What is Fixed Absorption?

What is Fixed Absorption?

Welcome to Service Drive Revolution! Today, we're going to talk about fixed absorption. It’s a term that everybody thinks they know, but maybe they don't. What is it? What's the formula? How do it help the dealership health as a whole?

We’re also offering a history lesson on Henry Ford that you won’t want to miss!

We’ll answer questions, but first we're playing ‘Would You Rather?’ This is where I asked Christian would you rather do this, or would you rather do that?

The question:

“Would you rather fire a single mom who's a service advisor, who's late all the time, and can barely pay her bills, plus the dad is a deadbeat, or would you rather interview a dealer's friend who thinks he can be a tech, but he's been selling insurance?”
Christian’s wants to give me an honest answer, so he has some follow-up questions.

How many kids does the woman have? Let's say three. What's the oldest kid’s age? 16 and he’s a pain in the ass. He knows everything. Does the woman have any tattoos? This question threw me off, but yes. How many times has the dad been to prison? Zero. And I have to explain to Christian that’s he firing her, not dating her. That’s a different game.

With the dealer’s friend, what kind of insurance? Car, home, that sort of thing. How many jobs has that guy had over the last five years? Two. Drinker? Yes, and let’s just say that they're a straight up alcoholic.

Christian has a heart made of stone, because he’s going to fire the single mom. Why you ask? Because he’s never seen an insurance person become a technician before!

There you have it everybody. Please put in the comments what you would rather do. Are you cold blooded like Christian or do you actually have a heart?

Let's go to questions from the audience.

I actually have a felony on my record, it's a hit and run. I served two years in prison. I've been released for a year now. I have a work history of automotive for 10 years. I've been a service writer and assistant manager in Sears Automotive. Since my release about a year ago, I have not been able to find a job in automotive. Seems to be really hard. I did an interview with a BMW dealership, which they told me that they couldn't cover me for insurance purposes. And I was just wondering with someone in my case, if you've ever hired anybody or know of anyone that usually will hire. I know that there's probably people out there that have felonies and they've done their time and they just want to move forward with their life. So, I'm sure this would help a lot of people. And I thank you for your help so much.

It's tough. In a lot of situations, the insurance company won't cover you and so it really isn't even the employer's choice because they can't hire somebody that they can't insure. And it gets harder and harder with all of the lawsuits and claims that happen. The insurance companies have a pretty good handle on what you can and can't do. A lot of dealerships just wouldn't be able to hire you because of their insurance at the time. Most of them probably wouldn't even interview you because they know they can’t move forward. We've tried getting things like that pushed through and it has 100% been a no.
It’s more than just an uphill battle, it's an impossible fight in those cases. It’s terrible because everyone deserves a second chance. Since the dealer world's strict, it might behoove the caller to try an independent shop where there's a little bit less HR red tape and he might be able to get in a chance based on his merit and his abilities as a service advisor. We would really like to see this guy get a chance.

Now Christian wants to talk about fixed absorption, because oftentimes it's a term that's thrown around, but a lot of people don't understand what it means. It's really bloody important to Christian. And it's coming up more and more in the field from our clients.

One thing that’s great about fixed absorption is that it’s not service, it's not parts, it's what's happening in the back. It naturally brings those two departments together.

What I understand about fixed absorption is that it came out of Henry Ford trying to scale up Ford. He had a dealer network, but he would deliver the cars and get paid after they sold the cars to the consumer. And to scale, he needed to increase his cash flow and not have receivables. So, he convinced the dealers to get a line of credit, which we call a flooring line. Which means when the Model A's were delivered to the dealer, they were put on a line of credit with the bank. And then Ford got paid right away, but the dealers had to pay interest on their inventory.

Let’s say an inventory at a dealership can be 10M or 20M. Depending on the brand, you could have $10M worth of new cars in inventory and then that dealership is paying interest on that money. And so let's say interest rates are 5%. So, you're going to be paying 5% divided by 12 months because it's an annual interest rate, right? Then, your flooring expense in a dealership can be $20,000 to $100,000 a month.

We’re getting into the history lesson but stay with me. Ford encouraged the dealers to have service and parts departments. And they literally used to make these charts of what it would cost to build a Model A in parts and service. The Model A cost a $1,000, it costs $17,000 to build it in parts and service. Now, nobody in parts and service is ordering a wood frame Model A and building it. But the point is that if they serviced cars, they would be able to cover the overhead of the dealership. And if times got tough, they could give the cars away at cost and still be profitable because of their parts and service business. That’s why dealerships have parts and service. It was a big part of how Ford scaled, and then other manufacturers followed suit.

If you think about it, it is odd that dealerships have five different businesses inside of one business, right? They could be separate businesses – warranty came later and then it made more logical sense. But it is a measurement of how healthy your dealership is in a competitive market. Do you have parts and service and a body shop, essentially fixed ops, and they cover the overhead of the business? And could you just give away cars or trucks at costs and still be profitable? Or in some cases, and this has happened, you give them away to a loss and you're still profitable. You really could make a dealership profitable by giving away the car and charging for the maintenance, in a sense.

We might move to an economy where it's more of a lease and maintenance type thing. Especially, if cars don't depreciate as much as they have historically, which might change, they might just have more software updates and they might not depreciate as quickly. We might be more of a printer model where you're buying the printer at cost or even at a discount, but where we're making the money is in you buying the ink cartridges over time and it's more of a subscription model.

I hear Porsche tries to do that here in Los Angeles. A couple of their manufacturers are trying to have subscription models. So fixed absorption, when you say 100% fixed absorption, that means that the fixed ops are covering 100% of the overhead for the dealership. And there's two ways to do that formula. One would be all of the overhead, the other would be taking out the sales departments, commissions, flooring, expense, and advertising – the variable selling expenses.

