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Tag Archive: Retail Operations

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/

Garry House

The Importance of the Used Vehicle Value Folder

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Unquestionably, the Internet has changed used vehicle shopping habits and as a result, many dealers have altered their manner of presenting and pricing pre-owned cars and trucks. Today’s successful used vehicle merchant recognizes the changed market realities and adapts accordingly. In order to ensure that our vehicle makes it to the prospect’s “short list,” we must have an aggressive, competitive pricing policy – but we must also have a sales process that effectively defends margins.

Adding the presentation of the value folder (or evidence jacket, inventory dossier, etc.) as a step in the used vehicle sales process will increase our closing rates and optimize our grosses. The NCM Retail Operations team has proven that the effective implementation and execution of the value folder process has increased our clients’ used retail volume by 10% or more. The operative word here is obviously effective.”

Where should this step be integrated into the sales process?

One place and one place only: Immediately following the demonstration drive. Once the demo has been completed, the salesperson should simply say, “Follow me, and I’ll show you the complete history on this vehicle.” Not only does this step set up the value presentation, it moves the customer from the tarmac to the closing office, where the remainder of the sales process can be closely monitored by sales management.

Where should the value folders be stored and maintained?

At the location from which the desking manager operates. The value folder presentation must occur before the deal write-up step begins.The desking manager must observe the salesperson remove and return the value folder.

What should be included in each value folder?

Dale Pollak, president of vAuto, emphasizes that the purpose of the value folder is to “replace negotiation with documentation.” Therefore, in answering this question, recognize that more is better. The reason the customer is visiting our dealership is because our vehicle offers the most attractive combination of mileage, color, equipment and cost. The value folder content must validate and affirm these considerations, as well as many others that may trouble the prospect. Never forget that since the beginning of the used car business, the number one fear of the customer is buying someone else’s problem. The NCM Retail Operations team recommends that the value folder contain at least 10 items, including a copy of the CarFax or AutoCheck report, a description of the reconditioning process and copies of all reconditioning R.O.s, a market analysis report on the vehicle, the detail of any warranty information on the vehicle, and any other materials that will serve as evidence that your customer is in the right place to do business.

The used vehicle value folder process is taught in the Used Vehicle Profit Improvement Program (UVPIP) offered by the NCM Retail Operations division. For more information about UVPIP, click here. This process is also presented in Principles of Used Vehicle Management II, offered by the NCM Institute Center for Automotive Retail Excellence. To request more information about either of these programs, call 866.756.2620 or click here.

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Permanent link to this article: http://blog.ncm20.com/2014/06/the-importance-of-the-used-vehicle-value-folder/

Rebecca Chernek

Is Transparency Good or Bad?

HonestAbe “Transparency” has been a buzz-word in our industry every since Saturn first introduced the concept of no-haggle pricing back in 1985. AutoNation took it a step further in 1997 when they introduced no-haggle mega-stores offering one-price pre-owned vehicles. And more recently, TrueCar has brought the concept of one-price pricing to the Internet. Today, there appears to be two camps when it comes to whether or not no-haggle pricing and transparency is a good thing for our industry. In one camp are those who insist that car buyers really want to negotiate and “play the game,” regardless of what they might say in an anonymous survey. Whatever value price a dealer offers will never be good enough, the thinking goes. In the other camp are those who recognize the power of real transparency, in both sales and F&I, to attract customers and give them a positive buying experience. Buyers really are tired of playing the game. This thinking goes: the idea of negotiating back and forth with a dealership and running all over town brandishing different dealer quotes is not something that appeals to them.

Paying a Fair Price

Count me in the latter camp. In 2001, I was promoted to run a Saturn store. Even then, plenty of people were saying that the one-price concept would fail, but people loved it so much that we couldn’t get enough inventory to keep up with demand. Of course, Saturn failed in 2009, but this was due to mismanagement on the GM side, not their no-haggle concept. I believe that the Saturn concept demonstrated without a doubt that car buyers enjoy a more relaxed buying experience — and that they’re willing to pay a fair price for a vehicle if they believe they’re being treated “fair and square.” The success of AutoNation and TrueCar are proof of this. The fact is, dealers today that have adopted market-based pricing and a no-haggle sales process are consistently selling more vehicles. One of the problems with the negotiation game from the buyer’s perspective is that they don’t really know what winning the game looks like. Sure, they can spend hours doing Internet research trying to find out what a “fair” price really is. But if they find out later that they paid more than someone else for the same vehicle, their win suddenly looks a lot more like a loss.

