Improve Dealer Performance: A 3-Step Strategy

Strong dealer performance is essential for business success. McKinsey's report 'How to build top-performing auto dealerships,' shows how successful dealerships, focus on coaching and long-term business planning. The key?  Strong teamwork, the right tools and effective communication between OEMs and dealerships.

How Does Improved Dealer Performance Management Influence Business Success? 

Effective dealer performance management starts with the right platform. Dealerships need benchmarking, clear communication and proactive support. Managing sales, inventory, customer service and operations all at once is a challenge. A centralised performance management solution provides clear performance metrics and real-time data analytics. Keeping continuous improvements on track to drive stronger market performance. 

Here’s 3 fundamentals to maximise impact:

• Focus on the right data – Identify what insights matter.
• Act on improvement opportunities – Implement clear and measurable actions.
• Stay accountable – Monitor performance and flag missed opportunities.
  
  

1. Why Do Performance Insights Matter?

Understanding how your network performs at all levels is key for dealership growth and profit. From individual locations to regional sectors, all the way up to a global scale.

KPIs should be set for the network that:

• Help meet business goals.
• Track market share.
• Monitor customer satisfaction ratings.

 
Performance Comparison: A Tool for Improving Dealer Outcomes

Utilising performance comparison tools allows field managers to analyse data trends across various scenarios. For example, comparing sales performance metrics across different regions can help identify areas needing support. Or validate market condition challenges faced by dealerships. Performance can be visualised in charts, maps or graphs.

In the example below, we filtered the results by ‘Sales’ category and ‘Area’ business level. We compared ‘New Car’ and ‘Used Car’ CSI scores side-by-side for all vehicle models in the current calendar quarter. Depending on data captured, you could also create a leaderboard for individual sales reps.  If a dealership claims that market conditions hinder their ability to meet targets, the Sales Area Manager can use the performance comparison tool. Loop’s tool shows how other dealerships in similar situations are doing. This would either validate the dealership’s concerns or indicate that they might need further support to achieve their goals.

Using Scorecards to Track Dealer Success 

While dashboards provide real-time performance data, balanced scorecards focus on long-term strategic goals. By assigning points to KPIs, balanced scorecards help leadership teams evaluate progress and set future benchmarks, motivating dealerships through recognition and rewards.

In the example below, we see performance for selected KPIs grouped. Participating dealers are given points based on their performance against a KPI over a set period; the system then looks across all participants and ranks them dependent on the overall points score for that group of KPIs. Benchmarks can consequently be set and weaved into future goal setting.   
 
 

League tables are often used by OEMs to reward high performers at highly anticipated awards ceremonies. A great way to incentivise the network, but do ensure the system is fair and acknowledges individual and team contributions. 
 

2. What Actionable Steps Will Improve Dealer Performance?

With a clear understanding of your data, it's time to implement the right tools to drive dealership transformation. Having an action centre centralises action plans, aligning them with KPIs for continuous improvement and helps with better communication between dealerships and Area Managers.

This step strengthens communications between your dealerships and your Area Managers. Pick a solution that:

• Increases visibility - Everyone can see what actions have been set to who in the network (unless it’s been tagged as confidential).
• Reduces misunderstandings - With the ability to add comments and documents the context of the task can be fully explained.
• Tracks progress - View action statuses at a glance. This ensures an auditable trail for regulatory tasks.
• Provides a comprehensive approach - Actions can be connected to KPIs and visit agendas.
• Sends automated reminders and notifications - Automated prioritisation flags and reminders help as deadlines loom.

3. How Do OEMs Increase Accountability Across the Network?

Establishing clear accountability is a must for sustained dealer performance. By setting SMART goals and regularly reviewing progress with dealerships, leaders can foster a culture of accountability and continuous improvement.

The expectations-feedback-accountability framework is a performance management cycle that continually revisits its three pillars; this is a key factor in improving dealer performance and sustaining it.

This can be effectively achieved when leaders utilise business management software to set clear expectations and continually embrace open two-way communications with their dealerships. A culture of accountability drives engagement, motivation and productivity.
 

4 Tips to Implement a Culture of Accountability

1. Translate your SMART goals into KPIs and allocate them to the dealerships, via retailer performance management software.
2. Set up a meeting to collaborate how to achieve these KPIs. Check the dealership understands the expectations. Reconfirm timescales. Ask them why they think meeting or exceeding expectations is beneficial.
3. Talk about possible challenges and make a plan to address them. The dealership might need support, resources or training. Share best practices from high-performing dealerships.
4. Encourage timely and supportive feedback during performance review catch-ups. Have a discussion to find out what help is needed. Ask the dealership to identify actions to get back on track if performance slips. This ensures they take ownership of the required actions.

It’s clear that to improve dealer performance OEMs must invest time in populating the right tools for the job. This must also be driven by a team dedicated to supporting, training and motivating the dealerships.


Struggling with performance gaps across your network? Our ‘5-Step Process to Handle Performance Dispersion Among Car Retailers’ blog gives you an action plan to close the gap.

* How to build top-performing auto dealerships | McKinsey