As written by Co-founder, Timothy Rushforth
Over the last decade my consulting firm has worked with hundreds of retail and importer organisations in the automotive sector on behalf of OEMs. Without exception when we ask, “What’s your target?” the answer is always the same: “X this month.” In some cases dealership target setting is broken down by model but usually it’s just the summary number, and it’s always wrong!
You could argue there are a number of reasons why this happens: the importer or OEM changes the target due to increased demand, production issues (both positive and negative), or the retail dealer adjusts them to account for any previous shortfall. All of these are reality but, in most cases, they’re adjustments to a subjective target in the first place (a gut feel, or worse, a repetition of the previous year +x% across the board).
But that’s not the reason the answer is ‘always’ wrong.
Then there’s the question of accuracy in dealership target setting. In the vast majority of cases, dealer organisations fail to use the business intelligence already available to them, ‘Seasonalisation’. By simply averaging the last 3-5 years of actual monthly sales, you can get a picture of how your business usually performs each month as a percentage of the annual objective. This can then be applied to your new annual target (drilled down as much as is needed) and adjusted for model run-outs, new model introductions, fixed and movable market factors, i.e. Christmas and New Year are fixed, Ramadan and Hajj move each year.
So using the, now average, 5-year performance ‘Seasonalisation’, you can see the effect the movable market factors had on the preceding, current and post event periods, and ‘tweak’ your annual target accordingly. Now, at least, there’s some science to the targets being set.
Even so, the answer to the target question would still be wrong. Why?
Answer: We’re in the business of selling and that is a daily affair, not a monthly one. So the correct answer is: “my target is X deals a day”.
The math is simple… and when done, the task of leading and managing a sales team becomes simpler and considerably more focused.
Here’s an example:
5 sales consultants, 670 unit annual target, 335 selling days per year
1. 670 / 335 = 2 deals a day. It’s just that <> Your Target.
2. You have 5 sales consultants with, let’s say 10 prospects each on the go = 50 opportunities.
3. You need to close 2 deals from 50 opportunities each day, and that’s only a 4% conversion ratio, which is well below most dealers’ trading performance and definitely well below most OEM expectations.
So why is the target such a grind each month?
1. Dealer focus is on the end-of-month objective.
2. There’s no urgency as, “We’ve still got 25 days to close the target” (at this point, 5 days into the month with only 3 deals on the board, you’re already 7 deals behind).
3. To make matters worse, the daily under-performance adds to the remaining task so now you’ve got 3 or 4 deals a day to do to hit the month-end target. You’ve just doubled the task.
‘Ah’ but you say,
“my DMS does not give me live, accurate performance data, my sales consultants don’t update the DMS daily (as they should), we’re too busy, we don’t have the tools to do this… etc.”
Well, now you can with the introduction of aureso’s automotive sales & CRM solution; the first component in the next generation of automotive dealer management solutions and a foot in the door to the future.