COLUMBUS, OH—Don Reed, CEO of DealerPro Training Solutions and an NADA Top 10 speaker since 2008, has announced an increased Service Gross Profit Guarantee for automobile dealers nationwide.
This applies for dealers who implement DealerPro’s In-Dealership Performance Driven Training program. This 13-month program installs new policies and processes guaranteed to increase customer pay hours per RO and CSI.
The results from this No-Risk program are so dramatic that DealerPro says a typical dealer will increase Service Gross Profits at least $200,000 within the program’s 13 months. Dozens of dealers have hit this mark and become proud members of the DealerPro $200K Club.
More important, dozens more dealers have exceeded the $200K mark, earning more than $300,000 … and $400,000 in additional Service Gross Profits. One dealer is currently on track to make more than $900,000 additional Service Gross Profits in his first 13 months on the program.
Because dealers are enjoying such tremendous success under the DealerPro Performance Driven Training program, Mr. Reed is providing a Performance Guarantee … and a Money-Back Guarantee as well. “We do the job, or we don’t get paid,” says Mr. Reed.
DealerPro trains Service Advisors to sell, and provides them with the tools for success. The result: 40% or better Increases in customer pay sales … Increased RO count, Increased sales per RO, more incoming calls converted into appointments … and more.
Mr. Reed has more than 20 years experience as a dealer and more than 10 years as a trainer. As a Twenty Group Advisor and consultant, he has helped hundreds of dealerships dramatically improve Service Gross Profits.
“The real growth in Service Gross Profits comes from monthly monitoring and refresher training built into the DealerPro process,” says Mr. Reed. “That’s how we can guarantee success.”
For more information visit www.dealerprotraining.com, call toll-free at 1-888-553-0100 or email Don Reed: dreed@dealerprotraining.com.
DealerPro Announces Phone Training Schedule For 2011
Once in a while a great deal comes along. Your friend has tickets to the game at half price…you find the golf clubs you want on sale at 40% off…the caterer for your daughters wedding throws in two bottles of champagne for the wedding party… great deals come in all shapes and sizes.
This is a great deal.
DealerPro Training Solutions is sponsoring 10 Training Sessions covering topics ranging from Increasing Your Service Absorption to Overcoming Objections starting January 5th, 2011!
All you need is a phone and a workbook…the seminars are FREE! It’s simple to register! Just send an email to freetraining@dealerprotraining.com so we can send you the password for the workbook.
It’s That Easy!
Each Training Session will last approximately 1 hour with a rebroadcast later in the day. These seminars are for Dealership Management Personnel, Fixed Operations Personnel, Service Advisors, Parts Advisors and anyone that has a Customer Service role in your Dealership.
All of the material is from DealerPro Training Solutions extensive Training Library and includes our most popular subjects from Training Manuals, Articles written by Don Reed the CEO of DealerPro Training Solutions, DealerProVT, Blog Posts and other Training Modules.
And the best thing is…it’s FREE!
Just send an email to freetraining@dealerprotraining.com so we can send you the workbook password and seminar schedule. We will do all the rest! All you have to do is call in on the designated day, listen, complete the workbook and implement the Training!
Of course, DealerPro is ready to help should you need or want additional Fixed Operations Training. You can tell us about that at your convenience. We are a full service Fixed Operations Training Provider and NADA University Partner. Go to www.dealerprotraining.com or www.dealerproblog.com for more information about us.
If you miss the start time, don’t worry! We will rebroadcast the seminar later in the day.
Send an email to freetraining@dealerprotraining.com and get signed up!
This is a great deal.
DealerPro Training Solutions is sponsoring 10 Training Sessions covering topics ranging from Increasing Your Service Absorption to Overcoming Objections starting January 5th, 2011!
All you need is a phone and a workbook…the seminars are FREE! It’s simple to register! Just send an email to freetraining@dealerprotraining.com so we can send you the password for the workbook.
It’s That Easy!
Each Training Session will last approximately 1 hour with a rebroadcast later in the day. These seminars are for Dealership Management Personnel, Fixed Operations Personnel, Service Advisors, Parts Advisors and anyone that has a Customer Service role in your Dealership.
All of the material is from DealerPro Training Solutions extensive Training Library and includes our most popular subjects from Training Manuals, Articles written by Don Reed the CEO of DealerPro Training Solutions, DealerProVT, Blog Posts and other Training Modules.
And the best thing is…it’s FREE!
Just send an email to freetraining@dealerprotraining.com so we can send you the workbook password and seminar schedule. We will do all the rest! All you have to do is call in on the designated day, listen, complete the workbook and implement the Training!
Of course, DealerPro is ready to help should you need or want additional Fixed Operations Training. You can tell us about that at your convenience. We are a full service Fixed Operations Training Provider and NADA University Partner. Go to www.dealerprotraining.com or www.dealerproblog.com for more information about us.
If you miss the start time, don’t worry! We will rebroadcast the seminar later in the day.
Send an email to freetraining@dealerprotraining.com and get signed up!
DealerPro Announces NADA Convention Seminar Schedule
Don Reed, CEO of DealerPro Training Solution is scheduled to present “Implementing The Four Essentials To Service Absorption” at the NADA Convention in February 2011.
There are four seminars to choose from.
Friday February 4th@1:30pm in Room 2018 West.
Saturday February 5th@1:00pm in Room 303 South Esplanade.
Sunday February 6th@11:00am Room 2016 West.
Monday February 7th@8:30am Room 2016 West.
Don has been a Top 1o NADA Convention Speaker since 2007. He recently completed a seminar schedule in England where he delivered workshops and seminars on The Four Essentials To Service Absorption to Dealer Principals and Service Managers.
You will leave with Action Steps you can take to start increasing your Service Absorption right away.
There are four seminars to choose from.
Friday February 4th@1:30pm in Room 2018 West.
Saturday February 5th@1:00pm in Room 303 South Esplanade.
Sunday February 6th@11:00am Room 2016 West.
Monday February 7th@8:30am Room 2016 West.
Don has been a Top 1o NADA Convention Speaker since 2007. He recently completed a seminar schedule in England where he delivered workshops and seminars on The Four Essentials To Service Absorption to Dealer Principals and Service Managers.
You will leave with Action Steps you can take to start increasing your Service Absorption right away.
Be A Compelling Leader In 2011
2011 is on the doorstep.
Anytime of the year is time for reflection, goal setting and renewed committment.
However, this time of the year is particularly important as the year is winding down and we take time to look at what we have accomplished in 2010 and what we would like to do better in 2011.
This is not a “Goal” setting blah blah blah blog post. If you are in a Leadership position in your Dealership and you need a lesson on Goal setting and business planning, sorry to disappoint.
This is the first in a 5 Part Series on Leadership.
The nuts and bolts of Goal setting and business planning is in here in several different posts like “Service Absorption Rule #1″ and “Crunching Your Service Numbers.” Search the blog posts and you will find them.
A little background. I am constantly in search of new ideas or maybe old ideas presented in a new way. I had been leading seminars for a well known training company and I was assigned to deliver a Communications seminar to a large transportation organization.
I always arrive early so that I can look around and quite frankly, I spend a lot of time looking at what people put up on their walls. You can tell a lot about an organization from what you find hanging in the lobby or in the training room. (Ever notice that that the places with the most Rules posted on the walls always seem to be the unfriendliest?)
I noticed that this organization had a lot of Leadership thoughts posted. I found one very, very interesting Leadership model hanging in the training room and I copied them down. I transferred them to a 3×5 card and posted them on the wall in front of my desk. I look at them every day and think of their meaning often.
Here is the first one and the beginning of this 5 part series.
“Create A Compelling Vision”
Creating a “Compelling” Vision and one that is well, ordinary, is really two very different things.
The word compelling means “forceful” and “driven.” Combine that with the word “vision” and you have a future destination that other people can’t resist and feel obligated to help you achieve.
That is a “Compelling Vision.”
If you have been having some difficulty achieving your Vision, perhaps it’s time to decide if the Vision is Compelling or is it just a “if we can” or “if it works out” or a “maybe if everything falls into place” kind of Vision.
If you have what you feel is a “Compelling” Vision, try it out on a few people and see if their enthusiasm matches yours. Compare the two below to yours and see how your Vision stacks up.
■Compelling “We have had success this past year in increasing labor sales. Based on what we have accomplished so far I know that we can increase 10% for 2011. In order to do this I am using a two pronged approach and will start by providing additional Sales Training beginning next month. Secondly, I am initiating a performance based bonus plan that rewards increased labor sales. I am counting on you to help me and our Dealership meet this new objective.”
■Not Compelling. “Uh, as you all know, we have had a pretty good year and are looking to do better next year. There is no reason that we can’t improve and I am expecting big things for 2011.”
See the difference? The first is specific and lays out a game plan for hitting the new objective. The second is so general that you could be talking about how the bake sale for the school went.
Yet, how many of us have heard or delivered a Vision statement that sounded similar to that?
Start 2011 off right be Creating A Compelling Vision.
By............Leonard Buchholz
Anytime of the year is time for reflection, goal setting and renewed committment.
However, this time of the year is particularly important as the year is winding down and we take time to look at what we have accomplished in 2010 and what we would like to do better in 2011.
This is not a “Goal” setting blah blah blah blog post. If you are in a Leadership position in your Dealership and you need a lesson on Goal setting and business planning, sorry to disappoint.
This is the first in a 5 Part Series on Leadership.
The nuts and bolts of Goal setting and business planning is in here in several different posts like “Service Absorption Rule #1″ and “Crunching Your Service Numbers.” Search the blog posts and you will find them.
A little background. I am constantly in search of new ideas or maybe old ideas presented in a new way. I had been leading seminars for a well known training company and I was assigned to deliver a Communications seminar to a large transportation organization.
I always arrive early so that I can look around and quite frankly, I spend a lot of time looking at what people put up on their walls. You can tell a lot about an organization from what you find hanging in the lobby or in the training room. (Ever notice that that the places with the most Rules posted on the walls always seem to be the unfriendliest?)
I noticed that this organization had a lot of Leadership thoughts posted. I found one very, very interesting Leadership model hanging in the training room and I copied them down. I transferred them to a 3×5 card and posted them on the wall in front of my desk. I look at them every day and think of their meaning often.
Here is the first one and the beginning of this 5 part series.
“Create A Compelling Vision”
Creating a “Compelling” Vision and one that is well, ordinary, is really two very different things.
The word compelling means “forceful” and “driven.” Combine that with the word “vision” and you have a future destination that other people can’t resist and feel obligated to help you achieve.
That is a “Compelling Vision.”
If you have been having some difficulty achieving your Vision, perhaps it’s time to decide if the Vision is Compelling or is it just a “if we can” or “if it works out” or a “maybe if everything falls into place” kind of Vision.
If you have what you feel is a “Compelling” Vision, try it out on a few people and see if their enthusiasm matches yours. Compare the two below to yours and see how your Vision stacks up.
■Compelling “We have had success this past year in increasing labor sales. Based on what we have accomplished so far I know that we can increase 10% for 2011. In order to do this I am using a two pronged approach and will start by providing additional Sales Training beginning next month. Secondly, I am initiating a performance based bonus plan that rewards increased labor sales. I am counting on you to help me and our Dealership meet this new objective.”
■Not Compelling. “Uh, as you all know, we have had a pretty good year and are looking to do better next year. There is no reason that we can’t improve and I am expecting big things for 2011.”
See the difference? The first is specific and lays out a game plan for hitting the new objective. The second is so general that you could be talking about how the bake sale for the school went.
Yet, how many of us have heard or delivered a Vision statement that sounded similar to that?
Start 2011 off right be Creating A Compelling Vision.
By............Leonard Buchholz
10 Reasons Multi-point Inspections are Important
In our world there is a constant search for “better.”
Better personnel, better systems, better procesess, better sales…you get the idea.
Is there “better” out there in Fixed Operations?
Sure. In recent years software and computers have made getting every conceivable report possible and as easy as a press of the button.
Software applications like ASR Capture from Reverse Risk is a prime example. Here is an application that does nearly everything that old school managers did by hand 20 years ago. It tracks and compiles every Multi-point Inspection and tells the Service Manager at a glance what is happening in Service Drive.
There have been strides made in vehicle repair. In the Dealership today we repair more vehicles with software than we do with metal. It’s the evolution of the computer chip combined with software engineering that made that possible.
What about the Dealership? Has there not been a serious industry wide upgrade to facilities over the past 20 years? The Customer has been the beneficiary of new waiting rooms and amenities like wifi and espresso coffee makers.
Better and better.
You know what has remained the same?
The Multi-point Inspection.
Do you know why?
Because it still remains the Number One Tool a Service Department has to ensure Excellent Service to the Customer. (Besides the well trained Service Advisor)
The reason it has remained a mainstay in Fixed Operations is because it works.
It works for the Customer. They get a safe and reliable vehicle. They get consistent service. They get a report on the condition of everything from the windshield washer fluid to the air in the tires.
It works for the Fixed Operations. They get an opportunity to sell repair work while providing a safe and reliable vehicle. It helps them provide a consistent product called Excellent Service!
It works for the Dealership. It reduces the liability factor. It increases the amount of Customer contacts. It increases the amount of opportunity to demonstrate to the Customer that the Dealership is the right place to not only Service the vehicle it is the right place to buy the next vehicle.
Some in this industry have said that “Multi-points are dead” and “old school won’t work in the new school attitude we have nowadays.”
Really? Customers don’t want safe and reliable vehicles? Service Advisors don’t want opportunities to sell needed services so Customers can maintain their vehicle? Dealerships don’t need revenue…or Customers?
I would like to see a Service Manager explain to 75 year old Granny that there is no need for a complete and thorough Mult-point Inspection…in a waiting room…full of Customers.
Hey Mr./Ms. Service Manager! Looking for a way to stress the Dealer Principal?
Just go into their office and announce that you will singlehandedly increase their exposure to Liability and Risk by not completing a thorough Inspection on every vehicle that comes into the Service Drive. Think they will embrace that idea?
So here are the Top 10 Reasons Why Multi-point Inspections are Important.
1. The word “Liability” has not been removed from the dictionary. Every time a vehicle comes in to the Service Department there is a risk of Liability. A properly completed Multi-point Inspection reduces that Liability.
2. The word “Responsibility” has not been removed from the dictionary. Dealerships not only have a responsibility to the Customer, they also have a responsibility to the manufacturer. This responsibility is to provide the Customer with a safe and reliable vehicle.
3 thru 7…They have not made a Lifetime-No Replacement Necessary Brake Pad, Tire, Wiper Blade, Serpentine or Drive Belt or Air and Fuel Filter. (Here is a little tip…they’re not going to anytime soon).
8. They have not made a vehicle capable of fixing its own oil leak, replacing a cv boot, removing a rock from a caliper or rotating its own tires.
9. They have not made a vehicle capable of completing its own Safety Inspection. There is no doubt that the Vehicle Management Systems we have today can check a lot of things. Airplanes have one of the most sophisticated management and monitoring systems on the planet. Ever notice the pilot walking around the outside of the plane and taking a look?
10. Oil has not been re-invented. It has been reformulated to be sure, but it wears out. And because everybody drives differently, it wears out at different intervals.
Bonus Reason!
People have not stopped finding ways to drive with little or no regard to how the manufacturer thinks they should drive! (Ever removed a bush, bike, furry animal, piece of concrete, chunk of wood, dead furry animal, lost watch, family heirloom or some other flotsam from the front seat, rear seat, grill, undercarriage, windshield, gas tank, engine compartment or wheel well?)
Better sometimes is left well enough alone.
Better personnel, better systems, better procesess, better sales…you get the idea.
Is there “better” out there in Fixed Operations?
Sure. In recent years software and computers have made getting every conceivable report possible and as easy as a press of the button.
Software applications like ASR Capture from Reverse Risk is a prime example. Here is an application that does nearly everything that old school managers did by hand 20 years ago. It tracks and compiles every Multi-point Inspection and tells the Service Manager at a glance what is happening in Service Drive.
There have been strides made in vehicle repair. In the Dealership today we repair more vehicles with software than we do with metal. It’s the evolution of the computer chip combined with software engineering that made that possible.
What about the Dealership? Has there not been a serious industry wide upgrade to facilities over the past 20 years? The Customer has been the beneficiary of new waiting rooms and amenities like wifi and espresso coffee makers.
Better and better.
You know what has remained the same?
The Multi-point Inspection.
Do you know why?
Because it still remains the Number One Tool a Service Department has to ensure Excellent Service to the Customer. (Besides the well trained Service Advisor)
The reason it has remained a mainstay in Fixed Operations is because it works.
It works for the Customer. They get a safe and reliable vehicle. They get consistent service. They get a report on the condition of everything from the windshield washer fluid to the air in the tires.
It works for the Fixed Operations. They get an opportunity to sell repair work while providing a safe and reliable vehicle. It helps them provide a consistent product called Excellent Service!
It works for the Dealership. It reduces the liability factor. It increases the amount of Customer contacts. It increases the amount of opportunity to demonstrate to the Customer that the Dealership is the right place to not only Service the vehicle it is the right place to buy the next vehicle.
Some in this industry have said that “Multi-points are dead” and “old school won’t work in the new school attitude we have nowadays.”
Really? Customers don’t want safe and reliable vehicles? Service Advisors don’t want opportunities to sell needed services so Customers can maintain their vehicle? Dealerships don’t need revenue…or Customers?
I would like to see a Service Manager explain to 75 year old Granny that there is no need for a complete and thorough Mult-point Inspection…in a waiting room…full of Customers.
Hey Mr./Ms. Service Manager! Looking for a way to stress the Dealer Principal?
Just go into their office and announce that you will singlehandedly increase their exposure to Liability and Risk by not completing a thorough Inspection on every vehicle that comes into the Service Drive. Think they will embrace that idea?
So here are the Top 10 Reasons Why Multi-point Inspections are Important.
