Service Drive Magazine | December 2015 by CBTNews

DECEMBER 2015

Check out our daily newscast on servicedrivetoday.com

VOLUME 1, ISSUE 8

a CBT Automotive Network publication

TACKLING COMMON ISSUES

WITH SERVICE ADVISORS DAVID LEWIS … see PAGE 16

THE RIGHT TECH WORK SCHEDULE

BOOSTS OUTPUT CHUCK WENZLER … see PAGE 18

REGULATORY COMPLIANCE

MINING YOUR ROs FOR INSIGHTS

NEEDS MGMT. OVERSIGHT TERRY DORTCH

A sample of 100 recent repair orders can reveal if your service department is taking the wrong kinds of jobs. ... see PAGE 6

… see PAGE 20

BAD FACEBOOK REVIEWS

REQUIRE QUICK ACTION DAVID KAIN

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

… see PAGE 24

KPIs ON SERVICE ADVISOR PERFORMANCE

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

Don’t just track how many ROs are being written; you also want to know labor billings and parts sales with an average order. ... see PAGE 8

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.

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SERVICE DRIVE MAGAZINE

Letter From The Editor Dear Readers, In our pages and in my letters in recent editions, I’ve tried to keep you updated on all of the material developments with our CBT Automotive Sales, Service and Marketing Conference & Expo – which is not an easy task, trust me. As an attendee, you of course will be primarily concerned with the practical value of the guidance you hear from our speakers. To that end, you’ll want to read our update inside about the addition of several panel discussions. Apart from creating a seamless bridge from our keynote addresses to the conference breakout sessions, these panel discussions will bring you top minds and business leaders in retail automotive breaking down some of the most vexing issues for dealers. The early registration deadline (for a $200 discount) for our Feb. 9-11 conference in Atlanta is fast approaching, so go to www.cbtconferenceandexpo.com to sign up today. Also in this edition, we bring you insights on repair order metrics key performance indicators, management tools on which every service manager relies but which are constantly evolving. Make a point of reading the piece from Don Reed of DealerPro Training about how Managing Editor a routine, random sample of your ROs can provide insights into where your team is struggling or succeeding, insights that you might have missed in the everyday crush. Also, you’ll want to check out thoughts from John Fairchild of Fairchild Automotive Solutions on how to identify and track KPIs that truly reveal your service advisors’ performance.

JON MCKENNA

In that same ilk of how setting up the proper system from the get-go pays off, you won’t want to miss an article by Chuck Wenzler of M5 Management Services Inc. about boosting output simply by reconfiguring technicians’ work schedules, rather than undertaking a building expansion. And Terry Dortch of Automotive Compliance Consultants reminds you that constant compliance with all of the federal laws and regulations that govern a dealership’s departments (including the service department) demands planned oversight from top management. Finally, every service manager knows that responding to a negative online review by a service customer demands his or her immediate response. David Kain of Kain Automotive tells you why the need for the dealership’s reply is particularly paramount when the review is on Facebook. Here’s hoping for a busy December in your service department.

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 Marketing Associate Roxanne Luhr

In This Issue 6 Peruse a batch of your latest ROs to identify key service work trends By Don Reed, DealerPro Training

8 ROs written isn’t the only vital KPI for advisor performance By John Fairchild, Fairchild Automotive Solutions

18 Alternative time structures can significantly boost your techs’ output By Chuck Wenzler, M5 Management Services Inc.

20 Use this road map to dealership compliance with laws and regs By Terry Dortch, Automotive Compliance Consultants

10 Heavyweights in auto retailing fortify February CBT Conference agenda

22 On The Set With Service Drive Today

12 Fluid diagnostics should be part of every MPI but often aren’t

24 Address bad customer reviews on Facebook as quickly as you can

By Ron McElroy, Magna-Guard Inc.

Ask The Pros

Leading service gives 16 trainer thoughts on common advisor issues

By David Lewis, David Lewis & Associates

4 Service Drive DECEMBER 2015

Subscription Manager Emily Wiggins

28 Management approaches that keep a rein on departments’ competition By Mark Tewart, Tewart Enterprises Inc.

Info about 30 customers’ preferences

maximizes your CMS and CRM

By Michael Roppo, Automotive Domain Results

By David Kain, Kain Automotive

competitive pay 26 Combine with incentives

Gary Blitzer gblitzer@cbtnews.com d 678.221.2955 c 770.330.6821 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.

for hourly BDC agents

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MEDIA SALES REPRESENTATIVE

ONLINE FEATURES Visit www.ServiceDriveToday.com

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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!

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Dale Pollak Founder, vAuto | Senior VP, Cox Automotive

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PERUSE A BATCH OF YOUR LATEST ROs, AND

VALUABLE

INSIGHTS AWAIT Watch for negative trends with one-item jobs, older cars generating little work, skipping of menus and inspections. BY DON REED

hat can service department directors and managers learn from a repair order? Plenty. More specifically, I’m referring to a customer pay RO. In this article, I’ll refer to it as a “retail” RO. I want to discuss how you can use an examination of retail ROs to effectively evaluate the performance of your dealership’s service operations team, while needing as little as 30 minutes per week to gather and present the data.

WHERE A SAMPLE OF 100 ROs LEADS To begin with, gather 100 of your recent retail ROs. Next, create an Excel spreadsheet and across the top, enter these headings. You will need to review each of those 100 ROs and make a check mark in the appropriate column, as I have done below:

RO# 03214

LOF CDM Menu 1-Item Multiple 0-25 26-50 51-75 76+ Est 27pt Sign x

Note, for example, that on RO #03214, a lube, oil and filter change (LOF) was performed but was the only item on the RO (1-Item). The mileage on the vehicle serviced was between 26,000 and 50,000 miles (26-50). The customer did sign the RO (Sign). Simple enough, right? Now, once you have checked and recorded all 100 ROs, total the number of “X” entries in each column. Report that number at the bottom and calculate it as a percentage of the total ROs, as follows with my hypothetical example:

RO#

LOF CDM Menu 1-Item Multiple 0-25 26-50 51-75 76+ Est 27pt Sign

03214

03218

x x

03220

03225 x

03229

x 3

x x

n/a

60% 20% 20% 6 Service Drive DECEMBER 2015

60%

x 1

20% 20%

40% 20% 20% 20% 80%

As you can see, 60 percent of the ROs had an LOF performed. The customer declined maintenance (CDM) on 20% of the ROs, and on 20% bought a service that is recommended or required based on age and mileage (Menu). Sixty percent bought only one item while 40% purchased multiple items (Multiple). Twenty percent of the customers had less than 25,000 miles on their vehicles (0-25), another 20% had 26,000 to 50,000 miles, 40% had between 51,000 and 75,000 miles (5175), and 20% had 76,000 or more miles (76+). Twenty percent of the customers received an estimate (Est), another 20% had a 27-point inspection completed (27pt), ad 80% signed the RO

HOW MANY 1-ITEM CUSTOMERS? Now, let’s analyze what this spreadsheet teaches us about the performance of our hypothetical service operations team. The most glaring problem stems from 60% of repair customers buying only one item. If your dealership writes more than half of its ROs in the 1-Item column, that means you probably average about 1 to 1.2 hours per retail RO. This is the equivalent of terminal cancer for increasing service absorption and for long-term profits in fixed operations! You must understand that 1-Item ROs fail to train your

“You must understand that 1-Item ROs fail to train your customers to pay attention to preventive maintenance needs.” ServiceDriveToday.com

that only 27% of advisors even present maintenance menus, but when they do, customers respond affirmatively 46% of the time. How do you like that closing ratio?

TRY RO ANALYSIS FOR EACH ADVISOR So, what do you think? Is it worth 30 minutes of your time to perform this RO analysis? Obviously it is, because the exercise will cut through all of the excuses you’ve been hearing or offering as to why your sales per RO are so low. How often should this analysis be done? Once a week. Who should conduct it? The service director/ manager. Who should see the results: The dealer, GM, all service advisors, the service drive sales manager and the shop foreman should meet weekly to review the results. Additionally, it is a great idea to review the numbers with all of your techs in a shop meeting at least once a month.

Every customer should receive a full services-menu review, even if it makes him or her a bit edgy. customers to pay attention to preventive maintenance needs. In the long run, their cost of ownership will increase, because clearly no one on your team is advising them about recommended and/or required services for a safe and reliable vehicle. Mechanical failures lead to mechanical repairs, which are costlier than preventive maintenance. A high percentage of 1-Item ROs indicates your technicians are not inspecting all of the vehicles they service. (The same warning is sounded about the 20% of ROs with a completed 27-point inspection.) Plus, if your 1-Item ROs exceed 50% of the total, then your advisors are not advising. Your goal should be 15% of ROs or fewer.

OLDER VEHICLES MUST DRIVE WORK Another interesting trend to note in my table is that 60% of the ROs surveyed are for vehicles with more than 50,000 miles. Research shows that starting with the fourth year of ownership, the average customer will spend about $450 per year to service and/or repair their vehicle, or three times as much as during the first three years. In your dealership, you will probably find that about half of your customer pay ROs have more than 50,000 miles, with a high proportion of that group at more than 75,000 miles. Common sense tells us that many of these vehicles are due for some form of maintenance or repair. How often should your team perform a 27-point inspection of a used vehicle with more than 50,000 miles on the odometer, yet your tech identifies only one item to repair or service? Never! Compare your service department’s per-vehicle used car reconditioning costs you’re your average dollar sales per customer pay RO on vehicles with more than 50,000 miles. I’m guessing reconditioning will be $500 to $700 per vehicle and customer pay ROs will be $175

ServiceDriveToday.com

to $250. You need to wake up to the problem of these reconditioning jobs and dollars coming into your service department every day, but your service team not giving customers the option of saying, “Yes” to needed repairs or services. I am not talking about a hard sell, not at all. Your team simply should inspect the vehicle and then advise the customer ( just like you do with the used car manager) of the needed services. Then, let the customer decide whether he or she wants a safe and reliable vehicle.

