AutoSuccess Service March/April 2016 by AutoSuccess

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The foundation of the Auto/Mate customer relationship: a two way, mutually beneﬁcial relationship with the dealer's best interest at heart.

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CONTENTS

20 DaveDavis

GAIN $30, LOSE $2,000: Customer Loyalty and the Pleasant Surprise

“Since I didn’t but the tires there — they came with the car — and I had no ‘road hazard’ warrantee agreement with the retailer, I expected to pay to have it fixed. What I didn’t expect was being told ‘No charge — just remember us next time you need tires.’”

21 DonReed

AN ENEMY CALLED AVERAGE

service training solutions 06 JeffCowan

THEY ARE CALLED “CELL” PHONES, NOT “SELL” PHONES

“Personal cell phone calls and texting while on the job have gotten out of hand. Even taking business calls and texts is rude if you are already talking to another person in a business situation.”

08 ClaireGarstka

WHY WOMEN MATTER

Brian Ankney, Account Manager brian@autosuccessonline.com

“If you are a manager, how about you set a meeting with the dealer and say, ‘Boss, I just wanted to let you know that I think you are an average dealer, so I’m going to give you an average effort today so I can produce for you some average results and manage my average department.’ I bet nobody is taking notes on this one.”

Dave Davis, Editor & Creative Strategist ddavis@autosuccessonline.com

17 AndyTyriver

“By accepting a woman’s business, you are committing to help find her personality through a car. Her purchase is not only a financial decision, but also an emotional one that leads to a lasting relationship.”

THREE PRICING STRATEGIES TO BOOST PROFITS IN THE PARTS DEPARTMENT

“The good news is it’s not only possible, but actually pretty easy to increase profitability in your parts department.”

service marketing solutions KevinBradberry HOW TO FIND AND HIRE AUTOMOTIVE TECHNICIANS IN AN 12 AGGRESSIVE AND COMPETITIVE MARKET “... you must have that candidate begin the interview process within 24 hours of their initial application. Honestly, 24 seconds would be preferable for first contact. Just know that you begin losing candidates exponentially every 24-hour period.”

16 TimJames

FIVE TYPES OF VIDEO TO USE IN YOUR SERVICE DEPARTMENT

“As dealers explore video marketing strategies to help them sell more cars, it’s important not to overlook potential applications in fixed ops.”

TomLaPointe HOW TO “POWER-UP” YOUR COUNT WITH LIVE CHAT: Three Critical Tips to Boost Sales Without Killing Them “With a typical dealership Website, 60 to 75 percent of all visitors never return, so chat helps reach out and engage them just as it does on the lot and the service drive.”

Hannah Philpott, Media Director hannah@autosuccessonline.com

14 KenRock

2300 Hurstbourne Village Dr, Suite 1200 Louisville, KY 40299 / p 877.818.6620 / f 502.588.3170 / AutoSuccessOnline.com/AutoSuccessPodcast.com / info@autosuccessonline.com

Thomas Williams, Creative Director design@autosuccessonline.com

leadership solutions

AutoSuccess Magazine is published monthly at 2300 Hurstbourne Village Dr, Suite 1200 Louisville, KY 40299; 502.588.3155, fax 502.588.3170. Direct all subscription and customer service inquiries to 877.818.6620 or info@autosuccessonline.com. Subscription rate is $69 per year. AutoSuccess welcomes unsolicited editorials and graphics (not responsible for their return). All submitted editorials and graphics are subject to editing for grammar, content and page length. AutoSuccess provides its contributing writers latitude in expressing advice and solutions; views expressed are not necessarily those of AutoSuccess and by no means reflect any guarantees. AutoSuccess accepts no liability in respect of the content of any third party material appearing in this magazine or in respect of the content of any other magazine to which this magazine may be linked from time to time. Always confer with legal counsel before implementing changes in procedures.© All contents copyrighted by AutoSuccess Magazine, a Division of Systems Marketing, Inc. All rights reserved. Reproduction in whole or part is prohibited without express written consent from AutoSuccess. AutoSuccess may occasionally make readers’ names available to other companies whose products and/or services may be of interest; readers may request that names be removed by calling 877.818.6620. Printed in the USA. Postmaster: Send address changes to AutoSuccess Magazine, 2300 Hurstbourne Village Dr, Suite 1200 Louisville, KY 40299.

Susan Givens, Publisher sgivens1@autosuccessonline.com

on the cover - see page 10

service training solution president of Jeff Cowan’s Pro Talk | jcowan@autosuccessonline.com

JeffCowan

THEY ARE CALLED “CELL” PHONES, NOT “SELL” PHONES When I was growing up, there were many rules in our house. There were some important rules that you never tested, let alone break, and then there were those you could occasionally test with little or no repercussions. But one rule that we never, ever broke was the “Don’t call Mom or Dad at work” rule unless it was an emergency — an emergency meaning one of us kids was dead or dying. Calling to complain that my brother was hitting me only lead to me being hit more once my parents got home. You never, ever called the parents at work — period. And you know what? We survived. I was reminded of this seemingly forgotten rule recently as I was boarding an airplane. The flight was running about 30 minutes behind schedule. It was the end of a long day and everyone just wanted to get on board and go. Things were progressing along fine until, about halfway through the boarding process, we were all stopped so the gate agent could take personal cell phone call from her son. Apparently, he was instructed to contact his Mom once he had made it home from school. Needless to say, this did not make anyone in line happy, as many of us had connections to make at our next stop and, if we were held up much longer, we risked missing those connections that would get us home to our families. Now, don’t get me wrong. I have kids, and I understand the need to make sure they are where they are supposed to be and to know that they are safe. But if you are working, arrangements should be made for someone else to take that call (i.e. neighbor, sibling, friend, etc.) and, as my parents used to assume, no call from them means there is no emergency at home, no one was dying or dead and everything was fine. For that gate agent to take that call was unnecessary, rude and highly unprofessional.

