Looking at the recent projected numbers by NADA, it appears that fixed operations is in a position to increase on their 2014 total of service and parts sales of $91.73 billion. In this latest report NADA was projecting a modest increase of four to five percent in the customer mechanical number. However, there was a 20 percent projected increase coming from the warranty side, obviously we can thank the increased volume due to recalls. Recently, I was presenting in meeting with a group of high functioning CJD dealers and looking at their composite year to date we found that warranty repair was getting close to 35 percent of their total labor sales. This number is huge when you take in consideration it has typically been in that 20-25 percent range.

So why do I think this is a bad thing? We all want the added income, right? Warranty/Recall work is providing a substantial increase to all of our income – but is it here to stay? I believe that the litigious battle of recalls is here to stay, but are your customers? The added recall work is bringing new customers to your door that otherwise may have never come. They are giving you the opportunity to grow your customer base, but are they going to be long-term loyal customers? Can you forecast and count on this added volume next year in your customer pay numbers? My suggestion….. NO

Is the first experience your customer receives from you a positive one? Considering parts availability issues and the length of time to complete the recall, you will be able to retain a very small percentage of the “new” faces that are coming in to have their air bag inflators replaced on their 10-year-old vehicle. Most of these customers you will never see again.

Here is my biggest worry for 2016 and forward.

• Very few recall customers will stay and continue to service or spend with you
• The recall business is making it harder for your loyal customers that do want to spend with you get in the door.

This added volume is helping pay the bills and has increased most of your commissioned based pay employees paycheck over the last several months but it is also allowing them to make this income through the path of least resistance. Recall work is eroding our customer pay business. Advisors car turn into a high volume recall factory and at the end of the month all theses bits add up to a glob. A customer that spends with us typically will stay providing it was a positive experience. A recall customer that also has a positive experience still does not have the loyalty bridge built as one that spends with us. Therefore a very small percentage of them will return even after a great experience.

To sum it all up – The recall business is here to stay. How are you going to make space for your long-term loyal customers and how are you going to keep your advisors focused on building the customer relationship one oil change and multipoint inspection at a time?

Looking at the recent projected numbers by NADA, it appears that fixed operations is in a position to increase on their 2014 total of service and parts sales of $91.73 billion. In this latest report NADA was projecting a modest increase of four to five percent in the customer mechanical number. However, there was a 20 percent projected increase coming from the warranty side, obviously we can thank the increased volume due to recalls. Recently, I was presenting in meeting with a group of high functioning CJD dealers and looking at their composite year to date we found that warranty repair was getting close to 35 percent of their total labor sales. This number is huge when you take in consideration it has typically been in that 20-25 percent range.

So why do I think this is a bad thing? We all want the added income, right? Warranty/Recall work is providing a substantial increase to all of our income – but is it here to stay? I believe that the litigious battle of recalls is here to stay, but are your customers? The added recall work is bringing new customers to your door that otherwise may have never come. They are giving you the opportunity to grow your customer base, but are they going to be long-term loyal customers? Can you forecast and count on this added volume next year in your customer pay numbers? My suggestion….. NO

Is the first experience your customer receives from you a positive one? Considering parts availability issues and the length of time to complete the recall, you will be able to retain a very small percentage of the “new” faces that are coming in to have their air bag inflators replaced on their 10-year-old vehicle. Most of these customers you will never see again.

Here is my biggest worry for 2016 and forward.

• Very few recall customers will stay and continue to service or spend with you
• The recall business is making it harder for your loyal customers that do want to spend with you get in the door.

This added volume is helping pay the bills and has increased most of your commissioned based pay employees paycheck over the last several months but it is also allowing them to make this income through the path of least resistance. Recall work is eroding our customer pay business. Advisors car turn into a high volume recall factory and at the end of the month all theses bits add up to a glob. A customer that spends with us typically will stay providing it was a positive experience. A recall customer that also has a positive experience still does not have the loyalty bridge built as one that spends with us. Therefore a very small percentage of them will return even after a great experience.

