Tag Archives: best practices

Use Efficiencies for Higher Profits

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The Army Air Corp (AAC) needed bomber planes. They contracted Consolidated Aircraft in San Diego to design and build the ultimate fighting machine. But once America entered WWII, the AAC needed thousands of these planes. The Consolidated B-24 Liberator, an American heavy bomber, holds records as the world’s most-produced bomber, heavy bomber, multi-engine aircraft, and American military aircraft. But it might not have held that record had Edsel Ford not stepped up to help build this bomber.
Consolidated Aircraft knew how to build planes but didn’t know how to build them quickly. It would take one month to build one plane. Edsel Ford and his right-hand man, Charles Sorensen, visited California and immediately saw problems. Ford and Sorensen laid out a plan that would eventually go from one plane built in a month to 650 planes a month.

Henry Ford said he would help build the bombers if they were built in Michigan. It took Ford Motor Company one year to build the 3.5 million square foot Willow Run Bomber plant as designed by Albert Kahn. By the end of 1944, the plant was producing one bomber every 66 minutes.
What does that have to do with your dealership? Think about the differences in approaching the task. A) is how Consolidated did it, B) is how Ford Motor Company improved the process, and C) is how this applies to your business.

PLANS
A) Consolidated Aircraft built every plane from memory. There were no blueprints, and because of that, no two planes were identical.
B) Ford Motor Company sent 240 drafting technicians and engineers to California to draw 5 miles of blueprints for consistency in each plane.
C) Are you like Consolidated or Ford when it comes to training your employees? If you create checklists and training sheets for each employee’s job in your department, pat yourself on the back. What are you missing if you start your training from scratch with each new hire? How consistent is the training from one employee to the next?

Start with a plan to create your “blueprint” to train your employees. Create a list of skills and processes new employees need to learn. Some of the tasks easily crossover from one department to another – such as logging in to the DMS or “punching” a time clock, so there is no need for each department to create the same document. Creating your training blueprints isn’t all on you. Your employees can and should help.
1) Have each person bullet point their duties as they do them. (It may be over a day or week) They don’t have to put the details, just the points. They can do this while completing the task so that it won’t be overwhelming. Create a sheet with 3 or 4 of these boxes. If you need a form, email us for the form at profitblueprints@gmail.com.
TASK: ___________________________________
AVERAGE AMOUNT OF TIME SPENT ON TASK______________________
CAN THIS BE BROKEN DOWN TO SMALLER TASKS? _________________
BIGGEST CHALLENGE FOR THIS TASK (do you have to wait for something?) _________________________________________________________
2) Review their lists and select one task from each person’s list that someone else could do or help with (with the aid of a checklist).
3) Once everyone has submitted their list of tasks, selected one task from each list, set aside 10 minutes during the first week for everyone to flesh out the item you picked for them to detail. Give them guidance on the best approach for each one: Screenshots, quick videos, checklists. (If it takes more than 10 minutes – the task probably needs to be broken down into smaller tasks if possible.) Keep it up throughout the year, until you have training tools for every task and job.
4) Because of potential reluctance, make it fun. You could have a weekly drawing of completed training lists (after you’ve reviewed them), and the winner gets a gift card. The small amount of the “reward” is overshadowed by the benefits the dealership will receive with the documentation of the tasks.

EFFICIENCIES
A) Consolidated Aircraft built every plane from memory with one component at a time, and the parts were crafted individually. They waited until the aircraft was assembled to install the wiring.
B) Ford Motor Company introduced the assembly line and interchangeable parts to speed up the process and improve the quality of the product. They created tools and dies to reduce the time to complete tasks. They wired the plane as it was being assembled; thus, all they needed to do was add fuel once assembled.
C) Are you like Consolidated Aircraft or Ford Motor Company regarding efficiencies? When it comes to your employees, are they cross-trained in other roles? Can someone fill in when an employee is absent, or does the work pile up? Have you invested in the right tools to get the work done efficiently?
With your “blueprints” created from the first point, cross-training and having someone fill in is more manageable. Employees with identical training will positively impact the consistency and quality of their work – from a Technician doing a multipoint inspection to a Salesperson delivering a new vehicle.
Look for gaps in efficiencies, from the speed of your internet to the length of time a Customer is in the finance department to how long it takes to produce the financial statement. Do you have paperwork or parts pre-staged for employees? If you think of your processes as assembly lines, you want to eliminate downtime as someone waits for the “part” to continue their work.

