Estimated reading time: 7 minutes
What has the pandemic done to our industry? It has advanced how we use technology. It has forced us to be scrappier and smarter with our time and money than ever before. And the pandemic has changed how our shoppers want to interact with us.
We’re also left with a number of unknowns that only time will allow us to understand with clarity. I call these unknowns our blind spots. These are things such as lending conditions, imbalance of inventory supply and demand, drastic consumer activity fluctuations, consumer expectation and behavior changes, cash flow strains, staff and resource shortages and more.
Blind spots can leave us with a lot of questions.
- Will the profit centers of my business change?
- Do I need to work harder to hold onto my market share?
- When will the activity surge of pent-up demand from March-May end?
- Will I have enough cars to sell?
- Will I end up with too many cars getting stale on my lot?
While we can’t see the future or look to the past to answer these questions, we can look at where we are right now, set goals and make an informed plan.
Now is the time to examine our data, priorities and processes.
When things are going along smoothly without disruption, we often don’t stop to think, and I mean critically think, about what we could do differently to improve our competitive advantage, grow our market share and increase our efficiency and effectiveness. As people with entrepreneurial spirits by nature, it’s easy for us to get caught up in working harder, not smarter. But now, there is a HUGE opportunity to stop, think, and act in a smarter way than ever before.
A problem or an opportunity? You choose.
There are blind spots that we can’t solve with the rear-view mirror, because so much has changed in the last several months. But I contend that not being able to look to the past to answer our questions can either be seen as a problem or used as an opportunity. Let’s make it an opportunity for your business. Be brave, be ready to change your thinking, and select a few areas to focus on to move your needle this month.
In order to do that, we need to have specific, measurable, achievable goals, processes, and tools in our toolbelts. And we have to be laser-focused on moving the needle incrementally over time in the areas that really matter. This can only be achieved by deliberate measurement, testing and iteration – using data to track and measure, to understand what’s working for us and what’s not. Data-based decision-making is critical in today’s environment.
The plan of attack – let’s start with info gathering and goal setting.
It’s imperative to have a solid understanding of where you are today in order to determine what you want to test and change to improve tomorrow. This week, identify your focus areas, select the items you are going to measure (identify and define the metrics) and complete your fact base of where you are today. That will help you to select your focus for the remainder of 2020 and into the new year.
Here are some focus area thought starters for you, plus some tips on how you may want to approach the discovery process.
Your profit centers:
Reviewing your profit centers should be on everyone’s list. Did into your recent data for a close look at where your revenue comes from, where your revenue efficiencies lie and where you have waste. The key here is a multi-pronged approach to your core revenue. Think about it like a tripod or four-legged chair and identify at least three to four distinct profit-centers/income streams within your business.
The members of your dealership team can and should be one of your biggest, most productive assets, dollar for dollar. But you can only ensure that with clear, unified goals and measurement. Look at dollars spent per job role and the return per day, per week and per month. Are each dealership employee’s daily, weekly and monthly tasks contributing directly to one of your focus areas or directly to the bottom line? If not, make adjustments to ensure that everyone’s time, energy, skills and individual goals are focused on the areas that will move the needle.
Your customer acquisition strategy:
Be sure you can answer this question: What is your overall customer acquisition cost? How does it vary between repeat and referral business, new customers within your market area and new customers outside of your market area? Think about:
- Existing book of business (your CRM)
- Follow-up and retention efforts
- Marketing and advertising
- Lead generation
If you haven’t read my recent post Creating demand: How to drive car sales and get more used-vehicle inventory, now would be a great time to give it a look. And in November, stay tuned for another blog post on customer acquisition strategy.
Your inventory management strategy:
We all know that no matter the market conditions, time of year, influencing factors and depth of data and insights available, supply, demand and price will always be a primary driving factor in how fast a vehicle sells. With the amount of data consumers have at their fingertips today and the time they are willing to spend on their vehicle purchase decision, you cannot survive without a technology-based, data-driven inventory strategy.
Are you thinking about expanding your used vehicle sales outside your local market? If so, Kevin LeSage’s latest blog post can help you examine the your opportunity and make a plan: Q4 Strategy: Expanding used vehicle sales and advertising outside your DMA.
Your competitive landscape:
Know who you are competing with and what they’re doing well right now. One of my favorite quotes is “They put blinders on race horses for a reason,” so I’m not suggesting that you spend extensive time hung up on what the dealership down the street is doing, but it is important to understand and have awareness of the competitive factors in your marketplace. And it’s essential that you identify, create and maintain differentiators for your business.
- How is your brand positioned?
- How does your inventory mix compare to those around you?
- Is your pricing strategy competitive?
- Does your lot look appealing compared to others or is it time for a spruce up?
- Are you adopting technology and embracing change to compete and meet consumer expectations, and so many more?
Start with the big items, but over time, you may even get to the small details like how many rings it takes you to answer an inbound call, how long the hold time is from receptionist to service appointment scheduling, and how you price and package your parts and accessories. This list goes on and on and on.
Your spend and expenses:
Don’t forget that savings can drastically impact your bottom line. Just like knowing what your people are spending time on minute by minute, know what your dollars are doing for you, dollar by dollar. One of the opportunities in times like the recent pandemic, is to renegotiate or rethink some of the recurring expenses of your business. Vendors need your business right now, so it’s a great time to shop and cut costs on utilities, insurance, office supplies, floor plan costs and even items like hand soap, paper towels and cleaning contracts. Right now, you need every one of those extra dollars to position your brand and your vehicles in the marketplace and ensure you are investing in the tools and technology that set your business up for success in the future.
Moving past blind spots to data-driven action
It can be hard to carve out the time to pause, reflect, dig into data and ensure that your strategy is serving you as well as it possibly can, but it is always worth it. Identifying and tracking your key focus areas with intensity will pay off today, when every dollar and every minute matter more than ever before. And it will continue to benefit your business when we return to more normal conditions. Being a relentless and deliberate tracker, measurer, tester and innovator will always set you up for success.
In my next post, we’ll discuss success measurement, testing and iteration for the focus areas you’ve selected. Be sure to sign up below to get blog post notifications in your inbox, so you won’t miss it!