As there are several different departments in dealerships, each with their own goals and targets, it is quite common for inter-departmental fighting to occur – a woe of many a manger. This happens because each department attempts to preserve revenue within their own department – other departments be darned!

For example, the used car manager will complain about the cost of reconditioning vehicles because it eats into the potential front-end gross profit they could potentially make– and that’s what their pay plans are based on. Or, the service department is hesitant to refer customers back to sales and/or to F&I for service contracts, preferring instead to keep revenue in their department through higher RO dollars.

A recent article in Automotive News reports how this dynamic only serves to hurt a dealership’s overall bottom line. However, according to the article, there may be a solution – at least one that’s working for several dealerships; and that is sharing the wealth, if you will, by incentivizing service to refer customers to sales and/or to F&I for service contracts when a customer comes in and is presented with a hefty service estimate. In fact, at one dealership, 30 percent of customers referred by service purchased extended service contracts, 10 percent purchased new vehicles and, as a desirable bonus, the retention rate in service was a very healthy 84 percent. All for $25 per service contract!

The key? Creating pay plans that incentivize both sales and service to refer customers to F&I for service contracts. Think about it. Any salesperson or service advisor is eligible to make some extra $ and its great motivation to refer their customers to F&I. 

The result is that, overall, the dealership wins for multiple reasons. First, there is less in-fighting and more teamwork in the dealership which improves the company culture. Second, the employees are happier because they can make additional money every month. Third, customers who purchase a service contract will continue to service at that dealership, rather than any competition. And last, but not least, the profit generated in F&I will increase the dealership’s bottom line.

Seems like a win-win to me. And my guess is that dealers would rather have the profit and service retention gained through the sale of a service contract than the $25 they pay the service advisor or salesperson who referred them.

Help your dealership employees and departments work together by incentivizing them to do so. It has been proven to be extremely successful for other dealerships, so why not yours?

One of the staples for service department is tires, including sales, mounting, balancing and alignments. Tires are a price leader for your dealership and a great way to get customers in, providing you the opportunity for additional service work revenue.

Well, what if your customers no longer need to buy tires from your dealership? What if they could simply go on Amazon and buy them cheaper – just like everything else on Amazon? Cheap doesn’t mean easy though. Who wants tires delivered to their home or office, where they must pack them into their vehicle and get them to a service station to be installed? 

Here’s the deal…Amazon has just solved the EASY part of this equation. Now they own a cheap and EASY way for customers to order tires and get them installed.

How can Amazon, an online retailer with no physical stores, compete with your service department?

Easy, they partnered with Sears Auto Centers! Amazon tested the partnership at 71 Sears Auto Centers this winter/spring and have already expanded it to well over 150 locations nationwide. Now, customers that order parts on Amazon, including tires, can have them shipped directly to their local Sears Auto Center for installation. Not only is it super convenient for customers to order parts, the clear majority of Sears Auto Centers are located right next to a mall. Customers can drop their vehicle off, go shopping at the mall, or have lunch, then pick up their vehicle as part of a convenient day of errands and activity. This is a very different experience to waiting at a dealership or having to get transportation to and from the dealership, which is usually on dealership row, away from easily accessible fun activities for customers.   

Naysayers may discount the importance of this development, but they shouldn’t. With the acquisition of Wholefoods, Amazon has proven it’s no longer happy staying purely in digital e-commerce. And, while Sears was a retail giant last century, they have closed hundreds of stores over the last decade. I read about their financial troubles all the time and Amazon could easily buy Sears, or even just Sears Auto Centers, and create a whole vehicle service network to compete with dealerships.

Amazon is pushing even further into the bricks and mortar retail world. In fact, it recently announced that Amazon Prime members (which account for a whopping one-third of United States citizens at 100 million members) can now enjoy a healthy 10 percent discount on Wholefoods’ purchases.

There’s a reason behind everything Amazon does. It’s calculated, and they don’t care whether they disrupt or destroy a whole industry. And, it appears, it isn’t slowing down on its entry into the automotive industry. From parts, to at-home repair services -- and now tire and parts sales installed at a Sears Auto Center retail location -- the path ahead can only lead to more disruption in the auto service industry.

How are you as a dealer supposed to counteract this? The only way is to ensure customers choose your dealership for service work and tires is by providing a superior customer experience. As dealers, you must start looking at all your services the same way Amazon looks at things - from the customers perspective! You must analyze every step in your service process, remove the friction points and be extremely CONVENIENT for your customers.

The times they are a changin. The time to get ahead of the competition is now – well actually it was yesterday. But, if you act now, you can create your own superior customer experience and avoid the fate so many other retailers have suffered thanks to Amazon’s disruption.

