Category Archives: General

Make Effective Communication at Your Dealership a Priority

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Dale Carnegie, the author of “How to Make Friends and Influence People,” said, “90 percent of all management problems are caused by miscommunication.”  Everyone reading this article can think of at least one time (or maybe one time a day) when miscommunication created a problem at the dealership or at home.  The following are best practices to reduce issues that arise because someone didn’t know what you meant.

Communicate With Co-Workers

Think before you speak, and speak with the desired action in mind.

If you haven’t clearly defined what you want to say, wait until you can be concise before you speak.  If you are rambling or adding unnecessary words, you are confusing the situation, and the listener may not hear the intent of your words.

An example of unclear intent: “When you get a chance, can you see how many titles we’re waiting for from trade-ins?”  Well, who knows when he’ll “get a chance” and who knows what he’ll do with the information?  For the desired results: “Tom, before lunch could you give me a list of how many titles we are waiting for and how long it’s been since they were paid off?”  Clear instructions along with a deadline will ensure you won’t want to strangle Tom at the end of the day when you realize you never got the requested information. 

Just because we know what we want to say doesn’t mean the listener understands.  We can be the most succinct speaker, but if the other person (or people) isn’t listening, we are just wasting time.  For complex conversations and instructions, ask the listener to repeat back to you what needs to be done and then clarify any misunderstandings.

Educate the Customers

For your customers’ sake, every dealership employee should know that the customers don’t deal with the same things they do, so the customers have no way to know how long it usually takes to get a license plate.  Keep in constant touch with customers to encourage them to ask you questions instead of broadcasting their concerns over the internet.

You help your customers when you eliminate dealership acronyms and jargon.  Our “secret language” could end up confusing and alienating customers.  Think about a Body Shop Estimator reviewing an estimate with a customer.  We have a DRP agreement with your insurance company, we’ll R & R this and here we’ll R & I, we’ll use aftermarket parts, etc.  We have an agreement with your insurance company so you’ll have no worries.  For the fender, we will replace it with a new one and we’ll remove the bumper when we paint the vehicle and reinstall it.  Your insurance company wants us to use generic parts, not ones produced by your vehicle’s manufacturer.  When we drop the jargon, we provide the customer with a more comprehensive explanation.

Communicate with Customers

You can learn a lot from the internet; you can really learn a lot from Google Reviews.  I saw that most of the dealership complaints came from miscommunication or no communication between the customers and the employees. 

When you practice concise communication skills and hone your listening skills you will experience fewer mistakes, and have happier employees and customers.

“I bought a used car a week ago and still don’t have the license plates I paid for.”

This comment shouldn’t have even been a complaint; nevertheless, it was.  Even if the salesperson had told the customer how long it could take to get the permanent license plate, it doesn’t mean the customer remembers.  According to Google “What to Expect When You’re Expecting” is the most widely read pregnancy guide in America.  It provides the reader with answers to questions they may not know they have.  Think about a Q & A Guide for your customers: “What to Expect When You Buy a Vehicle”.  Based on the most common questions, common issues could be explained in an easy-to-read (Q & A) format.  The sequels could be “What to Expect When Bring Your Vehicle In for Service”, or “What to Do In Case of an Accident”. 

“Poor customer service.  I tried calling them like 20 times.  Left message, no one called back.”

When I call dealerships to speak with the department managers I’m in the same situation as the customers, after four rings I get frustrated and I hang up.  It doesn’t take a genius to see if dealerships want more customers – Answer the Phones.  If I hang up, imagine someone who is calling you – to BUY from you – who gets put on hold, whose call is transferred from person to person, and/or has to leave an unanswered voicemail message.  The only solution to this communication problem is to Answer the Phones and at the very least follow the Parts Department’s response, “Parts, could you hold please?”

Sometimes you just need a 2×4 to fix a problem (just kidding – sort of) such as these two Google Reviews revealed:

“I was looking for a used truck and found one here. The salesman that waited on me was too concerned about his phone to help me…”

“My salesman was very laid back and seemed to have no motivation in selling me the vehicle, and he couldn’t have cared less if it was me or the next person in line.”

All the communication in the world can’t fix the lazy or the unmotivated but it can put people on notice that you “expect better” or, just to be clear, at “Paradise Motors the policy is that when an employee is with a Guest/customer the employee does not look at his or her phone.  All of our customers are to be shown the same courtesy we would like to be shown in the same situation—understand?”

When you practice concise communication skills and hone your listening skills you will experience fewer mistakes, and have happier employees and customers.

