Author Archives: Brooke Samples

Service Advisors – Should They Also Be Cashiers?

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With the demand to trim expenses, more and more Dealerships are looking to the Service Advisors to Cashier their own Repair Orders.  Assuming the Cashier isn’t doing many other duties, such as filing, warranty processing, etc., then here are four reasons to consider changing the way you’ve done it in the past:

  1. Free up Personnel Expense for another commissioned Service Advisor.
  2. Increase Customer Retention and Improve CSI.
  3. As a bi-product of #2 you’ll increase your sales and profitability.
  4. If the Advisors have to speak to the Customers to finish the transactions this will force Service Advisors to perform some variation of an “Active Delivery” (A term we use to loosely describe how the serviced vehicle is returned back to the Customer—similar to the Vehicle Sales Department delivering a New or Used Vehicle).  The Sales Department DOES NOT RELY on the Title Clerk to review the paperwork with the Customer, so the Service Department should not rely on the Cashier to review the Repair Order, Multipoint Inspection, and Manufacturer’s Survey with the Customer, either.

If you think your Service Advisors are doing a good job on the telephone reviewing the work done to the vehicle, and that alone is a sufficient Active Delivery, stand by the Cashier from 4 P.M. to 6 P.M. and listen to the Customers’ questions.

If the Cashier is paging your Service Advisors to explain what was done to the vehicles; or worse, attempting to explain the repairs him or herself, then you first need to train the Service Advisors on how to do an Active Delivery.  Please call us at 877.316.7418 if you want a written process.

Your Service Advisors need to perfect the Active Delivery Process before you make a change.  If you have a good CSI score, this will make it better!  It will also make a bad CSI score worse.  Please don’t punish the Customer because you want to cut some Personnel Expense.  This is your opportunity to put your Service Advisors in charge of their Customers from start to finish.

To begin, each Service Advisor will need his or her own credit card machine.  There aren’t many cash transactions in the Service Department, so there can be a centralized cash drawer, perhaps at the parts counter or somewhere secure.

Managers need to check the Exception Report (CDK: REX, R&R: 3619), if available on their DMS, every day, looking for changes to invoices.  As a final safeguard, any changes made to an invoice after it is finalized should ONLY be done by the Manager.  The Customer needs to be there when the change is done!

When done properly, eliminating the Cashier position and training your Service Advisors will improve your Net Profit, your CSI and improve the Advisors’ Client retention.  It’s a win-win-win for you, your Advisors and the Customers!

 

Yes, You Can Reduce Employee Turnover

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Employee turnover is a fact-of-life in any business. Employees retire, relocate, find a better job or are terminated for one of the several possible reasons. The costs of turnover are numerous. The direct costs of recruitment and training are the easiest to calculate; but the loss of Manager’s time, disruption of staff, reduced sales and losing Customers because of bad experiences could be where the biggest costs lie. There are different ways of calculating employee turnover, but the idea is to use the same method year over year and to work on reducing the turnover rate. After the W2s are printed is a good time to run the numbers to generate a baseline turnover rate for your Dealership.

To calculate your turnover rate: count the numbers of W2s of former employees and divide by the number of W2s of current employees. Multiply the answer by 100 to get a turnover rate that you can compare to other industries. The national average for private sector businesses is 42% according to NADA. In vehicle dealerships, one department is typically the biggest contributor to the turnover percentage: the sales department. While turnover is a big money waster and creates a customer retention problem, I have to give credit to Sales Managers for persevering in the efforts toward keeping a full staff and working on upgrading when possible.

After the financial collapse of 2009 and subsequent high unemployment rates, surprisingly an estimated 30 million people quit their jobs in 2014.
According to Forbes, some of the key reasons employees quit are, because:

You’re overloading your best people with more responsibilities.
After years of trimming staff; to get the same if not now more work done, your best people are asked to do the work of 2–3 people. Take a look at your top staff: do they have the opportunity to work on higher-level stuff, or are they expected to come in day-after-day and do the same old stuff just to keep up with the work?

You’re never around.  We say the most important time Managers can spend at their job is the face time with their employees and customers. If your employees can’t find you, how can you solve problems, and coach and motivate your staff?

You’re complacent with the caliber of your employees.
Good people want to work with good people, yet managers will let bozos keep their jobs; they’ll let tardy people keep their jobs, and they’ll let lazy people keep their jobs. It’s easier than taking the time to make better hiring choices, easier than confronting the inept, and easier than training people – that is, until the good people leave.

