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VOLUME 2, ISSUE 5
A TEAM APPROACH TO F&I IN THE SERVICE DRIVE
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EXPLORE FIXED-OPS ADVICE Jeff Cowan shares his insights to earning your most profitable year in fixed-ops ... see PAGE 12
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FIGHT RISING COSTS
THE NEW NORMAL
MAKE YOUR SERVICE DRIVE THRIVE
CREATING A TIME-TO-MARKET CULTURE
DAVID LEWIS
DENNIS MCGINN
... See Page 08
... See Page 22
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SERVICE DRIVE MAGAZINE FIGHT CUSTOMER FLIGHT
WITH VALUE & PRICES MARY WELCH
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SERVICE DRIVE TODAY Email newsroom@servicedrivetoday.com Phone 678.221.2955 President And Publisher Jim Fitzpatrick Vice President/COO Bridget Fitzpatrick Managing Editor Mary Welch Creative Director Brandy Brewer Graphic Design Ashley Race Marketing Coordinator Megan Wilson Director of Marketing & Events Karen Locadia Digital Marketing Associate Erin Mumphord Subscription Manager Emily Wiggins Producer Danny Ramos
Letter From The Editor Dear readers, What I love about sports is that as one sport is winding down for the season (Who will win the Stanley Cup and the NBA Finals?), others are cranking up, like baseball and football. Regardless of the sport, it’s all about teamwork.
MARY WELCH Managing Editor
But, it rarely is about stars. Sure, they get attention, press and big bucks but Tom Brady can throw all the footballs (inflated or not) he wants to but they won’t go anywhere if he doesn't have teammates blocking or running down field to catch the ball. It’s the same with a dealership. All parts must put running on full steam and working together. The sales department, like a star quarterback, is the face of the franchise but the service department is the real grinder. The department that works hard, gets the job done and keeps the rest of the team at the top of its game. It also is a major profit center and catalyst for customer retention. So, let’s give the service department its due! David Lewis throws the gauntlet down and challenges dealers and the service industry in general to draw a line in the sand and tell insurance companies that they deserve a fair price for their work. Lewis believes the insurance adjuster holds service departments to
low profit margins despite the fact that wages are going up and equipment is increasingly expensive. He notes that insurance rates go up every year, but not so much on what they industry is willing to pay for repairs. It’s a thoughtful and provocative article. Dennis McGinn offers tips on establishing a Time-to-Market culture that focuses on improving all recon processes, with the end result an improvement to the bottom line and a way to get more vehicles frontline ready faster. Jeff Cowan offers five suggestions to improve the service department and bring in more profits and satisfied customers. Actually, four suggestions will move your service department forward; the fifth suggestion was to do nothing and see how that continues to work. We are also introducing Rian Locadia as a new contributor. Rian is a service advisor for Nalley BMW of Decatur, Ga. and offers insights of a man who is on the front lines daily and who is unabashedly passionate about cars. There is a lot more in this issue and, as always, we appreciate your thoughts and suggestions. In the meanwhile, let’s all work together and win.
Mary Welch
Production Assistant Chris Riggins Jillian Kaszubski News Anchor Joe Gumm Bridget Fitzpatrick MEDIA SALES REPRESENTATIVE Jim Fitzpatrick jfitzpatrick@cbtnews.com d 678.221.2955 SUBSCRIPTIONS To subscribe electronically, log on to ServiceDriveToday. com and click the subscribe link on the side bar. Alternately, forward your company name, your name, address, phone number and email address to:
info@ServiceDriveToday. com CBT Automotive Network, 5 Concourse Parkway Suite 2410, Atlanta, GA 30328 Please send address changes to the above email or mailing address. Permission to reprint or quote excerpts granted only upon written request. Advertising rates are provided upon request. Entire contents ©2016 Service Drive. All Rights Reserved.
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SERVICE DRIVE MAGAZINE
In This Issue 08 Fight rising cost in the service drive By David Lewis, David Lewis & Associates
10 Shop Talk: Hiring enthusiasts By Rian Locadia,
14
Nalley BMW
12
Why are you waiting to profit in fixed-ops? By Jeff Cowan,
Jeff Cowan;s ProTalk
14
Have you checked your department's retail health? By John Fairchild,
Fairchild Automotive Solutions
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16 Dealership Profile: Texas Dealer on the rise in customer satisfaction By Mary Welch 20 Ask The Pros 2 Creating a time-to-market culutre 2 By Dennis McGinn
16
Rapid Recon
24 Industry News 26 A team approach to F&I inside the service drive By John Stephens, EFG Companies
29 Are your service advisors prepared to start the day? By Paula Bliss, EFG Companies
30 Seattle dealer fights customer flight By Mary Welch
26
32 On the set ONLINE FEATURES Visit www.ServiceDriveToday.com
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888.628.6779 | eleadsales@eleadcrm.com | www.elead-crm.com Š Data Software Services, L.L.C. 2016
Service Departments need to get insurance adjusters to pay a fair and going rate for repairs.
FIGHT
SHRINKING MARGINS
IN THE BODY SHOP Costs Are Rising But Your Service Department Can Still Thrive BY DAVID LEWIS
O
ne of the unique and marvelous things about a free market economy like ours here in America is that prices are based on what the market will bear. When we have a product or service that is being introduced into a competitive marketplace, the success of the business will often depend upon its quality and price compared to the competition. It is the nature
of a true capitalist economy and it has been central to building America’s success as the most powerful economic nation in the world.
8 Service Drive MAY 2016
ServiceDriveToday.com
Whether it is a product or service that I am interested in purchasing, as a potential customer I am expected to shop the various providers of such things until I find one who offers the quality and product I need at a price I will be willing to pay. It works that way in most American businesses, whether providing products or services, and it has been this way for well over a hundred years. If I need to hire a plumber I can generally expect to pay $70 to $90 an hour for those services. Mechanic repair companies for something like heating and air-conditioning might charge $75 to $90 per hour; auto mechanic shops range from $75 to $225 per hour. It is how things work in our society and it is the best way to measure the value of products and services in a free market economy. While this is true of most industries, Auto Body Shop Repair and Refinishing businesses are held to low profit margins by the insurance companies who set the amount they will pay for an insured repair. In most states Body Shop & Refinishing businesses can usually expect to be paid $44 to $52 an hour by the company insuring the vehicle. Not only is that out of step with the pricing for similar services in the marketplace, it is the insurance company who decides what they will pay. If you want their business you have to take it at that price. In collision repair the insurance company is over 90 percent of the time the payee of the repair bill and the insurance companies dictate the labor rate charged by the shop. Body shops have no choice but to charge that amount or try to get the difference from the customer. A few try this approach, but those who do rarely remain successful. In spite of the fact that the cost of labor continues to rise, including benefits, employee taxes, tools, equipment and the rising cost of an experienced body shop employee. The expertise needed for this job requires a highly skilled individual. If the person they can afford at those rates is not well qualified for the job, what suffers is the quality of repair. So what can be done to right this unjust system? Here are some examples of potential solutions that can possibly make a difference with some insurance companies:
1
Body shops and Dealership Collision Centers need to form local and state associations forums and join together to make their plight known to their local insurance companies
Coming together as a sort of coalition they are more apt
to increase the labor rates that are essentially being dictated by the insurance companies. The going rates are grossly inadequate as a general rule and need to be given fair consideration. Some areas in the country already have strong associations while others have none.
2
Training: Repair shops need to train their estimators/collision advisors to write complete estimates and to negotiate properly with insurance companies.
This is their business and they need to defend reasonable rates of payment for their services or things will not change. Obviously the insurance company will continue to pay these low rates as long as they are not challenged and can get away with it. At David Lewis & Associates we understand that this must be done with care in some aspects. However, Body Shop Managers need to stop trying to be the insurance adjuster’s best friend to the point of detriment to the dealership. We are in business just like the insurance companies are and we deserve fair composition for the services we supply.
”Auto Body Shop Repair and Refinishing businesses are held to low profit margins by the insurance companies who set the amount they will pay for an insured repair.” Some may say that this is the way it is always been done and so it is the way is still being done. But as in every case, doing things the way they have always been done is the worst excuse for doing anything. In case you have not noticed, the insurance industry continues to raise their rates year after year while practically freezing the rates they will pay for the very intricate repair work being performed on the damaged vehicle. While these shops need and appreciate the opportunity to get their business, it is not fair to penalize them by shrinking their profit margins. All businesses to be successful need to be profitable, take the necessary steps by joining together in a coalition or association with other repair shops and dealerships so you have a stronger voice in your local area. SD
DAVID LEWIS
President of David Lewis & Associates Inc. David Lewis is the President of David Lewis & Associates, Inc. a National Training and Consulting Company that specializes in the Retail Automotive Industry. He is also the author of 5 industry related books, “The Secrets of Inspirational Selling,” “The LEADERSHIP Factor,” “Understanding Your Customer,” “The Common Mistakes Automotive Salespeople Make” and “Winners versus Losers.”
