Profit Accelerator No. 3: The Magic of Menus
For Profit Accelerator No. 1, click HERE.
For Profit Accelerator No. 2, click HERE.
Have you ever been to Olive Garden, Outback Steakhouse or how about Longhorn Steakhouse? When you were seated at your table, were you presented a menu? Of course, you were. Did you have to ask for one? Of course not. It is not an option to receive or not receive a menu. It is company policy that every customer gets a menu at these restaurants.
Menus Empower Your Customers
Not only does every customer get a menu, but they get multiple menus. Let me explain. Already on your table is a drink special menu and soon your waiter/waitress will also be offering the special of the day menu. Next comes the main entrée menu.
After you’ve finished your meal, you then are presented the dessert menu (many times they will show you the actual dessert). Oh, I almost forgot my favorite — the wine menu, which was probably presented when you first sat down.
The point I’m making is that 100% of their customers are presented multiple menus 100% of the time. This process is not an option; it is a rule. Why? Their rule simply means that every customer is given the opportunity to make choices. That’s plural not singular.
Offered Choices, Customers Choose More
Choices are made based on the customer’s perception of likes and dislikes, value, price and benefits. Are the food servers high-pressure, forceful salespeople? Do they offend you by offering multiple menus that allow you to make choices based on your individual wants and needs? Do they refuse to offer you a wine menu because they don’t think you can afford a $50 bottle of wine?
Do they ignore the dessert menu presentation because they think you “look” like someone who doesn’t buy dessert? The answer is obviously “NO” — they don’t make judgments before giving their customers choices. When it comes to presenting menus in the service drive, however, your average service advisors make judgments all day long!
There are a number of reasons they make these judgments — one being the lack of professional sales training — but we’ll save that topic for another time.
What About a Maintenance Menu?
Ask yourself a couple simple questions:
1. If my advisors presented a maintenance menu to 90-100% of my customers on each and every visit to my service department, would sales go up, go down or remain the same?
2. If my advisors allowed my customers to make individual choices in maintaining their vehicles, based on their individual wants and needs (value, price, likes, benefits), would my CSI, owner retention and retail sales go up, go down or remain the same?
Obviously, I don’t need to answer those questions for you. A menu process will increase your hours per customer pay RO by another .2 to .3 which, based on our earlier math, (500 CPROs x .3 = 150 additional hours @ $85 labor rate and 75% profit margin) will produce an additional $114,750 per year in labor sales and $55,080 in parts sales (based on 80% parts to labor ratio and 45% margin).
Building Profits, Step by Step
Combine these numbers and you gain a total of $169,830 per year ($114,750 + $55,080) or $14,153 per month in additional parts and labor sales, simply by training your team to use maintenance menus with every customer, on every visit.
If we add this to what we have already gained through improved profit margins ($130,500) and the .5 increase from the inspection process ($283,056), our new total gross profit improvement stands at $583,386 annually for every 500 ROs written per month. Apply this toward your shortfall…how close are you to 100% absorption?
100% of Your Customers, 100% of the Time
The only way to achieve these numbers with your menu process is to make it policy meaning, it is not an option. It is company requirement that 100% of your customers will receive a menu presentation 100% of the time on each and every visit to your dealership. It does not matter how old they are, their “perceived” income level, what part of town they’re from, the age of their vehicle, or who they’re friends with.
The only criteria that matters is their status as your customer. They will all be treated the same. They will all be given the opportunity to say “YES” to any and all of the services that you provide. It is not the service advisor’s job to make choices for your customers. It is your customer’s vehicle, your customer’s money and your customer’s decision to make. Wouldn’t you agree? In summing up so far, is there anything about making an additional $583,386 in gross profit per year (or more) that you don’t like?
If you’re serious about achieving 100% service absorption, (making your dealership 100% recession proof), let’s move on.