Growth Revenue Optimization Management
Is it possible to prosper during economic down turns? What about plain old survival? Good point! You need to survive first. But you need to plan for a destination greater than simple existence – as we all know the law of the jungle is “eat or be eaten”.
Having analyzed and worked with many automotive dealerships on improving fixed operations and marrying up systems, processes and best practices with their operational needs, it is plainly obvious that the best dealers in the industry have recognized they need responsive management driven process, accountability and a deeper use of their technology to run a long-term dealership retail business successfully. That process would be a Growth Revenue Optimization Model also know as G.R.O.
That’s what WithumSmith+Brown and Automotive Domain Results, Consulting, Training & Business Development is doing to help our dealerships prosper in any economy!
Best Practices, Employee Accountability and Technology in dealerships has become a mandatory retail management tool to identify what’s selling, to whom, and by whom, right throughout the buying and servicing process, and into the accounting and reporting systems. Best Practices and Technology is an integral element in every part of a successful dealership retail business environment.
When running a dealership during a slowdown, it’s more important than ever to monitor the basic measures of the business even more thoroughly while holding people accountable for their individual performance.
If you want to increase your business, ask better questions:
- Do I have to structure, or modify my business plan for these tough times?
- Who will help you do it?
- How will these times affect your loyal customers?
- What improvements will drive them to your business versus the competition?
- Do you offer a better level of service than your competition?
- Is it time to review staff member contributions?
- Is your current level of service, the product range and product mix (good, better, best) appropriate for these times?
- Where are the gaps when compared to the competition?
- Will your on-line channel contribute enough?
- In what shape are your cash reserves?
- As you can see, there are many questions to ask. Most, if not all, of which will be answered with the aid of technology and peoples accountability.
You can’t manage what you can’t measure, so if you have some tough decisions to make, think about the information you need in order to make the choices you need to make to handle the concerns you face. Your systems need to give you access to key performance data about your business.
To survive, you need to make sure that your systems are delivering the key daily, weekly & monthly management information you need to operate the business in an investment mode and not a protection mode.
Point of sale systems must be capturing sales, supporting your loyalty programs, balancing your cash, and identifying how your staff members perform. Your stock management systems must be identifying sales trends and facilitating buying decisions based on prudent Open to Buy budgets.
Your accounting systems should bring it all together so you have a good handle on profitability and cash flow forecasts. This is where accounting firms with special niches and specialized business knowledge like WithumSmith+Brown and Automotive Domain Results Consulting Training & Business Development can really add value to your success factors, so don’t be afraid to ask questions.
During tough times, dealer retailers need to be vigilant about how hard and smart their people, processes and stock is working. Every retail management driven consulting system package, if it qualifies to hold that title, should be providing you with category performance statistics.
Every dealer retailer knows that building lasting customer relationships is absolutely critical to building a lasting long term business, but they often underutilize the leverage from the technology to build and retain customers. Dealer retailers need to be interacting with customers according to their preferences if they want to remain relevant, and so building a seamless multi-channel strategy has become urgent during these times.
As the customer experience and value rating systems becomes more vital in a tough economic climate. The customer experience rating system offers important indicators that prices might be too high, sales skills are not good enough, the product mix can be improved, or promotions are ineffective. By pulling one of the levers and monitoring these very important statistics, managers will identify where to focus for improved business performance.
There are a number of dealer indicators that can be used to drive sales staff in the right direction over time. Analyze today’s position, set a target for each individual store or every single person required for the delivery of results, and reward the attainment of the targets.
An example is Units per Sale to drive value added services or add on selling. In fact managers need to keep their eye on a number of areas like the following during challenging times:
Cost of labor:
- Wages to sales commissions
- Sales per advisor or sales person
- Sales by hour and staffing by hour
- Gross Profit contribution per employee
- Stock turn and labor ratio
- Days in a month worked
- Average GP required per employee
- Discounts being applied and sold
- Parts per RO
- Effective labor rate
- Dollars per RO
- Top sellers, bottom sellers
- Store ranking
- ROI all department % returns
- Benchmarks
The list goes on and on. Increasingly, successful dealers are realizing that operations outsourcing and investing in business intelligence tools is a value added requirement because they recognize that the ROI in sticking to processes, best practices and data analysis is potentially huge.
If your information technology is not providing you with actionable information to help you make operational and strategic decisions, then you have a clear action to take remedial steps.
It’s not always a case of reinvesting in a new system. Often, it’s a relatively small add on, or investing in some training, or making some adjustments to the way technology is managed within the business.
To ensure compliance with U.S. Treasury rules, unless expressly stated otherwise, any U.S. tax advice contained in this communication is not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.
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