Prevent Lower Sales per Repair Order This Summer

Posted on July 11, 2018 by Brooke Samples

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.

Improve Dealership Cash Flow With Best Practices

Posted on July 11, 2018 by Brooke Samples

Every business faces unexpected events which can strain its bank balance; the trick is to be prepared for them. Stop-sell orders could destroy your annual forecast for New and Used Sales. A tornado or a hailstorm could put a dent in your vehicle sales and tie up cash while you wait for the insurance check. You finally got (and paid for) all of those recall parts, now you have to find the time to install them. A significant increase in the factory Customer rebates, along with an aggressive sales campaign, could boost your sales to the point where you are stretched for cash because your profits came from factory money and IT’S NOT HERE YET – but everyone wants to be paid—NOW!! These are just a few of the potential times when all of a sudden “Where did all our cash go”? The financial statement’s balance sheet shows the two main areas to look for that money: Receivables and Inventories.

When it comes to the financial statement, most managers see their role to make the profit and control the expenses. Cash flow is low on the list of priorities; after all, isn’t that accounting’s responsibility?

Actually, cash flow should be everyone’s responsibility! On the last page of your Profit Blueprints^© report, there is an analysis of key assets. Not only do we track the monthly balance, but we put it into perspective by comparing the balances to the appropriate sales accounts. The values highlighted in green show you how much cash, if any, is tied up in frozen assets.

Be familiar with the schedules and the accounts that concern your department to understand where cash could potentially be hiding. The checklists on the following pages are for each department manager to make sure his or her accounts are always within target — and that processes are in place to keep the cash flowing.

SALES DEPARTMENT

VEHICLE INVENTORIES

Review the aging of your inventory; always be looking for “a sale” for the older vehicles. What are we doing to sell the five (or 10) oldest vehicles?
For new vehicle inventory, review the combination schedule that includes the inventory detail and the floor plan amount to confirm all vehicles are floor planned. For most dealerships, vehicles are floor planned. If that is your policy, make sure dealer trades are either sold or floor planned promptly.
Look at your day’s supply of vehicles, either on the last page of your Profit Blueprints Report or on your own internal spreadsheet. Keep in mind handling costs and missing out on potential bargains are just two of the costs you pay if your inventory is too heavy.
Walk the lot; inspect the vehicles for faded stickers and cleanliness. Ask the question “if I were a potential customer, would this vehicle appeal to me?” Don’t let “ugly” vehicles take up space and tie up your money.

Bottom-line: Don’t fall in love with a used vehicle and hope to sell it if it hasn’t sold after 45 days.
Sell it! Free up the cash and move on to a better return on your investment.

RECEIVABLES

Confirm that you will be paid before you extend credit. Review Receivables Schedules weekly and follow-up with past due amounts:

Customer deposits, full payments, and drafts.
Finance Contract Receivables.
Factory Rebates and Incentives. These could easily get out of hand or charged back if we have sloppy paperwork. Clearly defined processes and continuous updates to staff will help collect and keep the factory money.
Finance Reserve Receivables. This should be reconciled when paid or the amount due is acknowledged by the finance source. If there is a shortage, ask the finance manager to determine why and then adjust accordingly.
Service Contract/Programs Refunds. Any money you are expecting should be on a schedule. When you refund a Customer, make sure you follow through and get your portion refunded also.

SALES PROCESSES

Move the deals from Finance to Accounting quickly. Eliminate bottlenecks and monitor pending deals daily. The faster the deal gets to Accounting, the faster contracts are cashed; the faster the trade-ins are sold, the faster the cash gets to the bank.
Make the decision on trade-ins when the vehicle is brought into inventory. Retail or Wholesale – those are your choices.

SERVICE DEPARTMENT, BODY SHOP, and PARTS DEPARTMENT

SERVICE DEPARTMENT

OPEN REPAIR ORDER REPORT

This report could easily hide thousands of dollars of potential cash or potential write-offs. Keep this report clean by closing Repair Orders promptly. If not paid in full, CLOSE the Repair Order to a receivables account when the vehicle leaves the lot. This will make it a “thorn in your side” when it starts to age but is better than the labor and parts sitting on a report that few people review. Open Repair Orders should have a vehicle on your lot; verify this at the end of every month.

