You think you’re dangling an enticing lure in front of your customers’ eyes. You plan to set the hook and reel them in. But what you don’t know is that the lure you’re using is completely ineffective!

Yes, that’s a nebulous analogy but you’ll see where it’s going very soon. It includes a challenge for everyone reading this to take a look at what you’re presenting to your customers.

From My Experience…

I’ve just completed a major purchase, one that’s very similar to that of buying a car: a travel trailer. I spent hours browsing online, searching for just the right layout and configuration for my family’s needs. I visited probably 10 to 15 dealer sites – maybe more – looking for the elusive ‘white whale’ of travel trailers.

And then I did. I found the right floor plan and the right equipment. But what was extremely tough to find was a list price. What I wanted to know is approximately what I should expect to spend for my desired trailer. And time after time, I was frustrated by the lack of pricing available. What was on more than 90 percent of the VLPs was a statement that makes my innards burn: “CALL FOR PRICE”.

You Haven’t Earned a Call Yet

Think of it as it applies to your online shopping and research experiences. When you come across a listing that demands you “CALL FOR PRICE”, how do you respond? I can tell you, my initial response is to find another dealer who will give me a price online. When you require your potential customer to ‘take the bait’ on a bare hook, you aren’t going to land many fish.

It’s because you haven’t earned a response yet. The goal for vehicle listing should be to create warm leads; to generate true potential sales. If someone is contacting you to find out a price, they’re already irked that you haven’t given them information they want and, for all intents and purposes, should already have from you.

You Don’t Want Their Call

And if you’re a salesperson who gets that phone call, you’re already behind. The conversation is no longer about the product or the experience – it’s all about price. No matter how much better your dealership performs, there’s very little chance you’ll sway the customer on any other metric than the price. Can you say “Mini”?

Take a look at your website today. Are there vehicle listings, parts specials, or service menu items that tell the customer to ‘CALL FOR PRICE”? If there are, think about how you’d respond if you were in the customers’ shoes. Then consider why your listing is like that. Is it because you don’t have a price available for the unit yet? Or, are you fishing for price-based leads that whittle your gross profit down to a nub?

If you’re fishing, you need a worm on your hook to get a bite. If you want customers to respond to your vehicle listings, give them a full, juicy, tantalizing description complete with a price.

In the past few weeks, we’ve covered topics like treating service customers and sales customers similarly, the supporting role service team members play in converting sales, and interdepartmental relationships. What hasn’t been discussed plays a very direct role in vehicle sales, and it’s a hot button: labor rates!

It’s a hitch for both new and used car departments. As it related to new car sales, labor rates can impact the bottom dollar. New Vehicle Prep charges are virtually standard, so that’s a non-issue. There aren’t a lot of repairs for new car inventory that’s charged to the unit, that’s not worth our time. But there are accessory sales (at least there should be).

Then, in the used car department, it’s a whole other animal. Everything is up for debate, from the initial reconditioning inspection charges and certification repairs to the detailing and body repair charges. This is an area where the service department hits a home run, and the main reason service departments consider the sales department their biggest customer.

Between both the new and used car departments, I’ve seen the labor rates structured in different ways. Everyone seems to have their own formula for what ‘works’, but it’s not often both the service and sales teams are satisfied with how it functions. Here are a few structures I’ve noted in the past:

Accessory Sales

• On both new and used vehicles, labor is charged at about 60-70 percent of the door rate. It keeps accessory sales in-house but really isn’t a great deal for the service department. Because the rates are so low, selling accessories brings down the average dollars per RO, and often the hours per RO – both KPIs for service departments.
• Accessories are installed at the full door rate but at warranty times. That keeps the gross much higher but takes a big hit on the hours per RO. It could work if your CP volume is sufficient to minimize the effects.
• Accessories are installed by junior technicians that operate on an hourly, or straight time, basis. This hurts profits less because of the lower cost of labor, but still has negative effects on the dollars per and hours per RO.
• Charge full rate for everything. Service is happy but sales can’t seem to sell anything more than mudflaps.

