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Category Archive: Express Service

NCM Associates

#AskNCM: How many tickets should a service advisor have each day?

Service advisor Robert wrote to #AskNCM about daily workload, asking: “How many customers per day is too many for a service advisor?”

Depends on your business structure, explains NCM expert Steve Hall, and how you’re staffed. Variations across dealerships mean there is no cut-and-dried answer to the question. However, he explains, NCM does have a recommended customer interaction-to-service advisor ratio.

Get Steve’s recommendations:

Have another question for Steve or the other #AskNCM experts? Leave a comment below! For more service advisor training, check out our NCMi courses.

Permanent link to this article: http://blog.ncm20.com/2017/04/askncm-how-many-tickets-should-a-service-advisor-have-each-day/

Chip Maher

Has Your Customer-Pay Service Business Grown? It Should Have!

Service with Customer

The U.S. automotive industry has grown substantially since the beginning of 2010 when the annualized sales rate bottomed out at a low of 10.5 million units from the previous high of 17.3 in 2000. Since then, it has steadily grown to almost 18 million units.

This increase in units in operation (UIO) begs the question: Has your dealership’s service department—specifically the customer-pay labor category—grown in proportion to the opportunities that are now available in the market? Although most dealerships have realized growth in the service department, as we drill down, it becomes apparent that some of that growth has come at the expense of the customer-pay labor category.

Evaluate service performance by category

The first thing to look at is your entire service department performance. Your next step is to look at the different labor categories that make up the total service department: customer-pay, warranty, internal, and express. Although many dealers have shown slow and steady growth in total labor sales, we are finding that most of this increase has been driven by the internal, warranty, and express categories. Many times, it has been at the expense—and to the detriment—of the customer-pay category.

What has prevented dealerships from growing their customer-pay business and why is this category necessary? Two things may be contributing to this: the first is the growth of the other labor types mentioned, and the second is limited shop capacity.

Understand the relationships between labor types

The increase in warranty, internal, and express business has taken a larger percentage of the total available hours, and therefore, reduced the number of hours typically available to book for customer-pay business. While some dealers have been effective at identifying this pattern and have added capacity to accommodate this need, many dealers haven’t realized the impact growth in these labor categories have had on their customer-pay sales and growth opportunities.

Once you understand the relationship between the types of labor rates, you can then maintain sufficient shop hours and capacity to handle the customer-pay business growth.

Warranty labor

Let’s consider a warranty repair for a high-line franchise. The repair takes 12 hours; if the average customer-pay repair order is 2.5 labor hours, this warranty repair uses the normally available shop time for 4.8 customers. The result is less available time to schedule the all-important, profitable customer-pay category that is essential to the long-term health and profitability of your dealership. Warranty labor also impacts your customer retention performance (which most OEMs use to determine incentives), as these clients will find other shops to handle the repairs rather than wait.

Let’s go a step further and say that you schedule 10 of these repairs in a month. That’s a total of 120 hours of additional warranty work. At 2.5 hours per customer-pay repair order, that eliminates your ability to schedule and service 48 customers.

Internal labor

As dealers are pushing to grow the used-to-new ratio and keep more trade-ins to retail on their lot, their internal labor business has grown. But again, unless these shops add capacity, they are just shifting hours that were available for customer-pay to internal.

The emphasis on express business has also negatively impacted customer-pay growth. Some shops have committed as much as 30 percent of their capacity to accommodate express service. This is an incremental business that will increase retention and customer satisfaction index (CSI) in the long run. This approach is okay for a large shop with plenty of excess capacity. However, too often, we see a shop at full capacity, and they just shift stalls to express at the expense of the other labor categories, including customer-pay. In this instance, a customer can come in at any time and get a competitive oil change in 45 minutes, but if they call for a check engine light or brakes service, they may be scheduled for two or three days out. Ultimately, this shop runs the risk of losing this customer to another shop.

Best Practices to Protect Customer-Pay Profits

  • Consider offsite reconditioning centers. Not only are these very effective, but they also free up shop capacity by moving the work that does not necessarily need to be done on site to a separate facility. Used car reconditioning, new car pre-delivery inspection (PDI), and some warranty repairs can all be performed at these places. The benefits are substantial, as they can reduce pre-owned turnaround time and reconditioning costs, and increase the primary shop capacity that will be available for customer-pay business.
  • Include customer-pay hours and growth in pay plans. Remember that the warranty and internal business are a given, but it is the customer-pay business that is at risk. Customer-pay growth is a must to maintain retention and CSI; its inclusion in pay plans will incentivize your team to focus on customer-pay business.
  • Regularly monitor and manage your available shop hours by labor category. Ensure that the internal, warranty, and express hours have not blocked out substantial hours for customer-pay business. If they have, you need to extend your hours of operation or expand your capacity. Regardless of the shop scheduling tool your store uses, you must review the available hours by each labor category on a regular basis.

