Category Archives: Service Department

WOW Your Service Customers

Tomorrow morning on your way to the dealership, do a little experiment just for fun. Count how many places you could go to get your oil changed. Count them, I dare you. You do not even have to count the other car dealers…they are not your real competition; it is the independent shops that you should worry about.

Count them. Count all of the Goodyear, Firestone, and Sears stores you see. Count the Pep Boy’s, NTB’s, small independents, and quick lube shops and as you count, and count, and count…keep this in mind: These guys are not stupid. They are aggressive and they know what they are doing. They focus on convenience, price, and quality, and they advertise. They play hard, and they have a thriving business, because you failed to keep your customers in the first place. They not only cost you serious service income, they also break the important customer relationship cycle that should take place from the sales department to service and back to vehicle sales over the lifetime ownership of a car.

Now, before you throw in the towel, let me give you the good news: It is not too late. All you have to do is get serious about customer retention and be willing to make some changes in the way you think about your lost and existing customers. Instead of only thinking about how to attract new customers, you have to focus, and be willing to spend time and money, on giving customers a reason to never go anywhere else.

Start by doing things that make your dealership stand out in the minds of customers: Things that impress customers and make them say ‘WOW!’ It is the little things, like valet parking their car when service is completed, reviewing invoices, and making sure they understand what they are paying for, and of course, always do what you say you will do, make sure your customers feel special, and know just how important they are to your dealership’s future. Make your dealership a fun place to be, hold bingo games in your customer lounge, and give away free oil changes to the winners. Once or twice a year have customer appreciation parties, monthly new customer orientations, send out newsletters, and offer special service discount days for loyal customers. ‘WOW!’

You also have to aggressively go after your lost service customers and get them back in your store. You have to get creative and entice them to give you another chance. And when they do, you have to ‘WOW’ them to ensure they will never go anywhere else, ever. Remember, it is the little things that make customers feel special, like free car washes anytime with no purchase necessary, honoring all competitors’ coupons, no expiration dates on service reminders, and showing you really care with consistent follow-up and fast resolution when problems arise.

‘WOW’ your customers and they will ‘WOW’ you back. They will become loyal. They will visit more often. They will bring their friends. They will spend more, be easier to up-sell and, because they have a relationship with you, they will buy more cars from you. WOW!
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Randy Johnson is president of Car People Marketing, a leading provider of customer retention and service marketing systems for auto dealers. He can be reached at 866-227-7337 or email rjohnson@carpeoplemarketing.com.

Your Service Department is Not a Democracy

Recently, I received a call from a dealer who had attended my workshop at the 2011 NADA Convention, and he asked if I would answer some questions for him regarding his service department. I said, “Sure,” so we had a good conversation about what he needed to do in order to improve his service and parts sales performance. During the course of that conversation, he stated he had written down one of my quotes from the workshop and had used it during his previous day’s managers’ meeting. I asked him what quote he was referring to and he stated: “You are not running a democracy.”

The point I was making is that, as a dealer, you are the ultimate decision maker. As a dealer, do you need to take a vote every time you want to make a change in policy, process or personnel? Do you really need anyone’s vote other than your own? Assuming you own the store, aren’t you the one who’s made the investment in property, equipment, inventory and personnel? If so, then don’t you deserve a good return on that investment? If you answered “Yes,” then why do you think you need permission from any employee to make a change in anything?

Let’s assume your service department’s productivity is running at 120 percent. Great job! You have two open bays with lifts and you ask your service manager to hire two more technicians so you can sell more appointments, increase customer pay sales and raise your service absorption as a result. Then, the first words out of your manager’s mouth are, “Ralph and George (technicians) each are using two bays. They would be very upset if we hired two more techs and gave them their two bays, so I don’t think this is a good idea.” What do you do? Do you need the buy-in of your three employees before you can make a decision?

Here’s another thought. You have a very good F&I department currently averaging over $1,000 per retailed unit by doing a great job selling from their F&I menus. You then decide to implement a service department maintenance menu to properly train your customers on preventative maintenance and increase service sales. You pay a professional to design it for you and install it on your advisors’ computers. You then have all of your advisors professionally trained on how to make a proper feature/benefit presentation of the menus just like you did with your F&I producers. A couple of weeks go by, you sit down with your service manager to review your advisors’ performance reports, and you find that your HPRO, profit margins and sales per RO have not improved at all. You ask your service manager, “How can this be happening?”

