Welcome back to Service Drive Revolution, everybody! I hope we all had a wonderful Thanksgiving!
Today we’re talking about throwing the baby out with the bathwater. I think that’s something that’s very common in our industry, and Christian and I have compiled a list of those situations just for you… But first– some car news!
So I read the other day that they raised the price of the autopilot feature on Teslas. When Christian leased his Tesla, it went for almost $9,000, and then it went down to $4,200 for a while for a promotion. Now it's selling for $10,000!
And he was showing me that you can literally just buy stuff from inside of your car on a dashboard menu. You don’t even have to go to a service department. You don’t have to call anybody. Literally, with the press of a button, you can spend 10 grand!
They even have a karaoke app you can buy for a couple hundred bucks!
When I had my BMW 650 convertible, I couldn’t even get my iPhone to sync up with it. Then, if you plugged it in, then the Bluetooth wouldn’t work. And it never showed the actual song that was playing. It was a disaster.
I think it’s interesting that car manufacturers don’t give service departments the ability to sell upgraded software because I would have paid $200 for sure just to get that to work right. It’s interesting, in the Jeep truck I’ve been driving, the Uconnect software’s perfect. You can text on there, everything. Never had a syncing issue, no issues whatsoever, but it’s interesting in a BMW that maybe is a $100,000 car compared to that Jeep which I think was $55,000-56,000.
The technology is so much better in the Jeep than in a BMW, but don’t you think it’s interesting that Tesla is selling that direct-to-consumer from an app store and the other manufacturers aren’t catching onto the fact that maybe people would be willing to pay for an update?
And they update from a satellite! You just have to park the car outside and have an internet connection.
I think that service advisors can sell that all day long. I don’t know about BMW and other manufacturers, but I’ve got to imagine that consumers would love it. And it’s a way to not cut the service departments out, but actually pull them into the transaction.
At this point, though, Christian leases his Tesla, and he doesn’t feel like he uses it enough to warrant the cost of the autopilot. That and he’s a bit stuck in his ways and doesn’t trust it, which is ironic because even though he likes to drive, he’s not a good driver.
I also like to drive, and I feel like that’s a hard disconnect because as cars progress and they’re driving themselves, you’re going to feel different about the car. It’ll feel more like public transportation and you’re going to want wi-fi.
We talked with Jeremy before about what we’d do in a self-driving car, and imagine having a 45 minute commute and just doing work the entire time. What can you get done on the way to the office?
So Christian also rents out his car through Turo, which is like an Airbnb app for cars. It’s great because when I fly to other cities, instead of renting a car through Hertz for a hundred a day, I’ll rent a pretty cool car on Turo for less than that, and it includes insurance!
A while back, I bought this VIP package where I got to take an Elite group to the Tesla factory, and one of the first things that the guy said on the tour was that Elon’s vision for Tesla is that the car will go pick up the kids, bring them home, go pick up dad, and then go out doing rideshare for money while everybody’s eating dinner. That’s why he believes that the value of Teslas will go up over time, and it’s interesting that Christian can make money with his Tesla on Turo.
Now, back to throwing out today’s topic: throwing out the baby with the bath water. If you don’t understand what that means, it’s a term from… I don’t know however long ago… On Wikipedia, it says the 1500s, so before Jesus. The term was used to mean throwing out everything when you just wanted to get rid of one thing.
We’ll start with a couple easy ones, but the basic premise here is that a lot of the times, we tend to overreact to things that we should not overreact to, and we throw the whole thing out instead of just fixing one issue.
- Places that don’t take checks
So a couple that I’ve seen a lot is places that don’t’ take checks anymore because somebody bounced a check… once. That’s always really funny to me because there’s so many ways to protect yourself, and you’re just making it harder to do business with you because of the maybe 1 out of 500 checks that might have bounced.
- Same with American Express
Whenever I would go in to fix a service department, especially in a Mercedes, Rover, BMW, a higher end service department, the advisors would always say, “It’s a huge complaint that we don’t take Amex and our customers hate it.” And I always just raise the price.
Do customers come in and ask the labor? Most customers don’t even know. They’re buying a water pump. They’re buying a service. I can make more money by just raising the price and absorbing the Amex into it and letting the customer pay for it, right?
It’s an easy fix, but it always seems like you’re losing that brand recognition, too, because people that have their Amex Black Card want to be acknowledged for it, and they don’t get to show it off. All my friends that have Amex Black Cards can’t wait to pull it out.
- Software Upgrades
The customers can come in, we do software upgrades on one car, we have an issue with the ECM, and then we’re like, “Nope, we’re not doing software upgrades anymore. We can’t do it. We can’t afford it.” That’s throwing out an entire revenue stream because of one bad issue.
- Accessory Sales
We’ll accessorize something and then we’ll sell it without accounting for it, especially in a car dealership.