ServiceDriveToday.com
MAY 2016 Service Drive 9
SHOP TALK ENTHUSIASM BEST
delivered
BY THE ENTHUSIAST
Hire Someone Who Loves Cars BY RIAN LOCADIA
T
he automotive business as a whole has flourished, bringing in many exciting opportunities and new clients reaching both sales and service departments. However, the extra business makes for a fast-paced environment in busy dealerships, which can cause inexperienced dealership personnel to crack under the pressure, stress out, and eventually end their tenure. What seems to happen from there is almost inevitable, the rush to hire any Joe or Jane off the street to fill a seat and then trust them to service your hard earned clients. I, being a service advisor since 2005, have seen this “revolving door” effect happen time and time again. As a self-proclaimed “veteran” in this business, I have seen the advantages of hiring actual “car people” as opposed to a recently laid off barista or bartender for important dealership roles.
Who Isn’t Obsessed with Cars? As far back as I can remember I have had an absolute obsession with the automobile. At the age of three, I vaguely remember having Hot Wheels and scale model cars no more than three feet away from me at any given time. By the time I was eight years old, I could name any vehicle on the road. Growing up in South Florida in the 1990’s during the tail end of the “Miami Vice” era, there was a mecca of exotic and luxury showrooms, of which my mother and father would drive by letting me venture inside, dream and drool. By this time, I knew that when I was of working age I wanted to be involved in the auto business without a doubt. Since 2002, at 15 years old, I started my
10 Service Drive MAY 2016
career in automotive and I can honestly say I still get enthused every day I arrive at work. When a client makes a big purchase of an automobile, especially a premium automobile from a prestigious marque, they have a sense of pride and joy. That enthusiasm should be shared via the sales representative, service advisor and even the parts and accessories counter. To some clients, vehicle ownership is not just a necessity but also a passion. Some may even say a lifestyle.
Take Delight in Brand Loyalty Working for BMW since 2007, there are many clients of mine that are brand loyalists. I can vividly recall certain clients spending their entire Saturday mornings in the dealership lounge area talking with other owners about their vehicles. Being a brand closely related to motorsports, I would also witness banter about recent achievements and wins from the manufacturer. As a fellow automotive enthusiast, I would get genuinely happy and excited to hear this banter. I would join in the conversation and build relationships with these people, further extending my client base of fellow enthusiasts. After acquiring these clients, I could use my vast knowledge and enthusiasm to make them aware of new products, advances and developments from the
A love affair with cars lasts forever.
manufacturer, but more importantly use it as a selling tool. No matter what you are buying, when you are dealing with somebody that truly believes in their product, whether it be a $500 camera or a $100,000 car, you can sense that that person truly loves the product and knows what they are talking about. As an advisor and a long time BMW owner and enthusiast, I find it very easy and actually delightful to explain a client’s vehicle to them. Whether it may be certain features, needed repairs or specifications, my clients can sense that I do have first-hand knowledge about these vehicles, which makes it an easier process to sell and close somebody. Not to mention the customer will have the upmost confidence in what they are buying. Have I seen employees successfully transfer from outside the automotive world succeed? Absolutely. There are plenty of people I have met and have become very close with that knew nothing about automobiles that have become great salespeople and brand ambassadors. However, those people are few and far between. To an employer, I believe that a true automotive lover and enthusiast would be a much safer, reliable plug and play option for the dealership and its clients. Employees are the backbone of any place of business and when the enthusiasm is there at 7 am thru 9 pm, it spreads like a wildfire. SD
RIAN LOCADIA
Service Consultant, Nalley BMW Rian has been into automobiles and working in the the automotive servicing business since graduating high school since 2004. Starting with Harley- Davidson and he has worked with the most elite brands in the business. Rian currently works as a service consultant for Nalley BMW in Decatur, GA, where he looks forward to exceeding his clients expectations daily.
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NOW
IS THE TIME Make Fixed-Ops More Profitable BY JEFF COWAN
anything with Fixed Operations on a large scale to
the aftermarket sector and win back the millions of
grow that side of the business?
customers who do business with them. Now would be the time to reevaluate how Service Departments
A
re you having your best Fixed Operations year ever or at least one of your best years?
Now Would Be the Time Now would be the time to mount an effort to take on
are run and eliminate old practices that have never worked and replace them with those that do. Now would be the time to create a training and certification program for all who work in key roles in Fixed
You should be. Think about it. If people are
Operations to insure a consistent level of compe-
not buying new cars then they are keeping
tence throughout dealerships nationwide.
the ones that they have, putting more miles
on them, needing more services, needing bigger repairs and looking for someone to help them with both.
There is no doubt that the past year has been very tough on the auto industry. I understand that when auto sales are down the manufacturers have to do everything they can to turn it around, and so far, I would give the effort shown a C+ to B-.
What I do not understand, is if everyone knows and agrees that Fixed Operations is the true backbone of the car dealer and one of the few places left where a substantial profit can be made and where true customer retention is gained, then why is no one doing
12 Service Drive MAY 2016
"Fixed Operations
is the true backbone
of the car dealer and one of the few places left where a substantial profit can be made and where true customer retention is gained"
Now would be the time to create ad campaigns that advertise the benefits of doing service business with your local Dealer. Now would be the time to teach your staffs how to flat-out sell. Why wouldn’t manufacturers do these types of things when most of the top 10 to 15% of the most profitable dealerships do part or all of these items?
The sad news is that no one is doing any of this and to the best of my knowledge, I know of no one planning to do any of it on a large scale. As a matter of fact, I have been in contact with several manufacturers recently and not one of them has plans that would do any of what I have described above. Instead, they seem to be intent on doing the same thing they have
ServiceDriveToday.com
done for years – work to get vehicle sales to return,
a top Dealer.
sell a lot of vehicles to a lot of people and hope they come back for a lot of service.
2.
You can go along with this plan (or non-plan) if you choose and history tells us things will eventually turn around and you will have another 8 to 10 year run
5.
Sit back, wait, do nothing and wait for the manufacturers to come up with a plan.
Visit several of the highly successful Dealerships and see exactly how they have accom-
I would be willing to bet that the many of the Dealers
plished these feats. I have found that the most
who were recently forced to close would love to have
successful Dealerships are usually very willing
these options. I would also bet that if they had it to do
to allow others to see what and how they do
over they would select one of the first four. SD
things.
before a sad economy zaps you again. Or, you can do like the top 10 to 15% of the Dealerships and take the mission on yourself.
3.
Hire someone full-time who can do this for you. There has never been another time when so much talent was available that specializes in
Drive Your Own Future
these areas.
It is clear, you have a few options to combat what is going on and to stop and change forever your future path. Your options are:
4.
Get outside help from a person or firm that has experience in this area and can quickly and efficiently help you make and execute a plan
1.
Self-analyze your current situation and make the appropriate changes to make you
that makes you a top 10 to 15% Dealership (My firm can do that).
JEFF COWAN
President of Jeff Cowan’s PRO TALK Inc. In his 28th year of training, Jeff is recognized as the creator of the modern-day walk-around and selling processes for service departments. Currently partnered with NADA, EasyCare, NCM, MPi and other vendors and manufacturers, he is the nation’s authority when it comes to training service advisors and service support staff. Visit his website at AutomotiveServiceTraining.com and sign up for free, weekly training.
Tune in every week for Weekly Tune Up with Jeff Cowan
NEWS.COM ServiceDriveToday.com
MAY 2016 Service Drive 13
KEY MEASURES TO ENSURE SERVICE DEPARTMENT'S
RETAIL HEALTH
Check Your Service Department's Strength BY JOHN FAIRCHILD
O
wners and general managers need to feel the pulse of the Service Department constantly. Service retail metrics can be misleading and frankly overwhelming. Knowing what to measure is the first step, but knowing what to do with all those numbers to deliver positive change, isn’t always crystal clear. Let’s explore key service department retail measures and why to watch them. When used properly, relative metrics provide laser-sharp insights into a dealership, showing areas of strength and weakness in sharp contrast. Many dealers and GMs look to the service department as a financial buffer but don’t thoroughly understand the key drivers of success. When bearing in mind metrics, don’t get flabbergasted; not all the measurements need to be taken instantaneously and not all modifications to process must be implemented at once. Small incremental steps well thought out are much healthier than making a few hasty jumps. The following are some service department retail measures dealers should consider and ways metrics can be used to analyze your retail service business and implement continuing progressive changes. By no means is this a comprehensive list, but these metrics are worthy beginning points to see how proficiently
14 Service Drive MAY 2016
and successfully the service department is running.
There is no Magical Figure Dealership consultants and factory representatives alike love benchmarks. But, statistical criteria can be crippling; what’s important is continuous improvement, Dealers shouldn’t use service metrics to aim for a generic benchmark. Incremental improvement over historical performance is a great place to start. Also they must be examined regularly, some preferably daily, and measured month-to-date. Too often, measurements are taken infrequently and if they look good, they’re not revisited on a regular basis. This is a huge mistake.
CP Repair Orders Written:
Looking at the number of tickets an advisor should be able to write in a day and as a department as a whole, are we slower or busier than we need to be for the staff we employ?
