At this point of the year, you have a pretty good idea how the numbers are going to pan out. This year has had its challenges for the automotive industry, but your fixed operations departments have weathered the storm well.

If you’re a typical dealership, you’ve had a 40 percent churn in your service advisors this year, and you’ve had to focus on retaining your technicians. Domestic and import dealers alike have had Takata airbag recalls to deal with, not to mention the supply issues associated with that. You’ve fared well despite the increasing trend towards dealership service department abandonment.

Your doc tells the story of 2016. You can identify your huge wins and your major battles by looking through each line. And while every store is a little different, one common theme will resound as you shift your focus to next year: you will be expected to do more.

Celebrate Victories While You Can

Take a moment to reflect on your 2016. Your team has made it through some seemingly impossible times; days that you thought would never end. You’ve had times when you were on top of the mountain too, and those are the moments you want to remember.

Along with your team, make time to celebrate your victories. Head out for a team dinner or host a small party where work isn’t your only topic. It’s important to remember the winning moments, because come January 1st, the slate gets wiped clean.

Set Your Targets

If your 2016 included an increase over the previous year’s numbers, great job! But be aware of one thing: you’ll be expected to do more in 2017. Your parts department may have experienced the largest year-over-year increase in the store’s history, achieving well above your forecast. That now sets your bar even higher, and you’ll have to outdo yourself next year. Your service team might have blown the 2015 GP out of the water, raking in tens of thousands more that hits the bottom line. Fantastic, now set your sights a little higher.

You’ll be expected to set your 2017 forecast higher, and that might seem impossible, especially if you had a blockbuster year. But you can do it, and you know it. You can squeeze a modest increase because, as you look at the doc, you can see areas that need improvement.

Where is Money Hiding?

No two stores are alike. An import store may struggle with one thing while a domestic dealership dominates in the category. Your location or your staff can affect how your dealership operates. That means the increases you’re expecting in 2017 will probably come from different places. Here are a few places to analyze, because you might be leaving money on the table.

Discounting

There’s a number of reasons that discounting can happen, but a bunch of reasons it shouldn’t. When your staff discounts parts or labor – even removing shop supplies from an invoice – it takes directly from your net. Keep a close eye on any discounting that happens in your department. It might be totally legit, or it could be being abused. Keep your staff accountable for discounting and you could see your profit margin increase.

Sales per RO

You can only raise your labor rate so high, but there are ways to increase your RO sales, even just a bit. Shop your dealership’s services among the other dealers nearby. You may find you’re selling yourself short on certain things. A dollar here and there, and you’ve managed to bump your net up without needing to sell more.

On the other hand, you might need to increase average sales per work order. Review ROs daily to determine if sales opportunities have been missed. Use it as a teaching experience for your staff.

Warranty Rate Increase

Your warranty rate will never match your CP hourly rate, and you’ve come to accept that. But is it where it should be or are you due for an increase? Applying for your warranty rate increase is a time-consuming, frustrating practice in most cases, but it can be rewarding. Especially with highly-technical vehicles that take hours longer to repair, you want to get the most from your warranty time.

Set aside time to audit your warranty labor rate. That might take several hours or days in itself because it’s never easy getting more money from your manufacturer. It may be well worth it.

Whatever your department’s weakness might be, set achievable and realistic goals for improvement. It will never be perfect, but we can strive for as close to perfection as possible, right?

Can you increase sales in the service department without chasing away your customers?

The goal of the service department at any dealership is the same as every other department: generate an income for the owner. Moreover, there’s an expectation that the profits will increase year-over-year. The responsibility for that growth falls squarely on the shoulders of the service manager and their team, namely service advisors and technicians. But is sales growth possible without chasing away faithful customers?

Labor Rate increases versus inflation rate

According to the Bureau of Labor Statistics, the US inflation rate has slowed from three percent on 2011 to just one percent in 2016. That indicates nearly stagnant financial growth for the vast majority of Americans.

In 2011, the average dealership labor rate was in the vicinity of $104 per hour. That number also varies significantly based on geographical location in the United States, but is an average across the nation. In 2016, the average labor rate charged by car dealerships nationwide has increased to $129 per hour.

What that indicates is the labor rate for auto repairs is nearing a ceiling. While economic growth has slowed to a crawl, dealership labor increases have forged ahead at nearly five percent per year. Additional labor rate increases have the potential to push customers to alternate vehicle service and repair choices that charge lower rates.

How, then, can an automotive dealership increase their sales without increasing their hourly labor rate? What challenges does it pose to customers and to service employees?

Ways to increase sales dollars

A critical component to increasing sales through the service department is to maintain the focus on added value to the customer. Should the concentration shift away from the client, it may be quickly noticed that efforts go unrewarded, and may even be detrimental to business.

