Dealerships couldn’t survive without a network of suppliers or vendors to perform work that would not normally be done by a dealership employee. Some examples of dealer vendors are listed below;
Auto glass installers Leather and fabric repair
Alarm installations Window Tinting Installers
Auto-Start Installers Rim Refurbishing
Dent Removal Body-shops
Tow Companies Hardware Vendors – Nuts Bolts…
Oil Companies Recycling Companies
Garbage Company Paper Shredding Companies
Lojack
The list goes on and on and on…
Have you performed a sampling to see if your expenses have increased or crept up over time? You may have originally hammered out a deal with each individual vendor for pricing but have you checked up on the pricing recently or any time since. You may be presently surprised to find out that some of your vendors have taken advantage of your businesses time constraints and snuck a few fast ones by you. Run a report month over month and compare your expenses for each vendor with services received. Look for discrepancies and you will follow and find the money trail.
We are all looking for ways to increase our dealership profits and this method is one way to help save money from bleeding out of your profits! For example most dealerships employ paint-less dent removal companies to offer customers another amenity as well as raising gross profit. If you do not have a written contract of WHAT you are paying per panel or per dent you may end up paying more as time goes on. Should this happen to you and if you have never raised the price you are charging your customers, you are effectively lowering the GP percentage.
Another way to ensure you are able to properly measure your numbers is by sitting with your body shop manager and hammer out a deal on price per panel. Yes, price per panel! I have an agreement with the body shop manager that any panel that has minor scratches and needs repainting is done for $125 per panel, even bumpers. If the panel needs bodywork we are adding an additional $75 to the $125 bringing the cost to $200. This is a great way to measure and estimate a vehicle right on the service drive which ultimately leads to more sales. All this takes place because your advisors KNOW what the price cost per panel is so they will automatically add a 30% markup. Now you can make money and your service staff won’t be afraid to quote pricing to your customers.
Be on the lookout for price creeping, inaccurate pricing, pricing terms, over inflated transportation charges and surcharges. These types of pricing inaccuracies lead to lowered gross profits which ultimately chew into your ability to achieve higher fixed absorption numbers. The goal is not to save to profit, however you MUST be diligent in examining the price you pay for outside vendor services or you might be taken to the cleaners without ever realizing your true profit potential.
One way to stay on top of your vendor agreements is to secure all written agreements in one file drawer where they are easily accessible for an on the spot review of any vendor pricing. If you have a vendor prospect looking to do business with you, don’t chase them out the door, see what they have to offer and find out what pricing they charge.
Perform cost comparisons and keep your current vendors in check! If you find a cheaper price for the same service, meet with your current vendor and restructure the cost pricing. Do not be afraid of negotiation, negotiation leads to opportunities for you and the dealership.
If you find during an audit of your vendors that you have been paying more then you agreed to, do not be afraid to ask for a refund check! The vendor will certainly think twice before trying to pull another fast one during your watch. Be on the lookout for surcharges that were not part of the original agreement, should you find discrepancies again ask for the refund and stick to the original signed contract. Yes, get contracts with each vendor showing the dissection of charges and how each charge is applied.
The benefits to keeping a watchful eye on all your vendors can be summed up as;
1. Prevention of overcharges improves overall profitability!
2. Your confidence with your suppliers/vendors improves with a regular audit!
3. Auditing information is useful in selecting future suppliers & vendors!
4. Vendor/supplier compliance improves with regular auditing processes!
5. Internal employee compliance using designated suppliers will increase and you won’t be taken advantage of with vendor/supplier kickbacks to your current employees!
Performing a quarterly supplier/vendor audit will ensure compliance with pricing and employee utilization of outside products and services as well as yielding significant results in gross profit retention!
David
Sunday, December 12, 2010
Sunday, December 5, 2010
Service Department Reviews Sell the Next Vehicle
Is your service department hurting your sales departments ability to sell more vehicles? Most dealer owners, GM’s and GSM’s would say yes! In most cases the sales department sells the consumer their first vehicle, with that said the service department either sells the next two vehicles or breaks the chain. The service department has the ability to increase your sales departments total unit sales, yet in a lot of cases underperforms in giving the exceptional experience and the fixed right the first time statistics.
The problem goes back to old saying, “Doing the same thing over and over again expecting different results is the definition of insanity”! Most service departments are doing the same old things the same old way and haven’t grown or expanded with the business. Markets have definitely changed and consumers have changed, so why haven’t some dealership mentalities concerning their customers and the increasing level of services offered changed?
What are you doing right now to send a message to your customers that they are important? Are you sending postcards, mailers, newsprint advertising or web advertising? Are you putting next service stickers on your customer’s vehicles to remind them of the next scheduled service, heck your BDC department should be calling these customers with reminders for upcoming or missed services, state inspections and annual wheel alignment and front end inspections! Think outside the box and watch your customer base rematerialize.
