Leadership & ManagementResearch & Analysis

Leadership & Management
A Salesperson’s POV on Digital Retailing

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The automotive industry’s shift into digital retailing is no longer a possibility, but a reality. With the accessibility of information and commerce tools on any device, car buyers have already started to expect an experience closer to that of shopping on Amazon , Apple , or even Walmart . In fact, a recent Cox study showed that 83% of car buyers want to do all or some of the purchase process online. The tools are out there and many of the dealerships that have already made the plunge are benefiting from new operational efficiencies and higher customer engagement. At Roadster, we recently hosted a webinar with two industry sales veterans who use Roadster’s Omnichannel Commerce tools every day (and sometimes in the middle of the night, as we learned). Dustin Dutterer from Sun Automotive Group went from selling 15 cars on a good month to averaging 36. Gabriel Hale from Rallye BMW is on track to sell 400 cars by himself for the end of the year. Both were kind enough to share their first-hand accounts of how implementing new processes allowed them to work multiple deals at the same time and provide improved customer experiences, helping to nearly double their individual monthly sales. Digital Retailing Brings a New Efficiency With a digital-first process, the buyer and the salesperson can walk through more transparent pricing together, eliminating the time-consuming back-and-forth so many buyers have come to dread. We have found that those “let me check with my manager” moments, where buyers are left alone, are a clear point of dissatisfaction. In our study, the Roadster Time Study , we calculated that throughout the car buying process customers are left alone for an average of 2.5 hours. After the third time being left alone, satisfaction will likely have dropped as much as 30%. Gabriel discussed how many customers now walk into an experience that’s clean and clear, which eliminates an hour or two of his usual needs analysis and presentation process. He added that because buyers now have the opportunity to hit the pause button in-store and later go online to continue where they left off, he’s able to save time as the sale moves forward remotely. The buyer has already sold themselves on the deal and he can work more on simply facilitating the experience. He has also found a surprising amount of deal-building happens around 2 a.m. It’s about planting seeds Omnichannel Commerce tools have allowed a different sales process to emerge. It’s one that feels more transparent to the buyer and builds loyalty. The salesperson and customer can look at the deal together to see how each add-on affects the price, how their monthly payments can go up or down, and the buyer is generally in control of their own process. Dustin shared that even when the price is higher than a competitor’s, he is able to have a guided, transparent conversation with the customers that increases his credibility. They’re more likely to trust him and if he sends out 5 deals within 10 minutes of each other, usually 2-3 of them will close within a day’s time. In developing a relationship with one salesperson throughout the process, the buyer [1]   [2]  is empowered to move their purchase along in the way that they are most comfortable. Gabriel or Dustin can email or text the deal to the customer at any stage and then support them remotely. The data backs up a collaborative sales approach, as well. In our Customer Experience Study , we asked car buyers what they wanted most out of their experience. 39% of respondents wanted to deal with the same person from start to finish — beating out inventory selection and price transparency. When salespeople are able to act as facilitators and connect with their customers, it feels more transparent and grows investment in the process. Leadership Drives Culture Both Dustin and Gabriel agreed that their experience expanding into an Omnichannel approach would not have been the same without leadership that was eager to change with the times. Both described dealers who were hungry for better efficiency and unafraid to jump into the rising digital retailing tide. At Sun Automotive Group, the sales team was provided with technology, high-quality inventory and a customer-first mindset. They started with just a few iPads but increased the showroom technology footprint as they found more car buyers using them. The ease of use meant they could also bring in staff from more diverse backgrounds. "One of our best guys was a bartender at Red Lobster," Dustin said, highlighting the importance of having people skills, not just sales experience. The leaders at Rallye BMW built foundational skills and empowered their salespeople through frequent 1-on-1 training with the Roadster team. Gabriel shared that there was anxiety because of the newness of the system, but everyone quickly realized how simple the process was once they just dove in. For them, he said, “It’s a tool to get you to the next level.” You can literally see the anxiety leave their bodies Dustin consistently gets a few young, professional couples coming into his store each week. He explains the process, the tools and the transparent pricing, and he almost always witnesses a dramatic shift. “You can literally see the anxiety leave their bodies. They relax, they settle into their seats a little bit more...everything just changes when the anxiety leaves and they know they’re going to be treated fairly.” A customer recently said to Gabriel, “There’s no way you can give me this deal, deliver the car, take in my trade and that’ll be that.” Four hours later they delivered the car to his home. “One of the easiest sales I’ve ever made,” Gabriel said, “It’s so flawless from start to finish. He sold himself on it. Easier than buying an iPhone or ordering something from Amazon.” When you’re able to break personal sales records and remain excited to help the people walking through your door every day, you know you’re doing something right. Watch the full webinar with more insights, ideas and tactics here .
Maintain Your Service Department's Effective Labor Rate With Prepaid Maintenance

