The other day, a colleague was asked to speak to a group of business executives about sharing KPIs (Key Performance Indicators), a topic he is passionate about and something we take seriously here. In talking with him, it reminded me that many of our most profitable and fastest-growing auto dealership clients do a great job of both measuring and sharing KPIs with their team.
What is a Key Performance Indicator?
A Key Performance Indicator (KPI) is a measurable value that demonstrates how effectively a company is achieving key business objectives.
A KPI is not a new, internet-born term. KPI has been a business term for decades and businesses have measured their productivity long before the term was coined.
Benefits of Using KPIs at Auto Dealerships
KPIs provide feedback on production, sales, quality, and other important measurables. You can use them to see long-term trends, measure and improve processes, oversee day-to-day operations, and to communicate to your team. That last usage is huge with auto dealerships because KPIs can inspire and encourage employees to work harder and be more efficient, just by sharing metrics.
Think about your sales team. What happens when Joe has 10 deals this month, Bob has 2 sales, and everyone else has 5-6 deals two weeks into the month? Bob will work tirelessly to catch up to the pack, members of the pack will try to top Joe’s sales count, and Joe will continue to excel to ensure he stands out at the end of the month. All of these actions come from sharing relevant metrics with the sales team, not from a sales manager pressuring the sales team.
The same inspiration can happen to your service department too. Provide your team with KPIs of jobs completed and they will work harder to win, even when there is no prize. Imagine what they’d do if they got a prize for finishing first. (Note – For service departments, you need to score more time-consuming jobs like removing a dent in a fender differently than an oil change to make your metrics competitive).
To further ramp up the competition, create teams for your service department and see them encourage, mentor, and assist their team members. It is human nature to want to survive (not be on the bottom) and to thrive (win first place).
The best part is this can happen without pressure from management and for less than $1,000 (cost of a 48”-54” TV, small computer, and install). Observing and working with our clients, we found it best to share KPIs on monitors that every employee can easily see instead of having them only accessible from their computers. When they have to click to find them, the KPIs eventually become forgotten about, while having them displayed on a monitor attracts attention.
You can also give employees access to KPIs on their phones.
Where to Get & How to Share KPIs at Auto Dealerships
You’re probably excited and wondering how do you get started with KPIs.
- Find a KPI Vendor – Most likely, your DMS (Dealer Management Software) has 95% of the metrics you need. (You have a huge advantage over other industries who track everything in Excel.)
- Find Meaningful Measurements – Determine what KPIs you want to share with your teams.
- Determine Your Frequency – Think how often your data needs to be refreshed. Do you need real-time data or will a daily, weekly, or monthly recap suffice?
- Hang Monitors – Find locations in the back-of-the-house to display your KPIs, such as sales numbers in the break room and service job numbers where the team picks up new tickets.
- Refine Measurements – Tweak what KPIs you need to share and their frequency.
If you’re like us, you’ll see the benefits of sharing KPIs almost immediately and your team will ask for more monitors to see additional KPIs. Twelve years ago we had two monitors. Now we have 17 monitors throughout the office and we’re planning on adding three more this year.