What You Can Do at Your Dealership During the Coronavirus Crisis

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John F. Kennedy’s quote, “The time to repair the roof is when the sun is shining,” has never been more relevant. Don’t wait for the world to return to normal; seize this time to upgrade your processes and do all of the things “we don’t have time to do.”

Many or most of your current processes have built-in waste. With our free time, now is the perfect time to evaluate potential wastes. Waste is any step or action in a process that is not required to complete a process. Six-Sigma lists the 8 wastes of lean, as Defects, Overproduction, Waiting, Non-Utilized Talent, Transportation, Inventory, Motion, and Extra-Processing. I don’t know your dealership, but I’d wager at least one or two of your current processes embrace one or two of the wastes.

Besides reducing waste, consider implementing the 5S methodology to streamline your processes with visual control. The 5S Methodology helps a workplace remove items no longer needed. It starts when you remove (Sort) everything from a space. Then only bring back (Straighten) what you need and organize the items to optimize efficiency. Daily keep the area clean (Shine), so you can identify problems. My favorite step (Standardize) is to use labels and color-coding to be consistent. Finally develop the habits (Sustain), and implement the processes to best maintain your “new behavior” over the long term. (5S works just as well at home.)

New Behaviors

We will have to create new behaviors to accommodate Social Distancing (for sure the 2020 word-of-the-year) for your employees and customers. Consider flexible schedules for employees (half the accounting office works in the morning, the other half in the afternoon). For some positions, employees do their work from home. To engage your customers, create videos or flyers that answer their questions or solve their problems. Encourage your service customers to schedule their appointments (no more “just come on in”); maybe you want them to stay in their vehicle until your Advisor gets to them. Explain and show customers your “new” processes with videos and emails.

We will adopt “temporary” practices to accommodate and protect our customers – you never know these new practices could become your new best practice. Remember the ad from Mr. Mom (1983), “We at Schooner Tuna can sympathize with all of you hit by the hard economic times. In order to help we’ve decided to reduce the price of a can of tuna by $.50 until the crisis is over. After that, we will resume our regular pricing. Schooner Tuna, the tuna with a heart.” They adjusted their pricing for the times.

As a temporary practice, deliver parts to your counter retail customers just like you would for your wholesale customers. Offer curbside parts pick-up for parts paid for online or over the phone. If you don’t already have the capability for customers to pay online, determine what works best for you—use a vendor like DocuSign or work with your website vendor to establish a convenient way for customers to pay and go!

If you now offer pick-up and delivery for service customers, vehicle salespeople can be those extra hands. Salespeople can help their fellow salespeople with remote vehicle deliveries. If the salespeople are unwilling to help to maintain a paycheck, are they the people who will be with you in the long run? The Controller in me says always have two people go to a customer’s home or workplace to reduce potential liability issues from a “crazy” customer.

The Great Toilet Paper Shortage of 2020
When you can’t buy toilet paper, the lesson you learn quickly is to conserve resources. My first job as a Controller was at a Chrysler-Dodge dealership before Lee Iacocca revived Chrysler, and we were thrilled to make $4,000 in 1981. We were so cash strapped, (How cash strapped were you?) I would use both sides of the calculator tape. I hope you will never be in the position where a roll of calculator tape makes a difference. Still, in this time of uncertainty, there is a valuable lesson we all will learn from and perhaps be better managers when business returns to normal.

You may have reviewed your expenses at the end of 2019, but now you have a different lens to look through, one that also focuses not only on the best price but on reducing what you are using. Look at want versus need. Maybe I can look at that on the computer monitor instead of printing it out. Hey, Tech, you don’t need to put on new gloves every time you get a little dirt on them—wash it off and save a few gloves for others. Disposable is removed from the lexicon and replaced with I bet I can make this work. What you learn over the next few months will pay off for years to come in better processes and reduced expenses.

Hang on to Your Cash
I’m writing the definitive manual for dealership accounting (to be released this summer), and one segment that is applicable today is the Cash Conservation segment. Although COVID-19 wasn’t part of the plan, the ideas are even more valid in uncertain times when you spend more than you take in.
• Floor plan used vehicles (especially if your lender is allowing a grace period)
• Keep a vigilant eye on frozen capital – those resources used ineffectively. Collect those receivables and sell the old inventories.
• Tighten the credit extended to wholesale vendors.
• Pay bonuses to managers whose salaries are substantial, quarterly.
• Send out Accounts Receivable statements early.
• Make payments on a company credit card to extend the time to pay.

