Every dealer knows that the inventory that turns the fastest is often the most profitable. This is compounded by the carrying cost of the vehicle (often cited as $10 to $25 per day), for both reasons, the longer a car remains in inventory, the more it eats into your profits.
That’s why it’s critical to measure and improve “Time-to-Market”, or how long it takes for a car to get through the service department and become fully merchandised online. But for many dealers, the problem goes undetected because they fall into two common traps:
- First, cars spend too much time in the service department. We all know that the customers of pre-owned vehicles are the service department’s top customers. But we also know that because the service department is focused on serving retail customers, this can lead to inventory that moves through the reconditioning process slowly, resulting in expensive fresh inventory. For many dealers, it’s hard to maintain visibility on this process, which makes it difficult to manage.
- Second, the handoff to digital marketing is too slow. When a car completes reconditioning, too often there’s lag in getting vehicles fully merchandised online.
It’s obvious that a vehicle unavailable for sale prevents a quick turnaround. But that’s also true for a vehicle that’s available for sale but isn’t visible to consumers on the Internet. So what can you do about it?
You can’t improve what you can’t measure, and there are three easy ways to get started:
- Measure your “Time-to-Market”
- Compare the date a car was received in inventory to when it was fully merchandised online. This simple metric allows you to keep a pulse on both your service activities and digital marketing efforts. Cars should make the transition from service to digital marketing in three to five days.
- Identify potential gaps in your current process
- By tracking vehicles that fail to meet this goal, you can identify opportunities for the teams to work more efficiently, as well as hold people accountable for their responsibilities. There will always be outliers â€” vehicles waiting on a title or critical parts on order, for example. But by measuring time-to-market, you will be able to identify those outliers and focus on vehicles that had a breakdown in process.
- Accelerate your “Time-to-Market
- Before a vehicle enters the service department, have the digital marketing team immediately take three exterior photos and post them online immediately (in states where this is appropriate). This will help speed the process of getting a vehicle fully merchandised online once it’s reconditioned.
Remember: if you measure it, you can manage it. A number of tools, including MAX, make it easy to monitor these metrics. Just make sure you set up alerts that keep this information in front of you on a regular basis. Once you get a handle on where the bottlenecks are in your time-to-market, you’ll be able to make your digital marketing efforts more efficient, and your inventory more profitable.
My next post will cover the importance of understanding exactly where your online traffic is coming from.