I write this month’s column while sitting aboard my airplane of the day, heading back home from another energizing 20 Group meeting. Spending three days with a group of successful, entrepreneurial and opinionated dealers, exchanging perspectives in engaging discussions, always stirs many thoughts. Today’s first thought is the diverse manner in which dealers wind up as dealers. Some, like I did, planned it from a very early age (four, to be exact). Others made it via a natural progression from a sales position, through many of the sales management positions, through the general manager’s position, and finally securing the opportunity to become a dealer. Others actually backed into the job, coming from an allied industry perhaps, never intending to become a dealer until the opportunity presented itself. In any case, the paths that dealers take differentiate their perspective, which effectively molds their management style and areas of primary focus.

The perspectives that they have of both themselves and each other work to set artificial barriers in their minds. These barriers cause dealers to think their performance has reached its top level or to rationalize that there is no way their store can ever reach the performance level of the particular dealer leading the group in profitability or in certain specific areas of operation.

Then they come together for one of their three annual meetings and magic occurs.

There is just something about putting 20 car dealers in the same room together. Suddenly the box opens. Suddenly they are thinking way outside of it. Feeding off the energy of their fellow dealers’ honest disclosure and desire to give as well as take, their creative juices begin to process the new ideas and formulate plans to take their operations to the next level—and they do so with the highest confidence that success will indeed follow. . . and is it ever an exhilarating experience to be a part of!

So how does this tie to fixed operations?

You see, as I walk around the room right before I adjourn each meeting, I always ask each dealer what was the best idea or most important issue that they are going to return home and focus on. They are usually excited to return home and refine something in their sales or marketing process. They even get charged up over ideas on attacking escalating expenses or reducing the dealership’s exposure to liability.

What I seldom see is the same aplomb given to their fixed operations. I am quite sure this isn’t just limited to the 20 Groups that I moderate.

Their service and parts departments often seem synonymous with “necessary evils,” which are also referred to as “greasy black holes in which to throw money,” or “areas of total frustration.” Granted, others look at the same departments as the foundation of their entire operation, or “what floats the boat.” How can such polarizing terms be used to describe such important profit centers? It all goes back to one’s perspective.

Having owned six service centers before I bought my first dealership and having spent 23 years as an owner and operator of successful fixed ops departments and centers, I certainly find it difficult to see the former. Unfortunately, it is the perspective of the majority of dealers.

I will grant you that the service department isn’t nearly as sexy as variable operations. The excitement in sales starts with the first time a new model roles off the transport truck or a truck load of fresh vehicles arrive from the auction. All dealers know the exhilaration of the “bell ringer” deals—the deals that result in $5,000 to $10,000 in gross profit sales. When they occur, high-fives circulate throughout the operation.

My question is: how often do high-fives occur when a technician flags 60, 70 or 80 hours in a 40-hour work week? Or when a service advisor sells $30,000 to $40,000 of customer pay labor gross profit in a month? My dealer friends that own many different stores always tend to know the top sales people at each of their various locations, and their relative productivity. I wonder how many know their top technicians or service writers and their specific production?

Fixed absorption can be an awesome thing. In our 20 Groups there are some dealers whose service operation will put the dealership in high five figures or even low six figures of profitability before the store ever sells the first vehicle for the month. That takes a lot of pressure off the sales department!

This certainly doesn’t happen by accident. It takes the same analysis, planning and training that are generally focused on the sales effort. And it takes a strong commitment and focus by the dealer to ensure that it takes place. I continually challenge my 20 Group members to look for the magic in their service bays. I do the same for you as well.

Vol 2, Issue 7