Take the time to evaluate your service labor type mix and see how it is impacting your customer-pay growth and profitability. If there’s an issue, try my suggestions above, discuss the problem at your next NCM 20 Group meeting, or have one of our consultants draft an improvement plan for you.

Learn more about Chip Maher and how he and his NCM colleagues can help your dealership through 20 Groups and in-dealership consulting.

Permanent link to this article: http://blog.ncm20.com/2017/03/has-your-customer-pay-service-business-grown-it-should-have/

Steve Hall

Why Dealers Should Be In Express Service

Express Service

Dealers know you must provide fast, convenient, and competitively-priced service in order to retain your customer base.  They also know that oil changes and light maintenance are the most requested service items by customers.  Knowing this, why do dealers continually fight express service?

I’ve heard all the excuses: it hurts my hours per repair order; it hurts my gross profit percentage; it hurts my effective labor rate; I can’t make any money in express service; the list goes on and on.  Shouldn’t we think about it differently?

Isn’t it logical that if a customer comes to you for express services, you will have an advantage to getting the remainder of their maintenance and repair work?  Customers generally do business with people they trust.  If you start to grow that relationship from day one, when the only things that are needed are express-types of items, won’t you have the trust of the customer when the “real” repairs come into play?

We need to realize express service is the gateway to real profits, and if done properly you can make plenty of money along the way.   After all, how do you think all the mass merchandisers and independents stay in business?

Let’s look at it this way, have you ever taken a low profit (or no profit) deal on a new vehicle?  I’m sure that every dealer has, many times.  Why do you do this?  Often times it is because you are getting a trade-in you feel you can make money on.  Other times it is so you can move a unit off the lot to reduce your inventory costs, or maybe to help you reach unit bonus levels for factory incentive money.  Possibly, it was just so you would have an opportunity for the F&I department.  Whatever the reason you decided to take the short deal, you have a plan.  The loss of front-end gross on that unit gave you opportunities to make more money in the long run.  You had to make the deal to gain all of the other benefits.

Can you relate this thought process to express service?  We must retain the customer in order to get all of the long-term benefits.

But express service has an added benefit.

If properly structured, you will make money in express while retaining your customer.  That is a win-win, both short- and long-term!

Take a few minutes and examine how much money is spent on a single vehicle over the lifetime of that vehicle.  Include average warranty work, recalls, oil changes, maintenance, tires, brakes, breakdowns and everything else that happens eventually to every vehicle.  Once you add all of these dollars together and look at the complete picture, you really see what the customer is worth over the lifetime of the vehicle.  Now you must develop your plan to make sure that customer never goes anywhere else, and express service has to be part of that plan.

Let’s look at express service for what it can and should be, a profit center with long-term financial benefits.  Remember, customer retention is a good thing.  Get fast, get efficient, get competitive and get profitable!


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Permanent link to this article: http://blog.ncm20.com/2015/02/why-dealers-should-be-in-express-service/

Steve Hall

Customer Retention in the Service Department (Part Two)

This is the second installment in a two-part series by Steve Hall. To read Part One, click here

Service Advisor 2

This is the second installment in a two-part series by Steve Hall. To read Part One, click here

Now that you understand the importance of custom retention, the next logical question is how do you capitalize on these opportunities? The most common way has been express service. It is probably the single largest retention tool we have available.

Express service is a business we know we need to be in. If we don’t offer, and actively pursue this work, our customers can and will go to the aftermarket competitors. For the most part, we aren’t losing our customers to other dealers, but rather to Jiffy Lube, Goodyear, Pep Boys, Meineke and independent shops. It’s not uncommon for a metro dealership to have a couple hundred of these types of shops within a five mile radius of their dealership. This makes the competition fierce.

The advantage we have, as dealerships, is all of the customers start as ours. Let’s think about this. Every vehicle that is on the road was originally sold by a dealership. It was what we did after that point that allowed us to either retain or lose that customer. In an effort to retain more of these customers, express service became a battle cry.

The Advent of Express Service

Virtually every manufacturer and most dealerships started some sort of express service system. The problem with this was twofold.

