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To: General Manager/Dealer Principal
From: Fixed Operations Net Profit
Reference: Fixed Operations Gross Profit Resignation Letter
Dear General Manager/Dealer Principal,
It has come to my attention that Gross Profit has resigned.
Without the continued support of Gross Profit, I cannot continue to be effective in the performance of my duties! As you know, I am extremely sensitive to sudden changes in revenue stream and expenses.
In the recent past there have been direct actions taken against me by personnel who do not have my best interests at heart. For example, the Service Department stopped making appointments after 3 p.m., they don’t advise the customer on needed maintenance, they don’t have a service drive sales process and, to top it off, they’ve started giving discounts on repairs!
This is an instantaneous revenue reduction in my department.
And because we don’t really have any processes in place (including how to answer the phone), there has been a decrease in customer pay RO count. Just last week I heard one advisor tell a customer they could not get in this week for service. And we have techs standing around at 3:30 most days!
Not to mention that tire sales have been extinct in our service drive for some time. I am sure you are aware that the first person to recommend tires usually gets the sale. And forget about alignments. Last month we serviced 550 vehicles and sold 10 alignments.
Yet, studies show that four out of 10 vehicles on the road today need some type of tire repair/replacement and/or alignment. I know how to do math…I’m Net Profit for goodness’ sake…and if there were 550 vehicles in for service, there were 220 potential sales. We missed almost all of them.
I don’t know if you know this or not (and I am not trying to be a “disgruntled ex-employee”), but I heard that the parts obsolescence was too high (nearly 20% of current inventory) and it has become very difficult to get any customer’s car in and out of the shop in one day due to a lack of parts availability. Just yesterday we did not have brake pads in stock!
To make it even harder for me, the Sales Department has stopped introducing new customers to the Service Department, which means there is little opportunity for building customer retention. What am I supposed to do when I don’t get the support I need?
Lastly, there is not a CSI management process in place and all our customers are leaving. Retention has dropped to an all-time low. Instead of long-term customers making service appointments on older model vehicles (five to seven years), they have all started going to nearby aftermarket facilities.
We used to have 100% of the customers who purchased here come back here for service, and now we are lucky to have 20-25% repeat service business. Boss, there is not a Net Profit on earth that can work under these circumstances.
There is hope. If we were to work together to create a service sales team, focus on providing all our customers a safe and reliable vehicle while executing a customer retention plan that includes training, coaching, monitoring and rewards, then I think we’ll have a chance to turn this around.
If we stand by and hope, wish and pray for change, I’m afraid that this will lead to more customer and employee defection, increased costs, loss of service and vehicle sales, not to mention the impact that poor business performance has on the local community. (People don’t spend money if they are not making money.)
I have talked with Margins, HPRO and Effective Labor Rate and they are undecided on whether they will stay. Of the three (if I had to guess which one), I believe Margins have just about had it as well and will be leaving soon.
I never say “never,” Boss. If things change around here, and Gross Profit decides to come back, I would be interested in getting a call from you.
With Sincere Regret,
Fixed Operations Net Profit