EVERYONE GETS A MENU REVIEWED When a customer declines “Menu” services, your people should note “customer declined maintenance” on the RO so that the decision becomes part of his or her service history. Your advisors should give a menu presentation to 100% of your customers in order to train them to pay attention to preventive maintenance. Again, this is not a hard sell but rather advising the customer about necessary maintenance. A problem with many advisors is that they effectively make the customer’s decision by failing to give them the opportunity to say, “Yes.” In other words, many advisors never even present a menu to your customers! A recent survey from J.D. Power showed

If you are interested in total accountability for individual performance in your department, then try preparing this RO analysis for each advisor. You will be able to identify who is providing your customers with a high level of service, and who is not. Service advisors who do a great job both for their customers and their dealers unfortunately fall into a minority. Service directors should separate their top performers from the underachievers, so they can identify who needs training and who deserves a pat on the back for a job well done. SD

“The [RO analysis] will cut through all of the excuses you’ve been hearing or offering as to why your sales per RO are so low.”

DON REED

CEO of DealerPro Training After 26 years in the automobile business as a dealer, GM, sales manager, service manager, service advisor and salesperson, Don began a new career as a consultant and trainer. As CEO of DealerPro Training and founder of The Don Reed PRO Training Network, he has worked with hundreds of dealerships and major dealer groups across the U.S., Canada and the U.K. to increase profits in their fixed operations. He was rated a Top 10 Speaker at the NADA convention for four consecutive years. Visit the firm’s website at DealerProTraining.com.

DECEMBER 2015 Service Drive 7

Track These KPIs To

MEASURE YOUR SERVICE ADVISORS’ PERFORMANCE The number of ROs written isn’t the only vital stat; various sales per RO are important ratios. BY JOHN FAIRCHILD

n any arena, business as well as sport, top performers are identified through constant, ongoing performance evaluations. Service advisors are no different. Amid the frantic pace of a service drive, the absence of performance-tracking definitely can affect the bottom line, and quickly. A key performance indicator (KPI) is a business metric used to gauge activities that are crucial to the business’ success. KPIs differ based on the individual enterprise’s goals, but they are alike in that they are applied in order to identify trends and suggest a strategic response. Before KPIs can be identified for service advisors, the following conditions must be met: ✘ A defined service drive process ✘ Clear goals for each advisor ✘ An easy method of measuring each KPI, and consistency in reporting performance ✘ Willingness from management to fix and amend inconsistencies in setting and measuring KPIs, so as to avoid de-motivating the staff Looked at another way, KPIs are a set of standards against which to compare actual results. For both service advisors and their managers, KPIs are a success gage for the service drive. Ultimately, they help the manager and the advisors assess toward their shared goals. Now that we’ve established a foundation for KPIs, what should we measure with service advisors? Advisor KPIs need to be a stretch but still attainable. It is critical that advisors can view at any given time how their scores compare with established standards for each KPI. Most KPIs are measured on a comparable month basis, or month-to-date along with a projection for the end of the month if the advisor continues at the current pace.

At this point, let me discuss the main customer pay metrics for improving advisor retail performance.

ROs WRITTEN BY ADVISOR AND DEPARTMENT

The number of repair orders that your advisors write is a metric that is very revealing, both for the individual advisor and the service department as a whole. Here are a few things to deliberate when measuring this KPI: As a department, are we tracking to exceed our car counts vs. historical data? Are we going to have more customers this month than last, and more than the same month last year? As an advisor, am I writing enough ROs per day, or too many to truly do a quality job for the customer’s and dealership’s interests? (The industry standard is typically 12 to 15 ROs per advisor per day.) Advisors who are not writing enough ROs, especially in conjunction with underperformance with other KPIs (such as low labor dollars per RO), should get the service manager’s attention and training. Advisors who cannot pick up the pace AND quality of the ROs they write over a period of time should be replaced or repositioned within the dealership. If your service department is slack on car count, in the short term service managers and advisors should ramp up their follow-up with existing customers and recruitment of new ones. Examples of activities to value are setting the customer’s next appointment, following up with previously declined work, e-mailing or calling customers who have received recall notices, and reaching out to customers who recently have defected or seem likely to go elsewhere. Substantial increases in RO counts over

sustained periods indicate a pressing need for additional manpower. Stick to the guideline of 12 to 15 ROs a day per advisor, and don’t wait too long to act.

CUSTOMER PAY LABOR PER RO

Customer pay labor per RO is a metric that is likely to be a bit specific to your dealership’s car lines, demographics of your location and a few other factors. This metric actually breaks down for further analysis, so if your advisors are lagging in this metric, examine the following components: Customer pay effective labor rate MULTIPLIED by the customer pay flat rate hours per RO EQUALS the labor per RO. For example, ELR = $100.00 X 1.0 FRH = $100 labor per RO. If a service manager’s investigation concludes the ELR is low, then look for excessive discounts or mishandling of the estimating process. If the investigation reveals the ELR is OK but the FRHs are low, then analyze ROs to learn whether legitimate additional service needs are being presented to the customer. Train and counsel advisors accordingly on sales strategies and estimating skills, in order to improve this metric.

CUSTOMER PAY PARTS PER RO

This metric also will vary based on a few different elements. As a rule, the parts-to-labor ratio should range from 1:1 to 1:1.6. While parts do follow the labor, you can take certain actions to improve this ratio. If the parts per RO metric seems low compared with labor, it may mean “parts-heavy” jobs are being undersold.

Advisors who are not writing enough ROs … should get the service manager’s attention and training.”

“

8 Service Drive DECEMBER 2015

ServiceDriveToday.com

Certain conditions must be met before KPIs are devised for your service advisors.

Parts-heavy operations include tires, batteries, filters, wipers and pour-in additives. Investigate the percentages of these commodity sales by advisor, to learn if an advisor is underperforming. Train and coach advisors to watch and affect own performances on this metric. Low parts per RO may indicate low margins on the parts themselves. Service departments should check their gross margins on RO parts regularly.

COMMODITIES SALES/RO, AS A PERCENTAGE OF ROs WRITTEN

Tires, brakes, filters and flushes are considered commodity sales and should be compared to the number of customer pay ROs written. To troubleshoot, watch and see whether advisors are asking for the additional business at write-up and when presenting additional service needs. Equip your advisors and techs with information about what, how and when regarding

“Amid the frantic pace of a service drive, the

absence of performance-tracking definitely can affect the bottom line, and quickly.” benefits a customer will receive if the services are performed. Instruct advisors to offer these services based on mileage, if your records show no history of their being performed. Make sure your techs are on the same page and recommending the services based on vehicle condition as well as mileage intervals.

MPIs AND POSTPONED SERVICES-CODING

More specifically, I am talking here about how many multi-point inspections and condition codes are booked vs. the number of customers getting assistance. This actually presents legal and ethical issues as well. You don’t want a customer to leave your store not knowing about a potential safety concern. However, regarding retail success, the bigger issue is whether the service departments are leaving money on the table by not inspecting certain cars. They should

review ROs daily, and coach and counsel employees as needed. It is such a critical issue that service managers should consider performance as mandatory and non-negotiable. Use the dealership’s historical data as well as established industry and group benchmarks to set your targets. Managers should supply their teams with up-todate metrics, posted in conspicuous places with regular updates. E-mail distribution of KPI performance is another way to keep everyone informed. The visibility of your metrics scoreboard will strengthen accountability and spawn competitive ambitions among your crew members. Make sure you include both comments of praise and action items in areas that need attention. Finally, some additional service advisor retail KPIs to consider are 1) Tech flat-rate hours produced, 2) The numbers of appointments scheduled and of customers who show, and 3) The numbers of carryovers and open ROs older than 10 days. SD

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.

Advisors and techs need to get on the same page about when to recommend particular services. ServiceDriveToday.com

DECEMBER 2015 Service Drive 9

Nick Saban

Patrick Lencioni

Retail Automotive Movers And Shakers

Jared Rowe

Jason Dorsey

Dale Pollak

Join Panels That Enhance Th Of CBT Automotive Confere Industry execs like Jared Rowe, Rachel Richards, Dale Pollak and Stuart Bailey will explore vital dealer issues in detail during panel sessions.

s the agenda continues to expand for the CBT Automotive 2016 Sales, Service and Marketing Conference & Expo, dealership professionals are getting the opportunity to hear a range of highly topical guidance that is unprecedented for a conference in their industry. Interestedattendeescangowww.cbtconferenceandexpo. com now to utilize an easy registration process and get full information about the most comprehensive conference for the industry.

NEW PANEL DISCUSSIONS BRIDGE AGENDA

In recent weeks, CBT Automotive Network, which will

10 Service Drive DECEMBER 2015

hold the event Feb. 9-11 in Atlanta, has created extremely focused panel discussions to be held immediately after each day’s keynote address, and which will be conducted by some of the best leaders and minds in retail automotive. “Dealers and their managers will discover these panel discussions not only offer fresh new viewpoints on some of their biggest business challenges, but also create a wonderful bridge between our keynote speeches and the 65 breakout sessions,” said Jim Fitzpatrick, founder and CEO of CBT Automotive Network. “Our panelists will challenge the attendees to run their dealerships and their industry in entirely new ways, to respond to a complex and increasingly digitally driven marketplace.”

