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Tag Archive: Service

Steve Hall

We’re All On The Same Team: Parts & Service – Helping Each Other Succeed

Parts and Service

Have you ever wondered why Service and Parts Managers don’t get along? In reality, don’t they need each other to succeed? As we examine this, let’s start with some generalizations from dealing with thousands of Service and Parts Managers along with General Managers throughout my career. The overwhelming consensus is that Service and Parts just don’t get along. That’s not to say that there aren’t dealerships where they do get along very well, but those are definitely in the minority.

If you think about it, it’s easy to see why these managers can be at odds. Here are just a few reasons:

  • Service Managers are typically extroverts, whereas Parts Managers are typically more introverted.
  • Service Managers typically have a “whatever it takes” attitude towards resolving issues. At that moment, they just want the customer handled. In the same situation, the Parts Manager will typically revert back to the processes to work through the issue, looking for the reasons why it happened.
  • Parts Managers like to have a place for everything and everything in its place. Service Managers generally don’t.
  • Parts Managers work from an inventory of parts. If a part doesn’t sell today, it will still be on the shelf to sell tomorrow. Service Managers work from an inventory of time. If they don’t utilize an hour today, it’s gone forever.

I’m not saying that one is right and the other is wrong; it’s just that they’re wired differently. That’s what makes each of them good at what they do; they have different mindsets for different types of positions. Unfortunately, these different mindsets can often times cause friction and impede them from effectively working together.

Rather than belabor the differences, let’s work on why and how they must align to achieve their departmental goals.

Did you know that, in a typical dealership, 85% of the Parts Department gross profit is generated from their internal customers, meaning the Service Department (and the Collision Department, if they have one)?

Or, have you ever thought that the Parts Department doesn’t really sell anything? They fill orders and requests. On occasion, they may “sell” an additional item when filling a request, like when a front counter customer is purchasing a timing belt and, at that time, the counterperson suggests drive belts or a timing belt tensioner and the customer purchases them. But most of the time, they are filling requests. Again, this is not an indictment; it’s reality.

Why is it so important? Because it all comes down to knowing what truly affects your department’s numbers. Realizing that 85% of your Parts gross profit is generated from your Service and / or Collision Departments (and that they are truly the salespeople for the Parts Department) is vital in building a growth strategy for your Parts Department.

Let me explain a key correlation for your Parts and Service Departments.

When dealers are asked how much total gross profit they generate for every dollar of labor they sell, we generally hear an answer like this: “We have a gross profit on labor of 75%, so that would mean we earn 75 cents of gross profit for every $1.00 in labor that we sell.”

While that answer will appear accurate on the surface, it actually is incorrect. Remember, I said the Service Department is the salesforce for the Parts Department, and when I asked how much total gross profit is generated from every $1.00 in labor sales, this changes the previous answer. Because there is a relationship of Parts to labor sales, for every $1.00 in labor sold, a typical dealership will generate approximately $1.25 in total gross profit. You have to remember that when you sell labor, Parts will naturally be sold with it.

Realizing that the Service Department generates the vast majority of the Parts Department gross profit, what would be the most effective way to grow both your Parts and Service Departments?

You need to sell more billable flat-rate hours! Both departments must be focused on this primary goal.

Are you starting to see how these managers must start working together for the good of their departments? So far, I’ve focused on why the Parts Department needs to get along with Service. You may be asking, “Why does service care?” It still comes back to the driving factor for both departments — producing more billable flat-rate hours. The Service Department can’t produce as many billable flat-rate hours if they aren’t working well with the Parts Department. Parts can slow down or even stop production, thus costing the Service Department the ability to produce gross profit for themselves.

What we need to find is common solutions that allow the Service Department to bill more flat-rate hours and the Parts Department to achieve more Parts sales through those hours billed. So, how do both managers find ways to increase the amount of flat-rate hours billed? Let’s start with what the Parts Department can do to help. Here are some thought starters:

1) Stock more breadth of Parts and less depth of Parts. With daily stock orders, departments need less depth of parts, or how many of each individual part number you have on hand. Then, you can repurpose this capital into having more part numbers in stock, thus increasing your breadth, or total number of parts that you have on hand. By having better breadth of Parts, the Parts Department will be able to have a higher filled-from-stock ratio. This will help keep Technicians in their bays producing billable flat-rate hours and help both departments grow.

2) Another way to increase billable flat-rate hours is to find ways to keep the Technicians in their bays working, rather than waiting at the Parts counter for Parts. The best way to achieve this is by delivering the needed Parts to the technician right to his bay. This saves walk, talk and wait time for the Technician, as they would normally make their way to and from the back Parts counter.

3) Stock fast-moving Parts in the express Service bays. At the very least, oil filters have to be in the bay, but in reality you should make provisions for additional fast-moving items like air filters, cabin filters and wipers. Service Managers, take note: once these parts are stocked in your bays to increase Technician productivity, the parts are now under your control and any shortages are the responsibility of the Service Department.

