BG Products Industry News

The following is a true story.

I took delivery of my new vehicle in January 2009. It was a smooth process and overall a pleasant buying experience. The salesman thanked me for my business and then he stuck his hand in my face, palm facing me, and said, “We do not want to see you again until the oil light tells you that you need an oil change.”

Even though it goes against my grain, I decided I’d play the game. At 11,000 miles the light came on and I stopped at the closest dealership for an LOF and tire rotation. At 22,000 miles the message center on the dash said it was time; so once again I had a dealership do an LOF and rotation. In both cases the combo service was about $39.95. (By the way, 11,000 miles between tire rotations is absurd…but, I’m only doing what the on-board message center and the service advisor tell me to do.)

My vehicle told me it was time for another oil change at 32,000 miles so I popped into the closest service center, a tire store, where they installed nitrogen in my tires and performed a fluid maintenance service on all my vital fluids. So why didn’t I go to a dealership? Because I never got the feeling they wanted my business. The selling dealer didn’t give me a service menu at the time of purchase. They never made reference to the service department. And I never received any correspondence from the service manager or an advisor inviting me in for service.

The two dealers that serviced my vehicle didn’t seem to want my business either. No menu, no call, no card, no nothing. Let me be clear, the service was great, the people were professional, the facilities were nice; but there was nothing to build loyalty. There wasn’t anything to tie me to the dealership.

The tire store wasn’t as clean as the dealership, the chairs in the waiting area were pretty worn, and the TV was probably purchased during Ronald Reagan’s first term. But, I learned that they offer a full array of vehicle maintenance services.

The bottom line is I lost loyalty to the dealerships because they never asked for my business or took any action to demonstrate they were anything but an oil change place. Maybe you’re reading this thinking, “OK Charlie, your car is low mileage and doesn’t need anything.” How about a quality, professionally installed bug shield? How about nitrogen in the tires? How about an air filter? How about a full wash and detail? All of which I would have purchased if asked!

At the very least they could have given me a menu, a multi-point inspection and set my next appointment. Yet they didn’t….and they’ve lost me.

Here’s a question for you: Has my story ever been repeated in your dealership? Don’t guess, but rather go to your DMS system and get the facts. How many new cars purchased in the first quarter 2009 have been in your service department in the past year?

Did you see the article written by Erin Kerrigan in the March 2010 edition of Dealer magazine?

“The back end is the new front end! The front end is a loss leader. It is credit-reliant, unpredictable, susceptible to the manufacturer’s challenges, and generally driven by forces for which the dealers have minimal control. By contrast, fixed operations is a profit engine. It is credit-resistant, recurring, predictable and if done well, it should be the pipeline for future car sales.”

Erin is right on the money…literally. By the way, she works for Auto Star, a growth capital firm; therefore, she’s looking at this strictly from the profitability angle.

She goes on to say, “The service and parts profit margin is 10 times larger than that of the new car department (45% versus 4.5%). In other words, the new car department has to work 10 times harder to earn the same gross profit.”

“At some level, service is a “need” not a “want”, whereas, a new car is usually a “want”; not a “need”. Most Americans require a functioning car and therefore, must service their vehicle in order to live their lives.”

Thank you, Erin, for telling it like it is.

Action point: Assemble your service “sales staff” for a meeting to discuss their importance to overall dealership profitability and customer loyalty. Copy this acticle and use it as your agenda. Teach them your expectations on handling customers with low mileage vehicles. Make sure they know how to recommend services needed today and how to plant seeds for the future.

In conclusion, I must tell you about a dealership in the northeast that “gets it!” Frenchie Coupal, owner of Frenchie’s Chevrolet in Massena, NY, along with his son, Scott, read my February article on Motivating Technicians. They implemented the “cash for upselling” process and in the first 22 days of March they increased fixed operations revenue $15,797. Their investment was $500 cash plus pizza and soda pop!

“It was fun for everyone,” Frenchie said. “We have already refilled the box with cash and we’re doing it again!”

