Your CRM program should help track inventory turn rate, average sales cycle, and regional averages. You can easily monitor these metrics with the right CRM program to grow your business. This article will discuss the most important metrics to watch in your auto dealership.
After reading this article, you’ll be better prepared to decide which CRM system to use for your dealership.
Inventory Turn Rate
An auto dealership’s inventory turn rate is a crucial indicator of success. It’s calculated by dividing the cost of goods sold by the average value of its inventory. Auto dealers should aim for an inventory turn rate of 12 percent. That means they should sell their inventory every thirty days or less than 12 months.
The inventory turnover ratio should be evaluated on an ongoing basis. This metric can change over time, so it is vital to monitor it regularly. This metric from VinSolutions can help auto dealerships make better business decisions, including pricing and purchasing new stock. If you’re a multichannel retailer, inventory turnover is an essential metric. In addition to understanding the trend of your inventory, it can help you determine what business practices will help you maximize sales and profitability.
Average Sales Cycle
Many car shoppers hate the long and painful sales process of buying a new car. While the average sales cycle for a car dealership is between two and four hours, some dealers report that it takes as long as five hours. 85% of dealers say they wish the sales process would take less than two hours—moreover, only 18% list the total price for cars. In addition, many dealerships are not transparent enough to disclose pricing information.
While average sales cycles vary between brands and models, they are symmetrically based on the size of the dealership. The sales cycle length depends on how many salespeople are working on the deal. Hiring a dedicated service-to-sales manager for a more prominent dealership can help identify potential service-to-sales prospects.
Average Sales Per Sales Rep
If you’re a new owner of an auto dealership, how can you increase average sales per sales rep? This is where base compensation comes into play. Unlike commission structures, based on the number of vehicles sold each month, base compensation pays each sales rep a fixed percentage of their sales. It also helps create a more team-like environment, allowing you to delegate responsibility to more than just selling cars.
California tops the list regarding the average salary of a Dealer Sales REP. Next, Santa Rosa, CA, is second, while Cambridge, MA, is third highest. However, it should be noted that the salary range is significantly different depending on skills, years of experience, and location. In general, however, the higher the salary, the higher the expected profit. So, if you’re considering a career as an auto sales rep, check out these cities.
Average Sales Per Region
The number of vehicles sold in a region can be a good indicator of the overall health of the local auto market. For example, in metro Houston, suburban dealers accounted for only 25.4 percent of new vehicle sales, while dealerships in Harris County sold 74.6 percent. Moreover, the auto market is split 50/50 between domestic and import brands, with foreign cars representing 57.3 percent. The average sales per region of auto dealerships were $264,000 in May, while sales per location of auto dealers in metropolitan Houston reached a whopping $6 million.
Future of CRM in the Automotive Industry
CRM (Customer Relationship Management) is expected to become increasingly important in the automotive industry in the coming years. A key trend is the shift towards more personalized marketing and customer experiences. Automotive companies will leverage the large amounts of data they collect on customers to deliver tailored recommendations and content to drive sales.
The use of AI and predictive analytics in CRM systems will enable even more precise consumer insights and segmentation. Automated lead scoring and routing will help dealerships determine which prospects are most sales-ready. Overall, the car buying journey will become more digitized, with CRM systems linking online research to the dealership visit.
This will provide consumers with a more seamless, personalized brand experience. CRM in automotive will also increasingly focus on loyalty and retention, using data from connected cars and past service history to predict maintenance needs and offer incentives to purchase a new vehicle. The central role of CRM underscores the auto industry’s growing focus on lifetime customer value over one-time sales.
Automotive Market in Europe
In Europe, the automotive market is experiencing radical change. Five megatrends – real customer focus, autonomous driving, connectivity, digitalization, electric powertrains, and shared mobility – are reshaping the industry and changing its fundamentals. These trends will impact car sales worldwide, but their impacts are different in each region. As a result, auto dealers can benefit from new revenue streams by taking advantage of these trends. Fortunately, a new study published by Bain found that auto dealers can retain profitability levels and even increase their ROS by exploiting new opportunities.
