The demo drive is a vital and fundamental selling process critical to the effective closing sales in dealerships new and used vehicle departments.
Is there a similar sales process in the service department that is crucial to attaining benchmark sales performance as well?
The answer is YES. Or at least there should be one in your service departmentif you are serious about cash flow, improved technician production, net profit and improved fixed coverage.
What is this process called?
It is called the Interactive Reception or Walk Around Process. This process is performed by service advisors with customers on the service drive!
Let’s discuss why dealers should implement an effective walk around process and:
- Why dealers struggle to implement it;
- What service advisors should not say when they make service sales suggestions or sales closing statements:
- How to perform the walk around properly;
- How much it costs dealers by not having an effective walk around and point of sale process!
The service advisor walk around is as important to the service departments selling performance as the demo drive is to the new and used vehicle sales department. In both cases, it is the point of sale opportunity to present features and benefits of the product or service to the customer. Of course, to the consumer, it is more exciting to purchase a new vehicle rather than spending money on a
factory 30,000 mile service. However, in both cases, the dealer has spent thousands of dollars per month to attract customers to the dealership and each department has a responsibility to ensure their sales personnel are properly trained to effectively handle customers. While there are many components and processes to an effective walk around, here are some examples of ineffective walk arounds we see too frequently at dealerships.
Examples of an Ineffective Walk Around Process.
The service advisor:
- Walks around the vehicle without the customer;
- Only walks around the vehicle to inspect for damage;
- Walks around the vehicle without an inspection sheet;
- Does not discuss features and benefits of the service suggestions;
- Does not open the hood and misses the opportunity to discuss maintenance services such as fluids, filters, belts, battery cables and terminal condition;
- Does not have a sales plan and is not organized to present potential up-sell recommendations;
- Suggests maintenance when the customer’s prime concern is a diagnostic issue such as a check engine light which adversely affects the credibility of the presentation;
The walk around, if being performed in dealerships, can vary greatly from one dealership to another. Our company gets numerous compliments from service clients about our version of the walk around. Service management and advisors claim it is easier, quicker and more effective to perform than what they have been instructed to do previously.
The interactive reception entails the service advisor interacting with the customer at their vehicle which is the point of sale following the meet and greet. The most common issue we see is the lack of interaction with the customer and service advisor during a walk around in dealerships that claim to have the walk around process implemented.
Effective word tracks for service advisors whether they do or do not know the customer’s vehicle history prior to the walk around is imperative. The service advisor should make service maintenance suggestions to the customer with an emphasis on the features and benefits of the services recommended. The service advisor opens the hood of the vehicle to discuss what the service department provides complimentary for the customer during the service (such as top off fluids, etc.) At this time, the service advisor discusses with the customer what is in good operating condition visually and maintenance services to be recommended based on mileage and current condition. In addition, future service needs may be mentioned at this time as well.
How to Desk the Deal!
Once the walk around with the customer is completed, the service advisor goes to his/ her computer, reviews history, and tailors the online factory compliant menu based on the findings from the walk around and vehicle history. The service advisor checks the appropriate box on the service menu to include the dealer recommended services and then makes the visual menu presentation to the customer. The customer is also informed that a complimentary vehicle inspection will be performed and that they will be notified if any items need immediate attention.
The repair order now has the captive sale services that the customer initially requested and the point of sale maintenance services that were just upsold and authorized. In addition, a potential follow-up sale is in process by way of the vehicle inspection sheet that is ready to be dispatched to the technician.
When the technician gets the repair order, he completes the vehicle inspection first. If the technician finds safety issues needing immediate attention, he will bring the repair order back with parts pricing to the service advisor so the customer can be informed of the safety issue and pricing. This process ensures that the preventative maintenance is not performed until the customer is provided an opportunity to determine if the additional unforeseen safety related service item is within their total budget - even though they already approved recommended maintenance services and pricing.
The walk around presentation and interaction at the point of sale is one of three distinct stages of a service sale. The point of sale transaction has significant labor hours per repair order associated with it.
If there is no point of sale process in place in the dealership, there is potentially tens of thousands of dollars being left on the table every month!
Besides an effective point of sale/walk around process, the word track utilized by service advisors will determine the outcome of the sales presentation. While there are numerous effective word tracks for closing a potential service sale, these are some sales closings we often hear in dealerships.
Examples of what not to say when attempting to close a service sale:
- Anything else?
- What do you want to do? - We have a minimum check out fee of $95.00 for 1 hour of diagnosis. If you decide not repair the vehicle you will owe us $95.00.
- It’s your decision.
- It’s up to you!
- Just the oil change today?
- You don't really need these services, I am just suggesting them.
- Are you sitting down? The total is $565.00.
- Are you holding on to your hat, it is going to be $ 678.00
- I have some good news and some bad news. What do you want to hear first?
- Yes, I know that our parts are expensive, if you bring me your aftermarket parts I will have them installed for you.
Do any of these statements sound familiar?
Are your service advisors properly trained on effective word tracks that sell?
How many advertising dollars are you spending each month in the hope of turning price leader coupons into realistic transactions and or a future customer?
Have you invested in training your service sales personnel aside from the basic required factory training?