Yes, I agree, this is a lot to ask, but look at the different results between Consolidated Aircraft and Ford Motor Company. Which company do you want to be?


Build Your Customers’ Trust

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This is nothing new – Cox Automotive found that in 2023, dealerships accounted for 30% of all service visits in the U.S., down from 35% in 2021. With Customers holding on to their vehicles longer due to negative equity and higher interest rates, this downward trend is disconcerting.
One reason for Customers shunning dealerships is that they erroneously believe dealerships are way more expensive than the alternatives. 51% of those surveyed said they wouldn’t return to a dealership for fear of being overcharged. The Cox Automotive research found “that dealership service costs are mostly on par with non-dealer providers. The average dealership service visit in 2023 costs $258; a visit to a non-dealer service provider costs an average of $249, indicating that the suggestion dealers charge more for service is mostly unfounded.”

You can dispel the idea that your Service Department is more expensive when you post your prices in comparison to the competition’s. A “We Shopped the Competition, So You Don’t Have To,” with prices posted on a large sign or TV screen in the Service Lane and Customer Lounge, can alleviate some Customers’ fears about paying too much. For maximum impact post it on your website and social media. Pick a few standard services and shop your competition – Pep Boys, Jiffy Lube, and tire stores – not other dealerships. You can get some prices from their websites; for other services, call for prices. Understand what is covered so you can compare similar services. Even an oil change can have various prices. Add Free Video Inspection to your comparison board.

You don’t have to be the cheapest, but you need to be close. Posting your prices helps in the latest buzzword – transparency and with transparency comes more trust. The Salespeople can also use the signs when they take the Customers on a tour of the dealership; they can point out how competitive your Service Department is. The signage will build a “halo effect” (positive feelings in one area, influencing feelings in other areas) for other services and perhaps even vehicle sales. We need to build trust from the first Customer interaction.

“No longer is it good enough for companies to have the best product or the best service. To grow and succeed, companies must have the trust of their Customers.” Natalie Oldfield from Forbes.
Continue to build trust with a maintenance menu to show the “Why” we recommend this for each maintenance service and the necessary intervals. If you try to sell system flushes at 15,000 or 30,000 miles, you will lose the Customers’ trust. If you can’t say yes to the question, “Would I sell this to my mother at this mileage?” then don’t recommend it to your Customers.
The best trust builder is video inspections. If you aren’t using videos to show your Customers what you found during the Multipoint Inspection, you are missing a pivotal opportunity to build trust and sell needed work. Several of my previous newsletters delve into this topic. Still, one underutilized opportunity is to edit an MPI video and use it in your social media marketing and on your website. The ability to “wow” Customers with videos won’t last long as non-dealer service centers get in on this latest trend.
Based on my recent service experience, I’m surprised that the Cox survey found (only) “48% of vehicle owners were frustrated with at least one aspect of their recent service experience at a dealership.” Three key frustrations include:
Service taking longer than expected,
Struggle to schedule an appointment,
Dealers pushing additional services.
If you have any of the above issues, start to resolve them today. Select one and determine the reason, then craft a resolution. Below are some ideas to reduce the Customers’ frustrations
(1 & 2) Hire additional technicians, train technicians, don’t interrupt techs in the middle of a job to work on something else, introduce efficiencies from the advisors to techs to the parts counter, preview appointments two days before the appointment, invest in the right tools, and much more.
Use Video Multipoint Inspections and have printed ‘features & benefits’ for your maintenance recommendations. Don’t let the sales reps from MOC or BG influence your Service Advisors with spiffs for selling flushes and chemicals.
Whether it’s vehicle sales, service, body shop, or the parts department: to build trust, put everything in writing so there is no miscommunication and actively listen to your Customers. Every interaction with your Customers is an opportunity to build trust and, thus, more loyal Customers.