1. The word “Liability” has not been removed from the dictionary. Every time a vehicle comes in to the Service Department there is a risk of Liability. A properly completed Multi-point Inspection reduces that Liability.
2. The word “Responsibility” has not been removed from the dictionary. Dealerships not only have a responsibility to the Customer, they also have a responsibility to the manufacturer. This responsibility is to provide the Customer with a safe and reliable vehicle.
3 thru 7…They have not made a Lifetime-No Replacement Necessary Brake Pad, Tire, Wiper Blade, Serpentine or Drive Belt or Air and Fuel Filter. (Here is a little tip…they’re not going to anytime soon).
8. They have not made a vehicle capable of fixing its own oil leak, replacing a cv boot, removing a rock from a caliper or rotating its own tires.
9. They have not made a vehicle capable of completing its own Safety Inspection. There is no doubt that the Vehicle Management Systems we have today can check a lot of things. Airplanes have one of the most sophisticated management and monitoring systems on the planet. Ever notice the pilot walking around the outside of the plane and taking a look?
10. Oil has not been re-invented. It has been reformulated to be sure, but it wears out. And because everybody drives differently, it wears out at different intervals.
Bonus Reason!
People have not stopped finding ways to drive with little or no regard to how the manufacturer thinks they should drive! (Ever removed a bush, bike, furry animal, piece of concrete, chunk of wood, dead furry animal, lost watch, family heirloom or some other flotsam from the front seat, rear seat, grill, undercarriage, windshield, gas tank, engine compartment or wheel well?)
Better sometimes is left well enough alone.
3 Ways Service Advisors Can Speed Up Service Sales
One of the most frustrating things that Service Advisors have to deal with is the unavailability of the Customer after they have left the Dealership.
In 100% of the cases there is a series of steps the Advisor can do during the writeup and repair process to increase the chances that they will be able to contact the Customer once the vehicle has been inspected or the repairs have been completed.
Step Number One.
Get a “Pre-Approval” amount. This is amazingly easier than what you would think it would be. Why? Because the Customer wants to have the vehicle repaired the same day as much as the Advisor does.
And the easiest way to do that is for the Customer to authorize an “up to” amount. This amount is typically a figure based on what the average RO dollar amount is for your Dealership.
And it is just as simple as asking the Customer. It might sound like this.
“Mr. Jones, I have here on the Repair Order to do an oil change, check the brakes for a grinding noise and diagnose the check engine light. If I can repair all of these items for less than $250.00 dollars, do you want me to go ahead and take care of it?”
This does not mean spend the $250.00. What it means is if the repairs can be handled for $250.00 or less then the Customer is authorizing you to complete those repairs and to call him (or her) if the repairs exceed $250.00 dollars.
Step Number 2
Have the Technician do a complete and thorough Inspection and report back to the Advisor before any other repairs are completed. This will ensure that the Advisor has a complete report to share with the Customer and advise them on any needed repairs before the vehicle comes off the rack.
Step Number 3
Verify the Customers Information.
Now you would think that this would be a “no brainer.”
And every day in a Dealership a Customer is being written up right now and the Advisor is not asking the Customer “Is the information listed here correct?” while pointing to the address and telephone number on the RO.
Or asking “What is the best way to reach you today?” and “Is there another number or email that I can use if I don’t have any success reaching you on the primary number?”
If you are a Service Advisor and you want to increase Service Sales, why would you not ask for a telephone number and email address? It makes no sense not to ask. Service Advisors are in the Communication Business and the first rule is “Know How To Contact Your Customer!”
These 3 Simple Steps will Speed Up your ability to contact your Customer and make more Service Sales.
In 100% of the cases there is a series of steps the Advisor can do during the writeup and repair process to increase the chances that they will be able to contact the Customer once the vehicle has been inspected or the repairs have been completed.
Step Number One.
Get a “Pre-Approval” amount. This is amazingly easier than what you would think it would be. Why? Because the Customer wants to have the vehicle repaired the same day as much as the Advisor does.
And the easiest way to do that is for the Customer to authorize an “up to” amount. This amount is typically a figure based on what the average RO dollar amount is for your Dealership.
And it is just as simple as asking the Customer. It might sound like this.
“Mr. Jones, I have here on the Repair Order to do an oil change, check the brakes for a grinding noise and diagnose the check engine light. If I can repair all of these items for less than $250.00 dollars, do you want me to go ahead and take care of it?”
This does not mean spend the $250.00. What it means is if the repairs can be handled for $250.00 or less then the Customer is authorizing you to complete those repairs and to call him (or her) if the repairs exceed $250.00 dollars.
Step Number 2
Have the Technician do a complete and thorough Inspection and report back to the Advisor before any other repairs are completed. This will ensure that the Advisor has a complete report to share with the Customer and advise them on any needed repairs before the vehicle comes off the rack.
Step Number 3
Verify the Customers Information.
Now you would think that this would be a “no brainer.”
And every day in a Dealership a Customer is being written up right now and the Advisor is not asking the Customer “Is the information listed here correct?” while pointing to the address and telephone number on the RO.
Or asking “What is the best way to reach you today?” and “Is there another number or email that I can use if I don’t have any success reaching you on the primary number?”
If you are a Service Advisor and you want to increase Service Sales, why would you not ask for a telephone number and email address? It makes no sense not to ask. Service Advisors are in the Communication Business and the first rule is “Know How To Contact Your Customer!”
These 3 Simple Steps will Speed Up your ability to contact your Customer and make more Service Sales.
The Hundred Mile An Hour Goat
Two friends are out hunting, and as they are walking along they come upon a huge hole in the ground. As they approach it they are amazed by the size of it.
The first hunter says “Wow, that’s some hole; I can’t even see the bottom. I wonder how deep it is.” The second hunter says” I don’t know, let’s throw something down and listen and see how long it takes to hit bottom.”
The first hunter looks around and spies an old automobile transmission lying in the grass. He tells the other hunter “Hey, there’s this old automobile transmission here. Give me a hand and we’ll throw it in and see”.
So they pick it up, carry it over and count “One, two, three!” and
throw it into the hole.
They are standing there listening and looking over the edge when they hear a rustling in the brush behind them. As they turn around they see a goat come crashing through the brush, run up to the hole and with no hesitation jump in head first!
They are totally shocked and suprised to say the least! While standing at the edge of the hole looking at each other and then looking into the hole trying to figure out what just happened, an old farmer walks up.
“Say there”, says the farmer, “you fellers didn’t happen to see my goat
around here anywhere, did you?”
The first hunter says ” Funny you should ask, but we were just standing here a minute ago and a goat came running out of the bushes doin’ about a hunert miles an hour and jumped headfirst into this hole here!”
The old farmer said “Why that’s impossible…… I had him chained to a
transmission!”
The moral of the story…don’t chain your 2011 Fixed Operations Gross Profit to anything that can be tossed into a deep hole. If your 2010 ended up like a goat chained to a transmission, now is the time to make a plan for 2011.
This is the time to measure what you accomplished or did not accomplish in 2010, what you want to improve in 2011 and plan how you are going to do it.
Goal setting is critical for achieving Success.
Here are 10 0f the most important areas to measure in Fixed Operations and their standards to help you set defined Goals for 2011.
■Labor Gross Profit Margins (75% is the correct number)
■Parts Gross Profit Margins (45% is the correct number)
■Parts to Labor Ratio (80% is the correct number)
■Multi-point Inspection Completion Rate (100% is the correct number)
■Additional Service Requests (30-40% of CP ROs is the correct number)
■ASR Closing Ratio (30-50% is the correct number)
■RO Count to Sold Units (6-1 Ratio is the correct number)
■Effective Labor Rate (90% of Door Rate is the correct number)
■Gross Profit Increase Year over Year (10% or more is the correct number)
■RO Count Increase (Yearly 10% or more is the correct number)
These are the bare minimum numbers for planning next years Goals. By planning now you are keeping yourself from “chaining your goat” to something that can be tossed at the first sign of trouble or adversity, which we all know happens when things are not going smoothly.
Goal Setting with everyone involved will prevent the possibility of 2011 being tossed into a deep hole before it even gets started.
The first hunter says “Wow, that’s some hole; I can’t even see the bottom. I wonder how deep it is.” The second hunter says” I don’t know, let’s throw something down and listen and see how long it takes to hit bottom.”
The first hunter looks around and spies an old automobile transmission lying in the grass. He tells the other hunter “Hey, there’s this old automobile transmission here. Give me a hand and we’ll throw it in and see”.
So they pick it up, carry it over and count “One, two, three!” and
throw it into the hole.
They are standing there listening and looking over the edge when they hear a rustling in the brush behind them. As they turn around they see a goat come crashing through the brush, run up to the hole and with no hesitation jump in head first!
They are totally shocked and suprised to say the least! While standing at the edge of the hole looking at each other and then looking into the hole trying to figure out what just happened, an old farmer walks up.
“Say there”, says the farmer, “you fellers didn’t happen to see my goat
around here anywhere, did you?”
The first hunter says ” Funny you should ask, but we were just standing here a minute ago and a goat came running out of the bushes doin’ about a hunert miles an hour and jumped headfirst into this hole here!”
The old farmer said “Why that’s impossible…… I had him chained to a
transmission!”
The moral of the story…don’t chain your 2011 Fixed Operations Gross Profit to anything that can be tossed into a deep hole. If your 2010 ended up like a goat chained to a transmission, now is the time to make a plan for 2011.
This is the time to measure what you accomplished or did not accomplish in 2010, what you want to improve in 2011 and plan how you are going to do it.
Goal setting is critical for achieving Success.
Here are 10 0f the most important areas to measure in Fixed Operations and their standards to help you set defined Goals for 2011.
■Labor Gross Profit Margins (75% is the correct number)
■Parts Gross Profit Margins (45% is the correct number)
■Parts to Labor Ratio (80% is the correct number)
■Multi-point Inspection Completion Rate (100% is the correct number)
■Additional Service Requests (30-40% of CP ROs is the correct number)
■ASR Closing Ratio (30-50% is the correct number)
■RO Count to Sold Units (6-1 Ratio is the correct number)
■Effective Labor Rate (90% of Door Rate is the correct number)
■Gross Profit Increase Year over Year (10% or more is the correct number)
■RO Count Increase (Yearly 10% or more is the correct number)
These are the bare minimum numbers for planning next years Goals. By planning now you are keeping yourself from “chaining your goat” to something that can be tossed at the first sign of trouble or adversity, which we all know happens when things are not going smoothly.
Goal Setting with everyone involved will prevent the possibility of 2011 being tossed into a deep hole before it even gets started.
“The Cheapest Oil Change In Town”
In every market and at every dealer there is the perception in Fixed Operations that cheap oil changes will add profit.
While it is true that cheap oil changes will bring Customers to your door, it is up to you to do something with them when they arrive.
Here are 3 Ways you can maximize the cheap oil change.
■Be “Over The Top” with your Customer Service. Be clean and neat, be accomodating, be prompt, be courteous and be Thankful. Think of the Customer as someone who is test driving your Dealership to see if they like the ride. Give them the best ride possible.
■Do a Complete and Thorough Inspection of the vehicle. Instead of a “27 Point” how about a “Driveability Check” or a “Winter Safety Check” or a “Brake, Light and Fluid Check” in addition to your usual 27 Point Inspection. The object is to give the Customer something that they were not expecting when they came in for “just an oil change.”
■Give them a Reason to Complete Service Work with You. Hey, you advertise, you plan for, you spend money and you lose money on the oil change and then…you don’t give your Customer a compelling reason to have service work completed at your Dealership? What are you thinking?
Making money in Fixed Operations is difficult when you don’t plan for the Oil Change Customer who might or might not be your Customer. It is impossible if you do not maximize the Cheap Oil Change Customers visit.
While it is true that cheap oil changes will bring Customers to your door, it is up to you to do something with them when they arrive.
Here are 3 Ways you can maximize the cheap oil change.
■Be “Over The Top” with your Customer Service. Be clean and neat, be accomodating, be prompt, be courteous and be Thankful. Think of the Customer as someone who is test driving your Dealership to see if they like the ride. Give them the best ride possible.
■Do a Complete and Thorough Inspection of the vehicle. Instead of a “27 Point” how about a “Driveability Check” or a “Winter Safety Check” or a “Brake, Light and Fluid Check” in addition to your usual 27 Point Inspection. The object is to give the Customer something that they were not expecting when they came in for “just an oil change.”
■Give them a Reason to Complete Service Work with You. Hey, you advertise, you plan for, you spend money and you lose money on the oil change and then…you don’t give your Customer a compelling reason to have service work completed at your Dealership? What are you thinking?
Making money in Fixed Operations is difficult when you don’t plan for the Oil Change Customer who might or might not be your Customer. It is impossible if you do not maximize the Cheap Oil Change Customers visit.
Passionate About Success in Service? Are You Using “Old Thinking” In New Times?
I was reading a post on another site when I read something I found quite profound. It was a comment by another gentleman.
He said ”If you are not passionate about what you do, if you do not believe in it with every fiber of your being, it will be reflected in your achievements.”
In my role as a Trainer, this is the single biggest reason I see people fail in this business as Service Advisors and Service Managers.
1st, they don’t want to be there. This is “just a job.” For many it is just the “means to pay the bills.” The amount of effort they put into the day is just enough to get them through it. Yet, when questioned, many people say “I need my job.”
Really? Lots of people need a job.
The truly successful Service Advisors see themselves not only as Advisors, they see themselves as Caretakers of the Customer. Not as Order Takers and Phone Answerers.
2nd, they don’t believe that what they do has real meaning. The Truth is, in our roles as Service Managers and Service Advisors, it can be a thankless and grinding task.
You are not going to rescue a child from a burning building or invent a cure for a life threatening disease.
However, if you are looking for something that involves working with people, thinking, commuication skils, sales, action management, technical knowhow, Customer Service knowledge and the ability to remain calm during stressful situations then you are going to love this position. It has all of that and more.
I like to think of the Service Advisor as more of a Traffic Controller than anything else. Just as important as the Air Traffic Controller is to the Tower, the Advisor is to the Dealership.
The average Advisor has more to do with the overall profitability of the Dealership than any other single person employed by the Dealership.
It is an important role and if you don’t have that mentality, then you should find another profession. And, once in awhile. there will be someone who recognizes your efforts and Thanks you. Sometime they bring donuts, sometimes they just look you in the eye, and say “Thanks for taking care of me.”
Lastly, Resistance To Change. Why is it in our business everyone thinks that once you are trained, nothing else need be done?
What single business on the planet remains static, frozen in process and procedure? What single busines on the planet has a constant supply of the Customers who are exactly the same as they were the year before? With all of the same buying habits, demographics and metrics? Not one that is still in business. Because every single business that thinks that way goes out of business.
Look around you. In the past 5 years, Dealerships have Decreased! and Aftermarket Competition has Increased!
Why are you using old thinking in new times?
Change is inevitable. Become a Change Agent. Read everyday about your Profession. Find and attend Training relevant to your areas of opportunity. Ask your Customer what is important to them. Become proactive and not reactive.
He said ”If you are not passionate about what you do, if you do not believe in it with every fiber of your being, it will be reflected in your achievements.”
In my role as a Trainer, this is the single biggest reason I see people fail in this business as Service Advisors and Service Managers.
1st, they don’t want to be there. This is “just a job.” For many it is just the “means to pay the bills.” The amount of effort they put into the day is just enough to get them through it. Yet, when questioned, many people say “I need my job.”
Really? Lots of people need a job.
The truly successful Service Advisors see themselves not only as Advisors, they see themselves as Caretakers of the Customer. Not as Order Takers and Phone Answerers.
2nd, they don’t believe that what they do has real meaning. The Truth is, in our roles as Service Managers and Service Advisors, it can be a thankless and grinding task.
You are not going to rescue a child from a burning building or invent a cure for a life threatening disease.
However, if you are looking for something that involves working with people, thinking, commuication skils, sales, action management, technical knowhow, Customer Service knowledge and the ability to remain calm during stressful situations then you are going to love this position. It has all of that and more.
I like to think of the Service Advisor as more of a Traffic Controller than anything else. Just as important as the Air Traffic Controller is to the Tower, the Advisor is to the Dealership.
The average Advisor has more to do with the overall profitability of the Dealership than any other single person employed by the Dealership.
It is an important role and if you don’t have that mentality, then you should find another profession. And, once in awhile. there will be someone who recognizes your efforts and Thanks you. Sometime they bring donuts, sometimes they just look you in the eye, and say “Thanks for taking care of me.”
Lastly, Resistance To Change. Why is it in our business everyone thinks that once you are trained, nothing else need be done?
What single business on the planet remains static, frozen in process and procedure? What single busines on the planet has a constant supply of the Customers who are exactly the same as they were the year before? With all of the same buying habits, demographics and metrics? Not one that is still in business. Because every single business that thinks that way goes out of business.
Look around you. In the past 5 years, Dealerships have Decreased! and Aftermarket Competition has Increased!
Why are you using old thinking in new times?
Change is inevitable. Become a Change Agent. Read everyday about your Profession. Find and attend Training relevant to your areas of opportunity. Ask your Customer what is important to them. Become proactive and not reactive.
For Trainers
The greatest single feeling of accomplishment you can experience as a Trainer is one where someone you are Training suddenly…Gets It.
And right in front of you… before your very eyes, there is a Change.
See, in Training, change is mostly slow, frequently subtle, hard to see and sometimes hard to measure. It requires energy, time, committment, belief, knowledge, skill, communication, background, application and mostly… Will Power.
So, when someone “Gets It” and it happens right in front of you, it is a pretty special moment. Because up until that time you have invested all of yourself on…Faith.
Nothing more.
Faith in that person. Faith in what you Teach and how you Train. Faith that if you keep trying and never give in to the naysaying, the complaints, the whining, the bitching, the negativity…then you will have that moment…that special moment that occurs only after you have given of yourself and invested in another person based solely on Faith… with the only Thought and the only Reward… a moment in time when… that person…Gets It.
