The real driver of vehicle sales isn’t your closing questions, or that new online buying web-app, it’s access to credit. So, if your dealerships only goal for 2017 is to “sell more cars,” you might as well just tell your marketing company your goal is to “spend more money on digital ads.”

With so many things out of dealers control, even if you do sell more cars you’re not guaranteed to make more money. Just for fun, how about 3 things dealers have no control over that impact sales:

1. Interest Rates – Until we understand the impact the end of QE and the Fed's December rate hike will have on auto loans, there is no way of knowing if we’ll continue to see 0.9% interest rates. Rates have been low for so long, at this point even 3.9% seems high.
2. Consumer Confidence – I had a Honda dealer tell me the #1 predictor of Honda sales YOY is Consumer Confidence. It might be solid now (up 4.3 points in December 2016), but we all know confidence levels rise and fall with the tide. We’re only starting to understand Millennial consumers, although one thins clear, they're not going to spend more than they have to.
3. Whatever Stunt the OE’s have for 2017 – Emissions, ignition switches, Trump Tweets. You get the idea.

If selling more cars is a terrible goal, what are good goals? Let’s stick with the theme and pick 3:

1. Take One Less Loser Deal Per-Month – Think about the impact to your bottom line if you took 1 less loser deal of -$1,000 or more per month. It’s not just the $12,000, it’s the $200 in commission per-deal you pay your sales people for losing you money, and the loss of income from selling the car at a profit! If one less deal a month keeps you from your OE bonus, you need a new GSM.
2. Make More Money – This is a no-brainer. Do you care if you sell 1,000 new cars, or 500 new cars if you could make more money doing it? The OE’s might not be too happy about it, but it’s not like they asked dealers when they started investing in all that Ride-Sharing technology.
3. Eliminate Waste – I’ll give you a place to start: ask your controller how many LAW forms you purchased in 2016, then subtract your total vehicle sales, and see how many extra forms you paid for. At $2.50+ per form, it adds up quick with all the miss-aligned documents, re-prints, and re-signs, and that’s just one document. How many FEET of documents do your customers sign again?

The point is, having a goal that you can’t fully control is only going to get you as far as you would have gotten anyway. Your sales team should be selling as many cars as they can, it’s the whole reason they exist.

A goal should be something to strive for, something to achieve above and beyond your normal day-to-day. Not what you’re supposed to do anyway.

And who knows what could happen? Maybe interest rates will remain low, Consumer Confidence will sky rocket, and Trump will send enough Tweets to create 2 million new jobs and the SAAR will hit 25 Million. Then when everyone is trumpeting their achievement of “selling more cars,” it won’t matter because everyone sold more cars. You’ll have made more money while doing it.

I feel like I need to start this post with a joke about “Captain Obvious,” but since I’ve had this discussion with several dealers in recent months I’m not so sure.

Regardless of what your short-term goals are (better inventory management, improving lead conversion, reducing operating costs, etc.), the real goal is to improve how much cash you put in your pocket at the end of the day.

So, in that vein here are 3 ideas to improve cash flow:

1 – Tighten Up Your eContracting Process
The more efficient your F&I office is with processing deals via eContracting, the faster you get paid (in theory anyway). Improving the efficiency of eContracting can be as simple as reviewing what forms are available in your local market, to more complex process changes like who is responsible for sending wet-ink forms to lenders each day.

2 – Monitor Floorplan Effectiveness
Do you know how many vehicles on your lot qualify for Floorplan that are sitting unleveraged? With highly favorable Floorplan interest rates and payment terms available from both captive and non-captive lenders, there’s no reason not to leverage your inventory for cash. Because your inventory is always moving, consistent attention is required to take advantage of favorable floorplan rates without letting aged inventory eat away at your profitability.

3 – Stop Rolling Un-Funded Deals
Yes, we’re talking about you Florida*. And yes, you can still hit 40% service contract penetration on 250 new cars a month without playing some paper-shell-game. You might find some resistance from your F&I managers, but if they can’t sell product to qualified buyers on a funded deal, let them know Verizon is hiring.

More so than any other process, how you manage cash has an incredible impact on your business. Implementing a new process will help plug leaks, but without ongoing review and improvements new leaks will always spring up.

If you have a better way to improve Cash flow, or a reason why you’ve seen efforts like these fail in the past, leave a comment below. I don’t know everything, just ask my wife.

*(Something about states with SEC Schools seem to be the biggest culprits here.)

I don’t sell CRM anymore, but since I work with data I’m a little bias when it comes to over-input. Yes, dealers are creating a tremendous amount of data. The problem is, most of it is junk. Data is like a 1958 Tops Baseball Card Complete Set. You have it all, or you don’t and no one cares.

Dealers need their people to use CRM (obviously), more importantly they need their people to use it well. Here are four reasons to improve your CRM utilization in 2017:

1. It Works
   • I get that a “roll-a-dex” was once a valuable piece of business equipment, but if a sales person says “CRM doesn’t work” ask them what they know Salesforce.com doesn’t. With 288% gains in the past 5 years, the idea that a powerful CRM can’t help small business went out the window with 4 squares and VW Diesel.
2. It Keeps Your People Honest
   • Even today, there are dealers out there who don’t have their employees making phone calls that integrate with their CRM. It’s easy to spot, because half the sales people tend to “make” their phone calls between 11 and 11:15AM. Phone call reporting at the time the call was made is immensely valuable: if your prospect isn’t available at 11AM, have the follow up call scheduled for 2PM the next day. I’ll bet even your off-brand CRM’s can schedule follow up based on time-of-day.
3. You’re Guessing Without Data
   • You'll need facts to make decisions in 2017. If your people don’t enter every single phone call into your CRM, you’ll never know how effective your sales people are on the phone (I can’t believe I have to say that). If you don’t want to pay for texting-integration with your CRM, at least give your sales people the option to use “Text” as a lead source, or “Closed via Text” so you can track how texting impacts your sales.
4. They Don’t Come Cheap
   • If you improve your CRM utilization for no other reason than you’re paying for it, well that is as good a reason as any. CRM decisions take months. Demos from potential vendors, then demos of the “new” platform from your current vendor, then NADA demos of the same thing one more time. Then you finally decide and you wait 3 months for your first day of training. More effort is put into trying to save $100 a month on a CRM bill than ever goes into making sure your people are using it. Be better than that.

One word of caution: if you push your sales team to enter every interaction into your CRM, you may need to define new performance metrics. If you have a closing ratio of 30%, but your sales people don’t enter every up or lead they receive, you should expect that closing ratio to go down when you start getting all the information.

If you’re team’s productivity is tied to their comp plan, you may need to evaluate their pay structure after you begin the new process. Your team’s output won’t change, the reports simply haven’t been reflecting their real productivity, and it can take some adjustments to get it right.

If you would like to see how ƒrogdata uses analytics to help dealers analyze and improve performance and profitability, check out frogdata.com for more info.