Turn It Around by the Numbers

My goal was to write a very specific guide on gathering information that would help track a dealership’s progress by the use of metrics. This is the sixth draft and it is garbage.

Metrics or KPI are great tools, but metrics are not going to turn anything around, if your dealership is dying, tracking the fading pulse is not going to help you.

I am going to publish this but understand: If your dealership is in decline, or if you are brought into a dealership to turn it around, the only thing that will save it is your culture. If you want the magic bullet, it is not tracking your hours per repair order, sorry, I wish it was that easy, the magic bullet is to realistically assess the culture in each of your departments and if the culture is broken, fix it. KPI and metrics are important but not more important, in fact not even close, than a no excuses no exceptions, leader led leader enforced culture revolution.

DTCARGUYCULTUREREVOLUTION

So what is the right culture? Along with culture what part does process and KPI play? It is a tease, I am working on that post now.

All of that being said, here is the pile of garbage I had been working on.

Having witnessed the death of various car dealerships from both the outside and inside, I understand. If you are present during the decline or are tasked with turning around a failing dealership it may seem like an impossible task – but there is a clear path to follow to stop the decline. It all starts with the hardest and simplest rule.

Rule #0
First and foremost, DO SOMETHING NOW.

This is especially difficult if you have been there during the good times and have watched the ship start sinking. Having been in that position a couple of times there is an inclination to blame external factors, and sometimes there are external factors, but if you are really honest usually it boils down to something you, your managers or your dealership could have done better.

The NOW part of the DO SOMETHING NOW statement is very important. It means today, right now, get started.

Think about this: Does one month of decline equal a downward trend? If you are only paying attention to your metrics once a month, one month is not a trend – of course until the second month ends. If you only look at your numbers once a month it takes at least a month for you to notice that things are changing and sometimes it is well into month 3 before a trend is recognized.

Which brings us to Rule #1.
Pay attention to your metrics (benchmarks, KPI, whatever you want to call them) daily.

You are deep in the weeds most days with customers, employees, recalls, manufacturer webinars, and the list goes on; and you don’t have time to look at numbers every day. Understand that everyone in the business has the same pressures and time in a day but if you really care about your dealership and your employees you will make your Metric Report the first thing you do in the morning or the last thing you do before you go home every day. This is the difference between being average and being a star.

That brings us to Rule #1A.

Define your metrics and how to quickly build a Metric Report.

Start by defining what is important to measure and track. Of course all dealerships have unique circumstances however there are certain benchmarks that always need to be tracked. The biggest yardstick that we are all measured by is profit and you know how to measure that. Obviously everything else becomes slightly less important if it is one record net profit month after another, and if that is the case I would not finish reading this I would be out spending that money. Still reading? Join the 98% of us that are not riding back to back to back to back record net profit months.

The first place to start building benchmarks is in the Service Department. The reason to start in Service is twofold, first, as a generalization, most General Managers and Owners came from the Sales Department and although most have gained an understanding of the fixed side of the building many do not understand the importance of both Service, Parts, and Body Shop (if equipped). Starting with these metrics in service puts the gears in motion to tracking and rebuilding:

RO/Advisor (Repair Order per Advisor) Pretty simple formula here although there are two parts to watch, the overall formula is the total count of RO’s divided by the total number of advisors. You also need to watch what the actual count is for each advisor.

TARGET METRIC: 15 TO 20 RO’S PER DAY PER ADVISOR (20 TO 25 PER DAY IS POSSIBLE DEPENDING ON THE MIX OF WORK BUT WATCH CSI)

Sales/Advisor (Sales per Advisor) Again pretty simple formula Gross Sales divided by total number of advisors. Again watch that each advisor is actually selling their share.

ELR (Effective Labor Rate) Total Sales Dollars divided by Total Flagged Hours.

TARGET METRIC: IS A MOVING TARGET BUT ELR SHOULD ALWAYS BE BETWEEN 90 – 100% OF YOUR POSTED LABOR RATE

HRS/CP RO (Hours per Customer Pay Repair Order) Total Customer Pay Hours divided by Customer Pay RO count.

TARGET METRIC: EASY ANSWER IS 2.0 TO 2.5 BUT AS WITH MOST OTHER MEASUREMENTS THE MIX OF WORK IN THE SHOP WILL DETERMINE YOUR DEALERSHIP’S NUMBER.

Technician Productivity – Actual time worked by a technician versus the number of hours available in other words Hours Worked/Hours Available

TARGET METRIC: 85% TO 88%

WIP (Work in Process) There are variations to WIP but the first concern should be How many Open RO’s does each advisor have and why are they still open at the end of the day?

Parts:

Sales/Parts Person
Parts/CP RO
Parts Turn
Parts Gross / Parts Profit on Wholesale, Internal, Retail

#Automotive #CulturalRevolution #Culture #KPI #ManagebyMetrics #dtcarguy #advertisingboss #carCultureRevolution

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s