Tag Archives: Don Reed

The Service Advisor’s “6 Steps to Happy Bank Deposits”

Here is a simple way to make more every month.
It’s called the “6 Steps to Happy Bank Deposits” and it goes like this.

1st, write down what you make per month right now.

Your position in life is determined by what you believe.

Your position in life is determined by what you believe.

2nd, write down what you want to make per month. (Be Realistic) This is a crucial first step because if you don’t make a personal commitment to make a change in how you think about your income then you can’t make the income you desire. 
3rd, determine your Sales per Transaction. If you write an average of 180 Customer Pay Repair Orders per month and you average $45,000.00 dollars a month in Customer Pay Sales, each Repair Order you write is worth $250.00.
4th, decide what amount of increase you would like on each Repair Order. Write it down and be Realistic. Post it where you can see it everyday. Think of it as building a staircase. You can’t jump to the top of the staircase…you have to take each step one at a time. Make a commitment to yourself to increase by a specific dollar amount…say $25.00 on each Repair Order. 
5th, increase your Sales per Transaction by using the Tools (Menu, Multi-point Inspection, Maintenance Recommendations) and Techniques (Feature/Benefit Sales Presentation, Professional Sales Skills) to Communicate Effectively to the Customer the Information they need to Maintain their Vehicle in a Safe and Reliable operating condition.
6th, Deposit New Income from following these steps.

Set Goals, Be Successful!

By Leonard Buchholz


Uh Oh…Another Employee Quits

Resignation Letter

To: Dealer Principal

From: Fixed Operations Net Profit

Reference: Fixed Operations Gross Profit Resignation Letter

Dear Dealer Principal,

It has come to my attention that Fixed Ops Gross Profit has resigned effective immediately. Without the continued support of Gross Profit I cannot continue to be effective in the performance of my duties while adding funds to your Profitability. (not to mention your bank account)

I too have found other employment at a dealership that understands me and appreciates me for who I am. As you know, I am extremely sensitive to sudden changes in revenue stream, expenses and …ahem…”discretionary purchases” (if you know what I mean)

In the recent past there have been direct actions taken against me by personnel who do not have my best interests at heart. For example, the Service Department has stopped making appointments with adequate time between customers resulting in an instant revenue reduction in my department. In fact, last time I checked, they didn’t have a service drive process at all!

And because we don’t really have any processes in place (including how to answer the phone) there has been a decrease in customer pay RO count. Just last week I heard one advisor tell a customer they could not get in this week for service! And we have techs standing around at 3:30 most days!

I don’t know if you know this or not (and I am not trying to be a “disgruntled ex-employee”), but I heard that the parts obsolescence was at nearly 27% of current inventory! It has become very difficult to get any customers car in and out of the shop in one day due to a lack of parts availability. Just yesterday we did not have brake pads in stock for one vehicle and on another we didn’t have wiper blades.

In one case, the parts manager had to make an emergency purchase and then the advisor gave the customer a discount on parts and labor to make up for the extended wait time they endured while we were chasing down the parts!

Boss, there is not a Net Profit on earth that can work under these circumstances.

I have talked with Margins, HPRO and Effective Labor Rate and they are undecided on whether or not they will stay. Of the 3 (if I had to guess which one), I believe Margins have just about had it as well and will be leaving soon.

I never say never Boss, and if things change around here, I would be interested in getting a call from you.

With Sincere Regret,

Fixed Operations Net Profit

Resignation Letter

Resignation Letter

Date: Effective Immediately

From: Fixed Operations Gross Profit

To: Dealer Principal

Dear Dealer Principal,

It is with great regret that I must submit this letter of resignation effective immediately.

Although we have worked together over the past few years I don’t feel I can contribute to your bottom line anymore. It has been a great experience and I wish you and all of your dealership team the best.

I am quite excited about the opportunity that is in front of me. The team I am moving to have a firm grasp on my potential and have made a commitment to increasing my role while taking care of their customers.

For example, the advisors understand the difference between taking an order and taking care of the customer. They take the time to explain to every customer the different maintenance requirements of their particular vehicle.

And they make sure every customer gets a maintenance schedule with recommendations on how the customer can best take of their vehicle for longer life and greater customer satisfaction.

They even set up a quick lane service that is as convenient as the “aftermarket guys.” Yessir, they have the customer’s best interest in mind at my new place of work.

Those are just a few things they have done to attract new Gross Profit like me. In fact, they made an offer so attractive, I just could not say no. The best part…they even have an advisor service drive write-up process that practically guarantees my continued employment there for as long as I like!

Believe me when I say I contemplated a long time before deciding to make a change. I considered all the benefits of staying here and there are a couple. I know that every month will be the same as last month and there is something to be said for continuity I guess.

Also, doing the exact same things day after day without making changes does have some benefits. At least I always knew that I would have some small role in the dealership’s success. I have to be honest with you when I say that sometimes it was hard watching the other dealerships with larger Gross Profits, but I got used to it.

Perhaps that is what has finally led to this. All in all, I think the best word to describe my time here is “underachievement.” And without any new processes or changes, I’ve made the decision to part company.

