The title of this article comes from the book “An Enemy Called Average” by John Mason. The purpose of his book is to get you from where you are currently to where you dream to be. Mr. Mason says “Break the chains of mediocrity and then live the life you dream of.” This of course can apply in your personal life as well as your professional one.
Far too often in our industry we have Dealers, General Managers, Service Directors, etc. who focus on and measure themselves in terms of the “average” dealer. Here are some examples:
“The average dealer is grossing $700 PRU in F&I income”
“The average salesperson sells 11 units per month”
“The average Service Advisor sells 1.4 HPRO”
“The average CSI for my region is…..”
“The average …….for my 20 Group is ………”
Does this sound familiar to you?
Additionally your manufacturers also provide composites and reports showing the average this and the average that so you can compare yourself to what’s average.
Here‘s a simple exercise for you complete after reading my article. When you get up tomorrow morning ask your family to sit at the kitchen table for a brief family meeting before you go off to work and before the kids are off to school.
Stand up in front of your family and say the following: “It looks like it’s going to be an average day here in Hometown, U.S.A., and your average Dad and your average husband is going to his average job to put forth an average effort to maintain my average paycheck so I can support my average kids and my lovely average wife.
By the way kids, at school I want you to focus on getting average grades and you don’t really need to put forth the effort to be a great student so a “C” will be just fine.”
Does that work for you? How’s that average wife comment going to work out for you? Are you excited about holding that meeting?
If you are a manager how about you ask to meet with the Dealer and say the following: “Boss I just wanted to let you know that I think you are an average Dealer, so I’m going to give you an average effort today so I can produce for you some average results and manage my average department.” I bet nobody is taking notes on this one!
Let’s not forget what average really is. It is nothing more than a reference point.
Average means you are the “Worst of the Best or the Best of the Worst!”
Is that where you really want to be? I hope you answered NO WAY!
Well if that is true then why is it that when I speak to hundreds of dealers across our country I hear comments like “Well Don the average HPRO for my 20 Group is 1.4 and I’m averaging 1.5 so I’m doing a pretty good job.” No Sir-you are still hanging around with that “Best of the Worst crowd! Why do so many of you use the word average like it is a good place to be? Do you really want to be a straight “C” Dealer? Does the term mediocre Dealer appeal to you? I think not.
So how do you go from being average to becoming a Top Performer?
It all starts with one word-Commitment.
Are you committed to change? Are you committed to leaving your comfort zone? Are you committed to achieving different results? Think of it this way—when it comes to making “Bacon & Eggs” the chicken was a participant but the pig was totally committed.
If you, the Dealer, are not totally committed then nothing is going to happen differently. As Zig Ziglar says “You have the perfect processes in place to get you exactly what you got last year.” Get committed to change.
Next you must establish SMART goals. Specific-Measurable-Achievable-Realistic-Time based.
Here is an example: “I want to increase my retail HPRO by .5 over the next 6 months”
Specific: Yes it is—retail Ro’s only—increase .5 HPRO (Don’t forget to calculate how much specific gross profit you will produce on parts as well as labor with that extra .5 HPRO)
Measurable: Yes it is—your DMS can print a Service Advisor Performance Report DAILY showing the HPRO for each Advisor
Achievable: Not sure—what are my Advisors going to do differently to achieve different results? If they could sell the extra .5 HPRO why haven’t they already done so? Do they have a good menu to sell from? Do they have the proper communication skills and processes to make a feature benefit presentation to your customers? Are they willing to leave their comfort zones? Are they committed to change? (Chickens or Pigs?)
Realistic: Yes it is—since the average dealer is averaging 1.4 that means a lot of dealers are doing much better than 1.4 and since there is a multitude of dealers out there averaging 2.0 to 2.5 HPRO then another .5 is very realistic.
Time Based: Yes it is—you have 6 months to decide what you are going to do differently, what new processes will you implement, how will you train everyone on new skills that will increase their sales performance and provide the customer with a higher level of service?
Once you achieve your SMART goal then move on to the next one. Long term success is a journey not just a destination. That first SMART goal is just the first leg of your journey. Do not allow yourself to become complacent because you will gravitate back toward mediocrity.
John Mason in his book ”An Enemy Called Average” states: “Mediocrity is a region bound on the north by compromise, on the south by indecision, on the east by past thinking and on the west by a lack of vision.”
