Many dealers will sign up for a marketing product or service campaign with the intention of bringing more customers into their service department in order to increase their customer pay business, improve owner retention, raise CSI and, of course, build net profits. Since about 60 percent of the average dealership’s net profit comes from fixed operations, this strategy makes a lot of sense, right? The fact is, many times the results are the exact opposite of what the dealer expected to achieve.
Is it possible to increase retail traffic and improve owner retention with an average CSI rating while lowering sales and reducing net profits? In other words, can a successful marketing campaign result in your dealership losing money? It’s a great thing to bring more customers into your dealership but there’s a more important question to ask: What do you do with them when they show up?
To explain my point, let’s take a look at case study of a dealer who 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 (see Figure 1). That dealer ended up losing more than $165k.
This scene is playing out in far too many dealerships across the country, so how can you prevent this from happening in your dealership when launching marketing campaigns with your CRM vendor? Let’s start by examining all the factors that led to the disastrous results outlined above. This dealership was averaging about 1,000 customer pay repair orders per month at 1.5 HPRO when his marketing campaign was launched, resulting 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
Of course, in reality all of this did not happen as outlined since the dealership was not prepared to provide these new customers with the highest level of service possible. This dealer is now experiencing an increase of more than 50 percent in repair orders, but the net profit is still not there. You can prevent this from happening in your store by following these three simple rules:
Rule No. 1 – Evaluate Your Capacity for Growth
Rule No. 2 – Train Your Staff for Growth
Rule No. 3 – Measure Performance Metrics Daily
Rule No. 1:
Evaluate Your Capacity for Growth
• Measure your 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?
• Ensure good service reception — your service advisors should work with no more than 12 to 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 with videos for speedy, professional presentations.
• Can your cashiering process handle the additional traffic without long wait times?
• Is your waiting room adequate for the additional “waiters”?
Rule No. 2:
Train Your Staff for Growth
• There are three customer touch points
– Incoming phone calls
– Your website
• Shocking facts on incoming phone calls (Source: Phone Pops)
– 81 percent of customer pay 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.
• Provide 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 your 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 No. 3:
Measure Performance Metrics Daily
• Number of Incoming phone calls
– Is the volume increasing, decreasing or stagnant?
– Phone, shop and record all advisors and appointment coordinators monthly.
• Number of Appointments Scheduled
– Is the volume increasing, decreasing or stagnant?
– Set appointments 15 minutes apart for each advisor.
– Follow up on all “no shows” to reschedule.
• Technician performance
– Measure the number of hours produced versus the number of hours worked daily.
– Measure the number of multi-point inspections completed.
– Measure the number of additional service request by technicians.
– Measure the number of ROs per day per tech, CP, warranty and internal.
• Service Advisor performance
– Measure the number of customers serviced per day at 12 to 15, CP and warranty.
– Measure the dollar sales per RO
– Measure the effective labor rate — labor margin and parts margin
– Measure the 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? If you have any questions on this topic, send me an email the address above.