Looking forward to the New Year and in most of my conversations with executive level management about their fixed operations business, they have indicated that 2016 represents an opportunity to make a few little changes to have a really successful year. Some of these changes they point out are doing a better job handling the increased traffic or improving on the customer experience slightly to achieve high levels of customer satisfaction. All of these tactics are well deserved and certainly needed but I would suggest adding one more element to those tactics to maximize their effectiveness.

I have yet to have a discussion with any level of executive leadership that indicated the changes that they will be making to make the team stronger and yield better results. Here is a suggestion, invest your time into your people and help them build strong teams.

I recently read an article on HBR.com that discussed the importance of using the word “together” when developing your action plans for change or implementing a new policy. They continue stating that studies show a dramatic increase in the performance and engagement of an employee that is in a workplace with relatedness.

“The feeling of working together has indeed been shown to predict greater

motivation, particularly intrinsic motivation, that magical elixir of interest,

enjoyment, and engagement that brings with it the very best performance.”

As I read this article and related it to the automotive dealership I was constantly reminded that in most cases, under the same roof, three or four teams work very independently. The teams I am referring to are the Sales, Service and Parts teams. Although history would not indicate this is going to change anytime soon I would encourage any dealer to get everyone working together as a cohesive team.

“So what we need is a way to give employees the feeling of working as a team, even when they technically aren’t. And thanks to new research by Priyanka Carr and Greg Walton of Stanford University, we now know one powerful way to do this: simply saying the word “together.”

Two thousand and sixteen will be a great year for the automotive industry but we need to be aware of the cyclical nature of our business and what is looming out there in the years to come. I am reminded of a saying that applies here “you fix your roof on a sunny day.” So Today, lets focus on our people, build a well-informed cohesive team that is a ready for what the industry will throw at us.

As you are preparing for 2016 and finalizing your forecast, keep in mind the biggest opportunity for improvement: Building a passionate work culture that is able to deliver high-level results.

In the biology world the term “culture” refers to the cultivation of microorganisms. Relating this to the automotive industry, I automatically refer back to the latest NADA workforce study where it states that in an average dealership, barely 50% of the employees make it to the three-year milestone. Stores that exceed this level see an increase in sales and customer satisfaction scores due to the actions of a senior staff. As leaders in this industry it is time to invest your efforts in growing and building your team, creating a positive workplace culture and maximizing your human capital.

Culture is made up of the values, beliefs, underlying assumptions, attitudes, and behaviors shared by a group of people. Culture is the behavior that results when a group arrives at a set of - generally unspoken and unwritten - rules for working together.

 - Here are some tips in building a positive workplace culture

• Have a clear vision statement
• Establish trust for all employees and the employer
• Insist on mutual respect between employees and management
• Have a positive attitude and look for a positive attitude when hiring
• Open door policy
• Open communication and keep employees informed of exciting new changes

Human capital is the stock of knowledge, habits, social and personality attributes, including creativity, embodied in the ability to perform labor so as to produce economic value.

 - Here are a few tips to grow your human capital

• Embrace creativity
• Encourage growth in knowledge, have a clear training plan
• Think laterally and solve problems through an indirect and creative approach
• Discuss issues in a solution-oriented way
• Improve employer and employee relationships

To begin leveraging human capital and a positive workplace culture start with the basic measurement of the effectiveness of everything from training programs to employee engagement. Use these analytics to make decisions on grooming talent and finding ways to keep it. Companies that place a premium on human capital, measuring it, and treating it as a pure asset will increase the margin between those that succeed and everyone else.

As you are preparing for 2016 and finalizing your forecast, keep in mind the biggest opportunity for improvement: Building a passionate work culture that is able to deliver high-level results.

In the biology world the term “culture” refers to the cultivation of microorganisms. Relating this to the automotive industry, I automatically refer back to the latest NADA workforce study where it states that in an average dealership, barely 50% of the employees make it to the three-year milestone. Stores that exceed this level see an increase in sales and customer satisfaction scores due to the actions of a senior staff. As leaders in this industry it is time to invest your efforts in growing and building your team, creating a positive workplace culture and maximizing your human capital.

Culture is made up of the values, beliefs, underlying assumptions, attitudes, and behaviors shared by a group of people. Culture is the behavior that results when a group arrives at a set of - generally unspoken and unwritten - rules for working together.