PANEL TOPICS ON MARKETING, USED CARS, CULTURE

On Feb. 9, after keynoter and millennials expert Jason Dorsey finishes his address on secrets of selling to Gen Y, Brian Pasch, founder of PCG Digital Marketing, will lead a panel discussing important trends in auto marketing. Other panelists now include Jared Rowe, the president of Cox Automotive’s media division; Rachel Richards, VP and chief marketing officer at Sonic Automotive; and John Fitzpatrick, president and CEO of Force Marketing. The next day’s keynote speaker is business leadership author and speaker Patrick Lencioni, who will discuss strategies for dealers to keep their most valuable and productive employees. After he concludes, a high-profile

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WHEN: Feb. 9-11, 2016 WHERE: Omni Hotel at CNN Center in downtown Atlanta HOW TO SIGN UP: Early bird registration is still going on (a $200 savings), but the deadline is approaching. Complete information is available and being constantly updated at www.cbtconferenceandexpo.com.

Marcus Lemonis

Rachel Richards

Stuart Bailey

Larry Dorfman

Jeremy Anspach

The Appeal ence & Expo panel will explore the future of used vehicle sales. It will be led by Dale Pollak, the president and founder of vAuto. His fellow panelists currently include Stuart Bailey, VP of marketing and pre-owned vehicles at Asbury Automotive; Larry Dorfman, chairman and CEO of EasyCare, which powers the Motor Trend Certified program; Jeremy Anspach, CEO and co-founder of PureCars; and Jim Fitzpatrick. On Feb. 11, University of Alabama head football coach Nick Saban is the first keynote speaker, explaining how he assembles and motivates a successful team in both football and the dealerships he owns. As Saban leaves off, a panel on building a winning culture in the dealership environment takes over. It now includes Joseph Michelli, the New York Times best selling author of the Mercedes-Benz and Starbucks obsessions with customer experience, as well as CBT’s Jim Fitzpatrick.

ServiceDriveToday.com

The conference’s final keynote speech concludes the event after that panel is completed. It will be delivered by Marcus Lemonis, host of the CNBC business-oriented reality show “The Profit,” and offer his philosophy and discipline for winning in business every day. Between the keynote addresses, panel discussions and 65 breakout sessions, critical insights will be delivered to virtually every manager in a dealership, from dealers and GMs to GSMs and new/used car sales managers, F&I managers to marketing directors, service and parts managers to comptrollers and BDC managers.

VENDOR INTEREST IS BRISK

Another important and appealing aspect of the Sales, Service and Marketing Conference & Expo concerns the leading vendors of goods and services to dealerships, which will be exhibiting at the event.

Platinum sponsors for the conference are EasyCare and AutoTrader. After exhibit space sold out for the event, CBT added another 10,000 square feet for booths – only to see that quickly sell out as well. “The response from exhibitors was intense and rewarding, reflecting the retail automotive industry’s need for a conference that focuses on every aspect of running a successful dealership, and in turn the ability of vendors to present to a large and diversified audience of dealership professionals,” Fitzpatrick said.

REASONS TO REGISTER NOW

Dealers and their managers, vendor representatives and others with an interest in retail automotive can register now to attend the conference by logging on at www. cbtconferenceandexpo.com. The early bird registration period will expire soon, but in the meantime attendees can save $200 by signing up now. SD

DECEMBER 2015 Service Drive 11

WHY FLUIDS MAINTENANCE Should Be Included in Every MPI The truth about ‘lifetime fluids,’ and the bottom-line impact of including fluids in your inspections. BY RON MCELROY

ew car sales may be the face of all dealerships but fixed ops generate approximately 60 percent of all profits. One of the most important tools or process within this department is your multi-point inspection (MPI). It is your key to identifying and maximizing additional service opportunities.

accelerated recommendation for severe driving conditions. Additionally, today’s vital fluids are subjected to increases in heat torque that shorten their lifecycle. Yes, chemical engineering is better than ever; however, no fluid alchemy exists that prevents fluid breakdown. This prompts the question: Are “lifetime fluids” a product of technology or a marketing strategy?

Surprisingly, the most neglected MPI category is vital fluids maintenance, which includes transmission, power steering and brake fluids as well as gear oils. It is also one of the highest-margin categories, on average $108 per service.

MANY VEHICLE OWNERS’ MANUALS STATE:

FIRST CONTACT SETS THE TONE

Completing a MPI at customers’ first visit and all subsequent intervals, and walking them through the inspection and testing results, are essential in developing trust and confidence in your maintenance practices and services. This is your opportunity to demonstrate the consistency, quality and credibility of your inspections and service recommendations. This also is when and where loyalty and retention to your dealership are developed and maintained. The bottom line: A thorough and complete MPI dramatically increases your opportunities to increase ticket averages and overall sales, with no increase in marketing costs or car counts.

Regular maintenance is essential to obtain the highest level of performance from your vehicle. In additional to scheduled maintenance, your vehicle requires ongoing general maintenance such as fluid checks and visual inspections. Be sure to perform these procedures regularly to ensure the most trouble-free operation of your vehicle. With proper maintenance and care, your vehicle will last longer and deliver economic efficiency and more dependable performance.

If the goal is to service fluids before they become depleted, then fluid diagnostics is the best strategy to identify when services should be recommended and performed.

OEMS RETHINK ‘LIFETIME FLUIDS’

Some OEMs, it should be noted, have recently retreated from their “lifetime fluids” stance. Many have returned to time-in-service recommendations, especially when the vehicle is operated under severe driving conditions, which is the case for most cars.

An analysis card for fluids like power steering and transmission can be very influential on customers.

In the past decade, there has been a paradigm shift in why and when to recommend vital fluid services. It is not just original equipment manufacturer (OEM) timein-service or mileage anymore. Fluid condition is the most important qualifier in determining when to recommend and perform fluid preventative maintenance. Why, then, are vital fluids omitted from many OEMs’ lists of preventative maintenance service? Manufacturers have been courting higher J.D. Power customer satisfaction ratings by marketing their cars as having a lower “cost of ownership.” One way to accomplish this is to reduce or eliminate servicing vital fluids. They promote their cars as being supplied with (protected by) “lifetime fluids,” no servicing needed – just gas up and go.

WHY FLUID TESTING IS NECESSARY

Historically, OEMs have specified vital fluid service intervals based on time-in-service or mileage – one recommendation for normal driving conditions and an

12 Service Drive DECEMBER 2015

ServiceDriveToday.com

“Yes, chemical engineering is better than ever, but

no alchemy can prevent fluid breakdown.” ONE SERVICE MANAGER’S STORY

The most authoritative voices come from the professionals who implement these programs on a daily basis. One such professional is Don Fritz, service manager at Rogers Toyota in Lewiston Idaho. Here is what he wrote about adding fluid diagnostics to his department’s MPIs: “I don’t think I have ever actually discussed the results of implementing fluid testing in my service department. I was introduced to the fluid diagnostic sheets a few years ago in the Tacoma, Washington area. It sounded like a great way to tie fluid conditions into our multi point inspection instead of just recommending based off of time, miles or color.

The first discussion between a service advisor and customer about an MPI should cover vital fluids.

T h e C a l i f o rnia Bureau of Automotive Repair (BAR) recognizes this conundrum and has published its stance on recommending services, especially those that are not covered or recommended by the OEMs. The BAR’s “Preventative Maintenance Services Best Practices” are as follows: ✔ Obtain customer authorization and inspect the vehicle before making service recommendations. ✔ Openly and honestly communicate with your customer. ✔ Ask customers conditions.

about

vehicle

driving

“The beauty of being able to present inspection results with confidence to customers showed immediate results. The “RED,” “YELLOW,” “GREEN” theme works seamlessly with our MPI’s “PASS,” “CAUTION,” “FAIL.” This generated additional confidence that led to definitive word tracks that the advisors began using, and they closed more sales.

Ask customers for permission to perform the tests, and give them a brochure or explain the technology being used and the benefits of proper fluid preventative maintenance.

Perform the fluid test ASAP in accordance with fluid sampling guidelines, and document the results.

Walk through the OEM’s fluid service recommendations and then share the results of each fluid test with your customer. Point out which fluids are “GOOD” as well as those that require service.

Explain to your customer that changing fluids before they become depleted can reduce fuel consumption, optimize performance and reliability, and extend the vehicle’s service life.

Offer to perform all required or suggested fluid services, and give your customer the cost and a time estimate for completing them.

After servicing a fluid, perform a post-fluid test to ensure the service was successfully completed. The fluid must test “GOOD,” or the service must be repeated.

✔ Ask customers about driving habits and vehicle maintenance repair history. ✔ Communicate maintenance service recommendations made by the manufacturer. ✔ If recommending an accelerated maintenance service that deviates from the vehicle manufacturer’s recommendations, explain why. The MPI is all about empowerment. When you provide your technicians and service advisors with the tools and means to communicate clearly with integrity, you empower your customers to base their preventative maintenance decisions on credible information and visual aids that speak to the problem as well as the solution.

7 STEPS TO INCLUDE FLUIDS IN A MPI

The following seven-point process provides a program to add fluid diagnostics to your MPI that is simple to implement.

Offer a complementary fluid analysis as part of your MPI.your MPI.

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“The first time I saw this make a significant impact was when I implemented the process in one of my express service lanes. We averaged nearly 40 cars per day but we were consistently at the bottom of the list compared to our other stores in the group. Fluid exchange services were tracked monthly by the organization, and the results were emailed and posted. We began using the diagnostic sheets, gave the advisors simple menus and a few word tracks, and the needle moved quickly! We went from the bottom of the list to the number 2 or 3 position, which was over much larger stores in the group. “I implemented this process at the dealership I am at, and we immediately saw a 300% increase in fluid exchange services. We are pacing for much more than that, since everyone has acclimated to the process and believe in the product. Seeing is believing; this eliminates any argument out of presenting fluid conditions to your customers.”