To sum it all up – The recall business is here to stay. How are you going to make space for your long-term loyal customers and how are you going to keep your advisors focused on building the customer relationship one oil change and multipoint inspection at a time?

Periodically, I get the opportunity to roll up my sleeves and dig into a dealer’s pain point. More often than not these pain points lately are, “How do I get all the customers in to my shop and completed in a timely manner?” or, “Do you know any techs?” and “What is the best way keep my customers coming back?” Here is the extremely tough answer to Mr. Dealer’s questions. The short answer goes something like this, “I have an answer, but I don’t think you will like the timeline it will take to accomplish this once and for all.” After a frustrated perplexed look from the dealer I usually say, “The complete fix sits within your people, your training program and your ability to grow and mentor your staff.” Obviously this is not an overnight fix. Most of the time I feel they are looking for the silver bullet to

Customer retention starts with having a solid process and business model, yes this is a given. The execution of customer retention sits fully on the shoulders of having a well-trained senior staff that builds relationships with every one of your customers. It goes without saying customers like to do business with people and competent ones at that. They may like the facility or the customer waiting lounge or even your movie screen, but when it comes to loosing a customer it is always due to the action or lack of action of a person within your guidance.

How do we create a positive workplace environment that has long-term employees excelling at their position? Here are a few areas to start.

All of these should be completed with regularity within your department.

• Positive reinforcement of a job well done – This one regularly goes without notice. This doesn’t mean pay a spiff or more money, challenge the owner or GM to walk though and hand out a high five very publicly.
• Develop your staff – A well-trained staff not only handles tough customer situations better but they also feel valued by the organization to invest in their success.
• Balance – We work in an intense environment. Help employees understand their needs to be a balance in their work life and personal life. Granted we want them here for the hours of their scheduled time just as important is to enjoy the time they are not there.
• Communication – Engage in open and thought provoking dialog with your employees. Too many times businesses think of communication as talking about policy change or a new process and this is important but not the entire equation. Talk to your employees about their solution to customer satisfaction. Remember to listen and you might just learn something. 

Periodically, I get the opportunity to roll up my sleeves and dig into a dealer’s pain point. More often than not these pain points lately are, “How do I get all the customers in to my shop and completed in a timely manner?” or, “Do you know any techs?” and “What is the best way keep my customers coming back?” Here is the extremely tough answer to Mr. Dealer’s questions. The short answer goes something like this, “I have an answer, but I don’t think you will like the timeline it will take to accomplish this once and for all.” After a frustrated perplexed look from the dealer I usually say, “The complete fix sits within your people, your training program and your ability to grow and mentor your staff.” Obviously this is not an overnight fix. Most of the time I feel they are looking for the silver bullet to

Customer retention starts with having a solid process and business model, yes this is a given. The execution of customer retention sits fully on the shoulders of having a well-trained senior staff that builds relationships with every one of your customers. It goes without saying customers like to do business with people and competent ones at that. They may like the facility or the customer waiting lounge or even your movie screen, but when it comes to loosing a customer it is always due to the action or lack of action of a person within your guidance.

How do we create a positive workplace environment that has long-term employees excelling at their position? Here are a few areas to start.

All of these should be completed with regularity within your department.

• Positive reinforcement of a job well done – This one regularly goes without notice. This doesn’t mean pay a spiff or more money, challenge the owner or GM to walk though and hand out a high five very publicly.
• Develop your staff – A well-trained staff not only handles tough customer situations better but they also feel valued by the organization to invest in their success.
• Balance – We work in an intense environment. Help employees understand their needs to be a balance in their work life and personal life. Granted we want them here for the hours of their scheduled time just as important is to enjoy the time they are not there.
• Communication – Engage in open and thought provoking dialog with your employees. Too many times businesses think of communication as talking about policy change or a new process and this is important but not the entire equation. Talk to your employees about their solution to customer satisfaction. Remember to listen and you might just learn something. 

