Back in the day, I was CFO of a retail group that grew from 1m to 20m in EBITDA over 10 years. I remember the first year, we went from 1m to 2m by just doing a proper budget and holding people to account. Next, we put in systems to drive visibility, started a central distribution facility, opened more branches, put mezzanines into them wherever possible and really sweated the assets. Profits soared! The biggest learning though was that you need systems, processes and motivated people to be all over everything every day to be a successful retail company.
This seems like common sense but delivering information that can drive these processes is the challenging piece. Businesses can easily get caught up in what they believe is good performance, but struggle to prove their numbers stack up against the competition.
At RWA Automotive, we are working with some of the UK’s strongest dealerships who have slick processes which already drive growth across their various departments. We recently launched a benchmarking project to give our customers exclusive insights to how they perform against other RWA Automotive customers. This information keeps motivation top of mind, as they can easily identify what good looks like and make improvements to achieve the benchmark if necessary. This enhances their other information and enables them to work confidently, knowing they are performing to a market standard.
The world of automotive dealerships is the same as any other retail business, though with extra complexity. Different dynamics are seen within new car sales, used car sales, service and parts departments. A CRM system ties all of these things together, and a sophisticated web presence is required to drive enquiries. Big dealership groups have multiple sites, across multiple regions and hundreds of staff and products at play. All this complexity though can be boiled down to the one simple objective - hitting this month's targets.
Automotive dealerships have a thorough budgeting process. The subsequent market dynamics very often conflict with the budget leading to both satisfaction and frustration. Dealerships are inundated with data already, from both a retail and a manufacturer level. Every customer we work with receives composites at the end of each month from their manufacturer. This enables the retailer to identify how they are performing against their franchise peers. This is vital information, but composites are a post-mortem report. The reaction time for a typical dealership is circa three months, as it takes time to discover the issue, identify ways to improve and implement new procedures to make change. For example, if your sales have dropped relative to everyone else for March, you’ll be finding out about in April and realistically it will be May at the earliest before you see your remedial actions result in higher sales. As time passes, retailers can find themselves quickly falling behind budget targets.
Apart from composites, retailers rely on meeting peers at events or auctions to get anecdotal information on whether they are having a good or bad month performance wise. Even then, retailers might not want to admit you’re having a bad month or be too bullish on your apparent good month.
This is where RWA Automotive’s benchmarking steps in. We have introduced a weekly flash report to show each of our customers how they are performing against a set number of KPIs, in comparison to other relative RWA Automotive customers.
Our weekly flash report shows each of our customers how they are doing against other RWA Automotive customers on a month to date basis. It includes categories such as orders, new and used car sales, hours sold and parts sales. This shows whether the dealership group is trading up or down year on year against the RWA Automotive market cohort. This provides a weekly temperature check of the market enabling the dealer group to either push harder or appreciate the performance achieved.
Below are some examples from our new weekly flash report:
Here, we see a retailer who is struggling on used cars. We can quickly see they are down YOY on their own performance but also on the RWA Automotive average year performance. This tells them that the market is performing well, but their group is falling behind. We can also see how many vehicle sales below the average they are. In this case, they would need to make up an additional 64 units to catch up to the RWA Automotive average. Without adapting or making a change, this retailer is unlikely to achieve their target at the end of the month, thus falling behind budget.
However, as this is a weekly flash the retailer has time to make a change and turn the figures around. For example, the retailer might change how they advertise stock, implement a new marketing campaign or move stock around within the group.
In the next example, we are looking at a retailer who is performing really well against their RWA Automotive peers. We can see that MTD, they are 13.9% ahead of the RWA Automotive benchmark, having sold 1,053 additional hours so far in the month. This information can be used to further motivate staff, prove that internal procedures are working well and to keep the focus as they approach end of month.
In our final example, we are looking at Part Sales. Here, a customer can easily see where they sit against their peers and see the range of performance across the rest of RWA Automotive customers. Our example location below is showing an acceptable growth in part sales in that they are not negative YoY, but the chart shows them the potential growth available that is already being achieved by others. Through understanding the variation of performance within the market, the retailer is more empowered to change internally processes to achieve growth.
We are delighted with the feedback received from our customers since launching our weekly flash report. It has now become a staple at weekly management meetings and monthly board meetings across our dealer groups. Month to date performance has been put into real context for customers. Within our own Customer Success meetings, we are now using our weekly flash report to identify areas to focus on with our customers.
I know from my own experience that driving substantial growth in a retail business is achievable but takes dedication and a constant drive to be successful, which often means adapting processes to hit targets and to keep your staff motivated. Tools like a weekly flash report are invaluable to drive performance forward.
To learn more about benchmarking, read our other blogs on this topic or reach out for a non-obligatory chat.
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