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/

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/

“You don’t build a business, you build people—then your people will build your business!” –Zig Ziglar

Wow! That’s powerful, isn’t it? Zig Ziglar was my hero for over 40 years. Even after his passing, his words still inspire me.

Business men and women always say people are their most valuable resource; yet all too often they don’t provide the resources and training necessary to grow their people.

To clarify, I’m talking about consistent, intentional, planned training. Practice, drill, and rehearse. Follow-up and accountability. It is so easy to get caught up in the daily grind of taking care of business that training gets pushed to the back burner.

When training does occur, it is often used as punishment. I’ve actually heard service managers tell their advisors, “Whoever doesn’t hit their numbers this month will have to go to training!” Oh brother! Don’t be the moron that says that.

Service departments can never stop training. The “knowledge retention” curve declines quickly, meaning people only remember 10% of what they learn. Therefore, constant reinforcement is necessary to turn knowledge into action, and to turn action into revenue.

Training is never ‘one and done.’ No one is ever completely trained—rather, it is an ongoing career-long process.

Some managers say building their people is a waste of time—they’ll just quit and move on. I have heard it said that it is far better to train your people and have them leave than it is to not train your people and have them stay!

Max Zanan wrote a wonderful little book called “Perfect Dealership” (perfectdealership.com). It is a quick read that’s packed with nuggets of practical advice on running a dealership.

Zanan wraps up the book with the Ten Commandments of Success. Three of them focus on personnel development:

• „Remember, automotive retail is a career, not a temporary gig.

I believe techs get it, and they’ve made a huge investment in their tools to further their careers. I think the biggest challenge dealers have with techs is keeping them at your dealership. Working conditions, work load (read that as not enough work to do), production-based pay plans, and continuing training are all potential deal breakers. Lube techs and service advisors often view their jobs as less of a long-term career path. These folks are way too transient and often bounce from dealership to dealership. I am truly amazed at the turnover of advisors. If a guy is an order-taker at the Toyota store, then he’ll be an order-taker if he gets hired at the Ford dealership across town.

• „ Focus on employee development that provides a path for career growth.

Remember what Zig says: build your people and they will build your business. Don’t get cynical because of a handful of jerks that don’t want to grow and get better. Most of your people are good people that want to do better; they aspire to more—more money, more responsibility, more productivity, more respect.

• „Attract a better workforce by having better pay plans, schedules, and training.

I get the part about pay plans and training, but schedules? I’m motivated by money and I thrive on a production-based pay plan, but not everyone does. There is a growing segment of the workforce that values time off and flexible schedules. They aren’t lazy, they don’t want something for nothing, they just want it on their schedule. A three-day weekend and two Saturdays off per month might be a game-changer for these folks. As a manager, don’t have an attitude that says, “hey, I’m in charge and my people will work when I tell them to work.” At least look into what motivates your people and see if you can accommodate them. Maybe you could tie sales production to flex-time off. Going back to pay plans, I’ve seen dozens of advisors that believe the only way to get a raise is to move to a different dealership. Tragically, all too often, they’re right. Just when they start making good money, the pay plan changes and out the door they go.

Action Points:

„ You must be intentional with your training. Schedule a service sales meeting with all fixed ops personnel once a month. Make it a big deal where you feed everyone, celebrate victories, and reward production.

„ Train your service advisors on how to sell. I’d suggest 15-30 minutes per week. Consistently reinforce the message. Spend half the time reviewing last week’s training and the remainder on new material.

„ If you’re hung up on exactly what to do, then subscribe to a blog, podcast, or video series from Dave Anderson. Show one clip at each weekly training session. Give your team access to Dave’s library of free resources (learntolead.com)

„ You might also want to check out all the service advisor sales training resources provided by Jeff Cowan (automotiveservicetraining.com). Jeff has an amazing ability to simplify word tracks that advisors can use to close the sale.

„ Lastly, I work with a team of over 700 fixed ops trainers spread out across North America. Let me know if you’d like to connect with one of them for live in-dealership training.

If you build your people in 2019, if you invest in their development and growth, then they will build your fixed ops department into a vibrant revenue stream for your dealership.

Happy sales to you and Happy New Year!

Dealership service departments have a great opportunity to increase traffic on the drive by pursuing recent used car buyers—those who bought from your dealership and those who bought elsewhere.

