Standards Management; The Key to Driving Dealer Performance

Traditionally, OEMs have used standards management to ensure dealer compliance with brand standards programs and to control brand image. But with the current economic conditions, standards management can be more important than ever as it not only ensures consistent brand delivery during uncertain times, but can also hold the key to performance improvement strategies.

The time is ripe for OEMs to look beyond reactive performance auditing and take a more proactive approach using standards to drive performance improvement across the retail organisation. By understanding the commonalities among high performers and then establishing correlating benchmarks for the balance of the retail body, OEM can identify untapped opportunity to increase sales and profitability; raising the bar on quality, and establishing greater consistency within the entire network. The end result is simple: a higher quality network, means better performing dealers; and better performing dealers mean more satisfied customers and increased sales.

To realize this untapped potential, OEMs need to change the way standards are both collected and measured. It isn’t about the quantity of standards, but the quality of each standard that drives performance. By applying science to standards management, OEMs can uncover the valuable, hidden insights that lie embedded in performance variations within the retail network.

MOVE BEYOND THE YES/NO ANSWERS

Today, most OEMs are collecting yes/no responses when managing standards, which work well for simplified assessment of dealer compliance. However, to facilitate standards driving improved performance, OEMs need to collect detailed responses and to compare standards compliance with other benchmarks of retail performance (sales, effectiveness, etc...).

The answer is to apply a list of simplified, criteria-based standards that tie performance directly with results. Once each standard is statistically linked to a specific Key Performance Indicator (KPI), OEMs can then uncover the specific relationship between standard and driver in order to evaluate dealership performance.

THE METHOD TO THE MADNESS

OEMs need to adopt a scalar method to analyze the relationship between specific KPIs and standards. A scalar method provides specific values per standard which provide greater insight into how a dealer is performing. This suggested scientific approach to standards management begins as always, with the assessment of performance, then comparisons are made between profitable, sales-effective group averages and expected sales.

For example, a common OEM standard is dealership salesperson training.  Currently, a simple yes/no is collected to determine if the dealer has conformed to the standard, and the analysis stops there. While this is an appropriate standard, if a more detailed question is asked, an OEM can determine how many sales people are currently employed, and the total number of hours of training. Then, by using the scalar method, OEMs can measure this information against the performance of each sales person, further analyzing the relationship between trained sales personnel and sales effectiveness as indicated in the chart below.

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Given the current economic condition, OEMs need to take advantage of the insight hidden in their current standards management data and move beyond the basics to drive actionable performance plans. A more detailed, scientific analysis of standards promotes an overall healthier network for the OEM, increased profitability for the dealer and a more satisfied customer.

To learn more, contact Urban Science