Here are a few methods to increasing sales in the service department without bumping up the labor rate:

• Monitor the service process closely. From the vehicle walkaround in the service drive to checking in with a service advisor, right through to the technician’s inspection and repairs and subsequent estimate, the processes that are set out for employees to follow should be adhered to. Regularly follow a work order through the whole process to ensure every person is performing their role fully. Otherwise, sales dollars are being left on the table.
• Offer mobile services. A growing industry trend is mobile vehicle servicing or vehicle pickup and delivery. Lincoln has claimed that every 2017 model year vehicle will be offered vehicle pickup and delivery for maintenance and repairs during the warranty period. While Lincoln is providing this service free of charge, customers don’t expect convenience to be free. Offer mobile services or vehicle pickup and delivery for a premium charge.
• Provide services that save customers time. Consider items where customers are required to make an additional appointment elsewhere. Services such as glass repair can be performed at the dealership with little training and almost no cost for materials. These services can be performed by a junior technician at a low labor cost, meaning even at a competitive price the gross profit is still quite acceptable. Dent repairs or upholstery repairs can be subleted and marked up and, though marginal, the profit will improve sales figures.
• Emphasize accessory sales. Parts and service departments both profit well on accessory sales and installation. A prominent accessory display at the service desk can trigger an impulse purchase from customers who see it. Accessories show pride in vehicle ownership and are perceived as good value by those who purchase them.
• Offer full-service vehicle detailing. Again, the labor costs of detailing staff are on the low end, meaning competitive pricing can be offered to customers without sacrificing gross profit. Provide upholstery cleaning, exterior scratch removal, and complete vehicle polishing for high-ticket detail services that customers will be happy to pay for.

Among each of these services, it is imperative that pricing is competitive. That doesn’t mean offering the lowest price but it does mean being in the same ballpark. If the services offered are exceptional – truly better than the competition offers – it’s quite possible to charge a premium and still be good value.

Get the whole team on board

Successful increases in sales are a team effort. It requires a concerted push from vehicle write-up through to the completion. For that, every team member involved needs to buy into the process.

Regardless of the method of increasing sales dollars, the process is the same.

• Make the objective clear. Determine a specific target to achieve through the chosen method. If the goal is to increase sales $10,000 per month, ensure that every involved team member knows the goal. The targets should be realistic and measurable and should be well-researched and metered before implementing the process.
• Make the benefits clear to staff members. Requesting more productivity from any particular role with a reasonable expectation of success hinges on answering one question – “What’s in it for me?” Knowing how the team will benefit and how each individual will benefit from the increased sales is a great way to motivate the team towards the new common goal. Be prepared with this information as the process is rolled out to prevent opposition.
• Track the sales increase. As with developing any habit, it takes 21 days of repetition and consistency to cement a new sales process into daily routines. Follow up daily with each team member involved in the chosen method, reviewing their performance toward the goal and encouraging them on.

Set a timeline to review the implementation and assess if the goals have been achieved, exceeded, or missed. It may be necessary to revise the sales target or select a different process to implement, but do so only after a concerted effort.

Once again, the emphasis must be placed on the benefit to the customer in order to achieve increased sales without hurting the customer base. If clients don’t perceive value, few will buy into the process without straining the future service relationship. 

We all love to think we are irreplaceable; that the function we perform can’t be done any better than us. But let’s not kid ourselves. When you’re gone, there’s going to be someone who takes your place. They’re going to sit at your desk, in your chair, and maybe even drink their coffee from the same mug.

And how your replacement performs is completely within your control.

At one time, I had a mentor tell me that if things could not go on just as well if he died or moved on, he failed. At first it sounds self-deprecating, like you’re not important to the process. That’s not how it’s meant, though – actually, quite the opposite.

Chain of Command

He modeled his leadership after the armed forces, and no, not like a drill sergeant. When you’re in the army, you’re responsible for making sure the person that ranks directly below you is trained to fill your shoes. In that way, if you were killed on the battlefield or promoted, your replacement could slip in and take over your role with a moment’s notice.

When you feel like your role is pivotal, like you’re the officer in charge of a whole platoon, that’s when this ‘chain-of-command’ approach is even more crucial. What happens when you leave and you don’t have a clear replacement?

In the army, chaos would reign. Structure is the rule. How would your replacement be decided? Would it be left to the privates to hash out? Or would a high-ranking captain need to assign the duties without knowing who is best for the job?

The same goes for your department. There should be clear structure of the ranks; of who reports to whom. And everyone should train a person below them in rank.

 Dealership Boot Camp

If you’ve put staff around you that want to excel, who want to become all they can be in the dealership, you have your replacement already. Now you need to groom them for your job. Let’s make this clear: this is not just teaching skills. This is equipping your staff to truly become your equal.

It’s a process that’s ongoing, and goes hand-in-hand with professional development. Where professional development is a general concept that trains critical thinking skills and positive habits, training your replacement is much more focused.

Be Intentional

The first step to training your replacement is identifying your protégé. You see the person who asks the right questions and has a keen awareness for how your job is done. If you had to, you could narrow it down to one, maybe two, people. Discuss your intentions with your protégé so they know precisely what the end result is supposed to be. If they aren’t sold on training for the role, encourage them to think about it but don’t force it. You may have to pick your second choice.