I really wish we could have done more together. Good Luck to you in your future endeavors.


Fixed Operations Gross Profit

What is lacking in Fixed Ops?

Don Reed’s “Accountability”

“An Enemy Called Average”

The title of this article comes from the book “An Enemy Called Average” by John Mason. The purpose of his book is to get you from where you are currently to where you dream to be. Mr. Mason says “Break the chains of mediocrity and then live the life you dream of.” This of course can apply in your personal life as well as your professional one.

Far too often in our industry we have Dealers, General Managers, Service Directors, etc. who focus on and measure themselves in terms of the “average” dealer. Here are some examples:

“The average dealer is grossing $700 PRU in F&I income”

“The average salesperson sells 11 units per month

“The average Service Advisor sells 1.4 HPRO”

“The average CSI for my region is…..”

“The average …….for my 20 Group is ………”

Does this sound familiar to you?

Additionally your manufacturers also provide composites and reports showing the average this and the average that so you can compare yourself to what’s average.

Here‘s a simple exercise for you complete after reading my article. When you get up tomorrow morning ask your family to sit at the kitchen table for a brief family meeting before you go off to work and before the kids are off to school.

Stand up in front of your family and say the following: “It looks like it’s going to be an average day here in Hometown, U.S.A., and your average Dad and your average husband is going to his average job to put forth an average effort to maintain my average paycheck so I can support my average kids and my lovely average wife.

By the way kids, at school I want you to focus on getting average grades and you don’t really need to put forth the effort to be a great student so a “C” will be just fine.”

Does that work for you? How’s that average wife comment going to work out for you? Are you excited about holding that meeting?

If you are a manager how about you ask to meet with the Dealer and say the following: “Boss I just wanted to let you know that I think you are an average Dealer, so I’m going to give you an average effort today so I can produce for you some average results and manage my average department.” I bet nobody is taking notes on this one!

Let’s not forget what average really is. It is nothing more than a reference point.

Average means you are the “Worst of the Best or the Best of the Worst!”

Is that where you really want to be? I hope you answered NO WAY!

Well if that is true then why is it that when I speak to hundreds of dealers across our country I hear comments like “Well Don the average HPRO for my 20 Group is 1.4 and I’m averaging 1.5 so I’m doing a pretty good job.” No Sir-you are still hanging around with that “Best of the Worst crowd! Why do so many of you use the word average like it is a good place to be? Do you really want to be a straight “C” Dealer? Does the term mediocre Dealer appeal to you? I think not.

So how do you go from being average to becoming a Top Performer?

It all starts with one word-Commitment.

Are you committed to change? Are you committed to leaving your comfort zone? Are you committed to achieving different results? Think of it this way—when it comes to making “Bacon & Eggs” the chicken was a participant but the pig was totally committed.

If you, the Dealer, are not totally committed then nothing is going to happen differently. As Zig Ziglar says “You have the perfect processes in place to get you exactly what you got last year.” Get committed to change.

Next you must establish SMART goals. Specific-Measurable-Achievable-Realistic-Time based.

Here is an example: “I want to increase my retail HPRO by .5 over the next 6 months”

Specific: Yes it is—retail Ro’s only—increase .5 HPRO (Don’t forget to calculate how much specific gross profit you will produce on parts as well as labor with that extra .5 HPRO)

Measurable: Yes it is—your DMS can print a Service Advisor Performance Report DAILY showing the HPRO for each Advisor

Achievable: Not sure—what are my Advisors going to do differently to achieve different results? If they could sell the extra .5 HPRO why haven’t they already done so? Do they have a good menu to sell from? Do they have the proper communication skills and processes to make a feature benefit presentation to your customers? Are they willing to leave their comfort zones? Are they committed to change? (Chickens or Pigs?)

Realistic: Yes it is—since the average dealer is averaging 1.4 that means a lot of dealers are doing much better than 1.4 and since there is a multitude of dealers out there averaging 2.0 to 2.5 HPRO then another .5 is very realistic.

Time Based: Yes it is—you have 6 months to decide what you are going to do differently, what new processes will you implement, how will you train everyone on new skills that will increase their sales performance and provide the customer with a higher level of service?

Once you achieve your SMART goal then move on to the next one. Long term success is a journey not just a destination. That first SMART goal is just the first leg of your journey. Do not allow yourself to become complacent because you will gravitate back toward mediocrity.

John Mason in his book  “An Enemy Called Average” states: “Mediocrity is a region bound on the north by compromise, on the south by indecision, on the east by past thinking and on the west by a lack of vision.”

Every department in your dealership must be a profit center for the dealer who wants to thrive and not just survive in this very competitive industry of ours. The aftermarket service providers currently have over 80% of all the parts and service business in America. Don’t you think it’s time we started taking it back?

Don Reed-CEO

DealerPro Training Solutions

Don Reed in the UK!


Comfort Zone vs Accountability

As a Dealer, did last year bring you the return on investment that
you expected?

As a General Manager did you meet or exceed your net profit
for the year?

