Service Drive Magazine, November 2015 Issue by CBTNews

NOVEMBER 2015

Check out our daily newscast on servicedrivetoday.com

VOLUME 1, ISSUE 7

a CBT Automotive Network publication

INSIGHTS FROM LENCIONI AND DORSEY

ANALYZE YOUR PRICING

TO MAXIMIZE YOUR ELR

JOHN FAIRCHILD … see PAGE 10

TECHNICIAN PAY PLANS

THAT INCENT THE HABITS YOU WANT

Keynote speakers Patrick Lencioni, Jason Dorsey explore business management and millennials topics in advance of their presentations to the CBT Automotive Conference & Expo. ... see PAGES 8, 9

STAYING ON TOP OF SAFETY

AND ENVIRONMENTAL WORKPLACE RULES The latest tools from the Clean Auto Alliance aim to help your service operation comply with all government laws, regulations and audits. ... see PAGE 6

DAVID LEWIS … see PAGE 16

THINK AGAIN ABOUT USING GROUPON

TO MARKET SERVICES

Plus, Marcus Lemonis Joins Speaker Roster

PETER MARTIN … see PAGE 18

… see PAGE 5

A PARTS GROUP CAN HAVE A

BIG IMPACT ON SERVICE PROFITABILITY

CHUCK WENZLER

PRSRT STD US POSTAGE PAID Permit No. 1459 Pewaukee, WI

… see PAGE 20

GETTING THE MAX FROM QUICK SERVICE LANES You can’t just roll out express service and wait for customers to flock to you; follow these steps to make the investment really pay off.

CBT Automotive Network 5 Concourse Parkway Suite 2410 Atlanta, GA 30328

... see PAGE 12

A Patrick Lencioni

Magazine archives at servicedrivetoday.com

Nick Saban

Marcus Lemonis

Jason Dorsey

SCHEDULED RETENTION

MORE CUSTOMERS BUYING MORE STAYING LONGER

86%

of drivers who return for regular maintenance are also more likely to purchase their next vehicle from the same dealership.1 LEARN HOW TO CAPTURE THESE OPPORTUNITIES!

Visit easycare.com/servicedrive Or Call Us Today at 855.772.6590

1 PPM Driving Retention, Profits - March 2013, Auto Dealer Today. © 2015 Automobile Protection Corporation – APCO. EasyCare is a registered trademark of APCO. MOTOR TREND® is a registered trademark of TEN: The Enthusiast Network Magazines, LLC.

DEALERS, GMs, SALESPEOPLE, SERVICE MANAGERS, F&I MANAGERS, MARKETING DIRECTORS, BDC MANAGERS AND ALL OTHER DEALERSHIP PERSONNEL Check out CBTNEWS.com for news, information, best practices, training tips from the nation’s top automotive trainers, in-depth interviews with industry experts and more. It’s completely FREE to all dealership personnel!

Roger Penske Owner of Team Penske, The Penske Corp.

Mike Jackson Chairman, CEO & President of AutoNation, Inc.

Sandy Schwartz President, Cox Automotive

Nick Saban Head Football Coach, Alabama Crimson Tide

Mark Fields President & CEO, Ford Motor Company

Jared Rowe Division President, Media, Cox Automotive

Dale Pollak Founder, vAuto | Senior VP, Cox Automotive

Craig Monaghan President and CEO, Asbury Automotive Group

Bill Fox 2015 NADA Chairman

Jeﬀ Dyke Execurive Vice President, Sonic Automotive

Joe Verde President, Joe Verde Sales & Management Training, Inc.

Alan Mulally Former President and CEO, Ford Motor Company

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SERVICE DRIVE MAGAZINE

Letter From The Editor Dear Readers, Momentum is building fast and furious for our CBT Automotive Conference & Expo to be held Feb. 9-11 in Atlanta. To give you a better feel for the strategies you’ll hear at the conference for ramping up every department and critical activity in your dealership, this edition we bring you writings from two of our keynote speakers: business leadership guru Patrick Lencioni and millennials expert Jason Dorsey. Speaking of keynoters, Marcus Lemonis, star of the CNBC reality show “The Profit” about saving small businesses, has signed as a speaker. Early bird registration is under way, and just log on at www.cbtconferenceandexpo.com to sign up.

JON MCKENNA

This edition, we also highlight one group’s effort to help service operations stay compliant with government laws and regulations governing staff and environmental safety. The Clean Auto Alliance recently published new tools, including a set of updated metrics to assess how attuned your service department is to proper handling of and training on equipment and tools, hazardous materials and chemicals. Check out our article inside.

Managing Editor

And, two veteran trainers offer insights you won’t want to miss on fundamental pricing and salary issues. John Fairchild’s article calls on service directors to more aggressively manage their effective labor rates by more closely examining their pricing decisions for both routine maintenance and more complicated repairs. David Lewis offers a framework to create a pay plan for technicians that rewards more than just hours sold. Finally, Peter Martin of Cactus Sky Digital wants service departments to take another look at the potential of Groupon offers – with the real goal being capturing e-mail addresses of people who just like coupons. Rich Holland gives his take on how dealerships actually can deliver on the promise of express lanes. You’ll get a lot out of their articles. Have a productive month.

SERVICE DRIVE TODAY

Email newsroom@servicedrivetoday.com Phone 678.221.2955

President And Publisher Jim Fitzpatrick Vice President/COO Bridget Fitzpatrick Managing Editor Jon McKenna Creative Director Randall Veugeler Art Director Erica Abrams Production Manager Laura Payne Designers Shay Harbaugh Brian Hassinger April Miller Christina Zavlanos Web Design Jeff Pearson Director of Marketing & Events Alex Branam

In This Issue 6 Group offers new tools to help police a service centers’s safety and compliance By Jon McKenna

8 Insights from CBT conference keynoters Patrick Lencioni, Jason Dorsey By Jon McKenna

10 Manage your ELR better by drilling into pricing of maintenance, repairs By John Fairchild, Fairchild Automotive Solutions

to ensure 12 Steps your quick service lanes really resonate with customers

By Rich Holland, AutoPoint

16 Other factors than hours sold should matter more with tech pay plans By David Lewis, David Lewis & Associates

18 Think again about Groupon marketing, but your real goal is prospect e-mails By Peter Martin, Cactus Sky Digital

20 Parts staff influence service productivity in more ways than they think By Chuck Wenzler, M5 Management Services Inc.

Small 22 adjustments to ROs can produce

big improvments in profit over time By Rob Gehring, Fixed Performance, Inc.

14 Ask The Pros 15

On The Set With Service Drive Today

24 A direct and honest approach is the best way to really motivate your techs By Brenda Stang, Shifting Gears Training

4 Service Drive NOVEMBER 2015

Marketing Associate Roxanne Luhr

26 Insist that your service team follows basic phone skills with inbound calls By Michael Roppo, Automotive Domain Results

28 Frequency, content variation bring better results on e-mail marketing By Amy Farley, Force Marketing

When a review 30customer is on Facebook, your special attention is needed

By David Kain, Kain Automotive

32 Association News 33 The time to put YouTube video to work promoting your service dept. is now By David Lewis, David Lewis & Associates

ONLINE FEATURES Visit www.ServiceDriveToday.com

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SUBSCRIPTIONS To subscribe electronically, log on to ServiceDriveToday. com and click the subscribe link on the side bar. Alternately, forward your company name, your name, address, phone number and email address to info@ServiceDriveToday.com or CBT Automotive Network, 5 Concourse Parkway Suite 2410, Atlanta, GA 30328. Please send address changes to the above email or mailing address. Permission to reprint or quote excerpts granted only upon written request. Advertising rates are provided upon request. Entire contents ©2015 Service Drive. All Rights Reserved.

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Star of CNBC’s “The Proﬁt”

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Feeling Confident That Your Service Department

COMPLIES WITH SAFETY AND ENVIRONMENTAL LAWS AND REGS Non-profit group offers tools to evaluate whether your compliance and training are thorough and structured. BY JON MCKENNA

hink of the potentially hazardous situations in which your dealership’s service techs and advisors work routinely – walking beneath cars on the lift and across slippery floors, etc. Ponder the containers of solvents and cartons of petroleumbased products stored in your workplace that must be shielded from careless use and the water supply. Now, consider the myriad of federal, state and local laws, rules and regulations that govern safety and environmental protection. It’s seemingly impossible just to keep up with them all, let alone to act responsibly if you want to stay in good stead with OSHA but there is no federal standard about how often employees need to undergo lift training.

That everyday reality in automotive service and repair was the motivation for creating the non-profit Clean Auto Alliance in late 2014. Recently, the Alliance posted a free online risk assessment tool and updated performance metrics to help service departments feel compliant and prepared for government oversight.

COULD YOU PASS AN AGENCY AUDIT?

“The idea was to put together a list of activities that, if you do these things, you will pass an EPA or [federal] DOT audit with flying colors,” said Alliance Chairman Eric Schmitz, who also is VP of product and business development at KPA, a Lafayette, Colo.-based provider of dealership management software and services. The new or revised Alliance tools can be accessed at www.cleanautoalliance.org. Overviews are shown in the exhibits with this article. Employees of KPA who were informally providing auto service clients with a standard for doing a good job on safety and environmental compliance launched the Alliance. Several dealership businesses – including AutoNation Inc., Chapman Automotive Group, Stead Automotive Group, Crown Auto Group, Voss Auto Network and Gengras Auto Group – signed on with the effort, are helping to fund the non-profit and have representatives on a metrics-setting committee. Schmitz said the goal is to raise enough money by late 2016 that the Alliance can hire fulltime staff and let him step aside from running it.

THE CERTIFICATION PROCESS

Service departments can log on at the Alliance’s website and answer a series of screening questions (for example, How many gallons of petroleum do you store

6 Service Drive NOVEMBER 2015

Just considering lifts and storage of various chemicals and petroleum products, a typical service department comes under a number of regulations on-site? Does your operation paint cars? Do you ship any hazardous materials? Do you keep a forklift on the premises?). These screening questions are intended to determine which of the service department’s activities must meet federal, state or local standards and thus are addressed by the Alliance’s standard or more rigorous metrics. At that point, a service director can begin answering more detailed questions regarding those metrics that apply, and uploading procedures and documentation to prove the safety efforts his department has implemented.

“Every one of these criteria has a regulatory basis,” he said. “We’re not imposing on service departments anything that a regulatory agency hasn’t already said you have to do or that it will reward them for doing it.” An Alliance team next reviews the service center’s answers and documentation and decides whether to grant an award, or certification. The administrative fee is $595 (free to KPA clients, however). Slightly more than 800 awards have been granted, Schmitz reported. An initial group of metrics published just after the Alliance was created recently was revised, with some new safety activities and tougher benchmarks.

“The idea was to put together a list of activities that, if you do these things,

you will pass an EPA or [federal] DOT audit with flying colors.” -- Eric Schmitz.

ServiceDriveToday.com

An Overview Of Clean Auto Alliance’s Environment And Safety Metrics ACTIVITY

STANDARD METRIC

TOUGHER, PLATINUM-LEVEL METRIC

A QUICK SCREEN GETS YOU STARTED

As for the online risk assessment, Schmitz said it is a tool to help a service department quickly determine how much work it faces before it can apply for an Alliance award. It quickly walks a service director through several safety categories and some quick reminders (for example, with regard to the AC 609 standard on handling AC refrigerants, applicants are advised they need to ask a new employee for a copy of his certification and make sure techs use only EPA-approved recover/recycle or recover-only equipment). The risk assessment produces a one-page checklist “that says you have done this, and these are the things you have to work on,” Schmitz explained.

