Using Humor to Connect With Customers (ft. Drew Tarvin)

Using Humor to Connect With Customers (ft. Drew Tarvin)

Nothing's more contagious and endearing and fun than humor. Nothing bonds you with somebody as easily as humor. Nothing will improve your customer service as significantly as humor. Even just seeing somebody laugh or smile makes you want to do the same. There's research that shows that we, as humans, have neurons in our brains that mirror certain behavior, and laughing and smiling are the two biggest ones. It's more contagious than any coronavirus will ever be, and nothing pulls somebody in more than being able to make them laugh; it's the easiest way to endear customers and build trust!

We have an exciting show for you today with a special guest to talk about how to improve our customer service and connect with customers using humor. Andrew Tarvin is a returning guest, spoke at our Top Dog event, and we've had him on some coaching meetings. One of the highlights we've had during COVID though was Andrew having all of our coaches doing stand-up for the whole company via Zoom, which is unbelievable that he pulled that out of everybody because some of our coaches are more introverted – if you remember that from when I talked about how personality tests don't work.

How he was able to do that was by creating a framework that they filled in and he tweaked a little bit in the end. Our group of coaches in particular were so willing to try something different that they latched onto it, and it's that kind of willingness and eagerness that gives somebody the confidence to rock it.

He's also worked with Christian on the side, and I'm sure if it wasn't for COVID, Christian would be doing stand up right now. The one thing he got from working with Andrew is that it's always a work-in-progress every time you get an opportunity to throw out a little bit of a set or you get feedback from people on what material is funny and what's not. The cool thing is how much of an ongoing process it is, and you've got to start somewhere.

Like many other things, building a good stand-up routine is its own system, and it's incredible how easy things are once you understand a system. I was telling Christian the other day this story I have for ownership because I'm always blown away by Jocko's story in his book, Extreme Ownership.

He has a story in there about how, to be a leader, you have to own every aspect of the result. Basically, you walk away from the first couple chapters of his book just going, “Man, I'm a wimp!” It's like life and death in the Navy Seals, and they're out their putting their lives on the line while business for us doesn't get us killed if we mess it up. We might be broke – homeless, maybe – but we're not going to die. We get another shot at it, right?

So anyways, by owning up to the results, you get better at a skill by doing it, just like riding a bike, or writing, or customer service. You improve your skill through repetition, and it gets even easier when you have the right framework or structure. It doesn't take away from the creative process, it makes it better. You're always going to tweak and evolve the format, but it at least gives you a place to start from.

Andrew describes it as the nerd or engineer inside him. He loves taking things apart. If we can take a clock apart or a computer apart, can we do the same with umor? Can we parse it and see what works and what doesn't? Why does it work, or why doesn't it, etc? It's like a math problem; comedy is like math but with words.

That's also our job as teachers. We take the complicated and make it simple for people to be able to understand and then apply it. My biggest takeaway with Andrew's work is that it all starts with the way you look at and pay attention to things. One of the things that he teaches is that humor is in the way you look at it, and you start to see things you wouldn't have seen before you learned what to pay attention to. It just got easier because I looked at things a different way.

Sense of humor is tied to perspective. It's made up of all the things that you find interesting. For some people, it's watching videos and stuff. One of the things Andrew does is he joins a Zoom call and plays a game of what's in a person's background. He looks at somebody's chair and wonders how smooth it must be to sit in, or what could be the best book on somebody's shelf, etc. That's where it all starts: what's interesting to you? What are you curious about? What makes you go, “Huh?” All of these will help you develop a sense of humor that you can apply to your customer service interactions.

Look at stand-up comedians. Eddie Izzard's sense of humor is really different from Chris Rock, which is different from Dave Chappelle, which is different from Ali Wong. They all have their specific take or view on the world.

It changes the way you look at things; it enriches you, and you start paying attention more. There's also a line between being naturally funny and being good at stand-up. I was watching this HBO special called Talking Funny with Louis C.K., Chris Rock, maybe Seinfeld, and they were talking about how they have friends that when they're hanging out playing poker or whatever, they'll have them in stitches, but when they step up in front of a microphone, they're not funny anymore. It's a different art to be able to do it in front of an audience and bend a room compared to just being funny. With Andrew's help, I've seen that kind of evolution in Christian where he was naturally funny before, but now he can apply it and do it reactively. He can apply it to stories and to lessons, and I think it's awesome. It's fun to watch.

It's also great to recognize that you don't have to be a standup comedian to be funny. You don't need to do standup to use humor to build better relationships with clients, but you can learn if you want to because it can help make your conversational skills even a little stronger. There's a difference between conversational humor and presentational humor and what you do in a comedy club vs. what you would do in an office setting, but those techniques can meld together, especially as they become second nature. When you first start to learn them, you consciously think about the comic triple and all those very specific techniques and stuff, but then as you ingrain that into your behavior and how you speak, you start to naturally speak that way!

What Christian finds really impressive about his experience in creating these systems of humor is your ability to apply it with the right situations, especially when thinking about customer service. If we're in a service department and we're dealing with a client, how do we use that humor to break the ice and everything? Your system identifies those opportunities to quickly respond to that. You can apply it to the business world really easily.

To put his money where his mouth is, here's how he would do it: let's say you're a service advisor going up to a client that pulls their car in. It's a minivan and it's got like dents and dings, and there's six kids pouring out of it. You can see that the mother is understandably stressed and the last thing in the world she wants to do is be in front of you taking care of her car and all that. In Christian's experience as a service advisor, his thing was to figure out what to open with that would make that person immediately laugh and be okay with the six kids they have dangling from the ceiling of the minivan.

That's when you continue setting up your system and identifying the right amount of humor to inject. Your goal in that situation is what, in comedy, you would call ‘calling the moment.' In a comedy club, if someone drops a plate and it shatters everywhere while you're performing, you kind of have to address that so the audience can laugh and move on, otherwise they'd be fixated on what just happened while you're trying to continue your routine, right?

It doesn't have to be a perfect joke, but if you can get even the server who dropped the plate to agree with the joke or maybe find it hysterical, that's one more person put at ease. There are plenty of ways to deal with the situation. Like with that mom who pulled into the service drive with her six kids, you could be like, “Wait, only six kids? I was expecting an entire soccer team to jump out of there, but you've only got half the team. You've got a basketball team. That's way easier to deal with. Like a basketball team, plus a sixth man? What are you, the Toronto Raptors? Who's this coming off the bench?”

So in that situation you’re using humor to diffuse the tension of the situation with the customer. You can frame it in a positive way or focus it back on yourself as well like, “Don't worry. This is no problem whatsoever. We had a clown car come down here one day…. 87 people inside!” So you can go that exaggerated route where it's clearly a joke, and you still put them at ease by making them laugh a little.

