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Dealership Business Modeling
DSES 2018
Dealership Business Modeling DSES 2018 Grandpa Bay/Trolley Corner - - PowerPoint PPT Presentation
Dealership Business Modeling DSES 2018 Grandpa Bay/Trolley Corner - - PowerPoint PPT Presentation
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
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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
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Business Model:
The rationale by which an
- rganization creates, delivers and
captures value.
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Transactional vs Subscription
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Blockbuster founded. Grows to 8.4 billion by 1994
1985 1998
Netflix founded because Hastings was frustrated with his late fee.
2000
Blockbuster turns down offer to buy Netflix for $50mm Blockbuster enters 20 year deal to stream
- n-demand movies.
Blockbuster enters DVD by mail subscription business. Enron files for Bankruptcy.
2001 2004
Blockbuster markets ”no late fees” and is sued in 48 states.
2005 2007 2006
Netflix 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
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Refusing to let go of the past is usually more dangerous than ignoring the future.
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- 1. Commitment to a clearly defined
model
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Revenue
Time Revenue
Conditions: Conditions: 20% Customer Growth $2,000 Per Transaction
One-time Revenue Subscription Revenue 20% churn Subscription Revenue 10% churn
+333% ! +333% !!
One-Time vs Subscription
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Cash Flow
Subscription generated cash
Cash BE Time Cash flow +165 deals per month +330 Deals per month
Conditions: Conditions: $180 CAC $15 MRR per
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Customers sold Avg Transaction % Late Fees $ Late fees Subscriber base MRR Chun CAC LTV
One -Time Subscription
Metrics
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- 2. Deliberate choice of key
metrics.
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Marketing Education Sale Online Conversion Demand Gen Point of purchase Process Recommendation Engine Fulfillment Concessions Late fees Structure Digital CX/UX/UI Logistics Robotics Low skilled workers Real Estate leasing
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- 3. Alignment of assets to model
achievement.
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Applying model innovation to dealerships.
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Distributors are model and experience innovators.
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Isn’t our model constant?
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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
!
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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
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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
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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
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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.
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Which store would you rather be?
Our old metrics are incompatible.
$35,000 $30,000 $31,000 $30,000 $30,000 $29,500 $5,000 Discount $1,500 Gross $1,000 Discount $1,500 Gross $500 Discount $1,000 Gross B A C
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Which store would you rather be?
Our old metrics are incompatible.
100% Commission Hire 10 to keep 3 70% Turnover Gross only focus B A Salary + Time to productivity Performance Review Score Focus to match your model
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Front Gross Back Gross Volume % Commission Avg Discount Dealer Gross Turnover Time to Productively
Traditional Modern
Metrics Match the Model
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Marketing “Meet or beat price” Come in to deal Transparent price Transact where you are Process Late disclosure of info “If I could, would ya?” Responsive Selling Digital Retailing Structure Commission only Low Skilled “Stay stupid” Turn & burn employees Strong Customer Experience Salary based + High Retention
Traditional Modern
Alignment
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How do you create alignment? Process.
Recruiting & Hiring Employee Onboarding Training & Development Performance Reviews Variable Compensation
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Grandpa Bay/Trolley Corner
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Thank you
Jared@DrivingSales.com