Category Archives: General

Dealerships Can Generate More Profit By Eliminating Waste

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You can generate more profit without spending money – just resolve to eliminate wasted time at your Dealership or in your Department. I think you’ll be amazed at how much WASTE you can find just by looking. In most Service Departments, the average gross profit per Technician billed hour runs over $100, so it doesn’t take long for the savings to add up.  A Sales Person’s time can run between $95, to well over $150 an hour, depending on his or her abilities. It doesn’t always take a Time and Motion Expert to see what can be improved. Read below and think about some of the common areas of waste (besides being seduced to surf the Internet) at your Dealership:

WAITING: Employees waiting for Customer approvals or authorization, equipment to be repaired, parts to arrive, the finance manager to be available, etc. Waiting probably accounts for the biggest waste of time. If you increased the number of Customers making Service appointments would that help your sales? YES – You generate more income when you have the opportunity to prepare for the Service Customer’s visit. Would better Repair Order descriptions help? Yes – If the Technician can fix the vehicle without having to go back to the Service Advisor to get the answer to “how can we duplicate your concern?”

CORRECTIONS: Fixing a repair twice, re-ordering a needed part, re-contracting a finance Customer, etc. Taking the time to get it right the first time will save you time. Think of the saying, “If you don’t have the time to do it right, when will you have time to fix it?” Do we have the right Techs working on vehicles? Do we have properly trained Salespeople? When you spend your money on Advertising, and your Customers receive average treatment from their Salesperson, it is time AND money wasted.

MOTIONS: People, paperwork or equipment moving more than required. This waste is probably the easiest to fix. Start by streamlining processes, then updating or adding new equipment. Could barcoding parts and vehicles save you time and money when counting inventories? Are Technicians wasting time looking for a Customer’s vehicle on the lot? Do Salespeople roam the lot in hopes of finding the right car or truck to sell to their Customers? Fix these problems with efficient processes.

OVER PROCESSING: Are there process steps in place to overcome a poor design not required to take care of a Customer? Think of a title clerk hand addressing envelops for vehicle registrations that could easily be put into window envelopes.

UNDER-UTILIZATION: Underutilizing the potential of your people is also considered a waste. When you have a Tech (generating over $100 an hour), does it make sense to waste any of his or her time? Pre-pulling parts or running parts to Technicians would make better use of the Techs’ time. Should the Salespeople be gathering insurance information instead of the Finance Manager? Is the Sales Manager handling all of the Dealer Trades, when he or she could be coaching Salespeople or working with a Customer?

By eliminating or reducing waste, the result will improve the overall efficiency of your Dealership—thus providing time to generating more income. Involve your Employees to see how to eliminate wasted time in every Department.

My Profit Blueprints Analysis provides Dealership Managers with a monthly report that saves them time by highlighting underperforming areas with color and provides Managers with Dealership-Proven Action Plans to help them with a plan for an area of concern. Couple that with a monthly conference call and you are on your way to a fabulous year!

Make Your Job Easier with Better, Faster Decision Making

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If you’ve watched any football game, you have to be in awe at the speed at which coaches decide what will be the next best play, based on the current circumstances. There are enormous variables that dictate the best play. Third down and seven yards may call for an entirely different play if you’re in the first quarter compared to the last two minutes of the game, and you are behind. Now are you behind by 3 points or 5 points? How close are you to the goal? The coaches have less than 25 seconds to analyze all of the variables to come up with the right play for the desired outcome.

Decades ago, exceptional coaches knew there had to be a better way than just going with their gut. Bill Walsh, Bill Parcells, and Jimmy Johnson figured out that if you knew ahead of time what the decision(s) should be in specific situations, you would be more successful. They “invented” the laminated sheets that every head football coach now carries with 1st Quarter plays already scripted, and situational decision plays “decided.” It is much easier discussing play options sitting at a table with unlimited time than making split-second decisions when the outcome of a game depends on choosing the right play while the crowds are screaming, your starter left injured, and you are trying to think clearly.

