If you are like most dealers, you are reading this article and scratching your head, wondering, “What the heck is this guy talking about training your service customers?” To begin with, I want you to come to grips with the concept that training can solve most any problem. Training can give you a higher return on your capital investment. Training can generate more bang for your working-capital buck. Training can reduce employee turnover. Training can improve closing ratios and increase owner retention. Training will generate more net profit. Think about it.
You just hired a new payroll clerk who has five years of payroll experience using ADP. However, your payroll system is on Reynolds and Reynolds. What do you do? You train the clerk to use your computer system, and, within a few days, your payroll process is back to normal. You just lost your top F&I producer and you have this successful salesperson who has always wanted to move into F&I, so you do the right thing and offer him the position. You know that in order for him to be successful in producing F&I income, he must have some training on how to become a top F&I producer. So, you send him to a professional F&I training class. Now, how about that service advisor you just hired from the competition down the street (big mistake), who is supposed to improve your falling CSI, stop your declining repair order count and increase sales? Obviously, achieving those worthy goals will require a lot of communication and sales skills. Clearly, you will also seek out a professional to train this new advisor, right? (I hope you said yes).
Now you’re starting to get the picture regarding training. This trained advisor can now go to work each day and focus on achieving the goals that you have given him/her, improve your falling CSI, stop your declining repair order count and increase sales. All three of these can be accomplished by this advisor simply training your customers. It all starts with the first oil change.
When I was a service advisor, way back in the 70s the manufacturers actually helped me train my customers. That’s right; every customer was given a maintenance booklet that resembled a checkbook, with coupons about the size of a check. The customer was required to complete all of the required maintenance items listed on each coupon. As an advisor, I would remove the coupon upon completion of the service, attach it to the hard copy of the RO and validate the coupon stub with my dealership stamp and date. Upon delivering the vehicle back to my customer, I would review what was required on the next coupon, explain when the next service would be due and tell the customer that these services were required by the manufacturer in order to maintain their manufacturer’s warranty. It worked like a charm.
My customers would walk up to me with their keys and maintenance booklet in hand and state something like, “Hi Don, I’m here for my 15,000-mile service.” When they came back to pick up their vehicle, I reviewed the 18,000-mile service. In those days, the required service intervals were every 3,000 miles for the life of the vehicle. I had very happy customers (CSI) because their vehicles were properly maintained. My repair order count continued to climb each month and, of course, so did our sales. So, why can’t we use this same process in today’s service departments? The answer is, we can. The question is, why aren’t we using this same process in service departments? Do you realize this kind of training is exactly what the aftermarket quick lube centers are doing with your customers?
Starting today, ask each of your advisors what maintenance is required by your respective manufacturer. I’m betting they don’t know. If that is the case, then require them to read the warranty book and they will find the words “required maintenance” inside. So, wouldn’t it be a novel idea to advise each and every customer, on each and every visit to your service department, of the maintenance requirements for their respective vehicle? If you did so and they agreed, do you think they would be driving a more reliable vehicle? The people who build the vehicles think so. If they have a more reliable vehicle, will your CSI improve? Yes. If your CSI improves, will your customers keep coming back? Most likely. If you advise them on what is required next and when it is due, will even more of them come back? Probably. If more customers return for more required maintenance, would it be a good idea to offer them recommendations for additional maintenance based on your local driving conditions and their individual driving habits? Absolutely.
Now, what are the benefits of following this simple process from the 70s? Your CSI improves, your repair order numbers increase and your sales go up, along with a nice steady supply of repeat customers for your sales department. With someone always saying, “Sell more cars,” isn’t it about time you get serious about service and start training your service customers?
---Don Reed
Not Taking Action Has Consequences
Previously, we 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. 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. Lets break down the numbers.
With his .9 HPRO at the national labor rate of $85.00 an hour, John is earning $76.50 in Gross Labor Sales per RO. Add in his Parts Gross Sales of $61.20 per RO (which is a 80% parts to labor ratio)and that 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 is 1.5 HPRO. By accepting Johns performance it is costing the Dealership money.
How much money?
Using 1.5 HPRO as a benchmark, 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 a $20,196.00 per month loss of income 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 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 performance sends a message to everyone in the Dealership that there is a lack of accountability and that continued performance at this level is A-OK! In fact, John and every employee in the Service Department need not worry about their 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 has John Q. become a drain on the daily cash flow at ABC Motors, the Service Manager at ABC Motors is costing the Dealership money as well.
How is that possible and Why is it the Service Managers fault?
By not Taking Action, not providing Training and Coaching and not holding Jonh Q. accountable for his daily performance, 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!
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. Lets break down the numbers.
With his .9 HPRO at the national labor rate of $85.00 an hour, John is earning $76.50 in Gross Labor Sales per RO. Add in his Parts Gross Sales of $61.20 per RO (which is a 80% parts to labor ratio)and that 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 is 1.5 HPRO. By accepting Johns performance it is costing the Dealership money.
How much money?
Using 1.5 HPRO as a benchmark, 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 a $20,196.00 per month loss of income 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 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 performance sends a message to everyone in the Dealership that there is a lack of accountability and that continued performance at this level is A-OK! In fact, John and every employee in the Service Department need not worry about their 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 has John Q. become a drain on the daily cash flow at ABC Motors, the Service Manager at ABC Motors is costing the Dealership money as well.
How is that possible and Why is it the Service Managers fault?
By not Taking Action, not providing Training and Coaching and not holding Jonh Q. accountable for his daily performance, 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!
Exceeding the Expectations
What would a Service Professional do?
A Professional understands their Customers Expectations.
Now this has got to be the easiest “no brainer” post you have read in years! You would think that every person who works in the Dealership has heard of Customer Service (here’s a little hint: WE ALL DO) and would take the time to understand their Customer expectations.
You would think.
And every day in the field at a Dealership there is a couple of moments where there is the “I have no idea” look on people’s faces when asked about what their Customer came in for, what was the reason for their visit, why are they here, how are we helping them, what’s the story etc....It's like a mystery novel.
The reason is they have become order takers. This new breed of Service Advisor has been trained by corporate America all of their lives with “instantology”, which is using the smallest amount of brain activity required to actually have meaningful interactions with their Customers.
This in turn has led us to a new term in Training called “you don’t need to know” in which Customers are regularly greeted and serviced by non-communicators who cannot distinguish between a request for service or a statement of concern unless it’s printed on the touch screen menu in front of them.
This collection of "Service (aacckkkk, cough cough) Professionals” are then left to founder and fumble with your Dealership Customers (you know, the "lifeblood of the Dealership, our main focus, why we are open"...etc...you've heard all of that before, right?) with more skills in “instantology” than in COMMUNICATION and CRITICAL THINKING!
This has reduced our once world renown model of Service Excellence we called the “American Way of Doing Business” to a misdirected application called "Someone told me to stand here and talk to you."
And because we choose to do business this way we find ourselves in constant need of reminding our Service "Professionals" what they are supposed to do and why they are supposed to do it.
In turn, this has increased our Customers chances of having to do business with someone who has little desire and are completely clueless how to deliver Exceptional Customer Service because it does not come with instructions on the box.
The true Professional Service Advisor not only knows what his or her Customers expectations are, they EXCEED them. They are anticipatory because they have taken the time to study their product and their Customer. And they truly understand Service. More importantly, they understand how the Customer could EXPECT to use their vehicle in their daily lives. Lastly, they understand their Customers EXPECTATIONS when they come in for Service.
How do they know these "magical things?"
The true Professional Service Advisor has taken the time to become an excellent COMMUNICATOR and only relies on “instantology” for storage and processing of the Customers information as a means of assistance and not as a means of conveyance.
Basically folks, you can’t get the computer to pull out its wallet no matter how hard you try.
When you have taken the time to really understand and anticipate your Customers Expectations by asking if they have been met one on one and by becoming a true Communicator through study and application will you become a True Service Professional.
Be Professional.
A Professional understands their Customers Expectations.
Now this has got to be the easiest “no brainer” post you have read in years! You would think that every person who works in the Dealership has heard of Customer Service (here’s a little hint: WE ALL DO) and would take the time to understand their Customer expectations.
You would think.
And every day in the field at a Dealership there is a couple of moments where there is the “I have no idea” look on people’s faces when asked about what their Customer came in for, what was the reason for their visit, why are they here, how are we helping them, what’s the story etc....It's like a mystery novel.
The reason is they have become order takers. This new breed of Service Advisor has been trained by corporate America all of their lives with “instantology”, which is using the smallest amount of brain activity required to actually have meaningful interactions with their Customers.
This in turn has led us to a new term in Training called “you don’t need to know” in which Customers are regularly greeted and serviced by non-communicators who cannot distinguish between a request for service or a statement of concern unless it’s printed on the touch screen menu in front of them.
This collection of "Service (aacckkkk, cough cough) Professionals” are then left to founder and fumble with your Dealership Customers (you know, the "lifeblood of the Dealership, our main focus, why we are open"...etc...you've heard all of that before, right?) with more skills in “instantology” than in COMMUNICATION and CRITICAL THINKING!
This has reduced our once world renown model of Service Excellence we called the “American Way of Doing Business” to a misdirected application called "Someone told me to stand here and talk to you."
And because we choose to do business this way we find ourselves in constant need of reminding our Service "Professionals" what they are supposed to do and why they are supposed to do it.
In turn, this has increased our Customers chances of having to do business with someone who has little desire and are completely clueless how to deliver Exceptional Customer Service because it does not come with instructions on the box.
The true Professional Service Advisor not only knows what his or her Customers expectations are, they EXCEED them. They are anticipatory because they have taken the time to study their product and their Customer. And they truly understand Service. More importantly, they understand how the Customer could EXPECT to use their vehicle in their daily lives. Lastly, they understand their Customers EXPECTATIONS when they come in for Service.
How do they know these "magical things?"
The true Professional Service Advisor has taken the time to become an excellent COMMUNICATOR and only relies on “instantology” for storage and processing of the Customers information as a means of assistance and not as a means of conveyance.
Basically folks, you can’t get the computer to pull out its wallet no matter how hard you try.
When you have taken the time to really understand and anticipate your Customers Expectations by asking if they have been met one on one and by becoming a true Communicator through study and application will you become a True Service Professional.
Be Professional.
Was Last Month Defined By Two Simple Words?
Was your last month defined by these two words…”If only”?
“If only…”
The Dealer Principal
“If only” I had asked my Managers “What is your plan for increasing Profit this month?” and held them accountable for their replies.
“If only” I had taken a walk every day and made it my mission to talk to Sales and Service Customers, introduce myself and say “Is there anything I can do to help you today while you are here at our Dealership?”
“If only” I had walked through the Dealership and asked my personnel “What is there about your job you like to do?”
“If only” I had walked through the Dealership and asked my personnel “What is there about your job you don’t like?”
“If only” I had asked the Service Manager “What is your daily routine when you come into work in the morning…in other words…walk me through the first 10 things you do every day.”
“If only” I asked the Service Manager “What is your plan for getting Labor Margins to 75%?” and the Parts Manager “What is your plan for getting the Parts Margins to 45%?” and held them accountable for their actions.
“If only” I had asked the Service Advisors “How do you do a Walk-a-round?” and let them demonstrate it to me.
“If only” I had asked the Service Advisors “What does it mean to ask for a Pre-authorized amount when writing a repair order?” and then observed them doing it.
“If only” I asked my shuttle drivers to take me with some Customers on a shuttle ride so I could see how they were treating the most valuable asset I have…My Customers.
“If only” I had been more involved in the daily business of my Dealership. What would have happened? Would I have been able to influence the outcome?
“If only…”
General Manager
“If only” I had held a meeting in which I asked the Service Manager and the Parts Manager “What is your plan for increasing Gross Profit…increasing Repair Order Count…increasing CSI?” and held him/her accountable for their actions.
“If only” I had held a meeting in which I asked the Parts Manager “What is your plan for increasing Item Transactions…Gross Profit Margins…Wholesale Item Transactions?” and held them accountable for his/her reply.
“If only” I had walked through the Service Department once a day and introduced myself and asked my customers “Is there anything else I can do for you today?”
