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Is The Juice Worth The Squeeze?


Time is an often overlooked, and costly, asset in business operations. A company will often try to save a few bucks by bringing a service in house. (We'll stick to reconditioning for this example.)

Sometimes, it works great. The service team and the used inventory manager work hand-in-hand to make used vehicles frontline ready while ensuring that paying customers don't wait days for their repairs. But I'm sure many can identify with the times it didn't work so well...

Have you ever felt the tension in the air while the service director argues with the used car manager about the value of taking care of customer services over reconditioning a vehicle no one has purchased yet? It's a very valid concern. If customers are waiting days for repairs, they'll stop coming back and the dealer will lose repeatable revenue. But, studies show that a dealer loses an average of $85 per day in holding costs and potential front-end gross for each day that a vehicle isn't retail ready. If it takes a week, the dealer loses nearly $600 to make the same amount in service gross profit.

Does that change the way you value your time? This is the point you should be asking if the effort is really worth the return; if the juice is worth the squeeze.

The Pareto Principle states that 80% of your business will come from 20% of your efforts. Imagine your success if you took your team's valuable time and had them only focusing on the 20% while vendors service the tedious work that often put your team behind.

There isn't necessarily a right or wrong answer. Some dealers feel a personal connection to the work because it's their name on the line, while other groups, like Sonic Automotive, feel like they work best by letting someone else handle reconditioning while they focus on the 20% yielding the biggest ROI. It's all about what works best for YOU!

In short, it's important to address the bigger picture when looking at analyzing your internal efforts. You might be asking why you'd pay someone else to do something you can easily do, but you could be overlooking major inefficiencies that cost you a LOT of time and money.

What works best for you? Have you figured out the efficiency to reap the benefits of internal work or do you let someone else handle it to free up your schedule for the big returns?

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