The Most Inaccurate and Misleading Metric in Retail Automotive is Costing You Big-Time...

The Look to Book metric could be the most misleading, inaccurate, and meaningless metric ever created in the retail auto industry.

Olympic athletes compare themselves primarily to only two metrics: Personal Record and World Record.? Nothing else is significant.

Let's take a cue from these world-class competitors and stop using deeply flawed metrics such as Look to Book to assess our level of success when it comes to acquisitions.

Another example of the cost of using a flawed metric is CSI, where we compare ourselves to other dealers' scores rather than the actual bar for measuring whether we exceeded a client's expectations - your net promotor score, which pits us against Apple's, Amazon's and others every dealer states they want to emulate.

So what is wrong with Look to Book?

A typical Look to Book rate is between 45% and 50%, which doesn't sound terrible.? The problem - and high cost - with using this as your measurement of success:

It has been asserted to be an accurate measurement of our trade acquisition effectiveness and misled us into believing that we are doing an excellent job of acquiring used cars if we achieve a result of 50% or better.? Many used car managers may even use this incredibly inaccurate metric to show their dealer "proof" that their store is doing a good or even great job of acquiring used inventory, which fools everyone into thinking that there is a limitation on how many cars can be acquired.

That is about as accurate as the CSI scores we have been fooling ourselves with for years.

If you want to become the best at CSI, you must use metrics that are accurate and genuinely matter.? It is the same for used car acquisitions.

• Every dealership has hundreds if not thousands of clients who drive into their service drive every month - with a prospective acquisition.
• Every dealership has hundreds, if not thousands, of prospective clients coming in via the web or in the showroom every month with a prospective acquisition.
• Every dealership also writes up and presents prospective deal numbers to at least twice as many prospective clients as they sold.? So why do we only count the sales as the measurement of our success rate and not write-ups, walk-ins, and service drive opportunities?

Jack Nicholson famously said in the movie A Few Good Men, "You can't handle the truth!"? Well, if we want to go from wanting to be great to realizing that objective, we better start with this truth:

• 100 units sold, 50 appraisals, and 25 trades/acquisitions = 50% Look to Book.? There is only one problem: this is?wildly inaccurate.
• 100 units sold typically means at least 200 write-ups/proposals. 50 appraisals = 25% appraisal rate and 50% Look to Book?which is equal to a 12.5% actual trade/acquisition opportunity rate. This is an accurate reflection of your results. Well, kind of.
• To get the full-on, no-holds-barred version of any dealership's acquisition effectiveness, you must count EVERY single acquisition opportunity. [More on this later.]

Want to be the best?? Then, measure yourself against the best. When selling a car (new or used), the competition is probably the dealerships in your market area. When acquiring a vehicle, the competition is CarMax or Carvana - both have changed the game and set the bar higher regarding clients' expectations for a fast, fair, and accurate appraisal. And they don't fool themselves by using Look to Book as their North Star. They look at EVERY person who drives in as an acquisition opportunity. As Frank Knox , an 18+ year veteran of CarMax, recently stated, they target 100% appraisal of true opportunities and typically achieve 80% with their "We'll buy your car even if you don't buy ours" approach.

The result?? A whopping 85% of the cars they sold in 2023 were acquired from customers off the curb.? They had so many cars that they bought MORE than they could use and wholesaled 500,000 of them.

How would a typical franchised dealer currently compare?? Oh man, it isn’t even close.

The good news is that we can change that overnight.? In fact, immediately.

Let's start by no longer looking at, talking about, and most importantly using Look to Book as the true measurement for acquiring used car inventory because the truth is that it isn't.

It is all about appraisals - and what I call Appraisal Velocity.?

That means going from where your results are now to 80% of EVERY opportunity to acquire a car - website, phone, internet, customer pay and warranty ROs, walk-ins, and, of course, write-ups.

Most stores that use this accurate measurement of acquisition effectiveness appraise well at less than 10%.? Can you imagine how many used vehicles you'd have at 80%?

Can you imagine how much additional gross profit? Net profit? Income? As a data guy, I can tell you, roughly speaking, A LOT!!

So be like an olympian and go for the gold in acquisitions by using a comparison and metric that matters.? Appraisal rate (appraisals/total write-ups or total opportunities) and actual trade effectiveness. (vehicles acquired / total write-ups or total opportunities).

The only question is this: How can you appraise 80% of EVERY acquisition opportunity?

Spoiler alert:? It is absolutely not the failed approach that has been coming up short for decades.

Spoiler alert #2: To manage your inventory, use an inventory product of your choice. To have more inventory to manage and the right inventory at that, you better be using what the best-used car operators I know use - AccuTrade. Because it's able to achieve an 80% appraisal rate, a fair, fast & accurate appraisal in minutes (with or w/o a UC manager doing the appraisal), and maximum acquisition effectiveness.

Many of you have heard me say this: Want to sell more? Then, appraise more.

Want maximum appraisal velocity? Get the only solution that can make that happen.