BG Products Industry News

By Charlie Polston, Automotive Customer Retention & Profitability Consultant, BG Products, Inc.

The holiday season is a wonderful time to reflect on the past year and count your blessings. Let me start by saying, I’m not naive or unaware of the political, religious, or ideological issues that divide us. Ours is not a perfect country, nor are any of us perfect – but there’s nowhere else on the planet that I’d rather live. And, there is no other career path that affords the excitement, variety, satisfaction, and unlimited financial opportunity like the automotive industry – and the best is yet to come!

Let’s review the opportunity that lies ahead of us as we count our blessings:

Vehicles in Operation

There are currently 273.7 million cars on the road in the U.S. That’s the highest car count in history – up over 70 million since 2002. When you consider the average car gets serviced two times a year, that’s over 500 million service visits. What an opportunity to increase your customer base as the VIO grows.

Service Bays

The number of service bays continues to decline. Over 50,000 service bays have gone away, due to dealerships and garages going out of business, in the last 15 years. Service bay count went from 1,217,000 in 2004 to 1,167,000 today.

It is simple supply and demand economics. The supply (of service bays) is down and the demand (of cars on the road) is up. What an opportunity to increase your shop efficiency and facility utilization. You have less competition and more cars needing service. The automotive service business is a robust growth industry.

Unperformed Maintenance

Last year, $69 billion of preventative maintenance went unperformed. That’s money left on the table. It’s not exactly pent-up demand… but it is pent-up need! My friends, that is over $250 per car of low hanging fruit. Of course, you won’t get all of it; but you’ll get at least a third of it – if you ask.

Dealership Service Share

Last year, dealership customer-pay service and parts sales exceeded $39 billion. That’s the highest ever! While that is still just a fraction of the total $252 billion market, it represents an increased market share over previous years. Time out. Consider the last two statistics: Dealers sold $39 billion and left $69 billion on the table. You could increase your business by 25%, 50%, or even double it and still barely scratch the surface of the untapped potential.

You Eat What You Kill

Most fixed-ops pay plans are performance-based. The more hours or dollars you produce, the more money you make. From techs to advisors to managers there is a financial reward for working harder, smarter, and more efficiently. There are so many dead-end jobs in other industries – where the pay is the same regardless of work ethic or performance. What an opportunity to be able to work harder and make more!

Career Advancement

No matter what your education, skill level, or ambition there is a place for you in a car dealership. If you’re a gear head that wants to solve complex mechanical problems, dealerships have a place for you. If you’re a wanna-be gear head, you can start as a lube tech and work your way up. If you aspire to leadership, management, or sales, there’s no better place than a car dealership to fulfill your dreams. If you have an entrepreneurial passion there are opportunities across the nation to own your own dealership. I know several dealers that got their start turning a wrench, selling F&I, or even washing cars.

Making a Difference

Many in the automotive industry have a passion for the environment and “going green.” The quickest way to help customers reduce their carbon footprint is to see that they have a well-maintained automobile. Tires, filters, fuel system cleaning services, and fluid maintenance services are just a few ways to keep vehicles green.

Americans cannot live their lives without safe, reliable automotive transportation. If you truly care about your customers then selling preventative maintenance services is your ultimate noble mission – it is your higher purpose. It is a win-win for everyone. The customer wins through less costly catastrophic failure and you win with an increase in revenue. If you want to make a difference, there is no better way than the automotive service business.

Most dealerships take inventory at years end. It’s a necessary part of your business. Equally important is that you take an inventory of your blessings. I am certain 2020 will be the best year the automotive industry has ever seen.*

https://www.digitaldealer.com/sales-variable-ops/seasons-of-opportunities/

Happy New Year! As you bring 2019 to a close, it’s time to hit the reset button and start fresh.

It’s a given that you are expected to grow your business in 2020 and out-perform last year. The question is how?

If you had stunning growth in 2019, then you struggle with thoughts of “How do I best myself… after coming off of my best year ever?”

If you had a lousy year, then it’s “What did I do wrong – and how do I avoid another disaster?”

Regardless, the answer is found in becoming a master of the basics. If you simply adhere to the basics of our business, the simple meat and potatoes, that have proven successful – then you will grow in 2020.

King Solomon was correct when he said, “There is nothing new under the sun.” It seems like many managers are looking for the latest, greatest digital miracle, or the magical process that will propel their business to the next level; yet true success is found in the basics. And there is nothing more basic and fundamental to fixed ops success than selling service on the drive. It is the centerpiece of a successful fixed ops growth strategy.