IMPROVING YOUR BOTTOM LINE

Every day, hundreds of vehicles roll out of service bays with at least one depleted fluid. This contributes to the generally accepted projections of $80 billion-plus of unperformed vehicle services for 2015. If your MPI does not include fluid diagnostics, then your techs and service advisors are missing the opportunity to get your customers to say, “Yes” to needed fluid services. SD

RON MCELROY

CEO and founder of Fluid Rx Diagnostics by Magna-Guard Inc. Ron is the founder or co-founder of five companies. In his career, he has received two “best new product” awards and four “product innovation” awards for automotive products that integrates electronics into OEM systems and change the dynamics of fluids preventative maintenance services.

DECEMBER 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.

“What do you think a realistic conversion rate to additional service or repairs should be for recall customers who haven’t previously had any work done in our shop? Should we track conversion rates both for work done at the same time as the recall work, and for future work?”

JIM IN LEAVENWORTH, KAN.:

Vern Poyner, general manager of the myCARFAX Program at CARFAX:

Conversion rates will differ for each service department, but many shops participating in our free myCarfax Service Shop program tell us they consistently write up additional ticket orders for recall customers. Ted Britt Chevrolet, for example, has about a 30 percent conversion rate.

the customer, since time in the shop often matters more than how much it will cost. They know they’ll have to pay to have the work done eventually, so killing two birds with one stone and no added wait time can make the difference between a yes or no.

Reassuring first-time recall customers about your knowledge of their vehicle is one key to converting them. A courtesy inspection (Ted Britt does one for all recall customers) and access to the vehicle’s service history help your team support their service recommendations, even for first-time customers.

A good practice to help track upsells on recall customers is to measure the ticket value and separate out recall work from added services. Noting first-time recall customers in your DMS will help pinpoint those who come in for a follow-up visit. It’s a good idea to track work done for these customers at the time of the recall and in the future, since it will help determine the recall conversion rates for your service department. It also helps you more accurately forecast revenues from recall visits and adjust your customer service efforts around recalls to maximize ticket orders.

Whenever possible, let customers know your expert team can take care of the recommended services at the same time as the recall. Minimizing their wait is a big plus for

Make sure you’re doing everything possible to foster those relationships and turn one-time recall visits into longterm loyal customers.

ARNOLD IN FLAGSTAFF, ARIZ.: “I have noticed that an unusual percentage of our women customers in service, significantly more so than male customers, only want to go by the manufacturer’s suggested service calendar. They don’t want to hear about our recommended service calendar. Do you have any thoughts on why this is?”

Jody Devere, CEO of AskPatty.com Inc.: As of 2012, more women

than men have driver’s licenses, a reversal of a longtime gender gap. So, it makes sense why women represent a higher percentage of dealership service customers across the U.S., and why that number is growing.

I believe your main challenge here is reining in any perceived notion that you are attempting highpressure up-sell techniques. You need to overcome women customers’ anxiety that you may be trying to take advantage of her ‘just because she is a woman,’ by suggesting the dealership’s calendar. Offering any additional services may put her on guard, especially if she is conscientious about following the manufacturer’s service intervals in her owner’s manual. Women do not want to be seen as a target who can be taken advantage of due to lack of knowledge or understanding the terminology of services you are offering, even if they actually do need to consider them. So, here are a few approaches that could help:

1) Hold monthly women-only car care clinics. This is

a great way to build relationships and educate women vehicle-owners on maintenance needs and your service offerings. 2) Have your advisors and techs speak in plain English, not in car-tech terms, when they explain what the customer may need. Seek to educate. 3) Urge those advisors and techs to be helpful and avoid talking down to women customers. Body language and tone of voice are important. 4) Forget that you’re selling. This seems counterintuitive, and it’s a hard lesson for anyone at a retail business to learn. But, the most important thing service advisors can do is to stop selling and focus on building relationships. 5) Remember that clarity and transparency work best. Don’t oversell a particular service, but do be honest with the woman customer about important items that need attention.

JARRETT IN TALLAHASSEE, FLA.: “One of our competitors advertises for quick-lane techs by telling them they must work for 11 hours a day five days a week for a seven-week stretch,

then work all six days (Monday through Saturday) on the eighth week. We think that is too intense a schedule, but we might be forced to change our approach to compete. What do you think?” Garrett Ming, CEO of KABI Automotive Systems:

You need to staff to meet your shop’s workflow demand, not to match a competitor’s unrealistic schedule. A one-size-fits-all staffing approach like your competitor is using creates increased labor costs, due to techs standing around during the slower times in any given day. In most shops, as with most freeways, there are times during the day of increased traffic flow and times when traffic flow slows down. The most important areas to consider when you are creating a production staffing schedule are time-of-day

14 Service Drive DECEMBER 2015

and day-of-week demands, lunch/break coverage, and a balance of lube-to-general techs. The best way to measure time-of-day and day-of-week demand is to create a report from the computer system you use to create repair orders, or from an operational system you use to optimize your workflow. If possible, look at your last 30 days to get a good sample size and break it down in 30-minute intervals – 7:00 to 7:30, 7:30 to 8:00, etc. Create another report to show your day-of-week workflow. Graph the results, and you’ll quickly see your time-of-day and day-of-week demands. Taking into account breaks (lunch, rest, etc.) and days off in your staffing and scheduling is also very critical to having consistent success in meeting your customer’s

expectations on timely service. Staggering your lunch breaks over a three-hour timeframe avoids the lunch hour production drop-off. Consider your time-of-day demand when setting your break schedules, and your day-of-week demand when setting your techs’ scheduled days off. Getting your tech staffing mix right – lube to general tech – will have a huge impact on meeting your customers’ expectations on timely maintenance service, as well as on your general techs’ ability to perform all necessary additional work found during the inspection. One out of three initial jobs entering your shop (an initial job is usually a LOF, rotation, inspection) has additional work needed. Timeliness on the initial work leads to more sales.

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DAVID LEWIS:

HOW TO MAKE SERVICE ADVISORS

What are effective ways to instill a genuine belief in a service advisor in the products and services he is selling?

What are the biggest weaknesses you see in the ways service advisors try to establish trust with their customers, and how do you suggest addressing them?

David Lewis: “The

David Lewis: “The first thing everyone in a service

“A lot of times, we take these service advisors and we make technicians into service advisors, and we don’t continually work with them and we don’t continually train them. This is a function of leadership. Just like a salesperson, they need to be trained on a daily basis. Every service manager should be having a 10- to 15-minute session every day with his service advisors going over certain things and certain aspects of the job, the products and the customers.

“The second problem that we have is that throughout time, we have always tried to upsell our customers, and we try to upsell them at two opportunities. First, we upsell them in the walk-around. They arrive, we do our meet and greet, we take them out to the car, we bring along our pad and iPad and we do a walk-around. Most customers realize what [service advisors] are doing. It’s two parts – yes, you’ve got to make sure everything’s good and correct, but it’s always to upsell us. The second time we’re upselling the customer is after the service technician does the multi-point inspection. Now we’re selling while the tech is talking to the customer, or we’re calling the customer on the phone later trying to upsell them again.

most important thing that dealers have to do is, they have to provide for a service advisor with better leadership and better training. That’s what it all boils down to. If a service advisor doesn’t believe in the product or service he’s selling, it’s because he or she has not been sold it by their leader.

EFFECTIVE

“If I feel as a service advisor that you as a leader don’t care, then I won’t care. If I don’t feel that you have confidence in the products and services, then I won’t have confidence in the products and services.

They need to pick their spots for when to go for the sale.

“If I feel your entire role is just to make money, make money, make money – that you don’t truly care about the customer – that’s the attitude and approach I will take. This is a big issue with service advisors. They have very, very little training, and their leadership has even less training.”

department has to understand is that the customer does not want to be there. No one wakes up in the morning and says, ‘Hey, I’ve got a great day planned. I’m going over to the car dealership and I’m going to get my oil changed and my tires rotated. This will be a lot of fun.’ So, the customers don’t want to be there.

“This is driving our customers to our competitors, the secondary repair facilities. The reason the secondary care facilities are doing so well these days is because of the perception that they are less expensive than the dealership, that we are constantly trying to upsell them. In a dealership, we’re looking for an upsell rate where we are upselling them $200, $300, $400 for every car that comes in. When you go to the secondary repair facilities, their upsells are usually $60, $70 or $80 per vehicle. “For example, say I bring my car in to [a dealership service department] for an oil change and tire rotation.

THIS MONTH, WE ASKED LEADING SERVICE AND SALES TRAINER DAVID LEWIS FOR HIS THOUGHTS ON SEVERAL ISSUES THAT DEALERSHIPS FREQUENTLY HAVE WITH THEIR SERVICE ADVISORS. You might be smarter to wait until after this multi-point inspection to try to sell the customer on additional repair services. 16 Service Drive DECEMBER 2015

ServiceDriveToday.com

You always seem to find something wrong with my brakes or my frontend alignment, or I will have a leak here or a leak there. When I go to Jiffy Lube to have work done, Jiffy Lube only upsells me certain things. Their average upsell is about $80 per car; that’s what they’re looking to get. So, a customer doesn’t feel they’re getting taken advantage of, because it’s all maintenancerelated items. “That being said, how do we address [the trust weaknesses]? The first thing we need to do is, we need to understand the customer, to understand that they don’t want to be there and they have a fear of us. The second thing we need to do is, we only need to do our upsell one time. We either upsell everything in the walk-around, or we upsell everything after the service technician does their multipoint inspection.

