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?
Showing posts with label parts gross profit. Show all posts
Showing posts with label parts gross profit. Show all posts
Comfort Zone vs Accountability
As a Dealer, did last year bring you the return on investment that you expected?
As a General Manager did you meet or exceed your net profit projections for the year?
If you are a Fixed Operations Director did you increase your customer pay retail sales for parts and labor over last year?
For all three of you, is your Service Absorption rising year over year? If any of your answers were “NO”, then you must ask yourself...why?
To begin with, your financial statements will show you where the opportunities for improvement (conditions) are but what they won’t show you is how to fix them. To fix them you have to know what’s causing the out of line condition.
Once the cause is determined you can then make the corrections
necessary to properly bring the condition in line with industry guides. For those of you who have ever written a repair order you probably recognized this as the “Three C’s”, Condition-Cause-Correction.
The Technician needs the Condition to properly diagnose the Cause which then enables him to make the necessary Correction. It’s no different for the Dealer, the General Manager or the Fixed Operations director when it comes to making money.
So, now that you have studied your financials carefully to determine the conditions that prevented you from attaining your respective financial goals, let’s determine what the cause might have been. I believe the culprits here are Comfort Zones and Accountability.
Everyone in your dealership has a comfort zone just as you do. The issue is not to get rid of them but to simply move them again and again until you achieve the results you’re looking for and then move them again!
This is important because it enables you to focus on the performance
of your employees. Next, you must hold them accountable for their individual performance.
Currently, most of you are doing that in the New Car, Used Car and F&I departments, which of course is where you devote much of your time and energy anyway, but you fail to do so in the Service and Parts departments.
Allow me to give you some examples to clarify what I’m talking about:
1. If I am a Salesperson and I sold an average of 5 units per month last year, what are you going to do with me? Answer: Train me how to sell 10 units or more per month or replace me with someone who can.
2. If I am a Service Advisor and I sold an average of 1.5 hours per customer pay repair order last year, what are you going to do with me? Answer: I have a job for life!
3. If I am a Sales Manager and my Sales Team averages 5 units per month and my gross per retail unit is at $700, what are you going to do with me? Answer: Train me how to average 10 units per Salesperson and gross $1500 PRU or replace me with someone who can.
4. If I am a Service Manager and my Service Team averages 1.5 HPRO and my Technicians’ productivity is at 80%, what are you going to do with me? Answer: Leave me alone because the other dealers in your 20 Group are about the same!
5. If I am your General Sales Manager and my Sales Team averages 5 units per salesperson, $700 gross PRU, $200 F&I gross PRU and loose $600 per wholesale unit, what are you going to do with me? Answer: I wouldn’t have lasted 6 months let alone a year!
6. 6. If I am a Fixed Operations Director and my Parts and Service Team averages 34% in retail parts gross, 62% in labor gross, averages 1.5 HPRO, shop productivity of 80% with a declining repair order count, what are you going to do with me? Answer: Thank you for being back there because I sure as heck don’t want to fool with that stuff!
Are you starting to see my point?
Most Dealers and General Managers will hold their Sales Team accountable for their performance on a daily, weekly and monthly basis and make any adjustments (moving their comfort zones) on an as needed basis NOW!
Meanwhile their Parts and Service Team remain in their comfort zones to continue to dwell in the land of “underachievers”.
Why does this happen?
My belief is that most Dealers and GM’s are outside their comfort zone in the “back end” of their dealership since their roots are in the “front end.” What can a dealer do to enable him or her to leave their comfort zone and cross over the demarcation line to the back end of their business?
• Measure the performance of the people you intend to manage.
• Your people must know that you are measuring their performance.
• Their performance will be compared to industry benchmarks.
• They must understand that they will be held accountable for achieving or exceeding those benchmarks.
Simply say what you mean but more importantly mean what you say. Again, most dealers don’t hesitate to do this in their Sales and F&I departments. Start making it happen in Fixed Operations.
Now I want you to rid yourself of the usual whiny excuses that I here from dealers when I’m speaking to 20 Groups, Dealer Associations, Dealer groups or individual Dealers. It doesn’t matter whether it’s north, south, east, west or rural versus metropolitan. I hear this all across the U.S.,
Canada and the United Kingdom:
“Don, you don’t understand, my market is depressed.”
“Don, you don’t understand, my Service Manager has been with me for a long time.”
“Don, you don’t understand, I can’t find an Advisor that’s any better.”
“Don, I don’t want to run off my customers by up selling”
Well folks, here is what I do understand.
A depressed market has nothing to do with accountability for performance.
Time on the job does not dictate a good performance on the job.
