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Maximize Your Automotive ROI: Expert Insights with Dan Trinidad
Join Dan Trinidad, Founder and CEO of Benchmark Data, as he dives deep into the crucial question every business faces: "What's my ROI?" Discover practical tips on how to optimize your marketing strategies, enhance process efficiency, and leverage software systems for better business outcomes. Whether you're a business owner, general manager, or executive, this video will empower you with the knowledge to understand and improve your return on investment across various marketing channels.
Key Highlights:
- Understanding ROI in marketing and how to measure it effectively.
- Strategies for enhancing operational efficiency to boost ROI.
- Insights on integrating software solutions for optimal performance.
You can’t fix a process problem with marketing.
The question I got most when we were just doing consulting was, what's my ROI? I would most likely to be talking either to the owner or the general manager or a C-level executive, and they want to know what their return on investment is.
There are different marketing channels and different marketing campaigns, and what we always told them is until you are running as efficiently as possible, both in your processes and with your software systems, we're never going to know what your true ROI is.
If you neglect your process and you look at your ROI, and your marketing and its inventory management, lead handling, or internal sales chain that's causing the biggest leak within that flow, that's going to cost you more than what your marketing dollars are. So, 100 percent of the dollars spent on the process is going to improve the dollars spent on marketing.
Why do we spend money on marketing instead of process?
I think it's twofold.
One, it's easy to push the bug down the road, right? If you're if you consistently don't hit a goal and you pull the marketing lever and it doesn't work, you're constantly focusing on something that's external, and it's not your fault. So, the accountability is not there. In this industry, a good management team has to be accountable and has to accept what, you know, what the data is pointing them and where to look.
I think the second reason is maybe they don't know how to improve a process. There are not a lot of systems in place within this industry that could be and should be that some of the top dealers execute. and I don't think they really have the information or know-how on what to do when something's not performing internally if that makes sense.
What do you see the role of management in this?
I think the managers, it really depends on how they came to become a manager. You know, unfortunately, in this industry, they'll promote someone who's a really good salesperson and maybe has a very good internal process and how they look at us, you know, their own personal achievements, and they'll be promoted to a manager the majority of the time.
That doesn't translate on how to educate or how to, you know, groom someone else who's coming up.
I think managers, their perception is they’ve got to do the job, just get the job done, qualify and bring them in. It's more of a hard nose, get your job done instead of nurturing. And, in today's day and age, the consumer is different. You’ve got to service the client. You’ve got to ask questions of the client.
It's hard to groom salespeople who have been doing this for years. It's easier to work with some of the newer guys. So, I think it's just a challenge.
And then it's called inspecting what you're expecting. Once they get to that granular level of inspecting, I think they're going to see a better outcome or change.
Simple adjustments can make all the difference.
It's the little things that make all the difference. What we often see within a dealership is the easiest thing to have an impact on your sales that month is your internal sales chain and the management of your sales team.
For example, I have a client this month and we're talking about how come we're not hitting our 150 goal. It’s a metric they've been trying to achieve in April for years. Now, we've grown from one hundred and eight to one hundred and fifteen. Now, this year we're tracking one hundred thirty-five.
And the conversation went, “I don't think we have enough of the market or I don't think we have enough leads to achieve that goal.” But when I showed him, we had two new salespeople and the bottom sales performer usually performs about 30 percent less than your top sales performer. In this case, the two bottom salespeople were performing 25 and 30 percent less than the store average. Yet they had the most ups and most walk-in distribution. If they would have been closing just at the store average, they would have had 14 more sales month to date. And that was last week. That would put them at exactly one hundred and fifty sales.
So, it's just managing the walk-in distribution. If you're managing the up distribution and just looking at who's taking on those opportunities, a simple tweak like that can make all the difference in them.
What are some of the first metrics you look at in a dealership?
The first thing we do is we do a funnel review. We measure the amount of users, the VDPs, which is an indication of marketing. Then we measure their VDP to leads, an indication of inventory management. Then we measure leads to visits, an indication of lead handling, and then you're in-store visits to closing to sales, closing percentage.
The reason why we do that is every dealership has a different weak point within their flow, and it's really, really crucial that the dealership knows where they're lacking in that funnel and they prioritize that part of the funnel to start correcting.
It's always process, whether it's a marketing process or an inventory process.
One of the things that I've noticed that most successful dealers do is inventory management. I think that has the biggest impact on sales. It's usually recon time, I think, is number one. Some dealers are really happy at five to six days of reconditioning time, whereas others are above ten. But, you know, I hate to break the news, but some of the top dealers are two days, two to three days in reconditioning time. Their time to the line is instant. They buy that vehicle for day one, and there's really no depreciation by day two or three, whereas with another dealer, they buy a vehicle, they put it out on the lot 15 days later. They're already in the values are very much different.
I think that it's really important to find what part of that funnel is impacting your ROI the most. Focus on it, and I guarantee it's a process issue that can be improved.
What are some of the most impactful sales metrics a dealership can look at?