Recognizing that this customer really doesn’t want to be bringing her car in for “Number three, it’s a very good work is the first step to establishing trust. technique to always get a takeaway item in your upsell. So I might say to you, ‘You know, the technician noticed a couple of things. He noticed that your “What I did was, when he walked away I took out my front brake pads are down to the ribbon, and this is phone and took a picture of my tires to capture the a dangerous situation. He also noticed you have a model and size, and then when I got back to my office situation with a ball joint. It’s not that bad, it doesn’t I went online and priced tires. He called me up later need to be corrected today, but it’s something we need and told me four tires were going to cost me $1,280. I to look at down the road.’ Let the customer know that said, ‘Well, I think I will pass because I can get them there are issues but don’t try to sell them everything. David Lewis: “I believe an ineffective walk- installed for $890 somewhere else, with a front-end Let them know you care. alignment.’ He said, ‘Let me see what we can do’ and around is when you create pressure on the customer to then called me back to say they would match the price. buy something. Pressure can be determined differently “And finally, this is the most important thing: When I went back to the dealership to pick up my car, by each customer. Everybody has different thresholds Whenever you upsell a customer anything, you must I chatted with the service manager, and he said, ‘We of when they feel pressure gets to them. I am not a create visuals. Customers think that made a whopping $17 selling you those tires. But, I huge fan of selling in the walk-around presentation. I we’re doing things in their car that didn’t want to lose you.’ think people expect it, I think the items we sell in the don’t need to be done or that we’re not walk-around are nickel-and-dime items, and I believe doing them at all. It’s like if you go to “The thing is this: If he had waited until after the that it takes away from selling the bigger items. the dentist and he tells you you have a multi-point inspection, if he had called me or shown cavity, but you don’t have it drilled at me a picture, I might have said, ‘Yes, do it right “Because when you do a walk-around, you can’t tell the time. Then you go back a couple then.’ By doing the service walk, the walk-around, he if the brakes are bad. So, what exactly are we doing? of years later, he looks at the film and prompted things in my mind and he allowed me to do We’re selling things like tires, wiper blades and tells you everything is fine. You say, my homework because I was given the extra time that headlights. We do make money on tires, but here’s the ‘Wait, I thought I had a cavity!’ It’s the was needed for research. problem: If I tell you that you need new tires, and if same with your customer. the customer is dropping the car off, guess what that “I believe in the walk-around. The walk-around is a customer is doing between when they leave and when “If you want to build trust with your very important thing. A walk-around might plant a you give them a quote? They’re shopping tire prices customer, whatever you’re going to few seeds, but it’s more there for safety [issues] and online, and the reason why I know this is because that upsell them, you’ve got to show them to make sure there are no scratches or dents or dings is what I did. – whether it be visually in person or in the car, to make sure the customer doesn’t need be a picture or video. So, when your anything in the back seat. It’s for me to create dialog “I bring my car in religiously for an oil change and tire customer needs front brake pads, I’m with the customer. rotation every five to six months. The last time I was going out there and I’m either going in, the guy does his walk-around and found that my to show them a quick 10-second or “I am just not a big fan of doing selling in the walktires were getting very low. He showed them to me. I 15-second video, or I’m going to take around. If we do our research, we’re going to find we agreed with him. He said, ‘Let me get you some prices some pictures and show them what sell very little [in the walk-around], and the little we on tires,’ and I said, ‘Great.’ their brakes look like and what a new do sell we don’t make a lot of money on.” SD set of brakes should look like. They can see for themselves that the pads need to be replaced immediately.

What makes a service advisor effective or ineffective in conducting the walk-around, which is widely regarded as an important sales opportunity?

DAVID LEWIS

“Visuals will help you create more trust and help you create more sales.”

ServiceDriveToday.com

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.

DECEMBER 2015 Service Drive 17

INNOVATING ON WORK SCHEDULES CAN INCREASE SERVICE WORK OUTPUT WITHOUT NEEDING A BUILDING EXPANSION The right approach can ramp up productivity within your current bays, and still offer enough time off. BY CHUCK WENZLER

In many service departments, techs start at the same time every morning. The service drive may open at 7 a.m., but techs may not start work until 7:30 or 8. It is very difficult for service advisors to write enough repair orders first thing in the morning to assign each tech a job as soon as he arrives. Techs rarely actually start working at their designated start time, so many hours of lost production result. Staggering start times is one way to overcome this. Rather than having all techs work a standard 8 a.m. to 5 p.m. shift with an hour off for lunch, the service director could stagger shifts to accommodate workflow. One group of techs could work from 7:30 to 4:30, another from 8 to 5, a third from 8:30 to 5:30. However, this is not the same as increasing overall shop capacity. Many dealerships need to make room for additional techs to increase the flat rate hourcapacity of their service departments. They may not have available stalls to accommodate additional techs, but brick and mortar are expensive, and not all dealerships have enough land to expand. The options I present in this article to increase shop capacity address three key areas. First, they extend hours of operation in the service department, providing the dealership employs enough techs to fill the schedule. Second, some of my examples provide techs with additional days off, which younger employees particularly tend to value. Third, the service department could add techs, increase productive capacity and expand hours of operation without a physical expansion.

4/10s WITH A SATURDAY ROTATION I have found techs and advisors generally respond well to this configuration. Techs work four 10-hour days once week, and four 10-hour days plus an eighthour Saturday the next week. Thus, they have three days off one week and two the next. Assuming the

18 Service Drive DECEMBER 2015

This structure also allows for staggered starts or a late-starting shift (e.g., 11 a.m. to 10 p.m.). A service director could further enhance this schedule by rotating days off, which would give the techs a fourday weekend once every 10 weeks. And, as in the example that follows, a dealership that once could accommodate only eight techs now has room for 10.

4/10s WITH SAT./SUN. ROTATION In many dealerships, “Sunday” is a dirty word. But let’s face it, our aftermarket competitors (Pep Boys, NTB, Goodyear, Wal-Mart, etc.) all stay open on Saturdays AND Sundays and are very successful doing so. At many, Sunday is their busiest day, second only to Saturday.

It’s convenient for dealership service customers to bring in their vehicles on weekends, but only if we treat Saturdays and Sundays as “real” days, meaning the department is open a full day with all normal services offered. With this schedule, techs rotate four four-day weeks with four five-day weeks. Saturdays and Sundays are staffed, but techs never have fewer than two days off per week. In fact, during the four-day-week stretch, they will get four days in a row off at one point. In the example shown below, Tech 1 will have Friday, Saturday and Sunday off, then also get Monday off to start the week as he rotates to the No. 2 slot in the schedule. Just as with a schedule based on four-10 hour shifts with Saturday rotation, pairing of techs and advisors should strongly be considered. Caution must be taken not to leave customer vehicles disabled during an

4/10s WITH SATURDAY ROTATION

WEEK ONE

In this article, I am going to focus specifically on increasing capacity through alternative work schedules.

service department is open eight hours on Saturdays, techs will average 44 hours per week.

WEEK TWO

often hear service managers lament that they need a larger building to run at peak efficiency. However, before a dealership breaks ground on a new or expanded service operations area, it must first pursue all avenues for increasing production capacity via managing technician productivity, dispatch techniques, shop structure and work schedules.

TECHNICIAN

MONDAY

TUESDAY

WEDNESDAY

THURSDAY

FRIDAY

SATURDAY

SUNDAY

OFF

TECHNICIAN

MONDAY

TUESDAY

WEDNESDAY

THURSDAY

FRIDAY

SATURDAY

SUNDAY

OFF

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Communication between the tech, advisor and dispatcher must be seamless. In the below scenario, not only was the number of work days expanded but also the tech count was increased to 12 from eight without a building expansion.

4/10s WITH SAT./SUN. ROTATION

WEEK ONE

extended (three to four days) time-off period. This problem can be addressed by partnering techs of equal skill levels, and having only one of them off work at a time. If a repair cannot be completed, then the partner resumes the job as he comes on shift.

3/13s WITH A 4-WEEK ROTATION The concept of working personnel on schedules of three 13-hour workdays has become quite popular in many industries, such as healthcare. This approach would let a service department stay open for six days and evenings, and it is possible to cycle through the work schedule every eight weeks, making it easy to administer.

Note that in the chart below, Techs 1 through 5 have seven days off following their fourth work week, and that Sunday hours can easily be incorporated into this schedule. In a 3/13 work schedule, pairings of techs with advisors should be mandatory. Each group should have a “mirrored” partner that includes an advisor. In order to ensure effective communication between the groups regarding carryover work, they should meet on the evening before or the morning following shift changes. As with the four-10-hour-day schedule, all efforts should be made to avoid having vehicles disabled during an extended (three to seven days) time-off period. Pairing techs with equal skill levels can help avoid this situation.

ADDING A SECOND SHIFT Generally, second shifts are added to accommodate internal and fleet work, freeing up the day shift to handle regular customers’ needs. Several types of work schedules can accommodate a second shift, although attracting employees willing to take them on can be difficult. Two of the alternatives a service department might consider are: Internal work only second/night shift: Should capacity be your primary issue, you could benefit by moving all or most of the internal work to a second shift. Expenses are minimized because no cashier is required, the parts department can pre-pull many necessary parts before the shift starts, and no customer relations personnel are needed. Plus, a shop foreman, group leader or lead tech can function as a working manager, eliminating the need for a service manager

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FOUR -WEEK SCHEDULE 1

This does mean there would be only one day of rest between work stints every eighth week, but a sevenday break would come every eighth week. Also, given the long work days, service leaders should expect techs to become fatigued, and production to suffer, toward the middle of the third day – especially in hot months if the facility’s air conditioning is not great.

MONDAY

TUESDAY

WEDNESDAY

THURSDAY

FRIDAY

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OFF

3/13s WITH 4-WEEK ROTATION

FOUR -WEEK SCHEDULE 2

The eight-week cycle is best utilized with complete sets of personnel, meaning lateral support groups, “super groups” and teams. These complete sets of techs operate within their own individual shops and are either working or off-duty as a group.

