R this and R that

R this and R that. Which one is the right R for our Dealership? If we concentrate on ROI, what do we lose in ROR? Is it possible to have too much focus on ROR?

Wait. I didn’t explain what I am talking about very well. Ok. ROI is referring to Return On Investment. This “Investment” can be anything. Time, Money, Parts, Labor…anything. And when we “Invest” we have a perceived “Return” we would like to get back.

ROR is Return On Relationship. And this too requires an “Investment.” Of ourselves. That’s why ROR is a little more important (IMHO) than ROI. Because we put “ourselves” in the building of the Relationship, when we don’t get a “Return”, we feel bad about the decision.

If we put a part on a car or give a discount, and the Customer goes sideways or doesn’t come back, we feel the loss of revenue. And when it doesn’t work out, we might mutter under our breath, but we can move past it because we don’t have a piece of us on the chopping block. We can “write it off” as a “bad investment.”

When we start building Relationships we put some of ourselves into this Relationship, and the last thing we want is our Customer to go someplace else to have Service work performed on their vehicle. Our “Return On Relationship” suffers and we have a difficult time “writing it off” because it is about us.

Yes, we need ROI. Profit is important. Revenue is important. We work for MONEY! But, the Relationships we build with our Customers is even more important. Without ROR, every Dealership will fail.

So, what do we do different in Service to build a Relationship that is different from every other department in the Dealership? Not much.
In Sales, do we not strive to build a Relationship or a connection with the Customer as they come on to the lot, call us on the phone or send us an email?

In Sales, do we not have a Sales process to guide the Customer from the initial Meet and Greet through the Sales transaction to delivery and then

Layers of a typical sales funnel. (Photo credit: Wikipedia)

follow-up?

In Sales, do we not advertise for additional business using every media available to us?

In Sales, do we not have a process that every Sales Customer is taken on a tour of the Dealership and introduced to every department so they can make the transition from “Here is a New Sales Customer” to “Here is OUR New Customer?”

In Sales, do we not have one meeting a week at a minimum to generate excitement, introduce upcoming Sales events, reinforce best practices, go over aging inventory, describe specials and define Goals for the coming week/weekend?

So, if we do all of these things in the Sales department, and it is part of the Standard Operating Procedure to build a Relationship with the Customer, why would we do something different in Service?

We wouldn’t. In building Relationships with our Customers, we need to be consistent and Send the same message to our Customers from the initial contact to the initial Service appointment.

In Service, we need to start the ROR process from the moment we first meet the Customer. The strongest message we can send begins with a proper Greeting, a friendly outgoing attitude and a complete and thorough walk around every time they come in for Service.

In Service, we must have a Sales process to efficiently guide the Customer and ADVISE them as to the proper way to MAINTAIN their vehicle so they get maximum life and value from their purchase.

In Service, we must have an advertising budget to keep in contact with our Customers in a manner they have come to expect and taking into account how they want to be contacted. We must be as media savvy as any other Dealership department.

In Service, our ROR process must include a “How to” of the Service department. Everything from “How to make an appointment” to “How will the Advisor advise me on needed services and repairs?”

In Service, we must conduct weekly meetings with our personnel to generate excitement, describe specials, discuss service issues, reinforce best practices and define Goals for the week.

If our Standard Operating Procedure was the same for every Department in our Dealership, would we not have an EXCEPTIONAL Return on Relationship which would give us an EXCELLENT Return On Investment?

One word every Service Department needs.

What would be the one word to describe what a Service Department needs these days to compete?

There are so many to choose from. However, the one word that keeps coming up when I visit Dealerships across the country is adaptability.

The Dealerships that are doing well, adapt to changing market conditions and Customer demands.

Even if this is your first day in a Dealership, you know that the ability to adapt is the key to Exceeding Expectations.

The dictionary tells us that it means to “adjust to new circumstances.” Boy, if that is not the definition or guiding principle of the Service Department these days, I don’t know what is.

If you think about it, the Service Department is the only “gray” area in the Dealership. Everything else is black and white.

We have the part in stock or we don’t. We have the car on the lot or we don't. We can fund you or we can't. We are open extended hours or we are not.

In the Service Department, they don’t have those hard and fast rules because Customers and the situations that Service Advisors deal with are seldom written in stone. It’s more like an “etchasketch.”

This requires a person that is adaptable, flexible and understanding with the backing of an organization that is adaptable, flexible and understanding. Having either without the other won’t work.

And if you have Service Advisors who do not understand this concept or cannot adapt to a Customers Expectations, you will have problems.

