Pub. 12 2013-2014 Issue 1

N e w J e r s e y C o a l i t i o n O f A u t o m o t i v e R e t a i l e r s 17 new jersey auto retailer w w w . n j c a r . o r g Those ratios are a good first pass in judging your ROI. Let’s say that your dealership is paying $20 each for 300 leads ($6,000) from your manufac- turer. Following the guide, your salespeople will contact 150 of the leads and about 75 will make appointments. Of those appointments, about 40 will show up and you can ex- pect eight of them to purchase a vehicle. While some stores might con- centrate on the $20 cost of the lead, the real measurement is the cost per sale. You spent $6,000 to get eight sales or $750 per sale. That is not good. Ac- tually it is kind of scary. Good stores can get the cost per sale below $300 and the best are often below $200. How do t hese dea lersh ips achieve these great Return on Investments? They either fix the process or fix themselves. Starting with the process, in each of the steps above, there is plenty of room for improve- ment. Small advances in con- tact, appointment and closing ratios can bring the average cost per sale down. Does your deal- ership have the right people, with the right training, and with the right tools to make the money spent count? What if, next month, the deal- ership tries to contact the 150 leads they didn’t previously reach, or the 75 that did not make an appointment? If they did little else, that would nor- mally result in an extra four or five vehicles sold. Doing it all over again for a third month will get most dealers even closer to their goals. Other common issues that can lead to poor results include: • The Internet strategy was a “kind of sort of” approach from the get go. • Functions and desired out - comes were never properly defined. • It is deemed the job is entry level, pay entry-level wages and hire entry-level talent. • No one on the BDC staff is empowered. • There is no substitute program when the main person is out; success is pending on only one person to make it successful. Of course, the cost per lead is important as well, but only as a reverse indicator of its ef- fectiveness in closing a sale. In our example above, eight sales should only cost about $2,400, meaning those leads are per- fectly fine if they were priced at $8 each. Once the process is right, if the results are still disappointing it is time to look a little closer. If a dealership doesn’t have the inventory to meet its client’s needs then they will have dif- ficulty. A successful online presence needs to be treated as an entire separate profit center which requires: • The Dealer principal and the management team to take an active role in making sure on- line success is able to happen on a regular basis. • Make sure the Management team is aligned properly to support the defined Internet strategy. • Know that the success and fail - ure of this department means going beyond stated intentions and actively supporting the Internet Department properly. • Be careful and specific on what it is the dealership is looking to achieve in its online presence. • Measure the performance metrics that are important to the dealership. • Have a stated budget for the online markets and work those markets diligently. • Make the necessary adjust - ments as the dealership grows the department Success, whether it’s online or at the dealership, will depend on the same things that drive the showroom: people, pro- cesses service department, parts department, best practices and technology. Michael Roppo is the Director of Fixed Operations and a business development expert for the automotive practice of The Mironov Group, LLC and has more than 27 years experience as a speaker, author, trainer and facilitator. He can be reached at 732.572.3900 or via email at mroppo@ mironovgroup.com.