Any auto dealer who wants to understand the importance of turn rate should visit a Greek Restaurant at the height of the lunch rush.
Customers come in. They place their order. Food comes fast. They eat it quickly, pay the bill, and are on with their day. Another customer comes, takes that table and the process repeats. The wait staff and cooks are moving in a near choreographed precision getting as many customers in and out as humanly possible.
Think about it…if a restaurant can get people in and out of a table in 20 minutes instead of 30, they can make 50% more revenue. But, the longer a customer occupies a booth, the less money the restaurant makes.
For dealers, it’s like leaving inventory on the lot for too long. If you can sell a vehicle in five days instead of 10, it is much more profitable.
The key is tying together the process from vehicle acquisition to reconditioning, to marketing to sales. This flow needs to be equally as well choreographed as the restaurant lunch rush to increase turn rate and maximize profits. Fortunately, technological tools (including our MarketAI platform) are evolving to make this lofty goal an attainable reality.
Acquire the right vehicles, faster
On the vehicle acquisition side, our MarketAI platform helps dealers better understand their market, so they acquire the right inventory. A dealership, its sales history, and its local market will be different in Toledo than it will be in Tucson. One market might skew more toward passenger vehicles, while another does high volumes in pickup trucks and SUVs. By using MarketAI, the dealer might learn that they should only stock one pickup for every five high-mileage, passenger cars, for example. Stocking the right vehicles keeps cars and trucks from sitting on the lot for too long.
The same principle works for ordering used vehicles at auction. No matter how low pickup truck wholesale prices might be, those vehicles might not meet the unique needs of the dealer’s local market. Applying MarketAI can provide the same insights for used vehicles as they do for new.
The next phase in the used vehicle cycle, reconditioning, can be positively impacted by software that connects every team member with a role in getting vehicles from acquisition to the sales floor. Given that a used vehicle loses $40 in value each day, Time to Line (T2L) is becoming an important benchmark in dealership performance. Substituting software for manual processes can cut T2L by more than half.
Target and Market to the right customers
Next, vehicle marketing needs to be highly targeted. Acquiring the right vehicles and quickly getting them to the showroom floor is important, but it goes for naught if you don’t reach the right customer at the right time. This is another area where the MarketAI platform is a powerful ally.
The ZeroSum MarketAI platform takes the guesswork out of automotive paid advertising by leveraging machine learning and real-time data to be more efficient than any human alone. It is the secret weapon dealers need to turn vehicles faster than anyone else in their market.
The MarketAI software uses real-time data to allow dealers to adjust creative and spend on the fly to find the perfect combination that drives more customer engagement and helps close more sales quickly.
Dealers who can leverage these technologies to bring in the right vehicles, develop the right message and target in-market shoppers are the ones who will succeed in bringing down their turn rate. Having vehicles sit on lots for days on end is a dead-end for any dealership. The key ingredient for success, MarketAI, will help keep a dealership moving just like that high-functioning Greek restaurant.