You are definitely served well by doing everything you can to support the sales department, because the sales department gives you the most customers. You want to keep as many cars going out of your sales department as you can because six or 12 months down the road, those people are coming to see you. So focusing on the whole dealership health is exactly why I fixed absorption exists.

The customer sees us as one business or one manufacturer, they could care less that there's parts, service, sales, finance, etc. It's one experience and one payment in their budget monthly. We will, as an industry, adapt to that and there'll be fewer walls in between departments. It’s conceivable that the service department could be selling the next car, especially when manufacturers start going to more of a subscription base.

For example, the Porsche subscription here in Los Angeles, you just call the concierge and they bring you a different one. So you have three levels. And if you subscribe, let's say to the middle level, and in the middle level, I don't know, it's their middle SUV and the Panamera and something else. I don't know what it is, but you want a Panamera and you want to give back the SUV, you call them, just swap it out. Sounds pretty darn easy, right? And you're not going in for a service either. As things evolve, the service departments will be more of a fleet type service department than a consumer type.

So, that's fixed absorption in a nutshell, it is the health of the dealership. How healthy are you in a competitive market and even in good times? And service and parts managers should be talking about that number every month. How are we doing? Are we covering the nut?

Fun stuff. We're uploading new stuff every day so make sure you subscribe so you don't miss out. If you have a question that you'd like us to answer on the show, call (833) 3-ASK-SDR. For special deals on our books and training head over to offers.chriscollinsinc.com. We will see you next on Service Drive Revolution!

Why You Can’t Hire Techs

Why You Can’t Hire Techs

Welcome to Service Drive Revolution! Today’s subject: why you can't hire techs. We also are playing my new favorite bit, ‘Would You Rather?’

But first, Christian had a joke. “How many service managers does it take to screw in a light bulb?” His punchline, “Three. One to unclog the toilet, one to de-program the building alarm, and then the other one to actually do the screwing of the light bulb.”

He’s not wrong, that's so true. I had one too. “Who does the general sales manager call when the sales department's toilet is backed up?” You guess it, the service manager.

Now, on to ‘Would You Rather?’ Christian was excited about this segment, or maybe he’s wasn’t…

Our question: “Would you rather write up a night drop that ends up being a comeback for an advisor that's no longer there or write a 20-line warranty RO on a car that's one day out of warranty, but they made the appointment a week ago?”

In the first scenario, the tech is still there, but the advisor's gone. It’s a Volkswagen Vanagon that the tech left lug nuts loose, and the wheel came off driving on the freeway. It was towed in on the weekend, on Sunday, and it's sitting there on a jack. There's three wheels on it. It's missing the wheel jumped the median. So, it's a night drop, you have to call the customer.

Christian went with the Vanagon since “it's an opportunity as the advisor to become the hero” because you're in a situation where since the previous automotive service advisor’s left, so you get to take over with a fresh start. Christian is looking to make a new friend. He never wrote service for Volkswagen, but he was a manager, so maybe he knows what’s he’s talking about…

Time for questions. If you have a question, it doesn't have to just be about service or parts, it could be anything, marriage advice, whatever. Call (833) 3-ASK-SDR.

“Hey, my name is Kelly. I work in southern Louisiana. My question for you is about working with technicians. I don't want to overstep and make a technician feel like I'm second guessing his diagnosis. He is the technician; he's had the training. But knowing that they either didn't take the time to diagnose it and it seems like we're throwing parts at something or basically saying that a part failed a certain way. By knowledge, doing my own research, or talking to other technicians, I know that's not how that part operates.

I've actually sold a job on a car where he told me the turbo was leaking and needed to be replaced, only to find out that my customer didn't actually have a turbocharged car. So, that was my partly fault too, because I didn't actually go out there and put my eyes on it, being busy in the front. I feel like my customers lose their faith in me and makes me feel like a liar. I don't know how to approach a technician without ruffling some feathers in the shop, or if I need to ruffle feathers, that's fine too. I just try to keep the peace when possible.”

Christian shared an interesting story. When he went from sales back to service, he went back into the shop and really asked them for a show and tell. He fell on his sword and said, “You know what, guys, I'm sorry, I don't know anything about fixing cars, and the more that you help me explain this to someone, the better off I'm going to be able to sell it for you.” But in the meantime, when they're showing you, it's also confirming their diagnosis a little bit too, because they've got to show you what’s broken.

But the whole tech telling Kelly about something is needed that's not even on the car, that's a different scenario. Was the tech messing with her or was that real? What happens in some cases is technicians, who’ve been working on that car for 20 or 30 years, gets an RO with a certain complaint on it, they automatically go to, “Oh, it needs a turbo,” because of the description of the issue. And then they give it back to the advisor saying, “Call him, tell him it's going to need a turbo.” They don't look at the car or anything like that. So, that probably works in 95% of the cases, and they're right because of their experience. But in those 5% of the cases, it's unacceptable to call somebody and tell them that they need a part that they don't own.

In psychology, they call this process versus content. For example, have you ever been in a situation where you're with your significant other and they ask you, “Honey, do I look fat in these jeans?” It seems like a trick question and you automatically say no. So, why did you say no? Because yes is what they don't want to hear. But the truth is maybe different? The truth is the content and maybe the truth is a yes.

The process is where people get messed up. In that situation, oftentimes you're arguing with somebody and you're right in the point that you're making, but they don't like the way you said it, or they don't like the way it makes them feel. And so, the process is the problem, not the content. Does that make sense?

It’s how the information is being exchanged, and how the other person feels about that exchange. Really, it has nothing to do with the actual conversation. In that scenario, you're alluding to they don't really want the truth.

And so, I think when you're dealing with technicians, you got to understand that it's the process, not the content. And so, how you approach the technician, and what you're doing for them. So, say for example, if I go to a technician and I'm like, “Hey, I don't understand that, but I want to make sure that I get you as much time as I can.”

