Maximizing Fixed Ops Potential and Profits — A Conversation with Ally Financial

Maximizing Fixed Ops Potential and Profits — A Conversation with Ally Financial

Through structured training programs and strategic guidance, Ally equips dealership personnel with the tools and insights to navigate the complexities of the automotive service landscape successfully.

The dynamics of auto dealership services are constantly evolving. As the landscape shifts, dealerships are increasingly facing challenges from independent aftermarket repair facilities that are becoming the preferred choice for many consumers when it comes to servicing their vehicles.

This trend is driven by factors such as potentially lower costs, perceived higher flexibility and often quicker service times offered. As a result, traditional auto dealerships are under pressure to adapt their service models and customer approach to stay competitive and retain their customer base.

Robert Brooks, senior fixed operations product manager at Ally Financial, is helping lead the charge to help dealers retain customers and keep them coming back for service and repairs.

With over four decades of experience in the automotive industry, Brooks’ journey through the automotive sector goes back to his tenure as a service advisor, service manager and director across various manufacturers. He transitioned to Ally Financial in 2006. In 2014, he embarked on a mission to redefine fixed operations consulting.

The vision was clear. Brooks and his business group wanted to craft tailored solutions that resonate with the unique needs of each dealership, fostering a culture of continuous improvement.

“While many things are similar from one store to another, no two stores are alike, even within the same dealer group,” emphasizes Brooks.

A lot of Brooks’ time is spent training dealer principals, service department managers, parts department managers and service advisors to help optimize their service departments. He sees several prevailing challenges that hinder customer retention in dealership services.

Brooks references a recent Cox Automotive survey that revealed 30% of service work is being done at franchise dealers. In 2021, service work at franchise dealers was at 35%. He believes the decrease comes from a lack of focus on customer service.

“My feeling is it’s due to indifference,” explains Brooks. “They don’t make the customers feel special.”

Brooks points to the crucial role of the customer experience, stressing the importance of exceptional service at every touchpoint.

“Most customers won’t defect because of a single bad experience or even multiple bad experiences if the car doesn’t get fixed,” says Brooks. “But consumers will leave if they don’t feel that they’re important [or] don’t perceive that they’re valued, even if the dealership has done nothing wrong. The dealership needs to be exceptional on the customer service side.”

Brooks mentions another issue going against dealer service departments is pricing. Customers think that dealers are more expensive than independent shops, and in some instances they are, but not typically for maintenance services. Brooks says dealers are heavily investing in tech training, tools and technology in a way most independent shops can’t or won’t. Ally’s consulting business helps shift the focus off of pricing and puts a bigger focus on value.

“When they build value in what they bring to the customer, pricing becomes secondary,” says Brooks.

On top of value, he says communication is a key element to a successful service department. This goes beyond talking one-on-one with a customer. It also goes with using dealer technology transparently and openly with customers.

Brooks advocates for a paradigm shift in the dealer service industry. Part of Ally’s fixed ops consulting shows the importance of a customer centric approach.

Brooks says this is a standard that should be seen across a dealership. It starts with a salesperson walking a customer back to the service department and introducing them to a service advisor who lets them into the service department’s process.

“[Advisors] are the frontline people, and it’s essential that they understand that they are customer service people and that is their primary role,” educates Brooks. “Technicians are in the car business. Advisors are in the people business.”

When it comes to solutions, Brooks says Ally’s approach can empower fixed operations managers to make changes to enchance the dealer’s performance. A big part of this approach is a focus on measurable metrics, like hours per repair order (RO) and effective labor rate, which enable service departments to track improvements over time.

“Our goal for the dealer is incremental increase,” explains Brooks. “It doesn’t matter where they start as far as if their numbers are good or bad compared to industry metrics. We need to look for improvement and measurement, and those two metrics are very easy to identify.”

It’s usually a good rule of thumb to shoot for small, incremental increases in metrics, such as hours per RO in the first few months.

For example, a dealership that writes 200 customer pay ROs a month that  includes quick service with an effective labor rate of $140 an hour will see an increase of $5,600 per month or $67,000 per year in additional labor.

The increase in just this metric can also have a positive effect on the rest of fixed operations.

“When you talk about adding in other departments, for every dollar in labor sales, you typically see a dollar in parts sales that goes along with it,” educates Brooks. “That would add an additional $67,000 in parts sales. So, the value of increasing just two-tenths of an hour in labor can be $134,000 a year in additional sales revenue.”

Through structured training programs and strategic guidance, Ally equips dealership personnel with the tools and insights to help them navigate the complexities of the automotive service landscape successfully. However, Brooks says the key to success is a dealership taking the initiative to improve.

“The work comes in from the dealer principal holding people accountable and the leadership team of the departments holding people accountable to following the process,” says Brooks. “The manager has to provide the coaching and the feedback for the advisors to, as we say at Ally, do it right.”

An important aspect of the conversation revolves around the art of suggestive selling and its significance in helping to increase both customer experience and dealership profitability. Brooks highlights the importance of educating customers and fostering transparent communication to drive informed decision-making.

He advocates for a consultative approach where service advisors prioritize repairs based on customer needs, thereby enhancing trust and credibility.

Brooks suggests, “The advisors need to give customers the opportunity and the reason to buy repairs or maintenance. They don’t have to sell them anything. The advisors do this by being consistent and transparent in [their] recommendations.”

Brooks has seen several success stories that show the impact of effective training and management practices. One dealership that Brooks helped train saw the type of sustained, incremental improvement he wants dealers to strive for.

This dealer increased its customer pay hours per RO by 0.14. That was the average increase over the last three months for this dealer, which was very consistent. It resulted in an over $10,000 increase per month in customer pay labor.

“The annual gain for that store was over $120,000 in just customer pay labor sales,” recalls Brooks.

Ally also helped this dealer establish a pricing policy to address a discounting problem, as well as help build a maintenance pricing policy that was competitive, yet profitable for the store. By the dealer making these changes, the effective labor rate was raised over $12 per hour.

This increase in labor rate created an additional $144,000 annual increase in sales dollars for the dealer.

“We want the advisors to be themselves, while still following the Ally and industry processes. This helps them feel more confident in delivering an exceptional customer experience,” says Brooks. By fostering a culture of continuous improvement and investing in the development of frontline personnel, Brooks says dealerships can elevate the customer experience and drive sustainable growth. It’s about investing in people and the pivotal role of leadership in shaping a positive organizational culture.

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