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Category Archive: Training

NCM Associates

#AskNCM: How often are NCM KPIs updated?

Ever wonder what goes into the critical NCM® metrics you use in your dealership? Expert Rick Wegley explains the differences between NCM Benchmark® data and best practice guides and tells you how we create them.

Learn how to leverage your NCM numbers.

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

Permanent link to this article: http://blog.ncm20.com/2017/03/askncm-how-often-are-ncm-kpis-updated/

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: Why is New Vehicle F&I Such a Big Deal?

Why has new vehicle F&I become such a hot topic? “Fierce competition,” says NCM expert Robin Cunningham. As the market compresses, dealers cannot afford to miss the new car sale.

See how F&I impacts your dealership and discover how you can learn more about it.

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

Permanent link to this article: http://blog.ncm20.com/2017/03/askncm-why-is-new-vehicle-fi-such-a-big-deal/

Alan Ram

You Lose 40% of Your Customers Each Month. Here’s How to Get Them Back.

Customer choosing to write satisfied face over unhappy face

I want to talk to you about the importance of having someone—in addition to your sales staff—following up with each and every unsold client. That’s right: not instead of, but in addition to! I would also encourage you to do it internally versus farming it out and having someone do it for you; I’ll get to why in a minute.

Who owns the sale: You or your salespeople?

So, I get it. Someone comes into your dealership, and you naturally expect the salesperson to follow up with that individual. Here’s one problem with that: Our data indicates that 39% of customers who visit a dealership won’t return to that dealership because they don’t like the salesperson.

Why don’t they like the salesperson? Could be anything: personality differences; they thought the rep was too tall, too short; maybe they smelled like smoke or made an inappropriate comment. Whatever the reason, the clients decided that they just don’t like the salesperson. But their dislike of your staff doesn’t mean you don’t want to sell them a car—of course, you do!

Personality fit matters.

Here’s the problem. Based on my experience with salespeople, if the salesperson wasn’t necessarily feeling the love with a particular client, they’re probably not going to make that big of an effort to get back in touch. Even if they do reach the client, that person will rarely tell the salesperson “We didn’t like you.” Instead, if the salesperson can, in fact, even reach them, they’ll say …

“We decided to hold off.”

“We’re not going to buy anything right now.”

“We already bought something.”

… even if they didn’t! They won’t tell the salesperson they didn’t like him or her, but they will tell someone else. That’s why I recommend having someone in addition to the salesperson following up each and every guest to your showroom.

How many sales have you lost?

Let’s do the math—

Say you get 600 floor ups per month. Of those, 300 either do buy or can’t buy for whatever reason right off the bat. That leaves you 300 be-back opportunities—or does it? If 39% of those 300 don’t like the salesperson, for whatever reason, he or she has zero chance of getting about 120 of those people back in.

Now let’s imagine a scenario when a well-trained client service specialist or BDC agent calls those clients. Of 120 clients, they should be able to get about 25-35% of them back in. That would be about 35 people showing back up at your dealership who would not have shown up otherwise. And you should have a much higher closing percentage on those 35 than you would on any regular be-back. Why? Because when they come back in, in many cases they buy out of spite. Thirty-five be-backs could very easily translate into 20 plus deals. Those are deals you would not have otherwise had.

The point is this: You have lost sales.

I’m sure that many people have found a new or pre-owned vehicle at your dealership but were turned off by the salesperson to the point where they said, “While I like the vehicle, I’m not buying anything from that guy!” That’s why it’s critical to have someone in addition to salespeople follow-up each and every customer. Many of you will tell me that your managers are the ones making these calls, and that’s great in theory, but not quite as good in reality. Most managers will make one attempt to get someone, leave a message, and then move on. I’ve found that a well-trained business development center representative or Client Service Specialist can be much more persistent and get just as good of results if trained properly. (Also, many times it’s a manager the client didn’t like.)

Train your staff to make the call.

I realize there are outside services that will make these calls for you. In many cases, they make a warm fuzzy call that identifies the objection and then rely on management to call these clients back. I always encourage dealerships to teach their BDC representatives and client service specialists how to handle the call from A to Z (Z being when the buyer shows up at your dealership).

There are fewer moving parts this way, and there tends to be much better communication with management when this role is handled internally. So get your staff ready to follow up on each and every unsold client to ensure that 39% of your possible deals aren’t being mishandled!

Check out in-person training options through NCM Associates, and discover our online platform, NCM OnDemandAlan Ram’s Management by Fire course offers additional tools for your dealership training needs.

Permanent link to this article: http://blog.ncm20.com/2017/03/you-lose-40-of-your-customers-each-month-heres-how-to-get-them-back/

Paul Potratz

Why You Need a Facebook Live Strategy

SOCIAL MEDIA

“I want to wait until I get a new iPhone; I still have the 6S.”

