August 2009, Auto Dealer Today - WebXclusive
A Lesson From the School of Hard Knocks
I remember it like it was yesterday. There are things you just never forget. It happened in the spring of 1994. Something that unexpectedly shakes your business soul so dramatically that you swear you will never go there again. Just the thought sends a chill down your spine.
I was basking in the glory of a five-year, 500-percent service profit increase when we hit a small slump, not a major downturn in service volume, but one that took us from being nearly 130 percent productive to 115 percent. However, that 15 percent drop had a lot of net profit in it. Service is a little cyclic, just as sales are, although the swings are usually much less dramatic. I was determined that my service department was not going to dip further even if every other dealer around me did.
That is when I created my first service BDC. The planning and structural changes we made were substantial. Our two strongest service writers became service drive managers and we hired two additional writers to train under the two drive managers. Additionally, we hired two young, bright individuals focused on customer service who had prior telemarketing experience.
Pulling reports and call lists daily was easy. Initially, we called customers:
• To schedule appointments when their special-order parts arrived
• Who hadn’t an oil change in the last 90 days to schedule their next service
• Two days after their visit to thank them, ensure complete satisfaction on their recent visit, and attempt to schedule their next visit 60 to 120 days out
• The day before their scheduled appointment to remind them about or reschedule their appointment
It was a brilliant plan, right? Just like dentists, who of course we have all admired for their scheduling and confirmation processes. Why wouldn’t it work in a dealership service department? Well, it did work, but we had no idea what we had created. We created a service BDC monster.
Within two weeks of our May 1st launch, our service department was inundated with 25 to 40 additional customers per day. Most needed oil changes, tire rotations or small warranty repairs due to special-ordered warranty parts. I know what you are thinking—what was the problem with that and how can I get one, right?
If you remember the good old days of the 1994 service era, you know there were plenty of very profitable light, medium and heavy repairs to be done in a “Big 3” store. Quick service was not considered “gravy” unless we did a bunch of flushes, and our quick-service pricing/labor structure did not bring us the profits we made doing repair work. We had a shop full of A- and B-techs who hated that kind of work.
So what happened? I actually witnessed my team run in circles. We were so busy with the extra volume that all of the following occurred:
• We had to back off scheduling of profitable repair work that we were fully structured to handle.
• We scrambled to find and hire additional C technicians for whom we had not planned additional shop space.
• Our two service writer trainees mishandled everything they touched because the drive managers were too busy to provide oversight or training, and although they had been great writers, they were not great managers.
• Line techs who were150-percent productive became 110-percent productive, as they were repeatedly forced to break from repair work to take overflow quick-service work.
• The customer lounge that usually had six or seven customers in it overflowed onto the show floor, at times with 15 to 20 waiting service customers.
• Surveying every customer’s satisfaction gave me 10 or more additional customers to call back daily to handle minor concerns, most of which involved complaints about how long it took to get their oil change or small warranty repair completed.
• Technicians, writers, porters, cashiers and the warranty clerk were all less than happy.
• Net profit dropped almost 50 percent in the first month.
It is an understatement to say that my well-thought-out plan turned out to be ill-thought-out.
About the time we started getting adjustments made, hired additional quick-service staff, and figured out how to handle the monster we created, the dealer pulled the plug. His phone had started to ring with complaints as well. The project was written off as an experiment gone bad, but was it?
Growth never comes without growing pains. The program was the right program then, just as it is today. Inadequately thought out and weak on initial processes for sure, but who would have anticipated these results? Maybe I should have consulted with a dentist. I rightfully shouldered the blame, but because of it, I have become a more meticulous process developer. I take the “leave no stone unturned” approach when it comes to process development. This comes from the school of hard knocks and this project was just one of my many experiments. I eventually turned that 500-percent service profit increase into an 800-percent increase, so as they say, no pain, no gain.
A service BDC is a powerful and essential tool not just for maximizing each and every service opportunity in your dealership, but also for maximizing opportunities, period. You already own this list of your most valuable customers! Your service and body shop customers are already partial to doing business with you. Why spend money or time calling or e-mailing any other group of potential buyers before you have explored every use of your own service base in your own computer?
Vol. 6, Issue 6