Today’s consumers know WHAT they want! Most want good service, value, best price and ease of serviceability, these items differ from customer to customer, yet one item that remains a constant is the EXPERIENCE! All customers want and require an exceptional experience. The experience is what will keep them coming back in your door! If you keep them coming back they will continue to purchase vehicles from your dealership, AND they will tell others about your great level of service! WOW – FREE MARKETING... You cannot get better then this scenario!
Research done by NADA show that in MOST cases dealership service departments are coming up short on facilitating a truly exceptional service experience, for example over 55% of consumers polled feel that their local independent service facility will provide them with better value and a better experience than that of nationally owned repair chains at 25% or manufacturer repair facilities that come up at a whopping 20% satisfaction rating! The real kicker here is that 46% of vehicle repair customers surveyed FEEL that manufacturer or dealer facilities will overcharge them, this can lead to the negative experience instead of the exceptional experience. Remember perception is reality, therefore your service advisors MUST also show value and benefit to the customer to offset the perceived notion of a higher cost!
You are probably asking yourself, “Ok, how does this impact our sales department”. Well, 75% of all consumers shopping for anything from household appliances to automobiles reported that they regularly read on-line reviews regarding customer service experiences before they commit to a purchase from a particular retailer. That is why it is so important to maintain an unblemished image, especially on dealer rater! Social media can make your dealership profitable as well as it can ruin your ability to attract future clients, social media can make your business fly or make it crash and burn!
Due to the current economic situation, consumers are looking for alternative means to save money or spend the money necessary to obtain that unique exceptional experience, therefore it is imperative to the sales department that customers have the perception of added value and benefit at your service department, as well as receiving the exceptional experience and the fixed right on the first visit experience.
Brand loyalty is on the decline and only you can stop it! Use your GOOD image, CSI, Amenities and value added servicing to show your customers you are head and shoulders above the competition. Marketing from a standpoint of a competitive advantage or position of strength can go a long way to attract new customers and in keeping the ones you already have.
Market and advertise your great CSI. Post customer letters on your website and use your website to market how well you compare to that of your competition. Always market from a position of strength in everything you put out! If you are giving all your customers the experience they want and you show value and benefit you will not only grow your service department, you will grow your sales department, and this is cyclical business building at its best. You will guaranty the future of hourly productivity generation in your service department by helping to generate vehicle sales.
David
The problem goes back to old saying, “Doing the same thing over and over again expecting different results is the definition of insanity”! Most service departments are doing the same old things the same old way and haven’t grown or expanded with the business. Markets have definitely changed and consumers have changed, so why haven’t some dealership mentalities concerning their customers and the increasing level of services offered changed?
What are you doing right now to send a message to your customers that they are important? Are you sending postcards, mailers, newsprint advertising or web advertising? Are you putting next service stickers on your customer’s vehicles to remind them of the next scheduled service, heck your BDC department should be calling these customers with reminders for upcoming or missed services, state inspections and annual wheel alignment and front end inspections! Think outside the box and watch your customer base rematerialize.
Today’s consumers know WHAT they want! Most want good service, value, best price and ease of serviceability, these items differ from customer to customer, yet one item that remains a constant is the EXPERIENCE! All customers want and require an exceptional experience. The experience is what will keep them coming back in your door! If you keep them coming back they will continue to purchase vehicles from your dealership, AND they will tell others about your great level of service! WOW – FREE MARKETING... You cannot get better then this scenario!
Research done by NADA show that in MOST cases dealership service departments are coming up short on facilitating a truly exceptional service experience, for example over 55% of consumers polled feel that their local independent service facility will provide them with better value and a better experience than that of nationally owned repair chains at 25% or manufacturer repair facilities that come up at a whopping 20% satisfaction rating! The real kicker here is that 46% of vehicle repair customers surveyed FEEL that manufacturer or dealer facilities will overcharge them, this can lead to the negative experience instead of the exceptional experience. Remember perception is reality, therefore your service advisors MUST also show value and benefit to the customer to offset the perceived notion of a higher cost!
You are probably asking yourself, “Ok, how does this impact our sales department”. Well, 75% of all consumers shopping for anything from household appliances to automobiles reported that they regularly read on-line reviews regarding customer service experiences before they commit to a purchase from a particular retailer. That is why it is so important to maintain an unblemished image, especially on dealer rater! Social media can make your dealership profitable as well as it can ruin your ability to attract future clients, social media can make your business fly or make it crash and burn!
Due to the current economic situation, consumers are looking for alternative means to save money or spend the money necessary to obtain that unique exceptional experience, therefore it is imperative to the sales department that customers have the perception of added value and benefit at your service department, as well as receiving the exceptional experience and the fixed right on the first visit experience.