He responds with, “The advisors just don’t have the time to use those menus.” What do you do? Before you answer that question, understand this: There are only two reasons why advisors are not presenting menus to 100 percent of your service customers: 1) they don’t know how to or 2) they don’t want to. Now, you’ve already paid to have them professionally trained, so clearly they should know how to. They just don’t want to. You see, they did not buy into the training and the new process of presenting menus. Do you need their buy-in to implement this new process?

How about you decide you want to train your service and parts managers to become more effective and productive managers by measuring the performance of their respective employees every single day and using those measurements to compare their performance to the industry benchmarks and thereby hold them accountable for their individual performance. You feel it’s important that these managers become proficient at reading, understanding and evaluating their departments’ financial statements to build a plan and focus on achieving 100-percent service absorption. Your managers respond with, “I don’t have time to do all that stuff.” What do you do? If your managers do not have time to do “that stuff,” then they’re not really managing. Do you need their buy-in to do the job you hired them to do?

By now you should have a pretty good idea that I don’t have much empathy for people who don’t buy into change when it comes to improving customer satisfaction and retention, increasing profitability, and giving dealers the kind of return on their investment they deserve. Here’s a news flash: There are dealers who are losing money in their fixed operations because of the lack of buy-in by employees to change. Hold them accountable to change, or replace them! You don’t need their vote.

You think I’m too harsh? You think because someone has worked for you for a number of years that they shouldn’t be held accountable for their performance? Does tenure make them a top performer? Please answer the following questions:

1. What do you do with an F&I producer who can only average $200 per retailed unit?

2. What do you do with a salesperson who can only sell four cars a month?

3. What do you do with a sales manager who won’t take a T.O.?

4. What do you do with a used car manager who doesn’t have time for an appraisal?

I’m guessing your answers were a little harsh. Most dealers have accountability in place for the sales departments. Your processes are not optional based on who buys into them, are they? Why should fixed operations be any different? You are not running a democracy.
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Don Reed
CEO, Fixed Ops Solutions
DealerPro Training Solutions

Without A Vision, Profit Potential Is Reduced

It’s been said, "The mind cannot achieve what it cannot perceive." Dealership service departments are losing thousands of dollars, because the service manager does not have the true perception of what his department could really produce. After all, according to last year’s financial statement, labor and parts dollars have increased this year. However, last year’s profits could have been so much better, based on technician proficiency at 85%, stall utilization at 53%, service advisor selling techniques as "order takers", and one-line repair orders at 65%.

Last week I received a call from a regional manager of a major auto manufacturer, who asked, "Why can’t service managers get their employees to work together to accomplish a single objective?" There are several key elements that are needed in developing the path toward greater profits. The number one factor is a concise vision of what the service department can accomplish. It’s important to establish realistic achievable goals. Goals will force strategy. The service manager must know his break even point and just as important, how to generate a 20% net profit; the monthly service expense divided by the current gross profit percentage, less 20 points, which will equal the labor sales necessary to generate a 20% net profit. Successful service managers must communicate their vision to every employee in the department. The service manager should sit down with each team member and help work out realistic goals. These goals should include long-term as well as short-term objectives. The service team should agree that the vision is realistic and obtainable. Through constant reminders, proficiency reports, and communication, the employees are kept informed of how close they are to achieving the goal. Many service managers have met with failure, because of their inability to communicate with their employees.

The service manager should help develop teamwork through trust and respect. There must be integrity, a commitment to customer enthusiasm, employee accountability at all levels, a passion for winning, and a dedication to continuous improvement. Someone once said, "Without a vision, the people perish." Without a vision in the service department, profits will be lost. Labor time if not used today, will be lost forever.

Develop a management team that shares your vision. Empower your employees to make good, sound business decisions with training and communication. Allow your employees to take ownership of your vision by giving them the opportunity to help establish goals toward achieving your plan.
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David Brown, president of Brown & Associates consulting firm has 34 years experience in the automotive field, including 16 years with the GM Parts Division and Chevrolet Motor Division. If you have questions or comments about this article, call 866-578-8773 or email him at brownassoc@charter.ne.

Why There are No Statues to Committees

Check out this too common circumstance:

[list:179xwzj6]1. Customer enters service drive.