You’ve never given your people a sense of where they can go with their careers.
You may hold the job that you’ve always wanted, but what about your employees: have they reached their goals? Do you even know what their goals are? A career path is one way to show them how far they can go at your dealership, yet few managers have laid out a path for their staff. Take the time to understand your employees’ goals and what role you are playing in helping them reach those goals. They may not know what their ultimate goal is, but I’m sure they’d appreciate knowing you cared.

According to Indeed.com, the new normal for employment at one place is just under five years; and January is the month when most start looking for a new job. On-line job searches were up 40% from December to January. So now is a great time to work on employee retention before your employees have a “New Years Resolution” that includes finding a new job.

The best way to retain employees is to communicate with them. Conduct “Stay Interviews” and ask employees why they stay at your dealership, and then pay attention to what they like. Are they happy here? Are developmental needs being addressed? Are you recognizing and rewarding hard work?

Back to the turnover rate, just like any other measurable procedure, you can improve the numbers by setting goals, examining current processes, looking for ways to improve them, and implementing best practices. It will be worth your time to further break down the turnover analysis by examining how many employees either were terminated or quit within the first 90 days of employment. Understanding why this group of employees “didn’t make it” will aid in implementing processes to improve your retention numbers. If you conduct formal exit interviews, excellent! If not, get a list of folks who didn’t make the 90 days and call them to ask either why they quit or why they feel the job wasn’t a good fit (i.e., they got fired). This trove of information will help you on the right path for good employee retention.

Upsells – Your Secret Weapon for Higher Profits

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I have shopped at the same grocery store chain since I was able to use a microwave.  They have always had a good fresh seafood department.  Last week, for the first time, someone tried to upsell me at the seafood counter: I ordered my pound of shrimp, and after weighing and packaging the shrimp, Matt, the new seafood manager, asked me if I needed cocktail or scampi sauce.  The man ahead of me had been asked if he wanted to try one of their new butters for the salmon he was buying.  I upsell myself enough at the grocery store, but for the first time, this manager proactively upsold me.  I imagine the sales of sauces and butters have increased since Matt took over the seafood department.

So what does that story have to do with you?  Well if Matt can upsell cocktail sauce and a $7.50 an hour cashier at McDonalds can upsell French fries, then why can’t we do a better job of upselling at our Dealerships?  I’m not talking about selling Customers unnecessary work; I’m talking about items that go hand-in-hand with each other, just like the shrimp and cocktail sauce!
In the Service Department, for example:

Request: New Tires:  Add-On Repair: nitrogen, wheel alignment, and road hazard insurance.

Request: Engine Misses  Add-On Repair: Besides the Correction, Replace spark plugs, change fuel contaminated oil & filter, possible air filter, PCV valve

Request: A/C Hose   Add-On Repair: Other A/C Hose if they are same age, Evacuate & Recharge

Request: Honda timing belt   Add-On Repair: Replace the water pump, radiator & heater hoses, coolant.

Lloyd Schiller of Lloyd Schiller.com says, “I see this all the time, a Customer comes in for a needed repair and we do that repair.  These are more than upsell opportunities; this is taking proper care of the Customer’s vehicles.  For example, if an original hose breaks, then the other hose or hoses will fail soon. Why put your Customer at an inconvenience PLUS charge them again for lost coolant or lost refrigerant because “we were afraid we’ll chase them off.”  If you’re inside my heart doing an angioplasty, PLEASE check ALL my arteries and vessels and give me ALL the stents I need (also a real-life lesson)! By training which repairs should be paired with corresponding work or what work will save the Customer money as long as the other work is being done, not only do you increase your sales, you provide a better level of service.  We train these repair combinations during our Service Advisor training classes and see the Total Sales per Repair Order increase.” 

Take a few minutes and ask your Service Advisors what they should do when a Customer requests any of the above services.  I hope the answer is, “I’d recommend….”

Upselling is not limited to the Service Department.  When the Parts Department’s phone rings it is opportunity calling.  The call is not an annoyance that must be dealt with, it’s a prospective Customer.  Answer the phone promptly and with a smile.  This simple courtesy will make it easier to close the sale and to upsell the caller.  The following is an excerpt on phone upselling from The Ultimate Marketing Plan by Dan Kennedy.

Dan’s example is from a Parts store where the Owner is spending a lot of money on advertising, but the sales are not increasing:

Well, Customers were calling, but after the caller stated his business, the answer went like this: “Lemme look it up–hold on . . .still there?  It’s $62.50.” Click.  Does this sound familiar?  The Parts Store owner had spent a lot of money advertising, but he had failed to train his people to handle the calls.  What they did to fix this was the following:

  • Devised a phone script to capture the caller’s name, address, and phone number.
    (This information was used to market to the callers)
  • They taught the script to all Employees.
  • They instituted a reward pool of fifty cents per captured name, address and phone number, divided at day’s end by everybody working that day.
  • They added a “telephone upsell” to the script as follows.

