As dealer groups grow in store count and acquire a diverse range of operational processes, cultures and technologies, store individuality must yield to group-wide standardization and consistency.
Just as each store monitors and measures its financial performance according to generally accepted accounting principles shared upward in the organization, so must they standardize workflow processes, performance monitoring, and reporting.
This means:
- Using the same accountability and accuracy yardstick throughout their same-brand stores.
- Insisting on applying this yardstick throughout variable and fixed, including reconditioning, which is an influential driver of used car department profitability.
- Using a standardized recon yardstick to ensure apples-to-apples performance measurement and reporting from store to store and group-wide
Every month, we see a few dealerships trying other yardsticks, failing to understand that vehicle reconditioning is more than counting cars faster. The risk here is settling for ease of operation and losing the ability to spot and remedy risks to profitability when something can be done to stop them.
We’re speaking here of continuous process improvement, the CarMax disruptor model — standardizing stocking, pricing, merchandising, and sales, to which each location commits.
I’m not coming at this from the dugout. I’ve been in the game for years. My Silicon Valley background with the computer and the semiconductor industries — and my direct work with OEMs like GM, Ford, BMW, Mercedes-Benz and Fiat — taught me the value of managing by Key Performance Indicators (KPIs), standardization, and continuous improvement.
Twelve years ago, I created Rapid Recon with the lofty expectation of cutting the average store reconditioning performance by half. For many dealers practicing our time-to-line efficiency standards, their time to line dropped by 80%! But even in these dealerships, ingrained inefficiencies between fixed, variable, parts, and F&I continue to put their businesses at long-term risk.
Particularly for stores within groups, different and unequal practices used from one store to the next put return on investment and earnings per share at risk.
When process, measurement, and reporting standards are shared:
- Efficiencies improve, lowering holding costs and speeding responsiveness to market demand
- Accountability for who does what next stop time and money leaks in speed to sale, margins, and sales volume.
- Lead conversion and sales retention improve as compelling customer-facing transparency and trust mechanisms enhance vehicle marketing investments.
Dennis McGinn is chief executive officer for reconditioning communications and workflow software company Rapid Recon, which he founded in 2010. www.rapidrecon.com
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