BMW Motorrad took only six months from the order being placed to the final target concept.

Quotes: BMW Motorrad and Cirquent

“The Cirquent Management Consultants showed us a holistic and pragmatic way to continuously monitor and realign the strategy of our sales network,” said Heiner Faust, Head of the German Market at BMW Motorrad.

“The keys to success were to take a neutral and objective approach to optimise the sales network and involve everyone responsible for sales in the implementation from the beginning and to provide information to the BMW Dealer Council at an early stage,” explained Timm Kruse, Project Manager and Principal Customer Management Consulting at Cirquent.

To summarise: Sales network optimisation is worthwhile

Within the scope of its German strategy, in addition to optimising its sales network BMW Motorrad Germany also initiated various other steps to improve its market position. In total, as at May 2010, the implemented measures had led to a marked increase in market share compared to the previous year – from 16.8 per cent in 2009 to 21.7 per cent in 2010.

If there is no need to evaluate the dealership types and sales formats or to carry out the customer survey and the trend workshop because this information is already known from other sources, the costs and project duration for sales network optimisation can be reduced even further: This would mean that with an abridged method, the optimum sales network could be determined in just three months with a team of two to three consultants. The costs would be amortised in just a few months through the increases in sales and cost reductions that would be achieved.