Collision center fit testing

1 or more employees within 400 days

Forklift written training program

Program uploaded and signed within 3 years

Forklift training

1 or more employees within 3 years

Respiratory protection training

1 or more employees within 400 days

Collision center training on EPA Rule 6H on paint-stripping and surface-coating

1 or more employees within 5 years

DOT training for general awareness and hazmat shipping

1 or more employees within 3 years

DOT mandated, 24-hour phone number to report any issues with shipments

Compliant phone number is available

Emergency action plan

Uploaded and signed within 3 years

Evacuation map

Evacuation map uploaded

Emergency response training

40% of employees within 1 1/2 years

EPA Tier II reports on chemical inventory, and state- or local-mandated business plan

Uploaded and signed within 1 1/2 years

AC compliance equipment certification

AC equipment certification signed

Spill Prevention, Control & Countermeasures (SPCC) plan

SPCC plan uploaded and signed

Categories In Clean Auto Alliance’s Online Risk Assessment

Hazard communication program

Uploaded and signed within 3 years

ENVIRONMENTAL COMPLIANCE

Hazard communication training

60% of chemical-handling employees within 2 years

75% of chemical-handling employees in 2 years

Chemical inventory

Over 30 chemicals in inventory

Accident investigation process

25% corrective action in last year

50% corrective action in last year

Safety training

10% of all employees in 2 years

50% of all employees in 2 years

Safety committee meeting frequency

Last meeting within 120 days

Safety committee meeting attendance

2.5 average attendance over 1 year

3.5 average attendance over 1 year

Inspection records

Conducted within the last 120 days

Conducted within the last 120 days\

Personal protective equipment (PPE) assessment

Uploaded and signed within 3 years

Safety program

Uploaded and signed within 3 years

Personal protective equipment (PPE) training

30% of chemical-handling employees within 3 years

50% of chemical-handling employees in 3 years

AC Sect. 609 training

80% of technicians

Lift safety training

80% of technicians in 3 years

80% of technicians in 1 year Source: Clean Auto Alliance

Moving forward, the Alliance plans to next year establish a nationwide working group of 20 to 30 service techs to identify the biggest OSHA-related safety issues they face, he added. Those workplace issues will feed new training courses. SD

AC 609 on handling refrigerants Fire prevention and emergency response Spill prevention, control and countermeasures (SPCC) Underground storage tank compliance Waste management

SAFETY COMPLIANCE

Automated lift safety DOT hazmat Forklift safety Hazard communication Personal protective equipment Respiratory protection

BEST MANAGEMENT PRACTICES Blood-borne pathogens Heat illness prevention New hire training Regulatory inspections Safety management Source: Clean Auto Alliance

ServiceDriveToday.com

NOVEMBER 2015 Service Drive 7

Patrick Lencioni:

EXECS SHOULDWithNOT EQUATE Productivity, Or Fear SCREEN TIME ‘Micromanagement’ BY JON MCKENNA

ne of the most eagerly anticipated keynote speakers for the CBT Automotive Conference & Expo in Atlanta Feb. 9-11 is business leadership authority Patrick Lencioni.

Lencioni is founder and CEO of The Table Group Inc. in Lafayette, Calif., the author of nine best-selling business books and one of the nation’s most soughtafter and interviewed speakers and writers on business leadership challenges. This edition, we bring you examples of his work to give you an advance look at the kinds of insights he will offer at the February event (www. cbtconferenceandexpo.com). Lencioni’s writing is excerpted from his blog.

From “The Blessing of a Power Outage,” August 2015: When you were a kid, did you ever have a power outage at your home, maybe in the middle of a big storm, and find yourself without access to distractions like television and other forms of technology? Most of us who grew up before iPads and iPhones and “mobile everything” know what I’m talking about. The family ended up lighting candles and playing a game or engaging in some other group activity that it wouldn’t otherwise do, and afterward everyone said, “We should do this more often.” And then the power went on and we got sucked back into television or e-mail or some other technological distraction. Well, I was recently thinking about this as it relates to work life. When I arrive at work, I almost always find my colleagues staring at their computers, working hard at

whatever they’re doing. This usually makes me a little uncomfortable. Don’t get me wrong. My concern has nothing to do with the idea that my co-workers are doing personal business at work; I expect them to do that because it’s an inevitable part of life. And I certainly know that they aren’t slackers; they do whatever is necessary to make our company successful. What bothers me is that we – in my office and in society – have come to visualize productivity as people staring at a screen and typing. Whether we’re responding to e-mail, writing a Word document or doing online research, we’re usually performing a solitary activity that a person sitting more than 5 feet away has no idea about. After years of observation, contemplation and deliberation, I’ve come to the conclusion that this is the productivity equivalent of being “penny wise and pound foolish.” Sure, everyone is individually busy and focused. But as a whole, we’re not maximizing our collective ability to get the most important things done.

From “Micromanagement is Underrated,” April 2015: When I entered the workforce after college, I first became acquainted with the term “micromanagement.” I quickly learned that this wonky sounding word actually had deceptive power. People who accused their bosses of micromanaging seemed to do so as a permanent insult more than a mere suggestion for change. It was the organizational equivalent of being labeled a Neanderthal, or a corporate version of being politically incorrect. Micromanagers were assumed to be insecure and distrustful, so no one wanted to have that label applied to them. To make matters worse, being called a micromanager was almost indefensible; if an employee felt that they were being micromanaged, those feelings had to be validated and addressed. It might be tempting to read this and think, “What’s the big deal?” Well, there was an unintended consequence to this micromanagement witch

8 Service Drive NOVEMBER 2015

hunt, one that had a chilling effect on leaders that continues today. See, the pendulum swung far away from micromanagement and seemed to get stuck on the opposite end of the spectrum, in a place I’ll call “abdication management.” Today, for every real micromanager I come across, especially at the top of organizations, there are dozens of abdication managers. These are the people who know little about what their direct reports are working on, and defend their approach by citing their own busy schedules, or worse yet by proudly using words like trust, autonomy and empowerment. Unfortunately, the results of abdication management are consistent: a lack of necessary guidance, delays in recognizing problems, stunted professional development of key people, and anxiety among employees. The consequences of this on the bottom line of an organization are not hard to imagine. Addressing the abdication management problem requires understanding its root causes. Those include the fear of being accused of micromanagement, which I discussed above, as well as a strange combination of negligence and ignorance.

From “The jerk Factor,” January 2015: I had the opportunity to work with a college baseball team recently, and came to a realization that helps explain why accountability is one of the biggest challenges for team members and leaders alike. I call it “The jerk Factor,” and yes, the “j” is not capitalized for a reason. I was doing an exercise with a group of about 10 team leaders in which I asked each of them to identify their key strength and weakness as a leader. After a few players admitted that their weakness is their reluctance to confront teammates who aren’t living up to the team’s standards, another of the leaders reported that his weakness is being too confrontational. He said, and I’m paraphrasing here because college guys don’t talk the same way that executives do: “I felt like a jerk the other day when I called out the team and said they were wimps for not doing enough reps in the weight room.” One of his peers replied, “Yeah, I heard a few of the guys say they thought you were being a jerk, but they also said you were right.” This didn’t seem to make the leader feel any better. I advised him to go back to his teammates and admit that even though what he said may have sounded harsh, he was doing it for their good, and the good of the team. And that’s when I realized that part of being a leader and team player is the willingness to be a “jerk” from time to time. SD

ServiceDriveToday.com

Jason Dorsey:

EASE OF USE AND VISUAL To Millennial IMAGERY HELP SELL Buyers

BY JON MCKENNA

o one in the country speaks and writes with more authority about what motivates, and de-motivates, millennials than Jason Dorsey does.

Working from his Center for Generational Kinetics in Austin, Texas, Dorsey is perhaps the country’s most noted expert and speaker on Generation Y. He will be a keynote speaker at the CBT Automotive Conference & Expo (www.cbtconferenceandexpo.com) in Atlanta Feb. 9-11. For this edition, Dorsey fielded several of our questions pertinent to how dealerships sell and market vehicles to millennials.

Service Drive Magazine: What would you consider to be the singlemost-effective marketing channel for a car dealership to reach millennial buyers? Dorsey: The most effective marketing channel to reach millennial buyers is a strong cross-channel digital approach. There is no one channel, campaign or secret digital sauce that will get every millennial buyer. However, by tracking the results of your digital outreach by channel, you can get good insight into what is actually working and where to invest more. In fact, in different parts of the country you can see very different results engaging millennials by digital channel. The most important thing when it comes to marketing is to go where millennials in your area are searching for cars online. Be there ready for them with visuals, messaging and as few steps as possible for them to reach out. And, whenever possible, don’t try to call them! See if you can send a text message instead. Writing both as a millennial and a millennial researcher, please don’t leave us a voicemail. That is what our dad does.

see some consistent starting points that work well across the generation when it comes to the auto industry. Those starting points include: 1) Make it as easy as possible to get the information millennials want when they are looking for a vehicle online. Every single click you require or extra second you make them search means millennials are more likely to go somewhere else. 2) Millennials read and learn almost entirely through imagery. Skip the blocks of text and instead show them photos, videos and bullet points. 3) Make sure your website works seamlessly on mobile and tablets. You’d be shocked at how many dealership websites we review that are extremely difficult to navigate when not on a traditional computer. 4) Show millennials how easy and low-risk it is to contact your dealership. Every blank you add that they have to fill out to complete an info request form makes them less likely to complete it. Instead, let them just send you an e-mail or text message to start the conversation, and then you can amaze them with how great your dealership is.

Service Drive Magazine: How much importance do millennials really place in online customer reviews, when they are researching a car purchase? Do they understand there are two sides to a negative review? Dorsey: Depending on which data you look at, millennials value online ratings and reviews more than any other source when considering what car to buy and where to buy it, or at least they rank online ratings and reviews them among their top three carbuying influencers nationwide.

Service Drive Magazine : What potential benefits in that marketing message (price, selection, vehicle features, speed and integrity of the process, quality of the dealership staff, etc.) are most likely to appeal to a millennial?

While millennials certainly recognize that there is more than one side to a negative review, the only thing that really matters is how the dealership responds to the negative review. Millennials are watching to see if the response is sincere, personal and human. If it comes off as defensive, automated or generic, then the benefit of the doubt too often goes to the person posting the negative rating or review.

Dorsey: Millennials are a huge generation, numbering nearly 80 million in the U.S. alone. In our research, it has become clear that all millennials don’t fit neatly into one huge box. However, we do

We believe that negative reviews in auto retailing are often the best opportunity for a dealership to show how great you are based on how you respond. You can win customers based on how you handle negative

ServiceDriveToday.com

reviews, because your handling of the reviews offers a great snapshot into your culture and shows the world how you treat others.

Service Drive Magazine: What about when it comes to servicing a car? What are the critical success factors in establishing a relationship of confidence and trust between a dealership’s service department and a millennial car owner? Dorsey: The critical success factors come down ease and amount of stress in scheduling a service appointment, interaction with service professionals throughout the process from drop-off and hang-out areas to pick-up, transparency in fees and payment, and ease of departure. The bottom line is, you want to give millennials plenty of options to make, confirm and remind them of their service appointment; reduce their stress by telling them in advance what to do and expect (which might literally mean a short video showing where to park or pull up to the service drive and what to bring); a clear explanation of the work to be performed, in regular English not service-speak; and updates available by text. In a perfect world, millennials would be able to pay before they pick up their car and enjoy free Wi-Fi and a decent cup of coffee while they wait. Ironically, other generations increasingly want the same things; so, if you know how to win millennials, then you are in position to make every other generation happier, too. Most importantly, millennials are the fastestgrowing generation of auto buyers in America. They’re also incredibly loyal if you know how to win their loyalty. That combination provides a powerful backbone for dealership leaders to drive sustainable growth for the next 10 years – if they make the changes necessary to win this generation now. SD

NOVEMBER 2015 Service Drive 9

Follow These Steps To Manage Your Service Department’s

EFFECTIVE LABOR RATE AND PROFITS The process starts with drilling down into pricing of both routine maintenance and more complex repairs. BY JOHN FAIRCHILD

he goal of any service department’s retail pricing strategy is to retain as much labor gross profit as possible while remaining sensitive to giving customers an economical price and perceived value. Through analysis, proper set up-and maintenance, we can straddle this fence and provide both great value to customers and a handsome profit to the dealership. On the sales side of things, it’s essential to manage effective labor rate (or, the overall average hourly charge for labor). Basically, the dollars collected from the customer for labor divided by technician hours flagged equals the effective labor rate, or ELR. For example, if my team collected $100 for labor and flagged one hour, the ELR is $100 per hour. If they flagged two hours, the ELR declines to $50 per hour. A dealership performs two basic types of labor in its service department: Competitive maintenance and repair labor.

COMPETITIVE MAINTENANCE

This term refers to common service items that a customer can have performed at virtually any auto service center, independent garage or dealership. Typically, you’re talking about items like oil changes and tire and brake service. A dealership wants to be competitive in these services. We don’t want to be the lowest-priced provider in our area necessarily, but we certainly don’t want to be the highest. “Shopping” your competitors at least every 90 days to determine an average price for each

service is critical to ensure your price is reasonable. Plus, knowing what percentage of overall service work that competitive maintenance covers is critical to managing your overall effective (average) labor rate and the sales aspect of labor gross profit retention.

HERE ARE THE STEPS TO CONDUCT A COMPETITIVE MAINTENANCE ANALYSIS:

Determine an average local price for each individual competitive maintenance item on your menu. Depending on your market, you’ll typically shop four to six independent shops and the same number of dealership competitors. Have your staff perform blind calls posing as customers to get competitors’ prices. Once you have this information, it’s a good idea to post a price comparison board for your customers to see in the drive and lounge.