4) Aggressively chase parts rather than automatically subjecting the Service Department to the perils of the special order Parts process. If you can pick up the part locally from another dealer and complete the job today, do so.

5) Keep your Parts Department aware of the daily and month-to-date hours produced in the Service Department. Seldom will you have a great month in the Parts Department without your Service Department having a great month. Therefore, the Parts Department needs to know exactly how the Service Department is tracking.

By posting these numbers, this will keep the relationship of hours billed to parts sold fresh in your employee’s mind. Hopefully, this will make them more proactive in finding ways to keep the Technicians in their bays working rather than waiting in line, or talking about their latest fishing adventure.

You can even incorporate shop hours produced into the pay plans of back counter people to keep them focused on increasing flat-rate hours billed. This helps make them more open to solutions.

Those are some ways that the Parts Department can help the Service Department produce more flat-rate hours. But since this is a team effort, what can the Service Department do to assist in this effort?

The Service Manager and Department must realize that the Parts Department is a business partner with them, not a servant to them. The success of both Service and Parts will be greatly reduced if they don’t work together.

Think about this: how is the Service Department staffed? Do you have enough Technicians and Advisors? Are both of these positions selling and producing enough? If you’re short Technicians or Advisors, your labor sales will suffer, thus your Parts sales will suffer. This is a critical element for both departments. Remember: your Service Department is your sales staff for your Parts Department.

Next, track and scoreboard your “Parts sales to labor hours billed” ratio. This will help you determine any shortcomings that you have by individual employees.

The final suggestion that I would like to give is simple. Employees find ways to work their pay plans. If you want to increase Parts sales, include your “Parts sales staff”, meaning your Service Advisors. Incentivizing Advisors (along with Service Managers) will help increase your Parts gross profit and help break down some of the interdepartmental barriers, as they will feel more a part of the same team. Continue to promote teamwork to ensure that both departments are successful, as that’s how the dealership wins. Just like a football team, the offense must be successful and the defense must be successful for the team to win the game. One without the other just won’t get it done.

Permanent link to this article: http://blog.ncm20.com/2015/06/were-all-on-the-same-team-parts-service-helping-each-other-succeed/

Steve Hall

60 Seconds to Gain a Service Customer

Clock

Do you have 60 seconds to gain a service customer? Let me restate that: Do you have a structured 60 seconds to gain this customer? Why the emphasis on “structured”?  Let me explain.

Let me start with this.

If you are a dealership that doesn’t already perform an introduction of the new and used vehicle owners to the service department, then you aren’t quite ready to read this article. In that case, set the process in place, and get it started. Enough said?

Now, for the intended audience:

What does your customer introduction to the service department really look like? Think about this. You have just worked hard to gain a vehicle sale, and now your sales consultant completes the dealership “road to a sale” process by escorting the new customer to the service department for an introduction and to set the appointment for the first service visit. The salesperson stands with the customer in the service drive as the advisors are busily moving around. One of them is on the phone, one is with a client, and another is working on something, but we’re just not sure what. Five minutes pass by… OK maybe it’s only 45 seconds, but it feels like five minutes. Once the wait is over, the sales consultant and customer approach one of the advisors. The advisor glances around, looks at the salesperson and customer with a “what do you want” look, and he doesn’t even smile. Everyone can can tell that he’s distracted.

The salesperson tries to make the situation better and introduces the customer to the advisor with an enthusiastic phrase, but the advisor’s response is lukewarm. The advisor congratulates the customer on his purchase and says, “If you ever need anything, please let me know,” and then he hands over a business card.

At this point both the sales consultant and the service advisor feel that they have followed the process and have “done their job”.  But what really happened? Did the customer feel welcomed? Did the customer feel like you really wanted them to do business with you? Did your people provide anycompelling reason why this new customer should do business with you?

Your service department just had 60 seconds to win a customer – and you fumbled. Worse yet, you didn’t even realize the opportunity that you missed.

I am a firm believer that every new customer should be introduced to the service department, parts department, and the collision center. I am also a firm believer that these introductions should make a very positive impression on each customer. This is our time to shine! After all, this may be the only time that members of these departments ever get to see this customer, so we need to make a great impression.

To help you along the way, here is an introduction script that I developed for our NCM InstitutePrinciples of Service Management class.

Introduction Script:

Service Department Employee: Congratulations on your purchase. I would like to be one of the first to welcome you to our family. What type of vehicle did you buy? (as the customer talks, smile, nod in approval slightly, and listen… do not interrupt them.)

Customer: (Answers)

Service Department Employee: Terrific! May I ask what kind of vehicle you have been driving up until now?

