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Category Archive: Service

Mark Shackelford

The 10-Minute Fix for Lost Customer-Pay Hours

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There’s no question that customer repair hours and R.O.’s are on the decline. I have the pleasure of working with more than 250 dealers, and I’m alarmed at how many service departments are going backward in customer-pay service hours and gross.

If we saw a massive downturn like this in new vehicle sales, every dealership would be clamoring for a solution. I think the increase of warranty and internal hours have lulled us into a false sense of security. But even though those hours are up, hemorrhaging customer-pay is a losing long-term strategy.

We have the tools to get more customer-pay hours, so let’s use them.

I’m continually amazed at the effectiveness of the automotive industry’s sales processes; yet we rarely, if ever, apply the same approaches in our service department. We need to change that because the best way to solve the customer repair hour problem is through improved service sales.

To do this, though, we need to overcome culture. When service team members encounter issues with a sale, most of us just let the sale go … we commonly send service business home without any attempt to save the deal. And then we rely on a coupon or other incentive to get customers back into the shop.

Bring more sales to service.

We would never allow a new vehicle buyer to just walk way! So, why do we let service work go? After all, what do you think happened? Did the client wait for the discount coupon? Or, do you think they called up one of your competitors and had the work done elsewhere?

Let’s get back to the basics and begin holding training meetings with the number one sales people in our stores: our service advisors. They talk to more customers in a day than some sales people do in a month, and they generate more gross profit in a month than most sales people do in two or three months! A sales model makes perfect sense, yet we spend too little time motivating and training the most productive sales person in our dealership.

Here are two easy meeting agendas you can use to start bringing a sales approach to your fixed operations staff. I also recommend training to support this culture change; the NCM Institute has a great one-day training course that teaches your service advisors how to sell.

10-Minute Service and Parts Meeting
Meet with techs and advisors every day for 10 minutes at 7:15 a.m. Here are some discussion points:

  • Customer Satisfaction Index (CSI) numbers: 1-month and 3-month
  • Fixed Right First Time (FRFT) stats
  • Number of hours written by each advisor and tech against their goal(s)
  • Pace for the month
  • Review work schedule for the day
  • Problems (i.e. problem child issues)
  • Housekeeping
  • Multi-Point Inspection (M.P.I.) walk around

Bring back service sales.

What happened to the time in our industry when a customer could simply call our store for service work on their vehicle and be told to bring it in today with no appointment?

Think about it, how do you feel when you are told it’s an hour wait to get a table at your favorite restaurant? If you’re like me—and like most people—you probably just go somewhere else for dinner because of the wait! The same thing happens in our service department.

It’s time to realign our fixed ops approach to be more sales focused. Let’s take control of our service lanes and have a very profitable year!

See how Mark Shackelford and his NCM colleagues can help your dealership improve performance with 20 Groups, in-dealership consulting, and customized training optionsAnd don’t forget about NCMi training for service managers and service advisors!

Permanent link to this article: http://blog.ncm20.com/2017/06/the-10-minute-fix-for-lost-customer-pay-hours/

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/

NCM Associates

#AskNCM: How Can I Retain More Service Customers?

You already know the basic steps to get customers back: appointment/phone call, write-up, end-bay process, and active delivery. But customer retention isn’t a simple linear process, explains Steve Hall. Don’t think of retention as something with a beginning and an end, but as a circle that—hopefully—never ends.

Discover Steve Hall’s customer retention cycle.

Have another question for Steve or the other #AskNCM experts? Leave a comment below!

Permanent link to this article: http://blog.ncm20.com/2017/02/askncm-how-can-i-retain-more-service-customers/

Adam Robinson

How to Hire the Most Important Sales Role in Your Dealership: Service Advisors

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There is no question that a successful dealership has both skilled technicians and knowledgeable salespeople to maintain profit margins. But an oft-overlooked—and equally (or arguably even more) important—component is the service advisor.

When people take their cars to a dealership, the service advisor is the first face they see. The service advisor quarterbacks the entire service experience and serves as the critical link between the customer and the work. This dynamic means service advisors have a heavy influence on customer experience, which can either keep them coming back or drive them away.

While a basic understanding of how cars work is essential to helping the customer navigate their needs, communication skills are even more crucial in ensuring the customer has a positive experience and feels confident about the work and service your dealership provides. Critical conversations had between the advisor and customer include such topics as explaining invoices, deciphering warranty coverage, explaining necessary or suggested additional repairs and providing the customer with updates on the progress of the work. All these conversations require someone with good people skills as well as excellent car skills.

Here are the key elements I recommend to identify quality service advisor candidates and how to hire them.

