I own a book on how to run a service department that was written in the 1930s, almost 100 years ago.
Even though the brands, cars and trucks have changed drastically in the last 100 years, the best practices for running a profitable service center describe the same system most of us still run today.
Obviously, the book doesn’t mention CSI or tablets, but what’s changed the most in the last few years is a decline in front end profit in most dealerships; putting more emphasis on fixed absorption.
Earlier this year, I was invited by a client to speak at his 20 Group meeting in Denver. This group wasn’t any different from the others I’ve spoken to recently. A little over half of them were not profitable in service, and 13 out of 20 were in the red, even after the parts transfer.
Now, anyone who knows me understands that I believe very strongly that being profitable in fixed ops is the number one priority for a dealership that wants to be successful. That’s because, at the end of the day, it’s mindless to work that hard without making a profit.
When I see a service department losing money or an unhealthy dealership with low fixed absorption, I see a business with managers who are conditioned to lose, are severely unfulfilled, often coming in and grabbing a cat by the tail, letting it drag them around all day, just to be left with a feeling that they lost more than they won. Those days stack up and become months, months become years. What a terrible existence. Often people need someone to help them realize their full potential, and escape the negative cycle.
So, back to that 20 Group. At a break, one of the members, Jason, approached me. Good-looking kid, maybe 35 years old from Seattle, where I grew up. He went into what a big fan of mine he was. He was proud to tell me he had read all of my books and had bought Fixed Ops Revolution. He loved it, learned a ton. It made a lot of sense to him.
He goes back to his seat. The meeting starts back up and I look him up in the composite. He was No. 6. After talking with him, I would assume that he would be one of the handful on the side making money. Ends up though, he’s losing money. He was the fourth least profitable out of 20 dealers.
My heart kind of sank.
I don’t believe anyone sets out to run an unprofitable department. No one wakes up every day and says, “Hey, let’s go see how much money we can lose today.”
What does happen is that over time, we accept failure as being OK. It’s easier to keep doing the same thing we’ve always done than it is to change. “My market’s different” and “what if it doesn’t work” become the narrative. Then failure becomes accepted as normal.
I often sit in these 20 Group meetings looking around the room and wonder how it’s OK for more than half the room to be losing money. No one raises their hand and says “enough is enough.” Let’s stop talking about the factory, car washes, loaner cars, etc. and start talking about the basic reason for business. Profit! We aren’t victims here. The economy is good.
At the lunch break, I pulled Jason aside and asked him why he hadn’t implemented any of what he learned in Fixed Ops Revolution. His face told the story before his words escaped his lips. He just hadn’t.
You have to wake up to get up. You have to put on your shoes to work out. In other words, you have to take the first step. He just hadn’t taken the first step. He hadn’t felt what it’s like to see the positive outcome of a new strategy or system. It’s scary, but not as scary as doing nothing.
Jason was just like everyone else. He wanted to do better, but just didn’t know where to start. He was paralyzed with the fear of failure.
On my flight home it hit me. What Jason — and dealers like him — needs is a challenge. Something big enough, exciting enough to get them to take the first step.
I’ve done this before with a similar contest. It was my $50,000 Service Manager Challenge, which worked to get managers past their own hang ups and fears.
Here’s what one of our past winners said about his journey.
“Ever search for service manager training? Pretty slim pickins. Then I came across The Bearded One!” said Damon Egan. “I watched a few videos and all of a sudden lights were turning on! What do you know! There is a better way to do things. It’s called a PLAN! I made a call.
“You have to remember that we are not used to these California types up here in Canada,” Egan continued. “So when I got a call inviting us down to the offices for Boot Camp, both my GM and I were a little shocked about how fast this is moving. We show up and there are many other people just like me sitting in this room. We all look like we did the first day of school — scared, apprehensive, unsure of ourselves. We have all thought that we are better than we actually are.
“Then, the weirdest thing happened,” Egan said. “They had the same problems and the same stories I had. They were facing the same challenges in getting their departments to where they need to be. I start to feel more comfortable about this whole new way of thinking. After this day, I made pages and pages of notes and more the commitment that we were going all in. We were going for failure. I would implement everything as soon as I got back to Canada. We needed a full paradigm shift in our attitude, execution and presentation to our guests. We immediately started to see results. ELR goes up, RO count goes up and CSI goes up! We had happy advisors. We had happy technicians who were making more money than they had ever seen. We became darlings of the entire dealership. We were absorbing more than ever and breaking every sales and gross record ever produced in the store.”
It’s a powerful transformation once someone decides to take action and move forward.
This year, instead of giving away $50,000, I’m giving away a Jeep Gladiator Truck at our Top Dog event this August. Anyone who joins the contest can win. The rules can be found at chriscollinsinc.com.
It’s you vs. you at the end of the day.
See you in August ….