What to Do? What to Do? What to Do?
No one knows when you might have to furlough or downsize your staff, hopefully, you won’t have to. The rest of this article offers ideas to keep your valuable staff busy and productive—staff that you spent time and money recruiting and training. If you have folks quarantined at home and you are paying their wages, keep them in the loop with quick calls via Zoom, Skype, or other internet communications options. Most of these providers have free options.

Create a list of projects you’d like to accomplish to “up your game.” You probably won’t get to all of the projects, but you’ll have a list for the future when things are slow. Some of these ideas you can use even if your department is closed due to government mandates. With Zoom, you can see all of the employees’ smiling faces.

1) Create training videos. Create  5 – 15 minute training sessions for your team. Get their feedback on areas they feel they could improve.

2) Roll play. Practice those skills that make a difference with your customers, such as Asking customers for referrals, Presenting service maintenance menus, Upselling on a body shop estimate.
3) Discuss bottlenecks. Have employees tell you or send you a message on why they think their work slows down due to bottlenecks. Discuss solutions and engage all of your employees for their ideas. Do not disparage their input, or you will stifle their input.
4) Do your spring-cleaning now. Remove and dispose of clutter around the dealership. Sort and shred files (as allowed by the IRS.), scrap warranty parts (as authorized by your manufacturer.), or shred outdated forms.
5) Review every page of your website – do all departments shine? Call every phone number to verify they still connect to the right department.
6) Update employees’ job descriptions.

Everyone acknowledges the coronavirus crisis is an unprecedented time in our history, but we know it will pass. Heed the words of Zig Ziglar, “It’s not the situation, but whether we react negative or respond positive to the situation that is important.” Don’t let this gift of free time get away from you without making the best out of it.

If you would like a detailed list of projects, for each department, that you can do if business is slow, email me at profitblueprints@gmail.com or call Brooke at 877.316.7418.

Internal Labor Rates – Customer Pay Rate or Lower?

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The debate of what the Sales Department should pay for repairs and maintenance continues year after year.  Most Dealerships elect to do most work at a Retail Labor Rate, understanding that the cost of the work will be passed on to the vehicle Customer and the Dealership ultimately will make more profit, since the Sales Department typically sells from cost on Used Vehicles and the commission rates are probably lower.

However, there are still Dealerships whose Internal Labor Rate is 50% – 60% of the Retail Labor Rate and deeply discount the parts.  To those Dealerships, I pose the following question:

What if you’re the Used Vehicle Manager and every week you bring in a beautiful trade at a great price, and you expect to make $2,000 on it, plus finance income.  Now you’re told to sell it to an employee for $500 over cost.  (Even if the employee has plans to retail the vehicle.)  If this happens every week, the $104,000 Gross Profit you would have made for the year is now $26,000. 

Although the numbers may be more significant in this example (and maybe not), the effect is the same when the Sales Department “asks” the parts department, the service department, and the body shop to discount their efforts.

The Service Department, the Body Shop, and the Parts Department could be selling their work at a higher rate to retail Customers.  For Service and Body, there is no replenishing the time sold – once it’s sold at a discounted rate, there’s no chance of selling it at the higher rate.  The time the Parts Counter People spend tracking down the parts the Parts Department doesn’t stock could be spent providing excellent service to the Departments and Customers who pay a higher markup percentage.

As any Service Manager or Body Shop Manager can tell you, finding Technicians is a challenge; just like finding beautiful used vehicles at bargain prices.  The effort of finding, hiring, training, and coaching Technicians is valuable –just like the time spent by the Sales Managers finding, appraising, preparing a vehicle, and then ultimately working a deal to get the best price.

If the Labor Rate for Service work was only worth 60% of the Retail Labor rate, you can be sure that the Factory would pay claims at that Labor Rate.  If a parts Markup of 20% made sense, then the Factory would pay no more.  I’ve run the analysis many times, for many Dealerships, and a 25% Markup on parts will allow the Parts Department to break even.  There is little pride or sense in breaking even.

There will be times when the Service, Parts, and the Body Shop will need to help the Sales Department with a discount, but it shouldn’t be an everyday occurrence — we call them “Mulligans.”  Maintenance work should be done at the same price as Customer Pay – not more than the Customer Pay work.  If there is a “special” price, then that is what Sales should pay.  The Sales Department should also be part of the “Team” and not send work outside the Dealership because they can get it done “so much cheaper.”  This is a disservice to all involved, including the Customer if something on the vehicle fails because the cheapest guy on the block did the work.

The Service Department should be part of the Team and earn the right to charge the retail labor rate, by providing excellent service and not putting the vehicles from the Sales Department at the end of the line.  If it takes a week to get a car through reconditioning, then I can’t fault the Sales Department for demanding a discount, and now Service needs to figure out how to get the vehicle reconditioned in under 72 hours.

