With the end of 2010 in sight, it’s time for proactive dealers to begin finalizing their plans for 2011. Where will you be this time next year? What new products, services, processes or procedures will you pilot? What will be the makeup of your team? Are you planning to expand your staff? Where will you drive the bulk of your success and, just as important, where will you spend your marketing dollars? Finally, how many units do you expect to sell next year?
Providing answers to these and many other questions will help you build the framework for your 2011 budgets and goals. While most in the industry expect 2011 to be an improvement over this year, it’s important for you (and your entire team) to know where you’re going and how you’re going to get there.
Getting from here to there
Many experts predict the new car market will grow almost 20% next year. If we assume you are an above average dealer (you must be, you’re reading Digital Dealer magazine aren’t you?), we can assume you will grow your Internet sales at a rate of at least 30% in 2011. Using this as your goal, how are you going to get from where you are now (Here) to where you want to be (There)?
The first step is to take an inventory of what’s working and what’s not in your Internet sales operation. (This is called “knowing where ‘Here’ is.”) I’m not sure why, but I am still surprised when I interact with general managers and dealer principals who have almost no idea what is working and not working with their Internet marketing. (This is actually the rule and not the exception.) Moreover, they often have just a few ineffective measurements in place to determine if their Internet sales team is delivering incremental value or merely collecting a paycheck.
Key performance indicators
Without spending too much time identifying how to know where ‘Here’ is, I think it’s important for all automotive leaders to understand the key performance indicators are for Internet sales. Tracking and measuring these will give you a clearer picture of your current state and allow you to build goals for the future.
Lead acquisition vendors – When tracking and measuring vendors delivering leads, you need just a few numbers to determine a vendor’s overall effectiveness. These are: Total (unique) Leads; Total Sales and Total Cost. With just these three numbers, you are able to determine the following KPIs: Cost Per Lead; Cost Per Sale and Closing Percentage. Using these KPIs, you can easily watch vendor trends over time and compare one vendor to another.
Online branding vendors – The measurements you choose to use for vendors who provide online branding depends on your goal for this marketing spend. For example, if your goal is the nebulous “exposure,” then you may want to look at the indeterminate measurement of ad impressions. If your goal is more concrete, like sales growth, then feel free to use the KPIs we identified for Lead Acquisition Vendors.
Internet salespeople – The KPIs for this group are not simply sales and gross, because tracking just a few other numbers can give you great insight into training opportunities. For example, successful Internet dealers also track and measure salespeople’s Connection Rate (the percentage of email leads a salesperson “connects with” during the first 30 days), Appointment Rate (the percentage of leads that become shown appointments) and Close Rate (the percentage of leads that become sales).
If you track and measure all of the above, then you now know where ‘Here’ is. This, of course, begs the question: how do we get to ‘There?’
The X at the end of your roadmap
Just as you would use a roadmap when driving in unfamiliar territory (for those under 30, a roadmap is like a paper GPS), your Internet sales operation needs to create a roadmap to plan for 2011’s above-average growth. ‘There’ is the X at the end of your roadmap.
Would you like to do more with video, social media or reputation management in 2011? How about adding online negotiations to your website or increasing your pay-per-click spend? While a mixture of these tactics should be on every dealer’s 2011 roadmap, there are likely a few less exciting tactics that could actually drive better results that should also consider.
For example, is everyone on your team following a written Internet sales process or does each salesperson just do their own thing? Have you identified the optimum lead counts for your team and are you ensuring that you maintain those per person levels each month? How about phones? Do you have written scripts that everyone follows to a “T,” or does your team just freelance with your inbound sales calls? More importantly, are your managers listening to every inbound sales call and are they training based on these results?
The rules for the coming changes of 2011
Once you plot the tactics you’d like to add or need to add to grow your sales in 2011, it’s important to understand a few rules about the changes that you’ll want to track (and believe me, you’ll want to track these changes).
Change rule number one: You cannot change too much at once. The reason for this is simple: if you change too many variables to any equation at one time (in this case, the sales equation), you cannot determine which variables truly affected the outcome.
Change rule number two: You must measure before and after each change. If you get lazy and fail to follow this rule, be prepared to unwittingly keep poor providers/processes/people and jettison good providers/processes/people. I don’t know why this is, but dealers who are meticulous about measurement always seem to be “lucky” and have great providers, processes and people; while those who fail to measure always seem “unlucky” and end up with the leftovers.
Change rule number three: You need a buffer between changes (the bigger the change, the larger the buffer). A buffer is simply time: time to examine the results of the previous change; time to plan for the next change; time to allow for the positive changes to become habits and time for the negative changes to be reversed.
Be prepared for course corrections
Although you’re now ready to create your roadmap for 2011, you should be aware that course corrections will be the norm – so be prepared for them. Even with perfect planning, the changes that you make early in 2011 will affect the changes you’ve planned for later in the year. For example, if you choose to add a technology vendor to help you manage more leads per person, and if the installation is successful, then your future plans to add more lead providers or reduce the size of your sales team will need to be accelerated to take full advantage of the benefits delivered by this new technology vendor.
Given that you now know what ‘Here’ looks like, and you’ve identified where ‘There’ is, build your final roadmap, share it with everyone on your team (so you become committed to it) and set up check points throughout the year to gauge your progress. After all, that’s what all the proactive dealers are doing this time of year.