As I look through a group of dealers’ financials I quickly see the huge increase in warranty labor sales and gross. I quickly think of the enormous opportunities there are to capitalize on the increased traffic coming in the door. They are endless, increased revenue, increased customer database, unknown or lost customers coming trough the door and I even know of a dealer that sold 12 cars last month off customers that have come in simply for a service recall. These are all great right? The answer is yes, for the short term. Even though there are incredible profits made currently due to the increased warranty traffic you need to keep a few things in mind to make certain your business is positioned for future prosperity.

Keep an eye on your retail business: Due to the increased traffic and workload from the recalls your retail business will suffer. Quite frankly all of your service advisors made more money last month than they did the prior year due to the “free” warranty money coming in, so their focus is not on your core business. All your hard work and effort to build your retail sales and gross can go out the door simply due to the ease of running and filling your stalls with recalls. Suggestion: Do not let the recall business erode your “core” business and keep your advisors focused on selling service, menu presentations, complete multi point inspections, proper walk around and cultivating customer loyalty.

This too shall pass: Although the immense nature and huge volume of recalls that still need to be done will keep us going for a period of time, there will be a point in time that they reduce. When this happens your traffic will stop. If we are successful in retaining ten to fifteen percent of those that came in for the recall and that have never been in with you before I would consider it a success. The point is, the majority of them you still will not see coming back to your store. On smaller scales history would dictate this to be the case.

Learn from history: When I was running a Ford store in the early 2000’s at the height of the firestone recall we had more late model trucks and SUV’s coming in for replacement tires. Then this was the largest tire recall in history. At the time everyone in the store from parts to service was fat and happy because we had more traffic than we could handle doing over 100-tire replacements daily including Saturdays. The bad news we were more interested in getting the work done instead of looking to grow and retain our customer base. In addition we didn’t have awesome tools at our disposal to give a customer a professional inspection printout with a competitive price quote. Suggestion: Increase staff to help with the increased demand, perform a complete inspection and communicate to the customer. Take it to the next level and make it a positive customer experience and imagine if we were able to retain half of these customers that have not visited a dealership prior to the recall.

As I look through a group of dealers’ financials I quickly see the huge increase in warranty labor sales and gross. I quickly think of the enormous opportunities there are to capitalize on the increased traffic coming in the door. They are endless, increased revenue, increased customer database, unknown or lost customers coming trough the door and I even know of a dealer that sold 12 cars last month off customers that have come in simply for a service recall. These are all great right? The answer is yes, for the short term. Even though there are incredible profits made currently due to the increased warranty traffic you need to keep a few things in mind to make certain your business is positioned for future prosperity.

Keep an eye on your retail business: Due to the increased traffic and workload from the recalls your retail business will suffer. Quite frankly all of your service advisors made more money last month than they did the prior year due to the “free” warranty money coming in, so their focus is not on your core business. All your hard work and effort to build your retail sales and gross can go out the door simply due to the ease of running and filling your stalls with recalls. Suggestion: Do not let the recall business erode your “core” business and keep your advisors focused on selling service, menu presentations, complete multi point inspections, proper walk around and cultivating customer loyalty.

This too shall pass: Although the immense nature and huge volume of recalls that still need to be done will keep us going for a period of time, there will be a point in time that they reduce. When this happens your traffic will stop. If we are successful in retaining ten to fifteen percent of those that came in for the recall and that have never been in with you before I would consider it a success. The point is, the majority of them you still will not see coming back to your store. On smaller scales history would dictate this to be the case.

Learn from history: When I was running a Ford store in the early 2000’s at the height of the firestone recall we had more late model trucks and SUV’s coming in for replacement tires. Then this was the largest tire recall in history. At the time everyone in the store from parts to service was fat and happy because we had more traffic than we could handle doing over 100-tire replacements daily including Saturdays. The bad news we were more interested in getting the work done instead of looking to grow and retain our customer base. In addition we didn’t have awesome tools at our disposal to give a customer a professional inspection printout with a competitive price quote. Suggestion: Increase staff to help with the increased demand, perform a complete inspection and communicate to the customer. Take it to the next level and make it a positive customer experience and imagine if we were able to retain half of these customers that have not visited a dealership prior to the recall.