It’s not just that one episode, either. This is happening more and more in what seems to be in every aspect of life. It happens when I am at restaurants, the theatre, at the convenience store, the shopping mall, when talking to family members and on and on. It seems the only time this doesn’t happen is when I am talking to my dogs. They seem to be the only ones left on the planet that can or want to give me their full

attention — but that’s probably because I’m the one who feeds them, now that I think about it. Personal cell phone calls and texting while on the job have gotten out of hand. Even taking business calls and texts is rude if you are already talking to another person in a business situation. As a minimum, let’s take a look at this situation from a selling standpoint. If you are working with a customer and, during that time, you answer your cell phone, text or even look at your phone, here is the least your customer will think: 1. This salesperson is rude. 2. This salesperson is not interested in me. 3. This salesperson does not care about my concerns. 4. This salesperson is too busy for my business. 5. This salesperson is not organized. 6. This salesperson’s business is understaffed. 7. If I don’t have their full attention when they are trying to sell me their product, how much of their attention will I have after I buy? 8. I am in the wrong place. 9. If you want my business, I want your attention. Even worse, whenever you are working with a customer and you take your attention away from them, you are now allowing the customer to take control of the sale. If you are not giving them your full attention, then they will continue to examine your product and make decisions based on information they do not have because you were not there to give it to them. And, most of the time, their decision will be to not buy what you presented, but only

what they originally asked for — if anything at all. Any time you take your attention away from the customer, for any reason, and allow them to consider your product without you there to guide them, your closing percentage will drop off by 95 percent. Work the deal, customer or situation you have in front of you, and you will experience infinitely more success. The person on the phone is only a possibility; the one in front of you is reality. I believe every business and salesperson should implement the following rules: 1. No personal calls or texting unless you are on a break and out of view of your customers. 2. No personal calls or texting during working hours unless it is a true emergency. 3. During working hours, all personal calls should go through the main switchboard. 4. No personal cell phones are allowed on the service drive/sales floor — period. 5. When a salesperson is talking with a customer in any manner, they are not to have an interruption of any kind until that sales situation has ended and the customer is out of the area. In closing, let me share with you how far I have personally taken this. When going to a presentation, my phone is shut off and is in my briefcase until the end of the meeting and I am out of my customer’s sight. When I go to a lunch or dinner meeting, my cell phone is off, in my pocket and not turned back on until the meeting is over and the customer is out of sight. It has even carried over to our home. No cell phones at the dinner table or during other family events. Bottom line: It’s time to stop being rude to the people that mean the most to us — family, friends and customers — and start appreciating and taking care of what is right in front of us. After all, isn’t that where most of the things we seek are, right in front of us?

Your Next Best Customer is Sitting in Your CRM

Call Today 443-345-5049 or Visit leadigniter.cactusskydigital.com

service training solution

WHY WOMEN MATTER In 2012, a survey conducted by Auto MD stated that 85 percent of women dislike going to a car dealership more than going to the dentist. The survey also found that 83 percent have felt overcharged for services at a dealership or repair shop. Currently, women are responsible for close to 60 percent of all final purchases on a car lot. This means that dealerships must familiarize themselves on the needs and characteristics women possess in order to successfully build a relationship with them. What can you do to make this experience more enjoyable for your female customers? Understand The Relationship

Providing service to your female customers starts with understanding and acknowledging the relationship women have with their vehicles. The car a woman purchases is seen as an external representation of her personality. This relationship is very different than it is for male customers; it involves a deeper emotional pull. Although men are very emotionally connected to their vehicle, women tend to see the personality extension prior to even stepping on a car lot. Focus on feelings and brand value when making a sale to a woman.

DOES YOUR FIXED OPS ENGINE NEED A TUNE UP? Complete a Multi-Point Inspection of Your Fixed Ops Department: q Are this year’s Fixed Ops Profits higher than last year’s? q Has your Customer Pay Repair Order count grown 10% or more this year? q Is your CSI above Zone Average? q Are you averaging at least $125 per Visit us in Q-Lube RO? NADA B ooth q Have your CP Hours per RO #2367C increased by .3 hr over last year? q Is your Service Absorption growing?

How’d you do? If you answered NO to ANY of these questions, you need DealerPRO to inspect and diagnose your Fixed Ops process and hidden profit opportunities. We’ll come to your dealership to perform a FREE Profit Potential Analysis and deliver a Profit Improvement Plan—all at no obligation.

www.dealerprotraining.com

ClaireGarstka

vice president of sales & marketing for Colors on Parade | cgarstka@autosuccessonline.com

When it comes to service, 88 percent of women trust the advice they are given about what’s wrong with their car a majority of the time. However, 60 percent of frequent service users believe they know more about their car than the mechanic gives them credit for. Women conduct research heavily through the Internet and social media, followed by word of mouth and traditional media. This decision is not entered into lightly. Assume your customer is well informed and has made the right decision by choosing your dealership. By accepting a woman’s business, you are committing to help find her personality through a car. Her purchase is not only a financial decision, but also an emotional one that leads to a lasting relationship. Provide Inviting Environment