Or the customer wants to buy, but they don’t want the wheels and you don’t have a tech there on Sunday to take them off, and instead of just writing a wheel for it to be done on Monday, you’re just like, “No, we don’t want that.”
Meanwhile, in most markets, if you sit in the service drive and just look at the cars coming in, probably half of them have some sort of upgraded wheels or something to personalize. And dealerships choose not to participate in that because it messes with their identity or something like that. Especially with BMWs and Jeeps, people are doing really cool stuff to them and the dealers just aren’t taking part in it so they’d rather go to an independent and get a lift kit. It doesn’t make sense…
And probably because of one car that had a warranty issue from having aftermarket parts on it and they didn’t want to deal with the hassle, even though it’s easy to fix it by having them sign a release for the warranty.
Also, customers aren’t idiots. They know that if they modify their car, there could be concerns about warranty later down the road. Customers that do those sorts of things to their Jeeps and modify them are more loyal, and you’re in their club. So by not doing it and letting them take it to the local independent instead, you’re saying, “We don’t care about you.”
- Extended Warranties
Speaking of warranties, what we’re talking about is when you have an extended warranty come in and there’s a problem with collecting payment or authorization or something like that, and then you just go ahead and make the decision, “We don’t take any aftermarket extended warranties.”
In cases like that, they’re just doing away with that revenue stream and making it harder to get money!
I’ve never ran into it in my experience but maybe Christian has where it’s an extended warranty that didn’t do a credit card anymore. Most of the time, when that rule is in place, I just say, “No car leaves until we’re paid.”
So yeah, the advisor’s got to be on the phone for an hour to get paid, but it’s still worth it. And you can delegate that to warranty or a cashier, too.
- No car washes (because we’ve broken antennas)
What happens is the service director goes to NADA, they get sold a car wash by a bunch of buffoons, and then it breaks a couple antennas, and then they’re like, “We’re not washing cars anymore.”
Most of the time, it’s better to wash by hand anyway…
- They drop off with the shuttle
So a service department will drop customers off, but they don’t pick them up. It’s like, “We half-care about this. We’re half into it, but beyond that, it’s your problem. Go around the office and beg somebody to drive you to pick up your car.”
Because one time, a shuttle driver got stuck in traffic at 4 or something and was late picking up the customer so they do away with it. They’ll just get you out of here, but they won’t bring you back…
I’ve seen people completely go away from the whole valet system because they’ll have one valet pickup that doesn’t go right where the customer doesn’t meet them or they don’t get there on time because of traffic. And they’ll be like, “We’re not doing valets anymore because we had this angry customer.”
I know there’s some stuff missing on our list so do us a favor and post some in the comments because Christian and I like to laugh at this sort of thing, whether it’s something you’re guilty of or you’ve worked a department where they threw the baby out with the bath water. Like the questions, if you post a good one, we’ll send you some swag!
Speaking of questions and swag, we have time for one question today because the voicemail was actually really long. Remember, if you have a question and we play it on the show, we’re going to send you swag so call us at (833) 3-ASK-SDR or (833) 327-5737. Just call, leave your question as a voicemail, and we’ll send you some swag if we answer it on the air. Also, you’re not limited to just questions about service drives. Life questions are welcome, relationship advice, whatever you need, call in. Christian and I are here to help you perform, make more money, have freedom, get a raise, and be the envy of everybody in your city.
So here’s today’s question that was left as a whopping 2 minute and 56 second voicemail:
“I’ve recently taken over the service department at a local auto service center where service is only about a quarter of the overall gross. I was brought into the same place about 10 years ago to do the same thing: consult and troubleshoot. I left about 7 years ago. I was called again recently, and again, the department is back to the same old business, right? The tech’s running the garage, and no systems in place, blah, blah, blah, same old stuff.
After about 3 months, place has been about 80% – over the last 6 years – it’s been in the red about 3 of those years and broke even about 3 years. After changing the culture, implementing systems and procedures, the department is up 80% again, like I said already, week-to-week and on pace for $1.2 million, which is just naturally what that shop will do without advertising and marketing.
Just getting back to the basics, outworking everyone until they follow your lead. Same old story. Which leads me to my question: for all that hard work, there is still one major hurdle. This shop, a tech, who was again, a C at best holding the department back with a steep salary and horrible productivity. I’ve managed to work around him, running the shop as efficient as I could with 6 other guys. It’s the same technician that, my second week there, says to me in the garage in front of all the other techs and the other that I should stay up front because he runs the back and I run the front. To which I replied, ‘No, my friend. I run both so you’ll be seeing a lot more of me out here.’
