In our articles so far this year, we have covered aftersales and used cars in terms of showing what’s important for this year. This month we will look at your lifeblood and your biggest cost - people. People really are your business but having them focus on what is important will build a high-performance culture that will translate into a business performance that will put your company into the league of the top performers.
Cash must be the number 1 priority in an ambitious company, in turn EBITA and capex will be the priorities. The biggest drain on cash is stock, so a hands-on CEO or CFO must focus on stock every day. For used vehicle sales this is achieved through a well thought out pricing policy backed up with the right data and skilled people to make the decisions that affect pricing and overage stock. For new vehicle sales your managers will track order take, forecourt, consignment and overage stock. The best managers keep a constant eye on debtors and warranty to avoid margin and cash leakage. The sales leaders are responsible for hitting sales and margin targets with their focus on today and tomorrow – rather than using management accounts which only supports analysis of what happened last month. Get all this right and it will put you in the driving seat when considering strategic acquisitions.
To make sales targets, salespeople need to be motivated and tracked. We all know the KPIs; for new vehicles it is order take, deliveries and metal margin which needs to be aligned with the OEM incentives. Significant profit drivers are the add-ons especially F&I, making these targets is often the difference between hitting your margin target or not. For used vehicles; in addition to those above, future values at the point of buying in this softening market must be part of your strategy. Next it is pricing to sell at least within 45-60 days to avoid accelerated depreciation.
With so many moving parts, intuitive league tables which show performance and opportunities missed compared against your peer dealers will identify training and mentoring needs. Benchmarking against peers relentlessly drives managers and team members’ performance ever upwards.
For managing and motivating technicians, a league table showing hours taken, sold, idle, with productivity, efficiency & utilisation is a basic requirement. To nail all the big drivers, this should also include VHC % checked, red and amber work identified per check to get a complete view of a technician’s performance. For service advisors, red and amber % sold is important, so too is the ability to contact the customers with accurate and complete CRM information. Parts advisors should be measured on parts picked per hour and the accuracy of CRM information. All of this is of course in the context of a CSI score for the workshop.
Everyone tells you how important culture is, and what it should be. Few tell you how to change culture. They say the tone is set at the top. If you set a performance culture at the top, the people will follow especially when you can recognise and reward great performance.
John Hogan is CEO & Chief Data Scientist at Real World Analytics (RWA Automotive) who helps dealer groups become more efficient with actionable drillable dashboards & reports.
This article was published in the September issue of Auto Retail Bulletin by Auto Retail Network.
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