Now, I’ve flipped the process and the content is important. It's all about them. But if they don't appreciate the content and they think I'm just wasting their time, or they have an ego and they're a pain in the ass, then the content doesn't matter. Because they're just fighting to win at that point.

It’s very much in the frame and how you handle the process. Making it to their benefit, and that you're trying to protect them, or trying to save them time. So, say you go to a technician and you say, “Hey, I want to understand this because I don't want to write this wrong,” or “I want to make sure that you get paid under warranty for this,” or those little things I've found, make them open up and they're your best friend.

But if you just come to them and you're like, “Hey, show me that.” Then it's saying, I don't believe you. A lot of them are super insecure and it's like, “Well, why? You don't trust me?” You have to manage the process with technicians often and make them feel like it's to their benefit.

That’s the thing, as an advisor, the technician has to be your biggest fan, in order for the thing to work really, really well. Showing gratitude to technicians is a really, really good way to get little things like this solved.
The thing is, there's maybe more glory in being an advisor sometimes. The techs don't get enough credit. Even though they should get all the credit, they don't. It’s just the way the process is in a service department, because they're in the back. They get blamed for a lot of stuff. And so, it's just the nature of the business that we should be aware of and try to change that.

So, to Kelly I say manage that. Manage their feelings, but get to the point. The turbo situation, that's unethical, and I'd be very clear that it’s unethical and not something that should be allowed. I hope that you don't work for a place where that's okay.

We hear this a lot. “I can't hire techs.” Why can't they hire techs?

Christian and I haven’t run into a situation where we couldn’t hire techs. It's never happened. But the predominant belief in the industry is that they can't hire techs.

This is when Christian's eyebrows shot up. He’s got an expressive face!

Let's talk about why people can't hire techs. The first reason people can't hire techs is because they're saying they can't hire techs. The mindset portion is off. In neuro-linguistic programming that’s called an embedded command. If I'm saying I can't hire techs, then I can't hire techs will become reality. It's the nail in the coffin.

Instead, start saying, “I haven't figured out yet,” or “I'm going to figure out.” You're going to be 100% accurate in that situation, most of the time.

Okay. The next thing in hiring tech that we see is that the job ads are terrible. The ads are written by an HR department. There's something to the effect of, “The job of a technician is to fix cars, and 401k.” Plus, bullet points of everything the tech already knows. It's not appealing. You have to understand that technicians that are good, aren't looking. And so, most of the time, those ads only are replied by technicians that you probably don't want, that are bouncing around. Maybe if you're lucky, somebody relocating, but for the most part, you're not attracting anybody with the ad.

So, you need to know how to write a good ad that attracts the right technician, and it's not your fault that you don’t. It’s like sales copy, which is why in our stuff, we have swipe files of tech ads that work, and we're always collecting them, and testing them. Because everybody isn't good at writing them, but if they have examples, they usually can do it.

The other one is that they delegate it to HR. Which is a task to them. It's not a lifeblood of their business. An HR person doesn’t see the difference between hiring a receptionist and hiring a technician. It's all one ad. So, they don't understand the complexity of the whole thing and it's them just doing one more thing on their list for the day. It's not their fault.

So, if you're going to try and hire techs, you have to do it yourself. I think it's easier to hire just about every other position than techs. Say your average tech produces $144,000 a year in gross. That’s just one hire. Why would you delegate that to anybody? Why wouldn't you be the one selling that and engaging?

The other thing that we see a lot is the placement of the ad. Everybody just automatically puts their ad up on Indeed. Indeed just puts it around your local area, and that's it. And unless somebody's searching specifically for your town, it's not going to come up. And even within, if you don't have certain keywords in there, then it doesn't come up when they're searching. You have to guess what they're going to be typing into the search. Where you run the ads matters a lot.

So, Christian and I were talking, and we're going to do a thing in Facebook, for however long it takes, but I think it'll take about six weeks. We're going to go through how to hire technicians, and anybody in our coaching group can jump on there. We'll fix your ads for you. We'll coach you. We'll teach you how to do it, but we're going to go through the steps of how to recruit techs, because I don't know that there's anything more important to be good at in the next five years than hiring techs. It's going to get harder and harder. We're losing two for every new one coming in to the industry. And so, I think that would be a fun thing to do weekly, where we just get on Facebook Live and we go through, “Hey, this week, we're going to talk about the ads. This week we're going to talk about placement,” that sort of thing.

Christian says it's like an accelerated masterclass for automotive service managers. So, watch out for that!

We have a final little nugget from Christian. “Let's say that I'm a technician and I've been at my shop for 10 years and, all of a sudden, my shop is starting to get slow. My hours keep going down every week. When am I at the most vulnerable to look somewhere else for a job?” When my hours are going down, and more specifically on payday. So, when I think about when I want to place my ads, I want to do it Friday at 3:30pm. Because when they get home at 5:00pm, and they're like, “I can't take another paycheck like this,” your name magically appears.

He’s got something genius there, folks. I like it. So, it’s timing.

That was a fun show, you guys.

Remember, if you have any questions, (833) 3-ASK-SDR. For special deals on our books and training, head over to offers.chriscollinsinc.com. I'm Chris Collins, and I'll see you next time on Service Drive Revolution!

What is Leadership?

What is Leadership?

It’s good to be back, everyone. We took a bit of a break with the show, but now we’re back with this year’s new-and-improved Service Drive Revolutioooooooooooooon!

We’ve got a fun show for you today. We talk about leadership and what it means, we play a little game called ‘Would You Rather?’ and, like always, we’re going to answer your questions.

So you might not have guessed, and I’d rather you not tell me if you did, but my birthday was in January and I turned 49. That means 50 is coming up, and I do feel like there’s time for a midlife crisis.

This is the year to do it so maybe I should do something crazy like get my eyebrow pierced or get a neck tattoo. But it also cracks me up when a grown man has a nose ring or eyebrow piercing so maybe I should just get a sports car.