After taking the Customer’s phone order or answering the Customer’s questions, the Employees finish with:

 “Oh, just one more thing – we have an extra special offer just for today’s callers – would you like to hear about it?”

More than 70 percent of the callers said, “Yes.”

“Good.  Any caller who comes in today or by noon tomorrow will receive a 10% discount coupon for any purchase in the store and a free copy of our 400-page catalog.  Also, there’s a sale right now on (insert product).  I can set your coupon and catalog aside with your name if you are coming in.  Should I do that?”

More than 50% said yes.  More than 25 percent actually showed up.  More than 15% not only came in but also bought the item they originally called to ask about and bought the sale item described on the phone.

Spend a little time fine-tuning a script for your Parts Department to gather the caller’s contact information and to close the sale upon the initial phone call.  Don’t let those opportunities go unanswered.

The Body Shop has opportunities, too.  It can get discouraging trying to upsell Customers who want you to cover their deductibles, but there are Customers who are “not guilty” of the accident and have no deductible.  My mother recently visited a body shop due to a minor accident.  After the repair was done, she told me about the accident and how nice they were at the Body Shop.  When I inquired if she also had the missing passenger mirror replaced, she said: “I didn’t think of it and no one mentioned it.”  Missed opportunity!  She still is driving around with a warped plastic mirror instead of a glass one — a plastic mirror was her fix so she wouldn’t have to go to a Body Shop (for those with friends or family in Bonita Springs, Florida, you might want to warn them about a burgundy Mercury Sable).  To maximize your Body Shop opportunities, while writing an estimate, do a vehicle walk around.  Increase sales by offering to write an estimate for work not associated with the insurance claim, it is bound to be cheaper if it is done while the vehicle is already at your Dealership.  When I had my vehicle at a Body Shop for a repair I wasn’t responsible for, the Estimator never even went to my car; he just took the insurance company’s estimate — he could have found a few “defects” to upsell me on had he bothered.  For Customers who have their vehicles serviced at your Dealership, check the service history; you could save the Customer time by having their needed maintenance done while the vehicle is in your shop.  Don’t miss the opportunity to help the Customer and the Service Department.

For the Sales Department, accessories are your big opportunity to upsell to the Customer, but that is a whole other article.  Make this month the time when you look at Service, Parts and Body Shop and see how legitimate upsells are your secret weapon to Happier Customers and to higher Net Profits.

Parts Goals = Higher Profits

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Lord William Kelvin (1824 –1907) stated: “If you can not measure it, you can not improve it.”  That theory is the basis of the Profit Blueprints® System.  We start by measuring the numbers critical to your success and then work with you to reach your targets.  We have the pleasure of working with Parts Managers who seize the opportunity to measure and improve the performance of their Departments.  Here is how Sébastien Vanier does it:

One French-Canadian Manager’s recipe for success:

Big Hairy Audacious Goals

+ Real-Time Posting of Daily/MTD Results

+ Delicious Treat Rewards for Achievements

= Record-breaking Achievements Every Month

Parts Manager Sébastien Vanier sets the standard for motivating the productivity of his staff, and that is just one of his many talents.  For over 4 years, Sébastien has been motivating his staff with posting the Department’s goals and the progress towards those goals.  He admits, at first the employees were skeptical about the ambitious goals and daily posting of the numbers; “but once they saw the improvements in their efforts and in their paychecks, they appreciated it!”

Besides Sales and Gross Profit goals, there is a lot of emphasis on answering the phones.  To give all Parts Counter People a chance to earn more, he allows Tech Counter People to answer phones when the Tech Counter is slow, and the Wholesale Counter People are allowed to help out at the Tech Counter when Wholesale calls are slow.

BIG HAIRY AUDACIOUS GOALS

Sébastien clearly embraces the philosophy of BIG Hairy Audacious Goals (BHAG), a term first proposed by James Collins and Jerry Porras in their 1994 book Built to Last: Successful Habits of Visionary Companies. BHAG encourages visionary goals that are strategic and emotionally compelling.  The folks who work for Sébastien know all about the goals because reaching individual goals is built into their pay plans.  Each year, Sébastien reworks and fine-tunes the goals, as the employees continue to exceed them.

REAL-TIME POSTING OF DAILY & MONTHLY RESULTS

Every employee knows where they stand on an hourly, daily, weekly, and monthly basis — thanks to the big-screen monitor in the Parts Department installed last year.  Super Bowl worthy screens keep the numbers in front of the team’s eyes.  It’s not just the Sales and Gross Profits that are monitored, the Incoming and Outgoing calls are tracked and shown in real-time. This measurement really took hold when the screens went up.  Before he started tracking and rewarding the telephone efforts, the number of abandoned calls ran between 15% —18%, afterward that number dropped to 8%.

