“Success is achieved through the relentless application of the basic fundamentals!”
Last month we discussed how to “Compete with the Aftermarket and Win.” In that article, we focused on being different from every other dealer in town so that you could provide your customers with the highest level of service possible by exceeding their expectations every time they visit your dealership. Now, let’s continue to focus on what you can do to be different and achieve record profits at the same time.
Achieving 3.0 hours per customer pay repair order would be different for most dealers since the average dealer in America is producing on average about 1.5 hours per repair order. In other words, most dealers are performing at about half of their true potential. Is 1.5 HPRO acceptable to you? I would certainly hope not! Let’s look at this scenario in a different context for you dealers and GMs who came from the sales department. If your F&I department only produced $500 gross profit PRU when you know the top dealers in America are producing $1,000 gross profit PRU or more, would that be acceptable to you? Probably not. If your sales force averages five vehicles per salesperson per month when you know they should average at least 10, what would you do? By now you probably are beginning to understand my point. You don’t tolerate underachievers in your sales operations so why would it be an acceptable practice to maintain a “safe haven” for underachievers in your fixed operations?
Underachievers exist due to one of two reasons: 1.) They don’t know how to become “top performers”, or 2.) They don’t want to! If they don’t know how, it can be corrected through training. Training can and will solve any problem within any organization. However, if the trainee does not want to learn new ideas and processes in order to change their behavior and become a top performer, then what do you do? You cut their final pay check and quietly show them to the door after you have conducted a thorough exit interview. This is the result of a creative process known as accountability.
You can’t manage what you don’t measure. Most dealerships that I’ve been in have something called a “Performance Board” for their salespeople that gets updated daily to track the number of units sold per salesperson, the number of units sold by the dealership, average gross PRU and even average F&I gross PRU. Your service, parts and body shop departments should also have a “Performance Board” tracking the hours produced per technician per day, the advisors’ hours per CPRO, effective labor rate, parts sales MTD, etc. The results posted on the boards will clearly point out those individuals or areas of performance that need immediate attention by your management team. Additionally, everyone on the respective team gets to see how everyone is performing in relationship to the goals that were set at the beginning of the month. I believe it is called peer pressure. Top performers love it; underachievers hate it!
In order for the accountability process to be fair to everyone, you must establish what processes you expect them to follow with every sales opportunity. Everyone must then be trained on how to use those processes and ensure that they all understand that these processes are not optional! They are company policy and must be followed. Next, you must measure their performance and advise them of their performance both good and bad so that they know and understand exactly how you feel about their performance. Now here is another opportunity for you to be different. Do this every day; not weekly, not monthly and not semi-annually. Performance must be measured and evaluated DAILY. Again, your top performers will love it and your underachievers will hate it. Another example of how this works in the sales operations is the salespersons turnover of their customer to the F&I Department. Most dealers have a policy (not optional) of 100 percent turnover of every customer to the F&I department. The obvious is that they want every customer to have the opportunity to finance or lease their vehicle at their dealership, and they want to ensure that everyone is presented the benefits of buying additional products such as extended service contracts, insurance, etc.
Why not have a similar policy (not optional) that all service advisors must present a maintenance menu to 100 percent of your customers every time they come into your service department. By present, I mean explain the benefits of preventive maintenance that will help keep their vehicle in like-new condition and maintain their factory warranty or extended service contract. The advisor does not have to be a hard “closer,” he or she just needs to offer what the manufacturer recommends. This process again will probably give your customer a different experience since I have yet to go into a service department where the advisors present menus to 100 percent of customers. If your underachievers do not want to participate in this new process, then it is time for the exit interview. Then, drive down to your local restaurant for lunch and seek out the best food servers. Tell them about all of your fringe benefits, no nights, no weekends, health insurance, paid vacations and earnings potential of $30,000 to $50,000 a year. They will be more than happy to present menus to 100 percent of your customers all day long since that is exactly what they are already doing! Have you ever sat down in a restaurant without being presented a menu? Don’t get me wrong, these food servers will need some training, of course, but I assure you they will out perform the 1.5 HPRO underachiever who refuses to give your customers the highest level of service possible. Maintenance menus will increase your sales if you present them to 100 percent of your customers.
Top Performers are needed to ensure high owner retention and long- term success; underachievers need to be shown the door.
“There are two primary choices in life: to accept conditions as they exist or accept the responsibility for changing them.” – Dr. Denis Waitley
Vol 2, Issue 10
Recapturing lost revenue is the first step toward fixed ops profitability. Use this four-step process to reduce or eliminate wasted tech hours, declined services, inefficient scheduling, and lost tire sales.