Now I am not saying that selling preventative maintenance services will solve all your problems – oh wait a minute; yes, I am. In fact, it doesn’t matter what other processes you have, if there isn’t an effective sales process in place, then your success will be limited.

There is no place in your dealership for a technician that won’t recommend services to sell. There is no place in your dealership for advisors that won’t sell services the technician recommends. And there is no place in your dealership for service mangers that won’t hold technicians and advisors accountable to sell service.

This was clearly underscored a few weeks ago during a secret shopper assignment carried out by one of the ladies on our team. When our shopper arrived at the dealership she was blown away by the prompt, friendly service. As an avid coffee connoisseur, she couldn’t believe the selection of javas, espressos, and lattes they had in the waiting room.

Her diesel pickup was delivered right to the service drive upon completion; only a few steps from where she paid the bill. Oh, by the way, the bathroom was spotless – stocked with paper products, soap, and even flowers.

She left the dealership less than an hour after she arrived. She had a wonderful experience, but… she left with tires that had two thirty-seconds of tread depth, a fuel filter with less than 2% life (according to the digital display), a dirty cabin air filter, and transmission fluid that was dark (original factory fill.)

The dealership had a great meet and greet process, a great caffeine process, a spectacular bathroom process, and a stunning delivery process.

However, they left over $1,500 on the table because they don’t have a sales process.

Now, in fairness to the dealership, they do in fact have a sales process in place – but no one followed the process, and no one held them accountable to follow it.

In addition to the lost revenue, of even greater concern is the fact that she left the dealership with an unsafe vehicle!

This is a true story and this is exactly what happened. Unbelievable, but true. I’m sure you get the point. So, let’s look at the basics of selling service.

For the past 35+ years I’ve taught a simple sales process of 1) Educate the customer, 2) Offer the solution, and 3) As them to buy. Educate. Offer. Ask. That’s the basics of selling.

The most profound truths are profoundly simple and easy to understand. Therefore, if you can keep the communication simple, your customer will have clarity; and with clarity comes sales success.

Let’s look at a profound truth in the automotive industry: The fluid fails before the part. The beginning of transmission failure is transmission fluid failure. Head gaskets fail because the antifreeze got acidic (fluid failure.)

Master cylinders corrode due to moisture absorbed by brake fluid (fluid failure.) There is a direct relationship between engine failure and engine oil failure.

Another profound truth is that fluids are cheaper than parts. At $250 a transmission fluid exchange is expensive – but it’s a lot better than a $5,000 transmission. Antifreeze is cheaper than a water pump. Brake fluid is cheaper than calipers.

A third profound truth is that vehicle owners can’t budget for a catastrophic part failure, but they can budget for routine fluid exchange.

The word track for service advisors would go something like this: “Mrs. Jones, our factory trained technician has recommended a brake fluid exchange service for your Tahoe. The beginning of master cylinder failure is brake fluid failure. Therefore, we have found that by keeping the fluid fresh we can greatly reduce the chances of costly brake system repair down the road. The fluids always fail before the parts, does that sound reasonable? Can we go ahead and do a brake fluid exchange for you today?”

Remember our goal is simplicity. A profound truth explained in easy to understand terms, followed by asking for the sale – today.

I’d suggest you make copies of this article and use it as the basis of your first service sales meeting in 2020. Practice, drill, and role-play. Keep it simple.

About the Author

Charlie Polston is an Automotive Customer Retention and Profitability Consultant with BG Products, Inc. Charlie has been with BG’s Fixed Operations Division for over 38 years. He has trained over 7,500 dealers, managers, and technicians – and has been a frequent workshop leader at NADA’s annual convention.*

https://www.digitaldealer.com/sales-variable-ops/fluid-fails-part-sales-opportunity/

By Charlie Polston, Automotive Customer Retention & Profitability Consultant, BG Products Inc.

Tatton Manning of Patriot Auto bought the group’s first dealership in 2014 – today they own five. He turned 40 last month! Manning is the epitome of entrepreneurship, determination, ingenuity, and living the American dream. 

Manning doesn’t have an automotive background and didn’t get in the business because of a Ph.D. (papa had a dealership.) No, instead he describes his entry into dealership ownership as more of a calling. With the exception of a brief stint as an F&I manager right out of college, he didn’t have any automotive experience at all before he got into the business. 

But he had an even greater calling – the U.S. military. Shortly after the war in Afghanistan, Manning would meet soldiers and felt that “these guys are my age and sacrificing everything to protect our freedom – and I’m not doing anything.” 

He joined the Army and served from 2005 to 2009, including a one-year tour in Afghanistan. Captain Manning was a Field Artillery Officer in charge of “the big guns.” 

