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”
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!
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