Set aside time

Schedule regular times for training. Develop one skill at a time. Assign leadership-building resources as homework. Get them involved as silent attendees to management meetings. And when you meet for your training sessions, make sure they know your expectations for the next time around.

Perform test runs

When you’re away on vacation or away sick, it’s a great time for your staff member to get some real-world experience however short it is. On your return, debrief with them about their experiences and any challenges.

Dealer-Wide Concept

When your replacement is filling your shoes, you’re now leaving a gap where they once stood in the line. This training method truly works at its best when your whole department and dealership buys in. Your replacement should be training their own replacement. And the one under them should be learning new skill, and so on.

It’s no secret that promoting from within the ranks is the smoothest way to transition for any kind of job, whether it’s the Army, a fast-food restaurant, or the service department at a Chevy dealership. The time to restore full productivity is much less and there are fewer speed bumps along the way.

If you haven’t thought about stepping into a promotion, you may need to set your sights higher. The process goes for you as well. Learn the job above you, for the same reasons. And when the times comes for you to move up or move out, it’s your duty to make sure the department and dealership can run just as smoothly without you. 

There’s an old adage: “There aren’t enough hours in the day”. For some, that applies to recreation, like trying to stretch a fishing expedition out a little longer. For others, it’s all about family time. Who doesn’t want to spend more time with their kids and spouse? And for many, many more, it’s about getting all their work completed.

You have a purpose for the career you chose. It’s not all about the money; it never is. It’s about the things you use those greenbacks for. It’s about buying a bigger fishing boat and better tackle. It’s about taking a week off for a family vacation in the Caribbean, or buying a new swing set for the little ones. It’s about saving up for college educations at Ivy League schools for your kids.

For me, it’s about being able to spend time away from work. I love to hunt and fish. My wife and I enjoy heading out of town to our little hideaway in the woods where the crickets lull you to sleep at night and the bustle of the city can’t be heard. That’s why I work.

I can’t count the number of times I’ve said that there aren’t enough hours in the day to get everything done at work. That’s especially true of when I was a service advisor for a major domestic dealership. I would fret and get myself all worked up, trying to leave my desk at the end of the day with all my loose ends tied up, often getting home late, and even more often getting home stressed out and grumpy.

I discovered the problem wasn’t the clock, and it wasn’t my job. It wasn’t my supervisors or skill set either. The problem was my time management, and it’s painfully obvious to see now.

My Achilles Heel

I’ve always worked well under pressure, and that could be part of my problem. When things are quiet and relaxed, I have a tendency to procrastinate my duties until later or even another day. When the environment is fast-paced, I excel. I gather that’s because I don’t have a choice in the matter to be lazy and complacent. Obviously, that can lead to poor communication or follow-up which the creates its own stress later on. But that’s not my main issue.

I’m a self-proclaimed tech genius. If you need someone to help you figure out your infotainment system, how to pair your new phone to Bluetooth, find a wiring schematic for a 1970 Dodge Dart, or track down a discount on a pair of sneakers from a retailer in Hong Kong, I’m your guy. I was almost always the person who was called upon to fix printer issues, install software programs, or virtually any other task when the IT guy wasn’t around. That was always a reliable go-to excuse for poor performance – “I’m too busy doing other things” -- but was never truly my worst problem.

I know now that I was never good at time management. I’m still not. It’s something I was never taught on the professional level, and it became my Achilles heel. If you want an expert procrastinator or excuse maker, I’ve got that mastered. But time management? Nope, not me.

My day would start like everyone else, writing work orders and performing walkarounds (on MOST cars). I would fall behind as soon as the morning rush slowed down, right around time for a coffee run. I’d return to a mess of estimates to call, customer phone calls I’d missed, and the late morning customers that just arrived. Being commission-based, I’d grab another customer and postpone the phone calls. Finally, late morning, I’d get around to calling the impatient customers who’ve left messages and selling estimates for the impatient technicians who’ve already kicked the vehicle out of the shop.

That would be the case once again after lunch hour. By the end of the day, I’d have to scramble to get all the work out the door, be there for customers arriving late (because of my poor time management), and apologize to my wife yet again that I had to stay late to get things complete.

Perhaps the worst part is the following day. When a customer is upset about the lack of follow-up, poor communication, or unmet expectations, their comments have a way of reaching the ears of management. Being called into the office to account for a customer’s poor opinion of your service has a way of reducing your self-worth to rubble.

If I had to do it all over again…

I would absolutely ask for more structure to my workload. Not everyone has the same needs for time management training, and you’ll notice the people who have it mastered already. Speaking from personal experience, more people need help with it than not.

Unlike other professions, even among the auto industry, service advisors usually don’t have any certifications. Some may have been technicians first, but most have very little post-secondary schooling if any. That leaves a gap in real-world style training. Universities expect students to manage their own workload, teaching an important skill for life after the classroom. Without that taught structure, some people, like me, flounder.

How you can help

If you’re a service or parts manager, fixed ops director – or any other manager, really – you probably have an employee’s face in your head already. It likely rings true for someone in your dealership, and you can help them out.

