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Wayne George

Wayne George

Author's details

Name: Wayne George
Date registered: April 8, 2013
URL: http://www.ncm20.com

Biography

Wayne joined NCM Associates, Inc. in June 2000 as an Executive Twenty Group Moderator. Prior to his joining NCM, Wayne has spent 29 years in the retail automotive world. He was also a charter member of the NCM General Managers Top Twenty Group for 7 years. Wayne’s background is in accounting and general management. Having had P&L responsibilities for the last 15 years, and having performed duties in all areas of dealership operations, makes Wayne well prepared for his moderator position. Wayne has the unique abilities of being able to look at the numbers and identifying what is going on behind the scenes, and then provide the insight for making effective changes in any operation.

Latest posts

  1. More Manufacturer Recalls Are Coming: Here’s Your Checklist to Make the Most of Them — November 17, 2015
  2. Five Tips to Build Your Most Successful Forecast Ever — November 13, 2014
  3. Positioning Your Store in the Recall Era — May 27, 2014
  4. Show Me How You Pay Them and I Will Show You How They Work — January 16, 2014
  5. Debunking “Retail Recon”: Why Your Used Cars Aren’t Competitive — March 14, 2013

Most commented posts

  1. Debunking “Retail Recon”: Why Your Used Cars Aren’t Competitive — 2 comments

Author's posts listings

Wayne George

More Manufacturer Recalls Are Coming: Here’s Your Checklist to Make the Most of Them

recall

Experts believe that we’ll see more frequent and larger automotive recalls in the future, as regulatory agencies increase their scrutiny of the automotive industry. After a record-breaking number of recalls in the last few years—and today’s highly publicized emissions concerns—it looks like that is a safe bet.

Fortunately for dealers, though, owners report that they are pleased with service during recalls. The J.D. Power 2015 U.S. Customer Service Index Study found that “overall satisfaction among customers who take their vehicle to a dealer for recall-related work improved to 789 on a 1,000-point scale, up from 777 in 2014.”

It’s clear that while recalls may strain the service department, they present a great business opportunity for your dealership. Here’s my checklist to help your dealership get the most out of manufacturer recalls.

First, the basics:

  • The primary goal of every recall should be to retain all your current customers by providing them with exceptional customer service.
  • The second goal is to “WOW” any first time or former customers during this visit in order to make them or recapture them as service clients.
  • Every recall comes with problems, so get your team together and create plans that address anticipated issues.
  • Make sure every vehicle serviced is handled as you would a customer pay repair.

Now, how you can make a stellar impression and secure more customers:

  • Make sure your team has a plan in place that assures an email address is captured or verified for every recall customer that comes into the shop.
  • Specifically identify any new customers or former customers. These are people new to your area, customers that have never returned for service or customers you once serviced that have not been in during the last 6 months.
  • Have a promotional package of “Welcome” or “Welcome Back” materials that will bring these customers back to you for future maintenance. Do not sell any repairs or maintenance during this visit. Only complete the recall repair unless something is specifically requested by the customer, or if you discover a problem with a safety related item.
  • Be sure that your Service Manager (not a clerk or an advisor) contacts every one of these “newly found” customers after their visit. We want to know how the repair visit went and also want to take the opportunity to welcome them back for future service.

Have manufacturer recalls positively or negatively impacted your business? What steps have you taken to ensure you’re getting the most from these opportunities? Tell us below.

Permanent link to this article: http://blog.ncm20.com/2015/11/more-manufacturer-recalls-are-coming-heres-your-checklist-to-make-the-most-of-them/

Wayne George

Five Tips to Build Your Most Successful Forecast Ever

Take Notes

There are many dealerships every year that embark on forecasting exercises. There are many that do not because their past experience has not been that productive. Let’s explore some techniques and tips that can help you come up with numbers for 2015 that will make your goals much more achievable.

Tip #1: Start with the end in mind.

By working backwards when building a forecast, you will be forced to address some issues that normally are overlooked. If we start with the desired Net Profit for the store, we can work backwards from there. If 2014 will result in net profits of $1.5 million dollars, the first approach to forecasting 2015 will be to dissect how we got to $1.5 million. Here are some questions that will need to be answered very honestly and candidly:

What percent of the gross produced did we retain? Were we a 30% net to gross store or did the $1.5 million come to the bottom line after we spent 85% of the gross (15% net to gross)?

Is any sub-par retention of gross an expense control issue or is it a result of sales and service volumes and lagging gross production?  (Hint – we all know it is usually a little of both).