The Right Buying Experience

Most buyers understand that car dealerships are in business to make a profit, and they don’t begrudge them for this. Rather than take the time, and expend the emotional energy required to play the negotiation game with dealerships, they would prefer to do business with a dealership that gives them the kind of buying experience they want — a satisfying, trustworthy experience with no gamesmanship or tricks. And the key to providing this kind of buying experience is, quite simply, transparency. Being transparent means that the total price of the vehicle is straight-up right from the beginning. There are no hidden fees or extras added and sprung on customers when they get back to F&I to sign all the paperwork. The sale is a seamless process from the sales floor all the way back to F&I, with the front and the back end of your store working together every step of the way. Some in our industry don’t think that there are enough car buyers out there who truly want to see real transparency to make a one-price or value pricing strategy successful. I strongly disagree. Dealerships that embrace transparency and sell based on value, integrity and credibility — and not on playing sales games with customers — are going to lead the way in the future. But doing so requires a culture change at your dealership, and this change must start at the top. It’s up to the owner and general manager to instill a culture of transparency within the dealership and continue to nurture this culture over the long term.

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Permanent link to this article: http://blog.ncm20.com/2014/05/is-transparency-good-or-bad/

Tony Albertson

Better Processes Improve Technician Productivity and Gross Profits

Calculator red pencilDid you ever perform this calculation for your dealership Service Department? Whenever we do this exercise, either in the field with one of the NCM Retail Operations clients or in the NCM Institute classroom, the result always knocks the socks off the dealership management team. Click here to be immediately taken to an interactive Excel spreadsheet to perform this calculation for your dealership.

If your dealership’s technician productivity is below the Best Practice Guideline for your franchise, what do you need to do to increase technician flat rate hour production by one hour per technician per day? If you’re scratching your head, don’t feel like you’re alone! It’s a lot easier to identify the need for improvement than it is to determine WHAT you need to do and HOW you need to do it!

Effective processes drive productivity! In the Principles of Service Management classes conducted at the NCM Institute Center for Automotive Retail Excellence, attendees are taught how to develop, implement and flawlessly execute the following:

  • The interactive Walk-Around Process
  • The Menu Sales Process
  • The Additional Service Request (ASR) Process

How have you improved technician productivity in your store?  What are your greatest challenges to improvement?

Click here to learn about all our service management training options, including NCMi classroom, regional and on-site training opportunities.

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Permanent link to this article: http://blog.ncm20.com/2013/12/better-processes-improve-technician-productivity-and-gross-profits-2/

Gene Daughtry

Managing a Healthy BHPH Portfolio: Recency vs. Delinquency

financial_portfolioI have heard how important keeping your accounts current is to the success of a portfolio of receivables. I would put that statement down the list four or five spots when discussing how well your Buy Here, Pay Here portfolio is performing. In Buy Here, Pay Here (BHPH) you need to manage your receivables portfolio differently.  Why? Because in BHPH, many of your customers are going to have trouble keeping up with their payments; it’s simply the nature of the business, but one that with proper processes and oversight, is manageable and will provide an excellent return on your investment.

In my BHPH operations, I would tie a small bonus to the percentage of current accounts to help keep my collectors’ eyes on who is not paying as they should. When a collector has several hundred accounts to maintain, I want their focus on what is most important – cash flow. Because I feel cash flow is the primary bell weather of a successful receivables portfolio, I place higher priority on two other important receivables management metrics: recency and collection potential.

In a BHPH portfolio, your recency metric should generally remain, at a minimum, in the 90’s. This means 92 to 96 percent of your open accounts have made payment in the last 30 days. Collection potential is the amount of payments your portfolio has due each week based on contractual terms. This is the money, the life blood of your operation. If you are taking in 110% of total payment dollars due each week (average weekly payment times number of open accounts) while meeting your recency goals, you will see the performance anticipated from your portfolio and the cash flow you should expect.