Here's another interesting example. We have a young salesperson in a dealership versus an experienced salesperson in a dealership. We like to measure ups to demo and percentage ups to write a percentage. Those, I think, are the two most impactful metrics that a dealership could look at with an individual salesperson.
For a store up to the demo, a good average is anything above 75 to 78 percent. But the most important metric is that they get them to the write-up phase, and what we see is when a young salesperson doesn't get them to the write-up phase, it's usually because they're not qualifying them properly, they're not gaining their trust. Maybe during the demo ride, they're not asking the right questions. It might be a flying TO and they're not answering the questions. Does he have a trade-in which is payment? How much has he got down? Does he have a co-signer? When they come back to the dealership and they're sitting down with the prospect and, you know, they're going to go to the manager, a lot of that information hasn't been gathered and there's really no bond or trust, so the consumer is reluctant to give that information.
We recognize that's the number one metric that really increases sales as your ups to write a percentage. If it's an older sales rep or a more experienced sales rep with a low ups to write a percentage, what we notice is they like to overqualify. They don't need the manager's help. They know they have all the answers. This person doesn't have good enough credit by a car. They're not going to qualify, so they kind of rush them out.
What we see is consistent in both of them is they go through that process quickly, that that customer leaves and they're standing at the door onto the next customer. The follow-up process and feedback percentages are low, so they usually get the most opportunity and the lowest ups to write up and the lowest feedback percentage.
I'm telling you that impacts the dealership, you know, huge, greatly a month over month. just by fixing or analyzing those two metrics with your sales team, you can have a much different month.
And that's something that you can implement today. That's not something you have to wait for, you know, next month or something different if the manager is looking at those metrics and they understand what's impacting their sales, that can be turned and changed overnight.
Data should not be a weapon.
For years, we gathered the data manually, and we were we were a boutique consultancy. We would spend a lot of time within a dealership and provide this information and try to help them, you know, groom along the sales route. Now we have a software that's automated that does creates these reports for them on a daily basis and sends them a benchmark alert and lets them know this individual is underperforming in this specific metric with a for example, here's you can do a B or C.
What we're what we're updating now is an accountability factor where the manager who's in charge of the department will get an alert and they would have to put in a note and close out the alert to just to show that someone took action on what's happening. It's no longer taking a lot of time.
It's presented to the dealership, you know, for them and let some know what's wrong and potentially how to fix it and gives them the opportunity to close out what we call an open ticket or an open alert so they can address the issue. Now, understand that not all changes are going to have a huge impact. It takes time.
I also want to say that data should not be weaponized. When a dealer first starts analyzing data and managing their store by leveraging data to the best of its ability, you have to give it time. You have to give it three to six months for everyone to make an adjustment and try to improve.
As soon as you weaponize it, it has a negative impact and no one wants to be graded at that level. Then they start to skew numbers.
Who should be accountable for this?
You have to have the trust of the employee. First of all, it comes from the top down. You need an owner of the solution, regardless of what solution a dealer invests in, whether it's a marketing campaign or a website or our software for process management. You need an owner within the dealership to own the solution who's going to manage the process, meaning he's going to manage the alerts and manage the timelines.
That person has to be a voice of reason and of trust. The employees have to trust the data and trust the person that's delivering the information.
I usually think it's not it doesn't fall on the employee when they can improve. It's usually management because management is in charge of hiring, right? Making sure to hire slow, fire fast, making sure you got the right people on board. And then it's up to the management to provide that nurturing and education for them to get better.
I think the employee should kind of have almost free reign in the first 90 days to look at their data, find out what their weak points are, and try to improve upon it, but it's imperative that the dealership has something in place to help them grow and grow.
You know, we find oftentimes where, you know, dealerships overinvesting in certain parts of the funnel, right?
Let's say they're overinvesting in the bottom part of the funnel and they can save five, ten thousand dollars a month and they wouldn't have any impact on their sales.
A lot of times when you find that, they want to know what's the next marketing campaign that we can reinvested in because we still want to sell more cars. My answer to them is to find the leak within your sales chain. And if it's in sales and development, invest in that.
You know, if the managers are not equipped to educate and bring that salesperson along, bring someone who can, and I think when they adapt that mindset, they're going to get a better outcome. They're going to get much better results for their investment.
What is the ideal client for you?
I would say it's a dealer, one who has to be data-driven. They don't have to completely understand how to be data-driven or know what to do, or how to be data-driven, but they have to be of the mindset that we want to make decisions based on empirical data to improve. Number one.
Number two, they have to have someone within the dealership who's going to manage that process as an account and is accountable for managing that process, someone who's willing and able.
When we do a demo for a dealer, we have a discovery call. We like to ask who within your dealership, "Can you see in this position, and is this person available either in a week, biweekly, or monthly for monthly meetings?"
We can go online and we can onboard and continue to educate that person once they have that in place and they can visualize someone that they that they trust. That's an ideal client for us.
And as long as that person is transparent, willing, and able to look at the data, you know, make adjustments accordingly and educate, then then it's going to be a really good relationship, and results are inevitable. It all really depends on how long it's going to take us to achieve that goal.
