Key Performance Indicators: The "Keys" to Professional Dealership Management & Growth

Transcription

1 Key Performance Indicators: The "Keys" to Professional Dealership Management & Growth With Jeff Sacks, Jeff Sacks Auto Moderated by Mike Bowers, Executive Editor at DealersEdge

2 Jeff Sacks is considered one of the premier experts in dealership operations. His accounting and business finance degrees, coupled with his practical "in the seat" operational experience, have allowed him to offer his unique insights to automotive clients worldwide for over 30 years. Jeff immigrated to the United States in 1977 and has immersed himself in car dealership operations since then. After having worked for a variety of dealerships he founded Jeff Sacks & Associates, a consulting company dealing with the needs of his automotive clients. Jeff merged his practice and became a principal with Dixon Hughes PLLC (formerly Dixon Odom), a leading automotive CPA firm, in In 2005, NCM Associates, Inc. and Jeff Sacks finally merged after collaborating for many years on various joint initiatives, including the highly respected General Manager's Bootcampsm. In 2009, Jeff returned to his roots as operating President with Jeff Sacks & Associates in order to provide customized programs to his clients. Jeff has spoken before many organizations that have used him as a resource to improve dealership functionality as it relates to process improvements strategies, asset and expense controls, computer utilization, management information systems and other related topics. He has published many automotive specific articles and was the contributing editor to the Jeff Sacks Newsletter. Currently, Jeff shares his insights on and knowledge of the automotive industry in his bi-monthly Dealer Magazine article. Jeff Sacks Auto Tel: (858) Toll free: (800) Fax: (858)

3 DealersEdge Webinar Key Performance Indicators - The Keys to Professional Dealership Management & Growth Jeff Sacks, CEO Jeff Sacks Auto La Jolla, CA jsacks@jeffsacksauto.com

4 The Keys to Professional Dealership Management & Growth Drive productivity through a targeted layered management approach Key Performance Indicators (KPIs): What should they be? Do they remain constant or do they evolve? How can they be improved upon? Create your own customized report card

5 Auto Sector Performance SAAR Source: Stephens, Inc.

6 Key Focus Areas that Drive Performance Personnel Productivity Asset Management

7 Drive Personnel Productivity Personnel Costs: Exceed 65% of total dealership costs Total personnel costs are probably going to be increasing rather than decreasing Dealership Posture: Drive Gross per Employee Higher: Continually seek out and embrace great training Rationalize/streamline staff alignment Embrace appropriate technology Insist on accountability

8 Staff Alignment Productive to Supportive Total Dealership: Definition of productive employees Goal is to be above 60% productive to supportive: Easier to accomplish the larger the footprint of the dealership and the # of employees Publics are shooting for well in excess of 60% across the board How does your dealership compare?

9 Some Pointers Personnel Productivity If you are not producing gross, you had better be supporting those who do! : Management s leadership task is to enable the gross producers to increase their effectiveness Look to process improvement and/or technology to help enhance this ratio: Examples: Digitalizing the Service Drive Process Consider providing assistants for high unit volume producers Dealership culture: Commitment to the Process

10 Personnel Productivity A Constant Focus The two positions that generate the most gross profit: Finance & Insurance Producers Service Advisors Ensure that these positions are occupied by gifted, ethical, accountable and talented employees Must maintain high performance thresholds

11 Personnel Productivity Standards An Inverted Pyramid Approach Salespeople selling in excess of 12 vehicles per month at acceptable front end gross Finance managers handling in excess of 75 sales contracts per month with acceptable back end gross Technicians producing close to 200 hours per month in service (beware of an unbalanced labor mix) Ratio of service advisors to techs between 3.5 to 4.75 techs per service advisor Technicians comprise more than 50% of the total service department employee count Sales per parts employee of close to $50K per month

12 Gross per Employee Guidelines Gross Produced per Dealership per Employee per Average Month Domestic Dealers: >$9,000 Regular Imports: >$11,000 Luxury Imports: >$13,000

13 Gross per Employee Subsets Average per Month per Position SALES: Gross produced per salesperson Gross produced per sales manager Gross produced per F & I producer SERVICE: Gross per technician Gross per service advisor PARTS: Gross per parts employee

14 Commentary: Statistical Data Gross Profit Analysis: NEW Gross Profit per Unit New Vehicles ($) Penske Auto Group 2,807 Lithia Motors 2,278 AutoNation 2,007 Asbury Automotive 1,987 Group 1 Automotive 1,935 Sonic Automotive 1,864 Source: Stephens, Inc. 2Q13 Auto Ranking

15 Commentary: Statistical Data Gross Profit Analysis: USED Gross Profit per Unit Used Vehicles ($) Lithia Motors 2,768 Penske Auto Group 1,928 Asbury Automotive 1,762 Group 1 Automotive 1,697 AutoNation 1,598 Sonic Automotive 1,418 Source: Stephens, Inc. 2Q13 Auto Ranking

16 Commentary: Statistical Data Finance & Insurance Finance & Insurance per Retail Vehicle ($) AutoNation 1,375 Asbury Automotive 1,305 Group 1 Automotive 1,188 Sonic Automotive 1,116 Lithia Motors 1,100 Penske Auto Group 1,024 Source: Stephens, Inc. 2Q13 Auto Ranking

