According to the latest
NADA statistics, The Fixed Operations Department only
accounts for 12% of the total revenue when in fact it
produces over 60% of a dealership's net profit. Dealerships
typically gross 5% on new cars, 12% on used cars, and 38% on
parts; yet they gross an incredible 70% in the service
department. Obviously, the quickest way to increase gross is
to sell service.
Consider the closing ratio of ups to sales in variable
operations. It's about 30%, or for every 100 people who walk
through the door you sell about 30 cars. However, in fixed
operations the closing rate is 100%. Nearly every person who
walks through the service door produces revenue for the
dealership.
If a boatload of prospective clients showed up on your sales
floor every morning to shop your inventory we are certain
you would take the appropriate action to capture their
attention. Why not take the same action on your service
sales floor? After all, it is the backbone of your business!
Moving Forward
I'm on one of my regularly scheduled service training visits
at a well established, family owned & operated Chrysler
Dodge Jeep store in upper Michigan. I was observing the
service drive process, as I do each day during my training
visits, and I observed a service advisor doing a proper walk
around inspection on a customer's car with the customer
present. Knowing this certainly builds value in any sales
presentation I watched the advisor, Mike, pull fluid samples
from the master cylinder and power steering reservoir while
providing & illustrating the samples to the customer. After
all was said & done, Mike made an up-sell of a necessary
flush due to contaminated power steering fluid.
This went on throughout the day and of course I was pleased
that everyone was utilizing proven and effective tools
learned from our training course. I stepped outside the
service bay to watch from a distance and I witnessed an
elderly woman pulling into the service drive. She handed her
keys to the advisor as they exchanged pleasantries, then the
sweet little lady walked away to the customer lounge. I
thought perhaps she had an appointment or she was returning
for previous recommendations during a previous visit. After
all, there had to be some reason for not performing a
service history review or walk around inspection with the
customer present. I asked the service manager, Tom, to look
at the repair order and I was a bit taken aback. The RO was
for a simple oil & filter special.
You may be thinking to yourself that's not too surprising;
well that's what I thought too. As part of our process in
service training we require that 100% of the customers have
on their repair order a copy of the service history. This
proves to eliminate or reduce the amount of time that a
technician has to spend reviewing a particular vehicle, thus
reducing down time with extra personnel pulling files and
researching concerns.
Moving on, I observed that the same technician, Joel, had
been the technician on the previous services for the last
year and a half for elderly lady. This particular service
history report indicated an alarming statistic. As I always
explain to advisors that a service customers car is like a
crime scene accident; there are plenty of tell tale signs to
observe a customer's driving habits and maintenance history.
As I continued to look this car over I watched Joel change
the oil & filter, check the tire pressure, refill the
crankcase, affix an oil sticker reminder on the windshield,
back the car out and park it. I was completely baffled.
After he parked the car in the lot I asked, "Please do me a
favor, Joel." He says "Huh", so I repeat my request and he
complies, but of course with a bit of apprehension. You see,
as Joel was backing the car out of his service bay I stood
behind the car and noticed some abnormalities from a
standing view only. Joel brought the vehicle back on his
rack and proceeded to lift it for my inspection. Prior to
the car being placed back on the rack I had requested that
the General Manager, David, as well as the Service Manager,
Tom, be present with me while I review important
inconsistencies within this process.
So there we were, four men standing under this late model
sled. Now, keep in mind that I am still holding the repair
order in my hand and am continuing to review the service
history as I question this particular vehicles previous and
current inspections. I ask Joel, "Do you think that this car
had that left front c/v boot still intact when it was here
around 7,500 miles ago?" He answers with an "I don't know."
So I ask him again, "Joel, do you think that it is possible
that this car had that c/v boot here 15,000 miles ago?" He
repeats his previous answer, "I don't know." Around this
time is when the GM starts getting worked up and asks "Well
what exactly do you know?" Joe responds calmly with, "Mrs.
Johnson never buys anything; she only comes in when her car
is due for service."
I for one admired his blatant honesty; on the other hand I
thought this guy had to be a loon to be so bold to come back
with an answer like that. I finish my questioning by asking
Joel, "Do you think that she never buys anything due to the
fact that you have never recommended her to have the
necessary repairs and maintenance done?" He boldly says,
"Maybe".
I proceeded to point out that the c/v boot was indeed
missing, the axle joint was dried out and loose, and the
front tires were worn beyond belief. Reminder: This is upper
Michigan; it gets very cold here in the winter time.