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Kickoff 2016 with a plan that works! 1.888.553.0100

dreed@dealerprotraining.com

Approximately 50 percent of women use a private mechanic, versus 40 percent who use a dealership. If dealers want to see more female customers for service, they may need to change the way they present their business. Local private mechanics tend to have a more personal relationship with their customer versus a dealership that sees hundreds of different people a week. These relationships take time to develop. For an immediate return, a dealership should consider creating an environment that is comfortable and inviting to the female customer. Making small changes to your environment, such as setting the television station to a neutral or female-friendly channel, offering current magazines that are non-automotive and having a staff who is friendly to females are just

a few ways to start. Some dealerships have even added computer labs, kid play areas, soft music, free snacks and exercise equipment. Keep in mind that women are influencing car decisions even if they aren’t the ones buying. Having an environment that is conducive to their needs makes women feel that the auto industry values their time and money just as much as a man’s. The environment extends past the building and into the dealership team. Your vendors and the people on your lot should reflect the same values of excellent service to female customers. Often, this includes adding more female staff and vendors to the crew. Many times, a female consumer will feel most comfortable when surrounded by people like her. These women are valuable assets because they know what techniques best appeal to their fellow clientele. Currently, only 15 percent of the employees in the automotive industry are female. In addition to adding staff, educating current team members is also a great step in the right direction. Some helpful resources for training could include Women’s Automotive Association International (WAAI), NADA and AskPatty.com. A few female-friendly partners could include: Colors on Parade, TrueCar, Cox Automotive and ALLY. Respect The Customer

Most people dislike a visit to the car dealership, but women seem to dread it more. A survey led by Jabian Consulting showed that 26 percent don’t feel they are treated equally to a male customer. Women may “only” be making 60 percent of the purchases, but they are influencing more than 80 percent. Keeping these statistics in mind and making sure women feel included in the process of purchasing a car or taking it to get serviced is crucial. If a couple comes together to a dealership, the woman should be treated with the same respect the man receives from the staff. In order to ensure you are providing a positive experience to all your customers, you should make sure they are all receiving the same amount of respect and sincerity on the lot. Even the simple act of shaking a woman’s hand goes a long way, as it commands the same respect a dealer would give to a male customer they encounter. The stigma of women getting taken advantage of on a lot is still a common notion. Treating women with respect is the No. 1 way to best service this customer consistently. Women have been changing the game for the auto industry for years now. When you consider the fact that, as of 2010, the number of female drivers in the U.S. surpassed the amount of male drivers by 105.7 million to 104.3 million, it really puts things into perspective. It is time for dealers to embrace the new auto customer and make them feel at home in their car again. 09

“OUR DEALERSHIP AND OUR TEAM HAVE GROWN

1,500 PERCENT ” IN THE LAST FOUR YEARS.

their team before you can ask them to really care about every customer experience and to do the things necessary to improve retention. Merchants Auto was not always the place you see today. Half a decade ago, I came home from work one night discouraged and expressed to my wife my frustration with the negativity I felt in the dealership. She saw through my frustration to This is the story of a family-owned the underlying problem and said dealership in a town with a popusimply, “Change it.” The next day, I lation of 20,000 that reached 2,700 returned on a mission to change to 2,800 retail units for the year and the very culture of the dealership 1,600 ROs per month in 2015. We and from there on, we never looked are forecasting more than 3,000 back. I read The Energy Bus by retail units in 2016. We now have John Gordon and used his ideas to 18 service bays that are open seven transform the dealership. In order days a week and employ 20 techs. to get our team “on the bus,” we Did I mention we don’t have a single gave copies to every employee and franchise? made it mandatory that they read When I joined the Merchants Auto and understood the material. They team, we faced a major challenge did, and this laid the foundation for that we needed to overcome before the dealership team you see today. we could even begin to consider a Even now, reading The Energy Bus customer retention program. You is a prerequisite to employment at can’t retain your customers until Merchants. Every person in the dealyou retain your people. And more ership — from the service porters to importantly, your people need to the sales manager, from the service be happy and positive. They need manager to the cashier — is looking to care about the dealership and every day for opportunities to grow

and get better. We started our “Merchants for Life” retention program in January 2015 with a value proposition at the point of sale. Our package includes a three-year, 36,000-mile warranty, lifetime inspection and car washes for life. This program feeds our sales customers into our service department seamlessly. Customers must use our service department for maintenance to get the warranty. In the third and fourth quarters, we really saw our RO counts increase due to the new program. The second and third service visit is where we are seeing consistent opportunities for revenue increases. Getting started was simple. We really didn’t face any major hurdles, and implementing the Merchants for Life program was easy for our team because we had already built the culture needed to focus on the customer experience and retention. We just needed the guidance, processes and consistent coaching to be successful. That where selecting the right partner comes into play. There are several companies that can help you combine some benefits into a so-called loyalty program.

It’s in the processes, the training and the day-to-day coaching where the wheels tend to fall off. We chose Dealership for Life to help us start our program and get us up and running. “You don’t want to launch a program only to have it not stick and ultimately fail,” we were told by Jack Garrity, a partner in Dealership for Life, when we were setting up our Merchants for Life program. “This is a tremendous branding opportunity for your dealership. From the launch of the program you need a consistent message, combined with monthly monitoring to keep all employees on track. Study the analytics. Eliminate what is not working and improve on what is.” We knew we only had one chance to really get this right, so we did our homework. It is important that you look beyond the benefits in the program you hope to provide your customers. Every person in the dealership will need to be trained and coached on an ongoing basis. Many processes are going to change and will need to be monitored and measured. Do you have the time to take on a new project of this magnitude alone? We knew we did not, so we looked for more than a simple stack of benefits and a training manual. Eventually, we found just what the doctor ordered, and the results speak for themselves. Our dealership has grown more in just one year than any of us thought possible. Customer retention is the new CSI. It is the single most important metric you can use to determine the current and future health of your dealership. In retention, your customers vote with their wallets. Are your customers voting for you, or for another dealer up the street? If Adam Secore