They have nine techs, two advisors and they see about 850 cars on the drive per month. They are located 60 miles south of Montreal, Canada.

Frenchie concludes, “Since we began this emphasis on maintenance, our fixed coverage (service absorption) has gone up six points…from 64.8% to 70.9% …I’m very pleased!”

For more information on the technicians “cash for upselling” process and the play money template just send me an email and I’ll send the info your way.

Have a profitable summer! *

https://www.digitaldealer.com/dealer-ops-leadership/fixed-operations/a-story-of-lost-loyalty%e2%80%a6-and-how-to-regain-it/

The greatest challenge in the automotive industry today is finding leaders who will lead, managers who will manage, and directors who will provide direction. The centerpiece of effective leadership, management, and direction is accountability:

1. Personal Accountability—holding yourself accountable for the desired outcome
2. Top Down Accountability—holding others accountable to perform implemented processes

Service departments are famous for implementing processes and not holding employees accountable to consistently perform the task. For example:

• Advisors must do a walk-around on every vehicle that enters the service drive…with the owner present. They don’t, and there are no consequences.
• Every technician must do a comprehensive inspection on each vehicle. They don’t, and no one follows up to see why not.
• Advisors are required to follow up on declined work by calling the customers within 48 hours. They don’t, and management seems to have forgotten all about it.

Accountability isn’t a four-letter word. Dave Anderson says accountability is not something you do to somebody, it’s something you do for somebody. It’s management saying, “I care enough about you to hold you accountable. I care more about your future than your feelings. I’m hard on you because I know you can do it…and I believe in you.”

There is a common belief among service managers that techs and advisors don’t want to be held accountable. They have bought into a lie that says accountability is punitive—punishment, big brother, micro-managing—or something distasteful to employees. In fact, the opposite is true.

A few years ago I was consulting with a group of seven dealerships, and to say they were a dysfunctional family would be an understatement. There was drama and strife everywhere, and their business was in decline. I brought the techs and advisors together (without any managers) and simply asked them what was up. They listed a few minor issues and personality conflicts, but their main issue was lack of accountability. I was floored. This group of educated, professional adults wanted management to “inspect what they expected.”

Their frustration was centered around the fact that management demanded processes be followed, then didn’t correct, coach, mentor, and lead when employees didn’t follow the process. The message from management was “do it or else;” yet nothing happened to those who didn’t perform. The techs and advisors quickly learned that management didn’t really care and, therefore, they didn’t, either.

Quoting Dave Anderson again, “you will lose the respect of the best if you don’t deal with the worst!” Anderson goes on to say that leaders shouldn’t desire “to be liked” –their goal should center around “being respected.”

If you are respected, people will follow you—and ultimately like you. The leaders of the above dealer group lost all credibility because they failed to hold their team accountable. The net result was not just internal drama; it affected hours per RO, maintenance service sales, CSI, retention, and fixed ops profitability. All that could have been avoided by simply holding team members accountable. Surely, it can’t be that simple. Yes, it’s that simple.

The dealer saw what was happening and hired a new fixed ops director. Within 90 days things started to change, and six months later several of the service departments had record months. He didn’t come in and fire everyone, although some managers couldn’t be salvaged. He just laid out the expectation, provided clarity on how to meet his expectations, and did weekly follow-up (accountability) to make sure his processes were being followed.

His monthly service sales meetings are exciting, attitudes have improved, and everyone’s income has gone up! It’s a beautiful thing.

The primary reason the new fixed ops director made such a difference and turned seven dealerships around is because he practiced personal accountability. That means when he accepted the responsibility of being fixed ops director, he became accountable for the outcome.

Accepting responsibility for a task is meaningless and won’t produce any results if you don’t hold yourself personally accountable for the outcome.