Reducing Lot Damage is No Accident

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Despite advancements in vehicle technology, like backup cameras and driver assistance systems, including forward collision warning systems (FCS), accidents happen. But do they need to? On the roads, 94% of accidents result from human error. On the dealership lot, it is probably closer to 100%. I’m perplexed when I hear an expense came from lot damage, not because technology should have prevented it but because there are many ways to avoid accidents, where the repair cost ends up in the policy or vehicle expense account, and in the case of a Customer’s vehicle—your reputation. Lot damage is preventable if you make it a priority.
1) Angled parking: Angled parking results in turns that are gentler than perpendicular parking and require less steering, so angled parking is easier and requires less time to park a vehicle. Time saver and money saver! Angled parking requires less space on the lot because of one-way driving; it doesn’t need enough room for two vehicles to pass. Observe how easy it is the next time you are in a parking lot with angled parking versus maneuvering an F150 into a perpendicular spot designed for a Pinto. If you restripe your parking lot, don’t forget one-way arrows, designated pedestrian crossings, and include parking space numbers to easily locate Service vehicles.
2) Safety Accessories: Speed humps slow traffic down. The advantage of speed humps over speed bumps is there is less of a jolt for the vehicle traveling over them. Speed humps measure from 2”—4” at their peak. Since your folks shouldn’t drive over 5 miles an hour, the chance for damage is zero. Purchase humps that can be moved and reinstalled for paving. Install blind spot mirrors at every corner to prevent someone from saying they didn’t see the other vehicle. And don’t forget signage.
3) Add bollards to prevent the risk of damage to buildings or equipment from vehicles. Padded covers or flexible posts for your Service and Body Shop can minimize minor dents and scratches. (I use swim noodles on the edges of shelves so I don’t have to make another trip to the Body Shop when I park in my garage.)
4) Written Policies: All this protection won’t help if your folks are driving distracted. If employees are texting or talking on the phone while driving on your lot or under the “influence,” you are bound to have accidents. Have a written dealership policy, reviewed by a lawyer that spells out your driving policies and holds the guilty party responsible for the repairs.
5) For your Employees who drive your vehicles on the roads—parts delivery vans, shuttle drivers, pick up/deliver drivers, and salespeople; enroll them in Fleet Defensive Driving Courses. Online training could protect your employees and vehicles better than the hope that the employees remember what they learned in a driving course (10 – 30 years ago) — if they even had formal training. You may also save money on insurance, and in the case of an accident, your commitment to training shows that you take safe driving seriously, perhaps reducing your liability.


Safety is everyone’s responsibility, but management must be committed to keeping everyone safe and reducing the chances of accidents.

3 Tips for Effective Dealership Training

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If you got a cool new toy, like a drone, and you had never used one, you were probably dependent on reading the manual to get started.  (Just kidding, no one reads the manual.)  And you wouldn’t ask Tom to make a cheesecake without providing the ingredients or telling him what kind of cheesecake you wanted, would you? 

It would make it easier and faster for you if you had someone show you how to use your new drone or if Tom had step-by-step directions (a recipe) to make a cheesecake.  Similar scenarios play out at dealerships daily when managers ask employees (new or experienced) to do something without providing enough training or refresher training.

If the goal is to have a high-performing workforce, we need to be in a continuous, consistent training mode to develop employees’ skills.  While reviewing Profit Blueprints trend analysis reports for the past few years, I noticed some departments spend nothing on training, while others well exceeded the target percentage.  What I couldn’t confirm for many dealerships was a direct correlation between training (or not) and the net profit. 

I hope that when you invest in training your staff, you are able to measure its impact.  An additional measurement, besides increased net profit or better CSI scores, is the employee turnover rate.  If you’ve invested in training, your employees the turnover rate should be reduced from the previous year.  See the last paragraph for the math on that equation. 

You know you’ll invest time in training new employees as they learn about your company, your policies and procedures, and their roles and responsibilities.  But don’t forget aboutwith your existing employees – refreshers on how to best perform their jobs and to learn new skills to aid them in their career growth.  Receiving continuous education also means they’re always on top of industry developments.

Create an annual Training Calendar. Begin with the factory-mandated training.  If you have a time choice with factory training, don’t select from May-August as you will already be challenged with vacations.  Look at your roster of employees who will benefit from training.  Determine what topics you want to review or train on with the employees.  Decide if you want to hire a professional trainer or if you’ll do it in-house.  For a list of pros and cons for both, email me at Brooke@profits4dealers.com.