General Manager Merchants Automotive adamsecore@merchantsauto.com

the answer isn’t you, then you need to take a look in the mirror and ask yourself if you still want to be in the car business in five years. Customers are demanding a better experience and, more and more, dealers are delivering on this desire every day. Remember the days when every dealer did not have a Website — and many thought they didn’t need to understand the Internet? Or those last dealers who held out on lead management and CRM. How did these practices work out for them? Do you want to join them? There is no question that, if you hope to maintain a healthy dealership, you must embrace customer experience — and the best way to get started at managing and improving this is with a customer loyalty program. So, have you accepted the importance of customer experience and decided to take the first step? Look for a program that has a track record of success. Bluntly ask providers what their churn rate is. Ask to speak with dealers who have been on the system for years, and other who are just a year or less in. Ask them to speak with a dealer who had an issue to see how they will handle any issues you might have come up. You need a partner with experience at implementing customer loyalty programs that work and stick with dealerships for life. Your customers want a dealership that values them enough to provide a positive experience when they visit the dealership, and offers them valuable incentives to continue their patronage. For a free copy of “What to look for in a loyalty program” please email me or contact Jack Garrity and get your program started the right way. Jack Garrity jack@dealershipforlife.com

Dealership For Life is the premier customer retention program in existence today! Since 2004 Dealership For Life has assisted dealers in creating custom programs to brand their businesses, administrate their program, train their staff and produce retention and sales/service profits that set new standards in the industry. Let us help your dealership become a Dealership For Life!

ADMINISTRATION. TRAINING. BRANDING.

DealershipForLife.com

service marketing solution

HOW TO FIND AND HIRE AUTOMOTIVE TECHNICIANS IN AN AGGRESSIVE AND COMPETITIVE MARKET If I’ve heard this once, I’ve heard it 1,000 times. “We’ve tried all the traditional means to find techs, from dangling ‘We’re Hiring Techs’ banners out front, to newspaper ads, to radio spots, to online job postings, to auto-specific job boards. We’ve even tried offering finder’s fees to our internal employees, but we just can’t find any technicians, and now we just don’t know where to turn.” I certainly do understand dealers’ frustrations and can definitely hear it in their voices when I speak with them. Rest assured — there is a way you can successfully recruit technicians with or without a recruiting company alongside to help you. To do this, however, you need some strategies and processes in place in order to have any level of success. Getting Onboard

Your dealership must have a fast on-boarding process. We recommend seven days from start to finish. The time you first meet the applicants

until the minute they punch their own time card should be less than seven days. Don’t be discouraged if you don’t have that in place yet. It’s easy and important to implement, which is why it’s the first thing on this list. I’ve spoken with dealers who have a three-week on-boarding process and they lose upwards of 50 percent of their total invites over that 21-day period. Why work so hard to have applicants apply, only to give them three weeks to go back to their shops and start talking about their job opportunities to anyone who will listen? When the boss finds out, he’ll just offer him or her a raise and you’re back to Square One. You must have someone — such as the general manager, service director or service manager — agree to be available whenever a candidate has agreed to come in or to do a phone interview. Also, you must have that candidate begin the interview process within 24 hours of their initial application. Honestly, 24 seconds would be preferable for first contact. Just know that you begin losing candidates exponentially every 24-hour period. The key is to move quickly with those applicants and not wait around and let them get cold sitting in your HR rep’s in box. Strategy and Process

You need high-volume access to a large number of technician candidates. Access isn’t the most important thing in the world, but when it comes to finding techs, it ranks right up there with oxygen. Why? Because every technician worth his or her weight in tools already has a job and is not actively seeking employment. This means that they are not active job seekers: They are passive job seekers and must be sought out and contacted by you in order to know you’re even offering a tech job. They’re not looking up, going to or responding to any job postings, newspaper ads, career fairs, social sites or stopping at your dealership because they saw a sign out front. You

70 70

% of your customers are % researching online to determine where to service their vehicles.

Is your dealership showing up? Let us bring your service department to page 1 of the most popular search engines. Drive traffic to a website built specifically for your service department. Effectively market extended warranties and aftermarket products. Improve service retention. Receive co-op support from the top manufacturers.

SCHEDULE A CALL TODAY! 888-849-1152

YOUR TOP 4 TAKEAWAYS Discover how to start booking over 60% of your service appointments online. Discover how our customers have a significantly higher service retention than the national average. Discover how to put your message in front of almost 50% of all in market service customers on a daily basis. Discover how to reclaim your customers from the independent and national repair chains like Jiffy Lube, Firestone, Pep Boys, etc.