If you can’t find better people, look harder because they are out there. If you or any of your people are afraid of “running off customers from up selling” then you need to get out of the retail business of selling parts and service. (By the way, the aftermarket already has 70% of your customers’ maintenance)
Don’t you think it’s time to get out of your comfort zone and make the return on your investment that you deserve? Please, drag your Fixed Operations Team out of their comfort zones and start holding them accountable! Once they stop kicking and screaming they will all make more money, they will be happier and your customers will realize you have the best dealership in town.
“The entrepreneur always searches for change, responds to it, and exploits it as an opportunity.” -Peter F. Drucker
Don Reed
CEO
DealerPro Training Solutions
“Pro Solutions-Pro Results”
As a General Manager did you meet or exceed your net profit projections for the year?
If you are a Fixed Operations Director did you increase your customer pay retail sales for parts and labor over last year?
For all three of you, is your Service Absorption rising year over year? If any of your answers were “NO”, then you must ask yourself...why?
To begin with, your financial statements will show you where the opportunities for improvement (conditions) are but what they won’t show you is how to fix them. To fix them you have to know what’s causing the out of line condition.
Once the cause is determined you can then make the corrections
necessary to properly bring the condition in line with industry guides. For those of you who have ever written a repair order you probably recognized this as the “Three C’s”, Condition-Cause-Correction.
The Technician needs the Condition to properly diagnose the Cause which then enables him to make the necessary Correction. It’s no different for the Dealer, the General Manager or the Fixed Operations director when it comes to making money.
So, now that you have studied your financials carefully to determine the conditions that prevented you from attaining your respective financial goals, let’s determine what the cause might have been. I believe the culprits here are Comfort Zones and Accountability.
Everyone in your dealership has a comfort zone just as you do. The issue is not to get rid of them but to simply move them again and again until you achieve the results you’re looking for and then move them again!
This is important because it enables you to focus on the performance
of your employees. Next, you must hold them accountable for their individual performance.
Currently, most of you are doing that in the New Car, Used Car and F&I departments, which of course is where you devote much of your time and energy anyway, but you fail to do so in the Service and Parts departments.
Allow me to give you some examples to clarify what I’m talking about:
1. If I am a Salesperson and I sold an average of 5 units per month last year, what are you going to do with me? Answer: Train me how to sell 10 units or more per month or replace me with someone who can.
2. If I am a Service Advisor and I sold an average of 1.5 hours per customer pay repair order last year, what are you going to do with me? Answer: I have a job for life!
3. If I am a Sales Manager and my Sales Team averages 5 units per month and my gross per retail unit is at $700, what are you going to do with me? Answer: Train me how to average 10 units per Salesperson and gross $1500 PRU or replace me with someone who can.
4. If I am a Service Manager and my Service Team averages 1.5 HPRO and my Technicians’ productivity is at 80%, what are you going to do with me? Answer: Leave me alone because the other dealers in your 20 Group are about the same!
5. If I am your General Sales Manager and my Sales Team averages 5 units per salesperson, $700 gross PRU, $200 F&I gross PRU and loose $600 per wholesale unit, what are you going to do with me? Answer: I wouldn’t have lasted 6 months let alone a year!
6. 6. If I am a Fixed Operations Director and my Parts and Service Team averages 34% in retail parts gross, 62% in labor gross, averages 1.5 HPRO, shop productivity of 80% with a declining repair order count, what are you going to do with me? Answer: Thank you for being back there because I sure as heck don’t want to fool with that stuff!
Are you starting to see my point?
Most Dealers and General Managers will hold their Sales Team accountable for their performance on a daily, weekly and monthly basis and make any adjustments (moving their comfort zones) on an as needed basis NOW!
Meanwhile their Parts and Service Team remain in their comfort zones to continue to dwell in the land of “underachievers”.
Why does this happen?
My belief is that most Dealers and GM’s are outside their comfort zone in the “back end” of their dealership since their roots are in the “front end.” What can a dealer do to enable him or her to leave their comfort zone and cross over the demarcation line to the back end of their business?
• Measure the performance of the people you intend to manage.
• Your people must know that you are measuring their performance.
• Their performance will be compared to industry benchmarks.
• They must understand that they will be held accountable for achieving or exceeding those benchmarks.
Simply say what you mean but more importantly mean what you say. Again, most dealers don’t hesitate to do this in their Sales and F&I departments. Start making it happen in Fixed Operations.
Now I want you to rid yourself of the usual whiny excuses that I here from dealers when I’m speaking to 20 Groups, Dealer Associations, Dealer groups or individual Dealers. It doesn’t matter whether it’s north, south, east, west or rural versus metropolitan. I hear this all across the U.S.,
Canada and the United Kingdom:
“Don, you don’t understand, my market is depressed.”
“Don, you don’t understand, my Service Manager has been with me for a long time.”
“Don, you don’t understand, I can’t find an Advisor that’s any better.”
“Don, I don’t want to run off my customers by up selling”
Well folks, here is what I do understand.
A depressed market has nothing to do with accountability for performance.