• 15 tickets a day per Advisor is a good place to be any, more may prevent cultivating quality transactions. • Historical context versus the same
month in the prior year and the previous month. • Measure tickets written month to date divided by the number of days worked times the working days in the month to obtain your rate of travel. • CP RO’s written speaks to your customer retention. Are your car counts climbing, stagnant or falling?
Measure Your Service Advisors Salesmanship Service Advisors are a critical point of interaction between your dealership and your customer, nevertheless they often don’t get the kind of training a salesperson gets. Service Advisors, however, are actually a make-it-or-break-it employee for the service department. Are they upselling to your customers or just handing out the repair order (RO) and taking orders? Measuring a service writer’s efficiency and effectiveness is critical; what you find may enable you to increase sales dramatically. • Customer pay Labor Dollars per customer. Two measurements diagnose performance here. 1. Effective Labor Rate (Average labor charge per hour flagged) TIMES the 2. Hours sold per Repair Order equals the Labor Dollars per customer. • Customer pay Parts Dollars per customer. A baseline of 1:1 Parts-to-Labor ratio is desirable in most scenarios with heavier parts sales attributed to selling Parts-heavy jobs like Tires, Batteries and Filters. • Commodities penetration. How many key Competitive services are being sold per Repair Order? Maintenance commodities include Brakes, Tires, Wipers, Filters, Batteries and Fluid exchange services. • Parts & Labor Gross Profit Percentage Retained. This is really how much money are we keeping from the transactions we have. Low percentages may indicate excessive discounting and/or poor upsell penetration. • One Line Repair Orders. Another useful metric when gauging a service writer’s efficiency and salesmanship is how many ROs have only one item on them. A high incidence of one line RO’s indicates a need for training, or worse, apathy to asking for the business. Again, these measurements must be taken often and consistently to provide a definitive snapshot of efficiency.
" When used properly, relative metrics provide laser-sharp insights into a dealership, showing areas of strength and weakness in sharp contrast." Assessing Your Technician Condition The next area of attention is the tangible production in your shop. The productivity and efficiency of your Technical staff is an area that tells a lot about the health of the overall department. Here are the things to be attentive to regarding techs.
intimately familiar with your standing here. Be careful that you are not underrating your people based on “good” scores. A good score is a ZERO in the eyes of the factory but usually just means the customer was not informed as to how important the top box answer is to the Dealership or Advisor involved. • Customer Retention Metrics - A critical metric to evaluate is how many of your customers are going elsewhere for service. Are your car
• Technician Productivity – Defined by the number of flagged hours versus time on the clock. So if a Technician is at work 8 hours and flags 8 hours, his productivity is 100%. Be aware that in a lot of shops there is not a religious accounting of “clock” hours recorded in the DMS system. In these cases, for a consistent measuring point, divide the number of flagged hours by the general time an employee is clocked on the job…usually 8 hours. • Gross Profit Percentage per Tech – This measure tells us how profitable a technician is and the shop as a whole. It may indicate if the tech is over or underqualified for the job being worked on. If you’re “A” level tech is performing ultra-competitive services the GP% will be very low.
Measuring From A Customer’s Viewpoint When considering service department retail metrics, managers are in jeopardy of becoming so internally absorbed that they overlook that what’s truly essential, how they measure up from the customers’ perspective. There are so many critical measurements internal to our operations, but the key measurement external to us is customer satisfaction. Was a customer satisfied? Will he return for more service work or promote our department? • Customer Satisfaction Scores – There is a huge amount of credence given by the manufacturer here so it’s likely that you are already
counts declining? Is there a large number of VIN numbers that have not been back in over 12 months?
Enduring Analysis Paralysis There are hundreds of measurements of every aspect of your service department related to retail health and viability. Instead of feeling enlightened, you may be ready to pound your head against the Service Desk. You are suffering from information overload. Now what? You might have bitten off more than you can chew, but you can work your way out of the mess. First of all, keep it simple then add measurements gradually. These solid core retail measurements we have discussed above are an excellent starting point and the basis of ongoing success. Armed with this retail metrics information, General Managers and Dealers can subjectively review where their dealership ranks and feel in step with the state of affairs in the Service Department at any moment. SD
JOHN FAIRCHILD
President and Performance Coach of Fairchild Automotive Solutions John has more than 35 years of experience in fixed-operations management and consulting, and trains fixed-ops staff to improve performance and customer service. He started working in auto repair and parts at age 15 and over time held numerous positions at dealerships, including general manager. Reach John at john@johnfairchild.net, or visit the website at www.fairchildautomotivesolutions.com.
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MAY 2016 Service Drive 15
WHY IS
R SATISFACTION ME STO CU GOING UP?
Texas Honda Dealership Manages Satisfaction With Software Packages BY MARY WELCH
T
o many dealerships having 45 cars lined outside your service doors waiting for you to open is a nice problem but to Tony Pereira, service director, is was just a problem. “When you have that many people waiting for service so early in the day, it’s not a matter of if you upset a client, it’s a matter of how many and how badly. We had to get our arms around the flow or we would never have a satisfied customer, much less exceed their expectations.” First Texas Honda has the largest Honda footprint in the country. Pereira manages 102 service bays, 65 technicians, 18 service advisors; in all 105 employees. First Texas Honda is part of the Continental Automotive Group that includes Austin infiniti, Austin Subaru, BMW of Corpus Christi and MercedesBenz of Austin. He joined the Austin, Tex.-based First Texas Honda from another large dealership in August 2015 and quickly saw that the dealership had some challenges. The first was growth. It had moved to a new larger facility and went from 34 bays to 102. “They never got their arms around the increase so there many problems. I came in and began to evaluate everything from the get-go.” The first thing he noticed was that there was no appointment system. “None whatsoever. Of if they had one, their people were either not using it or not using it well. This was a big problem and I felt like we had gone back in time.”
16 Service Drive MAY 2016
First Texas Honda in Austin, Tex., has the largest Honda footprint in the country. (photo by Shelby Rae Photography)
Tony Pereira First Texas Honda, Service Manager
Customers would call the service department and were told “‘hey, come on down and we’ll get you done’ but that may take all day. There was a lot of customer frustration and many of our competitors were doing a much better job.” Despite the wait and frustration, the dealership’s service retention rate hovered around 57 percent. “I think anything north of 50 percent is winning rather than losing. But the dealer is in a very good location and they draw from other areas of influence. Even the people who were unhappy came back.” But, Pereira knew he had to make drastic changes if he wanted to achieve a sense of organization and flow in the service department, increase retention and grow profits.
And, he has. Since he came on board, customer satisfaction has gone up 4.8 points on a 100-point scale. In the first quarter of 2016, First Honda’s profits were up substantially over the 2015 results. “I’m analytical and I operate on what I can measure. One of our main metrics is labor hours per repair order, and it’s really important with Express. We will transact over 30,000 repair order this year in Express and we raised the labor hours sold by .48 per repair order; that’s an increase of 65 percent. That increase will mean over $1 million in additional revenue for the year. Typically, a service department would have a grand celebration with an increase of .10 or .20 hours/RO, but with this increase, well, I’ve just never seen that before. We are extremely pleased with our progress.” He turned to Xtime and its Spectrum software that is designed to create a consistent, high-quality ownership experience that improves customer loyalty. Spectrum is the industry’s first fully integrated, cloud-base system for the service drive. Spectrum consists of four tightly integrated products — Invite, Schedule, Engage and Inspect powered by Service Pro. Pereira had used the software previously and right away turned to its first three products. Schedule is a customer-facing portal that allows customers to set appointments anywhere,
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First Texas Honda has 102 service bays, 65 technicians and 18 service advisors.
any time using multichannel scheduling and for dealers to visualize their shop capacity. “It really was a matter of changing the culture and retraining our customers while the employees were also going through the change. It proved to be very difficult and a daunting task but we worked through it and am still alive.” Each service employee had to educate the customers every time they came into the store about the switch and handed out business cards that explained how to set up an appointment themselves or — at the very least — to call for an appointment. Slowly the needle started moving. “If you showed them the difference that making an appointment made, they started to do it. They realized that the front of the line expected stay was much less. They realized they could have a predictable experience. Before they never knew if an oil change would take 45 minutes or three hours.” Helping is that Austin is “tech savvy,” but once implemented the system was embraced. “When a customer had their last appointment before we set up the system and came back for the first time with it, they saw the difference. Customer satisfaction started to rise and so did the bottom line.” Pereira then moved on to Xtime Engage that uses a tablet to have instant access to menus, pricing, inspections, recalls, tires and service history. For that installation, Spectrum brought in a team to teach employees how to use it properly. “Teaching associates was easy but the set up has to be dialed in so tightly so that there is never a discrepancy in pricing. Set up was
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key and that check-in tool very much became a sales tool. It’s a wow factor with our customers.”
“When you have
that many people waiting for service so early in the day, it’s not a matter of if you upset a client, it’s a matter of how many and how badly.”