If you are already netting out at 35 – 40% net-to-gross, then how much more can be produced? Small increases in sales and service volumes will produce huge increases in net dollars.

Did your management team have any input in setting the 2014 goals? Were all of the goals reasonable or was there some “fantasy” in the numbers?

Tip #2: Determine the total store net profit that should be produced before all “other Income” is accounted for. This becomes the objective for all departments in total.

Once you have decided on a reasonable Departmental (Operational) Net Profit number, assign each department their share of profit they will be responsible for generating. Now it’s time for the hard work. Each department head should be tasked with an exercise that has them identify any expenses that can be eliminated or reduced from this year’s operations. This will create your operating budget for 2015.  Now that you have that expense budget, you can start forecasting for sales and gross numbers. Then, run a test and see if the sales and budget will reach the desired net.

This is now the critical stage. Be very suspect of any increases in sales volumes, sales grosses, service volumes and gross, etc. If those numbers were that easy to do, why would you not already  be hitting them? Be relentless in your questions. Make the team develop action plans with timelines that will support their numbers. If the 2015 market is similar to this year, we know we can’t get better by just continuing to do the things we are currently doing; some things will need to change.

Tip #3: Give the forecast enough time.

Start this process well before December 31st. Be prepared to meet with your team over a few weeks. Break it up in steps that can be digested and allow time for buy-in. Defensive postures will diminish with time. Be sure their action plans are reasonable and measurable.

Tip #4: Set some stretch goals.

The forecast should not be the destination, but just a stop along the way. Ask your team for some stretch goals after the forecast is done. Don’t mention this until the last meeting when the numbers are finalized (this will help prevent sandbagging). Then reward them for achieving both sets of numbers.

Tip #5:  Review and adjust accordingly.

Once every three months there needs to be a formal “Forecast Meeting” where all of the agreed to objectives are reviewed. Adjustments are OK if warranted by a sudden shift in the market. But, if it is due to poor execution of their plan, it will require a separate conversation.

Make the numbers crystal clear, create the plans to reach them, execute the plan, and then hold everyone accountable.

Good selling.

Permanent link to this article: http://blog.ncm20.com/2014/11/five-tips-to-build-your-most-successful-forecast-ever/

Wayne George

Positioning Your Store in the Recall Era

reacall

Every recall comes with a certain amount of pain and customer discontent. Some of the current recalls that have been announced are extremely volatile. So what, if anything, can you do to keep your entire store’s mindset positive and in a position to continue to thrive and grow?

Some of the ideas worth sharing are just a repeat and reinforcement of basic fundamentals when dealing with customers. During times of stress we will want our people executing fundamentals as opposed to showing frustrations with a challenging situation.

So where should we start?

Well, why not call a team (store) meeting and openly discuss what the most current recall is going to challenge everyone with? If we can clearly communicate the problem and provide everyone in the store with a common goal or two when dealing with these issues, we stand a better chance of retaining, or even recapturing an upset customer. Let the staff offer some of their own suggestions for ways to address the current recall. Some of the front-line folks might have better suggestions or solutions than we can provide them with. Insure the staff that the goal will be to come through the situation with a stronger, more loyal owner base. Keep them engaged and modify any plans quickly if unforeseen problems occur.

We will have a chance to “WOW” many customers during these events. So identify the most likely issues with the recall and make a plan to be sure that your people are empowered to turn a customer into a raving fan when the issues arise. You will also have the opportunity to re-engage with customers that, for whatever reason, have abandoned your store as their place for service. Everything possible should be done to recapture these defectors. New customers that have never been to your store will show up. If they are within a 5 to 10 mile radius of the store, be sure you have a plan to blow them away with customer service.

Make sure your people resist the urge to sell anything that is not safety related. Absolutely do your multi-point inspections, but turn down the sales pitch a notch or two. There can easily be a follow up on non-sold repair recommendations handled by your staff a few days later. Safety items, however, always need to be addressed.

Be sure your staff is taking the opportunity to verify, capture or update all contact information in your system regarding email, cell phone and physical address of every recall customer. Offer these folks some sort of “return visit” incentive. For example:

  • $15 off scheduled maintenance within the next 60 days
  • Free alignment checks
  • Discounted oil change packages

You get the idea. Have your people help with this promotion. And lastly, be sure you contact the customer after the visit and check on how everything went while they were in.