Now, refine your grasp of your own current labor pricing by performing two extensive surveys of your ROs:

A Analyze prior ROs over at least a 90-day period, in order to get a broad enough sample.

Visually inspect 100 or so ROs. This can reveal patterns in the way competitive services are sold, and recommended by techs

Is your pricing approach thought-out well enough to balance customer satisfaction with profitability?

and advisors, which an electronic survey won’t show.

Using your data and observations, make some determinations about the following regarding your dealership’s maintenance jobs:

A Your current mixes of maintenance vs. re-

pair, and of individual services performed or lack thereof. A good overall benchmark to target is 60 percent of maintenance dollars vs. repair labor dollars sold. That points to a healthy maintenance upsell program; a lower percentage indicates lackluster sales penetration in these operations.

B Your overall gross profit retained for main-

tenance operations prepared, and the individual profit for each service. This may reveal areas in which you are low on parts and labor gross profit, as well as areas of opportunity to enhance profitability.

C The ELR for this category of service. This

number, along with the individual share of labor dollar sold in this category, gives the weighted menu ELR contribution.

“Once you have set your repair and competitive rates, make sure to

follow through and ensure accountability to the process.” 10 Service Drive NOVEMBER 2015

ServiceDriveToday.com

REPAIR LABOR

Next, you want to turn to the repair side of the equation to ensure you are getting a high-enough overall effective labor rate. This type of work is performed when the customer and/or the tech has a serious concern about the vehicle, or something clearly is broken. The repair category often is proprietary to manufacturer-trained techs and requires special tools and software to perform.

COMPETIVE RATE CALCULATION EFFECTIVE RATE WORKSHEET

Category Competitive & Maintenance Repair

Repair labor is set up as a static rate or a fluctuating grid, according to the degree of difficulty and time necessary to complete the work. It also is sensitive to what the market will bear, although to a lesser degree than competitive is. Once you have “backed in” to your competitive rate and know your mix within overall labor sales, you can set your repair rate to reach your overall target ELR. Here is an example:

MEANWHILE, HERE ARE SOME ADDITIONAL FACTORS TO CONSIDER WITH THE REPAIR CATEGORY: ✓ Consider a static repair rate, or implementing a labor grid that starts at your target repair rate and moves up slightly until it reaches your average target hours per RO. An example of a labor grid is provided here ✓ Configure your diagnostic charges so that they reflect your actual rate. Discounts given here can drastically reduce your overall ELR. ✓ Deliberately look for areas in your repair work performed that require further expertise, special tools or extra training. Examples are diesel and high-tech electrical. Categories like these require additional tech expense; these techs get paid more and should bear a higher repair rate than ordinary repair labor. ✓ This work is no longer “sold by the hour,” as it has been in the past, but now should be sold “by the job.” Quote the total job parts and labor, shop charges and tax. Never quote labor by the hour unless your customer specifically questions you. It’s not a secret but the minutiae will distract and confuse your customer and give him or her a chance to pick apart your recommendations. ✓ Diligently monitor your use of your labor grid or static repair rate. Some shops are inclined to reduce repair labor dollars to compensate for an underestimated quote, so the ticket comes out to what the customer expects. ✓ Encourage your advisors to have all discounted labor approved by a manager BEFORE the work is accepted.

FOLLOW-THROUGH TASKS

Once you have set your repair and competitive rates, make sure to follow through and ensure accountability to the process. Regular (i.e., daily) RO reviews and DMS system queries will identify where staff have defeated the established policy. Counsel offenders to emphasize the benefits of the recognized procedure, and escalate your response to further violations as needed. Perform the study I have described quarterly in order to stay up on recurring trends and changes in the marketplace. I am confident that by taking a methodical approach, your service retail pricing strategy will succeed. SD

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% of Total x 55% 45%

Actual rate now = $66.14 $95.00 Current Rate

Proportion $36.38 $38.62 $75.00

Try-On Rate = $74.00 $110.00 Target Rate

Proportion $40.70 $49.50 $90.20

Try-On Rates Category Competitive & Maintenance Repair

% of Total x 55% 45%

LABOR GRID EXAMPLE FROM 0.01 0.11 0.21 0.31 0.41 0.51 0.61 0.71 0.81 0.91 1.01 1.11 1.21 1.31 1.41 1.51 1.61 1.71 1.81 1.91 2.01 2.11 2.21 2.31 2.41 2.51 2.61 2.71 2.81 2.91

TO 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90 1.00 1.10 1.20 1.30 1.40 1.50 1.60 1.70 1.80 1.90 2.00 2.10 2.20 2.30 2.40 2.50 2.60 2.70 2.80 2.90 3.00

AMOUNT $ 11.88 $ 23.88 $ 34.88 $ 48.88 $ 60.88 $ 72.88 $ 84.88 $ 96.88 $ 112.88 $ 125.88 $ 137.88 $ 150.88 $ 162.88 $ 175.88 $ 195.88 $ 208.88 $ 221.88 $ 234.88 $ 247.88 $ 260.88 $ 283.88 $ 297.88 $ 310.88 $ 324.88 $ 350.88 $ 364.88 $ 378.88 $ 392.88 $ 406.88 $ 420.88

1999-2015 FAIRCHILDAUTOMOTIVESOLUTIONS.COM

“A dealership wants to

be competitive in these [basic maintenance] services. We don’t want to be the lowest-priced provider in our area necessarily, but we certainly don’t want to be the highest.”

JOHN FAIRCHILD

President and Performance Coach of Fairchild Automotive Solutions John has more than 35 years of experience in fixed-operations management and consulting, and trains fixed-ops staff to improve performance and customer service. He started working in auto repair and parts at age 15 and over time held numerous positions at dealerships, including general manager. Visit the website https://fairchildautomotivesolutions.com.

NOVEMBER 2015 Service Drive 11

You’ve Decided To Go With Quick Service Lanes;

NOW MAKE THEM REALLY DELIVER Take these steps to ensure the promise of express service strikes the right chords with your customers. BY RICH HOLLAND

t should come as no surprise that the biggest challenge your dealership service department faces today is customer defection to the ever-encroaching aftermarket shops and chains. There’s a simple reason for this challenge: Dealerships simply can’t compete with aftermarket shops on convenience.

Even if your prices are roughly the same as theirs, aftermarket service shops typically are situated much closer to your customer, making them a far more convenient locale for routine maintenance. Most dealerships quite literally are surrounded by aftermarket outlets, which most consumers have come to believe – rightly or wrongly – offer lower prices and shorter wait times than their nearby dealership. So, how is a dealership service department supposed to compete in such difficult market conditions: One alternative is to create quick service or express lanes. Dealership service departments that offer quick service lanes routinely sell more parts and write more repair orders than those opting to compete without them. However, winning back customers who have gravitated to aftermarket shops isn’t as simple as putting up a sign announcing your new express lane. Poorly managed or overcrowded quick service lanes can lead to unacceptably long wait times and frustrated customers. Remember, if a customer could potentially stop at four different aftermarket shops before reaching your service drive, then he or she is not going to show much patience for a lengthy visit. Fortunately, your dealership still has unique selling points that customers want. If you can combine your greatest attractions with the irresistible convenience of the aftermarket express lane, then you can expect to see your customers return again and again for the routine maintenance that pumps up your revenue. Use the following strategies to keep your quick service lane running smoothly, and avoid some common speed bumps along the way.

12 Service Drive NOVEMBER 2015

WALK-IN AND 24/7 SCHEDULING

Most aftermarket shops don’t require appointments for express lane services. They welcome walk-in customers and aggressively advertise open bays to passing motorists. A walk-in option of your own will enable motorists to stop by your dealership whenever they’re nearby and have 30 minutes. However, your quick service lane can’t rely on walkin traffic exclusively. Your appointment system should be available online and be fully accessible after-hours. Most motorists make appointments from their smart phones now and expect constant availability. If your appointment process is too complicated, drivers will go somewhere else rather than try to muddle through it.

DEDICATE SPECIFIC LANES

Your service department wants its quick service lanes to stand out as much as possible from its regular service bays. So, you should clearly label the express lanes, both to direct customers to the right place and advertise on the spot that you offer express services. A customer who comes in for warranty work will remember that you also offer fast oil changes when he or she needs routine maintenance later. At least, that customer will as long as your dealership has clearly marked its quick service lanes and marketed them directly.

ESTABLISH A GREETING SYSTEM

However, express lanes shouldn’t be seen as a quick fix. Dealerships must be mindful of the customer experience. Some stores with express lanes can get so

“Establish a greeting approach that

ensures immediate and personal attention

as the customer pulls into the service drive. You should roll out the red carpet for every motorist.” ServiceDriveToday.com

“Winning back customers who have gravitated to aftermarket shops isn’t as simple as putting up a sign announcing your new express lane.

Poorly managed or overcrowded quick service lanes can lead to unacceptably long wait times and frustrated customers.” maintain efficiency. However, they can still prove a blessing for your top-tier techs.

If you have the flexibility, try assigning a newer tech to perform fluids changes in the quick service area.

caught up in getting vehicles in and out that customer service suffers. As a dealership, service quality and personal attention are two of your biggest selling points, and those can’t be given short shrift in the express lane. So, establish a greeting approach that ensures immediate and personal attention as the customer pulls into the service drive. You should roll out the red carpet for every motorist. Make sure two or more techs say hello as soon as he or she gets out of the car, and have a dedicated greeter walk the customer to the waiting area and point out amenities. Mobile write-up and inspection tools both get motorists checked in quickly and contribute to an exceptional customer experience.

HIGHLIGHT WAITING AREA; SET EXPECTATIONS

Quality service isn’t the only selling point your dealership has to fight defections to aftermarket shops. Your waiting area also can make a huge difference. Think about the waiting room you see in your typical oil change center. Remember the hard plastic chairs and tiny TVs (if any)? The more comfortable waiting room and perks that dealerships emphasize really matter to a lot of customers. Get your express lane customers in on the action by personally walking them to the waiting area. They might only be there for a half-hour, but that’s 30 minutes they can spend sitting on a comfortable couch watching a flat-screen TV.

Express services usually include simple tasks like oil changes, so techs with less knowledge and experience can still perform them easily. As a result, express lanes automatically separate easy tasks out for your entry-level workers and save complex troubleshooting and diagnoses for the appropriate staff members. Electronic inspection systems and digital vehicle specification databases also contribute to a more efficient shop and better use of the skilled techs you have. Also, express lanes are a great loyalty tool in and of themselves, offering another benefit to customers who return to your store. However, dedicated loyalty programs provide still further incentives that help your customer retention. Try offering a digital loyalty and rewards program that customers can access from their smart phones. You could easily deliver special offers, incentives and targeted marketing to make sure your customers stay your customers for years to come.

EMPHASIZE INSPECTIONS

Customers see an electronic multi-point inspection following express lane service as a big benefit. So will your dealership, if you leverage the opportunity to point out problems with common-fail items like tires and brakes.

Offer a menu of inspection options as part of the greeting and write-up processes. Tailor your options to fit different mileage thresholds.

MONITOR COMPETITORS; LABEL SPECIAL OFFERS

When you’re literally surrounded by aftermarket shops, you have to offer competitive prices. No matter how convenient you’ve made your express lanes, they won’t attract customers if the independent shop down the street is half the cost. Customer perception also assumes dealerships are more expensive, so you already have to work to change preconceived notions.

Bottom line: Monitor your local competitors’ pricing, adjust your own when necessary, and directly market your prices. Also, be sure to separate your express lane offers from your regular service specials, and label them accordingly. You want routine services directed to the express lanes and to draw in customers who incorrectly assumed an oil change takes a long time at the dealership. SD

Once the quick service work is done, this tech should start on a multi-point inspection, in order to cement a value perception with the customer.

While fast service is the backbone of a successful express lane, you can’t just assume customer satisfaction. Upon greeting a customer, your people also need to clearly communicate the current anticipated wait time and then keep him or her updated on the vehicle’s progress. An electronic display board in the waiting area can help keep customers so informed and reduce interruptions of your busy staff.

MANAGE STAFFING AND INSPIRE LOYALTY

Highly skilled techs are in short supply. Obviously, express lanes demand adequate staffing in order to

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RICH HOLLAND

Managing Director of AutoPoint As a frequent speaker on the future of automotive dealership service, Rich believes in an “adapt-or-die” theory of innovation. With more than 30 years of diverse experience, he is a recognized expert in information technologies and creating customer loyalty through digital excellence. Visit the website at Autopoint.com.