And so that's pretty much it. It all really depends on how long it's going to take us to achieve that goal.
How do you stop salespeople from “gaming” the data?
On our end, you know, that's one of the main things we experienced, and especially when we onboard a new client, they want to know how accurate the data is or we'll get a lot of pushback that it’s not right.
Within our system, we have an auditor and we can see when things are kind of fudged or not followed accurately, whether it's leads, whether it's visits, b-backs, BDC appointments, or appointment shows.
In our dashboard, we have CRM data and then we have benchmark data and we hold them side by side. Oftentimes those numbers will be different anywhere from 10, 15 percent. In the beginning, it could be up to 40 percent.
In utilizing that auditor, we're able to show, well, this person didn't use a stop, put in a stock number, this person said this that the appointment arrived. It was an appointment, but they put the appointment in after the visit arrived. It's probably a visit, not an appointment.
So we're able to break it down, and we use that as a teaching tool and a management tool for the manager to go in and make sure everyone's trying to follow the process accordingly. It takes us a good three to four weeks to implement this process and have everyone on board.
So it's important that the dealership follows it. They're of the mindset that they want to get as clean as possible and get the data as accurate as possible, but we actually have some tools on our end that we can kind of see what's going on, even if they're not utilizing the system the right way.
The importance of data in the sales process.
Most dealerships, when they think data, they think in terms of marketing. They're not measuring their internal processes, first and foremost.
Once you start doing that, you have to understand that you're already ahead of the curve. Now you're starting to see where you can improve internally, and once you accept that and understand that every dealer has similar issues, every dealer has holes in different areas of the processes.
All you have to do is say, how do I focus and how do I set them up for success?
And again, I think that's management and, you know, C level, you know, a problem or challenge to try to solve. How can I put my team in a better position to succeed if the metrics aren't where I want them to be?
How many of your process metrics are universal vs dealer-specific?
We know that the OEM will have some specific data and we can use that as a guideline, but we pull historical data into the dashboard and we'll do a 90-day average of their performance.
And then according to what their goal is for the month, we'll let them know throughout that sales chain what percentage, what type of improvement, improvement by percentage in each part, each part of that funnel that they need to improve upon to meet that goal. So instead of saying every dealership needs to be here or every dealership has to follow this OEM guideline, we have to first figure out where you're at, what's your starting point and how can we improve upon what you're doing. Then we can start saying here's an OEM percentage or here's an industry standard.
You know, we see metrics up and down. For lead handling, I have a BDC team that performs leads to show at 34 percent. I don't care what part of the season it is. Consistently leads to show, not leads to appointment, leads to shows at 34 percent. That's an that's an excellent number. And, you know, you have other dealerships that are at 12 percent.
So you have high and you have low. I think a good number is right about 28 percent, that's a good low benchmark, I would say, for any dealer.
There are some industry averages that I've seen throughout the years. There are some OEM recommendations. But then I think the most important metric is where does a dealer sit at now and how can we improve upon his personal performance, you know, in the next 60 to 90 days?
Can you define hard and soft conversions?
During our consulting time and the majority of the time we would sit in meetings, and we’d spend hours with the marketing team and with the dealership ownership and management. We'd be going over metrics such as cost per click, click-through rate, impression, impression share, and influences. These are five soft conversion metrics, and we would talk about them through exhaustion.
I would sit there and tell the dealer we're having another month where we're underperforming by 20 percent. The marketing team or agency is telling you how great they're doing in all these soft metrics.
As a dealer, if you're not investing in soft metrics. They are important, but that's for the marketing team to focus on and understand their internal performance has nothing to do with the dealership.
The dealership is investing in hard conversions. That's leads, visits, and sales. That's what they should care about. That's it.
Why is that? If all the soft conversions are performing, all of them, and they're all coming to your website and they're not converting into leads, then that's a conversation that they want to say, hey, let's take a look at your inventory. If they're coming to your site and they're looking at your VDP and they're staying, you know, above two and a half minutes, three minutes on a VDP page, that's a quality visit. If they're not becoming a lead, which is a hard conversion, why is that? What's wrong with our inventory? You know, when was the last time we updated pricing? Do we have the right pictures? What was our time to line?
Now you could ask those questions internally, but the dealerships spin themselves in a circle month after month, focusing on these soft conversions. They don't understand. They're not a marketing agency, nor should they want to be.
Another thing I would tell you is I would never invest in impression share unless my conversion rates and unless my leads, my VDP to leads is above 15 percent on any specific campaign. I'm not going to invest in impression share because you're all you're going to do is spend more money on visitors who aren't going to convert, and that's a great way to spend your money quickly.
Another example is influences. You know, we have a saying, if you can't measure it, you can't manage it. Not all multichannels are actually influencing a sale, so that's just another area a dealer really has to be careful with.
What they want to do is trust their marketing agency to make sure your soft conversions are there but focused on your soft conversions are there, but focused on your hard conversions, because that's what's really ultimately going to make a difference with the new dealership.
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