The recent devastation caused by Hurricane Harvey and Hurricane Irma is horrifying in terms of lives lost, lives affected, and the billions of dollars in property damage. If there is any silver lining to be found, it is only that things could have been much worse if not for residents taking action on data-driven early warning and storm forecasting models. The intensity of the storms, storm tracks and predicted areas of landfall were all pretty accurate.  

These predictions allowed government officials to issue evacuation orders and set up shelters for residents in affected areas. Without these warnings, undoubtedly damage would have been much greater. Thanks to the weather services' computer models, millions of citizens were warned days in advance, and were able to safely evacuate from the areas of greatest impact. For those who chose to take action, the chance for safety was dramatically increased, if not assured. 

In our small part of the world we talk a lot about 'big data' and all of its advantages, but it's not until a catastrophic event happens that you can truly appreciate the value of what data provides. When it comes to forecasting weather, balloons and satellites collect millions of data points such as temperature, humidity, wind speed and air pressure. All this data is fed into supercomputers that generate a series of computer models. When acted upon, this data literally saves lives. 

Certainly, dealership data won't save any lives, but it does provide your business the same type of prediction models, warning of a downturn or unexpected business events. 

But are you taking action? 

In your dealership, you have access to tools right now that will tell you, with a high degree of accuracy, where you will be at the end of the month, quarter or year (DMS, CRM, Registration data, Website Analytics, etc.). You can either act on what you see or you can ignore it.  

If you choose to ignore your reporting tools, you may come through an unexpected event just fine. Most likely you will wish that you had acted on the warning signs that were there all along. 

What warning signs am I talking about? Below are example KPI warning signs from our top-performing dealers:  

New Car Inventory. Do you know what your new vehicle day supply is? This KPI is an important indicator of new vehicle sales performance. Tracking it on a daily basis allows you to see if a negative trend is developing far in advance. If this number is creeping up, that's an early warning sign. Based on seasonality, are you carrying a 60-day supply? 

Used Car Inventory. What is the average age of your used vehicle inventory? If this number trends upwards, there's a problem somewhere. The earlier you spot this warning sign, the sooner you can take action. Is 55% of your inventory under 31 days old? 

Service Department. One of the biggest challenges in service is to accurately gauge how individual service writers are performing. One effective way to do this is to track the number of open Repair Orders (ROs) for each employee. If at any given time, an advisor has more open ROs than they have the capacity to write in one day, that's an early warning sign that requires immediate investigation. Writer ‘A’ writes 17 ROs per day average but has 21 open ROs, what is the corrective action? 

Parts Inventory. If 10 percent or more of your total parts inventory is over 12 months, that's an early warning sign. What is the ‘return reserve’ being applied to if not over 12 month parts? 

Accounting. Deals should be posted within 24 business hours of completion. If accounting is consistently taking two, three or four days to get deals posted, that's an early warning sign that you have some issues within your accounting department. Does each department operate with the same ‘sense of urgency’? 

This rundown of departmental KPIs is just a sample of how you can use benchmarks to alert you to a potential storm on the horizon. The more advanced the notice, the easier it is to take corrective action.  

More than ever, business owners have the ability to see into the future and control their own destinies. When you receive an early warning, you have a choice: batten down the hatches and ride out the storm, or act immediately on the information. Weathering a storm is so much easier with data as your guide. 

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