Customer(Answers)

Service Department Employee: Well, we’re glad that you are joining our family now, and I’m sure that you will enjoy your (type of vehicle purchased). I would like to share a little information with you, so that you can feel comfortable anytime that you come in for service… 

  • (Point to the service doors.) You can see over here, these are the service entry doors. Any time that you need service, you will just pull up to them, and we will open them up and let you in. 
  • (Point to the service advisors.) Also, you can see the advisors over here. They will greet you and take great care of you any time that you arrive.
  • I would also like to reassure you that we are here for you. There is no reason to worry about anything pertaining to your vehicle, because we can handle it. Whether it is warranty work (which hopefully you will never need), routine maintenance, tires or anything… we can handle it for you. We offer highly competitive prices on everything, including oil changes. We will get you in and out quickly to make it most convenient for you.
  • But, most of all we want you to know that, since you have purchased your vehicle, you are now part of our family and we will take great care of you. 

Are there any questions that I can currently answer for you?

Customer: Not right now, I’m just excited to get the vehicle.

Service Department Employee: I’m sure you are. Here is my business card. Just know that if you ever need anything please let us know, and enjoy your car.

You can see that your employees will need to practice the script, but I’ve underlined the most important points so they are easier to learn. You will also need to modify it slightly for customers that are currently servicing their vehicles with you, but you get the concept. As a final tip, I suggest that the sales consultant carry a color-coded, bright yellow clip board when he escorts the customer to the Service Department. The yellow clip board signifies to the service department employees that the salesperson is accompanied by a new dealership customer and not a “heat case.”

Consistently perform and flawlessly execute the structured 60 seconds approach to win over the customer, and it will become one of the most profitable investments of time ever spent with your clients.

Permanent link to this article: http://blog.ncm20.com/2015/05/60-seconds-to-gain-a-service-customer-2/

Jeff Cowan

The Myths of Writing Service Part 1

writing_service

The automotive industry is filled with myths regarding service writing. I think they hang around so long because myths are convenient excuses not to change. They certainly give us license to be lazy and ignore problems!

Today, I list some of the most common myths surrounding the writing of service and hopefully, once and for all, make the many believers of these myths see otherwise.

Myth: If you write service and have a high closing ratio and high customer paid repair order averages, then it is impossible to have high survey scores and/or high customer retention.

Fact: I know hundreds of service writers who complete the trifecta month after month year after year.  The difference is how hard you are willing to train a person and hold them accountable. If you expect and allow the myth to come true, it will, but it doesn’t have to. Think high-end restaurant here.  If you visit a five star restaurant, like Ruth’s Chris you will experience servers that please people, sell plenty of appetizers, desserts and drinks, and have people return in the future and request them.  As a matter of fact, if they cannot do those things, their service will not be retained and they will be let go. They accomplish the trifecta because they are trained to and then held accountable.

Myth: It takes at least a year before a service advisor can be a top producer.

Fact: If it takes that long, you simply hired the wrong person, did not train the person to be successful, or the person has no goals and desire to perform. If a new service writer is not meeting or exceeding your minimum standards within ninety days of their start date, it is likely they never will. If this is a concern for you, change your interview practices and/or your training program.

Myth: Finding a great service advisor is next to impossible.

Fact: The average service writer makes $65,000 annually, gets two weeks paid vacation, and has a benefit package that rivals some of the biggest industries.  An employment package like this puts them in the top twenty-five to thirty percent of income earners in the country. It allows them to have a house that will average 2300 square feet and drive a new vehicle in the thirty-five thousand dollar range.  And if they have a spouse that works, add in another vehicle and another eight hundred square feet of house.  All that said and you can’t find these employees? You need help with your ads, your interviewing techniques and help in knowing how to sell a marvelous, highly satisfying, and rewarding career like service writing.

Myth: A great service writer rarely makes a great manager.

Fact: Not if you pull them out of their job writing service one day and then stick them in the manager’s chair the next without any coaching.  The mistake I see here is we constantly put people in management because they understand the technical side of the business, are well liked, and appear to want to go the extra mile.  The first and most important thing to look for in a new manager is their ability to lead, make decisions, and make those around them better. Those are things, just like the technical side of the business that can be taught and learned by a willing student. To develop tomorrow’s leaders from today’s service writers, you have to teach them how to lead and make good decisions as they perform today’s job. Teach them to prepare for the next step up the ladder as they occupy their current step.

Myth: Service writers can handle more than fifteen customers a day.

Fact: Not if you want to have high survey scores, high customer retention, high closing ratios, high customer paid sales and the maximum profits. For years, I have said this in nearly every meeting I conduct. If you allow your service writers to write more then fifteen repair orders a day, then forget about the high numbers in the fore mentioned areas. If you choose that path, you are now limiting your service writers to be high volume clerks.  You can and will make some profits off the high volume sales template, as that is the very way most dealerships allow their service writers to work. But the other numbers simply will not be there for one reason: lack of time.  If you want to have high survey scores, customer retention, closing ratios, hours per repair order, and maximum profits, you have to give your writers the time to sell and work with the customers. You only have the right in my mind to expect high numbers in all categories if you limit and control the number of tickets written in a day to fifteen or less.