Pereira has very strict training with the advisors. For instance customers should never see the back of the iPad because the advisor should be looking at the screen with the customers to share information. “It’s a collaborative effort, checking in the vehicles, presenting additional recommendations. It’s not not just generic automotive tool but it’s a specific Honda tool.” Invite is a marketing tool that handles email campaigns and data mines to get information on certain segments of the customer base. It allows dealers to increase utilization and recapture customers. “It’s very easy to turn lapsing customers into very active ones with that product. And because we are regulating the service flow, we actually can accommodate more capacity,” he says. The first three products all were aimed at giving customers a predictable experience and even though the associates knew there was a problem, Pereira still didn’t know how well the software — and changes — would be embraced. He identified three service advisors whom he thought would be so negative that “they wouldn’t make it through, but I was wrong. There was a lot of nervousness on management because we were interrupting the normalcy. I was new and they didn’t know me and thought that I was another flashin-the-pan with the newest and greatest thing — just like others before.”
MAY 2016 Service Drive 17
Examples of three of Spectrum's products, including Invite (Upper Left),Service (top left) and Engage (bottom).
He also wanted to ensure that the software was user friendly so he had three eight-year-olds go online and make an appointment for an oil change for their parents’ cars. All three navigated the software and made the appointment in under two minutes. Then he had the children pretend they were employees and had them check in a customer. Again, a grand slam. His strategy was to aim for the early adapters and get them on board first. The other employees watched and essentially decided to “give it a shot,” he says. “The last part of the equation was the doomsayers and eventually they succumbed to peer pressure and embraced it,” he says. But even the naysayers eventually had that “aha” moment where they realized they could tell their customers something and mean it. “No one wants to make that 4:30 call to a customer saying that we couldn’t get to their vehicle and it’ll have stay in the shop until the next day. They realized they weren’t making those calls any more and carried themselves more proudly because of it.”
18 Service Drive MAY 2016
After the three products were introduced and had a high comfort level, Pereira brought in an inspection tool from Spectrum’s competitor and is looking into Spectrum’s product, Xtime Inspect, and he predicts he’ll switch over eventually. “To me, all the Spectrum products communicated well and are linked together and, with the results we’re getting, there’s no reason not to integrate the fourth product.” Not only is customer satisfaction rising each month, but so is employee satisfaction. The average tenure of his service employees is about 10 years so each has developed a large book of business. “Our customers all have our employees’ emails and cell phones so all this communication was taking place. It’s a breeding ground for problems. We no longer have a customer lounge with no seating. Customers know how long it will take to get their car serviced and we get them in and out faster,” he says. “Another benefit of this is that we are able to schedule our loaner fleet more efficiently as well, which our customers really like. We don’t have technicians standing around at 2 p.m. We couldn’t have increased our repair order by 14 percent without this system.” SD
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“A new dealership just opened close to me. How do I keep my employees, especially my service guys?” SAM, GAINESVILLE, FL:
Askthe
Pros:
Do you have questions? We have experts who can answer them. We have partnered with some of the top fixed operations consultants in the business who are ready, willing and able to share their knowledge and advice with you. All you have to do is email your questions to Newsroom@ ServiceDriveToday.com, and we’ll take care of the rest.
Tim James, COO of Flick Fusion : Absolutely. Service departments can benefit greatly from producing videos. Here is a list of videos that we recommend for service departments, along with their benefits:
1) Value Proposition. Many customers are afraid that dealership repairs will be expensive. A value proposition video addresses these fears by focusing on how your technicians are trained, the quality of repair work and trustworthiness.
2) Service Department Testimonials.
“I’ve heard that the latest air bag recall is different from the others. What’s going on?”
JACK, DAYTON, OH.:
Chip Magid, a partner at the international
law firm Dorsey & Whitney who works with clients to reduce their liability risks and to help them navigate the federal regulatory system :
to show that it is acting in the public interest and is not too cozy with industry. This recall expansion is another manifestation of NHTSA’s response to that pressure.
“How do you sell a customer on needing unexpected repairs during an inspection?” JAY B., BUTTE, MONT.:
Fixed Performance Inc. :
Here are some tips to sell needed services. The first thing to remember on a waiting customer is to have the additional recommendations from the multi-point inspection returned to the advisor in the first 15 minutes of the visit.
The inflators in some of the newly recalled airbags aren’t expected to degrade to the point of posing a safety risk for a decade or two. But NHTSA’s taking no chances, and has directed that all of the non-desiccated airbags be recalled by the end of 2019. NHTSA is under tremendous pressure from Congress
loyal customers.
3) Service Manager/Staff Introduction. People like to do business with people they like, so introduce your service manager and other personnel to potential customers. Videos convey personality far ers that they already know you. This increases their comfort level in choosing your dealership.
4) Service Department “How To." Select a dozen of your most common and profitable services. Create videos that talk about why they are important for the health of the vehicle and a quick tutorial of how the repair is done. This creates confi-
A typical recall involves products shown to pose an immediate risk of harm. This recall expansion is somewhat unusual, in that NHTSA has determined that a problem is likely to occur at various points in the future and is acting prophylactically.
than "we said." Create videos that feature happy and
better than a photo, creating a sense in your custom-
Rob Gehring, President and Founder of The recall expansion focuses on newer air bag inflators that don’t appear to pose a safety threat at the moment. But NHTSA (National Highway Traffic Safety Administration) has determined that the inflators will degrade over time – particularly in warm and moist environments. So Takata has agreed to recall airbags by region, starting with the warmest and most humid areas, where degradation will occur fastest.
In marketing "they said" is always a lot more powerful
Eighty percent of any approvals are in this time frame. After the customer waits they disengage and begin thinking about the next commitment on their time and only buy 10 percent of recommendations in the final 15 minutes of their visit. The percentage declines to zero if the suggestions come after the vehicle is pulled out of the shop. Involve the customer visually whenever possible showing them the concern. Using cell phone cameras showing leaks and needed repairs will improve approvals dramatically.
dence in the customer that they are making the right decision. Be sure to discuss the additional damages that can be caused if the consumer does not have each issue fixed immediately, the “time” it takes to complete each repair, any special tools needed for each repair, and potential damages that can be caused if the repairs are not completed properly.
5) Upsell. Finally focus on feature benefit selling explaining professionally what the customer’s needs are and how it protects their investment in their car and keeps them safe.
When customers drop their cars off for a scheduled repair, one of their biggest fears is an unnecessary upsell. A short video created by the service adviser can help to alleviate this fear and provide "visual proof" that a repair is really needed. A landing page that includes your Value Proposition, Customer Testimonial, Introduction, and a “How To” video along with the Upsell Video will also help the customer trust your service team and feel good about their decision to move forward with the additional service(s).
20 Service Drive MAY 2016
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“I have several customers who want our service department’s help in fixing old cars. One of them has a 1984 Chevrolet Monte Carlo and wanted to convert it to manual brakes. Can we remove my power brake booster and use the same master cylinder to make it manual brakes?” JAKE, SPRINGFIELD, IN:
tach them to the master cylinder (since it moves back a
I personally have a family to provide for and quite
few inches). Your brake pedal SHOULD have the correct
frankly, enjoy being happy so I like to project a happier
hole in it already to mount the pushrod for proper manu-
vibe. No matter what is going on at the dealer, ultimate-
al brake pedal ratio. That should be the bulk of the parts
ly your customers are your most valuable and precious
you need, from there it will be classic hot rodding “trial
commodity. So show it! When I have a client step into
and error” to get everything working smoothly. It may
my office, I am front and center! Smiles for days and just
be easy, it may not. You have to decide if it is worth the
be engaging. Even though behind the scenes may be a
time and effort.
little rattled at the dealer, please, do not let your client see that. They are not interested on how you get paid,
The bottom line is that when you want to change your vehicle from one configuration to another, start by
Brian Medford, Ask My Car Guys:
looking to see if your vehicle was ever available with that option during its production life. This works for brakes,
who is now running the place or who just got let go. They are there for one and one thing only, to get their vehicle serviced in the most enjoyable and convenient manner possible. And at a high line dealership, that is what they will always expect!
