Tag Archives: Leadership

Why small increases are important to your Dealership profits

Just what does a 10% increase (in any KPI you choose) really mean to your dealership?

Why small changes make big things happen.

Why small changes make big things happen.

 

Have you heard the old saying “Yard by yard it’s hard, but inch by inch is a cinch”?

If I were to go to any of your dealerships and walk into the GM’s office and say “Would you be interested in a 50% increase in Gross Profits?” what do you think he or she would say to me?

They would jump out of their chairs and yell out “Of course…how do I get it!”

And therein lies the problem with increasing performance or increasing profits 50% at a time. It is really hard to achieve that big of a jump all at once. It’s not that people are not capable or willing, it’s just that getting all of the components of a dealership focused and firing on all cylinders at the same time is a difficult proposition at best, and trying to get a 50% increase in any measurable KPI just becomes impossible.

Truthfully, whenever you have heard someone (DP, GM, New Manager, etc…especially the New Manager) say something like “I’m expecting big things this year and our goal is to increase (fill in the blank) by 50%”, would you say the “Dirty Diaper Alarm” trips in your head and you disregard everything that was said and develop a less than favorable opinion of said “Authority Figure” (or whomever was speaking)? Yep, me too.

But if I go into any dealership and ask any service advisor “Hey there Mr. /Ms. Advisor, do you think you could sell an extra $10-20 dollars on every repair order?” what do you think the answer is nearly 100% of the time?

“Of course I can.”

That is the power of a 10% increase.

So let’s look at John Q. Advisor and some of his numbers. At the average of 1.5 HPRO at $85.00 an hour, every repair order John writes is averaging about $229.00 a ticket. A 10% increase is only $22.90 and if John writes 220 repair orders a month, that equates to a $5 Grand a Month increase in Service Sales.

What does John get? At the end of a year, he gets an additional $60 grand in Commission-able Sales and if he is on an average pay plan, he just made another $5000.00 or so dollars for the year or $400.00 bucks a month.

Now go ask your Advisors, “Hey there Mr. /Ms. Advisor, want to make $400.00 more a month?” and what do you think their answer will be? (If they say something smarty pants or “No” or “Who do I have to kill?” just tell them you are going to write a letter to their spouse or significant other stating they turned down a $400.00 dollar a month raise)

Most organizations focus on trying to increase too much when they should focus on just making small but effective changes that yield results over time.

One more thing. Don’t forget the power of compounding.

Back to back increases of 10% in John Q’s example is big. How big? In the second year of a 10% increase, John’s average sales per repair order become $277.00 per copy or $48.00 more than year one, which equates to a $126,720.00 yearly increase in service sales…not too bad a result for a 10% increase.

Get focused on making small incremental changes that add up to big improvements! Help your team see the value and vision of a 10% increase in their service sales process and watch those profits (not to mention team morale) soar!

By Leonard Buchholz

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Is this a “Training Issue”…?

Nearly every week we spend training in a Dealership, we try to identify and help correct deficiencies in production, CSI and dealership employee performance. The rub is that every dealership has different issues and problems.

Sometimes it’s the training, sometimes it’s the employee and sometimes it’s the management.Is this a "Training Issue?"

And 100% of the time when there is little progress in performance or profit improvement, the dealership employees and management say “It’s a TRAINING ISSUE!” Of course, it must be a training issue because there is no way on this green earth that is could be the dealerships employees or management team.

So, let’s tackle the myth of the “Training Issue.”

Inconsistent application of processes is not a Training Issue. Once a process has been introduced, trained on and implemented, it can’t be un-introduced, un-trained and un-implemented. It can be ignored. It can be discarded. It can be disregarded.

Processes are systematic steps completed in a specific order to achieve a desired result. Once personnel have been trained on them, practiced them, implemented them and used them, training is complete.

When they are not being followed, it’s because a human being decided that they were not going to follow that process. This means, it’s not a “Training Issue. “

Lack of follow through on promises made to the Customer is not a Training Issue. As an Advisor, when I made a promise to the Customer to call them by 2:00pm with an update on their vehicle, if that did not happen, it most definitely was not because I had not been “trained.”