If they’re at all like me, they truly do want to succeed but haven’t learned a few fundamental skills to do so. Here are just a few tips you can use to help them flourish instead of falter.

• Help the employee develop a point-by-point timeline for daily activities. Laminate it so the employee can use a dry-erase marker to tick off completed tasks every day. A visual list can help someone like me assess the workload still remaining before home time.
• Check in with your staff member throughout the day. Someone who just manages will just look to discipline mistakes after they happen. A leader such as yourself will help prevent the mistakes in the first place.
• Eliminate distractions in the workplace. I’d often follow a rabbit trail on Facebook or Google News, and my work would fall behind. Some sites like Facebook, Twitter, and Instagram aren’t required for your staff to do their job unless managing the dealership’s social accounts is their role. Block those sites from work computers to minimize time-consuming distractions.
• Coach your staff when complaints come in. Ask what they are prepared to do differently to avoid a time management problem they’ve been called out for. Give suggestions for improvement instead of ultimatums for employment.

Time management is a learned behavior. It’s a skill some of us are great at, while others (like me) may struggle with it for the rest of our lives. Remember that it is a coachable problem. Helping your staff through their time management issues doesn’t just help them today and for their entire future, it increases your dealership’s productivity. Everyone wins.

Members of LinkedIn are bombarded with memes and motivational pictures. Between the Ned Stark photos and the cool car pictures, everyone seems to think they have your answer to management issues. There’s one in particular that is excruciatingly common. It goes something like this:

“When I talk to Managers I get the feeling they are important. When I talk to Leaders I get the feeling I am important.”

There are hundreds of variations and motivational quotes that follow the theme, and there’s no question of the validity of the statements. It’s true that a manager instructs their team to accomplish a task. Aptly, a leader accomplishes the task alongside their team.

There’s a missing link in nearly every picture, meme, motivational quote, and encouraging statement, not to mention in the (lack of) management training materials at the dealership. While everyone knows there’s a qualitative difference between managers and leaders, no one tells us how to implement it.

What does it actually LOOK like to be a leader instead of a manager? You can find the inward personality traits that each typically has in books all over the place, and in articles on LinkedIn and professional resource sites everywhere. But how does it manifest in the people who are great leaders instead of just good managers?

My Experiences

Let’s start small. I began my automotive career like many others – in the detail bay. I washed every car that came through the doors, summer or winter. The crusty tower operator was my direct supervisor and it was obvious why he wasn’t exactly the most liked person in the building. He was aggressive and demanding.

The thing is, when I wasn’t doing something quite right, he would jump in and show me how to do it right. Whether there was a more efficient way of cleaning floor mats or my soap mix wasn’t right, he wouldn’t just tell me what to do to fix it – he’d show me. Often, more than once.

And when I was in the weeds, he was there to catch me up. It wasn’t his actual job to do it, but he saw a need and came to my aid. I can remember cleaning the windows on a smoker’s car three times before it was satisfactory, and only with his help so production wasn’t held up. On busy winter days when vehicles iced up as soon as the water spray hit them, he’d pull the next vehicle in for me so it could warm up.

At the time, I didn’t think of him as a leader, just a jerk. But he taught me skills – not just car washing skills – that I continue to use to this day. The biggest one – you’re never too big to help those below you.

A few years later, I displayed interest enough to work my way up as a service advisor. A couple years in that role left me wanting a bit more, and I threw my name in the hat for a vacancy for the tower operator. My manager at the time was hesitant. I shouldn’t have been surprised, though, because I was a scant 22 years old. I was still wet behind the ears and had much to learn.

Maybe no one else wanted the job, or maybe I was actually the best candidate. Whatever the reason, I took the seat in the tower and did quite well at it…in time. See, the manager knew that an inexperienced and young team member in such a crucial role would take time to get up to speed. Knowing this, he took the educated chance, fully aware there would be part of the burden he’d have to shoulder himself.

I’ve never worked for a more patient person. It’s only now, from the outside looking in, that I see how much of the load he must’ve bore while I was getting up to speed. The lesson he taught has also stuck – when you’re a leader, you carry part of everyone’s load so the team succeeds.

Perhaps the most important lesson I learned came from the DOC. Rather, from the person who introduced me to the DOC. Again, as a youthful tower operator, I was quite successful with the numbers. My role included claiming labor times and quoting estimates for repairs, and I was great at getting every .1 submitted and paid. And then I heard about all the background numbers…

The DOC opened my eyes. It’s like going from the production line at a LEGO plant, making one rectangular red brick for years on end. Then one day, you discover all the amazing and complex structures LEGO can build, and with so much more than just your red bricks. The DOC helped me discover WHAT numbers were actually important and WHY we do things and WHERE the money goes and WHO is having a great month and WHEN we needed to pull up our socks. And my manager showed me HOW it all tied together.