When you have staff that are rigid and inflexible, you end up with Customers getting service that they would describe one of several ways. They say things like “Functional, yet cold” or “They helped me but they were somewhat unfriendly” or “I had to yell at them to get them to listen to me” and lastly “What the %$&^ is wrong with you guys?”

On the flip side, if you have personnel that are really trying to work within your Dealership system and are not “Empowered with Authority” you end up with comments like “I have used you guys in the past and I’ll continue, but not as much as I used to” or “I don’t know if I’ll come back, even though your Advisors are great” and “They were ok, but if I find someone else that is closer or cheaper, I’m going to go with them” and lastly “What the *&^% is wrong with you guys? Don't you want my business?”

The Service Department that has “Empowered with Authority” all of their Advisors will consistently outperform and outsell any other Dealer that has not taken that step.

This means Advisors are Trained to be adaptable and flexible and they do what is in the Best Interests of the Customer.

This leads to a Customer experience that can only be described as “Exceptional at Exceeding Expectations” and "spontaneously helpful." And of course results in unsolicited referrals and an increase in business.

Learn to adapt, be flexible, change as needed and Empower with Authority and your Customers will respond with feverish repurchase loyalty and unsolicited testimonials.

“Missed it by that much”

There is an old saying carpenters use. “Measure twice, cut once.”

I recently went to a Dealer to present DealerPro and our Performance Driven Training Program and guess what…I measured once and missed the cut.

I didn’t miss by much. About a 1/16th of and inch or so. When you really think about it, on a small scale, 1/16th is not that much at all. It really does not seem that big a deal.

But miss by 1/16th of an inch when you are calculating something like the square footage of your home and taxes are involved and suddenly you remember things like high school algebra and can quote complex mathematical theories.

The point I am making is everyday we all say things to ourselves like “Oh, it’s ok if I don’t give that Customer a menu because I know that they don’t buy anything” or “I’m not going to worry about that multipoint inspection. They were in just a few months ago” and we give ourselves a pass.

Why?

It’s just a little bit and it won’t make a difference. Right?

I flew 200o miles to present our program to a Dealer that was not prepared to see me because I failed to follow my own process. I got busy with other things and did not “measure twice, cut once.” Can you guess the end result?

It’s never the big disaster that kills a deal. Big disasters almost always start with small decisions that don’t really seem that important when you are making them.

Deciding not to personally call this Dealer and get him on the phone even after we had talked a couple of times, did not seem that big a deal. I mean, everybody reads their email…right? And everybody can read and follow directions…can’t they?

It was only a little shortcut. And it caused a huge miss.

Are your Service Advisors taking those little “shortcuts” because in their minds “it’s just a little thing” and nobody will notice? Are you allowing your Service Team to circumvent, use “choice implementation” or refuse to follow processes that are in place? Are they “missing the cut?”

Take the time NOW to review everything you are doing that is working and everything that is not working and find out why.

Grandma dropped her car off and did not get a multipoint inspection? Why?

Mr. Jones came in for a recall and was not offered a menu? Why?

Billybob the local twice a month customer came in and was not greeted properly? Why?

Silly Sally the Service Advisor did not complete and walk around on her 10 writeups today? Why?

Ms. Coffeecellphone came in and was completely taken care of and even wrote a letter to the owner about her recent service experience. Why?

It’s not just about what is not being done. It also about what is being done correctly.

Find out what is being done correctly… train, show,coach, review, train, show, coach, review, lather, rinse, repeat daily for maximum results.

Do this enough and missing by just a 1/16th becomes a footnote in your Success Story.

Me, I’m back to measuring twice. I hate missing the cut. Don’t you?

“An Enemy Called Average”

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

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?

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”

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!

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

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

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

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

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

How Many Dealerships Would Still Be In Business If They Had 100% Service Absorption?

ALL OF THEM!

Join the 200K Club!

 

DealerPro Training Solutions
THE $200K CLUB

Join the $200K Club … and gain an extra $200,000
Service Gross Profit—Guaranteed!


MORE IS BETTER!

Q: How many thousands of dealers would still be in business if they achieved 100% service absorption?

A: All of them.

Think about it. Are you leaving service dollars on the table?


The Service Gold Mine

Good times or bad, when you keep customers coming back to your dealership for service, you can cover 100% (or more) of your dealership’s overhead. When your service department absorbs all your overhead, that’s 100% service absorption. Some dealerships can even exceed this ideal.


Join the $200K Club

And gain an extra $200,000 Service Gross Profit—Guaranteed!

Serious situations call for serious solutions—DealerPro Training Solutions. So if you are serious about success and having your Service Department pay all your Dealership’s overhead, contact me today at rheywood@dealerprotraining.com



WHY THE DEALERPRO $200K CLUB?