Every department in your dealership must be a profit center for the dealer who wants to thrive and not just survive in this very competitive industry of ours. The aftermarket service providers currently have over 80% of all the parts and service business in America. Don’t you think it’s time we started taking it back?
Don Reed-CEO
DealerPro Training Solutions
Showing posts with label gross profit. Show all posts
Showing posts with label gross profit. Show all posts
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!
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
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
Today is number 56. There are 309 days left in this year.
It’s the end of February. Are you happy with the results you achieved this month? Is your year on track to be better than last year? Are you concerned or content? Lets review 3 possible answers and see which one fits you.
For you the month of February in the Service Department was Great! You hit the Goals you set for HPRO, EFL and Profit Margins! Your CSI has never been better! Overall, you could not have done any more. Congrats! And, March looks like it is going to take off as well! Your overall strategy is to keep that ball rollin’ baby!
Ok, maybe your February was not as good. Maybe you got close to your Goals, HPRO was near the bar you set, and EFL was just a few dollars under what you felt you needed to get to and maybe your Margins were just under standards. Basically, you are not overly concerned, you felt you got everything you could and March is just around the corner and hey, you couldn’t possibly have two so so months in a row, right? It’s got to get better, doesn’t it?
Perhaps you are the Dealer with the worst month ever. Your HPRO is barely above the minimum you need to keep the doors open, your EFL and Profit Margins are just north of “this really sucks”, and your CSI is about as good as the last Customer who said “I wouldn’t come back here if this was the last place on earth.”
3 completely different results requiring 3 completely different Action Plans.
If you are Dealer number 1, your biggest challenge is finding a new set of Goals that are just out of reach for your Team to go after. Maybe you want to focus in HPRO and set a .2 increase as a new benchmark. Or, you want to increase CSI and are doing it by installing a new process to complete a write-up in the service drive. Whatever it is, you will need to make it harder to reach. “Maintaining Success is more difficult than achieving Success.”
If you are Dealer number 3, it’s all upside for you! Hey, you know you already need a change, Right! Personnel, attitude, training, processes…everything! It’s got to be changed because you cannot hit Profitability Goals and achieve the level of Success with what you have in place right now! Congratulations, this is an exciting and fantastic time to be in your Dealership!
But, if you are number 2, you are in a lot of trouble my friend. Why? Because I left one little “C” word out in the very beginning.
Complacency.
It’s the evil that all Leaders fear more than anything. When you become complacent, you start to die!
If your Management and Leadership strategy sounds like this “Oh, it was just a slow month, and the weather was terrible, and we had some people sick, and the Customers…oh man…the Customers were just mean, nobody wanted to buy anything. They just wanted oil changes. Yep, next month will be better. Don’t worry, because we are not changing anything! All we need to do is just hang on until things get better” then I want you to immediately take out a sheet of paper and write down 3 NEW GOALS for March.
Whatever your HPRO was for February, add .5 to it, whatever your EFL was for February, add $5.00 to it, whatever your Profit Margins for February add 5%.
YOU NEED A JOLT! AN ELECTRIC SHOCK STRAIGHT TO THE HEART OF YOUR DEALERSHIP!
As soon as you have them written down, make a copy for everyone in the Fixed Operations Department, hold a meeting, TODAY!, pass them out and tell them “Failure is not an option!”
Because if you don’t, at the end of March, you will be saying ““Oh, it was just a slow month, and the weather was terrible, and we had some people sick, and the Customers…oh man…the Customers were just mean, nobody wanted to buy anything. They just wanted oil changes. Yep, next month will be better. Don’t worry, because we are not changing anything! All we need to do is just hang on until things get better” and you will be on the road to an entire year of wasted opportunity!
By the way, just to let you know, we are experts here at DealerPro in delivering the shock to jump-start your Dealerships Fixed Operations.
Posted by Leonard Buchholz February 25, 2011
For you the month of February in the Service Department was Great! You hit the Goals you set for HPRO, EFL and Profit Margins! Your CSI has never been better! Overall, you could not have done any more. Congrats! And, March looks like it is going to take off as well! Your overall strategy is to keep that ball rollin’ baby!
Ok, maybe your February was not as good. Maybe you got close to your Goals, HPRO was near the bar you set, and EFL was just a few dollars under what you felt you needed to get to and maybe your Margins were just under standards. Basically, you are not overly concerned, you felt you got everything you could and March is just around the corner and hey, you couldn’t possibly have two so so months in a row, right? It’s got to get better, doesn’t it?