The lesson I took away from the manager wasn’t actually to do with the DOC itself, although it made me much better at my job and every role I’ve held since. The lesson I learned was to train the person below you for your job. It’s a military mentality. If something happens to you “in the field”, your team should be able to carry on with hardly a stutter. If everything falls apart when you are absent, that would be considered a failure in my eyes.

There have been dozens of managers that I’ve worked with and worked for that haven’t been nearly as involved in shaping my career. They were the ones who instructed and commanded without explaining the WHY in the process. If you want to see better results from your team members, give them a glimpse into what they’re working toward. That could be revealing certain parts of the financial statements, or it might be more pedestrian like explaining your expectations for the coming month. If you’re grooming someone for your position when you move up or move out, let them know – it tells them you value them and gives them a goal to work towards.

Where do you put yourself in the spectrum of managers or leaders? Give your anecdotes and personal wins/fails as a manager or leader. Find encouragement and inspiration in the stories you hear from your peers.

Your store has a steady stream of customers with recall notices in hand, storming through your door. But unless you haven’t had access to the internet, television, or a newspaper in the past three or four years, you’ve noticed that it’s not just your particular brand that’s been inundated with recalls. It’s industry wide, and it’s because there are more stringent safety and emissions standards than ever before.

Everyone has the same problem – you want to focus on customer pay work, not the piddly .2’s and .3’s that most recalls bank for you. So, your view of recalls becomes tainted. There are thousands of recall customers to deal with in your area, yet you don’t want to reach out to them because they aren’t generating a windfall for your department. They’re plugging up your service drive, your shuttle seats, your parking lot, and consuming your advisors’ day without producing any real results on the bottom line.

Likely, you have pressure from the manufacturer to pound through the recalls as quickly as possible. They want to show that they’re taking the problem seriously, “ensuring public safety” and whatever other catch phrases they can come up with. The end of the recalls doesn’t appear to be in sight.

You can turn it around. Recalls don’t have to be a bane. They can be a boom for your dealership instead. It’s all about finding a process that works for you and your staff, and one that produces results – long-term, revenue-generating results.

Here are a few ideas on how to make that happen.

Make recall customers feel important

Often, if a customer has an appointment for solely recall work, they’re viewed as a second-class customer. They can feel it. They are sluffed off to the junior service advisor who is left to clean up all the scraps, receiving inexperienced, slow service that only increases their frustration.

Make your recall customers feel just as wanted as your customer-pay clients. Because that’s exactly what you’re going to turn them into.

If the customer senses that they aren’t wanted, they aren’t going to open their wallet before, during, or after the recall work is completed. You won’t sell them a wiper blade let alone a transmission service or electrical repair. If they feel like you truly value them, their safety, and their patronage, you may just crack their billfold open.

Get your senior service staff involved in recall customers

Show your recall customers that they are valued by putting your best people on the job. Senior service advisors have the experience to put a customer at ease, making their visit more pleasant and comfortable.

The problem you’ll discover is that senior service advisors know the money is in customer pay work. A minor recall is hardly worth their trouble. That’s when you remind them of their role – to care for every customer the same, converting non-paying customers into those who gladly fork over their money to your service department.

You might have to incentivize recall customers for your staff. You can spiff your advisors for converting recall-only customers into CP customers, and you will find that the best advisors will rise to the challenge. The thing is, they already know this but any commission-based position needs to be reminded occasionally that there’s a ceiling with easy money, but you can break through that ceiling if you bust your…hump.

Streamline recall repairs

You’re not going to convert every recall customer into a paying client on the same visit. It would be folly to think otherwise. However, if you provide exceptional service, you may just earn yourself another visit from that customer in the future where the purse strings have been loosened.

A common procedure is to dedicate a few specialized technicians to recall work, especially during the heaviest periods of a widespread recall. Vehicle after vehicle, that’s all they do, accurately performing recalls for fast, consistent repairs. It has the potential to significantly reduce wait times and can ease the pressure on your shuttle service or loaner cars.

Go the extra mile

As mentioned, recall customers can be made to feel like second-class citizens. Show them that they are valued customers by treating each one to a car wash or some other bonus service while they are in. Make sure it doesn’t chew up too much time or it could backfire in its intention, damaging your survey scores (if your recall customers get surveys) but more importantly, damaging your delicate relationship so they don’t return to you in the future.

Convert your recall customers into sales prospects

Many recalled vehicles are three years old or more. Those are the perfect customers to target for a service-to-sales handoff. I know – you’d prefer to keep your customers in older cars because maintenance and repair costs are higher. But switching your recall customers into new cars not only increases their satisfaction, it also creates a much stronger opportunity for long-term customer retention.

Make a plan with your sales department to offer a bonus or spiff to specific recall customers. Make sure your service advisors know all about it and are on board to convert on the opportunities. There’s no reason not to try switching a recall customer out of their ‘flawed’ vehicle and into something new and shiny.

The overwhelming number of recalls that are currently floating around, whether from General Motors, Fiat Chrysler, Toyota, Honda, or virtually any other brand, is staggering. Your view of recalls can quickly become jaded or just washed out. It’s important to remember that it’s not just about customer satisfaction for your recall customers, but converting on opportunities to increase your service department’s productivity.