Because a $200,000 increase in Service Department Gross Profit is a very attainable goal. In fact, it is a goal that practically every DealerPro dealership achieves, usually within about a year.

We started the Club to recognize that achievement … and to make it clear to every dealer that there are rich rewards to be had for joining the DealerPro $200K Club.


Training and Gaining

When you join the DealerPro $200K Club, it is an active membership. Every member of your Service team becomes fully engaged in making more money for you.

Fact: Each trained Service Advisor can add the equivalent of 22 more new car sales to your bottom line every month.

DealerPro Guarantees $200K in Added Service Gross Profits!

COLUMBUS, OH—Don Reed, CEO of DealerPro Training Solutions and an NADA Top 10 speaker since 2008, has announced an increased Service Gross Profit Guarantee for automobile dealers nationwide.

This applies for dealers who implement DealerPro’s In-Dealership Performance Driven Training program. This 13-month program installs new policies and processes guaranteed to increase customer pay hours per RO and CSI.

The results from this No-Risk program are so dramatic that DealerPro says a typical dealer will increase Service Gross Profits at least $200,000 within the program’s 13 months. Dozens of dealers have hit this mark and become proud members of the DealerPro $200K Club.

More important, dozens more dealers have exceeded the $200K mark, earning more than $300,000 … and $400,000 in additional Service Gross Profits. One dealer is currently on track to make more than $900,000 additional Service Gross Profits in his first 13 months on the program.

Because dealers are enjoying such tremendous success under the DealerPro Performance Driven Training program, Mr. Reed is providing a Performance Guarantee … and a Money-Back Guarantee as well. “We do the job, or we don’t get paid,” says Mr. Reed.

DealerPro trains Service Advisors to sell, and provides them with the tools for success. The result: 40% or better Increases in customer pay sales … Increased RO count, Increased sales per RO, more incoming calls converted into appointments … and more.

Mr. Reed has more than 20 years experience as a dealer and more than 10 years as a trainer. As a Twenty Group Advisor and consultant, he has helped hundreds of dealerships dramatically improve Service Gross Profits.

“The real growth in Service Gross Profits comes from monthly monitoring and refresher training built into the DealerPro process,” says Mr. Reed. “That’s how we can guarantee success.”

For more information visit www.dealerprotraining.com, call toll-free at 1-888-553-0100 or email Don Reed: dreed@dealerprotraining.com.

DealerPro Announces NADA Convention Seminar Schedule

Don Reed, CEO of DealerPro Training Solution is scheduled to present “Implementing The Four Essentials To Service Absorption” at the NADA Convention in February 2011.

There are four seminars to choose from.

Friday February 4th@1:30pm in Room 2018 West.

Saturday February 5th@1:00pm in Room 303 South Esplanade.

Sunday February 6th@11:00am Room 2016 West.

Monday February 7th@8:30am Room 2016 West.

Don has been a Top 1o NADA Convention Speaker since 2007. He recently completed a seminar schedule in England where he delivered workshops and seminars on The Four Essentials To Service Absorption to Dealer Principals and Service Managers.

You will leave with Action Steps you can take to start increasing your Service Absorption right away.

“The Cheapest Oil Change In Town”

In every market and at every dealer there is the perception in Fixed Operations that cheap oil changes will add profit.



While it is true that cheap oil changes will bring Customers to your door, it is up to you to do something with them when they arrive.

Here are 3 Ways you can maximize the cheap oil change.

■Be “Over The Top” with your Customer Service. Be clean and neat, be accomodating, be prompt, be courteous and be Thankful. Think of the Customer as someone who is test driving your Dealership to see if they like the ride. Give them the best ride possible.
■Do a Complete and Thorough Inspection of the vehicle. Instead of a “27 Point” how about a “Driveability Check” or a “Winter Safety Check” or a “Brake, Light and Fluid Check” in addition to your usual 27 Point Inspection. The object is to give the Customer something that they were not expecting when they came in for “just an oil change.”
■Give them a Reason to Complete Service Work with You. Hey, you advertise, you plan for, you spend money and you lose money on the oil change and then…you don’t give your Customer a compelling reason to have service work completed at your Dealership? What are you thinking?
Making money in Fixed Operations is difficult when you don’t plan for the Oil Change Customer who might or might not be your Customer. It is impossible if you do not maximize the Cheap Oil Change Customers visit.

Not Taking Action Has Consequences

Yesterday I had the privilege of addressing a room of Service Managers and Factory Personnel. And I have to believe that everyone in that room was there to find or gather some new information that would help them take action on something that might be causing them some problems at their Dealerships.