After training review with employees what they learned.  A 2015 study for the Harvard Business School found that “participants who were asked to stop and reflect on a task they’d just performed improved at greater rates than participants who just practiced a task.”  Your post-training review should reflect on what employees have learned and how it benefits them (and the dealership).  Your reviews help you gather information to continually improve your training program.

Use the following techniques for your in-house training or to supplement with third-party training:

1)  Use two videos with a “before” and an “after” scenario.  Create a video of the wrong way to do something, such as a Service Advisor writing up a new Service Customer.  Ask folks from Accounting or the Sales department to be the actors.  During a Service meeting or training session, play the video and ask the attendees to critique the performance – what could the fake Advisor have done better?  Make a list of the ideas for improvement, augment them with your ideas if needed. 

Later use a Service Advisor to create a new video on the proper way to greet the Customer and write up two repair orders – one Customer with an appointment and one without an appointment.

You can use these videos for one-on-one training for new Advisors.  Use videos for training Technicians on performing a Multi-point Inspection or for a Salesperson highlighting features of specific vehicles or to learn how to use those features.

2)  Let them teach themselves. Self-teaching is not a substitute for more formal training, but it works to supplement a skill set or knowledge base. 

There are many things your employees can learn best on their own like the benefits of regular vehicle maintenance items or for Salespeople to learn the difference between your vehicles and the competition’s vehicles.  Encourage employees to use materials at the dealership (service menus, factory information), to search the Internet for the answers, or to speak with other employees. 

The advantages of self-learning include the “student” may gain a broader view of the topic versus what you have ready to teach.  This knowledge will stick with the employee longer; it teaches self-discipline and responsibility. 

Set timeframes for the employee to learn.  When they finish, have them share with you, or with the other employees, what they’ve learned.

Create internal “courses” for consistent training.  The courses could cover product features, business processes, DMS protocols, etc.  Create quick reference sheets (laminated) for easy access during the learning period.  For high-turnover positions (employees who stay less than a year), break the training down to the smallest learning points to create efficient and effective training.  Think McDonald’s.

3)  Use stories to help employees to remember. Storytelling is a strategic learning tool that conveys action – not static information.  For example, you could tell Technicians and Service Advisors the importance of completing thorough Multi-point Inspections and reporting ALL of the findings to the Customers or you could tell the story of the New Jersey dealership that paid out a $5,000,000 lawsuit settlement.  All because its employees were lax in doing their job, plus the lawsuit exposed that the dealership was making fraudulent claims about how the dealership inspected Customer’s vehicles.  Here’s how this came to light:

A tire blew out on a Customer’s vehicle and the vehicle rolled over. According to court documents, that happened three days after the Customer visited the dealership for a pre-vacation Inspection and services.  The Advisor failed to notify the Customer about the Technician’s concerns about a serious problem with the rear tire, along with the prior service records and Inspection reports that showed problems with tread depth and wear patterns.  I bet they’ll remember that.

Encourage employees to share stories during staff training meetings on how they’ve applied the knowledge they’ve gained.  As part of ongoing training, stay alert for stories that reinforce skills or knowledge and write the stories down to share when needed.

Keep a notebook of your stories that will reinforce a learning point.  How Kari sold a customer who said they were just looking.  How Miguel got a perfect CSI score from an upset customer.

Incorporate a variety of training methods to give your employees the skills they need for their success. Richard Branson, Virgin Group founder, sums it up: “Train people well enough so they can leave, treat them well enough so they don’t want to.”

Calculate Employee Turnover.  Use your W-2s (US dealers) for this exercise.  You can also do this for each department.  Determine how many employees you issued W-2s to who are no longer employed. Determine the average number of employees for the year (add the number of employees at the beginning of the year to the number of employees at the end of the year, divide by two). Take the number of employees who left and divide it by the average number of employees for the year.  Multiply that by 100 to get your percentage of employee turnover.  Example: 40 employees are no longer at the dealership. The average number of employees during the year was 80. (40/80) x 100 = 50% turnover rate.

5 Habits Of Exceptional Dealership Managers

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I hope you fall into the category of an Exceptional Manager. While the following is just my opinion, I’ve come with these points from speaking with managers and comparing their actions (both good and bad actions – not the managers) to their financial results (both good and bad) over the past 23 years.


