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Where Do I Start?

Ask the Experts – Why Are My Metrics Off?

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DealerKnows.

Thank you so much for this fantastic resource, I’ve gotten a lot out of your articles already. I’m the Internet Director at a franchise dealer averaging around 130 cars a month, I’ve been here for about 4 months already and have done everything I can to turn my BDC around into a fully functioning entity. While there’s always room for improvement and training, I’ve definitely seen tangible results just from implementing the CRM properly. However, despite the drastic improvement of our numbers, I’m still falling short of corporate’s expectations. I’m expected to convert about 40% of our total leads into shown appointments and 10-15% of our total leads into sales. We’re getting about 800 new leads a month (550 internet, 250 phone) with 3 BDR’s. Right now I’m more like 25-30% show:lead and 7-8% sale:lead. I’m desperately trying to find a way to get to their desired metrics but they feel unattainable. My BDR’s are great at setting the appointment but we struggle to actually get people through the door, and once they do get here the sales floor/sales managers treat the CRM like it’s a weight dragging them down (they just don’t use it) so I can’t keep track of our prospects after they’re passed on to a salesman. I’ve approached upper management about this multiple times and they talk a good game, but the sales managers are the ones to actually implement the process and they don’t want to do anything to rock the boat, so to speak. I’ve worked at other dealerships before where I’ve had a more stable environment and they’ve bought into the internet sales process, and my numbers are even better here then they were there. Am I missing something? I personally feel like I’m getting excellent production despite a challenging situation, but executive management doesn’t agree. Any advice would be greatly appreciated.

Thank you again for all of your insight!

David C.
Internet Director
_______________________

David,

Thank you for the question (and the kinds words!). Since the Internet side of the business is so easily measured, it makes it sort’ve hard to hide. I’m guessing that if the microscope were placed on the other departments, the ownership wouldn’t be excited about their results either (as evidenced by your CRM comments). Try not to take it personally.

There are quite a few things that jump out from the numbers that you shared. First, and foremost, management’s expectations are slightly off. While we have some clients that exceed all expectations, solid BDCs consistently reach a 40% set appointment ratio, and get nowhere close to a 40% show ratio from total leads. Management may need to adjust their goals for your department to the actual market. Again, we have clients that have achieved such amazing metrics as your management desires, but we can tell you that BDCs that do are very few and far between.

From another angle, it looks like your BD agents are working past the point of diminishing returns. Based on our data, as well as other studies, 200 opportunities is the sweet spot for BDRs, with 220 being the ceiling for the most experienced. Beyond these levels, corners get cut, communication breaks down, and results become undesirable. Adding another agent would likely go a long way in helping to achieve better set and show results.

In regards to the close ratio, several other variables outside of your BDRs contribute to that over all ratio. Again in defense of you, if you have a traditional BDC, closing deals doesn’t fall within your department. As you indicated, the CRM seems to carry the weight of suggested use, so many of the appointments could be derailed by someone, or something, outside of your control. It might be worth the time to investigate.

Above and beyond that, inventory mix, merchandising, and pricing all make a massive impact on the overall closing ratio. Let’s face it: Mitsubishi is the lowest volume mainstream brand (Mazda did more than 2X more units last month, and it only goes up from there). Being near one of the wealthiest areas in the country isn’t helping matters much. From what we can see on the used side, your store has a really bizarre (like extraterrestrial) mix of preowned vehicles including luxury and exotic cars. That certainly fits the luxury market, but not the brand on the side of the building. Climbing above the 10% close ratio often takes a nearly perfect mix of the three elements I mentioned above, plus a consistent process. I believe the expected closing metrics may not be reasonable for this type of inventory strategy.

Let’s tackle the stuff you can fix on your own. I’d look to lower the amount of opportunities per BDR to get closer to 200 per. You can either do that by adding an extra agent, or by throttling back any third party leads you are receiving and/or trimming back targeted geography. This should boost your set and show ratios above 40% (or higher). I would also see what your ratios look like by netting out the Ferrari and Porsche leads (true story, dear readers) to see how those high-lines are effecting your numbers. There is a good reason why Target doesn’t carry Gucci and Louis Vuitton. If we get the BDC metrics where they should be, it’s a much easier conversation to have about the showroom and the lot.

Hope this helps,
Bill

Bill Playford • September 5, 2015 • Ask the Expert

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