“If only” I had walked through the Service and Parts Departments and asked Dealership personnel “Is there something preventing you from doing your absolute best?”
“If only” I had weekly meetings with my Fixed Operations Managers and asked them “How are we doing in meeting our monthly objectives and what can I do to help you get there?”
“If only” I had taken the time to have a monthly meeting with the Fixed Operations personnel and congratulated them on something that they did well.
“If only” I had been less tied to my desk where I only hear what people want me to hear. Would I have been able to prevent a bad month from happening.
“If only”
Service Manager
“If only” I had been in the Service Drive every day especially during the busiest times to work with my Advisors and help them become more Professional.
“If only” I had taken the time to be available to the Technicians and Advisors especially during the busiest times and help them overcome problems with production.
“If only” I had coached my Advisors every day on the previous days results using the reports from the DMS.
“If only” I had coached my Technicians every day on the previous days results using the reports from the DMS.
“If only” I had taken the time to introduce myself to my customers and asked them “Is there anything else I can do for you today?”
“If only” I had asked my Service Advisors to demonstrate an ASR presentation and then coached them on the results…again and again.
“If only” I had reviewed the Customer Pay Repair Orders with the Advisors and Technicians and coached not only on what was wrong, I also coached them on what was done right.
“If only” I had taken control of my month.
Everybody
“If only” I had accepted responsibility for my actions, held myself accountable for what I needed to do, made changes when necessary and reviewed my progress, what kind of month would I have had?
“If only…”
The Dealer Principal
“If only” I had asked my Managers “What is your plan for increasing Profit this month?” and held them accountable for their replies.
“If only” I had taken a walk every day and made it my mission to talk to Sales and Service Customers, introduce myself and say “Is there anything I can do to help you today while you are here at our Dealership?”
“If only” I had walked through the Dealership and asked my personnel “What is there about your job you like to do?”
“If only” I had walked through the Dealership and asked my personnel “What is there about your job you don’t like?”
“If only” I had asked the Service Manager “What is your daily routine when you come into work in the morning…in other words…walk me through the first 10 things you do every day.”
“If only” I asked the Service Manager “What is your plan for getting Labor Margins to 75%?” and the Parts Manager “What is your plan for getting the Parts Margins to 45%?” and held them accountable for their actions.
“If only” I had asked the Service Advisors “How do you do a Walk-a-round?” and let them demonstrate it to me.
“If only” I had asked the Service Advisors “What does it mean to ask for a Pre-authorized amount when writing a repair order?” and then observed them doing it.
“If only” I asked my shuttle drivers to take me with some Customers on a shuttle ride so I could see how they were treating the most valuable asset I have…My Customers.
“If only” I had been more involved in the daily business of my Dealership. What would have happened? Would I have been able to influence the outcome?
“If only…”
General Manager
“If only” I had held a meeting in which I asked the Service Manager and the Parts Manager “What is your plan for increasing Gross Profit…increasing Repair Order Count…increasing CSI?” and held him/her accountable for their actions.
“If only” I had held a meeting in which I asked the Parts Manager “What is your plan for increasing Item Transactions…Gross Profit Margins…Wholesale Item Transactions?” and held them accountable for his/her reply.
“If only” I had walked through the Service Department once a day and introduced myself and asked my customers “Is there anything else I can do for you today?”
“If only” I had walked through the Service and Parts Departments and asked Dealership personnel “Is there something preventing you from doing your absolute best?”
“If only” I had weekly meetings with my Fixed Operations Managers and asked them “How are we doing in meeting our monthly objectives and what can I do to help you get there?”
“If only” I had taken the time to have a monthly meeting with the Fixed Operations personnel and congratulated them on something that they did well.
“If only” I had been less tied to my desk where I only hear what people want me to hear. Would I have been able to prevent a bad month from happening.
“If only”
Service Manager
“If only” I had been in the Service Drive every day especially during the busiest times to work with my Advisors and help them become more Professional.
“If only” I had taken the time to be available to the Technicians and Advisors especially during the busiest times and help them overcome problems with production.
“If only” I had coached my Advisors every day on the previous days results using the reports from the DMS.
“If only” I had coached my Technicians every day on the previous days results using the reports from the DMS.
“If only” I had taken the time to introduce myself to my customers and asked them “Is there anything else I can do for you today?”
“If only” I had asked my Service Advisors to demonstrate an ASR presentation and then coached them on the results…again and again.
“If only” I had reviewed the Customer Pay Repair Orders with the Advisors and Technicians and coached not only on what was wrong, I also coached them on what was done right.
“If only” I had taken control of my month.
Everybody
“If only” I had accepted responsibility for my actions, held myself accountable for what I needed to do, made changes when necessary and reviewed my progress, what kind of month would I have had?
Comfort Zone vs Accountability
As a Dealer, did last year bring you the return on investment that you expected?
As a General Manager did you meet or exceed your net profit projections for the year?
If you are a Fixed Operations Director did you increase your customer pay retail sales for parts and labor over last year?
For all three of you, is your Service Absorption rising year over year? If any of your answers were “NO”, then you must ask yourself...why?
To begin with, your financial statements will show you where the opportunities for improvement (conditions) are but what they won’t show you is how to fix them. To fix them you have to know what’s causing the out of line condition.
Once the cause is determined you can then make the corrections
necessary to properly bring the condition in line with industry guides. For those of you who have ever written a repair order you probably recognized this as the “Three C’s”, Condition-Cause-Correction.
The Technician needs the Condition to properly diagnose the Cause which then enables him to make the necessary Correction. It’s no different for the Dealer, the General Manager or the Fixed Operations director when it comes to making money.
So, now that you have studied your financials carefully to determine the conditions that prevented you from attaining your respective financial goals, let’s determine what the cause might have been. I believe the culprits here are Comfort Zones and Accountability.
Everyone in your dealership has a comfort zone just as you do. The issue is not to get rid of them but to simply move them again and again until you achieve the results you’re looking for and then move them again!
This is important because it enables you to focus on the performance
of your employees. Next, you must hold them accountable for their individual performance.
Currently, most of you are doing that in the New Car, Used Car and F&I departments, which of course is where you devote much of your time and energy anyway, but you fail to do so in the Service and Parts departments.
Allow me to give you some examples to clarify what I’m talking about:
1. If I am a Salesperson and I sold an average of 5 units per month last year, what are you going to do with me? Answer: Train me how to sell 10 units or more per month or replace me with someone who can.
2. If I am a Service Advisor and I sold an average of 1.5 hours per customer pay repair order last year, what are you going to do with me? Answer: I have a job for life!
3. If I am a Sales Manager and my Sales Team averages 5 units per month and my gross per retail unit is at $700, what are you going to do with me? Answer: Train me how to average 10 units per Salesperson and gross $1500 PRU or replace me with someone who can.
4. If I am a Service Manager and my Service Team averages 1.5 HPRO and my Technicians’ productivity is at 80%, what are you going to do with me? Answer: Leave me alone because the other dealers in your 20 Group are about the same!
5. If I am your General Sales Manager and my Sales Team averages 5 units per salesperson, $700 gross PRU, $200 F&I gross PRU and loose $600 per wholesale unit, what are you going to do with me? Answer: I wouldn’t have lasted 6 months let alone a year!
6. 6. If I am a Fixed Operations Director and my Parts and Service Team averages 34% in retail parts gross, 62% in labor gross, averages 1.5 HPRO, shop productivity of 80% with a declining repair order count, what are you going to do with me? Answer: Thank you for being back there because I sure as heck don’t want to fool with that stuff!
Are you starting to see my point?
Most Dealers and General Managers will hold their Sales Team accountable for their performance on a daily, weekly and monthly basis and make any adjustments (moving their comfort zones) on an as needed basis NOW!
Meanwhile their Parts and Service Team remain in their comfort zones to continue to dwell in the land of “underachievers”.
Why does this happen?
My belief is that most Dealers and GM’s are outside their comfort zone in the “back end” of their dealership since their roots are in the “front end.” What can a dealer do to enable him or her to leave their comfort zone and cross over the demarcation line to the back end of their business?
• Measure the performance of the people you intend to manage.
• Your people must know that you are measuring their performance.
• Their performance will be compared to industry benchmarks.
• They must understand that they will be held accountable for achieving or exceeding those benchmarks.
Simply say what you mean but more importantly mean what you say. Again, most dealers don’t hesitate to do this in their Sales and F&I departments. Start making it happen in Fixed Operations.
Now I want you to rid yourself of the usual whiny excuses that I here from dealers when I’m speaking to 20 Groups, Dealer Associations, Dealer groups or individual Dealers. It doesn’t matter whether it’s north, south, east, west or rural versus metropolitan. I hear this all across the U.S.,
Canada and the United Kingdom:
“Don, you don’t understand, my market is depressed.”
“Don, you don’t understand, my Service Manager has been with me for a long time.”
“Don, you don’t understand, I can’t find an Advisor that’s any better.”
“Don, I don’t want to run off my customers by up selling”
Well folks, here is what I do understand.
A depressed market has nothing to do with accountability for performance.
Time on the job does not dictate a good performance on the job.
If you can’t find better people, look harder because they are out there. If you or any of your people are afraid of “running off customers from up selling” then you need to get out of the retail business of selling parts and service. (By the way, the aftermarket already has 70% of your customers’ maintenance)
Don’t you think it’s time to get out of your comfort zone and make the return on your investment that you deserve? Please, drag your Fixed Operations Team out of their comfort zones and start holding them accountable! Once they stop kicking and screaming they will all make more money, they will be happier and your customers will realize you have the best dealership in town.
“The entrepreneur always searches for change, responds to it, and exploits it as an opportunity.” -Peter F. Drucker
Don Reed
CEO
DealerPro Training Solutions
“Pro Solutions-Pro Results”
As a General Manager did you meet or exceed your net profit projections for the year?
If you are a Fixed Operations Director did you increase your customer pay retail sales for parts and labor over last year?
For all three of you, is your Service Absorption rising year over year? If any of your answers were “NO”, then you must ask yourself...why?
To begin with, your financial statements will show you where the opportunities for improvement (conditions) are but what they won’t show you is how to fix them. To fix them you have to know what’s causing the out of line condition.
Once the cause is determined you can then make the corrections
necessary to properly bring the condition in line with industry guides. For those of you who have ever written a repair order you probably recognized this as the “Three C’s”, Condition-Cause-Correction.
The Technician needs the Condition to properly diagnose the Cause which then enables him to make the necessary Correction. It’s no different for the Dealer, the General Manager or the Fixed Operations director when it comes to making money.
So, now that you have studied your financials carefully to determine the conditions that prevented you from attaining your respective financial goals, let’s determine what the cause might have been. I believe the culprits here are Comfort Zones and Accountability.
Everyone in your dealership has a comfort zone just as you do. The issue is not to get rid of them but to simply move them again and again until you achieve the results you’re looking for and then move them again!
This is important because it enables you to focus on the performance
of your employees. Next, you must hold them accountable for their individual performance.
Currently, most of you are doing that in the New Car, Used Car and F&I departments, which of course is where you devote much of your time and energy anyway, but you fail to do so in the Service and Parts departments.
Allow me to give you some examples to clarify what I’m talking about:
1. If I am a Salesperson and I sold an average of 5 units per month last year, what are you going to do with me? Answer: Train me how to sell 10 units or more per month or replace me with someone who can.
2. If I am a Service Advisor and I sold an average of 1.5 hours per customer pay repair order last year, what are you going to do with me? Answer: I have a job for life!
3. If I am a Sales Manager and my Sales Team averages 5 units per month and my gross per retail unit is at $700, what are you going to do with me? Answer: Train me how to average 10 units per Salesperson and gross $1500 PRU or replace me with someone who can.
4. If I am a Service Manager and my Service Team averages 1.5 HPRO and my Technicians’ productivity is at 80%, what are you going to do with me? Answer: Leave me alone because the other dealers in your 20 Group are about the same!
5. If I am your General Sales Manager and my Sales Team averages 5 units per salesperson, $700 gross PRU, $200 F&I gross PRU and loose $600 per wholesale unit, what are you going to do with me? Answer: I wouldn’t have lasted 6 months let alone a year!
