Of the $350B Service business in NA, franchise Dealers only capture 27% of it. In this Quick Tip, Andy Church asks what are you doing to increase your service business? 

In this Quick Tip, Andy Church shares a tip on an element that dealerships should include in their hiring process to improve productivity.

Andy Church shares tips on how dealerships can create pay plans that retain employees while also securing dealership profitability in this Quick Tip.

Andy Church shares a Quick Tip on understanding total Dealership Expense Management.

All too often, dealers are hesitant to make an investment in training new and Preowned salespeople because turnover in the sales department can be as high as 70 percent according to NADA. Service, however, has always been most dealership’s foundation for profitability. That’s where the phrase “service absorption” comes from.

For the most part, dealership service departments are profitable, and staff turnover is much lower at 27.2 percent, according to this article in Automotive News. While that is true, there are several things a dealer should consider. First, the turnover rate in service is increasing due to the competitive marketplace and second, the demand for technicians and service advisors is only increasing. Couple those facts with the recall epidemic that the industry has been experiencing for the last couple of years and the demand for service employees has skyrocketed. The problem is that individuals are pursuing automotive service careers less which, of course, exacerbates the problem.

As all of these factors spiral towards a collision course! What can dealers do to not only attract new service employees but also retain the ones they already have?

Show them their value! Invest in them and Train them!

Why you ask? First of all, a successful service department is more than just an automation factory of checking in vehicles and releasing them to customers. Training service advisors is also way more than just showing them how to work the DMS, CRM or translate an MPI form. Service advisors need to truly understand what the service recommendations MEAN and then be able to communicate that to the customer in a professional manner.       

For example, Most customers don’t understand the importance of, or need for, many recommended services. This is the primary reason why customers decline services. They don’t understand why they are important or if they need them. They’d rather decline them and go home and consult a family member or friend that they consider has more knowledge about automotive service.

You know what happens then? If the customer gets educated and realizes the importance of the service recommended, they price shop the dealership and could easily end up at an independent! That same customer, had the service advisor been trained how to correctly explain services, could have Built value to the customer adequately and, chances are, the customer would have accepted the service recommendation. Why? Because of the one single most important edge that a dealership has is convenience.

No one thinks I got nothing to do today I think I’ll bring my vehicle in again for service, and given the choice, and understanding the need, they will choose to have their vehicle serviced while still at the dealership! This increases revenue per RO and makes the dealership more profitable.

The second biggest reason for training service advisors also has to do with profitability. Training service advisors increases their confidence, makes them feel needed, wanted and appreciated. It increases the dealership’s stable of qualified employees which leads to better customer experience and lower turnover.

Think about how much it costs you to find a new service advisor to replace an one that leaves… most studies estimate the cost at 70% of the yearly salary! That can have a huge impact on profitability. Remember that old saying, where the manager asks what happens if we train our people and they leave, and the owner responds what happens if we don’t and they stay.

The key to profitability lies in training service advisors, to correctly present service recommendations in an understandable way that educates the customer, creates a company culture in which employees feel appreciated and stick around. That my friends, leads to a better customer experience which creates loyal customers who trust your dealership’s advice. That is how your dealership can create a solid foundation that not only provides increased profitability immediately but also places your dealership in a great position to handle the increased service demands that are headed your way.

Be Profitable!

Andy Church shares why there are two dynamics to dealership efficiency which both affect dealership profitability.

The word “transparency” gets floated around the automotive industry quite often – especially in the last few years. The days of “the invoice is locked in a safe at the corporate office” are gone and consumers have all of the access to data that they need. Yet some Dealerships are still trying to play the game.

I understand that dealerships need to be profitable, just as any business does, yet there is still a push-back from consumers on industry sentiment and trust when it comes to dealerships. The normal given reason for a lack of transparency is the pursuit of higher gross profits. With industry experts predicting a slowdown or even a decline in new car sales in the near future, profit is more important than ever to a dealership. According to this article, however, the lack of transparency could be hurting sales more than if the dealership had been completely  transparent from the beginning.

In the article, Congress ranked at the bottom in perceived level of trust by consumers, while service and technology companies were the most trusted. A whopping 65 percent believed that brands lied at least some of the time and 54 percent believed that the brands that they currently do business with are less than honest.

So, knowing that trust and transparency are actually good for business, how can a dealership be more transparent? Even if the Dealer scotch taped the vehicle invoices to the showroom windows consumers still wouldn’t believe those would they?

Really, it’s all about public communication. The facts are that the majority of consumers that leave reviews about a business do so in an emotional state, and that state is mostly when they’ve had a negative experience. For this reason, many dealerships pay little attention to the reviews that are left, whether those reviews are good or bad. Transparency online comes when dealerships are publicly responding to reviews – whether positive or negative – and actively looking to assist their customer in rectifying a problem or thanking them for their business, that is true engagement!

