RPM TRICKS FOR MANAGING CADENCE GROUP PERFORMANCE

Transcription

1 5 SIMPLE TRICKS FOR MANAGING RPM CADENCE GROUP PERFORMANCE DAILY, WEEKLY, & MONTHLY TASKS that improve speed, consistency, and accountability across every phase of pre-owned retail operations. A PUBLICATION BY A publication of

2 RPM CADENCE Due to dramatic changes in the competitive landscape, dealers that once charted their own course through gut feel must learn new ways of harnessing information to make fact-based decisions. The ability to take data understand it, process it, extract value from it, and take action will separate the best automotive retailers from the rest of the pack. A growing number of dealerships recognize this truth, but are stymied by how best to make it happen. Why? 1. First, they lack the clear visibility into their pre-owned operations required to accurately diagnose the source of problems and take corrective action. 2. And secondly, they are unable to institutionalize fundamental management processes that span each phase of the pre-owned life-cycle, and drive consistency and acountability across their dealership. ENTER RETAIL PERFORMANCE MANAGEMENT (RPM) The primary focus of a successful RPM strategy starts with gaining better visibility into the entire preowned operations lifecycle, and most importantly, act on opportunities for securing quicker turn and higher gross simultaneously. However, in order to achieve this, dealers require a strict management discipline across all phases of their pre-owned retail operation. This white paper provides insight into a fundamental management cadence that Used Car Operators can perform Daily, Weekly, and Monthly to expose risk, identify opportunity, and institute greater accountability across the dealership.

3 DAILY TASK LIST 1. Analyze sold units from the previous day. 2. Analyze appraisals from previous day. 3. Execute your pricing plan by aging buckets. 4. Assess Time to Market and Low Online Ad Performance. 5. Analyze screen run lists and online wholesale market.

4 DAILY TASK LIST 1. ANALYZE SOLD UNITS FROM THE PREVIOUS DAY. Identify trends in your previous day sales, and devise a plan to replace this inventory with additional pre-owned units. Look at the Days to Sale, Margin, and Market Days Supply of the car in the market. What is your current stocking position? How did you acquire this car (trade or purchase)? Was this a market performer, or a store performer? Does it make sense to replenish your stock based on current conditions and the results that you saw at your dealership? You may want to consider reaching out to other dealers and put together deals for their aging inventory (that match your core needs). Simply locate cars already in the market that have already been reconditioned and have low Market Days Supply. They may be overpriced or poorly marketed by their current dealer. In addition, check your Custom Inventory Analysis for the segments that make you the most gross and/or that you turn the fastest. Use FirstLook s Market Velocity Stocking Guide (1.1) to identify fast moving vehicles in the marketplace in those segments and drill down into the current market listings. Identify aging units in the market and buy them wholesale before they go to auction. 1.1 FirstLook s Market Velocity Stocking Guide

5 DAILY TASK LIST 2. ANALYZE APPRAISALS FROM THE PREVIOUS DAY. Review past appraisals with your sales consultants, and put a game plan together to recapture potential lost trades. Host daily save-a-deal (1.2) meetings, have another set of eyes look at your low-performing sales managers. 1.2 FirstLook s Make-A-Deal Summary Report

6 DAILY TASK LIST 3. EXECUTE YOUR PRICING PLAN BY AGING BUCKETS. Put together a game plan for execution. Which cars do you price? It is easy to look at your aged cars or just the cars you bought/traded for (if multiple people are appraising), but then you are just making daily updates to the prices. Here are few recommended best practices: 1. Stick to your Aging Policy and re-evaluate based on activity and market criteria. 2. PHYSICALLY pull the keys to each car on the planning tab. Book it out, check market listings, open the car (does it smell like a wet dog?), start it, check the tires, do a walkaround. If you are doing this everyday, there will only be a handful of cars on the list. Draw a line in the sand, and say When a car hits XX days, I will re-evaluate its position in the market for pricing and ONLY when it hits this age. You HAVE to give a car time to adjust to new pricing and have a chance to sell. Be in the game. Don t just look at a report to tell you the cars you are asking above AND below market average, know WHY you fail into each category on EVERY car. 1.3 FirstLook s Current Inventory Pricing Risk Report

7 DAILY TASK LIST 4. ASSESS TIME TO MARKET AND LOW ONLINE AD PERFORMANCE. Accelerate your Time to Market and streamline your process from appraisal through recon, and into Online ads. Follow up in your service drive to push cars through recon and get new inventory to market. Recommended Benchmark: Time to Market should take no more than: 72 Hours. Time to Market will vary based on the dealership. Know YOUR setup and benchmark based on your top performing months and shoot for a 20% improvement each month. 1.4 FirstLook s Digital Performance Analytics