6. 6. If I am a Fixed Operations Director and my Parts and Service Team averages 34% in retail parts gross, 62% in labor gross, averages 1.5 HPRO, shop productivity of 80% with a declining repair order count, what are you going to do with me? Answer: Thank you for being back there because I sure as heck don’t want to fool with that stuff!
Are you starting to see my point?
Most Dealers and General Managers will hold their Sales Team accountable for their performance on a daily, weekly and monthly basis and make any adjustments (moving their comfort zones) on an as needed basis NOW!
Meanwhile their Parts and Service Team remain in their comfort zones to continue to dwell in the land of “underachievers”.
Why does this happen?
My belief is that most Dealers and GM’s are outside their comfort zone in the “back end” of their dealership since their roots are in the “front end.” What can a dealer do to enable him or her to leave their comfort zone and cross over the demarcation line to the back end of their business?
• Measure the performance of the people you intend to manage.
• Your people must know that you are measuring their performance.
• Their performance will be compared to industry benchmarks.
• They must understand that they will be held accountable for achieving or exceeding those benchmarks.
Simply say what you mean but more importantly mean what you say. Again, most dealers don’t hesitate to do this in their Sales and F&I departments. Start making it happen in Fixed Operations.
Now I want you to rid yourself of the usual whiny excuses that I here from dealers when I’m speaking to 20 Groups, Dealer Associations, Dealer groups or individual Dealers. It doesn’t matter whether it’s north, south, east, west or rural versus metropolitan. I hear this all across the U.S.,
Canada and the United Kingdom:
“Don, you don’t understand, my market is depressed.”
“Don, you don’t understand, my Service Manager has been with me for a long time.”
“Don, you don’t understand, I can’t find an Advisor that’s any better.”
“Don, I don’t want to run off my customers by up selling”
Well folks, here is what I do understand.
A depressed market has nothing to do with accountability for performance.
Time on the job does not dictate a good performance on the job.
If you can’t find better people, look harder because they are out there. If you or any of your people are afraid of “running off customers from up selling” then you need to get out of the retail business of selling parts and service. (By the way, the aftermarket already has 70% of your customers’ maintenance)
Don’t you think it’s time to get out of your comfort zone and make the return on your investment that you deserve? Please, drag your Fixed Operations Team out of their comfort zones and start holding them accountable! Once they stop kicking and screaming they will all make more money, they will be happier and your customers will realize you have the best dealership in town.
“The entrepreneur always searches for change, responds to it, and exploits it as an opportunity.” -Peter F. Drucker
Don Reed
CEO
DealerPro Training Solutions
“Pro Solutions-Pro Results”
Parts & Service Director needed for Chrysler Dealership in Seymour, IN
Parts & Service Director needed for Chrysler Dealership in Seymour, IN
Great opportunity for the right person!!! Growing dealership!!!
If you have a great track record and can motivate your team, this is the opportunity for you!!!
Great opportunity for the right person!!! Growing dealership!!!
If you have a great track record and can motivate your team, this is the opportunity for you!!!
The one word every Advisor needs to hear...
There is one word every Service Advisor needs to hear.
This word is the key to their future...whether they become a top-notch superstar a middle of the road average Joe or a washout...they need this word.
It defines greatness as well as highlights deficiencies.
The word is...No.
Since our Company (DealerPro) trains in Dealerships all over the country, we are exposed to every level of Service Advisor imaginable.
From the greenpea who is day one in a new job to the old dog who knows every customer who has come in for the past 5 years!
In the Seattle area there is a Service Advisor named Chad who became a believer in the word No!
Chad did not come from an automotive background, unless you count driving a car, and had no more special skills than anybody else. He does not come to work wearing a cape and he does not have x-ray vision.
When we first started training in Chad's store and introduced Professional Selling Skills to the Advisors, Chad was skeptical just like everybody else.
After being trained on the 12 Step Process and ASR Presentation Skills he went to work in the service drive. At first, did some of the Write-up processes some of the time and followed the ASR Presentation process sometimes... and just like everybody else, he got what you might expect...some results.
But Chad was a little different.
He understood the value in presenting all of the recommended repairs and maintenance to the customers but didn't always follow through. Like many other Advisors, he didn't want to seem "pushy" or "sell them something they didn't need."
And he didn't like the word No.
What changed for Chad is referred to as a paradigm shift. His view of "what it means to be a Service Advisor" became radically different when he realized that the customers were having repairs done someplace else even though he had made the recommendations.
And other customers were coming in with the maintenance on their vehicle up to date because it was completed by other shops...his competition! He realized he was getting all of the "leftovers"...and the "warranty work."
He asked himself "Why are customers leaving my shop without having the work their vehicle needs completed right here at my Dealership?"
And then it hit him...it was because he NEVER ASKED!
He realized he was afraid to ask!
He made up his mind that his customers were going to be serviced at his Dealership! He started believing that the recommendations he was making were helpful to the customer in maintaining their vehicle and actually saved them money!
And he became a fan of the word No.
He started presenting recommended services...and repair recommendations ...and in the beginning he heard a No a lot. In fact, if you ask him, he will tell you that he almost gave up!
But he had decided that in order to be successful as an Advisor he needed to learn how to sell. And so, he heard even more No's.
And in his mind he decided that every No was a good thing because that led the next YES!
And because he stuck with it...more and more No's came his way... and still Chad kept going... and going... until finally one day...he started getting YES.
And soon the amount of YES'es doubled the N0's.
Can you guess what happened to Chad's HPRO?
Yep...it doubled as well... in fact...he became the number one Service Advisor in his store. Can you guess what happened to his income?
Yep...it nearly doubled as well.
Chad is still happily employed at that same Dealership...can you guess how his CSI is? Yep...it's better too!
All of us like to deal with a Trained Professional...someone who can guide us and help us make the right decision based on our needs and wants. Know what else is true?
We will gladly pay for it...and in some cases pay even more. It's because we all like to be taken care of.
Want to be succesful as a Service Advisor?
Be like Chad.
Get more No's!
This word is the key to their future...whether they become a top-notch superstar a middle of the road average Joe or a washout...they need this word.
It defines greatness as well as highlights deficiencies.
The word is...No.
Since our Company (DealerPro) trains in Dealerships all over the country, we are exposed to every level of Service Advisor imaginable.
From the greenpea who is day one in a new job to the old dog who knows every customer who has come in for the past 5 years!
In the Seattle area there is a Service Advisor named Chad who became a believer in the word No!
Chad did not come from an automotive background, unless you count driving a car, and had no more special skills than anybody else. He does not come to work wearing a cape and he does not have x-ray vision.
When we first started training in Chad's store and introduced Professional Selling Skills to the Advisors, Chad was skeptical just like everybody else.
After being trained on the 12 Step Process and ASR Presentation Skills he went to work in the service drive. At first, did some of the Write-up processes some of the time and followed the ASR Presentation process sometimes... and just like everybody else, he got what you might expect...some results.
But Chad was a little different.
He understood the value in presenting all of the recommended repairs and maintenance to the customers but didn't always follow through. Like many other Advisors, he didn't want to seem "pushy" or "sell them something they didn't need."
And he didn't like the word No.
What changed for Chad is referred to as a paradigm shift. His view of "what it means to be a Service Advisor" became radically different when he realized that the customers were having repairs done someplace else even though he had made the recommendations.
And other customers were coming in with the maintenance on their vehicle up to date because it was completed by other shops...his competition! He realized he was getting all of the "leftovers"...and the "warranty work."
He asked himself "Why are customers leaving my shop without having the work their vehicle needs completed right here at my Dealership?"
And then it hit him...it was because he NEVER ASKED!
He realized he was afraid to ask!
He made up his mind that his customers were going to be serviced at his Dealership! He started believing that the recommendations he was making were helpful to the customer in maintaining their vehicle and actually saved them money!
And he became a fan of the word No.
He started presenting recommended services...and repair recommendations ...and in the beginning he heard a No a lot. In fact, if you ask him, he will tell you that he almost gave up!
But he had decided that in order to be successful as an Advisor he needed to learn how to sell. And so, he heard even more No's.
And in his mind he decided that every No was a good thing because that led the next YES!
And because he stuck with it...more and more No's came his way... and still Chad kept going... and going... until finally one day...he started getting YES.
And soon the amount of YES'es doubled the N0's.
Can you guess what happened to Chad's HPRO?
Yep...it doubled as well... in fact...he became the number one Service Advisor in his store. Can you guess what happened to his income?
Yep...it nearly doubled as well.
Chad is still happily employed at that same Dealership...can you guess how his CSI is? Yep...it's better too!
All of us like to deal with a Trained Professional...someone who can guide us and help us make the right decision based on our needs and wants. Know what else is true?
We will gladly pay for it...and in some cases pay even more. It's because we all like to be taken care of.
Want to be succesful as a Service Advisor?
Be like Chad.
Get more No's!
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
Use the "3T System" to make more money in Fixed Ops.
Making more Money in Fixed Operations is everyone's goal.
Think not?
Just go tell your Dealer Principal that this month you've decided that making money is not important... and see what happens to you, Mr. /Ms. Jobless.
Making money is much easier when you use a system to do it and it is much better than just wishing for more Money. Use the "3T System" to drive more dollars to the bank.
The first T stands for "Tell Everybody" what you want to accomplish this month. It is also called "Create a Compelling Vision" and the more Compelling it is, the more people are drawn to it.
Additionally, it must be specific, memorable and most importantly, reinforced at every opportunity!
It cannot be the same old tired "We need to do better or else!" stuff. They have already heard it before.
If it is, people will just ignore it. Start the month off with a kickoff meeting detailing exactly what it is you must accomplish, what role each person has and how you will be holding people accountable.
Remember, the more specific you are, the better your results!
The second T stands for "Teach me Something New." Everybody wants to be part of the newest, latest and greatest.
New is fun...New is exciting...New is way better than "old and stale." Let me give you an example.
When was the last time a you offered to make a sandwich for a guest in your home, and they said to you "Please make mine using old stale bread, month old lunchmeat and could you put some expired mayonnaise on it"?
Not gonna happen. It's the same way in the Service Department.
People want to feel like they are part of a new challenge and accomplishing new things. Don't make them a stale old sandwich and expect them to eat it.
Teach them something new about their job, the Customer, the Dealership...anything!
And the last T stands for "Train to Win!"
Bobby Jones said it best when he said "If you fail to get the proper instruction you'll only get better at making yourself worse." Train to Win means the best Training by the Best Method yields the Best Results!
Train your personnel using the Best Methods available (like DealerPro VT) and you will consistently improve and reach new Goals!
Think not?
Just go tell your Dealer Principal that this month you've decided that making money is not important... and see what happens to you, Mr. /Ms. Jobless.
Making money is much easier when you use a system to do it and it is much better than just wishing for more Money. Use the "3T System" to drive more dollars to the bank.
The first T stands for "Tell Everybody" what you want to accomplish this month. It is also called "Create a Compelling Vision" and the more Compelling it is, the more people are drawn to it.
Additionally, it must be specific, memorable and most importantly, reinforced at every opportunity!
It cannot be the same old tired "We need to do better or else!" stuff. They have already heard it before.
If it is, people will just ignore it. Start the month off with a kickoff meeting detailing exactly what it is you must accomplish, what role each person has and how you will be holding people accountable.
Remember, the more specific you are, the better your results!
The second T stands for "Teach me Something New." Everybody wants to be part of the newest, latest and greatest.
New is fun...New is exciting...New is way better than "old and stale." Let me give you an example.
When was the last time a you offered to make a sandwich for a guest in your home, and they said to you "Please make mine using old stale bread, month old lunchmeat and could you put some expired mayonnaise on it"?
Not gonna happen. It's the same way in the Service Department.
People want to feel like they are part of a new challenge and accomplishing new things. Don't make them a stale old sandwich and expect them to eat it.
Teach them something new about their job, the Customer, the Dealership...anything!
And the last T stands for "Train to Win!"
Bobby Jones said it best when he said "If you fail to get the proper instruction you'll only get better at making yourself worse." Train to Win means the best Training by the Best Method yields the Best Results!