info@slipstreamcreative.com 12

KevinBradberry

president and CEO of TK Worldwide, Inc | kbradberry@autosuccessonline.com

either can hire a recruitment firm, or you can do it yourself by running resume campaigns, harvesting them from the Internet or acquiring a robust and viable list through other means. Then, you must reach out to them by phone or email to gain access. No matter how you get there, though, you must have access to passive candidates. Right now, in these market conditions, passive applicants are just about all you’ve got to work with. There are very few, if any, unemployed techs out there. There are, however, plenty of under-employed techs. Get to them, and your battle is half over. You might say, “We already knew that. The problem is that no one knows where they are.” Wrong answer. They’re out there and you can find them — just not with big job board companies and their subpar source and screen services. Sourcing applicants is a combination of art and science, and candidate access is king. At some point, if you’re going to try this on your own, you need to get your hands dirty in the candidate-access minefield. Once you have access to the applicants, you must have a call to action to get their attention. This is the other half of that battle I mentioned earlier. One that I’ve found works pretty well at getting the candidate’s attention is, “Guaranteed pay raise with job offer!” You have to give them a reason to be interested in looking further into this opportunity. Just getting an email or phone call to them is not enough. The call to action must motivate them to want to know more and start to follow the information trail. An added advantage to the dealership offering a guaranteed pay raise with a job offer is that the applicant must disclose to the interviewing manager what they are making (which isn’t illegal) if they want the raise, and that means no guessing games for you. If they prove their income and it’s too high for your dealership’s pay plan, then you simply don’t make the job offer. Keep the relationship and, when the time is right, they may be back around. Once you have all this in place, you simply keep it going. Keep sourcing for candidates on a daily basis to keep your pipeline full. In summary, attracting and recruiting technicians to work for your dealership is possible. You just need to make sure you have the right tools. You need a rapid on-boarding system at the dealership already in place. You also need to deploy a good strategy and process that includes a call to action, and a quick intro to your hiring manager. Once your applicant flow starts coming in, you’ll begin to make smarter, less desperate choices about who you hire. Email me for a free copy of a contingency job offer agreement. The agreement is contingent upon the applicant passing your dealership’s background, drug test, DMV, and other preemployment checks, allowing you offer them a “job” on the spot and still be legal. 13

service training solution corporate training manager & dealership consultant for Auto/Mate | krock@autosuccessonline.com

KenRock

THREE PRICING STRATEGIES TO BOOST PROFITS IN THE PARTS DEPARTMENT In the parts department, there are times when parts managers have no choice but to discount or sell parts at cost. In many dealerships, this leads to a mindset that it’s difficult, if not impossible, to make parts profitable. The good news is it’s not only possible, but actually pretty easy to increase profitability in your parts department. All that’s required are a few tweaks to price settings in your dealership management system (DMS). Most DMS solutions offer these setting options that, over time, can increase your parts department profitability up to 50 percent in one year. Matrix Pricing

Matrix pricing is a system where you take a part’s initial cost and multiply it by a certain number to come up with the selling price. The lower the cost of the part, the higher the multiplier. For parts that cost up to 10 cents, I recommend a mark up of 975 percent. I know that sounds like a lot, but if a part costs 10 cents, instead of selling it for the MSRP of 18 cents, the matrix price would be $1.18. Not so outrageous, and on a repair order (RO), the amount is downright negligible. As the cost of the parts rise, the markup percentage drops. I recommend capping matrix pricing at $20. For any part that costs $20 or more, revert to selling for the MSRP.

Matrix pricing should only be used on parts sold to the service department for ROs. It should never be used for over-the-counter parts sales. The Internet has made parts pricing so transparent that a customer can easily use their smartphone to look up a price. When selling parts over the counter, stick to MSRP. On ROs, customers rarely question pricing on parts and, if they do, the total amounts are such a small

“The good news is it’s not only possible, but actually pretty easy to increase profitability in your parts department.”

percentage of the overall RO they shouldn’t raise any red flags. Also, matrix pricing shouldn’t be used for all parts, such as oil filters, because prices for those are pretty standard. Matrix pricing is a quiet, gradual method for growing profit margins on smaller parts. It may take a year to realize the impact to the bottom line, but on average, this strategy can produce an increase in parts department profitability of 50 percent. 99-Cent Round Up

This pricing strategy automatically rounds up the price of every part to end with .99. So, if a part sells for $21.80, the system will round it up to $21.99. If a part sells for $210.05, the system will round it up to $210.99. It doesn’t have to be 99 cents. The price can be rounded up to end in .29 or .95 or whatever number you choose. This pricing model can be used for customer pay parts, but should never be used for wholesale customers. Again, this is a quiet and gradual way of growing profits over time. Over the course of a year, this method alone could result in profit gains up to 25 percent. Margin Pricing

Margin pricing is designed to protect dealers

from losing money on parts sales to wholesale customers. Certain parts from certain manufacturers don’t have a high margin of profit priced in to begin with. When you sell those parts to a local repair shop and give them a 20 to 30 percent discount, it’s quite possible — and this happens more than you think — that you’ve just sold the part for less than what you paid for it. For example, let’s say you pay $4,000 for a transmission. Your manufacturer’s MSRP may be as low as $4,250, for a total markup of $250. If you then turn around and sell that transmission to a local repair shop for a 20 percent discount, you’ve just sold the transmission for $3,400 — a loss of $600. Margin pricing automatically calculates what the margin of profit is on every part, then adjusts the discount accordingly so the dealer always maintains a profit. This feature applies to wholesale customers the most, but it could apply to over-the-counter sales if the customers are asking for a discount. Your customers should understand that your dealership can’t sell a part for less than cost. These pricing settings reside within your DMS’s “Calc Code” and your DMS provider should be able to help you with implementation and/ or set up.

“Let us be part of the solution, so others don’t become part of the problem.” Richard McCabe

service marketing solution COO of Flick Fusion Video Marketing | tjames@autosuccessonline.com

TimJames

FIVE TYPES OF VIDEO TO USE IN YOUR SERVICE DEPARTMENT As dealers explore video marketing strategies to help them sell more cars, it’s important not to overlook potential applications in fixed ops. Video is an ideal medium to help promote and sell the service department. An effective video marketing strategy for your service department includes the following five types of video: 1. Value Proposition. This video answers the “Why trust us?” question. Many customers are afraid if they bring their vehicle into a dealership service department, the repair will be expensive or they will experience unnecessary upsell.