“I will as soon as I get a haircut.”

“I want to build my followers first.”

“I don’t have enough likes.”

“My wife will get mad if I am on there.”

“I don’t really want people knowing my personal business.”

“My followers aren’t car shoppers.”

“I tried it and it didn’t work.”

“If I do it, how much of a return can I expect?”

This is just a small list of the excuses I have received from salespeople at a dealership when I asked why they are not using Facebook Live (and Facebook in general). Before you continue reading, I encourage you to reread the list above and ask yourself: Are these the types of excuses you would expect or want from a salesperson?

In this article, I will provide strategies you can use to increase your sales using Facebook Live.

Here’s your first tip: Just do it. Putting yourself out there might be the hardest part, but it’s also the most important part.

Keep this in mind, using Facebook Live is just like having your own TV station. Don’t go into it thinking you’ll just be able to broadcast infomercials or nonstop sales messages and succeed. You will need a variety of engaging programing. In other words, provide information that is helpful and that your audience actually wants to hear.

By now you have probably heard that if Facebook were a country, it would be the largest country in the world. In fact, one in seven people are on Facebook daily (which equals one billion daily users). Plus, Facebook Live has now surpassed even YouTube in video views. Hopefully that got your attention.

What is the secret to selling on Facebook Live

I am often asked, “Should we promote our low prices on Facebook Live?” Well, the answer is no. Like I said earlier, the point of Facebook Live isn’t to film a TV commercial. There’s a reason it’s called social media. Would you go to your son’s football game and try to sell tires? Would you tell the other parents that they must take delivery by Saturday to receive 3.9% APR and $0 down?

On a similar note, Facebook Live is also not the platform where you should selfishly broadcast how great your cars are. The secret is simple: Be a resource. You’re probably wondering what this means. Well, all you have to do is ask your staff this simple question: “What questions do shoppers ask us that don’t have to do with price?” For example, it might be, “Should I lease or buy?” or “Why does it take so long to do the paperwork?” Or maybe it’s, “Do I really need that repair?” Answering these questions and many more will give you the opportunity to be a resource. The secret is to build relationships, awareness, and consistency.

Facebook Live will increase sales the same day

Of course, the chances of this are slim, and that is why many individuals don’t feel Facebook Live is worth their time. We all want instant gratification, and unless you are downloading a song or a movie, there is usually no such thing. Building relationships takes time and work, and I’m sorry to say there are no shortcuts if you truly want valuable payoff. In other words, there is no such thing as a silver bullet, a secret formula, or a “get rich quick” scheme. Nothing worth having comes overnight. Sometimes it doesn’t come in a week or even a month.

If you start today, though, you can start to see that success grow. If you get on the phone today and make 50 calls and continue to do that every day for the next 12 weeks, wouldn’t you start to see the fruits of your labor? Facebook Live is the same way: It’s a marathon, not a sprint.

How many videos should you post each day?

The answer is simple: It depends on how many platforms you use. In other words, are you also using Snapchat, Instagram Live, or YouTube? If not, that’s okay— before you get ahead of yourself, you can work on mastering Facebook Live. In that case, I suggest one or two videos per day, but don’t forget about weekends. Also, switch up the time of day you film videos to see what works best for engagement.

Another piece of advice: Don’t start out trying to have conversations with your viewers, but do acknowledge them. It can be very discouraging if viewers don’t engage, so have an idea of how you will share information with or without that engagement. If it makes you feel more comfortable, pull in a coworker and have a live conversation.

Once you commit to doing these videos at least once a day for a month, then you can add more social platforms.

Final thoughts to ensure success

When you’re live on Facebook, don’t just broadcast. Engage with your online audience the same way you would in an in-person conversation.

Paul Potratz is the COO of Potratz Advertising, a digital agency and website provider. Paul is also the host of the weekly Internet shows Think Tank Tuesday and the Growth Mindset, which are also available on iTunes and Google Play.

Permanent link to this article: http://blog.ncm20.com/2017/02/why-you-need-a-facebook-live-strategy/

NCM Associates

#AskNCM: How do I make the most of a recall?

Manufacturers’ recalls: Are they a burden or an opportunity for your dealership? With the right plan in place, explains NCM expert Rick Wegley, a recall gives you an opening to learn more about how clients view your business. See how.

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

Permanent link to this article: http://blog.ncm20.com/2017/02/askncm-how-do-i-make-the-most-of-a-recall/

Robin Cunningham

Service BDC: Where are Your Customers, and When Are They Coming Back?