NOVEMBER 2015 Service Drive 13

Askthe

Pros:

Do you have questions? We have experts who can answer them. We have partnered with some of the top fixed operations consultants in the business who are ready, willing and able to share their knowledge and advice with you. All you have to do is email your questions to Newsroom@ ServiceDriveToday.com, and we’ll take care of the rest.

“We only have two stores, and our senior service manager will be retiring at the end of the year. A couple of guys who work at bigger dealership groups heard through the grapevine and have expressed interest. Do people from more of a corporate environment tend to do well in smaller businesses like ours?” FROM SANDY IN POCATELLO, ID:

Don Reed, CEO of DealerPro Training: I can certainly relate to your frustrations over CSI scores. As a dealer, I took over a store that had the lowest CSI score for that franchise of any dealership in the nation, at 34 out of a possible 100. When I left that store about five years later, we were consistently scoring 98. How did we do that? It all comes down to communication. The service advisor is the position in every dealership that has the most direct impact on communication with your customers, both good and bad. Your service advisors interact on the phone and face-to-face with more customers in a given day than any other employee in the dealership. For example, if your sales team is selling 100 units a month, then your service team is servicing about 700 retail and warranty customers a month. So, the question I have for you is: Have they all been professionally trained on proper telephone skills? In today’s market, about 80 percent of your service traffic starts with a phone call. Secondly, you need to evaluate your service drive processes to ensure your advisors are

communicating effectively with every customer.

Here are some examples:

• Verify the primary item • Review and recommend maintenance services based on condition, time and/or mileage • Advise your customer of your FREE multi-point inspection • Verify the best daytime phone number to reach your customer • Give the customer an approximate time for completion of the repairs or service • Tell him or her you will call when the vehicle is ready for pick-up • Conduct an active delivery of the vehicle to the customer to explain the entire repair order • Schedule the next appointment based on time and/or mileage • Conduct a follow-up call the day after delivery, to ensure the customer’s complete satisfaction It’s not good enough to simply meet all the customer’s expectations. You must exceed expectations, and your CSI scores will soar to new highs and stay there.

FROM TOM IN DENVER: “Our CSIs have been trending toward customers being unhappy about the length of time their service job is taking, which is ironic in that we’ve been emphasizing being more deliberate in our work because before the CSIs were complaining about rush jobs. Any thoughts about how we can calibrate customers’ expectations? Because we really don’t want to change our approach again.”

Glenn Pasch, CEO of PCG Digital Marketing: The answer can be

both yes and no. It really depends on what you are expecting from this individual in terms of his dayto-day duties. Here are two points I think you should consider during the interview process.

First, what type of authority will this role have to make decisions regarding the department? You have to find out from the people what they experienced in their previous job or jobs. You may currently have a similar structure, so it may be a moot point. On the other hand, if they were used to a structure where everything was decided by committee or their superiors, and in your stores this individual will be expected to make their own decisions on how to run the department (or vice versa), then you need to make sure this is a main topic of discussion during your interview process. Some individuals may not be comfortable with your structure. Secondly, in larger groups there may be more support staff for the execution of initiatives or projects. In your group, there may not be this type of support, and some of these tasks may fall to this person. This also must be clearly communicated to the interviewee, so that you can discuss his ability to multi-task roles and responsibilities. In the end, I have seen people bring great value to a smaller company after they have left a corporate environment. They bring great ideas and a sense of excitement. On the flip side, one can get very comfortable having a team around him or her to help handle certain tasks. The real success for any person you add to your team is the clarity that you share about your expectations for the role, the specific day-to-day responsibilities and lastly the responsibilities that you will be holding him or her accountable for. Remember, your main focus should be on whether this person is a fit for the culture of your business and not so heavily on where he or she worked before.

FROM CARL IN ALLEN TOWN, PA: “We got trashed on a review site by a service customer who probaly was the most difficult customer I’ve ever seen in 25 years of business. I won’t

bore you with a full history of the problems, but if you engage this customer online, she is just going to fire back with more unsubstantiated and untrue griping that just makes us look worse. Isn’t it better to not post anything online in response to the original review than to give this customer more encouragement to post something nasty about us?” Ryan Leslie, director at DealerRater: Always offer a response. As hard as it may be, it is especially important in a situation like this. The dealership’s response to a negative review serves two distinct and critical functions, as it is one microphone serving two audiences. Let’s address the obvious audience first: The cranky reviewer. Generally speaking, consumers don’t want to write a negative review; they want to have a satisfying experience. A negative review is a last-ditch effort to reach someone they feel will hear their complaint. A recent survey by Right Now found that when businesses

14 Service Drive NOVEMBER 2015

reached out to contact customers who left negative reviews, 34 percent voluntarily withdrew their original complaints without being asked. Another 33 percent responded to the outreach and re-posted a positive review after reconciliation. Responding 100 percent of the time helps to not miss the 66 percent of consumers who will be positively affected by your efforts.

prospect who will read this negative review and your response. He or she is perceptive enough to know when a consumer is acting unfairly. You will absolutely lose in the court of public opinion if it appears that you ignored the concerns of customers. But, if you’ve made every effort to hear them and help them in full view of the public, then the unsold prospect will see the situation for what it is.

By your description, you may very well have one of the 33 percent who won’t be happy no matter what you do, and that is okay. The best thing that could happen is for you to respond cordially and professionally, and have them continue to act irrationally.

Resist the temptation to defend yourself in your response, and don’t feel obligated to apologize when an acknowledgement is equally appropriate. The best response is always a brief and high-road acknowledgment of the review, with an offer to investigate the claims therein and written by someone with the authority to do so, giving their contact information.

The second audience for your response is the unsold

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ON THE SET WITH

Tim Klintz of The Klintz Group.

Bill Wittenmyer of ELEAD1ONE. Steve Rayman of Steve Rayman Chevrolet (left), with Joe Gumm of Service Drive Today.

Pete MacInnis of eLEND Solutions. Bruce Oâ&#x20AC;&#x2122;Brien of SpinCar.

Chris Lentz of AutoSweet.

Brian Pasch of PCG Consluting.

Lee Harkins of M5 Management Services.

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Don Reed of Dealer Pro Training.

Alex Perdikis of the Koons of Silver Spring dealership, with Corinne Lillis of Service Drive Today.

Gary Tucker of DealerRater.

Alexi Venneri of Digital Air Strike (right), with Corinne Lillis of Service Drive Today.

Writer, author and entrepreneur Grant Cardone (right), with Joe Gumm of Service Drive Today.

NOVEMBER 2015 Service Drive 15

Resolve These Fundamental Issues In

CRAFTING A PAY PLAN FOR SERVICE TECHS Too many dealerships emphasize total hours sold at the expense of other important factors. BY DAVID LEWIS historical perspective to start: In the 1990s, the automotive industry was booming, and dealership service departments enjoyed healthy customer counts and consistent growth. Additional staff were needed and technicians became a very hot commodity, especially as growing independent and after-market repair shops competed for skilled people. Very soon, dealership service departments felt a real pinch in tech headcount. They started moving away from a flat-rate pay scale for techs in order to compete for quality techs and retain them once hired. Tech pay rates became grossly inflated. By 2000, experienced and qualified mechanical, body and refinishing techs dominated a seller’s labor marketplace. Dealership service managers found themselves offering aggressive and sometimes unprofitable pay plans to average techs they had to hope could produce at least 40 hours per week from each assigned bay. They seemed to react to what prospective techs wanted to be paid rather than build a shop with varying pay scales designed to optimize gross profit. This mentality finally was turned upside down in 2008, as recession hit with full force. General Motors and Chrysler filed for bankruptcy; numerous dealerships closed their doors. Techs everywhere found themselves unemployed and turned back to independent

shops for jobs. Pay plans and scales again were negotiable for management, and for the first time in decades techs were a bit easier to find and less expensive to hire. I am convinced that service managers did not rethink pay plans at that time to financially hurt techs. However, it would have been foolish not to take advantage of the opportunity to reinvent pay plans so rewards followed only solid-or-better performance.

PAYING FOR HOURS SOLD ISN’T A COMPLETE ANSWER In 2015, the U.S. economy and the retail automotive industry have rebounded, but many service managers unfortunately have fallen back into the habit of overpaying poor-performing techs. In truth, some complicated pay plans in use such as a matrix system based on the number of hours turned will promote hours sold, but fail to push technicians to improve their status. What I mean is, these techs have less ambition to maintain their training and become

The tech compensation plan should not overemphasize boosting hours spent on every repair order.

“Optimum tech performance does not just mean an extra 0.3 hours on every repair order, as that extra

billable time might not actually be profitable.”

a product specialist or master tech, because a B-minus tech can simply turn more hours and avoid accepting complicated warranty or recall work.

Automotive News analysts predicted that in 2015, vehicle sales would peak at just over 17 million. That means new customers driving into service lanes with possible warranty concerns. That’s a good thing, right? Well, not if only 25 percent of techs in your shop are qualified to work on these vehicles.

16 Service Drive NOVEMBER 2015

ServiceDriveToday.com

grinding halt every afternoon. Service advisors refrain from bringing in work, and techs are not productive. Lost profits in this scenario are extraordinary, as is the slide in customer retention. A comprehensive tech pay plan will motivate performance in more areas than simply increased hours sold. Techs should be rewarded for additional profitable hours sold, which means they are disincented from carryover work.

3) Are the techs’ hourly pay scales designed to help the service department win, or to avoid losing? Poor-performing techs who balk at doing their factory training or investing in new tools, whose attendance is spotty and who display little ambition beyond upselling customers fluid changes effectively hold their service departments hostage. Service managers need to set realistic hourly pay plans that are based on the skill level that a tech brings to the table. Hourly rate increases, bonuses and spiffs should be offered only if performance in all desired and necessary areas improves.

4) Are the techs paid differently for billable factory warranty hours turned? If your service department is going with a matrix-type pay scale, at least consider paying a higher rate for factory warranty hours billed. This will incent techs to invest more time in warranty jobs and obtain the necessary training. However, be careful when determining these increases to make sure you are offsetting the costs of retail and internal billable hours.

WHY ABSENTEEISM REALLY MATTERS One of the most overlooked problems in a service operation is tech absenteeism and tardiness. Fifteen minutes late here, entire days absent there starts to add up to large amounts of lost revenue. Service managers need to closely track tardiness and absenteeism and step in when they suspect the problem is deliberate or chronic. At the end of the day, if you want a pay plan that drives higher performance by your techs, then it must be driven by true skill levels, and incentives must be based on productivity, efficiency, factory training accomplishments and attendance.

Service departments must find an approach to encourage their techs to take factory and other specialty training. Gross profit margins in the literal sense do not require a complex equation in the world of service department management. It is in the figurative arena that service managers start to struggle. With so many variables to handle and so many transactions going on at the same time throughout the day, the train can run away from them very quickly. Optimum tech performance does not just mean an extra 0.3 hours on every repair order, as that extra billable time might not actually be profitable.

WHAT MATTERS WITH TECH COMP Thus, in strategizing a pay system for their techs, service managers would be prudent to ask these four questions of themselves:

1) “Do we use strict guidelines for techs’ hourly pay scales?” All managers of a dealership department live by their monthly sales forecast. However, do you as service manager have a cost of sales forecast? Have you analyzed your overall cost of paying techs, and have you arrived at an effective labor rate that cannot be exceeded?

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Create a spreadsheet for the task. Start with the desired gross margin percentage – 75 percent, for example – and then place your annualized ELR dollars per hour at the top of the spreadsheet. Then, list all technicians’ costs including all “spiffs” and bonuses. Now, is your service department’s cost of labor in line with your targeted gross margin?

2) “Is our true productivity more than 110 percent?” Is your service department struggling with throughput? If you have a healthy number of repair orders each day but too many carryovers, then the shop stalls to a

Improved productivity and efficiency will create more billable hours, and techs willingly doing their factory training will in be qualified to perform any manner of warranty repairs. The end results are improved throughput and increased overall morale. As I mentioned earlier, a tech pay plan starts with your calculations of a cost line that is based on effective labor rate sales and of gross margins, and your forecast of incoming maintenance and repairs. Figure what percentages of that incoming work will be for warranty, internal and retail labor, and you can come up with an effective pay plan. Offer incentives above and beyond that pay system only if you have really thought about them and if they will improve the entire service operation’s performance. SD

DAVID LEWIS

President of David Lewis & Associates David’s firm is a national training and consulting business that specializes in the retail automotive industry. He also is the author of four industry-related books, “The Secrets of Inspirational Selling,” “The Leadership Factor,” “Understanding Your Customer” and “The Common Mistakes Automotive Salespeople Make.” Visit his website at www.DavidLewis.com.