In this video, address your customers’ fears by featuring friendly service personnel, focus on how your technicians are trained, the quality of your repair work and, most of all, emphasize your trustworthiness. Be certain to mention any awards you’ve won and your positive BBB Rating. 2. Service Department Testimonials. In marketing, “they said” is always a lot more powerful than “we said.” Create videos that feature happy and loyal customers.

Ask your customers to explain what their biggest fears were when they came in and how your service department eased their fears, took care of the repairs and also mention how reasonable the pricing was, if they are willing to do that.

Check out more from Tim in this video:

they see the “vehicle health” section, by planting a seed that they had better get this taken care of soon or they could end up stranded. “How to” videos are also great for building a customer’s perception of value in the “repair tutorial” section. 5. Upsell. When customers drop their cars off for a scheduled repair, one of their biggest fears is an unnecessary upsell. Unfortunately, this fear can create resistance to any repair recommendations. A short video created by the service adviser can help to alleviate this fear and provide “visual proof ” that a repair is really needed.

Videos are far more effective at doing this than photos because the service adviser can be explaining how the old part is worn while comparing it visually to the new part, along with an explanation of how important it is to get the repair done now. Additionally, advisers can mention the potential impact and costs of related problems that could be caused by not completing the service now. Once the upsell video is created, the adviser can text it directly to the customer so they can see the video on their mobile device and make a quick decision. Make sure each video is delivered on a landing page that contains your Value Proposition, Introduction and Testimonial Videos, so that the customer can quickly see that you have their best interest at heart and can be trusted.

If the customer refuses the additional service, send them a “how to” (on the same landing page) so that they can appreciate how serious you 3. Service Manager Introduction. Similar in tone to a value proposition believe this service is, and that it needs to be completed ASAP (even if video, this video introduces the service manager and other personnel they prefer to do it themselves). The more you can help the customer to potential customers. People choose to do business with people they understand that this about “their safety” and that you aren’t just trying to like, so create a video to display the likeability of your manager, advisers sell repairs that aren’t necessary, the more likely the customer will trust and technicians. Be certain to brag about their years of experience and you and approve the additional repairs. awards that they’ve won, as well. Service department videos should be included on a service videos page Videos are ideal for conveying personality and character, which in turn on a dealer’s Website and on a service videos page on their Facebook builds customer confidence that they are making the right choice. account. These videos can also be uploaded to YouTube for Video SEO, and hosted on a platform so they are available to include on landing 4. Service Department “How To.” Select a dozen or so of your most pages for service department texts, emails and ad campaigns. common and profitable services. Create videos that talk about why they are important for the health of the vehicle and a quick tutorial showing The quality of your videos is definitely important; however, you do not the work involved with the repair. Discuss the costs of parts and the have to hire a professional video crew to produce videos that will have a estimated amount of time it takes to complete the service (if you have positive impact on your sales. Today’s customer is more interested in a the proper tools and experience), along with the potential costs and sincere message versus a commercial-style video. time of repair that people have experienced when working with an experienced mechanic or trying to complete the repairs themselves. So, find yourself a good video host, get your video camera out and start shooting videos. The more you shoot, the more comfortable you will These types of video can stimulate an element of fear in customers when become, and the better your videos will be.

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leadership solution AndyTyriver

business development manager for Applied Data Consultants | atyriver@autosuccessonline.com

HOW TO SELECT A TECHNOLOGY PARTNER As a parts department, your focus is not on staying up to date with the latest tech and trends; your focus is solving problems for your clients — getting parts from Point A to Point B for clients who wanted it five minutes ago, and doing it with a smile. Many vendors offer software designed for selling new cars, and then some might try to retrofit it for the parts department. However, pre-built, onesize-fits-all software quickly gets dated, and this type of approach fends off innovation and growth. In this day and age, everybody needs a technology partner, not a software vendor. Further, many parts departments simply can’t afford to have merely a “vendorship.” This is where partnerships become essential. But what exactly constitutes a partnership? It’s more than just being the cheapest option or talking to the right client at the right time; it’s about providing value, about being irreplaceable. It’s being a consultant, and it starts with listening. With software companies having clients that span the range from having used basic paper-based systems to having built in-house software platforms, the first step is listening: what the potential user is looking for, why they have the systems they currently do, why they haven’t made the jump to something else and what would help them dip their toe into your water. After a thorough discussion of the prospect’s vision of a solution, and how a software or technology firm might be able to meet those needs, implementation is the next step. That implementation process can make or break a new client’s experience — not with just a software firm, but with technology companies in general. The key here is patience. At the software firm, we know our software better than anybody: its strengths, ROI, integration and functionality. What we want to know more about is exactly how it fits into your unique business. Because if a solution is not highly customizable from user to user, the current tech landscape isn’t very forgiving in terms of product longevity.

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Why? Because it’s Web-based without having to install anything. Functionality and features are easy to turn on and turn off, per a user’s request. Flexibility is a hallmark of cloud software; the framework is there — it’s just getting it dialed in to meet a client’s unique specs. Service and support are a breeze because the customer service rep can log in and see exactly what their client is seeing, and then troubleshoot from there. A simple browser refresh is often all it takes.

“Flexibility is a hallmark of cloud software; the framework is there — it’s just getting it dialed in to meet a client’s unique specs. Service and support are a breeze because the customer service rep can log in and see exactly what their client is seeing, and then troubleshoot from there.” The SaaS model lends itself to a very user-friendly, pay-as-you-go fee structure. Because it is inexpensive to maintain and there is no software to install, SaaS firms are able to pass savings on to their users in the form of no fees for unlimited licenses and seats, low monthly usage fees and minimal setup fees. What about security? Just like any organization, or even industry, that handles or works with sensitive data, high standards must be met and maintained. A huge part of a partnership is trust, and a lot of that hinges not on just product performance and customer service, but data security, as well.

