July 2009, Auto Dealer Today - WebXclusive
Key Auto Mall Sets the Standard with Centralized Dispatch
What recession? Some dealerships give hope to others for a reprieve from current conditions. At Key Auto Mall – one such example – overall business is good, and the 20-bay service department is booming. The auto mall, which spans two city blocks, is located in Moline, Ill., and has three separate sales showrooms encompassing Buick, Pontiac, GMC, Dodge and Mazda. However, all service is completed in a centralized department managed by Fixed Operations Director Dwight Keller.
Key #1 – Leadership
Having the right leadership in place is the first of the three keys to service success at Key Auto Mall. Keller has been there for over five years, and prior to his Key years, he worked as a service manager at another dealership that provided a different kind of customer experience. “We’ve got some pretty loyal clientele [at Key Auto Mall]. Even when I first came here, I noticed that. I came from a dealer that when people pulled in, they were already mad—not at my department but at another department in the store. When I came over here, people drove in and they were actually happy to be here, so I came to the right store.”
Over the years, Keller’s built a good reputation and strong relationships with the manufacturers. One example of how he continues to stay in good standing with manufacturers is through the service department’s use of factory coupons in its advertising. Plus, by using the factory coupons, they can “take advantage of the co-op money.”
General Manager Nathan Dietz said the store has always maintained Dealer Self Authorization (Dodge)/Silver Level (Mazda)/Empowered (GM) status, which “basically gives us goodwill authorization for [warranty] claims without calling the manufacturers within a certain time frame.” If a vehicle’s out of warranty, Keller can decide to warranty something. “That makes a big difference. That saves a couple days sometimes,” added Dietz.
He added, “Same with the body shop. We can warranty paint without waiting for somebody [from the manufacturer] to come down. A lot of that is because of [Keller’s] reputation. With [Keller] coming from a history of being a mechanic himself, he understands the importance of getting parts to the mechanics as soon as possible. They’re not standing around. They’re not waiting.”
Key #2 – Upselling
The dealership’s service absorption averaged 83 percent for the past 12 months, and the service department is only open five days a week from 7:30 a.m. to 5 p.m., averaging almost 1,500 repair orders per month. That steady absorption rate is no doubt linked to the dealership’s three service advisors’ knack for upselling—the second key to the department’s success.
When it comes to measuring hours per repair order (RO), Keller dissects the numbers for each advisor. The department’s top performer averages 3.5 hours per RO, with the second advisor averaging 2.8 hours per RO and the third 2.0. If those numbers sound high, that’s because they are. According to Bill Horgan, director of training for DealerPro Solutions, the industry average is around 1.5 hours per RO.
Keller brought in trainer Vince DeSalvo of DealerPro to work with his service department to improve upselling. While they worked mostly with the advisors, Keller said, “We got the techs involved more in helping upsell.” The technicians are expected to perform complete inspections on every vehicle, and Keller motivates them with a dice game that rewards them on completed inspections that result in additional service work. Technicians get one dice roll for each inspection upsell over $25, and each roll dictates a cash bonus. The bonus amount varies day by day, but on March 11, 2009, for example, two technicians rolled the dice and split about $100 in bonuses.
While technicians work to identify potential sales opportunities, a well-trained and skilled team of advisors is what converts those opportunities into sales and gross profit. Keller said, “Usually if you’re at 30 percent [conversion] on upsells, you’re pretty good.”
Dietz added that current dealership reports show 57 percent of their ROs have some type of upsell that was converted. “In ‘08, parts and labor sales were 78 percent above ‘07, and this year the department is tracking a lot better [than ‘08].”
Key #3 – Productivity
The third key to Key Auto Mall’s service success is monitored by DeSalvo. Dietz said, “[DeSalvo’s] main thing is accountability. He looks over our numbers daily to make sure our guys are doing what they’re supposed to be doing … You’ve got to know where you’re at to know where you’re going to end up.”
Keller’s days as a technician shed light on ways to improve technician productivity. He often felt like training was lacking, so he makes sure Key Auto’s 10 technicians get more than enough training, whether it be Web-based training or offsite manufacturer training in Chicago. He said, “We do extensive training because … if technicians are not up to date, they’re going to struggle getting things fixed. I spent a lot of money just last month on training. Sometimes I probably send them too often, but I’d rather have them knowing more than have them struggle. If they’re struggling, it’s taking longer to get a vehicle fixed or inconveniencing somebody.”
He also understands how access to up-to-date equipment can impact technician productivity. When he joined the staff at Key Auto, Keller said, “They had an alignment machine that looked like it was from the 1950s … Some of the equipment [I purchased for the department] has helped boost productivity because some of the equipment they had was either in poor shape or so outdated it wasn’t user-friendly.”
To further boost productivity, Key Auto employs a service/dispatcher foreman. After an advisor writes up a repair order, it is given to the foreman, who puts it on a board so everyone can track its progress. The foreman adjusts workloads throughout the day to maximize everyone’s time. “Our foreman is dedicated to making sure the cars are in, fixed and back to the advisor, so the customers can be notified as quickly as possible,” said Keller.
Dietz added that the foreman knows “which mechanics work on what better and which mechanics can get things in and out” and can appropriately assign work. Because the service foreman understands how parts delivery affects productivity, he will even get parts if the dealership’s parts staff is busy.
Improving the productivity of the parts department has also been an area of concentration for Keller. If the parts inventory is off kilter, some repair orders take longer than necessary to complete due to special ordering, and special orders can lead to increased parts obsolescence due to the inability to get the customer back to the dealership. Both scenarios can be costly. Keller’s been working on improving parts obsolescence for the past three years. When he hired a new parts manager a few years ago, Keller said, “We actually incentivized him to get that back where it belongs.” While it has improved, it’s an ongoing project.
So, what does a productive staff of technicians, a well-trained team of advisors and an all-star fixed ops director do for Key Auto Mall? These three keys unlock the door to customer satisfaction, repeat business and recognition from the manufacturers. The service department has won several awards, including GM’s Mark of Excellence Award and Mazda’s Full Circle Award. Dietz said with a chuckle, “I don’t think there’s an award we haven’t won in service yet.”
Vol 6, Issue 4