It's an oldie but a goodie-you can't manage what you can't measure. If you are going to develop an Internet sales department that works, it's going to have to be based on numbers. Otherwise you run the risk of the Internet becoming a hole where you throw good money after bad or a lost opportunity to differentiate your dealership from the competition.
Already you may have faced the web site fallacy of "build it and they will come." I have seen a number of dealerships give up on solid web site beginnings rather than determine what went wrong. Without decent metrics, it's difficult to know where your Internet presence floundered. Was it at the level of the web site or was it because your Internet salesperson wasn't trained to adequately follow up on hot leads?
Two recent statistics have made me believe that the Internet is not being taken as seriously as it should be within the automotive industry:
1. Only 63% of Internet requests are followed up by dealerships' salespeople.
2. Internet prospects were, on average, contacted a full 48 hours after sending their requests.
Before we focus on the automotive metrics, let's build some foundations for using statistics.
1. What's most effective, keeping statistics by the day, week or month?
2. What works best, using a limited number of statistics or using enough to not miss anything?
3. Who should keep the statistics?
4. Should pay plans be based on statistics?
5. Should you focus on the bottom line or continual improvement?
Statistical Control
Imagine for a moment that you are racing a Formula One car at Monaco. When you hit a short straight area of track and you glance down at the dash, what do you want to see, the critical measurements or a dash filled with gauges? It's the same when you're keeping statistics. You want to see a few critical metrics. Statistics need to be kept simple but they need to give you peace of mind through an adequate sense of control. I don't believe that you should keep a dozen metrics when 5 to 7 will give you all you need to know.
And if you're driving the track at Monaco, what gives you more sense of control, being able to shift the gears five times or fifty times? Obviously the more you can shift the gears, the more sense of control you will feel and the faster you will lap the field. To a point, it's the same with statistics. If you keep statistics on a monthly basis, you really don't have a sense of control because you can only make measurable changes 12 times a year. But does that mean you want to keep statistics 365 days a year? From working with lots of dealers, I have found that keeping statistics hourly or daily does give you more control, but if you are going to manage by statistics you can be thrown off by minor variations that occur in the dealership over short periods of time. We have found that weekly statistics for most dealerships are an ideal compromise. Keeping weekly statistics gives you control to shift gears 52 times a year but it doesn't get you overwhelmed with metrics.
When it comes to keeping statistics, you want to be able to personally verify statistics, but you also want the people who are responsible for results to understand the numbers they are going to be judged by and have ownership of those numbers. It is also important that these numbers be used in developing pay plans for your Internet department. You want the numbers that are good for the individual to be good for the dealership. I call this congruity. In other words, if the employee is to prosper, the dealership will also prosper. If the dealership suffers, the employee's pay suffers.
This may make it look like I am just focused on the bottom line. The reality is that I believe people fail their way to success. If I am going to start out making bottom line demands, it is going to be tough to man a new Internet department that is feeling its way toward success. I want to focus on continual improvement and work towards trending upward. In three years, when your Internet department has a solid track record, it's going to be easier to focus on the bottom line.
If your Internet department is going to produce numbers, it's important to give the tools they will need to do the job. The dealership will need an effective web site and the sales staff will need computers, E-mail capability, database software, word processing software and digital beepers.
It's also important to understand that if you are going to manage your Internet department by statistics, you can't rush into it. Keeping metrics and managing by metrics are quite different. The first step is to keep the statistics and get comfortable that you have the right measurements. Once you are comfortable you can start giving variable weighting to the statistics and start judging general trends. It's critical that your weighting is correct if you are going to manage the department by the numbers. In other words, it's important that there be a direct relationship between how the department is actually doing and what the statistics reveal. If your statistics are weighted improperly your pay plan may not be congruent. So don't rush into managing by the numbers.
Now, let's look at the behaviors we want from our Internet department:
1. Good product knowledge, Internet skills and sales skills
2. Solid numbers of leads from your web site
3. Percentage of leads (from our own web sites and from the automotive infomediaries) followed up within strict time limitations-cold leads lose Internet deals and cost your dealership money
4. Leads converted to prospects (i.e., they show up at the dealership)
5. Test drives from Internet leads
6. Sales/delivered vehicles from Internet leads
7. Solid follow-up with potential customers and sold customers
Good product knowledge is going to be related to good training and testing to be sure each individual is up to speed. The only specific graphing to be done would pertain to test scores and classes completed. Remember that your Internet department is only going to be as strong as its weakest link. You could have a strong web site and sales system, but if the Internet sales person lacks product knowledge, it can undermine the process.
The other six numbers you want to graph can be kept easily on weekly graphs. If your staff in the Internet department are keeping the weekly graphs charted by hand, the units being measured must be relevant. This means that as a statistic goes up or down you should clearly be able to see positive and negative results. For example, if you are getting four Internet leads per week from your web site and the graph of leads tops out at one hundred, a change to six leads per week looks insignificant. It may feel insignificant but it should show up as what it is-a fifty percent increase in web site leads. So if you're getting four web leads a week, the graph should top out at 20.
Be wary of turning management by statistics into managing by quota. Managing by quota results in meeting quotas but not in the ultimate results you want. For example, if you want to develop better relationships and loyalty from customers who buy vehicles, you might determine that making more follow-up contacts will do the job. So you establish a quota of 600 follow-up messages per week to past customers who purchased vehicles in the last twelve calendar months. Within several weeks you discover that the number goes to 650 messages sent out per week. You are tickled to see the number until you discover that the staff member who has the responsibility has made 5,000 copies of the same letter and they are just filling in the person's name and sending them out. In other words, quotas will be filled but what you are looking for is effective results.
Keeping statistics to track your Internet department is going to give you more control and ultimately more Internet sales. Keep in mind one final point that will help keep this project in perspective: Actively focus on continual improvement. Some of the things you try will move you forward and some will be total failures. Developing your Internet department is like creating a whole new business within your dealership. It will be an incremental project that won't pay off instantly. I guarantee that keeping key statistics on your Internet department will help keep you heading in the right direction and speed you along the track.
Todd L. Smith is the President and C.E.O. of Target Marketing Group, the leading automotive Internet solutions provider. He is the publisher of the manual "Automotive Retailing on the Internet." TMG works with OEMs, dealership groups, and individual dealerships on creating Internet strategies. If you have specific questions or require more information about this subject, please check the appropriate box on the reader response form on page 3. tsmith@dealeronline.com