2. After reception, vehicle parked waiting for technician.

3. Tech retrieves vehicle and begins service.

4. Tech determines parts list and orders.

5. Tech completes service and parks vehicle.

6. Paperwork pushed to front.

7. Customer goes to cashier and gets upset over price.

8. Customer finds vehicle not fixed right.

9. Managers saves the day by providing free rental, free fix, and TLC.

10. Customer tells 30 people that their service sucked.[/list:u:179xwzj6]
There is likely plenty of blame to pass around, and a management detective could analyze into the minutiae seeking answers, but is the devil really in these details?

Captain who?
The number one issue above, and in too many shops, is that everyone and yet no one is responsible for ensuring that every serviced vehicle is managed properly, from reception to completion. So, while each service and parts employee is likely embracing their partial, but significant, contribution to the ultimate result, there is no one actually responsible for the entire process. Consequently, when the results do not turn out well, it is everyone’s and yet no one’s fault, since no one is in charge of the final product.

Today’s service department organizational configurations are often so poorly structured, there is almost no possibility to continually service a volume of vehicles well, unless the jobs are simple, everyone is in a first-class mood, and most importantly the customers have low expectations.

What’s missing?
In the real world, individuals responsible for exacting accomplishment (technicians, etc.) should not be 100 percent responsible for their minute-by-minute performance without interaction, management, direction, structure from a, lets call him/her “job boss.” I do realize that there are unique individuals who are capable of completely managing themselves to the very highest of standards without any need for tutoring; and if you have 10 percent of your staff in that precious category, that would be extraordinary.

Everyone has heard the “there is a reason there are no statues erected to committees” idiom. Committees are not effective in quickly and competently meeting needs. Agendas stall in committees and debates always seem to take precedent over action. Committees serve more as a protection than action mechanisms, especially since no one has to take the blame when things don’t work out.

The service committee
Today’s service managers, especially in larger operations, are preoccupied with a plethora of activities not directly related to serving the current batch of customers. The only time they may ever devote themselves to current customer activities is to solve a customer complaint. It’s not remotely possible for these mostly hard working folks to attend to today’s patrons, so the customers are left to what is essentially a “service committee.”

That group would include, but not be limited to, greeters, writers, technicians, parts counter people, porters, and cashiers. Think about it, none of these employees report directly or regularly to anyone during their daily activities, and none have a 100 percent stake in the outcome of the actions of the committee. They just perform their part, end of story. If any management is conducted with the committee, it is reactive to an already created crisis.

Not one is indisputably responsible for managing the total outcome for the customer, only bits and pieces of self-management buried in the total outcome. How easy is it to hide or under-perform in this environment? Everyone literally sets their own performance standards, and this service committee approach to accomplishment protects them from overall responsibility.

The job boss
The highest quality outcome (read customer retention) in the service business results from independent shop owners, who take individual ownership of the outcome of every job. They are literally the “job bosses” from start to finish and if anything goes wrong, they carry the burden regardless, and then they make certain the issue doesn’t occur twice. Of course, because of their direct supervision in the workings of all parties creating the outcome, the results are seldom a problem.

So what is a frustrated service manager to do? I’m saving that for the next column. Write me if you have contemplation about this subject.
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Ed Kovalchick is the CEO and founder of Net Profit Inc., an international fixed operation consulting and training firm located in Alabaster, AL. Kovalchick and his firm have assisted hundreds of dealers and manufacturers and conducted workshops for thousands of students since 1979. He has written columns for Dealer magazine since its inception.

Why There Are No Statues: Part Two

I had a wonderful compliment paid to me by a large Mercedes dealership service manager the other day. He said he especially liked the “sarcasm” in my articles. I say, you can’t beat the opinion of an individual who would subject himself to a vehicle with two point five relays for every switch.

Organ-i-za-shun
In a recent column, I bellyached about the lack of organizational structure in dealer service departments today, citing the fact that the no one is actually in charge of minute-by-minute activities. Indeed, considering that the only management is usually mummified in a hidden office, dealer service departments run themselves, driven primarily by the pressures of fulfilling individual employee expectations (and some reactive management of course).

Individual expectations, you say? Yes, expectations of earning a paycheck, maintaining a job, keeping the customer from getting ticked off, ensuring the service manager’s threats are satisfied, and even keeping the significant other happy. “Individual expectation accomplishment” is achievement based on a pushing versus pulling process (i.e. do it or else), something common where there is no leadership. So what’s the problem?

The results are the problem. The employees’ levels of performance are individually determined based on each employee’s “need” and self-motivation to perform. Consequently, the service managers who have hired a larger ratio of “pushed” employees, excelling in individual expectation accomplishment, manage the better performing shops. Okay, so what’s wrong with that?