What you wouldn't want to do though is punch down. Humor can be used to build up but making fun of someone of a lower status is punching down. You obviously can’t enter a customer service scenario like that by saying, “What? Six kids in a car? Can't afford like two cars to drive them around? Where's your nanny to take care of this?” You don't want to go that route where they're going to feel bad about the situation. I would say that should be common sense, but you never know with some people.

Comedians prepare for scenarios like these all the time. They do some crowd work and immediately react to something, and you wonder, “how did they know that was going to happen?” They didn't, but they can plan for it. As a comedian, Andrew knows that one day the microphone might go out on him, or somebody is going to drop a tray of dishes or heckle him. At some point, there's not going to be any laughs, but you can rebound if you pre-plan for still getting a laugh out of those awkward situations.

That's also why it's valuable to keep a little notebook around to log what kind of scenarios could happen and what you should do just in case. I do it with the notes app in my phone. Reflection on the past also leads to action in the future (I loved this saying so much that I wrote it down). By reviewing what happened or didn't happen, you're better prepared to handle a situation the next time it comes up. When you see humor out in the world, you can also incorporate it into your work, and it can become a lesson. It can be a kind of humor inspiration for breaking up the day.

One thing I noticed about keeping that little log in your phone is that I was only putting in the things that actually got a laugh, so then it does subconsciously train your mind to what works. Paying attention to what works then trains you to do more of it, so you get better at it. 

Some people think, “I've made people laugh. I could probably do stand up,” but a big majority of people think they could never do that. Some of the more introverted coaches on the team had the mentality that they weren't going to do well at it, but the reality is that humor is a human trait. Everybody has made someone laugh one way or another, for better or worse. Maybe not intentionally, but everybody has some sort of sense of humor. Everybody has that perspective. So when you have that notebook, you start to recognize that maybe you do have the ability to make people laugh more than you thought. Then, you start to wonder how you can take that ability and just amplify it a little bit more.

I would tell everybody one of the best investments you could make is to hire Andrew. He'd do an hour a week where he coaches, and then at the end of the month, there would be a presentation. His website is humorthatworks.com. It will not only add humor to your business, it will help your team, your salespeople, your advisors, whatever it is, to think of things more as a system and understand that something that seems unattainable becomes very obtainable when you put a process to it. I can't recommend it enough. Contact him and set up some ongoing Zoom training. He can bring New York to your business through the magic of the interwebs.

Once again, thank you to Andrew Tarvin for coming on the show. It was great having him and now it's time to wrap up with some questions.

“Hello, my name is Chris. I work at Space Center Automotive. I was wondering if you had any literature on pay scales for service advisors and bookkeepers in particular? It's not uncommon for advisors to gain over $100,000 in certain skills. Thank you for any information.”

Advisors make exactly what they're worth, that's what I would say. It's different per market, per brand, per shop, all that, but you make exactly what you're worth eventually.

“I have a question, is it the responsibility of a Service Advisor to inform their customers of any or all warranty issues that directly involves their vehicle? Is it their responsibility to let me know there is an active warranty for a part in my car that may become faulty and may shut the car down?”

These questions are terrible… I think so. Yeah, I guess. If you notice something while the car’s in warranty and you're doing an inspection, you should tell the customer. Now, some manufacturers don't want you to do that. They don't want you to upsell warranty, so there's a balance there, but for the most part, I would treat it like it's my mom's car. If it was my mom's car and there was something under warranty that needed attention, I would tell her!

“Hey guys loving the podcast, started at episode one last week and have been listening every chance I can while making a hit list. My biggest issue right now is my GM doesn’t feel we need a third advisor. We write 25-28 ROs a day and are growing, I’m adding a film install bay/tech next week and replacing him with another detailer. I just interviewed and hired a new factory trained tech bringing our new shop body count to 10 (2 detail, 1 film, 6 licensed techs, 1 lube tech). We net 48% of gross, up from 42% YOY. I moved from parts manager (5yrs) to fixed manager last year we currently avg 41k net per month this year and I’m struggling to keep up with my own day to day responsibilities. I feel like my GM doesn’t trust my judgement or is expecting more water from this rock. I’m getting frustrated with a frozen pay plan and so are advisors (Covid excuse) and am struggling with the glass ceilings I keep hitting. Any ideas before I take a hammer to said ceiling? Also, can’t wait to sign up for some training once this pay freeze BS is sorted out.”

The first thing I would say is, if you want, contact us at [email protected] and schedule your general manager and yourself to do a strategy session with us. We'll kind of go through that and make the case for why less is more and that perfecting the customer service experience will get you more per repair order, and it will help your retention. The customers will come back, which in return will help you sell more cars.

I love the specific numbers in your question. In no way does an advisor succeed writing 25 a day. There's no way. You can't communicate, you can't over-deliver, and you can't make friends with that amount of ROs per day. That's too much day in and day out. You could do that much once in a while, but more than that wouldn't be realistic.

The other thing I would say as a rule of thumb is three techs for every advisor so I can instantly see when there's ten techs and two advisors that there's obtainable increase in dollars per ticket just by adding another advisor, because you're going to lose customers when you can't present what is needed. Just by having that extra advisor there to answer phones is life changing and that alone will increase how many more customers you can bring in.

I hope you guys got a lot from Drew. Once again, his website is humorthatworks.com. Reach out to him. I'm telling you, it's life changing to have him coach your team. It was for us. It was a blast. It'll make everybody see things in a different light, and it's just contagious for the culture of your business to have that humor. People learn more, they retain more, and they love coming to work when the environment is fun like that.

Think about some ways to inject more humor into your life and your work, and we'll see you next time on Service Drive Revolution!

Top 5 Things Service Advisors Take For Granted

Top 5 Things Service Advisors Take For Granted

This may come as a shock to you, but I occasionally make mistakes. Everyone does, but what's important is learning from them. When I was a 19 year-old service advisor, I made one of the biggest mistakes of my career – one so bad that it made a customer hate me – but I felt so bad that I made sure it never happened again…

Today, we're going to talk about the top five things service advisors take for granted, one of which led to that infamous mistake I made when I was a kid. It's a good list and I'm willing to bet you're going to learn a couple things. And to all the Managers out there reading this– see if you recognize anything from your own service advisors on this list.

It would probably be a good idea to make your service advisors watch this one.

Service History

How important is service history on a car? When I was a service advisor, it was my go-to before I even went out to meet the customer.

This is the one that can undo a sale really quickly. Let's say you have a good customer that comes in, but you're busy so that puts you in a rush. All of a sudden, the technician gives you the list and it says the car needs front brakes, rear brakes, etc. Then, you call up the customer and you lead with the first thing which is the brakes, but then they say, “Whoa, hold on a second there. Didn't you guys just do my brake six months ago?” Now, what could you have done that would have prevented you from ending up in that tough spot?

That's why you check service history, and it's also why it's important to build a loyal clientele so you can keep track of their histories in the first place. And if they got serviced at some other place before you, ask them something like, “Do you mind if I call over there and ask them what they had done so we don't overlap?”