Perhaps you are the Dealer with the worst month ever. Your HPRO is barely above the minimum you need to keep the doors open, your EFL and Profit Margins are just north of “this really sucks”, and your CSI is about as good as the last Customer who said “I wouldn’t come back here if this was the last place on earth.”
3 completely different results requiring 3 completely different Action Plans.
If you are Dealer number 1, your biggest challenge is finding a new set of Goals that are just out of reach for your Team to go after. Maybe you want to focus in HPRO and set a .2 increase as a new benchmark. Or, you want to increase CSI and are doing it by installing a new process to complete a write-up in the service drive. Whatever it is, you will need to make it harder to reach. “Maintaining Success is more difficult than achieving Success.”
If you are Dealer number 3, it’s all upside for you! Hey, you know you already need a change, Right! Personnel, attitude, training, processes…everything! It’s got to be changed because you cannot hit Profitability Goals and achieve the level of Success with what you have in place right now! Congratulations, this is an exciting and fantastic time to be in your Dealership!
But, if you are number 2, you are in a lot of trouble my friend. Why? Because I left one little “C” word out in the very beginning.
Complacency.
It’s the evil that all Leaders fear more than anything. When you become complacent, you start to die!
If your Management and Leadership strategy sounds like this “Oh, it was just a slow month, and the weather was terrible, and we had some people sick, and the Customers…oh man…the Customers were just mean, nobody wanted to buy anything. They just wanted oil changes. Yep, next month will be better. Don’t worry, because we are not changing anything! All we need to do is just hang on until things get better” then I want you to immediately take out a sheet of paper and write down 3 NEW GOALS for March.
Whatever your HPRO was for February, add .5 to it, whatever your EFL was for February, add $5.00 to it, whatever your Profit Margins for February add 5%.
YOU NEED A JOLT! AN ELECTRIC SHOCK STRAIGHT TO THE HEART OF YOUR DEALERSHIP!
As soon as you have them written down, make a copy for everyone in the Fixed Operations Department, hold a meeting, TODAY!, pass them out and tell them “Failure is not an option!”
Because if you don’t, at the end of March, you will be saying ““Oh, it was just a slow month, and the weather was terrible, and we had some people sick, and the Customers…oh man…the Customers were just mean, nobody wanted to buy anything. They just wanted oil changes. Yep, next month will be better. Don’t worry, because we are not changing anything! All we need to do is just hang on until things get better” and you will be on the road to an entire year of wasted opportunity!
By the way, just to let you know, we are experts here at DealerPro in delivering the shock to jump-start your Dealerships Fixed Operations.
Posted by Leonard Buchholz February 25, 2011
The Hundred Mile An Hour Goat
Two friends are out hunting, and as they are walking along they come upon a huge hole in the ground. As they approach it they are amazed by the size of it.
The first hunter says “Wow, that’s some hole; I can’t even see the bottom. I wonder how deep it is.” The second hunter says” I don’t know, let’s throw something down and listen and see how long it takes to hit bottom.”
The first hunter looks around and spies an old automobile transmission lying in the grass. He tells the other hunter “Hey, there’s this old automobile transmission here. Give me a hand and we’ll throw it in and see”.
So they pick it up, carry it over and count “One, two, three!” and
throw it into the hole.
They are standing there listening and looking over the edge when they hear a rustling in the brush behind them. As they turn around they see a goat come crashing through the brush, run up to the hole and with no hesitation jump in head first!
They are totally shocked and suprised to say the least! While standing at the edge of the hole looking at each other and then looking into the hole trying to figure out what just happened, an old farmer walks up.
“Say there”, says the farmer, “you fellers didn’t happen to see my goat
around here anywhere, did you?”
The first hunter says ” Funny you should ask, but we were just standing here a minute ago and a goat came running out of the bushes doin’ about a hunert miles an hour and jumped headfirst into this hole here!”
The old farmer said “Why that’s impossible…… I had him chained to a
transmission!”
The moral of the story…don’t chain your 2011 Fixed Operations Gross Profit to anything that can be tossed into a deep hole. If your 2010 ended up like a goat chained to a transmission, now is the time to make a plan for 2011.
This is the time to measure what you accomplished or did not accomplish in 2010, what you want to improve in 2011 and plan how you are going to do it.
Goal setting is critical for achieving Success.
Here are 10 0f the most important areas to measure in Fixed Operations and their standards to help you set defined Goals for 2011.