Anyone out there?
There is an old adage: “Ninety percent of the people make it happen. The rest watch it happen.” That leaves a small segment of prospective employees to hire, who do not require constant leadership to perform at the highest level of excellence. How many of you have to interview 10 candidates to find two or maybe just one?

Of the thousands of shops I have visited, self-accomplishment is equivalent to this ratio with the technicians, for example. In a 10-man shop, one to three techs will be superstars, five to eight will be acceptable to marginal on any given day, and one or two who the manager will not allow to work on his or any relative’s vehicles, just the customers’ cars.

What winning organization has 10, 20, and 30 employees per manager? The bottom line is that the missing management is the assistant service manager staff, commonly called service advisors, consultants, writers, and late for lunch. While these folks are often paid and beat up similar to service managers, they don’t have or take full responsibility for managing the customer needs from start to finish; in fact, no one does.

So, depending on the day, the excellence of service will depend on the current character, capability, disposition, and personal situation of each employee to which the vehicle is subjected. After all, who is looking?

How did this happen?
When dealerships were small there was one manager (a former tech) and a couple of techs. As the departments grew (in the 1950s) more techs were needed and that meant the manager needed an assistant, the assistant service manager, to help generate repair orders and manage the shop throughput.

As dealer shops continued to grow into the late ‘60s and ‘70s, additional assistant service managers were needed, and the service manager moved into a purely supervisory role, with no repair order writing. But wait; wouldn’t it be more beneficial financially to hire clerks instead of assistant managers? So the first service clerks were invented as a means of saving money. Who knew these minions would ultimately become the highest paid non-managers in the whole dang dealership?

Geez Beav, back to basics
The good news is, no pay plan changes are needed. What is needed is redefining employee roles and ultimate accountability. The service advisor has to be, at minimum, an assistant service manager, in charge of and accountable for the actions of everyone in service who interacts with a customer’s vehicle, or does that make too much sense?

I think we all agree that the customers, since they are the actual payroll clerks, are the ultimate bosses, so to speak. Take care of the bosses and everything else is lovely; it’s an axiom we can live by. Someone must be assigned to the important task of providing excellent customer service day in and day out; and that employee is the service advisor. No one else has the unique opportunity to interact with everyone involved in the outcome.

“My writers are not qualified to be managers, they can’t handle that responsibility,” a service manager may say. There is only one advantageous answer to this plausible statement.

A competent service manager knows what has to be done, so if that is you, do it. In the end, you will have a longer and more rewarding career, and you deserve that just for sticking with it.
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Ed Kovalchick is the CEO and founder of Net Profit Inc., an international fixed operation consulting and training firm located in Alabaster, AL. Kovalchick and his firm have assisted hundreds of dealers and manufacturers and conducted workshops for thousands of students since 1979. He has written columns for Dealer magazine since its inception.

Winning the Price War in the Service Department

A customer that is requesting a price is one of our biggest challenges in the service and parts departments. Many times those questions come in the form of a phone call and always, it seems, at your busiest times. Some dealerships have even gone so far as to not quote prices on the phone. However, price shoppers actually represent a good opportunity to increase our business if handled correctly.

Many price shoppers already have at least one price — or at least the perception of a price — and sometimes several prices at their disposal. Don’t just blurt out our price on request! If you do, your chances of getting the job are not good and you’ll also be building negative price perceptions in your marketplace.

We have to understand that we are probably not the lowest-cost service provider in our market due to our higher labor and OEM parts costs. Therefore, you must build value before you quote any prices.

To start with, when asked for a price, always answer a question with a question. For example, if a customer says, “How much is your brake job”, you should ask, “What kind of vehicle do you have?”, or “What kind of symptoms is your vehicle exhibiting that makes you think your brakes may need replacement?”, and, “Would you be more interested in the original equipment parts, or a less expensive but lower quality aftermarket part?” In short, you’ve got to get more information from your customer so that you can sell your product or service more effectively.

Once you’ve gathered a little information and have a conversation going, you can then begin educating the customer by explaining the benefit and quality of what we do. Let’s take a specific example: If a customer called me and asked the price of an oil change, and I say, “$24.95 plus tax”, have I enhanced the value of my product above my competitors? Of course not. By only stating a price, the customer would continue shopping until he or she found a better price. And when they found that lower price – which they will – then not only will they go to the lower priced competitor, but you will also be tagged in that customer’s mind as “highpriced”.

