So, on this week’s Service Drive Revolution, we’ve found a time machine. One that every customer can take a ride in. No, it’s not a Delorean…
It’s vehicle maintenance!
I assure you: I’m not going crazy and I’m not on anything. Well… I am interviewing this kid, Nick, for that $100,000 assistant position. He got me a limited edition bottle of tequila, and I may have been sipping on it earlier, but that’s besides the point.
Think about it as a service advisor: Why is maintenance easy for a customer to say no to? Because there’s no noticeable difference in performance until something breaks!
Wouldn’t it be great if manufacturers programmed cars to pull over to the side of the road and shut off if you were overdue for maintenance? I’m sure it wouldn’t be great for the driver, but it would be great for the car… Or at least, better that than running it ragged until it breaks down in the middle of the road, right?
Well, thankfully things don’t work that way, but that leaves the question of how to help service advisors and dealerships increase maintenance revenue – especially since parts revenue is under attack thanks to online venders.
The answer is stepping into the time machine that is vehicle maintenance and getting an 800% return on investment. That’s $8 worth of repairs you’re preventing for every dollar you invest in maintenance. Really!
In the independent world we see a lot of cars on a repair plan, while dealerships usually take really good care of their customers’ vehicles so those would be on a maintenance plan. In the end, it’s cheaper to drive a car on a maintenance plan than a repair plan. What we want to do is get the customer out of the repair plan by selling them maintenance.
That’s how the time machine works.
We all have moments where we wish we could go back in time and make a different decision, and maintenance is no different. It’s like seeing your future through a crystal ball but not doing anything about it until it’s too late. These are the kinds of things to convey to the customer so they make the right decision to protect their car for the next three or five years.
When the day comes and your car breaks down, we can’t go back in time and change the past where you decided not to have maintenance done. There’s no chemical we can put in your transmission to fix it after you’ve let it fail, but if you say yes to maintenance today, you’re preventing an internal failure (power steering, transmission, etc.) three, four five, or ten years into the future.
The core of what we do as trusted service advisors is create a customized maintenance and repair plan tailor-made for you and your car. Manufacturers don’t even put this stuff in the maintenance book or factory recommendations anymore.
So what should you do? Step outside of what’s in the book. Write your own book!
Manufacturers design these maintenance schedules because they want to sell cars! If the cost of maintenance of the Ford F-150 for the first 100,000 miles is $2500, while Chevy and Dodge are at $1200 for maintenance, who’s going to sell more trucks? That’s where extended service schedules come in. But now we’re seeing a labyrinth of catastrophic failures between 100,000 – 300,000 miles that lead to expensive repairs, all because the car was neglected in the first 100,000.
Of course, I didn’t come up with the time machine analogy. Full credit for that goes to Jeremy who is my guest host on this week’s Service Drive Revolution!
In this episode, we’re also introducing a new segment called “Terms You Should Know.”
Today’s term is…
More importantly, what is the formula for retention?
To figure that out, ask yourself: how many of your customers come back? How many customers come in a second, third, fourth, or fifth time? In the dealership world, numbers usually sink down to 25% retention by the fourth or fifth visit, even though they have free maintenance. What that basically means is that the customer would rather pay $80 at a Jiffy Lube for an oil change than come into the dealership.
Owning an independent shop himself, Jeremy has just two reasons for why that’s the case:
The location of the dealership isn’t as close as possible to work or home, or it takes too long to get the vehicle in for service.
A big issue with dealers is the attitude of the service department when the customer is trying to get an appointment to get serviced – it’s too hard to get a live person on the phone who’s nice and friendly. Times are changing. Just let the customer book online with their smartphone!
The last thing I want to say about retention is that every person that touches the customer during a transaction is going to be a factor in that retention. This is why you need to make sure that everyone on your staff has a positive attitude, and are committed to Petting the Dog.
Now it’s time for questions:
“Chris, love the podcast. Your ‘How to be Self-Made’ episode was a huge inspiration for me. Quick background: I work as a domestic manufacturing representative for after-sales parts and service. My occupation’s focus is to be more consultative to my group of dealerships. What recommendations do you have for manufacturer reps, pit falls, qualities of successful reps, how to foster strong relationships with the fixed ops department, etc.?”
Basically the question here is, he’s a factory guy so how can he relate to his dealers in a way that’s constructive?
At one point, I had a bunch of BMW clients. There were about 15 of them that were in a group here in Southern California, and the BMW factory had an agenda where they wanted all the dealers to be on this software called NPI, which was an inspection program.
I had some dealers on it, but it seemed like every time I’d go into a dealership that was on that program, I would have to get rid of it, because it didn’t work and their numbers would go down – even though it was a digital inspection system, the hours per RO would go down. When the nice people at NPI reached out to me, I told them myself, “If you guys pay me, I’ll tell you how to fix your software, because there are some flaws in it!”
Long story short: two guys from the BMW factory call me out to their headquarters here on the west coast, and they get me into this conference room with a long table where I’m one side and they’re on the other.
Now, I thought they were going to say, “Hey, how do we get our stores to perform like yours?”
That’s not what they were going to say. They told me that they had a problem with me because I was keeping NPI from going in all these stores.
I wasn’t going to spend five grand a month on something that made our numbers go down, so I tell them, “I’m not trying to mess up your agenda that everybody has to be on this program whether it works or not,” and then I ask them what the average net to gross in the average service department in the western region is.
They couldn’t even give me a straight answer! They had no clue what the net to gross was, because they couldn’t care less about it. Everybody knows the factories come out with a new thing every year and a new agenda, but it doesn’t always benefit the dealer.
Now, onto the next question:
“Hey Chris, I have been an advisor for about 10 years. I worked at multiple dealers and have experience with many different brands. Currently, I am at a Lexus store. My question to you is what is your opinion on calling a customer by their first name or last name? I prefer the first name because I feel like it makes a better connection, but out of respect, sometimes I feel like the last name is better. Any help would be appreciated, thanks.”
Great question. When I was an advisor I would just ask something like, “Would you like me to call you Chris or Mr. Collins?”
A great tip from Jeremy is to offer your name, shake their hand, and say, “I didn’t catch your name…” or “And you are?”
I think asking is a nice touch because it shows respect, but it can get weird sometimes… For example, I know billionaires that want to be called by their first name, and I know people that are broke as a joke but want to be called “Mr. Thompson,” or whatever. It really depends on the person and how they were raised or what their idea of respect is, but I would just ask up front.