Exceptional Managers Pay Attention to the Assets They Control. This may not seem like the most important habit but to me, it is indicative of how well a manager knows his or her department. If managers know these numbers, then it is likely they understand most of the numbers that pertain to their department and how their numbers relate to Key Performance Indicators and higher profits.


• Sales Managers should know: How many new and used aged vehicles are on the lot and how many new vehicles are in the pipeline to their lot. They should know the day’s supply of inventory by model.


• Parts Managers should know: The dollar value of parts over 12 months old and obsolete parts. They should be involved in the parts reconciliation to the General Ledger balance at the end of the month. They should know the day’s supply of their inventory, plus the day’s supply of Active or Normal Parts Inventory. They should know how much reserve they have to return unwanted parts.


• Service & Body Shop Managers should know: How many open repair orders are over 3 days for service and 7 days for body shop. They should know how many Customers are scheduled for the upcoming days and what the show rate is. What these departments sell is time, so they should know how much time is available every day.


• Accounting Managers should know: The bank balance is reconciled daily, and there’s enough cash to cover outgoing checks. The finance contracts are paid promptly, and the vehicles on floorplan vehicles are paid off when due.


Exceptional Managers Set Goals for their Department and Employees.
But Exceptional Managers just don’t set goals; they monitor them and coach employees who are falling behind and celebrate the victorious employees. They know how their numbers are tracking and anticipate where they will finish the month. The goals are the starting points for daily discussions with their staff.

Exceptional Managers Look at the DOC Every Day.
The name says it all – Daily Operating Control. Exceptional Managers know they can’t turn their back on their numbers even for one day; it’s like turning your back on a three-year-old. If you look at a DOC, set up with enough information, you know the exact day when something requires attention. I’ve seen some DOCs that were so long I wouldn’t even use them. I’ve seen DMS Dashboards that are so convoluted managers don’t both looking at them. Because DOCs don’t cost you anything extra, spend time to create numerous, useful DOCs for different purposes and the results will be DOCs that are reviewed every day.

DOCs help you scan your expenses quickly (DOCs should expand the expenses beyond lumped expenses like variable, personnel, semi-fixed, fixed expenses). If you have sub-accounts, detail those on the DOC to save time. For example, Service Policy Expense; we recommend sub-accounts such as lot damage, missed deductibles, warranty chargebacks, etc. If the DOC shows each of these account numbers, then the day the general ledger gets hit with a warranty chargeback, the manager knows the day and can research it now! The sales advertising account is perfect for subaccounts because of the variety of advertising expenses from pay-per-click to direct mail. When the manager sees a spike in an expense she can confirm she approved it.


DOCs allow managers to monitor Gross Profit Retentions; so the day there is a drop, the manager can examine the invoices from the previous day to see what happened.
For the sales department, DOCs let you know how many deals have been posted. Then if there is a large variance between what has been sent to the office and what is posted, the manager can check out what’s going on. You see which new models are selling and which aren’t – okay not a big deal this year but sometime in the future it could be important.
The power of using DOCs is frequently dismissed – that’s why I call managers who use them, Exceptional.

Exceptional Managers “Freak Out” When They See a Loss. Okay – not actually “Freak Out” but show enough concern to look into a problem before they assume anything. Whether it’s on a DOC or the financial statement, when something doesn’t look right, the exceptional manager doesn’t make assumptions; they ask why. They don’t Assume Anything. Once you understand why an Expense was high, or the Gross Profit was low, you can do something about it.

Exceptional Managers Don’t Make Excuses. There are very few problems that there aren’t solutions to – if you make an effort. “Oh woe is me, I can’t find any Techs.” “Because of COVID ___________ (Fill in the blank.),” “The weather..,” “Everyone else had a bad sales weekend so it’s okay.”
Many problems are exacerbated because of poor planning and failure to have contingency plans should something happen. “Waah, our computers went down, so we couldn’t write any repair orders” versus “okay, here are blank repair orders, start writing.”


Don’t let excuses be a default – it’s a bad habit to get into – you’re better than that! Benjamin Franklin said, “He that is good for making excuses is seldom good for anything else.”


These are just a few of the habits that help you be successful and show you are an exceptional manager. Take a moment and evaluate how you do on these crucial skills and if you think I should add more to the list – let me know!