Now, how does this sound: “Sir/Maam, our lubrication service includes changing the engine oil and replacing the oil filter with a genuine factory oil filter. We perform a 15-point inspection of your vehicle’s key operating systems, we top off all fluids at no additional charge, and we wash your vehicle. All of this is just $24.95 plus tax, and we can complete the entire service while you relax in our waiting room.” Now, doesn’t that sound better than just saying “$24.95”? We’ve just elevated our oil change to a much higher quality level.

Now I know that it sounds like a lot of time and effort spent selling a product that doesn’t give us much profit, if any. But we’ll make even less if our technician’s stalls are empty. Look, this is a win-lose-draw business. On some work, we’ll win. On some work, we’ll draw. On some work, we may even lose. But it’s important to remember that we’re in a relationship business, not a transactional business. You can’t focus on any one specific transaction. We want to build a long-term relationship with the customer. As a Service Advisor, I want all my customer’s work. That’s how I can increase customer retention and build long-term customer loyalty.

Think about this: dealerships start with 100% of the customers. We sell all the new cars. But, by the end of the warranty period, we have less than 30% customer retention in our service department. Imagine the effects on your business if we could improve that to just 50 or 60%. It’d be huge!

If we make an intelligent and value-building presentation on all of our services, even (and especially!) an oil change, we have an excellent chance of selling the customer. And, if we handle the customer well when they come in, we have an excellent chance of having the customer return to us. When he returns to us, we’ll make money. And that’s what customer retention is all about! All of this comes from spending an additional 20-30 seconds explaining an oil change to remove price as the primary issue.

Now I know that Service Advisors don’t always have the time to spend to make a good presentation. What are you supposed to do when they have two customers waiting and the phone’s ringing? You’ve got to call the customer back. There’s no advantage in trying to juggle a waiting customer and quickly process a phone call. You’ll do neither well. Instead, you should say to the phone customer “Mr. Customer, I have another customer with me at the moment. May I call you back in less than 10 minutes with the information you need?” But what if the customer is just calling to ask the price of an oil change and doesn’t want a call
back?

If you’re going to give them the price now, then you must spend the extra 20-30 seconds to do it right. Your waiting customer will probably be surprised at all you do on an oil change. Just don’t shortcut the process, ever, or you’re both wasting your time and sending the message that we are high priced.

And that’s how you lose the pricing war in your market.
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Written by Coker Automotive Consultants
3409 Lorna Lane
Birmingham, AL 35216
Phone: (205) 978-8993
Email: info@cokerconsultants.com

Why is it so Hard to Find Quality Technicians?

Have you ever heard dealers say that they cannot find quality technicians that have the work ethics they are looking for, or dealers that say that there must be something wrong with our education system because they cannot find employees that share their passion for the auto industry?

The fact is it is tougher today to find employees with the right skill sets to meet the needs of the typical dealership service department. Yet today the business of education is bigger than ever. Unfortunately it has lost its friendliness and ability to respond to community needs. Education has grown out of control, not because of how effective it is, rather because of laws and regulations that prevent the education system and schools from working with industry so that their students can meet the needs of industry at the local level. How did this happen? How did the Perkins Vocational Education Act get so out of hand?

There have been many books and articles written about the importance of early childhood development, how young children are different and what can be done to better prepare the next generation to live and prosper in our society. So why is it as an industry we typically recruit new employees today the same way we recruited them two and three decades ago?

A few weeks ago I had an opportunity to speak with a friend of mine, Dr. Vickie Markavitch, Superintendent for a large school district in Oakland County, Michigan about how education and industry partnerships have changed.

She indicated that today’s students learn differently than they did in the past.

“Today’s students have grown up with computers, digital music, cell phones, electronic games and the Internet,” said Dr. Markavitch. “What many businesses must realize is that today’s students are tomorrow’s market customers and workers.”

So how did this happen?

The answer is simple. We the community and industry alike have allowed this to happen. We allowed it by not being involved with the education system at the local level. Don’t believe it? Ask yourself, “What have I done with my local education system to ensure that students graduating from my local high school meet my criteria as an employee at my dealership?” Those attributes like punctuality, effort, work ethic, patience and unselfishness, to name a few, are especially important and yet we as parents, community leaders and industry members alike are not consistent in our requirements for the perfect employee.