Recognize the Traits of a Solid Service Advisor

As mentioned above, a service advisor is the first face your customer sees and the person with whom they communicate the most, if not exclusively, throughout their service experience. A good service advisor should possess the following traits:

Mechanical Knowledge and Ability to Articulate – Because the service advisor is the one to communicate with the customer from start to finish, it is important they understand the industry enough to be able to answer questions, suggest options and explain the process to a customer who may otherwise be unfamiliar with the work needed or performed. Additionally, the service advisor should be able to relay the information without overusing technical jargon, making it simple for every customer to follow and understand.
People Skills – The service advisor should have the ability to read and adapt to different customers’ communication preferences: some like a plethora of details while others prefer to be in and out. The service advisor must also possess good listening skills to clearly understand what the customer needs or wants and be able to relay that information correctly to the technicians doing the work.
Integrity – In addition to communicating information between customers and technicians, service advisors have a responsibility to provide the client with accurate information that is in their best interest, instead of using every interaction as an opportunity to upsell extra work. A service advisor with honesty and integrity will quickly earn the confidence of your customers, ensuring they look to your dealership as a trusted place of business, returning for additional needs and sending friends and family your way. Also, a good service advisor will provide updates or call customers back in a timely fashion, keeping them looped in every step of the way

Things to Consider When Hiring a Solid Service Advisor

Now that you know what to look for in a service advisor, there some factors to keep in mind when considering hiring one. For starters, consider how your dealership and employment brand will appeal to women candidates. Half of your customers are women, so having at least one female service advisor on staff will help you better connect with that demographic. Consider advertising the job with a title other than “service advisor,” so as to appeal to a larger number of applicants. Alternate titles can include customer service representative, service secretary or customer service associate. While technical knowledge is beneficial, you might consider advertising the position with “no experience required” to welcome applicants who have all the other necessary skills without potential bad habits that will require much more aggressive retraining to break. Lastly, consider the number of service advisors your dealership needs to meet demand to give your customers the full attention and service required.

Benefits of a Solid Service Advisor

Hiring the right individual for a service advisor position will yield lasting benefits, including an increase in repair order count, CSI and owner retention. It will also increase your technicians’ productivity, resulting in a boost of customer loyalty.

A service advisor typically touches a customer five times more than a sales person, making proper candidates for this position a crucial component for your dealership’s success. As new car sales are expected to plateau or decline next year, a stable of high-quality service advisors will keep your customers coming in for repairs and services. Preparing for 2017 means staffing up with skilled service advisors who can create a lasting, positive impact.

Thanks to NCM Associates’ content partner, Hireology, for sharing the guidance on employee referral programs. Learn more about Hireology. And join NCM’s experts for more actionable advice for hiring the best people for your team in our Hiring Top Talent and Success-Driven Pay Plans classes.

Permanent link to this article: http://blog.ncm20.com/2016/11/how-to-hire-the-most-important-sales-role-in-your-dealership-service-advisors/

George Gowen

From the 20 Group: The Importance of Value

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We all know that a customer will buy a product or service when the value exceeds price. Unfortunately, automotive dealerships hide the value that the service and parts departments bring.

Here’s how you can change that.

Recognize the value of “free”

Grocery stores commonly show the customer how much they “saved” on every receipt. That builds additional value to the price they paid for groceries. For some reason, dealerships comp services but, unlike the grocery store, never let anyone know about it.

Here’s an example: Almost every dealership I know requires a multi-point inspection (MPI) for each repair order. This check builds trust and helps to sell needed services.

But what is the “value” to the customer for that service? None. However, if you show on the repair order (RO) that the MPI has a $49-$149 value that we provided at “no charge,” it does means something.  After all, the service has actual value, and we should let customers know it.

Here’s another example. Many dealerships charge a diagnostic fee, using the information to explain the nature of the problem and how much the repair will cost. Along with the diagnostic work, you probably do a complete inspection of the entire vehicle and don’t charge for it. You should mention this value to your customer.

Always offer a deal

While we’re looking at other industries for inspiration, let’s consider restaurants. I’ve been to many establishments that promote a special that includes the appetizer, salad, entrée and dessert. You’re told that you’ll get a special value by ordering the components as a group versus ordering them individually. The reality is that people will take advantage of the “deal” even though they likely would not have ordered all the items separately.

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You can apply the same principle to service menu items. The best performers on menu sale penetration show the value of the combined services versus doing those services individually. But if you offer a “30k Service” for $400 without explaining the value of the individual services, all they will see is the $400.

Imagine the penetration level if you showed that all the services in the “30K Service” would separately cost $530! If the menu item is “only $400,” the customer just saved $130 by purchasing it.

The same advice goes if you provide a car wash, loaner cars, or any other services: Always make sure the customer knows the value. And, no matter what, make sure the value you provide exceeds the price.

Tell us below how your dealership creates value in the service department. Learn more about George Gowen and how his NCM colleagues can help your dealership through 20 Groups and in-dealership consulting

Permanent link to this article: http://blog.ncm20.com/2016/10/from-the-20-group-the-importance-of-value/

Rick Wegley

Announcing Something New at NCM: Service Advisor Training

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I’ve been chomping at the bit to make this announcement, and we just got the go-ahead!

After years of your asking for service advisor training, I’m happy to announce that the NCM Institute has added one to our roster. And I’m delighted to be teaching the first class in October.

Good management starts with a solid team

This is a significant change for NCM, which has focused on executive and management training since it began six years ago. But, as we’ve fielded call after call for training designed specifically for the professional service advisor, we knew this was an issue we had to address.

