Not Taking Action Has Consequences

Yesterday I had the privilege of addressing a room of Service Managers and Factory Personnel. And I have to believe that everyone in that room was there to find or gather some new information that would help them take action on something that might be causing them some problems at their Dealerships.

Why would you attend if you had no hope of getting something, right? I hope that everyone one of them got something that they can use right away at their Dealership this week.

And because I had a long drive home afterwards I started thinking about the consequences of not taking action.

In the Service Department the consequences really multiply quickly.

Lets take a look at John Q. Advisor.

John Q. is a underachiever at ABC Motors. His HPRO is at .9 and his Gross Profit Margin is below 70%. Now, John Q. is not necessarily a bad guy. In fact, he is a likeable and hard-working employee. He comes to work on time and believes he contributing to the overall success of the Service Department.

Johns current performance level is not acceptable. And the consequence of not taking action has verifiable results. Lets break down the numbers.

With his .9 HPRO at the national labor rate of $85.00 an hour, John is earning  $76.50 in Gross Labor Sales per RO. Add in his Parts Gross Sales of $61.20 per RO (which is a 80% parts to labor ratio)and that adds up to a total of $137.70 per CP Repair Order written.  John has been performing at this level for 3 months.

The national average is 1.5 HPRO. By accepting Johns performance it is costing the Dealership money.

How much money?

Using 1.5 HPRO as a benchmark, adding .6 at $85.00 equals $51.00 in Gross Labor Sales. Factor in the Parts Gross of $40.80 and each RO that John Q. writes is costing the Dealership $91.80 in LOST SALES!  John writes an average of 220 CP ROs a month.

That is a $20,196.00 per month loss of income and over a 3 month period that adds up to $60,588.00!

I have to ask you, would you pay any Advisor $20,196.00 extra  a month? $252,352 a year?

By not taking action, YOU ARE!

Everyday that John is not held Accountable for his performance there is a concrete and verifiable  loss. Not only a monetary loss but a performance loss that affects the whole department as well.

Why?

Accepting Johns performance sends a message to everyone in the Dealership that there is a lack of accountability and that continued performance at this level is A-OK! In fact, John and every employee in the Service Department need not worry about their future…it is secure at ABC Motors.

You know what is worse?

John thinks that it’s ok. Should John go to another Dealership for whatever reason, he would soon find himself out of a job, again.

Why? Because Underachievers are not tolerated everywhere!

So not only has John Q. become a drain on the daily cash flow at ABC Motors, the Service Manager at ABC Motors is costing the Dealership money as well.

How is that possible and Why is it the Service Managers fault?

By not Taking Action, not providing Training and Coaching and not holding Jonh Q. Accountable for his daily performance, the Service Manager is perpetuating Poor Performance and Condoning it!

Do you have a John Q. in your store?

Are you suffering the consequences of not taking action? What are you going to do about it!

Training is the basis for Exceptional Performance. Call 888-553-0100 or send an email to lbuchholz@dealerprotraining.com and find out how the right Training will make a difference in your Dealership.

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2 responses to “Not Taking Action Has Consequences

  1. Very Good post Leonard! This kind of situation not only applies to service, but can apply to sales as well or any department for that matter! You are correct, great management/leadership would/should resolve the issue and lead to greater profitability.

  2. Thanks Bruce! Absolutely correct in your observations.

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