Myth: Service writers will not do what is asked of them like walk around vehicles and memorize word tracks or respond well to authority.

Fact: No, they do not respond to weak leaders and weak leadership.  If that is your problem, then your problem is clearly a question of you or your manager’s ability to lead and command respect. Think of your service writers as vendors.  It is a business deal.  You require them to do what you ask, and they either do it and get to remain on your preferred vendors list or they do not do what you require and you find a new vendor.  Easy to do. Read myth three again.

Myth: It takes a special service writer to be able to handle high line vehicles because high end customers are different.

Fact: High line customers are rarely different than the non-high line customer.  As a matter of fact, they many times are the same exact customer. Literally.  For example, I drive a Mercedes, my wife drives a Ford.  Furthermore, look at the very street I live on.  There are fifteen houses.  Each driveway has either a Mercedes, BMW, Audi, Porche, Tesla, or Lexus in it. In addition, each of those driveways is Ford, Chevy, Toyota, Nissan, Hyundai, or Honda. Regardless of which vehicle we drive, we simply want to go to a place where they are enthusiastic, caring, honest, can get the job done, and where their skill and approach make us want to return for future visits. My CFO is a perfect example.  When she needs service, she drives past her Infiniti dealership to do business with the Toyota dealership simply because, in her words, “I get better service at the Toyota dealership.

As I have noted many times, I am a student of history.  Studying history I have seen time and time again that once a myth is dispelled, great advances routinely follow. In the future, whenever you hear something that sounds like a myth or hear an excuse from your staff and those in the business that impedes your ability to advance; question it, challenge it, and test it before succumbing to its restraints. Then you will be poised to break free from the myth’s chains that bind and make advances that will make your Dealer Principal happy. Because, in the end, it gets down to one simple fact-like being married, if the Dealer is happy, everybody is happy – and that ain’t no myth.

Jeff Cowan is considered the creator of the modern day walk around and selling processes for service departments everywhere. His company, Jeff Cowan’s PRO TALK, Inc. is recognized as North America’s number 1 fixed operations training company.

©Copyright Wm. Jeff Cowan 2015

Permanent link to this article: http://blog.ncm20.com/2015/02/the-myths-of-writing-service-part-1/

Jeff Cowan

Six Tips to Having Your Best Service Year Ever

service

As the tide rolls out on 2014 and we look ahead to the new incoming tide of 2015, it is time we sit down and start to plan for what I believe will be a record year for service department sales.

Since the recession began back in 2008, I have witnessed many service departments experiencing their best years, year after year. Although the number of service departments having their best years has not increased much with each passing year, those who are having record years understand that it is not happening because of luck. It is happening because they are identifying their roadblocks, developing plans to navigate around those roadblocks, setting minimum acceptable standards, and executing.

Having worked with literally hundreds of these successful service departments, I will share with you their secrets of how and why they are so successful.

Tip #1:

They have processes that have created a sales culture throughout their entire service department — processes that guarantee no matter who a customer speaks with in the service department, they will be spoken to and handled in the exact same way. The managers in these successful stores understand that just like in selling, you have to take control of a customer, and they understand that you must do the same with your staff. Take control of them, train them, require the memorization of word tracks and processes, and then make sure your staff executes. They fully realize that if they are not in control of their staff and their customers, their staff and customers will control them.

Tip #2:

They have all the latest tools needed (including multi point inspection processes) which are utilized to their fullest by both their technicians and their service advisors. They have tablets to make the check in process cleaner and quicker. They have up to date displays which are inviting and easy to work from. They have processes in place to maximize the technologies of email, texting, telephones and video to communicate to their customers in the most efficient ways possible; ways that today’s customer welcomes with open arms.

Tip #3:

They have some type of rewards system that remunerates their best customers for repeat business. Think airline mileage programs. They know that these types of programs are what truly accelerates customer retention, and they never rely on cheap prices and coupons. That said, they will use coupons, but with an advertised “value price” and not necessarily the cheapest price.

Tip #4:

They have processes to guarantee that every declined service and every missed check in time is followed up within 24 to 48 hours, maximizing every opportunity and showing their customers how serious their shop is when it comes to maintenance, repair, and providing great service.

Tip #5:

They approach training from the stand point that training is not something you did. It is something you do – forever. They have a basic training course that every service employee must attend when first hired, where they earn a certificate. This is followed by weekly fifteen minute sales meetings, capped with a monthly hour long sales meeting, where strengths and weaknesses are examined and corrected as needed. They typically have a recertification meeting once a year, because they believe all training certificates should come with an expiration date. They also look outside their own business for training, to make sure that they do not become stagnant and that their message does not grow tired.