8 DAILY TASK LIST 5. ANALYZE SCREEN RUN LISTS AND ONLINE WHOLESALE MARKET. For opportunities today and tomorrow. Bid and buy Online using our Live Auction Opportunities (1.4). Don t waste a day out of the dealership watching cars across the block, buy your bread and butter cars from your Inventory Management tool. For volume cars at the live sale, use the Vehicle Analyzer to see how YOU perform with those cars off the cuff. 1.5 FirstLook s Live Auction Search

9 WEEKLY TASK LIST 1. Examine wholesale results from your biggest local sale. 2. Analyze missed deals for the week. 3. Assess your core inventory s current stocking level. 4. Examine previous week s wholesale performance for your sleds. 5. Touch each unit that is in the top bucket of your aging profile.

10 WEEKLY TASK LIST 1. EXAMINE WHOLESALE RESULTS FROM YOUR BIGGEST LOCAL SALE. How did your best retail performers fare vs. book/mmr? If similar inventory to yours in failing at auction, then your potential customers will have much less competition in the retail marketplace to choose from. Compare book vs. cost, MMR vs. cost of your aged units in your top bucket. What way are the trends going? Will getting out of your poor performers now benefit you in the long run? Also, group the auction sold results by make/model and check it against your top performers/ highest volume in current inventory units. If there are a lot more running through the auction, your retail prices may have to be more competitive. Suddenly, that gross car may now be a commodity car and needs to be priced accordingly. 2.1 FirstLook s Loan Value - Book Value Calculator

11 WEEKLY TASK LIST 2. ANALYZE MISSED DEALS FOR THE WEEK. Have a weekly post mortem of non-closed deals and get new appointments set or blow out the lead. Save a deal meeting on Friday to get appointments for Saturday. * See example: 1.2 Make-A-Deal Summary Report 3. ASSESS YOUR CORE INVENTORY S CURRENT STOCKING LEVELS. Plan for next week by identifying the best place to source these cars at auction. Use your Inventory Manager to see which of your top volume, gross and turn cars you are under stocked in. Over/ Under Stocking Guide (2.2) and see what you need to source. Find them at local auction. Drill down past the make/model (Are there certain years, trims, or price bands you excel at?) 2.2 FirstLook s Over (Under) Stocking Report

12 WEEKLY TASK LIST 4. EXAMINE PREVIOUS WEEK S WHOLESALE PERFORMANCE FOR YOUR SLEDS. Make appropriate adjustments in the appraisal lane when evaluating immediate wholesale cars to reflect seasonal trends (be on the right side of the June Swoon ). Watch your immediate wholesale profit/loss on your Inventory Management Dashboard (2.3) and keep a window that is right for you to maintain an effective closing rate. Look at resources such as the Manheim Wholesale Value Index that will be a good predictor of market trends both month over month and comp sales. Also look at your Profitability by Buyer Report and watch for changes in P&L for each buyer. Some buyers may not be adjusting for lower demand by paying too much, some may be too conservative and could be getting you more inventory. 2.3 FirstLook s Store Retail Performance Dashboard

13 WEEKLY TASK LIST 5. TOUCH EACH UNIT THAT IS IN THE TOP BUCKET OF YOUR AGING PROFILE. Does it start? Does it smell? Good pics? All the normal stuff. See #3 in the daily tab. 2.4 FirstLook s Store Command Center - Inventory Aging Profile Report

14 MONTHLY TASK LIST Compared to your daily and weekly tasks involving pricing, appraisal and stocking performance, your monthly tasks include monitoring the performance of all pre-owned retail activities and using that data to make smarter decisions. Every month you should understand the value of your pre-owned operations has on your overall financial performance. 1. Analyze immediate wholesale profit and loss. 2. Analyze your overall retail effectiveness by viewing how many vehicles are sold in the first 30 and 60 day window. 3. Look at new car sales and see how many cars got traded in from them. 4. Analyze missed deals for the month. 5. Prepare financial statement recap with your Dealer Principal.

15 MONTHLY TASK LIST 1. ANALYZE IMMEDIATE WHOLESALE PROFIT AND LOSS. How close to $0 on the positive side did you get? How many deals did you save/miss by being too aggressive/ conservative on my numbers? Manage the managers involved. Don t knee-jerk and start giving $500/car more on every opportunity. Analyze the numbers and create an individual action plan for the people that are affecting the data the most. Your most expensive investment is PEOPLE - use this data to help you manage them. 3.1 FirstLook s Immediate Wholesale Report & Analysis