Jeff Peevy, President of Automotive Management Institute, has written extensively about this topic. Peevy says:

• Personal accountability doesn’t require heavy supervision
• Personal accountability creates a thirst for knowledge
• Personal accountability pursues quality

It starts at the top. If the leader doesn’t accept personal accountability, then respect will be lost and the leader’s authority will evaporate…and you can forget about your team members ever practicing personal accountability.

Top down accountability—accountability to the manager—is important, but when your team members accept personal accountability, then you, as a leader, have hit the sweet spot. Your personal accountability has now replicated itself and now your team members have it in the fiber of their DNA.

So, what’s at stake?

The National Automobile Dealers Association put out a fascinating statistic that I had never seen before. According to NADA, 49% of total dealer gross came from fixed ops in 2017. That’s up from 45% in 2015. Of course, I’m sure you already know that most of the dealership’s net income comes from fixed ops gross.

The point is simply this: accountability increases revenue sales, gross profit, and net profit. There is a high price to pay for ignoring the impact of accountability throughout your dealership…and a huge reward for training your team to master the art of accountability!

This article is for leaders—dealers, general managers, and service managers—the men and women who have been given a sacred trust to shepherd their employees and the dealership to success.

Once you, as a leader, have embraced the message, then I think it would be a good idea to pass this article on to your employees.

Shakespeare wrote in “Hamlet” Act III Scene I “To be or not to be.” A motivational speaker and personal trainer that I know says, “What you be, they are becoming.” One of my favorite authors says it like this, “Your employees pay more attention to what you do than what you say.” Behavior is caught, not taught.

The Draconian parenting philosophy of “Do what I say not what I do” has never worked and it never will. Yet I see this happening every day in the business world; managers have one set of standards for their employees and a different set of standards for themselves. (Good heavens, I’m starting to sound like Dave Anderson!)

So, are you a student, a disciple, or a disciple-maker? Let’s start by defining each:

Student: A learner (a person who is trained but never produces)

Disciple: A learner and a doer (a person who applies what they have learned; result: increased revenue via addition.)

Disciple-Maker: A learner, a doer, a believer, and a teacher (a person who is held accountable by their superiors to continue applying what they have learned; result: increased revenue and exponential growth via multiplication.

Rather obviously, the goal of every owner and manager ought to be to become a disciple-maker—and to have teammates that share the passion. What you be, they are becoming. It starts at the top. Let’s look at some examples that better explain each category:

Student example: Management sends a service advisor to a sales training seminar. However, the manager does not attend. When the service advisor returns from the training, he immediately goes back to doing what he has always done. He never applies anything he has learned. The manager doesn’t know what the advisor learned, therefore he does not have the ability to hold the advisor accountable. Nothing changes. It was a total waste of time and money. Unfortunately, this is the pattern that happens most often in the automotive business. Management is under the mistaken belief that the key to success is having trained service advisors. It’s not. The key to success is having trained service advisors who are held accountable to sell maintenance service—who are held accountable to apply what they have learned.

Disciple example: In this scenario, again, the manager does not attend the training. However, the service advisor has enough drive, energy, and desire that he does apply what he has learned. However, after a few days or weeks, because there was no accountability and the manager doesn’t really know or understand what he’s doing or why it doesn’t take long for him to return to his old ways.  And even though he applied it for a short time, it didn’t become part of his DNA.

This is so tragic because the advisor is all fired up—ready, willing, and able to produce—yet due to a lack of support from the manager, everything fades away. This is one reason there is such a high turnover in the automotive industry. Weak managers who don’t believe in training now have a self-fulfilling prophecy: “See, I told you so. All this training gets us nowhere; it’s a waste of time and money.”

Disciple-Maker example: The manager and the advisor attend the training together. The general manager and the dealer go, also! It sends a message that training is important; that training matters. There’s going to be accountability to a standard. It’s a new day. Things are going to change. There’s a new sheriff in town. Now when the advisor returns from the training, management all the way up to ownership knows what is required of the advisor to succeed. Therefore, everyone is held accountable up and down the management chain. What’s the net result?