Tip #6:

They schedule annual meetings with each employee to discuss goals, each individual’s role, and what they are being held accountable for. They have a briefer quarterly meeting to make sure that their goals are on track and stay on track. Their mantra tends to be, “It is not about any single employee; it is about every single employee.”

In addition to all of these major items, there are minor things they do as well to ensure their success. They take this seriously and execute it with great enthusiasm, because they clearly understand that if the customer is not “wowed” every single time, there may not be a next time. They get that they are there for the customer and if there is no customer, there is no job security.

As many of you know, I am out in the field on a consistent basis and have been for over 29 years. I may not know everything, but I see a lot. I receive telephone calls all the time from dealers and managers asking exactly what these dealerships do to have these record years. That question arises in nearly every meeting I am in. When I spell out what I have spelled out here, a few heed the advice and steer their ships toward newer and greater horizons. However, many more write it off as too much work or unrealistic and remain on the same ship in the same rough waters, never seeming to realize that it is they who need to simply plot a new course and guide their ship to discover these newer, bigger horizons that await all who are willing to navigate the waters.

service_mgmt

Permanent link to this article: http://blog.ncm20.com/2014/12/six-tips-to-having-your-best-service-year-ever/

Jeff Cowan

Who’s Failing Who? How to Improve Your Service Department

apptmnt

I have a friend who called me up in late June and asked me for some help. His daughter Tammy, who had graduated college the year before, was having trouble finding a job.  He knew I’m in the automotive industry and wanted to know if there might be an opportunity for his daughter. Knowing Tammy, I was thrilled to think that this bright young woman would have an interest in an industry that I love so much.

Although her college had been paid for, Tammy, not one to be idle, worked a part time job as she went to school. She worked at Starbucks for a while, but worked the bulk of her college years at an electronics and appliance store. She started out in customer service but quickly moved to the sales floor, as the managers saw that she had a work ethic and personality more suited for sales. After making that move, Tammy earned more than her share of spiffs and small awards for her ability to work with and sell to customers. This did not surprise me, as I had always known Tammy to be a happy, outgoing type of person; the type that could one day be a great salesperson if that is where her heart lead her.

Anxious to help, I recommended she give writing service a try. I told her how she could earn an income of $50K plus annually, and over a short period of time, 50% more than that. I explained to Tammy all the benefits of the job, explaining that although it might be tough, it could be a very rewarding career choice for her. Being the motivated, hard-working person she is, she immediately started applying at dealerships in her area. She was hired within one week of looking.

Tammy started at a GM dealership in July. This particular dealership has about 50 vehicles visit its service department every day. The pay plan she showed me was one that would allow her to make the $50k plus annually, just as I had told her, with a decent benefit package. She was stoked to say the least. With this job, she could accomplish her dream of being totally independent and on her own.

As I write this, it has been just over three months since she started. It has been nothing short of a disaster. She is averaging about $1,700 a month in gross income with no big upswing visible in the near future. Everything I had portrayed the job to be has not panned out. What went wrong?

1. In three months’ time, she has received one hour of training. That training came from the factory rep. He happened to stop by the dealership 35 days after she started. He was kind enough to spend an hour with her to show her some “tricks” on her computer.

2. With it being July and right in the heat of the summer, the advisors she shares her day with were supposed to help her learn the job. They did not. My assumption is that either they did not have the time, simply did not want to, or most likely, did not know how to do the job themselves, since their numbers are ridiculously low as well.

3. Her manager, who seems to be always missing or putting out fires, has spent zero time with her beyond normal chit-chat and monthly team meetings where he talks about the importance of better numbers – “Talks about,” yet gives no instruction on how to get these better numbers. The General Manager, however, taking a liking to Tammy and seeing her struggle, bought her a copy of the book “Gung Ho!” He felt by her reading the book, it would help improve her survey scores.

4. Morale is understandably low since no one is making anything close to the money they were told they could make, and would make with some training. What is even more demoralizing for the service staff and Tammy, is that they witness every week how the vehicle sales staff get endless training, endless spiffs, and have regular Saturday auto sales contests with hundreds of dollars in cash being handed out.

I have advisors write and call me all the time with similar stories, and although I have always felt for these advisors, it never quite resonated with me until I saw it happen first hand. I know that not all dealerships are like that, but by my best guesstimate, I believe that somewhere between 30 to 50% are, just based on the communication we have daily with dealerships who are seeking us out to improve their service profits.

Personally, I don’t get it. Why would someone go to the trouble of finding the land, building the facility, inventorying it with millions of dollars of inventory, spending thousands to get people to walk in the door and then stop short by a very few thousand dollars to train their employees to be prepared for their customers? We in the auto industry cry and scream for people to come and join our employment ranks. We are stunned that more would not want to, with all the industry has to offer. Yet it is easy to see why they do not. Just like an untrained salesperson will run your customers off, any business who does not train their employees will run those employees off.