Train your personnel using the Best Methods available (like DealerPro VT) and you will consistently improve and reach new Goals!
When Performance is Measured—It Improves
If you are a baseball fan like I am, you have most likely watched a game or two on TV or have gone to the ballpark to root for your favorite team (St. Louis Cardinals for me). In doing so, you have undoubtedly noticed the constant display of Player Statistics at the bottom of your TV screen or boldly displayed on the huge electronic scoreboard. For each batter who comes to the plate we see their Batting Average, RBI’s (Runs batted in), # of Home Runs, OBP (On base percentage), and for pitchers we see their ERA (Earned run average), number of games won versus lost, number of starts, how many innings pitched, etc. We even see the speed of every single pitch he makes displayed on the screen. Why? Maybe it’s because we as fans want to see and evaluate the performance of each player. Maybe it’s because the team’s coaches want to see and evaluate their individual player’s performance as well as that of the team. Maybe it’s because the opposing team’s coaches and players want to see and evaluate the other players’ performance. Or, just maybe it’s all of the above. When performance is measured it improves.
Top Performers are identified as such through constant, on-going performance evaluations. If you can’t evaluate their performance then how can you identify their status as a Top Performer? All of the players inducted into the Baseball Hall of Fame do not have the same stats. They are all different yet they all excelled in the sport of baseball and became the best players in the game. As a Dealer, General Manager or department manager you can learn a lot from this analogy because unless you have the stats on every individual on your team you cannot possibly evaluate their performance. You can’t identify their strengths or their weaknesses. You can’t measure improvement or failure accurately or fairly. You don’t know who needs training and what they need trained on. Now let’s take this concept of “you can’t manage what you don’t measure” and look at it from the perspective of “Front End” versus “Back End.”
The vast majority of Dealers have processes in place to measure the performance of their sales team every single day so they can evaluate their performance. Here are some typical examples:
Finance & Insurance Department:
• Gross Profit Per Retail Unit-New & Used
• Finance Penetration as a percent of total vehicle deliveries
• Extended Service Contract Penetration as a percent of total vehicle deliveries
• GAP Penetration as a percent of total vehicle deliveries
• Lease Penetration as a percent of total vehicles financed
• Number of contracts pending loan approval
• Total F&I Gross Profit produced Month to Date
This is typically measured for each Finance Producer as well as the entire F&I department and is done so DAILY so that you can effectively identify the Top Performers from the Underachievers and act accordingly.
New & Used Sales Departments:
• Gross Per Retail Unit-New & Used
• Number of units sold Month to Date
• Number of “UPS” Month to Date
• Number of Demos Month to Date
• Number of Written Proposals Month to Date
• Closing Ratio of UPS to Closed deals
• Number of Appointments for the day
• Number of T.O’s
• Conduct a lot walk to view inventory additions/deletions
• Number of Phone UPS Month to Date
• Wholesale Profit/Loss Month to Date
• Internet Sales Leads Month to Date
• Number of Internet Sales closed Month to Date
• Results from advertising campaigns
• Used Vehicle Reconditioning Cost PUVR
Most of these measurements are calculated for each Salesperson and each Manager for the same reasons as listed above for the Finance Producers and they are done DAILY. Most sales departments start their day with a brief Sales Meeting to review many of the items listed above. These are the typical 23 “Front End” processes that separate the average Dealer from the Top Performing Dealer. How would you rate your Sales Department?
Okay, now let’s cross over the demarcation line to the “Back End” of your dealership and take a look at the Service & Parts Departments and identify the typical processes for evaluating their performance DAILY. I emphasize DAILY not monthly.
Parts Department:
• Wholesale Parts Sales
• Counter Retail Sales
• Repair Order Sales
• Gross Profit Margin
• Lost Sales
• Fill Rate
My experience has been that far too many Dealers, GM’s and Parts Managers measure all of the above for the department but too often fail to do the same for each parts employee. For example do you run a DAILY Exception Report for each employee to identify the “Unauthorized Discounts?” Do you review a Performance Report DAILY by employee to identify their performance on parts margin—Wholesale, Retail Repair orders and Retail counter? Do you compare your performance to the benchmarks in our industry? Do you measure dollar sales per employee? Do you measure transactions per employee? Remember, if you only measure the performance of the department, you can’t effectively identify the Top Performers from the Underachievers. You can’t identify their individual strengths and weaknesses.
Service Department:
• Technician’s Flat Rate Hours Produced
• Technician’s Clock Hours Worked
• Hours per Repair Order by Advisor
• Number of Repair Orders Month to Date—Retail-Warranty-Internal by Advisor
• Number of Appointments Scheduled
• # of Carryovers
• Shop Productivity
Again, based on my experience and that of my 20 Trainers working in dealerships all across the country, we can’t find very many Dealers, GM’s, Service Directors/Managers and Parts Managers who measure anything else. Those who do measure more invariably will produce more. Measure things like their Advisors’ Unauthorized Parts & Labor Discounts, Policy Adjustment, Parts Margin, Labor Margin, # of Up-sells, Closing Ratio of Up-sells, Un-sold Hours per day, # of Menu Presentations, Closing Ratio on Menus, # of Inspection presentations, etc.
For Technicians let’s measure how many completed Inspections per day, # of additional repairs sold from inspections, # of comebacks, HPRO and the number of RO’s.
To sum it up, I see most dealers measuring about 23 stats per day in their Sales Departments and only about 13 stats per day in Service & Parts. If you follow my recommendations listed above that number jumps to about 30 stats per day and the good news is it costs you absolutely nothing! Now take a pen and check off all of the stats you measure DAILY in your Sales Department and then check off all of the ones you measure DAILY in your Service & Parts Departments. How did you score—Top Performer or Underachiever? It’s all in the stats!
Don Reed—CEO DealerPro Training Solutions
Top Performers are identified as such through constant, on-going performance evaluations. If you can’t evaluate their performance then how can you identify their status as a Top Performer? All of the players inducted into the Baseball Hall of Fame do not have the same stats. They are all different yet they all excelled in the sport of baseball and became the best players in the game. As a Dealer, General Manager or department manager you can learn a lot from this analogy because unless you have the stats on every individual on your team you cannot possibly evaluate their performance. You can’t identify their strengths or their weaknesses. You can’t measure improvement or failure accurately or fairly. You don’t know who needs training and what they need trained on. Now let’s take this concept of “you can’t manage what you don’t measure” and look at it from the perspective of “Front End” versus “Back End.”
The vast majority of Dealers have processes in place to measure the performance of their sales team every single day so they can evaluate their performance. Here are some typical examples:
Finance & Insurance Department:
• Gross Profit Per Retail Unit-New & Used
• Finance Penetration as a percent of total vehicle deliveries
• Extended Service Contract Penetration as a percent of total vehicle deliveries
• GAP Penetration as a percent of total vehicle deliveries
• Lease Penetration as a percent of total vehicles financed
• Number of contracts pending loan approval
• Total F&I Gross Profit produced Month to Date
This is typically measured for each Finance Producer as well as the entire F&I department and is done so DAILY so that you can effectively identify the Top Performers from the Underachievers and act accordingly.
New & Used Sales Departments:
• Gross Per Retail Unit-New & Used
• Number of units sold Month to Date
• Number of “UPS” Month to Date
• Number of Demos Month to Date
• Number of Written Proposals Month to Date
• Closing Ratio of UPS to Closed deals
• Number of Appointments for the day
• Number of T.O’s
• Conduct a lot walk to view inventory additions/deletions
• Number of Phone UPS Month to Date
• Wholesale Profit/Loss Month to Date
• Internet Sales Leads Month to Date
• Number of Internet Sales closed Month to Date
• Results from advertising campaigns
• Used Vehicle Reconditioning Cost PUVR
Most of these measurements are calculated for each Salesperson and each Manager for the same reasons as listed above for the Finance Producers and they are done DAILY. Most sales departments start their day with a brief Sales Meeting to review many of the items listed above. These are the typical 23 “Front End” processes that separate the average Dealer from the Top Performing Dealer. How would you rate your Sales Department?
Okay, now let’s cross over the demarcation line to the “Back End” of your dealership and take a look at the Service & Parts Departments and identify the typical processes for evaluating their performance DAILY. I emphasize DAILY not monthly.
Parts Department:
• Wholesale Parts Sales
• Counter Retail Sales
• Repair Order Sales
• Gross Profit Margin
• Lost Sales
• Fill Rate
My experience has been that far too many Dealers, GM’s and Parts Managers measure all of the above for the department but too often fail to do the same for each parts employee. For example do you run a DAILY Exception Report for each employee to identify the “Unauthorized Discounts?” Do you review a Performance Report DAILY by employee to identify their performance on parts margin—Wholesale, Retail Repair orders and Retail counter? Do you compare your performance to the benchmarks in our industry? Do you measure dollar sales per employee? Do you measure transactions per employee? Remember, if you only measure the performance of the department, you can’t effectively identify the Top Performers from the Underachievers. You can’t identify their individual strengths and weaknesses.
Service Department:
• Technician’s Flat Rate Hours Produced
• Technician’s Clock Hours Worked
• Hours per Repair Order by Advisor
• Number of Repair Orders Month to Date—Retail-Warranty-Internal by Advisor
• Number of Appointments Scheduled
• # of Carryovers
• Shop Productivity
Again, based on my experience and that of my 20 Trainers working in dealerships all across the country, we can’t find very many Dealers, GM’s, Service Directors/Managers and Parts Managers who measure anything else. Those who do measure more invariably will produce more. Measure things like their Advisors’ Unauthorized Parts & Labor Discounts, Policy Adjustment, Parts Margin, Labor Margin, # of Up-sells, Closing Ratio of Up-sells, Un-sold Hours per day, # of Menu Presentations, Closing Ratio on Menus, # of Inspection presentations, etc.
For Technicians let’s measure how many completed Inspections per day, # of additional repairs sold from inspections, # of comebacks, HPRO and the number of RO’s.
To sum it up, I see most dealers measuring about 23 stats per day in their Sales Departments and only about 13 stats per day in Service & Parts. If you follow my recommendations listed above that number jumps to about 30 stats per day and the good news is it costs you absolutely nothing! Now take a pen and check off all of the stats you measure DAILY in your Sales Department and then check off all of the ones you measure DAILY in your Service & Parts Departments. How did you score—Top Performer or Underachiever? It’s all in the stats!
Don Reed—CEO DealerPro Training Solutions
Hater or Creator?
It has been said that “the world is divided into haters and creators.”
As a Creator, we must embrace the role because we find ourselves besieged by Haters.
So, how do we become Creators?
Creators are people who decide which direction to go in and take the first step.
This is where the wheat is separated from the chaff. Creators are different than others. Creators are "first steppers." They use this first step as an act of ….Faith.
Faith in themselves and the tools they possess. This Faith comes from the belief that the actions they take will result in a desirable outcome.
Creators then mold and pull and add and push and turn and twist to keep moving forward no matter the circumstances.
A Creator in the act of creating rarely questions the material given to him or her.
No doubt, they seek the best material, but in the end, they still accomplish what they set out to do with what they have.
Creators are people who others want to follow. It's a natural instinct all people have. When someone is in the act of creating and there is Leadership, Pride and a Sense of Accomplishment, everyone wants to be close to the person who is responsible.
Who wouldn't?
Haters.
Haters question everything and everybody. They have little belief in themselves and thereby want to control an outcome by proxy.
They know that if anything anyone is trying to accomplish turns out bad, they can stand on one side, pointing their finger while saying "I told you so, I told you so."
Haters would rather tell you and everyone in earshot why it is dangerous to do anything new, when they tried something new something bad happened to them, how many times they had something bad happen to them, how many times they have seen others have something bad happen to them, etc...
They use this to create a feeling of control over themselves and others while never realizing that they gave up control when they decided to stand and watch instead of Create and Take Action.
Haters are out to prove themselves right and everybody else is wrong. They spend more time deciding how the world should run if they were in charge and yet take no charge of their world. Life is what happens to them.
There is not one spark of Creation anywhere.
So, at the end of it all, will you be remembered as a Creator or a Hater?