Many dealerships are focusing and investing in fixed operations. They are adding high tech equipment, expanding service bays implementing growth strategies and extending hours to meet the demand of the customers. All of these for the most part are necessary and will provide bottom line improvement but I warn you, the time is now, more than ever to focus on your people.

It is the people within your store that provide the experience that customers remember and want to come back. It is the people that build the relationship with your customer. Customers come to see Jim in service – not the brick and mortar or fancy alignment checker in your service drive.

I bring this up because our people see the financial investment being made on specialty equipment and space, but in return they are asked to work longer hours and handle more responsibility and duties. I understand the “tools” put in place are there to help improve profit that in return allows them to make more money. Adding more space allows more cars to flow through the shop that in return helps the advisor improve their customer satisfaction scores, end result make more money. So these tools are actually put here to help everyone achieve higher customer satisfaction and increased income potential.

So why don’t a majority of our employees see it this way? It’s simple, as an industry we typically do not do a good job of communication and performance acknowledgement. Our people want to feel the love and be recognized for their efforts.

Here are some tips that will help communication within your employees and ways you can praise and acknowledge your team’s efforts.

• Commit to training and advancement from within – Employees will see this process and strive to achieve the same levels.
• Make sure your compensation plan is fair and within guideline in your market – I wanted it to be known that I will overpay for performance, people wanted to stay with me and I often had calls from those that wanted to come to work.
• Tackle negative emotions – Do not let these fester, they only get worse. Be in touch with your team so you can see and feel when these issues arise
• Encourage, Encourage – Bob Wooden – NCAA basketball coaching wizard had a teaching way about him. A study was performed of his teachings for an entire year and they found only 6.6 percent were expressions of displeasure. But 75 percent were pure information on what to do, how to do it, when to intensify an activity.
• Authentic recognition – Not automatic, the human touch is paramount. Automatic recognition can become impersonal.
• Tied to the employee’s perception of value – People know when they’re valued, and they should have a good idea of their value to the organization. Monetary rewards can skew this notion of value, linking it to cash when it should be linked to appreciation of extra effort and smarts. Money is appropriate much of the time, but it’s not the only – or even the most effective – motivator. Treat employees as valued team members, not as numbers. Most of the time it’s the best way to really recognize a valued player.

Many dealerships are focusing and investing in fixed operations. They are adding high tech equipment, expanding service bays implementing growth strategies and extending hours to meet the demand of the customers. All of these for the most part are necessary and will provide bottom line improvement but I warn you, the time is now, more than ever to focus on your people.

It is the people within your store that provide the experience that customers remember and want to come back. It is the people that build the relationship with your customer. Customers come to see Jim in service – not the brick and mortar or fancy alignment checker in your service drive.

I bring this up because our people see the financial investment being made on specialty equipment and space, but in return they are asked to work longer hours and handle more responsibility and duties. I understand the “tools” put in place are there to help improve profit that in return allows them to make more money. Adding more space allows more cars to flow through the shop that in return helps the advisor improve their customer satisfaction scores, end result make more money. So these tools are actually put here to help everyone achieve higher customer satisfaction and increased income potential.

So why don’t a majority of our employees see it this way? It’s simple, as an industry we typically do not do a good job of communication and performance acknowledgement. Our people want to feel the love and be recognized for their efforts.

Here are some tips that will help communication within your employees and ways you can praise and acknowledge your team’s efforts.

• Commit to training and advancement from within – Employees will see this process and strive to achieve the same levels.
• Make sure your compensation plan is fair and within guideline in your market – I wanted it to be known that I will overpay for performance, people wanted to stay with me and I often had calls from those that wanted to come to work.
• Tackle negative emotions – Do not let these fester, they only get worse. Be in touch with your team so you can see and feel when these issues arise
• Encourage, Encourage – Bob Wooden – NCAA basketball coaching wizard had a teaching way about him. A study was performed of his teachings for an entire year and they found only 6.6 percent were expressions of displeasure. But 75 percent were pure information on what to do, how to do it, when to intensify an activity.
• Authentic recognition – Not automatic, the human touch is paramount. Automatic recognition can become impersonal.
• Tied to the employee’s perception of value – People know when they’re valued, and they should have a good idea of their value to the organization. Monetary rewards can skew this notion of value, linking it to cash when it should be linked to appreciation of extra effort and smarts. Money is appropriate much of the time, but it’s not the only – or even the most effective – motivator. Treat employees as valued team members, not as numbers. Most of the time it’s the best way to really recognize a valued player.