NOVEMBER 2015 Service Drive 17

DEALERS SHOULD

GRAVITATE TO GROUPON WITH THEIR PROMOTIONAL SERVICE DEALS

Your real goal is the contact info of people who respond favorably to e-mails and digital coupons. BY PETER MARTIN

am an avid coupon user. I travel frequently and am always trying to score a good deal on a hotel, rental car, dinner or entertainment. My preferred discount search engine is Groupon, and I am not alone. As of September 2014, Groupon was the most-visited coupon website in the country, with more than 20 Million monthly U.S. visitors. On the left-hand side of the Groupon home page and under its “Local” tab at the top, I noticed links to an automotive-specific section and decided to check whether any local dealerships were using it. That section offers deals for auto repair, detailing and rental as well as parking. However, when I browsed the total 82 Groupon deals for the Baltimore area, only one dealership (a used car lot in the suburbs) was offering a deal. One dealership was competing with 81 independent and chain repair shops. Dealers, it’s time to wake up.

“Yes, Groupon fans tend to be bargainseekers. However, with the proper dealership experience,

they also can become your best brand loyalists.”

I have discussed coupon-sharing sites like Groupon with my dealer clients before. Most dealers who had an unsatisfactory experience with Groupon believe the coupons attract low-end bargain-seekers, not repeat customers, and therefore are not a profitable enough marketing channel.

18 Service Drive NOVEMBER 2015

WHAT GROUPON CAN OFFER:

According to ForeSee, an independent research firm, and Groupon’s own data:

■ 60 percent of Groupon customers are trying the vendor partner’s business for the first time. ■ 73 percent of customers spend more with the vendor than the value of the deal. ■ 81 percent of customers refer a friend to the business. ■ 84 percent of customers say they are likely to patronize that business again.

Yes, Groupon fans tend to be bargain-seekers. However, with the proper dealership experience, they also can become your best brand loyalists. Dealerships should use Groupon to introduce themselves to this audience with service deals. Recipients sign up to receive offers, and Groupon has negotiated extensively with e-mail service providers to get guaranteed in-box placement.

BULKING UP YOUR E-MAIL LIST

Many dealers who abandoned Groupon marketing did not really take full advantage of the potential opportunity. Remember, for every Groupon offer redeemed, your service advisor has a reason to collect a valid e-mail address from that new customer. So, here is your chance to fatten your list with more people who have already shown they 1) check their e-mailboxes and 2) respond to coupons. It is up to you how to best remarket to this audience and bring them back to your dealership website or custom coupon microsite.

So, notwithstanding some dealers’ experience, statistics show Groupon does work. If your dealership has never used Groupon and is unsure about how to make it work effectively, consider the survey numbers I just mentioned.

Now, Groupon is not going to provide these e-mail addresses to you. Your dealership will have to actively ask redeemers of Groupon offers for their e-mail addresses. Still, collecting valid e-mail addresses from all of your Groupon redeemers is one of the most valuable benefits of this advertising program. Groupon subscribers love coupons, and chances are good they will want your coupons for oil changes, brake work, etc.

YOU WANT THE GROUPON AUDIENCE

YOU CAN NEGOTIATE WITH GROUPON

As I wrote earlier, Groupon is the most popular daily deal site out there today. Here are two critical things you need to know about the average Groupon subscriber: He or she reads e-mails and likes coupons. These are traits of the kind of customer you want in your e-mail list.

As with Yelp, Living Social or any other advertising service, Groupon is willing to work with you as a vendor partner. Groupon wants your business and despite the rumored 50-50 split, the specialist assigned to your account will find the best numbers for you. There is no up-front cost to your business.

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PLAN AHEAD

Groupon deals, just like coupons hosted on your dealership’s website or coupon microsites, are intended to drive traffic to your business. Whether those firsttime customers return to your dealership of course depends on the quality of their experience. Before you promote a Groupon deal or any other special, make sure your service department is adequately staffed to potentially take on a heavy influx of business. Encourage Groupon redeemers to schedule an appointment, so that your service department gets a more reliable idea of how many customers to expect.

One thing you know about Groupon: It attracts consumers who flock to coupons.

Because of past issues with small business partners that were flooded with more customers than they anticipated, Groupon now packages deals that will be capped in advance at the number of customers the business can effectively service.

“[With Groupon] the end game is not played for immediate profit but rather to

get a couponuser’s e-mail address.”

VIRGIN TERRITORY FOR DEALERS

I was surprised enough to find only one dealership offering a Groupon deal in a major metro market like Baltimore that I conducted another search near my other office in the Sarasota, Fla., area. There, only three of 49 automotive deals came from dealerships. Bottom line, there is an open market for dealers with Groupon advertising. You would be competing mostly against independent repair shops, so you would want to offer a deal those shops are incapable of giving. Go beyond the standard oil change and tire rotation, into the arena of multi-point inspections that only a full dealership service center can provide. You could stand out as one of the only dealerships in the Groupon program. Consumers will take notice of your progressive marketing and remember yours as the dealership that gave them a really great deal. Satisfied service customers are more likely to return to that dealership to buy a car.

Another aspect of Groupon that should overcome a dealership’s skepticism is that its ardent users spend a lot of time on e-mail.

Just because virtually none of your dealership competitors are tapping the Groupon opportunity doesn’t mean it won’t work well for you. Use Groupon to bring quality new customers who respond actively to e-mails and coupons in your door and on your e-mail list. Then, turn them into brand loyalists with your own ongoing quality service. SD

PETER “WEBDOC” MARTIN However, Groupon generates incremental revenue, so vendor partners make money on promotions only if they work from a low-cost or fixed-cost structure. To get the most from Groupon, a dealership must be cost conscious and calculate offer prices that draw in customers, predict the number of redemptions and estimate incremental revenue.

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President of Cactus Sky Digital

Peter is a technology correspondent and digital marketing expert for the automotive industry, and particularly works with e-mail marketing, mobile-enabled e-mails, conquest marketing and selling to women. He is a frequent speaker at industry events such as NADA Digital Dealer, AutoCon and RVDA.

NOVEMBER 2015 Service Drive 19

PARTS EMPLOYEES CAN HELP BOOST SERVICE DEPARTMENT PRODUCTIVITY In More Ways Than They Think

Simple improvements in how parts are stored, priced and moved help techs generate flat-rate hours. BY CHUCK WENZLER

once posed the following question to a gathering of parts managers: “Is service productivity important to you, and if so, what could you do to improve it?” Surprisingly, I was met with a lot of blank stares.

Finally, one parts manager spoke up and said, “Why should I care? I sell parts. I don’t have anything to do with service. Besides, what’s in it for me?” That was precisely the motivation for my asking the question. The parts department has quite a lot to do with driving service department productivity, and service productivity has a direct impact on parts sales. The groups should work hand in hand. Most managers in service and parts operations are familiar with the parts-to-labor ratio. It represents the dollars generated from parts sold in the service department compared with dollars of service labor sold, or: Parts $/Service Labor $ = Parts-To-Labor % However, a more telling measurement – one that is directly tied to technician production – is the ratio of parts sold to the service department for every flat rate hour that is sold, or: Parts $/Flat-Rate Hours = Parts Per Flat-Rate Hour

Parts managers need to think more about how to contribute to techs’ productivity. Try compensating them to think that way.

Techs produce flat-rate hours (FRHes). Multiplying those hours by the average collection rate for labor (or effective labor rate) give you labor sales in dollars. Service departments focus on tech production to drive revenue. The more flat-rate hours a tech produces, the more revenue the service department generates. For every flat-rate hour generated, there are corresponding parts sales expressed in dollars. The more hours, the more parts revenue. Simple enough math, right?

WHERE PARTS ARE PHYSICALLY POSITIONED

Okay, but what specifically can the parts department do to help the service department generate more flatrate hours? Actually, there are numerous processes a parts department could implement – some of them tried-and-true, others a little outside the proverbial box. Here are some approaches for your parts operation to consider:

20 Service Drive NOVEMBER 2015

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If the filter on the left is in constant demand by the service bays to the right, wouldn’t it make sense to keep a supply on hand at the back counter?

DMSes can produce reports identifying a dealership’s 150 fastest-moving parts. A parts manager could use these reports to determine which parts to relocate in order to provide easier and quicker access.

employee, or a shared employee, to deliver parts to techs? To control the personnel expense, this individual most likely would be entry level or even a retiree. Techs could remain in their service bays producing FRHes rather than pick up parts. And, if a tech could utilize an electronic parts request from his work area, then it would make it that much faster for the parts department to deliver it.

An easy one to implement would be to shift the faster-moving parts, including current recall parts, closer to the techs, meaning the back counter. Having these parts close-at-hand will help techs minimize their wait times and get back to their work bays faster.

You could also move parts used most often by the quick service lanes out to the quick service bays. Examples of such parts are air, cabin and oil filters; wiper blades; and batteries.

BUNDLED PARTS, SHARING ROS 5

Having those parts automatically priced out on the RO would help to minimize time spent at the counter. This is especially beneficial when the customer’s expectations for quick service are for under an hour. The quicker a vehicle can be serviced, the more vehicles can move through the shop, producing additional FRHes.

HOW PARTS ARE PRICED, TRANSPORTED 3

Family pricing can be a smart approach with fast-moving parts. Often, these parts (e.g., air filters, cabin filters, wiper blades) are not recommended to customers, simply because the advisor or tech expects too much time will be wasted on the phone or standing at the parts counter waiting for a price quote. Having these items price-averaged, or family priced, means advisors and techs know the price up front and will be more inclined to recommend and sell them.

The parts department could utilize parts runners. Techs waste a considerable amount of time each day just walking to and from the parts counter, and most don’t make the trip in a straight line. Side trips to the bathroom, vending machine and other techs’ bays are common. Instead, why not dedicate one parts or service

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I would suggest bundling parts as “parts packages” for scheduled maintenance services. Having all the parts needed for 15,000-mile, 30,000mile, etc. scheduled maintenance in one convenient location your store sells definitely would cut down on techs’ time wasted at the parts counter. You could create separate parts packages only for your dealership’s hottest-selling vehicles, or possibly one for every make and model you sell. That parts package would be pre-priced for ease of quoting and could easily be pre-billed on the RO. These packages could have their own location in the parts department, close to the tech counter for easy access and disbursal.

When an RO is generated, a copy could automatically be printed in the parts department. Then, the parts staff could pre-pull and pre-bill those parts on the RO. And, the parts could be set aside for the tech on the tech counter or in a specified bin nearby, or delivered directly to him.

PARTS WORK STATION, PAY PLAN 7

advisor in the service department. That person could work from a kiosk in the service area, where techs would come to order parts. Meantime, techs would get quick and accurate help with ordering parts without having to stray far from their bays. Tech production and parts sales would rise.

Finally, the parts department should consider pay plans for the parts counter employees that reward them for service productivity. In fact, many parts departments utilize this practice today. Counter people could be paid a set dollar amount per FRH produced by techs. Thus, the counter employees would be incented to deliver a higher level of service to techs and try to reduce the amount of time techs spend at their counter. As we know, properly constructed pay plans should drive desired behavior. Enlisting the parts counter to become part of the solution, rather than an enabler of the problem, would greatly help increase the service department’s productivity.

IN CONCLUSION

I hope I’ve made the point that the parts department staff plays a greater role in driving the service department’s FRH production than they think. It is key for the parts and service managers to work together on solutions that are mutually beneficial to their departments. The opportunity for improvement is there, but success depends on the parts and service departments seizing that opportunity, cooperating and working toward a common goal. SD

Another way in which the parts department can help drive production is to station a parts

CHUCK WENZLER

Consultant and Coach at M5 Management Services Inc. Chuck is a fixed operations professional with more than 25 years of managerial experience. He has worked for several dealerships and later moved into training and consulting, both independently and for AutoNation and M5. He specializes in fixed operations clients at M5.

NOVEMBER 2015 Service Drive 21

SMALL REFORMS IN HOW YOUR SERVICE DEPARTMENT APPROACHES REPAIR ORDERS

PRODUCE BIG RESULTS OVER TIME Quickly undertake these changes in pricing, recommending and scheduling.

Service departments have solid reasons to charge higher labor rates on more complicated repair jobs.

BY ROB GEHRING

very service department wants to maximize its results on repair orders – just ask them. The tone of the conversation will change, however, when you ask how they expect to maximize RO productivity.