Time on the job does not dictate a good performance on the job.
If you can’t find better people, look harder because they are out there. If you or any of your people are afraid of “running off customers from up selling” then you need to get out of the retail business of selling parts and service. (By the way, the aftermarket already has 70% of your customers’ maintenance)
Don’t you think it’s time to get out of your comfort zone and make the return on your investment that you deserve? Please, drag your Fixed Operations Team out of their comfort zones and start holding them accountable! Once they stop kicking and screaming they will all make more money, they will be happier and your customers will realize you have the best dealership in town.
“The entrepreneur always searches for change, responds to it, and exploits it as an opportunity.” -Peter F. Drucker
Don Reed
CEO
DealerPro Training Solutions
“Pro Solutions-Pro Results”
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
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.
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.
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.
Service Absorption Rule #3
“Maintain a 6 to 1 ratio of C/P RO count to total vehicle sales” says Don Reed, CEO of DealerPro Training Solutions.
That sounds simple enough. If you are currently selling 100 New and Used a month, then that pencils out to 600 Customer Pay Repair Orders per Month, not including Warranty and Internal. It’s the CP RO count we are after.
So, you just realized that your RO count is low, right? What are you going to do about it? If you are thinking that you need a big production that costs a lot of money and the only thing that you can do is advertise to get more Customers in the door, think again.
Certainly advertising can be a part of the overall strategy to bring customers back in. “You don’t need to spend more money-you need to spend more of your money wisely” says Don. Which means that you need to look at reallocating some of what you already spend elsewhere (Sales) and give it to Service where you can realize a much better ROI.
“The average dealer is spending $500 to sell a new customer while spending $8.40 to keep the customers they have.”
And, if you do the math on a 500 RO (Customer Interaction) Service Drive and the typical 100 car store, you can expect to pay $50000.00 to get results that are somewhere north of say $145,000.00 in Gross Profit from the sale of those cars, or, you can spend $5000.00 in your Service Department ($10.00 per Customer) for a $153,000.00 Gross Profit return.
Thats 30 times over what you invested…vs a 2.9% ROI in Sales. 30 times! If I asked you to give me a $10.00 bill and I told you that in exchange for that $10.00 I would give you back $300.00, would you do it? Of course you would!
While advertising is part of the overall strategy and is part of your planning, it is another tool to be used in conjunction with everything else you do in Customer retention and marketing.
In fact, there are at least 20 different things that you can do right away (in the next few months) that will have an immediate impact on your RO count. Most of them require nothing more than a little elbow grease and awareness.
Send me an email at lbuchholz@dealerprotraining.com and put “Send me the 20″ in the subject line and I’ll send you back 20 ways you can increase RO count in your service department.
In the meantime, measure your current numbers using the 6/1 Rule and see where you stackup. If you are struggling, it might be time for a fresh look.
Getting to 100% Service Absorption is a decision. Decide to have better Absorption this year
That sounds simple enough. If you are currently selling 100 New and Used a month, then that pencils out to 600 Customer Pay Repair Orders per Month, not including Warranty and Internal. It’s the CP RO count we are after.
So, you just realized that your RO count is low, right? What are you going to do about it? If you are thinking that you need a big production that costs a lot of money and the only thing that you can do is advertise to get more Customers in the door, think again.
Certainly advertising can be a part of the overall strategy to bring customers back in. “You don’t need to spend more money-you need to spend more of your money wisely” says Don. Which means that you need to look at reallocating some of what you already spend elsewhere (Sales) and give it to Service where you can realize a much better ROI.
“The average dealer is spending $500 to sell a new customer while spending $8.40 to keep the customers they have.”
And, if you do the math on a 500 RO (Customer Interaction) Service Drive and the typical 100 car store, you can expect to pay $50000.00 to get results that are somewhere north of say $145,000.00 in Gross Profit from the sale of those cars, or, you can spend $5000.00 in your Service Department ($10.00 per Customer) for a $153,000.00 Gross Profit return.
Thats 30 times over what you invested…vs a 2.9% ROI in Sales. 30 times! If I asked you to give me a $10.00 bill and I told you that in exchange for that $10.00 I would give you back $300.00, would you do it? Of course you would!
While advertising is part of the overall strategy and is part of your planning, it is another tool to be used in conjunction with everything else you do in Customer retention and marketing.
In fact, there are at least 20 different things that you can do right away (in the next few months) that will have an immediate impact on your RO count. Most of them require nothing more than a little elbow grease and awareness.
Send me an email at lbuchholz@dealerprotraining.com and put “Send me the 20″ in the subject line and I’ll send you back 20 ways you can increase RO count in your service department.
In the meantime, measure your current numbers using the 6/1 Rule and see where you stackup. If you are struggling, it might be time for a fresh look.
Getting to 100% Service Absorption is a decision. Decide to have better Absorption this year
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