The success of a company depends on making the right decisions, and the best decisions depend on having the right information. Key Performance Indicators offer that information, and tell management if each department and each resource is on track towards their objectives.
This article addresses more KPIs that a sales manager should monitor daily.
Margin profit
Why is this indicator important? This KPI is key to know the profit of each sale and thus detect which units are more profitable. This indicator can be contrasted with the acceptable minimum performance defined by dealership management.
How to improve this KPI? If this indicator is too low, the sales manager should analyze if:
- There are units that remain in inventory too long without being sold, and generate high warehouse and insurance costs
- Money is invested in marketing to generate leads that don’t pan out
- Discounts are offered to customers to avoid losing the sale, but they affect profitability of the operation
- High costs are incurred in the contact between seller and prospect (visits, calls, etc).
Lost sales
Why is this indicator important? It’s vital to know how many opportunities are lost along with the reasons. A potential customer that is lost is very difficult to recover and if this indicator is not measured, you may be losing many opportunities.
How to improve this KPI? Analyzing the reasons for lost sales and using them as triggers to focus on issues that can and should be improved:
- The customer bought from another dealer: What did that dealer do to attract them? Can you offer a better buying experience? Improve pricing?
- The customer postponed their purchase: Will you be calling them in a few months to see if they are interested again?
- Price too high: If prices can’t be lowered, was any special arrangement offered? Was it explained to the customer why the vehicle is expensive?
- Poor customer service: Did the customer expect a more personalized sales experience? Were they contacted in a timely fashion?
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Conversion cycle
Why is this indicator important? This is a typical CRM indicator and measures the time between a lead becoming an opportunity and an opportunity becoming a sale (or lost). It is essential to measure the salesperson’s response time, and to analyze the average closing time of deals.
How to improve this KPI? This KPI improves as the salesperson is faster to contact potential customers and move on to next steps. It is important to measure it against the amount of closed sales to know if the salesperson is efficient as well as fast.
Conversion rate
Why is this indicator important? This indicator tells us the probability of generating a sale in each business unit and for each salesperson.
It allows you to detect which salesperson performs best in each business unit (vehicle sales, spare parts, services, savings plans, etc.) In this way, each person’s efforts can be refocused on their most effective type of sale.
How to improve this KPI? The more qualified a salesperson is and the more tools they have at their disposal, the higher their success rate.
But there is one more issue to look at: what types of leads are being generated?
One reason for a low conversion rate is that the leads you are generating are not the right ones for your dealership. It is essential to analyze the quality of the leads and refocus marketing efforts on obtaining more qualified leads with a greater probability of buying.
These KPIs need to be measured regularly to help make decisions that will improve the profitability of the department and the dealership. What is measured can be improved; this premise must be reflected in the culture of the dealership and supported by the right tools.
With Autologica DMS you can automatically measure and improve the dealership’s KPIs. Request a demo today.