 - Here are some tips in building a positive workplace culture

• Have a clear vision statement
• Establish trust for all employees and the employer
• Insist on mutual respect between employees and management
• Have a positive attitude and look for a positive attitude when hiring
• Open door policy
• Open communication and keep employees informed of exciting new changes

Human capital is the stock of knowledge, habits, social and personality attributes, including creativity, embodied in the ability to perform labor so as to produce economic value.

 - Here are a few tips to grow your human capital

• Embrace creativity
• Encourage growth in knowledge, have a clear training plan
• Think laterally and solve problems through an indirect and creative approach
• Discuss issues in a solution-oriented way
• Improve employer and employee relationships

To begin leveraging human capital and a positive workplace culture start with the basic measurement of the effectiveness of everything from training programs to employee engagement. Use these analytics to make decisions on grooming talent and finding ways to keep it. Companies that place a premium on human capital, measuring it, and treating it as a pure asset will increase the margin between those that succeed and everyone else.

Understanding the difference between a “transactional customer” and a “relational customer” is the first step to helping your team succeed in customer satisfaction and future sales.

Applying an ideal training program that gives your employee the competence and the confidence to help customers properly and start building a “relational” type customer is the next step.

“Sales people are not needed to quote prices. They are the bridge between the selling price and the perception of value provided to earn the sale – Jeffery Gitomer

A transactional customer is simply there to fill their current need. They are customers that you will see in your service department once a year or maybe once every two years having a repair completed on their vehicle. Compare that to the relational customer when you review their service history they have pages upon pages of service history and their service history includes all type of services from oil changes to mechanical repair.

Here are a few more quick examples comparing the two different customers we see on a daily basis.

Transactional Shopper

• Only focused on todays need, has little thought of future purchases
• “Good deal” Price is the number one influencer in purchase decision and are very happy to negotiate
• Have already become the expert of the needed repair due to the research they have already performed

Relational Shopper

• Considers todays purchase as a series of future purchases
• Motivating factor or purchase decision is confidence in making the right decision, not price – They are simply looking for the “right place to buy”
• Looking for an expert they can trust

Now it should be very easy to see and determine what type of customer you would like to see more of in your service drive. Now lets take the next step and talk about the most effective way to help your staff achieve this goal.

Training – the key to helping your team become better is first recognition, and then developing a training plan to help overcome some of these type of roadblocks in service.

A consistent training program will help your team identify these customers and have the confidence to help convert all your customers into a relational type long-term loyal customer. Here are some training tips to accomplish this.

• Repetition – Train, train again and then train again. The more you talk about it the more effective it becomes
• Variety – Discuss the same topics if necessary but look at it from all angles and apply a different approach.
• Small Doses – instead of having an hour-long session consider 4  - fifteen minute training sessions to keep it short and simple and not a burden.
• Apply knowledge quickly – encourage employees to apply todays training content immediately, even on the next customer.
• Interesting – make it interesting and encourage collaboration.
• Feedback – encourage feedback from your employees for future training.

Now that you are looking at your customer base differently, discuss it with your team and help them identify the benefits of having relational type customer in the service drive. Knowing that a relational type customer is looking for an expert to help them make the right decision, apply a training program that gives them the confidence to be the expert.

Understanding the difference between a “transactional customer” and a “relational customer” is the first step to helping your team succeed in customer satisfaction and future sales.

Applying an ideal training program that gives your employee the competence and the confidence to help customers properly and start building a “relational” type customer is the next step.

“Sales people are not needed to quote prices. They are the bridge between the selling price and the perception of value provided to earn the sale – Jeffery Gitomer

A transactional customer is simply there to fill their current need. They are customers that you will see in your service department once a year or maybe once every two years having a repair completed on their vehicle. Compare that to the relational customer when you review their service history they have pages upon pages of service history and their service history includes all type of services from oil changes to mechanical repair.

Here are a few more quick examples comparing the two different customers we see on a daily basis.

Transactional Shopper

• Only focused on todays need, has little thought of future purchases
• “Good deal” Price is the number one influencer in purchase decision and are very happy to negotiate
• Have already become the expert of the needed repair due to the research they have already performed

Relational Shopper

• Considers todays purchase as a series of future purchases
• Motivating factor or purchase decision is confidence in making the right decision, not price – They are simply looking for the “right place to buy”
• Looking for an expert they can trust

Now it should be very easy to see and determine what type of customer you would like to see more of in your service drive. Now lets take the next step and talk about the most effective way to help your staff achieve this goal.

