5rpm simple tricks for - automotive news paper_rpm_cadence.pdf · identify trends in your previous...

5 SIMPLE TRICKS FOR

MANAGING GROUP PERFORMANCE

A PUBLICATION BY

RPMCADENCE

DAILY, WEEKLY, & MONTHLY TASKS that improve speed, consistency, and accountability across every phase of pre-owned retail operations.

A publication of

Due to dramatic changes in the competitive landscape, dealers that once charted their own course

through “gut feel” must learn new ways of harnessing information to make fact-based decisions. The

ability to take data – understand it, process it, extract value from it, and take action will separate the best

automotive retailers from the rest of the pack.

A growing number of dealerships recognize this truth, but are stymied by how best to make it happen.

Why?

1. First, they lack the clear visibility into their pre-owned operations required to accurately diagnose

the source of problems and take corrective action.

2. And secondly, they are unable to institutionalize fundamental management processes that span

each phase of the pre-owned life-cycle, and drive consistency and acountability across their

dealership.

ENTER RETAIL PERFORMANCE MANAGEMENT (RPM)

The primary focus of a successful RPM strategy starts with gaining better visibility into the entire pre-

owned operations lifecycle, and most importantly, act on opportunities for securing quicker turn and

higher gross simultaneously. However, in order to achieve this, dealers require a strict management

discipline across all phases of their pre-owned retail operation.

This white paper provides insight into a fundamental management cadence that Used Car Operators

can perform Daily, Weekly, and Monthly to expose risk, identify opportunity, and institute greater

accountability across the dealership.

RPM CADENCE

DAILY TASK LIST

1. Analyze sold units from the previous day.

2. Analyze appraisals from previous day.

3. Execute your pricing plan by aging buckets.

4. Assess Time to Market and Low Online Ad Performance.

5. Analyze screen run lists and online wholesale market.

1. ANALYZE SOLD UNITS FROM THE PREVIOUS DAY.

Identify trends in your previous day sales, and devise a plan to replace this inventory with additional pre-owned units.

TIPS & RECOMMENDATIONS

Look at the Days to Sale, Margin, and Market Days Supply of the car in the market. What is your current stocking

position? How did you acquire this car (trade or purchase)? Was this a market performer, or a store performer? Does it

make sense to replenish your stock based on current conditions and the results that you saw at your dealership?

You may want to consider reaching out to other dealers and put together deals for their aging inventory (that match

your core needs). Simply locate cars already in the market that have already been reconditioned and have low Market

Days Supply. They may be overpriced or poorly marketed by their current dealer. In addition, check your Custom

Inventory Analysis for the segments that make you the most gross and/or that you turn the fastest.

Use FirstLook’s Market Velocity Stocking Guide (1.1) to identify fast moving vehicles in the marketplace in those

segments and drill down into the current market listings. Identify aging units in the market and buy them wholesale

before they go to auction.

DAILY TASK LIST

1.1 FirstLook’s Market Velocity Stocking Guide

2. ANALYZE APPRAISALS FROM THE PREVIOUS DAY.

Review past appraisals with your sales consultants, and put a game plan together to recapture potential lost trades.


Host daily “save-a-deal” (1.2) meetings, have another set of eyes look at your low-performing sales managers.

DAILY TASK LIST

1.2 FirstLook’s Make-A-Deal Summary Report

3. EXECUTE YOUR PRICING PLAN BY AGING BUCKETS.

Put together a game plan for execution. Which cars do you price? It is easy to look at your aged cars or just the cars you

bought/traded for (if multiple people are appraising), but then you are just making daily updates to the prices. Here are few

recommended best practices:

1. Stick to your Aging Policy and re-evaluate based on activity and market criteria.

2. PHYSICALLY pull the keys to each car on the planning tab. Book it out, check market listings, open the car (does it

smell like a wet dog?), start it, check the tires, do a “walkaround”. If you are doing this everyday, there will only be a

handful of cars on the list.


Draw a ‘line in the sand,’ and say “When a car hits XX days, I will re-evaluate its position in the market for pricing and

ONLY when it hits this age.” You HAVE to give a car time to adjust to new pricing and have a chance to sell. Be “in the

game”. Don’t just look at a report to tell you the cars you are asking above AND below market average, know WHY you

fail into each category on EVERY car.

DAILY TASK LIST

1.3 FirstLook’s Current Inventory Pricing Risk Report

4. ASSESS TIME TO MARKET AND LOW ONLINE AD PERFORMANCE.

Accelerate your Time to Market and streamline your process from appraisal through recon, and into Online ads.

Follow up in your service drive to push cars through recon and get new inventory to market.


Recommended Benchmark: Time to Market should take no more than: 72 Hours. Time to Market will vary

based on the dealership. Know YOUR setup and benchmark based on your top performing months and

shoot for a 20% improvement each month.

