Have you ever suspected that a process is broken, but you're not sure what to fix? Every dealer has experienced this at some point. Process breakdowns lead to problems that often aren't spotted until they are revealed in a negative monthly or quarterly report.  


For example, what if you noticed in a month-end report that your dealership's F&I revenue was less than projected? How do you know what went wrong? Your F&I manager may offer an explanation but it may be more of an educated guess or an excuse, rather than a fact based on analysis of data. 


One reason it's important to establish benchmark Key Performance Indicators (KPIs) is because they indicate how well your processes are being followed. If you are not getting a result you want, that means there is a process breakdown. How can you find it? Follow your KPIs. They are the roadmap that will locate the problem. 


Key Performance Indicators (or what a good job looks like) 

Let's review an example of how this works. In the F&I department, a common metric that's followed is the PVR (Per Vehicle Retail). Let's say that for every new vehicle sold, you want your PVR to average $1,300. On your reporting dashboard, you could establish the following benchmarks. 


  • Green (good): above $1,301  

  • Yellow (caution): < $1,300 

  • Red (bad): < $1,169 


When your PVR dips into the yellow zone it's time to conduct a couple process checks. 


100% presentation, 100% of the time 

The first thing you want to do is audit the last 25 deals. Physically look at each deal to see if a customer signed the menu presentation. If you find menu presentations that aren't signed, that means your customers aren't getting 100 percent of the presentation 100 percent of the time. 



Multi-payment options, not optional 

The second thing you want to check is how each deal is being worked from the sales desk. Do your sales managers follow your dealership's prescribed process for working deals? Is there a minimum reserve included with each customer presentation? Are they presenting every customer with multiple payment options? 


Tightening up these two process will help you identify the problem and to correct it. Your PVR will soon move from the ‘yellow’ to ‘green’. 


Red Alert 

But what if it doesn't? What if your PVR dips into the red zone? 


For KPIs in the red zone, I always recommend something called "the eyeball test." In this case you want to sit in and watch the entire Desk to Close to F&I process with a customer. Is the process being followed? Would you sit through it? 


Also observe and listen to several turnovers. Are the sales managers following your turnover process?  


Not one, but many 

Perhaps the eyeball test doesn't reveal any problems. The F&I manager's presentation is great, and the turnovers from sales are fantastic. More than likely the problem is consistency. Your employees know what to do, but they are not doing it every time with every customer. Perhaps they assume that certain customers aren't going to buy certain products so they don't even bother to present them. 100% presentation, 100% of the time. 


Setting and sharing benchmark KPIs in every department allows you and your team to view at a glance whether or not you are on target to reach goals. If a KPI is less than optimal, there's a good chance that your established processes aren't being followed. Sharing allows them the opportunity to ‘self correct’, and allows you the opportunity to teach. 


Identify what ‘a good job looks like’ and benchmark performance. Whenever a KPI dips into the "yellow" or caution zone, use a methodical approach to identify where problems are occurring. Taking immediate, corrective action will help you avoid seeing a nasty surprise at the end of the month or quarter. 


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