First, let’s look at the statistics (according to Lang Marketing):

 Almost a million vehicles were lost in 2017 due to hurricanes Harvey and Irma, creating a surge in demand for new and used vehicles.

 There were 42.4 million used cars sold in 2017; that’s up over two million units from 2014 when 40.3 million used cars were sold.

 The average age of used vehicles sold in 2017 was 4.5 years old. That is down from five years old not too long ago. (Newer vehicles typically bring higher prices, which may explain the next statistic.)

 The average sales price for used cars in 2017 was $19,500. That’s $1,400 more per car than in 2010 when the average sales price was $18,100.

Jim Lang of Lang Marketing makes the following observations:

“Higher used vehicle prices are generally positive for the aftermarket since they make it easier for consumers to justify investing in the repair and maintenance of older vehicles. Higher used vehicle prices also raise the value threshold for scrapping cars and light trucks, thereby keeping older vehicles on the road longer.”

So, as prices go up, many consumers are motivated to not only keep their old car but to spend some money on it to make it last a few more years. Yea! But the sobering fact is most vehicle owners aren’t spending that money at their local dealership; rather, they are heading to the aftermarket.

You’re okay servicing older vehicles in your shop, right? And you’re okay servicing any make or model, right? If you’re an import store that sold an F-150 pickup off your used car lot, then you’re okay having that vehicle serviced in your shop, right?

Most independent garages and franchised aftermarket shops are ready, willing, and able to work on anything. I’m suggesting your dealership should be, also.

There are 267 million cars on the road in the United States and that’s increasing every year. Combine that with the fact that the number of service bays are declining every year and you have the perfect opportunity for fixed ops growth…if you pursue it.

Action Point #1: First, let’s look at the low-hanging fruit. I’m talking about being intentional in retaining your pre-owned car buyers—making them lifetime service buyers. I see a plethora of new car retention programs designed to keep consumers loyal, but rarely do dealers aggressively pursue their used car buyers. That’s tragic and doesn’t make good business sense.

The action point is to give your used car buyers access to all of the retention programs available to your new car buyers. Things like “Engines for Life,” lifetime warranties, complimentary roadside assistance for life, and scores of other incentives to keep them coming back.

But you can’t stop there. Customer loyalty in and of itself won’t make you any money. You can’t deposit loyalty in the bank. Forgive me for stating the obvious, but you can only deposit money in the bank, and the only way that will happen is when the service advisors sell something!

Don’t assume your advisors understand the big picture. Take the time to have a service sales meeting and lay out your two-fold used car buyer retention strategy:

1: Get them back on the service drive.

2: Sell tech-recommended services to keep their cars trouble-free and fun to drive…and to keep them coming back!

Action Point #2:
Secondly, equip your advisors with word tracks that are brief and easy to learn. For example, if you implement some type of lifetime engine warranty on all of your used cars, you might coach your advisors to check vehicle history and say, “Mr. Customer, I see you are already enrolled in our Engines for Life Program. In order to keep your coverage intact, you would want our performance oil change package, right?”

Or you might have them say, “All of our pre-owned vehicles come with Lifetime Roadside Assistance as long as you choose our “better” or “best” oil service. Which one of the oil change packages best meets your driving needs?”

The intent here is to give your advisors an opening sentence—a proven phrase that will “get them started” on the road to a sale. Most professional advisors can take it from there if you can just give them a starting point.

Action Point #3: Lastly, proactively reach out to “lost souls”—vehicle owners that haven’t been on your service drive in over a year. Most folks have their oil changed twice a year, so if you haven’t seen them in that amount of time, they’ve defected to the aftermarket. Oh, you’ll see them again if they have a catastrophic failure that’s covered under warranty, but for routine maintenance, you’ve lost them.

Go get them back! How about a car care clinic on a Saturday morning? Make it a grand party with hot dogs and those inflatable bounce thingies for the kids. All fixed ops personnel will be needed, from “A” techs to lube dudes to porters. The centerpiece of the event is a free multi-point inspection performed on every vehicle.

Granted, it’s a lot of work, but if you regain 20-30 lost customers, it’s a great success. Plus, you’ll sell lots of labor hours simply by having your techs get their hands and eyes on every vehicle.

So many used cars, so little time. Go start rounding them up. It’s worth it! My personal thanks to Jim Lang of Lang Marketing. For more information on the Lang iReport, you can visit langmarketing.com.