A good decision maker makes for a good Leader. Establish a decision-making process for common issues, and you can be more efficient in your day-to-day work. In any given week, Managers make hundreds of decisions; some easy, some critical. There are daily decisions that can be made quickly using an analytical approach when you follow a Decision Tree. Decision Trees are used to select the right strategy for a current situation and operate much like flow charts. If this – then do this, if that – then do this. When do we take a short deal versus passing on a deal?  To finish a Service Customer’s vehicle – do we special-order a part or do we pick it up locally to get the vehicle on the road sooner?  Decisions Trees, not only free up Manager’s time, they improve the consistency of your processes.

When applied to everyday choices, Decisions Trees will help your staff know what to do in specific situations – even when you’re not available.
The goal is not to take emotions out of the decision-making process, but to prevent emotions from taking over. Remember the old way you decided which used vehicles would make it to your lot – the Manager buying them because “he knows what sells in his market.” The myriad of tools available to help Managers stock inventory for their market and price their vehicles for their market insure Used Vehicle inventories that are right for your Dealership.

Our past experiences dictate the decisions we make and will influence the way we solve problems. When we apply what we’ve learned to make smart choices, we can continually adapt and improve our processes. Think about the decisions you make every day, can they be put into writing or flowcharts for you and your staff to follow the path that will yield the desired result quickly? It works in championship caliber football, and it can work for you.

For examples of Decision Trees email Brooke@profits4dealers.com

 

 

Ten Ways to Say Thank You to Your Customers

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People like to be thanked, especially if they have spent money with you.  Customers have hundreds of choices, and they selected you to spend their money with today.  If you’ve done a good job, they will spend money with you in the future; if you’ve done a really good job, they might recommend us to a friend.  We have a lot riding on today’s Customers; so let’s never forget to sincerely thank them.

Besides the customary verbal thank you, consider some of the following ways to say thank you to your Customers.

1) Write a Thank You card.  How much the Customer spent should make no difference.  Imagine the “Wow! factor” when your Customer receives a handwritten note of thanks.  Make it personal and sincere, and reinforce your appreciation for the Customer giving you the chance to sell him or her a vehicle, or take care of his or her vehicle.

2) Give one Customer an over-the-top experience.  What could you do that would leave the Customer telling all of his or her friends about the experience?

3) Bring lunch to one of your Wholesale or Fleet Customers.  If not lunch; how about donuts and fruit first thing in the morning?  As the Department Manager, go out of your way to meet some of the Customers who make you successful.

4)  Reward your social media community with special announcements or exclusive specials.  If things are slow in your Department, what can you post that might attract a visit to your Dealership this week? 

5)   Help your Customers learn something new.  Think about your website, Facebook page or inclusions in email blasts – can you provide the Customer with useful information about maintaining their vehicle or an interesting fact about the history of your brand? 

6)  Host an afternoon of business Workshops for your small fleet Customers.  Use your showroom floor to promote a variety of services and your training room to conduct 30-minute workshops on topics important to small businesses.  For more information email us at brooke@profits4dealers.com.

7)  Start a club for your Customers with high-mileage vehicles or vehicles over 8 years old.  Special pricing and recognition can go a long way to keeping your Customers loyal.  Find a way to reward and recognize the owner of the active highest mileage vehicle in your Service database.  Celebrate milestones when vehicles’ mileage goes over 100,000, 200,000, etc.

8)  Throw a party.  Have a special event to celebrate (40 years in business) or group of Customers to thank?  Host a bar-b-q or luncheon at your Dealership.  Remember the new model launch events from the fifties through the eighties?  Chrysler gave away Fostoria crystal glasses in the early 80s and at our Dealership, we had Customers lining up. (I still have some of the glasses.)

9)  Have an “Ask a Tech” event for Front Parts Counter Customers during lunch hours one Friday a month.  Offer a training class on new products to Parts Wholesale clients.

10)  Give quality swag to Customers.  Delight your Customers with a hat, key fob, or T-shirt.  You’ll surprise your Parts Wholesale Customers when they open a box with koozies or coffee cups for their Employees.  Custom printing offers you a variety of options at affordable prices.

I’m sure you can think of more ways to say Thank You to your Customers throughout the year – not just at the time of their initial purchase.

Thank you for reading !

 

 

 

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.