TECHNICIAN

MONDAY

TUESDAY

WEDNESDAY

THURSDAY

FRIDAY

SATURDAY

SUNDAY

OFF

TECHNICIAN

MONDAY

TUESDAY

WEDNESDAY

THURSDAY

FRIDAY

SATURDAY

SUNDAY

OFF

during the shift. Another tweak is to perform limited customer pay work until a certain time, like midnight. However, personnel expenses (advisor and/or cashier) will rise. Full-service second shift: A full-service second

shift can make better use of the facilities and help the service department make greater market penetration. Due to additional personnel needed to operate the second shift effectively (advisors, cashiers, parts staff, etc.), expenses increase considerably. SD

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 utoNation and M5. He specializes in fixed operations clients at M5.

DECEMBER 2015 Service Drive 19

REGULATORY COMPLIANCE IN SERVICE AND OTHER DEPARTMENTS Needs A Dealer’s General Oversight

Road map provided to work with managers to ensure all federal and state laws and regs are followed. BY TERRY DORTCH

ompliance with federal and state laws and regulations affects several departments in an auto dealership, most assuredly including the service operation. However, oversight of overall compliance must be driven by the dealer or GM, or a dealership’s risk of a costly and/or dangerous violation increases. In this article, I want to present a framework for administering an auto retailer’s total compliance from the head office level, recognizing that specific compliance duties will be policed and handled by individual departments. Broadly speaking, today’s federal (and often state) laws and regulations govern a dealership’s: ✔ Service and body shop operations, including OSHA regulations that pertain to worker safety and health; and OSHA/EPA regulations that pertain the storage, handling and disposal of materials classified as hazardous, including air bags. ✔ Sales and financing, pertaining to advertising, sales, consumer financing and aftermarket sales practices. ✔ Privacy and data security, pertaining to both the customer’s and employees’ information. ✔ Human resources, pertaining to Equal Employment Opportunity Commission employment, hiring, harassment and discrimination practices and policies.

COMPLIANCE IS A TOP-DOWN ACTIVITY

While every employee has a role to play in a dealership’s legal and regulatory compliance, commitment to operating a compliant business must come from the top. If your business is audited and found in violation of these laws, the owner pays! In dealerships whose owner takes an active role in compliance, generally I find that:

20 Service Drive DECEMBER 2015

At this point of the transaction, the dealership needs to start thinking about complying with laws and regs on after-market sales.

➜ Department heads know of their compliance obligations, and who may take actions necessary on compliance issues.

his/her authority.

➜ All employees know their responsibilities.

✖ The compliance budget.

➜ Errors are discovered and corrected before they become costly.

✖ Compliance reports to management.

Managing compliance internally (i.e., not turning to an outside consulting firm) starts with training. Include senior managers in that training to equip them with big-picture concerns, and include department managers and their staffs to ensure they know their hands-on responsibilities. On compliance processes, a dealership benefits from a compliance risk assessment, which can be performed internally or by a third party. It helps identify and isolate compliance risks, weaknesses and strengths. A risk assessment involves “boots on the ground,” with eyeballs on the nitty-gritty of current processes and procedures. Information from the risk assessment will provide your business with a good map toward an efficient compliance program. Whichever route you take, following is a by-department breakdown of compliance responsibilities (with this disclaimer: No one article can comprehensively cover all regulations governing the modern auto dealership. For that detail, you need to consult a compliance professional.)

FOR THE DEALER AND GM

Regulators recognize the necessity for owners and senior managers to be involved in compliance. Remember, at the start of any examination into your practices, government officials will review: ✖ Board meeting minutes and supporting materials during the period under review, looking for coverage of compliance matters. ✖ The role of the chief compliance officer and

✖ Training of board members and ownership.

Given that, a dealer or GM must ask themselves: ➤ When was compliance last discussed at a board meeting? ➤ Does the dealership compliance officer have meaningful authority in the dealership and ownership of compliance-related issues? ➤ Does the compliance officer have access to upper management? ➤ Has the dealership budgeted funds for compliance? ➤ Are compliance reports reviewed by ownership and upper management regularly?

FOR THE SERVICE MANAGER

In the service department, common compliance problems include: ★ Failure to maintain a current safety manual, train all shop employees on abiding by it, and conducting continual reviews of the manual, shop conditions and employee adherence. One common oversight is for the service department to forget about required signage like “Exit” or “Not An Exit” signs on doors. ★ Missing egress or exit route maps as required by law. Be sure these maps are current and visible in public areas. ★ Parts, parts shelving and crates that block access to electrical panels.

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Lift safety is one of the priorities for compliance in your service department.

✓ Make sure dealership policy and practice require that each customer be treated equally regarding the sale of ancillary products and their cost.

★ Failure to keep personal safety equipment near grinders, welders and similar tools and machinery. ★ Missing fire extinguishers or extinguishers, or units that are not properly marked or situated where they are easily visible. ★ Failure to set up hazardous materials and emergency response programs that cover safety data sheets, employee evacuation, disposal of used oil and refrigerants, etc. Service personnel also should maintain and inspect quick lube, service and body shop lifts annually to comply with OSHA’s local emphasis program (LEP). Insist that technicians who work on EV and hybrid vehicles comply with OSHA regulations pertaining to safety gloves.

FOR THE F&I MANAGER

The F&I department must be sure to: ✓ Have available for consumers, copies of sales and marketing materials for each product offered by the dealership. Your F&I staff should make sure customers review these materials prior to a purchase decision. ✓ Review and verify that the content of sales and marketing materials for each product sold is current and accurate, contains proper disclosures and accurately states what is and what is not covered.

✓ Monitor product sales to ensure that commission-based employees are not taking advantage of certain individuals and classes with the prices of ancillary products. ✓ Use a menu, and be sure it clearly describes the products being sold, their cash prices and their financed costs. Three additional advisories for the F&I staff are: Utilize adverse action letters when necessary: These must be delivered either in person, at the time of the transaction, by mail within 30 days of the denial, or electronically within 30 days of the denial to anyone who applies for credit and is denied. An adverse action letter also is required when terms differ from those requested, and the customer therefore does not accept them. Usually, the bank with which the dealership has pursued financing for the customer will produce and distribute this notice. However, when the dealer makes the credit decision or denies credit without shopping the application to a bank or finance company, the dealer must take that action. Provide risk-based pricing notice when necessary: Dealers must provide a risk-based pricing notice to customers who receive credit on material terms that are less favorable than those extended to a substantial proportion of the customer base. An alternative to a RBPN is an exception notice, which should be delivered to all customers on whom the dealership runs credit prior to entering into an agreement.

Safeguard customer information: The dealership must protect private customer information from identity theft to comply with the Gramm-Leach-Bliley safeguards rule and financial privacy regulations. Do not leave deal jackets or other sensitive customer information (worksheets, contracts, notes scribbled on notepads and up cards) anywhere where it might be read and/or stolen. This need also extends to the service department, where customer information appears on write-up sheets, repair orders, etc.

FOR THE HR MANAGER

Employment laws continually require auto dealerships to review harassment laws with employees. Discrimination suits based on gender, race and other factors that get the EEOC can cost an offending dealership $1 million or more in compensatory and punitive damages, if the business is found liable. So, dealerships and their HR staffs should pursue these hiring best practices: ✘ Have clear written anti-discrimination and harassment policies in place. ✘ Train management on how to handle and follow through on employee claims. ✘ Train all employees on anti-discrimination and harassment policies and proper conduct. Every employee needs to know to whom to report inappropriate conduct. ✘ Enforce the rules and procedures established in the dealership, regardless of the position an offender may hold. SD

✓ Have customers sign off when they decline to buy a product.

TERRY DORTCH

✓ Clarify in writing the benefits the produce will deliver to the customer and why the cost is therefore reasonable.

Terry is a former auto dealer and operator and also has worked as a GM, general sales manager, F&I director and F&I manager in a dealership environment. His company specializes in retail automotive compliance with federal and state laws and regulations. See the website at www.compliantnow.com.

President of Automotive Compliance Consultants

✓ Have established and published prices for each of the F&I products offered.

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DECEMBER 2015 Service Drive 21

ON THE SET WITH

Jeff Wardell of StealthShopper, with Corinne Lillis of Service Drive Today.

Brenda Stang of Shifting Gears Training, with Joe Gumm of Service Drive Today.

Phil Penton of SureCritic.

Kirk Manzo of Assurant Solutions, with Corinne Lillis of Service Drive Today.

Adam Robinson of Hireology, with Corinne Lillis of Service Drive Today.

Mark Tewart of Tewart Enterprises.

Matt Raymond of Haltermans Auto Group.

Jody Devere of AskPatty.com, with Joe Gumm of Service Drive Today.

Lisa Copeland of Fiat Austin (Tex.).

Dan Mondello of DealerTeamwork, with Corinne Lillis of Service Drive Today.

Jim Roche of Xtime, with Corinne Lillis of Service Drive Today. 22 Service Drive DECEMBER 2015

Brent Albrecht of Friendemic, with Corinne Lillis of Service Drive Today.

Writer, author & trainer Grant Cardone.

Aaron Wirtz of Subaru of Wichita, with Corinne Lillis of Service Drive Today.

Ricky Lopez of Ross Media, with Corinne Lillis of Service Drive Today.

Ryan Leslie of DealerRater, with Joe Gumm of Service Drive Today. ServiceDriveToday.com

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Take Extra Care To Manage Your Dealership’s

CUSTOMER REPUTATION ON Facebook The friends-and-family aspect of that platform means you want the domino effect to be positive, if possible. 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

24 Service Drive DECEMBER 2015

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 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

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

appreciate the customer amending his or her online complaint.