Personally, I find it fascinating how incremental changes in ROs can have a huge financial impact on the dealership over time. Take, for example, a dealership that performs 1,000 repairs per month. If that service department improved its average technician hours sold per RO by 0.2 and increased its effective rate by $4.00 per hour, then its parts and labor sales would jump by $500,000 after 12 months. If the RO count increased to 1,100 a month (assuming the same gains in hours sold and effective rate), then revenue would climb by $846,000 after a year. I hope I have made the point that achieving relatively small changes in RO results and achieving them consistently can have a major payoff. In this article, I am going to discuss several such incremental improvements that will help you maximize results.

STOP THE DISCOUNTING

I believe most people take the path of least resistance in life. In that regard, I see service across the country discounting labor and parts pricing on ROs as soon as they learn the price is higher than the estimate they provided to the customer. They also habitually give discounts to family members, friends, people from their church; the list goes on.

22 Service Drive NOVEMBER 2015

These advisors are taking the path of least resistance, as it is easier to give a discount than phone the customer and increase the bill over the estimate. Most service managers fail to monitor discounts in a consistent manner, so the advisor is never challenged about the reason he or she discounted the customer. While discounts can be examined in most DMS exception reports, the formats are not the easiest to read or understand. The most innovative way I’ve seen to control advisor discounts is a product called ROAMS (repair order analysis & management system) from KEEPS Corp. These easy-to-read reports show a percentage of advisor compliance on every RO that has been written on customer pay. They then give a detailed breakdown of non-compliant ROs, which are highlighted so the user can click to review them. It then becomes easy to review non-compliant discounts with the advisor to get the reasons for his or her actions. At that point, the path of least resistance for the advisor no longer includes discounting customer labor or parts sales on the RO. The goal here should be for every advisor individually and the dealership as a whole to be more than 90 percent compliant on a consistent basis.

CHARGE MORE FOR HIGHSKILL REPAIRS

Today’s dealerships have many competitors providing easy maintenance services such as oil changes and tire rotations. Due to the complexity of the latest automobile systems, the level of competition drops off dramatically it comes to electrical, diesel engine or transmission repairs. The independent shops typically offer little or no factory training of staff and no special tools. However, the dealership has invested hundreds of thousands of dollars in brand-specific technician training and special tools needed to repair the vehicle correctly the first time. Who is your competition for complicated repairs? To maximize service results, dealerships must be unafraid to charge the customer higher prices to offset these investments. Your dealership will never make large profits from oil changes and tire rotations. I have talked with many service managers who believe they cannot bill over a certain figure even for high-skill repairs. Remember, most of your customers do not come to a dealership service department expecting the lowest price. What they do expect is a properly trained tech who can perform a quality repair and make their vehicle safe.

“Achieving relatively small changes in RO results and achieving them consistently can have a major payoff” ServiceDriveToday.com

RECOMMEND MORE SERVICES

As we all know, every year billions of dollars of needed maintenance and repairs never even gets recommended to customers. I must share some of the most destructive reasons I’ve seen for this failure. Let’s say a tech thoroughly inspects a car and notifies the advisor about several issues. The advisor quickly responds: “That’s Mary. She never buys anything. Just button it up and go to the next car.” I am not a mind reader but I bet I know what that tech is thinking now: “I just wasted 15 minutes of time for which I won’t get paid, caring about problems that the customer won’t even know about. See if I do that again.” Going forward, the tech is likely to recommend less service because he assumes the advisor won’t sell it. It’s critical that you understand nobody wins in this situation, including the customer. Whether a customer buys a repair or service isn’t the biggest concern. The dealership has an obligation to inform that customer about his or her vehicle’s needs. Advisors need to encourage techs to make a complete list of recommendations, and service managers should tour their shops looking for repairs and service procedures that weren’t recommended. During these shop walks, I always discover work that was not suggested to the customer. Be sure that every multi-point inspection is presented in the first 15 minutes of the customer’s visit, with recommended services listed. We know that 80 percent of all approvals are given in the first 25 percent of the visit, so emphasize that your people are presenting inspection reports quickly in a disciplined fashion. Then, track and record each declined service, so that your advisors can review it in detail with the customer during a future visit.

A Hypothetical Dealership Reaps Benefits

DON’T POSTPONE ANY NEW WORK

Many of those service departments that do a good job immediately telling the customer of all needed maintenance or repairs get bogged down with their own calendars. They may tell the customer they are too booked to take on the work for the rest of the day and attempt to reschedule when it’s more convenient for them, not for the customer. This gives the customer an opportunity to price-shop at your competitors, and also creates the prospect for resentment if the vehicle does come back but is assigned to a tech other than the one who recommended the work. A best practice is to always schedule the work immediately, unless that is inconvenient to the customer. If your shop would shudder at the ripple effect on the jobs already in the queue, then you’ve got problems in your scheduling process and opportunity for improvement. SD

“To maximize service results,

dealerships must be unafraid to charge the customer higher prices to offset these investments.”

Key Per Customer Pay Repair Order Hours Per Customer Pay Repair Order Repair Orders Per Month

Before

After

Net Change

1.64

1.84

0.2

1000

1100

100

Total Labor Hours Sold

1640

2024

384

Effective Labor Rate

$81.00

$85.00

$4.00

Total Labor Revenue Per Month

$132,840.00

$172,040.00

$39,200.00

Total Parts Revenue Per Month

$106,272.00

$137,632.00

$31,360.00

Monthly Parts & Services Revenue

$239,112.00

$309,672.00

$70,560.00

ANNUALIZED IMPROVEMENT:

$846,720.00

ROB GEHRING

President and Founder of Fixed Performance Inc. Rob’s company specializes in training engagements for dealership fixed-ops clients throughout the U.S. and Canada. It aims for dramatic and profitable improvements in a dealership’s fixed operations in both processes and people. He also writes a free weekly newsletter and holds a free weekly conference call on fixed operations topics.

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NOVEMBER 2015 Service Drive 23

Techs typically appreciate a straightforward approach to airing problems in their department.

A FORTHRIGHT APPROACH AND SMART USE OF MEETINGS FORGE

“The real challenge for dealers and service managers is to create the kind of relationships with techs that taps into and

BETTER RELATIONSHIPS channels their WITH TECHS motivation.

”

Both staffwide and individual sit-downs will reveal how to motivate techs, if you pay close attention. BY BRENDA STANG

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ealer 20 Group meetings present a great way to forum with fellow dealers and managers to share best practices. Frequently at 20 Group meetings, I’ve been asked by dealers and service managers for advice on motivating technicians. Usually, the desire for motivation stems from some problem – low employee performance, declining metrics, alarming turnover among techs. The dealers and service managers seem convinced that the right magic words to utter in a rah-rah meeting to pump up their techs will make their problem vanish. No doubt, everybody feels good after a meeting that people left feeling pumped up, but techs tend to forget why they were motivated before long, and morale in the department continues to drop. A rah-rah session may put a band aid on the problem, but that problem will return in a worse form. It’s hard for techs to take dealership management seriously if the solution for every problem seems to be a band aid. Contrary to popular opinion, managers can’t give motivation to their staffs. I know that we all would like to possess super powers to motivate employees or to bestow that ability to others. The truth is, everyone you meet has the potential to be motivated. The real challenge for dealers and service managers is to create the kind of relationships with techs that taps into and channels their motivation.

FEARING TECHS BENEFITS NO ONE

Frankly, I find the relationship between techs and dealership management is one of the strangest workplace dynamics I have ever seen. When most dealers and service managers talk about their techs, they tend to acknowledge the relationship is difficult, shrug and finish with, “You know how it is. What can you do? You don’t want to stir the pot and have them quit.” Indeed, fear is widespread among dealership management that techs just quit if they don’t get their way. It’s difficult for managers to give respect in these circumstances, and difficult for techs to respect their bosses knowing the fear they inspire. Face reality: Most techs do feel taken for granted, out of the loop and isolated from the rest of the dealership. Whether managers agree with this perception doesn’t matter; the techs see it as their reality. And yes, physically, they are isolated from the rest of the dealership. They’re confined to their service bays and within the four walls of the service department. I find techs generally to be very straightforward people who appreciate managers who deal with them in a straightforward manner. By this, I mean a service manager doesn’t have to skirt the real issue. They can quit pretending the elephant isn’t in the room and acknowledge a problem and ask for the techs’ thoughts about it. Openness, honesty and respectfulness usually are responded to in kind by techs. They realize there isn’t an ideal solution for every issue. Sometimes, they just need to be heard and understood. Two of the best forums I’ve seen used to deal with the real issues and to start building a motivational environment are general and individual tech meetings.

GENERAL TECH MEETINGS

What is the worst thing that can happen in a meeting with your dealership’s techs? They whine, complain and bring up every little thing that rubs them the wrong way. This is great! This is exactly what you want! Now, a service manager needs to be smart and take advantage of this golden opportunity.

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Here are some tips to set the stage for a successful meeting:

Give adequate notice; a week is nice but in a pinch, a couple of days will be sufficient.

Schedule the meeting to last 90 minutes and make it overlap with the noon hour. This provides a time limit that will keep people on-topic Supply lunch and make sure you won’t run out of food.

Have a written agenda. This helps to keep the meeting moving along and on-topic. Let the techs know the exact discussion items, so they come to the meeting prepared with input and questions. In my service departments, the chief issues usually revolved around shop tools, equipment, training and relationships with advisors and parts staff. However, include a “Miscellaneous” section of the agenda to cover items of which you are unaware. For the service manager, this meeting is a factfinding mission. None of it is personal, so be professional. If any of the items can be addressed quickly and without conflict, do so. That shows the techs that, rather than sit in their stalls and stew about worst-case scenarios, they can approach their manager with questions and concerns. For other discussion topics that need to be checked out or have processes developed, take good notes and make sure you follow up with a plan.

How often should you meet? If you’re just starting these meetings and facing a number of issues with

your tech, schedule weekly gatherings until the biggest problems are resolved and the techs seem comfortable with the process. Afterward, move to twice-monthly meetings on fixed days, like the first and 15th or every second Wednesday.

1-ON-1 TECH MEETINGS

Here is where the real motivation happens. Make this meeting 30 minutes of uninterrupted time to get to know your tech better. You know the old saying, “People don’t care until they know you care.” Initially, the tech may think this is a private meeting for him to air personal beefs and gripes. Let him have his say and hear him out, but remember that positive working relationships aren’t built on gripe sessions. Direct the conversation back to the one thing the tech has total control over and that you need to understand better: Himself. Your goal is to get the tech to talk about himself. What makes him tick? What does he care about? What drives him? What are his goals? Listen well and you will find out what really motivates this person. Take that knowledge and use it to channel the tech’s energy and activities. Hold these meetings regularly – ideally weekly but at the very least every two weeks – and they will evolve into fine-tuning sessions. Connect with your techs and tapping into what motivates them requires a shifting of gears in a service manager’s thinking and actions. It requires more effort at first, but once the shift happens, you will know your tech staff and service department operate faster and more smoothly. The respect generated and the motivational work environment created makes all of this worthwhile. SD

“Let [the tech] have his say and hear him out, but remember that positive working relationships aren’t built on gripe sessions.”]

What will motivate this particular tech? A one-on-one meeting may reveal the answers.

BRENDA STANG

Chief Shifter at Shifting Gears Training After 19 years in the dealership world, Brenda shifted a gear and started an organization to train and coach dealership managers. During her time in the Ulmer Auto Group, she worked with GM, Toyota, Nissan, Dodge and Chrysler stores. As managing partner for two of the top GM dealerships in Western Canada for the past 14 years, she worked with her management teams to develop and practice the best habits to be effective and efficient. She is a certified trainer, coach and speaker with the John Maxwell Team. You can reach Brenda at stangbrenda.20@gmail.com.

NOVEMBER 2015 Service Drive 25

SERVICE MANAGERS SHOULDN’T TRAIN ON STAFF PHONE SKILLS BUT SHOULD INSIST ON

FOLLOWING BASICS

You can at least police for politeness, speed of response and professionalism with customers. BY MICHAEL ROPPO

he telephone remains a dealership’s lifeline to influencing service and sales business performance. As a service manager, you already know (or at least suspect) that customer service telephone technique is critical to your success, as the first and all-important contact with your customer. Now, ask yourself the following questions: Do you use an automatic phone-answering system in your service department? If so, big mistake – huge! Do you employ a gatekeeper to screen all calls and make sure they get to the appropriate person? Are that gatekeeper’s phone skills and performance monitored by management? If you feel positively about phone performance at your dealership, then I commend you. However, if you feel that your service department is limiting your book of business by the way it handles customer calls, then this article is for you. I should add that service managers should not try to train their people on the phones, given that so many of them probably could use sharper phone skills themselves. Better to persuade your dealership to spend on an outside phone-training firm and monitor the metrics for your people once they’re trained. Just don’t count on being able to hire people who already seem to have abundant phone training, as seems to be the fallback position of many service managers I know.

