If You Want to Win — Go For It!
By: Jeff Cowan
So you have been in business for a while and you’ve built a name. It’s a name that draws customers in to your service department like bees to honey.
The problem is, your business is drawing in more customers than you can handle. You have volume, but you have less than 1.5 customer paid hours per repair order. Your effective labor rate is less than attractive. You hover somewhere around the middle-of-the-pack with your survey scores. It appears as though your customer retention is okay because you have so many customers, but you know what they say about appearances — they deceive.
This is an Opportunity!
Is your business okay? Your advisors are afraid to sell anything because up sells take days and sometimes weeks to get done. More dealerships than you might think have this problem to some degree. Buck up! This is an opportunity.
I believe it is the “Business Gods” telling you, imploring you, to be bold! The “Business Gods” are commending you on your success in drawing people into your shop. They are telling you that now it is time to be bold and actually service your customers the way they expect to be serviced. Now is the time to offer a level of service by which your customer’s vehicle is fully inspected every time. Where the findings are discussed with them, they move forward to get the work done, and they are impressed enough to take the time to give you a perfect survey score. Your excellent service will ensure that your customers come back and do more business with you, and eventually purchase their next vehicle from you.
So what is this bold move that the Gods are telling you to make? It is to take the courageous step to finally get your service department under control.
Here are options on how you are going to do it:
- Extend your shop hours – I mean really extend them. Open on Saturdays- ALL DAY- if you are not already. Open on Sundays too. Open an hour earlier and run a second, and maybe a third shift. It’s a tall order, I know. Where do you find the qualified technicians? It’s not easy. It may take you two or three years to find what you need to go all the way. But your business plan forecasts three years from now anyway – right? So when you get there, do you want to still be grappling with your current problem or do you want to have it solved? Again, the theme here is to be bold. By the way, the most effective way to find the absolute best techs is to advertise that you have more high-dollar work than you can handle and that you are actually turning work away. The best techs look for places like yours, where they have plenty of work and can grow their careers. As far as the odd hours, there are plenty of people who like them and even prefer them.
- Cut back the number of customers coming in. Today’s customer is different. It’s not like it was 10 or 15 years ago when customers came in uneducated and unaware of their needs. Today they have tools like Google and they use them. They know what their vehicles need for maximum performance, efficiency, and economy. If you do not offer it to them, one of two things is going to happen:
a. They will go somewhere else, a place that is offering what they need.
b. They will not get what they need. Their vehicle will underperform, they will give you bad survey scores, and they will buy their next services and vehicle from another dealer of another manufacturer.
There is a reason customer retention has fallen to thirty-seven percent and is trending downward from those hideous numbers. Your customers are a lot like you. If you go to a five-star steak house and get a steak that tastes like spam, you are not likely to return. Bad product is bad product. Bad service is bad service. There are a finite number of customers that you can handle. Trying to handle more than that only leads to low up sell penetration, embarrassing effective labor rates, mediocre survey scores, and lost customers.
- Build a bigger shop. Rent or buy an empty building in your area that can be transformed into a world class service facility. Sure, it costs money- a lot of money- depending on where you are located, but being bold requires bold moves. Betting on yourself and taking chances is what it’s all about. Jim Graham of Santa Margarita Ford in Rancho Santa Margarita, California, is a perfect of example of a bold thinker and doer. Faced with an overloaded heavy truck department, he did exactly what I just described. Out of space, he went to a local business park and purchased a big building with very high ceilings and great big garage doors. He filled it with seventeen heavy duty, very expensive truck lifts. The move was big and bold. Some even considered it too risky. He opened up to a full shop and within two months was turning a profit – a big, bold one. In the process, he freed up his main shop and was able to offer his customers a level of service unlike anything he could have in the past. The main shop experienced increases like averaging well above 2.5 hours per customer paid repair order with a handsome effective labor rate, great survey scores, and well above average customer retention. He listened to the “Business Gods” and found business heaven. I have seen others do the same. Build it and they will come, but only if you dare to be bold.
- The fourth option is to do nothing. If you take this route, do not expect your advisors to have high sales, customer retention, or favorable survey scores. Do not expect your techs to turn the maximum hours on the big high-paying jobs. Take some friendly advice: stop bragging about how you have so many customers. It may be the reason why your numbers suck. When you do that, you bring attention to the fact that you lack the ingenuity and problem-solving skills necessary to meet the needs of your business and your customers. You are opening the door for your competition. If you ignore the “Business Gods” and do nothing, make sure to have a great exit plan for when a competitor realizes how ineffective you are. They only have make some or all of the moves listed above, and they will take your customers. In one sense, it’s already happening. When your customer retention sinks, the after-market service providers continue to grow. Your aftermarket competitors open early and stay late. They open in most markets on both weekend days, with full regular hours. If they run out of space, they expand and build more locations. They are bold. As a matter of fact, for every one dealership service department, there are approximately five aftermarket service centers where a customer can do business. And more are being built every day.
As I said before, if you plan on owning and/or running your business for another five to ten years, heed the “Business Gods!” They are signaling that now is the time to be bold. Growing businesses are bold. It’s how they find and keep their success. The dictionary defines bold as confident and courageous. Is that how you do business? Don’t look to the “gods” for everything. They’ve shown you the way, the rest is up to you. Be bold or be sold.