Once customers log on to enter a review on your dealership’s Facebook page, remember that they will be trying to draw others to their opinion.

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 satisfaction culture

customer

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

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

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ty / S Ttat

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.

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

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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 blow-up can occur. He teaches his team to alert management immediately if a customer expresses a concern to them personally. 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

Never forget the impact of reviews on Facebook.

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.

DECEMBER 2015 Service Drive 25

PAYING YOUR DEALERSHIP’S BDC REPS HOURLY? Then Don’t Just Assume They Will Be Productive Pay rates need to be competitive with other businesses, and you need to keep designing new incentives. BY BILL WITTENMYER

of performance and disproportionate costs-to-revenue-generation ratios can become problems. Hourly wages enable dealerships to employ more agents, reduce per-person base compensation and control benefit costs. Dealers also get more flexibility in hours of BDC operation. However, overtime expenses can climb, and reps sometimes become less productive during their regular hours in order to ensure they work overtime.

DON’T CUT CORNERS ON BASE WAGE

friend of mine says all the time that “Our pay raise becomes effective when we are.” It is his way of saying that we earn more when we do more, when we become more productive. Sounds simple and logical enough, but devising a productive pay plan actually is one of the more challenging undertakings at a dealership, especially where business development centers are concerned. BDCs are an important channel to sell service work, as well as vehicles, at many dealerships. Many different thought processes and operational considerations are involved when it comes to paying BDC representatives. It is not easy – in fact, it can be monumentally difficult – for a dealer to balance optimal efficiency and BDC production vs. cost and ROI.

CONCEDE THAT THIS IS A TOUGH JOB

In discussing the broad options for compensating BDC reps in this article, let’s first face the obvious: Running a BDC as a manager, or working as a phone agent, is difficult. Very few people aspire to make calls all day, every day. It’s a tough job that most of us would regard as repetitive and mundane. Also, dealers should recognize that the skill set a good BDC agent must possess is not commonplace. Just think about the number of different phone scenarios he or she must executive properly, especially from the service department’s point of view. With those calls, the BDC rep becomes the voice of fixed operations and

must understand and maintain numerous operation codes and technical information; juggle scheduling constraints, tech levels and hour optimizations; and meet customer service and experience expectations. Finding people with those talents isn’t easy; retaining them is even harder. However, high labor turnover is detrimental to the BDC’s expense structure and negatively affects customer experience. To run a successful BDC, a dealer must implement a pay plan that is attractive enough to recruit and retain talent, but that also maximizes operational efficiency and productivity. With those challenges as a backdrop, let me add that every dealership’s culture is unique. So, a “one size fits all” pay plan for BDC agents is ill advised. Dealerships in heavily populated metro markets have different challenges than those in rural areas, including BDC compensation. The keys to success for any BDC lie in performance and monitoring of production, which includes tying monthly activities and goals to the pay plan.

PROS AND CONS FOR HOURLY PLAN

When developing a pay plan for BDC agents, a dealer must consider both structures: salary or hourly rate. If each approach didn’t have many advantages and challenges, the choice certainly would be easier. While salaried BDC staff means no overtime and (presumably) improved retention, job stagnation, lack

Dealers must weigh several important provisions in considering an hourly pay plan for their BDC, but the most significant is to pay agents an hourly wage above the average for all industries in their region and for comparable local markets. I believe if they pay more, they will attract a higher-quality talent base. Choices diminish if a BDC agent will make no more per hour than at the fast food restaurant down the street. That person will be inclined to take the fast food job, which is easier and carries less responsibility. Thus, the talent from which you can choose just dropped a grade level – maybe more. It also is crucial to aggressively manage the BDC rep work schedule and hours, with the goal of avoiding overtime. Of course, you will always have employees who “call out” and need their shifts covered, but the dealership can prepare for that event with a deeper agent bench. If overtime is unavoidable, dealers need to make sure it is tied to call-outs and not to reps not completing their original tasks during regular hours.

THE KINDS OF BONUSES THAT WORK

A BDC that utilizes an hourly pay structure cannot thrive without incentives. Some of the best I see come in the form of contingency bonuses. First, the dealership should implement a unique goal for a single daily bonus opportunity. For example, you could add in a one-day bonus (for a set dollar figure) for every vehicle detail upsold when scheduling a service appointment.

“In discussing the broad options for compensating BDC reps … let’s first face the obvious: Running a BDC as a manager, or working as a phone agent, is difficult.” 26 Service Drive DECEMBER 2015

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“Choices diminish if a BDC agent will make no more per hour than at the fast food restaurant down the street.” Also, a dealer could institute a monthly bonus based on less-defined concept, such as the “call of the month.” The criteria should be set each month, based either on a scoring system or on the general goals for that call. Criteria should stem from the goals set for your BDC, and all phone calls that fit that month’s criteria would need to be analyzed or reviewed.

Monthly bonuses should be awarded at a BDC staff meeting, which also can serve as a mentoring session.

That incentive should be implemented as a “daily difference bonus,” and incorporated into agents’ word tracks. For every upsell executed, give the rep a bonus on top of the hourly pay. Change the goal and bonus amount each month; variety will keep the targeted goal fresh and provide an incentive for increased performance in targeted areas of production.

At the same time the bonus is awarded, you should take advantage of the opportunity to review the call and to mentor the entire team. The bonus needs to be substantial in a BDC agent’s eyes – say, $200. You could include other monthly call quality bonuses for second and third place. I have seen such bonuses promote a happier and more satisfied workplace and let BDC agents showcase their skills. They don’t always have to be monetary; restaurant certificates or event tickets accomplish the same purpose.

GETTING STARTED

To summarize, these are the key considerations to maximize the effectiveness of a BDC agent hourly pay plan:

BILL WITTENMYER

Partner at the ELEAD1ONE division of Data Software Services LLC Bill has over more than 20 years of experience in the automotive space and currently manages multiple divisions within his organization including sales, marketing, OEM relationships and large-client accounts. He speaks at several prominent automotive forums each year. Before joining ELEAD1ONE, he spent several years in dealership operations management.

• Offer above-average pay. If you pay average hourly wages, expect average talent and performance. • Set performance goals, and align incentives. The goals your dealership has for its BDC must be established and clearly understood – number of attempted dials, successful contact ratio, survey completions, average call length, number of script variations throughout the day, etc. Then, the pay plan needs to incent those goals judged as most crucial to the dealership. • Keep directions simple and concise. Employees who don’t understand the incentive or how to achieve it will lose belief and focus, and fail to accomplish the goal. Don’t overcomplicate the qualifiers or the scoring methodology for the incentives and call reviews. • Change things up. Keep monthly goals and bonuses fresh. Reward different skill sets by changing the goals every month. This gives BDC agents more opportunities to succeed and works on their areas of deficiency. • Measure performance and provide feedback. It’s critical to measure every day the important BDC activities that your dealership manages. Provide reps with feedback on success, and coach them on items that need improvement. Regardless of what BDC pay structure your dealership implements, the mission always is to define clear goals and manage activities and expectations throughout the day, every day. A pay plan is merely a guide to achieve the goals that your dealership has set for the BDC. SD

A daily bonus incentive should be woven into this agent’s word tracks.

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DECEMBER 2015 Service Drive 27

INTRA-DEPARTMENT COMPETITION Between Departments Is Great, Dog-Eat-Dog Is Not Giving staffs a direct stake in one another’s success is smart dealership management. BY MARK TEWART

am betting you have experienced this pain as a dealer too many times: The new car department constantly fights with the used car department, which is always upset with the service group. Service and F&I dislike and disrespect both sales staffs, and everyone hates the office manager.

home eventually will crumble if the foundation is bad. And, a business’ culture and environment are built upon having the right people doing the right things in the right way, i.e. character. In turn, character requires good leadership, and good leaders communicate effectively.

It’s time to stop the insanity. I actually have heard a few dealers say they like their departments feuding, because each is trying to outdo the other so everyone stays aggressive and on their toes. My reply is, “Are you kidding me?”

In every struggling dealership I’ve seen that is experiencing infighting with its departments, there has been little to no communication. Communication must come both from the top-down and bottom-up, and without it, your different departments will never understand and empathize with one another.

A healthy level of competitiveness and willingness to stand up for your department are one thing. However, constant battles and bickering between a dealership’s departments will inflict far more damage than any good that results. The success of every dealership starts with the culture and work environment. Even an expensive luxury

Now, let me address some potential approaches to improve communication, and minimize or eliminate inter-department wars in a dealership.

PAY BASED ON OTHER GROUP’S SUCCESS

If each one of your managers gets paid in part upon the

success and failure of other departments, then he or she has skin in the game with those groups. How would such a pay plan be set up? You could use a manager compensation pool that is based on the dealership’s overall performance, or for example pay the new car manager a percentage of profits in F&I, used car sales or even service in a “cross-banded” system. There’s an old saying in our industry that the used car department is the service department’s best customer, yet it is often treated the worst by service and waits the longest. You could create a days-from-reconditioning-to-sale component of compensation for both the used car and service directors or managers, thus incenting them to work together. These pay components or bonuses also could have a punitive effect if desired outcomes are not achieved. A successful business comprises successful departments. Encourage your individual staffs to assume at

Not only should leaders of sales and service functions be compensated in part on the other department’s success, but also they should periodically work the other group’s jobs.

“Encourage your individual staffs to assume at least some responsibility for their colleagues’ performance, using an overall dealership success bonus that fosters a ‘we’ mentality.” 28 Service Drive DECEMBER 2015

ServiceDriveToday.com

“Constant battles

Combative dealership staff meetings are not what you want; aim for broad strategy meetings instead.

and bickering between a dealership’s departments will inflict far more damage than any good that results.”

sales offices and use their current offices for contracting only. Cross-train the sales and F&I managers on one another’s positions. You should reap benefits from increased customer focus, faster processes and improved communication.

least some responsibility for their colleagues’ performance, using an overall dealership success bonus that fosters a “we” mentality.