So, for you Trainers out there, the ones with the skin in the game, the heart on your sleeve, the feet on the deck and the eye on the prize…Keep It Up. We are counting on you.
We are counting on you to see us for what we can Become and what we can Achieve. We are counting on you Mr. or Ms. Trainer to Push us when we think we cannot be Pushed any more, to Train us when we think we have been Trained enough, to ask us to Commit to what you are Teaching us and to hold us Accountable for what we do or do not do.
That is what we are asking of you Mr. or Ms. Trainer.
Because if you do not…who will?
And because we have Faith in you Mr. or Ms. Trainer, we will…Try.
Rest assured that we will stumble, we will procrastinate, we will regress, we will start in fits and flubs…and through it all we will be counting on you.
Counting on you to be there to guide and lead. To lead us when we want to quit and remind us what we can become. You never quit on us and that is why we look to you. Because you have Faith.
For if you give up on us, what Hope do we have? If you do not Train us, who will?
Remember that you fill a Role…the most important Role any person can have …the most Respected of all Professions a man or woman can undertake…that of one who Leads and Trains. We ask that you don’t give up on us.
We ask that you…Try. Because we want to be the person that “Gets It” and make everything you do worthwhile.
We are counting on you.
And right in front of you… before your very eyes, there is a Change.
See, in Training, change is mostly slow, frequently subtle, hard to see and sometimes hard to measure. It requires energy, time, committment, belief, knowledge, skill, communication, background, application and mostly… Will Power.
So, when someone “Gets It” and it happens right in front of you, it is a pretty special moment. Because up until that time you have invested all of yourself on…Faith.
Nothing more.
Faith in that person. Faith in what you Teach and how you Train. Faith that if you keep trying and never give in to the naysaying, the complaints, the whining, the bitching, the negativity…then you will have that moment…that special moment that occurs only after you have given of yourself and invested in another person based solely on Faith… with the only Thought and the only Reward… a moment in time when… that person…Gets It.
So, for you Trainers out there, the ones with the skin in the game, the heart on your sleeve, the feet on the deck and the eye on the prize…Keep It Up. We are counting on you.
We are counting on you to see us for what we can Become and what we can Achieve. We are counting on you Mr. or Ms. Trainer to Push us when we think we cannot be Pushed any more, to Train us when we think we have been Trained enough, to ask us to Commit to what you are Teaching us and to hold us Accountable for what we do or do not do.
That is what we are asking of you Mr. or Ms. Trainer.
Because if you do not…who will?
And because we have Faith in you Mr. or Ms. Trainer, we will…Try.
Rest assured that we will stumble, we will procrastinate, we will regress, we will start in fits and flubs…and through it all we will be counting on you.
Counting on you to be there to guide and lead. To lead us when we want to quit and remind us what we can become. You never quit on us and that is why we look to you. Because you have Faith.
For if you give up on us, what Hope do we have? If you do not Train us, who will?
Remember that you fill a Role…the most important Role any person can have …the most Respected of all Professions a man or woman can undertake…that of one who Leads and Trains. We ask that you don’t give up on us.
We ask that you…Try. Because we want to be the person that “Gets It” and make everything you do worthwhile.
We are counting on you.
Coaching For Professionals
Several years ago, our local golf course completed an extensive re-model and re-design. At the dedication, Ray Floyd was the celebrity guest of honor. At the time, Ray had been enjoying renewed success in his golfing career. The local newspaper covered the event which included an interview. The answer to one of the questions intrigued me, and formed the basis for this article. The question was, “Ray, what do you contribute your recent successes to?” Ray responded, “I hired a new swing coach and started seeing a golf psychologist. You see, I needed to make certain I was maximizing every aspect of my game, both mental and physical! I needed all I could get from my swing and had to make sure my head was in the right place. These two changes helped me to improve my game and start scoring again.”
From Ray’s comments we can conclude that regardless of experience, abilities or past successes, EVERYONE can benefit from coaching, even your business. Coaching can improve current performance and help move dealerships to their Next Level. A third party, a coach, will see things others do not see, or things that are seen but overlooked, or worse yet, tolerated. A coach can help efficiently maximize an organizations effort.
Many of the dealerships we visit lack structure and processes. Structure is like the golf swing, you need to START correctly in order to finish up where you want. Processes relate to the mental aspect. If a dealership has procedures that are followed as designed, the thought process becomes easier, EVERYONE does the same thing, EVERY TIME. The only time one needs to improvise is when the situation is not clearly defined by a process. When that happens, get help immediately.
Let’s look at each of these elements individually. Proper structure needs to include economic balance in every aspect of your business. Are you selling the right products, are you stocking the right merchandise? Are your grosses in line with others in your area, region or the nation? Are you spending more than you should to generate the sales and grosses you are currently generating? Do you have guidelines for your new and used inventories? Are you paying your people TOO much, or TOO little? Are your pay plans fair to your employees as well as the dealership? Are your goals in writing? Did your management staff have the opportunity to give their input when establishing those goals? How often are the goals reviewed? The more frequent your review of your goals, the more you tend to move toward those goals.
Processes reflect the mental aspects of your business. Everyone needs to be doing the same thing, every time. When a customer walks on your lot, they need to be greeted in a professional and courteous manner, every time. After the customer has been greeted, they need to be escorted to a place where the salesperson can conduct a thorough, fact finding interview, every time. When a customer walks up to your service or parts department, they need to be handled the same way, every time. When a salesperson sits your customer down to negotiate the deal on their new purchase, they need to follow the same process, every time. Simplify the mental parts with processes and improve the score. No one can be exempt, everyone needs to follow the processes, every time.
Processes require ongoing training and discipline. Speaking of training, who does your training, your managers, your top producers? If they are not training, who is? Here is a scary thought, if your sales managers or your top producers are not doing the training that means your BOTTOM producers must be handling it. When you hire new people, what are they learning and who are they learning it from?
A Coach can help an organization with these and other opportunities. When was the last time your dealership had a check up? Is your business on solid ground? How are your processes? Are regular, ongoing training sessions being held? Are ALL employees required to attend? Is your dealership selling what sells, and stocking what is selling. Are your managers involved at all levels, including forecasting? Are your forecast and goals written? Are the forecasts achievable? How frequently are your forecasts reviewed? Do you have a coach, and if not, why?
Dugan Anderson operates Profit Solutions, a Division of RVMax. Dugan is a former dealer and for the past 8 years has been working with RVMax and dealerships across the country, dealing with all aspects of Financial Analysis, Expense control, marketing, training and consulting.
From Ray’s comments we can conclude that regardless of experience, abilities or past successes, EVERYONE can benefit from coaching, even your business. Coaching can improve current performance and help move dealerships to their Next Level. A third party, a coach, will see things others do not see, or things that are seen but overlooked, or worse yet, tolerated. A coach can help efficiently maximize an organizations effort.
Many of the dealerships we visit lack structure and processes. Structure is like the golf swing, you need to START correctly in order to finish up where you want. Processes relate to the mental aspect. If a dealership has procedures that are followed as designed, the thought process becomes easier, EVERYONE does the same thing, EVERY TIME. The only time one needs to improvise is when the situation is not clearly defined by a process. When that happens, get help immediately.
Let’s look at each of these elements individually. Proper structure needs to include economic balance in every aspect of your business. Are you selling the right products, are you stocking the right merchandise? Are your grosses in line with others in your area, region or the nation? Are you spending more than you should to generate the sales and grosses you are currently generating? Do you have guidelines for your new and used inventories? Are you paying your people TOO much, or TOO little? Are your pay plans fair to your employees as well as the dealership? Are your goals in writing? Did your management staff have the opportunity to give their input when establishing those goals? How often are the goals reviewed? The more frequent your review of your goals, the more you tend to move toward those goals.
Processes reflect the mental aspects of your business. Everyone needs to be doing the same thing, every time. When a customer walks on your lot, they need to be greeted in a professional and courteous manner, every time. After the customer has been greeted, they need to be escorted to a place where the salesperson can conduct a thorough, fact finding interview, every time. When a customer walks up to your service or parts department, they need to be handled the same way, every time. When a salesperson sits your customer down to negotiate the deal on their new purchase, they need to follow the same process, every time. Simplify the mental parts with processes and improve the score. No one can be exempt, everyone needs to follow the processes, every time.
Processes require ongoing training and discipline. Speaking of training, who does your training, your managers, your top producers? If they are not training, who is? Here is a scary thought, if your sales managers or your top producers are not doing the training that means your BOTTOM producers must be handling it. When you hire new people, what are they learning and who are they learning it from?
A Coach can help an organization with these and other opportunities. When was the last time your dealership had a check up? Is your business on solid ground? How are your processes? Are regular, ongoing training sessions being held? Are ALL employees required to attend? Is your dealership selling what sells, and stocking what is selling. Are your managers involved at all levels, including forecasting? Are your forecast and goals written? Are the forecasts achievable? How frequently are your forecasts reviewed? Do you have a coach, and if not, why?
Dugan Anderson operates Profit Solutions, a Division of RVMax. Dugan is a former dealer and for the past 8 years has been working with RVMax and dealerships across the country, dealing with all aspects of Financial Analysis, Expense control, marketing, training and consulting.
Customers and Communications…Are You Missing Sales?
The number one area that your Customers would like you to improve in is… Communicating with your Customers.
Most of you reading this would say “We do communicate with our Customers all the time! We call them; we send them emails…why we even have a monthly newsletter that we send out. What more could they possibly want?”
Maybe…just maybe…they might want you to communicate with them the way they like to be communicated with…whaddya think?
Have you asked your Customers this question…”Mr./Ms. Customer, which way would you like me to communicate with you? Do you we contact you by cell phone? Do you prefer we text you? Would you prefer we send you an email? Or is there another form of communication that you would like for us to use?”
Once you have the answer to that question, you need to have people who are Trained to Communicate! And by training your personnel to Communicate they will become better at the one thing that they must be the BEST at in a Dealership…SALES!
“If you are willing to commit to training your entire Fixed Operations team how to effectively communicate with every customer on every phone call and at every visit you are well on your way toward creating a culture of salesmanship within your entire organization.” says Don Reed, CEO of DealerPro Training Solutions.
And that Culture is what is required to be successful and competitive in today’s Dealership.
You must have people who can effectively Communicate and that means you need to do 3 things.
1.Train everyone in Sales, Service and Parts how to answer the phone. It is a skill set like any other. There is a script or word track for just about every conceivable situation. Once they learn the script and begin to use it, it begins to sound natural and they gain confidence. There is nothing worse for a Customer and a Dealership than to have your Customer phone in and get someone who has absolutely no idea how to answer the phone or what to do. It sets the wrong tone and establishes the idea in the Customers mind that they may have made a mistake in choosing you to do business with. And that Customer will remember that experience for a long time. Think they don’t? Have you ever had a Customer start off a conversation with “One time I called here and _______ happened.”?
2.Train your Service Advisors to ask every Service Customer the following. “Mr. /Ms. Customer, what is the best way for us to contact you today?” when they drop it off for Service. The follow up question is “In case I’m having some difficulty getting in contact with you, is there another way or another person I can get in touch with?” These two questions will boost Sales in Service. Why? How many times have your Service Advisors set an RO aside for hours at a time because they could not reach the Customer? And when they finally did get them, it was too late in the day, there were other issues, the Technician was busy doing other work…blah, blah, blah. That leads to a Lost Sale and that leads to Lost Gross.
3.Train your Service Advisors to be investigatory. Investigatory means simply being inquisitive and asking questions. What kind of questions do you ask? Anything that leads to the discovery of more information. Questions in the service drive sound like “Have you had your tires rotated?”…”When was the last time you had ________?”…”Have you noticed any leaks? What color was the fluid?” These questions and others like them, will get you more action items on your Repair Order. At the writeup area you can ask other questions like “I noticed that the last time in we recommended ______ and I don’t see where we have taken care of that yet…is that right?”…These examples of investigatory questions help the Customer get the Best Service Experience and make the Service Advisor more proactive which leads to more Sales. This is the beginning of developing a culture of Salesmanship.
And that leads to a culture of Success.
Communication with the Customer is the key to Service Department Profitability. Training every Service Advisor in phone skills, how to contact the Customer and becoming an Investigator will pave the way on the Road to Success.
Send an email to rheywood@dealerprotraining.com or call 888-553-0100 and find out what your Dealership is capable of with a Profit Potential Analysis. You don’t know until you look.
Most of you reading this would say “We do communicate with our Customers all the time! We call them; we send them emails…why we even have a monthly newsletter that we send out. What more could they possibly want?”
Maybe…just maybe…they might want you to communicate with them the way they like to be communicated with…whaddya think?
Have you asked your Customers this question…”Mr./Ms. Customer, which way would you like me to communicate with you? Do you we contact you by cell phone? Do you prefer we text you? Would you prefer we send you an email? Or is there another form of communication that you would like for us to use?”
Once you have the answer to that question, you need to have people who are Trained to Communicate! And by training your personnel to Communicate they will become better at the one thing that they must be the BEST at in a Dealership…SALES!
“If you are willing to commit to training your entire Fixed Operations team how to effectively communicate with every customer on every phone call and at every visit you are well on your way toward creating a culture of salesmanship within your entire organization.” says Don Reed, CEO of DealerPro Training Solutions.
And that Culture is what is required to be successful and competitive in today’s Dealership.
You must have people who can effectively Communicate and that means you need to do 3 things.
1.Train everyone in Sales, Service and Parts how to answer the phone. It is a skill set like any other. There is a script or word track for just about every conceivable situation. Once they learn the script and begin to use it, it begins to sound natural and they gain confidence. There is nothing worse for a Customer and a Dealership than to have your Customer phone in and get someone who has absolutely no idea how to answer the phone or what to do. It sets the wrong tone and establishes the idea in the Customers mind that they may have made a mistake in choosing you to do business with. And that Customer will remember that experience for a long time. Think they don’t? Have you ever had a Customer start off a conversation with “One time I called here and _______ happened.”?
2.Train your Service Advisors to ask every Service Customer the following. “Mr. /Ms. Customer, what is the best way for us to contact you today?” when they drop it off for Service. The follow up question is “In case I’m having some difficulty getting in contact with you, is there another way or another person I can get in touch with?” These two questions will boost Sales in Service. Why? How many times have your Service Advisors set an RO aside for hours at a time because they could not reach the Customer? And when they finally did get them, it was too late in the day, there were other issues, the Technician was busy doing other work…blah, blah, blah. That leads to a Lost Sale and that leads to Lost Gross.
3.Train your Service Advisors to be investigatory. Investigatory means simply being inquisitive and asking questions. What kind of questions do you ask? Anything that leads to the discovery of more information. Questions in the service drive sound like “Have you had your tires rotated?”…”When was the last time you had ________?”…”Have you noticed any leaks? What color was the fluid?” These questions and others like them, will get you more action items on your Repair Order. At the writeup area you can ask other questions like “I noticed that the last time in we recommended ______ and I don’t see where we have taken care of that yet…is that right?”…These examples of investigatory questions help the Customer get the Best Service Experience and make the Service Advisor more proactive which leads to more Sales. This is the beginning of developing a culture of Salesmanship.
And that leads to a culture of Success.
Communication with the Customer is the key to Service Department Profitability. Training every Service Advisor in phone skills, how to contact the Customer and becoming an Investigator will pave the way on the Road to Success.
Send an email to rheywood@dealerprotraining.com or call 888-553-0100 and find out what your Dealership is capable of with a Profit Potential Analysis. You don’t know until you look.
Not Taking Action Has Consequences
Yesterday I had the privilege of addressing a room of Service Managers and Factory Personnel. And I have to believe that everyone in that room was there to find or gather some new information that would help them take action on something that might be causing them some problems at their Dealerships.
Why would you attend if you had no hope of getting something, right? I hope that everyone one of them got something that they can use right away at their Dealership this week, something they can take action on.
And because I had a long drive home afterwards I started thinking about the consequences of not taking action.
In the Service Department the consequences really multiply quickly.
Lets take a look at John Q. Advisor.
John Q. is a underachiever at ABC Motors. His HPRO is at .9 and his Gross Profit Margin is below 70%. Now, John Q. is not necessarily a bad guy. In fact, he is a likeable and hard-working employee. He comes to work on time and believes he contributing to the overall success of the Service Department.
Johns current performance level is not acceptable. And the consequence of not taking action has verifiable results. Take a look at Johns numbers.
His current HPRO at .9 at the national labor rate of $85.00 an hour equals $76.50 in Gross Labor Sales. His Parts Gross Sales are $61.20 at a 80% parts to labor ratio which adds up to a total of $137.70 per CP Repair Order written. John has been performing at this level for 3 months.
The national average HPRO is 1.5 and by accepting Johns performance it is costing the Dealership money.
How much money?
Adding .6 at $85.00 equals $51.00 in Gross Labor Sales. Factor in the Parts Gross of $40.80 and each RO that John Q. writes is costing the Dealership $91.80 in LOST SALES! John writes an average of 220 CP ROs a month.
That is $20,196.00 per month and over a 3 month period that adds up to $60,588.00! I have to ask you, would you pay any Advisor $20,196.00 extra a month? $252,352 a year?
By not taking action, YOU ARE!
Everyday that John is not Trained and not held Accountable for his performance there is a concrete and verifiable loss. Not only a monetary loss but a performance loss that affects the whole department as well.
Why?
Accepting Johns results sends a message to everyone in the Dealership that a lack of performance is ok and that continued performance at this level is not a concern that needs to be taken care of. In fact John and every employee in the Service Department need not worry about the future. It is secure at ABC Motors.
You know what is worse? John thinks that it’s ok. Should John go to another Dealership for whatever reason, he would soon find himself out of a job, again. Why? Because Underachievers are not tolerated everywhere!
So not only is the Service Manager at ABC Motors costing the Dealership money by not Taking Action, by not Training John, by not holding John Accountable, the Service Manager is perpetuating Poor Performance and Condoning it!
Do you have a John Q. in your store?
