5 Types of Metrics Your Dealership Should Track To Drive Sales Growth (With Examples)
Staying ahead of the game requires more than just great cars and a well-designed showroom. To truly thrive, automotive dealerships need a deep understanding of their performance and be able to track key metrics that drive success.
In this blog, we'll explore five types of key performance indicators (KPIs) that every dealership should track. These KPIs go beyond traditional metrics like sales volume and revenue and delve into the heart of what really matters — customer satisfaction, inventory turnover, lead conversion rates, service department efficiency, and online engagement.
By monitoring and analyzing these KPIs, dealerships can gain valuable insights, identify areas for improvement, and ultimately increase their bottom line. So, buckle up as we discover the KPIs that will take your automotive dealership to new heights.
Table of Contents:
Tracking Sales and Revenue Metrics
Monitoring Customer Satisfaction and Retention
Analyzing Website Traffic and Online Leads
Measuring Advertising and Marketing Effectiveness
Evaluating Inventory Turnover and Aging
Why KPIs Are Important for Automotive Dealerships
Tracking key performance indicators (KPIs) enables automotive dealerships to stay on top of their game and drive sustainable growth. KPIs provide valuable insights about performance, allowing managers to make data-driven decisions to optimize their sales strategies and operations. They help dealerships benchmark their performance against industry standards and best practices to stay competitive.
Key Types of KPIs for Automotive Dealerships
1. Tracking Sales and Revenue Metrics
When it comes to measuring the success of an automotive dealership, sales and revenue metrics are the first KPIs that come to mind. These metrics provide a clear indication of the dealership's financial performance and overall success. Key sales and revenue metrics include:
- Total Sales Volume: A measure of how many cars a dealership sells over a given time frame determining its success, revenue, market position, and effectiveness of its sales team.
- Average Transaction Value: The average amount of money generated from each vehicle sale, providing insights into the dealership's pricing strategies, customer preferences, and revenue generation.
- Gross Profit Per Vehicle: The amount of profit earned by the dealership from each vehicle sale after subtracting the cost of acquiring or producing the vehicle, serving as a measure of profitability and efficiency in the sales process.
- Gross Profit Margin: The percentage of revenue retained as profit after deducting the cost of goods sold related to vehicle sales, providing insights into the dealership's profitability, cost management, and pricing strategies.
2. Monitoring Customer Satisfaction and Retention
As mentioned earlier, customer satisfaction is a critical KPI for automotive dealerships. Happy and satisfied customers are more likely to become repeat customers, refer their friends and family, and leave positive reviews — all of which contribute to sales growth. Metrics that measure customer satisfaction include:
- Net Promoter Score (NPS): A metric used to measure customer loyalty and satisfaction by gauging their willingness to recommend a dealership to others, indicating the dealership's reputation, customer experience, and potential for business growth.
- Customer Satisfaction Surveys: A measurement of how happy customers are with their experience which helps the dealership understand how well they are meeting customer expectations and where they can improve.
- Online Reviews and Ratings: Monitor and evaluate what customers say about a dealership online to help understand their satisfaction levels, reputation, and influence on potential customers.
3. Analyzing Website Traffic and Online Leads
Having a strong online presence is crucial for automotive dealerships. Potential customers often start their car-buying journey online, researching different models, comparing prices, and reading reviews. Therefore, dealerships need to track metrics related to website traffic and online leads, such as:
- Website Traffic Volume: The total number of visitors who visit the dealership's website, indicating the level of online interest and potential customer reach.
- Unique Visitors: The number of individual users who visit the dealership's website, providing insight into the distinct user base and audience engagement.
- Page Views: The number of times a webpage is loaded or visited on the dealership's website, helping to assess the popularity and engagement of specific pages or content.
- Bounce Rates: The percentage of visitors who leave the website after viewing only one page, indicating the effectiveness of the website's content, usability, and relevance in keeping visitors engaged.
- Time Spent on Site: The average duration visitors stay on the dealership's website, providing an understanding of user engagement and the website's ability to hold visitor interest.
- Conversion Rates: The percentage of website visitors who take a desired action, such as submitting a lead form or making a purchase, highlighting the website's effectiveness in driving desired outcomes and generating sales or leads.
4. Measuring Advertising and Marketing Effectiveness
Tracking the effectiveness of advertising and marketing efforts is equally important for automotive dealerships. By analyzing these metrics, dealerships can determine which advertising channels or campaigns generate the best results and allocate their marketing budget accordingly. Measuring the following KPIs can help optimize advertising and marketing strategies, maximize ROI, and drive more qualified leads:
- ROI of Advertising Campaigns: A measure of profit the dealership gains compared to the amount spent on advertising, indicating those campaigns' effectiveness and financial success.
- Cost per Lead: The average amount of money spent to acquire each potential customer's contact information, helping the dealership evaluate the efficiency and affordability of their lead generation efforts.
- Cost per Acquisition: The average expense incurred by the dealership to acquire a new customer, considering the total costs involved in marketing, sales, and other activities, providing insights into the dealership's overall efficiency in acquiring and converting customers.
5. Evaluating Inventory Turnover and Aging
Effective inventory management is crucial for the success of automotive dealerships. Excess inventory ties up capital and increases carrying costs, while insufficient inventory can lead to missed sales opportunities. By analyzing these metrics, dealerships can identify slow-moving vehicles, optimize their inventory mix, and implement strategies to reduce holding costs and increase inventory turnover.
- Average Days To Turn: The average time it takes for a dealership to sell a vehicle.
- Average Inventory Age: The average length of time vehicles remain in the dealership's inventory before being sold.
- Inventory Aging Analysis: An evaluation of the distribution of vehicle ages in the dealership's inventory to show how long cars have been in stock.
Using Analytics To Engage Today's Car Shoppers
Tracking and measuring KPIs provide valuable insights that empower automotive dealerships to evaluate performance. Evaluate your dealership to see which KPIs you're currently following. Then consider monitoring a few of the metrics discussed above.
Want to learn more about what today's car shoppers are doing? We've analyzed consumer engagement behavior across 2,300 vehicles, and the findings were eye-opening. Download the free report below and use these insights alongside your KPIs to set and crush sales goals.