Treat your recall customers as first-class customers with friendly, courteous, and complete service, and you’ll reap the rewards. 

They’ve always been your biggest customer and always will be. In the franchised dealership world, new and used car sales are indirectly the biggest piece of the pie for your service department and parts department income numbers. But there’s a reason the sales department is known as variable operations, not fixed ops like you.

The sales world operates in the ebb and flow model. Some weeks, months, and even years are stronger than others hence the term “variable”. There are influences that cause trends including economic upticks and downturns, new model releases that draw pomp and circumstance, and news releases like widespread recalls.

The trend in sales numbers has been on an upward swing for years. Since the economy’s tables were overturned in 2008, where the American automotive world suffered one of the largest setbacks in history, sales numbers have been steadily increasing.

That bubble might soon burst though.

The automotive sales numbers in 2015 set a record. Light vehicle sales were up 5.7 percent over the 2014 sales numbers which were also the strongest ever. Originally, 2016 was expected to once again blow the doors off and increase sales, and car dealerships set their forecasts on those expectations.

Now those forecasts are being revised. 2016 is shaping up to fall short of the impressive sales numbers posted in 2015, not exceed them like originally thought. Both LMC Automotive and Bloomberg have revised their expectations recently.

The sales environment, unlike the fixed ops departments, is volatile because of outside influences. During a customer’s procurement phase, their purchasing decision is heavily influenced by what’s going on in the world, not just on what is going on in their life. Economic fluctuations are obviously a factor as are political changes on the home front and on the world stage. Brexit as well as the American politics have dominated the news and cause insecurity, meaning customers are warier of making big purchases like vehicles.

Top that off with two other items: recalls and manufacturing fluctuations. Major industry players like Takata have issued recalls that affect several carmakers. Volkswagen’s Dieselgate debacle has crushed the TDi sales numbers worldwide, not just in the US. And just this week, General Motors expected to halt production at several plants because one of their parts suppliers was going bankrupt.

You might wonder why this matters to you. You may not think it’s important to you at all, or maybe plays a very small role in your department.

The thing is, you COUNT ON the sales department for a big slice of your income. Every vehicle the sales department sells injects money into your service and parts departments. When those sales numbers dwindle, your gross profit dwindles. You already know this, but you still count on the sales department for a reliable source for your department’s income.

I know you have to plan out your coming year for financial forecasts. Every dealer does it – you need something to input into the doc. Realistically, that number shouldn’t be hard and fast. If it is, you’ll pat yourself on the back when you exceed those numbers, and because of something you didn’t really have control of. Or you’ll beat yourself up over missing the target even though there’s nothing more you could’ve done.  

Then what should you do?

The income your service and parts departments receive from the sales department – the pre-delivery inspections, the used vehicle safety inspections and certifications, the tire sales, and the accessory sales and installations – that can all get cut to a mere fraction of your current numbers at the tip of a scale. One major disaster, one political party folly, or an international incident can make that income stream dry up overnight.

If the sales department isn’t selling, there will be less inventory turnover resulting in fewer new cars to prep and fewer trade-ins and auction cars to certify. What won’t change are the number of people who already have vehicles.

Focus on your current OUTSIDE customers.

Yes, the sales department is your single largest customer, but the rest of your customers make up somewhere near 80 percent of your total income. When you count on your sales department to keep you afloat, you’re hanging your hat on numbers that can change as quickly as the wind direction. The rest of your client base will still need somewhere to service and repair their vehicles whether or not they are buying a new one.

Your outside customers are the reason you are a fixed operations department. There is always going to be a customer base to which you can provide service, advertise, and provide total satisfaction. Here are a few tips on how to focus on the customers you can count on, the outside clientele.

Make scheduling customer work your priority.

Your sales department understands that they aren’t your only customer, just your largest. Your outside customers, though, don’t care if the sales department needs a vehicle safety inspection completed or a new model prepped to go in the showroom. They want their vehicle done in a timely fashion. Schedule your shop capacity focusing on fulfilling your customers’ needs first, then fit your sales department’s needs in as it’s possible. The exception should be sold vehicles to be delivered to a customer – treat these like an outside customer’s vehicle.

Keep an open dialog with the sales department.

Set up a point of contact or liaison with the sales department to determine the priority vehicles. Knowing who needs what and when they need it can help you facilitate everyone’s needs in a timely manner, most importantly your outside customers.

Treat each customer to the highest level of service.

Make sure all of your customers are receiving full and complete care. These happy customers will be repeat customers that will continuously fill your service department. They will also be the repeat SALES customers, meaning several more years of repeat visits. The key is to provide exceptional customer service every visit. Just one bad experience can be enough to send your customer on a search for a new servicing dealer.

Maintain a social media presence.

Your parts and service departments should be highly visible. Attracting new customers is expensive, then turning skeptical first-time customers into repeat customers can be the hardest of all. Social media makes potential new customers feel like they already know you, and reinforces your value and relationship with current customers. It’s free or nearly-free advertising and is completely focused at strengthening your department.

