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Dealers can Calculate the Return On Investment (ROI) of Customer Relationship Management (CRM) Daily Work Plan Activities in a Business Development Center (BDC) by Tracking 5 Key Process Measurements...
From August 2005 through the end of March 2007 I worked for what was at the time, 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 applications and the process implementations necessary for getting up and running in a dealership, 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 article shows what we used to introduce Courtesy Chevrolet’s management team to the 5 most essential results measurements for a BDC operation... And, gain their buy-in and commitment to manage the collection of data necessary to have accurate measurements. These are the fundamental measurement points that must be tracked by ANY dealership that wants to be successful in managing their CRM activities as a source of incremental profits. Once we have a return on each type of CRM process activity or task measured and calculated, we can then compare the total returns to the costs associated with the dealership's investment in a Business Development Center (BDC) to track and consider the ROI on a monthly basis… The objective being to operate what I call a "CRM Profit Center".
Most dealerships which have been successful with CRM implementations from a Profit Center approach usually track additional performance metrics and Key Performance Indicators (KPI) above and beyond these 5. However, these additional and sometimes more sophisticated measurements are not useful without these five essential operational measurements.
It is critically important to keep in mind that these 5 key measurements (metrics) must be tracked for each category of CRM process execution activity. 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:
Shown in the diagram above 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:
Although just about every manager sees the importance of measuring these 5 results of CRM activities within each category (other than Internet), very few dealerships actually do it on a consistent basis. The exceptions (exceptional) are the dealership managers who “get it”… These are the ones that show up at various car dealer conferences and CRM seminars, bringing these 5 measurements with them, broken out into several categories of activities or CRM campaigns resulting from data mining programs. The managers and dealership operators who are in the top 10% of sales and service revenue performance among all dealerships will usually analyze each CRM category and data mining campaign with 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:
Shown below is 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 name you choose to brand your CRM profit center, we can now enter the total gross into a spreadsheet and see which CRM follow-up activities are worth more than others, as well as the gross profit value (GPV) 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 GPV of each CRM activity executed in a closely supervised BDC environment, justifying the ROI should become more academic than practical. When 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!