The reality is, good employees are not simply born, they are developed, which requires a certain amount of nurturing by employers to develop good employees who meet their needs today as well as tomorrow. For example, when I spoke with Dr. Markavitch, she shared with me a story about a small business that contacted its local high school; it seems that the company wanted to design a new corporate logo. A company employee spoke with the graphics design instructor and created a school project for students to design a new logo for the company.

“This company liked the design so much that they have had the school create things such as business cards, company letterhead and brochures,” said Markavitch. “Since that time representatives from the company can be seen on campus regularly working with the students and instructor, which has ultimately improved our graphics design curriculum.”

Another example of a small business getting involved with its school district that Dr. Markavitch shared was that of a local landscaping company that worked with high school students to develop designs for a local park entrance.

“Since that time, this company has hired many of our students as co-op students interested in horticultural and landscape design. This is an excellent way for students to learn first hand about the industry,” Markavitch said.

According to the U.S. Department of Labor, in 2006 there were 692,570 automotive service technicians in the automotive industry. Franchised dealerships employed 254,700 (37 percent) in the same period, according to NADA. In addition, according to an Automotive Retailing Today (ART) poll conducted by Harris Interactive there are currently more than 36,000 service department vacancies in U.S. dealerships.

When I talk to dealers and they say that they cannot find good service technicians in their area, one of my first questions is, “What are you doing to attract your quality employees?”

What I hear is amazing. Dealers have done everything from place advertisements in local newspapers, radio and TV to hiring the proverbial “head hunter” to find qualified candidates. However, when I ask them about what they are doing in their local education community to develop the next generation of employees, they look at me like I am crazy!

What I find incredible is that the automotive industry as a whole has worked with several education organizations for many years. Organizations like Association for Career and Technical Education (ACTE), National Automotive Technicians Education Foundation (NATEF) and SkillsUSA are just a few examples. In addition, the automotive service industry is somewhat unique in that it already has the framework for developing the next generation of service technician, both male and female, through the Automotive Youth Education System (AYES) (http://www.ayes.org).

AYES is specifically designed to encourage young people, while still in high school, to consider a satisfying career in the retail automotive service industry. I don’t know of any other industry that sponsors such a program. To be successful, dealers must also work hand-in-hand with these schools to ensure that these students have the fundamental skills to be long-term, loyal employees after graduation.

In addition, several AYES sponsoring OEM’s also offer two-year associate degree programs in automotive technology, where students learn exclusively on specific manufacturers’ products and technologies (an ideal place for that AYES student to continue their education, I might add). Programs like Chrysler’s College Automotive Program (CAP) (http://www.chryslercap.com) and General Motors’ Automotive Service Educational Program (ASEP) (http://www.gmasepbsep.com) are examples of programs available to help dealers meet tomorrow’s need for technicians today.

In addition, Automotive Retailing Today (ART) has a program called “Hire the Heroes,” where dealers can hire discharged military veterans. This program has many benefits for dealers who participate, which I will not get into in this article, other than to say the benefits include employee maturity and the G.I. bill to help with college expenses.

Did you know that according to the U.S. Census Bureau every year for the next four years there are almost 10 million new drivers reaching the age of 16? And each of the new drivers will be looking for work (not to mention transportation) and making their career choices based on their experiences.

The bottom line is, there is a lot of opportunity in our industry and we all share the burden of making sure that our education system meets the need of our industry by providing a work force that matches our expectations. It is time to stop complaining about how difficult it is to find quality technicians and start growing them! If we all work with our local educational system, whether it be by getting involved on their local curriculum advisory council, talking with students about our industry or giving students co-op opportunities, it is a win-win situation. Frankly, what I have seen is when dealers engage in their local educational system, the system is more likely to graduate students with the right amount of communication and technical skills to keep their service departments successful for years to come.

Let’s not forget that we are all tax paying businesses so it is in our best interest to ensure the best education is being delivered to our future work force each day school is in session. In fact, a recent J.D. Power Service Usage and Retention Study found that vehicle owners who are pleased with the level and quality of service provided by their dealership are far more likely to return for future service work; and that level of quality service starts in the classroom!

Let me leave you with a final thought. Employee loyalty starts with employee development, and employees you invest in are typically more loyal employees.
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Michael A. Collins is the national manager, career and technical education, Chrysler Academy School of Technical Training, Chrysler LLC.

Why Service Managers Fail

An entrepreneur, aka your Dealer Principle – is a person who organizes and manages a business undertaking, assuming the risk for the sake of profit.