Now, for our game of ‘Would You Rather?’ our question was:

“Would you rather go to a Chevy dealership in Waterloo, Iowa to train the service manager who’s the dealer’s son-in-law, or be the assistant parts manager at a Mitsubishi store in Vermont for a year (and maybe have a Bernie sticker on your demo)?”

The second choice was originally going to be ‘jump off the Golden Gate Bridge’ but that sounds just as tough. On one hand, Waterloo is an hour and something from Cedar Rapids, the dealer’s son-in-law probably has very little experience, the department is losing 50 grand a month, and the dealer probably secretly hates him, and on the other hand, you’re in Vermont for a year. Maybe it would be worth it if it was that sticker is that one photo of Bernie in a chair with the mittens…

Christian’s answer was to go with the assistant parts manager in Vermont because he’s never had to say, “Parts, hold,” to anybody yet, which was surprising because it still sounds like a no-win situation for anybody. Maybe it would be better to cater to people that operate sleighs up there or hook up lines to the trees and collect maple syrup.

Anyways, feel free to comment on here or the YouTube video which one you would rather do. It’s always fun reading everybody’s responses so I’m looking forward to that.

Speaking of which, that’s a good segue into our first questions for 2021. Remember, if you call and leave a voicemail at (833) 3-ASK-SDR and we answer it on the show, you’re going to get some cool SDR swag; as cool if not even cooler than the stuff from last year. Even if you need marriage advice, parenting advice, we’ll help you out because we love to hear from you guys.

“Hey, my question is about something you said on a past show. You said, ‘If you know Christian’s Peloton record, it would be easy to beat.’ So have you beat it? And when you figure out that it isn’t easy, could you try to figure out what PEDs he is using to set these records? Thanks.”

So I don’t ride on my Peloton that much but Christian and Patricia have more of a rivalry going on here. I myself don’t do it that much. My workout routine is Monday, Wednesday, Friday lifting weights and then boxing on Tuesday and Thursday. Also, I think it’s probably not healthy for me to try to beat everybody at everything all the time. If I engage in that, I’m going to get obsessed, and before either of us know it, we’re both trying to be Lance Armstrong and that’s the kind of mentality that makes people think they need to use PEDs, jokes aside. We don’t even need performance enhancing drugs because Christian and I can just get into people’s heads and psych them out.

Alright, well, you’re still going to get some swag for that because we covered it on the show, but now it’s time for a real question:

“Hi, my name is Lisa. I currently work for a Chrysler dealership in Canada. My previous dealership that I worked at as a service manager, we were able to bring our numbers up across the board. We actually went through about three and a half years of a lot of change. I left there due to a change in the upper management. We actually went from like a 29% absorption rate up to a 78% absorption rate in the dealership.

The dealership I currently have gone to is looking to increase volume, and to be quite honest with you, probably three blocks away from us is another Chrysler dealership. I’ve noticed that they don’t have active deliveries where they bring the new customers to the service department and introduce them, set up first appointment at the day of delivery for the vehicle, whether it be new or used – so that’s something we’re going to be implementing – but I’m just wondering if you have any other suggestions. I’ve read a few of your books. I listen to your podcasts. I’m wondering if there’s something outside of the box that I’m just not realizing.”

So that’s Lisa from Canada. She sounds very sweet but that’s not surprising because it’s Canada.

I do have an idea for you, Lisa, that I would say is the Armageddon, but your situation reminds me of a tweet that was sent to us about a lady who went to jail in Canada, and the West Shore RCMP posted the letter that she wrote:

“I was nervous about staying with you guys during my trip to the islands, but wanted to let you know that I appreciate how helpful and kind everyone was, especially the four jailers who do a tough job and are often under-appreciated by the people in their care. You make a difference.”

And then she drew a heart and said, “Thank you for your kindness while I was in your custody. Four and a half stars.”

That instantly made my mind go, “What do you have to do to get five stars?!”

The police department said, “We don’t often get thank you cards from people who stay with us, but this was nice.” Well, you guys gotta work on it because she seems very nice, but she still gave you four and a half.

But, Lisa, you’re on the right track. You’re trying to figure out a need that isn’t being fulfilled which is a great start when you’re talking about traffic and increasing RO count and stuff like that.

If you really need traffic tomorrow, I would just go guerrilla. There’s a thing in the on-demand called Pit Stop. If you’re in our coaching, I would set that up immediately. There’s an email suite sequence written for you that will drive traffic; set it up evergreen. Anybody that’s three years or older and hasn’t been in for six months, as soon as they hit the interval, send them that campaign.

What I would do is make up business cards that have the name of the dealership on there, and then on the back they say complimentary oil change or half-price oil change. Whatever you want to do; you could test it. Sometimes, a $29.95 oil change will pull better than free, because people feel like free either means it’s too good to be true or it’s just a gimmick.

Then, I would hire two people at minimum wage, and I would pay them $10 for everybody that comes in. This is going to be your cheapest marketing. You will literally have people in your drive tomorrow. Those two kids are going to have stacks of these cards, and they’re going to put their name on them, they’re going to go out to Costco, to K-Mart, to everywhere where there are Chryslers, and they’re going to put them on the windshield wiper. Pay them minimum wage and then another $10 for everyone that comes in with their name on it.

They can go within a 15-mile radius of the dealership, and you’ll drive traffic like crazy. Literally, you could go to a mall or a Costco parking lot and there will be 25-30 Chryslers! I mean, for you, they’re probably all at Tim Horton’s, but it would also be a good idea to gamify it if you have two employees. You can have a contest between the two of them and see who gets the pot at the end of the week.

That would spike your numbers even more!

That’s it with our questions for today. Great questions, and now it’s time to talk about leadership. During our hiatus, we created a new training for our on-demand, which is the 17 Laws of Leadership; 17 being my lucky number at the center of the roulette table.