INBOUND CALLS A key rule in phone interaction: Offer sincere concern for the customer’s problem.

“Service managers should not try to train their people on the phones, given that so many of them probably could use sharper phone skills themselves.” 26 Service Drive NOVEMBER 2015

The speed with which his or her phone call is picked up, and the professionalism of the greeting dramatically help shape a customer’s overall impression of the service experience. Here are some other basics you should expect from employees responding to inbound calls to the service department: 3 Answer the phone promptly and professionally. 3 Identify your department and then yourself, e.g,

“Service department, this is Michael, how may I help you?” 3 Try to speak “with a smile in your voice.” If you smile when talking on the phone, chances are your tone will come across as welcoming and friendly. 3 Show interest in the caller and his or her problems. Ask questions. 3 Be of service; offer assistance. 3 Make sure you are informed about your dealership and its departments, services and personnel before you pick up the phone. 3 Have basic materials and information readily available for reference. 3 Make referrals to other people and departments properly, but before transferring the call, provide the extension in case you get disconnected. 3 If you must put a caller on hold, ask permission first and don’t let him or her stay on hold for more than 28 seconds before you check back. 3 Take special efforts to record a message factually and deliver it promptly. Always double-check the name spellings and phone numbers you are given.

OUTBOUND CALLS

It’s a good idea for service managers to randomly audit the types of outgoing calls being made from the dealership. Think about your own experiences dialing out on a business call and how annoying it can be to get connected to someone who lacks the product or technical knowledge you need.

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Essential information should be readily accessible when a service employee is dealing with a customer over the phone.

“It’s a good idea

Some other suggestions:

1 2

Make sure you know where and whom you are calling. Have the correct number. Identify yourself professionally, e.g., “Hello, my name is Michael. I am the service advisor here at ABC Motors.” Be prepared. If you have several items to discuss, make a list or estimate beforehand so you will not forget anything important. Get to the point of your call quickly. If the person you are calling sounds busy, ask if you may call back at a more convenient time.

WHEN CUSTOMERS GET UPSET

When the other party on a work call gets ticked off, your people cannot fall back on scripts or mandated call flow. If a customer wanted to talk with a robotic system, he or she would have gone online to get an answer. When dealing with an upset customer, a dealership’s employee should:

Demonstrate sincere empathy and understanding.

Say something like, “I’m sorry about that. May I ask what happened?”

Try to be of service and express a willingness to help. Make sure to keep any assurances or promises you make.

Listen actively, and I mean actively.

Take notes to help you remember important details about the call.

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FOLLOW BASIC PHONE COURTESY RULES

Keep in mind, however, that what works for one person on the phone will not always work well for another employee. You never want to sound overly scripted on a business call, even if in fact the dealership is having you operate off a script. Some people tend to rely on their knowledge and confidence and can get down to business quickly; others rely on apologies and their friendly demeanor to control the conversation. Following are some essential telephone courtesies that apply to every call:  Identify yourself by announcing your name or the name of your dealership and the department you represent, rather than just say, “Hello.” For example: “Good morning and thank you for calling the ABC Motors service department. This is Michael. How may I help you?”  Speak directly into the mouthpiece and keep it at least 1 inch from your mouth, so that your voice will be clear and understandable. Speak clearly and enunciate your words. Listen actively. Studies have shown that 55 percent of communication is nonverbal, so it is important to develop good listening skills to compensate for the lack of eye contact, facial expressions and gestures.  Use the other person’s name often. People like to hear their name. Use good grammar and diction; avoid

for service managers to randomly audit the types of outgoing calls being made from the dealership.”

slang. Speak slowly enough to be easily understood. End the conversation with a definite “Goodbye” or any other expression that leaves no doubt that the conversation is about to conclude. However, let the person who originated the call hang up first. Always hang up the receiver gently.  Phone training is great for recruiting and refining good “people-ready” talent. Once your dealership becomes known for its well-planned training program that is a key part of its operating culture, talented people will want to work with you. Training also is great for employee retention. The only thing harder than hiring great employees is holding on to great employees whom you trained. Again, almost every dealership leader and manager agrees outwardly that training is important. And yet, hardly any dealership does it well. Maybe it’s time to put the money where your mouth is, when it comes to working with service customers over the phone. SD

MICHAEL ROPPO

Director of Fixed Operations and Training /QPS at Automotive Domain Results Michael has more than 30 years experience in training and consulting for Automotive Domain Results and its parent company, The Mironov Group. He helps dealers attain maximum profitability, customer satisfaction and retention by improving the quality of their management teams and the personnel who come in contact with their customers. Visit his website at AutomotiveDomainResults.com.

NOVEMBER 2015 Service Drive 27

SHARPEN YOUR SERVICE MARKETING E-MAIL MESSAGES Follow e-mail fundamentals: Don’t go overboard on the frequency, vary the content and personalize the tone. BY AMY FARLEY

our service department can be reaching out to your customers and prospects through many different means. E-mail is one of them, and as a marketing channel, it’s here to stay.

dealership before. While you definitely should craft marketing messages specifically for these customers, you also should refrain from overwhelming them with messages.

Is your service center’s e-mail marketing strategy set up to be effective and successful? Following are some dos and don’ts to take into consideration as you refine your approach for communicating with customers and prospects by e-mail.

As mentioned above, today’s customer likely has a full e-mail inbox. If you send too many e-mails to the same list, those customers might get tired of seeing them. This may lead a few of those customers to report your messages as spam, which can have a negative effect on your overall e-mail deliverability going forward.

ACQUIRE E-MAIL ADDRESSES AGGRESSIVELY When someone comes in to have his or her vehicle serviced for the first time at your dealership, your staff must be prepared to collect all relevant personal information. Asking the customer to fill out a form is one alternative, but experience has shown not everyone will be willing to divulge an e-mail address, given how full their in-boxes can get with marketing messages.

Additionally, when your offers become too frequent, they also lose effectiveness. Everyone in your database will know that another deal or discount is coming soon

from your dealership, which removes any sense of urgency on behalf of the customer to come in for service. Well-crafted marketing messages that are sent less frequently are much more likely to get a solid response rate than hasty offers that are sent too often.

VARY YOUR CONTENT AND OFFERS Varying the message is especially important if your service department is sending multiple e-mails to the same customers. While all the e-mail messaging you send out to promote your service center should reflect your

As you develop a service department marketing strategy, don’t overwhelm people with e-mails.

Given that reluctance, you may need to add an additional incentive. Offering them a reward, such as 15 percent off an oil change, can entice otherwise-reticent customers to give you their e-mail addresses. Even a small discount or offer can be all it takes to convince that customer to give you their information. Each time a loyal customer visits your service center, you should ask him or her to review all the relevant information in your system to ensure that it’s still correct. People change their physical addresses, phone numbers and even e-mail addresses occasionally, so it’s wise to continually check to make sure your database contains the best, most up-to-date information.

DON’T INUNDATE PEOPLE WITH E-MAILS Most of the customers in your database will either have purchased a vehicle from, or had one serviced at, your

28 Service Drive NOVEMBER 2015

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Informational content on auto care and maintenance will help keep your customers engaged.

“Offering them a reward, such as 15 percent off an oil change, can

entice otherwise-reticent customers to give you their e-mail addresses.” dealership’s branding, you want your customers to feel as though they’re receiving new and valuable content in their inbox each time. Otherwise, they’re more likely to simply delete your e-mails. Informational content such as auto care and maintenance tips can help keep customers engaged and loyal to your service department. Also, video can help your e-mails stand out, so you might consider including a video tour of your facility or a how-to video hosted by one of your seasoned service experts. The important thing is to create a mix of content for your e-mail customers that’s engaging and original. Likewise, changing the types and terms of your service offers will help keep your customers and prospects opening your e-mails. For example, try offering discounts on oil changes or brake services in one e-mail but include a more generic offer, like a dollar amount off the customer’s next service, in the subsequent e-mail.

GET PERSONAL WITH YOUR CUSTOMERS As with all of your marketing e-mails, you should strive for personalization whenever possible. Customers tend to respond well to e-mails that address them by name, so include your customer’s name in the subject line. About 70 percent of customers decide whether to open your e-mail based on the subject line, so personalizing yours can only help you. Your customers also appreciate personalization within the marketing message. Consider sending reminder e-mails to customers who are due – or even overdue – for a particular service. Your goal is to keep your service customers coming back again and again, but it’s easy for them to put off or forget routine maintenance. Address

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their specific needs, whether it’s time for an oil change, a tire rotation or something more complex.

OFFER CONVENIENT WAYS TO CONTACT YOU If the e-mails you send are effective, then customers will want to reach out to your dealership, either to ask questions or to schedule a service appointment. If they can’t find contact information or the process to get in touch is complicated, then the chances increase that those customers will just delete your e-mail and take their business elsewhere. Make sure you’re making it easy for them to reach you when they need you. Your contact information, including address and phone number, should be included on each communication. A prominent and clear call-to-action encouraging

customers to click through to your service center’s website (or the corresponding page on your dealership site) is a good feature for a marketing e-mail as well. You also can opt to include a form within a given e-mail that customers can fill out to schedule an appointment Whatever your approach, it’s important to make the processes of reaching out to your service department, getting answers to all of a customer’s questions and setting up an appointment as streamlined and simple as possible. E-mail is a simple and effective way to reach out to service customers, and it can be even more successful when you implement the tips I’ve discussed. Take the time necessary to improve your service department’s e-mail marketing strategy, in order to drive an improved ROI and increased business. SD

respond well to e-mails that address them by name, so include your customer’s name in the subject line.”

“Customers tend to

AMY FARLEY

Media and Communications Manager at Force Marketing Amy is a skilled writer and editor with a keen interest in digital trends and topics in the automotive industry. She utilizes her knowledge of what is new in retail automotive marketing to help Force – an automotive digital, direct mail and email marketing firm based in Atlanta – with its evolution of the dealer-to-customer shopping experience. Visit the website at Forcemktg.com.

NOVEMBER 2015 Service Drive 29

EXTRA EFFORT IS NEEDED When Customers Voice Frustration With Your Dealership

Given how easy it is for a reviewer to pull in acquaintances, you want the interaction to end on a positive note. BY DAVID KAIN

e’ve all heard the phrase, “It’s all fun and games until someone gets their eye poked out.” I think the auto industry’s current relationship with social media is like that. Right now, it’s mostly fun and games as dealers get their feet wet with social media, but just wait until an angry customer trashes their store in the digital world. Dealerships need to be particularly sensitive about negative reviews on Facebook. People have come to expect businesses to get panned as often as they are praised on sites like Yelp, but a bad experience stands out more on Facebook, where the overall atmosphere is positive and community centric. Also, that community aspect means an irritated customer may well try to draw friends and family into discussing this particular business, which is another different aspect of Facebook. All of us are tempted from time to time to respond with strong emotion, even in a business situation. Dealership managers don’t have that luxury, but our customers don’t have to live by the same rules. At my family’s dealership, we used to say that guests who don’t buy cars don’t fill out surveys. But that was bad advice then and it’s really bad advice now. All day long, your showroom and service department visitors are posting “live updates” about their experiences on dealership social media platforms. In this article, I will discuss how the mother of one of my client’s customers took the dealership to task about how her daughter and son-in-law were treated – in real time, on the store’s

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Facebook page. In one day, this established dealership with a pristine reputation online and offline went from hero to zero (almost literally the case, considering how many one-star reviews resulted), all because a mother felt her child was treated poorly.

CONTROLLING BAD REVIEWS IS DIFFICULT

Most dealerships have a strategy in place to recruit online reviews from happy guests, and that approach works well to build a four- or five-star reputation on Google, Cars.com, Yelp, DealerRater, etc. This was a lot more difficult in the early days of review sites, but with practice dealers have become proficient and acknowledge their team members for a job well done in encouraging satisfied customers to praise the store online. Unfortunately, they are not as adept in controlling the situation when a dissatisfied customer takes them to task on social media. Bad reviews on search engines like Google and review sites like Yelp tend only to be noticed by active shoppers for vehicles, car repairs, and other products and services. So, those online

environments are somewhat static. However, Facebook is a dynamic environment in that someone doesn’t need to be shopping at all to be waylaid by someone else’s negative review. With users checking Facebook multiple times each day, the review probably will appear on their feed without their seeking it out.

