From the NCM Institute Blog: OTDB Measurement and Management - Part Four

It’s time for a continuation of the mini case study focused on the objectives established and challenges faced in building processes to develop, measure and manage OTDBs in the operating departments of an NCM client automotive dealership group. In our article titled OTDB Measurement and Management – Part Two, published on March 20, 2012, I discussed the structure of the vehicle sales department and the general expectations that we defined and communicated to the members of the sales staff. Today I’m going to talk about the specific expectations and how they were communicated.

To kick off this new initiative to maximize OTDB development, measurement and management, the dealer principal, the group COO, and the GMs made it very clear that the minimum salesperson income expectation would soon become $54,000 per year. Also, that dealership senior management has made the commitment to support and ensure that new expectation through training and coaching. Here’s how the basic math would work:

12 vehicle deliveries per month x $375 average income per delivery x 12 months = $54,000

The 12 unit deliveries would come from two primary sources: (1) dealership-provided OTDBs; and (2) salesperson-developed OTDBs. Dealership-provided OTDBs include first-time walk-ins, “blind” inbound telephone inquiries, and Internet leads. It is expected that the dealership-provided OTDB category will deliver at a 12.0% rate (not including “be-backs”) and will provide each salesperson with a minimum of six deliveries per month (or half of a salesperson's minimum business level). In order to facilitate this delivery level, dealership management will guarantee that each salesperson, working his/her normal shift of 45 hours per week, will have access to an aggregate total of at least 50 dealership-provided OTDBs per month. (50 OTDB’s x 12.0% delivery rate = 6 deliveries.) The remaining six deliveries per month (or half of a salesperson's minimum business level) will come from salesperson-developed OTDBs…appointments set and confirmed through the following 15 defined sources:

Unsold Prospects (Walk-Ins)

Unsold Prospects (Phone OTDB)

Unsold Prospects (Internet)

Repeat Buyer

Owner Referral

Dealership Employee Referral

Dealership Manager Referral

“Bird Dog” Referral

Family Member

Personal Friend

Other Circle of Influence

Service Drive Prospect

Collision Center Prospect

Orphan Owner

Other Prospect

Salespeople (with management training, coaching and personal assistance) are expected to develop and set three confirmed appointments per week. Because we have some type of relationship with this group of OTDBs, it is expected that 85% of confirmed appointments will show, resulting in 11 appointments per month that will show.  Here’s how the math works:

3 appointments per week x 4.333 weeks per month x 85.0% “show” rate = 11 appointments (show)

As mentioned above, we have a relationship with these appointment OTDBs:  they are currently doing business with us or they have done business with us in the past; they are trying to do business with us; they know us (or someone who does business with us); or they are somehow otherwise connected to our dealership (or to a dealership manager or employee). Sales management has stated unequivocally that this group of appointment OTDBs will deliver at a rate of no less than 55%.

11 Appointments per month x 55.0% delivery rate = 6 deliveries per month

Dealership senior management has taken ownership of the required aggregate metric of 50 dealership-provided OTDBs per salesperson per month. The sales management staff is taking ownership of the salesperson training, mentoring, coaching, and accountability management process. And sales management has taken ownership of the respective 12% and 55% delivery rates for each major OTDB category. The dealer, group COO, and GMs clearly understand that this new OTDB development, measurement and management process will not be successful without 100% management commitment, ownership and accountability. Salesperson commitment, ownership and accountability are important, but they are most certainly secondary to those of management.

In future articles I will discuss how this traffic generation and management initiative was applied specifically to certain OTDB categories in each of the dealership operating departments.

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