The first problem is, because the state of the industry a few years ago, dealers had to accelerate their implementation of express service to try and get more customers, immediately. As vehicle sales plummeted, and due to better quality of vehicles being produced, warranty work continued to decline. Virtually overnight, industry contraction had mandated that we must fight for every customer we have. The years of continual industry growth and a strong economy had ended; a true focus on retention had begun, and thus express service became a mainstay.

This happened so fast that the dealer body didn’t have a chance to really learn how to implement a profitable express service program.  We didn’t have time to start by learning to crawl, then walk, then learning to run. Instead we had to start running immediately, and this caused many to stumble.

The second problem was that the automotive business was so tough, we got really focused on metrics. Unfortunately, traditional service metrics and express service don’t correlate well together; they don’t truly relate how the business is doing. The very acts of becoming more price competitive and pursuing more oil changes and light maintenance work, negatively effects metrics like: hours per repair order, effective labor rate, and gross profit margin. Though there are ways to negate this downward pressure, most dealers didn’t have the time, forethought and information to understand or implement the solutions.

When we start to focus on express service and drive a higher number of low mileage vehicles or light maintenance vehicles to us, these are the circumstances that commonly occur. Drops in hours per repair order and effective labor rate start the cycle of stress and the conversations of “What is happening to our business? Why are our numbers falling?” This is the common. How we react to this can make or break our retention goals.

Doesn’t every vehicle eventually wear out or break down?

Tires, brakes, batteries, air filters, wheel bearing, cv boots, transmissions, head gaskets… the list of items that wear out or break goes on and on. If we have done a great job of retaining our customers, we will get the repair work and that will help keep our overall mix healthy.

It seems many times we take the short term view and give up just before things get good for us. But how do we avoid this? If we follow our processes, give great service, present the items needed, develop a great relationship with the client and know that even if they don’t buy today, we will be the one they contact when the car won’t start, or the tire finally blows out, or the brake squeal gets so bad they must have it repaired. They will do this because we have the relationship with them and we have earned their trust. At that point we are their “go to” place and they are still ours to lose.

Even if the customer decides not to repair anything, they WILL need another vehicle, so keep this in mind. Never forget the CNW Marketing Research study that we talked about earlier. Remember the key results: 86% of regular servicing customers that you originally sold will become repeat vehicle buyers. Yet, it falls all the way down to only 8% of customers you originally sold will become repeat buyers if they never service their vehicle with you.

You can easily see that once we do a great job with retention, by utilizing express service as a retention tool, we will be able to grow not only our service department but also our complete dealership for the long term. Utilizing better metrics will allow you to do that with less stress and more understanding of the real picture of what it takes to build your business.

Permanent link to this article: http://blog.ncm20.com/2014/10/customer-retention-in-the-service-department-part-two/

Steve Hall

Customer Retention in the Service Department (Part One)

service

Is YOUR service department’s overall gross profit growing year-over-year? The automotive industry as a whole has been in a growth mode for the last five years.  Unfortunately, too often we want to continue to look back and blame the financial meltdown of 2008-2009 for what we are doing today. Although that did take a hard toll on us, currently we are actually in a good place going forward in the service department.

Since new vehicle sales have been on a steady rise for the last five years, the number of vehicles that are less than six years old coming into our service departments have continued to increase. These vehicles are our core target vehicles and allow us our highest retention possibility. So the question remains, is YOUR service department steadily growing year-over-year?

Looking at the big picture, we are able to see the overall industry growth pattern, but let’s take this a step further. The next question is what does YOUR retention look like? I’m going to quantify what I mean by retention. In my opinion, the definition of what a retained customer is varies depending on your manufacturer’s service interval. For instance, if your manufacturer recommended maintenance interval is 5,000 miles, then I would want to see two customer paid visits, per year, to be considered a retained customer. If your manufacturer recommended maintenance interval is 12,000 miles then I would consider one customer paid visit per year a retained customer. Looking at it this way, you will be able to find a figure that correlates with YOUR brand.

Why is this so important? I’m going to give you two thoughts on this; both are critical to the growth of a dealership.

Future Sales and Service Loyalty

The first reason I’m going to share is sales based. CNW Marketing Research studied owners of General Motors vehicles and correlated future sales with service loyalty. Here were their results:

  • Customers who regularly serviced their vehicles at the selling dealership became repeat vehicle buyers 86% of the time
  • Customers that occasionally service their vehicles at the selling dealership became repeat buyers 46% of the time
  • Customers who seldom serviced their vehicles at the selling dealership became repeat buyers 18% of the time
  • Customers that never serviced their vehicles at the selling dealership became repeat vehicle buyers only 8% of the time

Those numbers are just staggering. As we have just seen, service retention absolutely drives repeat dealer vehicle sales. And vehicle sales are a great long term by-product of service retention.