The owner has been blinded by his own loyalty, in my opinion, to a 5-year employee who’s been telling him what he wants to hear and chasing off other competent techs over the years. In the owner’s defense, he is not a service guy. He is running ¾ of the rest of the gross this overall company sees. And I would mention it, but it’d be too specific for this application here.
I’ve managed to keep our cost labor net in line, worked around this tech to avoid misdiagnosis of customer’s vehicles. He’s not even in the ballpark most times. The owner’s now asking questions about this tech’s salary vs. productivity, which my response a few times has been, ‘We’ve gone over this a few times.’ I’ve suggested that we dismiss him my third week here. Again, two months in. Again, three months in, after starting to realize that this owner maybe had a soft spot for his guy, eased up and learned again to work around this guy, and in this guy’s defense, he’s got a sweet thing going on there.
He knows I know what’s going on. If the owner wants to put up with it, fine, but at some point I start feeling guilty and other technicians are bothered by this as well. This guy’s got an ego and he’s rude, and again, they’ve got to fix all his mistakes, and he was supposed to be the guy there. So do I just fire this guy and save the owner from himself?”
So I would go at this a different way. Whenever we go into a service department, there’s always that guy usually. That’s not unique, and I’m sure you’ve experienced it also.
They’re just marking their territory. They know that they’re not as good as what they’re being paid, but their bills and everything else are matching what they’re being paid, right? That’s one thing that will happen is even though somebody maybe doesn’t deserve what they’re being paid, their bills and mortgage payment will catch up to what they’re making pretty quick.
And so I would make it about the production and the quality and I wouldn’t make it about the person in the beginning. I would, every week, do an Excel spreadsheet and I would have everybody’s efficiency and their costs and what the gross is on every tech.
I would do a performance hierarchy and I would give that to the owner and I would actually give each tech their individual one. So, you don’t want every tech to see what everybody else is making, but I would also have a board in the shop that listed out every day, the efficiency.
And then, the next thing I would do is I would not protect the guy from comebacks. I would give him diagnosis. I would treat him in the way I dispatched just like he was any tech and the best there. And then I would create a comeback sheet. And every time he had a comeback, I would give a copy to the owner and to him and put one in a file.
A comeback sheet would be like the RO number, what vehicle, the original concern, and then what was wrong with it, the fix, and how much it cost to fix it.
And even if that technician had to spend a couple hours, I would relate a cost that: fixing it. And I would start tracking comebacks and then let the facts work themselves out, but most of the time when we make it about our feelings and politics and jockeying for position, it just gets ugly or it doesn’t get better.
When you make it about the results and the outcome, sometimes they will fix themselves and other times they will go away. If it gets to the point where it’s ramping up, I would call the owner in and I would just have a blunt conversation. I would say, “Does this guy have naked pictures of you? Is there something I don’t know because the evidence is the evidence and I don’t understand,” but I wouldn’t do that for a couple months.
I would go with the strategy that he’ll probably either tune up or go away if you just make it about the outcome and not about anything personal or politics, that sort of thing. When you make personnel decisions based on playing the politics and getting someone going down, it will almost never end how you think it’s going to. Doing it by the facts and the results should be how we make human resource decisions in general.
I think, too, if you want to take a little different approach with the guy, you might want to pull him in closer and actually take him to lunch and be honest with him about what he’s doing in a very calm way. Just be like, “Hey, I’m here to turn this thing around, and you’re either on our team…”
Refer to yourself and the owner as us, because it’s about the performance of the business, not marking your territory. It’s an outcome of your efforts. Ask him about his ambitions and what’s going on. Is he struggling with something? Bring it up in a subtle way like, “You’ve had a couple comebacks recently. Don’t you think that somebody at your level should be double-checking their work?”
By pulling them in closer and having a little empathy and really trying to understand him, instead of just meeting his resistance with resistance, you might be able to fix him, too, because there is value to a technician if you can fix him. The best case scenario here isn’t that he leaves, it’s that he flips and becomes your teammate.
He’s telling you with his actions, if you listen, that he wants to belong, that he’s looking to feel important. His whole driver is somebody else stroking his ego. So stroke him. Who cares? I think one of the most important sayings in business is, “I’d rather win than be right.”
I’m not looking to win so I don’t need to be right. I’m not right a lot. I’ll listen. I still have great conversations with people about things even when I don’t agree with them because I learn a lot. It’s fascinating to understand why they see it the way they do, like how their parents did such a terrible job that they ended up that messed up or whatever it is.
Think the same thing with him. If he’s a tech, you can balance out the score and figure it out. The truth is your friend. Just go with the truth and create a hierarchy of performance, create accountability, and then encourage them on the other end. He’ll either come around or he won’t, but that’s leadership in a lot of ways, right?
Thanks a lot, guys, for reading, listening in, and watching us on YouTube. Have a great week and we’ll see you next time on Service Drive Revolution!