Leave it to a global pandemic to divide us. The world, the country, the automotive industry… On the dealership side of things, there are clear winners and losers– nobody is in the middle. And now that the economy is reopening on a massive scale and that pent-up demand is starting to become a reality, Service Managers everywhere are having their mettle tested.
Does that sound familiar? It should, because it’s what we’ve been saying from the very beginning: “New car sales are gone, Parts and Service is essential, your Service Manager is the MVP right now.”
So, here’s the big question: Did you use the downtime wisely? Service Managers: Did you invest in training for your team during the down time, or did you just lay everyone off? Most importantly: Is your Service Drive ready to weather the storm?
The difference in mindset is as obvious as could ever be. Right now, some Service Managers and Dealers are still talking about laying people off, while the ones that handled the Coronavirus shutdown right are busier than they were before…
…And it’s all because, as I was saying, there's pent up demand.
If the average car on the road was 12 years old before the nation went on lockdown, it's now going to be 13 years old, because people weren't buying cars for two months. I’ve said it before, but maybe they ought to bring back Cash for Clunkers. I think everyone can admit that the industry could use a stimulus like that right now to build momentum and get us up to speed.
What's funny is that the independent world is trying to fight a Cash for Clunkers program, because it would work in their favor if people just never buy a new car. They want it to be like Cuba, where you're constantly restoring vintage cars from the 50s!
We haven't even seen the fallout from all of this yet. The supply chain has been disrupted on a massive scale, Hertz is filing for bankruptcy, and early results are in… But we're still months away from seeing what else happens.
But remember: Your role as a Service Manager and Service Advisor is to help customers stay in safe, reliable vehicles. As long as you’re doing that, you're doing what you can to help our economy out. If I was a dealership right now, I would contact every single person in my customer base and offer them a free consultation.
One thing I don't understand right now is how the stock market has been up 30% since March. I asked Jeremy and Christian to help me out on this, because it doesn't make sense to me.
Real estate is up too, oddly enough. The thing I'm hearing is that a lot of tenants on the commercial side have closed up their businesses, taking their signs, and not paying rent. There's going to be a huge, huge deficit in retail commercial revenue because people are working remotely and they don't need the office space that they once did. I know here in California, they passed a moratorium where you can't evict anybody until August, but there's a lot of evictions pending and back rent owed, because people have been unable to pay rent.
And then the Fed said the solution is to stop giving people unemployment, because they're making more on unemployment than they were making when they had a job. So now people aren't even looking for jobs, because they're making more than they were! It's this perfect cocktail.
I just don't understand how anyone could possibly think that people are going to rush out and spend money on things that will drive the stock market… Most people are spending money on the lowest level of Maslow's hierarchy of needs: food and shelter.
Jeremy said it best: This is the ramp just before the cliff. Or maybe we’re already off the cliff. Who knows? There’s a lot of uncertainty in the world right now, and only time will tell.
All we can do is focus on the things that we can control. So, with that in mind, let’s go to our first audience question:
“Chris, I am approximately 9 months into my first job as a Service Advisor. He spelled it right. I came into this job with zero experience in the automotive industry. I really feel I've found my true calling and your books, videos, and podcasts have helped me increase my per auto sales by leaps and bounds. My question is this: how can I get customers to stop and look at their vehicle with me during check-in when they've been trained for years by the other Service Advisor I work with to just drop off their vehicles? I want to build rapport and trust with these people, but it's seemingly impossible to do that when I can't get them to slow down and walk around the vehicle with me. Please help a new Service Advisor desperate to build the circle of trust.”
The first thing there is, you need to control the narrative. That narrative starts when they make an appointment.
I don't know how your Service Drive works, but if you have appointments specifically for you, you could call or text the day before and just say, “Hey, I'm expecting you at 8. Can't wait to see you. Plan on spending 10 minutes together,” or something like that.
You can also do the ‘pre-suasion,' the pregame. The other thing is when they get there, meet them and say, “Okay, I'm so glad you're here today. I need a couple minutes. Let's look at your car together and let's catch up. Let me ask you a few questions.”
Just take control from the very beginning.I don't think it's any harder than that.
I think customers want you to take control, ultimately. They want to know that whoever they're dealing with is the right person for the job.
“Hello, Chris. I'm a new Service Manager. I was a Shop Foreman for 2 months after being a tech for 30 years. What advice would you give a new Service Manager that was a tech for as long as I was? I seem to have done well in 6 months. I'm a natural leader. I work hard and don't put things off. I guess a good question would be: how do I have confidence in myself, even though I know I have a lot to learn? Maybe that narrows it down. Thanks for your videos. I'm learning a lot.”
So, I can only speak to my personal experience. The first thing that I would have done, if I were your General Manager, is I would have made you write service for 6 months. That's what I would have done, but you also got to see it from a completely different side. I think the kind of topic we're going to talk about is make sure you are managing from a position of: What's important? What are the true measurables of winning or losing?
I think a lot of times the GM will promote a Foreman to Service Manager and say, “Here's the desk. Hop to it.” They don't understand that profitability and retention are the two most important things, so it’s up to you to educate yourself on those, the customer experience, and the financials.