Oddly enough, other places aren't that helpful but at least the gesture is nice…

The Relationship

This one's sad. A thing with human behavior is that it's really easy to take relationships for granted, one of which is that first timer who doesn't need much beyond an oil change. When I was a service advisor, I always thought I'd make my money by taking care of them so they wouldn’t need anything early on, but I still make friends with them so I become their go-to-guy when they do end up having a problem.

I remember watching other service advisors trip over each other to get to the old van or bus because they knew that it was $2,000 to fix the leaky coolant hoses or whatever, but nobody wanted to write up the brand new Subaru. But that wasn't the way I looked at it. I would think in a couple years, they're still going to need maintenance, right?

Something I've heard a lot on strategy sessions that I've done lately is pay plans for advisors where they bonus them on hours per RO. I don't understand why anybody would do that because the thing that happens is that they avoid going out and writing the smaller jobs like oil changes. Do you believe that pay plans direct behavior? If so, then by having an hours per RO bonus in your pay plan, your advisors are going to avoid the newer customers that need small, routine maintenance jobs!

At that point, you're no longer building a business that's customer-centric, and instead you're focusing on what the business can extract out of the customer.

Parts… No, just kidding, it's the Technician's Time

You're wasting your tech's time if you're not giving good descriptions on the repair order. You're not going for a test drive with the customer and actually putting your hands on the noise or the rattle. It's just, “Customer says it rattles.”

Every minute of a technician's time should be generating revenue, so if the service advisor isn’t identifying the root cause of the problem on the repair order, or they don't do a good write up, they're adding minutes to the tech's day that aren't spent generating that revenue.

Not only that, but technicians are compensated on just one thing– their time. They don't make anything on part sales, so if you waste their time, you're not only hurting the potential revenue of the business, you're robbing them, too.

Same with diagnostics. You gotta give them enough time. Vehicles are rarely fixed in under an hour or for less than $500.

Prevention

A lot of times, service advisors take prevention for granted and they overlook it. I’ve heard a common misconception that it’s greedy to prescribe preventative maintenance, which couldn’t be further from the truth. Preventative maintenance is proven to save a customer money. I think the general consensus is that every $100 spent on preventative maintenance saves you about $1,000 in future breakdowns. 

That's an 10-to-1 return on investment!

The common belief that preventative maintenance is the same as an unnecessary upsell isn’t only wrong, it's dangerous. Your job is not to sell maintenance or upsell unnecessary maintenance– your job is just to keep the customer in a reliable vehicle, and sometimes that requires preventative maintenance.

As a service advisor, I learned this from a mistake early on in my career. This customer came in with a coolant hose leaking. We replaced the hose and he took the car, but then we got a voicemail from him over the weekend and he was MAD! 

I called him back on Monday, and he hated me. He was so mad, and rightfully so. Both of the hoses were the same age, right? So even if only one of them is leaking at the time, we should probably have just replaced both, shouldn’t we? Isn’t it worth the extra charge to prevent a future breakdown or accident?

The answer is clearly yes, because his wife was driving from Seattle to Spokane with their kids and the car broke down! We didn’t do our due diligence, and his wife and kids got stuck on the side of the highway on a weekend when we were closed! Not good. Prevention comes in many forms, and as a service advisor, you have to really think long and hard  about preventative maintenance. 

One thing I think is crazy is that a lot of manufacturers now kind of have this mentality that at 100,000 miles, cars are disposable so they don't recommend things like power steering fluid. So when the cars reach 70-80,000 miles and the power steering racks start going, there's literally chunks of metal in there when you drain them!

Just think about it psychologically: Manufacturers call the coolant ‘lifetime,' when they actually mean ‘once it hits 100,000 miles, just push the thing off a cliff or put it in the smasher… anything but replacing the coolant.”The manufacturers want the customers to perceive that they don't have to maintain the cars, because their goal is to sell new cars! But your job as the service advisor is to protect the customer from that sort of thing and keep them in a safe and reliable vehicle. It's nuts to even debate that, but because so many service advisors oversell and over-recommended, preventative maintenance gets a bad reputation. 

If you just think about preventative maintenance as a whole, and you pay attention to what’s happening in the car, and the Manufacturers’ bad policies (like the connection between power steering and the factory replacing so many racks), you'll end up avoiding surprises and problems for your customers down the road. 

That's why I always say: if you wouldn't sell it to your mom, don't sell it. I told my mom to replace her power steering fluid because I would rather her pay for that than spend two grand on a rack in the future.

I'll tell you, after a couple incidents like that guy, I never skimped on doing an inspection on a car and telling the customer what was wrong. I'd rather have you be mad at me because you think I’m overselling and charging you more money, than have you stuck on the side of the road because I didn't tell you what I knew. I'd rather have a technician rerack a car and inspect it, than have a customer leave and not know.

Business Inside A Business

When I was a service advisor, even selling a little bit, I was able to pay the rent with my numbers, and I even got a piece of what I did. No liability; I didn't have to stay up at night worrying about making payroll or anything like that. I always looked at it as my business, and that business was collecting customers. The more friends I had and the more people I could collect, the better I did. I wasn't consciously creating key throwers, but after a while, I realized just how busy I was. I remember at one point looking around and the other seven advisors were standing around while three customers were waiting specifically for me.

I've seen over the years that people want certain special advisors that have been in our system, and they wouldn't let anybody else help. I remember sometimes I would get like a Thursday off early and then the rest of the weekend off while my band would tour, and I would come back from one of those and all the advisors were in a little huddle. I'm like, “What's up?” and they're like, “We hate it when you're gone. Your customers just pull in, and when they find out you're not here, they leave!”

That's what you want, right? They don't trust anybody else but me. If I tell them they need something done, there's no reason they're not going to believe me because my intentions radiate. You can tell if somebody's authentic or not, and there's absolutely nothing inauthentic that I would have had them do.

Another thing is if you take pride in your job and stop looking at it like you're just making X number of dollars per hour, you're not just bleeding the clock. You're more productive and your behavior changes. Your quality of life improves.

So recap the top five things service advisors take for granted: 1. Service History, 2. The Relationship, 3. Technician's Time, 4. Prevention, 5. Business Within A Business. Those are the five things service advisors take for granted, and with that, we can move onto our questions for this week:

“I love what I do, but not a fan of the pay plan. It's all averages. I noticed some advisors avoiding customers at the end of the month because they've already hit their good averages. I actually love helping customers, but at the end of the day, a simple oil change hurts my averages. Any advice?”

So I can't tell if this is communism or averages because I run into that sometimes where they average all the advisors' numbers together. But this looks more like you're getting paid off of averages so your pay plan is hurt if there's no potential to upsell.

