Today’s market conditions of pinched sales volume and record setting grosses are making dealerships get comfortable.
The current market is a perfect storm for bad habits to emerge if you don’t have the right approach. But the money is good now, right? So why worry?
Dealership’s enrolled in the Analytics Edge are using their data to navigate today’s market while improving dealership performance.
- Hiley of Fort Worth added $103,860.29 to the bottom line in three months using analytics to improve sales processes.
- Wischnewsky sold 95.24% more cars per month through their new website using conversion rate optimization data to convert more traffic into leads.
- Winnie became the TOP CDJR dealer in their respective area within 12 months after using analytics to cut traditional TV and change their marketing mix. A change that led to 144 additional sales over that time frame.
How This All Works:
In the movie Moneyball, Billy Beane (GM for the essentially bankrupt Oakland A’s) is faced with a tight budget and reinvents his team by outsmarting the richer ball clubs. Billy Beane’s team went on to win a record 20 games in a row and make the playoffs. The longest winning streak ever in Baseball.
Billy Beane was able to achieve this historical feat by focusing on sabermetric principles, essentially the analysis of in-game metrics. But can dealership’s do the same?
The average dealership normally doesn’t connect the “in-dealership metrics” at a 10,000 foot view.
By doing this, dealerships are leaving money on the table.
The large automotive groups have already hired MBA’s and Statisticians to extract value out of dealership data. So what are the other dealerships to do? Moneyball.
This is why we created Analytics Edge. The foundation of every strategy we create for a dealer is done using its own data. There’s a saying in the medical world: Prescription without Diagnosis is Malpractice.
Put simply, there are three different levels where dealerships can lose sales and profit.
If you choose to focus on, and fix one of the failure points that isn’t failing, the actual problem will remain unfixed and your dealership will waste in excess… and excess waste becomes “opportunity costs.”
Not only can you extract value using your data, you can STOP making poor decisions.
The Analytics Edge allows dealership’s to identify areas to improve, create a strategy to reach an objective, and then measure the implementation plan put in place to reach the desired objective using data.
Below are examples of how our dealerships have used the Analytics Edge to improve their performance.
Level 3 – Lead Nurturing
Before installing the Analytics Edge, Hiley Hyundai Mazda of Fort Worth wasn’t aware the sales team was performing below industry standards. In our first meeting together, we identified and focused on improving the dealership’s appointment show rate, which was below industry standards.
Appalled by the numbers, GM Eric Schimmels took immediate action and ensured his sales managers would strengthen this process at the dealership.
That they did.
The increase in the dealership’s appointment show percentage from 50%, to 80% added 42 additional car sales over the next three months. By focusing on a single metric in the lead handling process, the dealership added $103,860.29 to the bottom line in one quarter.
That was BEFORE the pandemic hit. Extract that into today’s dollars and that would be approximately $311,580.87.
Level 2 – Website, Inventory and Merchandising
Dealership’s websites are masters of defecting potential prospects from doing business with your dealership. You work so hard to target the right consumers, show them the vehicle they want, and finally they make it to your website – only to have a poor experience, confusing opt-in process, and end up abandoning your dealership.
After years of measuring website performance data, we now stick to a set of Conversion Rate Optimization best practices, backed by data. Wischnewsky CDJR was having issues with their website. After a few months of monitoring the website’s effectiveness with the Analytics Edge, Wischnewsky CDJR changed website providers.
With a new, faster website that was optimized for conversions, Wischnewsky CDJR is now selling 95.24% more cars per month compared to their old website. By focusing on level 2, Wischnewsky CDJR’s CORE lead volume increased to record levels, giving their sales team more opportunities to take advantage of.
Level 1 – In-Market Demand
Your market has a limited amount of car sales each month. The market, YOUR MARKET, isn’t going to get bigger just so you can sell more cars. That means each month, there are a limited number of people who are going to buy a car.
If your advertising dollars are focused on persuading those consumers in the decision making phase of the sales process (aka, the “low hanging fruit”), you can then start to convince more consumers to buy at your dealership (instead of buying from your nearest competitor) and sell more cars.
In late 2018, Winnie CDJR was struggling to compete with other dealers in the area. Reviewing their budget, we questioned the effectiveness of their traditional advertising efforts ,which were mainly focusing on building Brand Awareness.
Using the Analytics Edge we analyzed the dealership’s traffic mix and the cost to acquire a new customer using hyper-targeted Facebook ads vs traditional TV. Per our recommendation, Winnie Dodge cut TV from their budget in September of 2018. The dealership reallocated those dollars into paid Facebook ads to reach in-market consumers.
By targeting in-market individuals who are in the decision phase of choosing where to buy from, Winnie became the TOP CDJR dealer in their respective area within 12 months, and increased sales by 144 units year over year. Winnie had previously never cracked the top 3 in their competitive pool in the 5 years prior after they took on their new owner.
Stop Spraying and Praying
The three levels explained above all stack on top of each other, and compound. Each level is unique, but they all work in tandem – and collectively, they can multiply your ROI by 300-500% if all 3 levels are where they need to be without spending a single extra penny on advertising
The most common mistake we see dealerships make is not being able to identify which failure point is leaking the most money. The data is there, it just needs to be read! When sales and or lead flow slows during a month, dealerships usually hit the panic button, throwing money at different tactics with little supporting evidence that will help.
Again… If you choose to fix one of the failure points that isn’t failing, the actual problem will remain unfixed and your dealership will waste in excess. This is why we created the Analytics Edge Snapshot (AES). When sales or lead flow slows at a dealership, the Analytics Edge Snapshot (AES) will identify why.
Within 48 hours, our analytics team will provide a comprehensive report for each of the three levels above. As a decision maker at the dealership, you can be assured that you won’t be spending money in a wasteful manner with an AES in hand, backed by your dealership’s data
Don’t wait for rain – repair your roof while it’s sunny NADA forecasts 2022 will be the most profitable year ever for dealerships. But that won’t last forever. When all this (gross per car) ends, and it is going to normalize, you won’t be able to afford to panic when it does.
Put the Analytics Edge in place now, when it’s sunny. When things inevitably change and the rain comes, your previous data will allow you to play moneyball, making sound business decisions, bringing more profit to your bottom line.