At first the idea makes sense. If the
transmissions, engines, rear axles, even seats. There is no
power brake booster is what puts
reason to re-engineer the vehicle when factory replace-
the “power” in power brakes, then
ment parts may be available that bolt right in and are
Now, I know when a dealer is in a state of re-
removing it should be the only step,
designed to work together.
cent change or "presumptive" turmoil, there is always
right? Not quite. The brake system is designed to work
going to be some uncertainty in the employees’ minds.
as a unit. Removing the brake booster would truly ren-
I must admit, I recently did briefly fall into that trap of
der the system “manual” but the effort required to stop
walking around with a frown, bad attitude and being
the car would be MUCH higher than you’d expect. This
unapproachable but I realized I quickly needed to look
all has to do with the size of the master cylinder bore
at the brighter side. Dealership executives are at an elite
and brake pedal ratio.
status for a reason. They obviously have been through
“We are a well established high line dealership which have recently undergone some management, procedure and income changes and seems to be effecting morale in the store and ultimately CSI. What are some of your suggestions to overcome these challenges?” SIMON, SAN DIEGO, CA:
So the short answer is: no, you cannot convert a car to manual brakes by just removing the power booster. But let’s dig a little deeper for a solution. The GM G-body vehicles (including Rob’s 1984 Monte Carlo) were built from 1978-1988 and included a LOT of vehicles:
•
Buick Regal (1978–1987)
•
Chevrolet El Camino (1978–1987)
•
Chevrolet Malibu (1978–1983)
•
Chevrolet Monte Carlo (1978–1988)
•
GMC Caballero (1982–1987)
Actually, our center is in a similar situ-
•
Oldsmobile Cutlass Supreme (1978–1988)
ation as yours. We recently acquired
Oldsmobile Cutlass Cruiser (1982–1983)
a new general manager, our service
•
Rian Locadia, Nalley BMW Service Consultant:
manager is relatively new and we also have a new ser-
Oldsmobile Cutlass Salon (1986–1987)
•
Pontiac Bonneville (1982–1986)
yes, a new pay structure! As most in general are nervous
•
Pontiac Grand Prix (1978–1987)
or uncomfortable about change, it is important to make
vice staff as well. There are new processes in place and
the best of the situation. I know that sounds like it is
standardized General Motors G-body platform, which means that a lot of the parts are mix-n-match. If you dig
today. As an employee being on the lower end of the spectrum, it may be hard to understand that at times but always remember, the executives make these drastic changes for the good of their business. We, as employees, are an essential part of the business. They have not made these changes to create “turmoil." These changes were put into place for profit. No matter how your pay plan, procedures or management may change, remember they are changes made for the betterment of the
•
This broad spectrum of vehicles were all built on the
many trials and tribulations to get where they are at
easier said than done but believe me. All the pieces will fall into place if you just "work the system" and embrace the changes.
business and ultimately for us as employees.
If you "work the system" in your favor, you will ultimately see that all of the pieces will fall into your lap and you will thrive. It will show in your production, your attitude, to your clients and ultimately your bank account. Change is not always a bad thing. And in the booming world of the automotive dealer network, there is no slowing down anytime soon. Just sit back, relax, smile and do what you do best. Your good positive attitude will spread like a wildfire, bring up your dealers morale and ensure a successful operation. SD
into the vehicle options from back then you will find that a few cars were available from the factory with manual
In my opinion morale can either be the biggest friend or
brakes.
foe at any establishment. I have worked in environments where the morale is so incredibly poor, you literally did
It looks like you will need a manual brake master cylinder (with reservoir), a factory pushrod from the junkyard (or an adjustable unit), and an adapter plate for the firewall (since the brake booster is mounted with four bolts, and the master cylinder alone only uses two).
not see a single smile all day. When this occurs, especially in the customer service industry, it will cast a dark shadow not only over the employees but also on our most valuable assets, our clients. This will then affect your customer service comments, scores and ultimately your customer retention and, of course, revenue.
You will also have to bend your brake lines a bit to at-
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MAY 2016 Service Drive 21
ESTABLISH A RECON
TIME-TOMARKET CULTURE FOR
THE NEW NORMAL A Time-to-Market culture won’t stick where a GM delegates adoption. BY DENNIS MCGINN
A
uto dealers are experiencing sluggishness in the new-car market and off-lease cars are washing ashore into used car departments in increasing waves. Both will dampen profitability and force increasing pressure on fixed operations to cushion the blows.
The new normal is upon us. In the meantime, new attention is being given to how the reconditioning department can be evolved into a profit center for the dealership. That would be a novel perception of this operation, which increasing us automation and numbers-driven management is creating some remarkable and uncommon returns out of this traditional and somewhat haphazard assembly line. An alternative in step with the times is to practice a Time-to-Market culture in your dealership that focuses on improving all recon processes – through recon, the service department, detail and sublets, to the used car manager and frontline – using lean manufacturing principles. We get into what some changes look like later in this article.
Let’s make money What a Time-to-Market recon culture does for a dealership is get acquired and traded vehicles frontline
Time-to-Market benefits the customer, service department and the dealership because it increases work flow without compromising quality.
22 Service Drive MAY 2016
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ready faster, within three to five days. Many dealers believe they’re achieving this efficiency with a whiteboard, spreadsheet, and other tracking methodologies, but the fact is when Time-to-Market workflow software looks, their actual recon cycle can be eight to 12 days or more! When you look closely at this process, you’ll see opportunity there – significant opportunity to flow eye-opening cost from the operation to your bottom line and outstanding opportunity to get vehicles frontline ready faster so you can retail them sooner and increase inventory turn – up to two additional turns per year! According to our 20 Group clients and moderator experts, daily holding cost for the average dealership is $32 per vehicle per day based on the franchise and market area, NCM Associates tells us. Here’s the math: Shave six recon days off 100 units and the savings accrue to more than $19,000 a month or $230,400 a year! Is that worth getting excited about? Go here (http://www.rapidrecon.com/holding-cost/) to calculate the numbers for your store. Eliminate 2.5 days from you recon cycle and gain one additional inventory turn.
Benefits For Your Service Department Here’s what Time-to-Market does for you: • It defines the work to be done to achieve a particular outcome – and who is to do what, when and how. • It identifies key steps in a process and helps determine which if any can be eliminated to speed workflow without compromising quality. • It assigns people having the right skill sets to specific tasks to ensure efficiency and quality. • It creates a smoother, faster workflow, relieving managers from having to focus on tasks. • It builds rhythm into work and creates crew confidence, so productivity increases.
2. Set spend preapprovals: Giving recon
“The reconditioning function within your dealership is a cost center or revenue generator, depending on how it’s managed.” Leverage Time-to-Market Best Practices Best practices dictate that a combination of mechanical (including inspection and parts hold) and detail must be two days or less. The body shop will likely add another day to 35% of your cars, taking 4.5 days average. Image inventory for online marketing and market online immediately. Set response standards for used car manager repair approvals. Identify how off-site sublet work is to flow into the mix – and set tight parameters for that work being done. Finally, organize your “new normal” recon processes around these steps:
1. Speed repair approvals: Improving communication between recon and the used car manager can reduce bottlenecks. Inability to approve a work order by the used car manager can delay the start of work from a few minutes to a few hours or more.
DENNIS MCGINN
Founder and CEO, Rapid Recon Dennis McGinn is founder and CEO of Rapid Recon, (www.rapidrecon.com) the industry’s most advanced time-to-market workflow tool for auto dealership reconditioning and used car departments. www.rapidrecon.com
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some level of authority to proceed with needed work without used car manager approval can keep work flowing uninterrupted. Consider assigning repair dollar “buckets” for vehicles of varying mileage – low, medium, high -- based on the mileage and repair averages of the vehicles you recon.
3. Structure phase times: Set a time
frame for accomplishing specific types of work. Vary times based on the condition of the vehicle. Monitor times and hold staff are accountable for adhering to them.
4. Compensate for vehicle completion time, not per vehicle: Focus compensa-
tion on a production-based measurement. A specified end time window per vehicle will stimulate parties involved to work smarter and harder to move units through recon in fewer days. Consider spiffs for meeting goals; when considering spiffs, remember the larger picture – reducing holding costs, and turns that improve gross.
5. Equip for quality and manage by the clock: Make no allowance for less
quality work, but beware of tendencies to over-condition. The additional recon cost is rarely recouped and often contributes little to the vehicle’s sales-ability. Pay attention to visuals such as dings and dents, scuffed wheels, cracks and chips in glass, and other blemishes that will catch a buyer’s eye before any mechanical issues might.
6. Get training: Specifically on the use and application of the reconditioning software you use. Preferably, this training is done at your site, driven by an experienced performance manager. Then, continue to reinforce best practices applications through team meetings and the review of performance reports. 7. Use report data: Measure each step within your recon process to establish new targets and to monitor and forecast progress.
The reconditioning function within your dealership is a cost center or revenue generator, depending on how it’s managed. Given that both time and cost can be taken out of the average reconditioning process and flowed to the bottom line improving structuring reconditioning processes and bringing to it both workflow volume and productivity helps convert any reconditioning department into a profit center for the dealership. SD
MAY 2016 Service Drive 23
Industrynews TODAY’S MOTOR OILS NOT MADE FOR AVERAGE-AGED U.S. VEHICLES
ITIC AND ZAPOTEC WORK ON SMART CHARGING TECHNOLOGY The International Transportation Innovation Center (ITIC) in Greenville, S.C. has signed a Memorandum of Understanding with Zaptec of Norway to mutually work on smart charging technology solutions for electric vehicles. Zaptec specializes in super compact power electronics. Its smart charging technology is widely considered an increasingly important technological component for the electronic charging industry.
A car of average age today needs more metal protection for its engine than it can get from standard motor oil. That’s because the average age of U.S. vehicles is currently 11.5 years old, according to research firm IHS Automotive, and all vehicles of that age and older need more zinc and phosphorous than current engine oils contain. Rislone® 3X Concentrated Engine Oil Supplement with Zinc Treatment is a cost-effective way to help modern motor oils better protect the metal surfaces of older gasoline and diesel engines, safeguarding internal components like pistons, flat tappet camshafts, lifters and the valvetrain. It works with all petroleum-based motor oils including conventional, high mileage and synthetic formulas. For older vehicles, Rislone 3X Concentrated Engine Oil Supplement with Zinc Treatment offers two ways to protect and lubricate moving parts better then oil alone. The first is high levels of ZDDP (zinc dialkyldithiophosphate) zinc and phosphorus additives. When put under pressure, ZDDP attaches to metal surfaces and becomes a sacrificial wear material, preventing the metal itself from being worn away. Copolymer esters are the second level of protection. They have an attraction for metal surfaces that allow modern oils to hold onto metal surfaces instead of running off as normally happens over time.