Variable operations managers, general managers, and dealer principals, I can’t emphasize enough how important your business is to your fixed operations departments. It’s crucial. In an ever-changing automotive landscape, fixed operations needs to maintain a focus on keeping their departments full and busy, even when the variable side slows down.

Have you found a way to strike a balance between the varying workflow from your sales department and your service customer base? What works for you?  

In medieval times, when a severe punishment was handed out, the convicted party was often sentenced to time in the dungeon. One such prison was known as an “oubliette” which comes from the French term to forget. It was solitary and frightening and often prisoners would starve to death as their captors paid no attention to their wellbeing.

In the automotive industry, we could refer to the parts department as the dungeon.

There’s little glamour in working in the parts department. Every role, from dealing with irate customers at the front counter to placing orders for ornery technicians at the back counter – there’s nothing about the job that doesn’t seem like a harsh punishment.

Those working in parts departments across the country know what I mean. It’s like the rest of the dealership looks at you with little regard, because after all, how hard is it to pick parts off a shelf? If only they knew…

Parts personnel, you are not forgotten. Your role is more important than anyone else knows, and probably more important than even you know.

Holding it all together

The parts department is the linchpin at your dealership. They are a fundamental tie between departments no matter which way you slice it.

Without parts, your sales team could not do what they do. There would be no license plate brackets, no wheel locks, no block heater cords, and definitely no accessories. Good luck finding the right floor mats for your recent sale, by the way.

Without parts, your service department would literally be at a standstill. There would be no oil or filters for basic services, no tire patches for tire repairs, no one to tell you which additional gaskets you need for your head gasket job, and no one to price out those laundry-list estimates you’re trying to sell.

Without parts, your body shop would be twiddling their thumbs. They wouldn’t be able to price out amendments to insurance claims, locate aftermarket parts for those fender-benders, or determine the paint code for virtually every car they are working on.

Without the parts department, your dealership operations grind to a shuddering halt. Why is it that parts team members struggle to get the respect they so often deserve?

I’ve worked with a few absolutely fantastic parts people over the years (shout-out to Amy Fakes, Kevin Henzel, Chris Nickelman, Satbir Dhillon, and Rob Webster) who know their stuff better than any one of the techs that request parts from them. Do they know the head bolts need to be replaced without being told? Absolutely. Do they know you need dielectric grease for that electrical repair? Yup. Will you have both seals you need for the job when you only ordered one? Definitely.

Anyone who thinks working in the parts department is a joke or is easy to do, think again. Better yet, step into their space for a few days to see everything they do. What you don’t see comprises the bulk of their job. Here’s an incomplete list of a day in the life of a parts consultant:

• Order parts for technicians
• Field customer phone calls (with incomplete information – need a VIN number)
• Pick parts for technicians
• Pull accessories for a salesperson to show their customer
• Put away the stock order
• Call the manufacturer for a radio code
• Call the manufacturer due to a missing part listing (insert half-hour hold here)
• Order special order parts for customers and technicians alike
• Return special order parts that were never picked up
• Grab lube tech an oil filter (no, not that one, the other one)
• Order shop supplies
• Call for aftermarket parts/issue purchase order/receive and invoice aftermarket parts
• Stop for morning coffee break…if there’s time.

You get the idea. So when your parts team members look weary sitting behind the parts desk, or more likely standing, cut them some slack. None of their job is self-serving.

Level the playing field

Hopefully you have a better understanding of what goes into the role of a parts team member. It’s amazing that such pivotal people are behind the scenes, isn’t it? So maybe it’s time the parts department received some much deserved attention.  

First, it would make their day if you simply tell them how much you appreciate their hard work. What they do for your dealership is seldom recognized, and when it is, it’s even more seldom expressed directly.

Next, consider your training regimen. When your manufacturer puts on training sessions in your city, do you send your parts staff to attend? If your sales and service staff are involved in training exercises, there’s a good chance that your parts personnel would also benefit. This rings true for new model releases especially, but ride-and-drive events are always a good reward for your parts staff too.

Then, think about their personal development. Is there a parts person who should be groomed for the next parts manager position that opens up? Or is there someone who is using the parts department as a stepping stone to a different position? Some of the strongest candidates for high-level positions might be getting overlooked in the parts department.

Finally, have their backs. It’s so easy to come down with the full force of Thor when there is a part discrepancy. Maybe a wrong part was ordered or something was missed on an order. Maybe the person who requested the order incorrectly described the part or demanded the order without a VIN to verify. There are so many variables in the parts department that it’s literally impossible to get every order correct every time.

So cut them a bit of slack. They’re working with you as hard as they can – usually without the visibility that frontline staff get and almost assuredly with less pay than you think. They don’t desire a confrontation with you or anyone else.

Do you have a method of recognizing your parts personnel in the same fashion as the rest of your dealership team? How do you ensure parity between your departments? Weigh in with your thoughts on the subject. 