Dave Anderson would say that the difference between a manager and a leader is vision so what does leadership mean, really?

It’s getting people to follow you; getting them to do what you want them to do. I think Chase Hughes says it’s creating followership in others. So I made the 17 Laws of Leadership in order of importance, and it’s important to really nail each one because there’s no magic pill; you can’t just skip ahead.

It’s maybe the best leadership training out there. I had to pare it down to 17 because that’s already a lot for people taking in the content. All of that’s going to be on our on-demand like everything else. \

Thanks, everyone, for tuning back in after our month-long hiatus. We’re back now and we’ll see you every week for the rest of the year. Don’t forget to subscribe and call us at (833) 3-ASK-SDR if you have a question.

For special deals on our books and training, head over to offers.chriscollinsinc.com and I’ll see you next time on Service Drive Revolution!

The Service Drive Naughty Or Nice List

The Service Drive Naughty Or Nice List

We’re a couple days away from what is probably the weirdest Christmas of our lives so far, but at least that means an excuse for us to have a Christmas show for you today! Speaking of weird Christmases, both Christian and I are in ugly sweaters, but his deserves special mention. It has a hood with antlers on it, but it also lights up.

Today, we’re going to talk about Santa’s naughty or nice list in the service drive, but first, we need to talk our industry, because it’s in peril… It’s headed off a cliff at 110 miles an hour. 

Everything’s changing really, really fast. Now, I hate consultants, but you would still think that it’s their job to tell people the truth and help them avoid peril. If you were paying a consultant, wouldn’t you want them to tell you the truth?

I believe that, just like the politics in our country, people’s agendas are easy to see, and the truth is secondary to whatever narrative they’re trying to push. And so these consultants get paid by Ford and GM and the Big Detroit Three, and they’re trying to placate them by not telling them the truth.

On the show, we play a clip from an Autoline Network discussion on the future of electric trucks. You can watch it here. Skip to 6:37 for the clip we’re talking about.

One thing I’d like to say is that I have no dog in this fight. I’m not in the market for an electric car or truck. The outcome I want is for our clients to succeed and navigate the next five years and gain more market share, be more successful, have more fun, and enjoy the journey! I don’t want anybody to be blind to the fact that there’s going to be some challenges.

The truth is the truth!

So those consultants in the clip are saying that Tesla and Rivian, combined with all SEVEN manufacturers of electric trucks, will only sell 40,000 trucks by 2024, and that fleets aren’t going to buy them. 

Let me tell you guys something… First of all, Amazon’s already ordered 10,000. We’re still in 2020 and they’ll be delivered by 2022. 

But sure, no fleets want electric trucks. Yup, they don’t want customizable trucks with low maintenance costs and low operation costs. No fleet is going to pay $20,000 more for that. 

What is he talking about?! I’m not a consultant and I know more about this than you guys! You could easily Google this!

They’re already buying electric trucks because the companies are more flexible. I don’t understand how you can get away with lying about stuff like this. I don’t understand how Fox News does it, I don’t understand how CNN does it, and I certainly don’t think we should be lying to people to this degree in the car business! 

It lacks complete common sense. In fact, Tesla has 1.2 million pre-orders for their pickup truck. Let’s say 80% of those fall through, you still sold more than 40,000 trucks…

If you watch this whole interview, it’s nuts. I don’t understand who the target audience is, and I don’t understand what the motivation is to be so dishonest about the landscape of the marketplace!

It reminds me of NADA, the National Auto Dealers Association, years ago when I used to try to speak at their events. I could care less about them now. They never brought me business anyways. In my honest opinion, it’s the biggest waste of $100,000 you could ever spend going and doing that event, but they make you present your keynote or your workshop to them and their panel. I present mine and they tell me two things:

  1. I can’t say Satan in my Pet the Dog story
  2. You can’t talk about Tesla

You might remember this story from our first show this year, so it’s all kind of come full circle, but I ask them, “Why can’t I talk about Tesla?”

Their answer is because it’s not a popular subject with the dealers, so I’m like, “Are you guys here to help dealers navigate the future or are you just trying to be popular?”

It’s like being the worst parents ever. Eat all the candy you want. Stay out as late as you want. Get pregnant when you’re 13.

There’s no fundamental truth! It’s not a ‘popular subject’? It’s the world today. It’s what’s going on. 

I should be checking my blood pressure with how much this drives me crazy! How do these guys get away with this? It’s straight up lying!

I expect this kind of stuff from Fox News, but for the life of me, I don’t understand how half-rate consultants can go around saying stuff like this. And these aren’t even the big consulting companies. 

Let me tell you something that isn’t outright lie: do you know what you should get good at in a market that’s shifting towards electric cars? 

Tires and alignments, because electric cars will still break and have problems, but they don’t have as much maintenance. Tires and alignments are how we’re going to retain them because that’s the maintenance they do have. That’s what we should be telling people. 

We should be honest with people on how they navigate the future, not that, “Oh, no. That’s a boogeyman that doesn’t exist!”

No! Electric cars and trucks are coming. They’re going to come and people are going to buy them. And the other thing that everybody leaves out of the equation is that China is going to be fully electric by 2026. 

They sell twice as many new cars a year as we do. They are the driver of why Volkswagen and all these manufacturers are making half their lineup electric. It has nothing to do with us. We’re going to get it because that’s what they’re making. They’re going to make it popular because that’s what’s coming off the line!

When a country as dominant as China is in new car sales (literally twice as much, if not more than us a year), that’s what they’re building factories to make! And they’re going full electric by 2026 so you’ve got to look at the whole landscape!

Anyways, that’s why I hate consultants. It’s almost like there’s some sort of conspiracy going on. Are the CEOs of the manufacturers out there really that naïve that they need these consultants telling them this? They know the truth. They’re looking at the real numbers. Is it the dealers they’re trying to brainwash?

