Managing by Numbers
“You can’t manage what you don’t measure” is often attributed to business guru Peter Drucker. (co author: The 1 Minute Manager)
Managing by Numbers is about keeping a focused eye on key performance indicators (KPIs) that drive sales success.
Like most things in life, running a business is getting more challenging. We see how the high performing dealerships know and use our metrics well, but I understand that it is more complex than just that. We discuss the ramifications of not drilling down on the KPI’s that lead high performance, with all levels of dealership management.
Numbers-Driven-Metrics based management is about keeping a focused eye on the key performance indicators (KPIs) that drive your sales organisation.
The theory is that you can utilise proven KPI’s and metrics to hold your managers and sales
teams accountable for High Performance in any market.
Performance-based management is picking the right metrics, agreeing on the actions that drive those metrics,
reviewing them, re-training and holding people accountable. Leading indicators signal future events.
An example comes from sport. Great coaches don’t focus on the score. Instead they focus on leading indicators. Leading indicators in sports are recruitment, skills training, skills KPI’s, player health and reading the game. The lagging indicator is actually the score.
Our Managing by Numbers performance management system has Leading Indicator metrics that drive lagging metrics.
Mostly we focus on the Leading Indicator KPI’s because that is what we can control day to day. The Lagging Indicator metrics, like closing ratios and sales profit, don't help us immediately because by the time a problem is normally identified, it's too late to change them.
Both Leading and Lagging indicators drive behaviour. So we need to be aware of the behaviours you are seeking because you get what you measure. Knowledge of leading and lagging indicators reinforces deadlines, gets sales team members engaged and creates High Performance sales environment.
Predicting and rectifying poor performance
Managing to Numbers will tell you what has occurred and if sales managers are trained, Managing by Numbers can be used to
predict what to do if the actual results are not meeting the desired results KPI’s.
“Every DP, GM and sales manager really would like to anticipate what problems or opportunities may occur over the next weeks or months, so they can work to create a high performance outcome.”
Managing to Numbers produces metrics including actuals to targets that allow good sales managers to predict what will continue to occur unless a change in attitude or process takes place.
It even predicts precisely what to do to correct the trend. Effective sales leaders do more than just manage to numbers—they manage productivity and efficiency.
Managing by Numbers is utilised to motivate sales teams to operate at a consistent high level of performance.
- MbN de-personalises any productivity and efficiency discussions as the numbers being discussed are based on the information provided and entered by the various sales managers based on actual performance.
- MbN can be positively utilised if the numbers are viewed as data and not used and interpreted as a personal criticism of any individual or collective group.
- MbN is an efficiency tool to examine performance and apply management logic that will be used to create more effective operational performance, and cultural improvement.
- The Managing by Numbers methodology is utilised to develop a self-empowering high performance culture.
Managing by Numbers provides unemotional data to assist your sales management team to:
- Develop specific training and operational plans to counter low performance.
- Create specific action plans to develop high performance on a consistent level.
- Anticipate and plan in advance, based on current AutoMbN data.
- Unemotional data that can’t be disputed.
Managing a broad set of KPI’s
This means maximising the full potential of your sales teams, systems and processes—and this requires having a broad view of data.
This includes metrics such as:
- The number of walk ins, phone ups and internet selling opportunities that each department achieves in any given period.
- The sales process KPI’s that create the results. E.g. demo ratios.
- The “be-back” ratio to unsold first visit prospects.
- The closing ratio of be backs.
- The acquisition ratio of vehicles traded on our product.
- Individual sales consultants productivity and efficiency scores.
Identifying Best Practices - Predictive Analytics
If you have the current MbN information, you can easily identify best practices and KPI’s within your sales team that increases
not just one person’s productivity and efficiency but every team members?
Imagine having the insight, flexibility and capability to micro manage individual team member’s processes as needed and still completely track productivity and efficiency across your sales team?
Managing by Numbers provides unprecedented visibility and insight but with the ability to drill down into the 3W’s.
The “Which, Why and What” of the numbers to drive better sales force efficiency.
It also provides predictive analytics to help you forecast actions required to change process and sales outcomes for the better.
Armed with this actionable intelligence, you can make better decisions about how to create a more nimble, productive and multi-talented sales force while simultaneously increasing efficiency, sales numbers and increasing ROI.
Metrics are the Score
Auto dealerships sales organisations must know the key metrics to achieve high performance outcomes.
They are the score of the sales process!
They inform us if we are winning or not. Owners love the numbers because they don't participate in the daily sales operations, so the only thing they can analyse is the numbers.
The Numbers Predict Danger
Our Managing by Numbers system will detail the leading metrics which drive lagging metrics.
As senior leaders, we need to focus on the “leading indicators”, because that is what we can control day to day. They influence the “lagging indicators.”
Do you know the full potential of your sales organisation?
Are you currently managing to maximum efficiency?
Do you know the High Performance numbers?
The Metrics are Gospel
We use, manage and analyse metrics because we have the metrics that most influence high performance history in auto sales.
Always ask yourself this question? What does a metric tell me?
What does it affect? Is it telling me what I need to know?
We personally review and audit our dealer clients metrics weekly, monthly and quarterly across all reporting dealers to answer those questions.
We then share this information with all sales managers and then discuss this information with the best managers and get them involved and understanding the metric to better manage their own dealerships but also contribute to high performance in other dealerships.