Management by Exception (MBE) is a management philosophy and practice where manager intervention is primarily focused on the areas of organizational

performance that need attention. In other words corrective management actions are driven by someone or something not performing "as expected" or an exception. A good analogy of the theory might be a hospital ward with several patients. Each patient is hooked up to monitoring devices to measure heart rate. When there is an abnormal deviation in a particular patient's heart rate the sirens and bells go off and the nurses come running to "Manage" the problem. This is a much more efficient means of managing the ward, as opposed to the days where they didn't have such equipment and by the time the nurse realized the exception, it may have been too late. Most dealerships have operated already using MBE practices in a number of areas already, but usually without the aid of any type of technology. For instance if sales start to fall off, but the amount of showroom traffic is the same. This should, if they are paying attention, alert a manager that there is a problem. They may find that guests are being written up on a regular basis, but deals aren't getting closed at the expected rate. This would be the exception. This would allow management to investigate a potential problem with their desk managers. Why CRM reporting tools have failed to serve the dealer? What managers need on a continual basis is information that is meaningful in making day-to-day decisions. Most CRM and other sales support software applications have failed to deliver on their promise of improving sales results for a number of reasons, not the least of which is that they are often unable to provide dealership management with actionable information. Now one might say that "my software gives me every report I could ever dream of", but herein lies the problem. Typical of software systems designed by software engineers as opposed to real world users, the amount of DATA provided by the software is usually quite vast and comprehensive. Notice the emphasis on the word data. However, managers only need data or reports on a periodic basis. What managers need on a continual basis is information that is meaningful in making day-to-day decisions. This is what we refer to as Actionable Information. To illustrate the difference between data and actionable information, let's take, for instance, a standard Closing Ratio report that any CRM should contain. This report will tell you the percentage of deals closed in relation to the number of sales opportunities (leads) that each individual has had over a period of time. Great data to have, no doubt, and not that unreasonable from which to glean actionable information with a small number of sales people. But let's say that your dealership group has 300 sales associates. Now you are looking at a report with a vast amount of data, and in order to get to the point where you can transform this data into actionable information takes both significant time and energy; both of which are already in high demand for managers. In the real world, where managers are busy putting together car deals, putting out fires, dealing with customer, employees, vendors etc. etc. the exceptional effort required to transform the typical data coming out of a CRM means one thing:

REPORTING DOES NOT GET LOOKED AT ON A REGULAR BASIS - IF AT ALL. This is where the promise of CRM falls off, and where the promise of CRM utilizing Management by Exception picks-up and delivers. Before we move on, let's look at two distinct categories of Exception Management for the dealership. in as close to "real time" as possible in order to facilitate course corrections. Without this ability, the only information your are receiving is far too old to take action upon and therefore is only useful for making future decisions ("next month we'll do better...") as opposed to being able to take immediate corrective action.

Think of Process Execution Monitoring as a "Check Engine Light" for your CRM. Using the hospital ward example above, a course correction would be the nurse intervening to save the patience. The result being that patient lives. Without the ability to monitor process execution as it happens by exception it becomes untenable to effectively make course corrections along the way. Let's use a simple dealership example. Let's say you have a process that stipulates that any new Internet lead should receive 3 phone calls within 24 hours until an appointment is set. If you have no means to track whether they are making these calls or not, then your results will be the only information you have, and by then it's probably too late to save the deals that submitted a lead and nobody ever bothered calling them back. Results Exceptions are generally easier to track because dealerships have been already measuring results as a normal course of business. Regardless of the gymnastics that managers have to go through to obtain valid results, which is an entirely different discussion, most managers have the ability to identify results that are not being achieved according to expectation. This, of course, becomes less manageable as organizations become larger, especially for centralized management structures. How DealerPeak's CRM CenterTM Addresses Information Delivery via MBE. DealerPeak's CRM architecture is uniquely positioned to create meaningful MBE functionality. This is because the first requirement in identifying exceptions is to determine what is considered expected. This is commonly called a sales process, follow-up plan etc. DealerPeak's AutoPilotTM feature allows you to define exactly what, when and who needs to follow-up with customers. The "what" are things like phone scripts, E-mails, and printed letters. The "when" is configured in the system according to our proven process guide. Finally, the "who" is determined automatically by the system according to how the dealership is setup. Each individual involved in the process then has a work-plan that is built dynamically, but systematically, according to the AutopilotTM setup. This work-plan is where each individual completes their assigned tasks

according to the system. When circumstances change, such as making the sale, the work-plan automatically adjusts. ...the first requirement in identifying exceptions is to determine what is considered expected. This forms the foundation of what the expectations are of the organization, the managers and the individuals. Once this foundation is in place, DealerPeak's CRM Process Monitoring Features come into play. DealerPeak's innovative method of calculating exceptions is ground breaking within the CRM industry. The DealerPeak technology takes a measurement of the process critical tasks that have been assigned to each individual in the sales team. Each dealership can determine which tasks they want to include in the scoring algorithm. The dealership then makes a determination of the benchmark of completion (minimum score) that is acceptable. Once this benchmark is notated in the system, management needs only to look at locations that are out of process, thereby focusing energy where it is needed. At a glance, management knows where to focus and where to drill down to details.

Correcting Your Course Typical Scenario Most dealerships have no process that is put down on paper, let alone configured in a CRM tool. You probably have each individual following his or her own follow-up process which is usually no more systematic than "I try to follow-up with my customers." This obviously is a situation that is entirely reliant on the individual sales person's own motivation, organization and followthrough skills. Dealership sales performance is relegated to the ever changing landscape of talents of its salespeople with no means for control. Most dealerships would be doing well to even have a well defined CRM process in place supported by a good CRM system, let alone an effective MBE toolset to work with. So how do you get from here to there? First it's critical that you define your follow-up process in a way that works for your dealership, market and products. Then you need a CRM tool that will adequately allow your staff to easily manage their activities in support of that process. Finally you must set expectations for execution of the process as well as expectations for results. Using the CRM to set, monitor and manage both (by exception) will allow you to more effectively manage your dealership. Ideal Scenario

Conclusion Managing people, processes and organizations has always been challenging. With the advent of modern computing systems and customer databases, the shear amount of information available to management is daunting. Having so much data has usually meant that someone has had to take

the time to compile, present and understand the data in order to get actionable information. This resulted most commonly in a situation where the data was ignored all together. Management by Exception (MBE) is a concept that basically says "just give me the information that I need to take action on! I'll go get the rest if I need it." Using this principle, DealerPeak CRM CenterTM provides "Real-time CRM Process Monitoring" that alerts managers to when and where their dealerships, crews, and salespeople are falling out of the prescribed customer follow-up processes. This MBE toolset goes a long way in making good on the promise of CRM in today's dealership environment.