Are you suffering the consequences of not taking action? What are you going to do about it!
Why would you attend if you had no hope of getting something, right? I hope that everyone one of them got something that they can use right away at their Dealership this week, something they can take action on.
And because I had a long drive home afterwards I started thinking about the consequences of not taking action.
In the Service Department the consequences really multiply quickly.
Lets take a look at John Q. Advisor.
John Q. is a underachiever at ABC Motors. His HPRO is at .9 and his Gross Profit Margin is below 70%. Now, John Q. is not necessarily a bad guy. In fact, he is a likeable and hard-working employee. He comes to work on time and believes he contributing to the overall success of the Service Department.
Johns current performance level is not acceptable. And the consequence of not taking action has verifiable results. Take a look at Johns numbers.
His current HPRO at .9 at the national labor rate of $85.00 an hour equals $76.50 in Gross Labor Sales. His Parts Gross Sales are $61.20 at a 80% parts to labor ratio which adds up to a total of $137.70 per CP Repair Order written. John has been performing at this level for 3 months.
The national average HPRO is 1.5 and by accepting Johns performance it is costing the Dealership money.
How much money?
Adding .6 at $85.00 equals $51.00 in Gross Labor Sales. Factor in the Parts Gross of $40.80 and each RO that John Q. writes is costing the Dealership $91.80 in LOST SALES! John writes an average of 220 CP ROs a month.
That is $20,196.00 per month and over a 3 month period that adds up to $60,588.00! I have to ask you, would you pay any Advisor $20,196.00 extra a month? $252,352 a year?
By not taking action, YOU ARE!
Everyday that John is not Trained and not held Accountable for his performance there is a concrete and verifiable loss. Not only a monetary loss but a performance loss that affects the whole department as well.
Why?
Accepting Johns results sends a message to everyone in the Dealership that a lack of performance is ok and that continued performance at this level is not a concern that needs to be taken care of. In fact John and every employee in the Service Department need not worry about the future. It is secure at ABC Motors.
You know what is worse? John thinks that it’s ok. Should John go to another Dealership for whatever reason, he would soon find himself out of a job, again. Why? Because Underachievers are not tolerated everywhere!
So not only is the Service Manager at ABC Motors costing the Dealership money by not Taking Action, by not Training John, by not holding John Accountable, the Service Manager is perpetuating Poor Performance and Condoning it!
Do you have a John Q. in your store?
Are you suffering the consequences of not taking action? What are you going to do about it!
3 Important Steps to Increase Service Sales
Ooooohhh, you got a shiny new car. I got to admit….you look good in it! It’s all you…the color… the styling….all your friends and neighbors are just gonna scream when you pull it into the driveway…they’ll say things like “Nice ride” or “Man, that is saaaaawwweeeetttt!”
And for the next few months you are constantly looking for excuses to take that baby for a spin! Need a double A for the tv remote??? “I’ll be right back” is the only thing you shout as you rush out the door to a store clear across town just so you can “cruise it baby!” Know what I’m talking about?
You probably are not even thinking about this next question.
“What percentage of your customers take delivery of their new or used vehicle and then, once they get home, remove that maintenance manual so they can review their required and recommended maintenance schedule?”
asks Don Reed of DealerPro Training Solutions.
The answer, not many. The reason is, they are just like you and me. The last thing on our minds is “When will I need to take it in for my first service?” All this means is that the purchaser, who has become your new potential Service Customer, will need to know what maintenance is required in order to keep their vehicle in top running condition.
If you are in Service there should be a word that just popped into your head. Can you say “Opportunity? In order to capitalize on your potential ”opportunity” you will need to do at least 3 things.
1st, provide a friendly, inviting environment to have service completed. Some things you will need to have are Friendly People (not fake friendly), clean waiting rooms and restrooms (a real must!), adequately comfortable chairs to sit down (not the plastic high school lunchroom chairs), access to refreshments (does not have to be gourmet) and probably the number one item in the customers mind, a promise to meet the customers time expectations.
2nd, have personnel that are not only knowledgeable about the maintenance required, but can explain it in a manner that a customer can understand with a friendly, caring attitude. No condescending, no derogatory or demeaning statements, no expectation of compensation. Just a sincere and caring attitude in favor of the customer. Lastly, a thorough inspection of the customer vehicle when in for service. Everytime. When completed, the customer should receive a copy and complete explanation of what was found and the overall condition of the vehicle. Everytime. By doing this the customer and you will begin to build a relationship. One that will lead to continued customer loyalty to the brand and the Dealership and future business for you.
Are there many more things you need to do? Yep. These are just 3 of the most important. There are a lot more steps to take in increasing your service market. If you can accomplish these 1st 3, you’ll be on your way to having increased service business, returning loyal customers and increasing profit.
Now, go get your car and take it for a ride…somewhere there is a double A about to go bad and you are going to need a new one!
And for the next few months you are constantly looking for excuses to take that baby for a spin! Need a double A for the tv remote??? “I’ll be right back” is the only thing you shout as you rush out the door to a store clear across town just so you can “cruise it baby!” Know what I’m talking about?
You probably are not even thinking about this next question.
“What percentage of your customers take delivery of their new or used vehicle and then, once they get home, remove that maintenance manual so they can review their required and recommended maintenance schedule?”
asks Don Reed of DealerPro Training Solutions.
The answer, not many. The reason is, they are just like you and me. The last thing on our minds is “When will I need to take it in for my first service?” All this means is that the purchaser, who has become your new potential Service Customer, will need to know what maintenance is required in order to keep their vehicle in top running condition.
If you are in Service there should be a word that just popped into your head. Can you say “Opportunity? In order to capitalize on your potential ”opportunity” you will need to do at least 3 things.
1st, provide a friendly, inviting environment to have service completed. Some things you will need to have are Friendly People (not fake friendly), clean waiting rooms and restrooms (a real must!), adequately comfortable chairs to sit down (not the plastic high school lunchroom chairs), access to refreshments (does not have to be gourmet) and probably the number one item in the customers mind, a promise to meet the customers time expectations.
2nd, have personnel that are not only knowledgeable about the maintenance required, but can explain it in a manner that a customer can understand with a friendly, caring attitude. No condescending, no derogatory or demeaning statements, no expectation of compensation. Just a sincere and caring attitude in favor of the customer. Lastly, a thorough inspection of the customer vehicle when in for service. Everytime. When completed, the customer should receive a copy and complete explanation of what was found and the overall condition of the vehicle. Everytime. By doing this the customer and you will begin to build a relationship. One that will lead to continued customer loyalty to the brand and the Dealership and future business for you.
Are there many more things you need to do? Yep. These are just 3 of the most important. There are a lot more steps to take in increasing your service market. If you can accomplish these 1st 3, you’ll be on your way to having increased service business, returning loyal customers and increasing profit.
Now, go get your car and take it for a ride…somewhere there is a double A about to go bad and you are going to need a new one!
Increasing Sales and Gross Profits is all in the Plan.
“Your plan for achieving 100% Service Absorption should focus on what you are going to do differently to increase sales and gross profits. It’s not just about advertising and marketing, it’s about processes” says Don Reed, CEO of DealerPro Training Solutions.
Increasing Sales is the one of the core functions of the Management Team (read Service Manager). And quite frankly, is one area that most Service Managers have difficulty doing.
Why?
It’s not that they are incompetent or incapable, it’s that they have so many other duties piled on to them, that the time they allocate to increasing Sales is never enough or is sandwiched between everything else that happens in a Dealership every day. From light bulbs out in the showroom to sprinklers not working to counseling the Service Advisor who has “personal issues” there never seems to be time to do it properly.
If that describes you, you need a plan. And all plans are built on measurements.
1st step, measure how your Advisors are performing.
What do we measure?
Every Service Manager looks at different things because that’s how they learned. You might be a SM that focuses more on Profit Margins and your buddy down the street might look at HPRO. (Hours per Repair Order)
When you are looking to increase Sales though, your view must be very narrow and specific. The focus needs to be on how many ROs did the Advisor write and how many hours did the Advisor produce on those ROs. In other words, how effective is the Advisor in making Sales with the ROs he/she wrote?
If your Advisor wrote 11 ROs and sold 9 hours on those ROs, that would be something that would get your attention as a Service Manager. And, yes, there are ALWAYS extenuating circumstances…. “This Customer never buys anything” or “All I had was LOFs today” or “I don’t know what happened, I just had on off day.”
If you are the SM, you gotta dig into what is going on with your Advisor (and ignore the excuses) because if you don’t know WHY they are not Selling you sure as heck won’t be able to Coach them to Sell more. That’s why it is so important to measure, and when trying to diagnose why Sales are not happening, to measure the Advisors effectiveness by comparing Hours sold per RO vs how many ROs did the Advisor write.
Now that you have dug into the numbers, you can see what Processes are not being followed. Finding out what is wrong is only half the battle.
2nd step, install a Process that the Advisor can follow and will follow (even when the SM is not there).
Here are 5 Common Reasons Advisors have difficulty Selling more.
1.The Advisor does not do a pre-write history check and is unaware of previous recommendations.
2.The Advisor does not conduct a walk-a-round of the vehicle during the writeup.
3.The Advisor does not present a menu to the Customer offering maintenance and services.
4.The Advisor does not make recommendations to the Customer based on observations, the Customers description of concerns or from the vehicles prior history.
5.The Advisor is uncomfortable (in some cases incapable) of making a Sales presentation to the Customer.
These 5 are responsible for more Lost Sales than any other reason in most Dealerships. Did you see any Processes not being followed in the above common reasons Advisors do not Sell?
So, now that you have measured AND you know WHY they are not selling, you can make a plan to address those discrepancies. Before you start, there is one question that you must answer first.
How effective is the Service Manager in teaching the Advisor to Sell?
If the SM cannot teach or coach the Advisor to sell, then part of the Action Plan will be to bring in someone who can.
There is no shame in admitting this if you are the SM. There is shame in allowing poor performance and low Sales through not admitting that you need to have some help in that area. Not every SM has the ability to Coach or Teach someone to Sell. They may have expertise and ability in a completely different area that makes them a strong Manager and it’s this reason they are the Manager.
Different people have different strengths. You need to know what yours are. If you are not good at Coaching or Teaching Sales, then don’t. “If you fail to get the proper kind of instruction, no matter how much you practice, you’re going to get better at making yourself worse.” Bobby Jones, Golfer
Basically, if you need help, get help.
Once you have a plan, you need to set aside a specific amount of time everyday for Training and Followup.
What do you Train on?
Processes, processes and more processes. It needs to be an automatic thought for the Advisor and not one he/she needs to think about.
Do you see the difference? If they have to think about it, it will not get done.
If they automatically do the Process and there are no questions, no “This Customers does not need a walk-a-round ’cause they were in last week”, no do it differently this writeup from the last writeup, and your Advisors have received the proper instruction and coaching, then you will have an increase in Sales.
Why? As Don Reed, CEO of DealerPro Training Solutions likes to say “Processes lead to Consistency. Consistency leads to Results.”
Increasing Sales is the one of the core functions of the Management Team (read Service Manager). And quite frankly, is one area that most Service Managers have difficulty doing.
Why?
It’s not that they are incompetent or incapable, it’s that they have so many other duties piled on to them, that the time they allocate to increasing Sales is never enough or is sandwiched between everything else that happens in a Dealership every day. From light bulbs out in the showroom to sprinklers not working to counseling the Service Advisor who has “personal issues” there never seems to be time to do it properly.
If that describes you, you need a plan. And all plans are built on measurements.
1st step, measure how your Advisors are performing.
What do we measure?
Every Service Manager looks at different things because that’s how they learned. You might be a SM that focuses more on Profit Margins and your buddy down the street might look at HPRO. (Hours per Repair Order)
When you are looking to increase Sales though, your view must be very narrow and specific. The focus needs to be on how many ROs did the Advisor write and how many hours did the Advisor produce on those ROs. In other words, how effective is the Advisor in making Sales with the ROs he/she wrote?
If your Advisor wrote 11 ROs and sold 9 hours on those ROs, that would be something that would get your attention as a Service Manager. And, yes, there are ALWAYS extenuating circumstances…. “This Customer never buys anything” or “All I had was LOFs today” or “I don’t know what happened, I just had on off day.”
If you are the SM, you gotta dig into what is going on with your Advisor (and ignore the excuses) because if you don’t know WHY they are not Selling you sure as heck won’t be able to Coach them to Sell more. That’s why it is so important to measure, and when trying to diagnose why Sales are not happening, to measure the Advisors effectiveness by comparing Hours sold per RO vs how many ROs did the Advisor write.
Now that you have dug into the numbers, you can see what Processes are not being followed. Finding out what is wrong is only half the battle.
2nd step, install a Process that the Advisor can follow and will follow (even when the SM is not there).
Here are 5 Common Reasons Advisors have difficulty Selling more.
1.The Advisor does not do a pre-write history check and is unaware of previous recommendations.
2.The Advisor does not conduct a walk-a-round of the vehicle during the writeup.
3.The Advisor does not present a menu to the Customer offering maintenance and services.
4.The Advisor does not make recommendations to the Customer based on observations, the Customers description of concerns or from the vehicles prior history.
5.The Advisor is uncomfortable (in some cases incapable) of making a Sales presentation to the Customer.
These 5 are responsible for more Lost Sales than any other reason in most Dealerships. Did you see any Processes not being followed in the above common reasons Advisors do not Sell?
So, now that you have measured AND you know WHY they are not selling, you can make a plan to address those discrepancies. Before you start, there is one question that you must answer first.
How effective is the Service Manager in teaching the Advisor to Sell?
If the SM cannot teach or coach the Advisor to sell, then part of the Action Plan will be to bring in someone who can.
There is no shame in admitting this if you are the SM. There is shame in allowing poor performance and low Sales through not admitting that you need to have some help in that area. Not every SM has the ability to Coach or Teach someone to Sell. They may have expertise and ability in a completely different area that makes them a strong Manager and it’s this reason they are the Manager.
Different people have different strengths. You need to know what yours are. If you are not good at Coaching or Teaching Sales, then don’t. “If you fail to get the proper kind of instruction, no matter how much you practice, you’re going to get better at making yourself worse.” Bobby Jones, Golfer
Basically, if you need help, get help.
Once you have a plan, you need to set aside a specific amount of time everyday for Training and Followup.
What do you Train on?
Processes, processes and more processes. It needs to be an automatic thought for the Advisor and not one he/she needs to think about.
Do you see the difference? If they have to think about it, it will not get done.
If they automatically do the Process and there are no questions, no “This Customers does not need a walk-a-round ’cause they were in last week”, no do it differently this writeup from the last writeup, and your Advisors have received the proper instruction and coaching, then you will have an increase in Sales.
Why? As Don Reed, CEO of DealerPro Training Solutions likes to say “Processes lead to Consistency. Consistency leads to Results.”
Are You Trying to Save Your Way to Profitability?
Getting profitable. Wow. How cool would that be?
You come into the store the first day of the month, open the door to your office, turn on the lights, sit at your desk and open the drawer that you keep your last months financial statement in and read through it until you come to the page that has the final numbers….and you smile a little self satisfied smile….when you realize “we paid all of our bills before we even opened the door this morning.”
Sounds like a science fiction novel? Or a fairy tale?
Maybe…especially if you are trying to save your way into Profitability.
It can be done…no doubt…that first month or two after you have made the cuts in Personnel, and wages (a favorite of all the employees by the way), and supplies, and vendors (they love that thing you do…you know..”Hey dude, I’m not paying $75.00 a car anymore for ding repair, it’s $50.00 now.”), and weekend meals for the Sales Dept…..you know what I’m talking about…and at the end of the second month…Wala…Profit. Right there on the statement. Just like you thought.
Then….the unthinkable happens…even less Traffic…. which you guessed it…. leads to less Sales and that of course takes us to less Profit because there is less Revenue and less of….well…EVERYTHING!
Now what do you cut? More importantly, how can you remain Profitable?
Maybe the question is not “Are my Expenses too High?”….maybe it’s “Are my Profits too Low?”
If this is you, then you need to start looking at Profit Generation and not Expense Cuts. Let me elaborate.
There is an area in your Dealership that has been known to generate Profit….consistently…if it’s being done correctly….it’s called the Fixed Operations or Service and Parts Department. I know….you can’t believe it either….it’s been there all along. Just waiting to be capitalized on.
Let’s present some facts. Now, I’m not picking on anyone, just discussing. Don’t get offended…I’m just the messenger and the alarm sounder.
The average hardworking Salesperson in the average Dealer selling an average New Vehicle will generate an average of $1450.00 in Gross PUS. If the New Vehicle has a $30000.00 sale price, that equates to .048333 or almost .05% average Gross Profit PUS.
Lets look at the Service Numbers. The average hardworking Advisor writing an average of 12 ROs a day will generate an average of $2754.00 in Sales with an average overall Gross of $1636.00 or 59% Gross Profit, per day.
Compared that to the average hardworking Salesperson overall average monthly Sales of 11 Units generating a total average monthly Gross of $15950.00, the average Advisor, well, has the bigger potential!
The average Advisor will generate $32,720.00 in average Gross Profit for the month!
Ok, what’s your point?
Since Saving our way to Profitability is a short term fix (and one sure to demoralize and in some cases, scare the employees), why not invest and allocate available resources into the Fixed Operations? One thing is for sure, the Sales to Gross ratio is a lot better, and the potential for getting even more is a lot greater.
So, which seems the better course of action?
Saving your way to Profitability or Generating More Profit?
You come into the store the first day of the month, open the door to your office, turn on the lights, sit at your desk and open the drawer that you keep your last months financial statement in and read through it until you come to the page that has the final numbers….and you smile a little self satisfied smile….when you realize “we paid all of our bills before we even opened the door this morning.”
Sounds like a science fiction novel? Or a fairy tale?
Maybe…especially if you are trying to save your way into Profitability.