There are other dollars coming in, of course:  down payments, deferred payments, wholesales, service income, cash deals, payoffs and other services you may provide. Generally, I experienced 72 to 74 percent of my monthly cash flow as payments. My collectors’ largest incentives each month were tied to recency and collection potential. Both must be met to receive the bonus.

So many dealers I have worked with are very concerned about missed payments. Some of these dealers will repossess a vehicle one or two days after a payment is missed. My approach was different.  I would make every effort to keep the vehicle with the customer. I would try to find ways to collect our money. Yes, if customers break too many promises or skip out then I would advise you go after the car. If the customer comes in and wants the car back, I’d give it to them. The customer and I would have a discussion beforehand, of course. My advice is to require proof of insurance and some money before they drive off, but not require everything that might be due. You want the customer to get the message that you are serious about getting your money, but you also know that if the car is on your lot the money isn’t going to come in, either.

Repossessions are a fact of life in BHPH. Don’t be fearful of them. Even though you will refer to repossessions as “losses” on your P&L, the aggregate of your repossessions should actually be profitable. Look at every deal like a hand of poker. The hand is dealt and must be played out. Folding might save you money but you’ve already made a big investment and you want to win. Winning is making profit on each deal. So stay with your customers as long as they are working with your collectors. Watch your exposure or “cash in deal” as you make decisions on delinquent accounts.

The bottom line in BHPH is that dollars through the payment window is the score to go by. Knowing how much should be coming in and tracking that number will be more important than if all of your accounts are current today or not. As long as you bring in more than what’s scheduled and all of your accounts paid you something this month, then you can focus your attention on your expenses and selling more cars.

Gene Daughtry teaches BHPH Service and Reconditioning Management  for the NCM Institute.  To learn more about management training for BHPH dealers and managers in sales, service and reconditioning, and underwriting and collections management, and to register for our next classes coming up in August and September, click the link below or call NCMi® at 866.756.2620.

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Permanent link to this article: http://blog.ncm20.com/2013/07/managing-a-healthy-bhph-portfolio-recency-vs-delinquency/

Steve Hall

Does Your DMS Match Your Actual Parts Counts?

Fotolia_36189691_XSHave you ever had this happen?  … A service advisor contacts your parts department to see if you have a specific part in stock. You check the computer system and it shows that you have it. A price is given, “Yes, we have it in stock” is told to the advisor.

The advisor proceeds to sell the job to the customer; the information is relayed to the technician who then comes to the parts counter to get the part. Your counter person goes to pick the part from the shelf, only to find the spot on the shelf is empty!

What happens now? You either have to pick the part up from another dealership, possibly hold the vehicle over while the part is ordered, or have the customer return at a later date. None of which are good end-results.

What caused this to happen and what can be done about it? If you believe that you “can’t sell what you can’t find” then you need to have systems in place to make sure that you can “find it.” Let’s look at a few basic rules for a parts department:

  1. Every part must have a “home.” A bin location must be assigned to every part that you have in stock. Even if you are cramped for space, you must designate a space for every part in your system that has an on hand quantity. This includes special ordered parts.
  2. Each bin or location should have a designated number for identification. Does the numbering system make sense? Can a new counterperson or stocker locate the appropriate bin quickly and efficiently?
  3. Each bin should be arranged in alpha numeric order. Shelves should have parts tags for each part that is stocked in it. This makes for easier, faster and more accurate stock replenishment.
  4. If space allows, leave the top and bottom shelves empty. This will allow space for growth within specific bins. You will need this as you add additional part numbers into your stock.
  5. Perform I-bin counts. Individual bin or “I-bin” counts should be a daily discipline within your department.

Items one through four are pretty basic, but I would like to expand more on item five. Parts managers should be aware of this term, whether they apply it or not. General managers or owners may not have been exposed to it, so let me explain how and why to perform these counts.

I-bin counts are used to check the accuracy of your DMS parts system vs. the actual on-hand quantity.  Ideally, they should be set up the following way:

First, make a spreadsheet listing each of your parts bins number. Have additional columns for the date the bin was counted and a column for who counted it. You should have one more column noting that there were, or were not, discrepancies found and adjustments to on-hand quantities.