Zaptec intends to develop and expand its R&D and manufacturing activities in North America and chose ITIC as a strategic partner due to its unique ability to test smart charging solutions in closed test beds and in urban and non-urban open environments with smart grid and next generation communication infrastructures. The collaboration with ITIC also allows Zaptec to test innovations such as bi-directional charging, fast charging and wireless charging. ITIC has successfully demonstrated wireless charging solutions with other R&D partners and is planning a significant expansion of its testing capabilities in connected driving, automated driving and zero-emission driving. This is in direct response to the automotive industry's growing global investment in vehicle electrification, more intelligent charging processes, and smart city initiatives.
ROTARY LIFT® EARNS U.S. PATENT FOR Y-LIFT™ VERTICAL RISE PLATFORM LIFT Rotary Lift has received United States patent number 9254990 B2 covering two major aspects of the design of its award-winning Y-Lift™ vertical rise platform lift. These design features maximize rise speed based on vehicle weight, ensure a smooth rise and descent, and increase runway structural rigidity for more accurate measurements when performing alignments, especially on heavier vehicles. Rotary Lift’s Y-Lift is a drive-on hinged lift that uses a patented design and unique Y-shaped legs to provide true up/down lifting. With no forward or rearward movement to reduce valuable bay space, it has a compact footprint to fit in smaller service bays. Its namesake legs eliminate the need for scissor mechanisms and corner posts common to other lifts, so technicians have at least 20 percent more room to work, as well as full vehicle access from side-to-side and front-to-rear. It can be used for general service work (model Y12) and vehicle alignments (model YA12).
AIAG ISSUES A CALL-TO-ACTION FOR PORTAL THAT CONNECTS OEMS AND SUPPLIERS WHO HAVE LOST OR FOUND RETURNABLE TRANSPORT ITEMS. The Automotive Industry Action Group (AIAG) has created a new online portal to help connect OEMs and suppliers who have lost returnable transport items (RTIs) with those who have found them. The AIAG RTI Portal facilitates the process of locating lost RTIs (called orphans) and clearing them from the factory floor or warehouse where they were left. The goal is to save the industry time and money by accelerating the search-and-recovery process.
The first enhancement covered by the patent is an innovative and efficient weight-sensing electro-hydraulic control system that enables the Y-Lift to raise vehicles up to 50 percent faster than other scissor lifts of similar 12,000 lb. capacity, while using the same amount of electrical power. This system uses an infinitely variable displacement hydraulic pump and valves that are controlled by an electronic feedback system that provides quick and level rise and descent.
The patent also covers increased structural rigidity provided by larger tension bars. These bars actuate the front legs at the same rate as the rear legs to ensure the level rise/descent of each runway. These tension bars improve alignment measurement accuracy for heavier vehicles by providing a more rigid and level platform. The
Creation of the RTI portal is a direct result of the industry asking AIAG to develop a program for orphan containers piling up in their assembly plants and factories. The containers — which range from small to elaborate — cannot be re-used by the company that receives them because they are designed for specific parts manufactured by the container's owner.
24 Service Drive MAY 2016
bars also minimize downtime by improving accessibility to the hydraulic cylinder for easier serviceability.
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DOMESTIC GROUP UNVEILS NEW MOBILE COMFORT PRODUCTS
NONDA INTRODUCES ZUS FOR ROAD TRIPS AND SUMMER TRAVEL
Dometic Group, provider of mobile comfort products for the automotive industry, announced that its Commercial and Passenger Vehicle unit exhibited at the WardsAuto Interiors Conference in Detroit, Mich. At the conference, Dometic exhibited its luxury comfort solutions for automobiles and trucks, including heated and cooled thermoelectric cup holders, thermoelectric bottle coolers and compressor-driven fridge/freezers.
Nonda, a smart hardware startup based in Palo Alto, introduced its latest product, ZUS, which can charge phones and tablets at twice the speed of average car chargers as well as find your car even where there is no cell service such as a park. The USB car charger puts out a max 4.8 output and fully charges two iPads in 3.75 hours. Download the free iOS/android app to locate your car while the ElegantShineTM Lighting System provides great usability in dark environments. ZUS is the only USB car charger to meet US Military MILSTD-810G High Temperature Standard. It is crafted from the highest grade German Bayer PC with all metal parts coated in Titanium. Currently, ZUS has a 4.4 rating out of 5 stars on Amazon.com with 700 reviews.
“Refreshment solutions are an exciting new development in automotive luxury. At the WardsAuto Interiors event, we will showcase technology that can keep drinks and food chilled, frozen or heated on the go,” said Brian Berlenbach, Director of OEM Sales at Dometic. “Our design teams are pioneers in engineering thermoelectric and compressor-based refrigeration, smart energy systems and sleek designs that add value, style and comfort to passenger and commercial vehicles.”
NEW CHIEF® HEAVY-DUTY RIVET GUN PIERCES USIBOR® AND OTHER HIGH-STRENGTH STEELS
Among the products shown were • Thermoelectric Cup Holders. These cup holders, which take the place of conventional cup holders anywhere in the vehicle, are fueled by thermoelectric power that draws minimal power from the vehicle battery. • Thermoelectric Bottle Cooler. The same technology that fuels Dometic’s innovative cup holders can also provide cooling for larger bottles. The Thermoelectric Bottle Cooler can be installed in an SUV door, in the door map pocket, or in rear quarter panels. Drivers or passengers can chill a large bottle of water or soda, or even transport a chilled bottle of wine or champagne on the way to a social gathering. • Compact Compressor Refrigerator/Freezers. Dometic compact refrigeration systems can be used as a fridge-only or freezer-only unit (depending on where the thermostat is set). Providing cooling space for up to six 20 oz. bottles – depending on the size of the vehicle – they are ideal for individuals who travel extensively for work or for families on long road trips. Store multiple drinks, sandwiches or even ice cream. The robust compressor, which draws power from the car battery, ensures steady, even temperature while driving. Depending on the vehicle design, the Dometic compact fridge/freezers can be engineered to fit into front and rear floor consoles. They can also be accessed through a rear seat armrest, with mounting placed in the trunk.
HIGHLANDER PARTNERS' PORTFOLIO COMPANY SELLS EAGLE ONE BRAND TO HANDSTANDS Niteo Products, LLC, a portfolio company of Highlander Partners, L.P., announced the sale of the assets of its retail automotive appearance chemicals brand, Eagle One, to HandStands, a portfolio company of Trivest Partners.
Chief’s new Heavy-Duty Rivet Gun puts out almost twice the force of the company’s standard rivet gun, enabling collision repair technicians to use it to install rivets in even the strongest steels, including Usibor®. The Heavy-Duty Rivet Gun is approved by Mercedes-Benz. “The new Chief Heavy-Duty Rivet Gun was developed to meet Mercedes-Benz specifications, including being able to pierce Usibor,” explains Mickey Swartz, director of global product management for Chief parent company Vehicle Service Group (VSG). “This is our strongest rivet gun, with a compression force of 22,000 lbs. vs. 12,000 lbs. available from our universal PNP90 rivet gun. While our universal rivet gun can be used on virtually any current automotive application, the Heavy-Duty Rivet Gun is designed for the next wave of vehicles that will incorporate even more high-strength steel.”
The Chief Heavy-Duty Rivet Gun uses the same pneumatically driven hydraulic pump and pressure intensifier as Chief’s standard PNP90 rivet gun, but adds a few more built-in features. The Heavy-Duty Rivet Gun includes a retract feature and a dial to adjust the output working pressure. The mobile hydraulic tool not only outputs 10 metric tons of compressive force, it also gives 8 metric tons of tension force to hydraulically retract the punching tool from metal sheets at the push of a button. The dial provides infinite adjustment of the working pressure so the output force can be controlled to the desired level. With a small adapter set that reduces the output pressure, the Heavy-Duty Rivet Gun is backwards compatible to the PNP90, so shops that already have mandrels for the standard gun can use them with the Heavy-Duty version. The Heavy-Duty Rivet Gun can be used to install self-piercing or flow form rivets and to punch holes.
The Eagle One brand has been an automotive appearance pioneer for over 30 years, offering a full line of technologically advanced washes, waxes, protectants and accessories designed for better performance, more shine and enduring protection.
ServiceDriveToday.com
Because the Heavy-Duty Rivet Gun is larger than the standard model in order to deliver higher power output, Chief is offering it with a cabinet equipped with a boom to help reduce technician strain and fatigue.
MAY 2016 Service Drive 25
A TEAM APPORACH TO
F&I
IN THE SERVICE DRIVE How to Use F&I to Grow Income Potential BY JOHN STEPHENS
ments capping or shrinking dealer finance reserve.
C
oming out of the 2016 NADA Convention, one of the most discussed topics was the importance of F&I and fixed operations in a sales environment that has the potential to plateau.