■Labor Gross Profit Margins (75% is the correct number)
■Parts Gross Profit Margins (45% is the correct number)
■Parts to Labor Ratio (80% is the correct number)
■Multi-point Inspection Completion Rate (100% is the correct number)
■Additional Service Requests (30-40% of CP ROs is the correct number)
■ASR Closing Ratio (30-50% is the correct number)
■RO Count to Sold Units (6-1 Ratio is the correct number)
■Effective Labor Rate (90% of Door Rate is the correct number)
■Gross Profit Increase Year over Year (10% or more is the correct number)
■RO Count Increase (Yearly 10% or more is the correct number)
These are the bare minimum numbers for planning next years Goals. By planning now you are keeping yourself from “chaining your goat” to something that can be tossed at the first sign of trouble or adversity, which we all know happens when things are not going smoothly.
Goal Setting with everyone involved will prevent the possibility of 2011 being tossed into a deep hole before it even gets started.
The first hunter says “Wow, that’s some hole; I can’t even see the bottom. I wonder how deep it is.” The second hunter says” I don’t know, let’s throw something down and listen and see how long it takes to hit bottom.”
The first hunter looks around and spies an old automobile transmission lying in the grass. He tells the other hunter “Hey, there’s this old automobile transmission here. Give me a hand and we’ll throw it in and see”.
So they pick it up, carry it over and count “One, two, three!” and
throw it into the hole.
They are standing there listening and looking over the edge when they hear a rustling in the brush behind them. As they turn around they see a goat come crashing through the brush, run up to the hole and with no hesitation jump in head first!
They are totally shocked and suprised to say the least! While standing at the edge of the hole looking at each other and then looking into the hole trying to figure out what just happened, an old farmer walks up.
“Say there”, says the farmer, “you fellers didn’t happen to see my goat
around here anywhere, did you?”
The first hunter says ” Funny you should ask, but we were just standing here a minute ago and a goat came running out of the bushes doin’ about a hunert miles an hour and jumped headfirst into this hole here!”
The old farmer said “Why that’s impossible…… I had him chained to a
transmission!”
The moral of the story…don’t chain your 2011 Fixed Operations Gross Profit to anything that can be tossed into a deep hole. If your 2010 ended up like a goat chained to a transmission, now is the time to make a plan for 2011.
This is the time to measure what you accomplished or did not accomplish in 2010, what you want to improve in 2011 and plan how you are going to do it.
Goal setting is critical for achieving Success.
Here are 10 0f the most important areas to measure in Fixed Operations and their standards to help you set defined Goals for 2011.
■Labor Gross Profit Margins (75% is the correct number)
■Parts Gross Profit Margins (45% is the correct number)
■Parts to Labor Ratio (80% is the correct number)
■Multi-point Inspection Completion Rate (100% is the correct number)
■Additional Service Requests (30-40% of CP ROs is the correct number)
■ASR Closing Ratio (30-50% is the correct number)
■RO Count to Sold Units (6-1 Ratio is the correct number)
■Effective Labor Rate (90% of Door Rate is the correct number)
■Gross Profit Increase Year over Year (10% or more is the correct number)
■RO Count Increase (Yearly 10% or more is the correct number)
These are the bare minimum numbers for planning next years Goals. By planning now you are keeping yourself from “chaining your goat” to something that can be tossed at the first sign of trouble or adversity, which we all know happens when things are not going smoothly.
Goal Setting with everyone involved will prevent the possibility of 2011 being tossed into a deep hole before it even gets started.
Are You Trying to Save Your Way to Profitability?
Getting profitable. Wow. How cool would that be?
You come into the store the first day of the month, open the door to your office, turn on the lights, sit at your desk and open the drawer that you keep your last months financial statement in and read through it until you come to the page that has the final numbers….and you smile a little self satisfied smile….when you realize “we paid all of our bills before we even opened the door this morning.”
Sounds like a science fiction novel? Or a fairy tale?
Maybe…especially if you are trying to save your way into Profitability.
It can be done…no doubt…that first month or two after you have made the cuts in Personnel, and wages (a favorite of all the employees by the way), and supplies, and vendors (they love that thing you do…you know..”Hey dude, I’m not paying $75.00 a car anymore for ding repair, it’s $50.00 now.”), and weekend meals for the Sales Dept…..you know what I’m talking about…and at the end of the second month…Wala…Profit. Right there on the statement. Just like you thought.
