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Wayne George

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

recall

Experts believe that we’ll see more frequent and larger automotive recalls in the future, as regulatory agencies increase their scrutiny of the automotive industry. After a record-breaking number of recalls in the last few years—and today’s highly publicized emissions concerns—it looks like that is a safe bet.

Fortunately for dealers, though, owners report that they are pleased with service during recalls. The J.D. Power 2015 U.S. Customer Service Index Study found that “overall satisfaction among customers who take their vehicle to a dealer for recall-related work improved to 789 on a 1,000-point scale, up from 777 in 2014.”

It’s clear that while recalls may strain the service department, they present a great business opportunity for your dealership. Here’s my checklist to help your dealership get the most out of manufacturer recalls.

First, the basics:

  • The primary goal of every recall should be to retain all your current customers by providing them with exceptional customer service.
  • The second goal is to “WOW” any first time or former customers during this visit in order to make them or recapture them as service clients.
  • Every recall comes with problems, so get your team together and create plans that address anticipated issues.
  • Make sure every vehicle serviced is handled as you would a customer pay repair.

Now, how you can make a stellar impression and secure more customers:

  • Make sure your team has a plan in place that assures an email address is captured or verified for every recall customer that comes into the shop.
  • Specifically identify any new customers or former customers. These are people new to your area, customers that have never returned for service or customers you once serviced that have not been in during the last 6 months.
  • Have a promotional package of “Welcome” or “Welcome Back” materials that will bring these customers back to you for future maintenance. Do not sell any repairs or maintenance during this visit. Only complete the recall repair unless something is specifically requested by the customer, or if you discover a problem with a safety related item.
  • Be sure that your Service Manager (not a clerk or an advisor) contacts every one of these “newly found” customers after their visit. We want to know how the repair visit went and also want to take the opportunity to welcome them back for future service.

Have manufacturer recalls positively or negatively impacted your business? What steps have you taken to ensure you’re getting the most from these opportunities? Tell us below.

Permanent link to this article: http://blog.ncm20.com/2015/11/more-manufacturer-recalls-are-coming-heres-your-checklist-to-make-the-most-of-them/

Wayne George

Five Tips to Build Your Most Successful Forecast Ever

Take Notes

There are many dealerships every year that embark on forecasting exercises. There are many that do not because their past experience has not been that productive. Let’s explore some techniques and tips that can help you come up with numbers for 2015 that will make your goals much more achievable.

Tip #1: Start with the end in mind.

By working backwards when building a forecast, you will be forced to address some issues that normally are overlooked. If we start with the desired Net Profit for the store, we can work backwards from there. If 2014 will result in net profits of $1.5 million dollars, the first approach to forecasting 2015 will be to dissect how we got to $1.5 million. Here are some questions that will need to be answered very honestly and candidly:

What percent of the gross produced did we retain? Were we a 30% net to gross store or did the $1.5 million come to the bottom line after we spent 85% of the gross (15% net to gross)?

Is any sub-par retention of gross an expense control issue or is it a result of sales and service volumes and lagging gross production?  (Hint – we all know it is usually a little of both).

If you are already netting out at 35 – 40% net-to-gross, then how much more can be produced? Small increases in sales and service volumes will produce huge increases in net dollars.

Did your management team have any input in setting the 2014 goals? Were all of the goals reasonable or was there some “fantasy” in the numbers?

Tip #2: Determine the total store net profit that should be produced before all “other Income” is accounted for. This becomes the objective for all departments in total.

Once you have decided on a reasonable Departmental (Operational) Net Profit number, assign each department their share of profit they will be responsible for generating. Now it’s time for the hard work. Each department head should be tasked with an exercise that has them identify any expenses that can be eliminated or reduced from this year’s operations. This will create your operating budget for 2015.  Now that you have that expense budget, you can start forecasting for sales and gross numbers. Then, run a test and see if the sales and budget will reach the desired net.

This is now the critical stage. Be very suspect of any increases in sales volumes, sales grosses, service volumes and gross, etc. If those numbers were that easy to do, why would you not already  be hitting them? Be relentless in your questions. Make the team develop action plans with timelines that will support their numbers. If the 2015 market is similar to this year, we know we can’t get better by just continuing to do the things we are currently doing; some things will need to change.

Tip #3: Give the forecast enough time.

Start this process well before December 31st. Be prepared to meet with your team over a few weeks. Break it up in steps that can be digested and allow time for buy-in. Defensive postures will diminish with time. Be sure their action plans are reasonable and measurable.