These are all basics, but in looking at the near future, we are in for many weeks and months of this — so let’s be sure the entire dealership staff is looking at this as a positive situation for the long term health of the store.

service

Permanent link to this article: http://blog.ncm20.com/2014/05/positioning-your-store-in-the-recall-era/

Wayne George

Show Me How You Pay Them and I Will Show You How They Work

moneyMany years ago, one of my first mentors uttered this well-known mantra. I knew what he meant, but I had no idea at the time how true his words were. Over the years I have found that, just like many of you in the retail world, crafting an effective pay plan is much harder than it sounds.

In fact, one of the most frequent requests of our NCM 20 Group and NCM Consulting clients is help with pay plans. Almost every group meeting we prepare for has at least one request for members to provide copies of pay plans for various positions. We also get numerous calls and emails every month looking for pay plan templates for all aspects of dealership operations. If only it was as easy as a template.

What I and many of my colleagues have learned over the years is that a good pay plan in one dealership may or may not work in another dealership. There are so many variables to take into account that we can’t just deploy a pay plan from one dealership into another without some careful consideration. In fact, there is no such thing as a perfect template. These cookie-cutter approaches work at various levels of effectiveness, and not always in the best interests of all involved.

So rather than share another dealership’s pay plans, let’s take a look at one possible way to develop your own. I have been using this method for years with fairly good results. Did every pay plan from this method work? No, but many more have succeeded than have failed. The success rate is fairly good if the correct amount of thought and research is invested when developing the plan. So let’s get started.

Make it Competitive, but Fair

The first consideration of any pay plan is making sure it is competitive and fair to all parties involved. If it is structured properly, there will be little need to adjust or change the plan if compensation dollars go up. A properly designed pay plan will allow for income growth to the associate as long as operational results are going up proportionately. The plan will stay within the key expense guidelines for that job as a percentage of the gross produced by that associate.

Decide How Much the Job is Worth

With that in mind, the first step is to decide how much the job is worth in your market if performed slightly above average. Using the service advisor position as our pay plan challenge, we have determined that in our sample market this job is worth $6,000 per month for an advisor doing an above-average job. The next question, then, is how much does doing a good job pay? Again we have determined that we would need to pay at least $6,800 per month for a good job, and a great job would pay $7,500-plus.  Now we can build on this information.

Identify the Desired Activities & Results

The next and possibly most important part of this process is to develop a list of the activities, duties and results that are what you want the focus of the pay plan to address. You will want to create a list for yourself of your desired activities and results. What will be the associate’s focus? Will it align with yours?  Here is a partial list of some activities an advisor should perform:

  • Sell as many labor hours as possible in a professional and ethical way – Gross related.
  • Treat every customer with respect and as if they were a family member – CSI related.
  • Maintain an effective labor rate that is a reflection of a balanced mix of work written up.  No unauthorized discounts.
  • Present and sell menus and recommended services to every customer based on time and mileage of vehicle – Gross and CSI.
  • Greet every customer at their vehicle and do a walk-around with every customer – Gross and CSI.
  • Proactively communicate with customers throughout the day to keep them informed of the status of their vehicle – CSI and Gross.
  • Close and cashier and deliver all tickets that are ready for customer pick up – Salary related.
  • Cover for other service advisors when they are not at work or unavailable – Salary related.

Every list will be a reflection of what is important relative to the store’s goals and culture. You need to determine the priorities. The differences in every operation are what makes pay plans so difficult to overlay. But this approach means that the pay plan has not only become the method of earning dollars, it also provides the framework for a job description of that position based on the culture and goals of the store.

Prioritize the Activities

Once you have identified the non-negotiable job duties, it is time to categorize the duties in order of importance. For this example, let’s assume that my list was built in order of what I think are most important. Now assign them a value as a percent of the total compensation package.  In this store, we want at least 50% of the writer’s pay to come from selling or producing something – you decide what your percentage is. At 50%, that calculates to $3,000 per month. CSI in our sample store would be worth 15% of total monthly comp, or $900.  We always want some flexibility in any pay plan, so reserve 10% each month for spiffs and other targeted activities — $600. That leaves 25% ($1,500) as unallocated.  For this store we will assign that as salary.  Because these are monthly calculations, you may need to craft the numbers around how often you pay.

Document the Plan

The process now becomes a math exercise to document the actual pay plan.  How many hours do you want your techs to produce? Once you decide that number, then each advisor will be responsible for producing their share of the total hours needed to be sold to keep the shop full. How many dollars will the sale of those hours produce? How much Gross? You can do these calculations based on your store’s historical performance data. With this information, you can then decide what commission percentage of sales or gross dollars will produce the desired level of pay.

Let’s view the pay plan in a grid format. You will decide which portions of the pay plan will be paid weekly or monthly.