As far as Tammy goes, she is now talking about leaving the car industry, not because she wants to, as she sees great potential in it. She is leaving it because her whole reason for going to school and working is not being met; the need to be independent and live without a handout, or the aid of others.

What a shame. I thought young, educated people were what we wanted and needed in our industry! If they truly are, we will never attract and keep them with our current approach. I did give Tammy access to my training, but as I was not able to be with her on the drive every day (living 2,000 miles away), I could not show her how it worked and coach her the way she and the rest of the staff needed to be coached.

All this to say: If you’re wondering why your advisors or service department is not meeting your goals, here are a couple of things to think about or address:

  1. Do you actually have a solid and ongoing training process for each advisor hired at your store – for veterans and rookies alike?
  2. Does your Service Manager hold daily and weekly meetings where they coach, critique and role play?
  3. Do you have clear, concise goals for your staff to meet?
  4. Do your managers themselves understand the profession of selling?
  5. Do you as a Dealer, General Manager or Fixed Operations Director fully understand the opportunity missed by not having a fully trained staff, prepared to meet and handle any situation in a proactive way?

Permanent link to this article: http://blog.ncm20.com/2014/10/whos-failing-who/

Steve Hall

Customer Retention in the Service Department (Part Two)

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

Service Advisor 2

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

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

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

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

The Advent of Express Service

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

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

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

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

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

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

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

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

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

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

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

Steve Hall

Customer Retention in the Service Department (Part One)

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

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

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

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

Future Sales and Service Loyalty

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

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

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

A Focus on Retention Leads to Total Dealership Growth

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

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

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

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

Bob Sloan

The Importance of Increasing Car Count

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Car count is one of the primary metrics for measuring growth in the service department. An increase usually leads to additional shop hours produced and gross profit. A decrease is a call to action to determine the cause(s) as well as develop a plan to reverse this trend.

Determining car count today can be complicated due to the following:

  • Financial statement
  • Prepaid maintenance
  • Express or quick service

Financial Statement

Some statements provide separate accounts for prepaid maintenance and express or quick service.  The factory accounting manual outlines how to handle these labor operations as well as traditional customer pay work

Recommended Action: Review factory guidelines to ensure proper accounting regardless of financial statement.  You cannot make valid comparisons unless the data is accurate. If not properly accounted for, DMS systems can double count repair orders feeding into your financial statement.  Therefore it may appear that your car count is increasing when actually it may not be.

Prepaid Maintenance

Several manufacturers provide no-cost prepaid maintenance in addition to offering factory backed prepaid maintenance contracts. Coverage varies from comprehensive plans like BMW to limited plans that provide basic oil and filter changes. These plans are designed to improve customer retention during the initial ownership period. Consistent follow up is key to ensuring vehicle owners remain “active,” especially after the prepaid maintenance period.

Recommended Action: Measure service retention by VIN and follow up with owners after the prepaid maintenance period to ensure they remain your customer.

Express or Quick Service

Most manufacturers are either encouraging or mandating that dealers offer customers some form of express or quick service.  This could be a structured program like Quick Lane (Ford) or simply a recommendation to set aside one or two bays for this work.  The primary goal is to be convenient while offering competitive prices.

Recommended Action: Do your homework and research the need and potential for express service in your market.

Summary

Car count is not the same as measuring the number of customer pay, prepaid maintenance or express repair orders. Car count represents the number of visits per vehicle (VIN) during a specific time period. It is a more accurate measure of service retention and owner loyalty.

Recommended Action: Begin today to track car count and develop a plan to improve or maintain your service retention using this metric rather than the number of repair orders.

To make this easier, many manufacturers’ web portals allow tracking by VIN’s serviced at your dealership. If you are unsure of how to get this information, ask your dealer representative for assistance. Remember they all start as your customers, what you do after that point makes the difference.

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Permanent link to this article: http://blog.ncm20.com/2014/08/the-importance-of-increasing-car-count/

Jeff Cowan

How Service Appointments and Reservations Destroy Customer Retention, Survey Scores and Upsells

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In my workshops I always like to have plenty of Q & A time so that I can address the real concerns that Service Advisors believe keep them performing at their highest level. One concern that never fails to be mentioned revolves around the issue of service appointments and reservations.

Typically, when your Business Development Center (BDC) or your Service Advisor sets your customer up with an appointment or reservation, the customer assumes it means the same thing as it does at a restaurant: when they arrive at the given time, their seat will be ready with no waiting. And just as when they make airline reservations, they expect to be on the plane backing up from the gate at that reserved or appointed time. When you set up a reservation or an appointment for your customer, they have been trained by business in general to believe that the work will begin at the appointment time. No matter how many times or how well you try to explain to your customers what is really going to happen upon arrival, the mere usage of the words “reservation” or “appointment” reinforce their belief that the work will begin at the exact time of the reservation.

This is a serious problem.

