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There are 5 Key Measurements Critical to Determining the Actual Profit Value (APV) of CRM Activities in a BDC
By Ralph Paglia
In August 2005 I had the privilege of going to work for the largest sales volume and revenue Chevrolet dealership in the world, Courtesy Chevrolet in Phoenix, AZ. Based on my previous 24 years of experience in developing “CRM Programs” for both dealerships and car companies, I knew that effectively communicating the concept of a CRM Profit Center to Courtesy’s entire management was one of my first essential objectives. This brief article was originally used to introduce Courtesy Chevrolet’s management team to the 5 most essential results measurements that must be tracked if ANY dealership is to be successful in managing their CRM activities as a source of incremental profits arising from the dealership's investment in a Business Development Center (BDC)… What I call a CRM Profit Center.
Let me begin by assuring you that dealerships which have been successful with CRM from a Profit Center approach usually develop additional measures to these 5, but the more sophisticated measurements are not useful without these five. Additionally, keep in mind that these 5 key measurements (metrics) must be tracked for each category of CRM activities. There are many sub-categories, especially in Service CRM that we must track, but here’s an illustration that displays the 8 general CRM categories:
As you can see, there are 4 Inbound (customer initiated) and 4 Outbound (dealer initiated) CRM Process Categories. At the dealership management level, a summary report of CRM activities within each of these 8 buckets should be reviewed weekly, or at the very least monthly. I also want to point out that the Inbound Showroom category is best looked at from a customer information capture perspective within an overall CRM program. For every other type of CRM Process Category, here are the 5 Key Measurements:
It has been my experience that although just about every manager sees the importance of measuring these 5 results of CRM activities within each category, but other than Internet, very few dealerships do it. Then there are the dealership managers who “get it”… These are the ones that show up at one of our CRM seminars and bring these 5 measurements with them, broken out into several categories of activities or CRM campaigns resulting from data mining programs. And, the ones that are in the top 10% of all dealerships in regards to CRM performance will analyze each CRM category and data mining campaign with some of the following performance ratios that are made possible by these 5 key metrics:
Without the 5 Key CRM Measurements, we could not see the above analytics, or use them to manage our CRM activities. But, why are these performance ratios important? Let me list some of the more basic reasons and a few examples of how managers in dealerships use these ratios:
Let me close by showing a
partial illustration (Outbound CRM only) of the 5 Key CRM Metrics listed in a simple Excel Spreadsheet format:
By tracking the profits generated from dealership appointments that result from CRM activities executed in our BDC, CRC, CCC, CDC or whatever you brand your profit center... We can not enter the total gross into a spreadsheet and see which CRM follow-up activities are worth more than others, as well as the actual profit value (APV) of each CRM activity completed in the BDC... This screen shot below is from one of those spreadsheets as used by a California Toyota Dealership where the APV of every customer contact they make is just a little below $20.00:
Once a dealership starts tracking the APV of each CRM activity executed in a closely supervised BDC environment, justifying the ROI should become more academic than practical. Once a dealership starts seeing real dollars of profit tracked back to every time somebody in the BDC picks up a phone, the real issue becomes how to enhance and grow BDC productivity!
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