After an honorable discharge, he went back to school at night and on weekends, earning a master’s degree in business from Oklahoma State University. His day job was in the oil and gas business, which he continued after graduation. He was successful and his career path seemed set… but he wanted more. 

He approached Bob Rosene, CEO of the firm and said, “Bob, I want to own a car dealership, but I can’t afford it.” A partnership was born, and it continues to this day. 

“I made cold calls on 14 dealerships exploring opportunities,” Tatton explained. “One of those 14 was Kevin Grover GMC in Wagoner, Oklahoma. Kevin took me under his wing as a mentor and coach. I would work four and a half days a week at my day job, then, I would work at the dealership every Friday afternoon and all-day Saturday.” 

With Grover’s help, Manning kept learning and looking – learning the business and looking for his first store to buy. The opportunity came in early 2014 in Bartlesville. Manning is an American patriot, so it was only fitting that his dealership was named Patriot GMC Hyundai. 

The dealership was housed in an aging facility with declining traffic and revenues. They had been selling about 30 cars a month and only seeing 280 ROs in service. (Last month they ran over 900 ROs.) 

From those humble beginnings the Patriot Auto Group now has five dealerships across Oklahoma. New and used car sales have grown from 190 units to over 900 vehicles per month. 

Manning credits Seth Knighton, COO and partner, with the dramatic growth in variable ops, “Seth knows how to buy cars, and sell cars, and grow the team!” he said. 

Fixed ops is growing, too. Manning hired Mark Demaro as fixed ops director as his family of dealerships began to expand. Demaro knows you grow a business by growing your people, and the more people you hire, the more customers you can serve. 

When they bought their most recent dealership earlier this year, there were three line techs and one lube tech. In just a few months they’ve grown to eight line techs and three lube techs… and they need more! 

So, how important is fixed ops? Manning answered, “Seth grew up on the sales side of the business; I grew up on the finance side of the business – yet every month we begin our executive meeting with strategies on how to move the needle in fixed ops.” 

“The real money is in parts and service; that’s the only way we can hit our net to gross,” Manning concluded. 

So how did he do it – five dealerships in five years before the age of 40. 

First, he attracted great people; both at the store level and at the corporate level. (just this year he has added a CFO, accounting manager, and HR director to his executive leadership team.) 

Second, he earned the respect of great people: vendors, strategic partners, industry experts, community leaders, etc. 

Third, humility. “That may sound strange, but successful people come with egos – and usually baggage.” Manning explained, “my faith teaches me to be humble. My church family is very important to me and my family. Without my faith I would not be humble.”

“I have to surround myself with people that are better than me. Seth is better at selling cars than I am. Mark is better at growing fixed ops than I am.” 

“If you always have to be the smartest guy in the room, then you limit yourself. Humility lets me defer to others who know more than me,” Manning said. 

Fourth, an emphasis on fixed operations. “We take a variable approach to fixed – meaning we focus on sales! We have service sales managers and service sales advisors at each dealership. Their job description and pay plans are built around sales production,” he explained. 

“If you want to increase the bottom line of a RO you start by increasing the top line – which means you must sell service.” 

Manning continued, “Many dealers, like me, didn’t grow up on the service side of the business; so my advice is to find someone you trust who knows fixed ops – a vendor, a partner, or a manager. Have them do an honest analysis of your parts and service department – and be prepared to be embarrassed. Most importantly, act on their recommendations. I did, and it paid off!” 

Fifth, tie car buyers to the service department. “Sales customers become service customers; and service customers become customers for life,” he said. To that end, Manning and his team started “The Patriot Pledge,” a retention program that encourages lifetime loyalty through lifetime vehicle protection. 

“It’s an investment in our customers and in our future – and it’s working,” Manning concluded. 

So, what’s next? “Our house is built on the goal of being the best and most respected dealership in each of our markets.” 

When asked if more acquisitions are on the horizon, Manning didn’t hesitate for a moment, “we are still on the grow – and managing the growth. I’m always on the lookout!” 

Hats off to Tatton Manning; a family man, a businessman, a Christian man, – and a true patriot! *

https://www.digitaldealer.com/latest-news/tatton-manning-a-true-patriot/

By Charlie Polston, Automotive Customer Retention & Profitability Consultant, BG Products, Inc.

Customers in your service department say that value is their top priority. Does that mean you’re charging too much; that you need to lower your prices; or that customers want cheap service? No! No! No! 

The Cox Automotive Service Industry Study, after interviewing 3,500 dealership service customers, found vehicle owners want a good return on the vehicle maintenance and repair dollars they invest, and that is the definition of value. You get what you pay for; cheap isn’t good and good isn’t cheap. 