After a recent conversation with a big fish in the Canadian automotive fixed ops industry, Walter Schirrmeister, VP of Fixed Operations at The Dilawri Group, I was struck with how seldom the basics are actually discussed in detail. I mean, they’re basics, right? That means a quick overview means you can execute the basics without fail, day in and day out…can’t you?

If that were the case, there would be no need for fixed operations managers, and rarely a need for service managers either. Unfortunately, the basic principles of the service department, in particular, are set aside for the newest trend coming down the pipe. The newest wave of marketing, social media presence, and customer satisfaction indexes – they all take our priority and attention while the “basics” are given lower importance.

As Walter reminded me, there are three basic principles for the service department:

• How many work orders you write
• How many hours per work order you sell
• How much money you keep per work order

While customer satisfaction is critical and reaching our customers is crucial, how we maximize the results every time they visit is what it all boils down to.

I’m sure you’d agree your service department is not a charity. Every staff member, from the cashier up to the dealer principal, depend on your service department to generate a profit. Your customers expect to spend money when they come through your door albeit in exchange for a valuable service. It’s up to you to make those basic principles come to life.

We’re going to review the basics here, if for nothing else than to keep them fresh in your mind. As ideas spring up for how to improve, jot them down, then act on them.

Write Work Orders

Are you aware of how many work orders each of your service advisors are writing? It’s going to vary depending on the size of your store and any additional roles or expectations you ask of your advisors, but an experienced one should be able to comfortably handle 12 to 15 customers per day. In that range, your service advisor should have plenty of time to attentively write up each work order, track them throughout the day, sell any required estimates, and assist in the vehicle pickup and cash-out.

If it’s 8 to 10 that your advisors are handling, you need to ask why. Are your appointment numbers dwindling, requiring additional marketing on your part? Is your advisor not working to their capacity and expecting someone else to pick up the slack?

If your advisors are writing 20 or more work orders in a day consistently, you might want to consider easing their burden somehow. Can you hold back a few appointments per day? Do you need to hire another advisor? Writing 20 or more work orders in a day is a recipe for burn-out and will likely start exhibiting diminished customer care. You may see hours per work order drop off or a higher number of customer complaints and bad CSI surveys. You may just have yourself a rockstar service advisor, so keep an eye out for that as well…

Sell Work on Those Work Orders

You obviously track your hours per RO. You didn’t get to where you are by neglecting that number. Each store is vastly different on what they consider an appropriate hours per RO, so you’ll have to be your own judge on how you stack up in this category.

What you can do is keep track of your improvements. Have you implemented a target for your service advisors and a way to achieve it? How are they doing with achieving that goal? Do you have someone that isn’t pulling their weight and needs either encouragement or additional training or support?

One suggestion: calculate how much additional gross and net profit you’d see by improving your hours per RO by just a tenth of an hour, then see if it’s achievable for your store’s performance.

Keep your Service Sales

This number, friends, is your Effective Labor Rate, or ELR. It’s what you’re effectively selling every hour of your department’s work. You want this number as high as possible because it has a very direct correlation to your gross profit.

There are only two ways to improve your gross profit. You can either raise your labor rate or you can improve your effective labor rate. Raising your labor rate costs your customers more money and is by far the more difficult route to take.

Improving your ELR is the most straightforward way of improving your gross. About ELR, Walter Schirrmeister says, “It’s found money. You’re not charging anyone any more. You’re just taking care of the problems, the crap that shouldn’t happen.”

What crap is that exactly? There are two main issues.

• Discounting. Every service manager has had that conversation with their service advisors about giving unauthorized discounts, so it shouldn’t be an issue anymore, right? Guess again. You’ll be surprised how often your disappointing ELR is because a service advisor is giving discounts. An easy way of tracing the issue is to pull every work order that has less than 70 percent gross profit and determine precisely why it is that way.

If you can stem the flow of discounting, you’ll see the results in your ELR immediately. And, when your service advisors know you’re watching for discounts, they will come to a grinding halt.

• Paying more than you should. In a service department, things get messy when you want to pay less for a service than before, but in some instances, it’s a necessity. With today’s modern alignment technology, it no longer takes a technician 1.5 hours to complete a four-wheel alignment. Most can be completed well within 45 minutes or less, so why pay more than twice that time? And does a full-rate technician need to perform the alignment, or can an apprentice complete the task just as well? By paying a lower rate technician to complete the job in a reasonable time frame, you can improve your ELR by several dollars.

It’s not an easy conversation to have, truth be told. You will likely experience a push back from the technicians who are losing out on gravy work. As a manager, it’s your job to make the tough calls that are primarily best for the business while caring for the needs of your staff. Your full-rate technicians will have time for other full-rate work that they are qualified to perform instead, and a technician that’s a team player will understand…just maybe not right away.

As a service manager, you’ve got a hard role to perform. You have to balance a happy and productive staff with the business side of your department. If you’ve gotten away from the basics, you may have a difficult task ahead to correct the course, but ultimately, what is your priority? Running a profitable department.