DELICIOUS TREAT REWARDS

The Parts Employees don’t have to wait for the end of the month to be rewarded.  Incoming phone calls are monitored with the goal that all calls are being answered quickly and no one hangs up before the call is answered.  He first rewarded them with Tim Horton donuts and coffee on the following day if no calls were lost.  The staff complained that they were doing so well, they were gaining weight on all those donuts.  So the higher goal was raised to have 5 days throughout the month with no hang-ups: Yahoo! It’s Pizza Time!

Sébastien’s efforts not only produce great numbers, they produce camaraderie among the staff.  One week, there was a day when only 1 call was abandoned (that didn’t count against Pizza), but all the staff got into good-natured ribbing, trying to figure which Counter Person should have gotten that call and what he might have been doing when he should have been answering that call.
Thank you Sébastien for all of your efforts.

Best Practices That Can Boost Your Bottom Line

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I always enjoy speaking with Dealership Managers; not just because I’m helping them, but because, for me, it is a reminder of why I do what I do.  I appreciate the stories I hear because they help me continue to improve the Profit Blueprints System and the Action Plans.  The following are three stories that reinforce why watching your numbers keeps your profits strong and why the Profit Blueprints System works to catch small problems – before they become big problems.

There are many components in Profit Blueprints that provide valuable information, but highlighting problems and opportunities using Smart-Colors is the part that saves you time—your most valuable asset.  Your financial statement shows current month and year-to-date information which is good data, just not great data.  It is easier to track a trend when you can compare your numbers to previous months’ numbers.  But the colors and clipart comments help the numbers tell a story.  It was the red that alerted Ron H., a Service Manager, to a problem.

You know how it is…you take a few days off and everything goes to hell in a hand basket.  (Okay, maybe it wasn’t that bad.)  But, it was at this time that the General Manager went to the Parts Manager to announce that the markup on sublet to their sister stores was going to be reduced from the standard markup.  Well when Ron, being astute and not color-blind, saw the sublet account that had never seen red a day in its life, suddenly appear like a hot fire ball, he got to the bottom of it. It seems there was a miscommunication and the Parts Department had reduced the markup on all sublet items.  Problem solved! Life is good and Ron can go back to being a super hero, knowing the extra set of eyes is watching to keep every account on track.

Best Practice: Changes in policies should be in writing and all involved parties should sign off that they understand the new process. 

While the red on his report helped Ron discover a problem, the same color helped Mike, a Body Shop Manager in Michigan, catch his problem with a vendor.  Mike, who is always trying to make a little more profit, watches every account like a dog guarding a new bone.  When he received his Profit Blueprints report, he saw the net of Paint and Materials percentage retained had dropped dramatically, thus it had turned red.  Mike followed one of the recommendation on the Action Plan: he had Accounting pull every invoice for supplies from the previous month and discovered that one company had over-billed him (inadvertently or intentionally) 10x the quantity he had ordered and received.  At this Dealership invoices went from directly from the Parts Department to Accounting.

Best Practice: Invoices should always be reviewed and signed by the Department Manager before they go to the Accounting Office.  Also, don’t forget to complete the purchase order with the expected total price.

Most Parts Departments hit the suggested targets for Gross Profit percentage with hardly ever getting into the yellow, let alone red.  We know if we charge too much for parts, we’ll lose Customers and if we charge too little, we’re just giving away profit.  The Parts Department is the baby bear in Goldilocks and the Three Bears and everything seems to be “just right” – most of the time.

Although the colors hadn’t gotten to red yet, the clipart comment added to the report pointed out to Jessie that the Gross Profit percentage on Counter Parts Sales had dropped two months in a row, without a huge Sales increase.  One month might be an anomaly, but two months indicated we should look into it.  The first thing Jessie did was run the detail of the Sale Account and the detail of the Cost of Sale Account…and low and behold one report was much longer than the other report.  Logic dictates that with Counter Tickets, the number of Sales and Cost of Sales entries should be the same (if there are no coupons). It seemed that a new discount had been added to Service Invoicing and was “mapped” to the wrong Account number, hitting the Parts Counter Cost of Sales instead of the Customer Pay Parts Cost of Sales.  Once corrected, Jessie was now able to see how much that new discount was reducing the Customer Pay Parts percentage, and all was right in the world of Counter Retail Parts.

Best Practice:  Monitor your Gross Profit Percentages, every month compared to previous months,  for unexplained changes. When you see something off, quickly get to the bottom of it and fix it.