Before my blood pressure gets any higher, let’s move onto today’s topic: the service drive naughty and nice list for 2020. Well, it’s more of a naughty list, but here’s a neat little trick:

If you want to make it a nice list, just do the opposite.

Managers wearing their seatbelt

No shortage of seatbelt inventory in manager offices, and that’s not just parts managers. It can be service, too. What I mean by that is that they never take their seatbelt off: they’re never leave their office chair.

CND: Could Not Duplicate

Not taking the time to do quality control and just blowing the customer off. What you’re basically saying is, “You’ve got nothing better to do than bring your car in and tell me you have an obscure problem?”

We’ve got to be better than that; not just the techs, but everybody with how we collect information and communicate with the client.

Customers not being updated

This one is pretty self-explanatory.

Customers not being safe and dependable vehicles

So one thing that I like to do when I go into a service department is I’ll go pull their declines and I’ll just call customers and ask them, “Hey, why did you decline brakes?” and most of the time, they’ll say, “Oh, they didn’t tell me about it until I came to pick up the car.”

We can’t keep customers in safe and dependable vehicles if we’re not communicating with them instantly while the tech still has it on his rack. Give them techs the chance to do the maintenance or repair first. It’s more efficient for the tech, it’s better for the customer, and at the end of the day, it’s better for the business!

Victims

It’s interesting that with all the things that happened this year with COVID, politics, and the economy. Some cities were just completely shut down, but the difference between the departments that set records and made this their best year ever and the ones that didn’t was just their mindset of being a victim or not. That’s it. They might have even been within 20 miles of each other!

Now it’s time to move onto our questions.

“Hey, guys. A question for you. I recently became a service manager of a small operation so I’m still a service advisor, especially if the other advisor is not there. I want to be in more of a traditional manager role in an office with two or three advisors so I’m not actually writing up the customers every day. Is your advice sticking with the same company and waiting for opportunity? Or would it be just keeping an eye on the area for another opportunity and kind of working your way up. Maybe hopping to a different company if they have an opening for – we’ll call it – the higher up position or something involving probably more money as well as more of a traditional manager role?

What is your opinion, stay with the company and ride the wave and hopefully everything works out and an opportunity opens up within the company? Or do I keep searching for outside opportunities and then interview for that outside opportunity if it sounds more like the role I’m looking for? Just looking for advice. I know you always say with advisors you’d recommend sticking with the same company, obviously because of the customer base, but where a manager is more – it’s not necessarily – you’re not dealing with customers every day so I don’t think it’s as important. Just looking for your opinion. Thanks.”

Something Christian immediately got from the question was that it’s not, “I want to be the manager.” It’s, “I don’t want to talk to customers every day anymore.”

As a manager, you have to love the customers even more. A little more information would also be helpful, but what I would say is I would go about it two ways:

One, let’s aim this at a different target. Let’s say you want to be a general manager someday because that’s how I would think. Your end goal is to be a service manager with two or three advisors. You want to get better, build your toolbox, have some real tangible results that you can be proud of but also show that you are a leader and that you can take a challenge, use that challenge to your advantage, and turn it into a positive outcome. You can put that orange in the juicer and out comes juice, right?

The other is I would go sit down with your dealer or general manager and tell them, “Hey, my goal is to someday be a manager like you and I want you to mentor me. I want you to show me how to read the financial statement. I want to learn. I want to be really good.”

Meanwhile, grow your service department. You need to get good at marketing and driving traffic. It doesn’t’ matter if you do it there or at the next place. You need to add some things to your toolbox that allows you to hit the sales button. 

It’s really important is that if 10 cars come in, or 10 cars and trucks come in, or 100 cars or trucks come in, that the outcome is customers love us and we have very high dollars per RO. The outcome of the process in the system we have in place is happy customers that are maintaining their vehicles and fixing whatever there is, and that’s not an easy thing to do. We’ve got to inspect every car, check history, and make customers feel at home and trust us.

So I would focus on hitting the leather off of the ball, like getting really, really good where you are and expressing your need and want for advancement, learning, and opportunity. If the dealership you’re in doesn’t want to offer that, then go find somebody who does AFTER you hit the leather off the ball. 

Basically, my answer is that I’ve rarely seen anybody be successful long term by jumping for the opportunity instead of learning how to fix things and get really good at maximizing traffic.

“Hey, Chris and Christian, what’s going on? Huge fan. Just wanted to ask a question about how to gamify a body shop. I just wonder if that’s something you can help me with. I’m just wondering, what happened to Jeremy? Where’d he go? He’s hiding after the election?”

Is that a Trump joke?

Well, anyway, Jeremy’s just been busy. He hasn’t had the time to be on the show. It’s a big commitment for him to drive a couple hours and then do this show in LA with COVID and all that. We love Jeremy.

Now, to answer your question, I guess there’s two things I would do:

I would probably gamify how many work plans they wrote, maybe within the first couple hours. The whole key is how soon can we get the car in, get it broken down, and write a work plan, not just an estimate. 

Then, I would probably gamify the turn; how quick they come in and out.

The biggest thing that I find with body shops is that they’re just dust. The good body shop operators that I know go out and grease pencil every day, like they do a lot walk. Who’s the advisor? Why is this still here? They figure out which advisors and techs have the quickest turn and they drive that. 

In fact, I’d probably make it all about turn because that’s what the insurance companies care about. That’s what keeps their rental car expense low. I would involve the techs, too. Maybe split the advisors and techs in half and do a competition or something. Two teams against each other and let them pick names for the other team.

Well, that’s it for the questions for today… and I guess the rest of this year. I like this new format where people call in because you get to hear their voice and get a feel for it. Remember, if you call us at (833) 3-ASK-SDR and leave a voicemail and it gets played on the show, you’ll get some cool swag. That’s (833) 327-5737.