Call Center Operators Working In Office

I’m a big fan of service BDCs. In fact, during my retail days in the mid-Nineties, I was an early adopter of the concept. I had asked a consultant friend of mine, who help dealers set these up, to give me a hand at my store. We had staff who were either mishandling or not making inbound and outbound calls, so I remember being eager to see the results.

This topic must have been on my mind recently when I asked a class of NCMi students, “Where are your customers, and when are they coming back?”

Well, you would have thought I’d asked the question in a foreign language or something! There was absolute silence in the room. Some were looking at others to see if they had an answer. My take on the look on everyone’s faces was, “This is THE question, isn’t it?” No one ventured an answer.

The first service appointment is key

So, I then asked, “How many of your dealerships set the first service appointment on each new and used vehicle at the time of delivery, based on time or mileage?” Of the 25 or so people in the room, only two raised their hands affirming that this was, in fact, happening at their dealerships.

When we started our BDC, one of the processes we decided track was the first service appointment. We, for sure, were not setting these. I’d heard that getting a 65% return rate for the 1st Service Appointment was the Holy Grail but, we were told, only 14% of customers would come back on their own for non-warranty, maintenance, and repair work. You cannot build a business on 14%! So it became part of the sales and delivery process to have the BDC, based on time or mileage, to put the customer’s scheduled first service appointment into the system.

Consistent appointments make loyal customers

While we were very good in service in those days—especially in menu sales and work found on multi-point inspections, which we called the “perpetual service clinic”—I am sure we were not setting next service appointments, something I now know is a critical component to service profits.

With that in mind, I asked my students, “How many of you set the next service appointment with each customer during the active delivery with their Service Advisor?” The answer was zero.

It’s a given that the first service Appointment is a must to get the whole process started, but it’s setting the next service appointment that keeps it all together. I always think of this analogy: “How often would we get our teeth cleaned, if the dentist didn’t call to remind us?” The answers range from “not as often” to “never!” Service work on automobiles is no different; most people forget about it until the vehicle doesn’t run or they are reminded of needed work. It’s so obvious that it still amazes me that so few American dealerships take the initiative to set the appointment!

Challenge yourself to invite clients back

We all know that customer loyalty is on the wane. In response, most dealers have invested in CRM software to help us keep track of our clients. Yet, these tools are only as good as our processes. The sad truth is that many of my clients still are not setting first and next service appointments, even when they use these tools.

So, here’s my challenge for you: Always be able to answer the question, “Where are your customers and when are they coming back?” Create a reliable system that gets your clients back to the dealership after their purchase and keeps them coming back.

NCM Expert Robin Cunningham is an instructor with our Institute and a frequent contributor to our blog and video series #AskNCM.

Permanent link to this article: http://blog.ncm20.com/2017/02/service-bdc-where-are-your-customers-and-when-are-they-coming-back/

Lee Michaelson

Retail Solutions: Hold Your Car Up to the Phone

Smiling salesman having a phone call

“Hold your car up to the phone, sir.” (hahaha!)

Remember when we made comments like this to customers who wanted phone appraisals? We were real witty back then when a customer wanted the old sight unseen trade appraisal!

Capture an interested customer

Well, today, we can do a phone appraisal, and it’s easy. As long as the buyer has a smartphone with a camera—and who doesn’t—you’re set!

You have a great chance to sell these customers because they have already narrowed their choices, and you have made it to the top of their shopping list. Make it easy, and you have an opportunity to sell a car.

Develop a process and set expectations

Customers are conditioned to the information you have provided about your car online: multiple pictures and possibly a video, equipment list, CarFax, and a compelling description for starters.

Let’s say the customer insists you provide an appraisal of their car before they come to the dealership. Do it in a professional manner. Tell them you have a process for this situation, and you need all of the following documentation just like they see online for the car they are interested in purchasing from you: six to eight pictures and a complete appraisal form. Explain that you will run a CARFAX or other similar vehicle history report on their vehicle.

My recommended Online Trade Appraisal Process

  • Make a PDF of your appraisal document and have it available for all appropriate team members to email to a customer. This is a great tool for qualifying the customer, and it gets the customer mentally involved in the appraisal. You also will start to build creditability in the evaluation, lower the client’s expectations of the trade price, and help build rapport between the salesperson and customer. You are now getting answers to many questions before the deal is started!
  • Have the customer complete the entire document, including disclosure about the odometer, accidents, body damage/work, and any mechanical deficiencies that require reconditioning. Make sure they sign it before they scan it (the camera app on their phone will work) and return it to you.
  • Detail the reconditioning and reconditioning cost on every appraisal to justify your appraisal. Use current market pricing evidence from the internet to validate your appraisal. Inform the customer that your appraisal is firm based on the appraisal document they submitted to you, subject to driving and inspecting the vehicle. This is a similar process they will likely want for the vehicle they plan to purchase from you.
  • Upon arrival at the dealership, every appraisal should get a trade walk around with the customer, 100% of the time. Profit can be improved if the evaluation of damage and missing parts is correct. Likewise, customer satisfaction can be improved as a result of clear communication and a transparent process.
  • Define follow-up responsibility in case of missing parts (needing a second key, for example). You can also reduce stock days by completing the vehicle trade-in process.