Most new and used vehicle departments have sales meetings daily. When was the last time your service department held a service sales meeting with service advisors and discussed minimum standards of sales and gross profit performance expectations?
If that was done, has anyone trained the service advisors how to attain these performance expectations?
Do your service advisors know the three stages of a service sale transaction and how to execute them?
Is your service driveway staffed properly and able to have service advisors effectively meet and greet customers, establish a rapport, perform a walk around, open the hood, review vehicle history, perform a menu presentation and desk the deal?
Keep in mind, service advisors may also book the repair orders, follow up with the customers throughout the day with progress updates, generate and provide pricing, perform appointment scheduling and assure an active delivery. Some service advisors also perform the cashiering role as well. Can this be accomplished effectively in your dealership?
How many repair orders should my service advisors handle per day?
The benchmark number of repair orders that service advisors should handle per day is 15-18 for domestic dealerships. High line import benchmark repair order count of 10 -12 is less, due to the demographics and expectations of the customers. In addition, the dollar amount of the transaction is significantly higher – requiring more attention. There is also a direct correlation to the amount of time spent with the client and the dollar amount they spend with you - another good reason to perform the walk around!
Where does this benchmark of repair orders, handled per advisor daily, come from?
On an eight hour day, there is approximately 27 minutes per transaction available based on 18 repair orders written. Obviously, there are carry over repair orders, phone calls, appointments and issues throughout the day not pertaining to the current repair orders that would require service advisors time as well. Even with these considerations, there is ample time to perform an effective walk around with this repair order count. The walk around and recommendations being suggested are relevant to the mileage of the vehicle so the time requirement to perform effective walk around’s will vary. In most cases, the actual walk around portion of the sales process takes less than 5 minutes.
Why is it difficult for dealers to implement an effective walk around process?
- The walk around may be too much of a vehicle inspection procedure versus a customer relationship building process and it may take too long;
- Lack of service advisor training on how to perform the walk around process and control the sale;
- Lack of service advisor training on effective word tracks that sell!
- Improper service advisor staffing;
- Ineffective compensation plans;
- Ineffective appointment scheduling;
- Service advisor comfort zone;
- Lack of management accountability and follow through of the process.
What is it costing younot to have a walk around / point of sale process in your dealership?
Let’s assume you have 700 Cp R.O’s monthly @ 1.60 customer pay labor hours per repair order at $74.00 CP ELR @ 70% labor GP retention and a $90.00 labor rate. In addition, a 75% CP part to labor ratio @ 36% CP parts GP retention.
An effective selling system at the point of sale incorporating walk around’s will attain a 2.10 hour per repair order or at least an additional .50 labor hours based on your actual numbers. The increase in CP labor sales is computed as 700 R.O’s x .50Hrs. (350 FRH’s) x $74.00 ELR which equals $ 25,900.00. The increase in CP labor GP @ 70% GP retention is $18,130.00.
Remember, in addition to up selling CP labor, there is an additional $.75 in part sales for every $1.00 in labor sold in this typical example. The increase in part sales at 75% part to labor ratio is another $ 19,425.00. The CP parts gross profit increase at 36% GP retention is an additional $6,993.00. Total monthly CP labor and parts gross profit increase is $25,123.00 or $301,476.00 annually!
In addition, you just improved the morale of the technicians by adding an additional 350 hours into the shop for the month as well.
Not Bad! No additional repair order count required, no additional advertising dollars spent, no additional coupons, no additional discounts, no gadgets, just fundamental operating systems!
Oh… But there is more money left on the table in this deal!
In addition to this financial increase, there is significant gross profit still being left on the table in this example because the customer pay effective labor rate and parts gross profit
retention are out of line as well. That’s a topic for another article.
How much would this additional $301,476.00 increase your Fixed Coverage percentage annually?
Would it make more sense to implement an effective selling system in your service department to address the financial opportunities you have today instead of looking for a Silver Bullet to increased profits?
Many dealers keep searching for that technology gadget or Silver Bullet to attain exceptional sales performance and customer satisfaction. At the end of the day, it is people systems, structure and accountability that drives sales performance and the bottom line!
Retail automobile dealers deserve a realistic return on investment, No More, No Less! Many dealership service and parts departments have additional and significant financial opportunities just by attaining a realistic industry benchmark level of sales and gross profit retention performance.
John Sheriff is the owner and founder of Sheriff 5-Star Fixed Operations Consulting. He has consistently generated proven results by increasing fixed operations profits and customer satisfaction both domestic and import retail automotive dealerships throughout the United States for over 22 years. John has a unique, real world, savvy and proven approach with dealership management and personnel to attaining their buy-in of the processes that generate bottom line results. John’s retail automotive dealer client base has enjoyed millions of dollars in additional profits through his assessments, systems, training and processes. John also works as a contract consultant in addition to having his own firm. John is also recognized as a keynote speaker for fixed operation seminars for Ford Motor Company, Dealer 20 groups and automobile accountancy firms.
July& August 2014 FIXED OPS MAGAZINE
ADVANCED SERVICE ADVISOR SELLING TECHNIQUES
PART 1 and 2
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