Measuring and monitoring key performance indicators can sound daunting, but it’s actually quite simple and it can be the key to your success in many cases. Knowing what’s making you money and what’s ultimately losing you revenue, will help shape your team’s and your own management activities on a daily basis.
The 80-20 rule is a widely known concept in business that suggests that 20% of your activities will account for 80% of your results. To put this to use, dealerships should clearly identify which of the top 20% of activities account for the majority of revenue, and put key performance indicators in place to measure the success of these.
Pro tip: We often find the close rates for repeat business to be the highest in our industry followed by referrals, be backs and phone ups.
So, to achieve your goals we recommend you measure the critical drivers of these activities to increase productivity and your bottom line.
Here are 5 ways you can evaluate which KPIs are most important to monitor for your dealership:
- How are you following up with sold clients which are your hottest lead source, closing at 75%? Are your salespeople reaching out to them consistently and updating records of the number of drivers in the household and who may be in the market next? Measure how many calls and communications that your sales team has with their sold clients as well as how they’re keeping top of mind through social channels and be top of mind when they’re in the market for a car next.
- Measure how many referrals your salespeople are getting each week. This may mean you need to tighten up your processes so that your salespeople are asking for referrals at each touchpoint, not only at the time of delivery. When your team is consistently following up with sold clients (this is KPI #1) they should also be asking for referrals. With close rates as high as 65%, this is an area that you should focus on and measure.
- What is the rate of success for your be-backs? Is someone other than the manager following up with people who came in but didn’t buy? Research shows that 37% of people didn’t buy a car from a dealership because they didn’t like the salesperson. This is why it’s critical to have a third party call and uncover the objection to bring the person back into the dealership. You should be measuring the number of people who left the dealership and of those, which have returned as a result of your follow-up efforts.
- Inbound phone calls are hot leads closing at 45%. The difference between making a deal and losing a deal is knowing what to say. Your dealership should be measuring how many phone calls your dealership took in, how many of those resulted in an appointment and most importantly, how many of those appointments showed up.
- Tracking your online leads is also critical– whether they’re coming in from email or web chat you need an accurate count of how effective your strategy is to bring them in. Similar to a phone up you will look at how many online inquiries you’re getting each week, how many appointments are being set and of those, how many are showing up.
If you’re able to set up a dashboard with these KPIs, you can begin to shift your focus on a daily basis to what’s going to move the needle. Not only will you become more efficient and profitable, but you’ll start to see problems before they occur. You can go from being a reactive manager to a proactive one, just by looking at the numbers of the activities that drive the most revenue.
If you’d like to learn more about how to make your dealership more successful, schedule a demo with one of our team members and we’ll create a custom plan for you.