There may be any number of reasons (excuses) that I missed my call back time. What’s not important is the reason, what is important is the implication, not only to the Customer, but to the Service Team.

If I as a Service Advisor, do not follow through on my promise to the Customer to call them back, take care of an inquiry, make sure a part got ordered…etc., why would that Customer trust me or the Service Department to take care of their needs in the future?

That is the real consequence of lack of follow through. Customers stop coming back. And that hurts the entire dealership.  And it is most certainly not a Training Issue.

Absence of performance results is not a Training Issue.  Performance increases remain the end result of repeated application of processes. Stop applying the process, start deceasing performance. It does not matter if you are talking about a sports team; orchestra, business team or dealership team, the performance achieved is directly related to the consistent application of a process.

So, what is a “Training Issue?”

It’s when someone does not know how to do something. They require Training to understand the process, what steps need to be taken in what order, how to circumvent obstacles and how to implement what’s been taught.

As a young Advisor, I needed to be shown how to write a repair order. I needed Training to understand the steps necessary to make a piece of paper print on a printer so I could present it to the Customer for their signature. Someone had to Train me to do that.

If I did not follow the steps, a piece of paper did not print and I could not get a signature. It was not a matter of not being Trained and entirely a matter of not following the steps.

In the CarBiz, we all have processes in place to help us take care of the Customer whilst making a return on the investment of time we put into following that process. Anytime we deviate from that plan, we risk losing all that we put in plus we risk losing the Customer.The Truth

Make sure that what you believe is a Training Issue is really a Training Issue by asking the simple question “Do they know how to do what we are asking?”

Because most “Training Issues” are really “Leadership Issues.”

By Leonard Buchholz

Where does Profit Improvement start? At the Service Managers Desk, of course!

In every Dealership there is a desk. And behind that desk sits someone who has the responsibility to increase Profits.

In Fixed Ops, this person is called the Service Manager.

Typically  (when I go into a store that is not profitable), I find the person sitting behind that desk working on everything not related to increasing Profits while believing that they are working on everything related to increasing Profits.

I call it the “Theory of Un-relativity” and it goes like this.

P=ATD+PIxNC. Profits equal the Amount of Time Dedicated plus Process Implementation times the Number of Completions.

Simply, the Manager must dedicate as much time as needed every day to making sure processes are being followed and that they are being done with every Customer.

In stores that are not profitable, the Manager spends more time on things that have nothing to do with Profits and everything to do with nothing…including Managing the department…or as I stated before the “Theory of Un-relativity.” The things they are doing have no Relativity to making more Profits for the Dealership.

UP=ATW+UTxNC. UnProfitable equals the Amount of Time Wasted plus Unnecessary Tasks times the Number of Completions.

Let give you an example. I am standing in the Service Drive with a Service Manager when he is approached by the Sales Manager and informed that the tethered marketing balloon outside which normally is in position first thing in the morning is not up yet and “Could you take care of that as soon as possible.”  Unnecessary Task.

Another. SM is working in his office when he is informed that the lights on the front lot “are not lit up and can you do something about it?” Unnecessary Task.

One time, as the owner of my store had just handed me another daily task not related to Profit growth, I decided to write down all of the daily tasks that had been thrown my way over the past year just so I could get a handle on it. The list was 40 plus items and guess what…not one of them had anything to do with making more money.

Were some of them important? Yes. Necessary…no doubt about it. But at the end of the day when the Dealer Principal has “The Fin” in his or her hands and wants to know why “Fixed Ops is off by 15% and what are you going to do about it?” and you have the “But Boss, I’m so busy doing all of these other things!” excuse sputtering out of your mouth…now doesn’t that paint a pretty picture Mr./Ms. Service Manager?

By the way, when I handed the Dealer my list and asked him to specify which of those tasks were Top Priority and which were not, he actually apologized. He had no idea how many things he had “delegated” to me until I pointed it out to him.

