The Sales Department is the cornerstone of the dealership, but its performance can depend on economic fluctuations. Therefore, Sales Manager need to be quick thinkers so they can analyze situations and make the right corrections and improvements to department’s business processes.
Among the frequent problems the Sales Manager has to deal with are periods of decreased vehicle demand, low prospect to customer conversion rates, and dead or slow-moving inventory.
Let’s analyze some practices adopted by successful Sales Managers.
Like every department in the dealership, the Sales Department has indicators to measure its performance. A Sales Manager should understand these indicators in order to detect the flaws, measure their economic impact, and plan the way to correct them.
What to measure
1. Inventory Turnover
The Sales Manager must know the average time units spend in inventory; as time on the lot increases, units lose value. In addition, the Sales Manager needs to know the Inventory Turnover indicator for each vehicle model sold by the dealership in order to accurately measure the department’s effectiveness.
Value of inventory * number of days of the period being analyzed
Sales costs of the period
Recommended practice: Get rid of immobilized and slow-moving inventory
The value of the units that are not sold decreases with time and generates insurance and storage expenses. The Sales Manager can generate an Inventory Aging Report through the dealer management system in order to quickly detect vehicles that are not moving as expected. With this information the Sales Manager can implement promotion strategies, special offers and price reductions, showroom reorganization, etc.
Vehicle Registrations * 100
OEM sales objectives
2. Meet OEM sales objectives
OEMs define objectives for vehicle sales, and dealers that meet them are typically rewarded. The Sales Manager should always know how the dealership stands regarding these objectives.
3. Sales volume
Does the dealership that has more prospects and sales staff sell more? This question is essential because the increase in sales and in the department’s metrics depends on the successful interaction between prospects and sales staff.
Recommended practice: Use a CRM
Sales advisors should record each and every interaction in the dealership’s CRM. With this information, they can later suggest the right vehicles to their prospects according to family structure, profession, hobbies, and purchase history. Furthermore, the Sales Manager will have access to the negotiation history with each prospect, which will allow them to detect at what stage each sale was lost or won: first contact, test drive, negotiation, etc… this analysis helps improve the sales process.
Reinforce the good, eliminate the bad
After applying improvements and measuring the increase in sales, the Sales Manager should continue to analyze the department’s performance regularly to avoid relapses and to see if employees respect the department’s processes and policies.