CROSS-DEPARTMENTAL STRATEGY MEETINGS

If you aren’t already, try holding a weekly meeting between top leadership and your managers. Heads of every department – new car, used car, F&I, Internet, BDC, service, parts, body shop and controller – should attend and be prepared to report on performance against five top metrics established for their groups. They will cover month-to-date numbers and extrapolate them to project future performance, based on working days. I call this a “war board meeting,” as I prefer that each manager write his or her numbers on a large dry erase board that is broken into columns. Physically recording

your department’s data on the board promotes personally responsibility. You should not rely on doc sheets, as their numbers usually are behind. Once the group has discussed each department and filled in the projected profit and loss based upon working days, take a few minutes to talk about one thing that each department can do to help another. Doing this helps creating a culture and environment based on teamwork and purposeful communication. For the same reason, I suggest daily save-a-deal meetings with the available managers. Apart from producing possible ways to revive a sale that is in trouble, these meetings improve communications, teamwork and accountability to other departments.

JOB-SHADOWING HELPS MANAGERS’ PERSPECTIVES

I also believe job-shadowing by managers helps with communication, understanding and empathy. All managers should be required to periodically work in other departments for a day. Imagine if the new car or used car managers shadowed a service writer or service manager for a day. What do you think would happen to their perspective? Also, all managers should periodically work the jobs of the people they manage. A sales manager should occasionally work the floor for a day, and a GM should staff an F&I job, etc. Managers should never lose the perspective of their staffs.

FIND CROSS-TRAINING OPPORTUNITIES

The days of silo management in dealerships may be coming to an end. As one example, technology has blurred the lines between the sales and F&I managers and process. Try moving your F&I managers into the

MARK TEWART

President of Tewart Enterprises Inc. Mark is a sales expert and professional speaker, trainer, consultant, entrepreneur and author of the best seller “How to Be a Sales Superstar – Break All the Rules and Succeed While Doing It.” He has a 27-year career ranging from sales to becoming an executive manager at age 27, to founder and president of four successful companies. He is a professional member of the National Speakers Association and the Author’s Guild. Visit his website at www.MarkTewart.com.

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Also, require training in another function that occurs outside of the dealership. For example, try sending a service manager to a sales seminar and vice versa. Plus, schedule social activities outside of the dealership that give your teams an opportunity to interact in a relaxed fashion as regular people. At the end of the day, they will be able to understand one another and relate at work better.

HOW TO DEFUSE STAFF TENSIONS

As a dealer, you must also make sure to always handle conflicts between your departments immediately. Inter-department wars start off as small embers of dissent; eventually, the fire can grow so large that it’s tough to put out without firing people. Ignoring problems only makes them worse; you can’t sweep manure under a rug and expect the stink to go away. With that in mind, let me provide some tips for resolving conflicts: 1) Address the problem immediately, but only in private with the parties involved. 2) Be concise, handling only the issue at hand, and be firm. Address the issues, not the people. 3) Don’t let your emotions get the best of you. It leaves scars on you and your team. 4) Don’t let your managers play the one-up game (“Yeah, but you …”) 5) Avoid conflict words such as “always,” “never” and “but.” 6) Give suggestions and alternatives. Build your managers back up. Show them and tell them that you care. 7) Always end the meeting by talking in terms of “we,” not “I” or “you.” As a dealer, there is no better feeling than going to work each day to a successful dealership staffed by successful, happy and professional team players. There is no worse feeling than trudging into an underperforming store drained by staff infighting and backstabbing. Do not tolerate inter-department strife that can ruin your team and your business. SD

DECEMBER 2015 Service Drive 29

LEVERAGE U

YOUR CMS & CRM

To Understand A Service Customer’s Expectations Better Regularly querying customers, coupled with your existing systems, are a powerful combination. BY MICHAEL ROPPO

nderstanding your customer’s needs, expectations and preferences is at the center of every successful dealership organization’s sales and service businesses. This is true regardless of whether a company sells its products and services directly to individuals or to other businesses. This core knowledge can be used to influence a potential or existing customer that buying from your dealership is in his or her best interests. I cannot understate how important it is for a service department to pursue insights into its customers’ preferences. These insights can be garnered from your dealership’s DMS and CRM systems, working together to help you win service business from your competition. However, you first need to establish what you want to know about your customers’ preferences and how you will use it to steer them into buying from your dealership more frequently and effectively.

ONGOING INFO ABOUT CUSTOMERS, PROSPECTS

The more you know about your customers, the more effective your service sales and marketing efforts will be. It’s well worth making the effort to find out: ✘ Who they are? ✘ What they are planning on buying? ✘ Why are they buying it? ✘ How soon are they planning to make the purchase? ✘ Who will they buy it from? ✘ What do customers want to buy from you? ✘ Why do customers need your dealership and your services? ✘ What are the differences between your services and that of your competition? ✘ What do you specifically know about your customers? ✘ Whom are they buying from now and why? If you’re selling services to other businesses with a fleet of vehicles that get bought, sold and serviced frequently, you’ll need to know which individuals are responsible for making the buying decisions and take steps to ensure they can buy from your dealership.

Targeting decision-makers requires a consistent approach to marketing your products and services in a value-added way. Make sure there are plenty of incentives for customers and prospects to do business with you and not your competition. You can learn a great deal about your customers by simply talking to them on a regular basis. Asking them why they’re buying or not buying, what they may want to buy in the future and what other needs they have can give a valuable picture of what’s important to them. Strong car and service sales are driven by emphasizing the benefits and value that your products or services bring to your customers. If you know the challenges that face them, it’s much easier to offer them solutions.

KNOW THEIR CURRENT SERVICE PROVIDERS

Chances are your potential customers already are buying something similar to your dealership’s products and service from another dealership. Before you can sell to a potential customer, you need to know: ✔ Who is that prospect’s current dealership and service provider? ✔ Is that prospect happy with the current dealership or service provider? ✔ What additional, valued benefits could your dealership offer that person? The easiest way to identify a potential customer’s current dealer and service provider is by simply asking him or her. Generally, people are very happy to offer this information and to reveal whether they’re happy with their present dealer or auto service organization.

LEVERAGING DMS, CRM TOGETHER

Today, when you look at automotive DMS systems like Automate’s and CRM-associated software, we realize that the scope of features and functionality is significant. DMS and CRM software used together can provide dealers with an arsenal of tools and powerful customer information to drive business forward in any economy. Proper utilization is of these systems is becoming the core of operational performance for all dealer profit centers. These are the kinds of resources that allow smart service managers and advisors, sales managers and salespeople, parts counter people, and BDC and BDR staff (who usually are the ones held accountable for gathering, confirming and constantly updating pertinent customer information) to ask the right questions and entering the answers into the dealer’s chosen DMS screens for every customer. Efforts made in the area of building and maintaining information influence strong relationships in our industry. With proper time, targeted communications to keep customers coming back over and over again are a must to be successful in our industry. Some DMS providers like Automate partner with organizations that allow open access to information that can point to: ➜ Core CRM program marketing initiatives for dealers ➜ Best-in-class practices that are tailored to your customer’s specific needs ➜ Multi-channel approaches for a dealership to communicate with its customers in a regimented fashion, from the time they take ownership of a new vehicle until they purchase their next one

Your CRM becomes a more powerful tool once you populate it with more data about your customers’ buying habits. 30 Service Drive DECEMBER 2015

ServiceDriveToday.com

“I cannot understate how important it is for a

service department to pursue insights into its customers’ preferences.” efforts from a streamlined database in order to be more profitable. Storing your customer data, service history and inventory in one system rather than several lets you log onto one database to open service campaigns, influence more appointments, market special service programs, manage service customer records and parts inventories, run e-mail campaigns, properly desk a deal and conduct trade appraisals. Utilizing an extensive array of CRM data (sales history, sales modeling and customer history information) available from your DMS can help determine when to communicate service and sales messages to customers in a targeted manner.

Your service staff need to make a special effort to converse with customers about their purchase needs and preferred vendors.

➜ E-mail and direct mail targeted messages for a customer’s birthday, anniversary, next recommended service, etc. ➜ Targeted information based on a customer’s buying preferences and response analytics

HOW THIS INFORMATION CAN BE USED

Just a few examples are: ★ Make the first service appointment immediately after the vehicle sale, say for

1,000 miles out ★ Invite customers to a monthly service educational seminar or a welcome introduction for new and used car customer? ★ Provide monthly service clinic invitation to new and current service customers ★ Distribute ongoing customer service specials that influence value perceptions and customer retention Efforts like these are a requirement if you want to drive all of the dealership’s sales and service marketing

SANER INVESTMENT IN TECHNOLOGY

Smart dealers, leaders and managers who have been in the business for quite some time all have witnessed dealers investing in a myriad of technologies to better manage customers, marketing websites and inventory. As many vendors present the benefits of using a particular DMS or Internet lead management systems (ILMS), it all looks pretty compelling. The dealer signs up and hopefully realizes some of those benefits, but then along comes along another vendor pitching a different system – say, a website, CRM or e-mail marketing program. The dealer may sign up for those as well but capitalize on none of them. After a few years, that dealer will look around and find he’s spent big bucks on every kind of technology available, but none of it works well for him. This means that collectively, it doesn’t really work well at all. Get smart! SD

“DMS and CRM software used

provide dealers with an and arsenal of tools powerful customer information.” together can

ServiceDriveToday.com

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.

DECEMBER 2015 Service Drive 31

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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