A Focus on Retention Leads to Total Dealership Growth

Now let’s look at the second reason that retention is so critical. It’s the immediate gratification that comes from increased service and parts gross profit. These two components make it so that if you are truly focused on retention, it will feed the whole dealership, both in the short term and long term.

Think about it this way, a retained service customer creates service and parts gross profit, they are more likely to repurchase from the same dealership and when they do, you will more than likely get the trade in. Over time, this helps every department within your dealership! So, if we know the “pie” or market is growing, and we know that increased service retention gives us an even larger slice of that larger “pie,” we start to see a positive pattern of current opportunity within our fixed operations.

Stay tuned for Part Two to learn how to capitalize on these opportunities. Subscribe to the Up to Speed blog to get our best practice articles sent directly to your inbox! 

Permanent link to this article: http://blog.ncm20.com/2014/10/customer-retention-in-the-service-department-part-one/

Garry House

The Importance of the MPI-ASR Process

wrenchesBack in May of this year, I published a blog article focused on the difference between good and great automobile dealers and I promised to follow that up by discussing what we, at the NCM Institute Center for Automotive Retail Excellence, have learned about the differences between some of the good and great processes employed by these dealers. This is the second of those follow-up articles.

What is the MPI-ASR process? “MPI” is an acronym for Multi-Point Inspection. “ASR” is an acronym for Additional Service Recommendation or Additional Service Request. The two together make up The Process. By definition, an ASR is necessary work discovered by the technician, in his stall or on his lift, during the performance of a Multi-Point Inspection, which has nothing whatsoever to do with the customer’s primary concerns. It is therefore often referred to in the dealership as the technician up-sell process.

Most every experienced fixed ops director and service manager that we work with at NCMi recognizes and admits that a well-designed, habitually-performed, and flawlessly-executed MPI-ASR process will provide more fixed gross than any other available service department opportunity. One of the exercises in NCMi’s Principles of Service Management I class continually demonstrates that a well-managed MPI-ASR process in a 15-technician shop will produce an incremental net profit of at least $250,000 per year.

Both the good and great dealership fixed operations professionals understand the need for a sound MPI-ASR process, however, very few (only the “great” ones) know that their MPI-ASR activities must be continually trained, monitored, reinforced, and enhanced in order to avoid process evaporation.” Following are the 10 components of what the NCMi faculty believes to be a great MPI-ASR process.

  1. Ensuring that a sound MPI-ASR process is anchored within the culture of the service department. Strict adherence to the requirements of this process must become conditions of employment for service advisors, service technicians, service support personnel, and service management.
  2. Performing Multi-Point Inspections on 100% of the vehicles accessing the dealership service operations (including express service), beginning with the first service visit following vehicle delivery.
  3. Continually educating the customer as to the value of the Multi-Point Inspection process and consistently obtaining the customer’s permission to perform the MPI.
  4. Ensuring 100% documented feedback to the customer of the results of the Multi-Point Inspection, even if no out-of-line conditions were discovered.
  5. Conducting regular technician training sessions (a) on how to perform a “quality” MPI, (b) on understanding the standards relating to “within-line,” “marginal,” and “out-of-line” MPI line items, and (c) on clearly and effectively communicating the results of the MPI. Conducting regular service advisor training sessions on how to advise the customer of ASRs and on how to overcome objections in closing the sale of these ASRs.
  6. Based on valid industry data for vehicle age and mileage, defining and communicating expectations to technicians for:
    • Ratio of ASRs to MPIs
    • Number of Line Items per ASR
    • Number of Flat Rate Hours per ASR
  7. Based on valid industry data for sales effectiveness, defining and communicating expectations to service advisors for sales closing rate on ASR hours requested by technicians.
  8. Ensuring that there is a disciplined “second effort++” program to sell declined ASR work is employed, both with the customer when he/she is still in the dealership and/or after the customer has exited the dealership.
  9. Developing and implementing a system to measure and report the results of the MPI-ASR process on an accurate and timely basis. Without the availability of current procedural technology, this step is, without question, the most difficult and painful in the overall process.
  10. Installing and instilling a highly-visible score-boarding discipline to internally display, on a month-to-date basis, the most current MPI-ASR recommendation frequency and quantity by technician and sales results by service advisor.

And, yes, you guessed it! Within the NCMi Service Management training curriculum, we do teach the details of each of the above 10 MPI-ASR Process components.

Training Solutions for Service Managers sept oct

Permanent link to this article: http://blog.ncm20.com/2013/08/the-importance-of-the-mpi-asr-process/