CX & Gross

Ron Henson
What are your thoughts on the relationship between Customer Experience and Gross?
Chris K Leslie
It's a good question Ron and something that I think is going to come up more and more. I am assuming when you say Gross you are talking Gross Profit and not Gross Margins. So I think holding gross in each vehicle is a nice goal to have. However running a business based off of each individual unit is a recipe for disaster. Margins are a reality though and can be accomplished along side CX. Some might say Gross and CX can work too. I'm sure it can. But, gross is to easy to lose whereas margins are easy to maintain.
Clint Jones
Gross Profit and Gross Margin are not figures that exist independent of one another. Gross Profit determines Gross Margin. Gross Margin is a very important number in many businesses. The retail automobile business is not one of them. The primary reason for this is the fact that Gross Profit does not fluctuate with the selling price of the vehicle. A second reason for this is we do not use a Pricing Matrix or Factor (like a parts department) but rather we price our vehicles to a competitive point within our market. It would be great to be able to simply apply a 1.4 multiplier to our cost, have a 30% GP as a % of Sale, and have people flocking in to pay it. One more reason is because the use of Gross Margin to compare to Industry Benchmarks is virtually impossible because of the drastic fluctuation due to Average Selling Price. I guess the point I am making is that I am not certain how we easily lose Gross Profit while maintaining Gross Margin. At any rate, back to the question. I have though a great deal about the relationship between CX and Gross. While I want to believe that a better Customer Experience will lend itself to a higher Gross Profit, I am really not sure. When I exclude repeat customers, I am actually of the belief that there is no correlation. I am surrounded by dealerships that beat a customer half to death during the sales process, and these stores absolutely put people away. Sure their advertising expense is extremely high, but we aren't really talking to that. I believe that a favorable Customer Experience can convince a customer to do business with us, but not necessarily guarantee us a higher Gross.

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