As dealers put a higher priority on appraising customers’ vehicles for purchases and trade-ins, many are paying more attention to appraiser performance.

To do so, many dealers evaluate the “look to book (LTB)” ratios of individual appraisers, as well as their team overall. The ratio shows the percentage of the appraisals an appraiser “won” compared to the total number of appraisals they offered.

Industry veterans advise that a 50 percent LTB ratio suggests an appraiser is doing a good job. That is, they book half of the vehicles they appraise.

If dealers or managers see an appraiser with a LTB ratio less than 50 percent, it often represents a teaching opportunity. Maybe they weren’t putting enough money in the vehicles they appraised. Maybe they weren’t providing the kind of transparent experience today’s customers expect. Maybe they simply were too busy with other things and weren’t appraising as many cars as they could or should.

But if dealers want their appraisers to be more effective, appraising more cars while booking them more consistently for the right money, they need to go beyond LTB ratios. There are three reasons this shift is important:

1. An appraiser’s LTB ratio doesn’t tell you if an appraiser does a thorough job of assessing a vehicle’s condition.
2. The LTB also doesn’t tell you if the appraiser detailed the condition issues they found and properly accounted for them as they completed an offer.
3. The LTB also doesn’t say anything about the experience the appraiser provided the customer.

This isn’t to suggest an appraiser’s LTB ratio isn’t important. The point is that LTB ratios have limited utility when it comes to knowing if every appraiser is doing everything they can to accurately capture a vehicle’s condition and make a compelling offer on a vehicle, especially if it’s one you know you really need.

That’s why a growing number of dealers are using two new appraisal KPIs to firm up their appraiser performance and process.

• Appraisal Completeness. This metric measures whether appraisers are doing the steps of your appraising process that you expect. Are they marking a “source” (i.e., street purchase, service drive, auction, trade-in) on every appraisal? Do they include photos and notes? Did they drive the vehicle and/or use an OBII scan? Did they walk the car with the customer? Have they edited/itemized recon items? Once you measure these items, your inventory management system can “score” and coach individual appraisers to make sure their vehicle assessments and offers stand tall.
• Appraisal Effectiveness. This metric helps you ensure you’re appraising a sufficient number of vehicles across a wider number of inventory sourcing channels to help you increase the number of vehicles you acquire directly from customers. Ideally, dealers should appraise at least the same number of vehicles they sell in a given month if they want to increase the share of customer-acquired inventory.

Dealers who use these new metrics, in addition to managing individual LTB ratios, tend to rely less on auction vehicles for inventory, create more opportunities to acquire and sell vehicles with higher retail profit potential and make more deals with customers who may have chosen to sell or trade their vehicle to a competitor.

Check out the vAuto podcast to learn more about how the new appraisal metrics can help you improve appraiser performance.