It’s probably because of my college training in industrial engineering, but I’ve always been fascinated and challenged by trying to define any meaningful relationships between “opportunities to do business” (OTDBs) and sales results. After a half-century of experience in the retail automotive business, I’ve concluded that there truly are consequential metrics associated with selling both vehicles and service at an auto dealership.
For instance, do you know how many good vehicle sales prospects arrive in your dealership’s service department each month? If not, don’t think you’re unique. Most dealers are embarrassed when asked that question, and quickly admit that they should know the answer.
The NCM training and consulting teams have developed the “Service Ambassador” process that when effectively implemented and executed will not only answer the question, it will sell you a lot more new and used vehicles. The Service Ambassador process uses dealership management input combined with a mathematical calculation to identify new and used vehicle sales opportunities on the service drive. Many dealers who have successfully adopted this process now include customer-pay service visitors in their vehicle sales department OTDB traffic count.
Consider the following Sales Consultant Productivity Modeling worksheet used by the NCM Retail Operations consultants and trainers. It demonstrates the metrics for this OTDB category beginning with item 33. (Hint: if you're having trouble viewing the worksheet, click on this article's title and it will take you to the blog page where it will be easier to view.)
In this example, the dealership service department writes 1,100 customer-paid R.O.s per month. Research shows that in domestic and non-luxury import dealerships, the average odometer reading on these vehicles is now 65,000-75,000 miles. Wouldn't it be reasonable to assume that 10% of those vehicles should be replaced?
Of the 110 vehicles that could or should be replaced (item 35), let’s further assume that if approached at the right time and in the right manner, 40% (Item 36) of those 110 owners would be willing to consider replacing their vehicles and would agree to an appointment with our salesperson.
And since we’re already doing business with (we have a relationship with) these 44 owners (item 37), they should also close at 50% (item 38) and produce at least 22 “near-future” vehicle sales (item 39).
What we’ve been discussing so far is near-future sales, meaning tomorrow, or next week, or two weeks from now. But what about next year, or the year after that? What many dealers and their sales managers aren’t cognizant of is that according to national averages, approximately 40% of the customers that do business with our service departments are “visiting owners.” They did not buy their vehicle from our dealership’s vehicle sales department.
The Service Ambassador process also addresses the visiting owner issue to ensure that the vehicle sales department builds a relationship with this group of customers.
So now you know how you can know how many good vehicle sales prospects are in your service department. Confused? No worries! The worksheet used in this article is available for your own data input via our free eReport, “It’s All About the Numbers: The Mathematics of Dealership Sales.”
To get a copy of the report and access to this and many other useful worksheets to help you calculate the mathematics of your dealership's sales, click here!