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The New Data Visualization
Automotive retailing is an extremely competitive endeavor. In the U.S. and Canada there are at least 33 automobile brands for consumers to choose from. As the quality of manufacturing continues to improve, vehicles stay on the road longer, creating a glut of used car alternatives. On the service and parts front, a host of competitors vie with dealerships for customers. These factors are driving automotive retailers to continually explore new ways to maximize the performance of their operations. Dealerships have utilized aspects of business intelligence tools for years, but one of the most exciting developments for automotive and truck dealerships is data visualization.Data visualization is the graphical presentation of information that gives the viewer a qualitative understanding of information and stats about operations. In dealership settings, advanced visualization technology is offering ways to manage large amounts of complex data through a new visualization language - using colors and shapes that decision makers can easily consume, analyze and take action upon.
ADP Dealer Services, which provides computing and technology solutions to automotive, truck, power sports and marine dealerships, has an exclusive relationship with a data visualization company called FYI Corp. FYI and ADP Dealer Services are jointly building a technology suite that utilizes this technology to significantly improve dealership operations. FYI's solution, called FYI Visual, is advanced software that converts large amounts of information into an intuitive representation that users can act on immediately. One way to picture FYI's tool is to compare the display to a weather map, where conditions are understood at a glance, because millions of underlying data points are displayed in standardized colors and symbols. This patented technology leverages the brain's natural ability to recognize colors and shapes in greater volume and detail than numbers. It represents a new way to convert raw business intelligence into actionable information.
Figure 1
ADP Dealer Services offers FYI technology as a component add-on to our Decision Support suite of solutions, which help dealerships identify, manage, and predict performance issues and make informed, accurate decisions. With data visualization a dealership can instantly view the success of individual stores, departments within those stores, or even individual employee performance. All of this data is benchmarked against key metrics already in place and each level (store, department, individual) is benchmarked against peers. In visual form, the data is represented as KEGS (knowledge enhanced graphical symbols), patented by FYI Corp, in an advanced visualization dashboard that can present thousands of metrics on a single screen. This display provides visibility to domain knowledge of dealership metrics, relationships and patterns of data. Users quickly learn to identify the metrics associated with individual KEGS, enabling fast and effective decision-making that can deliver immediate results. With data visualization, dealerships using ADP's Decision Support can customize parameters. A typical case is to vary the color representation by percentage from the target value. Increments could be the difference of 10 percent between each level above and below target. In this example, blue represents better performance and red reflects poorer performance. Given that dollar targets can vary from year to year or even by month, percentages are one of the better ways to allow dealerships modify range values. The individual KEGS are then organized into "kegsets" of related metrics.
Note that in Figure 2, Store 002 is doing very well in several areas. Store 005, on the other hand, shows several areas of underperformance.
Figure 2
In automotive dealerships, revenue and profits are derived in four key areas: the sale of new and used cars, financing and insuring vehicles, servicing vehicles and supplying parts. ADP has developed a series of key dealerships metrics that measure the revenue and profit elements of each department. Going back to our example of store 005 (see Figure 3) we find that new car sales are relatively strong but the used car segment requires more focus.
Figure 3
Sales Department
Many high volume dealerships have multiple locations that each employs 15 to 20 salespeople. Given that more than 60 percent of total dealership sales are derived from this department, it is vital that managers have the ability to track performance of individual stores and salespeople. Figure 4 shows a view of stores nationwide and filters exceptions to look at individual sales reps, allowing managers to work with laggards or reward top performers.
Figure 4
Finance and Insurance Office
As margins on new car sales have tightened, there is pressure on the finance and insurance (F&I) department to deliver greater profits, which must be balanced against maintaining strong customer satisfaction index (CSI) scores (see Figure 5). ADP offers the ability to monitor the number of F&I or extended warranty deals a particular manager closes in a day, which correlates to the likelihood a customer felt rushed into a decision that created a negative experience. By setting a specific staff/deal ratio, management can effectively determine who is selling the right amount of add-on products and services.
Figure 5
Service Department
Though service revenue at dealerships averages less than 10 percent of total sales, it represents up to 40 percent of total profit, so managing this piece of the business is crucial to a dealer's success. Service departments face a variety of competitors: independent repair shops, quick lube locations, brake, muffler, tire and transmission specialists, and other dealerships can all lay claim to service dollars. To compete in this marketplace, service departments must manage operations with much greater efficiency than in the past. One metric that can help service revenue is the number of repair orders written per service advisor. If a service advisor writes up too few repair orders the revenue and profits of the department will suffer. If too many are written up, vital customer service might be neglected in order to jam more customers into the service bay. With this technology a manager can establish a pre-determined best case for repair orders and measure service advisors across the entire enterprise against that number.
Figure 6 looks at all of the service advisors in a dealer group and clearly shows that some advisors (0002) are providing superior performance whereas others (0004 and 0005) are struggling.
Figure 6
Dealers can similarly identify the best service advisors in the group (see Figure 7) to find out why they have excelled and reward their performance.
Figure 7
Parts Department
Many dealerships maintain daily parts inventory worth more than $1 million. The pressure on parts managers to keep inventory cycling, while meeting service department needs, is a key to running an efficient and profitable parts operation. Critical metrics include parts purchasing efficiency and total net profit. For dealerships sitting on large inventories, a key metric is true turns. If inventory turns are too low, the dealership could burn through cash, affecting overall profitability. In addition to selling in-house, the dealership retail parts counter can be an area of untapped profit. With data visualization, dealerships can take better advantage of this profit stream by monitoring the gross profit margin for counter transactions.
Figure 8
Much of this information is already available in one form or another within the dealership group, but not in an intuitive summary form that provides automatic notification to key managers whenever KEG-targeted values exceed pre-defined thresholds. As testimonials from our customers have shown, this new, intuitive form of data visualization is an exciting advance that allows managers to effectively and accurately absorb large amounts of data in a short period of time. The combination of ADP and FYI Visual technology will change the way dealerships are managed; I expect that you will find ways in which advanced visualization will change your industry as well.
Clifton Mason is vice president, product marketing at ADP Dealer Services.
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