Sales alone will only get your dealership so far. You need to retain your other profit centers to remain viable, both financially as well as in the minds of your customers.

In this video blog, Ujj Nath shares why AI will never completely replace humans and why.

If you have been paying attention to industry trends I am sure you have noticed the ever-increasing gap between the size of smaller dealerships and large auto groups. Groups are swallowing up smaller dealers left and right as they continue to grow.

Of course, size matters when it comes to many things in the dealership world and the consolidation of the industry will end up primarily giving the large dealer groups cost advantages. They can acquire and maintain larger inventories and attract more consumers, decrease the costs of doing business by creating their own brand of bulk OEM parts straight from China and handle more service business simply because they have more bays and more technicians.

How then, are small dealerships supposed to compete?

Well, let’s talk about what can happen as these large groups continue to expand… they risk becoming mediocre. With the volume of vehicles they now need to sell, and the quantity of vehicles that must be serviced, the simple act of juggling this volume of work can quite easily turn them into more of an assembly line.

That’s where the smaller dealerships will find their edge. Smaller dealerships can have a more personal approach and provide more individual attention to their customers which can make them stand out. They can operate in a more agile manner, performing vehicle analysis for free and ranking them “Now” and “Later” so that the customer feels that you are truly looking out for them. The idea is to do something that large structured organizations typically don’t give the advisors or service managers the leeway to do.

I can personally relate to an incident where giving your service advisors more latitude, rather than less, (as large groups tend to do with their controls) would have helped. I had taken my Audi in for service, which was done on Friday, but I went to pick it up on Saturday. It was stored on the roof and, because of construction on a nearby building, there was a layer of sawdust on it. While they had washed the car, they did it right after service and so after the wash it got covered with sawdust. My bill was $3,500. I asked if they could wash it again, but they were thinly staffed, and the replacement advisor told me that it would take 45-minutes to get it done, at which point I left and went to a car wash and got it done myself. 

Wouldn’t it have been very powerful if the service advisor had said - “Sorry for the inconvenience, I am crediting you $25. Please take the car to a car wash as you are in a hurry!”  Simple things ... easy to do ... give every SA a $50 discretionary customer satisfaction discount.  Which is something luxury hotels routinely practice.

There are simple things that can be done in the service department such as improving communication with the customer with a better system of status updates and ETAs. Or offering multiple forms of communication including text messages, along with email and phone based on customer preference, would be a great start.

Smaller dealership can provide that personalized service that customers find satisfying and unexpected.  I have yet to see a dealer that does not discount their services to keep customers. How about offering a pickup and delivery service so that customers can get their cars repaired in the luxury of their home.

Now is the time to start thinking about what your dealership can do to differentiate itself if you want to compete in the future. The large auto groups will only continue to grow larger, so make sure that you don’t find yourself getting smaller at the same time.

In this video blog, Ujj Nath shares more uses for video walkarounds than just inventory merchandising.

Ujj Nath explains why old-school paper multi-point inspections are outdated and shares a better solution for dealers in this video blog.

In my recent travels I went to Tokyo and Kyoto in Japan. A few things struck me: just how space efficient and clean everything was.

I visited the famous Tsukuji wholesale fish market. To my surprise, there was no smell of fish. The local sushi restaurant (where I lined up at 4 am for the 1st seating at 5 am) served their sushi on the countertop. Yes, the countertop was so clean that you could literally eat off the table!

Now onto the infamous toilet seat.

I was training a dealer in the Northeast (and yes, I still do training). I mentioned to my consultant who was accompanying me that he should invest in a $1000 toilet seat to replace his current one. I had caught him off-guard, and he burst out laughing, unable to contain his laughter. He wanted to know why, and I explained to him all the things that this seat did; I decided to tell him the story of visiting a Shinto shrine in Japan.

When I wanted to use the public restroom at the Shinto shrine, they wanted me to take my shoes off. The thought of doing that in the public restrooms of the US would have appalled me! I did it anyway and was surprised to find spotless bamboo tile flooring with no paper towels on the floor. There were also bamboo sandals that we could wear to use the toilets. The toilets had bidets in them too. The cleanliness of the whole affair totally impressed me, to the point that when I got back to the US, I did some research and found this $1000 toilet seat that converts a regular toilet into a bidet.

At the dealership I was training, my consultant had already shared my “story” with all the dealership personnel. For a short while, I became the brunt of their jokes, until everyone saw this promotional video for the toilet seat https://youtu.be/U8KyBlGWI2k.

