Let’s say you’re preparing to run the marathon and want to set a good training regimen. If you ask any professional trainer, physician, or runner, they’ll give you one piece of advice: you need to set goals. Run at full speed as long as possible and your stamina won’t improve. Run once a week and you won’t make any meaningful progress at all. Success is a process of goal-setting and consistency. The automotive industry works the same way – yet too many professionals hit the gas with no specific endgame in mind.
Benchmarks are how we measure progress and compare results in not just the automotive industry, but any field. While the end goal might be the same for every dealership – selling vehicles – the pace, method, and price at which it’s done can vary wildly for different locations. Here are some methods for measuring the success of your dealership while factoring in what makes your specific store unique.
When you’re setting benchmarks, you don’t have to reinvent the wheel. Using official, tested results as your baseline is a good starting point.
The National Automobile Dealers Association provides various benchmarks and averages that work well as a foundation for measuring your dealership’s annual success. For example, the NADA states your gross profit margins should be around 10-12% for new vehicles and 12-15% for used. Other key performance indicators include an average of 50-75 sales per employee annually and a customer satisfaction index (CSI) of around 80%. These are just a few ways to properly measure your dealership’s success. Further exploring the NADA’s numbers can better prepare you for the road ahead, so don’t be afraid to rely on the professionals.
Of course, you don’t just want a one-size-fits-all plan for your dealership, you have a specific team, inventory, and location to consider. Finding benchmarks designed for your dealership is miles easier when you rely on Business Intelligence platforms.
BI Platforms aggregate your data and give you up-to-date information on everything like individual model performance, ad campaign effectiveness, employee results and more. Let’s say this past March was phenomenal for revenue and growth; you really want to replicate that success but aren’t sure what it resulted from. You could try reruning certain campaigns and stocking up on your most sold vehicles, but those surface level observations might not tell the full story. BI may reveal your SUV lineup was bolstered by a promotion you were running, and point you to run it again, or experiment with a similar promotion on a different model. With the answers at your fingertips, you can set attainable goals that properly reflect what does and doesn’t work for your dealership.
Whether you’re running a marathon or a dealership, benchmarks are the key to success. For your dealership, use industry targets, and start to leverage your own data to see what levels you can pull to help you get there. For dealerships relying on BI, the finish line has never been closer.