As far as auxiliary technology that serves to complement the Web-based solution, there are mobile devices such as smartphones, laptops and high-speed scanners, bluetooth scanners and OBD2 devices. If your partner isn’t able to provide these pieces, getting you pointed in the right With that in mind, as technology so rapidly changes, we’re seeing in real- direction is the bare minimum here. time that “Software as a Service” (SaaS) has become the standard, not Last but not least, what is the vision of your software partner? It is often just for dealerships and parts departments, but across many industries. said that history is the best indicator of the future. How is their track Note that when talking about SaaS or cloud software, it is not locally record for innovation? While a solution to meet your needs today is installed programs hidden behind a Web login. It is fully hosted and great, a truly invaluable partner will propose solutions to meet needs maintained by the software firm, such that all you need is a computer you don’t even know about yet. and a Web connection. Commonly referred to as cloud, or Web-based, services, this type of solution, at its very core, is cost effective in every way. From setting up and kicking off a pilot, to support and maintenance, to additional implementations, to even switching between DMS platforms, SaaS is inexpensive and easy.

No matter where your department finds itself with the adoption of technology, it’s an exciting time to be in the software and technology spaces. So, just as your team is made up of folks excited about cars, make sure your technology partners are made up of people excited about technology.

service marketing solution

HOW TO “POWER-UP” YOUR COUNT WITH LIVE CHAT:

Check out more from Tom in this video:

Three Critical Tips to Boost Sales Without Killing Them While chat is typically marketed to dealership variable ops departments to help increase unit sales, a well-executed live chat implementation can be an excellent tool for fixed ops, as well. And a huge collateral benefit is that it can also act as a first responder for CSI issues. The same arguments for using chat to generate car sales also apply to the service and parts departments — and so do the risks.

service departments who can respond within a reasonable time frame.

nearly impossible even for medium-sized BDCs to answer a chat during every minute of the business day, not to mention after hours, so consider a quality managed chat provider to provide backup support or even take every conversation.

On a final note, there are now more than a dozen players in the managed chat business category for car dealerships. Shopping for these companies can be a daunting task. Be sure to work with the marketing team coordinating that search to ensure the vendor they choose is able

Chat on dealer Websites started as a novel way to communicate with online shoppers, but has evolved into genuine tool to increase business. With a typical dealership Website, 60 to 75 percent of all visitors never return, so chat helps reach out and engage them just as it does on the lot and the service drive. Live chat is going to be set up one of two ways: self-managed software with in-house dealer staff taking the chats, or using a third-party managed chat provider. Generally, 40 to 50 percent of chat conversations are about fixed ops — service questions or appointment requests, parts inquiries and even job applicants. So, it’s paramount that processes are in place through every step of the chat process to give customers a smooth experience. The last thing you want is to offer them a chance to communicate with this great technology, only to stomp all over it. There are dozens of minute details that make up a successful chat roll-out, but attention to these three critical points can help avert a chat disaster: Have someone answer chat requests in less than 10 seconds — Under six is best. It’s

Also, don’t forget your collision center. Often, chat conversations need to be routed to the body shop, as well.

“With a typical dealership Website, 60 to 75 percent of all visitors never return, so chat helps reach out and engage them just as it does on the lot and the service drive.” Ensure operators are set up to respond to service and parts inquiries — It’s OK to have the operators positions as receptionists (even preferred), but be sure they are comfortable giving shoppers links or push pages to service appointment forms and other fixed operations inquiries. This is a big risk if salespeople are handling the chats. Respond to leads in a timely manner — Shoppers chat because of the implied promise that a live person is looking out for their interests. Be sure that leads are routed to a capable team member for both the parts and

to serve the fixed ops department with as much attention as the variable ops side of the business. Just throwing live chat on the Website and starting to count the cash from transmission and air conditioning repair jobs is not a realistic expectation. But, if you take the time to ensure a good chat setup on the Website, have operators who respond to requests in a timely manner and follow through with any leads it generates, it is a great way to generate incremental business, prevent CSI issues from festering and earn customer loyalty for providing an extremely convenient means of communication.

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TomLaPointe

digital advisor for CarChat24.com | tlapointe@autosuccessonline.com

leadership solution editor for AutoSuccess | ddavis@autosuccessonline.com

DaveDavis

GAIN $30, LOSE $2,000: Customer Loyalty and the Pleasant Surprise

Having been the editor of AutoSuccess for almost a decade now, I find myself in an interesting position when it comes to dealing with cars and dealerships. I’m not a salesperson (never have been), and I’m not responsible for managing a team. What I have done is read hundreds, if not thousands, of articles from automotive professionals about selling vehicles, running a dealership and maintaining customer loyalty, which has given me the feeling of being almost a “super consumer” when it comes to my personal vehicle and my relationship with the dealership. Which brings me to the story of how a dealership made $30 off me and blew at least $2,000. I live in the Louisville area, and one thing this area is becoming known for is road construction, with two major bridge projects going on and highways being redesigned. There are so many projects that, in the space of a year, I managed to pick up a nail in a tire on three separate occasions. The car was new and still under full warrantee, so when we got the first “low tire pressure” light, my wife and I made an appointment and brought it back to the dealership. They were pleasant, professional and charged $30 for the repair. The next time that light came on a couple of months later, I decided to try the local tire retailer. It was closer to my house, didn’t require an appointment and I had done business with them for years. I figured that they certainly weren’t going to charge more than the dealership did. Since I didn’t buy the tires there — they came with the car — and I had no “road hazard” warrantee agreement with the retailer, I expected to pay to have it fixed. What I didn’t expect was being told “No charge — just remember us next time you need tires.” A few months later, the light came on again, and the retailer fixed it for free — again — and just asked me again to remember them when I needed new tires. The car’s a little older now, and new tires are probably the next thing on the maintenance agenda. So, who do you think I’m going to buy tires from the next time? I’m also the type who tends to hang on to cars for a long time. Figuring a conservative $125 per tire, and probably four tire changes over the life of the vehicle, the $30 fee for fixing a flat cost the dealership around $2,000 in the coming years for the life of that vehicle, along with the loyalty hit. That’s not even taking into account that our second vehicle will need tires along the way, and that word-of-mouth marketing will be on the tire retailer’s side.