The sales training works because the advisors are held accountable. They now have become disciple-makers who teach and train customers, who themselves become disciple-makers with their friends and family. In other words, the service advisor’s sales presentation is so clear that not only do the customers buy the maintenance services, they “buy-in” to the concept that preventive maintenance saves them money. This is true success. This is what you’re looking for, isn’t it?

So managers, ask yourself, “Am I a student?” (Which doesn’t make me or the dealership any money), “Am I a Disciple?” (Which will add a little bit to the bottom line, but not much), or “Am I a disciple-maker?” (A game-changer, a guy who is out there getting it done and holding my people accountable to get it done.)

Excuses: These are some of the most common excuses for not becoming a disciple-maker:

1. Can’t afford the time “I’m too busy. We’re short-handed.”

Let’s take a reality check for just a minute. I understand the fact that a dealer can’t attend every training event for every department every time. And I understand that a service manager can’t attend every OEM technical training class that he sends his technicians to or every sales training class his advisors attend. But the more engaged you, as a leader, are in understanding what your people are learning, the more effective you’ll be at holding them accountable to do it.

At the very least attend one training event a month with them. Additionally, you could commit to being present at the beginning of most meetings held at your dealership, simply to welcome everyone, thank them for being on your team, and to let them know you support the processes and techniques they are learning.

2. Can’t afford the money “I hate to invest in people that I don’t think will be around very long. We have a high turn-over rate with our advisors and managers and we just don’t want to invest in them.”

It has been said that it is far better to train people and have them leave than it is to not train them and have them stay! If you invest in the training and hold them accountable to implement what they’ve learned, then your team will increase their production and give you a great return on investment.

3. Too lazy to do it; unmotivated “Quite frankly, I just don’t care.”

(Obviously, nobody is going to say this out loud but this is the attitude that many in management have.) Their thinking goes something like this: “I’m just not that passionate about it. I’m making an average salary, I have average personnel, we have an average dealership, things are going along pretty good. I just don’t want to put out the effort to get to that next level.” In other words, what you’re doing is “good enough” and you don’t want to invest the time, money, energy and effort to be great. By the way, you know the old saying, “the enemy of great is good.”

It’s easy to get worn out in the automotive service business. Long hours, customer expectations and demands, computer issues, technicians—it can suck the life out of the most optimistic among us.

That’s why we all need to be energized with fresh ideas. Just a reminder that I’m writing to managers and leaders—you are the folks that need refreshing the most. Attending training seminars with your service team will refresh you. If nothing else, do it for yourself.

In summary, if you’re looking for maximum return on the time and money you invest in having your people trained, this is the way to get it. Disciple-makers make disciples that go on to make disciples. This is contagious multiplication. What you be, they are becoming! “Go ye therefore and make disciples.”

“What is true environmentalism? The Obama administration told us you can’t be about jobs and growth and protect the environment. I simply reject that! We can do both,” according to Scott Pruitt, Administrator of the US Environmental Protection Agency.

“I think true environmentalism is really environmental stewardship. We have been blessed with wonderful, abundant natural resources in this country…and to whom much is given, much is required,” Pruitt continued.

“We need to be about managing the resources God has given us. So, we can do both—providing jobs and growth while being good environmental stewards.”

Last fall I had the privilege of sitting down with Administrator Pruitt to discuss the EPA’s impact on the automotive industry and to gain some insight on what the future holds concerning regulatory mandates. The event, “A Fireside Chat with the EPA” was attended by hundreds of professional automotive fixed ops consultants from all across North America and around the world.

Obviously, the laws and policies that come out of Washington, D.C. affect all Americans, but no agency has more impact on our industry than the EPA. From regulatory bans on lead in gasoline to emission mandates to compliance demands as a result of the Clean Air Act, the EPA has had a profound impact on automobiles.

On the topic of regulation, Pruitt said “One of the greatest issues for businessmen regarding energy and the environment is regulatory uncertainty—is a businessman supposed to follow the regulation (created by a federal agency) or the statute (created by Congress)?”