Why Service Managers Fail:

Many service managers measure their success by the manner in which they handle customer complaints, how they nurture their relationship with the manufacturer or by their friendly relationship with the people within the dealership.

Many service managers fail when they don’t have an accurate read on the daily activities in their department.

Many service managers fail when they simply react to problems in contrast to being assertive, analytical, motivational and proactive.

Many service managers fail when their department hasn’t grown in proportion to the new customers generated by their true partners, the sales department.

Management is not so much about authority as it is about influence, and the only effective way to develop that influence is through good communication.

Management is about getting people to want to do what you want them to do. It’s about connecting with people: your staff, your customers, your boss and your manufacturer. It’s about leadership: establishing priorities, setting goals, getting things done and making things happen. It’s about being creative, resourceful, logical, determined and focused. Managers remove barriers to improve performance. Managers avoid playing favorites. Managers must be viewed as credible and competent to lead, and managers must have the ability to show their people what good performance looks like.

As leaders, managers provide their staff with something they can’t provide themselves. People wouldn’t need leaders if they always knew what to do. Employees need help in seeing what’s possible. They need direction on how to proceed and the confidence to take action. Managers help their staff believe in themselves.

If you are new in your management position or are contemplating a career change, consider the importance of gaining the following information.

You want your Dealer Principal to be satisfied with your efforts—find out why your predecessor left. Ask your Dealer Principal what his expectations are and write it down. Ask your Dealer Principal what your scope of authority is and write it down. Find out what your employees expect from you and write it down.

In essence, your mandate is to be mindful of entrepreneurship. Establish priorities and accomplish an overall improvement to the following objectives: retain more customers, improve customer satisfaction, increase retail labor and parts sales, minimize expenses, hire the best people, develop the very best in your staff and create a pleasant working environment.

With your full knowledge of the service advisor’s role, provide your people with job descriptions and a list of your expectations. Your expectations should include specifically how your people are to interact with every customer, toward each other, their punctuality, attendance, cooperation and accountability.

If your people are well trained and empowered with the autonomy to carry out their responsibilities, this action will take most of the heat off you, the service manager. The net result is more control over your time, time to coach and motivate and time to measure your department’s progress.

Let your people make mistakes. Encourage progress, not perfection. Use job performance appraisals and let your people know how they are doing. You’ll be amazed how this approach contributes to morale and getting things done.

When your people know what’s expected of them, and you trust their decisions, support their efforts, reward them with acknowledgement of their good work, customer paid sales improve, CSI improves and customers come back.

Good luck!
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Written by Rick Boudreau
Director Of Service Training
Automotive Sales College

Why The Service Department’s Best Customer Should Pay ‘Door’

The used car department is the service department’s best customer, if you look at the sheer volume of vehicles originating from one source. I would argue, however, that the common practice of discounting service rates internally is flawed. Dealerships will actually reap more profit if the service department charges the used car department ‘door rate.’

Currently, service departments charge discounted rates so the used car department can keep the cost of the vehicle down. It is reasonable to think that the lower the cost, the higher the resulting gross. That reasoning neglects the additional gross profit that could be generated in the service department. It also doesn’t account for the all-too-common side effect of used vehicles being stuck in service because service management perceives they don’t make as much gross on used vehicles.

Two cars come into the service department at the same time: One internal car at a rate of 45 dollars an hour and a customer’s car at a rate of 80 dollars and hour. Which car is serviced first? If the service department is busy, the used car may sit there for days.

As any GM or sales manager knows, the majority of gross is made on a car the first five days the dealership has the car. This is why it is critical that every car gets out on the front line within a day or two. Every day that a used car sits in the service department is a day that the potential profit on that car drops.

I know what used car managers are thinking: If they were charged full rates by the service department, they would not be able to charge a competitive price and their gross would drop. Again, that reasoning is flawed. In my experience, as well as in published studies, the gross you get is the gross you get. Most used car departments work from cost up. So the cost of the car plus the cost of repairs becomes the base cost, the desired gross is added to that, along with market conditions. The sales managers know the bottom line gross profit they need. When that figure is reached, the salesperson tells the customer that’s the lowest they can go. The sales manager and salesperson may have to negotiate a little harder, but they will still make gross. Every department makes more gross. The service department profits because of the increased rate, the parts department profits since we are not discounting the parts, and even the used car department benefits since the vehicles are coming to the line faster and are being sold faster.