Here's the thing that I learned about pay plans from being a service advisor because I accidentally accepted a job once where I didn't understand. They showed me the pay plan, I looked at the percentage, I did the math and I was like, “Oh, this is a nice raise.” I took the job and then I went to get my first paycheck and the advisor in front of me that never got up to help a customer or anything says something to the effect of, “I hope you never quit because you made me a lot of money,” and I was like what does that mean?

That made absolutely no sense. What ended up happening was that they didn't want to lose me to make the other guy happy so they changed my pay plan. Performance drives your influence so, if you're putting up the numbers, then they're not going to want you to go away and your pay plans end up becoming negotiable. Let your numbers talk.

Get in coaching and fix your advisor pay plan because what you got sounds terrible. It sounds like a pay plan from 1984.

“I'm in Europe and I just finished high school as a technician, but I'm more interested in becoming a service advisor. My father owns a shop. He's a mechanic and he wants me to keep building our company. Should I go to college for a more technician-related degree or management? I would benefit from either choice, but I would love to hear your opinion. What would you do?”

I'm not the right person to ask this question, but Jeremy gives a good little nugget of advice which is to move to LA and get a coach. Don't even go to college. You're going to spend less money here to learn more through our coaching program, and then you can go back to Europe in 18 months and you'll be slaying the dragon. I meant that metaphorically, but it's been a weird year so I don't know what's been going on in Europe lately.

I think if you really wanted to, you could learn more about that job through our program than you ever could in school. I'm not big on two or four years, I'd rather work. Personally, I'd get to work and read books. When I was single, I dated this psychologist and she said that I know more about psychology than she would ever know, and I never went to college but I've read well over a thousand books. One year, I spent over half a million dollars on my own personal development.

I don't know, I feel weird saying that because some people need college. They need structure and motivation so it's hard for me to say without knowing somebody. Jeremy has his concept of a passion bucket where good service advisors never run out of energy if their bucket is full, but I grew up poor and hungry. A lot of the things I did, I had no passion for, and I did them because I was hungry and they had to be done. The hunger gave me that drive, I didn't need passion.

I'll tell you this, too: I've never met a really good entrepreneur business owner that attributes their success to a degree in business. Never. It's never happened. In fact, I meet people with degrees in business that need my help desperately because they're doing it wrong. They don't understand, and you can't learn that stuff in a classroom or in a textbook.

“I have a question for you guys. This pertains to both advisors and service managers. What do you do and how do you handle a vehicle that comes into the shop under factory warranty with a drivability concern, your master technician finds himself unable to track the source of the issue after multiple attempts, he's followed technical assistants who are often slow in response and vague, the customer is restless, and there's seemingly no end in sight? I feel like both positions at different times in the process. Both are bound to find themselves dealing with this issue. Assume also the customer is a good customer. He's been spending money and building trust in your drive for several years.”

So, he should have never put it in the shop without verifying it. I think I've explained this on the show before. The thing I would say to a customer is, “Listen, there's a five-mile dome over the shop and whenever you come within five miles, your squeak, your rattle, your run ability problem doesn't happen so we need to verify it.” So I just set that up with the customer because if something happens with them, it doesn't mean it'll happen within the invisible dome around the shop. Then I go, “When does it happen? Cold, hot, going over a bridge, in a rainstorm, first thing in the morning, or when you pull in and park and then run back out to get it?”

Then, I get permission from the customer so I can make the technician drive the car home like, “We can't verify it, but can I have him drive it home a couple times because it happens first thing in the morning?” or something like that.

So those are my tricks, but I wouldn't have put it in the shop without verifying it. And listen, you probably can't verify it, but it changes the customer's perception. If they can't show it to you and make it happen, then they can understand how difficult it is for a tech to find it.

When I was an advisor, we didn't have cell phones, but now you can ask customers to pull out their smartphone and record a video whenever it happens. That's the only proof you can get outside of the five-mile dome, and that would really help us.

As always, thanks for tuning it. We had a great show this week and we'll see you next time on Service Drive Revolution!

Dealerships vs. Independent Shops Part 2

Dealerships vs. Independent Shops Part 2

Monday, Monday, Monday, it's Round Two of the Shop Showdown!

Dealerships vs. Independent Shops: Who Has the Advantage? Who will win the fight for supremacy? Find out the answer, only on the final chapter of this special two-part Service Drive Revolution event!

On today's episode, Jeremy talks about independent shops and why (he thinks) they have an advantage. For those who weren't keeping score during the first round, there were 7 points for Dealerships.

It's no secret that, once a car is out of warranty, about 70% of consumers don't go back to the dealership for service. However, the dealerships control the first impression of the experience, so it does become the benchmark for what the customer expects from that point on. If a dealership does a great job by providing perks like car wash and vacuuming, but then you go to an independent shop that doesn't do that, then it's an incongruent experience.

Side note: Jeremy actually hand washes the cars at his shop if they come back.

Number 1: Independent shops service all makes and models.

Independent shops service all makes and models, anything you could possibly have on your driveway short of, I don't know, vehicles that aren't street-legal.

Sometimes the training at an independent shop is even more advanced than a dealership. Regardless of where a car is serviced, they're all machines; wires are wires and connectors are connectors. Most really good independent repair shops have their technicians and service advisors spend more time in the classroom than if they were at a dealership.

Jeremy claims that his technicians are better technicians than dealership techs because they don't fall into the rut of pattern failures. They see cars that are older, have more real world problems, and they overall have to fix tougher drivability issues because they're dealing with customers that might not have followed a proper maintenance plan. It's a harder job, but that makes them better at it.

Now, we had a little dispute over whether dealerships or independent shops have more comebacks where he felt that independents don't have more. He brought up a pretty good point that not many shops or dealerships even keep track of their comeback ratio.

Number 2: Independent shops provide a customized solution for the customer.

Independent shops provide a customized solution for the customer. Jeremy's parts department doesn't have a parts manager sitting there, not doing anything or messing up the inventory. They provide a customer with more options than if you were to take a car to a dealership for your make and model.

There's not just one estimate for the cost of repairs, there are many different ways that they can provide a solution. I totally conceded to this point because a lot of manufacturers would rather have you replace something than just fix it. If your BMW's transmission needs fixing, the BMW dealer would charge you $4,500-5,500 for a full replacement while an AMCO would just put a new seal on it or whatever for less than $1,000 and it's back on the road. There's not much leniency with dealerships if you're going against what the factory recommends.

In my experience, you do get what you pay for when you buy cheap brakes or whatever, but that also depends on the ethics of the person in charge of the shop. At Jeremy's shop, they don't do $89 brake jobs, they fix the $89 brake jobs.

Nowadays, customers are more market savvy and they want more choice. A big thing you get with independents is that their techs, advisors, and shop owners are resourceful and adaptable. Dealerships tend to be set in their way of doing things. They do what has statistically gotten the desired results, but good independent shops do what's best.

You know, one odd thing when we're coaching and looking at financials from independent shops is that their parts gross profit percentage is higher than the dealerships most of the time.

