Take your most popular selling make and model and pick your very best zip code.

  • Do you know how many of those particular vehicles were sold in that zip code in the last quarter?
  • How many of those were used?
  • What year was the most popular?
  • Who sold those vehicles?
  • What color were those vehicles?
  • Did they finance?
  • What was the average advertised price?
  • What did those buyers look like? Young? Female? Income?
  • Where can you find similar consumers?
  • Where do those consumers shop?
  • What beer do they drink now that Earnhardt has gone to AMP?
  • How has the data changed from last quarter?
  • Extra credit: Which vehicles will be the most popular used vehicles 90 days from now?

What would you do if you had all of this information? Could you use it to make better decisions regarding used cars, mailings, Internet leads, service, finance, training, etc.? All of the answers to the questions above are pieces of data. The trick is to find a way to quickly pull this data together, think about what the data means and how it has changed, and then take meaningful action. How do you know if you have used data correctly? Easy, cash flow!

Try this. You have decided to use direct mail this month; you’re going to send out 5,000 pieces offering free groceries for a month. Who are you going to send the piece to? One of your staff is now shouting “five-mile radius, five-mile radius.” It’s a shame your store is one mile from the Atlantic Ocean. Someone else is telling you to mail your customer base…again, another wants to mail to all minivan owners. How do you know which criteria to use to get the best results? Which mailing list do you buy? Your own data (CRM) combined with local market vehicle sales and consumer demographic data will yield your answers. You will be able to target local families, with two-plus kids, which shop nearby and have a minivan that is at least three years old. Or is that the wrong filter? Do not let direct mail companies from thousands of miles away choose your mailing list without your oversight and direct input. Watch for rivers, mountains, seasons, and road construction – all will impact your ROI.

Important safety tip: All direct mail pieces should have your store’s return address. Do not throw the returns away, keep them, count them, update them and you will thank yourself because it will improve your ROI next time. You must appoint a point person for this task in order to assure thoroughness and correctness.

Refer to the title above. (Data + Thought + Action = Cash) Action, however, is the key component for any success. You can look at data all day long and have nothing to show for it unless you develop a proactive action plan toward using it. The question is how to implement the action to put things in motion.

Recently I was sitting in a very successful dealer’s office; he had a stack of lead provider and Internet-related invoices sitting on his desk. What he confessed next was stunning, “I have no idea if any of these invoices made me any money last month.” He followed that up with a reasoning that kills the income line on his balance sheet, “but I know we had a pretty good month, we sold 157 cars.” In a dealership, “but we had a good month” is an excuse and is used to remove data accountability as well as other good sense “discipline processes.” The enemy of great is good and for years we have hung our hats on good enough and that philosophy simply does not work anymore in this market climate.

If the dealer is not going to hold himself or someone he/she really trusts responsible for managing his money, it is certain no one else in the dealership will truly care about managing his money. He asked, “What can I do to get a better handle on the effectiveness of my monthly expenditures?” My answer stunned him, “Become a better leader and train your people how to perform.” Who would have guessed that leadership, profitability, and data (ROI) were so closely linked?

ROI, return on investment, is an accurate measure of your short-term financial success. What you spend versus what you earned. As an owner or general manager, ROIs provide monthly feedback on your decision-making – good or bad. Advertising, inventory, and service equipment are straightforward ROI calculations. You are wasting your own money if you do not have these calculations as part of closing out your month. When it comes to advertising, track everything. Have your staff justify, with data, each advertising expenditure. We spent $3,250 with this lead provider and we sold three vehicles with a total gross of $6,211. Expensive. If you have a dealer management system and a customer relationship management system, then you have all the tools at your fingertips that can give you the answers to your ROI questions – provided your process requires your people to maintain your systems. Remember: Garbage in, garbage out, create a process that requires you and your staff to enter information accurately. Once again we have circled back to leadership and accountability.

Most ROI calculations are useless unless you have some meaningful way to compare the results. Baselines (not a baseball reference) are a standard set of values created over time. Use baseline data to determine your results. Be aware that your baselines are yours when you first establish baselines make sure you compare your results to industry results. NADA is a great place to find useful data/metrics.

Important safety tip: Just because your DMS system has 126 different reports available, it doesn’t mean you should run them all! The interesting thing about CRM reports is that you can very effectively run your business with maybe 20 percent of them. Try hard to avoid the analysis paralysis syndrome by getting bogged down on trivial reports and remain focused on the one that moves the needle on ROI, additional training needs (because of inferior performing salespeople), inventory, sales ratios (the phone to appointment to delivery or Internet conversion processes). ROI calculations based on training, people, and process are more difficult. How do you know if your training is effective? What should you measure? How long until the training takes effect? How long until the training wears off? How do I hold my managers accountable for implementing training and standing steadfast on discipline?

Worst case scenario: your best salesperson, 30 cars a month, does not want to take the time to follow your CRM process. “I’m too busy with customers to take the time to enter all of the customer’s information.” Consider a policy of compensation based on procedure compliance with escalators built in for repeat offenders.

How about an ROI calculation for leadership? Hmmm…


Chuck Barker

Chuck Barker has been CEO of his two companies, Impact Marketing & Consulting Group, LLC and Impact Summit, LLC, for the last 24 years, both located in Virginia. His experience ranges from an executive with Harris Corporation (16,000 employees) one of Fortune Magazine’s largest companies to the automobile industry where he has performed all executive positions. His companies specialize in growing businesses, dealerships, and people. He delivers unparalleled sales & service development programs, management leadership workshop programs, and dealer/principal business & profit improvement ideas for automobile dealerships. He has recently published the first comprehensive ‘in-house’ sales training solution program for dealers entitled The Dealership Success Guide.