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!
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!
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