Each day, the parts manager should print off and have on hand quantity or inventory sheet for the bins that need to be counted. Ideally, you should count enough bins so that you “look” at your complete inventory every 30-45 days. In most parts departments, this only a few bins a day.

Once the sheets are printed, the count should happen quickly. The reason for this is, if any parts are pulled after the sheets are printed you will show a discrepancy and have to research it before any potential adjustments are made. Normally it only takes a few minutes to count a bin, with the obvious exclusions of high-density drawers. In those cases, you may want to count a couple of drawers a day to break it into bite-size chunks.

After the count is completed, if you find any discrepancies, research them appropriately and if the count truly is wrong, make the adjustment in your system. At times you will have positive adjustments as well as negative adjustments. After you are finished with the bin, including the necessary research and adjustments, you should retain the count sheets for future reference.

On a side note, it is a good idea to have different people do counts periodically. Though we don’t like to think that any theft would happen within our store, it can happen. Having a variety of people doing bin counts will make it harder to cover up. As a general manager, be willing to go back and perform some counts yourself; it can be an eye-opening experience.

By doing the perpetual count and check, you will get to see how accurate your DMS and actual on-hand inventory really are. You might just find that the “missing” part in our example above was just stocked in the wrong location!

If you are interested in continued training for your parts manager, be sure and check out the upcoming NCM Institute Principles of Parts Management I and II courses that are launching this fall.

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Permanent link to this article: http://blog.ncm20.com/2013/06/does-your-dms-match-your-actual-parts-counts/

Garry House

Success Comes to Auto Dealers Who Want to Excel

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It’s certainly unusual that I would not contribute an Up to Speed article for two whole weeks, but I’ve been busy out in the field doing what I love most—rolling up my sleeves and working on-site with client-dealers, which is something I don’t have much time for in my position as director of the NCM® Institute. Recently, though, I’ve had the opportunity to work with two exceptional dealership groups who are committed to going “from good to great.”

I know I’ve been remarkably fortunate, over my 25+ years in training and consulting, to work predominantly with dealers and managers who sincerely want to excel. In my previous position with the NCM Retail Operations Consulting division, I became specialized in helping multi-franchise, multi-rooftop dealers who are growth-oriented…and who know if they want to successfully expand their dealership portfolios, they need a high performance culture, the best processes, and the best people. These growth-oriented dealers recognize they occasionally need outside training and consulting resources to accomplish their objectives. Happily for us, some of these dealers depend on NCM Associates to provide these resources.

Last week, I visited a very profitable three-franchise, five-rooftop group in the Northeast. The COO had read some of the Up To Speed articles on OTDB Development and Management, and he called to inquire how the strategies I recommended in the articles could be implemented within his dealership group.  I and a fellow NCM associate met with the COO, a GM, a GSM and the director of BDC operations for one full day to discuss the dealership’s goals, assess the current sales processes, identify areas for improvement, and set a strategy for 2013, with a 90-day action plan to get the team off to a solid start toward achieving those objectives. We met the following day with sales management to clearly communicate the “what, why, and how” of the strategy and to secure buy-in and set expectations.

Next, the collective team of senior managers and retail coaches conducted meetings with the front-line sales staff to again communicate the plan and expectations, but also to assure them they would have 100% support from their managers as the new processes were implemented. I was truly impressed by the thoughtful and strategic way in which this senior management team approached the process, and I was energized by their enthusiasm to make theirs a world-class sales organization.

At our exit meeting with the group COO, I asked, “How did it go? What did you think?” and was delighted to hear him say, “You met my expectations; in fact, you exceeded my expectations!” I must say this is high praise given the level of success this dealership has achieved. But the work in the dealership to consistently execute and manage the OTDB processes they’ve recently learned is just beginning. I have no doubt they will be successful–and even more profitable–because of the leadership and commitment to excel I witnessed in the dealership.

Was this a training engagement or a consulting engagement for me? Probably some of both, but while on-site consulting is no longer my focus, it is the focus for our Retail Ops team. This is the kind of work they do across the country every day for single rooftop dealerships as well as larger automotive groups.

If you’re interested in hearing about our OTDB Development and Management program or need any type of on-site assistance, call 877.497.2363 to speak with our Retail Ops team directly.