According to what I hear from your Service Advisors, and based on what we witness when providing our training on your service drive, three fourths of the customers your service staff work with everyday have this misunderstanding at the initial write up. As your Service Advisors try to explain that the time set for the appointment was for the purpose of gathering information, the exchange with the customer quickly turns into an argument. Therefore the write up and the relationship began with an argument. An argument that your staff can’t win; an argument that takes about six minutes to resolve; an argument that only gets the customer thinking that what they were told was just a ploy to get them in; and an argument that sets the mindset that you don’t do what you promise. Anytime you start out a relationship like this, you put yourself at a big disadvantage toward accomplishing the goals of customer retention, high survey scores and the chance to acquire any necessary up sells.

The simple and easy solution to stopping this and turning it around is as simple as implementing the following two steps.

Step 1: In service, never use the words “appointment” or “reservation” again. Not verbally. Not on signs. Not in print. Not online. Not anywhere. Appointment and reservation times imply an exact time that an event is going to begin. Check-in time implies that waiting will be involved. For instance, when you go to the airport you are encouraged to arrive two hours prior to check-in. Once you check-in, the next step is to wait for the reservation time when you will board the plane and take off.

From now on, you are going to start scheduling “check-in” times for your service customers so that after they check-in, they will wait for the appointed time set by the Service Advisor after they have had a chance to talk with the customer in person about their needs. In the customer’s mind, appointment and reservation times indicate that the event will commence at that specific time. Check-in time however, precedes an appointment time. In the customers mind, check-in time refers to a preliminary period designated for the collection of information. After the information is given, an exact time for work to begin can be determined. Check in time and its implications are familiar to customers.

Step 2: Now that we have replaced the words “appointment” and “reservation” with “check-in” time, the following word tracks are how you are going to explain check-in times and stop the arguments forever.

Word track one is to be said by your BDC or by the person scheduling the check-in time:

“Now that we have established your check-in time for 9:00am tomorrow, allow me to take a minute to explain to you what that means and what will happen once you arrive. First, you will want to arrive as close to your check-in time as possible. Getting here early means you will have to wait and getting here late could result in you losing your place in line. Once you do arrive, your Factory-Trained Service Advisor will be ready with all of the information you just gave me.

During the first part of the check-in process they will go over all of this information to ensure that I wrote everything down correctly, to make sure they understand what your concerns are and to see if anything needs to be added to your list.

The second step in the check-in process is when you and your Factory-Trained Service Advisor will walk around your vehicle to collect numbers off your vehicle and do a quick visual inspection.

The third part of the check-in process is when it will be determined which department and which Factory-Trained Technician will be the one best suited to diagnose and repair your vehicle. That decision will be based on what you and your Factory-Trained Service Advisor discussed and saw during the earlier part of the check-in process.

Once that is determined we will then look at the schedule for that department and Factory-Trained Technician and that will determine approximately when your vehicle will enter our state of the art shop.”

By using this one minute long word track, I have fully explained to the customer exactly what to expect when they arrive, exactly what happens if they are early or late, and exactly what will happen and why. I have explained that the check-in time does not mean reservation or appointment. I have explained and prepared them to wait. Once they arrive prepared, the Service Advisor has two word tracks to deliver:

“Thank you for arriving on time to get your vehicle checked- in. Now that you are here let me explain to you what we will be doing to get your vehicle checked-in. First, I will be going over all of the information you gave us on the telephone to ensure that it was written down correctly, to ensure that I understand your concerns, and to add anything that needs to be added.

Once that is done, we will both walk around your vehicle to collect some numbers off of it and to do a quick visual inspection. Based on what we discuss and what we see during the visual inspection, we will select the department and or Factory-Trained Technician that will be best suited to address your concerns today. Once that is determined, we will take a look at their schedule which will dictate approximately when your vehicle will enter our state-of-the-art Service Department.”

After the Service Advisor completes everything as they said they would, they follow with this final check-in time word track:

“Now that we have reviewed all of your original concerns and have completed our visual inspection, I believe the department/ Factory-Trained Technician that would be best to diagnose and repair your vehicle would be ____. Right now they are working on another customer’s vehicle, so it is likely your vehicle will be entering our state of the art facility at approximately _____. Let’s give them about one hour to an hour and a half to complete your diagnosis, meaning you can expect a telephone call from me between ____ and ____ with an update on the status and findings regarding your vehicle. Fair enough?”

By using these two word tracks, which combined take one minute to deliver, you have done the following:

  1. You have started the relationship on an up note and not with an argument.
  2. You have done everything to the letter that your BDC told them you were going to do.
  3. You have established the reality that when you say something is going to happen, it is going to happen. They can count on you.
  4. You have saved about four minutes at the write-up by being in control of your customer and the write-up itself.
  5. You have slowed the customer down giving yourself more time to build rapport and inspect their vehicle which will substantially impact customer retention, survey scores and your ability to get necessary upsells.
  6. The customer has been educated that speed is not the most important thing in getting their vehicle repaired.

