When your sales are hurting, do you want the placebo or the cure?

One of my favorite adages is “Figures don’t lie, but liars figure.” In our work with dealership BDC and Internet departments, we are often reminded of this when we analyze dealership performance.

As a result of the online shopping revolution, dealers and managers are being inundated with many new statistics and measurements, and they are almost always subject to interpretation by whoever is providing them. There are so many reports, with so many numbers that dealers are rightfully nervous about the real relevance or accuracy of the things they are being told. As one dealer told me recently, “Yes, they show me all these great numbers, but why hasn’t my market share gone up if I’m doing all these wonderful things?”

This phenomena even extends down to the more basic dealership specific measurements. Very recently, a dealer who I have known for a very long time asked me to take a look at his dealership’s Internet sales performance. What motivated his call was some concern he was having about the accuracy of the sales reports he was receiving form his Internet Manager. According to the information he was being given, his team was closing over thirty percent of their Internet leads. This sounded great, but his overall sales numbers weren’t going up, his sales effectiveness had actually decreased, and some of the factory provided reports he was receiving showed a much lower rate.

We pulled all the numbers for the past year, then cleaned them up by taking out the duplicates, misreported sales, and other inaccurate classifications. Once that was done we recalculated the dealership’s performance and found out they were really running at just under a ten percent closing rate for their Internet leads. Considering the average for dealership Internet lead closing rates is estimated to be around eight percent, this wasn’t too bad, but certainly nowhere near what the dealer was being told.

How was this happening? It was all in the calculations. His team was classifying sales made to walk-in and phone prospects as Internet sales, and thus overstating their real performance. They were also subtracting a large number of Internet leads from their calculations by marking them as “bad,” for no apparent reason than the fact that these prospects didn’t respond to them. Finally, they were recording sales made to prospects who submitted online credit apps after they had already visited the dealership as though they were fresh Internet leads. So, while the reports were showing 100 leads and 30 sales, what we found was really happening was that there were 150 leads, and only 14 sales.

Unfortunately we see a lot of this when we evaluate dealership performance. A lot of dealers aren’t looking hard enough at the information that is being provided to them by other people, both internally as well as outside vendors. We have many dealership clients that are doing a great job with their Internet prospect, and regularly closing twenty to twenty-five percent of their leads - and these reports are based on accurate reporting of leads and sales. But they’re doing this with a great team, that’s well trained and uses a solid process to work these prospects, not just by pretending they’re doing it.

If you’re being told you’re doing a great job and you aren’t seeing that great job reflected in your total sales or market share, don’t be afraid to challenge the numbers and see if they’re really reflecting your results. If you find out that there is a problem, you can take the steps necessary to fix, or “cure” the problem, which is always better than taking the placebo approach of pretending it doesn’t exist!