There are several critical performance indicators in service, however, the most critical one to measure and excel in is customer retention. Customer retention is the source for future growth. If we are able to reduce the amount of customer defections over a defined period of time while we keep our arms open welcoming new, we will continue to have a customer base that grows month after month. The main focus is to reduce the customer defection after the warranty time period expires. It is no secret within our industry that once a customer reaches the end of the warranty time period they almost simply disappear into thin air. The reality? They were looking to defect long before they vanished.

Every service visit, every customer touch point is recorded in a service experience bank deep within our customers minds. Every time a positive customer experience happens there is a deposit in the emotional bank and trust. Conversely when there is a negative experience there is a withdrawal. Here is the secret, and it's really no different than our physical bank accounts, the withdrawals are easier, quicker and even more severe than the time and energy it took to earn the deposits. For instance, during a relationship with a customer over the last three years that included several visits each year can be taken into overdraft with one negative experience. Simply put, our account is volatile and every single customer touch point should be treated as such. Walt Disney said it best “do what you do so well that they will want to see it again and bring their friends.”

Here are a few ways to ensure you are performing positive customer treatment.

• Actively listen – Hear what your customers are saying.
• Show genuine interest – Treat your customers right
• Treat your customer as a managing partner – value their opinion
• Build trust by being transparent
• Own up to your mistakes – Take full responsibility and then some, do a little extra
• Keep your word – Follow through on your promises
• Always say “thank you” – show extreme gratitude
• Communicate – building a strong relationship takes communication
• Invite them back – Ask your customer to come back and see you.
• Continue to over satisfy – build value and offer VIP specials.
• Respect – respect your customer, respect their thoughts and their feedback

Keep in mind that a minor 5% increase in customer retention can equate to a 70% increase in profit. Apply these eleven trade secrets on every interaction and watch your loyal customer base grow.

There are several critical performance indicators in service, however, the most critical one to measure and excel in is customer retention. Customer retention is the source for future growth. If we are able to reduce the amount of customer defections over a defined period of time while we keep our arms open welcoming new, we will continue to have a customer base that grows month after month. The main focus is to reduce the customer defection after the warranty time period expires. It is no secret within our industry that once a customer reaches the end of the warranty time period they almost simply disappear into thin air. The reality? They were looking to defect long before they vanished.

Every service visit, every customer touch point is recorded in a service experience bank deep within our customers minds. Every time a positive customer experience happens there is a deposit in the emotional bank and trust. Conversely when there is a negative experience there is a withdrawal. Here is the secret, and it's really no different than our physical bank accounts, the withdrawals are easier, quicker and even more severe than the time and energy it took to earn the deposits. For instance, during a relationship with a customer over the last three years that included several visits each year can be taken into overdraft with one negative experience. Simply put, our account is volatile and every single customer touch point should be treated as such. Walt Disney said it best “do what you do so well that they will want to see it again and bring their friends.”

Here are a few ways to ensure you are performing positive customer treatment.

• Actively listen – Hear what your customers are saying.
• Show genuine interest – Treat your customers right
• Treat your customer as a managing partner – value their opinion
• Build trust by being transparent
• Own up to your mistakes – Take full responsibility and then some, do a little extra
• Keep your word – Follow through on your promises
• Always say “thank you” – show extreme gratitude
• Communicate – building a strong relationship takes communication
• Invite them back – Ask your customer to come back and see you.
• Continue to over satisfy – build value and offer VIP specials.
• Respect – respect your customer, respect their thoughts and their feedback

Keep in mind that a minor 5% increase in customer retention can equate to a 70% increase in profit. Apply these eleven trade secrets on every interaction and watch your loyal customer base grow.