It can be done…no doubt…that first month or two after you have made the cuts in Personnel, and wages (a favorite of all the employees by the way), and supplies, and vendors (they love that thing you do…you know..”Hey dude, I’m not paying $75.00 a car anymore for ding repair, it’s $50.00 now.”), and weekend meals for the Sales Dept…..you know what I’m talking about…and at the end of the second month…Wala…Profit. Right there on the statement. Just like you thought.
Then….the unthinkable happens…even less Traffic…. which you guessed it…. leads to less Sales and that of course takes us to less Profit because there is less Revenue and less of….well…EVERYTHING!
Now what do you cut? More importantly, how can you remain Profitable?
Maybe the question is not “Are my Expenses too High?”….maybe it’s “Are my Profits too Low?”
If this is you, then you need to start looking at Profit Generation and not Expense Cuts. Let me elaborate.
There is an area in your Dealership that has been known to generate Profit….consistently…if it’s being done correctly….it’s called the Fixed Operations or Service and Parts Department. I know….you can’t believe it either….it’s been there all along. Just waiting to be capitalized on.
Let’s present some facts. Now, I’m not picking on anyone, just discussing. Don’t get offended…I’m just the messenger and the alarm sounder.
The average hardworking Salesperson in the average Dealer selling an average New Vehicle will generate an average of $1450.00 in Gross PUS. If the New Vehicle has a $30000.00 sale price, that equates to .048333 or almost .05% average Gross Profit PUS.
Lets look at the Service Numbers. The average hardworking Advisor writing an average of 12 ROs a day will generate an average of $2754.00 in Sales with an average overall Gross of $1636.00 or 59% Gross Profit, per day.
Compared that to the average hardworking Salesperson overall average monthly Sales of 11 Units generating a total average monthly Gross of $15950.00, the average Advisor, well, has the bigger potential!
The average Advisor will generate $32,720.00 in average Gross Profit for the month!
Ok, what’s your point?
Since Saving our way to Profitability is a short term fix (and one sure to demoralize and in some cases, scare the employees), why not invest and allocate available resources into the Fixed Operations? One thing is for sure, the Sales to Gross ratio is a lot better, and the potential for getting even more is a lot greater.
So, which seems the better course of action?
Saving your way to Profitability or Generating More Profit?
Saving Newbie Advisor
In the movie “Saving Private Ryan”, an Army unit is sent to rescue the last surviving brother for a mother in waiting. The team is successful and Private Ryan returns home to live a life of fulfillment.
Nice story. Great plot. Excellent movie.
What has that got to do with Fixed Operations and Service Advisors?
Well, it is more about what you are not doing than what you are doing. And “Saving Newbie Advisor” could just as well be titled “Saving Every Advisor.” But I chose Newbie because it brings home that in every Service Manager there beats the heart of a Trainer and Coach (at least there should be) , and that last thing we want to do is put Newbie Advisor in a position to Fail.
So the question is, “If I am the Service Manager today, what 3 things would I need to teach my Newbie Advisor so that I could save him or her from the same mistakes that most every other Advisor makes in their respective careers?”
1st, lets teach them How to be Investigatory. In other words, how to ask good questions. Let me give you an example of a bad question. “Would you like fries with that?” Why is that a bad question?
Because everything preceding that question was order taking. Order taking is just that. Writing down what the person told you, putting that into the computer and waiting for the next request. Anybody can learn to do that. Heck, we taught a monkey to fly in space using the very same technique.
Advisors are investigatory. They ask questions that are investigative in nature. “Mr. Customer, I noticed that it’s been 6ooo miles since you had your tires rotated. Would you like for me to rotate them for you today?” or “Mr. Customer, during your last visit we recommended replacing the upper and lower radiator hoses. Has that been taken care of yet?”
2nd, lets teach them how to be Sell properly. A true Salesperson is the ultimate Professional. They study their craft by reading, training and role playing. They leave nothing to chance that is in their direct control. They always know how to respond even if they don’t know what they are going to say.
Too many times our Newbie Advisors are in the position to make a Sale and have no clue how to properly do it. They say the wrong thing or even worse, never say anything at all! They lack confidence to complete the transaction if there is anything outside of the ordinary because they haven’t been trained to deal with the unexpected. (Does Handling Objections sound familiar?)
Lastly, lets teach them how to Listen properly. Listening is a skill like any other. Stop practicing good Listening habits and watch the Sales tumble like BP’s stock after the oil spill. Straight down the Leader board.
Good Listening start with eye contact and paying attention. If you find your Advisors staring at the computer screen and answering the phone when the Customer is standing in front of them, it might be time for a “Saving.”
Saving Newbie and Every Advisor does not need to be a rescue mission if Training and Coaching are a priority and practiced daily. Take a look at your Advisors and see if they are in need of being saved. Teach and Coach How to ask Investigative Questions, How to Sell and How to Listen and watch your Service Sales increase.
Nice story. Great plot. Excellent movie.
What has that got to do with Fixed Operations and Service Advisors?
Well, it is more about what you are not doing than what you are doing. And “Saving Newbie Advisor” could just as well be titled “Saving Every Advisor.” But I chose Newbie because it brings home that in every Service Manager there beats the heart of a Trainer and Coach (at least there should be) , and that last thing we want to do is put Newbie Advisor in a position to Fail.
So the question is, “If I am the Service Manager today, what 3 things would I need to teach my Newbie Advisor so that I could save him or her from the same mistakes that most every other Advisor makes in their respective careers?”
1st, lets teach them How to be Investigatory. In other words, how to ask good questions. Let me give you an example of a bad question. “Would you like fries with that?” Why is that a bad question?
Because everything preceding that question was order taking. Order taking is just that. Writing down what the person told you, putting that into the computer and waiting for the next request. Anybody can learn to do that. Heck, we taught a monkey to fly in space using the very same technique.
Advisors are investigatory. They ask questions that are investigative in nature. “Mr. Customer, I noticed that it’s been 6ooo miles since you had your tires rotated. Would you like for me to rotate them for you today?” or “Mr. Customer, during your last visit we recommended replacing the upper and lower radiator hoses. Has that been taken care of yet?”
2nd, lets teach them how to be Sell properly. A true Salesperson is the ultimate Professional. They study their craft by reading, training and role playing. They leave nothing to chance that is in their direct control. They always know how to respond even if they don’t know what they are going to say.
Too many times our Newbie Advisors are in the position to make a Sale and have no clue how to properly do it. They say the wrong thing or even worse, never say anything at all! They lack confidence to complete the transaction if there is anything outside of the ordinary because they haven’t been trained to deal with the unexpected. (Does Handling Objections sound familiar?)
Lastly, lets teach them how to Listen properly. Listening is a skill like any other. Stop practicing good Listening habits and watch the Sales tumble like BP’s stock after the oil spill. Straight down the Leader board.
Good Listening start with eye contact and paying attention. If you find your Advisors staring at the computer screen and answering the phone when the Customer is standing in front of them, it might be time for a “Saving.”
Saving Newbie and Every Advisor does not need to be a rescue mission if Training and Coaching are a priority and practiced daily. Take a look at your Advisors and see if they are in need of being saved. Teach and Coach How to ask Investigative Questions, How to Sell and How to Listen and watch your Service Sales increase.
Service Absorption Rule #3
“Maintain a 6 to 1 ratio of C/P RO count to total vehicle sales” says Don Reed, CEO of DealerPro Training Solutions.
That sounds simple enough. If you are currently selling 100 New and Used a month, then that pencils out to 600 Customer Pay Repair Orders per Month, not including Warranty and Internal. It’s the CP RO count we are after.
So, you just realized that your RO count is low, right? What are you going to do about it? If you are thinking that you need a big production that costs a lot of money and the only thing that you can do is advertise to get more Customers in the door, think again.
Certainly advertising can be a part of the overall strategy to bring customers back in. “You don’t need to spend more money-you need to spend more of your money wisely” says Don. Which means that you need to look at reallocating some of what you already spend elsewhere (Sales) and give it to Service where you can realize a much better ROI.
“The average dealer is spending $500 to sell a new customer while spending $8.40 to keep the customers they have.”
And, if you do the math on a 500 RO (Customer Interaction) Service Drive and the typical 100 car store, you can expect to pay $50000.00 to get results that are somewhere north of say $145,000.00 in Gross Profit from the sale of those cars, or, you can spend $5000.00 in your Service Department ($10.00 per Customer) for a $153,000.00 Gross Profit return.
Thats 30 times over what you invested…vs a 2.9% ROI in Sales. 30 times! If I asked you to give me a $10.00 bill and I told you that in exchange for that $10.00 I would give you back $300.00, would you do it? Of course you would!
While advertising is part of the overall strategy and is part of your planning, it is another tool to be used in conjunction with everything else you do in Customer retention and marketing.
In fact, there are at least 20 different things that you can do right away (in the next few months) that will have an immediate impact on your RO count. Most of them require nothing more than a little elbow grease and awareness.
Send me an email at lbuchholz@dealerprotraining.com and put “Send me the 20″ in the subject line and I’ll send you back 20 ways you can increase RO count in your service department.
In the meantime, measure your current numbers using the 6/1 Rule and see where you stackup. If you are struggling, it might be time for a fresh look.
Getting to 100% Service Absorption is a decision. Decide to have better Absorption this year
That sounds simple enough. If you are currently selling 100 New and Used a month, then that pencils out to 600 Customer Pay Repair Orders per Month, not including Warranty and Internal. It’s the CP RO count we are after.
So, you just realized that your RO count is low, right? What are you going to do about it? If you are thinking that you need a big production that costs a lot of money and the only thing that you can do is advertise to get more Customers in the door, think again.
Certainly advertising can be a part of the overall strategy to bring customers back in. “You don’t need to spend more money-you need to spend more of your money wisely” says Don. Which means that you need to look at reallocating some of what you already spend elsewhere (Sales) and give it to Service where you can realize a much better ROI.
“The average dealer is spending $500 to sell a new customer while spending $8.40 to keep the customers they have.”
And, if you do the math on a 500 RO (Customer Interaction) Service Drive and the typical 100 car store, you can expect to pay $50000.00 to get results that are somewhere north of say $145,000.00 in Gross Profit from the sale of those cars, or, you can spend $5000.00 in your Service Department ($10.00 per Customer) for a $153,000.00 Gross Profit return.
Thats 30 times over what you invested…vs a 2.9% ROI in Sales. 30 times! If I asked you to give me a $10.00 bill and I told you that in exchange for that $10.00 I would give you back $300.00, would you do it? Of course you would!
While advertising is part of the overall strategy and is part of your planning, it is another tool to be used in conjunction with everything else you do in Customer retention and marketing.
In fact, there are at least 20 different things that you can do right away (in the next few months) that will have an immediate impact on your RO count. Most of them require nothing more than a little elbow grease and awareness.
Send me an email at lbuchholz@dealerprotraining.com and put “Send me the 20″ in the subject line and I’ll send you back 20 ways you can increase RO count in your service department.
In the meantime, measure your current numbers using the 6/1 Rule and see where you stackup. If you are struggling, it might be time for a fresh look.
Getting to 100% Service Absorption is a decision. Decide to have better Absorption this year
Service Absorption Rule #2
“Maintain your hours per C/P Repair Order (RO) at a minimum of 2.5” says Don Reed, CEO of DealerPro Training Solutions.
If you are currently at the national average of 1.5, then this might seem a bit of a stretch. It’s always a stretch when it’s as big as an elephant. And we know how to eat an elephant, right…..one bite at a time.
So, let’s break it down into bite sized pieces.
In the pursuit of HPRO the first thing we must have is well trained personnel. This means everyone including the cashier must have training.
What kind of training?
If you are a person that has any customer contact (read everyone in the dealership) then Customer Service Skills would be high on the list. This includes everything from how to greet to how to answer the phone.
Now, you would think that a business that relies so heavily on the phone would have phone training on a regular basis.
Wrong.
Call your parts department sometime and ask about a special order part. Call the service department and ask to speak to the owner. See how long you are on hold. Call the receptionist and ask to speak to the detailers. Call and ask for a shuttle driver to come a pick you up.
The point is, it’s not only the day to day calls it’s also the unusual, the “you called parts and you really want sales” call that tells the tale.
Second, conduct regular Sales Training. Sales Training is for anyone in contact with the customer on a regular basis. Does this sound familiar?
Everyone in the dealership is a salesperson. The greeter who sells friendliness, the parts counter person who sells a part, the service advisor who sells the labor….everyone is a salesperson and yet why is it only the salespeople get sales training?
Lastly, maintaining 2.5 HPRO is a direct result of what you measure. You can conduct phone skills and sales skills training, and if you never spend a second listening or critiquing to those whom you have just trained, you have wasted your time.
What we measure determines what we focus on. If we consistently ask our advisors “You wrote 12 CP ROs yesterday and only booked 8 hours. Can you tell me what happened?” after awhile, they will be prepared to answer that question before you even ask it, which means they are focusing on…you guessed it…Labor Hours per RO.
Try it. Start asking your advisors about something specific for a week and see what happens.
Maintaining 2.5 HPRO is a lot more difficult than attaining 2.5 HPRO. Just take it one bite at a time and before you know it, you will have 100% Service Absorption.
If you are currently at the national average of 1.5, then this might seem a bit of a stretch. It’s always a stretch when it’s as big as an elephant. And we know how to eat an elephant, right…..one bite at a time.
So, let’s break it down into bite sized pieces.
In the pursuit of HPRO the first thing we must have is well trained personnel. This means everyone including the cashier must have training.
What kind of training?
If you are a person that has any customer contact (read everyone in the dealership) then Customer Service Skills would be high on the list. This includes everything from how to greet to how to answer the phone.
Now, you would think that a business that relies so heavily on the phone would have phone training on a regular basis.
Wrong.
Call your parts department sometime and ask about a special order part. Call the service department and ask to speak to the owner. See how long you are on hold. Call the receptionist and ask to speak to the detailers. Call and ask for a shuttle driver to come a pick you up.
The point is, it’s not only the day to day calls it’s also the unusual, the “you called parts and you really want sales” call that tells the tale.
Second, conduct regular Sales Training. Sales Training is for anyone in contact with the customer on a regular basis. Does this sound familiar?
Everyone in the dealership is a salesperson. The greeter who sells friendliness, the parts counter person who sells a part, the service advisor who sells the labor….everyone is a salesperson and yet why is it only the salespeople get sales training?
Lastly, maintaining 2.5 HPRO is a direct result of what you measure. You can conduct phone skills and sales skills training, and if you never spend a second listening or critiquing to those whom you have just trained, you have wasted your time.
What we measure determines what we focus on. If we consistently ask our advisors “You wrote 12 CP ROs yesterday and only booked 8 hours. Can you tell me what happened?” after awhile, they will be prepared to answer that question before you even ask it, which means they are focusing on…you guessed it…Labor Hours per RO.
Try it. Start asking your advisors about something specific for a week and see what happens.
Maintaining 2.5 HPRO is a lot more difficult than attaining 2.5 HPRO. Just take it one bite at a time and before you know it, you will have 100% Service Absorption.
Service Absorption Rule #1
“Maintain your profit margins at 45% C/P Parts and 75% C/P Labor” says Don Reed, CEO of DealerPro Training Solutions.
Maintaining your profit margins is not always easy, and it’s not getting any easier! If you are struggling with profit margins, the first thing you must do is measure what you are getting.
The financial statement is the place to look. On your financial you will find month end data as well as year to date. What we want to take a look at it is the month end numbers from last month. On your financial look at your total labor sales for c/p ROs. Now look for your gross profit. Next to that will be gross profit expressed as a percentage. This percentage is what we are after.
Notice I did not reference your last 3606 or Advisors report. Why? Because what is on the statement is all that matters. At the end of the month will the Dealer Principal ask you about your Advisors report or the financial?
If your GP percentage is at less than 75% we need to start looking at several factors, the most critical is how much do you discount?
The more you discount, the smaller the GP. The number one reason why GP is low in many dealers is the because the money is being given away by the service advisors.
Control your discounts, control your gross profit.
If you look on that same statement, usally right across the column, there will be the parts numbers. If you look at the c/p RO parts sales, there will be gross profit and percentage as well. If this number is less than 45% then we need to look at how the parts are being billed on the repair order. In other words, is the part being billed at the correct price or is it the discounted price? Most GP for Parts is lost the same way it is in Service, it is simply given away.
So, what’s next? Most times a serious conversation and follow up is enough to bring it under control. However, do not hesitate to remove the capability of giving a discount from those who are abusing the privelege. Recheck the numbers at the end of the following month and keep track of changes. The key to increasing Gross Profit is not only knowing where to look but also what to look for!
Maintaining your profit margins is not always easy, and it’s not getting any easier! If you are struggling with profit margins, the first thing you must do is measure what you are getting.
The financial statement is the place to look. On your financial you will find month end data as well as year to date. What we want to take a look at it is the month end numbers from last month. On your financial look at your total labor sales for c/p ROs. Now look for your gross profit. Next to that will be gross profit expressed as a percentage. This percentage is what we are after.
Notice I did not reference your last 3606 or Advisors report. Why? Because what is on the statement is all that matters. At the end of the month will the Dealer Principal ask you about your Advisors report or the financial?
If your GP percentage is at less than 75% we need to start looking at several factors, the most critical is how much do you discount?
The more you discount, the smaller the GP. The number one reason why GP is low in many dealers is the because the money is being given away by the service advisors.
Control your discounts, control your gross profit.
If you look on that same statement, usally right across the column, there will be the parts numbers. If you look at the c/p RO parts sales, there will be gross profit and percentage as well. If this number is less than 45% then we need to look at how the parts are being billed on the repair order. In other words, is the part being billed at the correct price or is it the discounted price? Most GP for Parts is lost the same way it is in Service, it is simply given away.
So, what’s next? Most times a serious conversation and follow up is enough to bring it under control. However, do not hesitate to remove the capability of giving a discount from those who are abusing the privelege. Recheck the numbers at the end of the following month and keep track of changes. The key to increasing Gross Profit is not only knowing where to look but also what to look for!