DAILY TASK LIST

1.4 FirstLook’s Digital Performance Analytics

5. ANALYZE SCREEN RUN LISTS AND ONLINE WHOLESALE MARKET.

For opportunities today and tomorrow.


Bid and buy Online using our Live Auction Opportunities (1.4). Don’t waste a day out of the dealership watching cars

across the block, buy your “bread and butter” cars from your Inventory Management tool. For volume cars at the live

sale, use the Vehicle Analyzer to see how YOU perform with those cars off the cuff.

DAILY TASK LIST

1.5 FirstLook’s Live Auction Search

WEEKLY TASK LIST

1. Examine wholesale results from your biggest local sale.

2. Analyze missed deals for the week.

3. Assess your core inventory’s current stocking level.

4. Examine previous week’s wholesale performance for your “sleds.”

5. Touch each unit that is in the top bucket of your aging profile.

1. EXAMINE WHOLESALE RESULTS FROM YOUR BIGGEST LOCAL SALE.

How did your best retail performers fare vs. book/MMR? If similar inventory to yours in failing at auction, then your potential

customers will have much less competition in the retail marketplace to choose from.


Compare book vs. cost, MMR vs. cost of your aged units in your top bucket. What way are the trends going? Will getting

out of your poor performers now benefit you in the long run?

Also, group the auction sold results by make/model and check it against your top performers/ highest volume in current

inventory units. If there are a lot more running through the auction, your retail prices may have to be more competitive.

Suddenly, that gross car may now be a commodity car and needs to be priced accordingly.

WEEKLY TASK LIST

2.1 FirstLook’s Loan Value - Book Value Calculator

2. ANALYZE MISSED DEALS FOR THE WEEK.

Have a weekly post mortem of non-closed deals and get new appointments set or blow out the lead.


Save a deal meeting on Friday to get appointments for Saturday.

3. ASSESS YOUR CORE INVENTORY’S CURRENT STOCKING LEVELS.

Plan for next week by identifying the best place to source these cars at auction.


Use your Inventory Manager to see which of your top volume, gross and turn cars you are under stocked in. Over/

Under Stocking Guide (2.2) and see what you need to source. Find them at local auction.

Drill down past the make/model (Are there certain years, trims, or price bands you excel at?)

WEEKLY TASK LIST

2.2 FirstLook’s Over (Under) Stocking Report

* See example: 1.2 Make-A-Deal Summary Report

4. EXAMINE PREVIOUS WEEK’S WHOLESALE PERFORMANCE FOR YOUR “SLEDS”.

Make appropriate adjustments in the appraisal lane when evaluating immediate wholesale cars to reflect seasonal trends (be on

the right side of the “June Swoon”).


Watch your immediate wholesale profit/loss on your Inventory Management Dashboard (2.3) and keep a window

that is right for you to maintain an effective closing rate. Look at resources such as the Manheim Wholesale Value Index

that will be a good predictor of market trends both month over month and comp sales. Also look at your Profitability

by Buyer Report and watch for changes in P&L for each buyer. Some buyers may not be adjusting for lower demand by

paying too much, some may be too conservative and could be getting you more inventory.

WEEKLY TASK LIST

2.3 FirstLook’s Store Retail Performance Dashboard

5. TOUCH EACH UNIT THAT IS IN THE TOP BUCKET OF YOUR AGING PROFILE.

Does it start? Does it smell? Good pics? All the normal stuff.


See #3 in the daily tab.

WEEKLY TASK LIST

2.4 FirstLook’s Store Command Center - Inventory Aging Profile Report

MONTHLY TASK LISTCompared to your daily and weekly tasks involving pricing, appraisal and stocking performance, your monthly tasks include

monitoring the performance of all pre-owned retail activities and using that data to make smarter decisions. Every month you

should understand the value of your pre-owned operations has on your overall financial performance.

1. Analyze immediate wholesale profit and loss.

2. Analyze your overall retail effectiveness by viewing how many vehicles are sold in the first 30 and 60 day window.

3. Look at new car sales and see how many cars got traded in from them.

4. Analyze missed deals for the month.

5. Prepare financial statement recap with your Dealer Principal.

1. ANALYZE IMMEDIATE WHOLESALE PROFIT AND LOSS.

How close to $0 on the positive side did you get? How many deals did you save/miss by being too aggressive/ conservative on

my numbers?


Manage the managers involved. Don’t knee-jerk and start giving $500/car more on every opportunity. Analyze the

numbers and create an individual action plan for the people that are affecting the data the most. Your most expensive

investment is PEOPLE - use this data to help you manage them.

MONTHLY TASK LIST

3.1 FirstLook’s Immediate Wholesale Report & Analysis

2. ANALYZE YOUR OVERALL RETAIL EFFECTIVENESS BY VIEWING HOW MANY VEHICLES ARE SOLD IN THE FIRST 30 AND 60 DAY WINDOW.

Retail Sales Efficiency: Those units that are sold within a 60 day window. Dealers should thrive for an RSE of: 85%


This is a better health indicator of a used car department than the traditional gross/volume metrics we all grew up with.

