The Benefits of Tracking Dealership Performance Metrics
Having an effective metric tracking system is essential for any dealership. Dealership performance metrics are important because they provide a way to track progress and identify areas of improvement. Metrics can help quantify the success of marketing campaigns, track service quality, and evaluate customer satisfaction. By tracking performance metrics, dealerships can make data-driven decisions that ultimately lead to higher profits and customer satisfaction.
Can you point at any given area of your dealership and tell how profitable it really is? If not, then you need to be better at tracking your profits – or risk losing thousands of dollars.
With the help of industry expert Bob Clements, we’ll explore some of the key benefits of tracking metrics at dealerships and how you can use them to your advantage.
What are the benefits of tracking dealership performance metrics?
Running a dealership is a lot like piloting a plane – there are lots of things to watch, but to succeed you need to be focusing on the important things. While every process and item at your dealership has a number attached to it, these numbers mean nothing on their own. Understanding Metrics in your dealership can help you to:
- Make data-driven decisions
- Create targeted optimizations to increase efficiency and productivity
- Boost accountability and transparency within your team
- Align your dealership goals with a data backed business strategy
- Improve customer satisfaction and retention through data-driven customer service improvements.
Consider this: you notice that your recovery rate for the year is 90%. That’s great news, right?
The only way to tell for sure is to compare it against prior years. Say at the same time last year, your year-to-date recovery rate was at 95%. That means that even though this year’s rate is good, it’s on a downward trend and you may need to prevent it from declining further.
As outlined in our 2023 trends report, by leveraging data analytics at your dealership, you can uncover these trends, highlight growth opportunities and identify bottlenecks that you may not have been aware of leading to an increased likelihood of dealership success.
So, how often should you be comparing these numbers? According to Bob Clements, you should be reviewing these numbers daily, weekly, and monthly to understand what’s happening at your dealership in a timely manner and start acting on it right away. If you wait until the end of your season to make an adjustment, it could be too late.
To learn more about implementing dealership metrics, download our free guide.
What Metrics Should You Be Tracking?
Depending on the department, the metrics that you should be regularly tracking will change. That’s why we’ve broken down a full list of OPE dealership metrics to track specific to each department.
For Owners, it’s important to keep an eye on your customer satisfaction metrics. One of the best ways to track this is through watching your top 10 customers. It’s important to not only identify them but make sure that you’ve spoken to them and that you have the right salesperson assigned to them. It’s also important for Owners to watch their financial metrics like profit margins and return on investment.
For Service Managers, Service metrics like appointment utilization and service efficiency are your best friends. Monitoring a variety of metrics is important to make sure that you understand what’s happening in the service department.
For Sales Managers, you will be monitoring sales metrics such as unit sales, revenue, and closing rate. It’s important to watch your customer acquisition cost to ensure your marketing dollars are spent in the right place. If the cost gets too high, you need to adjust your spending or adjust your strategy.
For Parts Managers, your main focus will be on Inventory metrics like inventory turnover and stock level. A key metric to keep your eye on is the average transaction value. If you notice that it’s tracking downwards, there may be an opportunity to re-train your employees in tactics for cross-selling and upselling to bring that part’s sales value up.
For more information on which metrics, you should be tracking in each department check out our guides linked in the list above.
How to Track These Metrics Effectively
Now that you know what to track, you might be wondering how to track it properly. According to Clements, the best way to implement an effective process is to invest in a DMS that can automate this reporting for you.
For example, in Ideal, you can build customizable dashboards that will show you all the high-level information you need to know in one place. For a full tutorial of how you can build these dashboards in Ideal, click here to watch our webinar.
Interested in learning how Ideal can help you monitor your dealership? Click here for a demo of Ideal Reports.