As a dealer, did 2006 bring you the return on investment that you expected? As a general manager, did you meet or exceed your net profit projections for the year? If you are a fixed operations director, did you increase your customer pay retail sales for parts and labor over last year? For all three positions, is your Service Absorption rising year after year? If any of your answers were “NO” then you must ask yourself why?
To begin, your financial statements will show you where the opportunities for improvement (conditions) are, but what they won’t show you is how to fix them. To fix them you need to know what’s causing the out of line condition. Once the cause is determined, you can then make the corrections necessary to properly bring the condition in line with industry guides.
For those of you who have ever written a repair order you probably recognized this as the “Three C’s”: Condition-Cause-Correction. The technician needs the Condition to properly diagnose the Cause which then enables him to make the necessary Correction. It’s no different for the dealer, the general manager or the fixed operations director when it comes to making money. So, now that you have studied your financial statements carefully to determine the conditions that prevented you from attaining your respective financial goals, let’s determine what the cause might have been. I believe the culprits here are comfort zones and accountability.
Everyone in your dealership has a comfort zone just as you do. The issue is not to get rid of them, but to simply move them again and again until you achieve the results you’re looking for and then move them again! This is important because it enables you to focus on the performance of your employees. Next, you must hold them accountable for their individual performance. Currently, most of you are doing that in the New Car, Used Car and F&I departments, which of course is where you devote much of your time and energy anyway. However, you fail to do so in the Service and Parts departments. Allow me to give you some examples to clarify:
Are you starting to see my point? Most dealers and general managers will hold their sales team accountable for their performance on a scheduled basis and make any adjustments by moving their comfort zones based on what is needed NOW! Meanwhile their Parts and Service team remains in their comfort zones to continues to dwell in the land of “underachievers”. Why does this happen? My belief is that most dealers and GMs are outside their comfort zone in the “back end” of their dealership since their roots are in the “front end.” What can dealers do to enable themselves to leave their comfort zone and cross over the demarcation line to the back end of their business?
To begin with, you must measure the performance of the people you intend to manage. Secondly, your people must know that you are measuring their performance. Thirdly, their performance will be compared to industry benchmarks. Last of all, they must understand that they will be held accountable for achieving or exceeding those benchmarks. Simply say what you mean, but more importantly mean what you say. Again, most dealers don’t hesitate to do this in their Sales and F&I departments so start off the New Year by making it happen in fixed operations.
Now, I want you to rid yourself of the usual whiny excuses that I hear from dealers when I’m speaking to twenty groups, Dealer Associations, dealer groups or individual dealers. It doesn’t matter whether it’s north, south, east, west or rural versus metropolitan. I hear this all across the U.S., Canada and the United Kingdom:
“Don, you don’t understand, my market is depressed.”
“Don, you don’t understand, my service manager has been with me for a long time.”
“Don, you don’t understand, I can’t find an advisor that’s any better.”
“Don, I don’t want to run off my customers by up selling”
Don’t you think it’s time to get out of your comfort zone and make the return on your investment that you deserve? Please, drag your fixed operations team out of their comfort zones and start holding them accountable! Once they stop kicking and screaming, they will all make more money, be happier, and your customers will realize you have the best dealership in town.
Vol 4, Issue 2
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.