A Map for the Road Never Traveled

POSTED ON October 27, 2020

How do you draw a roadmap for your business when faced with a circumstance that no one has ever dealt with before? What’s the baseline for expectations moving forward? Given a pandemic that impacted businesses very quickly, the team at NCM Associates wanted to provide their dealer and manufacturer clients with a tool to help navigate anticipated business fluctuations. It was clear at NCM that we needed to help provide direction – assisting dealers in getting ready to reengage their operations. An NCM webinar on business reengagement led a small group at NCM Associates to put their collective experiences and thoughts to work, and the result was a business reengagement tool known as the Emerge Stronger Scorecard (ESS) Composite.

Our first task was trying to identify what we felt would be a solid metric for dealers to know if they were on the right track in the reengagement of their business. We needed to give dealers a clear and concise tool of operational parameters that they could relate to. This led to a discussion on past business results. Do we look at the last auto decline cycle or do we use the best- or worst-case scenarios? The group kept coming back to one key item – 2019 was a steady year that we knew dealers felt had been a solid, successful year with consistent operational results across all departments. So why not use the average monthly data in 2019 as the baseline for how dealers would be measured during this period of unknown business expectations?

Now that we had the baseline, the next challenge was determining what to measure. It had to be succinct and delivered in a package that was easily interpreted by our clients. In short, it had to identify what mattered most to dealers and their management teams. The NCM team reviewed key dealership metrics and from this assessment, a seventeen-page composite was produced. What was different about this composite was that there were fewer metrics per page, along with fewer pages than a normal composite. Specific focus was given to operational productivity in dealerships. Items such as new and used volume and gross profit, personnel productivity, key expenses, and fixed department sales and gross were addressed. All of the data was driving to a recap of operational profitability. This was a quick snapshot that would help dealers with the infamous “map for the road never traveled” question.

The final piece was to determine how to measure in a period where we could not predict fluctuations for the months ahead. The baseline being an average month in 2019, we decided to provide dealers with three months of data. From this data, we would compare the most current month versus the baseline, as well as the two previous months. This provides dealers with the opportunity to measure their operations over a short time frame given the uncertainty of this pandemic, be it today or in the months ahead.  

So how did the ESS composite fare for dealers? The results were impressive. The composite spawned a tremendous number of ideas and business discussions among dealers and operators, who emerged stronger from the curveball that was delivered to the industry. Upon releasing the tool to our NCM team, dealerships’ 20 Groups started meeting regularly, virtually, to measure their performance versus the ESS baseline. While the data and benchmarks are well-received, what’s equally important is the sharing of ideas, processes and discussions that NCM industry experts facilitated. None of us had ever navigated through a pandemic that impacted all facets of the dealership. But now we have a solid tool to help reengage dealership operations today and through whatever might impact it moving forward.