Why would you attend if you had no hope of getting something, right? I hope that everyone one of them got something that they can use right away at their Dealership this week, something they can take action on.

And because I had a long drive home afterwards I started thinking about the consequences of not taking action.

In the Service Department the consequences really multiply quickly.

Lets take a look at John Q. Advisor.

John Q. is a underachiever at ABC Motors. His HPRO is at .9 and his Gross Profit Margin is below 70%. Now, John Q. is not necessarily a bad guy. In fact, he is a likeable and hard-working employee. He comes to work on time and believes he contributing to the overall success of the Service Department.

Johns current performance level is not acceptable. And the consequence of not taking action has verifiable results. Take a look at Johns numbers.

His current HPRO at .9 at the national labor rate of $85.00 an hour equals $76.50 in Gross Labor Sales. His Parts Gross Sales are $61.20 at a 80% parts to labor ratio which adds up to a total of $137.70 per CP Repair Order written. John has been performing at this level for 3 months.

The national average HPRO is 1.5 and by accepting Johns performance it is costing the Dealership money.

How much money?

Adding .6 at $85.00 equals $51.00 in Gross Labor Sales. Factor in the Parts Gross of $40.80 and each RO that John Q. writes is costing the Dealership $91.80 in LOST SALES! John writes an average of 220 CP ROs a month.

That is $20,196.00 per month and over a 3 month period that adds up to $60,588.00! I have to ask you, would you pay any Advisor $20,196.00 extra a month? $252,352 a year?

By not taking action, YOU ARE!

Everyday that John is not Trained and not held Accountable for his performance there is a concrete and verifiable loss. Not only a monetary loss but a performance loss that affects the whole department as well.

Why?

Accepting Johns results sends a message to everyone in the Dealership that a lack of performance is ok and that continued performance at this level is not a concern that needs to be taken care of. In fact John and every employee in the Service Department need not worry about the future. It is secure at ABC Motors.

You know what is worse? John thinks that it’s ok. Should John go to another Dealership for whatever reason, he would soon find himself out of a job, again. Why? Because Underachievers are not tolerated everywhere!

So not only is the Service Manager at ABC Motors costing the Dealership money by not Taking Action, by not Training John, by not holding John Accountable, the Service Manager is perpetuating Poor Performance and Condoning it!

Do you have a John Q. in your store?

Are you suffering the consequences of not taking action? What are you going to do about it!

Increasing Sales and Gross Profits is all in the Plan.

“Your plan for achieving 100% Service Absorption should focus on what you are going to do differently to increase sales and gross profits. It’s not just about advertising and marketing, it’s about processes” says Don Reed, CEO of DealerPro Training Solutions.

Increasing Sales is the one of the core functions of the Management Team (read Service Manager). And quite frankly, is one area that most Service Managers have difficulty doing.

Why?

It’s not that they are incompetent or incapable, it’s that they have so many other duties piled on to them, that the time they allocate to increasing Sales is never enough or is sandwiched between everything else that happens in a Dealership every day. From light bulbs out in the showroom to sprinklers not working to counseling the Service Advisor who has “personal issues” there never seems to be time to do it properly.

If that describes you, you need a plan. And all plans are built on measurements.

1st step, measure how your Advisors are performing.

What do we measure?

Every Service Manager looks at different things because that’s how they learned. You might be a SM that focuses more on Profit Margins and your buddy down the street might look at HPRO. (Hours per Repair Order)

When you are looking to increase Sales though, your view must be very narrow and specific. The focus needs to be on how many ROs did the Advisor write and how many hours did the Advisor produce on those ROs. In other words, how effective is the Advisor in making Sales with the ROs he/she wrote?

If your Advisor wrote 11 ROs and sold 9 hours on those ROs, that would be something that would get your attention as a Service Manager. And, yes, there are ALWAYS extenuating circumstances…. “This Customer never buys anything” or “All I had was LOFs today” or “I don’t know what happened, I just had on off day.”

If you are the SM, you gotta dig into what is going on with your Advisor (and ignore the excuses) because if you don’t know WHY they are not Selling you sure as heck won’t be able to Coach them to Sell more. That’s why it is so important to measure, and when trying to diagnose why Sales are not happening, to measure the Advisors effectiveness by comparing Hours sold per RO vs how many ROs did the Advisor write.

Now that you have dug into the numbers, you can see what Processes are not being followed. Finding out what is wrong is only half the battle.

2nd step, install a Process that the Advisor can follow and will follow (even when the SM is not there).

Here are 5 Common Reasons Advisors have difficulty Selling more.