Then….the unthinkable happens…even less Traffic…. which you guessed it…. leads to less Sales and that of course takes us to less Profit because there is less Revenue and less of….well…EVERYTHING!
Now what do you cut? More importantly, how can you remain Profitable?
Maybe the question is not “Are my Expenses too High?”….maybe it’s “Are my Profits too Low?”
If this is you, then you need to start looking at Profit Generation and not Expense Cuts. Let me elaborate.
There is an area in your Dealership that has been known to generate Profit….consistently…if it’s being done correctly….it’s called the Fixed Operations or Service and Parts Department. I know….you can’t believe it either….it’s been there all along. Just waiting to be capitalized on.
Let’s present some facts. Now, I’m not picking on anyone, just discussing. Don’t get offended…I’m just the messenger and the alarm sounder.
The average hardworking Salesperson in the average Dealer selling an average New Vehicle will generate an average of $1450.00 in Gross PUS. If the New Vehicle has a $30000.00 sale price, that equates to .048333 or almost .05% average Gross Profit PUS.
Lets look at the Service Numbers. The average hardworking Advisor writing an average of 12 ROs a day will generate an average of $2754.00 in Sales with an average overall Gross of $1636.00 or 59% Gross Profit, per day.
Compared that to the average hardworking Salesperson overall average monthly Sales of 11 Units generating a total average monthly Gross of $15950.00, the average Advisor, well, has the bigger potential!
The average Advisor will generate $32,720.00 in average Gross Profit for the month!
Ok, what’s your point?
Since Saving our way to Profitability is a short term fix (and one sure to demoralize and in some cases, scare the employees), why not invest and allocate available resources into the Fixed Operations? One thing is for sure, the Sales to Gross ratio is a lot better, and the potential for getting even more is a lot greater.
So, which seems the better course of action?
Saving your way to Profitability or Generating More Profit?
You come into the store the first day of the month, open the door to your office, turn on the lights, sit at your desk and open the drawer that you keep your last months financial statement in and read through it until you come to the page that has the final numbers….and you smile a little self satisfied smile….when you realize “we paid all of our bills before we even opened the door this morning.”
Sounds like a science fiction novel? Or a fairy tale?
Maybe…especially if you are trying to save your way into Profitability.
It can be done…no doubt…that first month or two after you have made the cuts in Personnel, and wages (a favorite of all the employees by the way), and supplies, and vendors (they love that thing you do…you know..”Hey dude, I’m not paying $75.00 a car anymore for ding repair, it’s $50.00 now.”), and weekend meals for the Sales Dept…..you know what I’m talking about…and at the end of the second month…Wala…Profit. Right there on the statement. Just like you thought.
Then….the unthinkable happens…even less Traffic…. which you guessed it…. leads to less Sales and that of course takes us to less Profit because there is less Revenue and less of….well…EVERYTHING!
Now what do you cut? More importantly, how can you remain Profitable?
Maybe the question is not “Are my Expenses too High?”….maybe it’s “Are my Profits too Low?”
If this is you, then you need to start looking at Profit Generation and not Expense Cuts. Let me elaborate.
There is an area in your Dealership that has been known to generate Profit….consistently…if it’s being done correctly….it’s called the Fixed Operations or Service and Parts Department. I know….you can’t believe it either….it’s been there all along. Just waiting to be capitalized on.
Let’s present some facts. Now, I’m not picking on anyone, just discussing. Don’t get offended…I’m just the messenger and the alarm sounder.
The average hardworking Salesperson in the average Dealer selling an average New Vehicle will generate an average of $1450.00 in Gross PUS. If the New Vehicle has a $30000.00 sale price, that equates to .048333 or almost .05% average Gross Profit PUS.
Lets look at the Service Numbers. The average hardworking Advisor writing an average of 12 ROs a day will generate an average of $2754.00 in Sales with an average overall Gross of $1636.00 or 59% Gross Profit, per day.
Compared that to the average hardworking Salesperson overall average monthly Sales of 11 Units generating a total average monthly Gross of $15950.00, the average Advisor, well, has the bigger potential!
The average Advisor will generate $32,720.00 in average Gross Profit for the month!
Ok, what’s your point?
Since Saving our way to Profitability is a short term fix (and one sure to demoralize and in some cases, scare the employees), why not invest and allocate available resources into the Fixed Operations? One thing is for sure, the Sales to Gross ratio is a lot better, and the potential for getting even more is a lot greater.
So, which seems the better course of action?
Saving your way to Profitability or Generating More Profit?
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