Top performing auto dealerships are three times more profitable than the average. This comes from a McKinsey Quarterly report (June, 2007). Three times more profitable!
I believe there is an important lesson here for business in other industries.
Here are the key factors that differentiated the Top from the Average:
- Employees - Top performing dealerships put more energy and resources into employees—selecting them, training them and providing long-term incentives.
- Customer Loyalty - Customer loyalty strategies were put into action in a more comprehensive way by top performers. Strategies that helped customers understand the value of maintenance, how to get the most our of the dealership, and ways that simplified the process for the customer.
- Competitive Differentiation - The relationship between the automaker’s representative and top performing dealership was much stronger. They spent much more time coaching and long-term business planning all directed at addressing that dealerships’ unique challenges.
The top dealers were more profitable because they had lower acquisition costs and made more profits from services.
When I take an integrated look at the key factors I see a concerted effort to deliver a compelling customer experience.