Training – the key to helping your team become better is first recognition, and then developing a training plan to help overcome some of these type of roadblocks in service.

A consistent training program will help your team identify these customers and have the confidence to help convert all your customers into a relational type long-term loyal customer. Here are some training tips to accomplish this.

• Repetition – Train, train again and then train again. The more you talk about it the more effective it becomes
• Variety – Discuss the same topics if necessary but look at it from all angles and apply a different approach.
• Small Doses – instead of having an hour-long session consider 4  - fifteen minute training sessions to keep it short and simple and not a burden.
• Apply knowledge quickly – encourage employees to apply todays training content immediately, even on the next customer.
• Interesting – make it interesting and encourage collaboration.
• Feedback – encourage feedback from your employees for future training.

Now that you are looking at your customer base differently, discuss it with your team and help them identify the benefits of having relational type customer in the service drive. Knowing that a relational type customer is looking for an expert to help them make the right decision, apply a training program that gives them the confidence to be the expert.

Human capital is the stock of knowledge, habits, social and personality attributes, including creativity, embodied in the ability to perform labor so as to produce economic value.

Providing ongoing training not only helps your employees perform their duties with more efficiency, but it also adds to their satisfaction and fulfillment within their job. To this date, when performing exit interviews I have never heard an employees reason for leaving was excessive training and investing too much into their career development. Unfortunately we do a poor job giving our employees the foundation of training it takes to succeed?

I do believe that a small percentage do a good job in this area, but the large majority within our industry fall below the minimum acceptable level.

Here are a few benefits to having an ongoing training program

• Reduce cost of turnover – A recent survey indicates that 40 percent of employees who receive poor job training leave their positions within the first year.
• Enhanced company image – Your customers are able to “feel” the culture of a business. A culture of a turnover-laden business does not increase customer satisfaction; actually it will directly affect you negatively. An enhanced company image will help you retain additional customers and employees.
• Increased employee motivation and efficiencies in processes – Quite often after a training session, I will have an employee come to me with a proposed solution to an ongoing problem or process that will improve customer satisfaction. There have been many times when the proposed solution was not implemented, but at least I know where the frame of mind was for my employee and they were looking for ways to improve our business.
• Increased professionalism – You never get a second chance to make a first impression and again this holds true here as well. Especially within our business we could use a little shot in the arm to up our professional standards.
• Increased sales and profits – This is one that does not happen immediately after a training session, so don’t loose sight of the end goal. Although not immediate, it is proven that someone that is properly trained will yield greater success within his or her career.

The greatest preparation for the future comes from planning and investing in your people. The best and most effective way to do this is develop a well-rounded training program.  

Human capital is the stock of knowledge, habits, social and personality attributes, including creativity, embodied in the ability to perform labor so as to produce economic value.

Providing ongoing training not only helps your employees perform their duties with more efficiency, but it also adds to their satisfaction and fulfillment within their job. To this date, when performing exit interviews I have never heard an employees reason for leaving was excessive training and investing too much into their career development. Unfortunately we do a poor job giving our employees the foundation of training it takes to succeed?

I do believe that a small percentage do a good job in this area, but the large majority within our industry fall below the minimum acceptable level.

Here are a few benefits to having an ongoing training program

• Reduce cost of turnover – A recent survey indicates that 40 percent of employees who receive poor job training leave their positions within the first year.
• Enhanced company image – Your customers are able to “feel” the culture of a business. A culture of a turnover-laden business does not increase customer satisfaction; actually it will directly affect you negatively. An enhanced company image will help you retain additional customers and employees.
• Increased employee motivation and efficiencies in processes – Quite often after a training session, I will have an employee come to me with a proposed solution to an ongoing problem or process that will improve customer satisfaction. There have been many times when the proposed solution was not implemented, but at least I know where the frame of mind was for my employee and they were looking for ways to improve our business.
• Increased professionalism – You never get a second chance to make a first impression and again this holds true here as well. Especially within our business we could use a little shot in the arm to up our professional standards.
• Increased sales and profits – This is one that does not happen immediately after a training session, so don’t loose sight of the end goal. Although not immediate, it is proven that someone that is properly trained will yield greater success within his or her career.

The greatest preparation for the future comes from planning and investing in your people. The best and most effective way to do this is develop a well-rounded training program.  

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.