Have you ever read and been influenced by a review? I know I have, I won’t buy a thing on Amazon or go to a restaurant until I have read the reviews. There is no doubt reviews and responses from the business, have an impact on my (and your) decision making process.  

But let’s get back to the argument of profit and transparency versus non-transparency. This same study showed that 73 percent of the participants believe that transparency is so valuable to them that “they were either more likely or very likely to pay extra for products” they deemed more transparent. Assuming that is true, it is logical to believe that being transparent can be more profitable than not being transparent. At the very minimum, it is an equalizer. Yes, dealerships are always going to get those consumers who come in offering absurd figures for vehicles. Nothing is going to stop that. Build value, however, in a culture that is transparent enough that consumers can see it and they will come, believe, tell their friends, and become repeat purchasers! They may, perhaps, even have a great enough experience to be motivated to leave the dealership a great review.

Stop thinking about transparency as a “price” thing. There is no point in doing so. There is too much data out there to argue with a consumer. Sometimes that data is inaccurate, I agree. Does that mean a consumer will believe the dealership or the source of the data they read? Chances are good, the data will win over the dealership just about every time.

It’s time to pay attention to the feedback that you are receiving by both happy and unhappy consumers and respond to each and every one of those reviews. Make it non-negotiable with your management team and by doing so, you will not only influence the opinions of those consumers, but you could very well be influencing the opinions of the prospects that you don’t even know exist.

Happy Selling!!

In this series, Andy Church shares how to increase the profitability in a dealership's service department.

Dealers are constantly inundated by trainers vying for their business. These trainers promise exponential success in sales and profits when they do. Many, however, are one-shot wonders in the sense that they come in, perform their training, get your staff pumped up and leave. What happens then? Chances are the lessons or knowledge that they may have learned during that brief period lasts for a week or two and then everyone falls back into their old normal habits and the status quo returns. Why do you think that happens?

Let us look at in-house training. The dealer or general manager goes to their management staff and instructs them to perform training on a regular basis. That training may include materials, or the dealer or general manager may be relying on those individuals to utilize the knowledge and expertise that they have through experience to educate their salespeople. You know what I see happen? Training begins and may continue for a few weeks and then, all of a sudden, everyone that’s supposed to be doing training gets busy and training becomes less of a priority.

Be honest. How many NEW TO THE BUSINESS salespeople in our career have you interviewed, seen promise in and let loose to grab an up after simply showing them how to do a foursquare? Perhaps you were relying on your closers, managers or a TO to a more experienced salesperson. Yes, we all know that busy stores need feel on the floor and, at times, that equates to warm bodies.

Why do you think, however, that our industry has a 70 percent turnover in sales? Were these young prospects that had promise, that you saw talent and ambition in couldn’t cut it? Or perhaps it means that nobody ever taught them how to sell CARS? They may have sales ability but selling cars takes more experience than selling shoes at Nordstrom. While the customer experience skills that you experienced which motivated you to recruit them may exist, selling a $300 pair of shoes is much more difficult than selling a $30,000 car.

Would you hire an inexperienced quick-service technician, throw them a wrench and tell them to go do oil changes? No! Why? Because that would inevitably hurt your service business (not to mention take up shop capacity and other technician’s time while they ask for assistance.)

It’s great when dealerships invest in training. But that training is wasted money if it isn’t organized and structured because it isn’t sustainable. Dealership profitability is predicated in part by a lower turnover rate in sales and that will only happen if salespeople are continuously trained and those skills are not only put into practice and reinforced by management but also consistent.

Continuous training is an integral part of all departments in a dealership. It can easily cost more to replace an employee than it would to train them on a continuous basis. But it’s not only the training that’s important, it’s accountability and reinforcement that management expects. Without that, salespeople simply go through the motions of watching or reading the training materials but either never put those skills into practice or quickly fall back into their old habits – or worse – the green peas never learn anything in the first place or, if they did, are influenced by their more experienced peers into doing things a different way.

Dealerships need to understand that by effectively training their salespeople, reinforcing that training by holding those salespeople accountable for their sales activities and continuing that training on a regular basis will lead to less turnover in the sales department, increased profitability through increased profits and sales volume but, most importantly, will groom their salespeople to thrive, make more money and rather than looking at their position in the dealership as a “job” will become emotionally invested in the dealership which will translate into increased employee engagement as well as a customer experience that is organically better simply because employees are invested and care.

There are many aspects that factor into dealership profitability. Training is one investment that is vital to an increase in profit as long as it is continuous, reinforced and contributes to the dealership’s company culture. Follow this plan and you will prosper.

Happy Selling!

Andy Church shares a tip on how to make your manager's meetings more productive and will benefit your entire dealership operations in this Quick Tip.