Recruiting Top Performers: How To Hire What You Want And Need
Do you plan on hiring additional fixed operations personnel this year or possibly replacing someone who currently isn’t getting the job done? I’m talking specifically about technicians, service advisors, parts managers and service managers. If so, do you have a well-thought-out strategy for recruiting top performers?
What is a top performer? It is simply someone who can perform above the industry’s performance guides for the position you wish to fill. These people thrive on performance-based compensation and are looking for more than just a weekly paycheck. They expect to be well-compensated for the above-average efforts that produce above-average results, which usually means more profit for their dealer. To put it another way: you get what you pay for! That being said, how do you find and recruit these top performers? You can be sure they’re not standing in line at the unemployment office or sitting at home waiting for the phone to ring. They are most likely employed by one of your competitors.
The first step in recruiting for any position is to determine the maximum compensation you are willing to pay to a top performer. Secondly, you must prepare a list of the benefits you can offer this person. Thirdly, you must decide how you are going to search for this person. Let’s look at technicians, for example.
To begin with, determine the W-2 earnings last year for your highest-paid technician. This is probably a technician who has a productivity level of 140 percent or higher. Let’s assume he earned $70,000 for the year. This now becomes the benchmark for the new hire’s compensation.
Next you must define your benefits. Remember that you want to recruit from not only your aftermarket competitors but from other dealers as well, so you must list the benefits of working at your dealership. (See the sample ad below for examples.)
Lastly, you must decide how and where you intend to advertise for this position, which for most of you will be your local newspaper. When advertising in the newspaper, do not buy a 3- or 4-line ad in the help-wanted section. Instead, spend the money to buy a display ad, maybe two columns by five inches.
I know it will cost a lot more than the liner ad, but here again, you get what you pay for. A liner ad will probably produce two or three applicants, whereas a display ad will bring in closer to 10, which of course gives you a lot more candidates from which to choose. Keep in mind that it doesn’t matter whether you want to recruit an A-, B- or C-level technician; an effective ad will attract all of them.
To see what the ad content will look like, see the sample ad below:
WANTED
Automotive Technicians
ALL skill levels Needed
Earn Up to
$70,000
PAID Health Insurance No Sundays
401K Plan Paid for Training Programs
Professional Work
Environment Full Appreciation for Work
Done
Terrific Bonus Program Ohio's Top Pay Plan
No Nights (Apply In Person)
Obviously, C- and B-level technicians will respond to this ad, and so will A-level technicians who aren’t currently earning $70K a year or who don’t have health insurance or a 401K. Aftermarket technicians will respond as well, attracted by the promise of no nights or Sundays and looking for additional training to increase their skill level.
As you can see, the ad was effective because it was able to attract a wide range of applicants. If you need help designing your recruiting ads, just send me an e-mail (Don@AutoDealerMonthly.com) and I’d be glad to send you some samples.
Everywhere I go, I hear dealers and service managers utter these same words: “Don, you don’t understand; technicians are hard to find.” Well, I do understand this: there are nearly four times as many aftermarket service facilities (over 80,000) as there are new car dealers (about 22,000). Who do you think employs the majority of the technicians in the work force?
I recommend you strive to recruit aftermarket technicians because most bring some very good work habits with them, such as performing a complete inspection of every vehicle before making repairs. Aftermarket technicians service all makes and models. They are trained on light repairs and maintenance services, which is exactly the kind of work you need in your service department to increase your retail service sales.
Over time, these technicians can become top performers in your dealership. Don’t limit your options when looking for top performers. Be aggressive and open-minded in your recruiting efforts and start growing your service business.
Don’t end up with someone else’s underachiever. Be aggressive, spend a little money and recruit as many applicants as possible, and I’m confident you will be able to hire a top performer.
Don Reed
CEO, Fixed Ops Solutions
DealerPro Training Solutions
What is a top performer? It is simply someone who can perform above the industry’s performance guides for the position you wish to fill. These people thrive on performance-based compensation and are looking for more than just a weekly paycheck. They expect to be well-compensated for the above-average efforts that produce above-average results, which usually means more profit for their dealer. To put it another way: you get what you pay for! That being said, how do you find and recruit these top performers? You can be sure they’re not standing in line at the unemployment office or sitting at home waiting for the phone to ring. They are most likely employed by one of your competitors.
The first step in recruiting for any position is to determine the maximum compensation you are willing to pay to a top performer. Secondly, you must prepare a list of the benefits you can offer this person. Thirdly, you must decide how you are going to search for this person. Let’s look at technicians, for example.
To begin with, determine the W-2 earnings last year for your highest-paid technician. This is probably a technician who has a productivity level of 140 percent or higher. Let’s assume he earned $70,000 for the year. This now becomes the benchmark for the new hire’s compensation.
Next you must define your benefits. Remember that you want to recruit from not only your aftermarket competitors but from other dealers as well, so you must list the benefits of working at your dealership. (See the sample ad below for examples.)
Lastly, you must decide how and where you intend to advertise for this position, which for most of you will be your local newspaper. When advertising in the newspaper, do not buy a 3- or 4-line ad in the help-wanted section. Instead, spend the money to buy a display ad, maybe two columns by five inches.
I know it will cost a lot more than the liner ad, but here again, you get what you pay for. A liner ad will probably produce two or three applicants, whereas a display ad will bring in closer to 10, which of course gives you a lot more candidates from which to choose. Keep in mind that it doesn’t matter whether you want to recruit an A-, B- or C-level technician; an effective ad will attract all of them.
To see what the ad content will look like, see the sample ad below:
WANTED
Automotive Technicians
ALL skill levels Needed
Earn Up to
$70,000
PAID Health Insurance No Sundays
401K Plan Paid for Training Programs
Professional Work
Environment Full Appreciation for Work
Done
Terrific Bonus Program Ohio's Top Pay Plan
No Nights (Apply In Person)
Obviously, C- and B-level technicians will respond to this ad, and so will A-level technicians who aren’t currently earning $70K a year or who don’t have health insurance or a 401K. Aftermarket technicians will respond as well, attracted by the promise of no nights or Sundays and looking for additional training to increase their skill level.
As you can see, the ad was effective because it was able to attract a wide range of applicants. If you need help designing your recruiting ads, just send me an e-mail (Don@AutoDealerMonthly.com) and I’d be glad to send you some samples.
Everywhere I go, I hear dealers and service managers utter these same words: “Don, you don’t understand; technicians are hard to find.” Well, I do understand this: there are nearly four times as many aftermarket service facilities (over 80,000) as there are new car dealers (about 22,000). Who do you think employs the majority of the technicians in the work force?
I recommend you strive to recruit aftermarket technicians because most bring some very good work habits with them, such as performing a complete inspection of every vehicle before making repairs. Aftermarket technicians service all makes and models. They are trained on light repairs and maintenance services, which is exactly the kind of work you need in your service department to increase your retail service sales.
Over time, these technicians can become top performers in your dealership. Don’t limit your options when looking for top performers. Be aggressive and open-minded in your recruiting efforts and start growing your service business.
Don’t end up with someone else’s underachiever. Be aggressive, spend a little money and recruit as many applicants as possible, and I’m confident you will be able to hire a top performer.
Don Reed
CEO, Fixed Ops Solutions
DealerPro Training Solutions
The Meaning Behind the Term "Fixed Operations"
Why do we classify half of our dealership as variable and the other half as fixed? What is the difference between the two? Should they operate independently of one another or operate as one? Is one more important than the other? As a dealer or general manager, which one deserves more of your time? These are interesting questions that are worthy of much discussion for the dealer who wants to survive and thrive in today’s marketplace.
Why do we call one variable and the other fixed? Let’s start with customer traffic. Variable operations calls them ups. Would you say you have the same approximate number of ups coming into your showroom each day of the week and each month, or does the number vary depending on factors such as weather, inventory levels, product, location, market conditions and advertising? My guess is the number of ups varies a great deal from day to day and month to month, as well as year to year. The expenses associated with these factors vary as well and go up and down based upon managements’ decisions. The more units you sell, the more commissions paid, the higher the inventory, the higher the floor plan interest--and of course there’s advertising, which is all over the spectrum.
Fixed operations calls traffic customers. Would you say you have about the same number of customers coming into your service department each day of the week and each month? Probably so, because you don’t have as many variable conditions in service and parts as you do in sales. Additionally, the expenses in service and parts tend to be more stable or fixed than they are in sales, right? Of course, this is not news to most of you reading this article and you might be wondering what my point is.
My point is: fixed operations can move up or down just as variable operations do. Here’s an example of the opportunity I want to share with you. Get your hands on your last 12 monthly financial statements. On a sheet of paper, make three columns, one for the month of the year, one for new and used vehicle sales and the other for customer pay repair orders,. Next to each month, enter the number of vehicle sales and the number of customer pay repair orders. In a perfect world, your customer pay repair orders should increase by the number of vehicles you’re selling, starting with the customers’ first scheduled maintenance which, let’s say, is at three months. In my perfect world, your columns should look like this:
Month New & Used
Vehicle Sales Customer Pay
Repair Order
Jan. 100 500
Feb. 80 475
Mar. 110 600
Simply put, if you continue to service the customers you already have and you then sell 100 units in January and they all return for their first scheduled maintenance in March, then you would see an increase of 100 repair orders, which brings your total to 600. This represents an increase of 20 percent. The same would then apply for each consecutive month following March. As you can see, fixed operations business now grows and grows! As fixed operations becomes bigger from increased traffic, it of course generates more gross profit, which in turn increases service absorption. That means your dealership has less dependency on vehicle sales to be profitable.
As this cycle progresses, at some point most dealerships will reach a point called 100 percent service absorption, and those dealers can then weather any economic condition because their dealership has now become recession proof. Now, regardless of factory sales incentives, inventory levels of hot products, turnover of salespeople, the price of gasoline/diesel, interest rates and so on, you can still survive and thrive.
Chances are, by now, reality has set in and you notice that this phenomenon outlined above is not reflected on your sheet of paper. Most likely, March does not reflect that 20 percent increase in RO count, nor do any of the following months. Why? The next step is to compare March 2008 to March 2007. What did you find? Is your customer pay RO count higher this year over last, about the same or lower? In far too many dealerships across our country the answer, sadly, is lower. Why?
I can answer both of the “why” questions. You may not like the answer, but here it is: Your customers don’t like doing business with you. When I say “you,” I don’t necessarily mean you, personally; I mean your dealership. You see, you have not given them enough benefits to return to your dealership for service. Your fixed operations are now shrinking instead of expanding. So, what are you going to do about it--buy a different franchise that’s exploding at the seams in service? Good luck with that deal!
The problem here is that the average new car dealer is losing customers in fixed operations at about the same rate as they’re adding new ones in variable operations. The result is stagnation in service, and it really does become fixed. This has got to stop for the dealers who want to be around for the long term. You must start growing fixed by making it variable. Give your customers reasons to come back, keep your name in front of them every month, make sure you have convenient hours, train your service and parts team on how to effectively communicate with your customers by offering benefits, always exceed the customer’s expectations, and remember: if you don’t care, they won’t either.
Don Reed
CEO, Fixed Ops Solutions
DealerPro Training Solutions
Why do we call one variable and the other fixed? Let’s start with customer traffic. Variable operations calls them ups. Would you say you have the same approximate number of ups coming into your showroom each day of the week and each month, or does the number vary depending on factors such as weather, inventory levels, product, location, market conditions and advertising? My guess is the number of ups varies a great deal from day to day and month to month, as well as year to year. The expenses associated with these factors vary as well and go up and down based upon managements’ decisions. The more units you sell, the more commissions paid, the higher the inventory, the higher the floor plan interest--and of course there’s advertising, which is all over the spectrum.
Fixed operations calls traffic customers. Would you say you have about the same number of customers coming into your service department each day of the week and each month? Probably so, because you don’t have as many variable conditions in service and parts as you do in sales. Additionally, the expenses in service and parts tend to be more stable or fixed than they are in sales, right? Of course, this is not news to most of you reading this article and you might be wondering what my point is.
My point is: fixed operations can move up or down just as variable operations do. Here’s an example of the opportunity I want to share with you. Get your hands on your last 12 monthly financial statements. On a sheet of paper, make three columns, one for the month of the year, one for new and used vehicle sales and the other for customer pay repair orders,. Next to each month, enter the number of vehicle sales and the number of customer pay repair orders. In a perfect world, your customer pay repair orders should increase by the number of vehicles you’re selling, starting with the customers’ first scheduled maintenance which, let’s say, is at three months. In my perfect world, your columns should look like this:
Month New & Used
Vehicle Sales Customer Pay
Repair Order
Jan. 100 500
Feb. 80 475
Mar. 110 600
Simply put, if you continue to service the customers you already have and you then sell 100 units in January and they all return for their first scheduled maintenance in March, then you would see an increase of 100 repair orders, which brings your total to 600. This represents an increase of 20 percent. The same would then apply for each consecutive month following March. As you can see, fixed operations business now grows and grows! As fixed operations becomes bigger from increased traffic, it of course generates more gross profit, which in turn increases service absorption. That means your dealership has less dependency on vehicle sales to be profitable.
As this cycle progresses, at some point most dealerships will reach a point called 100 percent service absorption, and those dealers can then weather any economic condition because their dealership has now become recession proof. Now, regardless of factory sales incentives, inventory levels of hot products, turnover of salespeople, the price of gasoline/diesel, interest rates and so on, you can still survive and thrive.
Chances are, by now, reality has set in and you notice that this phenomenon outlined above is not reflected on your sheet of paper. Most likely, March does not reflect that 20 percent increase in RO count, nor do any of the following months. Why? The next step is to compare March 2008 to March 2007. What did you find? Is your customer pay RO count higher this year over last, about the same or lower? In far too many dealerships across our country the answer, sadly, is lower. Why?
I can answer both of the “why” questions. You may not like the answer, but here it is: Your customers don’t like doing business with you. When I say “you,” I don’t necessarily mean you, personally; I mean your dealership. You see, you have not given them enough benefits to return to your dealership for service. Your fixed operations are now shrinking instead of expanding. So, what are you going to do about it--buy a different franchise that’s exploding at the seams in service? Good luck with that deal!
The problem here is that the average new car dealer is losing customers in fixed operations at about the same rate as they’re adding new ones in variable operations. The result is stagnation in service, and it really does become fixed. This has got to stop for the dealers who want to be around for the long term. You must start growing fixed by making it variable. Give your customers reasons to come back, keep your name in front of them every month, make sure you have convenient hours, train your service and parts team on how to effectively communicate with your customers by offering benefits, always exceed the customer’s expectations, and remember: if you don’t care, they won’t either.
Don Reed
CEO, Fixed Ops Solutions
DealerPro Training Solutions
Missed Profit Opportunities
In the pursuit of additional profit opportunities in your service department, you must focus on maintenance of your customers’ vehicles. This is a missed opportunity for many dealers who do not perform complete, thorough inspections of their customers’ vehicles and do not make recommendations for preventative maintenance based on time, mileage, local conditions, etc. The value of these missed profit opportunities might surprise you.
To begin with, let me ask you this question: What percentage of your customers take delivery of their new or used vehicle and then, once they get home, remove that maintenance manual so they can review and study their required and recommended maintenance services? I don’t know the exact answer but I’m pretty confident the answer is, not very many. I’m talking about the transmission services, coolant flushes, air filters, pollen filters (which very few customers know they need), alignments, tire rotations, and the list goes on, and on. Everyone knows when to change the engine oil, but how many do you really think know when to perform all of those other maintenance services?
Next question: Are all of your customers mechanically inclined and can they perform all maintenance services on their vehicles themselves? Most customers rely upon someone with knowledge of their vehicle to provide recommendations for the proper maintenance and service on their vehicle.
It’s kind of like going to the dentist; the dentist performs an inspection of your teeth on each and every visit and makes recommendations to you based on the time since your last visit and the condition of your teeth. You know that you have to brush after every meal and floss, but there are other things your teeth need that you may not be aware of.
You rely upon a professional to help you maintain healthy teeth. An automobile customer is no different. They rely upon a professional, your technician or your service advisor, to properly advise them on how to maintain a reliable and safe vehicle which, in the long run, provides a much more enjoyable driving experience. There’s nothing worse than going on a trip with the family and having a problem occur with your vehicle, right?
Okay, so let’s look at the profit potential regarding this process of inspecting every vehicle and making recommendations to your customers for additional maintenance. In working with dealers all over the country, I have found that a complete and thorough inspection will produce, on average, an additional 0.7 hour of labor per retail work order. Let’s use the following assumptions when calculating the profit opportunity in our model dealership/service facility:
•Retail labor rate of $85 per hour
•Retail labor profit margin of 75% (Techs are paid $21.25 per hour)
•Parts-to-labor sales ratio of 0.8-to-1 ($0.80 in parts sales = $1.00 in labor sales)
•Retail parts profit margin of 45%
•Average 500 retail work orders per month
By performing complete and thorough inspections of all 500 vehicles we find, on average, 0.7 additional hours to sell at $85 per hour equals $59.50 in labor sales. At a profit margin of 75 percent, this produces additional gross profit of $44.63. At a 0.8-to-1 ratio our parts sales would be $68 per hour with a profit margin of 45 percent, which produces additional gross profit of $30.60 per repair order. Add the two together, and our total additional gross profit equals $75.23 per work order. Multiply that by our 500 work orders and the result is an additional gross profit of $37,615 per month. That comes to $451,380 for the year, based on 500 work orders each month.
Now ask yourself this question: “How many additional vehicles would I need to sell throughout the year to produce another $451,380 in gross profit?” If your average gross profit per unit is $1,500, this equates to approximately 301 additional vehicles. Does that get your attention? The point is, you need to start looking at your service and parts departments as true profit centers that can not only stand on their own, but also actually generate enough profit to cover all of your dealership’s fixed expenses. That’s service absorption! This means you have less dependency on new and used vehicle sales to make a net profit, which becomes a huge benefit during a soft market, high interest rates, expensive fuel, bad weather and a whole lot of other ills.