Tip #4: Set some stretch goals.

The forecast should not be the destination, but just a stop along the way. Ask your team for some stretch goals after the forecast is done. Don’t mention this until the last meeting when the numbers are finalized (this will help prevent sandbagging). Then reward them for achieving both sets of numbers.

Tip #5:  Review and adjust accordingly.

Once every three months there needs to be a formal “Forecast Meeting” where all of the agreed to objectives are reviewed. Adjustments are OK if warranted by a sudden shift in the market. But, if it is due to poor execution of their plan, it will require a separate conversation.

Make the numbers crystal clear, create the plans to reach them, execute the plan, and then hold everyone accountable.

Good selling.

Permanent link to this article: http://blog.ncm20.com/2014/11/five-tips-to-build-your-most-successful-forecast-ever/

Wayne George

Positioning Your Store in the Recall Era

reacall

Every recall comes with a certain amount of pain and customer discontent. Some of the current recalls that have been announced are extremely volatile. So what, if anything, can you do to keep your entire store’s mindset positive and in a position to continue to thrive and grow?

Some of the ideas worth sharing are just a repeat and reinforcement of basic fundamentals when dealing with customers. During times of stress we will want our people executing fundamentals as opposed to showing frustrations with a challenging situation.

So where should we start?

Well, why not call a team (store) meeting and openly discuss what the most current recall is going to challenge everyone with? If we can clearly communicate the problem and provide everyone in the store with a common goal or two when dealing with these issues, we stand a better chance of retaining, or even recapturing an upset customer. Let the staff offer some of their own suggestions for ways to address the current recall. Some of the front-line folks might have better suggestions or solutions than we can provide them with. Insure the staff that the goal will be to come through the situation with a stronger, more loyal owner base. Keep them engaged and modify any plans quickly if unforeseen problems occur.

We will have a chance to “WOW” many customers during these events. So identify the most likely issues with the recall and make a plan to be sure that your people are empowered to turn a customer into a raving fan when the issues arise. You will also have the opportunity to re-engage with customers that, for whatever reason, have abandoned your store as their place for service. Everything possible should be done to recapture these defectors. New customers that have never been to your store will show up. If they are within a 5 to 10 mile radius of the store, be sure you have a plan to blow them away with customer service.

Make sure your people resist the urge to sell anything that is not safety related. Absolutely do your multi-point inspections, but turn down the sales pitch a notch or two. There can easily be a follow up on non-sold repair recommendations handled by your staff a few days later. Safety items, however, always need to be addressed.

Be sure your staff is taking the opportunity to verify, capture or update all contact information in your system regarding email, cell phone and physical address of every recall customer. Offer these folks some sort of “return visit” incentive. For example:

  • $15 off scheduled maintenance within the next 60 days
  • Free alignment checks
  • Discounted oil change packages

You get the idea. Have your people help with this promotion. And lastly, be sure you contact the customer after the visit and check on how everything went while they were in.

These are all basics, but in looking at the near future, we are in for many weeks and months of this — so let’s be sure the entire dealership staff is looking at this as a positive situation for the long term health of the store.

service

Permanent link to this article: http://blog.ncm20.com/2014/05/positioning-your-store-in-the-recall-era/

Wayne George

Show Me How You Pay Them and I Will Show You How They Work

moneyMany years ago, one of my first mentors uttered this well-known mantra. I knew what he meant, but I had no idea at the time how true his words were. Over the years I have found that, just like many of you in the retail world, crafting an effective pay plan is much harder than it sounds.

In fact, one of the most frequent requests of our NCM 20 Group and NCM Consulting clients is help with pay plans. Almost every group meeting we prepare for has at least one request for members to provide copies of pay plans for various positions. We also get numerous calls and emails every month looking for pay plan templates for all aspects of dealership operations. If only it was as easy as a template.

What I and many of my colleagues have learned over the years is that a good pay plan in one dealership may or may not work in another dealership. There are so many variables to take into account that we can’t just deploy a pay plan from one dealership into another without some careful consideration. In fact, there is no such thing as a perfect template. These cookie-cutter approaches work at various levels of effectiveness, and not always in the best interests of all involved.

So rather than share another dealership’s pay plans, let’s take a look at one possible way to develop your own. I have been using this method for years with fairly good results. Did every pay plan from this method work? No, but many more have succeeded than have failed. The success rate is fairly good if the correct amount of thought and research is invested when developing the plan. So let’s get started.