Number 3: Independent shops are grassroots and community-based.

Independents tend to provide a faster option where the customer feels like they have this personalized service experience where they don't have to wait for days for a phone call back from an advisor. There's more of a direct line, less layers. When you call, Jeremy is there to pick up. You don't have to listen to an automated voice telling you to press 4 for Parts.

Jeremy's had his shop for almost four years now and he's built so many relationships with his community that the shop is basically a part of their everyday lives. He knows everyone's names and faces. At a dealership, a lot of the time it's every one or two years when the car has a problem.

I do believe that this advantage isn't exclusive to independents, but there are definitely more of them that lean that way than with dealerships.

Number 4: Independent shops can provide a lower cost and better value repair.

Independent shops can provide a lower cost and better value repair, because they're nimble and can move quicker in certain areas. Areas like controlling overhead expenses rather than the large fixed ops at a dealership where, a lot of the time, advisors don't have any control over that. Everything at a dealership is preset – parts, pricing, labor rate, overhead – they have no control over it. Part of what gives independent shops this advantage is that they can understand each technician's specialty and what they're most efficient at. Because of this, their gross profit-per-actual-hour can be higher and they can manipulate the expenses better.

Number 5: Independent shops are better at marketing.

Strategic marketing! I gotta concede this one because dealerships don't really have to market, but that also makes them terrible at it. They think that marketing is posting pictures on Facebook of customers with their new car or ‘buy four tires, get one free,' but they focus everything on the commodity. Imagine if all of Apple's marketing was their hard drives and RAM. Buy the new Apple MacBook Pro and get a terabyte hard drive! They don't tell stories, there's no human connection, there's no vulnerability, no honesty, no authenticity; it doesn't pull you. Most of the time, dealers do marketing because they feel like they have to, not because it's actually effective.

With strategic marketing, the core of it is to be memorable and remarkable. Well, on the show, we both said ‘rememberable' which probably isn't a word but it sounds better when paired with remarkable. Be memorable and remarkable. If you succeed in that, the customer will share their experience with the world and that story will drive more business back to you.

Number 6: Independent shops are faster.

Number six is a bonus one, if you remember the terms you should know. What does SOS stand for? Speed of service. This is another one that's not necessarily exclusive to independent shops, but they execute on it more often. Dealerships don't really acknowledge it as a thing, but it's paramount to the customer.

Time is greater than money these days. Imagine being without your car for two weeks and there are two scenarios: one is that it takes the shop 95% of that time to figure out what's wrong with the car and they call you 13 days later to tell you that they'll have it fixed in five minutes. You wouldn't be very happy with that, but you'd be fine with the other scenario of them figuring out in five minutes that they need the rest of the two weeks to fix your car. Why is that? Because you know as early as possible how long it's going to take to fix it.

Jeremy firmly believes not only in giving the customer certainty, but that speed of service is a KPI that isn't generally tracked in the industry but really needs to be.

Ding, ding, ding! That's it, folks. The match is over, and it was certainly a close one. The winner and heavyweight champion of the world is Dealerships with a narrow margin of 7 to 6.

Really though, this was more just a fun little comparison than actually weighing which is better. I do think it's interesting because when you're sitting with an independent shop owner or a service manager in a dealership, they both think that the other has an advantage. What we know to be true is that the advantage is in your ability to execute the opportunity in front of you. Neither one has an advantage great enough to put the other one out of business. There's so much opportunity for dealers to do a better job at certain things and for independents to do a better job at certain things, and the advantage is really up to the beholder and who wants to execute. More than whether you're a dealer or an independent, more than what brand or market you're in, it's how you think and what expectations you set for yourself. The industry is plenty big enough for everybody that does it right, regardless of which corner you're in. I think the opportunity of a lifetime comes once a day, and everybody has that opportunity, so execute it and that's how you'll be successful.

This whole matchup was really fun. Be sure to post in the comments if you have some advantage for independent shops that you think Jeremy missed. We'd love to see your thoughts on it but I hope everybody agrees that it's your mindset and ability to execute more than anything else. Before we wrap things up, it's time for questions…

Audience Questions

This question comes from… [email protected]

Alright, then…

“I am a service writer. I learned through a trucking company and I worked at a dealership and now I'm at an independent shop. How do I learn more hands-on mechanical experience and grow in the industry?”

So my thought is that the mechanical experience is not that important. I remember when I was a service advisor before I was even 20 and when I was starting to do pretty well, everybody started finding reasons to diminish my value. This Volkswagen tech, let's call him Shane, pulls me into the shop, calls the other techs over, and on this wooden crate is a round metal disc. I didn't know that I was being ambushed here, and he says, “Hey, what's this?”

“I don't know, a brake rotor?”

Everybody starts laughing like how can you be a service advisor if you don't know the difference between a brake rotor and a clutch disc?

Anyway, Shane was an asshole. What he didn't know and what you need to understand, fitmommy1107, is that your value in the marketplace is your connection with the customer, not the commodity. You don't need to worry about the commodity, you can learn it any time. I spent most of my energy on connecting with the customers and petting the dog, and when a technician would bring me an inspection sheet and there was something I didn't understand, I'd just go back and ask them to show me. I would just say, “Hey, I can't present this to the customer if I don't understand. Can we put it up in the air and can you show me?”

Don't worry too much about the technical. Just take every customer, connect on a deeper level, over communicate, over deliver, and ask a tech when you don't understand something. You don't build trust by technical knowledge, you build it through empathy and genuine curiosity about people.

This next one is long, so buckle up…

“I'm currently a tech with 15 years experience in dealerships and independent shops. Hold all of my ASE, master Chrysler, and a Ford senior master. I want to get out of wrenching and into management. The trouble I'm finding is that I'm the second most productive tech in our dealer group and management doesn't want to lose my productivity and move me into a different position. I have looked at other dealers in my area, but I'm only being recruited as a mechanic. What am I missing? No one can tell me in between the books, podcasts, and your on-demand training. I'm still clueless about what I can do to move up. Any advice would be greatly appreciated.”

The sad part about this is, because of your technical expertise, nobody's going to want to move you from the shop to the front because there's a high demand for good technicians. If you're really good at fixing the cars, that's the one thing that dealerships and independent shops struggle with today, and they wouldn't want to give up the production.

Jeremy's advice is to show up early and offer to write up the night drops so you can start getting familiar with the system. Start to be a service advisor and be there when they need help. Go up and introduce yourself to customers more. Get out from behind the toolbox and get your cards out there! Realistically, you were always going to have to fight to get there.

If you want the position really badly, you're probably going to have to leave there. Another thing you could do is go to your current general manager or dealer and say, “Hey, this is where I want to go. I want to become a manager. I'd love for you to mentor me on how to be a manager. Will you teach me financials? Will you teach me what you know?” I've given this advice before, but for different questions, but chances are anybody who's older in their career is going to want to mentor somebody because it's good for their ego.

