Robert Atwood knows fixed operations; he speaks with authority because he speaks from experience. As a senior instructor at NADA Academy in McLean, VA and a frequent workshop leader at the annual NADA convention, Atwood is the go-to guy for maximizing parts and service profitability.
Earlier this summer, I attended a workshop that Atwood conducted in Oklahoma City for a group of dealers, general managers, and service managers. Here are some of the key takeaways and success tips that he discussed:
Time is a perishable resource.
Atwood said dealerships have four inventories: new cars, used cars, parts, and technician time. Concerning the first three—new cars, used cars, and parts—what you don’t sell today will still be there tomorrow. But when it comes to technician time, if you don’t sell it today, it is lost forever— it’s a perishable inventory. Therefore, service managers must demand that their service sales team develop a sense of urgency for selling their most valuable resource—time.
Speaking of value, new cars gross 4%, used cars gross 12%, parts inventories gross 35%, but technician time grosses 70%. If your shop isn’t selling 120% of the available time, then you have a problem. (Just to clarify, the NADA benchmark for proficiency states that for every 100 hours of clock time, the shop should be producing 120 flat rate hours – 120% proficiency.) Proficiency is hours billed or produced divided by hours available.
“Goals begin behaviors, consequences maintain behavior!” – Robert Atwood, NADA Academy
Convenience is a must.
“The service department should be open as late as the sales department—maybe later!” Atwood said. “Are you open for the convenience of your customers or your employees?”
Since most Americans live in two-income households, we need to make it convenient to do business at the dealership. Having the service department open 7 a.m. – 6 p.m. Monday through Friday and 7:00 a.m. – 2:00 p.m. on Saturday will probably fall short of the customers’ expectations for convenient hours.
Atwood reminded workshop attendees that there are 21 independent garages for every dealership. That’s a lot of service centers competing for your customers. If vehicle owners have to choose between quality and convenience, they may be forced to choose the convenience of an independent service center simply because the limited hours at the dealership don’t fit their work schedule.
I realize extending service hours will be a gut-wrenching cultural change for many dealerships and, frankly, some will dismiss the idea all together. But if you are looking for ways to boost loyalty and profitability, then you might want to consider it.
Atwood suggested at the very least to try extended hours on Tuesdays and Thursdays to see how your customers respond. He also suggested asking your customers what hours would be most convenient for them.
To drive the point home, Atwood discussed the growing trend of vehicle manufacturers offering free maintenance to consumers during the first two or three years of ownership. He cited one manufacturer’s retention statistics. This OEM had an 87% retention rate at 10,000 miles. It dropped to 48% at 20,000 miles, and to a shocking 27% at 30,000 miles.
That means at the 20,000-mile service interval, 52% are going to a competing service center and paying for the service when they could get it done at the dealership for free!! Why would someone pay an after-market shop for something the dealership will do for free? Could it be that the after-market shop had more convenient hours? Just sayin.’
Vehicle Walk-Arounds are a MUST at Write-Up
Has a vehicle ever left your service department with worn-out wipers? Tires with tread depth at an unsafe level? Dings, dents, and scratches that you didn’t cause but you got blamed for?
In short, failure to do a proper walk-around at the time of vehicle write-up costs you a ton of money. I don’t care how busy your advisors are, they have time to do a walk-around. Even a quick 60-90 second stroll around the car, with the customer, will reveal many opportunities.
Atwood says the walk-around is so mission-critical that he suggests you post a sign with this message on your service drive:
“Attention all service customers: You will receive a free oil change if your service advisor does not perform a walk-around inspection of your vehicle at the time of service check-in.”
Now here’s the kicker: Who pays for the oil change that had to be given away due to the lack of walk-around? “The advisor pays for it!” Atwood explains. He continues, “Goals begin behavior, consequences maintain behavior!”
Honestly, folks, isn’t it time to stop talking about walk-arounds and start insisting on them? Isn’t it time to implement some consequences for non-compliance? It’s not asking too much. Your advisors can do this.
In conclusion, Robert Atwood is a walking encyclopedia of “automotive best practices” that keep your customers coming back to you and spending money when they come.
I’ve learned a lot from him; he’s a mentor and a friend. Keep up the good work, Robert!