When it comes to setting up sales goals for your car dealership, there is no magic equation.
Some dealers use prior sales data, consider any changes in personnel and then make a reasonable guess as to how many vehicles they should sell the next month. Some dealers compare last month’s sales data to the same month from last year. Others use methods that require adding the number of vehicles in stock to calculate inventory turn rates.
No matter the tactic, the point is simple: there is no simple solution to project your sales goals. Whatever equation you implement, the key to achieving those goals is to calculate the activity needed.
Tracking and reporting activity is a vital aspect in understanding exactly where in your sales process each associate needs help and it will help each of your associates achieve their goals. The equation will remain the same but the numbers in the equation must be unique to each individual. We’ve all heard the cliché that “sales are a numbers game.”
Most dealers track their close ratio by comparing the number of logged ups to sales. In order to use statistics to help achieve your goals, the equation can be and needs to be more detailed and tailor-made for each associate.
For example, you set a goal of 10 cars next month for one of your sales associates (for this discussion, we’ll call him “Ben”). Let’s work backwards from there to track Ben’s activity. First, you’ll need answers to the following questions:
- How many “write ups” does it require for Ben to sell a vehicle?
- How many test drives does it take Ben to complete a “write up?”
- How many people does Ben need to greet on the sales lot to complete a test drive?
- If you rotate “phone ups” track those statistics too.
- Of those “phone ups,” how many does it take for Ben to set an appointment?
- Of those appointments, how many does Ben need to set in order to get a “lot up”?
Now you have Ben’s activity stats to help Ben understand what activity he needs to generate in order to meet his goal. For example, let’s say his numbers are the following:
- 10 sales = 20 write ups
- 20 writes = 30 test drives
- 30 test drives = 35 lot ups
- 5 shown appointments = 10 scheduled appointments
- 10 scheduled appointments = 20 phone ups
So, Ben will need 35 lot-ups each month to reach the 30 test drives and 20 write-ups to ultimately reach his projected goal of 10 sales. For phone ups, he will need to answer the phone 20 times next month to reach his projected goals.
When your dealership starts to create associate-specific goals, you’ll need to keep measurements like this in mind. There will also be other factors at work, like the “40/60 Rule” (which states that 60% of vehicles are sold in the final 2 weeks of the month).
The other key to successfully using statistics to achieve your goals is to drill your equations all the way down to daily activity. After a few months, give your associates their sales goals and let them calculate the activity needed to accomplish their goals.
So before setting up next month’s projections and goals, take a look at the stats from your activity for your current month and grind away!
~ Steve Dozier, National Director of Training @ DMEautomotive Bio:
Steve Dozier brings 15 years of experience in the automotive industry to DMEautomotive
(DMEa). Before joining DMEa, he held upper level management positions in the retail industry. Steve also owned a consulting company that specialized in CRM and direct mail, which brought in $2 Million in Sales for approximately 5 years. While serving as a consultant Steve was consistently recruited by the top 3 CRM firms of that time. Steve started at DMEautomotive in a managerial position overseeing the Direct-to-Dealer team, and is now responsible for developing and growing DMEa University; DMEa’s in-house dealer training organization. Steve is married with two children and enjoys scuba diving and boating in his free time.