Everyone from Roger Penske, chairman of Penske Automotive Group, to Bob Carter, senior vice president of automotive operations at Toyota Motor Sales, U.S.A., agrees that if the retail automotive market experiences a plateau in unit sales, the industry will need to focus their efforts on F&I and fixed operations to augment income potential. This is especially important given the current auto finance compliance climate, with lender settle-
Missed F&I Opportunities in Used Sales In addition, dealers are coming to the realization of a missed opportunity in F&I within their used vehicle sales, as manufacturers of some of the top selling used vehicle makes are changing their warranties to reduce terms based on either the model year, or the current owner. For example, Chevrolet has changed its powertrain warranty 2016 model-year vehicles, reducing the coverage by 40,000 miles. This type of change is prevalent in domestic brands, like General Motors and Chrysler. Among Asian brands, the manufacturer’s powertrain
warranty changes based on the current owner. For example, Hyundai’s powertrain 10 year/100,000 mile warranty only covers the first owner. The second owner only receives a 5 year/60,000 mile warranty. Combined with the potential unit sales plateau and regulatory environment, this is creating an opportunity for dealers to increase their F&I profit margin by addressing a growing exposure risk and pressing consumer need. The good news is that F&I and fixed operations have the potential to work well together to exponentially increase dealership profitability, regardless of economic or compliance pressures. Starting in F&I, consumer protection product sales have the potential to directly correlate with service drive
“The customer service provided during the claims process can have significant impact to your brand and your customer retention levels.” 26 Service Drive MAY 2016
ServiceDriveToday.com
traffic. For example, most everyone knows the benefits of a vehicle service contract (VSC) driving people back to the service department in the event of a major mechanical breakdown. That’s part of the reason why VSCs are widely considered table-stakes. However, there are a plethora of other consumer protection products that can be just as effective at driving traffic and repeat business, as they directly relate to current consumer challenges. According to research firm IHS Automotive, the average age of vehicles on the road in the U.S. has climbed to 11.5 years. Consumer ownership trends have permanently shifted in recent years to longer loan terms and longer ownership cycles.
Putting Customers First Today’s consumers are demanding more value from the brands and companies to which they choose to give their business. This has resulted in shifts in servicing models in almost every industry in the U.S., from transportation to technology and retail services. Now, the retail automotive industry is undergoing significant change, and those dealerships that face that change head-on will find themselves leading the industry in the years to come. One of those changes is in the F&I space to provide consumer protection products that consumers and dealerships find beneficial. According to Melinda Zabritski, Experian Automotive’s senior director of automotive credit, “getting the most out of the vehicle they purchase still appears to be top of mind for consumers.” Everyone knows that F&I managers are now faced with a more informed and demanding consumer. But, what few have taken into consideration is that this could be a good thing. With consumers hyper-vigilant about stretching their dollars, and getting more value from the companies with which they choose to do business, dealerships have the opportunity to create lasting relationships by aligning with their needs.
The consumers sitting across from the F&I manager know what it takes and the difficulties involved in maintaining older model vehicles. Imagine talking to a consumer who has dealt with three or more costly vehicle repairs within a single year. While they are concerned with current-model dependability, they still expect to keep their vehicles longer than historically normal.
Know Your Customers’ Needs By structuring your F&I products to meet their current needs, you can significantly enhance your dealership’s brand and generate lasting consumer relationships. Of course, this starts with knowing your customers. Before shopping around for a new product menu, it’s important that dealerships conduct the research to understand their customer base. Research the demographics in the area where the dealership is located. Evaluate the top-selling vehicle models and the price points at which they are sold. Compare those top-selling models to their service drive history. Is there a function that needs addressing sooner or more often? Do customers who purchase these vehicles tend to be concerned with trade-in value? This research can provide a general picture of a typical customer and where their needs lie. With the sheer number of F&I products available, it is vital that dealerships take their customers into consideration before tailoring a menu. This helps product sales and demonstrates to customers that their needs are put first, alleviating any concerns in the F&I office. In addition, by consulting with the service department, dealers can better determine which products will have a higher claims rate than others.
The F&I Product Menu Other than a VSC or GAP policy, some of the most common F&I products include: • pre-paid maintenance; • tire and wheel protection; • paintless dent repair; and, • paint and interior protection.
Each of these products has the potential to increase service drive traffic, and provide beneficial protection and services to both lease and finance customers. Although to truly be effective, their benefits need to be adequately presented to customers so they know what they are purchasing.
While consumers are looking to stretch their dollars, dealers can use this to create lasting relationships, which will be profitable for all.
ServiceDriveToday.com
MAY 2016 Service Drive 27
For example, with pre-paid maintenance, which potentially has the greatest opportunity for service drive traffic, customers have the ability to avoid the rising cost of oil changes and routine maintenance by paying for them in advance and at a reduced price. In addition, by utilizing prepaid maintenance, customers are better able to meet manufacturer requirements to keep warranty coverage, and keep track of vehicle maintenance records with automatic record keeping. In addition, customers have a better ability to negotiate their trade-in with a well-maintained vehicle. With tire and wheel protection, paintless dent repair, and paint and interior protection, customers have the ability to protect their vehicle from environmental factors, such as road hazards, small-but-visible body damage or paint/fabric fading from exterior elements. With these three products, customers can again help preserve their vehicles resale value, and ensure they have a safe ride. If a customer knows all the benefits and that the product is meant to be used, why shouldn’t they return to the dealership to use it? According to NADA, regular service customers are 17 times more likely to buy their next vehicle from their servicing dealership. In addition, an increase in customer retention rates of just five percent improves dealership profits by 35 percent. Now, there have been examples in the past of a few F&I managers skimming over benefit presentations or packing F&I product payments into an auto loan. Other than significant compliance ramifications, that practice also hurts overall dealership and service drive profitability, for when customers don’t even know what they have, they are less likely to return to the dealership to use the product.
“By structuring your F&I
products to meet their current needs, you can significantly enhance your dealership’s brand and generate lasting consumer relationships.” • provide training and one-on-one coaching with your F&I and sales managers on the benefits of the products, how to sell them, and how to overcome objections; • work with dealership management to implement incentivizing pay plans based on training and performance; and, • are transparent with the company’s administration practices, including call handle times, number of claims paid, average claim amount paid, speed of payment, industry experience and certifications.
The customer service provided during the claims process can have significant impact to your brand and your customer retention levels. The better the service provided, the better experience the customer associates with your dealership, and vice versa. That is why it is vital that dealerships work with product administrator’s whose business practices and values are aligned with their own.
Product Utilization If dealerships are struggling with F&I product sales, or product utilization in general, it could be due to not having the right mix of products in place, lack of product training, ineffective compensation incentives, or poor handling of product claims and negative consumer service from the administrator. Each of these areas work hand-in hand. Effective product administrators: • are nimble in developing products that can accomplish your business goals by meeting your customer needs;
Dealers have the opportunity to cultivate long-term repeat business and referrals by evaluating how their F&I department can better serve their service drive with relevant and valuable products. By implementing an F&I menu that is tailored to your customer base and backing it up with effective training and compensation models, along with effective product administration, dealers have practically unlimited growth potential from F&I and the service drive. So, whether vehicle sales level out or more lenders begin capping finance reserve, those dealerships that invest in their F&I and service drive departments now, will be better able to meet their profitability goals without putting excessive stress on their dealership. SD
JOHN STEPHENS
Senior Vice President of Dealer Services at EFG Companies As senior vice president of Dealer Services at EFG Companies, John Stephens directs the company’s direct sales and service channel, providing EFG’s solutions and engagement to auto dealers. John serves as a strategic copilot in guiding his clients’ businesses to greater profitability, and they will tell you that they rely upon his recommendations and leadership as a trusted partner. He is responsible for leading the Dealer Services team in optimizing the profitability of EFG’s direct dealer partners and supporting the use of EFG products and services. In his 25 years in the automotive industry, John has held many positions, from F&I contractor and director to a general sales manager. When working for Mac Haik, his store ranked number seven in the nation for unit sales.
