Your dealership Avg. Discount Report. Are you tracking it???

[Rick Buffkin]

I had a rep ask me this question earlier this week. My answer was simple. "No, not really!". The question isn't about your Avg Discount you have your cars priced to market. The question is, your transaction sale price compared to the last / most recent sale price the car is priced at online before it was removed and tying it back to sales mgr's that desked the deals and the reps that sold the cars . Are you tracking that? If you are, how? Are you using Excel and making a spreadsheet? Maybe using Google Charts or Plotly or something along those lines. Maybe your CRM or DMS has the data in it? Currently I don't have anything in place to track it. Sure we track gross and other items but not the Avg. Transaction Discount . I think this would be something interesting to track Sales Mgr's and Sales Reps on.

Thoughts?!?!?!

 

[Brendan Dolan]

I didn't track it on new, but I did on used. I was a big Dale Pollak vAuto Velocity kool aid drinker, and the rule was the desk couldn't discount the used car more than $500 without calling me to explain why. If I'm vRanked 2/25 and I've had the car 10 days with leads on it, I'm not taking another grand off just because.

I'd pull a sold log out of vAuto, dump it into excel, and then grab the sold log out of Reynolds and compare.

 

[jon.berna]

This is one of the more annoying to collect, yet useful metrics to track. We feel it is better than tracking FE GP for sales people as obviously they don't control the cost or the internet price. To do this we refresh with the inventory management software 6x a day and store the last online price each night. When the car sells we compare the sold price to the last online price we stored from the previous feed. We also call this the transaction discount.

 

[Rick Buffkin]

@jonberna I like the report. It has alot of data, Any thoughts on adding make and model to it to identify which models are selling over Inet price vrs which ones are selling below?

 

[jon.berna]

We haven't visualized that before, although all of it is in the warehouse! We are storing everything at the record level so anything is possible. In our email alerts we also show by manager. General consensus we hear is discounting is a human influenced metric more than model influenced. It is also obviously a function of recon.

Another 'goofy to measure' metric we show is the future values on trades based on the manager that took in i.e. future sales price minus allowance. Both of these metrics are signals to behaviors which tend to have more value than vanity metrics.

 

[jscole86]

@jonberna That's a great report and something we do track on a monthly basis. Although it would be much better to be automated and see it on a daily/ongoing basis like yours. Ours isn't as slick and automated as yours, but it at least gets us the number we need by sales rep. Do you also track the average discount by age of vehicle? We find more discounting on fresh units vs. aged (ie really aggressive pricing).

If only we had the resources to build out that level of reporting!

 

[jon.berna]

We have seen the same exact thing re: discount rate decreasing at a linear rate of change with age. It's actually a really great idea to add to this report, just a simple drop down with age buckets. Another idea is to send an alert when a car is sold at discount percentage based on thresholds that change based on the age of the car sold. So you only have to worry about it as a GM, dealer if a car is sold outside of the threshold.

We have been running out of real estate lately and there is something to be said for addition by subtraction, these alerts make more sense to help in that effort. Re: resources, I hear you on that front. That was part of my reason for starting this - I just always wanted to build cool reports.

I have easily had 100+ conversations in demos and review calls about managing SP and managers based on discount rate vs. FE GP. There really is a pretty large consideration/adoption to make this much more of a focal point for compensation. I see it as a qualitative metric versus a quantitative metric though. It's important to factor in future trade metrics as sins can show up there in allowance vs acv to manipulate discount rate i.e. don't discount the car sold and instead bump the trade.

Are you guys/gals using this in compensation or part of performance reviews?

 

[jscole86]

Are you guys/gals using this in compensation or part of performance reviews?

It's been a component of our sales comp for a couple years now. Our sales team is very aware of their discount average - and you'd be surprised at how much they build value & push back about our pricing philosophy. But you are 100% correct, we also track the average over/under allow to make sure the discount isn't being hidden in the trade.

 

[jon.berna]

This to me is an enlightened way of compensating sales people. Know that many are talking about potentially doing this, some are just getting started and you have already been at it for a couple years. Very innovative Josh!

Are you able to share any before and after lessons or change in total sales or total GP? (You can use %s to hide real numbers). I think it would be good for everyone just reading to see the results of a change like this.

 

[Brendan Dolan]

Are you guys/gals using this in compensation or part of performance reviews?

I didn't tie it to their compensation, since their inability to hold gross hurt their paycheck. I'd just use it as a performance review to show them that they're deviating from where we want to be, and that's why their paycheck is light.

They can complain till the cows come home about how to sell cars on a 27 day turn there is no front gross, but when you show them a report that they're the only one that discounts more than a few hundred bucks, then it shows them the areas they need to work on.