 

Advisor Pay $72,000 annually $6,000 monthly $1,385 weekly
Production based portion 50% $36,000 $3,000 $693
Salary 25% $18,000 $1,500 $345
CSI 15% $10,800 $900 $208
Misc. spiffs 10% $7,200 $600 $139

Test and Adjust

The last parts of any pay plan change or implementation is to back-test your numbers over the last three month’s results to see if it turns out the way you expected. Once tested, the plan is ready for presentation and implementation. You will probably be wise to protect the affected associates at their old level of pay (last 90 day avg.) for 2-3 months. This will allow for any needed adjustments to the plan to be made.  Once the protection period is over and any necessary adjustments have been made, the pay plans go live.

This process is may be more complicated than others, but it creates pay plans that clearly define the expectations of a job and what that will mean in wages when the results are tallied. So now it’s time to sit back and see the results of, “Show me how you pay them and I will show you how they work.” Let’s hope that everyone goes out and works their pay plan.

financial_analysis

Permanent link to this article: http://blog.ncm20.com/2014/01/show-me-how-you-pay-them-and-i-will-show-you-how-they-work/

Wayne George

Debunking “Retail Recon”: Why Your Used Cars Aren’t Competitive

Wayne George

Today’s blog post is by Wayne George, an NCM Executive Conference Moderator for several NCM 20 Groups. Prior to joining NCM, Wayne spent 29 years in the retail automotive world. He was also a charter member of the NCM General Managers Top Twenty Group for seven years.

Your service department charging retail rates to recondition your vehicles isn’t really why you aren’t as competitive as you could be. Let’s look at some facts.

Domestic and import average hours per Internal RO in our NCM composites usually comes in at about 2 hours. Effective labor rates are about $90. That means for most of our clients, the labor cost of recon is $180 per RO. Parts sales related to that labor is still running at about a 1:1 ratio. With that in mind, the average parts and labor total of this recon will come in at about $360. Let’s get crazy and discount all of that work by 45% (a very generous discount to the used vehicle department). We now have decreased the cost of that recon by $162 dollars. I would submit that no dealer would lose a deal and not be in a competitive pricing position over $162 in service charges. By the way, all of these examples and ratios hold true for luxury vehicles as well, the numbers are just slightly higher.

Now let’s dig deeper. Our NCM database shows us that reconditioning costs per
tirevehicle for domestic and imports average about $800 per vehicle (this varies by franchise and by how strongly the manufacturer’s CPO program is embraced). So why is there a spread between $360 (parts and labor costs) and $800?  It’s all the other stuff that we do to the vehicle to make it front line ready. Most of this type of work is done very close to cost rather than at full retail: tires, glass, paint and body, dents, etc. are just a partial list of what makes that difference.

So where is the competitive disadvantage in our recon so far?  Is $162 really creating a competitive issue?  Here is what I think is really happening as opposed to a sound practice of the shop charging full retail for reconditioning. This is just a partial list of what makes many dealers non-competitive and drives their vehicle costs of sales too high. Again, we see that many dealers have at least a couple of these items that increase vehicle cost going on most of the time.

Unreasonable hard packs. We all know hard packs were created in most cases to cover poor practices within a store. Bad pay plans needed to be hidden, bad inventory management leads to wholesale losses so we need a pack. Expenses are out of line so we need to bring gross back in without paying for it etc., etc.

A poor trade evaluation or recon evaluation leads to careless and unnecessary spending of recon monies.

There is no one in the store monitoring and controlling what the shop does once they have the vehicle. Work is unnecessary, being overcharged, and in some cases padded.

Shops are taking the factory CPO guidelines to an extreme and are demanding repairs over and above guidelines.

Recon cycle time is not being managed and results in multiple service trips and vendor touches to get all the work done only adding to recon costs.

Aging in most inventories requires vehicles be brought back to standards hence producing a second recon RO and a double dip for the shop.

Used vehicles are not being given correct pricing on competitive menu and routine maintenance items. Whatever a retail customer pays for brakes, alignments etc., needs to be passed through to used vehicles as well.

I am sure there are more underlying costs that I haven’t thought of, but it’s just too easy to pin all of the above issues on the practice of pricing recon at retail rates. If a dealer doesn’t have issues with these seven examples or the store is properly managed to eliminate all of these issues, he or she would have no problem charging full retail for repair items done in the shop—and that dealer would have a competitively-priced product to sell and at the same time, protect used and service gross opportunities!

 

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Permanent link to this article: http://blog.ncm20.com/2013/03/debunking-retail-recon-why-your-used-cars-arent-competitive/