Do I expect free service? Absolutely not. Will unexpected free service build loyalty? Absolutely.

leadership solution DonReed

CEO of DealerPro Training | dreed@autosuccessonline.com

AN ENEMY CALLED AVERAGE The title of this article comes from the book An Enemy Called Average by John Mason. The purpose of his book is to get you from where you are currently to where you dream to be. “Break the chains of mediocrity,” Mason writes, “and then live the life you dream of.” This, of course, can apply in your personal life as well as your professional one. Far too often in our industry we have dealers, general managers, service directors and other leaders who focus on and measure themselves in terms of the “average” dealer. Here are some examples: “The average dealer is grossing $700 PRU in F&I income.” “The average salesperson sells 11 units per month.” “The average Service Advisor sells 1.4 HPRO.” “The average CSI for my region is….” “The average (fill in the blank) for my 20 Group is….” Does this sound familiar? Additionally, your manufacturers also provide composites and reports showing the “average” this and the “average” that so you can compare yourself to what’s average. Here‘s a simple exercise for you. When you get up tomorrow morning, ask your family to sit at the kitchen table briefly before going off to work and school. Stand up in front of your family and say the following: “It looks like it’s going to be an average day here in Hometown, U.S.A., and your average Dad and your average husband is going to his average job to put forth an average effort to maintain my average paycheck so I can support my average kids and my average wife. By the way, kids, at school I only want you to focus on getting average grades, so you don’t really need to put forth the effort to be a great student — a “C” will be just fine.” Does that work for you? How’s that “average wife” comment going to land? Are you excited about holding that meeting? If you are a manager, how about you set a meeting with the dealer and say, “Boss, I just wanted to let you know that I think you are an average dealer, so I’m going to give you an average effort today so I can produce for you some average results and manage my average department.” I bet nobody is taking notes on this one. Let’s not forget what “average” really is: nothing more than a reference point. Average means you are the “worst of the best or the best of the worst.” Is that where you really want to be? I hope you answered “No way!” Well, if that’s true, then why is it that, when I speak to hundreds of dealers across our country, I hear comments

like, “Well, Don the average HPRO for my 20 Group is 1.4 and I’m averaging 1.5, so I’m doing a pretty good job.” You are still hanging around with that “Best of the Worst” crowd. Why do so many of you use the word “average” like it is a good place to be? Do you really want to be a straight “C” Dealer? Does the term “mediocre dealer” appeal to you? I think not. So how do you go from being average to becoming a top performer? It all starts with one word: commitment. Are you committed to change? Are you committed to leaving your comfort zone? Are you committed to achieving different results? Think of it this way: When it comes to making bacon and eggs for breakfast, the chicken was a participant but the pig was totally committed. If you, the dealer, are not totally committed, then nothing is going to happen differently. As Zig Ziglar said, “You have the perfect processes in place to get you exactly what you got last year.” Get committed to change. Next, you must establish “SMART” goals: Specific, Measurable, Achievable, Realistic and Time based. Here is a goal: “I want to increase my retail HPRO by .5 over the next six months.” Is it a SMART goal? Specific? Yes. The goal is for retail ROs only, with a specific number (.5) in mind. (Don’t forget to calculate how much specific gross profit you will produce on parts as well as labor with that extra .5 HPRO). Measurable? Yes. Your DMS can print a service advisor performance report daily showing the HPRO for each advisor.

Achievable? Perhaps. What are my advisors going to do differently to achieve different results? If they could sell the extra .5 HPRO, why haven’t they already done so? Do they have a good menu to sell from? Do they have the proper communication skills and processes to make a feature benefit presentation to your customers? Are they willing to leave their comfort zones? Are they committed to change? Are they chickens or pigs? Realistic? Yes. Since the average dealer is averaging 1.4, that means a lot of dealers are doing much better than 1.4 and, since there is a multitude of dealers out there averaging 2.0 to 2.5 HPRO, another .5 is very realistic. Time Based? Yes. You have six months to decide what you are going to do differently, what new processes you will implement and how you will train everyone on new skills that will increase their sales performance and provide the customer with a higher level of service. Once you achieve one SMART goal, move on to the next. Long-term success is a journey, not just a destination. That first SMART goal is just the first leg of your journey. Do not allow yourself to become complacent because you will inevitably gravitate back toward mediocrity. “Mediocrity is a region,” Mason wrote, “bound on the north by compromise, on the south by indecision, on the east by past thinking and on the west by a lack of vision.” Every department in your dealership must be a profit center for the dealer who wants to thrive — not just survive — in this competitive industry of ours. The aftermarket service providers currently have more than 80 percent or all the parts and service business in America. Don’t you think it’s time we started taking it back?