Now, why am I writing about a blooming toilet seat?? What Toto (the toilet seat company) shows us is that if you step back, look at any product or process, and get rid of the underlying assumptions, you can innovate just about anywhere. This is sorely needed in automotive service. We need to get rid of our assumptions and create innovative products and services that eventually bring convenience and luxury to the customers.

For today’s consumers, time is the ultimate commodity. No matter how much money they have, consumers are always on the go with their busy lives. Whether that means shuttling the kids to soccer practice, or running a bunch of errands, when it comes to fitting vehicle service into their busy schedule it is often viewed as a large and inconvenient time sink.

To help improve the service experience and enable customers to better occupy their time, dealerships across the nation have installed amenities ranging from shuttle service, to in-dealership restaurants, to mani-pedi services -- even movie theaters.

A recent article in Automotive News shares an interesting story about an ultra-luxury dealership; Post Oak Motor Cars in Houston, Texas, that recognizes how customer retention is the MOST important goal for any business.

In fact, this dealership will do just about anything to satisfy a customer and overcome the time objection. Their customer amenities are all based around saving time – and they are quite something! Are you in need a helicopter to bring you to the dealership? Done. How about a chauffeured Rolls-Royce while your car is being serviced? Want pick-up and delivery service? They’ll pick up your vehicle in an enclosed trailer, service it and deliver it right back into your garage – even across state lines.

Yes, this is an ultra-luxury dealership which services brands such as Ferrari, Rolls-Royce and Bugatti (amongst others); and their competitive edge is that they are willing to go to any length to earn (and keep) service business. Of course, given the price of these vehicles, they deal with very wealthy clients. And one of their biggest challenges is communicating with them. A star football player can be very difficult to reach via phone. So, what do their customers prefer? Text messages and emails. And not only does the dealership provide these methods of communication, it also provides each service customer with video and photo documentation of services to ensure the ultimate in transparency, keeping their customers informed and engaged. And it works.

Don’t worry, I am certainly not suggesting that your dealership should run out and buy a helicopter, or drive to other states to service (and return) vehicles. The lesson here is that regardless of whether you’re a domestic or high-line franchise, customers of every income value time over just about everything else, (including service coupons). It’s no longer discounts that motivate customers, but rather time-saving amenities. It doesn’t matter whether the client is a pro-athlete, celebrity, or stay-at-home mom – or whether they own a Ford Focus or a Bugatti.

Next time you’re considering how to improve customer retention and build your client base, instead of looking at things that make the customer’s WAIT AT YOUR DEALERSHIP less boring, try thinking a little bigger. Think about how you can make their wait at your dealership non-existent (or as much as possible.) You might find that saving time is more important to them then providing a free lunch or a movie.

Ujj Nath sends a wake-up call to dealers as Amazon enters the automotive service business in his new video blog.

Most dealerships at the very least conduct some form of multi-point inspection and inform the customer about any needed repairs discovered during the inspection. But what happens if those recommendations aren’t properly documented?

Well, failing to document those recommendations can be an expensive mistake – and not just because you miss out on any future revenue as you cannot follow up on declined recommendations. There is a whole other side to the importance of documentation as relayed in a recent Automotive News’ Fixed Ops Journal article, which tells an interesting story about a very expensive lesson a California Ford dealer had to learn the hard way.

According to the article, the dealership purchased a Ford F-250 at auction then sold it to a customer who returned it complaining about “multiple steering problems.” The dealership then resold it and the new owner subsequently brought it into the service department with similar complaints.

The issues were never resolved and, sadly, while towing a van the truck had a blow-out and rolled over twice, resulting in permanent injury to the driver. And, of course, the driver took the dealer to court.

As the dealership could not provide documentation proving that it had, in fact, informed the owner of the worn ball joints, the jury awarded the driver a $7.5 million settlement against the dealership.

If you do not have a good system for documenting your service recommendations, it’s time to update your technology -- you are leaving future revenue on the table and are also at risk for similar litigation.

Many solutions now exist that could prevent this verdict from happening. I recommend having the tech do a video walk around on an iPhone, an iPad or Android Phone, then storing those video recommendations in the cloud.

First and foremost, I don’t believe that any dealer would intentionally withhold service recommendations – especially those that could endanger their customers. And, according to the dealer, they did inform the customer… but couldn’t prove it. That is why it is so important to make a record, AND have it stored in a way that is fast and easy to access. You can then follow up with the customer for future service revenue and protect your dealership from any liability issues.

No court could hold you liable if you recommended service, the customer declined it then unfortunately had an accident due to a part left unrepaired. But only if you have the evidence to prove it!