From our family to yours, we wish everybody a happy holiday!

And I just want to mention that we’re going to take a little bit of a hiatus with the show, but we’ll be back on January 11th so we look forward to seeing you then! 

We hope that you have some time to enjoy the loved ones around you and reflect on this year, and think about next year and what you can do. And remember, don’t be a victim. The commonality between the winners and the losers this year were who owned the outcome, who stepped up and took the challenges, and who made the best of them. 

It’s very naïve of us to think that things are going to be easy and that everything’s going to be handed to us so I would just expect that the beginning of next year is going to be a challenge, but we can make it fun. We can have a good time. So thank you, Merry Christmas, and we’ll see you next time on Service Drive Revolution!

Four Reasons Why Consultants Can’t Save Your Service Drive

Four Reasons Why Consultants Can’t Save Your Service Drive

I personally hate, consultants. I know people might think that we’re consultants, but those people would be wrong.

Today, we’re going to go through the 4 Reasons Consultants Can’t and Won’t Save You. It’s a fun list, it’s going to be informative, and we’re going to tell you some inside industry secrets for sure. You might even get a laugh or two out of it.

If they fixed you, they’d be out of work

As Christian puts it, it’s a total conflict of interest. The better they make the client do, the better their chance of unemployment, right?

For us as a company, we don’t have contracts because that’s what our competition would do, and people have an apprehension to getting help because it’d be like, “Well, what happens is I’m locked into this contract. There’s no value, and I can’t get out of it.”

And so, if they have a long term contract, if they’re trying to tie you up for a year or two, they’re probably not any good. If we aren’t earning your business, we don’t want your business. If we’re not providing value, you can walk away.

It’s funny, but I worked for a consulting company really early on and that was their whole thing. They called it spinning plates, and they would try to spin as many plates as they could to always keep you feeling like you were never good enough or never fixed, that you always needed more. And then, they would also bring up these subjects that they would make a huge deal out of, like proficiency. I remember proficiency was all they would talk about, which it never made any sense to me because I didn’t help anybody.

I know in the truck world, proficiency means efficiency, so let’s just define those real quick:

Efficiency is if there’s eight hours in a day and the technician flags eight hours. He’s 100% efficient.

Proficiency was how long the technician was clocked on NRO because that showed how long they were standing at parts, how long they were taking a break, how long it took them to pull a car in and out, but none of that really made sense.

I remember this one time, I went back to one of their clients on my own and the shop was like 120% proficient and 80% efficient because the technicians were really good at managing the clocking on and off. They were all bonused on it. They made so many dollars more if they were proficient, but they weren’t efficient.

As soon as I switched it, they were over 100% efficient and they weren’t managing the clocking on and off of NRO anymore. They were managing the production and getting cars fixed.

We used to argue about that because I would tell them that’s not the best thing for the client, and they were like, “Yeah, but you know, it’s a new thing.” There were a couple of things like that, like they would try to get rid of the back parts counter, which I thought was funny.

Christian and I talked earlier about putting up a kiosk, and they would spend months planning out how to put a parts kiosk in the shop. They would have a parts person in the shop, and I did it three times in three different service departments. It’s funny because the dealers would go to their 20 group and they’d be bragging to everybody like, “Oh yeah, we closed our back parts counter and we have a parts person actually in the shop.”

I don’t know why, but for me, I always go to this weird place where I’m like, “Well, I’m just curious. What has happened to our efficiency?” And the efficiency every time I did it went down about 5%.

It’s not weird, though. It makes total sense because I kind of looked into it. I would tell them something like, “Every time we put your inspection software in, our hours per RO go down,” and I figured out why and I’d tell them, “If you want to pay me, I’ll fix it for you, but there’s glitches in your system, in the process. You don’t really understand what’s going on.”

But having a parts person at a kiosk, they don’t really have parts. When you have a back parts counter, a lot of times what happens is techs walk up, hand them the filter, then they type it in and a parts runner goes and gets it. But in the end, it’s not any quicker than the tech just ordering it from the store. And most of the time, what those parts guys would end up doing is BSing with the techs and talking. Them walking a little bit further to a back parts counter doesn’t help!

In every situation where they’ve eliminated the back parts counter, I’ve put in at least one. Even in big shops with 70 techs, they’ve got to have a place to ask a question or actually interact with a parts person. If you can get a shop to 80-90% ordered through the computer, that’s pretty good, but there’s a 10 or 15% anomaly that you’re hurting the efficiency in the shop if you don’t have some sort of parts counter.

I think the lesson is I was actually looking at the results and they were so caught up in this new thing that consultants would come in and suggest, but nobody tests it out to see if it would actually work. They’re just paying consultants to come in and do these quick lubes but the cost doesn’t outweigh the investment.

Consultants are between jobs

They’ve never really accomplished anything professionally themselves.

The team we’ve had? Everybody’s a Rockstar. They’ve accomplished great things so they don’t have the idealized version of things, because I think when you have never accomplished something yourself, your mode of communicating is to communicate an idealized version of something because you’ve never actually done it. And you have a different respect for things when you’ve actually done it, because it’s harder than you think.

The consultant leaves and you do the work

One thing that I think we are very aware of is that we’re teachers and we’re coaches. We call ourselves coaches. We want to be your personal coach and we want to coach you, but we don’t have any false premonition that we’re doing the work.

You’re doing the work. You’re emotionally committing to it, just the emotional work. It’s not easy to change. If you’re doing things this way today, and you’re getting less-than-amazing results and you want better, you’re going to have to change!

We understand that coaching you through that change isn’t easy, and it’s mental as much as it’s emotional. I think that’s one thing is that consultants want the credit because then it’s them and they are important where a coach wants to see the person they’re coaching or the player be successful.

They’re not attached to the results

They’re compensated for their time, not the results. You’re paying this big dollar amount and then they’re not giving you your money back.