There is this crazy wrong impression that dealerships charge too much for service work – way more than anyone else does. It just isn’t so! For example, Cox found the average dealership oil change to be $61, while the quick lube average was $60, and tire stores and repair chains averaged a whopping $75 – for an oil change. 

Fact: Quick lubes, tire stores, and auto repair chains do millions more oil changes than dealerships. 

Fact: Their average oil change price is the same or much higher. 

Conclusion: Cheap price is not a huge motivator – but value is. 

Quality, convenience, and trust rounded out the top four customer priorities – in that order. I find that very interesting because a great definition for value is quality (skilled technicians and precisely engineered parts), convenience (reasonable wait times, loaner or rental cars, shuttle, and streamlined drop-off and pick up), and trust (keeping your word, following through, and showing transparency). 

Speaking of convenience, the study revealed the threshold for wait times was 2.4 hours. Customers that spent less than 2.4 hours at the dealership gave a CSI grade of “very satisfied.” There is this crazy notion in the collective fixed ops mindset that says we have to get them out in 30-45 minutes. 

This rush to push customers out the door is a great excuse to squash any service up sales. In their quest for speed, many advisers never discuss needed maintenance with the customer – or if they do, it is discussed in terms of “do it later.” My friends, never put off until tomorrow the labor that you need to sell today! Strike while the iron is hot – ask vehicle owners to buy tech-recommended, needed maintenance – right now. Your shop can get any fluid maintenance service, filter exchange, or fuel service done in an hour, and the Cox study says the consumers will give you the time. 

I realize this is an article about value but indulge me for a few more paragraphs about time and convenience. If you review the multi-point inspection with customers no longer than 25 minutes into their wait time, then odds are you can buy more time. Most people would rather spend an extra hour at your dealership today, than try to figure out a time to come back, fight traffic, and go through the inconvenience later. For heaven’s sake, ask for the additional tech-recommended maintenance and repair business – ask for it today! 

The reality is if you don’t sell it today, you never will. 

Oh, and by the way, the dealership will make more money doing repairs and maintenance services than oil changes – and so will managers, techs, and advisers. 

Remember, you do oil changes to retain customers so you can sell maintenance services to make money. 

By the way, that’s value. Your dealership becomes their one-stop service shop for all their automotive transportation needs. 

Your labor rate is probably somewhere around $125 per hour – wow, that’s a lot of money; or is it? Bob Greenwood says shops are, in reality, knowledge-based businesses. Your shop manages productivity through billed hours, which come as a result of selling your knowledge. Greenwood, president and CEO of Automotive Aftermarket E-Learning Centre, LTD., goes on to say that the automotive industry is all about competency – and competency is reflected in the labor rate. That’s value! 

Doctors, lawyers, nutritionists, CPAs, college professors, and automotive technicians are all paid in the same manner – according to their knowledge and competency! 

Earlier this summer, I bought a 14-year-old four-wheel-drive SUV so my wife and I could access two of our favorite fishing holes. It was in great shape, but it had a flutter, a stumble at about 40 mph. It annoyed me beyond measure. The shop diagnosed it as a transmission issue; yet $400 later the problem persisted. Then I went to one of the most expensive places in town. Ninety seconds into the test drive the technician diagnosed a misfire. Problem solved. 

Additionally, they found my alternator was on its deathbed. I can’t tell you how much safer I feel taking my sweet wife of 34 years into these remote locations to catch bass. (She usually catches more than me.) I paid more for the right diagnosis and cure – and it was worth it. That’s value. 

Let me make one final point. Value is not automatically perceived by vehicle owners; it has to be sold. It may well be your most important sale.

Make sure your advisers keep “telling your story” and that they explain the credentials and certifications your techs have earned. That’s how you build value. Examples of this might include: 

•  “Our techs have a combined 10,500 hours of training.”
•  “Collectively our guys have over 295 years of experience working on Fords.” 
•  “We’ve invested over $150,000 in diagnostic tools, equipment, technology and software to assist our techs in quickly getting to the cause and cure.” 
•  “Our maintenance technicians are fully certified to perform all necessary fluid exchange services.” 

Customers demand value, and your service department provides it! Happy value sales to you! 

(My special thanks to Jim Phillips of Cox Automotive for permitting me permission to quote from the Service Industry Study.)*

y Charlie Polston, Automotive Customer Retention & Profitability Consultant, BG Products, Inc.

Customers in your service department say that value is their top priority. Does that mean you’re charging too much; that you need to lower your prices; or that customers want cheap service? No! No! No! 