I requested that the GM and the Service Manager stay with me
through the following steps. I got the parts department to
give me a P & A, (price & availability), and then requested
that the SM reserve a loan car for Mrs. Johnson. The SM
responded by saying "She won't need it; she only has her oil
changed on a regular basis." I stood there shaking my head
back and forth thinking that this poor management is the
reason that processes stop and profits soon follow. I looked
at the GM and he was also concerned.
I walked into the customer lounge and introduced myself to
Mrs. Johnson, lovely lady, and walked through the sales
process accordingly. I told her that I could see that her
husband had certainly been a great influence on her when it
came to servicing her car. She said "Yes, I was taught to
always bring my car in every 3 months or 3,000 miles. Since
his passing I have to remind myself when the car is due for
service." All I could do was smile. I told her that we
valued her business as well as her continued dedication in
allowing our team to be her choice to perform the scheduled
maintenance on her car. After all it is our duty and
privilege to deliver a safe and reliable vehicle back each
and every time we are visited. I also explained to her that
at times we don't always perform our duties as required, in
short, sometimes we make mistakes.
Mrs. Johnson was very understanding and said she appreciated
my honestly. I explained to her that the left, front
constant velocity boot had come apart and that this is the
part that keeps important front suspension and driveline
components lubricated and safe. I told her the boot was in
fact missing and because of this, her front tires were worn
and needed replacing. While explaining that this was not her
fault, the components just wear over time, I mentioned that
the cost of the repairs would be $759.00. This included both
front tires, as a result of the front suspension concerns,
the c/v joint and boot replacement, as well as the labor
associated with the repairs. I let her know we would be able
to start the repairs today, provide her with alternate
transportation and we would have the vehicle completed early
tomorrow afternoon. I asked if we should get started and she
thanked me, requested that we retrieve her garage door
opener from her car and authorized the repairs.
The moral of the story is not that the customer won't
purchase, the fact is that the work force refuses to follow
protocol when it comes to job performance & duties as
prescribed in the dealership employee handbook.
So what is it costing you to continue to follow examples
like this? This was a true story; the names were simply
changed not to humiliate those responsible for this
scenario. This could have had a dreadful consequence as a
result of terrible follow through and poor execution of
proper processes.
Ask yourself the following questions:
Are your managers short stepping important processes?
Do you think as a result of poor processes that your current
condition will continue to eat a hole in your wallets and
result in loss of customer satisfaction and future new car
sales?
When inspections become mandatory for 100% of all qualified
vehicles it becomes important to all parties involved. I
recently read of a Mazda dealership that had a customer
appreciation day and they held a contest to see who could
perform the best inspection. Keep in mind, this is the
service advisor with the customer, after all, isn't that
what our advisors are supposed to do?
Always recommend necessary maintenance suggestions based on
fact and make quality presentation based on needs,
importance, and safety. By allowing your staff to make a
judgment call on your customers' behalf is an accident
waiting to happen? If technicians and advisors alike allow
just one customer to slip through the cracks this will open
the door for another after market (your competition) to keep
and possibly forever retain the most important commodity any
dealership principal has...Your customers. I have yet to
meet a customer that would choose the safety of their family
over the cost of a needed component or a service repair. Our
customers are purchasing value...Period.
If you are looking for ways to increase customer loyalty and
future sales and gross profit margins, then its time to
contact me. Our team will design a personalized
dealer/franchise specific business plan that will eliminate
the probability of poor inspections like the one mentioned
earlier in this article.
Change only starts when the management is willing to accept
responsibility and provide a means for supporting a process
that eliminates poor performers within your dealership.
Expect performance and demand excellence. Also require daily
service & parts sales reporting from your management team in
your fixed department. If you want things to change, make
this process a job description in their everyday
responsibilities. "It's not personal, its business."
In closing, we must understand that buyer's objectives are
not always rational. In fact, objectives are often based on
emotion. It is a must that you respond to the customers'
emotional needs, along with the obstacles preventing them
from buying. Value must be built into every aspect of the
selling as well as the buying experience if we want to build
long term relationships.
Jim Bernardi is President/CEO of AutoPro Training Solutions,
a National Fixed Operations Training Solutions Company. Jim
has over 30 years of experience in the automotive industry
and has held such positions as Dealer, General Manager,
Administrator, Director of Operations, District Operations
Manager, Parts and Service Director and Service Advisor. He
is also the Publisher/CEO of Automotive Dealers Network, a
Global Automotive e-Newsletter that addresses every aspect
of Variable & Fixed Operations. Jim has been asked through
the years by dealers nationally to help them put his ideas
to work in order to improve their bottom line. He has had
dramatic success delivering uncompromising results & value
to dealers nationwide.
E-mail Jim at:
jbernardi@autoprotraining.com
And Visit:
www.autoprotraining.com
To reach him direct:
812-325-5651
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