Dealers love to talk about the value of a customer, which starts with the first vehicle we sell them and continues through repeat purchases, service business, and referrals.

But we rarely consider the total value of the trade that first transaction creates and the journey that trade takes through our dealership.

Years ago, dealers used something called a “wash-out sheet.” Some of you know exactly what I’m talking about, and the rest of you probably think it had something to do with the detail department.

Here’s how it worked. You sold a new car and took in a trade. You sold that trade and took in another trade. You sold that one and took in another. Eventually, the last vehicle was sold without a trade, and the entire chain of transactions was finally “washed out.”

Only then did the dealer calculate the total gross generated from the original sale and every transaction that followed.

Today, dealers have more technology and data than ever before, yet most still can’t answer a simple question: How much total profit did this vehicle create for the dealership?

Your first reaction may be, “We already track that.” No, you don’t. You track pieces of it. You know the front-end gross, F&I gross, Parts and Service gross from reconditioning, packs, and doc fees. But when the vehicle is sold and creates another trade, you stop connecting the dots.

I call it the Trade Tree. One vehicle creates a trade. That trade creates another sale and possibly another trade. The process continues until the final transaction ends the chain.

A deal that appears average might ultimately create thousands of dollars in additional gross profit, but because you aren’t tracking the entire Trade Tree, you simply don’t know. And part of that is tracking all the parts and service gross that’s a result of that very first transaction.

With today’s technology, dealers should be able to track the total gross generated by every vehicle from the first sale to the last transaction it creates. Stop looking at every transaction as an isolated event and start measuring the total profit created by the Trade Tree.

The old wash-out sheet may be a little like suits and ties. Keep them around long enough, and eventually they come back in style.

What’s the value of a customer?

How much gross does one trade create?

That’s all I’m gonna ask.

Tommy Gibbs