And, honestly, it made sense. Managers and other leadership team members need accountability management skills in all areas of the dealership to effectively growth dealership performance and profit.

We looked into it.  The challenge was selecting a provider that aligned exactly with our fixed operations management training philosophies—and there are many qualified vendors in the market today—but that mission, we discovered, was impossible. In response, we created our own.

Piloting the program

In 2015, the NCM Institute began offering our own service advisor training course on-site at dealerships across the country with tremendous success!

We started with the goals, objectives and philosophies of the NCMi service and parts management training curriculum, and then built our advisor training on these principles. The response has been remarkable, and I genuinely believe it’s because our approach gives your service advisors the same messaging as your managers who have attended our management training courses at the Institute. It streamlines management and gets everyone moving in the same direction.

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Protect your front line

As a service guy myself, I’m particularly excited to be part of this new opportunity at NCM. Service advisors are our front line personnel, and they are the ones who, individually, represent both our dealership and our manufacturer to our client base on a daily basis. And yet the opportunities to develop the soft skills and leadership potential of this group are few and far between.

Frankly, our service department deserves better.  As managers, we need to re-evaluate our strategy for improvement in our operations, and understand that our dealerships are judged on financial and customer satisfaction responses that are a direct result of the performance of our front line personnel.

Developing peoples’ full potential should be a goal of every department manager or dealer operator. And where better to start than with the front line employees who drive the future prosperity of our customer retention and repurchase efforts?

Seats are limited and filling fast for this inaugural event in Kansas City on October 27, 2016. Please reach out to NCM Client Engagement Specialist Jeff Hardin at NCMi@ncmassociates.com for more information and to reserve your dealerships’ seats.

Permanent link to this article: http://blog.ncm20.com/2016/09/announcing-something-new-at-ncm-service-advisor-training/

NCM Associates

#AskNCM: How can I stop my out of control shop expenses?

“Our shop supplies expense is out of control,” a service manager asks Steve Hall. “Do you have any tips or best practices for controlling it?”

Managing car dealership expenses is always a concern because of its immediate effect on the bottom line, explains Steve. Get Steve’s advice for simple steps you can take to reduce shop costs.

Have another question for Steve or the other #AskNCM experts? Email askncm@ncmassociates.com or leave a comment below!

Permanent link to this article: http://blog.ncm20.com/2016/08/askncm-how-can-i-stop-my-out-of-control-shop-expenses/

Steve Hall

Curing the Fixed Ops Hangover

Monday morning again

What a party it was! We showed up, had a great time, talked excessively, drank a bit too much, stayed out far too late and were glad that we did it.

Glad, that is, until the next morning when we woke up and had to face reality. Now, our head hurts, our body aches and we don’t want to go to work! The only reason that we actually get out of bed and go to the office is that we are afraid of the consequences if we don’t. We resign ourselves to the mantra, “Just make it through the day.”

Hangovers aren’t just post-party events—they happen in Fixed Ops, too.

The idea of “Just making it through the day,” can occur in any aspect of our lives. You’ll often see this attitude pop up in Fixed Ops departments after month end.

Just think about it. At the beginning of the month, does your service department get off to a sluggish start? I’ve typically found that work in process is low. The team is feeling the “hangover” effect of closing repair orders while looking for those last dollars to finish the month. Many dealerships have a light appointment schedule around this time, too, as they pushed customers into those final days.

Reacting to this environment, employees just want to take a day or two to catch their breath. As a manager, you can just feel the entire department is coasting. It’s as if they too, have also adopted the mantra, “Just make it through the day.”

What causes the Fixed Ops Hangover?

If you were to review the typical advisor’s monthly sales on a weekly basis, you would find that the sales aren’t spread out evenly. Rather, the advisor sales distribution curve usually looks like this in a four-week month: 15% the first week, 25% the second week, 25% the third week and 35% the last week of the month.

It’s a cycle that feeds on itself. And whether this uneven workload is caused by the month-end hangover effect or a combination of it along with the advisors not closing tickets until the end of the month, it is a major problem.

Stopping the Fixed Ops Hangover

So, how can a manager stop this monthly hangover? I recommend motivating your service advisors with a “fast start” spiff. This could be a monetary bonus or another reward to any advisor who hits a pre-set objective for the first seven calendar days of the month. The idea is to keep your department rocking from the very first day of the month, rather than losing the first couple of days while everyone relaxes after the close.

The spiff can be set at different levels for various types of advisors; you can set different goals for the main shop and express, rookies and veterans, as long as they must work to achieve it.

No matter what goals you set, make sure they are challenging enough that the “just make it through the day” attitude cannot pay off. This spiff can not only be used for advisors but can be incorporated with your technicians’ compensation, also. Be creative, and get out of the starting blocks strong—right from the very first day of the month!

Do your service advisors and staff suffer from the “Fixed Ops Hangover?” Learn how to break the boring cycle and other useful service tips at our Service Management Roadshow

Permanent link to this article: http://blog.ncm20.com/2016/05/curing-the-fixed-ops-hangover/

Wayne George

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

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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/

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