Ryan Morrison
| 03/11/2017

What's the True Health of Your Business?

Do you truly understand the health of your business? When a doctor evaluates your health, they look at quantifiable measures and benchmark them against healthy individuals to decide whether or not your body needs further attention. They gauge your temperature, blood pressure, weight and blood sugar levels to determine your health. But too few dealerships take the same data-driven approach to understand the health of their business. In the end, this leaves too many dealerships operating on hope.

In order to understand the health of your business, you have to look at data. Gathering and understanding reporting and metrics is critical to understanding what’s going on inside. But you can’t stop at the numbers. Like a good doctor, you don’t just measure the temperature of our business, say “whoa, she has a temperature of 103 degrees” and do nothing about it. According to McKinsey and Company, there are three common mistakes businesses make related to metrics: not connecting data to the client experience, waiting for “perfect” data, and focusing on the data instead of what the data is telling you.

How you view and respond to your metrics is a choice each organization must make. You should make purposeful, precise, and powerful decisions based on the story your metrics are telling you.

Here are some important tips to keep in mind:

React Fast

React fast, but react appropriately. Analyze the numbers as close to real-time as possible, and implement those changes quickly. In many situations, if you wait too long to react, you’re missing out on opportunities. For example, if you find out at 8:45 this evening that today was a bad day for the business, it’s too late to fix it. String a few of those days together, and you end up with a bad month. Have an attitude of neither overreacting nor under reacting, and realize that doing nothing is never a healthy response.

Zero in On What Makes a Difference

You look at a lot of data. How much of that data matters? Probably most of it. But how much of it really makes a difference? Look at your data in relation to your business goals. What will move the needle? Identify a handful of key metrics as a foundation from which to monitor and make business decisions. Redefine these special metrics as your critical metrics and you’ll be in a healthier position to fix the right things, at the right time, in the right way.

Be Wary of "Alarm" Fatigue

If your data tells you something is wrong period after period, you may be experiencing a form of alarm fatigue. A study at Johns Hopkins Hospital found that when the same alarm repeatedly goes off, people have a tendency to completely block it out. Addressing the issue at the onset instead of putting it off will protect you from ignoring what could ultimately be a fatal business warning.

If you start really paying attention to the metrics that make a difference in your business, you may find many hidden sources of value you can unlock. A healthy business is one that maximizes operations, reinvests, and seizes opportunities when they present themselves. Understanding the state of your business, addressing issues and looking for opportunities will help your business thrive instead of just survive.

Want to learn more about how to analyze the health of your dealership? Listen to the podcast.


Ryan Morrison
Ryan Morrison

With retail sales background in the automotive and related industries, Ryan joined CDK Global 21 years ago. As the Senior Director of Retail Solutions for CDK his responsibilities span continued innovation of CDK Consulting’s retail-focused solutions, overseeing CDK Consulting Associates development programs, growing CDK’s Global Business Optimization University, curricula development, and also leading the teams of Dealership Optimization Coaches throughout the US, Canada and Latin America.