SWAG, SOP and MSU

I am sure that some of my clients or recent workshop attendees will read this and think, “Greg has to be referring to me!” Really, this isn’t about any particular dealership, but I know many it could be about.

What I am referring to is the management process where decisions are made based on data gathered by the SWAG method. Sometimes this is also known as the SOP method. (For those who don’t recognize these acronyms, let me help you: SWAG stands for Scientific Wild-A__ Guess, and SOP stands for Seat Of the Pants.) In either case, you have highly intelligent minds trying to make a sophisticated management decision by using data that they have accumulated by using a SWAG. Incidentally, SWAGs may or may not be better than something that comes from MSU. I don’t mean Michigan State University or Mississippi State University or even Montana State University; I mean Making Stuff Up. That happens a lot, too.

With the burners on the special finance market now having been turned up to high, I am getting calls and e-mails every day from dealers or managers wanting to know how to create more SF traffic. They want to know what is new, what is hot, and what will fill their inboxes, voicemail boxes and showrooms with more traffic than they know what to do with.

My first question, as so many of you know by now, is always: How many opportunities did you have last month (combination of walk-ins, repeat/referrals, be-backs, Internet leads, credit hotline leads and call-ins)? And the next question is always: How many did you sell? Then, I always ask how many people the dealership or department has working these opportunities. It really is possible you have more traffic than you can handle and more may just make things worse. Enter SWAGs.

The problem is SF is the largest profit center I know of in a franchised dealership that does not have its statistics broken out on the financial statement. That leads to all sorts of guessing and conjectures on what the department really accomplishes and, in general, leads to a lack of expectations. Most people want “more” when they contact me—more sales and more gross profit most definitely. The problem is, their lack of sales and gross isn’t always due to a lack of traffic. It may be. However, it could also be inefficiencies with the way the current traffic is being handled, or indeed, it may just be where they are spending their marketing or advertising dollars.

Those clients with whom I consult on a regular basis or who have attended our annual SF conferences know what it is I look for. The tracking data is more than just the number of leads a campaign has generated. The report breaks down all the activities that go along with those leads, including sourcing where the opportunities come from. If you would like to have the tracking report in an Excel format, drop me an e-mail at [email protected].

So why is it so important to really know who is coming to the dealership and what happens when they do? For starters, the old adage is: Half of your advertising works, but which half is it? Certainly if you know which ad source produces the best type of traffic, you want to do more of it and less of something that isn’t working as well. Beyond that, you’ll learn which type of customer you do best with. Then you can increase that type of customer traffic, while finding a way to convert more of those from the demographic you struggle with.

You will learn who is not adequately contacting or talking to enough leads.

You will learn who is spending too much time on the phone with each customer.

You will learn who is outperforming or underperforming in the department.

You will learn who struggles to contact leads timely.

You will learn who struggles to adjust their call-back time in order to reach a difficult-to-contact customer.

You will learn who is not engaging to the customer, as their appointment-setting ratios are too low.

You will learn who is selling the appointment too hard, offering too much information or not engaging, as their appointment-kept ratios will be low.

You will learn who is being too harsh on the phone, as their appointment-setting ratios are low but their show rate is high.

You may even learn whether you have more traffic than your sales team can currently handle.

All this information and more can be used in daily one-on-ones, as well as for your decision-making. Finally, you can accurately compare your operation to that of the SF benchmarks we publish each year (the 2010 benchmarks are in the October 2010 issue of Auto Dealer Monthly). The bottom line is, the more accurately you measure, the better you can manage, and that will equal more sales and more net profits.

Until next month,
Great selling!