The Cox Automotive Service Industry Study, after interviewing 3,500 dealership service customers, found vehicle owners want a good return on the vehicle maintenance and repair dollars they invest, and that is the definition of value. You get what you pay for; cheap isn’t good and good isn’t cheap. 

There is this crazy wrong impression that dealerships charge too much for service work – way more than anyone else does. It just isn’t so! For example, Cox found the average dealership oil change to be $61, while the quick lube average was $60, and tire stores and repair chains averaged a whopping $75 – for an oil change. 

Fact: Quick lubes, tire stores, and auto repair chains do millions more oil changes than dealerships. 

Fact: Their average oil change price is the same or much higher. 

Conclusion: Cheap price is not a huge motivator – but value is. 

Quality, convenience, and trust rounded out the top four customer priorities – in that order. I find that very interesting because a great definition for value is quality (skilled technicians and precisely engineered parts), convenience (reasonable wait times, loaner or rental cars, shuttle, and streamlined drop-off and pick up), and trust (keeping your word, following through, and showing transparency). 

Speaking of convenience, the study revealed the threshold for wait times was 2.4 hours. Customers that spent less than 2.4 hours at the dealership gave a CSI grade of “very satisfied.” There is this crazy notion in the collective fixed ops mindset that says we have to get them out in 30-45 minutes. 

This rush to push customers out the door is a great excuse to squash any service up sales. In their quest for speed, many advisers never discuss needed maintenance with the customer – or if they do, it is discussed in terms of “do it later.” My friends, never put off until tomorrow the labor that you need to sell today! Strike while the iron is hot – ask vehicle owners to buy tech-recommended, needed maintenance – right now. Your shop can get any fluid maintenance service, filter exchange, or fuel service done in an hour, and the Cox study says the consumers will give you the time. 

I realize this is an article about value but indulge me for a few more paragraphs about time and convenience. If you review the multi-point inspection with customers no longer than 25 minutes into their wait time, then odds are you can buy more time. Most people would rather spend an extra hour at your dealership today, than try to figure out a time to come back, fight traffic, and go through the inconvenience later. For heaven’s sake, ask for the additional tech-recommended maintenance and repair business – ask for it today! 

The reality is if you don’t sell it today, you never will. 

Oh, and by the way, the dealership will make more money doing repairs and maintenance services than oil changes – and so will managers, techs, and advisers. 

Remember, you do oil changes to retain customers so you can sell maintenance services to make money. 

By the way, that’s value. Your dealership becomes their one-stop service shop for all their automotive transportation needs. 

Your labor rate is probably somewhere around $125 per hour – wow, that’s a lot of money; or is it? Bob Greenwood says shops are, in reality, knowledge-based businesses. Your shop manages productivity through billed hours, which come as a result of selling your knowledge. Greenwood, president and CEO of Automotive Aftermarket E-Learning Centre, LTD., goes on to say that the automotive industry is all about competency – and competency is reflected in the labor rate. That’s value! 

Doctors, lawyers, nutritionists, CPAs, college professors, and automotive technicians are all paid in the same manner – according to their knowledge and competency! 

Earlier this summer, I bought a 14-year-old four-wheel-drive SUV so my wife and I could access two of our favorite fishing holes. It was in great shape, but it had a flutter, a stumble at about 40 mph. It annoyed me beyond measure. The shop diagnosed it as a transmission issue; yet $400 later the problem persisted. Then I went to one of the most expensive places in town. Ninety seconds into the test drive the technician diagnosed a misfire. Problem solved. 

Additionally, they found my alternator was on its deathbed. I can’t tell you how much safer I feel taking my sweet wife of 34 years into these remote locations to catch bass. (She usually catches more than me.) I paid more for the right diagnosis and cure – and it was worth it. That’s value. 

Let me make one final point. Value is not automatically perceived by vehicle owners; it has to be sold. It may well be your most important sale.

Make sure your advisers keep “telling your story” and that they explain the credentials and certifications your techs have earned. That’s how you build value. Examples of this might include: 

•  “Our techs have a combined 10,500 hours of training.”
•  “Collectively our guys have over 295 years of experience working on Fords.” 
•  “We’ve invested over $150,000 in diagnostic tools, equipment, technology and software to assist our techs in quickly getting to the cause and cure.” 
•  “Our maintenance technicians are fully certified to perform all necessary fluid exchange services.” 

Customers demand value, and your service department provides it! Happy value sales to you! 

(My special thanks to Jim Phillips of Cox Automotive for permitting me permission to quote from the Service Industry Study.)