As a Creator, we must embrace the role because we find ourselves besieged by Haters.
So, how do we become Creators?
Creators are people who decide which direction to go in and take the first step.
This is where the wheat is separated from the chaff. Creators are different than others. Creators are "first steppers." They use this first step as an act of ….Faith.
Faith in themselves and the tools they possess. This Faith comes from the belief that the actions they take will result in a desirable outcome.
Creators then mold and pull and add and push and turn and twist to keep moving forward no matter the circumstances.
A Creator in the act of creating rarely questions the material given to him or her.
No doubt, they seek the best material, but in the end, they still accomplish what they set out to do with what they have.
Creators are people who others want to follow. It's a natural instinct all people have. When someone is in the act of creating and there is Leadership, Pride and a Sense of Accomplishment, everyone wants to be close to the person who is responsible.
Who wouldn't?
Haters.
Haters question everything and everybody. They have little belief in themselves and thereby want to control an outcome by proxy.
They know that if anything anyone is trying to accomplish turns out bad, they can stand on one side, pointing their finger while saying "I told you so, I told you so."
Haters would rather tell you and everyone in earshot why it is dangerous to do anything new, when they tried something new something bad happened to them, how many times they had something bad happen to them, how many times they have seen others have something bad happen to them, etc...
They use this to create a feeling of control over themselves and others while never realizing that they gave up control when they decided to stand and watch instead of Create and Take Action.
Haters are out to prove themselves right and everybody else is wrong. They spend more time deciding how the world should run if they were in charge and yet take no charge of their world. Life is what happens to them.
There is not one spark of Creation anywhere.
So, at the end of it all, will you be remembered as a Creator or a Hater?
***Service Drive Manager and Service Advisors Needed Immediately (Ft. Worth)
SERVICE DRIVE MANAGER MUST HAVE 5+ YEARS EXPERIENCE AND ADVISORS MUST HAVE 2+ YEARS EXPERIENCE!
Allen Samuels Dodge/Hyundai is looking for qualified people to join our team. Our talented teams of professionals perform at high levels due to their efforts and proven processes that are performed 100% of the time.
Please send resume to rheywood@dealerprotraining.com or fax to 727-230-7502
We provide professional training by a Fixed Operations Specialist.
Allen Samuels offers unlimited earning potential, with an extremely generous compensation program in addition to industry leading benefits. Top performers deserve top pay. If You have the Desire and Drive, We have the Vehicle.
Job Summary:
Service Drive Manager is responsible for leading a team of advisors, perform set processes and making sure that their team performs the same processes with each and every customer.
The service advisor is responsible for the highest quality customer service and selling additional needed service to customers. The service advisor is the dealership's first-line customer-relations and service representative.
Job Responsibilities:
*Perform service drive processes 100% of time with every customer.
o Greet each customer in a prompt, courteous manner, let customers who are waiting in line know that they will be helped soon
o Communicate with service customers to determine the nature of the mechanical problems
o Secure agreement from customers before repairs; cover cost estimate; and approximate time when vehicle's work will be completed
o Obtain customer and vehicle data
o Maintain a dealership-prescribed standard for "hours per customer repair order written"
o Inspect all vehicles for bodywork, notify the customer if work is needed and provide an estimate for body shop work
o Advise customers on the care of their cars and the value of maintaining their vehicles in accordance with manufacture's specifications, using maintenance menus
o Keep a daily log of repair orders written, status as well as carryovers
o Handle minor customer complaints and misunderstandings
o Communicate the need for additional work when needed; explain the details to the customer, including the additional cost and time consideration and document properly on repair order
o Follow up progress of each repair order during the day, contact customers by telephone regarding changes in the estimate or time promised
o Handle telephone inquiries regarding work in process and appointments and return phone messages promptly
o Deliver vehicles to customers and answer any questions, review work performed and explain charges and coverage
o Interpret warranty information and policies to customers
o Advise customers of parts ordered and make an appointment to have them installed before customer leaves
o Assist the service manager as necessary
o Follow company safety procedures to avoid exposure to fumes, dirt, dust and harsh chemicals
o Demonstrates behaviors consistent with the Company's Vision, Mission, and Values in all interactions with customers, co-workers and suppliers
o Adheres to all company policies, procedures and safety standards
Required Experience
Qualifications:
o Must meet company's requirements for employment
*CSI skills a must with proven sales history
o Must have valid driver's license
o Ability to drive manual transmission vehicles
o Demonstrated customer service skills
o Previous service advisor experience 2 years +
o Ability to read and comprehend instructions and information
o Sales experience (preferred)
o Excellent verbal and written communication skills
o Professional appearance
*Must have valid Texas driver's license
Physical Requirements & Working Conditions:
o Exposure to inclement weather
o Ability to operate an automobile
o Prolonged periods of standing, stooping and bending
Allen Samuels Dodge/Hyundai is looking for qualified people to join our team. Our talented teams of professionals perform at high levels due to their efforts and proven processes that are performed 100% of the time.
Please send resume to rheywood@dealerprotraining.com or fax to 727-230-7502
We provide professional training by a Fixed Operations Specialist.
Allen Samuels offers unlimited earning potential, with an extremely generous compensation program in addition to industry leading benefits. Top performers deserve top pay. If You have the Desire and Drive, We have the Vehicle.
Job Summary:
Service Drive Manager is responsible for leading a team of advisors, perform set processes and making sure that their team performs the same processes with each and every customer.
The service advisor is responsible for the highest quality customer service and selling additional needed service to customers. The service advisor is the dealership's first-line customer-relations and service representative.
Job Responsibilities:
*Perform service drive processes 100% of time with every customer.
o Greet each customer in a prompt, courteous manner, let customers who are waiting in line know that they will be helped soon
o Communicate with service customers to determine the nature of the mechanical problems
o Secure agreement from customers before repairs; cover cost estimate; and approximate time when vehicle's work will be completed
o Obtain customer and vehicle data
o Maintain a dealership-prescribed standard for "hours per customer repair order written"
o Inspect all vehicles for bodywork, notify the customer if work is needed and provide an estimate for body shop work
o Advise customers on the care of their cars and the value of maintaining their vehicles in accordance with manufacture's specifications, using maintenance menus
o Keep a daily log of repair orders written, status as well as carryovers
o Handle minor customer complaints and misunderstandings
o Communicate the need for additional work when needed; explain the details to the customer, including the additional cost and time consideration and document properly on repair order
o Follow up progress of each repair order during the day, contact customers by telephone regarding changes in the estimate or time promised
o Handle telephone inquiries regarding work in process and appointments and return phone messages promptly
o Deliver vehicles to customers and answer any questions, review work performed and explain charges and coverage
o Interpret warranty information and policies to customers
o Advise customers of parts ordered and make an appointment to have them installed before customer leaves
o Assist the service manager as necessary
o Follow company safety procedures to avoid exposure to fumes, dirt, dust and harsh chemicals
o Demonstrates behaviors consistent with the Company's Vision, Mission, and Values in all interactions with customers, co-workers and suppliers
o Adheres to all company policies, procedures and safety standards
Required Experience
Qualifications:
o Must meet company's requirements for employment
*CSI skills a must with proven sales history
o Must have valid driver's license
o Ability to drive manual transmission vehicles
o Demonstrated customer service skills
o Previous service advisor experience 2 years +
o Ability to read and comprehend instructions and information
o Sales experience (preferred)
o Excellent verbal and written communication skills
o Professional appearance
*Must have valid Texas driver's license
Physical Requirements & Working Conditions:
o Exposure to inclement weather
o Ability to operate an automobile
o Prolonged periods of standing, stooping and bending
Optimism Abounds in Fixed Operations
Over the past couple of months I’ve conducted several workshops for NADA and the Detroit Auto Dealers Association. In attendance were Dealers, GM’s and Service Directors and I was amazed at the level of optimism displayed by all. Dealers are selling more cars and trucks. Retail service traffic is increasing and net profits are improving. Great news for us all!
Many dealers tell me that the dealership closings in their markets have resulted in more customers coming into their dealerships for both sales and service. This of course is a positive trend but my concern is this: “What are you going to do with the additional service customers when they show up?” Have you prepared your service team for these new opportunities? Do you have a customer friendly appointment process, on-line, on the phone and in person? Do you have the proper selling processes in place to professionally engage your customers? Once you get these new customers do you have the right processes in place to keep them coming back?
In my last article for ADM I addressed the Five Rules of Engagement for service customers whereby I outlined how a dealer must hold their service team accountable for following the Rules as outlined below:
• Rule #1: Offer an Appointment to 100% of the incoming service calls
• Rule #2: Conduct a Vehicle Walk-around with the customer
• Rule #3: Present a Maintenance Menu at the time of write up
• Rule #4: Complete a Vehicle Health Check with every RO
• Rule #5: Conduct an Active Delivery of the vehicle back to the customer
Interestingly enough, J.D. Powers conducted a recent study of new car dealers’ service departments measuring a dealer’s performance in following Rules 2 thru 5 and Worldwide Phone Pops evaluated the dealers performance with Rule #1 after shopping over 9000 dealerships nationwide. Let’s review the results of each of these.
Starting with Rule #1, Worldwide Phone Pops states that 57% of all Service Advisors do not ask the customer for an appointment. Why would a dealer allow that to happen? Why would you not hold everyone accountable to offering 100% of your service customers an appointment? (My dentist does!) To make matters worse, Phone Pops states that 38% of operators keep customers on hold too long causing hang ups. So the question is are you going to let this happen to all of the new opportunities that we are all so excited about? Would it be acceptable for your salespeople to only offer 57% of your phone ups an appointment to come into your dealership to test drive a new or used vehicle? Do your phone ups stay on hold for prolonged periods of time waiting for a salesperson to speak to them?
The survey from J.D. Powers shows that Rule #2 did not fare much better since only 53% of the Service Advisors conducted a walkaround. My guess is this means that the remaining 47% of Advisors performed the function of a clerk preferring to stay at their work station waiting for the customer to come to them. When you install a walkaround process you will discover that your customers like it and your CSI will most likely go up along with your sales and gross profits.
The walkaround is a perfect lead in to a Maintenance Menu presentation, Rule #3. Survey shows that only 29% of Service Advisors made recommendations for other maintenance or repairs. Even more interesting is the fact that 46% of the customers said YES to have additional work performed on their vehicle at the time of write up. That sounds like a Closing Ratio of 46%! How would you like that closing ratio on extended service contracts in your finance department? What happens when the 29% becomes 100%? Most likely your menus sales will triple!
Rule #4 is what I call the Vehicle Health Check or multi-point inspection. It’s really like giving your customer’s vehicle a “physical check up” to insure they are in fact driving a safe and reliable vehicle. Survey shows when an Advisor calls a customer and reviews the results of the Vehicle Health Check and makes recommendations for additional repairs or maintenance services that a whopping 56% of them said “YES”. Now we have a 56% closing Ratio which in my book is a great job! Are your Technicians inspecting 100% of the vehicles in your service department every single day? Are your Service Advisors reviewing the results of the inspection with every customer?
The Active Delivery, Rule #5, is one of the most important processes for building owner retention and increasing CSI. This process is quite simple and costs you absolutely nothing: Always retrieve the vehicle and bring it to the customer—never send the customer to find their vehicle. J.D. Powers states that 23% of Advisors had their customer wait alone while their vehicle was retrieved and 5% of Advisors waited with the customer while the vehicle was retrieved and 16% of Advisors escorted the customer to their vehicle. So, let’s be generous and give the Advisors a combined compliance ratio of 44%. By now I’m sure you see where I’m going with this scenario-----56% of the customers were simply told where the vehicle was. When you deliver a new or used vehicle to a customer do you tell them where it’s parked and tell them to have nice day finding it? Again, this is a very simple process that costs you absolutely nothing. Why not make it a rule starting today!
Yes, optimism abounds in fixed operations and that optimism will turn in to record sales, record profits and record CSI scores for those dealers who choose to make the Five Rules of Engagement company policy and then holds their service team accountable for 100% compliance. You might hear a few moans and groans from your underachievers but remember—you are not running a Democracy here!
