dealership business modeling - drivingsales...
TRANSCRIPT
Dealership Business Modeling
DSES 2018
Grandpa Bay/Trolley Corner
Learning Objectives 1. Understand how automotive business model evolution is
impacting your dealership.
2. Discover strengths & weaknesses of prominent dealership models to react accordingly.
3. Align Marketing, Processes and Structure to make your Model
Business Model:
The rationale by which an organization creates, delivers and captures value.
Transactional vs Subscription
Blockbuster founded. Grows to 8.4 billion by 1994
1985
1998Netflix founded because Hastings was frustrated with his late fee.
2000Blockbuster turns down offer to buy Netflix for $50mm
Blockbuster enters 20 year deal to stream on-demand movies.
Blockbuster enters DVD by mail subscription business.
Enron files for Bankruptcy.2001
2004Blockbuster markets ”no late fees” and is sued in 48 states.2005
2007
2006Netflix reaches 6.3mm subscribers
Netflix partnership discussions. Blockbuster fires CEO over free rental from stores, refuses offer, raises prices, growth halts.
Blockbuster reaches 3mm subscribers on pace to double in 2007
Refusing to let go of the past is usually more dangerous
than ignoring the future.
1. Commitment to a clearly defined model
Revenue
Time
RevenueConditions:20% Customer Growth$2,000 Per Transaction
One-time Revenue
Subscription Revenue20% churn
Subscription Revenue10% churn
+333% !!
One-Time vs Subscription
Cash FlowSubscription generated cash
Cash BE
Time
Cash flow +165 deals per month
+330 Deals per month
Conditions:$180 CAC$15 MRR per
Customers soldAvg Transaction% Late Fees$ Late fees
Subscriber baseMRRChunCACLTV
One -Time Subscription
Metrics
2. Deliberate choice of key metrics.
Marketing Education SaleOnline Conversion
Demand GenPoint of purchase
Process Recommendation EngineFulfillment
ConcessionsLate fees
Structure Digital CX/UX/UILogistics Robotics
Low skilled workersReal Estate leasing
3. Alignment of assets to model achievement.
Applying model innovation to dealerships.
Distributors are model and experience innovators.
Isn’t our model constant?
Our old metrics are incompatible.
Inv. Mix
Front Gross
Back Gross Annual Volume
Total Gross
A (Unique) 17% $1919 $1000 201 $586,243
B (Plentiful) 39% $34 $1000 472 $488,013
C (Traditional) 23% $939 $1000 276 $535,456
D (Inexpensive) 21% $1352 $1000 251 $590,460
!
Our old metrics are incompatible.
Inv. Mix
Front Gross
Back Gross Dealer Gross
Annual Volume
Total Gross
A (Unique) 17% $1919 $1000 201 $586,243
B (Plentiful) 39% $34 $1000 472 $488,013
C (Traditional) 23% $939 $1000 276 $535,456
D (Inexpensive) 21% $1352 $1000 251 $590,460
What is “Dealer Gross”?
Dealer Gross
Doc $399
Recon $540
Pack $450
Total $1389
All gross that is triggered by the sale, that is not front or back gross.
Dealer Gross
Doc $399
DMA $540
HTB $450
Total $1389
Our old metrics are incompatible.
Inv. Mix
Front Gross
Back Gross Dealer Gross
Annual Volume
Total Gross
A (Unique) 17% $1919 $1000 201 $586,243
B (Plentiful) 39% $34 $1000 472 $488,013
C (Traditional) 23% $939 $1000 276 $535,456
D (Inexpensive) 21% $1352 $1000 251 $590,460
Our old metrics are incompatible.
Inv. Mix
Front Gross
Back Gross Dealer Gross
Annual Volume
Total Gross
A (Unique) 17% $1919 $1000 $1389 201 $865,205
B (Plentiful) 39% $34 $1000 $1389 472 $1,143,575
C (Traditional) 23% $939 $1000 $1389 276 $919,029
D (Inexpensive) 21% $1352 $1000 $1389 251 $939,163
B cars are 234% more valuable than thought.
Which store would you rather be?
Our old metrics are incompatible.
$35,000
$30,000 $31,000 $30,000 $30,000 $29,500
$5,000Discount$1,500Gross
$1,000Discount$1,500Gross
$500Discount$1,000Gross
BA C
Which store would you rather be?
Our old metrics are incompatible.
100%CommissionHire10tokeep370%TurnoverGrossonlyfocus
BA
Salary+TimetoproductivityPerformanceReviewScoreFocustomatchyourmodel
Front GrossBack GrossVolume% Commission
Avg DiscountDealer GrossTurnoverTime to Productively
Traditional Modern
Metrics Match the Model
Marketing “Meet or beat price”Come in to deal
Transparent priceTransact where you are
Process Late disclosure of info“If I could, would ya?”
Responsive SellingDigital Retailing
Structure
Commission onlyLow Skilled “Stay stupid”Turn & burn employees
Strong Customer ExperienceSalary based +High Retention
Traditional Modern
Alignment
How do you create alignment? Process.
Recruiting & Hiring
Employee Onboarding
Training & Development
Performance Reviews
VariableCompensation
Grandpa Bay/Trolley Corner