Brand loyalty is on the decline and only you can stop it! Use your GOOD image, CSI, Amenities and value added servicing to show your customers you are head and shoulders above the competition. Marketing from a standpoint of a competitive advantage or position of strength can go a long way to attract new customers and in keeping the ones you already have.
Market and advertise your great CSI. Post customer letters on your website and use your website to market how well you compare to that of your competition. Always market from a position of strength in everything you put out! If you are giving all your customers the experience they want and you show value and benefit you will not only grow your service department, you will grow your sales department, and this is cyclical business building at its best. You will guaranty the future of hourly productivity generation in your service department by helping to generate vehicle sales.
David
Saturday, November 27, 2010
Mr. Common Sense
A friend of mine from Canada sent this to me and I thought I would post it for all to see. The story made me think about some employees and some customers I have dealt with over the years. Hell, even some decisions I have made throughout my life! The one think that struck me is how the new young recruits both you and I hire have a general lack of common sense, reason and a sense of responsibility for ones actions. I hope you agree this is a huge problem to overcome, enjoy.
Today we mourn the passing of a beloved old friend, Common Sense, who has been with us for many years. No one knows for sure how old he was, since his birth records were long ago lost in bureaucratic red tape.
He will be remembered as having cultivated such valuable lessons as:
- Knowing when to come in out of the rain;
- Why the early bird gets the worm;
- Life isn’t always fair;
- and maybe it was my fault.
Common Sense lived by simple, sound financial policies (don’t spend more than you can earn) and reliable strategies (adults, not children, are in charge).
His health began to deteriorate rapidly when well-intentioned but overbearing regulations were set in place. Reports of a 6-year-old boy charged with sexual harassment for kissing a classmate; teens suspended from school for using mouthwash after lunch; and a teacher fired for reprimanding an unruly student, only worsened his condition.
Common Sense lost ground when parents attacked teachers for doing the job that they themselves had failed to do in disciplining their unruly children. It declined even further when schools were required to get parental consent to administer sun lotion or an aspirin to a student; but could not inform parents when a student became pregnant and wanted to have an abortion.
Common Sense lost the will to live as the churches became businesses; and criminals received better treatment than their victims. Common Sense took a beating when you couldn’t defend yourself from a burglar in your own home and the burglar could sue you for assault.
Common Sense finally gave up the will to live, after a woman failed to realize that a steaming cup of coffee was hot. She spilled a little in her lap, and was promptly awarded a huge settlement. Common Sense was preceded in death, by his parents, Truth and Trust, by his wife, Discretion, by his daughter, Responsibility, and by his son, Reason.
He is survived by his 4 stepbrothers; I Know My Rights, I Want It Now, Someone Else Is To Blame, and I’m A Victim.
Not many attended his funeral because so few realized he was gone. If you still remember him, pass this on. If not, join the majority and do nothing.
Author Unknown
David
Today we mourn the passing of a beloved old friend, Common Sense, who has been with us for many years. No one knows for sure how old he was, since his birth records were long ago lost in bureaucratic red tape.
He will be remembered as having cultivated such valuable lessons as:
- Knowing when to come in out of the rain;
- Why the early bird gets the worm;
- Life isn’t always fair;
- and maybe it was my fault.
Common Sense lived by simple, sound financial policies (don’t spend more than you can earn) and reliable strategies (adults, not children, are in charge).
His health began to deteriorate rapidly when well-intentioned but overbearing regulations were set in place. Reports of a 6-year-old boy charged with sexual harassment for kissing a classmate; teens suspended from school for using mouthwash after lunch; and a teacher fired for reprimanding an unruly student, only worsened his condition.
Common Sense lost ground when parents attacked teachers for doing the job that they themselves had failed to do in disciplining their unruly children. It declined even further when schools were required to get parental consent to administer sun lotion or an aspirin to a student; but could not inform parents when a student became pregnant and wanted to have an abortion.
Common Sense lost the will to live as the churches became businesses; and criminals received better treatment than their victims. Common Sense took a beating when you couldn’t defend yourself from a burglar in your own home and the burglar could sue you for assault.
Common Sense finally gave up the will to live, after a woman failed to realize that a steaming cup of coffee was hot. She spilled a little in her lap, and was promptly awarded a huge settlement. Common Sense was preceded in death, by his parents, Truth and Trust, by his wife, Discretion, by his daughter, Responsibility, and by his son, Reason.
He is survived by his 4 stepbrothers; I Know My Rights, I Want It Now, Someone Else Is To Blame, and I’m A Victim.
Not many attended his funeral because so few realized he was gone. If you still remember him, pass this on. If not, join the majority and do nothing.
Author Unknown
David
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