In far too many dealerships, the service and parts departments are simply there to provide support for the sale and delivery of new and used vehicles. Their secondary role is to take care of all the warranty repairs, and last of all, if time permits, they will write a retail work order for cash business. I’ve actually been in a service department that told customers that if they didn’t buy their vehicle from the dealership, they were low priority.
If this philosophy makes sense to you, then welcome to the dark ages! As you can imagine, this dealer was losing money in his service and parts department in numbers that would take your breath away. Would you want to be a service advisor or service manager in that store? It’s worth noting that the turnover in those two positions was quite high.
Why would you want to operate any department in your dealership at a loss to support another department? I believe it makes a lot more sense to operate every department as a standalone enterprise that works with the other departments to maximize overall performance and profits. It’s called return on investment.
Don Reed
CEO, Fixed Ops Solutions
DealerPro Training Solutions
To begin with, let me ask you this question: What percentage of your customers take delivery of their new or used vehicle and then, once they get home, remove that maintenance manual so they can review and study their required and recommended maintenance services? I don’t know the exact answer but I’m pretty confident the answer is, not very many. I’m talking about the transmission services, coolant flushes, air filters, pollen filters (which very few customers know they need), alignments, tire rotations, and the list goes on, and on. Everyone knows when to change the engine oil, but how many do you really think know when to perform all of those other maintenance services?
Next question: Are all of your customers mechanically inclined and can they perform all maintenance services on their vehicles themselves? Most customers rely upon someone with knowledge of their vehicle to provide recommendations for the proper maintenance and service on their vehicle.
It’s kind of like going to the dentist; the dentist performs an inspection of your teeth on each and every visit and makes recommendations to you based on the time since your last visit and the condition of your teeth. You know that you have to brush after every meal and floss, but there are other things your teeth need that you may not be aware of.
You rely upon a professional to help you maintain healthy teeth. An automobile customer is no different. They rely upon a professional, your technician or your service advisor, to properly advise them on how to maintain a reliable and safe vehicle which, in the long run, provides a much more enjoyable driving experience. There’s nothing worse than going on a trip with the family and having a problem occur with your vehicle, right?
Okay, so let’s look at the profit potential regarding this process of inspecting every vehicle and making recommendations to your customers for additional maintenance. In working with dealers all over the country, I have found that a complete and thorough inspection will produce, on average, an additional 0.7 hour of labor per retail work order. Let’s use the following assumptions when calculating the profit opportunity in our model dealership/service facility:
•Retail labor rate of $85 per hour
•Retail labor profit margin of 75% (Techs are paid $21.25 per hour)
•Parts-to-labor sales ratio of 0.8-to-1 ($0.80 in parts sales = $1.00 in labor sales)
•Retail parts profit margin of 45%
•Average 500 retail work orders per month
By performing complete and thorough inspections of all 500 vehicles we find, on average, 0.7 additional hours to sell at $85 per hour equals $59.50 in labor sales. At a profit margin of 75 percent, this produces additional gross profit of $44.63. At a 0.8-to-1 ratio our parts sales would be $68 per hour with a profit margin of 45 percent, which produces additional gross profit of $30.60 per repair order. Add the two together, and our total additional gross profit equals $75.23 per work order. Multiply that by our 500 work orders and the result is an additional gross profit of $37,615 per month. That comes to $451,380 for the year, based on 500 work orders each month.
Now ask yourself this question: “How many additional vehicles would I need to sell throughout the year to produce another $451,380 in gross profit?” If your average gross profit per unit is $1,500, this equates to approximately 301 additional vehicles. Does that get your attention? The point is, you need to start looking at your service and parts departments as true profit centers that can not only stand on their own, but also actually generate enough profit to cover all of your dealership’s fixed expenses. That’s service absorption! This means you have less dependency on new and used vehicle sales to make a net profit, which becomes a huge benefit during a soft market, high interest rates, expensive fuel, bad weather and a whole lot of other ills.
In far too many dealerships, the service and parts departments are simply there to provide support for the sale and delivery of new and used vehicles. Their secondary role is to take care of all the warranty repairs, and last of all, if time permits, they will write a retail work order for cash business. I’ve actually been in a service department that told customers that if they didn’t buy their vehicle from the dealership, they were low priority.
If this philosophy makes sense to you, then welcome to the dark ages! As you can imagine, this dealer was losing money in his service and parts department in numbers that would take your breath away. Would you want to be a service advisor or service manager in that store? It’s worth noting that the turnover in those two positions was quite high.
Why would you want to operate any department in your dealership at a loss to support another department? I believe it makes a lot more sense to operate every department as a standalone enterprise that works with the other departments to maximize overall performance and profits. It’s called return on investment.
Don Reed
CEO, Fixed Ops Solutions
DealerPro Training Solutions
Business Development Centers Can Maximize Service Appointments
I recently reviewed some research findings from a Detroit 3 manufacturer that revealed a very disturbing statistic: “The average dealer has a drop rate of about 35% on incoming service calls.” This simply means the customer hangs up the phone without speaking to anyone. This is disturbing, particularly in light of the declining warranty and retail repair order counts we are experiencing in our industry today. As a dealer or general manager, would you allow 35 percent of your incoming sales calls to be dropped? What would happen to your service appointments if you could find a way to capture all of these lost calls?
Additionally, research shows that for every five incoming calls that are answered, one results in an appointment, one is calling on the status of their vehicle and three are calling for a price quote or availability. What would happen to your service appointments if you could convert just one of the three incoming calls for price and availability to an appointment?
How does this happen in so many dealerships across the country? It’s because most dealers send incoming service calls to their service advisors. Some dealers even have a direct phone line to the service advisors. Most of these calls are coming in during the morning hours, midday and late afternoon, which is exactly the same time the advisors are their busiest working with customers and technicians. These processes are not conducive to increasing appointments, increasing sales, improving CSI or building owner retention.
Here are a few situations to consider evaluating in your dealership:
•Your advisor is making a maintenance menu presentation to a customer and the phone rings. What do they do?
•Your advisor is on the phone with a customer and the phone rings. What do they do?
•Your advisor is reviewing a repair order with a technician or customer and the phone rings. What do they do?
•Do your advisors ever answer the phone, “Service, hold”?
•Does your receptionist ever complain about your advisors not answering their phone?
The correct answer to the first three is: never stop working with the customer in front of you to answer the phone. The answer to the last two is probably yes, which is exactly why 35 percent of the service calls are dropped. What can you do to change this?
One very effective way to correct this is to send all incoming service calls to a business development center (BDC). Properly trained BDC personnel can provide a multitude of services that will increase owner retention and CSI while enabling your advisors to become more productive, thereby increasing sales and shop productivity. Here are some examples:
•Answer all incoming calls eliminating the 35 percent dropped calls and increase appointments set.
•Convert one of the three customers who call for price and availability to an appointment.
•Call all lost service customers to invite them back for service
•Make CSI follow-up calls
•Contact all no-shows to reschedule their missed appointment
•Call customers for appointments to install special order parts
•Contact all customers with an appointment reminder
•Advise customers on recall campaigns
Now your advisors have the time available to focus on providing your customers the highest level of service they expect and deserve. Advisors tell me that the phone consumes more of their time than any other function they perform. With a BDC, you can greatly reduce the number of time-consuming incoming service calls going to your advisors, giving them the available time they need.
How much time do your advisors spend answering incoming service calls? Well, again the research shows that the average dealer will schedule one appointment for every five incoming service calls. Let’s assume your service department schedules 500 appointments per month (retail and warranty), or 24 per day. That equates to about 2,500 service phone calls per month or about 120 per day.
If you had two service advisors taking these calls, then each would handle approximately 60 service calls per day to schedule 12 appointments each. Assuming each call lasts for three minutes, each service advisor would spend three hours on the phone. With a 9-hour workday, that means your advisors are spending 33 percent of their day answering the phone. This does not include outgoing calls advising their customers on needed repairs or services, reviewing the repair order with their customer, getting authorization for extended service contract repairs or advising on completion times, all of which could easily add another three hours. Is a business development center starting to make sense?
If you don’t think you are quite ready for a BDC, then you might want to consider hiring appointment coordinators. Appointment coordinators will receive all incoming service calls and schedule service appointments. They can perform the exact same functions as the BDC would for the service department, except they only work for the service department. The benefits to the advisors and customers are still the same, and your sales and CSI will increase. Your increase in sales and CSI will far outweigh the costs of this position.
If you are of the opinion that you don’t need a BDC or appointment coordinators, then here is a simple exercise for you to complete as soon as you finish reading this magazine. Phone shop each of your advisors. Ask a friend, a relative or maybe someone in your office staff to do the phone shopping. Make a note of how many times the phone rings, whether the caller was put on hold at any time during the conversation, whether the advisor offered an appointment for a specific time for today or tomorrow, and if the advisor give his or her name and asked for the callers. Did the advisor exceed your expectations?
Don Reed
CEO, Fixed Ops Solutions
DealerPro Training Solutions
Additionally, research shows that for every five incoming calls that are answered, one results in an appointment, one is calling on the status of their vehicle and three are calling for a price quote or availability. What would happen to your service appointments if you could convert just one of the three incoming calls for price and availability to an appointment?
How does this happen in so many dealerships across the country? It’s because most dealers send incoming service calls to their service advisors. Some dealers even have a direct phone line to the service advisors. Most of these calls are coming in during the morning hours, midday and late afternoon, which is exactly the same time the advisors are their busiest working with customers and technicians. These processes are not conducive to increasing appointments, increasing sales, improving CSI or building owner retention.
Here are a few situations to consider evaluating in your dealership:
•Your advisor is making a maintenance menu presentation to a customer and the phone rings. What do they do?
•Your advisor is on the phone with a customer and the phone rings. What do they do?
•Your advisor is reviewing a repair order with a technician or customer and the phone rings. What do they do?
•Do your advisors ever answer the phone, “Service, hold”?
•Does your receptionist ever complain about your advisors not answering their phone?
The correct answer to the first three is: never stop working with the customer in front of you to answer the phone. The answer to the last two is probably yes, which is exactly why 35 percent of the service calls are dropped. What can you do to change this?
One very effective way to correct this is to send all incoming service calls to a business development center (BDC). Properly trained BDC personnel can provide a multitude of services that will increase owner retention and CSI while enabling your advisors to become more productive, thereby increasing sales and shop productivity. Here are some examples:
•Answer all incoming calls eliminating the 35 percent dropped calls and increase appointments set.
•Convert one of the three customers who call for price and availability to an appointment.
•Call all lost service customers to invite them back for service
•Make CSI follow-up calls
•Contact all no-shows to reschedule their missed appointment
•Call customers for appointments to install special order parts
•Contact all customers with an appointment reminder
•Advise customers on recall campaigns
Now your advisors have the time available to focus on providing your customers the highest level of service they expect and deserve. Advisors tell me that the phone consumes more of their time than any other function they perform. With a BDC, you can greatly reduce the number of time-consuming incoming service calls going to your advisors, giving them the available time they need.
How much time do your advisors spend answering incoming service calls? Well, again the research shows that the average dealer will schedule one appointment for every five incoming service calls. Let’s assume your service department schedules 500 appointments per month (retail and warranty), or 24 per day. That equates to about 2,500 service phone calls per month or about 120 per day.
If you had two service advisors taking these calls, then each would handle approximately 60 service calls per day to schedule 12 appointments each. Assuming each call lasts for three minutes, each service advisor would spend three hours on the phone. With a 9-hour workday, that means your advisors are spending 33 percent of their day answering the phone. This does not include outgoing calls advising their customers on needed repairs or services, reviewing the repair order with their customer, getting authorization for extended service contract repairs or advising on completion times, all of which could easily add another three hours. Is a business development center starting to make sense?
If you don’t think you are quite ready for a BDC, then you might want to consider hiring appointment coordinators. Appointment coordinators will receive all incoming service calls and schedule service appointments. They can perform the exact same functions as the BDC would for the service department, except they only work for the service department. The benefits to the advisors and customers are still the same, and your sales and CSI will increase. Your increase in sales and CSI will far outweigh the costs of this position.
If you are of the opinion that you don’t need a BDC or appointment coordinators, then here is a simple exercise for you to complete as soon as you finish reading this magazine. Phone shop each of your advisors. Ask a friend, a relative or maybe someone in your office staff to do the phone shopping. Make a note of how many times the phone rings, whether the caller was put on hold at any time during the conversation, whether the advisor offered an appointment for a specific time for today or tomorrow, and if the advisor give his or her name and asked for the callers. Did the advisor exceed your expectations?
Don Reed
CEO, Fixed Ops Solutions
DealerPro Training Solutions
Maximum Accountability Creates Maximum Profitability
After spending the last nine years working with hundreds of dealerships all across our country, I have discovered an amazing phenomenon permeating fixed operations. One could compare this phenomenon to cancer. The good news is this cancer is 100 percent curable for every single dealer who really wants to be cancer-free! The cancer is called “Lack of Accountability.” I find maximum accountability for everyone’s performance in the sales department, but when I cross over the demarcation line into the service and parts departments, I find a total absence of accountability with the exception of technicians, who are usually held accountable for their performance due to their flat rate compensation plan. Let’s look at some examples.
Most dealers would fire a used car manager who had $50,000 in used inventory over 12 months old, yet their parts manager can have $50,000 in 12 month old obsolete inventory and the dealer says, “He’s been a good employee and he will sell it someday.” Really? Most dealers would not tolerate salespeople with a 10 percent closing ratio, yet they continue to employ service advisors averaging 1.0 customer pay hours per repair order and say “I can’t find anyone who can do any better.” Most dealers would not tolerate a finance manager who averages $250 PRU, but a service director averaging 60 percent one-item retail repair orders has a job for life because “the customers like him.” If you have the misfortune of being one of these dealers whose business has this cancer, then I ask you to consider the following mathematical exercise.
This exercise begins with the following formula:
3 x 5 x 500 = 20,812
Now, if you are using conventional mathematics, you are most likely going to try and convince me the actual answer should be 7500 versus 20,812; however, I’m not using conventional math, I’m using accountability math.
The 3 represents three of the most important controllable areas of profitably when managing a Service and Parts department:
1. Hours per repair order
2. Labor Gross Profit margin
3. Parts Gross Profit margin
The 5 represents the improvement in these three controllable areas that most of you can realize starting today if you decide you want to get cured:
1. Add 0.5 hours per retail repair order
2. Add 5 percentage points to your Labor Gross profit margin
3. Add 5 percentage points to your Parts Gross profit margin
The 500 equals the number of Retail Repair Orders written in a given month, which is probably very close to what many of you are currently producing.
The 20,812 is the total additional gross profit dollars produced by increasing the three controllable areas on 500 repair orders as outlined above. Do I have your attention yet? This doesn’t require advertising, or fixed or semi-fixed expenses, just accountability for one’s performance.
Hours per repair order (HPRO) nationally are going down for far too many dealers. I see most dealers averaging between 1.0 and 1.3 HPRO. I see more and more averaging 0.6 to 0.9. What’s up with that? The answer is quite simple; there’s no selling going on. Why do you allow your service advisors, writers and assistant service managers (or whatever you call them) to become clerks? Most of you reading this article have the opportunity to raise your sales by 0.5 HPRO starting today if you’re ready to start your cancer treatments. It’s called process change with accountability for performance. Do you expect your finance producers to make a menu presentation to 100 percent of your sales customers? If so, then require your service advisors to make a maintenance menu presentation to 100 percent of your service customers.
In reviewing thousands of financial statements in our workshops, I find that most dealers’ retail labor gross profit as a percentage of sales revenue is averaging around 70 percent or less. Your benchmark needs to be 75 percent, so there’s your additional 5 percent in labor gross. It amazes me how many dealers have a higher margin on internal and warranty labor sales than they do on retail. Now think about that for a moment; your used car manager and your manufacturer are paying a higher price than your retail customer. Does this make any sense to you? Please, get out there and get that extra 5 points in margin. All you need to do is hold your service director/manager and advisors accountable for “unauthorized discounts” and your margin will go up starting today. I bet your used car manager is on my side with this one!
Additionally, I see these same “unauthorized discounts” with parts sales, and that’s why your retail parts gross profit as a percentage of sales is averaging around 35 percent. If you simply follow your factory pricing guides, you will most likely average closer to 40 percent. With a good parts pricing matrix, you can take it up to 45 percent, and now you have your additional 5 percent in parts gross. This, of course, would not apply to items like tires and accessories, but chances are those two items do not account for the majority of your sales. This is a very simple fix if you’re willing to hold everyone accountable for maintaining the 45 percent margin.
Finally, the assumptions I used in my accountability math are as follows:
1. An Effective Labor Rate of $75.00 @ 75% margin
2. A Parts to Labor sales ratio of 80% @ 45% margin
3. Add .5 HPRO to 500 repair orders
For every 500 repair orders that equals over $20,812 in gross profit or almost $250,000 per year. Do you like that math? If so, then you are ready to start the cure.
Article by:
Don Reed
CEO-DealerPro Training Solutions
NADA University Partner
Most dealers would fire a used car manager who had $50,000 in used inventory over 12 months old, yet their parts manager can have $50,000 in 12 month old obsolete inventory and the dealer says, “He’s been a good employee and he will sell it someday.” Really? Most dealers would not tolerate salespeople with a 10 percent closing ratio, yet they continue to employ service advisors averaging 1.0 customer pay hours per repair order and say “I can’t find anyone who can do any better.” Most dealers would not tolerate a finance manager who averages $250 PRU, but a service director averaging 60 percent one-item retail repair orders has a job for life because “the customers like him.” If you have the misfortune of being one of these dealers whose business has this cancer, then I ask you to consider the following mathematical exercise.