Make it Competitive, but Fair

The first consideration of any pay plan is making sure it is competitive and fair to all parties involved. If it is structured properly, there will be little need to adjust or change the plan if compensation dollars go up. A properly designed pay plan will allow for income growth to the associate as long as operational results are going up proportionately. The plan will stay within the key expense guidelines for that job as a percentage of the gross produced by that associate.

Decide How Much the Job is Worth

With that in mind, the first step is to decide how much the job is worth in your market if performed slightly above average. Using the service advisor position as our pay plan challenge, we have determined that in our sample market this job is worth $6,000 per month for an advisor doing an above-average job. The next question, then, is how much does doing a good job pay? Again we have determined that we would need to pay at least $6,800 per month for a good job, and a great job would pay $7,500-plus.  Now we can build on this information.

Identify the Desired Activities & Results

The next and possibly most important part of this process is to develop a list of the activities, duties and results that are what you want the focus of the pay plan to address. You will want to create a list for yourself of your desired activities and results. What will be the associate’s focus? Will it align with yours?  Here is a partial list of some activities an advisor should perform:

  • Sell as many labor hours as possible in a professional and ethical way – Gross related.
  • Treat every customer with respect and as if they were a family member – CSI related.
  • Maintain an effective labor rate that is a reflection of a balanced mix of work written up.  No unauthorized discounts.
  • Present and sell menus and recommended services to every customer based on time and mileage of vehicle – Gross and CSI.
  • Greet every customer at their vehicle and do a walk-around with every customer – Gross and CSI.
  • Proactively communicate with customers throughout the day to keep them informed of the status of their vehicle – CSI and Gross.
  • Close and cashier and deliver all tickets that are ready for customer pick up – Salary related.
  • Cover for other service advisors when they are not at work or unavailable – Salary related.

Every list will be a reflection of what is important relative to the store’s goals and culture. You need to determine the priorities. The differences in every operation are what makes pay plans so difficult to overlay. But this approach means that the pay plan has not only become the method of earning dollars, it also provides the framework for a job description of that position based on the culture and goals of the store.

Prioritize the Activities

Once you have identified the non-negotiable job duties, it is time to categorize the duties in order of importance. For this example, let’s assume that my list was built in order of what I think are most important. Now assign them a value as a percent of the total compensation package.  In this store, we want at least 50% of the writer’s pay to come from selling or producing something – you decide what your percentage is. At 50%, that calculates to $3,000 per month. CSI in our sample store would be worth 15% of total monthly comp, or $900.  We always want some flexibility in any pay plan, so reserve 10% each month for spiffs and other targeted activities — $600. That leaves 25% ($1,500) as unallocated.  For this store we will assign that as salary.  Because these are monthly calculations, you may need to craft the numbers around how often you pay.

Document the Plan

The process now becomes a math exercise to document the actual pay plan.  How many hours do you want your techs to produce? Once you decide that number, then each advisor will be responsible for producing their share of the total hours needed to be sold to keep the shop full. How many dollars will the sale of those hours produce? How much Gross? You can do these calculations based on your store’s historical performance data. With this information, you can then decide what commission percentage of sales or gross dollars will produce the desired level of pay.

Let’s view the pay plan in a grid format. You will decide which portions of the pay plan will be paid weekly or monthly.

 

Advisor Pay $72,000 annually $6,000 monthly $1,385 weekly
Production based portion 50% $36,000 $3,000 $693
Salary 25% $18,000 $1,500 $345
CSI 15% $10,800 $900 $208
Misc. spiffs 10% $7,200 $600 $139

Test and Adjust

The last parts of any pay plan change or implementation is to back-test your numbers over the last three month’s results to see if it turns out the way you expected. Once tested, the plan is ready for presentation and implementation. You will probably be wise to protect the affected associates at their old level of pay (last 90 day avg.) for 2-3 months. This will allow for any needed adjustments to the plan to be made.  Once the protection period is over and any necessary adjustments have been made, the pay plans go live.

This process is may be more complicated than others, but it creates pay plans that clearly define the expectations of a job and what that will mean in wages when the results are tallied. So now it’s time to sit back and see the results of, “Show me how you pay them and I will show you how they work.” Let’s hope that everyone goes out and works their pay plan.

financial_analysis

Permanent link to this article: http://blog.ncm20.com/2014/01/show-me-how-you-pay-them-and-i-will-show-you-how-they-work/