“The previous EPA created regulations that were not tethered to any statutes. Capital will not be put at risk by businesspeople if there is regulatory uncertainty.”

The Administrator on many occasions has said that the purpose of a regulation is to “make things regular.” In other words, regulations should bring clarity, not confusion. If there was ever an industry that needed consistency, clarity, and certainty, it’s the automotive industry.

Therefore, I asked him about Corporate Average Fuel Economy standards, which are actually set by the National Transportation Safety Board with input from the EPA. The CAFE standard for 2025 is a whopping 54.5 mpg. For our industry to attain that number, which is almost 20 mpg higher than it is today… well, I just don’t see it happening.

Specifically, I asked him to explain the process in order to find out if there’s any way to roll CAFE back to a more attainable number.

According to Pruitt, “the mid-term review in April 2018 is important…in looking ahead to 2025. In essence, the review is to evaluate if the projections were correct…or overly optimistic.”

“The Obama administration rushed the mid-term review by pushing it up 16 months to January 2017.

The EPA under the Trump administration will be doing the review at its appropriate time in April 2018.”

I think it will be very interesting to see what they find out. I am assuming they will find out that the projections were way out of line and I hope they will recommend a lower, more realistic target. We’ll see.

Pruitt went on to say, “Concerning the design of vehicles, we shouldn’t go to Detroit and say, ‘manufacture a segment, a percentage, of your fleet that no one wants to buy!’ Rather, we need to look at what vehicles people are actually buying and then strive to make them fuel-efficient with acceptable emissions.”

Okay, time out. Let that soak in for a minute. Here’s a member of President Trump’s cabinet, a cabinet secretary who runs a powerful federal agency, saying let the people decide. Let the market dictate the direction. Let’s find out what people want and help the manufacturers meet the demands of the market and at the same time achieve environmental mandates. Wow, what a common-sense approach! How refreshing.

“If you make vehicles that people don’t want to buy, then it’s counter-productive,” Pruitt concluded.

It’s counter-productive because people will hold on to gas-guzzling, high-emission, older vehicles longer. That’s bad for the environment and for new car sales.

I pointed out to the Administrator about government involvement designed to influence vehicle manufacturing: specifically concerning mandates for increased fuel economy and decreased emissions. This was the desired outcome, yet the new engine designs are susceptible to fuel deposits and that has had the reverse effect: deposits actually reduce fuel economy and increase emissions.

So, the federal government’s mandates have caused the exact opposite of what they were intended to do. Therefore, I respectfully asked the Administrator, “When does the government need to get out of the way?”

Pruitt responded, “My philosophy is that the market is the better governor of those things. The government, when it mandates certain things or implements price controls, it can have a detrimental effect. It’s always best when technology and innovation control the market. American innovation and technology, when left to drive the process, always work best. Government is slow and reactionary while industry moves to get things done quickly and efficiently.”

It seems to me that the EPA has been a political hot potato since its creation in the 1970s. EPA policies have a polarizing effect in our society with strong emotions on both sides. Pruitt summed it up like this:

“So much of what we do at the EPA has been politicized…and it shouldn’t be. What’s ‘Republican’ or ‘Democrat’ about cleaning up a superfund site? Nothing! Clean water and clean air should not be political…so we are working hard to change the discourse and have meaningful discussion.

In the past, the EPA exercised regulatory overreach and lost sight of its core mission. We are trying to bring clarity as we go forward.

We have lost civility in our discourse—we need to get back to a reasonable discussion.

We need to celebrate the achievements in innovation and technology that we have made in this country with respect to clean air and clean water. We need to embrace how far we’ve come.”

Well said, Mr. Administrator. Well said.

My personal thanks to Scott Pruitt for taking time out of his busy schedule to sit down and discuss the issues that impact our industry. Due to his vision and leadership, I believe the relationship between Washington, D.C. and the automotive industry will be stronger and have more synergy than ever before. The best is yet to come.