Then, I would hand-write some letters to some general managers saying, “I'm a technician here. I'm the top tech, and I want to be a manager. Obviously, there's more demand for technicians and service managers but I'm gonna move on, and I would love for you to mentor me to become a manager.” I bet if you sent out 20 of those letters, half of them would bite.

That's it for the questions this week. So what did we establish here? If you had a choice, you'd rather work in a dealership, but you still have opportunity if you work at an independent? Nah, more or less, everyone has the same opportunity. You just need to go out there and make it happen!

This whole two-part showdown was awesome. Remember to post in the comments your thoughts about the advantages of independents and dealerships because we'd love to hear your thoughts on it. Thanks for tuning in, and we'll see you again real soon on Service Drive Revolution!

Dealerships vs. Independent Shops Part 1

Dealerships vs. Independent Shops Part 1

Monday, Monday, Monday, it's the battle of the century! Today's big match is Dealerships vs. Independent Shops…. Who Has the Advantage? Find out now! But before we get to the title fight, let's start with what's happening outside the ring…

So I rented this Airbnb on this lake up in Washington. My family's had property there forever and every summer I would go there and we would water ski until our hands swelled off. Swelled? Swole? Anyway, even if we got there late, we'd still water ski in the dark with a flashlight.

However, this generation of kids you guys are raising don't water ski. You know what they do? They blow up these inflatable lounge chairs, not even inner tubes, and they sit there texting behind the boat!

Listen: everyone tell your kids to put down the phone or Xbox and actually go outside and – I don't know – throw rocks at cars or something. Just as long as it's not from an overpass…

We gotta acknowledge that these kids are lazy. You're raising a generation worse than the last lazy generation!

Okay, the “back in my day” rant's over. Now onto the next one…

I drove by the Chevy dealership by my mom's and there were no cars for sale. Zero. They won't have cars until the middle of next month. Meanwhile, we still got clients. We did three of our monthly calls and our elite call with all the elite managers in our coaching group. Then, we had two of our bigger dealer groups and record months, booked out, two weeks, crazy.

And the whole time, I wasn't wearing pants!

But now… the moment you've been waiting for… Let's get ready to rumble!

The Shop Showdown: Dealership vs. Independents. Who has the advantage?

Two enter, one leaves… with the advantage. Today, we're going to talk dealerships and, in the next episode, its the independents' time to shine. Think of it like they're coming in with their entrance music right now, sitting in their corners, getting psyched up by their coaches. “You're gonna eat lightning and crap thunder!” All that.

In the blue corner is dealerships. That's gonna be me while next episode is gonna have Jeremy plead his case.

Number 1: Dealerships sell cars

The first advantage they have is that, in addition to service, they sell cars. If a car needs more work than it's worth, the customer can just walk up to the sales department. Granted, service is an afterthought in most dealerships, but the fact that they can sell a car is still an advantage. Not saying that they always use that advantage, but they could if they wanted to.

Number 2: Dealerships have perks

The next one is perks. Dealerships have more perks for their customers than independents. For example, loaners and shuttles.

Part of those perks is contingency. In most independent shops, there's like three customers that need a shuttle at the same time. In a dealership, you can pull somebody from somewhere. I'm sure there's somebody sitting around in Parts that's not doing anything. Another one is carwash. We had a dealership client that even had a movie theater! Christian's even seen one with a sushi bar!

Number 3: Dealerships have expertise

Number three is expertise, meaning expertise at fixing the same model car over and over again. In an independent shop, you could get an F-150 pickup one day and a BMW 3 Series another day, and so you might not have the special tools for each one. Sometimes you don't even have all the diagnostic equipment!

In a dealership, you have the tools and you have factory training. Part of that means they train techs to work on specific cars. Some dealerships not only have technicians that work on specific cars, some techs only do a specific service like suspension or transmissions. They're specialized so if you got a drivability guy, he knows everything about drivability ever for that manufacturer.

Number 4: Dealerships have the Parts Department

Next is the parts department. Believe it or not, that's actually an advantage. If you're a Ford dealer and you have a lot of F-150s and they go through brakes a lot, you have those brakes and rotors on hand. If the parts manager is doing their job, you're going to have the stuff that's needed, and they'll have a bunch of them right there in the back based on trends. You just walk back and somebody's there to put it on a repair order.

Number 5: Dealerships do everything

Next one is dealership service departments are one-stop shops. Most of the independent shops we talked to don't do tires or alignments or they don't have a body shop. If a dealership doesn't have a body shop, they'll have a relationship with the body shop that they get kickbacks from for sending them business, right? Let's say you wanted to exercise your home field advantage by being a one-stop shop. It would be very inconvenient for a customer to go to your shop to get the widget replaced, then go to another shop to get tires.

I don't know if you guys experience this as a day-to-day thing in your personal life, but the one thing that people don't have enough of is time, right? So a lot of times, a dealership is gonna have tires that are more expensive, but a customer isn't going to spend another two hours at some other shop they don't trust when they can get it all done at the dealer and save time. And if the car is there for the day, why not just have it all done there to save multiple trips?

Number 6: Dealerships have built-in traffic

This next one's a huge advantage: dealerships have built-in traffic. The service department in a dealership has built-in traffic because the customer has to come back in for the warranty when there's recalls. You don't have to be good at marketing! Basically, you can live off the marketing of the dealership most of the time while an independent shop has to spend money on marketing. The amount of money an independent shop spends on marketing is maybe 10 times what a dealership service department would.

On top of that, the little marketing that a dealership does is co-oped by the factory so they get money back! To be a good service manager at a dealership, you don't really even need marketing in your toolbox most of the time as long as you're at a good dealership that sells a lot of cars. It's dependent on the car sales. If a dealership isn't selling cars, then it ultimately hurts the service department.

Number 7: Dealerships have state-of-the-art technology

The last one I have is that dealerships embrace technology, and a lot of that's driven by the factory. Let's say you own a Chevrolet in Los Angeles and you want to make an online appointment. Out of 10 dealers, how many do you think you can make an online appointment with? The answer is it's 10 for 10, and keep in mind that this isn't just making things more convenient after COVID. Every dealership that you can hit here in LA or Orange County with a rock, you can make an online service appointment. 4 out of 10 independents offer online appointments…

So that's it for round one. Dealerships look like they might retain the title for now, but who knows. Maybe come next episode, Independents will be an underdog story. Between now and then, leave a comment on here or YouTube advantages that you think dealerships have over independents that I might have missed, because I think all you smart people in the audience are going to come up with some good ones to help my case even more. I'm sure some of them are gonna make me go, “Oh man! I wish I would've thought of that!”

So now it's time for our questions of the week:

“What advice would you give a parts manager who wants to transition to service? Let the jokes commence.”