They tell the tale of the modern dealership’s efficiencies. Looking at this report, you can see if your pricing strategy is

being executed by the average grosses per bucket. You can see what type of inventory is causing the most wholesale

giveback (green light vs. red light), separate the profitability of trades and wholesale.

MONTHLY TASK LIST

3.2 FirstLook’s Retail Inventory Sales Analysis Report

3. LOOK AT NEW CAR SALES AND SEE HOW MANY CARS GOT TRADED IN FROM THEM.

Compare numbers, formulate action plan for getting this number higher.


Look at click through rates for new cars. Are you advertising new cars with actual photos or stock? Are you adding

packages and pricing with discounts to draw in customers?

MONTHLY TASK LIST

3.3 FirstLook’s Click Through Rate Analysis

4. ANALYZE MISSED DEALS FOR THE MONTH.

Anything there? Post mortem... what would I have done differently?


Use Group Level Make A Deal to link green light car deals to trades that were appraised elsewhere in the group.

MONTHLY TASK LIST

3.4 FirstLook’s Group Level Make-A-Deal

5. PREPARE FINANCIAL STATEMENT RECAP WITH YOUR DEALER PRINCIPAL.

Go beyond the average gross/volume discussion. Separate aged wholesale from immediate wholesale. Look at service

department profitability and time to market. Is there justification for another recon tech to help get cars through service quicker?

Will a new photo process help our time to market? Look at profitability by age band and base success off sweet spot and retail

sales efficiency. Separate trades and purchases and discuss changes to buying strategy.


Adjust buckets group-wide if you are seeing trends in your Front End Gross (FEG) as it relates to age. Are we missing

opportunities because we are too slow in adjusting prices? Are we sacrificing FEG to turn units too quickly? How does

our auction performance for trades affect my closing rate this month? Find the balance and chart a course for next

month.

MONTHLY TASK LIST

RPM MANAGEMENT CADENCEDAILY, WEEKLY, MONTHLY TASKS

DAILY

1. Analyze Sold Units from the previous day

2. Analyze Appraisals from previous day

3. Execute your pricing plan by aging buckets

4. Assess Time to Market, and Low Online Ad performance

5. Analyze screen run lists and online wholesale market

1. Examine wholesale results from your biggest local sale

2. Analyze missed deals for the week

3. Assess your current core inventory stocking levels

4. Examine previous week’s wholesale performance for your “sleds”

5. Touch each unit that is in the top bucket of your aging profile

1. Analyze Immediate Wholesale Profit & Loss

2. Analyze your overall retail effectiveness over 30 and 60 day windows

3. Look at new car sales and how many cars were traded in for them

4. Analyze missed deals for the Month

5. Financial statement recap with your Dealer Principal

WEEKLY MONTHLY

We hope you find this RPM Management Cadence useful in your daily operations. Retail Performance Management

encompasses the best practices developed - on the front line - by the highest performing stores and groups within FirstLook’s

customer base. It’s not built on the philosophy of a single individual; rather, it represents proven innovations by the “best of the

best” who are appraising, pricing, stocking, and selling cars every day. At its core, RPM is built on the following principles:

1. Any retail market is driven by a combination of both high and low margin products. The key is understanding which is

which, and stocking the optimal mix of these products for the store.

2. The highest performing stores have a “retail first” mindset. The “best of the best” approach every vehicle by first

determining its retail potential. They attempt to retail every car possible by analyzing the market and their history to

ensure retail success. Whether assessing a trade or auction vehicle, the driving force in determining value is the price that

will turn that vehicle quickly while maximizing gross profits.

3. Groups that operate as a cohesive team (rather than as a collection of independent, if not competing stores) have an

obvious, sustainable, and quantifiable advantage over groups that do not operate as a team. RPM enables groups to

harness the power of size, volume, coverage, and market presence to allow them to be much more nimble, flexible, and

efficient.

4. The difference between success and failure is tied directly to the level of visibility you have into your pre-owned operations.

Visibility into group performance, store performance, and Online performance - every minute of every hour of every day.

SUMMARY

ABOUT FIRSTLOOK

For more then a decade, FirstLook has been working with thousands of Automotive Retailers across the country address these

challenges, and in doing so, have identified critical innovative retailing practices designed to improve both gross and turn. These

cutting-edge practices have since been incorporated into our on-demand software solution, Retail Performance Management

(RPM). Unlike conventional Inventory Management Systems, Retail Performance Management is designed to ‘drive your

numbers’ through the combination of advanced analytics and embedded cutting-edge practices from the best retailers in the

industry.

CONTACT US

www.firstlooksystems.com

[email protected]

888 - 282- 1507

5rpm simple tricks for - automotive news paper_rpm_cadence.pdf · identify trends in your previous...

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