If you are a Fixed Operations Director did you increase your customer pay retail sales for parts and labor over last year?

For all three of you, is your Service Absorption rising year over
year? If any of your answers were “NO”, then you must ask yourself…why?

To begin with, your financial statements will show you where the opportunities for improvement (conditions) are but what they won’t show you is how to fix them. To fix them you have to know what’s causing the out of line condition.

Once the cause is determined you can then make the corrections
necessary to properly bring the condition in line with industry guides. For those of you who have ever written a repair order you probably recognized this as the “Three C’s”, Condition-Cause-Correction.

The Technician needs the Condition to properly diagnose the Cause which then enables him to make the necessary Correction. It’s no different for the Dealer, the General Manager or the Fixed Operations director when it comes to making money.

So, now that you have studied your financials carefully to determine the conditions that prevented you from attaining your respective financial goals, let’s determine what the cause might have been. I believe the culprits here are Comfort Zones and Accountability.

Everyone in your dealership has a comfort zone just as you do. The issue is not to get rid of them but to simply move them again and again until you achieve the results you’re looking for and then move them again!

This is important because it enables you to focus on the performance
of your employees. Next, you must hold them accountable for their individual performance.

Currently, most of you are doing that in the New Car, Used Car and F&I departments, which of course is where you devote much of your time and energy anyway, but you fail to do so in the Service and Parts departments.

Allow me to give you some examples to clarify what I’m talking about:

  1. If I am a Salesperson and I sold an average of 5
    units per month last year, what are you going to do with me? Answer: Train me how to sell 10 units or more per
    month or replace me with someone who can.
  2. If I am a Service Advisor and I sold an average
    of 1.5 hours per customer pay repair order last year, what are you going to do with me? Answer: I have a job for life!
  3. If I am a Sales Manager and my Sales Team averages 5 units per month and my gross per retail unit is at $700, what are
    you going to do with me? Answer: Train me how to average 10 units per Salesperson and gross $1500 PRU or replace me with
    someone who can.
  4. If I am a Service Manager and my Service Team averages 1.5 HPRO and my Technicians’ productivity is at 80%, what are you
    going to do with me? Answer: Leave me alone because the other dealers in your 20 Group are about the same!
  5. If I am your General Sales Manager and my Sales Team
    averages 5 units per salesperson, $700 gross PRU, $200 F&I gross PRU and loose $600 per wholesale unit, what are you going to do with me? Answer: I wouldn’t have lasted 6 months let alone a
  6. 6.    If I am a Fixed Operations Director and my Parts and Service Team averages 34% in retail parts gross, 62% in labor gross, averages 1.5 HPRO, shop productivity of 80% with a declining repair order count, what are you going to do with me? Answer: Thank you for being back there because I sure as heck don’t want to fool with that stuff!


Are you starting to see my point?

Most Dealers and General Managers will hold their Sales Team accountable
for their performance on a daily, weekly and monthly basis and make any
adjustments (moving their comfort zones) on an as needed basis NOW!

Meanwhile their Parts and Service Team remain in their comfort zones to continue to dwell in the land of “underachievers”.
Why does this happen?

My belief is that most Dealers and GM’s are outside their comfort zone in the “back end” of their dealership since their roots are in the “front end.” What can a dealer do to enable him or her to leave their comfort zone and cross over the demarcation line to the back end of their business?

  • Measure the performance of the people you intend to
  • Your people must know that you are measuring their
  • Their performance will be compared to industry
  • They must understand that they will be held
    accountable for achieving or exceeding those benchmarks.

Simply say what you mean but more importantly mean what you say. Again, most dealers don’t hesitate to do this in their Sales and F&I departments. Start  making it happen in Fixed Operations.

Now I want you to rid yourself of the usual whiny excuses that I here from dealers when I’m speaking to 20 Groups, Dealer Associations, Dealer groups or individual Dealers. It doesn’t matter whether it’s north, south, east, west or rural versus metropolitan. I hear this all across the U.S.,
Canada and theUnited Kingdom:

“Don, you don’t understand,
my market is depressed.”

“Don, you don’t understand,
my Service Manager has been with me for a
long time.”

“Don, you don’t understand, I
can’t find an Advisor that’s any better.”

“Don, I don’t want to run off
my customers by up selling”

Well folks, here is what I do understand.

A depressed market has nothing to do with accountability for performance.

Time on the job does not dictate a good performance on the job.

If you can’t find better people, look harder because they are out there. If you or any of your people are afraid of “running off customers from up selling” then you need to get out of the retail business of selling parts and service. (By the way, the
aftermarket already has 70% of your customers’ maintenance)

Don’t you think it’s time to get out of your comfort zone and make the return on your investment that you deserve? Please, drag your Fixed Operations Team out of their comfort zones and start holding them accountable! Once they stop kicking and screaming they will all make more money, they will be happier and your customers will realize you have the best dealership in town.

“The entrepreneur always searches for change, responds to it, and exploits it as an opportunity.”    –Peter F. Drucker

Don Reed


DealerPro Training Solutions

Pro Solutions-Pro Results”