3 Ways to Use Data Analytics to Improve Dealership Performance

Running a dealership is like driving down a busy highway. You need the right car in stock, a clear roadmap to reach your target customers, and functional operations to keep things running smoothly. But in today’s competitive market, relying on instinct and experience alone can leave you stuck in the slow lane.

In order to remain relevant and maintain a competitive edge, dealerships must focus on optimizing their sales strategies, inventory management, and customer engagement processes. This can be done through the power of data analytics.

Data analytics put your dealership in the driver’s seat. By harnessing VIN-level insights, dealers can fully understand market trends, customer preferences, and operational efficiencies. However, the challenge lies in developing an effective data analytics strategy.

The age-old methods of sifting through complex reports or manually merging data are no longer enough. Dealerships need sophisticated analytics solutions that can filter through the noise, providing actionable insights in real-time. This calls for a shift towards more advanced analytics, like an automotive data platform that can handle vast amounts of data and deliver clear, concise, and immediate results, empowering dealers to make fast, informed decisions. Below are Lotlinx’s top three ways to use data analytics to its full potential.

1. The KPIs Don’t Lie

Key Performance Indicators (KPIs) are the pulse of your dealership. Identifying and understanding logistical bottlenecks across service, sales, and parts departments are crucial for synchronizing operations and enhancing overall dealership performance.

How efficient are your service techs? What is the turnaround time for part orders? How accurately is your inventory management going? All of these are good benchmarks on which to measure your dealership performance.

By quantitatively analyzing these aspects, dealerships can pinpoint areas needing improvement, creating a culture of productivity and progress. Lotlinx Sentinel the VIN Management Platform provides easy access to these analytics, enabling dealerships to benchmark their KPIs on its easy-to-operate inventory management platform. This strategic approach streamlines operations and is the keystone for elevating to 300% VIN coverage.

2. Measure What Counts

Deciding which metrics to track is a common challenge for dealerships, especially when juggling day-to-day responsibilities. However, aligning dealership data objectives with IT goals is important for integrating operations across sales, services, and parts. From a managerial standpoint, this can be simplified into three main areas:

  • Financial: Use data to set and achieve goals related to the rate of return on equipment, asset management, and budgeting. Think about how well you manage assets and if you have benchmarks for economic downturns.
  • Market: Establish a baseline for customer retention and then expand data analytics to grow market share. Here, you must know how you are quantifying customer satisfaction and what actions you can take to improve it.
  • People: Measure employee performance to understand the dealership culture better. Think about how your dealership is comparing across departments to lower turnover or burnout to create a sustainable culture.

Managing these areas correctly depends on accurately measuring them beyond setting profit goals for services. When these goals aren’t met, the right analytics tools can perform deep dives into the data to identify issues, whether they stem from inefficient billing, poor time management, or more complex problems. Such an analytical approach can help uncover discrepancies in service billing, significantly improving departmental profitability and turning a struggling service department into a lucrative one.

3. Predictive Analytics for Inventory Optimization

Predictive analytics revolutionizes how dealerships improve dealership profitability through their inventory. Its power lies in its ability to anticipate market demands and customer preferences, empowering dealers to make smart stocking decisions.

By analyzing current market trends and understanding your customers’ buying patterns, predictive analytics helps you stock pre-owned vehicles in high demand. This ensures you’re investing in quickly moving inventory, reducing holding costs.

For example, under the leadership of General Manager Edwin Tan, San Francisco Toyota leveraged Lotlinx’s advanced retailing platform to improve its dealership operations dramatically. By integrating AI and an automotive remarketing solution, the dealership identified which vehicles would sell the fastest based on historical sales data and market analysis, then refined its marketing strategies, reducing the average days on lot for each car from 45 to 15. This raised inventory turnover, in turn.

Knowing better what their customers preferred and needed over time, their inventory sales increased to 27% year-over-year, catapulting its ranking among national Toyota dealerships from #93 to #33.

Unlock the Full Value of Your Dealership’s Data

Adopting data analytics in dealership operations might seem daunting at first glance. Yet, the strategic integration of this technology lays the groundwork for sustainable growth and enhanced customer satisfaction for years on end. To learn more about which metrics you should track in each department, request a demo of Lotlinx’s innovative AI integrations.

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