I am again continuing the mini case study focused on the objectives established, and challenges faced, in building processes to measure and manage OTDBs in the operating departments of an NCM client dealership group. Today, my focus is on one of the greatest vehicle sales opportunities that most dealers enjoy, but fail to capitalize on.

At one point during this engagement, I had asked the dealer principal if he was satisfied with the strategies being employed to develop vehicle sales business from customers who were visiting the service department. Obviously my question hit one of his hot buttons. “No way,” he answered vehemently. “Depending on the store, we have 25 – 60 customers arriving in our service drives every day. And, according to my CFO, we’re only paying out 3 - 4 referral spiffs per store per month to the advisors and techs. It seems like we should be selling a lot more vehicles than that, based on the service customer count.” Since I totally agreed with him, I suggested that we do some basic research and develop a "Plan."

The dealer and I split up the dealerships for our research, and then we did an independent telephone survey with the GMs, sales managers, and service managers at our respective stores. We asked each of the managers the same question: “Of all the vehicles we see in the service department every month, (a) what percentage should be replaced based on age and mileage; and (b) what additional percentage would make great additions to our used vehicle inventory?” When combining the two percentages, the lowest number we received from any of the respondents was 15% and the highest number was 30%; the weighted average number was 23.5%. To begin developing our Plan, and being optimistically, but realistically, conservative, the dealer and I agreed that we could (and should) consider 20% of our monthly service customer count to be additional OTDBs available to the vehicle sales department.

We then made some assumptions for the foundation of our Plan to capitalize on these additional OTDBs:

• A written process would be developed detailing (1) why and when we would launch this new initiative, (2) the clearly defined expectations of this new initiative, and (3) all of the strategies and tactics on how this initiative will be completed.
• A sufficient number of vehicle sales personnel at each dealership would become available and committed to participate in this initiative.
• The sales management staff at each dealership would wholeheartedly take ownership of this new initiative.
• The service management, sales, technical, and support staff would wholeheartedly support this initiative.
• No less than one-third of the service OTDBs identified, if approached in the right manner in a timely basis, would be willing to set an appointment to discuss replacing their current vehicle. Because these appointment customers are currently doing business with us (we have a relationship with them), the delivery rate should be at least 50% of appointments.
• The results of this new initiative would be accurately measured, inspected and score-boarded on a daily basis.

The varying details of the Plan, by size of store, are as follows:

How’s the Plan working, you ask? Just as you might expect with any new initiative! A few of the dealerships within the group are producing excellent results (exceeding Plan), a few are at or close to Plan performance levels, more than half are between 50% and 75% of Plan performance levels, and about one-quarter of the stores just can’t seem to get it together. But here’s what we do know that we didn’t know before: the Plan makes sense, is truly achievable, and we are NOT changing it! The resulting numbers are too significant.

Measuring and managing OTDBs is a topic that is discussed in the Management Training courses offered by the NCM Institute Center for Automotive Retail Excellence. To view the content and upcoming schedule for these NCMi courses, click here.