16 MONTHLY TASK LIST 2. ANALYZE YOUR OVERALL RETAIL EFFECTIVENESS BY VIEWING HOW MANY VEHICLES ARE SOLD IN THE FIRST 30 AND 60 DAY WINDOW. Retail Sales Efficiency: Those units that are sold within a 60 day window. Dealers should thrive for an RSE of: 85% This is a better health indicator of a used car department than the traditional gross/volume metrics we all grew up with. They tell the tale of the modern dealership s efficiencies. Looking at this report, you can see if your pricing strategy is being executed by the average grosses per bucket. You can see what type of inventory is causing the most wholesale giveback (green light vs. red light), separate the profitability of trades and wholesale. 3.2 FirstLook s Retail Inventory Sales Analysis Report

17 MONTHLY TASK LIST 3. LOOK AT NEW CAR SALES AND SEE HOW MANY CARS GOT TRADED IN FROM THEM. Compare numbers, formulate action plan for getting this number higher. Look at click through rates for new cars. Are you advertising new cars with actual photos or stock? Are you adding packages and pricing with discounts to draw in customers? 3.3 FirstLook s Click Through Rate Analysis

18 MONTHLY TASK LIST 4. ANALYZE MISSED DEALS FOR THE MONTH. Anything there? Post mortem... what would I have done differently? Use Group Level Make A Deal to link green light car deals to trades that were appraised elsewhere in the group. 3.4 FirstLook s Group Level Make-A-Deal

19 MONTHLY TASK LIST 5. PREPARE FINANCIAL STATEMENT RECAP WITH YOUR DEALER PRINCIPAL. Go beyond the average gross/volume discussion. Separate aged wholesale from immediate wholesale. Look at service department profitability and time to market. Is there justification for another recon tech to help get cars through service quicker? Will a new photo process help our time to market? Look at profitability by age band and base success off sweet spot and retail sales efficiency. Separate trades and purchases and discuss changes to buying strategy. Adjust buckets group-wide if you are seeing trends in your Front End Gross (FEG) as it relates to age. Are we missing opportunities because we are too slow in adjusting prices? Are we sacrificing FEG to turn units too quickly? How does our auction performance for trades affect my closing rate this month? Find the balance and chart a course for next month.

20 RPM MANAGEMENT CADENCE DAILY, WEEKLY, MONTHLY TASKS DAILY WEEKLY MONTHLY 1. Analyze Sold Units from the previous day 1. Examine wholesale results from your biggest local sale 1. Analyze Immediate Wholesale Profit & Loss 2. Analyze Appraisals from previous day 3. Execute your pricing plan by aging buckets 4. Assess Time to Market, and Low Online Ad performance 5. Analyze screen run lists and online wholesale market 2. Analyze missed deals for the week 3. Assess your current core inventory stocking levels 4. Examine previous week s wholesale performance for your sleds 5. Touch each unit that is in the top bucket of your aging profile 2. Analyze your overall retail effectiveness over 30 and 60 day windows 3. Look at new car sales and how many cars were traded in for them 4. Analyze missed deals for the Month 5. Financial statement recap with your Dealer Principal

21 SUMMARY We hope you find this RPM Management Cadence useful in your daily operations. Retail Performance Management encompasses the best practices developed - on the front line - by the highest performing stores and groups within FirstLook s customer base. It s not built on the philosophy of a single individual; rather, it represents proven innovations by the best of the best who are appraising, pricing, stocking, and selling cars every day. At its core, RPM is built on the following principles: 1. Any retail market is driven by a combination of both high and low margin products. The key is understanding which is which, and stocking the optimal mix of these products for the store. 2. The highest performing stores have a retail first mindset. The best of the best approach every vehicle by first determining its retail potential. They attempt to retail every car possible by analyzing the market and their history to ensure retail success. Whether assessing a trade or auction vehicle, the driving force in determining value is the price that will turn that vehicle quickly while maximizing gross profits. 3. Groups that operate as a cohesive team (rather than as a collection of independent, if not competing stores) have an obvious, sustainable, and quantifiable advantage over groups that do not operate as a team. RPM enables groups to harness the power of size, volume, coverage, and market presence to allow them to be much more nimble, flexible, and efficient. 4. The difference between success and failure is tied directly to the level of visibility you have into your pre-owned operations. Visibility into group performance, store performance, and Online performance - every minute of every hour of every day.

22 ABOUT FIRSTLOOK For more then a decade, FirstLook has been working with thousands of Automotive Retailers across the country address these challenges, and in doing so, have identified critical innovative retailing practices designed to improve both gross and turn. These cutting-edge practices have since been incorporated into our on-demand software solution, Retail Performance Management (RPM). Unlike conventional Inventory Management Systems, Retail Performance Management is designed to drive your numbers through the combination of advanced analytics and embedded cutting-edge practices from the best retailers in the industry. CONTACT US sales@firstlooksystems.com