Here are a few things you can do to get back on track making more Profits.Profit

1st, make a list of the things you are doing every day. Now separate that list into “Tasks That Make Money” and “Everything That Does Not Make Money.” Give Top Priority to Monitoring, Coaching, Training, Managing and Nothing, Zero, None, Nada Priority to Everything Else. Within a few days someone will come to you and say something like “The lot lights are out again” and then you can show them your list that makes the Dealership money and they will find someone else to ask about the lights.

2nd, share this list with your Dealer Principal or General Manager. Why? Because they forgot they told you to do half of those things and don’t remember the reason why they told you to do the other half.

3rd, learn to say No. Point out that working with your Advisor on Phone Sales Skills is way more important than stocking toilet paper in the bathroom or talking to the coffee vendor about the price of the new machine.  Stick to what makes money and makes sense.

Lastly, you and I work in the real world. If the DP drops the keys off and asks to get his demo washed and gassed, don’t show them your list. Get the demo cleaned up and gassed. Remember the 20 foot rule. Walk outside the building 20 feet and look up 20 feet and see whose name is up there.

by Leonard Buchholz

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

200K in 200 Days

In the past 4 years there have been quite a few Dealers who successfully increased their Fixed Ops Gross Profit by $200K, $300K (one Dealer had a $900,000 dollar increase) by changing how they conducted their daily Service Operations.

They made fundamental changes in Processes and then Coached their personnel to increased Performance.

If they can do it, so can you.

 

Here is a link to “200K in 200 Days” a resource that describes how Successful Dealers did it!

Get it, Read it, Do it!

By Leonard Buchholz

Are your Advisors “Helpful” or “Professional”?

Helpful…or Professional…which of these sound better?

If you are like a lot of Dealers and General Managers hiring “helpful” people always seems to be the right call. The belief is that you can develop someone into becoming a Professional. While I don’t disagree with this practice, what I find all across the country is the opposite of helpful or Professional.

Because we train all across the country, we have exposure to every make and model of vehicle in every kind of Dealership, whether it is a locally owned single point, multi-line point or large Dealer Group.

And when we train invariably, we get to the point in the training that we ask the Advisor “How do you see yourself as an Advisor” or we might ask “What is your role in working with the Customer?”

And 9 times out of 10 the answer comes wrapped up with a bow in a package labeled “I want to be helpful” or “I want to help the Customer and give the best possible Customer service.” This answer is of course not only the expected answer but the accepted answer. And it has absolutely nothing to do with helping the Customer.

In fact, I submit to you that being “helpful” is exactly what we don’t need in a Dealership.

The reason I say that is because in every single case where I have an Advisor who is trying to be “helpful” to his or her Customers, they have become the exact opposite. They have become “un-helpful” and in most cases a liability.

Let me explain.

Helpful Advisors share 3 common characteristics.

  1. They make decisions for their Customers without asking the Customer what they (the Customer) would like to do.
  2. They make judgments about their Customers based on past experiences and fail to honor the word “Advisor” which is part of their job title.
  3. They are poor Salespeople with poor communication skills and non-existent processes.

Helpful Advisors make decisions for their Customers like not telling them everything that is wrong with their vehicles, instead just telling them what they think the Customer wants to hear.

They do not offer additional services during the write-up process and never present a menu. They have become in effect the same as the person whom we call an “order taker” at your local dry cleaners or fast food restaurant.

Professional Advisors make no decisions for their Customers at all. They Advise them on everything the vehicle needs, recommend additional services they know will be beneficial for the Customer and present a menu at the time of write up. They take the time to explain everything to the Customer so the Customer can decide what they would like to have done on their vehicle.

Helpful Advisors make judgments about their Customers based on the past.

If Mrs. Jones came in 2 years ago and Doubtful Dan tried to make an Additional Service Recommendation and was shot down by Mrs. Jones with the “I can’t afford it today”, Doubtful Dan now assumes that Mrs. Jones can never afford any additional repairs and stops telling her that there are additional services needed in order to maintain a safe and reliable vehicle.