This exercise begins with the following formula:
3 x 5 x 500 = 20,812
Now, if you are using conventional mathematics, you are most likely going to try and convince me the actual answer should be 7500 versus 20,812; however, I’m not using conventional math, I’m using accountability math.
The 3 represents three of the most important controllable areas of profitably when managing a Service and Parts department:
1. Hours per repair order
2. Labor Gross Profit margin
3. Parts Gross Profit margin
The 5 represents the improvement in these three controllable areas that most of you can realize starting today if you decide you want to get cured:
1. Add 0.5 hours per retail repair order
2. Add 5 percentage points to your Labor Gross profit margin
3. Add 5 percentage points to your Parts Gross profit margin
The 500 equals the number of Retail Repair Orders written in a given month, which is probably very close to what many of you are currently producing.
The 20,812 is the total additional gross profit dollars produced by increasing the three controllable areas on 500 repair orders as outlined above. Do I have your attention yet? This doesn’t require advertising, or fixed or semi-fixed expenses, just accountability for one’s performance.
Hours per repair order (HPRO) nationally are going down for far too many dealers. I see most dealers averaging between 1.0 and 1.3 HPRO. I see more and more averaging 0.6 to 0.9. What’s up with that? The answer is quite simple; there’s no selling going on. Why do you allow your service advisors, writers and assistant service managers (or whatever you call them) to become clerks? Most of you reading this article have the opportunity to raise your sales by 0.5 HPRO starting today if you’re ready to start your cancer treatments. It’s called process change with accountability for performance. Do you expect your finance producers to make a menu presentation to 100 percent of your sales customers? If so, then require your service advisors to make a maintenance menu presentation to 100 percent of your service customers.
In reviewing thousands of financial statements in our workshops, I find that most dealers’ retail labor gross profit as a percentage of sales revenue is averaging around 70 percent or less. Your benchmark needs to be 75 percent, so there’s your additional 5 percent in labor gross. It amazes me how many dealers have a higher margin on internal and warranty labor sales than they do on retail. Now think about that for a moment; your used car manager and your manufacturer are paying a higher price than your retail customer. Does this make any sense to you? Please, get out there and get that extra 5 points in margin. All you need to do is hold your service director/manager and advisors accountable for “unauthorized discounts” and your margin will go up starting today. I bet your used car manager is on my side with this one!
Additionally, I see these same “unauthorized discounts” with parts sales, and that’s why your retail parts gross profit as a percentage of sales is averaging around 35 percent. If you simply follow your factory pricing guides, you will most likely average closer to 40 percent. With a good parts pricing matrix, you can take it up to 45 percent, and now you have your additional 5 percent in parts gross. This, of course, would not apply to items like tires and accessories, but chances are those two items do not account for the majority of your sales. This is a very simple fix if you’re willing to hold everyone accountable for maintaining the 45 percent margin.
Finally, the assumptions I used in my accountability math are as follows:
1. An Effective Labor Rate of $75.00 @ 75% margin
2. A Parts to Labor sales ratio of 80% @ 45% margin
3. Add .5 HPRO to 500 repair orders
For every 500 repair orders that equals over $20,812 in gross profit or almost $250,000 per year. Do you like that math? If so, then you are ready to start the cure.
Article by:
Don Reed
CEO-DealerPro Training Solutions
NADA University Partner
Menus Can Make a Difference
Most dealers today understand the value of an F&I department, and history shows that this department can be a significant profit center when the right processes are implemented, enabling managers to sell additional products and services to every customer who takes delivery of a new or used vehicle. One of those processes is menu selling.
These menus are designed to offer the customer choices for protecting their vehicle, credit, payment, etc. Most menus will give the customer the opportunity to choose from three or four different options such as Platinum, Gold, Silver or Bronze coverage. We know that if the customer chooses any one of these options, it results in an automatic upsell, which of course means more gross profit in the car deal.
Additionally, the finance producer is usually required to present these menus to 100 percent of your customers with no exceptions! This process breeds consistency and ensures that every customer is treated the same, meaning that each and every customer receives a feature/benefit presentation on all of the products contained in the menu. Starting today, why don’t you install this same process in your service department?
Menus can be just as effective in your service department. Here are five steps to properly implement maintenance menus:
1. Create your own menu
2. Train service advisors how to make a feature/benefit presentation
3. Require this process to be followed with every customer on every visit
4. Measure menu sales for each service advisor
5. Hold managers and advisors accountable for performance
Designing a maintenance menu can be very time consuming if you do it right, but I can assure you the time will be well spent. You can choose to design a paper menu or you might prefer an electronic one. Technology is a wonderful thing when it’s used properly. I prefer the electronic menus, which require nothing more than Internet service.
Electronic menus cost less, allow for more pricing flexibility, are easy to use, offer 100-percent accountability tracking for advisors, are customer-friendly and are available 24/7 for your customers. Research shows that online menus partnered with an online appointment process will generate about 20 percent more in sales per repair order than those written by your advisors. Do the math in your store and you’ll probably see an opportunity to add at least $50 per repair order. The fact is, online customers will go to your online menu and “sell themselves” because 100 percent of the customers are presented the menu when they log in.
All maintenance menus should start with the manufacturer’s requirements and recommendations based on months in service and/or mileage. From there, you must add services for local driving conditions as well as the customer’s own driving habits. For example, the driving conditions in Mesa, Ariz., are not the same as those in Bangor, Maine, and a truck owner towing boats does not have the same driving habits as one hauling a horse trailer in the mountains.
Training your advisors on how to make a feature/benefit presentation starts with taking a plain sheet of paper and drawing a line down the middle of the page. On the left, you should list all of the features outlined in your menu. On the right, list the corresponding benefits of each feature, which are the reasons a customer will say yes to a menu presentation. Remember, your advisors must understand that customers only buy benefits; they don’t buy features. An example would be a tire rotation. Nobody wants to buy a tire rotation (a feature), but they do want to have longer-lasting tires to save money (a benefit). Electronic menus also have full-color video feature/benefit presentations that enable the customer to actually see the benefits as well as hear about them.
Now, you must require every advisor to follow this process every day with each customer they greet, both warranty and customer-pay. This is not an option for your finance producers, and it should not be an option for your service advisors. You will never get 50 percent service contract penetration in F&I by offering contracts to only those customers who might buy them, right? It’s no different in service.
You can’t manage what you don’t measure, so it’s imperative that you keep a record of each advisor’s sales performance. I’m talking about sales per RO, hours per RO, profit margins on parts and labor, effective labor rate, closing ratio on menu sales, and closing ratio on inspection upsells. You’re most likely measuring every measurable statistic in your sales and F&I departments every day, so start doing the same for your service and parts departments. Then, you will have complete accountability for their individual performance.
These five steps outlined in this article will boost your bottom line starting with day one. Your customers will become trained on how to pay attention to preventative maintenance, which will give them a much more pleasurable ownership experience and save them money over time. If you doubt me, just go visit any aftermarket service facility and observe their processes since they now own 84 percent of the parts and service business in America.
Article by:
Don Reed
Dealer Pro Training Solutions
These menus are designed to offer the customer choices for protecting their vehicle, credit, payment, etc. Most menus will give the customer the opportunity to choose from three or four different options such as Platinum, Gold, Silver or Bronze coverage. We know that if the customer chooses any one of these options, it results in an automatic upsell, which of course means more gross profit in the car deal.
Additionally, the finance producer is usually required to present these menus to 100 percent of your customers with no exceptions! This process breeds consistency and ensures that every customer is treated the same, meaning that each and every customer receives a feature/benefit presentation on all of the products contained in the menu. Starting today, why don’t you install this same process in your service department?
Menus can be just as effective in your service department. Here are five steps to properly implement maintenance menus:
1. Create your own menu
2. Train service advisors how to make a feature/benefit presentation
3. Require this process to be followed with every customer on every visit
4. Measure menu sales for each service advisor
5. Hold managers and advisors accountable for performance
Designing a maintenance menu can be very time consuming if you do it right, but I can assure you the time will be well spent. You can choose to design a paper menu or you might prefer an electronic one. Technology is a wonderful thing when it’s used properly. I prefer the electronic menus, which require nothing more than Internet service.
Electronic menus cost less, allow for more pricing flexibility, are easy to use, offer 100-percent accountability tracking for advisors, are customer-friendly and are available 24/7 for your customers. Research shows that online menus partnered with an online appointment process will generate about 20 percent more in sales per repair order than those written by your advisors. Do the math in your store and you’ll probably see an opportunity to add at least $50 per repair order. The fact is, online customers will go to your online menu and “sell themselves” because 100 percent of the customers are presented the menu when they log in.
All maintenance menus should start with the manufacturer’s requirements and recommendations based on months in service and/or mileage. From there, you must add services for local driving conditions as well as the customer’s own driving habits. For example, the driving conditions in Mesa, Ariz., are not the same as those in Bangor, Maine, and a truck owner towing boats does not have the same driving habits as one hauling a horse trailer in the mountains.
Training your advisors on how to make a feature/benefit presentation starts with taking a plain sheet of paper and drawing a line down the middle of the page. On the left, you should list all of the features outlined in your menu. On the right, list the corresponding benefits of each feature, which are the reasons a customer will say yes to a menu presentation. Remember, your advisors must understand that customers only buy benefits; they don’t buy features. An example would be a tire rotation. Nobody wants to buy a tire rotation (a feature), but they do want to have longer-lasting tires to save money (a benefit). Electronic menus also have full-color video feature/benefit presentations that enable the customer to actually see the benefits as well as hear about them.
Now, you must require every advisor to follow this process every day with each customer they greet, both warranty and customer-pay. This is not an option for your finance producers, and it should not be an option for your service advisors. You will never get 50 percent service contract penetration in F&I by offering contracts to only those customers who might buy them, right? It’s no different in service.
You can’t manage what you don’t measure, so it’s imperative that you keep a record of each advisor’s sales performance. I’m talking about sales per RO, hours per RO, profit margins on parts and labor, effective labor rate, closing ratio on menu sales, and closing ratio on inspection upsells. You’re most likely measuring every measurable statistic in your sales and F&I departments every day, so start doing the same for your service and parts departments. Then, you will have complete accountability for their individual performance.
These five steps outlined in this article will boost your bottom line starting with day one. Your customers will become trained on how to pay attention to preventative maintenance, which will give them a much more pleasurable ownership experience and save them money over time. If you doubt me, just go visit any aftermarket service facility and observe their processes since they now own 84 percent of the parts and service business in America.
Article by:
Don Reed
Dealer Pro Training Solutions
Service Advisor Training---Expense or Investment?
Service Advisor Training---Expense or Investment?
A significant number of dealers these days are becoming more and more aggressive in selling used vehicles. Some have even lost their new car franchises and now rely solely on used vehicle sales along with parts and service sales to pay the overhead and hopefully provide them with a significant Return On Investment (ROI). I’m confident you will agree that it is critically important for all dealers to earn the highest possible ROI on every single investment they make, right?
Now, in order to increase sales in any department you have to start doing things differently and/or do different things. If not, then you simply continue to do what you’ve always done as stated so clearly by Zig Ziglar: “You have the perfect processes in place to get you exactly what you got last year.” I’m talking about training here in order to positively affect change. Some of you will take the approach of “saving your way into profitability” by vowing not to increase your expenses but you remain willing to make investments every day of your business life. Let’s consider some examples.
NADA research shows that the average used car cost (investment) is about $13,300 and sells for around $15,000 resulting in a gross profit of $1700 which is a ROI of 13%. ($1700 divided by $13,300 = $13%). Assume you can turn that inventory investment of $13,300 every 30 days (great job) that would be 12 turns per year at $1700 gross PRU for a total gross profit of $20,400 resulting in a ROI of 153%! My guess is none of you would hesitate to invest $13,300 in a used car knowing that you will realize a 153% ROI over the next 12 months. As a matter of fact, many of you wouldn’t hesitate to make multiple investments: 50, 75 or even 100 of those $13,300 cars to earn that kind of an ROI. Makes perfect sense to me!
Research also shows that a Service Advisor servicing 12 customers per day (4 Warranty and 8 Customer Pay) and averaging 1.5 Hours Per Repair Order at NADA benchmark’s will produce about $1637 in Gross Profit per day, $36,016 in Gross Profit per month and a total of $432,194 in Gross Profit per year. Let’s assume you diverted just one of those $13,300 used car inventory investments into a $13,300 training investment in your Service Advisor and that training produced an extra .5 HPRO (33% Improvement), you would realize a Gross Profit increase of about $12,000 per month or $144,000 over the next 12 months resulting in a ROI of 1082%! (If your stock broker can do that for you please send me his name and number.) Let’s finish the math here by adding the additional gross profit of $144,000 to the $432,194 and you have a total gross profit of $576,194 produced by one employee—The Service Advisor. Now I ask you, how many employees do you have producing over $576,000 a year in Gross Profit? Maybe your F&I Producers. How many salespeople are producing that kind of gross for you? This is the equivalent of selling 28 used cars a month at $1700 PRU. How many sales people are selling an average of 28 cars a month to match the performance of a 2.0 HPRO Service Advisor? How’s that $13,300 training investment working out for you now? Is it an expense or an investment? Maybe you should ask your broker to answer that one for you?
Let’s continue on with this logic and consider the following:
1. Who gets the most incoming Sales Calls per day—Salesperson or Service Advisor?
2. Who meets and greets the most Sales Opportunities per day—Salesperson or Service Advisor?
3. Who has the greatest impact on Owner Retention—Salesperson or Service Advisor?
4. Who has the greatest impact on Brand Loyalty—Salesperson or Service Advisor
5. Who needs Telephone & Sales Training—Salesperson or Service Advisor
The answer to questions 1, 2, 3, and 4 is the Service Advisor. The answer to question number 5 is both the Salesperson and the Service Advisor. The simple fact is anyone in your dealership who comes in contact with your customers as well as your potential customers, must be professionally trained on how to effectively communicate (Sell) to them all.
I’m sure far too many of you Dealers, General Managers and Service Directors will continue to try and “save your way into profitability” versus being proactive and commit to re-allocating some of your inventory investment into your training investment. For those Dealers, General Managers and Service Directors who “get it” you can look forward to record Service and Parts Net Profits in 2010. It’s your choice to make.
Article by:
Don Reed
CEO-DealerPro Training Solutions
NADA University Partner
A significant number of dealers these days are becoming more and more aggressive in selling used vehicles. Some have even lost their new car franchises and now rely solely on used vehicle sales along with parts and service sales to pay the overhead and hopefully provide them with a significant Return On Investment (ROI). I’m confident you will agree that it is critically important for all dealers to earn the highest possible ROI on every single investment they make, right?
Now, in order to increase sales in any department you have to start doing things differently and/or do different things. If not, then you simply continue to do what you’ve always done as stated so clearly by Zig Ziglar: “You have the perfect processes in place to get you exactly what you got last year.” I’m talking about training here in order to positively affect change. Some of you will take the approach of “saving your way into profitability” by vowing not to increase your expenses but you remain willing to make investments every day of your business life. Let’s consider some examples.
NADA research shows that the average used car cost (investment) is about $13,300 and sells for around $15,000 resulting in a gross profit of $1700 which is a ROI of 13%. ($1700 divided by $13,300 = $13%). Assume you can turn that inventory investment of $13,300 every 30 days (great job) that would be 12 turns per year at $1700 gross PRU for a total gross profit of $20,400 resulting in a ROI of 153%! My guess is none of you would hesitate to invest $13,300 in a used car knowing that you will realize a 153% ROI over the next 12 months. As a matter of fact, many of you wouldn’t hesitate to make multiple investments: 50, 75 or even 100 of those $13,300 cars to earn that kind of an ROI. Makes perfect sense to me!
Research also shows that a Service Advisor servicing 12 customers per day (4 Warranty and 8 Customer Pay) and averaging 1.5 Hours Per Repair Order at NADA benchmark’s will produce about $1637 in Gross Profit per day, $36,016 in Gross Profit per month and a total of $432,194 in Gross Profit per year. Let’s assume you diverted just one of those $13,300 used car inventory investments into a $13,300 training investment in your Service Advisor and that training produced an extra .5 HPRO (33% Improvement), you would realize a Gross Profit increase of about $12,000 per month or $144,000 over the next 12 months resulting in a ROI of 1082%! (If your stock broker can do that for you please send me his name and number.) Let’s finish the math here by adding the additional gross profit of $144,000 to the $432,194 and you have a total gross profit of $576,194 produced by one employee—The Service Advisor. Now I ask you, how many employees do you have producing over $576,000 a year in Gross Profit? Maybe your F&I Producers. How many salespeople are producing that kind of gross for you? This is the equivalent of selling 28 used cars a month at $1700 PRU. How many sales people are selling an average of 28 cars a month to match the performance of a 2.0 HPRO Service Advisor? How’s that $13,300 training investment working out for you now? Is it an expense or an investment? Maybe you should ask your broker to answer that one for you?
Let’s continue on with this logic and consider the following:
1. Who gets the most incoming Sales Calls per day—Salesperson or Service Advisor?
2. Who meets and greets the most Sales Opportunities per day—Salesperson or Service Advisor?
3. Who has the greatest impact on Owner Retention—Salesperson or Service Advisor?
4. Who has the greatest impact on Brand Loyalty—Salesperson or Service Advisor
5. Who needs Telephone & Sales Training—Salesperson or Service Advisor
The answer to questions 1, 2, 3, and 4 is the Service Advisor. The answer to question number 5 is both the Salesperson and the Service Advisor. The simple fact is anyone in your dealership who comes in contact with your customers as well as your potential customers, must be professionally trained on how to effectively communicate (Sell) to them all.
I’m sure far too many of you Dealers, General Managers and Service Directors will continue to try and “save your way into profitability” versus being proactive and commit to re-allocating some of your inventory investment into your training investment. For those Dealers, General Managers and Service Directors who “get it” you can look forward to record Service and Parts Net Profits in 2010. It’s your choice to make.
Article by:
Don Reed
CEO-DealerPro Training Solutions
NADA University Partner
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