Permanent link to this article: http://blog.ncm20.com/2012/10/success-comes-to-auto-dealers-who-want-to-excel/

Garry House

Are You Closing 20% (or More) of Your Internet Leads?

H--REK-Pictures-Email campaigns-AIM Internet Sales-Fotolia_39667104_XL ecommerce word cloud-thumb_A sound Internet/BDC operation is a key component of every successful automotive dealership. The question is, what makes a sound Internet/BDC operation? When the NCM Institute decided to sponsor a dealership Internet/BDC training program earlier this year, we decided upon one of the recognized e-Commerce experts in the retail automotive industry, Automotive Internet Management (AIM), because we found their definition to be consistent with the needs expressed by our clients.

The operative words in my last sentence were “one of.” There are many recognized e-Commerce experts, some being generalists and some being specialists. However, in discussions with clients involved in our 20 Groups, who are using our Retail Operations Consulting programs, and who regularly attend NCM Institute classes, most said that what they need is to better understand Internet lead management (as oppose to lead development). These clients told us that their priority was to improve their Internet closing ratios, rather than increasing Internet lead volume. AIM’s “claim to fame” is to achieve world-class lead management effectiveness, and that’s why NCM selected Automotive Internet Management as its “specialist” training partner in presenting Bridging the Internet Sales Gap, one of NCMi’s newest training programs.

Last week, NCM sponsored the first such workshop, and as the host, I was privileged to attend. Bill Phillips and Greg Elam of Automotive Internet Management began the workshop by saying, “We know the reason you guys are here is to learn how to deliver vehicles to 20% of your Internet leads.” They then went on to show the class exactly how to do that.  It was all about expectations, process, activities, measurement, inspection, and yes, in a nutshell…Accountability Management. All of this training is focused on what needs to happen after the electronic lead hits the dealership. Bill and Greg did a great job of “downloading their brains” to the audience, without making it a sales pitch for AIM’s services.

The response by those attending this program could not have been more positive. As a result, NCMi has scheduled another Bridging the Internet Sales Gap workshop for November 7th and 8th in Atlanta, Georgia. Because of the nature of AIM’s program, seats are limited, so if you would like to enroll in this training program, please call Brandiss, Kara, or Cassie at 866.756.2620.

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Permanent link to this article: http://blog.ncm20.com/2012/08/are-you-closing-20-or-more-of-your-internet-leads/

Garry House

Managing Change at Your Automotive Dealership (Part 2)

Lead your dealership team to success with NCM InsituteEarly last week I facilitated a training workshop in San Diego called Leading Your Dealership Team to Success. Although the attendee evaluations of the training were very positive, I know that, at the conclusion of the class, several of the participants were asking themselves, “How do I embed the principles I’ve learned into the culture of my dealership?” After 25+ years of training and consulting experience, I know that what they were really saying was, “How do I manage the changes that I know are necessary at my store(s)?” And to be clear, these necessary changes did not relate to the handling of routine problems and issues that arise at almost every automotive dealership; the required changes that these senior managers recognized involved significant alterations in the way their front-line managers and employees must behave in the future.

When the NCM Consulting division (now named NCM Retail Operations Consulting) was formed in 1994, we knew that ‘what needs to change? How does it need to change? How do we manage that change?’ were the three primary questions our new NCM team needed to answer when engaged by a client-dealer. And the hardest question was the last one, “How do we manage the required change?”

To assist in responding to this question, we “borrowed” some of the strategies recommended by Dr. John Kotter, in his book Leading Change:

  • Establishing a Sense of Urgency – If there is already a true urgency, your work is done. If there is not a real urgency, you need to create one. (“If the dealership is not already burning, start a fire!”)
  • Creating a Guiding Coalition – Assemble a group with enough power to lead the change effort, and encourage the group to work as a team,
  • Developing a Change Vision and Strategy – Effective visions have six key characteristics, They are:
    1. Imaginable: They convey a clear picture of what the future will look like.
    2. Desirable: They appeal to the long-term interest of employees, customers, owners, and others who have a stake in the enterprise.
    3. Feasible: They contain realistic and attainable goals.
    4. Focused: They are clear enough to provide guidance in decision making.
    5. Flexible: They allow individual initiative and alternative responses in light of changing conditions.
    6. Communicable: They are easy to communicate and can be explained quickly.
  • Communicating the Vision for Buy-In – Use every vehicle possible to communicate the new vision and strategies, and teach new behaviors by the example set by the Guiding Coalition. Focus your efforts on getting buy-in from the top 75% of your employee body. You’ll rarely convert the bottom 25% to understanding, or agreeing to, the needed changes.
  • Generating and Celebrating Short-Term Wins – First go after the “low-hanging fruit,” and publicize and celebrate your achievements in these areas. Nothing is as great as the sound of applause!
  • Solidly Anchoring New Systems and Processes – When questioned about a proven practice, don’t ever allow yourself to think (or say), “We used to do that!”