The next time Mrs. Jones comes in for an oil change, Doubtful Dan is surprised to learn she has new brakes and tires.

Doubtful Dan then asks Mrs. Jones “Where did you have the repairs completed?” and Mrs. Jones replies “Right down the street at Bob’s Big Boy Service Center. After the last visit here my grandson stopped by to visit me and said ‘Grandma, you should have your tires checked’ and of course I asked Timmy (my grandson) ‘Why?’ and he said ‘One of your tires has some wear on the edge Grandma.’”

She continues “Well, I just happened to have some free time later that day and popped in at Bob’s and they said ‘Sure we can take a look at it’ and next thing I know they told me that the tires were needing replacement and I said ‘Are you sure, because I just had it in a ABC Motors and they didn’t say anything’ and they showed me the worn tires and wouldn’t you know it, when they took off the tires, the brakes were worn down too.”

In the car business this is known as “Someone just ate your lunch.”

Professional Advisors do not make judgments. They Advise. They take all the recommendations from the repair order, prioritize them from most important to least important and then tell the Customer everything they need to know about maintaining their vehicle. They let the Customer decide.

Lastly, Helpful Advisors are invariably poor Salespeople who do not keep up on their skills and they do not use any Sales Processes because they want to “be natural and not robotic.”

Let me ask you this and you tell me if it sounds crazy.

When was the last time the General Manager stood up in the Sales meeting and said “From this day forward, Salespeople do not need to log their ups. You do not need to touch the desk and you do not need to complete a walkaround and test drive with the Customer. You can do what you feel is natural.”

Crazy….or what?

And every day in the Service Drive we have Helpful Advisors who do the exact same thing. They don’t follow a process, they don’t communicate the benefits of maintaining the vehicle to their Customer and they don’t develop their skill sets.

Professional Advisors use tools like processes, like menus, like Listening Skills, etc. to help them make the Customers service experience the best it can be. They want the Customer to make informed decisions based on the recommendations and vehicle maintenance needs.

So, look around your Service Department. Ask yourself “Are my Service Advisors helpful or Professional?” and decide for yourself which of these is the better choice for your Dealership.

Written by Leonard Buchholz

Why “Old School” Communication is the new “Class Dismissed”

Fierce Leadership (Sketchnotes)

Fierce Leadership (Sketchnotes) (Photo credit: murdocke23)

Clearly there is a huge gap between what “we” (old school) managers and Leaders consider useful and proper communication,  motivation and Leadership techniques and what the “new” generation responds to.

There is a choice to be made.
A. Keep doing what you’ve been doing and keep getting the same results while expecting a different outcome.
B. Do something different.

In this business “transitional people” are a given. We attract people because we are the largest OJT training industry on the planet. ANYBODY can work in the Car Biz because we accept everybody.

The only people we reject (and that’s not a given either) is the people who cannot pass the smog test or background check…but I can guarantee you this…nearly half if not more reading these words do neither when hiring. It’s not an accusation or condemnation…it’s just the way it is.

So, having to deal with a generation who does not respond the same way, think the same way and act the same way should be no real surprise. What is a surprise is how much “old school” wants to hold on to the familiar and safe ways of management and Leadership style rather than adapting and overcoming this communication and Leadership gap.

Do we hold them to established Dealership standards of conduct? Yes
Do we hold them accountable to established performance goals? Yes
Do we expect professional behavior while on the job? Yes
Do we monitor and coach on a regular (daily) basis? Yes

HOW we communicate those standards of behavior and professionalism is where we need to to grow. HOW we hire and train is where we need to change. HOW we grow our own pool of qualified and professional people is HOW we overcome the challenge of finding qualified people.

This generation, like any other generation, still wants to Succeed. Just not in the manner we have defined Success! Identify and qualify that definition and you will have the employee you want and an employee you can count in in the future.

Keep applying “Old School” Communication and Leadership techniques and it will be “Class Dismissed”.