As an NCM Moderator, I have the privilege of working with dealers from across the country with a wide variety of challenges. Recently, I was sitting on a plane having just finished an in-dealership consulting project that covered multiple dealerships and brands, and I couldn’t stop thinking about the performance of managers at dealerships. I thought about it, and even though there are unique challenges at most dealerships I visit, there are also many similarities that I consistently see no matter where I go in North America. Sometimes I feel like Bill Murray in the movie Groundhog Day.
The Most Common Issues I See at Dealerships
The single most common issue I run into, is that many managers that are putting out fires due to lack of processes. This is a multi-layered problem, as while the manager is putting out the fire, the fire is taking time away from managing and training the sales staff. This lack of training and attention results in lost sales opportunities, and most managers are not aware of these losses because they are lost in the chaos caused by the immediate fire. Sadly, most managers think they have it all handled because they are hitting the OEM Market Share number (even if it’s always a nail biter).
Pre-Owned, well that is another fire altogether. Roughly half of the managers I work with mid-month cannot tell me how many units they have out at any time, gross generated, and rarely they are aware of what their departments average month expenses are. How do we know if we are going to make a profit in the department if your team is unaware of these critical metrics?
Finally, it also seems that many managers are opposed to change, even if they want to see a change in their bottom line. When the topic of daily and weekly responsibilities arises, the response I get most often from these managers is “I am too busy doing other things.” Instead of focusing on proven best practices like one-on-ones, training, and a CRM review with your sales staff, mangers are frequently doing things like “getting something for accounting”. The last time I checked, most managers get paid on gross and sales. So, unless I am missing something, nothing happens until we sell a vehicle. No vehicle sold – no paper to chase. The real question this manager should be asking themselves, is what process broke down that is forcing them to chase down a document on a submitted deal to accounting all of the time? This manger needs to be more focused on OTDBs.
OTDBs: What Are They, And What Do They Cost?
If you think about leads from all sources, these are your Opportunities to do Business. Great managers look at how many OTDBs they need, at the departments current closing ratio and gross, to overcome monthly departmental expenses. In other words, how many leads do I need to generate to make a profit.
Let’s start simple: If you took your Sales Department Vehicles Sold and divided them by your Closing Ratio, that would give you the Estimated Number of Up’s. Then take your Total Departments Expense for the same period and divide by the Estimated Up’s. This gives your value for each customer you sold. Sit down, as this can be a staggering number. I would challenge any manger to think about that number every time a customer walks out your door because a sales person skipped a step in the sales process. Examples can include the test drive, did not get the customer to fall in love with the vehicle, provided numbers then failed to perform a Management T/O, the Manager does not do a proper appraisal, all of these things can cause the customer to think unsavory things about your dealership, and lose you a sale. How about the customer that never even makes it in your door because of poor phone or internet skills, are these processes costing you some serious cash?
How Are You Measuring Your OTDBs and Contacts?
Most dealerships have a basic organizational system when it comes to their leads. Walk-Ins, phone calls, internet leads, and sales person self-generated leads are very common to see. However, the bigger issue at most dealerships is how these contacts are inconsistently measured! Below, I have listed a few of the more common inconsistencies that cost you money.
#1: Believe it or not, it is very common to watch customers come in and out of the dealership with no one approaching them. Are these customers logged into your CRM? Probably not. Another wasted opportunity to add a new contact, to find out why they arrived at your dealership, and to work on closing that sale.
#2: A sales person talks to the customer on the lot but does not get the customer’s information. I would say there is less than a 50% chance any given customer was added to your CRM with accurate information, especially if they are never led to the showroom. When mystery shopping on the lot, I find myself in the CRM maybe half the time. Even when I get entered into the CRM, many times my profile is entered incorrectly, or the sales team failed to gather critical follow up information. Usually I will find my first name listed twice, because no one asked for my last name, along with some bogus contact info. Will this level of information on your customer allow you to close a possible sale?
#3: Phone calls. Every time I have the opportunity to cover phone calls with dealers, GM’s and managers, I like to pull up their website and call their dealership. I then play the phone call on a speaker for all to hear. Obviously, the purpose is to hear how well the receptionist and sales person handles the call. I purposely try not to give my last name and roughly 80% of the time I get away with it. Additionally, most of the time no one asks for my phone number. Am I in your CRM? Probably not.
#4: Internet leads are probably logged into your CRM. However, many leads are still missed. For example, what do you do when the leads arrive in a Managers inbox? Odds are they are shot-gunned around the showroom for responses and the sales person responds from their Outlook email. Is this customer logged in to your CRM? There is a better chance, but are you 100% sure?
So, what is the take away from these examples? We work with flawed data to determine our sales staff’s performance. How can we begin to measure the basics, such as percentages to OTDBs for presentations, demo drives, percent given a written proposal, appointments, appointments that show, and more with flawed data in your CRM? Simply put, we cannot!
If you are looking to improve your variable operations, you can learn more from Randy and our other automotive consultants by joining a 20 Group, scheduling a customized dealership consulting session, or registering for automotive training in the NCM Institute. Backed by our benchmarking and automotive reporting software, NCM Associates is ready to help your dealership overcome any business challenge.