What are projected sales? Projected sales are the reason that you purchased the vehicle. Many people use bidding software to help them decide what they need to purchase and what they could pay for it. Even more people shoot from the hip using their intuitive knowledge to determine what to pay. These are extremely different methods but the common thing that both use is an estimate about how much revenue will the vehicle produce in sales. The amount that either the software or the buyer expects or thinks the vehicle will produce is the projected sales. Some people use the term anticipated sales which means the same thing in this discussion.
Why are projected sales important?
The amount of money you spend on salvage has a direct and near immediate impact on your sales. Tracking and paying attention to your projected sales will continually tell you if your business is going to be increasing or decreasing. When you have an influx of salvage you almost always have an increase in your business. Engine & transmissions are our top two selling items so an influx leads to them selling which creates demand on the dismantlers.
What can I do with projected sales?
There are a number of things that can be done with projected sales depending on who we are dealing with. The first thing is the old proverb of not being able to sell apples out of an empty apple cart. Buying a decreased amount of projected sales will lead to decreased sales at some point in time. Your depth of inventory can only sustain sales
for a period of time before it drains and sales drop. The opposite of that is true. Buying more projected sales will lead to sales growth. You can also use it to measure the performance of the buyer. We need the buyer to purchase enough gross profit per vehicle to make all of the work worth doing. Monitoring the number by buyer will show opportunities to eliminate some bad buys and add more of the high performing units.
Is accuracy or consistency more important?
Accuracy is nice but we can always determine the variance and adjust accordingly. Being consistent in how it is done is what allows the variance to be calculated. Over or under projecting can be solved by adjustments in the bid software very simply. Changing the method used to calculate sales makes the ability to trend difficult. It is hard to remember which months were done which way and etc. That is why it is always best for the buyer to furnish the number. They will do it the same way each time.
We know that our money is most easily made when the buyer makes good buys. Knowing how vehicles performed in the past predict how they are going to do in the future. Anticipated or projected sales merely keeps the scorecard to compare what we expected to what we got.
In an industry full of numbers, very few are
more important than this one.
Mike Kunkel Bill Stevens
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