It’s really that easy.

By changing your verbiage from appointment or reservation to check-in time and by delivering these three, simple word tracks, you will experience immediate impact and the arguing will end forever. I have always felt the best way to win an argument is to eliminate all possibility of an argument arising. You can always tell a great Service Advisor by the number of scars they have on their tongues from years of biting back argumentative words. The solution I have presented here will do two things; stop the arguments before they start and save your Service Advisors from acquiring unnecessary scars.

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Permanent link to this article: http://blog.ncm20.com/2014/07/how-service-appointments-and-reservations-destroy-customer-retention-survey-scores-and-upsells/

Steve Hall

60 Seconds to Gain a Service Customer

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Do you have 60 seconds to gain a service customer? Let me restate that: Do you have a structured 60 seconds to gain this customer? Why the emphasis on “structured”?  Let me explain.

Let me start with this.

If you are a dealership that doesn’t already perform an introduction of the new and used vehicle owners to the service department, then you aren’t quite ready to read this article. In that case, set the process in place, and get it started. Enough said?

Now, for the intended audience:

What does your customer introduction to the service department really look like? Think about this. You have just worked hard to gain a vehicle sale, and now your sales consultant completes the dealership “road to a sale” process by escorting the new customer to the service department for an introduction and to set the appointment for the first service visit. The salesperson stands with the customer in the service drive as the advisors are busily moving around. One of them is on the phone, one is with a client, and another is working on something, but we’re just not sure what. Five minutes pass by… OK maybe it’s only 45 seconds, but it feels like five minutes. Once the wait is over, the sales consultant and customer approach one of the advisors. The advisor glances around, looks at the salesperson and customer with a “what do you want” look, and he doesn’t even smile. Everyone can can tell that he’s distracted.

The salesperson tries to make the situation better and introduces the customer to the advisor with an enthusiastic phrase, but the advisor’s response is lukewarm. The advisor congratulates the customer on his purchase and says, “If you ever need anything, please let me know,” and then he hands over a business card.

At this point both the sales consultant and the service advisor feel that they have followed the process and have “done their job”.  But what really happened? Did the customer feel welcomed? Did the customer feel like you really wanted them to do business with you? Did your people provide any compelling reason why this new customer should do business with you?

Your service department just had 60 seconds to win a customer – and you fumbled. Worse yet, you didn’t even realize the opportunity that you missed.

I am a firm believer that every new customer should be introduced to the service department, parts department, and the collision center. I am also a firm believer that these introductions should make a very positive impression on each customer. This is our time to shine! After all, this may be the only time that members of these departments ever get to see this customer, so we need to make a great impression.

To help you along the way, here is an introduction script that I developed for our NCM Institute Principles of Service Management class.

Introduction Script:

Service Department Employee: Congratulations on your purchase. I would like to be one of the first to welcome you to our family. What type of vehicle did you buy? (as the customer talks, smile, nod in approval slightly, and listen… do not interrupt them.)

Customer: (Answers)

Service Department Employee: Terrific! May I ask what kind of vehicle you have been driving up until now?

Customer: (Answers)

Service Department Employee: Well, we’re glad that you are joining our family now, and I’m sure that you will enjoy your (type of vehicle purchased). I would like to share a little information with you, so that you can feel comfortable anytime that you come in for service… 

  • (Point to the service doors.) You can see over here, these are the service entry doors. Any time that you need service, you will just pull up to them, and we will open them up and let you in. 
  • (Point to the service advisors.) Also, you can see the advisors over here. They will greet you and take great care of you any time that you arrive.
  • I would also like to reassure you that we are here for you. There is no reason to worry about anything pertaining to your vehicle, because we can handle it. Whether it is warranty work (which hopefully you will never need), routine maintenance, tires or anything… we can handle it for you. We offer highly competitive prices on everything, including oil changes. We will get you in and out quickly to make it most convenient for you.
  • But, most of all we want you to know that, since you have purchased your vehicle, you are now part of our family and we will take great care of you

Are there any questions that I can currently answer for you?

Customer: Not right now, I’m just excited to get the vehicle.

Service Department Employee: I’m sure you are. Here is my business card. Just know that if you ever need anything please let us know, and enjoy your car.

You can see that your employees will need to practice the script, but I’ve underlined the most important points so they are easier to learn. You will also need to modify it slightly for customers that are currently servicing their vehicles with you, but you get the concept. As a final tip, I suggest that the sales consultant carry a color-coded, bright yellow clip board when he escorts the customer to the Service Department. The yellow clip board signifies to the service department employees that the salesperson is accompanied by a new dealership customer and not a “heat case.”

Consistently perform and flawlessly execute the structured 60 seconds approach to win over the customer, and it will become one of the most profitable investments of time ever spent with your clients.

Permanent link to this article: http://blog.ncm20.com/2014/06/60-seconds-to-gain-a-service-customer/

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