Don Reed
CEO-DealerPro Training Solutions
Many dealers tell me that the dealership closings in their markets have resulted in more customers coming into their dealerships for both sales and service. This of course is a positive trend but my concern is this: “What are you going to do with the additional service customers when they show up?” Have you prepared your service team for these new opportunities? Do you have a customer friendly appointment process, on-line, on the phone and in person? Do you have the proper selling processes in place to professionally engage your customers? Once you get these new customers do you have the right processes in place to keep them coming back?
In my last article for ADM I addressed the Five Rules of Engagement for service customers whereby I outlined how a dealer must hold their service team accountable for following the Rules as outlined below:
• Rule #1: Offer an Appointment to 100% of the incoming service calls
• Rule #2: Conduct a Vehicle Walk-around with the customer
• Rule #3: Present a Maintenance Menu at the time of write up
• Rule #4: Complete a Vehicle Health Check with every RO
• Rule #5: Conduct an Active Delivery of the vehicle back to the customer
Interestingly enough, J.D. Powers conducted a recent study of new car dealers’ service departments measuring a dealer’s performance in following Rules 2 thru 5 and Worldwide Phone Pops evaluated the dealers performance with Rule #1 after shopping over 9000 dealerships nationwide. Let’s review the results of each of these.
Starting with Rule #1, Worldwide Phone Pops states that 57% of all Service Advisors do not ask the customer for an appointment. Why would a dealer allow that to happen? Why would you not hold everyone accountable to offering 100% of your service customers an appointment? (My dentist does!) To make matters worse, Phone Pops states that 38% of operators keep customers on hold too long causing hang ups. So the question is are you going to let this happen to all of the new opportunities that we are all so excited about? Would it be acceptable for your salespeople to only offer 57% of your phone ups an appointment to come into your dealership to test drive a new or used vehicle? Do your phone ups stay on hold for prolonged periods of time waiting for a salesperson to speak to them?
The survey from J.D. Powers shows that Rule #2 did not fare much better since only 53% of the Service Advisors conducted a walkaround. My guess is this means that the remaining 47% of Advisors performed the function of a clerk preferring to stay at their work station waiting for the customer to come to them. When you install a walkaround process you will discover that your customers like it and your CSI will most likely go up along with your sales and gross profits.
The walkaround is a perfect lead in to a Maintenance Menu presentation, Rule #3. Survey shows that only 29% of Service Advisors made recommendations for other maintenance or repairs. Even more interesting is the fact that 46% of the customers said YES to have additional work performed on their vehicle at the time of write up. That sounds like a Closing Ratio of 46%! How would you like that closing ratio on extended service contracts in your finance department? What happens when the 29% becomes 100%? Most likely your menus sales will triple!
Rule #4 is what I call the Vehicle Health Check or multi-point inspection. It’s really like giving your customer’s vehicle a “physical check up” to insure they are in fact driving a safe and reliable vehicle. Survey shows when an Advisor calls a customer and reviews the results of the Vehicle Health Check and makes recommendations for additional repairs or maintenance services that a whopping 56% of them said “YES”. Now we have a 56% closing Ratio which in my book is a great job! Are your Technicians inspecting 100% of the vehicles in your service department every single day? Are your Service Advisors reviewing the results of the inspection with every customer?
The Active Delivery, Rule #5, is one of the most important processes for building owner retention and increasing CSI. This process is quite simple and costs you absolutely nothing: Always retrieve the vehicle and bring it to the customer—never send the customer to find their vehicle. J.D. Powers states that 23% of Advisors had their customer wait alone while their vehicle was retrieved and 5% of Advisors waited with the customer while the vehicle was retrieved and 16% of Advisors escorted the customer to their vehicle. So, let’s be generous and give the Advisors a combined compliance ratio of 44%. By now I’m sure you see where I’m going with this scenario-----56% of the customers were simply told where the vehicle was. When you deliver a new or used vehicle to a customer do you tell them where it’s parked and tell them to have nice day finding it? Again, this is a very simple process that costs you absolutely nothing. Why not make it a rule starting today!
Yes, optimism abounds in fixed operations and that optimism will turn in to record sales, record profits and record CSI scores for those dealers who choose to make the Five Rules of Engagement company policy and then holds their service team accountable for 100% compliance. You might hear a few moans and groans from your underachievers but remember—you are not running a Democracy here!
Don Reed
CEO-DealerPro Training Solutions
A recent Fixed Operations Study and what it reveals about Service Sales, Profitability and more...
Recent studies show that Service Advisors that hand out menus during the write up process experience an increase in Customer Maintenance Sales. The study also shows that this corresponds to an increase in the Service Advisors pay.
These recent studies also show that Technicians that completed a Multipoint Inspection on every vehicle flagged more hours than Technicians who did not. An interesting side note to the study, Technicians who completed the most Multipoint Inspections made the most money.
Furthermore, the study revealed that Professionally Trained Advisors had higher CSI Scores than Advisors who received little or no Training at all. In fact, during the study, Customers preferred talking to a monkey rather than an Un-Trained Un-Professional Service Advisor by a margin of 5-1. (Note; no monkeys were harmed in the study and were paid in peanuts for their participation, same as the Un-Trained Advisors)
Customers also preferred to have their vehicles repaired in one visit rather than having to return to the Dealership for repairs later due to an Un-Trained Un-Professional Advisor not being able to reach them during the day to complete the repair process. The Advisors who asked for a Pre-Authorized Repair Amount out serviced and outperformed the monkeys…er…Un-Advisors by a margin of 100%.
Additionally, Dealerships with Trained Professional Advisors had higher Gross Profit amounts than other Dealers who have monkeys... er…Un-Advisors. This was not too surprising to the Professional Advisors and Service Personnel but came as a shock to the monkeys…er…Un-Advisors who blamed the results on “demanding customers and high management expectations.”
One other aspect the study revealed was that Dealers who increased their Gross Profit had a Net Profit Increase as well. And interestingly enough, those same Dealers had an increase in Service Absorption. And the most telling aspect of the study revealed that Dealers that had an Increase in Gross Profit, Net Profit and Service Absorption stayed in business longer than those who did not.
One final note on this recent study…all of the Dealers that had monkeys…er…Un-Advisors working in the Service Department have closed.
These recent studies also show that Technicians that completed a Multipoint Inspection on every vehicle flagged more hours than Technicians who did not. An interesting side note to the study, Technicians who completed the most Multipoint Inspections made the most money.
Furthermore, the study revealed that Professionally Trained Advisors had higher CSI Scores than Advisors who received little or no Training at all. In fact, during the study, Customers preferred talking to a monkey rather than an Un-Trained Un-Professional Service Advisor by a margin of 5-1. (Note; no monkeys were harmed in the study and were paid in peanuts for their participation, same as the Un-Trained Advisors)
Customers also preferred to have their vehicles repaired in one visit rather than having to return to the Dealership for repairs later due to an Un-Trained Un-Professional Advisor not being able to reach them during the day to complete the repair process. The Advisors who asked for a Pre-Authorized Repair Amount out serviced and outperformed the monkeys…er…Un-Advisors by a margin of 100%.
Additionally, Dealerships with Trained Professional Advisors had higher Gross Profit amounts than other Dealers who have monkeys... er…Un-Advisors. This was not too surprising to the Professional Advisors and Service Personnel but came as a shock to the monkeys…er…Un-Advisors who blamed the results on “demanding customers and high management expectations.”
One other aspect the study revealed was that Dealers who increased their Gross Profit had a Net Profit Increase as well. And interestingly enough, those same Dealers had an increase in Service Absorption. And the most telling aspect of the study revealed that Dealers that had an Increase in Gross Profit, Net Profit and Service Absorption stayed in business longer than those who did not.
One final note on this recent study…all of the Dealers that had monkeys…er…Un-Advisors working in the Service Department have closed.
The Worth Of A Technician: Comparing Positions In The Dealership
Have you ever taken the time to sit down and actually calculate the real value of an average technician? The value I’m referring to is in regards to gross profit production and customer loyalty, which I hope are on your radar screen every day. If they are not, they need to be starting today. Let’s look at gross profit production first.
An average technician at 100 percent productivity (40 hours produced versus 40 hours worked) will contribute about $15,000 in parts and labor gross profit per month based on our industry’s benchmarks. If we annualized that monthly contribution, it amounts to about $180,000. This is about the same as selling 120 new vehicles per year at an average gross PRU of $1,450 (National Average last year), which is pretty close to what your average salesperson produced last year. If an average technician produces about the same gross profit as an average salesperson, one would naturally assume that each of these people deserve to share equally in the attention received from the general manager and/or dealer, right? Let’s look at some examples of how much these two actually have in common.
Let’s start with performance. If you maintain a performance board for salespeople where you post their sales daily for all in the sales department to see, then I would hope you also maintain a performance board for technicians to measure and post their flat rate productivity daily. Additionally, if you set daily, weekly and monthly goals for all salespeople then surely you are doing the same for technicians, since it is a fundamental part of measuring daily the success of all productive employees both in sales and service.
How about support? In the sales department you need to have a solid, customer-oriented finance department to provide the financing support for putting the cars over the curb. A weak finance department will most assuredly have a negative effect on the performance of your salespeople. Similarly, in the service department, you need to have a solid, customer-oriented parts department to provide the replacement parts for getting your customers back on the road. A weak parts department will most assuredly have a negative effect on the performance of your technicians.
Why is it that the parts department in most dealerships will send a driver in a truck across town to deliver a part to a competitor (wholesale), but they won’t walk 50 feet to deliver a part to their own technicians (retail)? Since the technicians are the primary customer of the parts department, it would seem obvious that providing technicians the highest level of service possible ought to be a top priority. This level of service will have a direct effect on your CSI Report for “Fixed First Visit.”
To often this Fixed First Visit score is misinterpreted to reflect shop comebacks by the technicians. The fact of the matter is that Fixed First Visit has a lot more to do with the lack of parts needed to complete the repair properly; therefore, you must special order parts and ask the customer to return for a second visit to complete the repair. Hence, when the customer comes to “Fixed First Visit” on their survey, the answer is going to be, “No.” Are you evaluating the performance of your support department for your technicians?
Now, back to the salesperson who’s selling 10 cars a month and producing about $15,000 in gross profit. I bet you have processes in place to measure their individual sales opportunities such as the number of ups, demos, write ups, and TOs. You’re probably thinking “how can any of these processes possible apply to technicians?” To begin, measure the number of repair orders dispatched (UPS) to each technician. Every repair order, with the exception of new vehicle internals, should have an inspection sheet completed by the technician to ensure every customer is driving a safe and reliable vehicle. This is equivalent to the Demo. Of course, any needed repairs and/or services found should be itemized on an estimate sheet (Write Up) and presented to the service advisor for review with the customer.
Any customer who declines a technician’s recommendation for these needed repairs and/or services should be turned over (TO) to the service drive sales manager or service manager for a second review with the customer so they understand we are just trying to make sure they are driving a safe and reliable vehicle.
If you implement these processes and measure them daily, like you do in sales, you will immediately realize an increase in service retail sales because your technicians’ productivity will go up. It’s not uncommon for a good technician to reach 120 percent productivity or more. At this level of productivity your technician is now worth about $18,000 per month. CSI and customer retention are on the rise and service absorption just took a big leap forward, which sounds to me like the dealer just got a pay raise!
By measuring the efforts of your technicians daily, several things will happen with your entire service team starting on day one. First, you send a strong message that you care about service. Second, you are looking at their performance daily and comparing that to their goals.
Third, they will be held accountable for their individual performance on a daily basis. Fourth, productivity will increase significantly and so will your net profits. Finally, your service customers will like doing business with you and are likely to become return customers. So, don’t you think it’s about time you crossed over that line separating sales from service and give your service team the attention they deserve?
Don Reed
CEO, Fixed Ops Solutions
DealerPro Training Solutions
An average technician at 100 percent productivity (40 hours produced versus 40 hours worked) will contribute about $15,000 in parts and labor gross profit per month based on our industry’s benchmarks. If we annualized that monthly contribution, it amounts to about $180,000. This is about the same as selling 120 new vehicles per year at an average gross PRU of $1,450 (National Average last year), which is pretty close to what your average salesperson produced last year. If an average technician produces about the same gross profit as an average salesperson, one would naturally assume that each of these people deserve to share equally in the attention received from the general manager and/or dealer, right? Let’s look at some examples of how much these two actually have in common.