For the intrepid souls who want to test this theory, results can be easily tracked via reporting tools available in a DMS with integrated fixed ops and sales modules. I am confident that not only will the reports show the RO dollars on used cars going up, but also the average age will decrease and the gross in the used car department will be unchanged, if not higher. Overall, this combination results in higher net profit for the dealership.
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Mike Esposito is president & CEO of Auto/Mate Dealership Systems, makers of AMPS (Automotive Management Productivity Suite), a comprehensive DMS with more than 20 integrated modules. He can be reached at mesposito@automate.com or call 518-371-4331 for more information.

Why Customers Put Off Maintenance

Sixty-four percent of vehicle owners have put off vehicle maintenance and repair. It is difficult to quantify how much money that would amount to in your service and parts departments, but it’s enough to matter. The top reasons they put off maintenance are as follows:

[list:2nze1va3]• 65 percent are afraid that the cost would be more than expected.

• 34 percent do not have the time.

• 28 percent do not believe the needed repair or maintenance is serious.[/list:u:2nze1va3]
How many of those reasons are within the control or at least influence of your service consultants? All of them, of course. Here are a few ideas that will help overcome these objections.

Costs More Than Expected
Offer an “Ironclad Price Guarantee.” There are monetary pitfalls to this, of course. It will be necessary to prepare your team for this change in culture. Most service departments believe that accurate estimates for some repairs are impossible; perhaps that is true. However; for the majority of the work a typical shop performs today, an accurate estimate is quite reasonable. Once you create your process and guarantee, promote it as a reason to do business with your shop – “We have an Ironclad Price Guarantee” – it will differentiate you from the other shops and overcome the top objection. The true test of your culture will come when someone misses an estimate by $200. What do you do—try to bump the customer or stick to your guarantee?

Don’t Have Time
Offer shuttle rides to and from anywhere as long as it is close enough to make sense. There are still many stores that will drop people off but not bring them back to the store when the work is done. Have you forgotten that the customer pays your bill when you bring them back? Do not make it difficult to do business with you; bend over backwards to make your business accessible and people will spend money with you.

Offer very cheap rental cars that are immediately available. Many stores use an outside rental agency, and the wait for the vehicle to arrive turns this benefit into a handicap. Do not make your customers wait. Remember, making your dealership easy to do business with wins every time.

Offer pickup and delivery of the customer’s vehicle. I understand the logistical challenges; at one time I had a small herd of retired folks shuttling cars. If you really want to make this work, you can. Hire an on-demand staff of retired folks, have a log (written or electronic) to track the dropoffs and pickups and assign one person to manage the process. I had one of the drivers who was very organized manage it. Customers will actually pay you for this convenience, by the way. Set the price based on the cost of your drivers plus gas, but keep the price as inexpensive as possible. Take a map and draw circles around the store’s location and continue out to a point that becomes impractical. Each ring has a set price. Think of this as a marketing strategy and not a profit center, much like oil changes.

Not a Serious Problem
Train your service consultants how to respond to the perceived need of the repair/maintenance. Most of your customers do not understand how their vehicles operate or what work is important. Your customer’s opinion is heavily influenced by hearsay from conversations with equally uniformed people. Train your service consultants to speak about the repairs/maintenance needed in the future in great detail. This conversation is more than the statement: “Next time we need to do the 45,000-mile maintenance.” They need to create value and explain why it matters and why do it at your store.

Your service consultants should have three solid reasons to complete the most common repairs/maintenances. This sounds simple but it is not. Test your team, ask them for three solid reasons to rotate tires, change the air filter or replace the fuel filter.

There are six reasons that motivate consumers to complete work on their vehicles:

[list:2nze1va3]1. Safety
2. Reliability
3. Appearance
4. Comfort
5. Money
6. Performance[/list:u:2nze1va3]
Most consumers have one of these as their primary motivator. If you discuss reliability as the reason for the repair, but the consumer is motivated by money, your chances of selling that repair are greatly diminished. There are many more ideas that impact the customer, but this should get you thinking. It is very easy to ignore some or all of these. After all, you have probably tried some in the past and they did not work so you stopped, or you know someone who failed, etc. Do not ignore these points; they matter. Remember, dealerships perform less than 25 percent of all repairs completed on vehicles. How good can we be? Do something today.
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Hal Scott
President/CEO
Automotive School of Management
HScott@AutoDealerMonthly.com