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Strategies

The Right System for Professionally Run Dealerships (Part 3)

How to manage each store’s KPIs

In our previous article (see article), we analyzed different features of a DMS which allow a dealer to integrate information from multiple locations in order to generate competitive advantages. In this article, we’ll analyze reports that cross-check information from each store to reach strategic conclusions.

Information that you need, today

The growth of competition in the automotive industry has changed the rules of the game: investing in more advertising, increasing your sales staff, lowering costs, etc. is not enough. Successful dealers will be the ones who know how to take full advantage of day-to-day information to improve service, increase sales, and optimize processes throughout all dealership departments.

What do you need to leverage information?

Comprehensive DMS systems offer reports with all the information generated by a dealership: sales in different time periods, purchases, hours worked on each job, most contacted customers, best-selling models, etc. This information constitutes the cornerstone of a management strategy for professional dealerships; but without a business analyst to process this information and draw conclusions, to measure KPIs and outline strategies to improve them, this data goes to waste.

Using a DMS to generate data and a Business Intelligence tool to understand it, information becomes browsable and interactive, and managers can see results from different perspectives, as well as for update key metrics in minutes. The dream of every manager and analyst, right?

This helps dealers to truly focus on management: How to improve indicators to be more profitable? How to optimize internal business processes, and prevent money leaks and fraud?

In conclusion, Business Intelligence is the technology that allows dealers to analyze the thousands of data points and transactions of a business through a matrix which displays them in intuitive graphics. BI also lets you define different formulas and cross-check different types of data so as to obtain different results.

This type of tool is the key to achieving the highest standards of excellence, a strong market position, and complying with manufacturer recommendations regasding process improvement.

3 KPIs that top dealers track

To begin working with the dealership data, we propose these KPIs (key performance indicators) that are vital to knowing the status of each department:

  • Absorption rate: Useful to detect the level at which the After-Sales revenue contributes towards the fixed expenses of the dealership. If this indicator is within the expected range (usually 0.75 and 1), it means that in times of low vehicle sales, parts service sales will cover fixed costs.
  • Parts, vehicles and service sales, in different date ranges: These indicators compares current with previous months and years, for example to detect which months are producing higher sales and which are the ones experiencing a slump. In this way, you can develop strategies to work on each situation before it occurs.
  • Parts inventory status: Allows you to know how your inventory is made up based on parts activity; detects the cost of dead inventory; compares inventories among stores; finds inefficient purchases; and more. Parts managers need to have a global overview of these indicators at each store since they are the ones who make strategic decisions to promote sales and prevent out-of-stocks and overstocks.

It is paramount that managers have a global, integrated and analytical overview of the business to monitor its status.

Ask the right questions

Before looking at any data it is important that you ask yourself what you wish to know. After that you need to choose a powerful and intuitive Business Intelligence tool, without which the massive amount of data and the number of possible combinations to cross-check it will be overwhelming.

Are you making the most of your data to maximize profit? Contact us to learn how Autologica DMS can help you.

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