Sounds easy, right?  Is it?  NOT! 

Do you feel you’re doing a good job managing change at your dealership?  If so, tell us what’s working for you by posting a comment, below.

Change management is a topic that is discussed in many of the NCM Institute courses and during on-site evaluation visits conducted by the NCM Retail Operations team. To learn more give us a call at 866.756.2620 or check out our complete list of programs at www.ncminstitute.com

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Permanent link to this article: http://blog.ncm20.com/2012/08/managing-change-at-your-automotive-dealership-part-2/

Garry House

How Many Vehicle Sales Prospects Are in Your Service Department?

It’s probably because of my college training in industrial engineering, but I’ve always been fascinated and challenged by trying to define any meaningful relationships between “opportunities to do business” (OTDBs) and sales results. After a half-century of experience in the retail automotive business, I’ve concluded that there truly are consequential metrics associated with selling both vehicles and service at an auto dealership.

For instance, do you know how many good vehicle sales prospects arrive in your dealership’s service department each month? If not, don’t think you’re unique.  Most dealers are embarrassed when asked that question, and quickly admit that they should know the answer.

The NCM training and consulting teams have developed the “Service Ambassador” process that when effectively implemented and executed will not only answer the question, it will sell you a lot more new and used vehicles.  The Service Ambassador process uses dealership management input combined with a mathematical calculation to identify new and used vehicle sales opportunities on the service drive.  Many dealers who have successfully adopted this process now include customer-pay service visitors in their vehicle sales department OTDB traffic count.

Consider the following Sales Consultant Productivity Modeling worksheet used by the NCM Retail Operations consultants and trainers.  It demonstrates the metrics for this OTDB category beginning with item 33.  (Hint:  if you’re having trouble viewing the worksheet, click on this article’s title and it will take you to the blog page where it will be easier to view.)

In this example, the dealership service department writes 1,100 customer-paid R.O.s per month. Research shows that in domestic and non-luxury import dealerships, the average odometer reading on these vehicles is now 65,000-75,000 miles. Wouldn’t it be reasonable to assume that 10% of those vehicles should be replaced?

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Of the 110 vehicles that could or should be replaced (item 35), let’s further assume that if approached at the right time and in the right manner, 40% (Item 36) of those 110 owners would be willing to consider replacing their vehicles and would agree to an appointment with our salesperson.

And since we’re already doing business with (we have a relationship with) these 44 owners (item 37), they should also close at 50% (item 38) and produce at least 22 “near-future” vehicle sales (item 39).

What we’ve been discussing so far is near-future sales, meaning tomorrow, or next week, or two weeks from now.  But what about next year, or the year after that?  What many dealers and their sales managers aren’t cognizant of is that according to national averages, approximately 40% of the customers that do business with our service departments are “visiting owners.” They did not buy their vehicle from our dealership’s vehicle sales department.

The Service Ambassador process also addresses the visiting owner issue to ensure that the vehicle sales department builds a relationship with this group of customers.

So now you know how you can know how many good vehicle sales prospects are in your service department.  Confused?  No worries!  The worksheet used in this article is available for your own data input via our free eReport, “It’s All About the Numbers: The Mathematics of Dealership Sales.”

To get a copy of the report and access to this and many other useful worksheets to help you calculate the mathematics of your dealership’s sales, click here!

Want to read more Up To Speed articles or post a comment?  Visit the Up To Speed blog at http://blog.ncminstitute.com.

Permanent link to this article: http://blog.ncm20.com/2012/06/how-many-vehicle-sales-prospects-are-in-your-service-department/

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