In many ways, the auto service industry has been a forgotten-about part of business for a long time—maybe even forever. New service advisors are trained by the advisors before them, who were trained by the advisors before them, and so on and so forth. There’s very little evaluation of the efficacy of the practices that get passed from advisor to advisor and almost no innovation. More often than not, these systems don’t work well and they definitely aren’t scalable. So what we’re left with is potentially talented advisors who are working 75 hours a week and getting disappointing results. But it’s just the way things are, right?
Wrong. Very wrong.
For those of us who have always chosen to do things differently, it was hard to watch this trend continue over the years. At a certain point, I knew we needed to disrupt the auto service industry in a big way. So I launched the Service Drive Revolution podcast to do just that by teaching you scalable and profitable systems that allow you to maintain a high quality of life and have fun all at the same time. We know what we’re doing and how to do it well, so we want to help you get to the top of your game too. This isn’t about making change for just one advisor either…it’s about revolutionizing the whole industry and lifting it up across the board.
On a recent episode of Service Drive Revolution, Jeremy O’Neal of AdvisorFix and I shared five ways you can increase your return on investment, or ROI, in your service department that most wouldn’t think of or expect. And even if you’re already aware of them, our insights will offer a different angle—a little twist, if you will— that’ll help you do them even better. Here they are:
1. Chase profits – NOT gross revenue
If you’ve been told that in order to get fixed absorption in the service industry, you need to chase gross revenue, which I’d be willing to bet most of you have….you’ve been lied to. (If you don’t know what fixed absorption is, you need to—go to chriscollinsinc.com, wait about 30 seconds, and opt-in when the pop-up comes up and I’ll send you a video explaining why fixed absorption is a house of cards.) When you chase gross, you’re essentially just chasing traffic, which often leads to discounting services until you end up making less per hour of labor that you sell. The secret is to understand how much profit you actually make for each hour of labor and make pricing adjustments to reach an effective labor rate accordingly. Stop counting cars and start focusing on what’s most profitable for your particular business and market. This takes what Ben Benstock called in an earlier episode, investing in “return on learning”, or ROL, meaning taking the time to test things out and learn in order to get it right. It pays off. You can listen to Ben’s episode here. Jeremy also got into what this looks like on the independent business side of things in this episode—listen to hear what he has to say.
2. Stop playing the short game
It can be really tempting to play the short game, focusing on saving money in the short term and cutting corners to get more done. But, as the phrase suggests, the short game is really short-sighted. Just because you’re saving a buck or two up right now doesn’t necessarily mean that you’re making a smart decision for your business. One example I shared on the episode is one of my coaching clients, who got stuck in this vortex of paying technicians to do alignment checks for whatever reason. At some point, he decided to stop because he didn’t want to pay techs to do them anymore, just because he got tired of the consistent expense and he liked that he was saving the money up front. I asked him how much he was paying a tech for an alignment check and it came down to about $9 a pop. Then I did the math: If you’re only trying to sell alignment checks to clients that are at the 12 month or 12,000 mile mark, 80% of them are going to be out of alignment—maybe even 100% sometimes. Say you offer 10 clients an alignment check and 5 of them take it. If the check tells 4 of those 5 that they need an alignment, they’re probably going to go for it. At anywhere from $500 to $700 per alignment, you’re bringing in anywhere from $2000 to $2800 right there. And it all starts with paying those techs $9 per check, or $40 in total up front. So by playing the short game, this guy was saving $40. In being more strategic and opting for a long game, he’s making thousands. We shared a few more examples in the episode.
3. Remember that people want to buy an experience more than anything
When it comes down to it, your best clients may be coming into your shop for your service, but the reason why they keep coming back is because of the experience you offer. This starts with the way you make them feel, building trust and listening to them—petting the dog, as I call it—and extends to actual experiences that you provide for them. For example, let’s say you’re at a dealership and you have customers that haven’t been to the shop in six months and they’re out of warranty. Just calling to remind them that their warranty is up probably won’t go too well, so how else can you get them in the shop? Send them a handwritten letter and invite them into the shop to meet their technician, put their car in the air and do a visual inspection with them, offer door prizes…the whole nine yards. Make it fun and interesting for them. When I’ve offered this experience in what I call Car Doctor Service Clinics, the record we did in sales in one day was $120,000. No matter what we did in sales, we’d make about double that amount over the next couple of months afterward. Experiences that help customers want to buy what you’re offering instead of coming to terms with what they’re being sold are a great way to drive ROI. Jeremy has some great examples on the episode of how to do this in independent shops too.
Pro-tip: Step up your game even further by creating events that people want to take pictures of and share. Get lions in there, baby penguins…whatever it takes to get people sharing their experience with others.
4. Get your salespeople in the service drive
The best dealerships that sell the most cars have salespeople in the drive. Salespeople looking at their appointments the day before. They’re introducing themselves to the customer, offering to get an appraisal on their car. If the customer bought the car there, the salesperson has already pulled up where they’re at with the car and what their payment is. Salespeople can often get the customer a better option at close to the same price using the tools they have access to. The thing is, the showroom doesn’t always get the most traffic, but the service drive has a ton of traffic. So if you’re working on 100 cars every day, you should be able to sell five cars a day out of the service drive. Instead of spending a ton of money on advertising new car sales to get people into the showroom, get your salespeople into the service drive where you already have tons of clients every day.
5. Invest in your people
I can’t tell you how often I hear from service advisors who are hungry for new training but their bosses won’t cover it. More often than not, these aren’t expensive trainings—a lot of them are online and cost less than $10 a day. This is related to the mistake of playing the short game, focusing on the upfront cost rather than thinking about the longer-term gain. The fact of the matter is, better trained advisors will probably make you more money in the long-run. Plus, paying for their training will probably increase their level of job satisfaction, so they’ll want to work harder and stick around longer. Investing in your team’s development up front is always worth it.
We share a few more tips and tricks in the episode, so give it a listen to learn even more. We also talk about what’s wrong with Jeremy’s soul and how I feel about mountain biking, if you’re looking for a different kind of entertainment.