Why Car Dealership Managers Want Sales Indicators to Lead More Than Lag

The following is adapted from Fearless by Tim Kintz.

As a sales leader, do you ever find yourself amazed as to why your dealership has some “blow the numbers out of the water” months, and some “What the bleep happened to our sales” months?

Unpredictable results make us reach for the stress ball on our desks way too often. They cause a fear of the unknown. How can we plan long-term if we don’t know what to expect from our next month’s sales? How can salespeople relax and operate from a mindset of confidence and clarity? How do we know what’s working and not working in our customer interactions? 

These uncertainties add up to a big problem. Luckily, it’s one that can be solved by following the right indicators.

The Difference between Leading and Lagging Indicators

In a dealership, you have to study leading and lagging indicators to know when to advance and when to drop back. Leading indicators are signs that help you anticipate a strategic next move. Lagging indicators are usually the results that come at the end of the sales process.

The traditional metrics a dealership follows are the lagging indicators: How many did we sell? How much did we make? What’s our net profit?

While those numbers are the final score, and they’re important to know, they don’t tell us the reason the win or the loss happened. However, in order to play competitively, you need to pay more attention to the leading indicators.

A leading indicator gives you the details you need about what play to call next. These indicators include but aren’t limited to:

• How many internet leads are we getting?
• How many emails did we send out?
• How many texts did we send?
• How many calls did we make?
• How many appointments were confirmed? 
• How many walk-in customers did we get?
• How many presentations or demonstrations did we do?
• How many customers made it to the negotiation? 

These leading indicators will ultimately lead to results. Managers are tempted to focus on the final outcomes—after all, that’s what pays the bills. However, if you want to change those final results, you need to improve the activities that get you there by focusing on the leading indicators.

Survival Mode versus Success Mode

Survival mode is what happens when a dealership is defined by lagging indicators. The managers are disorganized and don’t focus on the details. Instead, they’re solely focused on the numbers at the end of the month—the sales and their volume—but they aren’t thinking strategically about how to get there. This is akin to managing after the fact, and what good does that do?

At the beginning of every month, these managers pull goals seemingly at random. They might make it look sophisticated, but without the numbers guiding them, their goals are just a SWAG (Sophisticated Wild-Ass Guess). 

I hear these kinds of justifications: “Well, the salespeople had a bad month.” The fact is that they didn’t have a bad month. They had bad hours, which turned into bad days, which led to bad weeks and became a bad month. 

At the end of a month like that, the dealership is in full-on fire-sale mode, trying desperately to regain lost ground: “Holy crap! We’re thirty units behind our goal and we only have three days left to make it happen! We need to bust our asses!” That is the epitome of survival mode.

On the other hand, if those dealerships ever have a great month, they have no idea what to credit that success toward. A conversation about that with those types of managers might go like this:

“Why did you have such a good month?”

“I have no idea.”

“What are you going to do to make this month strong?”

“Just…kind of…work harder? I’ll put more hours in. I’m going to get recommitted.”

That’s not a plan. There are no facts guiding their strategy—no attention to the leading indicators. When you’re managing in such a disorganized way, it’s exhausting. You’re more likely to burn out, you’ll sell less, and you’ll likely have more turnover. In other words, operating in survival mode won’t enable you to survive for long. 

Putting an End to Unpredictability

When you have the details, numbers, and stats, you know exactly what your end-of-month projections should be and you can adjust accordingly. Your salespeople track their activities and sales. You’re on top of checking those stats, using your employees’ numbers to help them improve. 

Managing to this level of detail will lead you to consistent, continual growth. Paying attention to the leading indicators enables you to operate in success mode.

Now that you know the importance of looking at the correct numbers for your dealership, you can act as more of a fortune teller than victim, more unshakeable than breakable, and more leader than lagger. 

For more advice on how to follow leading, not lagging sales indicators, you can find Fearless on Amazon.

Tim Kintz is the author of the Amazon bestseller, Frictionless, and president of The Kintz Group, the automotive industry’s premier sales and management training company. A graduate of the NADA Dealer Academy, Tim has worked in almost every position in the dealership. He delivers hands-on coaching, workshops, and presentations throughout the world, teaching universal sales and management strategies that have proven effective in every business sector. As a strong believer in the power of a great leader, Tim helps managers anticipate change, adapt to challenges, and focus on the individual.