Believe it or not, Jeremy said, “Go for it. It's about time.” I'm serious. Go listen or watch the episode. I think that first round of Dealerships vs. Independents psyched him out. Got into his head…

“Is there an ideal percentage for a door rate that an import dealership should be striving for? Our door rate is $120.”

If you have a good customer experience, well-trained advisors, and a pricing strategy that the advisors are executing on, your door rate means nothing whatsoever and your effective labor rate is what matters. It's all about the execution.

We have an elite member that manages a very big import store in the middle of the country where they do $12.95 oil changes for life if you buy a car there, and his effective was a little over 112. That's a negative effective labor rate. What it means at the end of the day is that he's got a team of advisors that properly execute on that pricing strategy. They're not just throwing it up against the wall and seeing what sticks! It's very thought out and methodical.

Another answer to that is get in on our coaching.

“If they buy repairs, should the customer get the diagnostic fees applied towards the repair shop or on top? I generally try to apply to build more of a relationship, but just curious. What do you guys think? Is that losing money or building a relationship?”

This is an age-old question that Jeremy's got the answer to:

If you give it away, you haven't built enough value in your diagnostic process. Once the diagnostic service is performed, the fee for service has been earned, and it's a fee that stays on the repair bill. You've got to build the value in it. You got to have processes and checklists. In today's world, the fact that you fixed the car right the first time, you should get fairly compensated for that, and the testing is part of it.

I think a bigger part of that question is what value as an advisor do you see for your time? It's more about how you see yourself and that value because, when I was a service advisor, customers were going to pay but I also took really, really good care of them. Unless you have 10 cars coming in every week that you have to do diagnosis on, what's going to happen if you sell the customers the diagnosis without rolling it in? How many of those are going to get towed or pulled out because of that?

Hopefully zero. It just doesn't happen. It's in your head. You're thinking with your wallet and you're not putting a value on your time and how much you're going to take care of customers. Customers pay for better service! Start looking at it like, “Hey, customers are going to pay for me, but I'm going to take really, really good care of them, and I'm going to be the best advisor they ever had.” There's a premium for that.

I've never even quoted a customer diagnosis. You'd be setting yourself up to do everything twice. What I did as an advisor was, I never quoted diagnosis, but I got a repair authorization. Let's say you got a radiator leak on your BMW. I'm going to give a figure of $2,500 to work with but I also tell the customer that it's the worst case scenario and we'll know more after a tech checks it out. If it's more or less, I'll give them a call.

By establishing it with two calls instead of five, I'm saving time for both the customer and for the tech not having to go back and forth. 80% of the time, they sign and say okay. The other 20% says, “Oh, I just want you to check it out. I'm going to take it to my mechanic.” In that case, you can still try to get their business. What if they say they're getting ready to trade it in? Well, in that case, let's not even diagnose it. Let's go down and look at some cars and sales will fix it. But in their mind, they're still working with $2500.

Customers don't come in and expect their cars to get fixed for free or even $150 in diagnosis.

That's it for this week's questions. Tune in next time for round two of Dealerships vs. Independents. I got in Jeremy's head today, but is he going to come back swinging?

If you got anything to add to either list, post it in the comments and let us know what you think. Maybe place some bets. Thank you so much, and we'll see you next time on Service Drive Revolution!

3 KPI’s Service Managers Are Judged On

3 KPI’s Service Managers Are Judged On

Being judged on something without you knowing is kind of like being asked to drive without a steering wheel, but it happens to Service Managers all the time… So that’s why today’s show is all about the 3 KPIs, or Key Performance Indicators, that Service Managers are judged on– Whether they know it or not.

But before we get to Service Manager KPIs, we got a story from one of our own guys regarding the infamous Parts Department. Our editor, Michael, had a question for the show. So he crawled out from the broom closet where we keep him, and told us about his recent experience getting his car serviced. Now, Michael needs his car serviced pretty soon because he's taking some buddies on a road trip across the state of California and into Oregon, so he needs to make sure his car is safe.

Keep in mind, Michael drives a 2020 Corolla hybrid. His car is literally a brand-new model, and the reason why he's bringing it in for service is because there's a recall on the back seat belts. So he's getting the car, which is brand new, serviced at the dealership of purchase due to something that was entirely the manufacturer’s fault. This is a slam-dunk for the dealership to give Michael a fantastic experience and earn his business for life (hint, hint: Customer retention is one of those KPIs that Service Managers are judged on). How do you think it went?

Well according to Michael, it went like this:

They told him on the phone, “Okay, well, we can't deal with the recall until we check out the car,” so he says, “Great, I'll take it in.” He takes the car in, they inspect it, and he gets a phone call at the end of the day saying, “Hey, we did your maintenance and everything's done. But unfortunately, we don't have the part for the recall, so we're going to order it, it should be here next week, and we’ll just have come back in and we’ll replace it then.”

Fast-forward to last week. He calls the Service department saying, “Hey, I'm bringing my car in tomorrow for a recall. Last week, they told me to schedule an appointment for this week. Before I bring it in, I just want to confirm that you guys have the part that you needed.” 

So, it's been a week and they still haven't confirmed with him whether they have the part. The lady on the phone puts him on hold for a good minute because, wouldn't you know it, she has to confirm with the Parts Department. Then she comes back and says, “Hey, so in order to do that recall, we need to get your car in so we can inspect it and see what part to order.” 

Now, Michael is certain that he doesn't have some form of amnesia, because he swore that already happened. “Oh, well, I did that last week,” he says. “They already inspected my car.”

She says, “Oh, well, in that case, your part is definitely here!” 

Really? You magically confirmed you have the part in the 5 seconds? “If they’ve already inspected it, it's definitely here. Come on in!”

So whatever happened to Michael? Is he still with us? Did he survive that trip? Maybe you'll have to tune in next time to find out.

In all seriousness, what I'd probably do in this situation is I'd call and ask for the manager like, “Hey, this is my confusion and I'm getting frustrated. Could you help me?” Either that or ask specifically for the Parts Department, because naturally everything's their fault.

However, Jeremy personally wouldn't rely on Parts for that. To him, there's two possible scenarios for what happened: they either have a stockpile of those replacement parts ready, but they need to have the inspection done first, which they apparently forgot that they did the first time. That or, like countless Parts Advisors, they're saying the parts are on order, then they never show up.

What boggles my mind is that this is a major Toyota dealership in Hollywood. Do they really not have an appointment system or CRM in place to just send him a text message saying, “Hey, your part has arrived. We're ready for your appointment. Confirm your time. Push the button.” I guess I should stop complaining. After all, if every Service drive was hitting their KPIs, there wouldn't be a need for coaches and training, would there?

So if you're ever in a situation like Michael’s, I would call and talk to Parts. Maybe even ask for the Parts Manager, but make a big deal of it. Christian gave some pretty interesting advice which is to make them physically touch the part when confirming with you, or at least maybe have them stare at it longingly from across the room.