Used Cars

Ah, the elephant in the room…

• Charge low rates for inspections, oil changes, and detailing. Then, when the inspection is complete, estimate all repairs and services at full bore. The result is often two-fold: higher-priced units on the used car lot that are more difficult to sell and lower profit, or more units going to auction, ending up on the car lot beside you, and being retailed for a hefty profit by your competition.
• Low cost inspections again. Then, used car inventory is separated into two groups based on a dollar threshold. More expensive used cars are charged full rates for everything while the lower-budget units are discounted 30 percent or so. Parts comes to the table as well, lowering their markup too. This helps get more units on the lot and seems to be a decent compromise. You might find the UCD tries to take advantage of the program, slipping higher-priced units into that pile to maximize profits.
• Like the above situation, there are two categories of used vehicles. Higher-priced units go through the program as usual, but lower-priced cars are sent to a shop down the street for low-budget repairs. Service departments hate this because it seems like the UCD is taking money from their pockets. In many cases, though, these units would be wholesaled instead of going through the dealership’s service department, simply because costs are too high in-house.

I understand that what works for one doesn’t necessarily work for another. The best part is I’m not going to tell you what to do. I’d like to hear what your store does, if it works, and why it works. Hopefully by sharing your method, other dealerships can find a structure that benefits both the service department and the sales department.

You expect the occasional disgruntled customer or miscommunication when you work in ANY service industry. It’s a fact of life when you work with the public. But it seems that your best customer is the one that’s always the loudest one when they aren’t satisfied, and it’s not someone coming through your service drive.

This customer uses the back door. The staff entrance. This person is a familiar face and one you begin to rue after a while. It’s the used car manager.

When Steve, the used car manager, steps into the service department, it’s never with a smile and a soft-spoken word. When Steve has to make his way back to the service department, it’s because something hasn’t gone his way. Nine times out of ten, it’s because there’s a vehicle that’s not yet reconditioned, detailed, certified, or otherwise unready for the used car lot. So Steve’s not a happy guy.

What Goes Wrong?

Neither service managers, service advisors, nor used car managers are known to be subtle – especially when it comes to interdepartmental discrepancies. One thinks the other is lazy, another thinks someone has lost control, and someone else is thought to be completely unreasonable. You can figure out who’s who.  And so the problem always becomes a bigger issue than it has to, all due to ego.

Let’s play this out quickly: the UCD manager demands to have a vehicle completed right this minute. After all, it’s been 24 hours and it hasn’t hit the shop yet. The service advisor rebuts that there are customers with appointments that haven’t gone through yet. The service manager placates both parties somehow, making promises they can’t necessarily satisfy on both ends. And in the end, you have three frustrated staff and potentially dissatisfied customers (if their vehicle was bumped in queue). Nobody wins.

The argument that no service person wants to hear is this: “The used car department is your biggest and best customer”. Ugh. Unfortunately, it really is true, and somehow you have to keep your biggest customer satisfied. It’s much larger than just getting the work completed. It’s getting additional vehicles ready for sale and retailed so you have consistent work coming through the service department.

So How Do You Deal with the UCD?

There’s a balance to strike. Understanding is important. Flexibility is crucial. And cool heads have to prevail.

As a management team, the service and sales managers should have a pretty open relationship to discuss the ebbs and flows of their departments. Sales managers know when used cars have been purchased at auction, and when they’ll likely arrive. Service managers are aware of their workflow trends, and how many spare hours there are in each day.

Working together, an organic schedule can be written out. Make target timelines specifying how long each vehicle will ideally take through each step of reconditioning. 5 days for safety certification, 2 days for detailing, 3 days for dent removal and paint, and so on (purely sample numbers).

UCD managers have to realize that it takes time. Unless extenuating circumstances arise, no questions need to be asked until the vehicle is overdue. Service advisors need to understand that the sales department is, in fact, the biggest customer. That work is just as important as your customer appointments as it’s literally your “next generation” of customers that will be buying them.

The most important role is in the hands of the service manager. Controlling the workflow in the shop is a precision role left to a dispatcher, but done so at the behest of the service manager. When there’s an influx of used cars coming, the service department bookings may need to be reduced to allow the extra flow from UCD. It might not be a popular decision but it’s critical to maintaining a balance.

When a store has grown into a medium- to large-volume dealer, communication with Steve, the UCD manager, is probably best left to a single point person. In that way, Steve has only one person to inquire of for vehicle statuses, special requests, and the like. You free up your service advisors to deal primarily with the customers off the street, providing a high level of service on that end. You keep your UCD department satisfied with a point of contact that will be up to speed on all the ins and outs of each vehicle.

But because of the type of personality that is predisposed to the auto industry, someone will blow their top eventually, even with a structured plan in place. Give each other a little grace for these times. Another phrase everyone loves – “you are all on the same team.”