Measuring your Key Performance Indicators (KPIs) is crucial to running an effective and profitable dealership. These metrics will help you better understand how well your dealership is doing as a whole, what areas need improvement, and how efficient each of your departments are.
The trick comes in measuring the right metrics if you want your dealership to be performing at its best. While there are many KPIs that your dealership should be measuring, here are the ones your dealership should be paying close attention to:
- Net Profit Sales
- Gross Profit
- Absorption Rate
- Days to Break Even
- Department Contributions
- Employee Effectiveness
- CSI Scores
Dealership Net Profit Sales
Do you know how much profit your dealership is bringing in in relation to sales? Determining this will tell you how efficient your dealership is and will help you make better financial decisions in the future to help you remain more competitive and successful. This is not the same as your gross profit, which measures how much your dealership is bringing in before expenses.
How much revenue is your fixed ops department bringing in? In an ideal world, the fixed ops side of your department will have a 100% absorption rate, meaning your fixed ops side is bringing in enough revenue to cover the costs of the dealership. Over the past few years, the average absorption rate for dealerships is less than 60%. Ensuring that your service lane and your parts departments are exceeding their KPIs can help your entire dealership reach a higher absorption rate.
What Are the Contributions of Each Department?
For the dealership to be successful, each department within the dealership needs to be successful. Every department within your dealership needs to have its own KPIs that measure how efficient that department is. How much does each department contribute to the dealership’s overall gross profit?
How Many Days to Break Even?
How many days does it take your dealership to break even every month? The more efficient your dealership is, the quicker you will reach this number each month. Having a good absorption rate can help you get to this number quicker.
How Effective Are Your Employees?
It is important to know how efficient your employees are to ensure they are contributing to your dealership’s overall success. Your employees are an investment in the growth of your dealership, but that investment costs money. What is the net profit of each employee? The gross profit? How many sales are there per employee?
Your entire dealership, regardless of department, should be calculating CSI scores. Customer satisfaction drives sales and will encourage consumers to return to your dealership, whether it is to purchase a new vehicle, service their car, or buy parts and accessories. Your CSI scores give you an insight into your customer’s experience and expectations. They can also prove to your manufacturer that your dealership is performing, which can determine the future inventory your dealership receives.
Your Dealership’s BIGGEST Untapped Resource
General Managers are the drivers of success for the whole dealership. Armed with the right metrics and a goal-oriented team behind each department, there are no goals your dealership can’t exceed.
One of the most underrated departments is the part department, known as the “untapped goldmine” by successful dealers. By modernizing your parts department and investing in eCommerce, your parts department can be the unsung hero of your dealership. A successful parts department can help your dealership meet these top KPIs, including a higher absorption rate.
RevolutionParts provides parts departments a modern solution to selling parts by simplifying online order management, providing advanced reporting and access to a large online market worth $16 billion.
Want to know more about how your parts department can help you meet and exceed dealership KPIs? Download our FREE guide to learn how to HULK SMASH Your KPIs.