There's also the chance that you could get them to provide a loaner vehicle. Although, if they don't have the parts for the recall, who's to say they might have misplaced some of their loaners? One thing to keep in mind is that places might not give you a rental if they know you're, say, driving across the state with it. So this is one of those few times when I'll tell you that it's in your best interest to lie.

This story was a perfect example of a Service department that’s objectively failing to hit their KPIs, so let’s get on to our main topic for this week– the 3 KPIs you're being judged on without realizing it.

Profitability

This is one that just boggles my mind. A lot of times when I get on a strategy session and ask shop owners, “What's your profitability,” nobody knows. Now I may be wrong, but I always thought that the reason for doing business was profitability. Your business doesn't work if it isn't creating revenue, so profitability is the KPI for everything. Last I checked, shops and dealerships aren't charities… unless you're just a nonprofit where you can pay yourself a salary of $5 million a year.

A key thing with profitability is to not get caught in the four letter word of B-U-S-Y like a lot of other Service Managers. Not all work is equal, some is profitable, and some isn't. Help people but, at the same time, be careful about work that's bound to be inefficient and will waste time, which will essentially mean you're paying to fix a customer's car.

Every month, the General Manager or Dealer is getting a financial statement, and the first thing they're going to do is look at the profitability of each department. Most of the time, the Service Manager never sees the financial statement, but they're still being judged on it. It's a trick bag from the Dealer's side, but they're not being educated on that. It's just this secret metric that you're getting judged on.

Let's say you come into a Service Manager position and your pay plan's based on gross profit. At that point, you're assuming the social contract that your measuring stick is gross profit. The truth is that it's net profit; it's total profit at the end. Whether or not you know that doesn't change the fact that this judgment is affecting your pay plan. That's why you might come in and generate a ton of gross profit and over-expand, only for your expenses to exceed your gross profit.

You lose the Dealer money, so you lose your job, and you're left wondering why.

I don't know of any industry where you're judged on something you're not privy to like that. It's like driving a car without a steering wheel. What happens in dealerships is that most of the General Managers or Dealers come from car sales. They're not sharing the Service and Parts numbers, because they don't understand them. It's kind of like, “I know this, I know sales, I know F&I, so let me work on that, but I don't understand this.”

So, the steering wheel you don't have is information, but even when you have access to the information you need, you still don't understand it!

It's like compounding problems on top of each other. If you were a person trying to run a good business, the only thing that you're going to revert to is ‘if we're busy, we must be doing good.' So what we see time and time again is that every hour of labor they sell, they're losing 10 bucks. At that point, you might as well be standing out front and handing the customers $10 bills.

My advice in this situation is to trick the General Manager or the Dealer into giving you the information. I would go them and say, “Hey, I want to be mentored on this. Would you mentor me?” I've mentioned this before to play to their ego, because they have huge egos.

Make no mistake, the Dealers are firing Service Managers because of a lack of profitability, even though they were never given the tools or training to do understand profitability. The turnover for Service Managers is high because of this reason more than anything else, even though nobody realizes it.

Customer satisfaction and retention.

In case you need a reminder, retention is one of the most important KPIs for your Service drive. An increase of customer retention by just 5% can lead to a 35% increase in profitability. So this means how many customers come back to you…. Like what Michael won't be doing for that Toyota dealership in Hollywood. So, if the dealership that sold the car has home field advantage, why do dealerships lose 72% of their customers to independents over time? The reason the retention falls is because of the customer's perception and feelings about you. That's it. So as a Service Manager, you need to get involved in the car sale!

You need to own the idea that you have home field advantage, but those customers are scared. They perceive that your prices are too high, or your new car already has a recall for faulty seatbelts. It's a huge hustle. The dealerships take advantage of the idea that the customer has to go to them, but they lose them eventually. As soon as somebody doesn't have to go to the dealership, 80% of them go somewhere else.

You're in the business of being the lubricant in the process and constantly improving the customer experience, because the customer experience is the future.

Shop Efficiency

It's incredible that you're running a factory and you have no idea what the factory produces. Most of the time, the monkeys have the key to the zoo.

There's two questions that can tell you how good somebody is at their job: “What's your net-to-gross?” and “What's your shop efficiency?”

If I go to a plant manager at a production facility, Pepsi Bottling Company or something, and I go, “How many cans?” they'll be like, “We bottled 3 million cans yesterday.”

You go into an American Express phone room and ask, “How many calls?” “We had 3,000 customer issues and 1,750 of them are solved within 3 minutes.”

If I go to a shop and no one can answer those two questions, that's suicide. You're not running the shop, the shop is running you.

So those are the 3 KPIs you're being judged on, but before we wrap up let's answer some questions. Remember, if you send us a question, and we read it on the show, we'll send you some free swag.

“As a fairly new manager of an independent repair shop, how would you deal with a technician that will not take any type of criticism? He gets mad and walks out. He comes back the next day and apologizes but I still lost a lot of time and service because of him.”

Now, you could fire him.

Or, the more creative option would be to call his wife. Or his husband, whichever it is, if he's married.

The challenge here is that nobody wants to lose a technician and the talent pool for techs is dwindling, so this is a scenario that happens all the time regardless of if you're at a dealership or an independent.

Nobody likes criticism. You have to understand you're dealing with human behavior and you need to manage that behavior. The thing that raises some flags is that the guy just walks out in the middle of the day. If he comes back and apologizes later, then his heart's in the right place, but he still needs to figure out how to deal with his emotion. Maybe get some sort of therapy.

Christian's advice is to start by pulling the whole thing back. One, explain that the behavior is not acceptable. Second thing is before you make a withdrawal, you have to make a deposit. You have to connect with your people and say, “Here's what I expect out of you and if you're not doing this or this, then there's kudos or there's corrections to be done. There's going to be times when I'm going to give you corrections, because I care. And I want you to be the best version of yourself that you can be. And I'll need you to accept that criticism, grow and learn from it.”

Beautiful. You could put that in a Hallmark card.

The other line in the sand is that he can't just storm off like a toddler. It's almost as bad as throwing a wrench.

“I recently asked the service director, after interviewing an advisor, if the advisor asked what our net -to-gross percentage is at. He informed me he did not. I then inquired what we averaged month to month, and he told me we stay around 11% each month. My question is, how bad is 11%, and what percentage should someone's dealership push to achieve? Thank you for your time.”

11% isn't bad. It's a little higher than the national average, so that's not bad. The goal would be 30% plus. I hesitate to say just 30 because it seems like when we say 30, people hit 30 and then they put their feet up and quit. Do as much as you can while having high retention and taking care of customers. It's a balancing act.

If you're losing money, it's harder to get from losing to break even than from 11% to 30%, net-to-gross. You're doing more right than you're doing wrong. Absolutely.

Thank you guys for tuning in, and we'll see you next time on Service Drive Revolution!