When it comes to setting monetary goals in the automotive industry, whether you’re talking Independent car dealerships or used car dealerships, it all comes down to a formula.

Figuring out your bottom line is a matter of numbers, plain and simple. There are always exceptions to the rule, but calculating how many people you speak with, along with how many people buy, and what type of commission you get from each sale, you’re able to better focus on understanding how many leads you need to generate.

Let’s break this down in more detail.

Say your goal is to bring in $7,000 a month in sales. Car dealerships generally have an average number of people that come onto the lot. By choosing a sales goal, picking a number blindly simply doesn’t make sense. So, what do you need to do to reach that $7,000 sales goal?

First, consider how much money you make each time you get a sale. An average works best.

Let’s say you make $350 commission on each of these sales.

You’d take your $7,000 goal, divide it by $350, and see that you’d need to make 20 car sales to reach that goal. But how can you guarantee twenty car sales?

($GOAL)/(Commission) = How many sales you need

We need to now look at another aspect of the formula.

How many leads will you need?

Knowing you need to sell 20 cars gives you a specific goal, but how do you get there? What you’ll do is think about your sales numbers via your leads. So in this example, to keep things easy to follow, look at it this way. For every 10 people you speak with, 1 person will buy.

You need 20 sales. We already know that. So, that means you need 20 people to buy. Here, if only 1 in 10 buys, you’ll do it this way.

If 10 people = 1 sale, then 20 people would equal 2 sales, and so on.

In order to get those 20 sales, you’ll need to speak with 200 leads.

For every 10 people (you get 1 sale) x 20 sales (how many you need to reach your target monetary goal) = 200 people.

(How many people it takes to make one sale) x (How many sales you need) = (Total leads you need to speak with)

Looking for a calculator to make it easier? Here’s one that will come in handy.