1.The Advisor does not do a pre-write history check and is unaware of previous recommendations.
2.The Advisor does not conduct a walk-a-round of the vehicle during the writeup.
3.The Advisor does not present a menu to the Customer offering maintenance and services.
4.The Advisor does not make recommendations to the Customer based on observations, the Customers description of concerns or from the vehicles prior history.
5.The Advisor is uncomfortable (in some cases incapable) of making a Sales presentation to the Customer.
These 5 are responsible for more Lost Sales than any other reason in most Dealerships. Did you see any Processes not being followed in the above common reasons Advisors do not Sell?

So, now that you have measured AND you know WHY they are not selling, you can make a plan to address those discrepancies. Before you start, there is one question that you must answer first.

How effective is the Service Manager in teaching the Advisor to Sell?

If the SM cannot teach or coach the Advisor to sell, then part of the Action Plan will be to bring in someone who can.

There is no shame in admitting this if you are the SM. There is shame in allowing poor performance and low Sales through not admitting that you need to have some help in that area. Not every SM has the ability to Coach or Teach someone to Sell. They may have expertise and ability in a completely different area that makes them a strong Manager and it’s this reason they are the Manager.

Different people have different strengths. You need to know what yours are. If you are not good at Coaching or Teaching Sales, then don’t. “If you fail to get the proper kind of instruction, no matter how much you practice, you’re going to get better at making yourself worse.” Bobby Jones, Golfer

Basically, if you need help, get help.

Once you have a plan, you need to set aside a specific amount of time everyday for Training and Followup.

What do you Train on?

Processes, processes and more processes. It needs to be an automatic thought for the Advisor and not one he/she needs to think about.

Do you see the difference? If they have to think about it, it will not get done.

If they automatically do the Process and there are no questions, no “This Customers does not need a walk-a-round ’cause they were in last week”, no do it differently this writeup from the last writeup, and your Advisors have received the proper instruction and coaching, then you will have an increase in Sales.

Why? As Don Reed, CEO of DealerPro Training Solutions likes to say “Processes lead to Consistency. Consistency leads to Results.”

Saving Newbie Advisor

In the movie “Saving Private Ryan”, an Army unit is sent to rescue the last surviving brother for a mother in waiting. The team is successful and Private Ryan returns home to live a life of fulfillment.

Nice story. Great plot. Excellent movie.

What has that got to do with Fixed Operations and Service Advisors?

Well, it is more about what you are not doing than what you are doing. And “Saving Newbie Advisor” could just as well be titled “Saving Every Advisor.” But I chose Newbie because it brings home that in every Service Manager there beats the heart of a Trainer and Coach (at least there should be) , and that last thing we want to do is put Newbie Advisor in a position to Fail.

So the question is, “If I am the Service Manager today, what 3 things would I need to teach my Newbie Advisor so that I could save him or her from the same mistakes that most every other Advisor makes in their respective careers?”

1st, lets teach them How to be Investigatory. In other words, how to ask good questions. Let me give you an example of a bad question. “Would you like fries with that?” Why is that a bad question?

Because everything preceding that question was order taking. Order taking is just that. Writing down what the person told you, putting that into the computer and waiting for the next request. Anybody can learn to do that. Heck, we taught a monkey to fly in space using the very same technique.

Advisors are investigatory. They ask questions that are investigative in nature. “Mr. Customer, I noticed that it’s been 6ooo miles since you had your tires rotated. Would you like for me to rotate them for you today?” or “Mr. Customer, during your last visit we recommended replacing the upper and lower radiator hoses. Has that been taken care of yet?”

2nd, lets teach them how to be Sell properly. A true Salesperson is the ultimate Professional. They study their craft by reading, training and role playing. They leave nothing to chance that is in their direct control. They always know how to respond even if they don’t know what they are going to say.

Too many times our Newbie Advisors are in the position to make a Sale and have no clue how to properly do it. They say the wrong thing or even worse, never say anything at all! They lack confidence to complete the transaction if there is anything outside of the ordinary because they haven’t been trained to deal with the unexpected. (Does Handling Objections sound familiar?)

Lastly, lets teach them how to Listen properly. Listening is a skill like any other. Stop practicing good Listening habits and watch the Sales tumble like BP’s stock after the oil spill. Straight down the Leader board.

Good Listening start with eye contact and paying attention. If you find your Advisors staring at the computer screen and answering the phone when the Customer is standing in front of them, it might be time for a “Saving.”

Saving Newbie and Every Advisor does not need to be a rescue mission if Training and Coaching are a priority and practiced daily. Take a look at your Advisors and see if they are in need of being saved. Teach and Coach How to ask Investigative Questions, How to Sell and How to Listen and watch your Service Sales increase.