The 80/20 Principle Can Transform Your Dealership (and Change Your Life, If You Let It)

Baseball is 90% mental and the other half is physical.
—Yogi Berra

There’s a lot to unpack in that famous quote from Yogi Berra, the New York Yankees manager as legendary for his “Yogisms” as he was for his coaching. While Berra’s math doesn’t add up, his idea does: Seemingly small things can have an enormous, disproportionate impact.

In some ways, Berra was giving us a modern (if somewhat scrambled) take on the classic “Pareto Principle,” also known as the 80/20 Principle. The Pareto Principle states that 20% of the actions someone takes drive 80% of the results. For example, 20% of your sales bring in 80% of your profit.

But that’s a glass-half-full reading. The glass-half-empty interpretation is that, without real effort, 80% of what you’re doing may be a waste of time and resources. Who can afford to throw away that kind of cash?

In today’s competitive market, dealers are desperately trying anything and everything that might make a difference to their bottom lines. But the lesson of Pareto is to analyze what you’re doing, use this data to identify key issues, and then do those well. And that could change everything.

Let’s go over some examples of how you can apply this principle to your dealership.

Stop Wasting 80% of Your Marketing Budget

Look at where your marketing money is going. When you use third-party referral sites, or generic marketing within a large geographic area, 80% of your marketing dollars are wasted on people who aren’t interested in what you have to sell. The wider you cast your net, the less exposure you get to your target audience.

Similarly, don’t waste time on generic promotions to increase foot traffic. These will just bring in more people who aren’t in your core market.

Create tailored campaigns that appeal directly to your ideal clients. Reach them where they are—in their neighborhoods, on social media, and elsewhere.

With tools like AdCue, you can do just that by specifically targeting your marketing and promotions to your desired customer base.

Go After the Top 20% of Clients

As we mentioned earlier, 20% of your clients bring in 80% of your revenue. Therefore, your focus should be on how to best take care of those top 20%.

Use data analytics to identify who these core customers are. Then, learn everything you can about them and determine how to meet their needs. Are they commercial clients who will be regularly purchasing multiple vehicles? Are they buying high-end or family SUVs? New or used? Do they finance, trade-in, or pay cash?

Don’t worry about stocking every type of vehicle in the hopes that someone will walk in asking for it. Focus on your best clients and keep them happy so they’ll keep coming back and even refer their friends.

Meet their needs and forget the rest.

Go Reward Your Top 20% Staff

Traditionally, dealers use bonuses, contests, and other tools to motivate their sales staff.

But when you walk into a dealership and see a “Salesperson of the Month” plaque, how often do you see the same few names appearing on that list, again and again? You have stars—the 20% who make 80% of your sales. Focus on them, just as you target your ideal customers.

Give all of your performers the tools to succeed, but give your top performers what they need to thrive. Recognizing them is just the first step. Next, send your best staff on vacation or to a sales training conference to further develop their skills. Upgrade their vehicles. Invest in them.

And stop the ultra-competitive sales contests. These just pit the best members of your staff against each other, while the lesser ones check out.

Be loyal to your best team members, so they’ll be loyal to you.

Stop Going for Broke: Use the 80/20 Rule

According to Forbes, by correctly using the Pareto Principle, you’ll not only transform your company but also transform your life.

The Pareto Principle is about efficiency and time management. It’s about getting rid of the things that drag you down and making sure you get the most out of every opportunity.

Maybe the best idea that comes out of Pareto is that you don’t need to change everything to make a huge difference. Making just a couple of small adjustments can have an enormous impact.


Tips, Tricks, & Best Practices for Running a Modern Dealership

Guide to Facebook Advertising for Dealerships

Thinking about investing in traditional marketing channels? Think again. Traditional channels like TV and radio are continuing to price themselves out of dealers’ reach. The same goes for third-party listing sites that charge a fortune without delivering real leads. Fortunately, it’s never been easier for dealers to run their own digital advertising. Digital advertising isn’t just

Read More »

How to Beat the Competition in a Seller’s Market

It’s a seller’s market right now. That’s pretty incredible when you consider all we’ve been through in 2020. But dealers shouldn’t celebrate just yet. After all, more demand means more competition — and widespread inventory shortages are making it tough to fight back. So how can dealerships outmaneuver competitors and take advantage of this seller’s market? By

Read More »

How Automotive Marketing Has Changed in 2020 and Beyond

The shift towards digital retail has been happening for years and 2020 has only accelerated that trend. 2 out of 3 car buyers are now more likely to skip dealerships and buy directly online. And according to Google, searches for “dealerships near me” dropped over 20% earlier this year. But none of this is cause for alarm —

Read More »

Top 6 Dealership Software Tools to Sell More Cars

Dealers’ toolkits used to be a lot simpler. Salespeople relied on a couple of major pricing books, industry experience, and maybe a few common sales strategies. How times have changed. Modern technology has turned dealerships of every size into complex operations. On top of that, online competition is forcing dealers to use new digital tools

Read More »

16 Tactics (and 1 Tool) to Sell More Cars Without Sacrificing Profits

If 2020 has proved anything about the auto industry, it’s this: The only certainty in car sales is uncertainty.  Earlier this year, we experienced one of the biggest interruptions in retail history. Now, sales are as strong as ever. Who could have predicted that?  But it’s always possible we’ll experience another disruption. Thinning margins and

Read More »