The good news is that you have a plan for a major change or new initiative for 2023. As laid out in the previous post, Why Does It Matter Now, your organization was able to carefully articulate what change is necessary and why it is crucial for your client base. Time to go, right? Wrong. How is success measured as a manager? In order to understand that this new endeavor is worthwhile, we need to understand if it moves the needle on its own. If that can’t be isolated, the next step needs to be figuring out how.
Why More Vehicles Sold is Not the Answer
If we’re talking about a car dealership, the answer is not more vehicles sold. Sorry to burst your bubble, and I’ll gladly fight anyone on this. The hard truth is that only the OEM has the access to the data to understand what actual value the dealership added to the transaction. Unless a dealership has some proprietary software that measures year-over-year cyclical fluctuations, historical monthly incentives, historical finance rates, the historical inflow and outflow of inventory, the opportunity mix through all communication channels, and a multitude of other variables, no one can ever be sure if a sale was attributed to the hard work of the individuals or just having the right vehicle at the right time.
Inhale. If you don’t believe me, just watch how a truckload of vehicles skews monthly closing ratios to record numbers, despite the team’s lack of consistency in following the process. If success is an accident, how can you expect to repeat it?
Measuring Success with Objective Metrics
With that hard truth out of the way, if anyone ever plans to inspect what they’re expecting, whatever is being planned for implementation must have an objective measurement that can’t be skewed or manipulated. Seriously, how can anyone understand if the performance improves or worsens over time if that information cannot be isolated? Moreover, how do you know that any investment in time, people, and technology is paying for itself or, heaven forbid, creating a net loss? That’s why everything a business does, new or not, needs to have its own metrics. This is step one in the measurement process.
Holding People Accountable with Proper Measurement
Let’s face it, without the proper measurement, people can’t be held impartially accountable when objectives aren’t met. They can certainly achieve all their assigned tasks, but does anyone know if those tasks are relevant to the objective? For instance, many car dealerships have an arbitrarily selected daily call volume that needs to be achieved. (Let’s ignore predictable sales cycles, frequent incentives, and availability changes, let alone that macroeconomic forces are hard truths.)
What percentage of those calls are made to in-market shoppers in a given month? What percentage of those calls are made to those out of the primary market area? What percentage of those calls are made to those out of state? What percentage of those calls are made to those opportunities that were dusted off from last year?
If anyone is doing this, please let the rest of us know. For those not able to isolate these variables, they cannot be tracked and trended nor considered unequivocally critical to success. If we’d want actually to measure the success of a goal such as this, we should STOP and consider the variables we CAN MEASURE. After that, go back to step one to re-evaluate.
Understanding the Relevance of Metrics
Understandably, it’s hard to discern if specific metrics matter. One way to level-set is to establish a complementary measurement that gives the data additional context. For example, if someone were to only look at page views, they might get excited by a high number. However, if it were compared to last year during the same time, it might actually be a low number. If the team cannot come up with two complimentary metrics, then go back to step one.
Complementary Measurements for Context
For example, time is an easy compliment because it takes opinion out of the picture. Time is time. Most systems can track it, and it allows us to adjust for the seasons. But time can be tricky. Since opportunities do not, and never have, arrived in a predictable and linear way, looking at activities per hour could be deceptive because something as simple as snow can skew results. Looking at less granular chunks of time, such as quarterly or year-over-year, tends to give more accurate results because it nullifies incentives, weather, and personnel changes. Outside forces are always fluctuating, so it’s important that what’s on the inside isn’t fluctuating, too.
The Trickiest Questions: How is Success Measured?
Having worked with and consulted on a range of retail automotive technology, including over 30 different CRMs, the report you need is rarely available. Work with your vendor partners to locate or create reports that deliver the data that you need most. And, if it’s impossible, the business may have to create its own manual reporting system. If the business isn’t willing to go that far or to put in the effort to design such a report, it tells the casual observer the results just aren’t that important. If this can’t be done…you guessed it…go back to step one.
Outside of not having a strategy, this is one of the plagues of small business. Many find themselves being hurled down an endless tunnel of uncertainty because their work days are ruled by opinions, not facts. It’s no wonder why depression, substance abuse, and the sudden onset of quitting are so prevalent in many verticals, especially at car dealerships.
No one knows when they’re doing a good job because there’s nothing solid that they can point to that says, “I did that.” Measuring success today is the best way to prevent failure in the future.
See how this series of posts all started.