Most of our customers enjoy the easy satisfaction and quick turnaround of online shopping. Although there will always be a necessary in-person component to trade-in vehicles, by creating a simple phone appraisal process you can capitalize on their habits and gain new customers. And just think: how many more cars would you sell if you adopted this process?

Learn more about Lee Michaelson 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/2017/02/retail-solutions-hold-your-car-up-to-the-phone/

NCM Associates

#AskNCM: What are the Potential Benefits of a Service BDC?

Considering a service BDC? NCM expert Rick Wegley outlines the things you need to you consider before making the move. Check out the pros and cons below!

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

Permanent link to this article: http://blog.ncm20.com/2017/02/askncm-what-are-the-potential-benefits-of-a-service-bdc/

Terry Wichmann

From the 20 Group: How to Defend Your Used Vehicle Appraisal

NCM-CD-127

Editor’s Note: It’s clear that our readers found Terry’s last blog, My Favorite Wordtracks to Defend UV Gross Profit, an incredibly useful tool for their dealerships. We asked him what other defensive wordtracks he could share, and Terry came back with this excellent guide to making the most of your appraisal.

You, as the dealer principal or general manager, have two options when you feel that used vehicle gross profit per-vehicle-retail (PVR) is mediocre (or worse). You can yell at your sales managers to increase the gross profit PVR. Or you can determine if there is a Used Vehicle process which is “broken” or needs improvement. As yelling doesn’t accomplish much for long, I recommend that you consider your processes and fix them.

The four types of trade-ins

I have an NCM Retail Solutions client who likes to say that there are only four ways to take in a car: 1) steal the car; 2) take it in for the right money; 3) stretch to make a deal; or 4) bury yourselves in the trade-in.

During this conversation, let’s assume we are discussing trade-ins that we “took in for the right money” or “stretch a little bit to make a deal.”

Step One: Appraise the vehicle correctly

Many dealer principals or general managers believe that they make gross profit when buying the car. That is, the dealership makes its money when we trade for or purchase it, as opposed to when we retail it.  One of the factors in making gross profit when you ‘buy the car’ is determining if we appraise it correctly.

I imagine your sales managers mostly value trade-ins of your franchise accurately. You need to evaluate their performance on other franchises, too, to protect the appraisal. Here are some sample questions to get you started:

    • Do you think they correctly appraise trade-ins of other franchises accurately?
    • When it is necessary to replace the windshield on a luxury car, do you think they know which luxury car has the $300 windshield or the $3000 windshield (which includes cameras and sensors)?

Step Two: Understand the costs of misappraisal

If we appraise a trade-in or lease-return incorrectly, say by $500, we will probably make $500 (or so) less gross profit than if we caught it, assuming we took in the trade for the right money in the first place. So, it’s critical that you get the appraisal right.

Another of my NCM dealer-clients likes to include the line item “$300 hidden reconditioning” on the used vehicle appraisal form. This reminder helps his sales managers consider hidden problems that are often missed during an appraisal, such as the water pump, rear main seal, and other items we may not see or hear during the evaluation process.

Step Three: Replace negotiation with documentation

To solve the misappraisal problem, I recommend to my NCM clients that their fixed ops managers provide pricing to their sales managers for the forty or so most common maintenance items on their most frequently accepted models, based on the CP labor rate and 40% gross-%-sales for parts, which is cost plus 67%.

Once this menu is available, your salespeople—or, preferably, sales managers—can defend the appraisal to prospects by showing them the costs to repair these common maintenance items. It’s hard to argue against the costs in black and white. This approach of replacing negotiation with documentation was one of Dale Pollak’s philosophies when he defined used vehicle “velocity” by designing vAuto.

There’s so little room for negotiations nowadays, so you need to prepare to counter any objections while accurately appraising trade-ins and lease returns as a means to increase your dealership’s used vehicle gross profit PVR. With the right process in hand, you’ll see better results than yelling at your staff.

How does your dealership defend the appraisal? Tell us below. Have more dealership concerns? Meet with Terry or another NCM Consultant to identify opportunities for improvement in your store.

Permanent link to this article: http://blog.ncm20.com/2017/01/from-the-20-group-how-to-defend-your-used-vehicle-appraisal/

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