GSA E-News
(featured article from latest edition)

How the heck can I forecast my business?
by Gart Sutton
 

Hopefully your New Year planning is full of meaningful resolutions for your dealership.  The definition of resolution is: (a) resolving to do something and (b) course of action determined or decided on.  Question:  Do your resolutions include forecasting for 2012 or have you discontinued this effort? 

As industry educators & trainers, we are frequently asked, “How the heck can I forecast my business when there is so much uncertainty in the market?”  We know it’s difficult, and that is why we’ve adapted a different approach with our 20-groups, consulting services and classroom instruction.

Forecasting used to be a simple process that involved “Trend-Line Analysis.”  You merely charted 3-years of performance (for any department and in any desired category).  Each variance was identified with cause-and-effect reasoning.  Based on the year-to-year comparisons and other factors (e.g., inventory, human resources, market trends, etc.), you plotted monthly forecasted “guestimates” for the upcoming year.

Well, things are not – and may never be – that simple again.  Our industry’s many years of record-breaking highs have now seen years of record-breaking lows.  Dealers across the country are perplexed with their inability to determine what is going to happen in their stores.  We are left with a complex situation of controlling expenses while trying to maintain adequate customer-traffic coverage. 

Our more successful dealers are now taking a different approach to forecasting.  When forecasting, they focus on (a) door swings, (b) Sales Department traffic-log entries, (c) Parts & Accessories counter tickets, (d) Service repair orders and (e) CRM entries. The key question that must be answered is: “What did you do with what you had?”  Once you know what you did with what you had, you can project with better accuracy the future outcome.

Do you know what you have done with what you got?  Our successful 20-club members know.  They have door-counters on every door that customers might enter.  They are finding their traffic-levels are not necessarily the problem.  The challenge lies with closing ratios and the customer’s capacity-to-buy.  These dealers know that without adequate/accurate records, they would be working totally in-the-dark.

2012 is the year to tie things down.  This is the year to “take no prisoners” when it comes to good data and careful analysis.  The data should drive motivation and ultimately superior performance.  There are no excuses, so let’s make it happen!

BTW:  Some dealers have issues regarding door-counters.  Keep in mind, we are not really looking to count customers as much as we’re looking for traffic trends.  All of us have “X%” of our door swings due to employees.  But we have found that this “internal” traffic remains fairly constant.  So any increase (or decline) in real customer traffic is easily discernible.