When people ask me or one of my team members if we can really come in and improve things in their business, the first thing we always ask them for is reports. You see, to improve something, you have to know where you are starting.
The first thing you have to understand is that each department in your dealership is unique. Each department has specific numbers that need to be measured and base-lined against other known numbers.
For instance, in the service department, you should look at recovery rate, technician efficiency and transaction time (how long it takes to compete work orders). In the parts department, we should measure transaction time, parts sales, and number of turns. In sales, we monitor closing ratios and average sale price of wholegoods.
We know that without a clear picture, you will never know if you are moving forward, backward or just treading water. Here’s another truth: It is impossible to set realistic goals if you don’t know your starting point.
Imagine a NASCAR driver who has lost race after race and decides to simply set a goal to win a race before the end of the season. Would they have success? Probably not. There is nothing wrong with the goal, but they have no way of knowing how to get there. To achieve the goal, they must look at specific components of the race, such as average lap speed or the time it takes for a pit stop for example. Then, the driver can work on being more efficient in each area and will make great strides in achieving their goal.
How can you replicate this at your dealership? There are a lot of great tools out there. Many of you have a great software system in your store but underuse it simply because you don’t know how or have not taken the time to utilize it. Start there because many of the numbers you need are easy to generate with a simple click of a button. Based upon those numbers, you can begin taking small steps and achieving big goals.
Another way to help you set realistic expectations is to take the time to do the math. Once you have your numbers in front of you, invest time to figure out what they are telling you about each of your departments and your dealership as a whole. That time investment will help you set and achieve a realistic goal.
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You can also find out what other successful dealers are doing to improve their performances. Read current articles or join a dealer success or peer group. The main thing is to get informed and take advantage of the wealth of information, contacts and resources that are available to you.
Finally, insist that your staff do the things necessary for you to be able to monitor what is going on in your business. Make sure your techs clock in and out for each work order. Make sure your parts people inventory each item in and out of the parts area. Your staff must use your systems and software as a part of their daily routine otherwise you will not know what is going on under your own roof.
Service is about measuring the buying and selling of time on a daily basis. We really don’t measure labor dollars sold because there are too many variables that come into play —warranty claims, internal labor rates, write downs and customer pays for instance. To really manage a service department, you have to manage the one thing you sell, which is time. And make sure that when you measure time, you are tracking how much you buy and sell on a daily basis. In parts and wholegoods, we measure both time and products.
Read the next installment: “Measuring Success Part 2: Metrics Drive Success.”
