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Service: You Can’t Go Back to Business as Usual
Posted on May 06, 2010 - 12:32 PM
The other day I was talking to a dealer friend of mine about the past, the present and the future of his business. He talked about how tough the past 2 years were – with cut backs, lay-offs and low car sales. He talked about how much he had learned about the service business and how selling service is really the same as selling cars in a lot of ways. And he talked about how much better financial shape his dealership is in today because of his focus on expense control and service.
He went on and admitted that the downturn made him a much smarter businessman. And then, right in the middle of the conversation – he said something that really concerned me – it just sort of popped out of his mouth without thinking, I think, and that is what really got me thinking.
He said that since car sales are starting to turn around he can ‘get back to business as usual.’ Business as usual? Business as usual? “What does that mean – business as usual?” I asked. He said, now get this – “Well, you know – now I can go back up front and focus on selling cars like I used to instead of worrying about all of this service stuff.” Service stuff? – I wanted to punch him. That “service stuff” is what kept his business alive during the past few years – and now he just wants to go back to “business as usual”?
All I could think of was that he didn’t actually learn anything about the car business at all. Now, I know I am somewhat passionate – ok, a lot passionate and a little obsessive about customer retention and selling service – I know that – but, go back to business as usual? I don’t think so – not without a fight!
It was like he felt he had done his time – served his prison sentence and now that he was out of jail he could go back and start selling cars again. I really thought that he had figured out that his service and parts departments were vitally important profit centers that deserved as much attention and focus as the sales department and that customer retention and service traffic and cool stuff like effective labor rates, dollars per repair order and productivity were as important as selling cars – but, as the blue collar comedian, Ron White would say – I was wrong.
So, this article is for him – you know who you are and it is for anyone else out there that thinks their work is done in service and it is time to go back to the sexy world of selling cars (wasn’t so sexy the past few years now was it?) This is just to remind you of what you probably learned. It is meant to remind you that the gross from about 11 repair orders is equal to the gross from one car sale. It is to remind you that the average tech generates about $10,000 in labor gross alone in a month (not counting parts) and that is about what the average car salesman generates in gross each month. And it is to remind you that a lot of car dealers are not in business today because they depended totally on selling cars and had no interest in service – and this is for the dealer I spoke with a few years ago that told me he doesn’t see any reason to advertise or spend money in service because his customers love him and would never go anywhere else – he isn’t in business today, by the way. So here goes.
DON’T BE STUPID - BE COMPETITIVE & ADVERTISE: Just like in the sales department, if you don’t advertise, you don’t have traffic or ups in your service drive. Nothing happens until a customer calls or comes into your store and advertising is what makes that happen. First, make sure you are advertising to the right people – go after the customers in your database that have been there for service and haven’t come back – you have a much better response rate with those folks than you will ever get prospecting outside your database. Next, make sure you advertise the right way – direct mail is still the most effective form of advertising for service since you know who the customer is, what kind of car they drive and how long its been since they were in for service. Direct mail teamed up with email and phone call reminders are more effective and more affordable than newspaper, TV and radio combined. And last, but not least, make sure you advertise the right stuff. A competitive priced oil change is the best offer or hook you can use. Every car needs an oil change and customers have a good idea about what an oil change is worth – so let them know that you are priced as low or lower than everyone else. Customers have lots of places they can go for service these days. You have to make sure your prices are competitive, make sure you are open evenings and Saturdays and make sure you provide substitute transportation if you want to win the war against the competition.
FOR GOD’S SAKE - ANSWER THE PHONE: 85% of all service customers call first. They picked your name out of the phone book – they want to do business with you – answer the phone! Make sure your service team answers the phone quickly and courteously. Make sure they ask the customer’s name, give him features, benefits and advantages that entice the customer to come in and make sure they ask for the appointment on every single phone call. And don’t stop by just talking about it – check on them – call your store – one of my previous bosses always said – a good manager is a good checker.
BE NICE & WELCOME CUSTOMERS TO YOUR STORE: Nothing is worse than having a nice facility, competitive prices, spending money on advertising and answering the phone the right way to entice customers in only to ignore them when they arrive. Enact a 6 ft rule – if any employee comes within 6 ft of a customer they need to speak – ask if they need assistance – say Hi – ask how they are doing – something…just don’t let them walk past like a friggin’ robot. This just burns me up to see people that are obviously paid on commission treat customers like that. Reminds me of the obnoxious waitress – I like to ask her what she was doing before she cut her tip in half! Make sure your team knows that the customer in front of them is your very special guest and that they had hundreds of other places they could go for service – but they chose you. Make sure they know that things like smiling, being nice, listening and caring about customers are all a part of a condition of employment – not an option. Let everyone know that they work at Disney World and they need to act like it every single minute of the day.
CLEAN AND PROFIT BOTH GO HAND IN HAND: You don’t have to build a new building to have a clean building. Make sure your store looks like it is successful and it will be. Clean restrooms and a nice comfortable lounge makes customers want to return to your store to do business. Provide free Wi-Fi and work areas for busy business people and you will see a few more waiters instead of drop-offs. And remember, a clean organized shop, service drive and service write up desks instills the confidence customers need when they visit your store – and it shows you care. Make sure your service staff (techs included) are all clean and in good uniforms and make sure everyone wears a nametag. Lastly, paint, paint, and paint. Paint is the cheapest thing you can buy to update and freshen up your store. Make your store look professional.
DON’T STOP LOOKING - KEEP AN EYE ON THE NUMBERS: Don’t go up front and forget about what you learned in service. There is a ton of money to be made in the back and good, loyal service customers are much more likely to buy their next car where they have that one serviced – so you make more now and get the first shot at selling a car later. When you were back there you also learned about some good guide numbers – so keep an eye on your effective labor rate, gross percentages and dollars per RO. Monitor technician hours and productivity to stay profitable and continue growth. Make sure you have enough service salespeople and techs to get the job done – remember, on the right pay plans these folks don’t cost you money – they make you money, just like car salespeople do.
BE SMART - STAY FOCUSED ON CUSTOMER RETENTION: Just because things are starting to turn around you are not finished with customer retention, in fact, you are never really finished building customer retention – it is an ongoing project. Make sure you put some kind of loyalty program in place that rewards customers for doing business with you. Almost every business today has a rewards club because they have found that loyal customers spend more and visit more than non-club members. Keep it simple but make sure it is a true rewards program (not some punch card that looks like something an ice cream shop would offer). Remember, you are the Ritz Carlton of the car business - make sure your rewards program reflects that – people compare you to the airlines, hotels and other large purchase businesses – so make sure you walk the walk. And stay in touch with your customers each month – email them a rewards statement or newsletter - otherwise, customers will forget about it and you.
LAST – NEGOTIATE DEALS IN THE DRIVE: This is short and sweet – make sure your service team understands that half of a loaf is better than no loaf at all. A skinny deal is better than no deal and that if a customer leaves and doesn’t buy – you will probably never see them again. This is so important and you general managers, sales managers and dealer principals really have the key to success here. Teach your service team how to negotiate and close deals. Don’t let any customer walk – and remember this little annoying question- how much do you make when they go somewhere else and buy?
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