EARLY INTERVENTION IS NEEDED

My dealership client now recognizes it could have averted a big headache if it would have launched the same rapid escalation process it uses to tackle major business emergencies. The problem escalated here because an after-market vendor performed an upgrade and did some minor damage to the new vehicle in the process. A dealership employee went outside of his own body shop to save money, but the repair didn’t

“A bad experience stands out more on Facebook , where the overall atmosphere is positive and community centric.” ServiceDriveToday.com

THE EFFECTIVENESS OF ‘WE’RE SORRY’ Meanwhile, the dealer was blindsided and quickly gathered his leadership team to work toward a solution. He posted on the dealership’s Facebook page saying how sorry he was, that he understood why the customer was upset and that he would work diligently to resolve the problem to the customer’s satisfaction.

His acknowledgement of the customer’s side of the story and immediate use of the word “sorry” rather than the typical “I apologize if this offended …” seemed to work well. Customers who were pleased with the dealership’s work were inspired to come to the dealer’s defense and gave positive reviews, which slowed the tide of criticism even though it seemed to motivate the mother to recruit more anti-viewpoints. Ironically, the dealership discovered (on Facebook) that its body shop manager’s daughter knew the customer. Management used this connection to calm the situation and finally was able to arrange a resolution that satisfied the customer. The mother ended up posting that the dealership had handled the situation, and the social storm ended. However, a painful lesson was learned: Any customer who feels mistreated by a dealership employee can and probably will complain about the experience online, and if that customer uses Facebook, the ramifications can be serious.

It also is imperative for dealerships to foster a culture of vigilant customer awareness at all times, he says, and insist on its team talking professionally and courteously in every interaction.

TO CONCLUDE, HERE IS MY CHECKLIST FOR PRESERVING A POSITIVE REPUTATION ON SOCIAL MEDIA: Sustain a 24/7/365 customer satisfaction culture Orient your team to the impact of social media reviews with live digital “field trips,” like gathering around a computer running Facebook Encourage happy customers to review your dealership on your social media sites (Facebook in particular) Teach employees how to recognize the signs of customer dissatisfaction, and to involve managers quickly Teach every department manager how to effectively resolve customer concerns quickly SD

LESSONS FOR ALL DEALERSHIPS

It is not an overreaction to suggest that every dealership should receive ongoing social media sensitivity training. Mitch Gallant, the assistant GM for the Capital Auto Group in Regina, Saskatchewan, Canada, recommends quick engagement before a social blowup can occur. He teaches his team to alert management immediately if a customer expresses a concern to them personally.

meet the customer’s expectations and after three weeks, the GM was playing catch-up. Before that GM could handle the problem, the customer’s mother posted a one-star review (only because zero wasn’t available) and insisted her daughter and son-in-law had been wronged. She commented that the dealership didn’t seem to understand the power of social media and recruited hundreds of online friends to take aim at the business. Believe me, they did. I bet you can guess how this played out. Family, friends and then casual observers quickly sided with the customer. Post after post slammed the dealership, and then several one-star reviews were written on the dealership’s Facebook page. Within 48 hours, the original poster had created a hash tag and a community site to collect reviews on the dealership as well as on any other local businesses that were not performing up to expectations. It was crowd-sourcing at it most organic level. I would imagine that Angie’s List was started under similar circumstances.

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If the complaint does end up on social media, Gallant recommends an immediate “We’re sorry” be posted to that platform to express empathy, and an invitation to the customer to a phone or in-person conversation to settle the problem. He has found this approach works well because irritated customers tend to behave better in person than behind a computer screen, and more inclined to work things out. Once the problem has been resolved, Gallant says, a dealership should politely mention that it would appreciate the customer amending his or her online complaint.

Never forget the impact of reviews on Facebook.

“It is not an overreaction to suggest that every dealership should receive ongoing social media sensitivity training. ” DAVID KAIN

President of Kain Automotive David has a unique background that includes automotive retail, OEM executive leadership and digital sales training and consulting. His 20 years in retail included various positions in sales and service at Jack Kain Ford, where he remains a partner today. He also was the COO and co-founder of FordDirect.com, the Internet lead provider to Ford and Lincoln dealers. In 2003, he developed Kain Automotive. Visit his website at www.KainAutomotive.com.

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ASSOCIATIONnews JEFF CARLSON TO CHAIR NADA BOARD IN 2016 Colorado dealer Jeff Carlson was elected 2016 chairman for the National Automobile Dealers Association during NADA’s latest board meeting in Palm Beach, Fla. Carlson’s term as chairman begins in January at McLean, Va.-based NADA’s Convention and Expo in Las Vegas, when he takes over for upstate New York dealer William Fox. Carlson currently is serving as NADA vice chairman. He is president of Glenwood Springs Ford and Glenwood Springs Subaru in Glenwood Springs, Colo.; and co-owner of Summit Ford in Silverthorne, Colo. Meanwhile, metro Chicago dealer Mark Scarpelli was elected vice chairman for 2016 to succeed Carlson. He is president of Raymond Chevrolet and Kia in Antioch, Ill., and co-owner of Ray Chevrolet in Fox Lake, Ill. The 2016 NADA secretary is Bill Willis, president of Smyrna, Del.-based Willis Automotive Group, which has Chevrolet, Buick and Ford dealerships. Neale Kuperman, president of Rockland Toyota in Blauvelt, N.Y., was elected treasurer.

DEALERS SHOULD GET BEHIND VOLKSWAGEN, AIADA’S CHAIRMAN URGES Bradley Hoffman, chairman of the Washington-based American International Automobile Dealers Association, is trying to drum up public dealer support for Volkswagen as the company struggles with the diesel emissions controversy. “No one benefits from Volkswagen’s implosion,” Hoffman wrote in the Sept. 30 installment of his blog. “Not their customers, not their dealers, not their employees, and certainly not their shareholders. Now is the time to hang together.” He quoted Benjamin Franklin (“We must all hang together or we will surely hang separately”) in urging Volkswagen executives to reach out to their dealers, in terms of both financial compensation for non-viable diesel vehicles and improved communication. “The question is, will VW have the good sense to follow Franklin’s wisdom and harness the power of their 500+ dealers in the United States?” Hoffman recalled that during the 2010 congressional hearings on Toyota’s problem with unintended acceleration by vehicles, Toyota execs worked hard on dealer outreach and were rewarded “with unchecked loyalty” and a united dealer front before Congress.

ILLINOIS DEALER GROUP TAKES AIM AT PROPOSED AD SALES TAX The Illinois Automobile Dealers Association is trying to mobilize its members against a possible state sales tax on advertising that is getting some discussion from elected officials in Springfield. The Springfield-based organization’s chief complaints are that such a tax would hit small businesses (including dealerships) disproportionately and that it would ultimately be passed along to consumers as higher prices. In fact, “this tax will wipe out the advertising industry in Illinois,” the association predicts. Illinois dealers also are being reminded about job losses and reduced advertising purchases in Florida after that state extended its sales tax to advertising in 1987.

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NEW YORK STATE DEALER GROUP HOLDS ELECTIONS FOR DIRECTOR SLOTS The New York State Automobile Dealers Association held elections for board director positions during the second week of October in nine districts statewide. As of press time, the names of whom dealers chose for three-year board terms had not been announced by the association.

LEVI RETURNS TO OHIO AUTO AUCTION’S LEADERSHIP TEAM Greg Levi rejoined the Columbus (Ohio) Fair Auto Auction as chief operating officer. He worked for the auction until late 2013, when he left to become EVP of Finance Express LLC until that DMS software provider’s acquisition by DealerSocket.

AUCTION TRADE GROUP TAPS BROWNING AS PRESIDENT FOR NEXT YEAR

After a year as president-elect, Mike Browning was inducted as president of the National Auto Auction Association. Browning is general manager of Manheim San Antonio. He got into the auto industry in 1989 in car sales, and after more than a decade in retail jumped over to wholesale in 2003 as general sales manager of Manheim’s New Orleans auction. The Louisiana native became GM in New Orleans two years later. He succeeds Ellie Johnson, GM of Manheim North Carolina, as president of the Frederick, Md.-based association. Jerry Hinton, GM of Brasher’s Portland (Ore.) Auto Auction, is president-elect for the 2015-16 term; the vice president is Warren Clauss, general manager of ADESA Buffalo.

SENATORS PROD NADA TO DROP OPPOSITION TO BAN ON RECALL USED CAR SALES Debate over whether used cars under recall should be repaired before they are sold, and two U.S. senators recently pressured the National Automobile Dealers Association to drop its opposition to such a ban. In letters sent in early October to McLean, Va.-based NADA and the Arlington, Texas-based National Independent Automobile Dealers Association, senators Bill Nelson, D-Fla., and Richard Blumenthal, D-Conn., wrote they were “very concerned that used car purchasers will be the only category of vehicle consumers unprotected against potentially dangerous recalled vehicles.” They questioned whether dealers and their trade organizations are putting profits ahead of customer safety. Federal law prohibits selling a new car under recall until it is fixed. Congress is considering bills to put the same restriction on used car sales, and the Transportation Department and National Highway Traffic Safety Administration support such a measure. However, NADA’s position is that a blanket grounding would make used cars less affordable without a demonstrated improvement in safer vehicles and roads. The nation’s largest retailer of vehicles, AutoNation Inc. of Fort Lauderdale, Fla., already has acted, saying it will no longer sell or leased used vehicles that are under recall until the necessary repairs have been performed. SD

ServiceDriveToday.com

Put YouTube Video To Work Immediately

In Your Service Department The value in upselling and proving the need for repairs is obvious. BY DAVID LEWIS

t is hard to believe YouTube, one of the most popular media platforms in the world, is only 10 years old. The number of people and careers that have been affected by personalized videos sent to the masses via YouTube boggles the mind. Once its creators sold the company to Google, it didn’t take long for YouTube to become a household name and everyone to start recording virtually anything and posting the video online for the world to see. While automotive salespeople have been gravitating to YouTube and Facebook to create live walk-around presentations for customers, these platforms have yet to catch on with dealership service departments to the degree they deserve. Few media can compete with actual video of a tech showing work that needs to be done, in terms of potential to upsell customers on additional service and parts. At the very least, customers would appreciate video of progress after they have dropped off a vehicle for repairs. Suppose, for example, that a customer drops off his car at your service department at 7 a.m. for routine maintenance. He leaves his contact information, and then a service porter drives him to work. At 8:30 a.m., a service advisor calls the customer’s office with the update that a tech inspected his car and determined it needs brake work (replacing pads, rebuilding or replacing calipers, and turning the rotors on both front wheels) totaling $499. If he’s like most customers, this one will question whether the work really needs to be done now and tell the advisor he will think about it.

“Few media can compete with actual video of a tech showing work that needs to be done, in terms of potential to upsell customers on additional service and parts.”

uncomfortable in front of the camera, the advisor could appear instead. Imagine this customer’s reaction as he actually sees leaking calipers, worn brake pads and grooves in rotors. It would be even better if he could be shown what a new set of pads looks like side-by-side with worn-out pads. The success rate for this simple video upsell concept is about 90 percent. It does not require expensive technology or advanced video production experience. Smartphones and portable cameras can produce tremendously high-quality video that displays well on a customer’s phone or table. The savings in time and money creating this kind of presentation (which in turn improves profitability) for the service department is unparalleled. Considering that practically anyone can quickly learn how to shoot a video presentation of acceptable quality to be posted online, I find it hard to believe any service department would hesitate. Of course, you would want to invest enough time to learn and practice the recording process to make your videos consistently professional. You will not find the learning curve to be particularly long. Most of us use smartphone camera features routinely in everyday life.

enhanced presentation technology to your service department operations would likely be well received by your customers. If dealership salespeople and BDC representatives integrate video effectively with their customer interactions, I find it hard to believe service customers won’t gravitate to this approach. If we have learned anything in this generation of high technology, it is that those who fail to recognize and utilize the available technology are sacrificing a competitive edge. They also may find it hard and/or expensive to catch up later. The clear and obvious benefits that these inexpensive and easy to use video communications can bring to your service department should not be taken lightly. Ultimately, they can increase your service department’s efficiency, reduce the number of your customer complaints and enhance profitability. The time and money invested to get this simple a video project off the ground is easily worth it. The sooner your service department’s advisors and techs begin aggressively utilizing video in their sales efforts and customer communications, the more rewards that your customers and your group will reap. SD

WORKS FOR SALES, WORKS FOR YOU

With more than 1.5 billion YouTube users, adding this

DAVID LEWIS

VIDEO OF REPAIR IN ACTION

Now, consider the value of posting a video to the trusted YouTube site. The tech has removed the car’s wheels and can show evidence of why the recommended work really needs to be handled now. If that tech is

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NOVEMBER 2015 Service Drive 33

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