“If you sign up for a marketing campaign to bring in more service customers to increase customer pay, improve owner retention, raise CSI and build net profits, be careful! Many times, the results are the exact opposite of what you intend. You could lose money! Bringing in more customers can be great, but it’s what do you do with them that counts.” — Don Reed, CEO, DealerPRO Training
A Really Scary Case History
To explain my point, let’s take a look at an actual case study of a dealer who recently built a stand-alone quick lube facility next to his dealership and then launched a marketing campaign to drive more customers into his new facility.
Start Up of New Quick Lube Center Midwest Dealer
|Labor Sales||Gross||Margin||Parts Sales||Gross||Margin||Sales RO||# CPRO’s||ELR||HPRO||Total Gross|
|Last Yr 7 Mo||$924,640||$707,888||77%||$763,474||$307,215||40%||$235||7,265||82.05||1.6||$1,015,103|
|This Yr 7 Mo||$802,587||$578,481||72%||$733,768||$270,791||37%||$193||8,001||80.35||1.3||$849,272|
How did 736 new customers produce a net loss of $165,831, and how can you prevent this from happening in your dealership?
This scene is playing out in far too many dealerships across the country, so how can you prevent this from happening to you when you launch a new marketing campaign with your CRM vendor?
Let’s start by examining all the factors that led to those disastrous results. This dealership was averaging about 1,000 customer pay repair orders per month @ 1.5 HPRO. When his marketing campaign was launched, it resulted in a 10-percent increase in traffic, which then produced the following:
- 100+ additional incoming service calls
- 100 additional service appointments
- 100 additional maintenance menu presentations
- 100 additional ROs to dispatch
- 100 additional vehicles to inspect
- 150 additional technician hours
- 100 additional vehicles requiring parts
- 100 additional vehicles to park
- 100+ additional outgoing phone calls for advisors
- 100 additional customers to cashier
- 100 additional active deliveries
- 100 additional next appointments to schedule
The dealer was on track to get these results but didn’t because he wasn’t prepared to provide these new customers with the highest level of service possible. This dealer is now experiencing an increase of over 50 percent in RO count, but the net profit is still not there. You can prevent this from happening in your store by following these three simple rules:
Rule #1: Evaluate your Capacity for Growth
- Measure shop productivity (total hours billed on the ROs divided by total hours worked)
- Set your shop productivity goal at 120 percent
- Based on your current productivity, how many more hours can your techs produce?
- How many techs do you need to hire
- What skill level do you need to recruit (probably C-level techs)
- Do you have enough lifts and/or bays for additional techs?
- Is there adequate parking for additional vehicles?
- Service reception — service advisors work with no more than 12-15 customers per day
- Schedule appointments 15 minutes apart throughout the entire work day
- Do you utilize employees as service greeters?
- Utilize electronic maintenance menus for speedy, professional presentations with videos
- Can your cashiering process handle the additional traffic without long wait times?
- Is your waiting room adequate for the additional waiters?
Rule #2: Train Your Staff for Growth
3 Customer Touch Points
- Incoming phone calls
Shocking Facts on Incoming Phone Calls (Source: Phone Pops)
- 81 percent of CP labor comes from the phones
- 86 percent of advisors try to diagnose concerns over the phone
- 81 percent of advisors quote mechanical repair prices over the phone before they know what’s really wrong with the vehicle
- 95 percent of advisors quote higher prices than independent shops, allowing the customer to shop other places
- 57 percent of advisors never offer the customer an appointment
Incoming Phone Call Training
- Utilize appointment coordinators or call center not advisors for scheduling appointments
- Do not quote prices for mechanical repairs over the phone
- Avoid diagnosing over the phone
- Sell appointments at 15-minute intervals throughout the work day
- Never say no
- Always tell the customer what you can do versus what you can’t do
- Allow 20 percent of your schedule for walk-ins and upsells
- Carryovers are welcome
- Promote current maintenance specials
- Build value in your services
- Utilize interactive online maintenance menus so your customer can “sell themselves”
- Offer online appointment scheduling
- Consider building a complete fixed operations webpage
Rule #3: Measure Performance Daily
# Incoming Phone Calls
- Is volume increasing, decreasing or stagnant?
- Phone shop and record all advisors, appointment coordinators monthly
# Appointments Scheduled
- Is volume increasing, decreasing or stagnant?
- Set appointments 15 minutes apart for each advisor
- Follow up on all no shows to reschedule
- # hours produced versus # hours worked — daily
- # of multipoint inspections completed
- # of additional service request by technician
- # of ROs per day per tech, CP, warranty and internal
Service Advisor Performance
- # of customers serviced per day @ 12-15, CP and warranty
- Dollar sales per RO
- Effective labor rate, labor margin and parts margin
- Total sales and gross profit sold versus goal
- Hold everyone accountable for their performance — daily
- Praise for a job well done and take corrective action for underachievers
By following these three rules you can expect to avoid a negative ROI from your marketing campaign and start achieving an ROI that will produce for you the record profits that you deserve.
Remember the rules: Evaluate your Capacity, Train your Personnel and Measure Performance Daily. Isn’t it about time to get serious about service?