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A franchised car dealership’s service operation is like a factory whose products are labor and part sales. Service managers are charged with maximizing the output and the ROI for both products. Discounting services may keep techs busy, but it does little to hold the effective labor rate (ELR). Service operations consultant Mike Volkman of Service Department Solutions says service managers struggling to keep bays busy and maintain their set effective labor rate may benefit from a review of how a dealership’s “factory” needs to work to be most successful. Bay utilization at ELR begins by managing the correct inputs — advisors selling 40 hours of work a week at the standard door rate, and technicians available to execute that action. If you have a tech out that day with no suitable replacement possible, some of that sold time doesn’t get sold. How customers experience your service also contributes to bay utilization. A recent J.D. Power Automotive Analyst report indicated how: Customers with a satisfaction index score of 901 or higher made an average of 2.5 service visits to a dealer. Customers with a satisfaction index score of 600 and lower made an average of just 2.2 visits. At an average spend of $192, the difference between 2.5 and 2.2 visits per year for a dealer with 4,000 service customers is nearly $250,000 in lost revenue. Each bay should generate eight hours of labor time per day. Ten-bay operations, therefore, should be producing 400 hours of labor time per five-day work week. Based on the prevailing rule of thumb that every dollar of labor sales should generate 85 cents in parts sales revenue, keeping bays active and producing add up to a tidy sum, of which 60% to 65% should be profit to the dealership, notes Volkman. Service managers have several ways to improve scheduling, tech efficiency, parts sales, and other factors to drive more revenue through service operations — more than I have room to discuss here. The basic way to make these improvements, however, is by using scheduling tools in your dealership management system (DMS), or third-party software tools. Before that, though, first you should create a master plan for your shop. Second, Volkman advises, forecast monthly bay opportunity and tracked utilization daily. Finally, base pay plans on advisor success at book hours at a specific labor rate. “If you’re generating more hours but giving away the ELR, it’s a wash,” Volkman stresses. One proven way dealers are finding to generate more hours while holding their effective labor rate is by selling new and used car buyers prepaid maintenance (PPM) services. An example is the Lester Glenn Group in Toms River, New Jersey, which operates eight franchises at seven locations. “It’s always a challenge to keep everyone 110% productive every day, so this dealer-branded preventive maintenance service helps me fill my bays immediately, and creates opportunities for us to sell additional services,” says Kerry Monica, vice president of fixed operations. “When we schedule customers owning this plan, I have a guideline for the average hours per RO [repair order] per car coming in that day” The J.D. Power report also noted that customers who either prepaid for a maintenance package or bought a vehicle that included complimentary maintenance in 2015 made 88% of their service visits to dealerships in 2017. Those who had no prepaid or complimentary maintenance when they made their purchase in 2015, however, made just 75% of their service visits to dealers in 2017. Monica schedules as much volume as a technician can handle in eight hours, but as many PPMs are lube, oil, and filter (LOF) and tire rotation services, PPM work is scheduled with the express staff: five C-level technicians, who handle 12 appointments per day per team member. Any more severe work identified typically is additional business that flows to the main shop. Volkman says that’s smart. “There is no reason to bring PPM-driven work into the house if you cannot handle it, but if you can pass oil changes and other light work to less-experienced technicians to free up your main techs for production work, they can really turn time.” “For the 60 customers we’ll see in our Hyundai store today with a PPM plan, half will buy another service up and beyond what they initially came in for,” Monica says. He notes these percentages are similar to all other Lester Glenn stores selling PPMs. About 70% of that upsell work is mostly additional customer-pay business, while 30% is warranty repairs, such as oil leaks and other non-maintenance-related business. Although some dealers give away PPMs to stimulate retention, Lester Glenn charges for its plan, rightly believing that price connotes value, which encourages consistent plan usage. At Lester Glenn dealerships, plan holders return for three visits per year. The three-year plan includes five LOF services, and the five-year plan includes nine. “We sell 1,100 cars a month here at Lester Glenn Hyundai, with 15% of buyers also purchasing our PPM. That is 165 PPM contracts a month — 2,000 contracts a year — and the rate is growing. With these plans we’re creating extra traffic to this service department — and that’s driving additional service sales, which equals extra hours for technicians,” notes Monica. He says Lester Glenn Hyundai upgrades approximately 60 customers per month coming in for basic maintenance off the service drive into new and used replacement vehicles. “These are buyers we’ve retained through their commitment to use of our prepaid maintenance program,” Monica says. Ryan Williams is president of Fidelis PPM , and is a 20-plus year veteran of the auto industry, having served in multiple dealerships as sales manager, F&I manager, and GM. You can reach him at ryan@getfidelis.com .