17 70% 60% January June, Business Line Profit Contribution vs. Revenue Contribution 54.8% 50% 40% 30% 20% 10% 0% 42.5% 29.6% 20.0% 23.2% 14.4% 11.7% 3.9% New Used Parts & Service F&I *Source: Asbury Automotive filings Sales % Total GP % Total

18 Gross-to-Sales: Public Companies 2Q 2013 Analysis of Gross as a Percentage of Sales [2Q 2013] Public Company AutoNation Sonic Group 1 Asbury Lithia Penske Total Sales $4,426.5 $2,202.5 $2,335.1 $1,344.5 $1,008.5 $3,699.2 $15,016.3 Gross Profit $696.1 $323.8 $341.3 $221.9 $159.8 $569.0 $2,311.9 Gross-to-Sales % 15.7% 14.7% 14.6% 16.5% 15.8% 15.4% 15.4% Key Elements to achieving high Gross-to-Sales %:

19 The Personnel Productivity Picture Don t lose sight of the critical elements: Your other channels that you need to work Out of the box thinking and in the box execution Have systems and processes to enable the production of gross

20 The Purchase Funnel Then & Now THEN NOW RESEARCH ENGAGE MULTIPLE DEALERSHIP WEBSITES MULTIPLE DEALERSHIPS CONVERSION/ PURCHASE VISITED 4.5 DEALERSHIPS ON AVERAGE VISIT 1.4 DEALERSHIPS ON AVERAGE

21 Internet Lead Response Targets Of every 100 leads you receive... Actual Target With how many do you establish two-way communication? 60% = 60 Of those, how many do you make appointments with? 60% = 36 Of those appointments made, how many show up? 60% = 22 Of those, how many purchase a vehicle? 60% = 13 Source: 2011 Hyundai ecommerce for Dealership Leaders Seminar

22 Linking Dealership Activities to Produce Incremental Gross Sales to Service Handoffs Service Drive Activities Customer Retention Activities Customer Defection Activities

23 Asset Management New Vehicle Days Supply Used Vehicle Days Supply Inventory of Hours To Sell

24 Commentary: Statistical Data New Vehicles: Days Supply Inventory Days Supply New Vehicles Sonic Automotive 53 Penske Auto Group 63 Group 1 Automotive 67 AutoNation 67 Asbury Automotive 68 Lithia Motors 76 Source: Stephens, Inc. 2Q13 Auto Ranking

25 Commentary: Statistical Data Used Vehicles: Days Supply Inventory Days Supply Used Vehicles Sonic Automotive 29 AutoNation 30 Group 1 Automotive 33 Asbury Automotive 36 Penske Auto Group 42 Lithia Motors 51 Source: Stephens, Inc. 2Q13 Auto Ranking

26 Bias to Execute Identify low hanging fruit and be cognizant of your short, medium and long term strategic objectives Create a game plan that includes.. Manager buy in Employee buy in Metrics to manage and monitor Consistent tracking Holding people accountable

27 Within the Month Management Break down your monthly objectives into weekly chunks: Be cognizant of Weekends The last 1/3 of the month sales pattern Long weekends and public holidays Break your week into two segments: Monday thru Thursday Friday and the weekend Review segments Friday and Monday for signs of performance lags and create a game plan to lift performance

28 Dealership Scorecard

29 Dealership Report Card Dealership Dealership Net-to-Sales Sales Effective Gross per Employee Fixed Coverage Achieved Monthly Profit Plan CP RO Growth Same Month Y Over Y TOTAL Sunset Marine Mesa Canyon Dealership Net-to-Sales: Sales Effective: Gross per Employee: Fixed Coverage: Achieved Monthly Profit Plan: CP RO Growth Same Month Y Over Y: POINT SCORING: SUNSET AUTO Above 4% = 20 points; Between 3% and 4% = 15 points; Between 2.5% and 3% = 5 points #1 in Zone = 15 points; #2 in Zone = 10 points; #3 in Zone = 5 points Above $11,5K = 20 points; Between $11,0K and $11,5K = 15 points; Between $10,5K and $11,0K = 5 points Above 80% = 20 points; Between 70% and 80% = 15 points Above 115% = 20 points; Between 100% and 115% = 15 points; Above 95% = 10 points Above 12% = 25 points; Between 9% and 12% = 20 points; Between 6% and 9% = 15 points

30 Other Scorecard Possibilities YOU CAN TRACK. Gross-to-sales percentage CSI Service retention First service appointment kept Gross per unit: New Used Back end gross CPO as a % of used vehicles retailed Fresh internet leads: % engaged in two-way communication

31 Create Your Dealership Scorecard Advantages: Customized and collaborative Targets specific areas or financial levers Can work for a group with different franchises having different objectives and benchmarks Forces review and competition Could be used for pay plan design

32 Jeff Sacks GM Workshop 2-1/2 days: October Newark, NJ Target audience: GMs & prospective GMs DealersEdge referrals receive $200 discount per person Use coupon code de200 when registering online at

33 Thank you! Any questions?