Let’s start with performance. If you maintain a performance board for salespeople where you post their sales daily for all in the sales department to see, then I would hope you also maintain a performance board for technicians to measure and post their flat rate productivity daily. Additionally, if you set daily, weekly and monthly goals for all salespeople then surely you are doing the same for technicians, since it is a fundamental part of measuring daily the success of all productive employees both in sales and service.
How about support? In the sales department you need to have a solid, customer-oriented finance department to provide the financing support for putting the cars over the curb. A weak finance department will most assuredly have a negative effect on the performance of your salespeople. Similarly, in the service department, you need to have a solid, customer-oriented parts department to provide the replacement parts for getting your customers back on the road. A weak parts department will most assuredly have a negative effect on the performance of your technicians.
Why is it that the parts department in most dealerships will send a driver in a truck across town to deliver a part to a competitor (wholesale), but they won’t walk 50 feet to deliver a part to their own technicians (retail)? Since the technicians are the primary customer of the parts department, it would seem obvious that providing technicians the highest level of service possible ought to be a top priority. This level of service will have a direct effect on your CSI Report for “Fixed First Visit.”
To often this Fixed First Visit score is misinterpreted to reflect shop comebacks by the technicians. The fact of the matter is that Fixed First Visit has a lot more to do with the lack of parts needed to complete the repair properly; therefore, you must special order parts and ask the customer to return for a second visit to complete the repair. Hence, when the customer comes to “Fixed First Visit” on their survey, the answer is going to be, “No.” Are you evaluating the performance of your support department for your technicians?
Now, back to the salesperson who’s selling 10 cars a month and producing about $15,000 in gross profit. I bet you have processes in place to measure their individual sales opportunities such as the number of ups, demos, write ups, and TOs. You’re probably thinking “how can any of these processes possible apply to technicians?” To begin, measure the number of repair orders dispatched (UPS) to each technician. Every repair order, with the exception of new vehicle internals, should have an inspection sheet completed by the technician to ensure every customer is driving a safe and reliable vehicle. This is equivalent to the Demo. Of course, any needed repairs and/or services found should be itemized on an estimate sheet (Write Up) and presented to the service advisor for review with the customer.
Any customer who declines a technician’s recommendation for these needed repairs and/or services should be turned over (TO) to the service drive sales manager or service manager for a second review with the customer so they understand we are just trying to make sure they are driving a safe and reliable vehicle.
If you implement these processes and measure them daily, like you do in sales, you will immediately realize an increase in service retail sales because your technicians’ productivity will go up. It’s not uncommon for a good technician to reach 120 percent productivity or more. At this level of productivity your technician is now worth about $18,000 per month. CSI and customer retention are on the rise and service absorption just took a big leap forward, which sounds to me like the dealer just got a pay raise!
By measuring the efforts of your technicians daily, several things will happen with your entire service team starting on day one. First, you send a strong message that you care about service. Second, you are looking at their performance daily and comparing that to their goals.
Third, they will be held accountable for their individual performance on a daily basis. Fourth, productivity will increase significantly and so will your net profits. Finally, your service customers will like doing business with you and are likely to become return customers. So, don’t you think it’s about time you crossed over that line separating sales from service and give your service team the attention they deserve?
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
Five Rules of Service Customer Engagement
Five Rules of Service Customer Engagement
We started the New Year with the fewest number of new car dealers in decades. I believe the number is somewhere north of 18,000. This of course means there are now fewer dealers to provide warranty services as well as maintenance and mechanical repair services for customers. The question is will dealers aggressively go after customers or simply stand by waiting for them to show up? The latter option will most definitely provide the aftermarket competition with a significant pay raise. What is your marketing plan?
It’s not good enough to just say, “Get more customers in the door.” The basic principle for you to consider is what are you going to do with the customers when they do come in the door? The answer lies within the rules of engagement. These are basic rules that have been around for a very long time, yet some of them are either not being followed properly or not being used at all.
With that being said, what are the rules, and more importantly, why are they not being followed?
Rule #1: Offer an appointment to 100 percent of the incoming service calls. This certainly sounds simple enough, right? Why wouldn’t you want to offer an appointment to every customer? Research shows that service advisors do not offer an appointment to 57 percent of their customers who are calling about a service concern or need. So, you initiate a marketing plan, the plan works well and the phones start ringing. Your service advisors answer the calls and six out of 10 callers are not given the opportunity to say “yes” to an appointment! Why?
The answer is your advisors have not been properly trained on how to sell appointments. This is why you should phone shop every advisor or start listening to recordings of incoming calls. The best solution is to take the incoming calls away from the service advisors and hire an appointment coordinator (with no bad habits) to take all incoming service calls.
Rule #2: Conduct a vehicle walk-around with the customer. This process is well received by the vast majority of your customers, yet far too many service advisors wait for the customer to come to them for the write-up. Why? Again, they probably have not been properly trained or, forgive me for being blunt, they are lazy!
Your service advisors must go to the vehicle with the customer, walk around the vehicle looking for obvious signs of needed maintenance, note any damages found and make service recommendations to the customer (wiper blades, light bulbs, alignments, tires, etc). It’s also called selling. Your service advisors need to get the mileage reading anyway, so why not get the customer involved? Many service advisors consider themselves to be clerks versus salespeople. If you would like to know whether you have clerks or salespeople, just ask your advisors, or of course, you could track their performance every day.
Rule #3: Present a maintenance menu at the time of write-up. Nothing new here! Gosh, I even had menus to present back in the ‘70s when I was a service advisor. If you present menus in finance to increase your gross per retail unit, then why would you not present menus in your service department to increase your sales per repair order (RO)? Your F&I customers are not aware of all the products and services you may offer, so you present them with a menu.
The same holds true for your service customers, since most of them have no clue whatsoever about preventative maintenance requirements and/or recommendations. Clerks do not like presenting menus since it seems like they are trying to sell something, which of course clerks do not do. Professionally trained service advisors (salespeople) know that it is in the best interests of the customers to ensure their vehicles are properly maintained. In doing so, these salespeople will increase your hours per RO by about 0.3 hours.
Rule #4: Complete a vehicle health check (VHC) with every RO. Most dealers complete an inspection of some kind on every used vehicle before it’s retailed. Why? My belief is that they want to make sure the vehicle is safe and reliable for their customers. They also would like to maximize their gross per retailed unit, and they value their reputation in the community. When the inspection is completed, the used car manager usually has the final say on what repairs will be made and approves the final cost.
Sound familiar? If so, then I’m sure you will agree that it’s equally important for dealers to establish this rule for all of their service customers. After all, isn’t it important to ensure the customers are driving safe and reliable vehicles? Wouldn’t every dealer like to maximize their gross per RO and have a reputation in their community for providing excellent service? The process is the same for the service customer as it is for the used car manager. Inspect the vehicle, advise the customer on what’s needed and present an estimate to the customer. Then, let the customer have the final say on what repairs or services need to be completed and approve the final cost.
Sounds like a simple plan to me. So, why do so many dealers fail to complete a VHC for their customers at no charge? Answer: the technicians do not want to perform the VHC because the service clerks won’t sell (don’t know how or don’t want to) the recommended repairs or services. Properly present the results of the VHC to every customer, and watch your sales increase by another 0.7 hours per RO.
Rule #5: Conduct an active delivery of the vehicle back to the customer. “Mr. Customer, you’re all set. The cashier has your keys and your final bill. Have a nice day.” Have you ever heard that in your store? Is it the cashier’s responsibility to explain the work that was completed and what the final costs are? I hope you said “No.” Another way of explaining active delivery is valet service. Always bring the vehicle to the customer and never send the customer out the door to search for their vehicle.
The service advisor should review the three Cs on the RO (condition, cause and correction) with the customer, explain the costs and set their next appointment. If you are interested in saving some money, you might even consider eliminating the cashier’s position and let the advisor perform that function too during the active delivery. Rule #5 will definitely have a positive effect on your CSI and owner retention
It is vitally important that every employee in your dealership understand what a “rule” is. Here is Dictionary.com’s definition of rule: “A principle or regulation governing conduct, action, procedure, arrangement, etc.” Now that I have identified the five rules of engagement for your service team and customers, don’t you think it’s about time you held everyone accountable for following the rules?
We started the New Year with the fewest number of new car dealers in decades. I believe the number is somewhere north of 18,000. This of course means there are now fewer dealers to provide warranty services as well as maintenance and mechanical repair services for customers. The question is will dealers aggressively go after customers or simply stand by waiting for them to show up? The latter option will most definitely provide the aftermarket competition with a significant pay raise. What is your marketing plan?
It’s not good enough to just say, “Get more customers in the door.” The basic principle for you to consider is what are you going to do with the customers when they do come in the door? The answer lies within the rules of engagement. These are basic rules that have been around for a very long time, yet some of them are either not being followed properly or not being used at all.
With that being said, what are the rules, and more importantly, why are they not being followed?
Rule #1: Offer an appointment to 100 percent of the incoming service calls. This certainly sounds simple enough, right? Why wouldn’t you want to offer an appointment to every customer? Research shows that service advisors do not offer an appointment to 57 percent of their customers who are calling about a service concern or need. So, you initiate a marketing plan, the plan works well and the phones start ringing. Your service advisors answer the calls and six out of 10 callers are not given the opportunity to say “yes” to an appointment! Why?
The answer is your advisors have not been properly trained on how to sell appointments. This is why you should phone shop every advisor or start listening to recordings of incoming calls. The best solution is to take the incoming calls away from the service advisors and hire an appointment coordinator (with no bad habits) to take all incoming service calls.
Rule #2: Conduct a vehicle walk-around with the customer. This process is well received by the vast majority of your customers, yet far too many service advisors wait for the customer to come to them for the write-up. Why? Again, they probably have not been properly trained or, forgive me for being blunt, they are lazy!
Your service advisors must go to the vehicle with the customer, walk around the vehicle looking for obvious signs of needed maintenance, note any damages found and make service recommendations to the customer (wiper blades, light bulbs, alignments, tires, etc). It’s also called selling. Your service advisors need to get the mileage reading anyway, so why not get the customer involved? Many service advisors consider themselves to be clerks versus salespeople. If you would like to know whether you have clerks or salespeople, just ask your advisors, or of course, you could track their performance every day.
Rule #3: Present a maintenance menu at the time of write-up. Nothing new here! Gosh, I even had menus to present back in the ‘70s when I was a service advisor. If you present menus in finance to increase your gross per retail unit, then why would you not present menus in your service department to increase your sales per repair order (RO)? Your F&I customers are not aware of all the products and services you may offer, so you present them with a menu.
The same holds true for your service customers, since most of them have no clue whatsoever about preventative maintenance requirements and/or recommendations. Clerks do not like presenting menus since it seems like they are trying to sell something, which of course clerks do not do. Professionally trained service advisors (salespeople) know that it is in the best interests of the customers to ensure their vehicles are properly maintained. In doing so, these salespeople will increase your hours per RO by about 0.3 hours.
Rule #4: Complete a vehicle health check (VHC) with every RO. Most dealers complete an inspection of some kind on every used vehicle before it’s retailed. Why? My belief is that they want to make sure the vehicle is safe and reliable for their customers. They also would like to maximize their gross per retailed unit, and they value their reputation in the community. When the inspection is completed, the used car manager usually has the final say on what repairs will be made and approves the final cost.
Sound familiar? If so, then I’m sure you will agree that it’s equally important for dealers to establish this rule for all of their service customers. After all, isn’t it important to ensure the customers are driving safe and reliable vehicles? Wouldn’t every dealer like to maximize their gross per RO and have a reputation in their community for providing excellent service? The process is the same for the service customer as it is for the used car manager. Inspect the vehicle, advise the customer on what’s needed and present an estimate to the customer. Then, let the customer have the final say on what repairs or services need to be completed and approve the final cost.