There are a lot of challenges and debates when running a Dealership and its departments; let’s not make the Internal Markup be one of them.

Prevent Lower Sales per Repair Order This Summer

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The summer is half over and you may have seen a dip in your sales per Customer Pay repair order, but it’s not too late to improve your sales per repair order.

I see it every summer: lower labor sales per repair order compared to previous and succeeding months!
It comes down to one thing: not enough Techs and/or Advisors to take care of the Customers!!
When the staff takes a well earned vacation, our sales per repair order drop because either (A) the Advisors become order takers because we are short Advisors, and we’re doing everything we can to take care of the Customers who are coming in, or (B) we are short Technicians, and we don’t want to anger the Customer by recommending work we know we can’t get to today.
Factory experience also supports the fact that Summer is when CSI Scores are most likely to fall.
So here are several ideas to improve BOTH Service Sales AND CSI.

Tips on preventing a dip this Summer:
1. Have a well planned out vacation schedule. This is key to keeping your sales per repair order strong and taking care of your Customers. It’s not too late to lay out a plan for vacations. Based on your staff count, determine how many Advisors and Techs can be scheduled off at one time. First choice for dates could be based on seniority or on most productive employee. What we don’t want is everyone requesting off June 29th to July 3rd.

2. Coordinate Technicians’, Advisors’ and Back Counter Peoples’ vacation time. If you have three Techs off and a full staffing of Advisors and Back Counter People, some people will be standing around. Think of a restaurant, if you only have one person preparing food, you don’t want 10 waitresses pushing orders at the chef. If you have only 1 waiter you won’t need 10 people preparing food.

3. Based on your vacation schedule, adjust the number of appointments for a given day or week. Regardless of how Customers are scheduled (the Advisors, appointment setter or a third party scheduling system) these people need to have the full vacation schedule so they reduce the slots available to take in certain kinds of work. If you have two diesel Techs and one goes on vacation, there is little chance your one remaining Tech can do double the work. When we schedule the same amount for fewer Techs, we only compound the frustration and the quality of the work done for the Customer.

4. Can you schedule your employees to come into work a little earlier or stay later to knock out carry-overs or internal work?

5. Hire students or teachers who are off for the summer to help in the Service Lane (full or part-time) —moving vehicles, greeting Customers, or pulling the pre-work order packages (the work order, the service history, and the factory records). This time is also a great time to start apprentice Advisors, even if all of your Advisors are on deck – they’ll be happy to have an extra pair of hands.

6. Unless it is your only chance for a specific class, don’t schedule off-site training in June and July.

7. Coordinate your marketing and coupons. If you know you’re going to be short-staffed, then pull the coupons off your website for those time periods based on your vacation schedule. Don’t send email campaigns or direct mail campaigns if you won’t be able to take care of your Customers.

8. Don’t be stingy with your loaner vehicles. If you can sell a job, but it will take an extra day, SELL the Job and put the Customer in a loaner car.

9. Implement every efficiency technique you know. For a list of 28 ways to help your Service Department be more efficient, call us at 877.316.7418.

If you’re thinking “if I dial back the number of Customers who come in, I’ll lose business,” think about this: Your Techs can only do so much; currently what’s happening is we’re just rushing the Customers through the process. But if you slow it down to the normal pace, your team gets to do a better job of taking care of the Customer. Schedule the non-emergency Customers for the following week — when you are better staffed to provide them with an exceptional service experience.

Keep Your Service Customers Loyal With One Question

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Keeping Customers happy is essential to not only retaining your current Customers but in adding new Customers to your Service Department. To keep your Customers happy go beyond a Yes and No question and gather information you can use to improve the Service Customer’s experience.

To get good CSI scores, Service Advisors frequently ask Customers if there is any reason the Customer wouldn’t rate the service as excellent (or whatever the manufacturer deems the best score). Just like you might tell a waitress everything was fine, when in fact you may have no intention of returning, your Customers may be telling you the same thing.

But what if the Service Advisor asks the question “Is there anything I could do differently to make your next visit with us more enjoyable?” Not only does this reinforce to the Customer that you care and you expect him or her to return, it also gives you invaluable information to improve all of your Customers’ Service experiences. Make sure the Service Advisors thank the Customers with a smile for the Customer’s input, regardless of the Customer’s response. Have your Service Advisors do this for one week, log all of the responses, now look for areas where you can work to improve the Service experience at your Dealership.