The industry has let you down, because you need training and there isn't really any high-quality training out there for Service Managers, aside from my stuff. If you want something low-commitment, you should go read Irreplaceable Service Manager. That will give you a lot of the tools you need to run a healthy, profitable Service Drive. You could also join our OnDemand Training program, and start training your Advisors and Techs to really bring your whole team to the next level. Get a coach, learn the financials, and learn pricing strategies. That’s really it.
“Hey, Chris and Jeremy. Huge fan of this show. Been a Service Advisor now for a couple of years and my Manager just told me he wants me to learn parts also, which I feel is huge for my career. Two questions on that: 1. If I'm in Parts and Service, who can I blame everything on? But also I was wondering if you have any tips or suggestions for me learning this new position. I'm going to stay and be a Service Advisor but just have parts training also. Thanks a bunch.”
So there's something wrong with the fact that your boss wanted you to learn parts, because what he wants you to learn is how to deflect blame; how to sit in your office all day.
I think I'm kind of in a lot of ways like, “Hey, somebody thinks more of you that they want you to learn more stuff. Learn everything you can, you'll never regret it.”
With part-time, most of everything you need to know is on the month-end statement. I can look at a Parts Department's month-end statement and I can see how much they're adjusting the stock order. I can see how many lost sales they're putting in. I can see their inventory, their obsolescence, their margins, all of that. I would embrace it, and learn everything I can. That's always been my approach.
“How do I know I'm getting a good pay plan if offered a Service Manager position? Is there some general percentage of gross profit or something like that? I'm currently an Assistant Service Manager and I get 9% of the net gross profit, and at $35 or above I get 10%, plus a $1,500 monthly CSI bonus, plus $600 fixed base pay for being the Assistant Service Manager. I am in charge of 5 Service Advisors and 14 tTchs. Total monthly gross labor is currently at $200,000 and room for growth. What does that sound for a range of pay?”
Okay, first of all, 5 Service Advisors and 14 Techs… You either need more Techs or you need to get rid of some Service Advisors. The rule of thumb here is 1-3 Techs per Advisor. If you have 5 Advisors, you should have one more Tech at least.
Also, for every $10,000 in gross, you're making $900? That's a pretty juicy pay plan! That's what you make when you're a General Manager. Get that gross to $400,000. Double it.
That's a good pay plan. I would encourage you to pay attention to what we're going to talk about next though, because you might think that pay plan is juicy until they come in and change your pay plan in 6 months and you're not sure why.
Earlier this week, I was talking to a Director that's running 5 stores and I said, “What's the net to gross for all the stores?”
And he goes, “Oh, I don't know. We don't look at that.”
… So then I was like, “You're going to get fired if you don't know the answer to that.”
Imagine you're running a nursing home. It doesn't really matter if you know the average age of everybody there. Like Chuck here could be 90, 85, 80, whatever. What matters is that Chuck's diaper gets changed, he gets 3 meals a day, he takes his pills, and he's healthy.
In business, there's a scoreboard just like in sports. There's clear winning and losing. One of the things I think is really interesting is how players can recall every detail of a game from 20 years ago. They could talk about how many points they'd scored, how many rebounds they had by the 3rd quarter, and what they were thinking. I guarantee you that right now, we could call up Michael Jordan and ask what his win/loss record for the Bulls was in 1987 and what was his average, and he'd know the answer to both.
I don't know one Dealer or General Manager that doesn't have the financial statement within arm’s reach from their office, all the time. Most of the time, they can find the statement they're looking for without even getting up.
If you're a Service Manager and you’re under the impression that net to gross and profit don't matter, you're probably going to get fired.
Once again, the industry has let you down because they don't share those numbers with you. I would very much encourage you to go to the General Manager or the Owner and say, “Hey, I'm trying to get better and I want to be mentored. Mentor me on financial statements. Will you teach me what you know?”
I guarantee 9 out of 10 will pull you in and mentor you and start explaining and showing. Now, if you go to them all accusatory or indifferent, or you don't know what you're talking about, they're probably not going to share it with you.
Everybody wants to mentor and share the things they've learned. It's just natural that people want to do that! But if you're a Service Manager or Director and you're not looking at the financial statement, it doesn't mean you're not judged on it.
If you don't want your pay plan changed, why don't you really start to understand what the ROI is of you in that position? If you're not looking at the financial statement, we don't know if there's an ROI, right?
The reason why I named my book The Irreplaceable Service Manager is because there's 50% turnover in the Service Manager position, and it’s because they don't know what the ROI is. If you're not focused on the things that matter, if you're just chasing gross, it's a recipe for disaster.
“Oh, my pay plan is just on gross.”
Well, that's good. Keep that pay plan. Don't suggest they change it, but you better figure out what the net to gross is pretty quick, because they're going to change your pay plan. They're going to think, well, if we lower his pay plan, then we'll have more net.
Once again, we appreciate you guys listening and tuning in, and we'll see you next time on Service Drive Revolution.