Sounds like a simple plan to me. So, why do so many dealers fail to complete a VHC for their customers at no charge? Answer: the technicians do not want to perform the VHC because the service clerks won’t sell (don’t know how or don’t want to) the recommended repairs or services. Properly present the results of the VHC to every customer, and watch your sales increase by another 0.7 hours per RO.
Rule #5: Conduct an active delivery of the vehicle back to the customer. “Mr. Customer, you’re all set. The cashier has your keys and your final bill. Have a nice day.” Have you ever heard that in your store? Is it the cashier’s responsibility to explain the work that was completed and what the final costs are? I hope you said “No.” Another way of explaining active delivery is valet service. Always bring the vehicle to the customer and never send the customer out the door to search for their vehicle.
The service advisor should review the three Cs on the RO (condition, cause and correction) with the customer, explain the costs and set their next appointment. If you are interested in saving some money, you might even consider eliminating the cashier’s position and let the advisor perform that function too during the active delivery. Rule #5 will definitely have a positive effect on your CSI and owner retention
It is vitally important that every employee in your dealership understand what a “rule” is. Here is Dictionary.com’s definition of rule: “A principle or regulation governing conduct, action, procedure, arrangement, etc.” Now that I have identified the five rules of engagement for your service team and customers, don’t you think it’s about time you held everyone accountable for following the rules?
Does 100 Percent Service Absorption Interest You?
I hope you answered “Yes” to the question above. So, let’s begin with defining what “service absorption” means.
It is calculated by taking your total gross profit from the sale of parts and labor, which is sales minus the cost of parts and labor sales and dividing that total by your dealership’s fixed expenses. Do not include any variable sales expenses such as sales commissions or floor plan interest.
To put it simply, if one can achieve 100 percent service absorption, then all of the dealership’s fixed expenses are paid for by the service and parts departments, which means that the sales department is producing net profit on the very first unit it sells. For example, if your sales gross profit is $4,000, your sales commission is $1,000, and your floor plan interest is $500, then you have $1,500 in variable expenses to deduct from gross profit, which leaves you with a net profit of $2,500.
Based on our financial evaluations of RV dealerships across the country, we find that most dealerships are well below 45 percent. That means it is difficult for the average dealer to believe that 100 percent service absorption is indeed attainable since he or she never did it nor do they know of any other dealer who achieved such a feat.
Well let me assure you that it can be done if you are willing to change.
The most significant change needed is to change your attitude toward your service department. First, you must believe your service department will become a profit center. Currently, many dealers perceive this department as a support department for the sales department and to prep units for delivery, then handle warranty headaches after the sale.
Once the warranty period expires, there does not seem to be much effort to keep the customer coming back for retail repairs. After all, during the “season,” the shop is booked for two weeks or longer on any given day, so why worry about retail repair work? This attitude needs to change because retail customers will spend thousands of dollars on parts and labor, which have the highest profit margins of any product you sell. Additionally, we know the RV owners who have their RV serviced at the dealer who sold it to them are much more likely to buy their next unit from that dealer.
We find that the dealers who have low service absorption also suffer from low shop productivity. Shop productivity is defined as the number of hours sold on retail, warranty, and internal repair orders, divided by the number of clock hours the technicians actually work. For example, 100 hours sold on all repair orders divided by 200 technician hours actually worked, equals 50 percent shop productivity.
Our experience shows that most dealers fall into the range of 50-55 percent shop productivity. Are you starting to get a picture of the opportunity for improvement? How can you be booked out two weeks in appointments when your technicians are only 50 percent productive? What happened to the other 50 percent of their working hours?
Technicians, for the most part, are hard working employees. They brave the cold, the heat, the rain, and the snow to perform whatever service or repair is printed on the face of the repair order, and most of the time they complete the service or repair to the satisfaction of the customer. However, do they complete the service or repair in as short a time as possible? More importantly, do they have the incentive to complete service or repairs as quickly as possible? It’s called “performance based compensation.” At most RV dealerships, the answer is “No,” since technicians are simply paid by the number of clock hours worked with no regard for the number of hours sold. If you are a technician, what difference does it make to you if you spend four hours completing a two hour job? Conversely, if you were paid two hours to complete a two hour job, would you try your best to finish in two hours so you could get another repair order to get paid on? If you completed that same two hour job in 90 minutes and still got paid for two hours, would that be a good thing or a bad thing? If you are a good technician, a good employee, and you have a good attitude, you just gave yourself a pay raise. You also, just gave the dealer a pay raise.
Now, let’s assume that you install this “performance based pay plan” in your shop and your technicians’ productivity jumps to 75 percent from the current 50 percent. You just realized a 50 percent increase in labor gross profit. If your dealership is currently profitable, this 50 percent increase in labor gross profit then becomes 100 percent net profit. Take a look at your total labor gross profit for last year and increase it by 50 percent, and then ask yourself if it would be worth changing your attitude to put that much money in your bank account. What would it cost you to do that? Nothing!
by: Don Reed
It is calculated by taking your total gross profit from the sale of parts and labor, which is sales minus the cost of parts and labor sales and dividing that total by your dealership’s fixed expenses. Do not include any variable sales expenses such as sales commissions or floor plan interest.
To put it simply, if one can achieve 100 percent service absorption, then all of the dealership’s fixed expenses are paid for by the service and parts departments, which means that the sales department is producing net profit on the very first unit it sells. For example, if your sales gross profit is $4,000, your sales commission is $1,000, and your floor plan interest is $500, then you have $1,500 in variable expenses to deduct from gross profit, which leaves you with a net profit of $2,500.
Based on our financial evaluations of RV dealerships across the country, we find that most dealerships are well below 45 percent. That means it is difficult for the average dealer to believe that 100 percent service absorption is indeed attainable since he or she never did it nor do they know of any other dealer who achieved such a feat.
Well let me assure you that it can be done if you are willing to change.
The most significant change needed is to change your attitude toward your service department. First, you must believe your service department will become a profit center. Currently, many dealers perceive this department as a support department for the sales department and to prep units for delivery, then handle warranty headaches after the sale.
Once the warranty period expires, there does not seem to be much effort to keep the customer coming back for retail repairs. After all, during the “season,” the shop is booked for two weeks or longer on any given day, so why worry about retail repair work? This attitude needs to change because retail customers will spend thousands of dollars on parts and labor, which have the highest profit margins of any product you sell. Additionally, we know the RV owners who have their RV serviced at the dealer who sold it to them are much more likely to buy their next unit from that dealer.
We find that the dealers who have low service absorption also suffer from low shop productivity. Shop productivity is defined as the number of hours sold on retail, warranty, and internal repair orders, divided by the number of clock hours the technicians actually work. For example, 100 hours sold on all repair orders divided by 200 technician hours actually worked, equals 50 percent shop productivity.
Our experience shows that most dealers fall into the range of 50-55 percent shop productivity. Are you starting to get a picture of the opportunity for improvement? How can you be booked out two weeks in appointments when your technicians are only 50 percent productive? What happened to the other 50 percent of their working hours?
Technicians, for the most part, are hard working employees. They brave the cold, the heat, the rain, and the snow to perform whatever service or repair is printed on the face of the repair order, and most of the time they complete the service or repair to the satisfaction of the customer. However, do they complete the service or repair in as short a time as possible? More importantly, do they have the incentive to complete service or repairs as quickly as possible? It’s called “performance based compensation.” At most RV dealerships, the answer is “No,” since technicians are simply paid by the number of clock hours worked with no regard for the number of hours sold. If you are a technician, what difference does it make to you if you spend four hours completing a two hour job? Conversely, if you were paid two hours to complete a two hour job, would you try your best to finish in two hours so you could get another repair order to get paid on? If you completed that same two hour job in 90 minutes and still got paid for two hours, would that be a good thing or a bad thing? If you are a good technician, a good employee, and you have a good attitude, you just gave yourself a pay raise. You also, just gave the dealer a pay raise.
Now, let’s assume that you install this “performance based pay plan” in your shop and your technicians’ productivity jumps to 75 percent from the current 50 percent. You just realized a 50 percent increase in labor gross profit. If your dealership is currently profitable, this 50 percent increase in labor gross profit then becomes 100 percent net profit. Take a look at your total labor gross profit for last year and increase it by 50 percent, and then ask yourself if it would be worth changing your attitude to put that much money in your bank account. What would it cost you to do that? Nothing!
by: Don Reed
The 7 Measurables and the Financial Statement
There are 7 Measurable and Improvable Key Performance Indicators that every Fixed Operations Director/Service Manager needs to be aware of.
They are RO Count, HPRO, Labor Gross Margin, Parts Gross Margin, EFL (Effective Labor Rate), Total Gross Profit and Total Net Profit.
When you have a constant update on these measurables and a mandate to improve their numbers you can have a really impressive Financial Statement at the end of the month.
Think about what a 10% increase in RO Count would mean to your Advisors, or a .3 increase in HPRO. What would that translate to in real dollars and cents at the end of the month?
If you are the average store in America and you are at the average labor rate you can expect to have a $5400.00 increase in Gross Sales per Advisor for every 10% increase in RO count. Is that a number to get your attention?
How about a .3 increase in HPRO? That equates to an additional $10,800.00 in Gross Sales per Advisor. Can you see why that would be an important measurable?
How about the Gross Profit Margins? If you decrease unauthorized discounts by just 10% in your store you can expect to have a $1600.00 per Advisor recapture of Lost Profit. (or more)
Effective Labor Rate is not only a matter of proper Labor Rate billing it also a direct reflection of unauthorized discounts as well.
And finally, if you are working your numbers, and want an increase in RO Count, HPRO, EFL, Labor and Parts Gross to translate into higher overall Gross Profit, all you have to do is start measuring daily and start holding personnel accountable for performance.
In theory, it sounds easy, doesn’t it?
In practice, it is one of the most difficult things to do on earth if there is not a clear plan of action backed up by a firm resolve to see it through.
And if you are interested in Net Profit, then you have to know your expenses inside and out. Some easy questions to ask are “What are we spending in Policy Adjustment compared to Marketing?”
So the real question Mr. or Ms. Dealer, are you happy with your Financial Statement and if not, what are you going to do about it?
They are RO Count, HPRO, Labor Gross Margin, Parts Gross Margin, EFL (Effective Labor Rate), Total Gross Profit and Total Net Profit.
When you have a constant update on these measurables and a mandate to improve their numbers you can have a really impressive Financial Statement at the end of the month.
Think about what a 10% increase in RO Count would mean to your Advisors, or a .3 increase in HPRO. What would that translate to in real dollars and cents at the end of the month?
If you are the average store in America and you are at the average labor rate you can expect to have a $5400.00 increase in Gross Sales per Advisor for every 10% increase in RO count. Is that a number to get your attention?
How about a .3 increase in HPRO? That equates to an additional $10,800.00 in Gross Sales per Advisor. Can you see why that would be an important measurable?
How about the Gross Profit Margins? If you decrease unauthorized discounts by just 10% in your store you can expect to have a $1600.00 per Advisor recapture of Lost Profit. (or more)
Effective Labor Rate is not only a matter of proper Labor Rate billing it also a direct reflection of unauthorized discounts as well.
And finally, if you are working your numbers, and want an increase in RO Count, HPRO, EFL, Labor and Parts Gross to translate into higher overall Gross Profit, all you have to do is start measuring daily and start holding personnel accountable for performance.
In theory, it sounds easy, doesn’t it?
In practice, it is one of the most difficult things to do on earth if there is not a clear plan of action backed up by a firm resolve to see it through.
And if you are interested in Net Profit, then you have to know your expenses inside and out. Some easy questions to ask are “What are we spending in Policy Adjustment compared to Marketing?”
So the real question Mr. or Ms. Dealer, are you happy with your Financial Statement and if not, 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 customer’s 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. Every time. When completed, the customer should receive a copy and complete explanation of what was found and the overall condition of the vehicle. Every time. 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 customer’s 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. Every time. When completed, the customer should receive a copy and complete explanation of what was found and the overall condition of the vehicle. Every time. 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!
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.
Don Reed, CEO DealerPro 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.
Don Reed, CEO DealerPro Training Solutions
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