Article

Supporting Fixed Operations

February 2013, Auto Dealer Today - WebXclusive

by Don Reed - Also by this author

 

Over the past 12 years, my trainers and I have worked with hundreds of dealers to improve their fixed operations by using processes that always put the customer first. This, of course, has had a big impact on the customer satisfaction index (CSI) and owner retention, and has increased sales and net profits, yet I continue to meet so many dealers and general managers who fail to appreciate the real opportunities just waiting to be tapped into in the “back end” of their store. Here is a recent example.

Last month, I was speaking with a dealer about training his fixed operations team on how to put the customer first in his service department’s daily operations. I reviewed a profit pro forma with a business plan for implementation, and before I could finish, he said, “I don’t have time for this, so you need to review this with my service director because he will be the one to make the final decision. If you can’t get his buy-in, then we don’t need the training.” Really?

If you are a dealer or general manager reading this article, here is my question for you: If I sat in front of your desk and showed you a business plan on how to sell an additional 250 new vehicles in the next 12 months at an average gross per retail unit of $2,000, for a total gross profit increase of $500,000 over what you are currently producing, would you tell me, “I don’t have time for this, so you need to speak with my sales manager?” Would you really have no interest in learning how to sell those extra 21 new units per month? I don’t think so! Well, that’s exactly how much gross this dealer could have earned in his service operations. So I ask you, how about a little support for fixed operations?

As a dealer, do you spread your time equally between fixed ops and your sales departments? When was the last time you walked through your parts department and just said “good morning” to your parts personnel or walked down the center of your shop and asked a tech, “How’s it going today?” Here is a wild thought: Why not spend 10 minutes in your service reception lane and offer a great big, “Thanks for your business,” to each customer you see? By the way, don’t forget those hard-working advisors with maybe a pat on the back for a job well done. A few years ago, I took a dealer of mine on a walking tour of his service and parts departments and asked him to just say “good morning” to his employees as we walked past. Once we finished our tour, I returned to the shop to find 14 technicians, a shop foreman and a service manager in a huddle, obviously having a heated debate. I asked what was going on and the service manager replied, “I’ve worked here for 12 years, and this is the first time the dealer has ever walked through this shop—something bad is about to happen!” Again I ask, “How about a little support for fixed operations?”

Back to my dealer who did not have time for me. Here are just a few of this dealer’s performance metrics in fixed ops:

  • Customer pay labor gross at 58 percent;
  • Customer pay parts gross at 39 percent;
  • Hours per repair order at 1.3;
  • One-item repair orders at 63 percent;
  • Shop productivity at 80 percent;
  • Fixed coverage at 45 percent; and
  • CSI at nine points below group average.

I’m not making this up! If he can’t get his service directors to buy in, then he doesn’t need the training? Are you kidding me?! Why would any manager who has the dealer’s best interests at heart even hesitate to buy into the fact that he can do better, needs to change, must start doing some different things in order to maximize department profitability, can improve CSI and build owner retention? Answer: he’s an underachiever! Any manager who wants to do better and learn to become a top performer would not hesitate to do whatever it takes to improve on those pathetic performance metrics I outlined previously—not to mention adding an additional $500,000 in retail gross profit.

As a dealer, are you running a democracy? Do you really need someone else’s vote? Are you not the one who deserves a higher return on your investment? How much did your underachieving, lack-of-buy-inmanager invest with you? How much risk did they take in starting your dealership? As you can probably tell, I’m starting to get a little worked uphere, but here is the bottom line: Why would anyone not want to learn how to always put the customer first? So, how about a little support for fixed operations?!

Comment

  1. 1. Gary Iudice [ March 07, 2013 @ 05:00PM ]

    Hi Don,

    Amazing,isn't it! Like yourself,I have been down the same road many of time with Dealer Principals. I thimk we both know its an excuse when they pass it off to department managers. They simply don't want to hear it because they don't understand the back end!Period! They are typically front end guys who were lead to believe that the sales department is where all the gross comes from. Wrong again! I have had the opportunity to take on the task of converting many under achieving service departments and won! ELR at half of door rate...Average cost per Technician is to high to maintain an acceptable ELR and GP%.........Part to Labor Dollar? They just don't know what the bench marks should be to help achieve more gross. How about HPRO? 1.3 is the industry average..........We both know what an additional .3-.6 per R/O can do for the bottom line. Advisors don't sell because they Don't ask! My Clients with-in the first month of an installation will achieve close to 2.0 HPRO and up! It's pretty easy isn't it!

  2. 2. john mcfall [ March 08, 2013 @ 11:33AM ]

    after 20 plus years as a fixed op's manager a lot has changed however

    i believe the old way of thinking as you have outlined very much still

    exsists a strong selling csi driven advisor is extremly valuable and may out gross your best sales person. decided to be an advisor as i no longer want to be a manager but it's difficult to make the mental transition as i see thinks i would not tolerate as a manager which include employee thought process and the lack of desire to strive for goals in numbers as well csi standings. remeber a dealer ship is made of windows,walls etc it's what's inside that makes the difference!

 

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