28 Service Drive MAY 2016
ServiceDriveToday.com
IT'S 7:59:
ARE YOUR
Service Advisors PREPARED? Start Your Day Right — Before it Starts BY PAULA BLISS
I
answer is often yes. There is usually that one service
If this hits close to home, it is time for some coaching
advisor who arrives just before opening, is ill prepared
on preparation and time management. Chances are the
and seems to just catch up by lunch, if then. The impact
advisor is like this in his personal life and this is a normal
on your customer and your profit are significant!
way of existence for him. As a service manager, you must recognize this and be able to coach the advisor to
Show your Customers You Appreciate Their Time
build his work habits even though he may never change
clipboard and announces he is ready as he heads into
For many of our guests, perception is reality. The lack of
need to help the advisor to develop the process to be
the service lane to greet his first customers of the
preparation, the rushing around, the lack of follow-up
t is 7:59 a.m. and the service lane opens at 8:00 a.m. The advisor rushes in, pushes the start button on the computer, throws his coat on his stool, grabs his
his overall disorganization skills. Remember that this behavior is deeper than just his actions at work and you prepared for each day.
day. He rushes through the walk around and takes the
and the delay in getting to their vehicles are open
customer to his desk where he has to log into all of his
displays of how we were not expecting them and that
accounts while he apologizes for the delay by telling his
we do not appreciate their time and promptness. The
customer how slow the “system” is.
rushed “walk around,” or lack of one, does not allow for
Here are a few easy tips on how to start moving in the
proper communication with the guest and eliminates
right direction:
Are the customers waiting … and waiting?
the opportunity for any proper sales presentation. The
As he waits for the applications to load, he moves the
to an “active delivery” and definitely did not include
three drop off envelopes aside to get to next. As he
addressing any future service needs.
now works with his first guest, another one arrives and
Finally, for those unfortunate drop-off customers that
he waves and says he will be with them soon. The first guest reminds him they are supposed to get a loaner vehicle and they need to get to work. It is now 9:30 a.m. and the advisor has made it through the early appointments and even “walked” two waiters. It is time to get to the drop offs, even though one of the customers has already called to find out the status of their car. Does this sound familiar? Do you have one or more of these advisors in your service drive? Does this hurt your customer experience and affect your profitability? The
hurried delivery to the waiters lacks any resemblance
Let’s Move in the Right Direction
• Practice things such as pre-writing repair orders • Conduct a scheduling review the day before • Prepare loaner vehicles and alternate transportation ahead of the guest’s arrival
were not even written up until almost lunch time, they
The list goes on, but the key is that this type of advisor
will have to wait for any information because the shop
will not correct these issues alone. It will take active
is already busy from the morning load that was written
participation from the service manager. The sooner the
up on time. Despite the extremely negative impact, it
better! Your CSI, customer retention, profitability and
is surprising that this scenario exists in many service
service lane reputation depend on it! SD
departments and is allowed to continue.
PAULA BLISS
Director of Business Development at M5 Management Services Paula has over 30 years of experience in the automotive industry, with over 16 years in fixed operations training and consulting. Her entire automotive career was with General Motors, a majority of which was spent as a training program developer and instructor of parts and service non-technical training programs. She was also instrumental in training and ultimately managing GMs first ever field team of fixed operations consultants. She has extensive knowledge and experience in Organizational Development/Organizational Change Management (OCM) methodologies. Paula’s passion lies in training & development for fixed operations dealer personnel. Don't let ill prepared service advisors clog up the system and put extra work on technicians.
ServiceDriveToday.com
MAY 2016 Service Drive 29
SEATTLE DEALER
FIGHTS Creating
SERVICE CUSTOMER FLIGHT
With Price & Value
TRANSPARENCY KEEPS SERVICE CUSTOMERS FROM STRAYING BY MARY WELCH
purchased the car from is the right place to get service than over at an independent? And know you’re not going to pay any more with us than elsewhere? It’s a hard thing to overcome even if they had a great sales experience.”
N
eed a four-wheel alignment or cabin air filter replacement but am not sure the dealership will give you the best price? Don’t worry. At Carter Subaru Ballard in Seattle, Wash., their prices as well as their competitors’ are on its website.
Sometimes they are cheaper. For instance a synthetic oil and filter change costs $69.95 using genuine Subaru OEM parts at Ballard versus $84.95 at Jiffy Lube using non-factory aftermarket parts. Sometimes it’s a bit pricier. A battery replacement costs $137.35 versus $125 at the same Jiffy Lube or even $129.99 at Firestone.
Kristina Kelley, service manager at Carter Subaru Shoreline, says one way is to do the price comparisons for their customers. “We decided to be completely transparent. We have nothing to hide. I don’t look at our competitors’ websites and say we’ll do
this job for $4 less. But I do see that they wait for me to put something on our website and will try to match or be less.” Kelley points out that it’s not about being cheaper. “We could be at any price, but if you’re not providing value, who cares? You’re willing to pay a price for the service that’s behind it. From my perspective our number one job isn’t just selling cars; it’s to build a service-based company. Why are you going to buy a
Carter Subaru emphasizes value over price, but having competitive prices -- and being transparent about the pricing -- helps bring customers back to the service department.
“Our biggest challenge in today’s climate is competing against the independents. It’s trying to convince our customers that our value is greater even if our prices are the same,” says Jennifer Moran, executive manager of Ballard. “The perception that you fight is that people could get better service elsewhere, and for less. We don’t ever view our competitors in the same brand as our competition; it’s always the independents.” Moran, who has been at Carter Motors since 2007, says price perception is hard to overcome. “How do we convince our customers that the dealership that they
nice car and then spend $14.99 for the cheapest oil?” She admits that their website comparisons are not the industry norm. Not only do they run comparison pricing but they offer parts and service specials and coupons. They also run entertaining videos on common maintenance items and operations such as brake repair pods and rotors, battery replacement and checking engine air filters. For those who don’t understand
“We could be at any price, but if you’re not providing value, who cares?” 30 Service Drive MAY 2016
ServiceDriveToday.com
about proper maintenance of such items as windshield wipers, shocks and struts and brakes, there are easy-to-understand that explanations that should be the extra impetus needed for a customer to make a service appointment. “We aren’t an anomaly. But again, we tell our customers our goal is a fair price, not the cheapest. We’re also not afraid to answer questions about cost from people on our website,” Kelley says. “People are looking for prices and services on websites and they should. I do everything on my iPhone and I assume everyone else is as well.” The women say they’ve taken this aggressive, transparent stance for about two years now especially when they realized that dealers are selling parts to the independents at wholesale prices. “Who’s winning here,” Moran recalls asking. “And, it wasn’t us.”
Kelley has worked at Carter for 5 years, and says she’s never seen anything like the customer loyalty the dealership gets. “It’s family owned and people know
tion. For a long time no one outside the Northeast and Northwest was interested in a Subaru.” Jennifer admits that she knows that a relationship with the service department should start the day a vehicle is purchased. “I know the sales team should escort the customer to the service department where he or she can see our department and maybe even set up an appointment for the first check-up” she says. “But that’s in a perfect world and we don’t live in a perfect world. I don't want pretend that we’re great at doing that but we just try to put our best foot forward. It certainly benefits the customer and us if they are introduced to the Service Department at the point of purchase. The dealership does regularly communicate via email, phone calls and mobile apps about when service is due and available times.
“How do we convince our customers that the dealership that they purchased the car from is the right place to get service than over at an independent? And know you’re not going to pay any more with us than elsewhere?”
Every since the recession ended, the service business has increased year over year. They acknowledge that part of it is the Carter brand, which has been a fixture in the community since the 1960s. Wade Carter III opened his first dealership, a Volkswagen in Seattle in 1960 and Carter Subaru in Shoreline in 1976. In 2009, Carter Subaru in Ballard opened its doors. Wade Carter III passed away in 2001 in a helicopter accident and his son, Wade Carter IV and daughter, Sara, took over ownership. Overall there are 220 employees (full and part-time) and there are 27 service bays in Ballard.
ServiceDriveToday.com
“If I were really being honest and giving one answer about why we’re so successful, I would say it’s the Carter reputation,” says Moran. “They’ve been here for an awfully long time and have been paying it forward in our community for a long time. We give and our customers give it back to us. Sure, it helps the business getting our name out, but it’s really the right thing to do.”
the family. They know we support a lot of things — women’s professional basketball, the zoo, and a lot of environmental issues. We plant a tree for every test drive and three additional ones with a purchase.” Also helping the dealership is the increased popularity of Subaru. “We’re selling more cars,” says Moran. “Subaru has always been popular in the Northeast and in the Northwest, but in other parts of the country, particularly the Sunbelt states, they’re suddenly selling and there’s an increase in sales and market penetra-
Regardless of whether its web presence, the reputation, the increased interest in the brand or its price transparency, it’s working. About 50 percent of those who purchased vehicles at the Shoreline location return to get them serviced there. “Our corporate goal is even higher,” Kelley says. Let’s face it, Moran says, “Cars are better made than ever before. They’re not breaking down like they used to, which is good. They don’t need maintenance as frequently as even five years ago, so we have to be better than everyone else, and provide unprecedented customer service, or we will not retain that customer.” SD
MAY 2016 Service Drive 31
ON THE SET WITH
Rob Gehring of Fixed Performance with Joe Gumm of Service Drive Today.
Mike Haeg of CarWars.
Ed Jolliffe of Gorno Ford.
Erik Nachbahr of Helion Automotive Technologies. Joe Gumm of Service Drive Today.
Don Reed of Dealer Pro Training.
Gary Kalk of Dealer - FX.
Jeff Cowan of Weekly Tune Up.
John Faris of Enterprise.
John Fairchild of Fairchild Automotive Solutions with Joe Gumm of Service Drive Today.
Kevin Grant of Desert 251 Superstore with Joe Gumm of Service Drive Today.
32 ServiceDriveToday.com Service Drive MAY 2016
April Rain of Digital Rain.
Scott Pechstein of Autobytel with Jim Fitzpatrick of Service Drive Today.
Kathy Kruze Social Media and Digital Marketing Expert.
ServiceDriveToday.com APRIL 2016 Service Drive 1
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