They’re not attached to the result whatsoever. They’re trading their time for money or their knowledge for money, but the connection to the result does not exist. It’s on you to get the result or figure it out where our coaches are actually compensated and bonused on the result and the important measurables, too.

That’s the other thing: your proficiency doesn’t matter. What matters is your net and your customer satisfaction. Those two things matter. Efficiency in the shop will end up having an effect on your net so it’s a measurable, but not the most important measurable, and I think consultants like to hide in the early numbers, right?

The final number and the final result, which is your net, and the customer experience is what really matters, and that’s the thing we’re coaching you through in helping you navigate and fix your systems. I think that most consultants are very, very scared of the net conversation. In fact, when you interview consultants that have worked for other places and you ask them, Well, what was the average net to gross of your clients?”

They’re like, “Never saw a financial.”

And I’m like, “What? We wouldn’t even take a client if we didn’t’ see their financial!.”

It’s all about your financial. That’s all we care about: your ROI. They don’t even know how to read a financial sometimes!

Christian never viewed consultants as actually giving a crap about him or his employers back when he was working dealerships. He never felt like his success or wellbeing mattered to them. That’s another difference: you have to care first about the people as individuals, and then the rest of the stuff kind of comes back to you!

Before we move onto our questions, let’s cap this off by reading our little thing from our morning meetings about what we stand for as a company. I know this is kind of turning into a commercial, but we’re coming up on the end of the year and if you want to do better in 2012 and be effective, you’re going to need a coach. And we want to be that coach. The best thing that can happen is you raise your hand and we’ll help you and we go some amazing places that you didn’t think were possible on your own. But here’s kind of the manifesto I wrote for us probably a year ago and I called it ‘Training’:

“Training, it only exists while the person is taking it, but just like someone will enjoy a specific piece of art at a gallery, most of the time when they leave the art, it becomes past tense. It only was real when present, and it’s hard to recreate in its entirety in one’s memory. Our training will have the opposite effect. When someone is taking it, ingesting it, it should be delivered in a way that has a lasting effect. It should inspire ambitions. It should make the impossible obtainable, pull off the veil, and reveal the recipe for the desired outcome. It should leave with them. It should change them. It should anoint them and empower them. Hence, every tool available should be used appropriately; manipulation at the highest level, psychological magic.

Weaponize the ones, the self-made underdogs that wear the disguise of the entitled. Understanding that life-changing, empowering knowledge is contagious to other aspects of life. When someone takes a new tool, implements it, and gets positive results, they gain confidence and believe. We have all witnessed a manager have success, then become a better father, a better husband, a better citizen, no longer feeling left behind or irrelevant. It’s not just training. It’s ROL and ROC: Return On Learning and Return On Community.”

That last part I think matters the most. When someone takes these tools and they implement it and they get positive results, they gain confidence and then they start to believe in themselves. And then, when you start to believe in yourself, you start to attract more positive things. You start to win more and then winning becomes more of a habit.

Again, we’ve all witnessed somebody who comes in and they become a better father, mother, husband, a better citizen because they have confidence. And then, they’re spreading that positivity around with everybody else around them, right? All ships rise. And so, that’s our motto that we live by; our manifesto. And it’s not about consulting. It’s not about us. It’s not about you needing us. It’s about us providing you with tools that make you better.

And so, going into 2021, let’s do some great things. Let’s change the industry. Let’s hit some big numbers and some big goals, and we’d be so lucky if you’d allow us to be your coach and to help you through that journey.

And for everybody that’s already in our coaching group, we’re hitting some amazing numbers and having a lot of fun, but I will tell you hands down, coming up to the end of the year and the holidays and everything, I think the thing that we’re all the most grateful for is seeing people become better citizens.

That’s something that we need right now because there’s been a lot of negativity over the last couple months, and focusing on becoming better citizens will change the world.

Now, let’s move onto our question for today. Remember, if you want a question answered on the show, you want our professional advice, our insight, our years and years of wisdom and knowledge at your disposal, all you have to do is call (833) 3-ASK-SDR and leave a message. That’s (833)-327-5737. If we play your question on the show, we will send you some swag, but more importantly, the advice is priceless!

“Hi, I’m a shop foreman in a small input dealership in Rio, New York. Customer service scores are constantly in the 80-85% range, and the service manager doesn’t seem to care about anything. He’s content where we are and never makes any attempts trying to improve customer service scores and profits. It’s bad leadership. It’s making good employees want to leave. I want a service department to thrive. How can I improve our department with the manager who doesn’t care? Thanks.”

Personally, I think the CSE is going to work itself out. If it’s consistently bad, what typically happens after a long time is that it comes back to haunt the manager after a while.

The thing is, you’ve ever got to be really good at profitability or really good at taking care of the customer. If you’re going to complain about leadership, your other option is to either become part of the solution or shut up. You’re already shop foreman. Maybe you need to hop in the chair or at least volunteer in letting somebody know that you’re interested in making it better.

Christian’s way of doing that would be to learn as much as you can about the job. Find somebody to teach you about financials, teach you about the ins and outs of the department, maybe start to game plan with the team on how to make CSE better. Those kinds of things. When the time comes, you’d go to ownership and be like, “I’ve got an opportunity to try and take this department to the next level.”

I would go to ownership right out of the gate and say, “Hey, my aspirations are to become the manager. I’m doing my goals for the next couple of years, and I have a five-year plan. What do I need to do to become a manager?” And then I shut up.

If you ask somebody to mentor you and teach you what they know, it’s rare that somebody wont’ want to help you, especially if you do it with humility and real intention to learn and be good at it. People are going to root for you.

Well, that was good stuff. We hope everybody makes some big goals for 2021. Let’s be a part of that and help you achieve those by being your coach. Have a happy holiday and we’ll see you again next week on Service Drive Revolution!