When Performance is Measured, It Improves

In Fixed Ops Toolbox by Don Reed

–– Don Reed, CEO
DealerPRO Training

“In baseball, we want to see and evaluate the performance of each player.”

“If you are a baseball fan, you have undoubtedly noticed the constant display of Player Statistics at the bottom of your TV or on the  scoreboard. For each batter we see the Batting Average, RBI’s, Home Runs, and more. For pitchers, we see their ERA (Earned run average), wins/losses … We even see the speed of every pitch. Stats tell the tale.”

What Are Your Team's Stats?
Baseball measures everything. Why? Maybe it’s because we as fans want to see and evaluate the performance of each player. Maybe it’s because the team’s coaches want to see and evaluate their individual player’s performance as well as that of the team. Maybe it’s because the opposing team’s coaches and players want to see and evaluate the other players’ performance. Or, just maybe it’s all of the above. When performance is measured it improves.

Top Performers are identified as such through constant, on-going performance evaluations. If you can’t evaluate their performance then how can you identify their status as a Top Performer? All of the players inducted into the Baseball Hall of Fame do not have the same stats. They are all different yet they all excelled in the sport of baseball and became the best players in the game.

As a Dealer, General Manager or department manager you can learn a lot from this analogy because unless you have the stats on every individual on your team you cannot possibly evaluate their performance. You can’t identify their strengths or their weaknesses. You can’t measure improvement or failure accurately or fairly. You don’t know who needs training and what they need trained on. Now let’s take this concept of “you can’t manage what you don’t measure” and look at it from the perspective of the “Front End” of your dealership versus the “Back End.”

You Hold the Front End Accountable ...
The vast majority of Dealers have processes in place to measure the performance of their sales team every single day so they can evaluate their performance. Here are some typical examples:

Finance & Insurance Department:

  • Gross Profit Per Retail Unit-New & Used
  • Finance Penetration as a percent of total RV deliveries
  • Extended Service Contract Penetration as a percent of total RV deliveries
  • GAP Penetration as a percent of total RV deliveries
  • Number of contracts pending loan approval
  • Total F&I Gross Profit produced Month to Date

This is typically measured for each Finance Producer as well as the entire F&I department and is done so DAILY so that you can effectively identify the Top Performers from the Underachievers and act accordingly.

New & Used Sales Departments:

  • Gross Per Retail Unit-New & Used
  • Number of units sold Month to Date
  • Number of “UPS” Month to Date
  • Number of Demos Month to Date
  • Number of Written Proposals Month to Date
  • Closing Ratio of UPS to Closed deals
  • Number of Appointments for the day
  • Number of T.O’s
  • Conduct a lot walk to view inventory additions/deletions
  • Number of Phone UPS Month to Date
  • Wholesale Profit/Loss Month to Date
  • Internet Sales Leads Month to Date
  • Number of Internet Sales closed Month to Date
  • Results from advertising campaigns
  • Used Unit Reconditioning Cost PUVR

Most of these performance measurements are calculated for each Salesperson and each Manager DAILY. Most sales departments start their day with a brief Sales Meeting to review many of the items listed above. These are the typical  “Front End” processes that separate the average Dealer from the Top Performing Dealer. How would you rate your Sales Department?

What About the Back End?
Okay, now let’s cross over the demarcation line to the “Back End” of your dealership and take a look at the Service & Parts Departments and identify the typical processes for evaluating their performance DAILY. I emphasize DAILY not weekly or monthly.

Parts Department:

  • Counter Retail Sales
  • Repair Order Sales
  • Gross Profit Margin
  • Lost Sales
  • Fill Rate
  • Special Order Parts

My experience has been that far too many Dealers, GM’s and Parts Managers measure all of the above for the department but too often fail to do the same for each parts employee. For example ...

  • Do you run a DAILY Exception Report for each employee to identify the “Unauthorized Discounts?”
  • Do you review a Performance Report DAILY by employee to identify their performance on parts margin—Retail Repair orders and Retail counter?
  • Do you compare your performance to the benchmarks in our industry?
  • Do you measure dollar sales per employee? Do you measure transactions per employee?

Remember, if you only measure the performance of the department, you can’t effectively identify the Top Performers from the Underachievers. You can’t identify their individual strengths and weaknesses so that as an owner or manager you can help coach and manage them to improve on their individual performance.

Service Department:

  • Technician’s Flat Rate Hours Produced
  • Technician’s Clock Hours Worked
  • Hours per Repair Order by Advisor
  • Number of Repair Orders Month to Date—Retail-Warranty-Internal by Advisor
  • Number of Appointments Scheduled
  • # of Carryovers
  • Shop Productivity (Hours billed divided by hours worked)

Again, based on my experience and that of my 20 Trainers working in dealerships all across the country, we can’t find very many Dealers, GM’s, Service Directors/Managers and Parts Managers who measure anything else. Those who do measure more invariably will produce more. Measure things like their Advisors’ Unauthorized Parts & Labor Discounts, Policy Adjustment, Parts Margin, Labor Margin, # of Up-sells, Closing Ratio of Up-sells, Un-sold Hours per day, # of Menu Presentations, Closing Ratio on Menus, # of Inspection presentations, etc.

For Technicians let’s make sure they inspect every unit, measure # of additional repairs sold from inspections, # of comebacks, HPRO and the number of RO’s. Once you inspect what you expect your employees will see that you care about their individual performance. You care about customer satisfaction. Reaching the goals you have set is important to you and therefore must be important to them.

Here is a simple process that costs you absolutely nothing but will have a definite impact on your employees’ production. If you are a dealer, get out of that chair and simply walk through every department of your dealership EVERY DAY and speak to everyone you see. Acknowledge them with a “Good morning”, “Good afternoon”, “How are you doing” or whatever type greeting is appropriate in your marketplace. You will be pleased with the results you get. If you think I’m wrong then tomorrow morning when you first arrive at your dealership walk directly to your office, do not speak to anyone and slam the door shut! Within about 5 minutes every employee will be saying “something BAD is about to happen.”

If you are a Service manager or a Parts manager get out of that chair and spend some time with your technicians. Observe the inspection process. Take a personal interest in assisting the technician with getting the right parts as quickly as possible and/or insure that you special order the right parts. During your busy season how about both Service and Parts managers getting out of that chair and visit with your customers who might be waiting for their RV to get serviced or who are waiting to see your Advisors.

Getting back to the stats it is important that you maximize the capabilities of your DMS system. Are you aware of all the reports that the system provides. Are you reviewing those reports daily? Are you sharing these reports with those employees who are responsible for producing the results you’re reviewing? Accountability for one’s performance is the key if you expect to grow and prosper. Make sense?

To sum it up, I see most dealers measuring about 23 stats per day in their Sales Departments and only about 13 stats per day in Service & Parts. If you follow my recommendations listed above that number jumps to about 30 stats per day and the good news is it costs you absolutely nothing! Now take a pen and check off all of the stats you measure DAILY in your Sales Department and then check off all of the ones you measure DAILY in your Service & Parts Departments. Again the emphasis is on DAILY. How did you score—Top Performer or Underachiever? It’s all in the stats!

Call Don Reed toll free at 1-888-553-0100
Or email dreed@dealerprotraining.com.

Don Reed
CEO—DealerPRO Training