Are You Measuring These Key Metrics In Your Dealership?
When was the last time you looked at the gross profit margin in your service department? Or, for that matter, how long has it been since you measured the profit margin of your showroom compared to your available square footage?
It’s easy for owners to get so wrapped up in the day-to-day workings of their dealerships that they neglect to look at key metrics on a weekly or monthly basis. But, these metrics exist for one purpose: to help you measure the health and forward progress of your business. When you go without looking at them, it’s like trying to sail a ship without a rudder or a map. In other words, it’s not something you want to do unless you actually want to get somewhere.
Successful dealerships use quality outdoor power equipment office software to help them measure these key metrics. OPE office management software can give you access to vital information about your business in just minutes, and can drastically shorten the “information gathering” time you’d spend without it.
So, what should you be looking at on a weekly basis to make sure you’re meeting your goals for the year?
The most important performance indicator that you need to be looking at weekly is your gross profit margin on parts, whole goods, and service. If you do rentals in your dealership, then you also need to look at your gross profit margins in this department as well.
Determining where you need to be will vary slightly with each dealership, but in your service department you should be aiming for a gross profit margin of 50%-55%. Your parts should be 48%-53% for OEM, and for aftermarket 60%-70%.
When it comes to your whole goods, you need to analyze this number as it’s compared to the total square footage of your showroom space.
Another key metric you should be looking at is the management cost per dollar sold in each department. Some dealerships are very small, which means that owners are also working as managers. If this is the case in your dealership, then you need to take into account your salary just as you would a manager that you had working for you full time.
When it comes to the metrics you need to be looking at on a monthly basis, parts aging and inventory turns are probably the most important. Now, doing this without OPE office management software is going to be challenging, which is why so many owners find that investing in quality software is more than worth it.
The reason why it’s so important to look at these two metrics monthly is because it’s so easy to let parts and inventory slide through the cracks, especially during the busy seasons. Most dealers only look at this information at the end of the year, since that’s when they do the bulk of their buying.
Staying on top of the key metrics of your dealership is easy if you have quality software to do the work for you. Even if you don’t, however, it’s vital you spend the time compiling this information. These metrics show you clearly how your business is doing. If you discover that you have aging parts and falling margins, you can take action to fix the problem before things get out of control. And that can make the difference between a thriving, and failing, dealership.
Management, outdoor power equipment software | 
May 10, 2010 9:12 am
