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Dealers must know what data to measure and how to measure it to remain competitive. However, it can be challenging to sift through the mounds of available information to identify the most critical metrics to evaluate performance. Dealerships must research and create a list of crucial digital and standard dealership KPIs (key performance indicators) to address this challenge by helping their teams focus on those data points essential to operations.
Digital Dealership KPIs
The following are four digital KPIs that dealerships should consider when ramping up an online marketing campaign:
Although total website visitors is a high-level metric, dealers should not overlook the information it provides. Overall traffic patterns (measured year over year and month over month) can help dealers identify:
- Potential roadblocks
- Opportunities for attracting more visitors
- Gaining insight and making future predictions
The click-through rate (often referenced as CTR) indicates an ad’s relevance to your target audience. Dealers might consider changing ad design and methods or introducing special incentives in the content if the CTR drops.
Conversions and Conversion Rate
Identifying how frequently website visitors take meaningful actions can provide valuable insights. Low conversions of these actions could indicate any of the following:
- The website is attracting the wrong audience
- Contact forms are unnecessarily lengthy
- Users find the website difficult to navigate
Conversely, the campaign might be converting effectively, indicating that it already has excellent targeting.
Email leads can serve as an accurate indicator of consumer interest in a dealership’s vehicles or financing offerings. Dealerships might make a concerted effort to understand each provider’s online lead closing ratios and alter their communications accordingly.
Standard Dealership KPIs
The following are four digital KPIs that dealerships should consider to boost the profitability of operations:
Inventory Turn Rate
The inventory turn rate equals the in-stock inventory compared to monthly sales. The best performers turn inventory every three weeks. Short turn times rely on dealership-wide commitment from all departments to:
- Prioritize efficiency
- Stress age intolerance
- Conduct proper inventory management
- Maintain an up-to-date vehicle list on the website
Quick inventory turns can maximize high-profit opportunities connected with new inventory while also driving earnings in other departments.
Tracking reconditioning time is a critical aspect of managing pre-owned inventory. Top-performing dealers understand the opportunity costs of delaying potential sales due to a slow refurbishing and repair process.
Dealerships should watch for any potential bottlenecks and explore means for optimizing the process, which might include:
- Posting vehicle descriptions on the website before they are ready for sale
- Hiring a designated reconditioning team
- Integrating reconditioning software
Cost to Market
The best performers closely monitor Cost to Market, which compares a vehicle’s retail value to its overall investment, including reconditioning, purchase costs, packaging, and transportation. Successful dealers minimize expenses to allow for aggressive inventory acquisition and a high return on investment.
Aged Wholesale Loss Per Vehicle
Aged wholesale losses result from dealerships wholesaling vehicles following a failed retail attempt. It is critical to differentiate these vehicles from those the dealership promptly wholesaled because the inventory repaired and unsuccessfully offered for retail is the costliest.
High-performing dealers establish KPIs for the average wholesale loss on these specific vehicles. However, they do not consider a pack adjustment to counteract these losses. Instead, they want to single out those failed retail attempts and make the necessary process changes to avoid future losses.
Analyzing Metrics Requires the Best Technology
If you track each of these dealership KPIs, you can more accurately evaluate your dealership’s performance and identify areas for improvement. With so many methods for monitoring and gathering data at your disposal, evaluating KPIs is one of the most valuable strategies you can adopt to boost revenue.
However, effectively tracking these metrics requires the right technology. Your dealership needs a digital solution that provides a comprehensive view of your operations to identify those opportunities that can drive more business.
Contact us today and discover how Affinitiv’s DealerLens can help you identify the best KPIs for your dealership and analyze that data to optimize operations.
All | November 23, 2022