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A Formula for Dealership Success Despite Shrinking Margins

We’re coming off of a few great years, so you might not feel it yet, but vehicle sales are trending downward and profit margins already have begun to compress. It’s just the cyclical nature of the automotive industry.

Something I’m sure you’ve felt, however, is the not-so-subtle shift in customer expectations. Every day it seems dealers are expected to do more for their customers, and with less money. In fact, 60% of customers expect more from you now than they did just a year ago.

Follow this simple formula for success to relieve the pressure before it can build:

Measure Right Metrics
There are plenty of things you can measure throughout the sales cycle, but when it comes to assessing your sales team’s effectiveness, only five metrics really matter:

  • Contact ration.

  • Internet lead response time.

  • Appointments confirmed by a manager.

  • Service penetration.

  • Number of overdue tasks.


Why these five? Because you can’t close if customers aren’t coming into your dealership. So knowing how often your team is contacting customers, how quickly they’re following up after a visit to your site and how many appointments are being confirmed can help you see which parts of your process are working and which could use a tweak or two.

The same goes for service penetration. Keeping customers connected to your dealership through service appointments helps drive additional revenue and loyalty. According to Cox Automotive’s “2016 Maintenance and Repair Study,” customers are 1.5 times more likely to return to your dealership for service when introduced to the service department at the time of purchase.

Last but not least, tracking overdue tasks can reveal how effective you are at holding your team accountable for all of the above.

Hold Team Accountable for Improvement
Your CRM is a powerful tool, but only when used consistently. If you just set it and forget it, so will your team. To benefit from your CRM, you have to take the time to set – and reset – meaningful, but reachable goals, and then walk your team through the steps you expect them to follow.

If tasks still aren’t getting completed, assess the situation and take action to remedy it. Make whatever changes you need to, but don’t let up on the accountability front. Run reports daily – as 83% of best-in-class dealerships do – and really hammer home the importance of accurate and consistent data entry. Show your team that if you work in the CRM, the CRM works for you.

Be Proactive, Not Reactive
During a market downturn, agility is essential, and this is where your CRM shines. If you’re regularly running reports and measuring results, you should be able to identify inefficiencies and problems early on.

Look for gaps in your business based on closed/lost opportunities to see where your process needs improvement. Whether you have to reset expectations with your team, change the task structure or even upgrade technology, these are all actions you can take sooner rather than later.

Just remember: Software shouldn’t dictate your process, but it can help you figure out whether or not your process is working for you. And when margins shrink, those insights can be a significant competitive advantage.

A version of this post originally appeared in Ward's Auto.

See more Resources on CRM Utilization

Mark Vickery

Senior Director, Performance Management

Mark joined VinSolutions in 2013 as Director of Performance Management, after serving as one of the early Performance Managers at sister company vAuto. Charged with implementing a true account management department, Mark has grown VinSolutions’ Performance Management department from approximately 30 people in 2013 to more than 80. Mark brings a strong background in the retail car business with a focus on customer retention and leading and establishing teams.

Connect with Mark Vickery on Linkedin or shoot them a note.

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