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Tag Archive: Motivation

Richard Head

Is Story Time Causing Your Dealership Turnover? FIRO and MBWA Can Stop It

open boo

One of the biggest expenses dealerships face each year is turnover. Not only does finding a new employee take a lot of time and money, but you then have to reinvest in proper training to get that new person up to speed.

I’ve found that dealerships – like many other complex work environments – are negatively impacted by assumptions, something I like to call “story time.” Before I go into the details of how story time ruins your employer-employee relationships and leads to turnover, let’s take a second to review what motivates people in the first place.

Motivation in action: FIRO

Developed by observing well-oiled, capable teams working in high-stress situations, the Fundamental Interpersonal Relationship Orientation (FIRO) approach boils people’s fundamental behavior down to three desires:

Inclusion.  Everyone expresses or wants contact with others—to be around others and work with others.

Control. Everyone expresses or wants influence over things and people.

Openness. Everyone expresses or wants to be known, seen, appreciated—a curiosity about others and a willingness to be seen ourselves.

This chart shows how each area relates to the others:

Blog graphic

For managers who typically can’t create a team from scratch based on compatibility, we have to focus on the thing we can change. Will Schutz – the psychologist who invented the FIRO method – says that creating an environment that encourages openness is the best method. And openness is what story time is all about.

It’s story time

First, let’s address openness. I’m not talking about some touchy-feely “new-age” thing. Instead, “openness” means a willingness to consider other interpretations of behavior.

Whenever something happens to us, we almost always make up a story about it. Unfortunately, most of the time we don’t make the effort to check out our made-up story. We simply create this fantasy world about what’s going on. As time goes on, those stories get hairier and stranger.

Just think about the last time you were baffled by something your boss said. You probably found yourself thinking, “I bet they’re irritated with me,” or “They probably think that ….” In reality, you just don’t know what’s happening with your boss. But your brain doesn’t like uncertainty, so it’s compelled to make up a story that gives you some understanding. And our people do the same about us!

Story time has a huge impact on businesses. Dealerships (and all businesses) are composed of multiple, competing stories about what’s going on and why—stories that are rarely discussed openly and almost never examined in a way that could prove or disprove the stories. Left to run unchecked, story time can give your best performers misinformation, and lead them to walk out the door.

Putting story time to bed.

In work relationships, we have two choices:

  • Let people make up stories about what is going on with us
  • Tell people what’s actually going on, so that they stop making up their own stories

As a leader, you set the tone.

When you stay holed up in your office, I can guarantee that your staff is making up stories trying to understand your decisions.

“Management By Wandering Around” (MBWA) is a great way to stop story time in its tracks. And, what better way to interact with the dealership?!

When I get out into the departments, I share with my staff what’s going on in the department, what’s keeping me up at night … and, critically important, what my hopes and dreams are for the dealership and the department. As an added bonus, the employees relax a bit and tell me things they might not in more formal situations. Everybody wins! And everyone stops inventing stories.

Give it a try in your dealerships. Manage by “wandering around” and find out what’s really going on. Stop the stories and deal with facts! What do you have to lose?

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Garry House

Why Not Add a New Profit Component to Your Service Department?

Extended Service Agreements can increase Service profitabilityVery few dealers are both aggressive and effective in selling Extended Service Agreements (ESAs) after the new or used vehicle has been delivered. If you are so fortunate to be among this minority, you don’t need to read any further. Since most F&I departments don’t seem to have the inclination or motivation to work these post-delivery opportunities, let’s explore an alternate strategy…structuring a process to have our service advisors aggressively and effectively sell ESAs in the lane.

How many of our service department customers are opportunities for ESA sales? Consider that only the best F&I departments achieve a 50% ESA sales penetration at the time of sale; that means the service department has an opportunity for a “second swing” at at least half of our owners. Consider that a large percentage (industry experts claim 40%) of our Service customers didn’t purchase their vehicles from us; how good a job did their selling dealer do with ESA penetration at the time of sale? Our best chance for ESA sales will be to customers whose manufacturer’s warranty will soon expire. However, any customer without an ESA should certainly be considered an opportunity!

Why don’t service advisors currently take maximum advantage of this opportunity?

1. There is no sound process or structure in place for post-delivery ESA sales.

2. If and when the customer acknowledges an interest in an ESA, there is often no one available in the F&I department to handle the turn over.

3. Service advisors are not effectively trained or incentivized to concentrate on ESA sales.

4. Service managers are not effectively trained or incentivized to promote and manage ESA sales.

There is no accountability for service department sales of ESAs.

How do we quantify this service department opportunity? If you want to perform a similar analysis for your store, here’s an example of how the math works:

A service department with 3 service advisors will “face off with” an average of 195 customers per week (3 advisors x 13 customers per day x 5 days per week = 195). Keeping the math simple, that means approximately 10,000 customer interfaces per year (195 x 52 = 10,140). With a minimal ESA sales penetration of 2.0% we would sell an additional 200 service contracts. At $700 gross per contract and 70% incremental net profit retention, this performance level produces $98,000 in annual net profit improvement (200 x $700 x 70% = $98,000) for the service department. And that’s with each of our service advisors selling ONLY 5.5 ESAs per month. That’s just slightly more than 1 per week. This same example, with a 5.0% ESA sales penetration, would bring an additional quarter million dollars to the bottom line!

What needs to happen to make this net profit improvement opportunity a reality at your dealership?

1. Develop, implement and execute your plan.

2. Implement a systemic structure.

a. Accounting and reporting (Service gets 100% of the revenue)

b. Advisor training (ESA provider becomes a training partner)

c. Contract preparation (performed by Service personnel)

3. Establish compensation parameters.

a. Service manager (3% – 5% of Net Income)

b. Service advisors (15% – 20% of Net Income)

c. Other service department personnel (1% – 3% of net income)

4. Define and communicate your expectations.

5. Measure what you need to manage and inspect what you expect. (Score-keeping and score-boarding)

Sounds a lot like Accountability Management, doesn’t it?

Service Drive ESA Sales is one of the processes taught in Principles of Service Management at the NCM Institute Center for Automotive Retail Excellence. To learn more, click here.

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