SCHEDULES

Receivables

Confirm that you will be paid before you extend credit. This includes Extended Service Contract companies.
Warranty Claims Schedule. Clearly defined processes and continuous training of staff will help collect and keep the warranty money. The last page of your Profit Blueprints report tracks your Warranty Receivables in relation to your warranty sales. If you are above the days supply target, the excess will show in green.

Sublet Schedule – Service and Body Shop

There is nothing worse than when you have to write off a balance on the sublet schedule because when the work was done, you thought you were going to be paid for it…then something slipped through the cracks and now you have to write off a balance. Compare the Sublet Schedule to the Open Repair Order report every few weeks to make sure the two are in sync. Shore up your sublet processes when you see a problem.

BODY SHOP

OPEN REPAIR ORDER REPORT

To free up cash and avoid potential write-offs, close Repair Orders when the vehicle is delivered to the Customer, don’t wait until the end of the month. Open Repair Orders should have a vehicle on your lot; verify this at the end of the month by touching every vehicle.

RECEIVABLES

The Body Shop should have a receivables schedule separate from the other departments. The only balances on this schedule should be for Insurance companies you have a Direct Repair Agreement with; all other repairs need to be paid-in-full before the vehicle leaves the Body Shop. Deposit Customers’ checks in accordance with your dealership’s policy. Do all of this and you will have a picture perfect schedule.

PAINT AND MATERIALS

Because most paint suppliers deliver requested materials within hours of a request, there is little reason to stock more than a month’s supply. If your financial statement’s balance sheet doesn’t breakout Paint and Material (P & M), we don’t analyze it on your report unless the inventory balance is supplied by your Controller. Calculate your P & M supply of inventory by comparing your General Ledger Balance to your P & M Cost of Sales for the Month. (Sales – Gross Profit = Cost of Sale) Ideally, the inventory value will be around the average Cost of Sale. Reconcile the General Ledger balance to the physical Paint and Material balance every month. Do not let your paint vendor count this inventory!

PARTS DEPARTMENT

INVENTORY

The Parts Department is special because, even though the parts inventory can range from hundreds of thousands of dollars to several millions of dollars, there is no Accounting schedule to confirm that the General Ledger balance is accurate.

We recommend a monthly reconciliation of the General Ledger to the Parts Management Report to watch for growing gaps, but this does not assure that all the parts are on the shelves. Perpetual inventories (done 3 – 4 times a year) plus a physical inventory performed by an outside company should confirm all parts are present and accounted for 99% of the time.
Watch the days of supply as calculated on your Profit Blueprints^© 30 days is too skinny while over 60 days may raise a red flag. Parts managers will confirm when they got off the 30-day supply and stocked more parts, their sales went up! Work towards the optimal range of around 45 — 55 days supply.
Keep your eye on your stocking status and aging analysis from your Parts DMS Management Report. You could show the ideal days supply — only to find out 30% of the inventory is over 12 months old. Stocking Status (Normal or Active) is another indicator of the quality of your inventory with a target of 70%+ for most franchises.
Do everything you can to minimize Special Order Parts. If the part(s) could be here tomorrow, hold the vehicle. If it is a Customer Pay Part, the part(s) needs to be pre-paid. If it is a warranty part(s), the Customer has to confirm an appointment before the part is ordered. If we saw those Special Order Parts sitting on shelves as hundred dollar bills, we’d do what we could to get them to the bank.

RECEIVABLES

The Parts Department should have a receivables schedule separate from the other departments. The only balances on this schedule should be for approved Wholesale Customers. Approved means you also have on file a complete credit application and, if appropriate, a sales tax exemption number. Only extend credit to companies who have good references, continuously pay on time, and have a low percentage of returns. Being wary of a Customer suddenly buying more than usual – this may indicate they have been cut off from other vendors—or it could mean you are doing a great job! The Parts Department should be vigilant for Customers who drag their feet on paying. By the third week of the month, most wholesale accounts should reflect only current purchases.

Each department manager has the responsibility to keep the cash flowing. Review your responsibilities for your department’s cash flow. With the proper processes and continuous monitoring, the bank account will be flush and, you can focus on selling more and controlling expenses.

If you’d like a cash flow analysis, call us at 877.316.7418.

Keep Your Service Customers Loyal With One Question

Posted on March 7, 2018 by Brooke Samples

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.

Dealerships Can Generate More Profit By Eliminating Waste

Posted on March 7, 2018 by Brooke Samples

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

Posted on March 7, 2018 by Brooke Samples

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